☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
or
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from ________ to ________
|
Texas
|
74-1563240
|
|
(State or other jurisdiction of
|
(IRS Employer
|
|
incorporation or organization)
|
Identification No.)
|
|
P.O. Box 36611
|
|
|
Dallas,
|
Texas
|
75235-1611
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
Common Stock ($1.00 par value)
|
LUV
|
New York Stock Exchange
|
Large accelerated filer
|
x
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
Emerging growth company
|
☐
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3,940
|
|
|
$
|
2,548
|
|
Short-term investments
|
1,605
|
|
|
1,524
|
|
||
Accounts and other receivables
|
709
|
|
|
1,086
|
|
||
Inventories of parts and supplies, at cost
|
518
|
|
|
529
|
|
||
Prepaid expenses and other current assets
|
256
|
|
|
287
|
|
||
Total current assets
|
7,028
|
|
|
5,974
|
|
||
|
|
|
|
||||
Property and equipment, at cost:
|
|
|
|
|
|
||
Flight equipment
|
21,580
|
|
|
21,629
|
|
||
Ground property and equipment
|
5,818
|
|
|
5,672
|
|
||
Deposits on flight equipment purchase contracts
|
305
|
|
|
248
|
|
||
Assets constructed for others
|
198
|
|
|
164
|
|
||
|
27,901
|
|
|
27,713
|
|
||
Less allowance for depreciation and amortization
|
10,912
|
|
|
10,688
|
|
||
|
16,989
|
|
|
17,025
|
|
||
Goodwill
|
970
|
|
|
970
|
|
||
Operating lease right-of-use assets
|
1,278
|
|
|
1,349
|
|
||
Other assets
|
620
|
|
|
577
|
|
||
|
$
|
26,885
|
|
|
$
|
25,895
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
1,043
|
|
|
$
|
1,574
|
|
Accrued liabilities
|
1,037
|
|
|
1,749
|
|
||
Current operating lease liabilities
|
330
|
|
|
353
|
|
||
Air traffic liability
|
5,036
|
|
|
4,457
|
|
||
Current maturities of long-term debt
|
2,795
|
|
|
819
|
|
||
Total current liabilities
|
10,241
|
|
|
8,952
|
|
||
|
|
|
|
||||
Long-term debt less current maturities
|
2,288
|
|
|
1,846
|
|
||
Air traffic liability - noncurrent
|
1,175
|
|
|
1,053
|
|
||
Deferred income taxes
|
2,278
|
|
|
2,364
|
|
||
Construction obligation
|
198
|
|
|
164
|
|
||
Noncurrent operating lease liabilities
|
936
|
|
|
978
|
|
||
Other noncurrent liabilities
|
694
|
|
|
706
|
|
||
Stockholders' equity:
|
|
|
|
|
|
||
Common stock
|
808
|
|
|
808
|
|
||
Capital in excess of par value
|
1,582
|
|
|
1,581
|
|
||
Retained earnings
|
17,757
|
|
|
17,945
|
|
||
Accumulated other comprehensive loss
|
(186
|
)
|
|
(61
|
)
|
||
Treasury stock, at cost
|
(10,886
|
)
|
|
(10,441
|
)
|
||
Total stockholders' equity
|
9,075
|
|
|
9,832
|
|
||
|
$
|
26,885
|
|
|
$
|
25,895
|
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
OPERATING REVENUES:
|
|
|
|
||||
Passenger
|
$
|
3,845
|
|
|
$
|
4,745
|
|
Freight
|
39
|
|
|
42
|
|
||
Other
|
350
|
|
|
362
|
|
||
Total operating revenues
|
4,234
|
|
|
5,149
|
|
||
|
|
|
|
||||
OPERATING EXPENSES:
|
|
|
|
|
|
||
Salaries, wages, and benefits
|
1,854
|
|
|
1,976
|
|
||
Fuel and oil
|
870
|
|
|
1,015
|
|
||
Maintenance materials and repairs
|
272
|
|
|
293
|
|
||
Landing fees and airport rentals
|
339
|
|
|
333
|
|
||
Depreciation and amortization
|
311
|
|
|
297
|
|
||
Other operating expenses
|
698
|
|
|
730
|
|
||
Total operating expenses
|
4,344
|
|
|
4,644
|
|
||
|
|
|
|
||||
OPERATING INCOME (LOSS)
|
(110
|
)
|
|
505
|
|
||
|
|
|
|
||||
OTHER EXPENSES (INCOME):
|
|
|
|
|
|
||
Interest expense
|
28
|
|
|
31
|
|
||
Capitalized interest
|
(5
|
)
|
|
(9
|
)
|
||
Interest income
|
(17
|
)
|
|
(23
|
)
|
||
Other (gains) losses, net
|
28
|
|
|
2
|
|
||
Total other expenses (income)
|
34
|
|
|
1
|
|
||
|
|
|
|
||||
INCOME (LOSS) BEFORE INCOME TAXES
|
(144
|
)
|
|
504
|
|
||
PROVISION FOR INCOME TAXES
|
(50
|
)
|
|
117
|
|
||
|
|
|
|
||||
NET INCOME (LOSS)
|
$
|
(94
|
)
|
|
$
|
387
|
|
|
|
|
|
||||
NET INCOME (LOSS) PER SHARE, BASIC
|
$
|
(0.18
|
)
|
|
$
|
0.70
|
|
|
|
|
|
||||
NET INCOME (LOSS) PER SHARE, DILUTED
|
$
|
(0.18
|
)
|
|
$
|
0.70
|
|
|
|
|
|
||||
COMPREHENSIVE INCOME (LOSS)
|
$
|
(219
|
)
|
|
$
|
463
|
|
|
|
|
|
||||
WEIGHTED AVERAGE SHARES OUTSTANDING
|
|
|
|
|
|||
Basic
|
515
|
|
|
551
|
|
||
Diluted
|
515
|
|
|
552
|
|
|
|
Quarter ended March 31, 2020
|
||||||||||||||||||||||
|
|
Common
Stock
|
|
Capital in
excess of
par value
|
|
Retained
earnings
|
|
Accumulated
other
comprehensive
income (loss)
|
|
Treasury
stock
|
|
Total
|
||||||||||||
Balance at December 31, 2019
|
|
$
|
808
|
|
|
$
|
1,581
|
|
|
$
|
17,945
|
|
|
$
|
(61
|
)
|
|
$
|
(10,441
|
)
|
|
$
|
9,832
|
|
Repurchase of common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(451
|
)
|
|
(451
|
)
|
||||||
Issuance of common and treasury stock pursuant to Employee stock plans
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
6
|
|
|
(2
|
)
|
||||||
Share-based compensation
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||||
Cash dividends, $.180 per share
|
|
—
|
|
|
—
|
|
|
(94
|
)
|
|
—
|
|
|
—
|
|
|
(94
|
)
|
||||||
Comprehensive loss
|
|
—
|
|
|
—
|
|
|
(94
|
)
|
|
(125
|
)
|
|
—
|
|
|
(219
|
)
|
||||||
Balance at March 31, 2020
|
|
$
|
808
|
|
|
$
|
1,582
|
|
|
$
|
17,757
|
|
|
$
|
(186
|
)
|
|
$
|
(10,886
|
)
|
|
$
|
9,075
|
|
|
|
Quarter ended March 31, 2019
|
||||||||||||||||||||||
|
|
Common
Stock
|
|
Capital in
excess of
par value
|
|
Retained
earnings
|
|
Accumulated
other
comprehensive
income (loss)
|
|
Treasury
stock
|
|
Total
|
||||||||||||
Balance at December 31, 2018
|
|
$
|
808
|
|
|
$
|
1,510
|
|
|
$
|
15,967
|
|
|
$
|
20
|
|
|
$
|
(8,452
|
)
|
|
$
|
9,853
|
|
Cumulative effect of adopting Accounting Standards Update No. 2016-02, Leases, codified in Accounting Standards Codification 842
|
|
—
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
55
|
|
||||||
Balance after adjustment for the new accounting standard
|
|
$
|
808
|
|
|
$
|
1,510
|
|
|
$
|
16,022
|
|
|
$
|
20
|
|
|
$
|
(8,452
|
)
|
|
$
|
9,908
|
|
Repurchase of common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(500
|
)
|
|
(500
|
)
|
||||||
Issuance of common and treasury stock pursuant to Employee stock plans
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
6
|
|
|
(4
|
)
|
||||||
Share-based compensation
|
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
||||||
Cash dividends, $.160 per share
|
|
—
|
|
|
—
|
|
|
(89
|
)
|
|
—
|
|
|
—
|
|
|
(89
|
)
|
||||||
Comprehensive income
|
|
—
|
|
|
—
|
|
|
387
|
|
|
76
|
|
|
—
|
|
|
463
|
|
||||||
Balance at March 31, 2019
|
|
$
|
808
|
|
|
$
|
1,513
|
|
|
$
|
16,320
|
|
|
$
|
96
|
|
|
$
|
(8,946
|
)
|
|
$
|
9,791
|
|
|
Three months ended
|
||||||
|
March 31,
|
||||||
|
2020
|
|
2019
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income (loss)
|
$
|
(94
|
)
|
|
$
|
387
|
|
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
311
|
|
|
297
|
|
||
Unrealized/realized (gain) loss on fuel derivative instruments
|
2
|
|
|
—
|
|
||
Deferred income taxes
|
(49
|
)
|
|
13
|
|
||
Changes in certain assets and liabilities:
|
|
|
|
|
|
||
Accounts and other receivables
|
183
|
|
|
(222
|
)
|
||
Other assets
|
58
|
|
|
29
|
|
||
Accounts payable and accrued liabilities
|
(1,291
|
)
|
|
(257
|
)
|
||
Air traffic liability
|
701
|
|
|
944
|
|
||
Other liabilities
|
(132
|
)
|
|
(69
|
)
|
||
Cash collateral received from (provided to) derivative counterparties
|
(5
|
)
|
|
15
|
|
||
Other, net
|
(61
|
)
|
|
(32
|
)
|
||
Net cash provided by (used in) operating activities
|
(377
|
)
|
|
1,105
|
|
||
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||
Capital expenditures
|
(224
|
)
|
|
(160
|
)
|
||
Supplier proceeds
|
300
|
|
|
—
|
|
||
Purchases of short-term investments
|
(1,029
|
)
|
|
(251
|
)
|
||
Proceeds from sales of short-term and other investments
|
948
|
|
|
575
|
|
||
Net cash provided by (used in) investing activities
|
(5
|
)
|
|
164
|
|
||
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||
Proceeds from issuance of long-term debt
|
500
|
|
|
—
|
|
||
Proceeds from revolving credit facility
|
1,000
|
|
|
—
|
|
||
Proceeds from term loan credit facility
|
1,000
|
|
|
—
|
|
||
Proceeds from Employee stock plans
|
11
|
|
|
10
|
|
||
Payments of long-term debt and finance lease obligations
|
(78
|
)
|
|
(99
|
)
|
||
Payments of cash dividends
|
(188
|
)
|
|
(178
|
)
|
||
Repurchase of common stock
|
(451
|
)
|
|
(500
|
)
|
||
Other, net
|
(20
|
)
|
|
(12
|
)
|
||
Net cash provided by (used in) financing activities
|
1,774
|
|
|
(779
|
)
|
||
|
|
|
|
||||
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
1,392
|
|
|
490
|
|
||
|
|
|
|
||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
2,548
|
|
|
1,854
|
|
||
|
|
|
|
||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
3,940
|
|
|
$
|
2,344
|
|
|
|
|
|
||||
CASH PAYMENTS FOR:
|
|
|
|
||||
Interest, net of amount capitalized
|
$
|
14
|
|
|
$
|
15
|
|
Income taxes
|
$
|
5
|
|
|
$
|
4
|
|
|
|
|
|
||||
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
|
|
|
|
||||
Right-of-use assets acquired under operating leases
|
$
|
25
|
|
|
$
|
119
|
|
Right-of-use assets acquired under finance leases
|
$
|
—
|
|
|
$
|
1
|
|
Assets constructed for others
|
$
|
34
|
|
|
$
|
21
|
|
|
|
Maximum fuel hedged as of
|
|
|
|
|
|
March 31, 2020
|
|
Derivative underlying commodity type as of
|
|
Period (by year)
|
|
(gallons in millions) (a)
|
|
March 31, 2020
|
|
Remainder of 2020
|
|
976
|
|
|
WTI crude oil, Brent crude oil, and Heating oil
|
2021
|
|
1,283
|
|
|
WTI crude oil and Brent crude oil
|
2022
|
|
930
|
|
|
WTI crude oil and Brent crude oil
|
Beyond 2022
|
|
529
|
|
|
WTI crude oil and Brent crude oil
|
|
|
|
|
Asset derivatives
|
|
Liability derivatives
|
||||||||||||
|
|
Balance Sheet
|
|
Fair value at
|
|
Fair value at
|
|
Fair value at
|
|
Fair value at
|
||||||||
(in millions)
|
|
location
|
|
3/31/2020
|
|
12/31/2019
|
|
3/31/2020
|
|
12/31/2019
|
||||||||
Derivatives designated as hedges (a)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fuel derivative contracts (gross)
|
|
Prepaid expenses and other current assets
|
|
$
|
5
|
|
|
$
|
48
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fuel derivative contracts (gross)
|
|
Other assets
|
|
79
|
|
|
62
|
|
|
—
|
|
|
—
|
|
||||
Interest rate derivative contracts
|
|
Prepaid expenses and other current assets
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Interest rate derivative contracts
|
|
Other assets
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
||||
Interest rate derivative contracts
|
|
Accrued liabilities
|
|
—
|
|
|
—
|
|
|
14
|
|
|
5
|
|
||||
Interest rate derivative contracts
|
|
Other noncurrent liabilities
|
|
—
|
|
|
—
|
|
|
16
|
|
|
1
|
|
||||
Total derivatives designated as hedges
|
|
$
|
88
|
|
|
$
|
112
|
|
|
$
|
30
|
|
|
$
|
6
|
|
||
Derivatives not designated as hedges (a)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fuel derivative contracts (gross)
|
|
Prepaid expenses and other current assets
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate derivative contracts
|
|
Accrued liabilities
|
|
—
|
|
|
—
|
|
|
41
|
|
|
—
|
|
||||
Interest rate derivative contracts
|
|
Other noncurrent liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total derivatives not designated as hedges
|
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
41
|
|
|
$
|
—
|
|
Total derivatives
|
|
|
|
$
|
89
|
|
|
$
|
112
|
|
|
$
|
71
|
|
|
$
|
6
|
|
Balance Sheet location of hedged item
|
|
Carrying amount of the hedged liabilities
|
|
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities (a)
|
||||||||||||
|
|
March 31,
|
|
March 31,
|
||||||||||||
(in millions)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Current maturities of long-term debt
|
|
$
|
504
|
|
|
$
|
300
|
|
|
$
|
4
|
|
|
$
|
2
|
|
Long-term debt less current maturities
|
|
—
|
|
|
495
|
|
|
18
|
|
|
13
|
|
||||
|
|
$
|
504
|
|
|
$
|
795
|
|
|
$
|
22
|
|
|
$
|
15
|
|
|
|
Balance Sheet
|
|
March 31,
|
|
December 31,
|
||||
(in millions)
|
|
location
|
|
2020
|
|
2019
|
||||
Cash collateral deposits held from counterparties for fuel contracts - current
|
|
Offset against Prepaid expenses and other current assets
|
|
$
|
1
|
|
|
$
|
10
|
|
Cash collateral deposits held from counterparties for fuel contracts - noncurrent
|
|
Offset against Other assets
|
|
19
|
|
|
15
|
|
Location and amount recognized in income on cash flow and fair value hedging relationships
|
||||||||||||||||||||
|
|
Three months ended
March 31, 2020
|
|
Three months ended March 31, 2019
|
||||||||||||||||
(in millions)
|
|
Fuel and oil
|
|
Other (gains)/losses, net
|
|
Interest expense
|
|
Fuel and oil
|
|
Interest expense
|
||||||||||
Total
|
|
$
|
22
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
11
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss on cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity contracts:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Amount of loss reclassified from AOCI into income
|
|
22
|
|
|
2
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|||||
Interest contracts:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Amount of loss reclassified from AOCI into income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Impact of fair value hedging relationships:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest contracts:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Hedged items
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
6
|
|
|||||
Derivatives designated as hedging instruments
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
1
|
|
|
Counterparty (CP)
|
|
|
||||||||||||||||||||||||||||
(in millions)
|
A
|
|
B
|
|
C
|
|
D
|
|
E
|
|
F
|
|
Other (a)
|
|
Total
|
||||||||||||||||
Fair value of fuel derivatives
|
$
|
23
|
|
|
$
|
10
|
|
|
$
|
20
|
|
|
$
|
8
|
|
|
$
|
9
|
|
|
$
|
8
|
|
|
$
|
7
|
|
|
$
|
85
|
|
Cash collateral held from CP
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||||||
Letters of credit (LC)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Option to substitute LC for cash
|
N/A
|
|
N/A
|
|
(75) to (150) or >(550)(b)
|
|
(125) to (150) or >(550)(c)
|
|
(c)
|
|
N/A
|
|
|
|
|
||||||||||||||||
If credit rating is investment
grade, fair value of fuel
derivative level at which:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash is provided to CP
|
>(100)
|
|
>(50)
|
|
(75) to (150) or >(550)(d)
|
|
(125) to (150) or >(550)(d)
|
|
>(40)
|
|
>(65)(d)
|
|
|
|
|
||||||||||||||||
Cash is received from CP
|
>0(d)
|
|
>150(d)
|
|
>250(d)
|
|
>125(d)
|
|
>100(d)
|
|
>70(d)
|
|
|
|
|
||||||||||||||||
Cash can be pledged to
CP as collateral
|
(200) to (600)(e)
|
|
N/A
|
|
(150) to (550)(b)
|
|
(150) to (550)(b)
|
|
N/A
|
|
N/A
|
|
|
|
|
||||||||||||||||
If credit rating is non-investment
grade, fair value of fuel derivative level at which:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash is provided to CP
|
(0) to (200) or >(600)
|
|
(f)
|
|
(0) to (150) or >(550)
|
|
(0) to (150) or >(550)
|
|
(f)
|
|
(f)
|
|
|
|
|
||||||||||||||||
Cash is received from CP
|
(f)
|
|
(f)
|
|
(f)
|
|
(f)
|
|
(f)
|
|
(f)
|
|
|
|
|
||||||||||||||||
Cash can be pledged to
CP as collateral
|
(200) to (600)
|
|
N/A
|
|
(150) to (550)
|
|
(150) to (550)
|
|
N/A
|
|
N/A
|
|
|
|
|
|
Three months ended March 31,
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
NET INCOME (LOSS)
|
$
|
(94
|
)
|
|
$
|
387
|
|
Unrealized gain (loss) on fuel derivative instruments, net of
deferred taxes of ($19) and $22
|
(65
|
)
|
|
76
|
|
||
Unrealized loss on interest rate derivative instruments, net of
deferred taxes of ($10) and ($3)
|
(32
|
)
|
|
(11
|
)
|
||
Other, net of deferred taxes of ($9) and $3
|
(28
|
)
|
|
11
|
|
||
Total other comprehensive income (loss)
|
$
|
(125
|
)
|
|
$
|
76
|
|
COMPREHENSIVE INCOME (LOSS)
|
$
|
(219
|
)
|
|
$
|
463
|
|
(in millions)
|
Fuel derivatives
|
|
Interest rate derivatives
|
|
Defined benefit plan items
|
|
Other
|
|
Deferred tax
|
|
Accumulated other
comprehensive income (loss)
|
||||||||||||
Balance at December 31, 2019
|
$
|
(125
|
)
|
|
$
|
(33
|
)
|
|
$
|
20
|
|
|
$
|
59
|
|
|
$
|
18
|
|
|
$
|
(61
|
)
|
Changes in fair value
|
(108
|
)
|
|
(42
|
)
|
|
—
|
|
|
(37
|
)
|
|
43
|
|
|
(144
|
)
|
||||||
Reclassification to earnings
|
24
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
19
|
|
||||||
Balance at March 31, 2020
|
$
|
(209
|
)
|
|
$
|
(75
|
)
|
|
$
|
20
|
|
|
$
|
22
|
|
|
$
|
56
|
|
|
$
|
(186
|
)
|
Three months ended March 31, 2020
|
||||||
(in millions)
|
|
Amounts reclassified from AOCI
|
|
Affected line item in the unaudited Condensed Consolidated Statement of
Comprehensive Income (Loss)
|
||
AOCI components
|
|
|
||||
Unrealized loss on fuel derivative instruments
|
|
$
|
22
|
|
|
Fuel and oil expense
|
|
|
2
|
|
|
Other (gains) losses, net
|
|
|
|
5
|
|
|
Less: Tax expense
|
|
|
|
$
|
19
|
|
|
Net of tax
|
|
Three months ended March 31,
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Passenger non-loyalty
|
$
|
3,220
|
|
|
$
|
4,043
|
|
Passenger loyalty - air transportation
|
461
|
|
|
535
|
|
||
Passenger ancillary sold separately
|
164
|
|
|
167
|
|
||
Total passenger revenues
|
$
|
3,845
|
|
|
$
|
4,745
|
|
|
Balance as of
|
||||||
(in millions)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Air traffic liability - passenger travel and ancillary passenger services
|
$
|
2,650
|
|
|
$
|
