UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(MarkOne)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
ForthefiscalyearendedDecember31,2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Forthetransitionperiodfrom________to________
CommissionFileNo.1-7259

SOUTHWEST AIRLINES CO.
(Exactnameofregistrantasspecifiedinitscharter)
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)
Registrant'stelephonenumber,includingareacode:(214) 792-4000
Securities registered pursuant to Section 12(b) of the Act:
Titleofeachclass TradingSymbol Nameofeachexchangeonwhichregistered
CommonStock($1.00parvalue) LUV NewYorkStockExchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.YesxNoo
IndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.YesoNox
Indicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding12months(orfor
suchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YesxNoo
IndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyeveryInteractiveDataFilerequiredtobesubmittedpursuanttoRule405ofRegulationS-Tduringthepreceding12
months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitsuchfiles).YesxNoo
Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,asmallerreportingcompany,oranemerginggrowthcompany.Seethe
definitionsof"largeacceleratedfiler,""acceleratedfiler,""smallerreportingcompany,"and"emerginggrowthcompany"inRule12b-2oftheExchangeAct.
Largeacceleratedfiler
x
Acceleratedfiler ☐
Non-acceleratedfiler ☐ Smallerreportingcompany ☐
Emerginggrowthcompany ☐
Ifanemerginggrowthcompany,indicatebycheckmarkifthe registrant has elected nottousetheextendedtransitionperiodforcomplying with any neworrevisedfinancialaccounting
standardsprovidedpursuanttoSection13(a)oftheExchangeAct.¨
Indicatebycheckmarkwhethertheregistranthasfiledareportonandattestationtoitsmanagement'sassessmentoftheeffectivenessofitsinternalcontroloverfinancialreportingunder
Section404(b)oftheSarbanes-OxleyAct(15U.S.C.7262(b))bytheregisteredpublicaccountingfirmthatpreparedorissueditsauditreport.x
Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheAct).Yes☐☐Nox
Theaggregatemarketvalueofthecommonstockheldbynon-affiliatesoftheregistrantwasapproximately$31,305,364,914computedbyreferencetotheclosingsalepriceofthecommon
stockontheNewYorkStockExchangeonJune30,2021,thelasttradingdayoftheregistrant’smostrecentlycompletedsecondfiscalquarter.
NumberofsharesofcommonstockoutstandingasofthecloseofbusinessonFebruary2,2022:592,341,878shares
DOCUMENTS INCORPORATED BY REFERENCE
PortionsoftheDefinitiveProxyStatementfortheCompany’sAnnualMeetingofShareholderstobeheldMay18,2022,areincorporatedintoPartIIIofthisAnnualReportonForm10-K.
TABLE OF CONTENTS
PART I
Item1. Business 3
Item1A. RiskFactors 28
Item1B. UnresolvedStaffComments 42
Item2. Properties 43
Item3. LegalProceedings 44
Item4. MineSafetyDisclosures 46
PART II
Item5. MarketforRegistrant’sCommonEquity,RelatedStockholderMatters,andIssuerPurchasesofEquitySecurities 49
Item7. Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations 52
LiquidityandCapitalResources 69
CriticalAccountingPoliciesandEstimates 72
Item7A. QuantitativeandQualitativeDisclosuresAboutMarketRisk 76
Item8. FinancialStatementsandSupplementaryData 80
SouthwestAirlinesCo.ConsolidatedBalanceSheet 80
SouthwestAirlinesCo.ConsolidatedStatementofIncome(Loss) 81
SouthwestAirlinesCo.ConsolidatedStatementofComprehensiveIncome(Loss) 82
SouthwestAirlinesCo.ConsolidatedStatementofStockholders’Equity 83
SouthwestAirlinesCo.ConsolidatedStatementofCashFlows 84
NotestoConsolidatedFinancialStatements 85
Item9. ChangesinandDisagreementsWithAccountantsonAccountingandFinancialDisclosure 134
Item9A. ControlsandProcedures 134
Item9B. OtherInformation 135
Item9C. DisclosureRegardingForeignJurisdictionsthatPreventInspections 135
PART III
Item10. Directors,ExecutiveOfficers,andCorporateGovernance 136
Item11. ExecutiveCompensation 136
Item12. SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMatters 137
Item13. CertainRelationshipsandRelatedTransactions,andDirectorIndependence 137
Item14. PrincipalAccountingFeesandServices 137
PART IV
Item15. ExhibitsandFinancialStatementSchedules 139
Item16. Form10-KSummary 142
Signatures 143
2
TableofContents
-PART I-
Item 1.Business
Company Overview
Southwest Airlines Co. (the "Company" or "Southwest") operates Southwest Airlines, a major passenger airline that provides scheduled air
transportation in the United States and near-international markets. Southwest commenced service on June 18, 1971, with three Boeing 737
aircraftservingthreeTexascities:Dallas,Houston,andSanAntonio.AtDecember31,2021,Southwesthadatotalof728Boeing737aircraftin
its fleet and121 destinations in 42 states, the District of Columbia, the Commonwealth of Puerto Rico, and ten near-international countries:
Mexico,Jamaica,TheBahamas,Aruba,DominicanRepublic,CostaRica,Belize,Cuba,theCaymanIslands,andTurksandCaicos.
During 2021, the Company began service to 14 new destinations including Chicago (O'Hare), Illinois; Houston (Bush), Texas; Jackson,
Mississippi;ColoradoSprings,Colorado;Savannah,Georgia/HiltonHead,SouthCarolina;Sarasota,Florida;SantaBarbara,California;Fresno,
California;Destin,Florida;Bozeman,Montana;MyrtleBeach,SouthCarolina;Eugene,Oregon;Bellingham,Washington;andSyracuse,New
York.
Worldwide Pandemic
InMarch2020,theWorldHealthOrganizationclassifiedthenovelcoronavirus,COVID-19,asapandemic.Thespeedwithwhichtheeffectsof
theCOVID-19 pandemic changed the U.S.economic landscape,outlook, andin particularthe travelindustry, was swift and unexpectedand
resultedinasignificantnegativeimpactontraveldemand,revenues,andbookingsthroughout2020.TheCompanyrespondedbycancellinga
significant portion of its scheduled flights, grounding a significant portion of its fleet, significantly reducing planned capital spending, and
significantlyreducingitspreviouslyscheduledcapacity.Further,theCompanysubstantiallyenhanceditscashholdingsbyobtainingsignificant
financinginthecapital markets, throughpayroll fundingsupport ("PayrollSupport") withthe U.S.Department ofTreasury ("Treasury"),and
elsewhere.Inaddition,theCompanyofferedvoluntaryseparationandextendedtime-offprogramsforitsEmployees,whichsignificantlyreduced
theCompany'sactiveheadcount.
TheCompanycontinuedtoexperiencenegativeandunpredictablefluctuatingpandemic-relatedimpactstopassengerdemandandbookingsin
2021.Modestimprovementsinleisurebookingsbeganinmid-February2021andfurtherimprovedinMarch2021.Traveldemandandbookings
accelerated during second quarter 2021 as a result of declining reported COVID-19 cases throughout the United States, the easing of travel
restrictions,andanincreaseinthenumberofindividualsvaccinated.Despitesomesoftnessinbookingsandelevatedtripcancellationsdueto
surgingCOVID-19casesinAugustandSeptemberas aresultoftheDeltavariant,andinDecemberasaresultoftheOmicronvariant,third
quarterandfourthquarter2021domesticleisuredemandwasalsostrongandadramaticimprovementfrom2020.
Theunpredictablefluctuatingextentofthetraveldemandimprovementoverthecourseof2021,combinedwiththereductionintheCompany's
available workforce, contributed to operational challenges and resulting declines in the Company's operational performance as the Company
struggledtoreturntothestaffinglevelsnecessaryforoperationaldemands.Inresponse,theCompanycontinueditseffortstocorrespondingly
adjust capacitythroughout 2021and into firstquarter 2022. Inaddition, the Companyaggressively hired new Employees inthird and fourth
quarter2021,andiscontinuingtheseeffortsin2022,tobalanceitsschedulewithitscrewandgroundoperationsresources.
ForfurtherinformationonrisksrelatedtoCOVID-19,aswellasthesignificantimpactsofCOVID-19ontheCompany'soperations,financial
performance,andliquidity,see"RiskFactors,""Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations,"and
Notes2,7,and9totheConsolidatedFinancialStatements.
3
TableofContents
Industry
Asdiscussedaboveunder"Business–WorldwidePandemic,"thetravelindustrywasadverselyimpactedin2020and2021bytheCOVID-19
pandemic,includingtherecentDeltaandOmicronvariants.LiketheCompany,otherU.S.airlinesexperiencedsignificantnegativeimpactsto
passengerdemandandrevenues;howevertheimpactoftheCOVID-19pandemiconsomeoftheseairlineswasparticularlyseverebecauseofthe
percentageoftheiroperationsthathadhistoricallybeendependentonbusinessandinternationaltravel,eachofwhichsufferedparticularharmas
aresultofthepandemic.Demandforbusinesstraveldeclinedsignificantlyduetocompaniestighteningorevensuspendingcorporatetravel.This
notonlyreducedoveralldemandforairtravel,butalsoresultedinadecreaseinthepercentageoffull-farepurchases.Demandforinternational
travel was significantly harmed by the imposition of international travel restrictions. Like the Company, these other airlines responded with
adjustments to their flight schedules, capacity, operating costs and capital expenditures, and fleet plans. Unlike the Company, certain other
airlinesalsofurloughedemployeesand/orceasedserviceincertainmarkets.
LiketheCompany,otherU.S.airlinesbegantomitigatecashlossesandrecoverfromtheCOVID-19pandemicin2021,whilefacingchallenges
suchastheDeltaandOmicronvariants,lowerpassengerrevenueyields(i.e.,pricing),higherfuelpricesandothercostinflation,andsurgesin
leisuretraveldemandagainstconstrainedpersonnelresourcesresultinginoperationalchallenges.Overall,theU.S.airlineindustrysawastrong
recoveryofdomesticleisuretraveldemandduringpeaktravelperiodsin2021asaresultofdecliningreportedCOVID-19casesthroughoutthe
UnitedStates,theeasingoftravelrestrictions,andanincreaseinthenumberofindividualsvaccinatedagainstCOVID-19.However,business
travelremainedatasignificantlyreducedlevelthroughout2021,ascomparedwithpre-pandemiclevels.
Theairlineindustryhashistoricallybeenanextremelyvolatileindustrysubjecttonumerousotherchallenges.Amongotherthings,ithasbeen
cyclical,energy intensive,labor intensive,capitalintensive, technologyintensive, highlyregulated, heavilytaxed,and extremelycompetitive.
Theairlineindustryhasalsobeenparticularlysusceptibletodetrimentaleventssuchaseconomicrecessions,jetfuelpricevolatility,unscheduled
maintenancedisruptions,U.S.governmentshutdowns,actsofterrorism,poorweather,andnaturaldisasters.
Historically, airline industry results have been particularly susceptible to fuel price volatility. In 2021, the industry experienced a very
challengingfuelenvironment,ascomparedwithrecentyears,withyear-over-yearfuelpricessignificantlyhigherthroughoutmostof2021.
Company Operations
Route Structure
Southwest has historically principally provided point-to-point service, rather than the "hub-and-spoke" service provided by most major U.S.
airlines.Thehub-and-spokesystemconcentratesmostofanairline'soperationsatalimitednumberofcentralhubcitiesandservesmostother
destinations in the system by providing one-stop or connecting service through a hub. By not concentrating operations through one or more
central transfer points, Southwest's point-to-point route structure has allowed for more direct nonstop routing than hub-and-spoke service.
However,inresponsetotheeffectsoftheCOVID-19pandemic,theCompanyplacedgreaterreliancein2020and2021onconnectingtrafficin
aneffort tocapture Customerdemand. Approximately73 percent ofthe Company'sCustomers flewnonstop during2021, comparedwith 72
percent during 2020, and compared with 77 percent during 2019, and, as of December 31, 2021, Southwest served 788 nonstop city pairs,
comparedwith667asofDecember31,2020,andcomparedwith720asofDecember31,2019.For2021,theCompany’saverageaircrafttrip
stagelengthwas790miles,withanaveragedurationofapproximately2.1hours,ascomparedwithanaverageaircrafttripstagelengthof743
milesandanaveragedurationofapproximately2.0hoursin2020,andascomparedwithanaverageaircrafttripstagelengthof748milesandan
averagedurationofapproximately2.0hoursin2019.
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TableofContents
Southwest’spoint-to-pointservicehasalsoenabledittoprovideitsmarketswithfrequent,convenientlytimedflightsandlowfares.Forexample,
Southwest currently offers ten weekday roundtrips between DallasLove Field and Houston Hobby (andan additional six to Houston Bush),
sevenweekdayroundtripsbetweenDenverandChicagoMidway(andanadditionalsixtoChicagoO'Hare),sevenweekdayroundtripsbetween
LosAngeles Internationaland LasVegas,twelve weekdayround tripsbetween BurbankandOakland, andnine weekdayroundtrips between
Phoenix and Denver. Southwest complements its high-frequency short-haul routes with long-haul nonstop service including flights between
HawaiiandCalifornia,LasVegas,andPhoenix,andbetweenmarketssuchasLosAngelesandNashville,LosAngelesandBaltimore,Oakland
andHouston,LasVegasandOrlando,andSanDiegoandBaltimore.