2,125
|
|
Air traffic liability - loyalty program
|
3,561
|
|
|
3,385
|
|
||
Total Air traffic liability
|
$
|
6,211
|
|
|
$
|
5,510
|
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Air traffic liability - loyalty program - beginning balance
|
$
|
3,385
|
|
|
$
|
3,011
|
|
Amounts deferred associated with points awarded
|
656
|
|
|
711
|
|
||
Revenue recognized from points redeemed - Passenger
|
(461
|
)
|
|
(535
|
)
|
||
Revenue recognized from points redeemed - Other
|
(19
|
)
|
|
(16
|
)
|
||
Air traffic liability - loyalty program - ending balance
|
$
|
3,561
|
|
|
$
|
3,171
|
|
|
Air traffic liability
|
||
Balance at December 31, 2019
|
$
|
5,510
|
|
Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty)
|
4,565
|
|
|
Revenue from amounts included in contract liability opening balances
|
(1,949
|
)
|
|
Revenue from current period sales
|
(1,915
|
)
|
|
Balance at March 31, 2020
|
$
|
6,211
|
|
|
Air traffic liability
|
||
Balance at December 31, 2018
|
$
|
5,070
|
|
Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty)
|
5,704
|
|
|
Revenue from amounts included in contract liability opening balances
|
(2,008
|
)
|
|
Revenue from current period sales
|
(2,752
|
)
|
|
Balance at March 31, 2019
|
$
|
6,014
|
|
|
Three months ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
NUMERATOR:
|
|
|
|
||||
Net income (loss)
|
$
|
(94
|
)
|
|
$
|
387
|
|
|
|
|
|
||||
DENOMINATOR:
|
|
|
|
|
|
||
Weighted-average shares outstanding, basic
|
515
|
|
|
551
|
|
||
Dilutive effect of restricted stock units
|
—
|
|
|
1
|
|
||
Adjusted weighted-average shares outstanding, diluted
|
515
|
|
|
552
|
|
||
|
|
|
|
||||
NET INCOME (LOSS) PER SHARE:
|
|
|
|
|
|
||
Basic
|
$
|
(0.18
|
)
|
|
$
|
0.70
|
|
Diluted
|
$
|
(0.18
|
)
|
|
$
|
0.70
|
|
|
|
|
|
Fair value measurements at reporting date using:
|
||||||||||||
|
|
|
|
Quoted prices in
active markets
for identical assets
|
|
Significant
other observable
inputs
|
|
Significant
unobservable
inputs
|
||||||||
Description
|
|
March 31, 2020
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Assets
|
|
(in millions)
|
||||||||||||||
Cash equivalents
|
|
|
|
|
|
|
|
|
||||||||
Cash equivalents (a)
|
|
$
|
3,495
|
|
|
$
|
3,495
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial paper
|
|
360
|
|
|
—
|
|
|
360
|
|
|
—
|
|
||||
Certificates of deposit
|
|
19
|
|
|
—
|
|
|
19
|
|
|
—
|
|
||||
Time deposits
|
|
66
|
|
|
—
|
|
|
66
|
|
|
—
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
|
||||||||
Treasury bills
|
|
1,396
|
|
|
1,396
|
|
|
—
|
|
|
—
|
|
||||
Certificates of deposit
|
|
184
|
|
|
—
|
|
|
184
|
|
|
—
|
|
||||
Time deposits
|
|
25
|
|
|
—
|
|
|
25
|
|
|
—
|
|
||||
Interest rate derivatives (see Note 4)
|
|
4
|
|
|
|
|
|
4
|
|
|
|
|
||||
Fuel derivatives:
|
|
|
|
|
|
|
|
|
||||||||
Option contracts (b)
|
|
85
|
|
|
—
|
|
|
—
|
|
|
85
|
|
||||
Other available-for-sale securities
|
|
182
|
|
|
182
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
|
$
|
5,816
|
|
|
$
|
5,073
|
|
|
$
|
658
|
|
|
$
|
85
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Interest rate derivatives (see Note 4)
|
|
$
|
(71
|
)
|
|
$
|
—
|
|
|
$
|
(71
|
)
|
|
$
|
—
|
|
|
|
|
|
Fair value measurements at reporting date using:
|
||||||||||||
|
|
|
|
Quoted prices in
active markets
for identical assets
|
|
Significant
other observable
inputs
|
|
Significant
unobservable
inputs
|
||||||||
Description
|
|
December 31, 2019
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Assets
|
|
(in millions)
|
||||||||||||||
Cash equivalents
|
|
|
|
|
|
|
|
|
||||||||
Cash equivalents (a)
|
|
$
|
1,999
|
|
|
$
|
1,999
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial paper
|
|
535
|
|
|
—
|
|
|
535
|
|
|
—
|
|
||||
Certificates of deposit
|
|
14
|
|
|
—
|
|
|
14
|
|
|
—
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
|
||||||||
Treasury bills
|
|
1,196
|
|
|
1,196
|
|
|
—
|
|
|
—
|
|
||||
Certificates of deposit
|
|
268
|
|
|
—
|
|
|
268
|
|
|
—
|
|
||||
Time deposits
|
|
60
|
|
|
—
|
|
|
60
|
|
|
—
|
|
||||
Interest rate derivatives (see Note 4)
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Fuel derivatives:
|
|
|
|
|
|
|
|
|
||||||||
Option contracts (b)
|
|
110
|
|
|
—
|
|
|
—
|
|
|
110
|
|
||||
Other available-for-sale securities
|
|
197
|
|
|
197
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
|
$
|
4,381
|
|
|
$
|
3,392
|
|
|
$
|
879
|
|
|
$
|
110
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Interest rate derivatives (see Note 4)
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
Quantitative information about Level 3 fair value measurements
|
|||||||||||
|
|
Valuation technique
|
|
Unobservable input
|
|
Period (by year)
|
|
Range
|
|
Weighted Average (a)
|
|
Fuel derivatives
|
|
Option model
|
|
Implied volatility
|
|
Second quarter 2020
|
|
49-121%
|
|
93
|
%
|
|
|
|
|
|
|
Third quarter 2020
|
|
50-73%
|
|
59
|
%
|
|
|
|
|
|
|
Fourth quarter 2020
|
|
41-56%
|
|
47
|
%
|
|
|
|
|
|
|
2021
|
|
28-47%
|
|
36
|
%
|
|
|
|
|
|
|
2022
|
|
27-30%
|
|
28
|
%
|
|
|
|
|
|
|
Beyond 2022
|
|
25-27%
|
|
26
|
%
|
(in millions)
|
Carrying value
|
|
Estimated fair value
|
|
Fair value level hierarchy
|
||||
2.65% Notes due 2020
|
$
|
504
|
|
|
$
|
495
|
|
|
Level 2
|
Term Loan Agreement payable through 2020 - 5.223%
|
120
|
|
|
120
|
|
|
Level 3
|
||
737 Aircraft Note payable through 2020
|
7
|
|
|
7
|
|
|
Level 3
|
||
Revolving Credit Facility
|
1,000
|
|
|
978
|
|
|
Level 3
|
||
Term Loan Agreement due 2021 - 3.000%
|
1,000
|
|
|
990
|
|
|
Level 3
|
||
2.75% Notes due 2022
|
300
|
|
|
283
|
|
|
Level 2
|
||
Pass Through Certificates due 2022 - 6.24%
|
168
|
|
|
167
|
|
|
Level 2
|
||
Term Loan Agreement payable through 2026 - 3.03%
|
178
|
|
|
164
|
|
|
Level 3
|
||
3.00% Notes due 2026
|
300
|
|
|
284
|
|
|
Level 2
|
||
3.45% Notes due 2027
|
300
|
|
|
264
|
|
|
Level 2
|
||
7.375% Debentures due 2027
|
121
|
|
|
139
|
|
|
Level 2
|
||
2.625% Notes due 2030
|
500
|
|
|
420
|
|
|
Level 2
|
(in millions)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Trade receivables
|
$
|
44
|
|
|
$
|
53
|
|
Credit card receivables
|
4
|
|
|
112
|
|
||
Business partners and other suppliers
|
535
|
|
|
779
|
|
||
Income tax receivable
|
88
|
|
|
87
|
|
||
Other
|
38
|
|
|
55
|
|
||
Accounts and other receivables
|
$
|
709
|
|
|
$
|
1,086
|
|
(in millions)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Derivative contracts
|
$
|
60
|
|
|
$
|
49
|
|
Intangible assets, net
|
296
|
|
|
296
|
|
||
Other
|
264
|
|
|
232
|
|
||
Other assets
|
$
|
620
|
|
|
$
|
577
|
|
(in millions)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Accounts payable trade
|
$
|
218
|
|
|
$
|
304
|
|
Salaries payable
|
226
|
|
|
231
|
|
||
Taxes payable excluding income taxes
|
66
|
|
|
227
|
|
||
Aircraft maintenance payable
|
156
|
|
|
162
|
|
||
Fuel payable
|
57
|
|
|
129
|
|
||
Dividends payable
|
—
|
|
|
93
|
|
||
Other payable
|
320
|
|
|
428
|
|
||
Accounts payable
|
$
|
1,043
|
|
|
$
|
1,574
|
|
(in millions)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Profitsharing and savings plans
|
$
|
25
|
|
|
$
|
695
|
|
Vacation pay
|
443
|
|
|
434
|
|
||
Health
|
99
|
|
|
120
|
|
||
Workers compensation
|
168
|
|
|
166
|
|
||
Property and income taxes
|
67
|
|
|
79
|
|
||
Derivative contracts
|
55
|
|
|
5
|
|
||
Other
|
180
|
|
|
250
|
|
||
Accrued liabilities
|
$
|
1,037
|
|
|
$
|
1,749
|
|
(in millions)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Postretirement obligation
|
$
|
294
|
|
|
$
|
288
|
|
Other deferred compensation
|
286
|
|
|
313
|
|
||
Other
|
114
|
|
|
105
|
|
||
Other noncurrent liabilities
|
$
|
694
|
|
|
$
|
706
|
|
•
|
The Company is prohibited from repurchasing its common stock and from paying dividends or making capital contributions with respect to its common stock until September 30, 2021.
|
•
|
The Company must place certain restrictions on certain higher-paid employee and executive pay, including limiting pay increases and severance pay or other benefits upon terminations, until March 24, 2022.
|
•
|
The Company is prohibited from involuntary terminations or furloughs of its Employees (except for death, disability, cause, or certain disciplinary reasons) until September 30, 2020.
|
•
|
The Company may not reduce the salary, wages, or benefits of its Employees (other than its Executive Officers or independent contractors, or as otherwise permitted under the terms of the Payroll Support Program) until September 30, 2020.
|
•
|
Until March 1, 2022, the Company must comply with any requirement issued by the Department of Transportation (“DOT”) that the Company maintain certain scheduled air transportation service as DOT deems necessary to ensure services to any point served by the Company before March 1, 2020.
|
•
|
The Company must maintain certain internal controls and records relating to the CARES Act funds, and is subject to additional reporting requirements.
|
|
|
Three months ended March 31,
|
|
|
||||||||
|
|
2020
|
|
2019
|
|
Change
|
||||||
Revenue passengers carried (000s)
|
|
24,748
|
|
|
31,296
|
|
|
(20.9
|
)%
|
|
||
Enplaned passengers (000s)
|
|
29,779
|
|
|
37,813
|
|
|
(21.2
|
)%
|
|
||
Revenue passenger miles (RPMs) (in millions)(a)
|
|
23,935
|
|
|
30,704
|
|
|
(22.0
|
)%
|
|
||
Available seat miles (ASMs) (in millions)(b)
|
|
35,350
|
|
|
37,885
|
|
|
(6.7
|
)%
|
|
||
Load factor(c)
|
|
67.7
|
%
|
|
81.0
|
%
|
|
(13.3
|
)
|
pts.
|
||
Average length of passenger haul (miles)
|
|
967
|
|
|
981
|
|
|
(1.4
|
)%
|
|
||
Average aircraft stage length (miles)
|
|
737
|
|
|
751
|
|
|
(1.9
|
)%
|
|
||
Trips flown
|
|
312,393
|
|
|
326,390
|
|
|
(4.3
|
)%
|
|
||
Seats flown (000s)(d)
|
|
47,130
|
|
|
49,473
|
|
|
(4.7
|
)%
|
|
||
Seats per trip(e)
|
|
150.9
|
|
|
151.6
|
|
|
(0.5
|
)%
|
|
||
Average passenger fare
|
|
$
|
155.37
|
|
|
$
|
151.61
|
|
|
2.5
|
%
|
|
Passenger revenue yield per RPM (cents)(f)
|
|
16.07
|
|
|
15.45
|
|
|
4.0
|
%
|
|
||
Operating revenues per ASM (cents)(g)
|
|
11.98
|
|
|
13.59
|
|
|
(11.8
|
)%
|
|
||
Passenger revenue per ASM (cents)(h)
|
|
10.88
|
|
|
12.52
|
|
|
(13.1
|
)%
|
|
||
Operating expenses per ASM (cents)(i)
|
|
12.29
|
|
|
12.26
|
|
|
0.2
|
%
|
|
||
Operating expenses per ASM, excluding fuel (cents)
|
|
9.83
|
|
|
9.58
|
|
|
2.6
|
%
|
|
||
Operating expenses per ASM, excluding fuel and profitsharing (cents)
|
|
9.83
|
|
|
9.35
|
|
|
5.1
|
%
|
|
||
Fuel costs per gallon, including fuel tax
|
|
$
|
1.90
|
|
|
$
|
2.05
|
|
|
(7.3
|
)%
|
|
Fuel costs per gallon, including fuel tax, economic
|
|
$
|
1.90
|
|
|
$
|
2.05
|
|
|
(7.3
|
)%
|
|
Fuel consumed, in gallons (millions)
|
|
457
|
|
|
493
|
|
|
(7.3
|
)%
|
|
||
Active fulltime equivalent Employees
|
|
60,922
|
|
|
59,436
|
|
|
2.5
|
%
|
|
||
Aircraft at end of period
|
|
742
|
|
(j)(k)
|
753
|
|
(j)
|
(1.5
|
)%
|
|
|
|
Three months ended
|
|
|
||||||
(in millions, except per share amounts)
|
|
March 31,
|
|
|
||||||
GAAP
|
|
2020
|
|
2019
|
|
Percent Change
|
||||
Operating income (loss)
|
|
$
|
(110
|
)
|
|
$
|
505
|
|
|
n.m.
|
Net income (loss)
|
|
$
|
(94
|
)
|
|
$
|
387
|
|
|
n.m.
|
Net income (loss) per share, diluted
|
|
$
|
(0.18
|
)
|
|
$
|
0.70
|
|
|
n.m.
|
|
|
|
|
|
|
|
|
|
||
Non-GAAP
|
|
|
|
|
|
|
||||
Operating income (loss)
|
|
$
|
(110
|
)
|
|
$
|
505
|
|
|
n.m.
|
Net income (loss)
|
|
$
|
(77
|
)
|
|
$
|
387
|
|
|
n.m.
|
Net income (loss) per share, diluted
|
|
$
|
(0.15
|
)
|
|
$
|
0.70
|
|
|
n.m.
|
•
|
Travel funds created because of a flight cancellation between March 1, 2020 and September 7, 2020, will be available for use through September 7, 2022.
|
•
|
Travel funds that expired or will expire between March 1, 2020 and September 7, 2020, will be available for use through September 7, 2022.
|
•
|
While the Company has never charged a change fee (though the customer would be required to pay any fare difference), it is now also allowing any Customer to change their travel plans for flights through April 30, 2020, for another date 60 days from the original date of travel, without any fare difference, when booked in the same fare class and between the same origin and destination.
|
•
|
Rapid Rewards loyalty program members who have travel funds that are set to expire, or funds that are created between March 1, 2020 and September 7, 2020, now have the option to convert those travel funds into Rapid Rewards points at the same rate as they are able to purchase a ticket with points.
|
•
|
All Rapid Rewards loyalty program members qualifying progress received a "boost" of 15,000 tier qualifying points and 10 flight credits toward A-List and A-List Preferred status, and 25,000 Companion Pass qualifying points and 25 flight credits toward Companion Pass status.
|
•
|
All current A-List and A-List Preferred tier status members earned status has been extended through December 31, 2021.
|
•
|
Companion pass Members earned status has been extended through June 30, 2021.
|
•
|
Snack and beverage service has been suspended on all flights to minimize contact in the cabin until further notice.
|
•
|
Enhanced aircraft cleaning procedures have been applied since March 4, 2020.
|
•
|
Procedures and protocol have been implemented with the intent of enabling Employees to wear personal protective equipment and adhere to health officials' recommendations.
|
•
|
The Company has offered the ability to work remotely to most of the Company’s office and clerical Employees, including the vast majority of its more than 6,000 Employees at the Company’s headquarters campus in Dallas, Texas.
|
|
Three months ended March 31,
|
|
Per ASM
change |
|
Percent
change |
|||||||||
(in cents, except for percentages)
|
2020
|
|
2019
|
|
|
|||||||||
Salaries, wages, and benefits
|
|
5.24
|
¢
|
|
|
5.21
|
¢
|
|
|
0.03
|
¢
|
|
0.6
|
%
|
Fuel and oil
|
2.46
|
|
|
2.68
|
|
|
(0.22
|
)
|
|
(8.2
|
)
|
|||
Maintenance materials and repairs
|
0.77
|
|
|
0.77
|
|
|
—
|
|
|
—
|
|
|||
Landing fees and airport rentals
|
0.96
|
|
|
0.88
|
|
|
0.08
|
|
|
9.1
|
|
|||
Depreciation and amortization
|
0.88
|
|
|
0.78
|
|
|
0.10
|
|
|
12.8
|
|
|||
Other operating expenses
|
1.98
|
|
|
1.94
|
|
|
0.04
|
|
|
2.1
|
|
|||
Total
|
|
12.29
|
¢
|
|
|
12.26
|
¢
|
|
|
0.03
|
¢
|
|
0.2
|
%
|
Period
|
Maximum percent of estimated fuel consumption covered by fuel derivative contracts at varying West Texas Intermediate/Brent Crude Oil, Heating Oil, and Gulf Coast Jet Fuel-equivalent price levels (a)
|
||||
2020
|
(b)
|
||||
2021
|
55%
|
||||
2022
|
37%
|
||||
Beyond 2022
|
20%
|
Year
|
|
Fair value of fuel derivative contracts at March 31, 2020
|
|
Amount of losses deferred in AOCI at March 31, 2020 (net of tax)
|
||||
Remainder of 2020
|
|
$
|
4
|
|
|
$
|
(51
|
)
|
2021
|
|
16
|
|
|
(63
|
)
|
||
2022
|
|
32
|
|
|
(36
|
)
|
||
Beyond 2022
|
|
33
|
|
|
(10
|
)
|
||
Total
|
|
$
|
85
|
|
|
$
|
(160
|
)
|
|
|
Estimated economic fuel price per gallon, including taxes and fuel hedging premiums (e)
|
|
Average Brent Crude Oil price per barrel
|
|
Second Quarter 2020 (c)
|
Full Year 2020 (d)
|
$15
|
|
$.80 - $.90
|
$.85 - $.95
|
$20
|
|
$.90 - $1.00
|
$.95 - $1.05
|
Current Market (a)
|
|
$1.00 - $1.10
|
$1.20 - $1.30
|
$30
|
|
$1.10 - $1.20
|
$1.15 - $1.25
|
$40
|
|
$1.25 - $1.35
|
$1.35 - $1.45
|
$50
|
|
$1.50 - $1.60
|
$1.55 - $1.65
|
Estimated fuel hedging premium expense per gallon (b)
|
|
$.12
|
$.05 - $.10
|
Estimated premium costs (b)
|
|
$24 million
|
$97 million
|
|
Three months ended March 31,
|
||||||
(in millions)
|
2020
|
|
2019
|
||||
Mark-to-market impact from fuel contracts settling in future periods
|
$
|
2
|
|
|
$
|
—
|
|
Mark-to-market impact from interest rate swap agreements
|
24
|
|
|
—
|
|
||
Other
|
2
|
|
|
2
|
|
||
|
$
|
28
|
|
|
$
|
2
|
|
|
Three months ended March 31,
|
|
Percent
|
||||||
|
2020
|
|
2019
|
|
Change
|
||||
Fuel and oil expense, as reported (a)
|
$
|
870
|
|
|
$
|
1,015
|
|
|
|
Deduct: Premium cost of fuel contracts
|
(24
|
)
|
|
(28
|
)
|
|
|
||
Add: Fuel hedge gains included in Fuel and oil expense, net
|
—
|
|
|
17
|
|
|
|
||
Fuel and oil expense, unhedged
|
$
|
846
|
|
|
$
|
1,004
|
|
|
(15.7)%
|
|
|
|
|
|
|
||||
Other (gains) losses, net, as reported
|
$
|
28
|
|
|
$
|
2
|
|
|
|
Deduct: Mark-to-market impact from fuel contracts settling in future periods (b)
|
(2
|
)
|
|
—
|
|
|
|
||
Deduct: Mark-to-market impact from interest rate swap agreements
|
(24
|
)
|
|
—
|
|
|
|
||
Other (gains) losses, net, excluding special items
|
$
|
2
|
|
|
$
|
2
|
|
|
—
|
|
|
|
|
|
|
||||
Net income (loss), as reported
|
$
|
(94
|
)
|
|
$
|
387
|
|
|
|
Add: Mark-to-market impact from fuel contracts settling in future periods (b)
|
2
|
|
|
—
|
|
|
|
||
Add: Mark-to-market impact from interest rate swap agreements
|
24
|
|
|
—
|
|
|
|
||
Deduct: Net income (loss) tax impact of special items (c)
|
(9
|
)
|
|
—
|
|
|
|
||
Net income (loss), excluding special items
|
$
|
(77
|
)
|
|
$
|
387
|
|
|
n.m.
|
|
|
|
|
|
|
||||
Net income (loss) per share, diluted, as reported
|
$
|
(0.18
|
)
|
|
$
|
0.70
|
|
|
|
Add: Impact of special items
|
0.05
|
|
|
—
|
|
|
|
||
Deduct: Net income (loss) tax impact of special items (c)
|
(0.02
|
)
|
|
—
|
|
|
|
||
Net income (loss) per share, diluted, excluding special items
|
$
|
(0.15
|
)
|
|
$
|
0.70
|
|
|
n.m.
|
|
|
|
|
|
|
||||
Operating expenses per ASM (cents)
|
|
12.29
|
¢
|
|
|
12.26
|
¢
|
|
|
Deduct: Fuel and oil expense divided by ASMs
|
(2.46
|
)
|
|
(2.68
|
)
|
|
|
||
Deduct: Profitsharing expense divided by ASMs
|
—
|
|
|
(0.23
|
)
|
|
|
||
Operating expenses per ASM, excluding Fuel and oil expense and profitsharing (cents)
|
|
9.83
|
¢
|
|
|
9.35
|
¢
|
|
5.1%
|
|
|
|
|
|
||||
|
Twelve months ended
|
|
Twelve months ended
|
|
||||
|
March 31, 2020
|
|
March 31, 2019
|
|
||||
Operating income, as reported
|
$
|
2,343
|
|
|
$
|
3,094
|
|
|
Net impact from fuel contracts
|
—
|
|
|
(7
|
)
|
|
||
Operating income, non-GAAP
|
$
|
2,343
|
|
|
$
|
3,087
|
|
|
Net adjustment for aircraft leases (a)
|
134
|
|
|
102
|
|
|
||
Adjusted operating income, non-GAAP (A)
|
$
|
2,477
|
|
|
$
|
3,189
|
|
|
|
|
|
|
|
||||
Non-GAAP tax rate (B)
|
21.4
|
%
|
(d)
|
22.1
|
%
|
(e)
|
||
|
|
|
|
|
||||
Net operating profit after-tax, NOPAT (A* (1-B) = C)
|
$
|
1,947
|
|
|
$
|
2,486
|
|
|
|
|
|
|
|
||||
Debt, including finance leases (b)
|
$
|
3,412
|
|
|
$
|
3,422
|
|
|
Equity (b)
|
9,714
|
|
|
9,883
|
|
|
||
Net present value of aircraft operating leases (b)
|
492
|
|
|
566
|
|
|
||
Average invested capital
|
$
|
13,618
|
|
|
$
|
13,871
|
|
|
Equity adjustment for hedge accounting (c)
|
42
|
|
|
(169
|
)
|
|
||
Adjusted average invested capital (D)
|
$
|
13,660
|
|
|
$
|
13,702
|
|
|
|
|
|
|
|
||||
Non-GAAP ROIC, pre-tax (A/D)
|
18.1
|
%
|
|
23.3
|
%
|
|
||
|
|
|
|
|
||||
Non-GAAP ROIC, after tax (C/D)
|
14.3
|
%
|
|
18.1
|
%
|
|
|
The Boeing Company
|
|
|
|
|
||||||
|
MAX 7
Firm Orders |
|
MAX 8
Firm Orders |
|
Additional MAX 8s
|
|
Total
|
||||
2019 Contractual Deliveries
|
7
|
|
|
20
|
|
|
13
|
|
|
40
|
|
2020 Contractual Deliveries
|
—
|
|
|
35
|
|
|
3
|
|
|
38
|
|
2020 Contractual Total
|
7
|
|
|
55
|
|
|
16
|
|
|
78
|
|
|
|
|
|
Average
Age (Yrs)
|
|
Number
of Aircraft
|
|
Number
Owned
|
|
Number
Leased
|
||||
Type
|
|
Seats
|
|
|
|
|
||||||||
737-700
|
|
143
|
|
16
|
|
|
501
|
|
(a)
|
391
|
|
|
110
|
|
737-800
|
|
175
|
|
5
|
|
|
207
|
|
|
200
|
|
|
7
|
|
737 MAX 8
|
|
175
|
|
2
|
|
|
34
|
|
(b)
|
31
|
|
|
3
|
|
Totals
|
|
|
|
12
|
|
|
742
|
|
|
622
|
|
|
120
|
|
•
|
the Company’s financial outlook, goals, expectations, and projected results of operations, including factors and assumptions underlying the Company’s projections, in particular assumptions regarding the impact of the COVID-19 pandemic, and the MAX groundings and the timing of the MAX return to service;
|
•
|
the Company’s expectations about future receipts pursuant to the Payroll Support Program under the CARES Act;
|
•
|
the Company’s plans and expectations regarding its fleet, its fleet order book, and its fleet delivery schedule, including factors and assumptions underlying the Company’s plans and expectations, in particular the impacts of the COVID-19 pandemic and the MAX groundings;
|
•
|
the Company's plans and expectations related to the return of the MAX to service;
|
•
|
the Company’s capacity plans and expectations, including factors and assumptions underlying the Company's plans and expectations, in particular the impacts of the COVID-19 pandemic;
|
•
|
the Company’s network plans;
|
•
|
the Company’s plans, expectations, and estimates related to fuel costs and the Company’s related management of risk associated with changing jet fuel prices, including the assumptions underlying the estimates;
|
•
|
the Company's expectations with respect to capital expenditures and liquidity, including its ability to meet its ongoing capital, operating, and other obligations, and the Company’s anticipated needs for, and sources of, funds;
|
•
|
the Company's assessment of market risks; and
|
•
|
the Company's plans and expectations related to legal and regulatory proceedings.
|
•
|
the extent of the impact of the COVID-19 pandemic, including the duration, spread, severity, and any recurrence of the COVID-19 pandemic, the duration and scope of related government orders and restrictions, and the extent of the impact of the COVID-19 pandemic on overall demand for air travel and the Company’s access to capital;
|
•
|
the impact of fears or actual outbreaks of infectious disease, economic conditions, governmental actions, extreme or severe weather and natural disasters, fears of terrorism or war, actions of competitors, fuel prices, consumer perception, and other factors beyond the Company's control, on consumer behavior and the Company's results of operations and business decisions, plans, strategies, and results;
|
•
|
the U.S. Treasury’s right pursuant to the Payroll Support Program to amend the documents or require new or additional conditions of the payroll support in ways that may be materially adverse to the Company;
|
•
|
the enactment or adoption of future laws, statutes, and regulations and interpretation or enforcement of current and future laws, statutes, and regulations that affect the terms or application of the Payroll Support Program documents and that may have a material adverse effect on the Company;
|
•
|
the Company's dependence on Boeing and the Federal Aviation Administration with respect to the timing of the return of the 737 MAX to service and any related changes to the Company's operational and financial assumptions and decisions;
|
•
|
the Company's dependence on Boeing with respect to the Company's fleet order book and delivery schedule;
|
•
|
the Company’s dependence on other third parties, and the impact on the Company’s operations and results of operations of any third party delays or non-performance;
|
•
|
the impact of fuel price changes, fuel price volatility, volatility of commodities used by the Company for hedging jet fuel, and any changes to the Company’s fuel hedging strategies and positions, on the Company's business plans and results of operations;
|
•
|
the impact of labor matters on the Company’s results of operations, business decisions, plans, and strategies; and
|
•
|
other factors as set forth in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading “Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, and in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
|
•
|
The Company is prohibited from repurchasing its common stock and from paying dividends or making capital contributions with respect to its common stock until September 30, 2021;
|
•
|
The Company must place certain restrictions on certain higher-paid employee and executive pay, including limiting pay increases and severance pay or other benefits upon terminations, until March 24, 2022;
|
•
|
The Company is prohibited from involuntary terminations or furloughs of its Employees (except for death, disability, cause, or certain disciplinary reasons) until September 30, 2020;
|
•
|
The Company may not reduce the salary, wages, or benefits of its Employees (other than its Executive Officers or independent contractors, or as otherwise permitted under the terms of the Payroll Support Program) until September 30, 2020;
|
•
|
Until March 1, 2022, the Company must comply with any requirement issued by the Department of Transportation (“DOT”) that the Company maintain certain scheduled air transportation service as DOT deems necessary to ensure services to any point served by the Company before March 1, 2020; and
|
•
|
The Company must maintain certain internal controls and records relating to the CARES Act funds, and is subject to additional reporting requirements.
|
Issuer Purchases of Equity Securities (1)
|
||||||||||||||
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
||||||
|
|
|
|
|
|
Total number of
shares purchased
as part of publicly
announced plans
or programs
|
|
Maximum dollar
value of shares that
may yet be purchased
under the plans
or programs
|
||||||
|
|
|
|
|
|
|
||||||||
|
|
Total number
of shares
purchased
|
|
Average
price paid
per share
|
|
|
||||||||
|
|
|
|
|
||||||||||
Period
|
|
|
|
|
||||||||||
January 1, 2020 through
January 31, 2020
|
|
1,835,017
|
|
|
$
|
—
|
|
(2)
|
1,835,017
|
|
|
$
|
1,350,051,674
|
|
February 1, 2020 through
February 29, 2020
|
|
1,300,018
|
|
|
$
|
—
|
|
(2)(3)(4)
|
1,300,018
|
|
|
$
|
831,202,514
|
|
March 1, 2020 through
March 31, 2020
|
|
7,879,876
|
|
|
$
|
—
|
|
(3)(5)
|
7,879,876
|
|
|
$
|
898,812,340
|
|
Total
|
|
11,014,911
|
|
|
|
|
11,014,911
|
|
|
|
(1)
|
On May 15, 2019, the Company’s Board of Directors authorized the repurchase of up to $2.0 billion of the Company’s common stock. Repurchases are made in accordance with applicable securities laws in open market or private, including accelerated, repurchase transactions from time to time, depending on market conditions, and may be discontinued at any time. On March 16, 2020, the Company announced it was suspending further share repurchase activity following completion of the First Quarter 2020 ASR Program until further notice.
|
(2)
|
Under an accelerated share repurchase program entered into by the Company with a third party financial institution in fourth quarter 2019 (the “Fourth Quarter 2019 ASR Program”), the Company paid $550 million and received an initial delivery of 7,276,275 shares during December 2019, representing an estimated 75 percent of the shares to be purchased by the Company under the Fourth Quarter 2019 ASR Program based on a volume-weighted average price of $56.6911 per share of the Company’s common stock on the New York Stock Exchange during a calculation period between November 13, 2019 and December 11, 2019. The third party financial institution delivered an additional 1,835,017 shares to the Company in further partial settlements of the Fourth Quarter 2019 ASR Program in January 2020, which was determined based generally on a discount to the volume-weighted average price per share of the Company's common stock during calculation periods completed in January 2020. Final settlement of the Fourth Quarter 2019 ASR Program occurred in February 2020 and was determined based generally on a discount to the volume-weighted average price per share of the Company's common stock during a calculation period completed in February 2020. Upon settlement, the third party financial institution delivered 900,018 additional shares of the Company’s common stock to the Company. In total, the average purchase price per share for the 10,011,310 shares repurchased under the Fourth Quarter 2019 ASR Program, upon completion of the Fourth Quarter 2019 ASR Program in February 2020, was $54.9379.
|
(3)
|
Under the First Quarter 2020 ASR Program launched in February 2020, the Company paid $500 million and received delivery of 6,405,876 shares during March 2020, representing 75 percent of the shares originally expected to be repurchased under the First Quarter 2020 ASR Program. The third party financial institution exercised its early termination option in March 2020, and sent cash proceeds totaling $134.2 million to the Company in March 2020 to settle the transaction. In total, the average purchase price per share for the 6,405,876 shares repurchased under the First Quarter 2020 ASR Program, upon completion of the First Quarter 2020 ASR Program in March 2020, was $57.1030.
|
(4)
|
During the period from February 27, 2020 through February 28, 2020, the Company repurchased 400,000 shares of its common stock on the open market at an average price of $47.1229.
|
(5)
|
During March 2020, the Company repurchased 1,474,000 shares of its common stock on the open market under an additional share repurchase plan at an average price of $45.1799 per share.
|
3.1
|
|
3.2
|
|
10.1
|
|
10.2
|
|
10.3
|
|
10.4
|
|
10.5
|
|
10.6
|
|
31.1
|
|
31.2
|
|
32.1
|
|
101.INS
|
XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
|
SOUTHWEST AIRLINES CO.
|
|
|
|
|
April 28, 2020
|
By:
|
/s/ Tammy Romo
|
|
|
|
|
|
Tammy Romo
|
|
|
Executive Vice President & Chief Financial Officer
|
|
|
(On behalf of the Registrant and in
|
|
|
her capacity as Principal Financial
|
|
|
and Accounting Officer)
|
EXECUTION VERSION
|
AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT
|
among
|
SOUTHWEST AIRLINES CO.,
|
THE BANKS PARTY HERETO,
|
and
|
JPMORGAN CHASE BANK, N.A.,
|
as Administrative Agent
|
|
as of March 30, 2020
|
JPMORGAN CHASE BANK, N.A.,
|
BOFA SECURITIES, INC.
|
|
and
|
|
BNP PARIBAS
|
|
as Joint Lead Arrangers and Joint Bookrunners
|
|
and
|
|
BANK OF CHINA, NEW YORK BRANCH,
|
|
MORGAN STANLEY SENIOR FUNDING, INC.,
|
|
and
|
|
WELLS FARGO BANK, N.A.,
|
|
as Documentation Agents
|
|
Table of Contents
|
Page
|
2
|
|
|
2
|
|
|
20
|
|
|
20
|
|
|
|
|
|
21
|
|
|
21
|
|
|
21
|
|
|
22
|
|
|
22
|
|
|
22
|
|
|
22
|
|
|
23
|
|
|
24
|
|
|
24
|
|
|
24
|
|
|
25
|
|
|
26
|
|
|
27
|
|
|
28
|
|
|
29
|
|
|
29
|
|
|
29
|
|
|
30
|
|
|
33
|
|
|
33
|
|
|
33
|
|
|
33
|
|
|
34
|
|
|
35
|
|
|
|
|
|
36
|
|
|
|
|
|
36
|
|
|
36
|
|
|
38
|
|
|
|
|
|
39
|
|
|
39
|
|
|
39
|
|
|
39
|
|
|
40
|
|
|
40
|
|
|
40
|
|
|
40
|
|
40
|
|
|
40
|
|
|
41
|
|
|
41
|
|
|
41
|
|
|
41
|
|
|
41
|
|
|
41
|
|
|
41
|
|
|
42
|
|
|
|
|
|
42
|
|
|
42
|
|
|
42
|
|
|
42
|
|
|
42
|
|
|
42
|
|
|
43
|
|
|
43
|
|
|
Section 6.8 Appraisals
|
43
|
|
43
|
|
|
43
|
|
|
45
|
|
|
45
|
|
|
47
|
|
|
47
|
|
|
47
|
|
|
48
|
|
|
48
|
|
|
48
|
|
|
48
|
|
|
|
|
|
49
|
|
|
49
|
|
|
50
|
|
|
52
|
|
|
|
|
|
52
|
|
|
52
|
|
|
52
|
|
|
53
|
|
|
53
|
|
|
53
|
|
|
54
|
|
|
54
|
|
|
55
|
|
|
|
|
|
55
|
|
55
|
|
|
56
|
|
|
57
|
|
|
57
|
|
|
Section 9.5 Indemnity
|
57
|
|
58
|
|
|
Section 9.7 Governing Law
|
58
|
|
58
|
|
|
59
|
|
|
59
|
|
|
59
|
|
|
62
|
|
|
63
|
|
|
63
|
|
|
63
|
|
|
63
|
|
|
63
|
|
|
Section 9.18 WAIVERS OF JURY TRIAL
|
63
|
|
63
|
|
|
64
|
|
|
64
|
|
|
65
|
|
|
65
|
|
SCHEDULES
|
|
|
|
Pool Assets
|
Schedule I
|
Existing Term Loans and Additional Commitments
|
Schedule II
|
|
|
EXHIBITS
|
|
|
|
Form of Notice of Borrowing
|
Exhibit A
|
Form of Note
|
Exhibit B
|
Form of Company’s Internal Counsel Opinion
|
Exhibit C-1
|
Form of Company’s Outside Counsel Opinion
|
Exhibit C-2
|
Form of Administrative Agent’s Counsel Opinion
|
Exhibit C-3
|
Form of Financial Report Certificate
|
Exhibit D
|
Form of Assignment and Assumption
|
Exhibit E
|
Form of U.S. Tax Compliance Certificate – Foreign Banks (Not Partnerships)
|
Exhibit F-1
|
Form of U.S. Tax Compliance Certificate – Non-U.S. Participants (Partnerships)
|
Exhibit F-2
|
Form of U.S. Tax Compliance Certificate – Non-U.S. Participants (Not Partnerships)
|
Exhibit F-3
|
Form of U.S. Tax Compliance Certificate – Foreign Banks (Partnerships)
|
Exhibit F-4
|
Form of Aircraft Mortgage
|
Exhibit G
|
Form of Mortgaged Aircraft Operating Agreement
|
Exhibit H
|
AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT
|
Index Debt Ratings
S&P/Moody’s
|
Applicable Rate (Eurodollar Loans)
|
Applicable Rate (Alternate Base Rate Loans)
|
|
BBB/Baa2 or better
|
2.000%
|
1.000%
|
|
BBB-/Baa3 or below
|
2.250%
|
1.250%
|
|
(1)
|
the rate, or methodology for this rate, and conventions for this rate selected or recommended by the Relevant Governmental Body for determining Compounded SOFR; provided that:
|
(2)
|
if, and to the extent that, the Administrative Agent determines that Compounded SOFR cannot be determined in accordance with clause (1) above, then the rate, or methodology for this rate, and conventions for this rate that the Administrative Agent determines in its reasonable discretion are substantially consistent with any evolving or then-prevailing market convention for determining Compounded SOFR for U.S. dollar-denominated syndicated credit facilities at such time;
|
(i)
|
Subject to clause (b) below, the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable (including because the Screen Rate is not available or published on a current basis), for dollars such Interest Period; or
|
(ii)
|
the Administrative Agent is advised by the Majority Banks that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for dollars and such Interest Period will not adequately and fairly reflect the cost to such Banks (or Bank) of making or maintaining their Loans (or its Loan) included in such Borrowing for dollars and such Interest Period;
|
(A)
|
duly completed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable, claiming eligibility for benefits of an income tax treaty to which the United States of America is a party;
|
(B)
|
duly completed copies of Internal Revenue Service Form W-8ECI;
|
(C)
|
in the case of a Foreign Bank claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit F-1 to the effect that (i) such Foreign Bank is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Company within the meaning of section 881(c)(3)(B) of the Code, and (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code, and (ii) the interest payments in question are not effectively connected with the United States trade or business conducted by such Bank (a “U.S. Tax Compliance Certificate”) and (y) duly completed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable;
|
(D)
|
to the extent a Foreign Bank is not the beneficial owner (for example, where the Foreign Bank is a partnership or participating Bank granting a typical participation), an Internal Revenue Service Form W-8IMY, accompanied by a Form W-8ECI, W-8BEN or W-8BEN-E, U.S. Tax Compliance Certificate substantially in the form of Exhibit F-2 or F-3 (as applicable), Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that, if the Foreign Bank is a partnership (and not a participating Bank) and one or more beneficial owners of such Foreign Bank are claiming the portfolio interest exemption, such Foreign Bank may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-4 on behalf of each such beneficial owner; or
|
(E)
|
any other form prescribed by Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax duly completed together with such supplementary documentation as may be prescribed by applicable Law to permit the Company to determine the withholding or deduction required to be made.
|
|
(iii) If a payment made to a Bank under this Agreement or any other Loan Papers would be subject to U.S. Federal withholding Tax imposed by FATCA if such Bank were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1
|
Southwest Airlines Co.
P.O. Box 36611, HDQ-6TR Love Field Dallas, Texas 75235 Telecopy Number: (214) 932-1322 Attention: Treasurer |
E-mail: Capital_Markets-DG@wnco.com
|
JPMorgan Chase Bank, N.A.
|
JPM Loan and Agency Services
|
500 Stanton Christiana Road
|
NCC5 / 1st Floor
|
Newark, DE 19713
|
Attention: JPM Loan and Agency Services
Tel: 302-634-1929 |
Email: james.a.campbell@jpmorgan.com and 14698287788@tls.ldsprod.com
|
Agency Withholding Tax Inquiries:
|
Email: agency.tax.reporting@jpmorgan.com
|
|
Agency Compliance/Financials/Intralinks:
|
Email: covenant.compliance@jpmchase.com
|
with a copy to:
|
JPMorgan Chase Bank, N.A.
383 Madison Avenue, Floor 24 New York, NY 10179 Attention: Cristina Caviness |
Telephone Number: (212) 270-7289
|
E-mail: Cristina.caviness@jpmorgan.com
|
SOUTHWEST AIRLINES CO.
|
By: /s/Christopher Monroe
Name: Christopher Monroe
Title: Senior Vice President Finance & Treasurer
|
|
|
JPMORGAN CHASE BANK, N.A., as a Bank and the Administrative Agent
|
|
|
|
By: /s/ Cristina Caviness
Name: Cristina Caviness Title: Vice President |
BANK OF AMERICA, N.A., as a Bank
|
By: /s/ Prathamesh Kshirsagar
Name: Prathamesh Kshirsagar Title: Director |
BNP Paribas, as a Bank
|
By: /s/ Bo Wang
Name: Bo Wang Title: Vice President |
By: /s/ Ahsan Avais
Name: Ahsan Avais Title: Vice President |
[Bank of China, New York Branch], as a Bank
|
By: /s/ Raymond Qiao
Name: Raymond Qiao Title: Executive Vice President |
MORGAN STANLEY BANK, N.A., as a Bank
|
By: /s/ Subhalakshmi Ghosh-Kohli
Name: Subhalakshmi Ghosh-Kohli Title: Authorized Signatory |
Wells Fargo Bank, National Association, as a Bank
|
By: /s/ Adam Spreyer
Name: Adam Spreyer Title: Director |
Citibank, N.A., as a Bank
|
By: /s/ Michael Leonard
Name: Michael Leonard Title: Vice President |
Goldman Sachs Bank USA, as a Bank
|
By: /s/ Charles Johnston
Name: Charles Johnston Title: Authorized Signatory |
STANDARD CHARTERED BANK, as a Bank
|
By: /s/ James Beck
Name: James Beck Title: Associate Director |
Comerica Bank, as a Bank
|
By: /s/ Gerald R. Finney Jr.