TheCompanycontinuallyworkstooptimizeitsroutenetworkandschedulethroughtheadjustmentoffrequenciesinitsexistingmarketsandthe
addition of new markets and itineraries, while also pruning less profitable flights from its schedule. The Company's network and schedule
optimization efforts have been particularly beneficial in addressingthe impacts of the COVID-19pandemic. For example, these efforts have
enabledtheCompanytocontinuetoaddcitiesinkeyexistingmarkets,suchasCalifornia,aswellasopportunisticallyintroduceserviceinother
marketsduringthepandemic.AspartoftheCompany'srecoveryfromtheimpactsoftheCOVID-19pandemic,theCompanyremainsfocused
onrestoringitsnetworktopre-pandemiclevelsthroughaddingbackdepthandfrequencytotheCompany'snetworkwhilebalancingitsnetwork
schedulewithitscrewresources.
Despitethepandemic,theCompanyhasbeenabletocontinuetobolsteritspresenceinCaliforniathroughtheadditionofnewdestinationoptions
andflightsforCaliforniaCustomers.In2021,theCompanyaddedmanynewdestinationstoitsroutemap,includingnewCaliforniaserviceto
SantaBarbaraandFresno.Further,theCompanyexpandeditsCaliforniatoHawaiinetworkin2021byaddinginauguralservicebetweenLos
Angeles and Hawaii in June 2021. The Company also added inaugural service to Hawaii from Las Vegas and Phoenix in June 2021. The
Company also expanded its service at John Wayne Airport (Orange County) in2021, includingreinstated internationalservice beginning in
March2021.Inaddition,theCompanyiscurrentlyscheduledtoofferover700departuresfromCaliforniaonpeakflyingdaysinthesummerof
2022.BasedonthemostrecentdataavailablefromtheU.S.DepartmentofTransportation(the"DOT"),fortheyearendedSeptember30,2021,
SouthwestcarriedmoreCaliforniatravelersto,from,andwithinCaliforniathananyotherairline.
TheCompany'snetwork andschedule optimizationeffortshave also enabledittouseotherwise idleaircraft, whileoveralltravel demand has
been reduced. This, in turn, has enabled the Company to better optimize its service amongst its core markets and, in 2021, it enabled the
Companytoprovideserviceto14newdestinations.Theadditionalservicehascreatedadditionalregionalandinternationalconnectivitythathas
beenstructuredtogrowtheCompany'spresenceinstrategicmarketsthatserveascornerstonesforitsnetworkandprovideadditionaloptionsfor
Customerstoreachtheirfinaldestinations.TheCompanyexpectstocomplementandstrengthenitsexistingroutenetworkinornearcitieswhere
itsCustomerbaseislarge,alongwithaddingeasieraccesstopopularleisure-orienteddestinations.
TheCOVID-19pandemichadaparticularlynegativeimpactontheCompany'sinternationaloperationsandledtotheCompany'ssuspensionof
internationaloperationsatthebeginningofthepandemic.TheCompanyhassinceresumedserviceto13ofits14internationaldestinations.The
Company’soperationstotheCaymanIslandsaretemporarilysuspendedduetoimpactsfromtheCOVID-19pandemic,butwiththeeasingof
governmentrestrictionsandthecontinuedincreaseindemandforbeachandleisuredestinations,theCompanyintendstoresumeservicetothe
CaymanIslandsin2022.
Boeing 737 MAX
InMarch2019,theFederalAviationAdministration(the"FAA")issuedanemergencyorderforallU.S.airlinestogroundallBoeing737MAX
("MAX")aircraft. TheCompanyimmediately compliedwiththe orderandgrounded all34Boeing 737MAX8 ("-8")aircraft in itsfleet.In
November2020,theFAArescindedtheemergencyorderandissuedofficialrequirementstoenableU.S.airlinestoreturntheMAXtoservice.
TheCompanyreturnedtheMAXtoserviceinMarch2021,aftertheCompanymetallFAArequirementsandPilotsreceivedupdated,MAX-
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relatedtraining.FollowingtheFAArescissionoftheemergencyorder,theCompanytookdeliveryof35-8aircraftthroughtheendof2021and
had69-8aircraftinitsfleetat2021year-end.
During 2021, the Company entered into supplemental agreements with The Boeing Company ("Boeing") to increase its 2022 firm orders of
Boeing737MAX7("-7")aircraft,accelerateoptionsinto2022,2023,2024,and2025,andaddnewoptionsin2026and2027,ineachcasewith
thegoalofimprovingpotentialgrowthopportunities,restoringtheCompany'snetworkclosertopre-pandemiclevels,loweringoperatingcosts,
reducingcarbonemissionsperavailableseatmile,andfurthermodernizingtheCompany'sfleetwithmorefuelefficientaircraft.Additionally,
during2021,theCompanyexercised422022optionsfor-7aircraftandexercised222023optionsfor-7aircraft.Fleetandcapacityplanswill
continuetoevolveastheCompanymanagesthroughthepandemicrecoveryperiod,andtheCompanywillcontinuetoevaluateitsremaining
MAX options. However, with its cost-effective order book, the Company retains significant flexibility to manage its fleet size, including
opportunities to accelerate fleet modernization efforts if growth opportunities do not materialize. The Company continues to plan for 30-35
Boeing737-700 retirementsannually. Additionalinformation regardingtheCompany's currentfleet andfleetdelivery scheduleisincluded in
"Item2–Properties"below.Thedeliveryscheduleforthe-7isdependentontheFAAissuingrequiredcertificationsandapprovalstoBoeing
andtheCompany.TheFAAwillultimatelydeterminethetimingofthe-7certificationandentryintoservice,andtheCompanythereforeoffers
noassurancesthatcurrentestimationsandtimelinesarecorrect.
Cost Structure
AkeycomponentoftheCompany'sbusinessstrategyisitsfocusoncostdisciplineandchargingcompetitivelylowfares.TheCompany'slow-
cost strategy includes, among other elements, (i) the use of a single aircraft type, the Boeing 737, (ii) the Company's point-to-point route
structure,and(iii)itshighlyproductiveEmployees.Southwest'suseofasingleaircrafttypehashistoricallyallowedforsimplifiedscheduling,
maintenance,flightoperations,safetymanagement,andtrainingactivities.Southwest'spoint-to-pointroutestructureincludesservicetoandfrom
many secondary or downtown airports such as Dallas Love Field, Houston Hobby, Chicago Midway, Baltimore-Washington International,
Burbank, Manchester, Oakland, San Jose, Providence, and Ft. Lauderdale-Hollywood. These conveniently located airports are typically less
congestedthanotherairlines'hubairports,whichhascontributedtoSouthwest'sabilitytoachievehighassetutilizationbecauseaircraftcanbe
scheduledtominimizetheamountoftimetheyareontheground.This,inturn,hasreducedthenumberofaircraftandgatefacilitiesthatwould
otherwiseberequiredandallowsforhighEmployeeproductivity(lowerheadcountperaircraft).
TheCompany'sfocusoncontrollingcostsalsoincludesacontinuedcommitmenttopursuing,implementing,andenhancinginitiativestoreduce
fuelconsumption and improvefuelefficiency. TheCompanyfocuses onminimizingfuel consumption andimprovingfuel efficiencythrough
fleetmodernizationandotherfuelinitiatives.Forexample,in2021theCompanyreturnedits-8aircrafttoservice,whicharemorefuel-efficient
andreleasefewerCO emissionsperavailableseatmilethantheCompany'sotheraircraft.
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TableofContents
Fuel and oil expense can be extremely volatile and unpredictable, and even a small change in market fuel prices can significantly affect
profitability.Fuelandoilexpensefor2021increasedsignificantlycomparedwith2020,primarilyduetohighermarketjetfuelprices,andinpart
duetohighercapacityinresponsetoconsumerdemand.FuelandoilexpenseremainedtheCompany'ssecondlargestoperatingcostfor2021.As
evidencedbythetablebelow,energypricescanfluctuatesignificantlyinarelativelyshortamountoftime.ThetablebelowshowstheCompany's
averagecostofjetfuelforeachyearbeginningin2011andduringeachquarterof2021.
Year
Cost
(Millions)
Average
Cost Per
Gallon
Percentage of
Operating
Expenses
2011 $ 5,751 $ 3.25 38.2 %
2012 $ 6,156 $ 3.32 37.3 %
2013 $ 5,823 $ 3.19 35.3 %
2014 $ 5,355 $ 2.97 32.6 %
2015 $ 3,740 $ 1.96 23.6 %
2016 $ 3,801 $ 1.90 22.7 %
2017 $ 4,076 $ 1.99 23.0 %
2018 $ 4,616 $ 2.20 24.6 %
2019 $ 4,347 $ 2.09 22.3 %
2020 $ 1,849 $ 1.45 14.4 %
2021 $ 3,310 $ 1.98 23.5 %
FirstQuarter2021 $ 469 $ 1.63 25.3 %
SecondQuarter2021 $ 803 $ 1.88 23.5 %
ThirdQuarter2021 $ 990 $ 2.01 25.1 %
FourthQuarter2021 $ 1,049 $ 2.25 21.6 %
TheMAXgroundingsinearly2019resultedintheremovalofthesemorefuel-efficientaircraftfromtheCompany'sschedule,which,inturn,
droveadeclineintheCompany'soverallfuelefficiencyin2019.AlthoughtheCompany'sMAXaircraftremainedgroundedthroughout2020,
theCompanyimproveditsfuelefficiencyin2020,ascomparedwith2019,primarilybyoperatingfewerofitsoldest,leastfuel-efficientBoeing
737-700aircraftasaresultofcapacitycutsinresponsetotheeffectsoftheCOVID-19pandemic.Lowerloadfactors,duetoCOVID-19,also
contributedtofuelefficiencyduring2020.DespitethereturntoserviceoftheMAXaircraft,theCompany's2021fuelefficiencydeclined,as
comparedwith2020,duetohigherloadfactorsandtheCompany'sreturntoserviceofmoreofitsoldest,leastfuelefficient Boeing 737-700
aircraft,whichhadbeenplacedintostoragein2020duetocapacitycutsinresponsetotheeffectsoftheCOVID-19pandemic.TheCompany
continuestoundertakeanumberofotherfuelconservationinitiatives,whicharediscussedindetailunder"EnvironmentalSustainability."
ThetablebelowsetsforththeCompany'savailableseatmilesproducedperfuelgallonconsumedoverthelastfiveyears:
Year ended December 31,
2021 2020 2019 2018 2017
Availableseatmilesperfuelgallonconsumed 79.2 81.3 75.7 76.3 75.2
TheCompanyalsoentersintofuelderivativecontractstomanageitsriskassociatedwithsignificantincreasesinfuelprices.TheCompany'sfuel
hedgingactivities,aswellastherisksassociatedwithhighand/orvolatilefuelprices,arediscussedinmoredetailbelowunder"RiskFactors,"
"Management’s Discussion and Analysis of Financial Condition and Results of Operations," and Note 11 to the Consolidated Financial
Statements.
Salaries, wages, and benefits expense constituted approximately 55.0percent of the Company's operatingexpenses during 2021 and was the
Company'slargestoperatingcost.TheCompany'sabilitytocontrollaborcostsislimitedbythetermsofitscollective-bargainingagreements,
and increased labor costs have negatively impacted the Company's low-cost competitive position. The Company's labor costs, and risks
associatedtherewith,arediscussed
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inmoredetailbelowunder"RiskFactors,""Business-Employees,"and"Management’sDiscussionandAnalysis of FinancialConditionand
ResultsofOperations."
Fare Structure
General
Southwestoffersarelativelysimplefarestructure that featurescompetitive fares andproductbenefits, including unrestrictedfares, as wellas
lower fares available on a restricted basis. Southwest fare products include three major categories: "Wanna Get Away ," "Anytime," and
"BusinessSelect ,"toprovideCustomersoptionswhenchoosingafare.Allfareproductsincludetheprivilegeoftwofreecheckedbags(weight
andsizelimitsapply).Southwestdoesnotchargefeesforchangestoflightreservationsalthoughfaredifferencesmayapply.
• "Wanna Get Away" fares are generally the lowest fares and are typically subject to advance purchase requirements. They are
nonrefundable, but, subject to Southwest'sNo Show Policy, flight credit for the fare paid for unused travel by the Customer ("flight
credit")maybeappliedtowardsfuturetravelonSouthwest.WannaGetAwayfaresearnsixRapidRewards points,underSouthwest's
RapidRewardsloyaltyprogram,foreachdollarspentonthebasefare.TheCompany'sloyaltyprogramisdiscussedbelowunder"Rapid
RewardsLoyaltyProgram."
• "Anytime"faresare,subjecttoSouthwest'sNoShowPolicy,refundableifcanceled,orflightcreditmaybeappliedtowardsfuturetravel
onSouthwest.Ifthisfareispurchasedwithnonrefundableflightcredit,thentheresultingflightcreditwillbenonrefundableiftravelis
canceled.Anytimefaresearn10RapidRewardspointsforeachdollarspentonthebasefare.
• "BusinessSelect"faresare,subjecttoSouthwest'sNoShowPolicy,refundableifcanceled,orflightcreditmaybeappliedtowardsfuture
travelonSouthwest. Ifthis fareispurchased with nonrefundableflightcredit,then theresultingflightcredit willbe nonrefundableif
traveliscanceled.BusinessSelectfaresalsoincludeadditionalperkssuchaspriorityboardingwithaboardingpositioninthefirst15
boarding positions withinboarding group "A," 12 Rapid Rewardspoints per dollar spent on thebase fare - the highest loyalty point
multiplierofallSouthwestfareproducts,and"FlyBy "prioritysecurityand/orticketcounteraccessinparticipatingairports.Business
Select fares also ordinarily include one complimentary premium beverage coupon for the day of travel (Customers must be of legal
drinkingagetodrinkalcoholicbeverages);however,theCompanyhastemporarilysuspendedpremiumdrinkserviceinresponsetothe
COVID-19pandemic.