Name: Gerald R. Finney Jr. Title: Vice President |
SCHEDULE I
|
POOL ASSETS
|
[See attached.]
|
SCHEDULE I
|
POOL ASSETS
|
Airframes and Engines
|
|
Airframe Make
|
Airframe Model
|
U.S. Reg. Number
|
Airframe
MSN
|
Engine Manufacturer
|
Engine Model
|
Engine MSN 1
|
Engine MSN 2
|
1
|
Boeing
|
737-800
|
N8557Q
|
63582
|
CFM International
|
CFM56-7B27E/F
|
38803
|
38764
|
2
|
Boeing
|
737-800
|
N8556Z
|
63583
|
CFM International
|
CFM56-7B27E/F
|
38796
|
38800
|
3
|
Boeing
|
737-800
|
N8555Z
|
63600
|
CFM International
|
CFM56-7B27E/F
|
38791
|
38792
|
4
|
Boeing
|
737-800
|
N8554X
|
36993
|
CFM International
|
CFM56-7B27E/F
|
38779
|
38773
|
5
|
Boeing
|
737-800
|
N8553W
|
63601
|
CFM International
|
CFM56-7B27E/F
|
38778
|
38776
|
6
|
Boeing
|
737-800
|
N8552Z
|
63580
|
CFM International
|
CFM56-7B27E/F
|
38739
|
38704
|
7
|
Boeing
|
737-800
|
N8551Q
|
36951
|
CFM International
|
CFM56-7B27E/F
|
38678
|
38661
|
8
|
Boeing
|
737-800
|
N8549Z
|
63597
|
CFM International
|
CFM56-7B27E/F
|
38659
|
38658
|
9
|
Boeing
|
737-800
|
N8548P
|
36968
|
CFM International
|
CFM56-7B27E/F
|
38642
|
38643
|
10
|
Boeing
|
737-800
|
N8547V
|
63572
|
CFM International
|
CFM56-7B27E/F
|
38517
|
38500
|
11
|
Boeing
|
737-800
|
N8545V
|
63573
|
CFM International
|
CFM56-7B27E/F
|
38531
|
38526
|
12
|
Boeing
|
737-800
|
N8546V
|
63574
|
CFM International
|
CFM56-7B27E/F
|
38542
|
38540
|
13
|
Boeing
|
737-800
|
N8544Z
|
36926
|
CFM International
|
CFM56-7B27E/F
|
38486
|
38460
|
14
|
Boeing
|
737-800
|
N8543Z
|
63587
|
CFM International
|
CFM56-7B27E/F
|
38459
|
38454
|
15
|
Boeing
|
737-800
|
N8542Z
|
63581
|
CFM International
|
CFM56-7B27E/F
|
38415
|
38414
|
16
|
Boeing
|
737-800
|
N8541W
|
63599
|
CFM International
|
CFM56-7B27E/F
|
38385
|
38378
|
17
|
Boeing
|
737-800
|
N8540V
|
63598
|
CFM International
|
CFM56-7B27E/F
|
38372
|
38371
|
18
|
Boeing
|
737-800
|
N8539V
|
42534
|
CFM International
|
CFM56-7B27E/F
|
38352
|
38348
|
19
|
Boeing
|
737-800
|
N8538V
|
63586
|
CFM International
|
CFM56-7B27E/F
|
38355
|
38342
|
20
|
Boeing
|
737-800
|
N8537Z
|
63595
|
CFM International
|
CFM56-7B27E/F
|
38345
|
38332
|
21
|
Boeing
|
737-800
|
N8536Z
|
63571
|
CFM International
|
CFM56-7B27E/F
|
38344
|
38321
|
22
|
Boeing
|
737-800
|
N8535S
|
63596
|
CFM International
|
CFM56-7B27E/F
|
38330
|
38328
|
23
|
Boeing
|
737-800
|
N8532S
|
63576
|
CFM International
|
CFM56-7B27E/F
|
38297
|
38272
|
24
|
Boeing
|
737-800
|
N8533S
|
63577
|
CFM International
|
CFM56-7B27E/F
|
38292
|
38305
|
25
|
Boeing
|
737-800
|
N8534Z
|
63578
|
CFM International
|
CFM56-7B27E/F
|
38302
|
38299
|
26
|
Boeing
|
737-800
|
N8531Q
|
63575
|
CFM International
|
CFM56-7B27E/F
|
38295
|
38268
|
27
|
Boeing
|
737-800
|
N8530W
|
63592
|
CFM International
|
CFM56-7B27E/F
|
38203
|
38202
|
28
|
Boeing
|
737-800
|
N8529Z
|
36974
|
CFM International
|
CFM56-7B27E/F
|
38168
|
38169
|
29
|
Boeing
|
737-800
|
N8528Q
|
36927
|
CFM International
|
CFM56-7B27E/F
|
38126
|
38165
|
30
|
Boeing
|
737-800
|
N8527Q
|
36946
|
CFM International
|
CFM56-7B27E/F
|
38115
|
38114
|
31
|
Boeing
|
737-800
|
N8526W
|
36972
|
CFM International
|
CFM56-7B27E/F
|
864994
|
864984
|
32
|
Boeing
|
737-800
|
N8525S
|
36949
|
CFM International
|
CFM56-7B27E/F
|
864950
|
864947
|
33
|
Boeing
|
737-800
|
N8524Z
|
36970
|
CFM International
|
CFM56-7B27E/F
|
864933
|
864926
|
34
|
Boeing
|
737-800
|
N8523W
|
36969
|
CFM International
|
CFM56-7B27E/F
|
864887
|
864885
|
35
|
Boeing
|
737-800
|
N8522P
|
36922
|
CFM International
|
CFM56-7B27E/F
|
864878
|
864873
|
36
|
Boeing
|
737-800
|
N8520Q
|
42532
|
CFM International
|
CFM56-7B27E/F
|
864858
|
864844
|
37
|
Boeing
|
737-800
|
N8519R
|
36910
|
CFM International
|
CFM56-7B27E/F
|
864852
|
864851
|
38
|
Boeing
|
737-800
|
N8518R
|
63593
|
CFM International
|
CFM56-7B27E/F
|
864791
|
864797
|
39
|
Boeing
|
737-800
|
N8515X
|
36943
|
CFM International
|
CFM56-7B27E/F
|
864774
|
864766
|
40
|
Boeing
|
737-800
|
N8517F
|
63594
|
CFM International
|
CFM56-7B27E/F
|
864777
|
864773
|
41
|
Boeing
|
737-800
|
N8514F
|
36975
|
CFM International
|
CFM56-7B27E/F
|
864763
|
864761
|
42
|
Boeing
|
737-800
|
N8513F
|
36976
|
CFM International
|
CFM56-7B27E/F
|
864756
|
864747
|
43
|
Boeing
|
737-800
|
N8512U
|
38816
|
CFM International
|
CFM56-7B27E/F
|
864733
|
864731
|
44
|
Boeing
|
737-800
|
N8511K
|
36670
|
CFM International
|
CFM56-7B27E/F
|
864729
|
864710
|
45
|
Boeing
|
737-800
|
N8510E
|
36944
|
CFM International
|
CFM56-7B27E/F
|
864714
|
864700
|
46
|
Boeing
|
737-800
|
N8509U
|
36925
|
CFM International
|
CFM56-7B27E/F
|
864695
|
864677
|
47
|
Boeing
|
737-800
|
N8508W
|
38814
|
CFM International
|
CFM56-7B27E/F
|
864686
|
864685
|
48
|
Boeing
|
737-800
|
N8507C
|
41531
|
CFM International
|
CFM56-7B27E/F
|
864666
|
864640
|
49
|
Boeing
|
737-800
|
N8504G
|
38812
|
CFM International
|
CFM56-7B27E/F
|
864599
|
864598
|
50
|
Boeing
|
737-800
|
N8503A
|
38813
|
CFM International
|
CFM56-7B27E/F
|
864584
|
864582
|
51
|
Boeing
|
737-800
|
N8502Z
|
36666
|
CFM International
|
CFM56-7B27E/F
|
864568
|
864563
|
52
|
Boeing
|
737-800
|
N8501V
|
41530
|
CFM International
|
CFM56-7B27E/F
|
864542
|
864444
|
53
|
Boeing
|
737-8H4
|
N8698B
|
36977
|
CFM International
|
CFM56-7B27E/F
|
864488
|
864487
|
54
|
Boeing
|
737-8H4
|
N8699A
|
36923
|
CFM International
|
CFM56-7B27E/F
|
864497
|
864482
|
55
|
Boeing
|
737-8H4
|
N8697C
|
36728
|
CFM International
|
CFM56-7B27E/F
|
864413
|
865389
|
56
|
Boeing
|
737-8H4
|
N8696E
|
36678
|
CFM International
|
CFM56-7B27E/F
|
864455
|
864437
|
57
|
Boeing
|
737-8H4
|
N8695D
|
35965
|
CFM International
|
CFM56-7B27E/F
|
865167
|
864347
|
58
|
Boeing
|
737-8H4
|
N8694E
|
36661
|
CFM International
|
CFM56-7B27E/F
|
864411
|
864409
|
59
|
Boeing
|
737-8H4
|
N8676A
|
36941
|
CFM International
|
CFM56-7B27E/F
|
862719
|
862713
|
60
|
Boeing
|
737-8H4
|
N8675A
|
35976
|
CFM International
|
CFM56-7B27E/F
|
862714
|
862701
|
61
|
Boeing
|
737-8H4
|
N8673F
|
36937
|
CFM International
|
CFM56-7B27E/F
|
862629
|
862628
|
62
|
Boeing
|
737-8H4
|
N8674B
|
36734
|
CFM International
|
CFM56-7B27E/F
|
862671
|
862675
|
63
|
Boeing
|
737-8H4
|
N8672F
|
36940
|
CFM International
|
CFM56-7B27E/F
|
862613
|
862612
|
64
|
Boeing
|
737-8H4
|
N8671D
|
36715
|
CFM International
|
CFM56-7B27E/F
|
862432
|
862336
|
65
|
Boeing
|
737-8H4
|
N8670A
|
36656
|
CFM International
|
CFM56-7B27E/F
|
862254
|
862156
|
66
|
Boeing
|
737-8H4
|
N8669B
|
36655
|
CFM International
|
CFM56-7B27E/F
|
862139
|
862136
|
67
|
Boeing
|
737-8H4
|
N8668A
|
36903
|
CFM International
|
CFM56-7B27E/F
|
660999
|
660985
|
68
|
Boeing
|
737-8H4
|
N8667D
|
36657
|
CFM International
|
CFM56-7B27E/F
|
660957
|
661927
|
69
|
Boeing
|
737-8H4
|
N8662F
|
36936
|
CFM International
|
CFM56-7B27E/F
|
660829
|
660748
|
70
|
Boeing
|
737-8H4
|
N8661A
|
36906
|
CFM International
|
CFM56-7B27E/F
|
660566
|
660553
|
71
|
Boeing
|
737-8H4
|
N8660A
|
36654
|
CFM International
|
CFM56-7B27E/F
|
661511
|
660471
|
72
|
Boeing
|
737-8H4
|
N8659D
|
36901
|
CFM International
|
CFM56-7B27E/F
|
660527
|
661482
|
73
|
Boeing
|
737-8H4
|
N8658A
|
36899
|
CFM International
|
CFM56-7B27E/F
|
660656
|
660643
|
74
|
Boeing
|
737-8H4
|
N8657B
|
42535
|
CFM International
|
CFM56-7B27E/F
|
660653
|
660638
|
75
|
Boeing
|
737-8H4
|
N8656B
|
42530
|
CFM International
|
CFM56-7B27E/F
|
661562
|
661573
|
76
|
Boeing
|
737-8H4
|
N8653A
|
37037
|
CFM International
|
CFM56-7B27E/F
|
660552
|
661505
|
77
|
Boeing
|
737-8H4
|
N8655D
|
42529
|
CFM International
|
CFM56-7B27E/F
|
660572
|
660569
|
78
|
Boeing
|
737-8H4
|
N8654B
|
37045
|
CFM International
|
CFM56-7B27E/F
|
660571
|
660567
|
79
|
Boeing
|
737-8H4
|
N8644C
|
35973
|
CFM International
|
CFM56-7B27E/F
|
660212
|
660199
|
80
|
Boeing
|
737-8H4
|
N8643A
|
42524
|
CFM International
|
CFM56-7B27E/F
|
660216
|
660209
|
81
|
Boeing
|
737-8H4
|
N8652B
|
36971
|
CFM International
|
CFM56-7B27E/F
|
660484
|
660480
|
82
|
Boeing
|
737-8H4
|
N8651A
|
36920
|
CFM International
|
CFM56-7B27E/F
|
660429
|
660397
|
83
|
Boeing
|
737-8H4
|
N8650F
|
36909
|
CFM International
|
CFM56-7B27E/F
|
660371
|
660361
|
84
|
Boeing
|
737-8H4
|
N8649A
|
42527
|
CFM International
|
CFM56-7B27E/F
|
660322
|
660319
|
85
|
Boeing
|
737-8H4
|
N8648A
|
42531
|
CFM International
|
CFM56-7B27E/F
|
660287
|
657922
|
86
|
Boeing
|
737-8H4
|
N8646B
|
36935
|
CFM International
|
CFM56-7B27E/F
|
660242
|
660241
|
87
|
Boeing
|
737-8H4
|
N8647A
|
42528
|
CFM International
|
CFM56-7B27E/F
|
660245
|
660244
|
88
|
Boeing
|
737-8H4
|
N8645A
|
36907
|
CFM International
|
CFM56-7B27E/F
|
660226
|
660224
|
89
|
Boeing
|
737-8H4
|
N8642E
|
42525
|
CFM International
|
CFM56-7B27E/F
|
660201
|
660195
|
90
|
Boeing
|
737-8H4
|
N8639B
|
60086
|
CFM International
|
CFM56-7B27E/F
|
660139
|
660133
|
91
|
Boeing
|
737-8H4
|
N8641B
|
60085
|
CFM International
|
CFM56-7B27E/F
|
660178
|
660171
|
92
|
Boeing
|
737-8H4
|
N8638A
|
36911
|
CFM International
|
CFM56-7B27E/F
|
660107
|
657995
|
|
|
|
|
|
|
|
|
|
143
|
Boeing
|
737-7H4
|
N927WN
|
36889
|
CFM International
|
CFM56-7B24/3
|
897566
|
896662
|
144
|
Boeing
|
737-7H4
|
N924WN
|
36628
|
CFM International
|
CFM56-7B24/3
|
896586
|
896570
|
145
|
Boeing
|
737-7H4
|
N919WN
|
36625
|
CFM International
|
CFM56-7B24/3
|
897412
|
897411
|
146
|
Boeing
|
737-7H4
|
N920WN
|
32460
|
CFM International
|
CFM56-7B24/3
|
896482
|
896456
|
147
|
Boeing
|
737-7H4
|
N917WN
|
36624
|
CFM International
|
CFM56-7B24/3
|
896352
|
896142
|
148
|
Boeing
|
737-7BD
|
N7752B
|
33943
|
CFM International
|
CFM56-7B20
|
896388
|
896380
|
(EACH OF WHICH ENGINES DESCRIBED ABOVE HAVING AT LEAST 550 RATED TAKEOFF HORSEPOWER OR THE EQUIVALENT THEREOF)
|
SCHEDULE II
|
|||
Existing Term Loans and Additional Commitments
|
|||
Bank
|
Existing Term Loans
|
Additional Commitments
|
Total
|
JPMorgan Chase Bank, N.A.
|
$333,333,333.34
|
$166,666,666.66
|
$500,000,000.00
|
Bank of America, N.A.
|
$333,333,333.33
|
$166,666,666.67
|
$500,000,000.00
|
BNP Paribas
|
-
|
$500,000,000.00
|
$500,000,000.00
|
Bank of China, New York Branch
|
-
|
$400,000,000.00
|
$400,000,000.00
|
Morgan Stanley Bank, N.A.
|
-
|
$400,000,000.00
|
$400,000,000.00
|
Wells Fargo Bank, N.A.
|
$333,333,333.33
|
-
|
$333,333,333.33
|
Citibank, N.A.
|
-
|
$250,000,000.00
|
$250,000,000.00
|
Goldman Sachs Bank USA
|
-
|
$250,000,000.00
|
$250,000,000.00
|
Standard Chartered Bank
|
-
|
$150,000,000.00
|
$150,000,000.00
|
Comerica Bank
|
-
|
$49,999,999.67
|
$49,999,999.67
|
Total
|
$1,000,000,000.00
|
$2,333,333,333.00
|
$3,333,333,333.00
|
EXHIBIT A
|
FORM OF NOTICE OF [COMMITTED BORROWING] [INCREMENTAL BORROWING] [CONVERSION] [CONTINUATION]
|
|
___________ , 202__
|
_____
|
1.
|
Gives you notice pursuant to Section 2.2 of the Credit Agreement that it requests a [Committed][Incremental] Borrowing under the Credit Agreement, and in that connection sets forth below the terms on which such [Committed][Incremental] Borrowing is requested to be made:
|
||
|
|
|
|
|
|
|
(A)
|
Borrowing Date of [Committed][Incremental] Borrowing (a Business Day)
|
________
|
|
|
(B)
|
Principal Amount of [Committed][Incremental] Borrowing
|
________
|
|
|
(C)
|
Interest Rate basis1
|
________
|
|
|
(D)
|
Interest Period and the last day thereof2,3
|
________
|
1
|
Eurodollar Loan or Alternate Base Loan.
|
2
|
Applicable only to Eurodollar Loans.
|
3
|
Interest Periods shall have a duration of one, two, three, six or, if agreed by all Banks, twelve months and shall end not later than the Maturity Date.
|
_____
|
2.
|
Gives you notice pursuant to Section 2.3 that it requests the conversion of Loans that are Eurodollar Loans into Alternate Base Loans in the amount of $ 4 on ____________, 202_5.
|
||
|
|
|
|
|
_____
|
3.
|
Gives you notice pursuant to Section 2.3 of the Credit Agreement that it requests the conversion of Loans that are Alternate Base Loans into Eurodollar Loans in the amount of $ 4, having an Interest Period of _______ months, 3 on ____________, 20__.
|
||
|
|
|
|
|
_____
|
4.
|
Gives you notice pursuant to Section 2.3 of the Credit Agreement that it requests the continuation of Eurodollar Loans in the amount of $ 4 to another Interest Period of _______ months, 3 on ____________, 20__.
|
||
|
|
|
|
|
_____
|
5.
|
Proceeds of the [Committed][Incremental] Borrowing shall be disbursed pursuant to the funds flow to be agreed between the Company and Administrative Agent.
|
||
|
|
|
|
|
_____
|
6.
|
Gives you notice that it requests a Borrowing increase on the terms below:
|
|
|
|
|
(A)
|
Borrowing Date of [Committed][Incremental] Borrowing (a Business Day)
|
________
|
|
|
(B)
|
Current interest rate basis6
|
________
|
|
|
(C)
|
Current Interest Period end date
|
________
|
|
|
(D)
|
Increase Amount of [Committed][Incremental] Borrowing
|
________
|
|
|
(E)
|
Existing Term Loan Amount
|
|
|
|
(F)
|
New Aggregate Loan Amount
|
|
Very truly yours,
|
SOUTHWEST AIRLINES CO.
|
By:
Name: ______________________________ Title: _______________________________ |
4
|
Not less than $10,000,000 and in integral multiples of $1,000,000.
|
5
|
Must be the last day of the applicable Interest Period.
|
6
|
Eurodollar Loan or Alternate Base Loan.
|
EXHIBIT B
|
|
FORM OF NOTE
|
|
$___________
|
______________, 202__
|
SOUTHWEST AIRLINES CO.
|
By: ____________________________________
Name:. Title: |
|
2
|
|
SCHEDULE TO NOTE DATED _______________
ISSUED BY SOUTHWEST AIRLINES CO. TO _________________ |
Date
|
Loan
|
Type
|
Maturity
|
Interest Rate
|
Principal Repayment
|
Interest Payments
|
Balance
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
$
|
|
|
|
$
|
$
|
$
|
|
3
|
|
EXHIBIT C–1
|
FORM OF COMPANY’S INTERNAL COUNSEL OPINION
|
|
[See attached.]
|
[Southwest Airlines Letterhead]
|
1.
|
The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Texas, and is duly qualified to do business in each jurisdiction in which the character or location of its properties or the nature or conduct of its business makes such qualification necessary, except for those jurisdictions where the failure to be so qualified would not have a Material Adverse Effect on the consolidated financial condition of the Company and its Subsidiaries, taken as a whole. The Company has the corporate power to own its properties and to carry on its businesses as now conducted.
|
2.
|
The execution, delivery and performance by the Company of the Opinion Documents are within its corporate powers, have been duly authorized by all necessary corporate action, and do not conflict with or constitute a default under (i) any law, rule, regulation, order or judgment known to me or contractual restriction of the Company known to me, the violation of which would have a Material Adverse Effect, or (ii) the Restated Certificate of Formation or the Amended and Restated Bylaws of the Company.
|
3.
|
No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required by the laws of the State of Texas, or the federal laws of the United States of America, for the due execution, delivery and performance by the Company of the Opinion Documents other than routine filings of copies of the Credit Agreement with the Securities and Exchange Commission and routine filings of the Aircraft Mortgage and UCC financing statements to perfect a security interest in collateral.
|
4.
|
To my knowledge, except as set forth in the Company's Form 10-K for the year ended December 31, 2019 and subsequent Form 8-Ks, there are no legal or governmental proceedings or investigations pending or threatened against the Company or any Subsidiary or any property of the Company or any Subsidiary which individually or, to the extent involving related claims, in the aggregate, involve a material risk of a Material Adverse Effect on (i) the financial condition of the Company and its Subsidiaries considered as a whole, or (ii) the ability of the Company to perform its obligations under the Opinion Documents.
|
EXHIBIT C–2
|
FORM OF COMPANY’S OUTSIDE COUNSEL OPINION
|
|
|
[See attached.]
|
|
[Winstead Letterhead]
|
(1) the Credit Agreement; and
|
(2) the Mortgage and Security Agreement, dated as of March 30, 2020, between the Company and the Administrative Agent, as collateral agent (the “Aircraft Mortgage”); and
|
(3) the Mortgaged Aircraft Operating Agreement, dated as of March 30, 2020 (collectively with the Credit Agreement and the Aircraft Mortgage the “Opinion Documents”).
|
the application of general principles of equity (regardless of whether considered in a proceeding of equity or at law), including, without limitation, (x) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (y) concepts of materiality, reasonableness, good faith and fair dealing;
|
all applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws, decrees or regulations affecting the enforcement of creditors' rights generally;
|
with respect to indemnity, contribution and exculpation provisions contained in the Opinion Documents, limitations based upon public policy considerations; and
|
possible judicial action giving effect to foreign laws or foreign governmental or judicial action affecting or relating to the rights or remedies of creditors.
|
Very truly yours,
|
EXHIBIT C–3
|
FORM OF ADMINISTRATIVE AGENT’S COUNSEL OPINION
|
Simpson Thacher & Bartlett LLP
|
||
425 LEXINGTON AVENUE
NEW YORK, NY 10017-3954
|
||
TELEPHONE: +1-212-455-2000
FACSIMILE: +1-212-455-2502
|
||
Direct Dial Number
+1-212-455-2000
|
|
E-mail Address
|
March 30, 2020
|
Re:
|
Amended and Restated 364-Day Credit Agreement
|
BEIJING
|
HONG KONG
|
HOUSTON
|
LONDON
|
LOS ANGELES
|
PALO ALTO
|
SÃO PAULO
|
SEOUL
|
TOKYO
|
WASHINGTON, D.C.
|
|
Simpson Thacher & Bartlett LLP |
March 30, 2020
|
JP Morgan Chase Bank, N.A.
The Banks listed on Schedule I |
|
Simpson Thacher & Bartlett LLP |
March 30, 2020
|
JP Morgan Chase Bank, N.A.
The Banks listed on Schedule I |
|
Simpson Thacher & Bartlett LLP |
March 30, 2020
|
JP Morgan Chase Bank, N.A.
The Banks listed on Schedule I |
Schedule I
|
EXHIBIT D
|
FINANCIAL REPORT CERTIFICATE
|
FOR___________ ENDED ________, ____
|
ADMINISTRATIVE AGENT:
|
JPMorgan Chase Bank, N.A.
|
COMPANY:
|
Southwest Airlines Co.
|
RE:
|
Amended and Restated 364-Day Credit Agreement
|
DATE:
|
_________________, ____
|
____________________________________________
Name: Title |
Consolidated Adjusted Pre-Tax Income*
|
$
|
(1)
|
Aircraft Rentals*
|
$
|
(2)
|
Net Interest Expense*
|
$
|
(3)
|
Depreciation and amortization*
|
$
|
(4)
|
Cash dividends paid*
|
$
|
(5)
|
Sum of lines (1), (2), (3), and (4), minus line (5)
|
$
|
(6)
|
Net Interest Expense*
|
$
|
(7)
|
Aircraft Rentals*
|
$
|
(8)
|
Sum of lines (7) and (8)
|
$
|
(9)
|
Ratio of line (6) to line (9)
|
_____ to _____
|
|
Minimum Ratio
|
[___] to 1.00
|
|
|
|
*
|
For four fiscal quarter period ending on last day of Subject Period.
|
EXHIBIT E
|
FORM OF ASSIGNMENT AND ASSUMPTION
|
2.
|
Assignee: ______________________________
|
3.
|
Company: Southwest Airlines Co.
|
4.
|
Administrative Agent: JPMorgan Chase Bank, N.A., as administrative agent under the Credit Agreement
|
5.
|
Credit Agreement: Amended and Restated 364-Day Credit Agreement dated as of March 30, 2020 among Southwest Airlines Co., the Banks party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent
|
6.
|
Assigned Interest:
|
Aggregate Amount of Commitment/Loans for all Banks
|
Amount of Commitment/Loans Assigned
|
Percentage Assigned of Commitment/Loans8
|
$
|
$
|
%
|
$
|
$
|
%
|
$
|
$
|
%
|
ASSIGNOR
|
|
____________________________________________
NAME OF ASSIGNOR |
|
By:_________________________________________
Title:
|
|
ASSIGNEE
|
|
____________________________________________
NAME OF ASSIGNOR |
|
By:_________________________________________
Title:
|
ANNEX 1
|
|
Amended and Restated 364-Day Credit Agreement dated as of March 30, 2020 among Southwest Airlines Co., the Banks party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent
|
|
STANDARD TERMS AND CONDITIONS FOR
|
ASSIGNMENT AND ASSUMPTION
|
2
|
EXHIBIT F-1
|
FORM OF
|
U.S. TAX CERTIFICATE
|
(For Foreign Banks That Are Not Partnerships For U.S. Federal Income Tax Purposes)
|
EXHIBIT F-2
|
FORM OF
|
U.S. TAX CERTIFICATE
|
(For Non-U.S. Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
|
EXHIBIT F-3
|
FORM OF
|
U.S. TAX CERTIFICATE
|
(For Non-U.S. Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
|
EXHIBIT F-4
|
FORM OF
|
U.S. TAX CERTIFICATE
|
(For Foreign Banks That Are Partnerships For U.S. Federal Income Tax Purposes)
|
EXHIBIT G
|
FORM OF AIRCRAFT MORTGAGE
|
|
[See attached.]
|
MORTGAGE AND SECURITY AGREEMENT
|
W I T N E S S E T H:
|
GRANTING CLAUSE
|
EXHIBIT A
|
1
|
HABENDUM CLAUSE
|
IT IS HEREBY FURTHER COVENANTED AND AGREED by and among the parties hereto as follows:
|
•
DEFINITIONS |
ARTICLE 2
EVENT OF DEFAULT AND REMEDIES |
ARTICLE 3
TERMINATION OF MORTGAGE |
ARTICLE 4
MISCELLANEOUS |
* * *
|
|
SOUTHWEST AIRLINES CO., as Grantor
By: ____________________________________
Name:
Title: |
|
JPMORGAN CHASE BANK, N.A., as Collateral Agent
By: ____________________________________
Name:
Title:
|
|
|
Signature Page to Mortgage and Security Agreement
|
EXHIBIT A
|
|
to Mortgage and Security Agreement
|
|
Airframes and Engines
|
|
Airframe Make
|
Airframe Model
|
U.S. Reg. Number
|
Airframe
MSN
|
Engine Manufacturer
|
Engine Model
|
Engine MSN 1
|
Engine MSN 2
|
1
|
Boeing
|
737-800
|
N8557Q
|
63582
|
CFM International
|
CFM56-7B27E/F
|
38803
|
38764
|
2
|
Boeing
|
737-800
|
N8556Z
|
63583
|
CFM International
|
CFM56-7B27E/F
|
38796
|
38800
|
3
|
Boeing
|
737-800
|
N8555Z
|
63600
|
CFM International
|
CFM56-7B27E/F
|
38791
|
38792
|
4
|
Boeing
|
737-800
|
N8554X
|
36993
|
CFM International
|
CFM56-7B27E/F
|
38779
|
38773
|
5
|
Boeing
|
737-800
|
N8553W
|
63601
|
CFM International
|
CFM56-7B27E/F
|
38778
|
38776
|
6
|
Boeing
|
737-800
|
N8552Z
|
63580
|
CFM International
|
CFM56-7B27E/F
|
38739
|
38704
|
7
|
Boeing
|
737-800
|
N8551Q
|
36951
|
CFM International
|
CFM56-7B27E/F
|
38678
|
38661
|
8
|
Boeing
|
737-800
|
N8549Z
|
63597
|
CFM International
|
CFM56-7B27E/F
|
38659
|
38658
|
9
|
Boeing
|
737-800
|
N8548P
|
36968
|
CFM International
|
CFM56-7B27E/F
|
38642
|
38643
|
10
|
Boeing
|
737-800
|
N8547V
|
63572
|
CFM International
|
CFM56-7B27E/F
|
38517
|
38500
|
11
|
Boeing
|
737-800
|
N8545V
|
63573
|
CFM International
|
CFM56-7B27E/F
|
38531
|
38526
|
12
|
Boeing
|
737-800
|
N8546V
|
63574
|
CFM International
|
CFM56-7B27E/F
|
38542
|
38540
|
13
|
Boeing
|
737-800
|
N8544Z
|
36926
|
CFM International
|
CFM56-7B27E/F
|
38486
|
38460
|
14
|
Boeing
|
737-800
|
N8543Z
|
63587
|
CFM International
|
CFM56-7B27E/F
|
38459
|
38454
|
15
|
Boeing
|
737-800
|
N8542Z
|
63581
|
CFM International
|
CFM56-7B27E/F
|
38415
|
38414
|
16
|
Boeing
|
737-800
|
N8541W
|
63599
|
CFM International
|
CFM56-7B27E/F
|
38385
|
38378
|
17
|
Boeing
|
737-800
|
N8540V
|
63598
|
CFM International
|
CFM56-7B27E/F
|
38372
|
38371
|
18
|
Boeing
|
737-800
|
N8539V
|
42534
|
CFM International
|
CFM56-7B27E/F
|
38352
|
38348
|
19
|
Boeing
|
737-800
|
N8538V
|
63586
|
CFM International
|
CFM56-7B27E/F
|
38355
|
38342
|
20
|
Boeing
|
737-800
|
N8537Z
|
63595
|
CFM International
|
CFM56-7B27E/F
|
38345
|
38332
|
21
|
Boeing
|
737-800
|
N8536Z
|
63571
|
CFM International
|
CFM56-7B27E/F
|
38344
|
38321
|
22
|
Boeing
|
737-800
|
N8535S
|
63596
|
CFM International
|
CFM56-7B27E/F
|
38330
|
38328
|
23
|
Boeing
|
737-800
|
N8532S
|
63576
|
CFM International
|
CFM56-7B27E/F
|
38297
|
38272
|
24
|
Boeing
|
737-800
|
N8533S
|
63577
|
CFM International
|
CFM56-7B27E/F
|
38292
|
38305
|
25
|
Boeing
|
737-800
|
N8534Z
|
63578
|
CFM International
|
CFM56-7B27E/F
|
38302
|
38299
|
26
|
Boeing
|
737-800
|
N8531Q
|
63575
|
CFM International
|
CFM56-7B27E/F
|
38295
|
38268
|
27
|
Boeing
|
737-800
|
N8530W
|
63592
|
CFM International
|
CFM56-7B27E/F
|
38203
|
38202
|
28
|
Boeing
|
737-800
|
N8529Z
|
36974
|
CFM International
|
CFM56-7B27E/F
|
38168
|
38169
|
29
|
Boeing
|
737-800
|
N8528Q
|
36927
|
CFM International
|
CFM56-7B27E/F
|
38126
|
38165
|
30
|
Boeing
|
737-800
|
N8527Q
|
36946
|
CFM International
|
CFM56-7B27E/F
|
38115
|
38114
|
31
|
Boeing
|
737-800
|
N8526W
|
36972
|
CFM International
|
CFM56-7B27E/F
|
864994
|
864984
|
32
|
Boeing
|
737-800
|
N8525S
|
36949
|
CFM International
|
CFM56-7B27E/F
|
864950
|
864947
|
33
|
Boeing
|
737-800
|
N8524Z
|
36970
|
CFM International
|
CFM56-7B27E/F
|
864933
|
864926
|
34
|
Boeing
|
737-800
|
N8523W
|
36969
|
CFM International
|
CFM56-7B27E/F
|
864887
|
864885
|
35
|
Boeing
|
737-800
|
N8522P
|
36922
|
CFM International
|
CFM56-7B27E/F
|
864878
|
864873
|
36
|
Boeing
|
737-800
|
N8520Q
|
42532
|
CFM International
|
CFM56-7B27E/F
|
864858
|
864844
|
37
|
Boeing
|
737-800
|
N8519R
|
36910
|
CFM International
|
CFM56-7B27E/F
|
864852
|
864851
|
38
|
Boeing
|
737-800
|
N8518R
|
63593
|
CFM International
|
CFM56-7B27E/F
|
864791
|
864797
|
39
|
Boeing
|
737-800
|
N8515X
|
36943
|
CFM International
|
CFM56-7B27E/F
|
864774
|
864766
|
40
|
Boeing
|
737-800
|
N8517F
|
63594
|
CFM International
|
CFM56-7B27E/F
|
864777
|
864773
|
41
|
Boeing
|
737-800
|
N8514F
|
36975
|
CFM International
|
CFM56-7B27E/F
|
864763
|
864761
|
42
|
Boeing
|
737-800
|
N8513F
|
36976
|
CFM International
|
CFM56-7B27E/F
|
864756
|
864747
|
|
|
|
|
|
|
|
|
|
EXHIBIT A
|
1
|
43
|
Boeing
|
737-800
|
N8512U
|
38816
|
CFM International
|
CFM56-7B27E/F
|
864733
|
864731
|
44
|
Boeing
|
737-800
|
N8511K
|
36670
|
CFM International
|
CFM56-7B27E/F
|
864729
|
864710
|
45
|
Boeing
|
737-800
|
N8510E
|
36944
|
CFM International
|
CFM56-7B27E/F
|
864714
|
864700
|
46
|
Boeing
|
737-800
|
N8509U
|
36925
|
CFM International
|
CFM56-7B27E/F
|
864695
|
864677
|
47
|
Boeing
|
737-800
|
N8508W
|
38814
|
CFM International
|
CFM56-7B27E/F
|
864686
|
864685
|
48
|
Boeing
|
737-800
|
N8507C
|
41531
|
CFM International
|
CFM56-7B27E/F
|
864666
|
864640
|
49
|
Boeing
|
737-800
|
N8504G
|
38812
|
CFM International
|
CFM56-7B27E/F
|
864599
|
864598
|
50
|
Boeing
|
737-800
|
N8503A
|
38813
|
CFM International
|
CFM56-7B27E/F
|
864584
|
864582
|
51
|
Boeing
|
737-800
|
N8502Z
|
36666
|
CFM International
|
CFM56-7B27E/F
|
864568
|
864563
|
52
|
Boeing
|
737-800
|
N8501V
|
41530
|
CFM International
|
CFM56-7B27E/F
|
864542
|
864444
|
53
|
Boeing
|
737-8H4
|
N8698B
|
36977
|
CFM International
|
CFM56-7B27E/F
|
864488
|
864487
|
54
|
Boeing
|
737-8H4
|
N8699A
|
36923
|
CFM International
|
CFM56-7B27E/F
|
864497
|
864482
|
55
|
Boeing
|
737-8H4
|
N8697C
|
36728
|
CFM International
|
CFM56-7B27E/F
|
864413
|
865389
|
56
|
Boeing
|
737-8H4
|
N8696E
|
36678
|
CFM International
|
CFM56-7B27E/F
|
864455
|
864437
|
57
|
Boeing
|
737-8H4
|
N8695D
|
35965
|
CFM International
|
CFM56-7B27E/F
|
865167
|
864347
|
58
|
Boeing
|
737-8H4
|
N8694E
|
36661
|
CFM International
|
CFM56-7B27E/F
|
864411
|
864409
|
59
|
Boeing
|
737-8H4
|
N8676A
|
36941
|
CFM International
|
CFM56-7B27E/F
|
862719
|
862713
|
60
|
Boeing
|
737-8H4
|
N8675A
|
35976
|
CFM International
|
CFM56-7B27E/F
|
862714
|
862701
|
61
|
Boeing
|
737-8H4
|
N8673F
|
36937
|
CFM International
|
CFM56-7B27E/F
|
862629
|
862628
|
62
|
Boeing
|
737-8H4
|
N8674B
|
36734
|
CFM International
|
CFM56-7B27E/F
|
862671
|
862675
|
63
|
Boeing
|
737-8H4
|
N8672F
|
36940
|
CFM International
|
CFM56-7B27E/F
|
862613
|
862612
|
64
|
Boeing
|
737-8H4
|
N8671D
|
36715
|
CFM International
|
CFM56-7B27E/F
|
862432
|
862336
|
65
|
Boeing
|
737-8H4
|
N8670A
|
36656
|
CFM International
|
CFM56-7B27E/F
|
862254
|
862156
|
66
|
Boeing
|
737-8H4
|
N8669B
|
36655
|
CFM International
|
CFM56-7B27E/F
|
862139
|
862136
|
67
|
Boeing
|
737-8H4
|
N8668A
|
36903
|
CFM International
|
CFM56-7B27E/F
|
660999
|
660985
|
68
|
Boeing
|
737-8H4
|
N8667D
|
36657
|
CFM International
|
CFM56-7B27E/F
|
660957
|
661927
|
69
|
Boeing
|
737-8H4
|
N8662F
|
36936
|
CFM International
|
CFM56-7B27E/F
|
660829
|
660748
|
70
|
Boeing
|
737-8H4
|
N8661A
|
36906
|
CFM International
|
CFM56-7B27E/F
|
660566
|
660553
|
71
|
Boeing
|
737-8H4
|
N8660A
|
36654
|
CFM International
|
CFM56-7B27E/F
|
661511
|
660471
|
72
|
Boeing
|
737-8H4
|
N8659D
|
36901
|
CFM International
|
CFM56-7B27E/F
|
660527
|
661482
|
73
|
Boeing
|
737-8H4
|
N8658A
|
36899
|
CFM International
|
CFM56-7B27E/F
|
660656
|
660643
|
74
|
Boeing
|
737-8H4
|
N8657B
|
42535
|
CFM International
|
CFM56-7B27E/F
|
660653
|
660638
|
75
|
Boeing
|
737-8H4
|
N8656B
|
42530
|
CFM International
|
CFM56-7B27E/F
|
661562
|
661573
|
76
|
Boeing
|
737-8H4
|
N8653A
|
37037
|
CFM International
|
CFM56-7B27E/F
|
660552
|
661505
|
77
|
Boeing
|
737-8H4
|
N8655D
|
42529
|
CFM International
|
CFM56-7B27E/F
|
660572
|
660569
|
78
|
Boeing
|
737-8H4
|
N8654B
|
37045
|
CFM International
|
CFM56-7B27E/F
|
660571
|
660567
|
79
|
Boeing
|
737-8H4
|
N8644C
|
35973
|
CFM International
|
CFM56-7B27E/F
|
660212
|
660199
|
80
|
Boeing
|
737-8H4
|
N8643A
|
42524
|
CFM International
|
CFM56-7B27E/F
|
660216
|
660209
|
81
|
Boeing
|
737-8H4
|
N8652B
|
36971
|
CFM International
|
CFM56-7B27E/F
|
660484
|
660480
|
82
|
Boeing
|
737-8H4
|
N8651A
|
36920
|
CFM International
|
CFM56-7B27E/F
|
660429
|
660397
|
83
|
Boeing
|
737-8H4
|
N8650F
|
36909
|
CFM International
|
CFM56-7B27E/F
|
660371
|
660361
|
84
|
Boeing
|
737-8H4
|
N8649A
|
42527
|
CFM International
|
CFM56-7B27E/F
|
660322
|
660319
|
85
|
Boeing
|
737-8H4
|
N8648A
|
42531
|
CFM International
|
CFM56-7B27E/F
|
660287
|
657922
|
86
|
Boeing
|
737-8H4
|
N8646B
|
36935
|
CFM International
|
CFM56-7B27E/F
|
660242
|
660241
|
87
|
Boeing
|
737-8H4
|
N8647A
|
42528
|
CFM International
|
CFM56-7B27E/F
|
660245
|
660244
|
88
|
Boeing
|
737-8H4
|
N8645A
|
36907
|
CFM International
|
CFM56-7B27E/F
|
660226
|
660224
|
89
|
Boeing
|
737-8H4
|
N8642E
|
42525
|
CFM International
|
CFM56-7B27E/F
|
660201
|
660195
|
90
|
Boeing
|
737-8H4
|
N8639B
|
60086
|
CFM International
|
CFM56-7B27E/F
|
660139
|
660133
|
91
|
Boeing
|
737-8H4
|
N8641B
|
60085
|
CFM International
|
CFM56-7B27E/F
|
660178
|
660171
|
92
|
Boeing
|
737-8H4
|
N8638A
|
36911
|
CFM International
|
CFM56-7B27E/F
|
660107
|
657995
|
|
|
|
|
|
|
|
|
|
EXHIBIT A
|
2
|
EXHIBIT A
|
3
|
143
|
Boeing
|
737-7H4
|
N927WN
|
36889
|
CFM International
|
CFM56-7B24/3
|
897566
|
896662
|
144
|
Boeing
|
737-7H4
|
N924WN
|
36628
|
CFM International
|
CFM56-7B24/3
|
896586
|
896570
|
145
|
Boeing
|
737-7H4
|
N919WN
|
36625
|
CFM International
|
CFM56-7B24/3
|
897412
|
897411
|
146
|
Boeing
|
737-7H4
|
N920WN
|
32460
|
CFM International
|
CFM56-7B24/3
|
896482
|
896456
|
147
|
Boeing
|
737-7H4
|
N917WN
|
36624
|
CFM International
|
CFM56-7B24/3
|
896352
|
896142
|
148
|
Boeing
|
737-7BD
|
N7752B
|
33943
|
CFM International
|
CFM56-7B20
|
896388
|
896380
|
(EACH OF WHICH ENGINES DESCRIBED ABOVE HAVING AT LEAST 550 RATED TAKEOFF HORSEPOWER OR THE EQUIVALENT THEREOF)
|
EXHIBIT A
|
4
|
EXHIBIT H
|
|
FORM OF MORTGAGED AIRCRAFT OPERATING AGREEMENT
|
|
|
[See attached.]
|
|
|
MORTGAGED AIRCRAFT OPERATING AGREEMENT
|
W I T N E S S E T H:
|
ARTICLE I
|
DEFINITIONS
|
ARTICLE II
|
[RESERVED]
|
ARTICLE III
|
COVENANTS OF THE COMPANY
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
|
10
|
11
|
12
|
13
|
14
|
ARTICLE IV
|
REMEDIES
|
15
|
ARTICLE V
|
MISCELLANEOUS
|
16
|
* * *
|
17
|
|
SOUTHWEST AIRLINES CO.
By:_______________________________
Name:
Title: |
|
JPMORGAN CHASE BANK, N.A., as Collateral Agent
By:_______________________________
Name:
Title:
|
18
|
ANNEX A
|
DEFINED TERMS
|
Annex A
|
19
|
Annex A
|
20
|
Annex A
|
21
|
Annex A
|
22
|
Annex A
|
23
|
Annex A
|
24
|
ANNEX B
|
INSURANCE
|
A.
|
Liability Insurance.
|
B.
|
Hull Insurance.
|
Annex B
|
25
|
Annex B
|
26
|
Annex B
|
27
|
Annex B
|
28
|
ANNEX C
|
FOREIGN REGISTRATION
|
(i)
|
each of the following requirements is satisfied:
|
Annex C
|
29
|
Annex C
|
30
|
SCHEDULE 1
|
PERMITTED COUNTRIES
|
Argentina
|
Luxembourg
|
Aruba
|
Malaysia
|
Australia
|
Malta
|
Austria
|
Mexico
|
Bahamas
|
Netherlands
|
Belgium
|
Netherlands Antilles
|
Bolivia
|
New Zealand
|
Brazil
|
Norway
|
Canada
|
Paraguay
|
Chile
|
People’s Republic of China
|
Czech Republic
|
Peru
|
Denmark
|
Philippines
|
Egypt
|
Poland
|
Ecuador
|
Portugal
|
Finland
|
Republic of China (Taiwan)
|
France
|
Singapore
|
Germany
|
South Africa
|
Greece
|
South Korea
|
Hungary
|
Spain
|
Iceland
|
Sweden
|
India
|
Switzerland
|
Indonesia
|
Thailand
|
Ireland
|
Trinidad and Tobago
|
Italy
|
United Kingdom
|
Japan
|
|
EXECUTION VERSION
|
FIRST AMENDMENT TO REVOLVING CREDIT FACILITY AGREEMENT
|
R E C I T A L S
|
-1-
|
-2-
|
-3-
|
-4-
|
[Remainder of page intentionally blank.]
|
-5-
|
SOUTHWEST AIRLINES CO.
|
By: /s/ Christopher Monroe
Christopher Monroe Senior Vice President Finance & Treasurer |
[Signature page to Southwest Airlines
|
First Amendment to Revolving Credit Facility Agreement]
|
JPMORGAN CHASE BANK, N.A., as a Bank, an Issuing Bank, a Co-Administrative Agent, the Paying Agent and the Collateral Agent
|
By: /s/ Cristina Caviness
Name: Christina Caviness Title: Vice President |
[Signature page to Southwest Airlines
|
First Amendment to Revolving Credit Facility Agreement]
|
CITIBANK, N.A., as a Bank, an Issuing Bank and a Co-Administrative Agent
|
By: /s/ Michael Leonard
Name: Michael Leonard Title: Vice President |
[Signature page to Southwest Airlines
|
First Amendment to Revolving Credit Facility Agreement]
|
BARCLAYS BANK PLC, as a Bank, an Issuing Bank and the Syndication Agent
|
By: /s/ Craig Malloy
Name: Craig Malloy Title: Director |
[Signature page to Southwest Airlines
|
First Amendment to Revolving Credit Facility Agreement]
|
BANK OF AMERICA, N.A., as a Bank and a Documentation Agent
|
By: /s/ Prathamesh Kshirsagar
Name: Prathamesh Kshirsagar Title: Director |
[Signature page to Southwest Airlines
|
First Amendment to Revolving Credit Facility Agreement]
|
BNP PARIBAS, as a Bank and a Documentation Agent
|
By: /s/ Thomas C. Iacono
Name: Thomas C. Iacono Title: Vice President |
By: /s/ Robert Papas
Name: Robert Papas Title: Managing Director |
[Signature page to Southwest Airlines
|
First Amendment to Revolving Credit Facility Agreement]
|
GOLDMAN SACHS BANK USA, as a Bank and a Documentation Agent
|
By: /s/ Charles Johnston
Name: Charles Johnston Title: Authorized Signatory |
[Signature page to Southwest Airlines
|
First Amendment to Revolving Credit Facility Agreement]
|
MORGAN STANLEY BANK, N.A., as a Bank
|
By: /s/ Jack Kuhns
Name: Jack Kuhns Title Authorized Signatory |
MORGAN STANLEY SENIOR FUNDING, INC., as a Documentation Agent
|
By: /s/Jack Kuhns
Name: Jack Kuhns Title: Vice President |
[Signature page to Southwest Airlines
|
First Amendment to Revolving Credit Facility Agreement]
|
U.S. BANK NATIONAL ASSOCIATION, as a Bank and a Documentation Agent
|
By: /s/ Sean P. Walters
Name: Sean P. Walters Title: Vice President |
[Signature page to Southwest Airlines
|
First Amendment to Revolving Credit Facility Agreement]
|
WELLS FARGO BANK, N.A., as a Bank and a Documentation Agent
|
By: /s/ Adam Spreyer
Name: Adam Spreyer Title: Director |
[Signature page to Southwest Airlines
|
First Amendment to Revolving Credit Facility Agreement]
|
COMERICA BANK, as a Bank
|
By: /s/ Gerald R. Finney Jr.