Southwest'sNoShowPolicyappliesifaCustomerdoesnotchangeorcancelaflightsegmentatleasttenminutespriortoscheduleddeparture
andtheCustomerdoesnottravelonthescheduledflight.Insuchevent,subjecttocertainexceptions,allsegmentsassociatedwiththereservation
willbecanceled,and(i)withrespecttoa"WannaGetAway"fare,thefarepaidforunusedtravelwillbeforfeited;and(ii)withrespecttoan
"Anytime"or"BusinessSelect"fare,thefarepaidforunusedtravelwillbeheldasaflightcreditforfuturetravelonSouthwest.
TheCompanyhasannouncedplanstoaddanew,fourthfareproductthatenhancestheoverallproductofferingforCustomers.TheCompany
alsocurrentlyplanstoincreasebenefitstiedtoexistingfareproductcategoriesatvarioustimesinthefuture.Theanticipatedlaunchdateforthe
newfareproductisduringsecondquarter2022.
InresponsetotheCOVID-19pandemic,inordertoenhanceandexpanduponitsalreadygenerousandflexibleticketingpolicies,theCompany
extendedtheexpirationofthefollowingCustomerflightcreditstoSeptember7,2022:
• FlightcreditscreatedbecauseofaflightcancellationbetweenMarch1,2020andSeptember7,2020;and
• FlightcreditsthatwouldhaveexpiredbetweenMarch1,2020andSeptember7,2020.
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Ancillary Services
The Company offers ancillary services such as Southwest's EarlyBird Check-In , Upgraded Boarding, and transportation of pets and
unaccompaniedminors,inaccordancewithSouthwest'srespectivepolicies.
EarlyBirdCheck-InprovidesCustomerswithautomaticcheck-inandanassignedboardingpositionbeforegeneralboardingpositionsbecome
available, thereby improving Customers' seat selection options (priority boarding privileges are already a benefit of being an "A-List" tier
memberundertheCompany'sRapidRewardsLoyaltyProgram).TheCompanyhasimplementedavariablepricingmodelforEarlyBirdCheck-
InbasedonthelengthoftheflightandthehistoricalpopularityofEarlyBirdCheck-Inontheroute.
Whenavailable,SouthwestsellsUpgradedBoardingattheairport,whichallowsaCustomertopayforanopenpriorityboardingpositioninthe
first15positionsinits"A"boardinggroup.
Southwest’sPetPolicyprovidesCustomersanopportunitytotravelwithasmallcatordogintheaircraftcabinondomesticflights.Southwest
alsohasanunaccompaniedminortravelpolicy,withpricingtoaddresstheadministrativecostsandtheextracarenecessarytosafelytransport
theseCustomers.
Inflight Entertainment Portal and WiFi Service
Southwest offers inflight entertainment and connectivity service on WiFi-enabled aircraft on the majority of its fleet, where available.
Southwest'ssuiteofcomplimentaryofferingsonboardWiFi-enabledaircraftincludesmovies-on-demand,messaging,music,liveandon-demand
television, a flight tracker, and connecting flight information. The inflight entertainment service allows Customers to enjoy gate-to-gate
entertainmentdirectlyontheirpersonalwirelessdevices.CustomerscanalsopurchasesatelliteinternetservicewhileonWiFi-enabledaircraft,
whereavailable.
Thefreeinflightentertainmentofferingsincludeapproximately45freemovies-on-demandeachmonthandfreeappmessagingviaiMessageor
WhatsApp.Thetelevisionproductconsistsofover15livechannelsandupto75on-demandrecordedepisodesfrompopulartelevisionseries.In
addition, the onboard entertainment portal offers free digital music and live streaming radio service to Customers within the onboard
entertainmentportal.
Rapid Rewards Loyalty Program
Southwest's RapidRewards loyalty program enables program members ("Members") to earn pointsfor every dollarspent on Southwestbase
fares, also including purchases paid with LUV Vouchers, gift cards, or flight credit, with no portion of the purchase price paid with Rapid
Rewardspoints.Theamountofpointsearnedundertheprogramisbasedonthebasefareandfareclasspurchased,withhigherfareproducts
(e.g., Business Select) earning more points than lower fare products (e.g., Wanna Get Away). As discussed above under "Fare Structure -
General,"eachfareclassisassociatedwithapointsearningmultiplier,andpointsforflightsarecalculatedbymultiplyingthebasefareforthe
flightbythefareclassmultiplier.Theamountofpointsrequiredtoberedeemedforaflightisbasedonthebasefareandamultiplier.Underthe
program,(i)Membersareabletoredeemtheirpointsforeveryavailableseat,everyday,oneveryflight,withnoblackoutdates;and(ii)points
donotexpire.
Under the program, Members continue to accumulate points until the time they decide to redeem them. As a result, the program provides
Memberssignificant flexibilityandoptions forearningand redeemingrewards.For example,Memberscan earnmorepoints (and/orachieve
tieredstatussuchasA-ListandCompanionPassfaster)bypurchasinghigherfaretickets.Membersalsohavesignificantflexibilityinredeeming
points,suchastheopportunitytobookinadvancetotakeadvantageofalowerfareticket(includingmanyfaresales)andredeemfewerpointsor
by being able to redeem more points and book at the last minute if seats are still available for sale. Members can also earn points through
qualifyingpurchaseswithRapidRewardsPartners(whichinclude,forexample,carrentalagencies,hotels,andrestaurants),aswellasbyusing
Southwest'sco-brandedChase Visacreditcard.InadditiontoearningpointsforrevenueflightsandqualifyingpurchaseswithRapidRewards
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Membersalsohavetheabilitytopurchase,gift,andtransferpoints,aswellastheabilitytodonatepointstoselectedcharities.
Southwest'sRapidRewardsloyaltyprogramfeaturestierstatusandCompanionPassprogramsforthemostactiveMembers,including"A-List"
and "A-List Preferred" status. A Member who flies 25 qualifying one-way flight segments booked through Southwest or earns 35,000 tier
qualifyingpointspercalendaryearwillqualifyforA-Liststatus.AMemberwhoflies50qualifyingone-wayflightsbookedthroughSouthwest
orearns70,000tierqualifyingpointspercalendaryearwillqualifyforA-ListPreferredstatus.Exceptasnotedbelowwithrespecttoactions
takenbytheCompanyinresponsetotheCOVID-19pandemic,theMemberwillmaintainA-ListorA-ListPreferredstatusfortheremainderof
thecalendaryearinwhichthestatusisearnedandfortheentirecalendaryearimmediatelyfollowing.BothA-ListandA-ListPreferredMembers
enjoybenefitssuchas"FlyBy "prioritycheck-inandsecuritylaneaccess,whereavailable,aswellasdedicatedphonelines,standbypriority,
and anearnings bonus oneligible revenue flights (25 percentfor A-List and100 percent forA-List Preferred). Inaddition, A-List Preferred
MembersenjoyfreeinflightsatelliteinternetserviceonWiFi-enabledaircraft,whereavailable.MemberswhoattainA-ListorA-ListPreferred
status receivepriority boarding privileges.When these Customers purchase travelat least 36hours prior toflight time, theyreceive the best
boardingpositionavailable(generally,an"A"boardingpass).Duringthedayoftravel,ifanA-ListorA-ListPreferredMember'splanschange,
theyhavefreesame-daystandbyprivileges,whichallowthemtoflyonearlierflightsbetweenthesamecitypairsifspaceisavailable,butare
requiredtopayanyadditionalgovernmenttaxesandfeesassociatedwithchangesintheiritinerary.AnotherfeatureoftheRapidRewardsloyalty
program is the Companion Pass. Members who fly 100 qualifying one-way flights or earn 125,000 qualifying points in a calendar year
automaticallyreceiveaCompanionPass,whichprovidesforunlimitedtravelforthedesignatedCompanionfreeofcharges(otherthantaxesand
fees).ExceptasnotedbelowwithrespecttoactionstakenbytheCompanyinresponsetotheCOVID-19pandemic,theCompanionPassisvalid
fortheremainderofthecalendaryearinwhichstatusisearnedandforthefollowingfullcalendaryeartoanydestinationavailableonSouthwest
foradesignatedCompanionofthequalifyingMember.TheMemberanddesignatedCompanionmusttraveltogetheronthesameflight.
During 2021, the Company added Rapid Rewards Business, giving businesses the ability to earn Rapid Rewards points. By joining Rapid
RewardsBusiness, companies earnRapidRewards pointsthat canbe appliedtoward travelon thecompany's behalf,while travelerswho are
RapidRewardsMembersalsoearnRapidRewardspointsintheirpersonalaccounts.RapidRewardsbusinessaccountsgenerallyhavethesame
opportunitiesandbenefitstoearnandredeempointsasindividualMemberaccounts.
Southwest'sRapidRewardsloyaltyprogramhasbeendesignedtodrivemorerevenueby(i)bringinginnewCustomers,includingnewMembers,
aswellasnewholdersofSouthwest'sco-brandedChaseVisacreditcard;(ii)increasingbusinessfromexistingCustomers;and(iii)strengthening
theCompany'sRapidRewardshotel,rentalcar,creditcard,andotherpartnerships.
For 2021,Customers of Southwest redeemed approximately 8.1 million flight awards, accounting for approximately 17.3 percent of revenue
passengermilesflown.For2020,CustomersofSouthwestredeemedapproximately4.1millionflightawards,accountingforapproximately15.8
percentofrevenuepassengermilesflown.For2019,CustomersofSouthwestredeemedapproximately10.7millionflightawards,accountingfor
approximately 14.1 percent of revenue passenger miles flown. The Company's accounting policies with respect to its loyalty programs are
discussedinmoredetailinNote1totheConsolidatedFinancialStatements.
TheCompanyhastakensignificantmeasuresinresponsetotheCOVID-19pandemictoenhanceitsRapidRewardsloyaltyprogramincluding
thefollowing:
• ForA-ListandA-ListPreferredMemberswhoearnedtierstatusin2020,earnedstatuswasextendedthroughDecember31,2021;and
• ForCompanionPassMemberswhoearnedCompanionPassbenefitstobeusedthroughDecember2020,CompanionPassbenefitswere
extendedthroughJune30,2021.
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Additionally,inJanuary2021,inresponsetotheCOVID-19pandemic,theCompanymadeadditionalchangesthataffectedtierstatusaswellas
CompanionPasseligibility,allwiththeintentionofenhancingtheCompany'sRapidRewardsloyaltyprogramanditsMembers’experiences:
• AllRapidRewardsMemberswithvalidRapidRewardsaccountsasofDecember31,2020,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;
• Through December 31, 2021, for Members with Southwest's co-branded Chase Visa Premier or Priority Consumer credit cards, or
Premier or Performance Business credit cards, for every $10,000 in spend on their credit cards, they were eligible for 1,500 Tier
QualifyingPoints(withnocap);and
• For Companion Pass Members who earned Companion Pass benefits to be used through December 2020, which were previously
extendedthroughJune30,2021,thoseCompanionPassbenefitswerefurtherextendedthroughDecember31,2021.
Southwest.com and Direct to Customer Distribution Approach
TheCompanyprimarilyoffersitsfareproductsdirectlytoCustomersthroughitsInternetwebsite,Southwest.com.FortheyearsendedDecember
31,2021,andDecember31,2020,approximately86percentand83percent,respectively,oftheCompany’sPassengerrevenuesoriginatedfrom
Southwest.com(including revenues fromSWABIZ , theCompany's online booking tool designed for business Customers who prefer a self-
serviceandlow-costsolutionforbookingtheirairtravelonSouthwest).This"directtoCustomer"distributionapproachhashistoricallyprovided
acostadvantagefortheCompanybecauseiteliminatesfeesassociatedwiththeuseofthirdpartydistributionchannelssuchasthirdpartyonline
travelplatforms.TheCompanyaugmentsitsdirecttoCustomerdistributionapproachbyofferingabroadsuiteofdigitalplatformstosupport
Customers'travelneeds,includingfullfeaturedwebsitesandapps.ThesedigitalplatformshelpCustomersbookandmanagetheirSouthwestair
travelandalsofacilitatethepurchaseoftheCompany’sancillaryproducts,includingEarlyBird,vacationpackages,rentalcarreservations,hotel
reservations,andtravelactivities.Inaddition,thedigitalplatformsprovideself-servicetoolsforreservationmanagementandCustomersupport.
During2021,theCompanycontinuedtoinvestintechnologydesignedtoenhancerevenuesandlowercosts,whilealsoenhancingdigitaloptions
foritsCustomers.Toenhancerevenues,theCompanyimprovedthedigitalairbookingexperiencethroughfurtherimprovementstotheshopping
page,theadditionoffareupgradeoffers,andincreasedprominenceofexpandedpaymentoptions.Tohelplowercosts,in2021theCompany
increased its focus on improving the day of travel experience. For example, trip related messaging was added to improve awareness of the
Company'sbaggageandboardingprocess,andanewcustomercenterwasaddedtoprovide key content abouttheSouthwestexperience. The
resultingincreasedawareness ofself-serviceoptionsincreased Customerself-serviceusageand therebycontributedto reduced costs.Further,
improvementsweremadetothedigitalticketchangeprocess,leadingtoahigherpercentageofticketchangesoccurringindigitalexperiences.
Earlyin2021,theCompanyaddedanupdatedCOVIDtravelcenter,providinglocationspecificdetailsaboutwhattoexpectwhiletraveling.This
material was prominently focused across all shopping and trip related materials. Due to changing U.S. regulations regarding U.S. entry, the
Company also deployed self-service workflows for Customers to complete their travelattestations andcontact tracing information to reduce
transactionsattheairport.Automatingtheseexperiencesreducedwhatwouldhavebeenmuchlongerlineswhiledepartingcountriesoutsideof
theUnitedStates.Theseexperiencesweresupplementedwithadditionaldayoftravelalertstoincreasereadinessfortravel.