Name: Gerald R Finney Jr. Title: Vice President |
[Signature page to Southwest Airlines
|
First Amendment to Revolving Credit Facility Agreement]
|
ANNEX I
|
FORM OF AMENDED CREDIT AGREEMENT
|
|
[See attached]
|
EXECUTION VERSION
|
ANNEX I
|
$1,000,000,000 REVOLVING CREDIT FACILITY AGREEMENT
|
among
|
SOUTHWEST AIRLINES CO.,
|
THE BANKS PARTY HERETO,
|
BARCLAYS BANK PLC,
as Syndication Agent, |
|
BANK OF AMERICA, N.A.,
|
BNP PARIBAS,
|
GOLDMAN SACHS BANK USA,
|
MORGAN STANLEY SENIOR FUNDING, INC.,
|
U.S. BANK NATIONAL ASSOCIATION
|
and
|
WELLS FARGO BANK, N.A.,
|
as Documentation Agents
|
|
and
|
|
JPMORGAN CHASE BANK, N.A.
|
and
|
CITIBANK, N.A.,
|
as Co-Administrative Agents
|
and
|
JPMORGAN CHASE BANK, N.A.,
|
as Paying Agent
|
|
As of August 3, 2016,
|
as amended by First Amendment dated March 30, 2020
|
JPMORGAN CHASE BANK, N.A.
and CITIGROUP GLOBAL MARKETS INC., as Joint Lead Arrangers and Joint Bookrunners |
Table of Contents
|
|
|
Page
|
|
|
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
|
12
|
Section 1.1 Certain Defined Terms
|
12
|
Section 1.2 Computation of Time Periods
|
1521
|
Section 1.3 Interest Rates; LIBOR Notification
|
21
|
|
|
ARTICLE II LOANS
|
1522
|
Section 2.1 Commitments
|
1522
|
Section 2.2 Committed Borrowing Procedure
|
1622
|
Section 2.3 Refinancings; Conversions
|
1622
|
Section 2.4 Fees
|
1723
|
Section 2.5 Termination and Reduction of Commitments
|
1723
|
Section 2.6 Loans
|
1824
|
Section 2.7 Loan Accounts
|
1824
|
Section 2.8 Interest on Loans
|
1925
|
Section 2.9 Interest on Overdue Amounts
|
1925
|
Section 2.10 Alternate Rate of Interest
|
1925
|
Section 2.11 Prepayment of Loans
|
2027
|
Section 2.12 Reserve Requirements; Change in Circumstances
|
2027
|
Section 2.13 Change in Legality
|
2229
|
Section 2.14 Indemnity
|
2229
|
Section 2.15 Pro Rata Treatment
|
2330
|
Section 2.16 Sharing of Setoffs
|
2330
|
Section 2.17 Payments
|
2431
|
Section 2.18 Taxes
|
2431
|
Section 2.19 Calculation of LIBO Rates
|
2734
|
Section 2.20 Booking Loans
|
2734
|
Section 2.21 Quotation of Rates
|
2734
|
Section 2.22 Defaulting Banks
|
2734
|
Section 2.23 Mitigation Obligations; Replacement of Banks
|
2936
|
Section 2.24 Commitment Increases
|
3037
|
Section 2.25 Extension of the Termination Date
|
3138
|
|
|
ARTICLE III LETTERS OF CREDIT
|
3340
|
Section 3.1 L/C Commitment
|
3340
|
Section 3.2 Procedure for Issuance of Letter of Credit
|
3340
|
Section 3.3 Fees and Other Charges
|
3440
|
Section 3.4 L/C Participations
|
3441
|
Section 3.5 Reimbursement Obligation of the Company
|
3542
|
Section 3.6 Obligations Absolute
|
3542
|
Section 3.7 Letter of Credit Payments
|
3542
|
Section 3.8 Applications
|
3642
|
|
|
ARTICLE IV CONDITIONS OF LENDING
|
3643
|
Section 4.1 Conditions Precedent
|
3643
|
Section 4.2 Conditions Precedent to Each Committed Borrowing
|
3744
|
Section 4.3 Conditions Precedent to Each Letter of Credit Issuance
|
3744
|
Section 4.4 Legal Details
|
3744
|
i
|
ARTICLE V REPRESENTATIONS AND WARRANTIES
|
3845
|
Section 5.1 Organization, Authority and Qualifications
|
3845
|
Section 5.2 Financial Statements
|
3845
|
Section 5.3 Compliance with Agreement and Laws
|
3845
|
Section 5.4 Authorization; No Breach; and Valid Agreements
|
3845
|
Section 5.5 Litigation and Judgments
|
3946
|
Section 5.6 Ownership of Properties
|
3946
|
Section 5.7 Taxes
|
3946
|
Section 5.8 Approvals Required
|
3946
|
Section 5.9 Business; Status as Air Carrier
|
3946
|
Section 5.10 ERISA Compliance
|
3946
|
Section 5.11 Insurance
|
3946
|
Section 5.12 Purpose of Loan
|
4047
|
Section 5.13 Investment Company Act
|
4047
|
Section 5.14 General
|
4047
|
Section 5.15 EEA Financial Institutions
|
4047
|
Section 5.16 Anti-Corruption Laws and Sanctions
|
4047
|
Section 5.17 Security Interests
|
47
|
|
|
ARTICLE VI COVENANTS
|
4048
|
Section 6.1 Performance of Obligations
|
4048
|
Section 6.2 Compliance with Laws
|
4048
|
Section 6.3 Maintenance of Existence, Licenses and Franchises: Compliance With Agreements
|
4148
|
Section 6.4 Maintenance of Properties
|
4148
|
Section 6.5 Maintenance of Books and Records
|
4248
|
Section 6.6 Inspection
|
4248
|
Section 6.7 Insurance
|
4249
|
Section 6.8 Appraisals
|
4249
|
Section 6.9 Coverage Ratio
|
4349
|
Section 6.10 Reporting Requirements
|
4349
|
Section 6.11 Use of Proceeds
|
4450
|
Section 6.12 Pool Assets
|
4451
|
Section 6.13 Restrictions on Liens
|
4552
|
Section 6.14 Mergers and Dissolutions
|
4553
|
Section 6.15 Assignment
|
4653
|
Section 6.16 Amendments
|
53
|
Section 6.17 Liquidity
|
53
|
Section 6.18 Further Assurances
|
54
|
|
|
ARTICLE VII EVENTS OF DEFAULT; REMEDIES
|
4654
|
Section 7.1 Events of Default
|
4654
|
Section 7.2 Remedies Upon Default
|
4856
|
Section 7.3 Remedies in General
|
4858
|
|
|
ARTICLE VIII THE AGENTS
|
4958
|
Section 8.1 Authorization and Action
|
4958
|
Section 8.2 Agents’ Reliance, Etc.
|
4959
|
Section 8.3 Rights of Agents as Banks
|
5059
|
ii
|
Section 8.4 Bank Credit Decision
|
5059
|
Section 8.5 Agents’ Indemnity
|
5060
|
Section 8.6 Successor Paying Agent 51 and Successor Collateral Agent
|
60
|
Section 8.7 Notice of Default
|
5161
|
Section 8.8 Co-Administrative Agents and Documentation Agent
|
5161
|
Section 8.9 Collateral Matters
|
61
|
|
|
ARTICLE IX MISCELLANEOUS
|
5161
|
Section 9.1 Amendments, Etc
|
5161
|
Section 9.2 Notices, Etc.
|
5262
|
Section 9.3 No Waiver; Remedies
|
5363
|
Section 9.4 Costs, Expenses and Taxes
|
5363
|
Section 9.5 Indemnity
|
5364
|
Section 9.6 Right of Setoff
|
5464
|
SECTION 9.7 GOVERNING LAW
|
5465
|
Section 9.8 Submission To Jurisdiction; Waivers
|
5465
|
Section 9.9 Survival of Representations and Warranties
|
5565
|
Section 9.10 Binding Effect
|
5565
|
Section 9.11 Successors and Assigns; Participations
|
5566
|
Section 9.12 Confidentiality
|
5868
|
Section 9.13 Independence of Covenants
|
5869
|
Section 9.14 Severability
|
5969
|
Section 9.15 Integration
|
5969
|
Section 9.16 Descriptive Headings
|
5969
|
Section 9.17 Execution in Counterparts
|
5969
|
Section 9.18 WAIVERS OF JURY TRIAL
|
5970
|
Section 9.19 No Fiduciary Duty
|
5970
|
Section 9.20 USA Patriot Act
|
6070
|
Section 9.21 Acknowledgement and Consent to Bail-In of EEA Financial Institutions
|
6070
|
Section 9.22 Interest Rate Limitation
|
6071
|
|
|
|
|
SCHEDULES
|
|
|
|
Location of Lending Office; Notice Information
|
Schedule I
|
Pool Assets
|
Schedule II
|
|
|
EXHIBITS
|
|
|
|
Form of Notice of Committed Borrowing
|
Exhibit A
|
Form of Note
|
Exhibit B
|
Form of Company’s Internal Counsel Opinion
|
Exhibit C-1
|
Form of Company’s Outside Counsel Opinion
|
Exhibit C-2
|
Form of Agents’ Counsel Opinion
|
Exhibit C-3
|
Form of Financial Report Certificate
|
Exhibit D
|
Form of Assignment and Assumption
|
Exhibit E
|
Form of Appraisal
|
Exhibit F
|
Form of U.S. Tax Compliance Certificate – Foreign Banks (Not Partnerships)
|
Exhibit G-1
|
iii
|
Form of U.S. Tax Compliance Certificate – Non-U.S. Participants (Partnerships)
|
Exhibit G-2
|
Form of U.S. Tax Compliance Certificate – Non-U.S. Participants (Not Partnerships)
|
Exhibit G-3
|
iv
|
Form of U.S. Tax Compliance Certificate – Foreign Banks (Partnerships)
|
Exhibit G-4
|
Form of Increased Facility Activation Notice
|
Exhibit H-1
|
Form of New Bank Supplement
|
Exhibit H-2
|
Form of Aircraft Mortgage
|
Exhibit I
|
Form of Mortgaged Aircraft Operating Agreement
|
Exhibit J
|
REVOLVING CREDIT FACILITY AGREEMENT
|
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS |
iv
|
5
|
6
|
Index Debt Ratings
S&P/Moody’s
|
Applicable Rate (Eurodollar Loans)
|
Applicable Rate (Alternate Base Rate Loans)
|
Commitment Fee Rate
|
BBB/Baa2 or better
|
2.000%
|
1.000%
|
0.150%
|
BBB-/Baa3 or below
|
2.250%
|
1.250%
|
0.200%
|
Index Debt Ratings S&P/Moody’s
|
Applicable Rate (Eurodollar Loans)
|
Applicable Rate (Alternate Base Rate Loans)
|
Commitment Fee Rate
|
A/A2 or better
|
0.875%
|
0.000%
|
0.080%
|
A-/A3
|
1.000%
|
0.000%
|
0.100%
|
BBB+/Baa1
|
1.125%
|
0.125%
|
0.125%
|
BBB/Baa2
|
1.250%
|
0.250%
|
0.150%
|
BBB-/Baa3 or below
|
1.500%
|
0.500%
|
0.200%
|
7
|
8
|
9
|
10
|
(1)
|
the rate, or methodology for this rate, and conventions for this rate selected or recommended by the Relevant Governmental Body for determining Compounded SOFR; provided that:
|
(2)
|
if, and to the extent that, the Paying Agent determines that Compounded SOFR cannot be determined in accordance with clause (1) above, then the rate, or methodology for this rate, and conventions for this rate that the Paying Agent determines in its reasonable discretion are substantially consistent with any evolving or then-prevailing market convention for determining Compounded SOFR for U.S. dollar-denominated syndicated credit facilities at such time;
|
11
|
12
|
13
|
14
|
15
|
16
|
17
|
18
|
19
|
20
|
21
|
22
|
23
|
24
|
ARTICLE II
LOANS |
25
|
26
|
27
|
28
|
29
|
that the rate at which such dollar deposits are being offered(ii)
|
the Paying Agent is advised by the Majority Banks that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for dollars and such Interest Period will not adequately and fairly reflect the cost to the Majoritysuch Banks (or Bank) of making or maintaining such Eurodollar Loan duringtheir Loans (or its Loan) included in such Loan for dollars and such Interest Period, or that reasonable means do not exist for ascertaining the LIBO Rate,;
|
30
|
31
|
32
|
33
|
34
|
35
|
36
|
(A)
|
duly completed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable, claiming eligibility for benefits of an income tax treaty to which the United States of America is a party;
|
(B)
|
duly completed copies of Internal Revenue Service Form W-8ECI;
|
(C)
|
in the case of a Foreign Bank claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate substantially in the Fform of Exhibit G-1 to the effect that (i) such Foreign Bank is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Company within the meaning of section 881(c)(3)(B) of the Code, and (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code, and (ii) the interest payments in question are not effectively connected with the United States trade or business conducted by such Bank (a “U.S. Tax Compliance Certificate”) and (y) duly completed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable;
|
(D)
|
to the extent a Foreign Bank is not the beneficial owner (for example, where the Foreign Bank is a partnership or participating Bank granting a typical participation), an Internal Revenue Service Form W-8IMY, accompanied by a Form W-8ECI, W-8BEN or W-8BEN-E, U.S. Tax Compliance Certificate substantially in the form of Exhibit G-2 or G-3 (as applicable), Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that, if the Foreign Bank is a partnership (and not a participating Bank) and one or more beneficial owners of such Foreign Bank are claiming the portfolio interest exemption, such Foreign Bank may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit G-4 on behalf of each such beneficial owner; or
|
(E)
|
any other form prescribed by Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax duly completed together with such supplementary documentation as may be prescribed by applicable Law to permit the Company to determine the withholding or deduction required to be made.
|
37
|
38
|
39
|
40
|
41
|
42
|
43
|
ARTICLE III
LETTERS OF CREDIT |
44
|
45
|
46
|
ARTICLE IV
CONDITIONS OF LENDING |
47
|
48
|
ARTICLE V
REPRESENTATIONS AND WARRANTIES |
49
|
50
|
51
|
ARTICLE VI
COVENANTS |
52
|
53
|
54
|
55
|
56
|
57
|
58
|
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES |
59
|
60
|
61
|
62
|
63
|
ARTICLE VIII
THE AGENTS |
64
|
65
|
66
|
ARTICLE IX
MISCELLANEOUS |
67
|
Southwest Airlines Co.
P.O. Box 36611, HDQ-6TR Love Field Dallas, Texas 75235 Telecopy Number: (214) 932-1322 Attention: Treasurer |
E-mail: Capital_Markets-DG@wnco.com
|
JPMorgan Chase Bank, N.A.
|
JPM Loan and Agency Services
|
500 Stanton Christiana Road
|
Ops 2, 3rd Floor
|
Newark, DE 19713-2107
|
Attention: Robert Madak
|
Telecopy Number: (302) 634-1028
|
Telephone Number: (302) 634-1392
|
E-mail: robert.madak@jpmorgan.com and 14698287788@tls.ldsprod.com
|
JPMorgan Chase Bank, N.A.
383 Madison Avenue, Floor 24 New York, NY 10179 Attention: Robert Kellas |
Telecopy Number: (212) 270-5100
Telephone Number: (212) 270-3560 |
E-mail: robert.kellas@jpmorgan.com
|
68
|
69
|
70
|
71
|
72
|
73
|
74
|
75
|
76
|
SOUTHWEST AIRLINES CO.
|
By: _____________________________________
Name:
Title:
|
[Signature page to Southwest Airlines Revolving Credit Facility Agreement]
|
$125,000,000
|
JPMORGAN CHASE BANK, N.A., as a Bank, an Issuing Bank, a Co-Administrative Agent and the Paying Agent
|
By: _____________________________________
Name:
Title:
|
[Signature page to Southwest Airlines Revolving Credit Facility Agreement]
|
$125,000,000
|
CITIBANK, N.A., as a Bank, an Issuing Bank and a Co-Administrative Agent
|
By: _____________________________________
Name:
Title:
|
[Signature page to Southwest Airlines Revolving Credit Facility Agreement]
|
$125,000,000
|
BARCLAYS BANK PLC, as a Bank, an Issuing Bank and the Syndication Agent
|
By: _____________________________________
Name:
Title:
|
[Signature page to Southwest Airlines Revolving Credit Facility Agreement]
|
$95,000,000
|
BANK OF AMERICA, N.A., as a Bank and a Documentation Agent
|
By: _____________________________________
Name:
Title:
|
[Signature page to Southwest Airlines Revolving Credit Facility Agreement]
|
$95,000,000
|
BNP PARIBAS, as a Bank and a Documentation Agent
|
By: _____________________________________
Name:
Title:
|
[Signature page to Southwest Airlines Revolving Credit Facility Agreement]
|
$95,000,000
|
GOLDMAN SACHS BANK USA, as a Bank and a Documentation Agent
|
By: _____________________________________
Name:
Title:
|
[Signature page to Southwest Airlines Revolving Credit Facility Agreement]
|
$95,000,00065,000,000
|
MORGAN STANLEY BANK, N.A., as a Bank
|
By: _____________________________________
Name:
Title:
|
MORGAN STANLEY SENIOR FUNDING, INC., as a Documentation Agent
|
By: _____________________________________
Name:
Title:
|
[Signature page to Southwest Airlines Revolving Credit Facility Agreement]
|
$95,000,000
|
U.S. BANK NATIONAL ASSOCIATION, as a Bank and a Documentation Agent
|
By: _____________________________________
Name:
Title:
|
[Signature page to Southwest Airlines Revolving Credit Facility Agreement]
|
$95,000,000125,000,000
|
WELLS FARGO BANK, N.A., as a Bank and a Documentation Agent
|
By: _____________________________________
Name:
Title:
|
[Signature page to Southwest Airlines Revolving Credit Facility Agreement]
|
$55,000,000
|
COMERICA BANK, as a Bank
|
By: _____________________________________
Name:
Title:
|
[Signature page to Southwest Airlines Revolving Credit Facility Agreement]
|
Summary Report:
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|
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758
|
ANNEX II
|
FORM OF AIRCRAFT MORTGAGE
|
|
[See attached]
|
MORTGAGE AND SECURITY AGREEMENT
|
W I T N E S S E T H:
|
GRANTING CLAUSE
|
1
|
HABENDUM CLAUSE
|
2
|
IT IS HEREBY FURTHER COVENANTED AND AGREED by and among the parties hereto as follows:
|
ARTICLE 1
DEFINITIONS
|
3
|
4
|
5
|
6
|
ARTICLE 2
EVENT OF DEFAULT AND REMEDIES |
7
|
8
|
ARTICLE 3
TERMINATION OF MORTGAGE |
9
|
ARTICLE 4
MISCELLANEOUS |
10
|
11
|
|
SOUTHWEST AIRLINES CO., as Grantor
By: ____________________________________
Name:
Title: |
|
JPMORGAN CHASE BANK, N.A., as Collateral Agent
By: ____________________________________
Name:
Title:
|
|
|
Signature Page to Mortgage and Security Agreement
|
EXHIBIT A
|
|
to Mortgage and Security Agreement
|
|
Airframes and Engines
|
|
Airframe Make
|
Airframe Model
|
U.S. Reg. Number
|
Airframe MSN
|
Engine Manufacturer
|
Engine Model
|
Engine MSN 1
|
Engine MSN 2
|
1
|
Boeing
|
737-8H4
|
N8635F
|
60083
|
CFM International
|
CFM56-7B27E/F
|
658992
|
658949
|
2
|
Boeing
|
737-8H4
|
N8634A
|
42522
|
CFM International
|
CFM56-7B27E/F
|
658985
|
658982
|
3
|
Boeing
|
737-8H4
|
N8633A
|
36905
|
CFM International
|
CFM56-7B27E/F
|
658937
|
658892
|
4
|
Boeing
|
737-8H4
|
N8632A
|
60082
|
CFM International
|
CFM56-7B27E/F
|
658893
|
658891
|
5
|
Boeing
|
737-8H4
|
N8631A
|
42385
|
CFM International
|
CFM56-7B27E/F
|
657908
|
658873
|
6
|
Boeing
|
737-8H4
|
N8623F
|
36731
|
CFM International
|
CFM56-7B27E/F
|
658491
|
658488
|
7
|
Boeing
|
737-8H4
|
N8619F
|
33939
|
CFM International
|
CFM56-7B27E/F
|
658361
|
658359
|
8
|
Boeing
|
737-8H4
|
N8620H
|
42526
|
CFM International
|
CFM56-7B27E/F
|
658371
|
658351
|
9
|
Boeing
|
737-8H4
|
N8618N
|
36915
|
CFM International
|
CFM56-7B27E/F
|
658355
|
658354
|
10
|
Boeing
|
737-8H4
|
N8617E
|
36912
|
CFM International
|
CFM56-7B27E/F
|
658280
|
658279
|
11
|
Boeing
|
737-8H4
|
N8616C
|
36914
|
CFM International
|
CFM56-7B27E/F
|
658267
|
658257
|
12
|
Boeing
|
737-8H4
|
N8615E
|
36933
|
CFM International
|
CFM56-7B27E/F
|
962655
|
658223
|
13
|
Boeing
|
737-8H4
|
N8614M
|
36908
|
CFM International
|
CFM56-7B27E/F
|
962723
|
962719
|
14
|
Boeing
|
737-8H4
|
N8613K
|
36998
|
CFM International
|
CFM56-7B27E/F
|
963686
|
962683
|
15
|
Boeing
|
737-8H4
|
N8605E
|
36891
|
CFM International
|
CFM56-7B27E/F
|
962478
|
963475
|
16
|
Boeing
|
737-8H4
|
N8329B
|
37006
|
CFM International
|
CFM56-7B27E/F
|
962467
|
962465
|
17
|
Boeing
|
737-8H4
|
N8328A
|
38818
|
CFM International
|
CFM56-7B27E/F
|
962456
|
962448
|
18
|
Boeing
|
737-8H4
|
N8327A
|
37009
|
CFM International
|
CFM56-7B27E/F
|
962411
|
962410
|
19
|
Boeing
|
737-8H4
|
N8326F
|
35969
|
CFM International
|
CFM56-7B27E/F
|
962416
|
962415
|
20
|
Boeing
|
737-8H4
|
N8325D
|
37003
|
CFM International
|
CFM56-7B27E/F
|
962402
|
962401
|
21
|
Boeing
|
737-7H4
|
N954WN
|
36669
|
CFM International
|
CFM56-7B24/3
|
804732
|
804718
|
22
|
Boeing
|
737-7H4
|
N953WN
|
36668
|
CFM International
|
CFM56-7B24/3
|
804651
|
804507
|
23
|
Boeing
|
737-7H4
|
N952WN
|
36667
|
CFM International
|
CFM56-7B24/3
|
804571
|
804568
|
24
|
Boeing
|
737-7BD
|
N7737E
|
33929
|
CFM International
|
CFM56-7B20
|
894174
|
894335
|
25
|
Boeing
|
737-7BD
|
N7736A
|
35109
|
CFM International
|
CFM56-7B20
|
894344
|
890882
|
26
|
Boeing
|
737-7H4
|
N258WN
|
32516
|
CFM International
|
CFM56-7B24
|
894248
|
894154
|
27
|
Boeing
|
737-7H4
|
N257WN
|
32515
|
CFM International
|
CFM56-7B24
|
894221
|
892867
|
28
|
Boeing
|
737-7H4
|
N256WN
|
32514
|
CFM International
|
CFM56-7B24
|
894216
|
894200
|
29
|
Boeing
|
737-7H4
|
N255WN
|
32513
|
CFM International
|
CFM56-7B24
|
894198
|
894197
|
30
|
Boeing
|
737-7H4
|
N254WN
|
32512
|
CFM International
|
CFM56-7B24
|
894173
|
894172
|
31
|
Boeing
|
737-7H4
|
N253WN
|
32511
|
CFM International
|
CFM56-7B24
|
895150
|
894101
|
32
|
Boeing
|
737-7H4
|
N252WN
|
34973
|
CFM International
|
CFM56-7B24
|
894140
|
894139
|
33
|
Boeing
|
737-7H4
|
N251WN
|
32510
|
CFM International
|
CFM56-7B24
|
894136
|
894135
|
34
|
Boeing
|
737-7H4
|
N250WN
|
34972
|
CFM International
|
CFM56-7B24
|
894122
|
892987
|
35
|
Boeing
|
737-7H4
|
N249WN
|
34951
|
CFM International
|
CFM56-7B24
|
892993
|
892992
|
36
|
Boeing
|
737-7H4
|
N247WN
|
32508
|
CFM International
|
CFM56-7B24
|
892958
|
892957
|
37
|
Boeing
|
737-7H4
|
N246LV
|
32507
|
CFM International
|
CFM56-7B24
|
892950
|
892946
|
38
|
Boeing
|
737-7H4
|
N245WN
|
32506
|
CFM International
|
CFM56-7B24
|
892943
|
892942
|
39
|
Boeing
|
737-7H4
|
N244WN
|
34864
|
CFM International
|
CFM56-7B24
|
874962
|
892930
|
40
|
Boeing
|
737-7H4
|
N239WN
|
34714
|
CFM International
|
CFM56-7B24
|
892885
|
892884
|
41
|
Boeing
|
737-7H4
|
N238WN
|
34713
|
CFM International
|
CFM56-7B24
|
892396
|
892284
|
42
|
Boeing
|
737-7H4
|
N236WN
|
34631
|
CFM International
|
CFM56-7B24
|
892838
|
892835
|
43
|
Boeing
|
737-7H4
|
N235WN
|
34630
|
CFM International
|
CFM56-7B24
|
893784
|
892813
|
44
|
Boeing
|
737-7H4
|
N234WN
|
32502
|
CFM International
|
CFM56-7B24
|
892790
|
892776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXHIBIT A
|
1
|
45
|
Boeing
|
737-7H4
|
N233LV
|
32501
|
CFM International
|
CFM56-7B24
|
893759
|
893752
|
46
|
Boeing
|
737-7BD
|
N7720F
|
33922
|
CFM International
|
CFM56-7B20
|
892655
|
892654
|
47
|
Boeing
|
737-7H4
|
N228WN
|
32496
|
CFM International
|
CFM56-7B24
|
892606
|
892605
|
48
|
Boeing
|
737-7H4
|
N222WN
|
34290
|
CFM International
|
CFM56-7B24
|
892526
|
892525
|
49
|
Boeing
|
737-7BD
|
N7715E
|
33921
|
CFM International
|
CFM56-7B20
|
893511
|
893510
|
50
|
Boeing
|
737-7H4
|
N221WN
|
34259
|
CFM International
|
CFM56-7B24
|
892516
|
892515
|
51
|
Boeing
|
737-752
|
N7835A
|
34294
|
CFM International
|
CFM56-7B22
|
892486
|
893127
|
52
|
Boeing
|
737-7H4
|
N218WN
|
32489
|
CFM International
|
CFM56-7B24
|
892439
|
892438
|
53
|
Boeing
|
737-7H4
|
N217JC
|
34232
|
CFM International
|
CFM56-7B24
|
892429
|
892428
|
54
|
Boeing
|
737-7BD
|
N7713A
|
33919
|
CFM International
|
CFM56-7B20
|
892416
|
892415
|
55
|
Boeing
|
737-7H4
|
N214WN
|
32486
|
CFM International
|
CFM56-7B24
|
892183
|
892182
|
56
|
Boeing
|
737-7H4
|
N215WN
|
32487
|
CFM International
|
CFM56-7B24
|
893199
|
893194
|
57
|
Boeing
|
737-7H4
|
N213WN
|
34217
|
CFM International
|
CFM56-7B24
|
892217
|
892212
|
58
|
Boeing
|
737-7H4
|
N212WN
|
32485
|
CFM International
|
CFM56-7B24
|
892201
|
892195
|
59
|
Boeing
|
737-7H4
|
N211WN
|
34163
|
CFM International
|
CFM56-7B24
|
892214
|
892190
|
60
|
Boeing
|
737-7H4
|
N209WN
|
32484
|
CFM International
|
CFM56-7B24
|
892188
|
892179
|
61
|
Boeing
|
737-7H4
|
N210WN
|
34162
|
CFM International
|
CFM56-7B24
|
892213
|
892189
|
62
|
Boeing
|
737-7H4
|
N208WN
|
29856
|
CFM International
|
CFM56-7B24
|
892186
|
892185
|
63
|
Boeing
|
737-7H4
|
N207WN
|
34012
|
CFM International
|
CFM56-7B24
|
892187
|
892178
|
64
|
Boeing
|
737-7H4
|
N206WN
|
34011
|
CFM International
|
CFM56-7B24
|
892176
|
892166
|
65
|
Boeing
|
737-7H4
|
N205WN
|
34010
|
CFM International
|
CFM56-7B24
|
892196
|
892193
|
66
|
Boeing
|
737-7H4
|
N203WN
|
32483
|
CFM International
|
CFM56-7B24
|
893135
|
892285
|
67
|
Boeing
|
737-7H4
|
N202WN
|
33999
|
CFM International
|
CFM56-7B24
|
892275
|
892274
|
68
|
Boeing
|
737-7H4
|
N201LV
|
29854
|
CFM International
|
CFM56-7B24
|
893278
|
893277
|
69
|
Boeing
|
737-7H4
|
N200WN
|
32482
|
CFM International
|
CFM56-7B24
|
892254
|
892253
|
70
|
Boeing
|
737-7H4
|
N499WN
|
32481
|
CFM International
|
CFM56-7B24
|
893245
|
892248
|
71
|
Boeing
|
737-7H4
|
N498WN
|
32480
|
CFM International
|
CFM56-7B24
|
893230
|
892243
|
72
|
Boeing
|
737-7H4
|
N496WN
|
32478
|
CFM International
|
CFM56-7B24
|
892242
|
892241
|
73
|
Boeing
|
737-7H4
|
N497WN
|
32479
|
CFM International
|
CFM56-7B24
|
892247
|
892244
|
(EACH OF WHICH ENGINES DESCRIBED ABOVE HAVING AT LEAST 550 RATED TAKEOFF HORSEPOWER OR THE EQUIVALENT THEREOF)
|
EXHIBIT A
2
|
ANNEX III
|
FORM OF MORTGAGED AIRCRAFT OPERATING AGREEMENT
|
|
[See attached]
|
MORTGAGED AIRCRAFT OPERATING AGREEMENT
|
W I T N E S S E T H:
|
ARTICLE I
|
DEFINITIONS
|
ARTICLE II
|
[RESERVED]
|
ARTICLE III
|
COVENANTS OF THE COMPANY
|
ARTICLE IV
|
REMEDIES
|
ARTICLE V
|
MISCELLANEOUS
|
* * *
|
|
SOUTHWEST AIRLINES CO.
By:_______________________________
Name:
Title: |
|
JPMORGAN CHASE BANK, N.A., as Collateral Agent
By:_______________________________
Name:
Title:
|
ANNEX A
|
DEFINED TERMS
|
Annex A
|
19
|
Annex A
|
20
|
Annex A
|
21
|
Annex A
|
22
|
Annex A
|
23
|
Annex A
|
24
|
ANNEX B
|
INSURANCE
|
A.
|
Liability Insurance.
|
B.
|
Hull Insurance.
|
Annex B
|
25
|
Annex B
|
26
|
Annex B
|
27
|
Annex B
|
28
|
ANNEX C
|
FOREIGN REGISTRATION
|
(ii)
|
each of the following requirements is satisfied:
|
Annex C
|
29
|
Annex C
|
30
|
SCHEDULE 1
|
|||
PERMITTED COUNTRIES
|
|||
|
Argentina
|
Luxembourg
|
|
|
Aruba
|
Malaysia
|
|
|
Australia
|
Malta
|
|
|
Austria
|
Mexico
|
|
|
Bahamas
|
Netherlands
|
|
|
Belgium
|
Netherlands Antilles
|
|
|
Bolivia
|
New Zealand
|
|
|
Brazil
|
Norway
|
|
|
Canada
|
Paraguay
|
|
|
Chile
|
People’s Republic of China
|
|
|
Czech Republic
|
Peru
|
|
|
Denmark
|
Philippines
|
|
|
Egypt
|
Poland
|
|
|
Ecuador
|
Portugal
|
|
|
Finland
|
Republic of China (Taiwan)
|
|
|
France
|
Singapore
|
|
|
Germany
|
South Africa
|
|
|
Greece
|
South Korea
|
|
|
Hungary
|
Spain
|
|
|
Iceland
|
Sweden
|
|
|
India
|
Switzerland
|
|
|
Indonesia
|
Thailand
|
|
|
Ireland
|
Trinidad and Tobago
|
|
|
Italy
|
United Kingdom
|
|
|
Japan
|
|
|
Exhibit A
|
Page 1
|
ANNEX IV
|
|
SCHEDULE II
|
|
POOL ASSETS
|
|
[See attached]
|
SCHEDULE II
|
POOL ASSETS
|
Airframes and Engines
|
|
|
|
Airframe Make
|
Airframe Model
|
U.S. Reg. Number
|
Airframe MSN
|
Engine Manufacturer
|
Engine Model
|
Engine MSN 1
|
Engine MSN 2
|
1
|
Boeing
|
737-8H4
|
N8635F
|
60083
|
CFM International
|
CFM56-7B27E/F
|
658992
|
658949
|
2
|
Boeing
|
737-8H4
|
N8634A
|
42522
|
CFM International
|
CFM56-7B27E/F
|
658985
|
658982
|
3
|
Boeing
|
737-8H4
|
N8633A
|
36905
|
CFM International
|
CFM56-7B27E/F
|
658937
|
658892
|
4
|
Boeing
|
737-8H4
|
N8632A
|
60082
|
CFM International
|
CFM56-7B27E/F
|
658893
|
658891
|
5
|
Boeing
|
737-8H4
|
N8631A
|
42385
|
CFM International
|
CFM56-7B27E/F
|
657908
|
658873
|
6
|
Boeing
|
737-8H4
|
N8623F
|
36731
|
CFM International
|
CFM56-7B27E/F
|
658491
|
658488
|
7
|
Boeing
|
737-8H4
|
N8619F
|
33939
|
CFM International
|
CFM56-7B27E/F
|
658361
|
658359
|
8
|
Boeing
|
737-8H4
|
N8620H
|
42526
|
CFM International
|
CFM56-7B27E/F
|
658371
|
658351
|
9
|
Boeing
|
737-8H4
|
N8618N
|
36915
|
CFM International
|
CFM56-7B27E/F
|
658355
|
658354
|
10
|
Boeing
|
737-8H4
|
N8617E
|
36912
|
CFM International
|
CFM56-7B27E/F
|
658280
|
658279
|
11
|
Boeing
|
737-8H4
|
N8616C
|
36914
|
CFM International
|
CFM56-7B27E/F
|
658267
|
658257
|
12
|
Boeing
|
737-8H4
|
N8615E
|
36933
|
CFM International
|
CFM56-7B27E/F
|
962655
|
658223
|
13
|
Boeing
|
737-8H4
|
N8614M
|
36908
|
CFM International
|
CFM56-7B27E/F
|
962723
|
962719
|
14
|
Boeing
|
737-8H4
|
N8613K
|
36998
|
CFM International
|
CFM56-7B27E/F
|
963686
|
962683
|
15
|
Boeing
|
737-8H4
|
N8605E
|
36891
|
CFM International
|
CFM56-7B27E/F
|
962478
|
963475
|
16
|
Boeing
|
737-8H4
|
N8329B
|
37006
|
CFM International
|
CFM56-7B27E/F
|
962467
|
962465
|
17
|
Boeing
|
737-8H4
|
N8328A
|
38818
|
CFM International
|
CFM56-7B27E/F
|
962456
|
962448
|
18
|
Boeing
|
737-8H4
|
N8327A
|
37009
|
CFM International
|
CFM56-7B27E/F
|
962411
|
962410
|
19
|
Boeing
|
737-8H4
|
N8326F
|
35969
|
CFM International
|
CFM56-7B27E/F
|
962416
|
962415
|
20
|
Boeing
|
737-8H4
|
N8325D
|
37003
|
CFM International
|
CFM56-7B27E/F
|
962402
|
962401
|
21
|
Boeing
|
737-7H4
|
N954WN
|
36669
|
CFM International
|
CFM56-7B24/3
|
804732
|
804718
|
22
|
Boeing
|
737-7H4
|
N953WN
|
36668
|
CFM International
|
CFM56-7B24/3
|
804651
|
804507
|
23
|
Boeing
|
737-7H4
|
N952WN
|
36667
|
CFM International
|
CFM56-7B24/3
|
804571
|
804568
|
24
|
Boeing
|
737-7BD
|
N7737E
|
33929
|
CFM International
|
CFM56-7B20
|
894174
|
894335
|
25
|
Boeing
|
737-7BD
|
N7736A
|
35109
|
CFM International
|
CFM56-7B20
|
894344
|
890882
|
26
|
Boeing
|
737-7H4
|
N258WN
|
32516
|
CFM International
|
CFM56-7B24
|
894248
|
894154
|
27
|
Boeing
|
737-7H4
|
N257WN
|
32515
|
CFM International
|
CFM56-7B24
|
894221
|
892867
|
28
|
Boeing
|
737-7H4
|
N256WN
|
32514
|
CFM International
|
CFM56-7B24
|
894216
|
894200
|
29
|
Boeing
|
737-7H4
|
N255WN
|
32513
|
CFM International
|
CFM56-7B24
|
894198
|
894197
|
30
|
Boeing
|
737-7H4
|
N254WN
|
32512
|
CFM International
|
CFM56-7B24
|
894173
|
894172
|
31
|
Boeing
|
737-7H4
|
N253WN
|
32511
|
CFM International
|
CFM56-7B24
|
895150
|
894101
|
32
|
Boeing
|
737-7H4
|
N252WN
|
34973
|
CFM International
|
CFM56-7B24
|
894140
|
894139
|
33
|
Boeing
|
737-7H4
|
N251WN
|
32510
|
CFM International
|
CFM56-7B24
|
894136
|
894135
|
34
|
Boeing
|
737-7H4
|
N250WN
|
34972
|
CFM International
|
CFM56-7B24
|
894122
|
892987
|
35
|
Boeing
|
737-7H4
|
N249WN
|
34951
|
CFM International
|
CFM56-7B24
|
892993
|
892992
|
36
|
Boeing
|
737-7H4
|
N247WN
|
32508
|
CFM International
|
CFM56-7B24
|
892958
|
892957
|
37
|
Boeing
|
737-7H4
|
N246LV
|
32507
|
CFM International
|
CFM56-7B24
|
892950
|
892946
|
38
|
Boeing
|
737-7H4
|
N245WN
|
32506
|
CFM International
|
CFM56-7B24
|
892943
|
892942
|
39
|
Boeing
|
737-7H4
|
N244WN
|
34864
|
CFM International
|
CFM56-7B24
|
874962
|
892930
|
40
|
Boeing
|
737-7H4
|
N239WN
|
34714
|
CFM International
|
CFM56-7B24
|
892885
|
892884
|
41
|
Boeing
|
737-7H4
|
N238WN
|
34713
|
CFM International
|
CFM56-7B24
|
892396
|
892284
|
42
|
Boeing
|
737-7H4
|
N236WN
|
34631
|
CFM International
|
CFM56-7B24
|
892838
|
892835
|
|
|
|
|
|
|
|
|
|
1
|
|
43
|
Boeing
|
737-7H4
|
N235WN
|
34630
|
CFM International
|
CFM56-7B24
|
893784
|
892813
|
44
|
Boeing
|
737-7H4
|
N234WN
|
32502
|
CFM International
|
CFM56-7B24
|
892790
|
892776
|
45
|
Boeing
|
737-7H4
|
N233LV
|
32501
|
CFM International
|
CFM56-7B24
|
893759
|
893752
|
46
|
Boeing
|
737-7BD
|
N7720F
|
33922
|
CFM International
|
CFM56-7B20
|
892655
|
892654
|
47
|
Boeing
|
737-7H4
|
N228WN
|
32496
|
CFM International
|
CFM56-7B24
|
892606
|
892605
|
48
|
Boeing
|
737-7H4
|
N222WN
|
34290
|
CFM International
|
CFM56-7B24
|
892526
|
892525
|
49
|
Boeing
|
737-7BD
|
N7715E
|
33921
|
CFM International
|
CFM56-7B20
|
893511
|
893510
|
50
|
Boeing
|
737-7H4
|
N221WN
|
34259
|
CFM International
|
CFM56-7B24
|
892516
|
892515
|
51
|
Boeing
|
737-752
|
N7835A
|
34294
|
CFM International
|
CFM56-7B22
|
892486
|
893127
|
52
|
Boeing
|
737-7H4
|
N218WN
|
32489
|
CFM International
|
CFM56-7B24
|
892439
|
892438
|
53
|
Boeing
|
737-7H4
|
N217JC
|
34232
|
CFM International
|
CFM56-7B24
|
892429
|
892428
|
54
|
Boeing
|
737-7BD
|
N7713A
|
33919
|
CFM International
|
CFM56-7B20
|
892416
|
892415
|
55
|
Boeing
|
737-7H4
|
N214WN
|
32486
|
CFM International
|
CFM56-7B24
|
892183
|
892182
|
56
|
Boeing
|
737-7H4
|
N215WN
|
32487
|
CFM International
|
CFM56-7B24
|
893199
|
893194
|
57
|
Boeing
|
737-7H4
|
N213WN
|
34217
|
CFM International
|
CFM56-7B24
|
892217
|
892212
|
58
|
Boeing
|
737-7H4
|
N212WN
|
32485
|
CFM International
|
CFM56-7B24
|
892201
|
892195
|
59
|
Boeing
|
737-7H4
|
N211WN
|
34163
|
CFM International
|
CFM56-7B24
|
892214
|
892190
|
60
|
Boeing
|
737-7H4
|
N209WN
|
32484
|
CFM International
|
CFM56-7B24
|
892188
|
892179
|
61
|
Boeing
|
737-7H4
|
N210WN
|
34162
|
CFM International
|
CFM56-7B24
|
892213
|
892189
|
62
|
Boeing
|
737-7H4
|
N208WN
|
29856
|
CFM International
|
CFM56-7B24
|
892186
|
892185
|
63
|
Boeing
|
737-7H4
|
N207WN
|
34012
|
CFM International
|
CFM56-7B24
|
892187
|
892178
|
64
|
Boeing
|
737-7H4
|
N206WN
|
34011
|
CFM International
|
CFM56-7B24
|
892176
|
892166
|
65
|
Boeing
|
737-7H4
|
N205WN
|
34010
|
CFM International
|
CFM56-7B24
|
892196
|
892193
|
66
|
Boeing
|
737-7H4
|
N203WN
|
32483
|
CFM International
|
CFM56-7B24
|
893135
|
892285
|
67
|
Boeing
|
737-7H4
|
N202WN
|
33999
|
CFM International
|
CFM56-7B24
|
892275
|
892274
|
68
|
Boeing
|
737-7H4
|
N201LV
|
29854
|
CFM International
|
CFM56-7B24
|
893278
|
893277
|
69
|
Boeing
|
737-7H4
|
N200WN
|
32482
|
CFM International
|
CFM56-7B24
|
892254
|
892253
|
70
|
Boeing
|
737-7H4
|
N499WN
|
32481
|
CFM International
|
CFM56-7B24
|
893245
|
892248
|
71
|
Boeing
|
737-7H4
|
N498WN
|
32480
|
CFM International
|
CFM56-7B24
|
893230
|
892243
|
72
|
Boeing
|
737-7H4
|
N496WN
|
32478
|
CFM International
|
CFM56-7B24
|
892242
|
892241
|
73
|
Boeing
|
737-7H4
|
N497WN
|
32479
|
CFM International
|
CFM56-7B24
|
892247
|
892244
|
(EACH OF WHICH ENGINES DESCRIBED ABOVE HAVING AT LEAST 550 RATED TAKEOFF HORSEPOWER OR THE EQUIVALENT THEREOF)
|
2
|
PAYROLL SUPPORT PROGRAM AGREEMENT
|
Recipient: Southwest Airlines Co.
2702 Love Field Drive
Dallas, TX 75235
|
PSP Participant Number: PSA-2004031159 Employer Identification Number: 74-1563240 DUNS Number:
|
|
|
Amount of Initial Payroll Support Payment: $1,629,590,860
|
|
The Department of the Treasury (Treasury) hereby provides Payroll Support (as defined herein) under Division A, Title IV, Subtitle B of the Coronavirus Aid, Relief, and Economic Security Act. The Signatory Entity named above, on behalf of itself and its Affiliates (as defined herein), agrees to comply with this Agreement and applicable Federal law as a condition of receiving Payroll Support. The Signatory Entity and its undersigned authorized representatives acknowledge that a materially false, fictitious, or fraudulent statement (or concealment or omission of a material fact) in connection with this Agreement may result in administrative remedies as well as civil and/or criminal penalties.
|
|
The undersigned hereby agree to the attached Payroll Support Program Agreement.
/s/ Steven T. Mnuchin |
|
Department of the Treasury
Name: Steven Mnuchin
Title: Secretary
Date: April 20, 2020 |
Southwest Airlines Co.
First Authorized Representative:
Title:
Date:
|
Southwest Airlines Co.
Second Authorized Representative:
Title:
Date:
|
PAYROLL SUPPORT PROGRAM AGREEMENT
|
Recipient: Southwest Airlines Co.
2702 Love Field Drive
Dallas, TX 75235
|
PSP Participant Number: PSA-2004031159 Employer Identification Number: 74-1563240 DUNS Number:
|
|
|
Amount of Initial Payroll Support Payment: $1,629,590,860
|
|
The Department of the Treasury (Treasury) hereby provides Payroll Support (as defined herein) under Division A, Title IV, Subtitle B of the Coronavirus Aid, Relief, and Economic Security Act. The Signatory Entity named above, on behalf of itself and its Affiliates (as defined herein), agrees to comply with this Agreement and applicable Federal law as a condition of receiving Payroll Support. The Signatory Entity and its undersigned authorized representatives acknowledge that a materially false, fictitious, or fraudulent statement (or concealment or omission of a material fact) in connection with this Agreement may result in administrative remedies as well as civil and/or criminal penalties.
|
|
The undersigned hereby agree to the attached Payroll Support Program Agreement.