Southwest Business Initiatives
InadditiontoimprovementsintheCompany'sdirectSouthwest.comchannelofdistribution,inrecentyearstheCompanyhastakensignificant
actiontogrowitscorporatetravelbusinesswiththegoalofmakingiteasierforcorporatetravelCustomersandtravelmanagementcompaniesto
dobusinesswithSouthwest.
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In2019,theCompanyenteredintoanagreementwithAmadeusITGroup,S.A.("Amadeus"),andexpandeditsagreementwithTravelport,LP
and Travelport International Operations Limited (collectively, "Travelport"), to enable corporate travel Customers and travel management
companies to book Southwest products on the Amadeus and Travelport global distribution system ("GDS") platforms. The Company began
accepting corporate travel bookings through (i) Travelport's Apollo and Worldspan GDS platforms in second quarter 2020, (ii) Travelport's
Galileo GDSplatform in third quarter2020, and (iii)the Amadeus GDS platformin fourth quarter 2020.The Company's expansion intothe
Travelport and Amadeus GDS channels is intended to facilitate corporate travel managers' ability to book, modify, and cancel Southwest
reservations.
In2020,theCompanyenteredintoanewfullparticipationdistributionagreementwithSabreCorporation("Sabre"),toenableSabretocontinue
todistributeSouthwestcontentthroughtraditionalconnectivitytocorporations,governmentagencies,andtravelmanagementcompaniesthrough
Sabre'sGDS.InJuly2021,theCompanybeganofferingflightsforsalewithinSabre'sGDS,theleadingcorporatebookingchannelintheUnited
States.Asaresult,theCompanynowofferstheabilityforbusinesstravelersandtraveldecisionmakerstobookSouthwestfareswithinallmajor
GDSplatforms.
TheCompanyalsoutilizesAirlinesReportingCorporationtoimplementindustry-standardprocessestohandlethesettlementofticketsbooked
throughTravelport,Amadeus,andSabrechannels.
SouthwestBusinesshascontinuedtoinvestinandenhanceitsonlinebookingtoolSWABIZ ,withnewmobilecapabilitiesnowavailable,as
wellasitsdirectconnectchannel,withconnectionstoonlinebookingtools,travelmanagementcompanies,andcorporatecustomers.SWABIZis
designedforbusinessCustomerswhopreferaself-serviceandlow-costsolutionforbookingtheirairtravelonSouthwest.Thesitealsofacilitates
carandhotelbooking.
Marketing
During2020,inresponsetotheCOVID-19pandemic,theCompanyimplementedandmarketedthe"SouthwestPromise"toreassureCustomers
andEmployeesof theCompany's commitmenttotheir well-being,byfocusing on cleanlinessfromcheck-in to deplaningtheaircraft through
additionalstringentcleaningpracticesacrossthefleetandthroughouttheday,aswellasmeasurestosupportphysicaldistancingandpersonal
protectionandwellnessthroughouttheCustomerexperience.
Duringearly2021,theCompanycontinuedtomarkettheSouthwestPromise.Inaddition,during2021,theCompanymarketeditscompetitive
pointsofdifferentiation,specificallyfocusingonflexibilityandeaseforCustomers.SouthwestcontinuestobetheonlymajorU.S.airlinethat
offerstoallticketedCustomersuptotwocheckedbagsthatflyfree(subjecttoweightandsizelimits).Further,Southwestcontinuestoofferlow
faresandnounexpectedbagfees,changefees(althoughfaredifferencesmayapply),orhiddenfees.Southwestalsodoesnotimposeadditional
feesforitemssuchasseatselection,softdrinksandsnackswhereavailable,curb-sidecheck-inwhereavailable,andtelephonereservations.
The Company also continues to promote all of the many other reasons to fly Southwest in its marketing, such as its hospitality, low fares,
expandednetwork and newdestinations, CustomerService, freeinflight entertainment, Southwest Business offerings,and itsRapid Rewards
loyaltyprogram.
Technology Initiatives
Although during 2020 the Company narrowed its near-team technology focus and deferred a significant number of technology projects in
responsetotheCOVID-19pandemic,overthepastseveralyearstheCompanyhascommittedsignificantresourcestotechnologyimprovements
insupportofitsongoingoperationsandinitiatives.During2021,theCompanyachievedthelong-awaitedmilestoneofgettingallofitsaircraft
intoasinglesystemforaircraftmaintenanceandrecord-keeping.ThiswastheCompany'slargesttechnologyinitiativefor2021,andwas
®
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oneof the most critical system updates theCompany hasundertaken inthe historyof itsmaintenance program.In addition,during 2021the
CompanycontinueditsimplementationofcorporateGDScapabilitiesinconnectionwithSouthwestBusinessinitiativesbyinitiatingflightsfor
salewithinSabre'sGDS.
TheCompanycontinuestofocusontheprioritizationandexecutionofitstechnologyinvestmentsandisintheprocessofcontinuallyexecuting
anevolvingmulti-yearplanfortechnology,withthegoalofdevelopingastronger,moreadaptable,andmoreefficientandreliabletechnology
foundation to support the Company’s strategic priorities. The Company continues to invest significantly in technology resources including,
amongothers,theCompany'ssystemsrelatedto(i)humanresourcesmanagement;(ii)flightplanningandscheduling,includingwithrespectto
schedulechangesandCustomerreaccommodations;(iii)crewscheduling;(iv)revenuemanagement;and(v)technologyinfrastructure.
Environmental Sustainability
TheCompanyremainssteadfastinitsdesiretopursue,implement,andenhanceinitiativestoaddresstheCompany'simpactontheenvironment.
Overtheyears,theCompanyhasundertakenanumberoffuelconservationandemissions-relatedinitiatives,suchasthefollowing:
• introductionoftheMAXaircraftintotheCompany'sfleet,whichismorefuel-efficientandreleasesfewerCO₂emissionsperavailable
seatmilethantheCompany'sotheraircraft;
• installationofwinglets,whichreducedragandincreasefuelefficiency,onallaircraftintheCompany'sfleet;
• applicationofperiodicenginewashes;
• useofelectricgroundpowerandpre-conditionedairforaircraftatthegate,whenavailable;
• replacementofeligibleinternalcombustiongroundsupportequipmentwithelectricequipmentatselectlocations;
• deploymentofauto-throttleandverticalnavigationtomaintainoptimumcruisingspeeds;
• implementationofenginestartprocedurestosupporttheCompany'ssingleenginetaxiprocedures;
• adjustmentofthetimingofauxiliarypowerunitstartsonoriginatingflightstoreduceauxiliarypowerunitusage;
• implementationoffuelplanninginitiativestosafelyreduceloadingofexcessfuel;
• retrofittingofaircraftcabininteriorstoreduceweight;
• reductionofaircraftengineidlespeedwhileontheground,whichalsoincreasesenginelife;
• utilizationofCompany-optimizedroutes(flyingthebestwindroutestotakeadvantageoftailwindsortominimizeheadwinds);
• improvementsinflightplanningalgorithmstobettermatchtheCompany'saircraftflightmanagementsystemandtherebyenablingthe
Companytoflyatthemostefficientaltitudes;
• substitutionofPilotandFlightAttendantflightbagswithlighterElectronicFlightBagtablets;and
• implementationof RealTime DescentWinds (automaticuplinking of up-to-datewind datato theaircraft, allowingcrews totime the
descenttominimizethrustinputs).
TheCompanyhasalsoparticipatedinRequiredNavigationPerformance("RNP")operationsaspartoftheFAA'sPerformanceBasedNavigation
program, a key component of the Next Generation Transportation System (“NextGen”), which is intended to modernize the U.S. air traffic
system by addressing limitations on air transportation capacity and making more efficient use of airspace. RNP combines the capabilities of
advanced aircraft avionics, satellite navigation (instead of less precise ground-based navigation), and new flight procedures to enhance
navigationalandoperationalcapabilities,improvefuelefficiency,andminimizegreenhousegasemissions.RNPapproaches,whicharepublished
bytheFAA,arecurrentlyavailableat66oftheairportsSouthwestserves.
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SouthwestcontinuestoworkwiththeFAAtodevelopandseekmoreuseofRNPapproachesandtoevolveairtrafficcontrolrulestosupport
greaterutilizationofRNP.
In2021,theCompanyannouncedgoalsto(i)achievecarbonneutralityby2050,(ii)maintaincarbonneutralgrowth(to2019levels)throughthe
endofthedecade,and(iii)reducecarbonemissionsintensityperavailableseatmile(includingscope1andscope2emissions)byatleast20
percent by 2030. The Company also announced a series of actions and initiatives designed to assist the Company in achieving these goals,
including agreements with various third parties intended to facilitate the development, production, and usage of commercialized sustainable
aviationfuel;thelaunchofacarbon-offsetprogramthatallowsCustomerstocontributefundsforthepurchaseofcarbonoffsetsforSouthwest;
andarrangementswithnonprofitorganizationsseekingtoaddressclimatechangeandreducecarbonemissionsinaviation.
As part of its commitment to corporate sustainability, the Company has published the Southwest One Report describing the Company's
environmentalsustainabilitygoals,actions,initiatives,andstrategies,whichincludetheforegoingandothereffortstominimizegreenhousegas
emissions and address other environmental matters such as energy and water conservation, waste minimization, and recycling. Information
contained in the Southwest One Report is not incorporated by reference into, and does not constitute a part of, this Form 10-K. While the
CompanybelievesthatthedisclosurescontainedintheSouthwestOneReportandothervoluntarydisclosuresregardingenvironmental,social,
andgovernance(“ESG”)mattersareresponsivetovariousareasofinvestorinterest,theCompanybelievesthatthesedisclosuresdonotcurrently
addressmattersthatarematerialtotheCompany’soperations,strategy,financialcondition,orfinancialresults,althoughthisviewmaychangein
thefuturebasedonnewinformationthatcouldmateriallyaltertheestimates,assumptions,ortimelinesusedtocreatethesedisclosures.Giventhe
estimates, assumptions and timelines used to create the Southwest One Report and other voluntary disclosures, the materiality of these
disclosuresisinherentlydifficulttoassessinadvance.
Regulation
Theairlineindustryisheavilyregulated,especiallybythefederalgovernment,andthereareasignificantnumberofgovernmentalagenciesand
legislativebodiesthat have theabilitytodirectly or indirectlyaffecttheCompanyand/or theairlineindustryfinanciallyand/or operationally.
ExamplesofregulationsaffectingtheCompanyand/ortheairlineindustry,imposedbyseveralofthesegovernmentalagenciesandlegislative
bodies,arediscussedbelow.
Economic and Operational Regulation
Consumer Protection Regulation by the U.S. Department of Transportation
The DOT regulates economic operating authority for air carriers and consumer protection for airline passengers. The DOT may take legal
enforcementactionagainstaircarriersforviolatingtheirregulationsbyimposingcivilpenaltiesupto$35,188peroccurrence.
To provide passenger transportation in the United States, a domestic airline is required to hold both a Certificate of Public Convenience &
NecessityfromtheDOTandanAirCarrierOperatingCertificatefromtheFAA.ACertificateofPublicConvenience&Necessityisunlimitedin
duration, and the Company’s certificate generally permits it to operate among any points within the United States and its territories and
possessions.AdditionalDOTauthority,intheformofacertificateorexemptionfromcertificaterequirements,isrequiredforaU.S.airlineto
serve foreign destinations either with its own aircraft or via code-sharing with another airline. Exemptions granted by the DOT to serve
internationalmarketsaregenerallylimitedindurationandaresubjecttoperiodicrenewalrequirements.TheDOTmayrevokeacertificateor
exemption,inwholeorinpart,forfailuretocomplywithfederalaviationstatutes,regulations,orders,orthetermsofthecertificateorexemption
itself.
The DOT's consumer protection and enforcement authority is derived primarily from a federal statutory prohibition on "unfair or deceptive
practicesorunfairmethodsofcompetition"byaircarriers.AnewDOTruletookeffectinJanuary2021,codifyingthedefinitionsfortheterms
‘‘unfair’’and‘‘deceptive’’intheDOT’sregulationsby
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adoptingthedefinitionsusedbytheFederalTradeCommission,andamendingandclarifyingtheprocedurestheDOTwillfollowwhenengaging
inaviationconsumerprotectionrulemakingandenforcement.Thepurposeofthisnewruleistohelpestablishclearandconsistentcriteriafor
unfairordeceptivepracticeswhilealigningDOT’soversightofaviationentitieswithothergovernmentagencies’oversightofothersectorsofthe
economywithregardtounfairordeceptivepractices.
Undertheabove-describedauthority,theDOThasalsoadoptedso-called"PassengerProtectionRules,"whichaddressawidevarietyofmatters,
includingflightdelaysonthetarmac,chronicallydelayedflights,deniedboardingcompensation,baggageliabilityrequirements,ticketrefunds,
andadvertisingofairfares,amongothers.Forexample,undertheDOT'starmacdelayruleandsubjecttolimitedexceptions,aircarriersmustnot
allowanaircrafttoremainonthetarmacformorethan3hours(fordomesticdelays)ormorethan4hours(forinternationaldelays),without
allowingpassengerstodeplane.