/s/ Tammy Romo |
|
Department of the Treasury
Name:
Title:
Date: |
Southwest Airlines Co.
First Authorized Representative: Tammy Romo
Title: Executive Vice President and Chief Financial Officer
Date: April 20, 2020
/s/ Chris Monroe |
Southwest Airlines Co.
Second Authorized Representative: David Christopher Monroe
Title:Senior Vice President Finance and Treasurer
Date: April 20, 2020
|
PAYROLL SUPPORT PROGRAM AGREEMENT
INTRODUCTION |
DEFINITIONS
|
PAYROLL SUPPORT PAYMENTS
|
1.
|
Upon the execution of this Agreement by Treasury and the Recipient, the Secretary shall approve the Recipient’s application for Payroll Support.
|
2.
|
The Recipient may receive Payroll Support in multiple payments up to the Maximum Awardable Amount, and the amounts (individually and in the aggregate) and timing of such payments will be determined by the Secretary in his sole discretion. The Secretary may, in his sole discretion, increase or reduce the Maximum Awardable Amount (a) consistent with section 4113(a) of the CARES Act and (b) on a pro rata basis in order to address any shortfall in available funds, pursuant to section 4113(c) of the CARES Act.
|
3.
|
The Secretary may determine in his sole discretion that any Payroll Support shall be
|
TERMS AND CONDITIONS
|
4.
|
The Recipient shall use the Payroll Support exclusively for the continuation of payment of Wages, Salaries, and Benefits to the Employees of the Recipient.
|
a.
|
Furloughs and Layoffs. The Recipient shall not conduct an Involuntary Termination or Furlough of any Employee between the date of this Agreement and September 30, 2020.
|
b.
|
Employee Salary, Wages, and Benefits
|
i.
|
Salary and Wages. Except in the case of a Permitted Termination or Furlough, the Recipient shall not, between the date of this Agreement and September 30, 2020, reduce, without the Employee’s consent, (A) the pay rate of any Employee earning a Salary, or (B) the pay rate of any Employee earning Wages.
|
ii.
|
Benefits. Except in the case of a Permitted Termination or Furlough, the Recipient shall not, between the date of this Agreement and September 30, 2020, reduce, without the Employee’s consent, the Benefits of any Employee; provided, however, that for purposes of this paragraph, personnel expenses associated with the performance of work duties, including those described in line 10 of Financial Reporting Schedule P-6, Form 41, as published by the Department of Transportation, may be reduced to the extent the associated work duties are not performed.
|
5.
|
Through September 30, 2021, neither the Recipient nor any Affiliate shall, in any transaction, purchase an equity security of the Recipient or of any direct or indirect parent company of the Recipient that, in either case, is listed on a national securities exchange.
|
6.
|
Through September 30, 2021, the Recipient shall not pay dividends, or make any other capital distributions, with respect to the common stock (or equivalent equity interest) of the Recipient.
|
7.
|
Beginning March 24, 2020, and ending March 24, 2022, the Recipient and its Affiliates shall not pay any of the Recipient’s Corporate Officers or Employees whose Total Compensation exceeded $425,000 in calendar year 2019 (other than an Employee whose compensation is determined through an existing collective bargaining agreement entered into before March 27, 2020):
|
a.
|
Total Compensation which exceeds, during any 12 consecutive months of such two-year period, the Total Compensation the Corporate Officer or Employee received in calendar year 2019; or
|
b.
|
Severance Pay or Other Benefits in connection with a termination of employment with the Recipient which exceed twice the maximum Total Compensation received by such Corporate Officer or Employee in calendar year 2019.
|
a.
|
$3,000,000; and
|
b.
|
50 percent of the excess over $3,000,000 of the Total Compensation received by such Corporate Officer or Employee in calendar year 2019.
|
a.
|
the amount of Payroll Support funds expended during such quarter;
|
b.
|
the Recipient’s financial statements (audited by an independent certified public accountant, in the case of annual financial statements); and
|
c.
|
a copy of the Recipient’s IRS Form 941 filed with respect to such quarter; and
|
d.
|
a detailed summary describing, with respect to the Recipient, (a) any changes in Employee headcount during such quarter and the reasons therefor, including any Involuntary Termination or Furlough, (b) any changes in the amounts spent by the Recipient on Employee Wages, Salary, and Benefits during such quarter, and (c) any changes in Total Compensation for, and any Severance Pay or Other Benefits in connection with the termination of, Corporate Officers and Employees subject to
|
a.
|
Promptly provide to Treasury and the Treasury Inspector General a copy of any Department of Transportation Inspector General report, audit report, or report of any other oversight body, that is received by the Recipient relating to this Agreement.
|
b.
|
Immediately notify Treasury and the Treasury Inspector General of any indication of fraud, waste, abuse, or potentially criminal activity pertaining to the Payroll Support.
|
c.
|
Promptly provide Treasury with any information Treasury may request relating to compliance by the Recipient and its Affiliates with this Agreement.
|
a.
|
Permit the preparation of accurate, current, and complete quarterly reports as required
under this Agreement. |
b.
|
Permit the tracing of funds to a level of expenditures adequate to establish that such funds have been used as required under this Agreement.
|
24.
|
Treasury may make a final determination regarding noncompliance without regard to paragraph 22 if Treasury determines, in its sole discretion, that such determination is necessary to protect a material interest of the Federal Government. In such event, Treasury shall notify the Recipient of the remedy that Treasury, in its sole discretion, shall impose, after which the Recipient may contest Treasury’s final determination or propose an alternative remedy in writing to Treasury. Following the receipt of such a submission by the Recipient, Treasury may, in its sole discretion, maintain or alter its final determination.
|
25.
|
Any final determination of noncompliance and any final determination to take any remedial action described herein shall not be subject to further review. To the extent permitted by law, the Recipient waives any right to judicial review of any such determinations and further agrees not to assert in any court any claim arising from or relating to any such determination or remedial action.
|
26.
|
Instead of, or in addition to, the remedies listed above, Treasury may refer any noncompliance or any allegations of fraud, waste, or abuse to the Treasury Inspector General.
|
27.
|
Treasury, in its sole discretion, may grant any request by the Recipient for termination of this Agreement, which such request shall be in writing and shall include the reasons for such termination, the proposed effective date of the termination, and the amount of any unused Payroll Support funds the Recipient requests to return to Treasury. Treasury may, in its sole discretion, determine the extent to which the requirements under this Agreement may cease to apply following any such termination.
|
28.
|
If Treasury determines that any remaining portion of the Payroll Support will not accomplish the purpose of this Agreement, Treasury may terminate this Agreement in its entirety to the extent permitted by law.
|
29.
|
Any Payroll Support in excess of the amount which Treasury determines, at any time, the Recipient is authorized to receive or retain under the terms of this Agreement constitutes a debt to the Federal Government.
|
30.
|
Any debts determined to be owed by the Recipient to the Federal Government shall be paid promptly by the Recipient. A debt is delinquent if it has not been paid by the date specified in Treasury’s initial written demand for payment, unless other satisfactory arrangements have been made. Interest, penalties, and administrative charges shall be charged on delinquent debts in accordance with 31 U.S.C. § 3717, 31 CFR 901.9, and paragraphs 31 and 32. Treasury will refer any debt that is more than 180 days delinquent to Treasury’s Bureau of the Fiscal Service for debt collection services.
|
a.
|
A Member of Congress or a representative of a committee of Congress;
|
b.
|
An Inspector General;
|
c.
|
The Government Accountability Office;
|
d.
|
A Treasury employee responsible for contract or grant oversight or management;
|
e.
|
An authorized official of the Department of Justice or other law enforcement agency;
|
f.
|
A court or grand jury; or
|
g.
|
A management official or other Employee of the Recipient who has the responsibility to investigate, discover, or address misconduct.
|
a.
|
Title VI of the Civil Rights Act of 1964 (42 U.S.C. § 2000d et seq.), including Treasury’s implementing regulations at 31 CFR Part 22;
|
b.
|
Section 504 of the Rehabilitation Act of 1973, as amended (29 U.S.C. § 794);
|
c.
|
The Age Discrimination Act of 1975, as amended (42 U.S.C. §§ 6101–6107), including Treasury’s implementing regulations at 31 CFR Part 23 and the general age discrimination regulations at 45 CFR Part 90; and
|
i.
|
80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance, as defined at 2 CFR 170.320 (and subawards); and
|
ii.
|
$25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance, as defined at 2 CFR 170.320 (and subawards); and
|
c.
|
the public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986. To determine if the public has access to the compensation information, the Recipient shall refer to U.S. Securities and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.
|
40.
|
The Recipient agrees that, from time to time, it will, at its own expense, promptly upon reasonable request by Treasury, execute and deliver, or cause to be executed and delivered, or use its commercially reasonable efforts to procure, all instruments, documents and information, all in form and substance reasonably satisfactory to Treasury, to enable Treasury to ensure compliance with, or effect the purposes of, this Agreement, which may include, among other documents or information, (a) certain audited financial statements of the Recipient, (b) documentation regarding the Recipient’s revenues derived from its business as a passenger or cargo air carrier or regarding the passenger air carriers for which the Recipient provides services as a contractor (as the case may be), and (c) the Recipient’s most recent quarterly Federal tax returns. The Recipient agrees to provide Treasury with such documents or information promptly.
|
41.
|
If the total value of the Recipient’s currently active grants, cooperative agreements, and procurement contracts from all Federal awarding agencies exceeds $10,000,000 for any period before termination of this Agreement, then the Recipient shall make such reports as required by 2 CFR part 200, Appendix XII.
|
42.
|
The Recipient acknowledges that neither Treasury, nor any other actor, department, or agency of the Federal Government, shall condition the provision of Payroll Support on the Recipient’s implementation of measures to enter into negotiations with the certified bargaining representative of a craft or class of employees of the Recipient under the Railway Labor Act (45 U.S.C. 151 et seq.) or the National Labor Relations Act (29 U.S.C. 151 et seq.), regarding pay or other terms and conditions of employment.
|
43.
|
Notwithstanding any other provision of this Agreement, the Recipient has no right to, and shall not, transfer, pledge, mortgage, encumber, or otherwise assign this Agreement or any Payroll Support provided under this Agreement, or any interest therein, or any claim, account receivable, or funds arising thereunder or accounts holding Payroll Support, to any party, bank, trust company, or other Person without the express written approval of Treasury.
|
44.
|
The Signatory Entity will cause its Affiliates to comply with all of their obligations under or relating to this Agreement.
|
45.
|
Unless otherwise provided in guidance issued by Treasury or the Internal Revenue Service, the form of any Taxpayer Protection Instrument held by Treasury and any subsequent holder will be treated as such form for purposes of the Internal Revenue Code of 1986 (for example, a Taxpayer Protection Instrument in the form of a note will be treated as indebtedness for purposes of the Internal Revenue Code of 1986).
|
46.
|
This Agreement may not be amended or modified except pursuant to an agreement in writing entered into by the Recipient and Treasury, except that Treasury may unilaterally amend this Agreement if required in order to comply with applicable Federal law or regulation.
|
47.
|
Subject to applicable law, Treasury may, in its sole discretion, waive any term or condition under this Agreement imposing a requirement on the Recipient or any Affiliate.
|
48.
|
This Agreement shall bind and inure to the benefit of the parties and their respective heirs, executors, administrators, successors, and assigns.
|
49.
|
The Recipient represents and warrants to Treasury that this Agreement, and the issuance and delivery to Treasury of the Taxpayer Protection Instruments, if applicable, have been duly authorized by all requisite corporate and, if required, stockholder action, and will not result in the violation by the Recipient of any provision of law, statute, or regulation, or of the articles of incorporation or other constitutive documents or bylaws of the Recipient, or breach or constitute an event of default under any material contract to which the Recipient is a party.
|
50.
|
The Recipient represents and warrants to Treasury that this Agreement has been duly executed and delivered by the Recipient and constitutes a legal, valid, and binding obligation of the Recipient enforceable against the Recipient in accordance with its terms.
|
51.
|
This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which together shall constitute a single contract.
|
52.
|
The words “execution,” “signed,” “signature,” and words of like import in any assignment shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act. Notwithstanding anything herein to the contrary, delivery of an executed counterpart of a signature page of this Agreement by electronic means, or confirmation of the execution of this Agreement on behalf of a party by an email from an authorized signatory of such party, shall be effective as delivery of a manually executed counterpart of this Agreement.
|
53.
|
The captions and paragraph headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.
|
54.
|
This Agreement is governed by and shall be construed in accordance with Federal law. Insofar as there may be no applicable Federal law, this Agreement shall be construed in accordance with the laws of the State of New York, without regard to any rule of conflicts of law (other than section 5-1401 of the New York General Obligations Law) that would result in the application of the substantive law of any jurisdiction other than the State of New York.
|
55.
|
Nothing in this Agreement shall require any unlawful action or inaction by either party.
|
56.
|
The requirement pertaining to trafficking in persons at 2 CFR 175.15(b) is incorporated herein and made applicable to the Recipient.
|
57.
|
This Agreement, together with the attachments hereto, including the Payroll Support Certification and any attached terms regarding Taxpayer Protection Instruments, constitute the entire agreement of the parties relating to the subject matter hereof and supersede any previous agreements and understandings, oral or written, relating to the subject matter hereof.
|
58.
|
No failure by either party to insist upon the strict performance of any provision of this Agreement or to exercise any right or remedy hereunder, and no acceptance of full or partial Payroll Support (if applicable) or other performance by either party during the continuance of any such breach, shall constitute a waiver of any such breach of such provision.
|
ATTACHMENT
|
PAYROLL SUPPORT PROGRAM
|
CERTIFICATION OF CORPORATE OFFICER OF RECIPIENT
|
/s/ Tammy Romo
|
/s/ Chris Monroe
|
Corporate Officer of Signatory Entity
|
Second Authorized Representative
|
Name: TammyRomo
|
Name: David Christopher Monroe
|
Title: Executive Vice President and Chief Financial Officer
|
Title: Senior Vice President Finance and Treasurer
|
Date: April 20, 2020
|
Date: April 20, 2020
|
Execution Version
|
|
TABLE OF CONTENTS
Article I
Closing |
Page
|
1.1
|
Issuance
|
1
|
1.2
|
Initial Closing; Warrant Closing Date.
|
1
|
1.3
|
Interpretation
|
2
|
|
Article II
|
|
|
Representations and Warranties
|
|
2.1
|
Representations and Warranties of the Company
|
3
|
|
Article III
|
|
|
Covenants
|
|
3.1
|
Commercially Reasonable Efforts
|
6
|
3.2
|
Expenses
|
7
|
3.3
|
Sufficiency of Authorized Common Stock; Exchange Listing
|
8
|
|
Article IV
|
|
|
Additional Agreements
|
|
4.1
|
Investment
|
8
|
4.2
|
Legends
|
8
|
4.3
|
Certain Transactions
|
9
|
4.4
|
Transfer of Warrants and Warrant Shares
|
9
|
4.5
|
Registration Rights
|
9
|
4.6
|
Voting of Warrant Shares
|
21
|
|
Article V
|
|
|
Miscellaneous
|
|
5.1
|
Survival of Representations and Warranties
|
21
|
5.2
|
Amendment
|
21
|
5.3
|
Waiver of Conditions
|
21
|
5.4
|
Governing Law: Submission to Jurisdiction, Etc.
|
21
|
5.5
|
Notices
|
21
|
5.6
|
Definitions
|
22
|
5.7
|
Assignment
|
22
|
5.8
|
Severability
|
23
|
5.9
|
No Third Party Beneficiaries
|
23
|
i
|
LIST OF ANNEXES
|
|
ANNEX A:
|
FORM OF OPINION
|
ANNEX B:
|
FORM OF WARRANT
|
SCHEDULE 1:
|
WARRANT SHARES FORMULA
|
SCHEDULE 2:
|
CAPITALIZATION
|
SCHEDULE 3:
|
REQUIRED STOCKHOLDER APPROVALS
|
ii
|
INDEX OF DEFINED TERMS
|
Term
|
|
Location of Definition
|
Affiliate
|
|
Annex B
|
Agreement
|
|
Recitals
|
Appraisal Procedure
|
|
Annex B
|
Board of Directors
|
|
2.1(i)
|
Business Combination
|
|
Annex B
|
Business Day
|
|
Annex B
|
Capitalization Date
|
|
2.1(b)
|
Closing
|
|
1.2(a)
|
Common Stock
|
|
Annex B
|
Company
|
|
Recitals
|
Company Reports
|
|
2.1(j)(i)
|
Exchange Act
|
|
Annex B
|
Governmental Authority
|
|
5.6(a)
|
Holder
|
|
4.5(k)(i)
|
Indemnitee
|
|
4.5(g)(i)
|
Initial Closing
|
|
1.2(a)
|
Lien
|
|
5.6(c)
|
Material Adverse Effect
|
|
5.6(d)
|
Organizational Documents
|
|
5.6(e)
|
Pending Underwritten Offering
|
|
4.5(l)
|
Piggyback Registration
|
|
4.5(a)(iv)
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Promissory Note
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Recitals
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register; registered; registration
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4.5(k)(ii)
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Registrable Securities
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4.5(k)(iii)
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Registration Commencement Date
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4.5(a)(i)
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Registration Expenses
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4.5(k)(iv)
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Rule 144; Rule 144A; Rule 159A; Rule 405; Rule 415
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4.5(k)(v)
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SEC
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2.1(c)
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Securities Act
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Annex B
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Selling Expenses
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4.5(k)(vi)
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Shelf Registration Statement
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4.5(a)(ii)
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Special Registration
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4.5(i)
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iii
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Stockholder Proposals
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3.1(b)
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Subsidiary
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5.6(f)
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Transfer
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4.4
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Treasury
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Recitals
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Warrant Closing Date
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1.2(a)
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Warrants
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Recitals
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Warrant Shares
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Annex B
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iv
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Article I
Closing |
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2
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Article II
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Representations and Warranties
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3
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4
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5
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6
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Article III
Covenants |
7
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8
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9
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Article IV
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Additional Agreements
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10
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11
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12
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13
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14
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15
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16
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17
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18
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19
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20
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21
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22
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23
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Article V
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Miscellaneous
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24
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If to the Company:
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25
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Southwest Airlines Co.
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P.O. Box 36611, HDQ-6TR
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Love Field
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Dallas, Texas 75235
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Telecopy Number: 214-932-1322
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Attention: Treasurer
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Email: Capital_Markets-DG@wnco.com
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Southwest Airlines Co.
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Legal Department - HDQ-4GC
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2702 Love Field Drive
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Dallas, TX 75235
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United States Department of the Treasury
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1500 Pennsylvania Avenue, NW, Room 2312
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Washington, D.C. 20220
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Attention: Assistant General Counsel (Banking and Finance)
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Telephone No.: 202-622-0283
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Email: eric.froman@treasury.gov
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26
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* * *
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[Signature page follows]
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27
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THE UNITED STATES DEPARTMENT OF THE TREASURY
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By: /s/ Steven T. Mcuchin
Name: Steven Mnuchin Title: Secretary |
SOUTHWEST AIRLINES CO.
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By: _______________________________________
Name: Title: |
|
THE UNITED STATES DEPARTMENT OF THE TREASURY
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By: _______________________________________
Name: Title: |
SOUTHWEST AIRLINES CO.
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By: /s/ Tammy Romo
Name: Tammy Romo Title: Executive Vice President and Chief Financial Officer |
|
ANNEX A
|
FORM OF OPINION
|
|
|
Execution Version
|
FORM OF WARRANT TO PURCHASE COMMON STOCK
|
WARRANT
to purchase |
1,258,232
|
Shares of Common Stock
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of
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Southwest Airlines Co.
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Issue Date: April 20, 2020
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2
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3
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4
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5
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6
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7
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8
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9
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10
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11
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12
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13
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14
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[Remainder of page intentionally left blank]
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15
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Proceeds to be delivered: $
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Name of Bank:
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City/ State of Bank:
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ABA Number of Bank
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SWIFT #
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Name of Account:
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Account Number at Bank:
|
|
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COMPANY: Southwest Airlines Co.
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By: _________________________
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Name:
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Title:
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Attest:
|
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By: _________________________
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Name:
|
Title:
|
[Signature Page to Warrant]
|
|
SCHEDULE A
|
|
|
SCHEDULE 1
|
WARRANT SHARES FORMULA
|
(i)
|
On the Closing Date, the quotient of (x) the product of the principal amount of the Promissory Note multiplied by 0.1 divided by (y) the Exercise Price (as defined in Annex B); and
|
(ii)
|
On each subsequent Warrant Closing Date, the quotient of (x) the product of the amount by which the principal amount of the Promissory Note is increased on such Warrant Closing Date multiplied by 0.1 divided by (y) the Exercise Price.
|
|
|
Shares Authorized
|
2,000,000,000
|
|
|
Issued Shares
|
807,611,634
|
Treasury Shares
|
(298,842,909)
|
Shares
Outstanding
|
508,768,725
|
|
|
|
|
Execution Version
|
PROMISSORY NOTE
|
1
|
Execution Version
|
2
|
Execution Version
|
3
|
Execution Version
|
4
|
5
|
Execution Version
|
(d)
|
Payments. All amounts due under this Section shall be payable not later than five (5) days after demand therefor.
|
6
|
Execution Version
|
SOUTHWEST AIRLINES CO.
|
as Issuer
|
|
|
By /s/ Tammy Romo
|
Name: Tammy Romo
|
Title: Executive Vice President and
|
Chief Financial Officer
|
Date: April 20, 2020
|
Execution Version
|
ANNEX A
DEFINITIONS |
Annex A-1
|
Execution Version
|
Annex A-2
|
Execution Version
|
Annex A-3
|
Execution Version
|
Annex A-4
|
Execution Version
|
Annex A-5
|
Execution Version
|
ANNEX B
GUARANTEE |
Annex B-1
|
Execution Version
|
Annex B-2
|
Execution Version
|
Annex B-3
|
SCHEDULE I
|
Date
|
Current Outstanding Principal Amount
|
Increase or Decrease in Outstanding Principal Amount
|
Resulting Outstanding Principal Amount
|
Notation Made By
|
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Schedule I
|
|
By:
|
/s/ Gary C. Kelly
|
|
|
Gary C. Kelly
|
|
|
Chief Executive Officer
|
|
By:
|
/s/ Tammy Romo
|
|
|
Tammy Romo
|
|
|
Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
By:
|
/s/ Gary C. Kelly
|
|
|
Gary C. Kelly
|
|
|
Chief Executive Officer
|
|
By:
|
/s/ Tammy Romo
|
|
|
Tammy Romo
|
|
|
Chief Financial Officer
|