Inaddition,thePassengerProtectionRulesrequireairlinesto(i)displayontimeperformanceontheirwebsites;(ii)adoptcustomerserviceplans,
publishthoseplansontheirwebsite,andaudittheirowncompliancewiththeirplans;(iii)designateanemployeetomonitortheperformanceof
their flights; (iv) provide information to passengers on how to file complaints; (v) respond in a timely and substantive fashion to consumer
complaints;(vi)paycompensationtoeachpassengerdeniedboardinginvoluntarilyfromanoversoldflight;(vii)refundanycheckedbagfeefor
permanentlylostluggage;(viii)prominentlydiscloseallpotentialfeesforoptionalancillaryservicesontheirwebsites;and(ix)refundpassenger
feespaidforancillaryservicesifaflightcancelsoroversellsandapassengerisunabletotakeadvantageofsuchservices.
ThePassengerProtectionRulesalsorequirethat(i)advertisedfaresincludeallgovernment-mandatedtaxesandfees;(ii)passengersbeallowed
toeither holda reservationfor upto 24 hours without making a paymentor cancela paidreservation withoutpenalty for24 hoursafter the
reservationismade,aslongasthereservationismadeatleastsevendaysinadvanceoftravel;(iii)faresmaynotincreaseafterpurchase;(iv)
baggage fees must bedisclosed to thepassenger atthe time ofbooking; (v) the same baggageallowances and feesmust applythroughout a
passenger’strip;(vi)baggagefeesmustbedisclosedone-ticketconfirmations;and(vii)passengersmustbepromptlynotifiedintheeventof
delaysofmorethan30minutesorifthereisacancellationordiversionoftheirflight.
TheDOTtookactionsthroughout2021tobolsteritsPassengerProtectionRulesincertainrespects.Forexample,inJanuary,theDOTissueda
final rule increasing involuntary denied boarding and mishandled baggage compensation, and prohibiting airlines from denying boarding to
passengersthat havealready boarded.In September,reacting tocomplaints filedin theearlier monthsof theCOVID-19 pandemic related to
carriers’refund practices,theDOT announceditplans tosolicitcomments onaproposed rulethatwould enhancepassengers’ rights whena
flightisoperatingbutthepassengerdecidesnottoflybecauseofgovernmentrestrictions(possiblyrequiringrefundsofnon-refundableticketsin
thosesituations).TheCompanydoesnotbelievethatpendingregulatorydevelopmentswithrespecttothe DOT’s PassengerProtectionRules
willhaveamaterialeffectontheCompany'scapitalexpenditures,earnings,orcompetitiveposition.
In addition to its statutory authority to prohibit unfair or deceptive practices or unfair methods of competition, the DOT is charged with
prohibitingdiscriminationbyairlinesagainstconsumersonthebasisof(i)disability;and(ii)race,religion,nationalorigin,sex,orancestry.
Underthisauthority,the DOThas proposed arulethatwouldprovideforchangestotheaccessibilityoflavatoriesonsingle-aisleaircraftfor
passengerswithdisabilities.Theseproposedchangesincludemodificationstotheinteriorofthelavatory,additionalservicesthatairlineswould
providewithrespecttolavatoryaccess,trainingrequirements,andimprovementstotheaircraft'sonboardwheelchair.TheDOThasindicatedit
intendstoalsoproposeandseekcommentsonaseparaterulein2022thatwouldeventuallyrequireairlinestoofferalargerlavatoryonsingle-
aisleaircraft.RequirementstoexpandthesizeoflavatoriescouldimposesubstantialcostsontheCompanyandhaveamaterialeffectonthe
Company'scapitalexpenditures,earnings,andcompetitiveposition.WhethertheDOTwill
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ultimatelyadoptanewrulerequiringlargerlavatories,andthetimingandapplicationofanynewrule,areunknownatthistime.
Aviation Taxes and Fees
The statutory authority for the federal government to collect most types of aviation taxes, which are used, in part, to finance programs
administered by the FAA, must be periodically reauthorized by the U.S. Congress. The FAA Reauthorization Act of 2018 (the "2018
ReauthorizationAct")extendsmostcommercialaviationtaxesthroughSeptember30,2023.
InadditiontoFAA-relatedtaxes,thereareadditionalfederaltaxesrelatedtotheU.S.DepartmentofHomelandSecurity.Thesetaxesdonotneed
to be reauthorized periodically. Congress has set the Transportation Security Fee paid by passengers at $5.60 per one-way passenger trip
originatingintheU.S.Inaddition,internationalpassengersarrivingintheU.S.aresubjecttoU.S.immigrationandcustomsfeesthatareindexed
to inflation. These fees are used to support the operations of U.S. Customs and Border Protection ("CBP"). Finally, the U.S. Department of
Agriculture'sAnimalandPlantHealthInspectionServiceimposesanagricultureinspectionfeeoninternationalpassengersarrivingintheUnited
States.
Airlinepassengers arealso requiredto paya PassengerFacility Charge,a userfee that isauthorized viafederal statutebut assessedby each
airport.ThemaximumPassengerFacilityChargeis$4.50perpassengerenplanement.Newaviationtaxesorregulationsmaybeimposedthrough
the annual congressional budget process. The annual appropriations bill funds the federal government - including the DOT, the FAA, the
TransportationSecurityAdministration(the"TSA"),andCBP.Passageofthefiscalyear2021and2022appropriationsbillwillbeconsidered
throughout2022andcouldresultinanincreaseinoneormoreofthetaxesandfeesdiscussedabove,aswellasnewmandatesontheDOTto
beginorcompleterulemakingsrelatedtoairlineconsumerprotection.
Operational and Safety Regulation
TheFAA,an agencywithinthe DOT, hastheauthority toregulatesafetyaspects ofcivilaviation operations. Specifically,theCompany and
certainofitsthird-partyserviceprovidersaresubjecttothejurisdictionoftheFAAwithrespecttoaircraftmaintenanceandoperations,including
equipment, ground facilities, dispatch, communications, training, and other matters affecting air safety. The FAA, from time to time, issues
orders or directives relating to the maintenance and operation of aircraft that require significant expenditures or operational restrictions. The
FAA, acting through its own powers or through the appropriate U.S. Attorney, has the power to bring proceedings for the imposition and
collectionofcivilpenaltiesforviolationoftheFAA'sregulations.
TheFAArequiresairlinestoobtainandmaintainanAirCarrierOperatingCertificate,aswellasothercertificates,approvals,andauthorities.
Thesecertificates,approvals,andauthoritiesaresubjecttoamendment,suspension,orrevocationforcause.
Astheairlines’safetyregulator,theFAAusestools,suchastemporaryflightrestrictions,tocontrolaircraftoperationswithindesignatedareas.
The FAA may also issue advisory circulars to provide guidance for compliance with aircraft and pilot certification standards, operational
standards, training standards, and other FAA rules. These regulatory tools may create additional costs and/or operational restrictions for the
Company.Forexample,theFAAhasexpressedconcernaboutthedeploymentofcertainwirelesstelecommunicationssystemsthatmaycause
interference with certain aircraftavionics, such asradio altimeters. In response, theFAA could imposetemporary flight restrictions until the
agencybelievesany safetyconcerns areresolved.The FAA couldalsorequiremitigations fromaircraftoperators(e.g., aircraftretrofits) asa
meanstoavoidanypotentialinterference.
Withrespecttoairlineoperations,theFAAhasrulesineffectwithrespecttocrewflight,duty,andresttimes.Amongotherthings,therules(i)
requireatenhourminimumrestperiodpriortoapilot’sflightdutyperiod;(ii)mandatethatapilotmusthaveanopportunityforeighthoursof
uninterruptedsleepwithintherestperiod;and(iii)imposepilot"flighttime"and"dutytime"limitationsbaseduponreporttimes,thenumberof
scheduledflight
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segments, andother operational factors.The FAA has establishedflight attendant dutyperiod limitations and rest requirements based onthe
lengthofaflightattendant’sscheduleddutyperiod,numberofflightattendantsassignedtoaflight,andotheroperationalfactors.
The2018ReauthorizationActcontainsaprovisionrequiringamodificationtotheFAA'srulestoincreasetherequiredflightattendantrestperiod
betweendutyperiods.FAArulescurrentlyprovidethataflightattendantscheduledtoadutyperiodoffourteenhoursorlessmustbegivena
scheduledrestperiodofatleastnineconsecutivehours.Thisrestperiodcanbereducedtoeightconsecutivehoursundercertaincircumstances.
OnNovember2,2021,theFAAissuedaproposedruleincreasingtheminimumrestperiodtotenconsecutivehoursandprohibitingareduction
oftheminimumrestperiodunderanycircumstances.ThecommentperiodontheproposedruleclosedonJanuary3,2022.Theimplementation
oftheruleasproposedcouldrequiretheCompanytomodifyitstechnologysystemsandflightattendantstaffingpractices,whichcouldhavea
material effect on the Company’s operational performance, costs, earnings, competitive position, and Customer Experience. The FAA has
indicateditexpectstofinalizetherulein2022.
Pursuanttothe2018ReauthorizationAct,theFAAisrequiredtoissueanorderrequiringinstallationofaphysicalsecondarycockpitbarrieron
"eachnewaircraftthatismanufactured"fordeliverytoapassengeraircarrier.Aworkinggroupcomprisedofindustrytechnicalexpertsprovided
adviceandrecommendationstotheFAAin2020onthemosteffectivewaystoimplementthephysicalsecondarycockpitbarrierrequirement.
Depending on if and how the FAA reacts to the working group’s advice and recommendations, as well as the FAA's interpretation and
applicationofthestatutoryrequirement,compliancewiththefutureFAAordercouldimposeasubstantialcostontheCompany.TheFAAhas
indicateditplanstoissueaproposedrulein2022.
The2018 ReauthorizationActalsocontainsprovisionsdirectingtheFAAtoexaminewhethertoissuenewregulationsestablishingminimum
dimensionsforseatsizebasedonsafetyconsiderations.Further,the2018ReauthorizationActexpandshumantraffickingtrainingrequirements
beyondflightattendantstoincludeseveralpublic-facingEmployeeworkgroups,aswellasrequiresaircarrierstoimplementaplananddevelop
trainingwithprotocolsforpreventingandrespondingtoverbalorphysicalassaultcommittedagainstcustomerserviceagents.Humantrafficking
trainingisrequiredfortheCompany’sfrontlineEmployeesandrecommendedasvoluntarycurriculumforotherEmployees.TheCompanyhas
alsoimplementedanEmployeeAssaultPreventionandResponsePlanthatincludestrainingtode-escalatehostilesituations,writtenprotocolsfor
dealingwithhostilesituations,andreportingofrelevantincidentstoappropriateauthorities.
Inadditiontoitsroleassafetyregulator,theFAAoperatesthenation’sairtrafficcontrolsystemandhascontinueditslengthyandongoingeffort
toimplementamulti-faceted,airspacemodernizationprogram,NextGen.AccordingtotheU.S.government,NextGenwillhelpcontributetoa
safer,moreefficient,andmorepredictablesystem,whichmaypotentiallycontributetoreducedfuelburn,emissions,andnoise.Aspartofthe
NextGeninitiative,in2010theFAApublishedrulesrequiringmostcommercialaircraftoperatinginthenationalairspacesystemtobeequipped
withAutomaticDependentSurveillance-Broadcast("ADS-B")technologybyJanuary1,2020.ADS-Btechnologyisintendedtoenhancesafety
andefficiencybymovingfromground-basedradarandnavigationalaidstoprecisetrackingusingsatellitesignals.Inadditiontoenvironmental
andefficiencybenefits,ADS-Btechnologygivespilotsandairtrafficcontrollersnewtoolstoreducetheriskofrunwayincursionsandaircraft
collisions.TheCompanyhasimplementedtechnologyandprogramsintendedtocomplywithallapplicableADS-Brequirements.OnNovember
9, 2021, the U.S. government announced an Aviation Climate Action Plan to reduce emissions by, among other initiatives and efforts,
operationalizing NextGen to realize the full potential of modernized infrastructure and systems, and enhancing data quality and information
distributiontoenableoperatorstoflymorefuel-efficienttrajectories.
TheAirTrafficOrganization("ATO")istheoperationalarmoftheFAA.TheATOisresponsibleforprovidingsafeandefficientairnavigation
servicestoalloftheUnitedStatesandlargeportionsoftheAtlanticandPacificOceansandtheGulfofMexico.TheCompanyissubjecttoany
operationalchangesimposedbytheFAA/ATOastheyrelatetotheNextGenprogram,aswellastheday-to-daymanagementoftheairtraffic
controlsystem.
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Passenger and Occupational Health Regulation
The Company is subject to various other federal, state, and local laws and regulations relating to health and occupational safety, including
Department of Health and Human Services, Centers for Disease Control and Prevention (“CDC”), Occupational Safety and Health
Administration,and Foodand Drug Administrationregulations. Inresponseto theCOVID-19 pandemic,federal,state, andlocal government
authoritiesimplementeddirectives,orders,andregulationsintendedtomitigatethespreadofthevirus,andinresponse,theCompanymodified
itspractices,policies,andprocedures,asappropriate.Forexample,theCDCandTSAissuedorders,effectiveFebruary1,2021,mandatingthe
wearingoffacemasksonallcommercialflightsandwithinairports,subjecttocertainlimitedexceptions.Themaskmandatehasbeenextended
throughMarch18,2022,andcouldbeextendedagain.Inaddition,onOctober25,2021,theCDCandCBPissuedorders,effectiveNovember8,
2021,requiringthatadultnon-citizen,non-immigrantpassengerstravelingtotheUnitedStatesbyairbefullyvaccinatedagainstCOVID-19and
show proofof their vaccination status. The orders also require that all passengers traveling tothe United States byair provide basic contact
tracinginformationtoairlinesbeforeboarding.
InSeptember2021,thePresidentoftheUnitedStatesissuedanExecutiveOrderestablishingavaccinationrequirementforemployeesofcovered
federalcontractors.Thefederalgovernmentrequiredthatfederalcontractorshavetheirworkforcevaccinated(orrequestanaccommodation)by
December8,2021.ThedeadlinewaslaterextendedtoJanuary4,2022.TheCompanystartedanactivecampaigntonotifyEmployeesofthe
need to submit proof of COVID-19 vaccination, or apply for an accommodation, by January 4, 2022. On December 3, 2021, the company
announced that 93 percent of its Employees were vaccinated, or had requested an accommodation. Due to legal challenges to the vaccine
mandate,theCompanyannouncedonDecember20,2021,thatitisnolongertargetingaJanuary4,2022,deadlineforcompliance.However,if
thevaccinemandateisrevived,theCompanywillresumeeffortstoworkwithEmployeeswhohavenotyeteithersubmittedproofofvaccination
orrequestedanaccommodation.
Additionalhealthrequirementsorstandards,whethermandatedbygovernmentagenciesorvoluntarilyadoptedbytheCompany,relatedtothe
COVID-19pandemicorotherwiseintendedtomitigatethespreadofcommunicablediseasescouldaffecttheCompany’scostsandperformance.
ForfurtherinformationpertainingtotheFAA’soversightandregulatoryauthority,aswellashealthandsafetyregulationsrelatedtoCOVID-19,
see“RiskFactors-Legal,Regulatory,Compliance,andReputationalRisks,andCOVID-19Risks.”
Security Regulation
PursuanttotheAviationandTransportationSecurityAct("ATSA"),theTSA,afederalagencyoftheU.S.DepartmentofHomelandSecurity,is
responsible for certain civil aviation security matters. ATSA and subsequent TSA regulations and procedures implementing ATSA address,
amongotherthings,(i)flightdecksecurity;(ii)theuseoffederalairmarshalsonboardflights;(iii)airportandaircraftaccesssecurity;(iv)airline
crewsecurity training;(v) security screening of passengers, baggage, cargo, mail, employees,and vendors;(vi) trainingand qualificationsof
securityscreeningpersonnel;(vii)provisionofpassengerdatatoCBP;and(viii)backgroundchecks.
UnderATSA,substantiallyallsecurityofficersatairportsarefederalemployees,andsignificantotherelementsofairlineandairportsecurityare
overseenandperformedbyfederalemployees,includingfederalsecuritymanagers,federallawenforcementofficers,andfederalairmarshals.
TSApersonnel andTSA-mandatedsecurityprocedurescanaffecttheCompany'soperations,costs,andCustomerexperience.Forexample,as
partofitssecuritymeasures,theTSAregulatesthetypesofliquiditemsthatcanbecarriedonboardaircraft.Inaddition,aspartofitsSecure
Flightprogram,theTSArequiresairlinestocollectapassenger'sfullname(asitappearsonagovernment-issuedID),dateofbirth,gender,and
RedressNumber(ifapplicable).AirlinesmusttransmitthisinformationtoSecureFlight,whichusestheinformationtoperformmatchingagainst
terroristwatchlists.Aftermatchingpassengerinformationagainstthewatchlists,SecureFlighttransmitsthematchingresultsbacktoairlines.
Thisservesto
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identifyindividualsformoreextensivesecurityscreeningandtopreventindividualsonwatchlistsfromboardinganaircraft.Italsohelpsprevent
themisidentificationofpassengerswhohavenamessimilartoindividualsonwatchlists.TheTSA'smulti-layeredapproachtoairportsecurity
alsoincludesphysicalpatdownproceduresatsecuritycheckpoints.Theseprocedureshaveraisedprivacyconcernsbysomeairtravelers,and
havecauseddelaysatscreeningcheckpoints.
TheCompany,inconjunctionwiththeTSA,participatesinTSAPreCheck™,apre-screeninginitiativethatallowspassengersdeemedlowrisk
by the TSA to move through security checkpoints with greater efficiency and ease when traveling. Eligible passengers may use dedicated
screeninglanesatcertainairportstheCompanyservesforscreeningbenefits,whichincludeleavingonshoes,lightouterwear,andbelts,aswell
asleavinglaptopsandpermittedliquidsincarryonbags.AsimilarCBP-administeredprogram,GlobalEntry ,allowsexpeditedclearancefor
pre-approved, low-risk international travelers upon arrival in the United States. The TSA has expressed its plans to leverage advanced
transportationsecurityscreeningtechnologies,includingbiometricsolutions,toimprovesecurityeffectivenessandoperationalefficiency,while
alsoenhancingthepassengerexperience.Theadvancedtechnologieshavepromptedprivacy,cost,andlegalconcernsfromaircarriers,travelers,
andadvocacygroups,whichcouldaffectthetimingandviabilityoftheTSA'splans.
TheCompanyalsoparticipatesintheTSAKnownCrewmember program,whichisarisk-basedscreeningsystemthatenablesTSAsecurity
officerstopositivelyverifytheidentityand employment statusof flight-crew members.Theprogram expedites flightcrew member accessto
sterileareasofairports.
The Company works collaboratively with TSA, foreign national governments, and airports to provide risk-based security measures at
internationallocationsservedbytheCompany.
TheDepartmentofHomelandSecurityhasgrantedtheCompanydesignationcoverageundertheSupportAnti-TerrorismbyFosteringEffective
TechnologiesActof2002(the"SAFETYAct")throughSeptember29,2022.DesignationcoverageaffordstheCompanycertainlimitationsof
liabilityforclaimsarisingoutofan"actofterrorism,"asdefinedundertheSAFETYAct.Thedesignationisbasedonthesecurityprogramused
bytheCompanytoprotectitsEmployees,Customers,andassetsfromterroristsandothercriminalactivities.
The Company has made significant investments in facilities, equipment, and technology to process Customers, checked baggage, and cargo
efficiently in compliance with applicable security regulations; however, the Company is not able to predict the impact, if any, that various
securitymeasuresorTSAresourcelimitationsatcertainairportswillhaveonPassengerrevenuesandtheCompany’scosts,eitherintheshort-
termorthelong-term.
Environmental Regulation
TheCompanyissubjecttovariousfederallawsandregulationsrelatingtotheprotectionoftheenvironment,includingtheCleanAirAct,the
ResourceConservationandRecoveryAct,theCleanWaterAct,theSafeDrinkingWaterAct,andtheComprehensiveEnvironmentalResponse,
Compensation and Liability Act, as well as state and local laws and regulations. These laws and regulations govern aircraft drinking water,
emissions,stormwaterdischargesfromoperations,andthedisposalofmaterialssuchasjetfuel,chemicals,hazardouswaste,andaircraftdeicing
fluid.
Additionally,in conjunctionwith airport authorities, other airlines, and state and localenvironmental regulatoryagencies, theCompany, asa
normalcourseofbusiness,undertakesvoluntaryinvestigationorremediationofsoilorgroundwatercontaminationatvariousairportsites.The
Company has not historically experienced any airport site environmental liability that has had a material adverse effect on its capital
expenditures, earnings, or competitive position. However, many airports, as well as federal, state and local governmental authorities, are
increasinglyfocusedongroundwatercontaminationcausedbyso-called“foreverchemicals,”mostnotablyper-andpolyfluoroalkylsubstances
(“PFAS”).PFAShavebeenusedinmanymanufacturingandindustrialapplicationsovermanydecadesandcanbefoundinnumerousproducts,
including building materials and household products. Most notably for aviation, PFAS are a key component in aqueous film-forming foam
(“AFFF”),whichiswidelyusedto
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fight petroleum-based fires at both commercial and military aviation facilities. The FAA and the U.S. Department of Defense have strict
performancespecifications for firesuppression systems, whichhascontributed totheuse ofAFFF/PFASover thedecades.PFAS isnowthe
focus of regulatory oversight at airports, as well as the source of litigation by airports against AFFF manufacturers. Moreover, regulatory
authoritiesatthefederal,state,andlocallevelsarecontemplatingboththeprohibitionofPFAS-basedAFFFandcostlyremediationeffortsat
airportstoaddressgroundwatercontamination.TheevolvinglegalandregulatoryactivitysurroundingPFAScouldleadtoaninadequatesupply
ofFAA-certifiedAFFFthroughouttheaviationsystemand/orincreasedoperatingcostsatcertainairports.
Thefederalgovernment,aswellasseveralstateandlocalgovernments,thegovernmentsofothercountries,andtheUnitedNations’International
CivilAviationOrganization("ICAO")haveimplementedlegislativeandregulatoryproposalsandvoluntarymeasurestoaddressclimatechange
by reducing greenhouse gas emissions. At the federal level, in July 2016, the Environmental Protection Agency (the "EPA") issued a final
endangermentfindingforgreenhousegasemissionsfromcertaintypesofaircraftengines,whichtheagencydeterminedcontributetopollution
thatcausesclimatechangeandendangerspublichealthandtheenvironment.Followingthisendangermentfinding,perthefederalCleanAirAct,
the EPA adopted aircraft greenhouse gas emissions standards in December 2020. These standards apply to airframe and aircraft engine
manufacturers, and align with the standards previously adopted by ICAO. On November 15, 2021, the EPA affirmed the agency will not
reconsidertheruleadoptingthestandards;however,severalstatesandnon-governmentorganizationshavefiledlegalpetitionschallengingthe
EPA’sadoptionoftherule.
Inadditiontoaircraftemissionsstandards,ICAOimplementeda"globalmarket-basedmeasure"frameworkinanefforttocontrolcarbondioxide
emissionsfrominternationalaviation.Thefocalpointofthisframeworkisacarbonoffsettingsystemapplicabletoaircraftoperatorsdesignedto
cap the growth of emissions related to international aviation emissions. ICAO's Carbon Offsetting and Reduction Scheme for International
Aviation("CORSIA")programisaglobalmarket-basedmeasureintendedtocapcarbonemissionsfrominternationalcivilaviationattheir2019
levels,enablingcarbon-neutralgrowthfortheinternationalaviationsectorbyrequiringthatinternationalaviationemissionsabove2019levels
areoffsetorreducedthroughtheuseofeligiblesustainableaviationfuels.TheU.S.federalgovernmenthasoptedtoparticipateinthevoluntary
phasesof the CORSIAprogram from 2021-2026(additionalphases extendthrough2035). Aspartof theCORSIAprogram, theCompanyis
currentlymonitoringitsinternationalemissionsforreportingpurposes.Datacollectedfromapplicableinternationalflightactivityin2019forms
thebaselineandisusedinthecalculationstodeterminesubsequentcarbonoffsettingrequirementsundertheCORSIAprogram.Regardlessof
themethodofregulationorapplicationofCORSIA,furtherpolicychangeswithregardtoclimatechangearepossible,whichcouldsignificantly
increaseoperatingcostsintheairlineindustryand,asaresult,adverselyaffectoperations.
Inadditiontoclimatechange,aircraftnoisecontinuestobeanenvironmentalfocus,especiallyastheFAAimplementsnewflightproceduresas
partofitsNextGenairspacemodernizationprogramdiscussedabove.TheAirportNoiseandCapacityActof1990givesairportoperatorsthe
right,undercertaincircumstances,toimplementlocalnoiseabatementprograms,providedtheydonotunreasonablyinterferewithinterstateor
foreign commerce or the national air transportation system. Some airports have established airport restrictions to limit noise, including
restrictions on aircraft types to be used and limits on the number of hourly or daily operations or the time of operations. These types of
restrictionscancausecurtailmentsinserviceorincreasesinoperatingcostsandcanlimittheabilityofaircarrierstoexpandoperationsatthe
affectedairports.
Atthefederallevel,theFAAhascommittedtoinformandinvolvethepublic,engagewithcommunities,andgivemeaningfulconsiderationto
community concernsand views when developing new flight procedures,and there is apossibility that Congress may enact legislation inthe
futuretoaddresslocalnoiseconcernsatoneormorecommercialairportsintheUnitedStates.Inaddition,the2018ReauthorizationActrequires
the FAA to consider community noise concerns when proposing a new navigation departure procedure or amending an existing navigation
procedurethatwoulddirectaircraftovernoisesensitiveareas.Thisrequirementcoulddelayorotherwiseimpedetheimplementationoruseof
moreefficientflightpaths.
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Governmenteffortsattheinternational,federal,state,orlocallevelstoaddressworldwideclimatechange,managegreenhousegasemissions,
andreduceaircraftnoisecouldaffectaircraftoperators,originalequipmentmanufacturers,producersandsellersofaviationfuel,andotherthird
parties on which the Company is dependent. Additional legislative or regulatory activity in this area could require modifications to the
Company’s equipment, operations, and strategy, and have a material effect on the Company's capital expenditures, earnings, or competitive
position.
Data Privacy and Security Regulation
Likeallindustries,theairlineindustryhasexperiencedheightenedlegislativeandregulatoryfocusondataprivacyanddatasecurityintheUnited
Statesandelsewhere.Asaresult,theCompanyhasbeenmonitoringagrowingandfast-evolvingsetoflegalrequirements,includingwithrespect
toconsumeraccessandcontrolovertheirpersonalinformation.
TheCompanyexpectsfederal,state,andothergovernmentstoassessandimplementcyber-securityanddataprivacyprotections,whichcould
resultinexpandedcomplianceburdens,costs,andenforcementrisksfortheCompany.
International Regulation
AllinternationalairserviceissubjecttocertainU.S.federalrequirementsandapprovals,aswellastheregulatoryrequirementsoftheappropriate
authorities of the foreign countries involved. Foreign regulatory agencies located in jurisdictions served by the Company can impose
requirements on various aspects of the Company’s business, including safety, marketing, ticket sales, staffing, and tax. In response to the
COVID-19pandemic,certainU.Sandforeignregulatoryauthoritieshaveimposedhealthrequirementsforinternationalpassengers.Forexample,
onOctober25,2021,theCDCissuedorders,effectiveNovember8,2021,requiringthatadultnon-citizen,non-immigrantpassengerstravelingto
the United States by air be fully vaccinated against COVID-19 and show proof of their vaccination status. The orders also require that all
passengerstravelingtotheUnitedStatesbyairprovidebasiccontacttracinginformationtoairlinesbeforeboarding.Theseordersandothernew
orexistinghealthrequirementsforinternationaltravelcouldadverselyaffectdemandandtheperformanceoftheCompany’sinternationalflight
offerings.
TheCompanyhasobtainedthenecessaryeconomicauthorityfromtheDOT,aswellasapprovalsrequiredbytheFAAandapplicableforeign
governmententities,toconductoperations,undercertaincircumstances,topointsoutsideofthecontinentalUnitedStatescurrentlyservedbythe
Company. Certain international authorities and approvals held by the Company are subject to periodic renewal requirements. The Company
requests extensions of such authoritiesand approvals when and as appropriate. To the extent the Companyseeks to serve additional foreign
destinationsinthefuture,ortorenewitsauthoritytoservecertainroutes,itmayberequiredtoobtainnecessaryauthorityfromtheDOTand/or
approvalsfromtheFAA,aswellasanyapplicableforeigngovernmententity.
CertaininternationalmarketsaregovernedbybilateralairtransportationagreementsbetweentheUnitedStatesandforeigncountries.Changesin
U.S.orforeigngovernmentaviationpoliciescouldresultinthealterationorterminationofsuchagreements,diminishthevalueoftheCompany's
existing international authorities, present barriers to renewing existing or securing new authorities, or otherwise affect the Company's
internationaloperations.Therearealsocapacitylimitationsatcertaininternationalairports,whichcouldimpactfutureservicelevels.Ingeneral,
bilateralagreementsbetweentheUnitedStatesandforeigncountriestheCompanycurrentlyserves,ormayserveinthefuture,maybesubjectto
renegotiation or reinterpretation fromtime to time. While theU.S. government hasnegotiated "openskies" agreements withmany countries,
whichallowforunrestrictedaccessbetweentheUnitedStatesandrespectiveforeigndestinations,agreementswithothercountriesmayrestrict
theCompany'sentryintothosedestinationsand/oritsrelatedgrowthopportunities.
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The CBP is the federal agency of the U.S. Departmentof HomelandSecurity charged withfacilitating international trade,collecting import
duties,andenforcingU.S.regulationswithrespecttotrade,customs,andimmigration.TotheextenttheCompanyexpandsitsinternationalflight
offerings,CBPanditsrequirementsandresourceswillalsobecomeincreasinglyimportantconsiderationstotheCompany.Forinstance,withthe
exception of flights from a small number of foreign "preclearance" locations, arriving international flights may only land at CBP-designated
airports,andCBP officersmust bepresentand in sufficientnumbersatthose airportstoeffectivelyprocess andinspect arrivinginternational
passengers,baggage,andcargo.Thus,CBPpersonnelandCBP-mandatedprocedurescanaffecttheCompany'soperations,costs,andCustomer
experience.TheCompanyhasmadesignificantinvestmentsinfacilities,equipment,andtechnologiesatcertainairportsinordertoimprovethe
CustomerexperienceandtoassistCBPwithitsinspectionandprocessingduties;however,theCompanyisnotabletopredicttheimpact,ifany,
thatvariousCBPmeasuresorthelackofCBPresourceswillhaveontheCompany'srevenuesandcosts,eitherintheshort-termorthelong-term.
Insurance
TheCompanycarriesinsuranceoftypescustomaryintheairlineindustryandinamountstheCompanydeemsadequatetoprotecttheCompany
and its property and to comply both with applicable regulations and certain of the Company's credit and lease agreements. The policies
principallyprovidecoverageforpublicandpassengerliability,propertydamage,cargoandbaggageliability,lossordamagetoaircraft,engines,
andspareparts,andworkers’compensation.Inaddition,theCompanycarriesacyber-securityinsurancepolicywithregardstodataprotection
and business interruption associated with both security breaches from malicious parties and from certain system failures. The Company also
managesinsuredriskthroughtheuseofreinsuranceprograms,poolingmechanisms,andawholly-ownedcaptiveinsurancesubsidiary.
Although the Company has been able to purchase aviation, property, liability, and professional insurance via the commercial insurance
marketplace,availablecommercialinsurancecouldbemoreexpensiveinthefutureand/orhavematerialdifferencesincoveragethaninsurance
thathashistoricallybeenprovidedandmaynotbeadequatetoprotecttheCompany'sriskoflossfromfutureevents,includingactsofterrorism.
Further,availablecyber-securityinsurancewithregardstodataprotectionandbusinessinterruptioncouldbemoreexpensiveinthefutureand/or
havematerialdifferencesincoveragethaninsurancethathashistoricallybeenprovidedandmaynotbeadequatetoprotecttheCompany'sriskof
loss.Withrespecttoanyinsuranceclaims,policycoveragesandclaimsaresubjecttoacceptancebythemanyinsurersinvolvedandmayrequire
arbitrationand/ormediationtoeffectivelysettletheclaimsoverprolongedperiodsoftime.
Competition
Competition within the airline industry is intense and highly unpredictable, and Southwest has historically competed with other airlines on
virtuallyallofitsscheduledroutes.Inrecentyears,themajorityofdomesticairlineservicehasbeenprovidedbySouthwestandtheotherlargest
majorU.S.airlines,includingAmericanAirlines,DeltaAirLines,andUnitedAirlines.TheDOTdefinesmajorU.S.airlinesasthoseairlines
withannualrevenuesofatleast$1billion;therearecurrently13passengerairlinesofferingscheduledservice,includingSouthwest,thatmeet
thisstandard.
Key competitivefactors within theairline industry have historicallyincluded (i) pricingand cost structure; (ii) routes, loyalty programs,and
schedules;(iii)customerservice,operationalreliability,productofferings,andamenities;and(iv)balancesheethealth.Asdiscussedbelow,the
COVID-19 pandemic has significantly altered the competitive landscape amongst the airlines, as the industry has been forced to prioritize
liquidityandcostcontrol,whichinturnhasdrivenactionssuchastakingonsignificantlymoredebtandinstitutingmorewidespreaddiscounted
faresandflexiblecustomerpoliciestostimulatetraffic.
Airlines,includingSouthwest, alsocompeteforcustomers withalternativestotravel, suchasvideoconferencing and businesscommunication
platforms.ThesealternativeshavebecomeparticularlyprevalentasaresultoftheCOVID-19pandemic.
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Pricing and Cost Structure
Pricingisasignificantcompetitivefactorintheairlineindustry,andtheavailabilityoffareinformationontheInternetallowstravelerstoeasily
comparefaresandidentifycompetitorpromotionsanddiscounts.During2020and2021,asaresultoftheCOVID-19pandemic,theCompany
experiencedanincreasinglycompetitivefareenvironment,asairlinesofferedsignificantlydiscountedfarestoattempttoaddressunprecedented
decreasesinconsumerdemand.
Pricingcanbedrivenbyavarietyoffactors.Inadditiontotheneedtostimulatetraffic,ashasoccurredduringtheCOVID-19pandemic,under
normalcircumstances,airlinesmaydiscountfarestodrivetrafficinnewmarketsand/orgrowmarketshareinexistingmarkets.
TheCompany believesits low-costoperating structurehas historicallyprovided itwith anadvantage overmany ofits airline competitors by
enabling it to continue to charge low fares. In addition, the Company believes its low-cost operating structure provided it with a significant
financialcompetitiveadvantagerelativetomanyofitscompetitorsinrespondingtothefinancialimpactoftheCOVID-19pandemic.Whileit
hasbecomeincreasinglydifficultfortheCompanytoimproveuponitsindustrycostposition,theCompanybelievesitsCustomerServiceand
flexibleCustomerandRapidRewardspoliciescontinuetopositivelydifferentiateitfrommanyofitscompetitors.
Routes, Loyalty Programs, and Schedules
TheCompanyalsocompeteswithotherairlinesbasedonmarketsserved,loyaltyopportunities,andflightschedules.WhiletheCompanyhasa
robust, point-to-point route network in the United States, some major airlines have more extensive global route structures than Southwest,
includingmoreextensiveinternationalnetworks.Inaddition,manycompetitorshaveenteredintosignificantcommercialrelationshipswithother
airlines,suchas strategic alliances,code-sharing,andcapacity purchaseagreements, whichincrease theairlines'opportunitiesto expand their
routeofferings.Anallianceorcode-sharingagreementenablesanairlinetoofferflightsthatareoperatedbyanotherairlineandalsoallowsthe
airline’scustomerstobooktravelthatincludessegmentsondifferentairlinesthroughasinglereservationorticket.Asaresult,dependingonthe
natureof thespecific allianceorcode-sharing arrangement,a participatingairline maybeable to,among otherthings, (i)offerits customers
accesstomoredestinationsthanitwouldbeabletoserveonitsown,(ii)gainexposureinmarketsitdoesnototherwiseserve,and(iii)increase
theperceivedfrequencyofitsflightsoncertainroutes.Moreextensiveroutestructures,aswellasallianceandcode-sharingarrangements,not
onlyprovideadditionalrouteflexibilityforparticipatingairlines,theycanalsoallowtheseairlinestooffertheircustomersmoreopportunitiesto
earnandredeemloyaltymilesorpoints.Acapacitypurchaseagreementenablesanairlinetoexpanditsroutestructurebypayinganotherairline
(e.g.,aregional airlinewithsmaller aircraft)tooperate flights onitsbehalf inmarketsthat itdoes not,orcannot, serveitself.The Company
continuesto evaluateandimplement initiativestobetter enableitselfto offeradditionalitineraries, andhasopened 18new airports sincethe
COVID-19pandemicbegan,whichhassignificantlyincreaseditsdomesticroutenetwork.
Customer Service, Operational Reliability, Product Offerings, and Amenities
Southwest also competes with other airlines with respect to Customer Service, operational reliability (such as ontime performance), product
offerings,andpassengeramenities. According tostatistics publishedby theDOT, Southwesthas historicallyranked ator nearthe topamong
domesticcarriersinCustomerSatisfactionforhavingthelowestCustomercomplaintratio.However,inparticularinresponsetotheCOVID-19
pandemic, carriers are increasingly focusing on customer-friendly policies as opportunities to win and retain Customers. In addition, some
airlineshavemoreseatingoptionsandassociatedpassengeramenitiesthanSouthwest,includingfirstclass,businessclass,andotherpremium
seatingandrelatedamenities,whichcanappealinparticulartobusinesscustomers.However,theCompanybelievesitsintroductionofitsfares
in the Global Distribution Systems (GDS) provides an opportunity to increase theCompany's market share of business customers. New and
differenttypesofaircraft
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flownbycompetitorscouldhaveoperationalattributesandpassengeramenitiesthatcouldbeconsideredmore attractive tocertainconsumers
thanthoseassociatedwiththeCompany'sexistingfleet.
Balance Sheet Health
TheCompanybelievesitisemergingfromtheCOVID-19pandemicwithastrengthenedfinancialpositionrelativetoitscompetitorsintheU.S.
airlineindustry,whichhasputtheCompanyinabetterpositiontosupportfuturegrowth.Further,theCompanyhasmaintaineditsinvestment-
graderatingbyallthreemajorcreditagencies(Moody’s,S&PGlobal,andFitch)throughoutthepandemic,andiscurrentlytheonlymajorU.S.
passengerairlinewithaninvestment-graderating.TheCompanybelievesitsbalancesheetprovideditadvantagedaccesstoliquidityduringthe
pandemic.
Other Forms of Competition
Technology advancements have provided alternatives to air travel, such as videoconferencing, business communication platforms, and the
Internet,andthesealternativeshavesignificantlyincreasedinscopeduringtheCOVID-19pandemic.TheCompanyissubjecttotheriskthatthe
significantlyincreaseduseofthesealternativescouldresultinpermanentchangestoconsumerbehaviorandtherebynegativelyaffectdemandfor
airtravel.
The airline industry is also subject to varying degrees of competition from other forms of transportation, including surface transportation by
automobiles, buses, and trains. Inconveniences and delays associated with air travel security measures can increase surface competition. In
addition, surface competition can be significant during economic downturns when consumers cut back on discretionary spending and fewer
choosetofly,orwhengasolinepricesarelower,makingsurfacetransportationalessexpensiveoption.Becauseoftherelativelyhighpercentage
ofshort-haultravelprovidedbySouthwest,itisparticularlyexposedtocompetitionfromsurfacetransportationintheseinstances.
Seasonality
The Company's business is ordinarily seasonal. Generally, in most markets the Company serves, demand for air travel is greater during the
summermonths,and,therefore,revenuesintheairlineindustrytendtobestrongerinthesecond(April1-June30)andthird(July1-September
30)quartersoftheyearthaninthefirst(January1-March31)andfourth(October1-December31)quartersoftheyear.Asaresult,inmany
cases, the Company's results of operations reflect this seasonality. Factors that could alter this seasonality include, among others, global
pandemicssuchasCOVID-19,thepriceoffuel,generaleconomicconditions,changesinconsumerbehavior,governmentalaction,extremeor
severeweatherandnaturaldisasters,fearsofterrorismorwar,orchangesinthecompetitiveenvironment.Therefore,theCompany'squarterly
operatingresultsarenot necessarilyindicativeofoperatingresults fortheentireyear,and historicaloperating resultsinaquarterlyor annual
periodarenotnecessarilyindicativeoffutureoperatingresults.
Employees
Total Employees and Labor Union Activity
AtDecember31,2021,theCompanyhadapproximately55,100activefulltimeequivalentEmployees,consistingofapproximately23,500flight,
3,200maintenance,21,000ground,Customer,andfleetservice,and7,400management,technology,finance,marketing,andclericalpersonnel
(associatedwithnon-operationaldepartments).TheCompanycontinuestofocusonitshiringneedstomeetscheduledemands.Thelaborforce
participationrateremainsdepresseddespiteanincreaseinjobs,especiallyinthetransportationandhospitalityindustries.Thereisanongoing
battlefortalent,leadingtolesscandidatesupplyandadeclineinqualifiedcandidates.
Approximately82percentofCompanyEmployeesatDecember31,2021,wererepresentedbylaborunions.TheRailwayLaborActestablishes
therightofairlineemployeestoorganizeandbargaincollectively.Underthe
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Railway Labor Act, collective-bargaining agreements between an airline and a labor union generally do not expire, but instead become
amendableasofanagreeddate.Bytheamendabledate,ifeitherpartywishestomodifythetermsoftheagreement,itmustnotifytheotherparty
inthemannerrequiredbytheRailwayLaborActand/ordescribedintheagreement.Afterreceiptofthenotice,thepartiesmustmeetfordirect
negotiations.Ifnoagreementisreached,eitherpartymayrequesttheNationalMediationBoardtoappointafederalmediator.Ifnoagreementis
reachedinmediation,theNationalMediationBoardmaydetermineanimpasseexistsandofferbindingarbitrationtotheparties.Ifeitherparty
rejectsbindingarbitration,a30-day"coolingoff"periodbegins.Attheendofthis30-dayperiod,thepartiesmayengagein"self-help,"unlessa
Presidential Emergency Board is established to investigate and report on the dispute. The appointment of a Presidential Emergency Board
maintainsthe"statusquo"foranadditionalperiodoftime.Ifthepartiesdonotreachagreementduringthisperiod,thepartiesmaythenengage
in"self-help.""Self-help"includes,amongotherthings,astrikebytheunionortheairline’simpositionofanyorallofitsproposedamendments
andthehiringofnewemployeestoreplaceanystrikingworkers.
The following table sets forth the Company's Employee groups subject to collective bargaining and the status of their respective collective-
bargainingagreementsasofDecember31,2021:
Employee Group
Approximate Number of
Employees Representatives Status of Agreement
SouthwestPilots 8,300
SouthwestAirlinesPilots'Association
("SWAPA") Innegotiations
SouthwestFlightAttendants 14,600
TransportationWorkersofAmerica,AFL-
CIO,Local556("TWU556") Innegotiations
SouthwestRamp,Operations,
Provisioning,FreightAgents 12,600
TransportationWorkersofAmerica,AFL-
CIO,Local555("TWU555") Innegotiations
SouthwestCustomerServiceAgents,
CustomerRepresentatives,andSourceof
SupportRepresentatives 6,100
InternationalAssociationofMachinistsand
AerospaceWorkers,AFL-CIO("IAM142") Innegotiations
SouthwestMaterialSpecialists(formerly
knownasStockClerks) 320
InternationalBrotherhoodofTeamsters,Local
19("IBT19") AmendableApril2024
SouthwestMechanics 2,600
AircraftMechanicsFraternalAssociation
("AMFA") AmendableAugust2024
SouthwestAircraftAppearance
Technicians 170 AMFA Innegotiations
SouthwestFacilitiesMaintenance
Technicians 40 AMFA AmendableNovember2022
SouthwestDispatchers 400
TransportationWorkersofAmerica,AFL-
CIO,Local550("TWU550") Innegotiations
SouthwestFlightSimulatorTechnicians 50
InternationalBrotherhoodofTeamsters
("IBT") AmendableMay2024
SouthwestFlightCrewTraining
Instructors 130
TransportationWorkersofAmerica,AFL-
CIO,Local557("TWU557") AmendableJanuary2022.Innegotiations
SouthwestMeteorologists 10 TWU550 Innegotiations
Human Capital Resources
General
TheCompany’sapproachtohumancapitalisacriticalstrategywithprioritiesthatinclude,amongothers:(i)attracting,developing,andretaining
adiverseandtalentedworkforce;(ii)providingopportunitiesforlearning,development,careergrowth,andmovementwithintheCompany;(iii)
evaluatingcompensationandbenefits,andrewardingperformance;(iv)investinginphysical,emotional,andfinancialhealthofEmployees;(v)
obtaining
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Employeefeedback;(vi)maintainingandenhancingCompanyculture;and(vii)communicatingwiththeBoardofDirectorsonaroutinebasison
keytopics,includingexecutivesuccessionplanning.
TheCompanyhasimplementedmanyprogramsdesignedtoachievethesepriorities,includingstrongEmployeetrainingandbenefitsprograms.
TheCompany'svastEmployeetraininganddevelopmentopportunitiesaddress,amongotherthings,leadershipdevelopment;diversity,equity,
andinclusion;communicationskills;andhumantraffickingawareness.TheCompanyrewardsEmployeeswithcompetitivecompensationand
benefitspackages,including attractive medicalplans,a401(k) plan withadollar-for-dollarmatchfor EmployeesotherthanPilots(subject to
vestingrequirementsandcertaincompensationlimits),a401(k)planwithanon-electivecontributionof15percentforPilots,andaprofitsharing
plan.
The Company regularly conducts Employee surveys to assess job satisfaction of its Employees, and uses information from the surveys to
improve the Company’s ability toattract, develop, and retain talented Employees who will help advance theCompany. For many years, the
bonus opportunity for the Company's senior leadership group, including its executive officers, has been tied to the Company's performance
relative to multiple pre-established performance metrics, which have from time to time included the Company's voluntary turnover rate for
Employees.Inaddition tobonusopportunitiesfor theCompany’sseniorleadership group,theCompany has implementedperformance-based
compensationprogramsforothernon-contractemployeeleaders,includingmanagers,supervisors,teamleads,andcertainotherEmployees.
Diversity, Equity, and Inclusion
Diversity,equity,andinclusion("DEI")isalsoanintegralpartoftheCompany’scultureandprocessesthatsupportrecruitment,hiring,training,
retention,andadvancement.InanefforttoadvancetheCompany'scommitmenttoDEI,theCompanyhasestablishedthefollowinggoals:
• Evolvehiringanddevelopmentpracticestosupportdiversitygoals,includingpostingallopenLeadershippositions(SupervisortoVice
President)andrequiringdiversecandidateslatesforeachrole;
• MeasureprogressinincreasingdiversityinSeniorLeadership;
• DoublethepercentageofracialdiversityandincreasegenderdiversityintheCompany’sSeniorManagementCommitteeby2025;and
• EngagingtheCompany’sbreadthofcommunitypartnerstoleveragerelationshipsinsourcingdiversetalent.
Additionally,theCompany’sBoardofDirectorshascommittedtoincreasingitsdiverserepresentationby2025.TheCompanyhasadedicated
DEIDepartmentthatprovidesregularupdatestotheCompensationCommitteeoftheCompany'sBoardofDirectors.TocontinuetheCompany's
commitment toinclusion, the DEIDepartment has launched amulti-year training plan to increase the cultural competency of theCompany's
workforce.
During2021,theCompanytooktangiblestepstoupdatetherequiredinfrastructure,processes,andpracticestomeettheseobjectives.TheDEI
DepartmentformedanExecutiveSteeringCommitteeto support thestrategic direction ofthisprogress. In addition,the Company evolvedits
talent acquisition processes by requiring diverse candidate pools, inclusion training for all hiring Leaders, and the creation of a Diversity
RecruitingCenterofExcellence.TheCompanyalsoworkswithcommunitypartnersinsupportofitseffortstocontinuedevelopingdiverseand
inclusivetalentpipelinesandexpandingrecruitingefforts.TheCompanyalsorecentlylaunchedaformalSponsorshipandMentorshipProgram.
In addition to current initiatives, the DEI Department has establisheda five-yearenterprise strategic planto continue advancingDEI efforts
throughouttheorganization.TheCompany'smotivationistobeahealthyorganizationwhereEmployeesthrive,feel appreciated, valued,and
haveanauthenticsenseofbelonging.
Additional Information About the Company
The Company was incorporated in Texas in 1967. The following documents are available free of charge through the Company's website,
www.southwest.com: the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any
amendmentstothosereportsthatarefiledwithorfurnishedtotheSecuritiesandExchangeCommission("SEC")pursuanttoSections13(a)or
15(d) of the Securities Exchange Act of 1934. These materials are made available through the Company's website as soon as reasonably
practicableafter
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they are electronicallyfiled with, or furnished to, the SEC.In addition to its reports filed or furnished with the SEC, the Companypublicly
disclosesmaterialinformationfromtimetotimeinitspressreleases,atannualmeetingsofShareholders,inpubliclyaccessibleconferencesand
Investorpresentations,andthroughitswebsite(principallyinitsPressRoomandInvestorRelationspages).ReferencestotheCompany'swebsite
in this Form 10-K are provided as a convenience and do not constitute, and should not be deemed, an incorporation by reference of the
informationcontainedon,oravailablethrough,thewebsite,andsuchinformationshouldnotbeconsideredpartofthisForm10-K.
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DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION
ThisForm10-Kcontains"forward-lookingstatements"withinthemeaningofSection27AoftheSecuritiesActof1933andSection21Eofthe
Securities Exchange Act of 1934. Forward-looking statements are based on, and include statements about, the Company’s estimates,
expectations,beliefs,intentions,andstrategiesforthefuture,andtheassumptionsunderlyingtheseforward-lookingstatements.Specificforward-
lookingstatementscanbeidentifiedbythefactthattheydonotrelatestrictlytohistoricalorcurrentfactsandinclude,withoutlimitation,words
such as "anticipates," "believes," "estimates," "expects," "intends," "may," "will," "would," "could," "plans," "goal," and similar expressions.
Although management believes these forward-looking statements are reasonable as and when made, forward-looking statements are not
guaranteesoffutureperformanceandinvolverisksanduncertaintiesthataredifficulttopredict.Therefore,actualresultsmaydiffermaterially
fromwhat is expressed in orindicated bythe Company'sforward-looking statementsor fromhistorical experience or the Company'spresent
expectations. Known material risk factors that could cause these differences are set forth below under "Risk Factors." Additional risks or
uncertainties(i)thatarenotcurrentlyknowntotheCompany,(ii)thattheCompanycurrentlydeemstobeimmaterial,or(iii)thatcouldapplyto
anycompany,couldalsomateriallyadverselyaffecttheCompany'sbusiness,financialcondition,orfutureresults.
CautionshouldbetakennottoplaceunduerelianceontheCompany'sforward-lookingstatements,whichrepresenttheCompany'sviewsonlyas
ofthedatethisForm10-Kisfiled.TheCompanyundertakesnoobligationtoupdatepubliclyorreviseanyforward-lookingstatement,whether
asaresultofnewinformation,futureevents,orotherwise.
Item 1A.Risk Factors
COVID-19 Risks
The COVID-19 pandemic, including associated variants, has materially and adversely affected, and could continue to materially and
adversely affect, the Company’s results of operations, financial position, and liquidity.
TheCOVID-19pandemic,includingassociatedvariants,hasmateriallyandadverselyaffectedpassengerdemandandbookingsforbothbusiness
and leisure travel, thereby materially and adversely affecting operating incomeand cashflows from operations.The extent ofthe continued
impact of the COVID-19 pandemic on the Company’s business and its financial and operational performance will depend on future
developments, including (i) the duration, spread, severity, or any recurrence of the COVID-19 pandemic, including through any new variant
strainsoftheunderlyingvirus;(ii)theeffectiveness,availability,andusageofvaccines;(iii)thedurationandscopeofgovernmentalordersand
restrictionsrelatedtotheCOVID-19pandemic;(iv)theextentoftheimpactoftheCOVID-19pandemiconoveralldemandforairtravelandthe
Company'srelatedbusinessplansanddecisions;(v)theimpactoftheCOVID-19pandemicontheCompany'sabilitytoretainEmployees;and
(vi)theimpactoftheCOVID-19pandemicontheCompany’saccesstocapital,allofwhicharehighlyuncertainandcannotbepredicted.
TheCOVID-19pandemichascausedpublichealthofficialstorecommendprecautionstomitigatethespreadofthevirus.Sincetheonsetofthe
COVID-19pandemic,federal,state,andlocalauthoritieshaveatvarioustimesinstitutedmeasuressuchasimposingtestingandself-quarantine
requirements, issuing directives forcing businesses to reduce operations or temporarily close, restricting international air travel, and issuing
shelter-in-placeandsimilarorders limiting themovement ofindividuals. Additionally,businesses haverestricted non-essentialtravel fortheir
employees. Such measures have depressed demand for air travel, disrupted the Company’s operations, and materially adversely affected the
Company’sbusiness.TheCompanywillcontinuetobeadverselyaffectedifbusinessescontinuetorestricttravelfortheiremployees.
Moreover, the ability to attract and retain passengers depends, in part, upon the perception and reputation of the Company and the public’s
concernsregardingthehealthandsafetyoftravelgenerally,especiallyregardingairlinetravel.ActualorperceivedriskofinfectiononCompany
flightscouldhaveamaterialadverseeffectonthepublic's
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comfortwith air travel,whichcould harmtheCompany's reputationandbusiness. TheCompanyexpects itwillcontinue toincurCOVID-19
relatedcostsasitcontinuestotakeotheractionstolimitinfectionamongitsEmployeesandpassengers.Inaddition,theindustrymaybesubject
to furtherhealth and hygienerequirements designed to counteractfuture outbreaks, whichrequirements may be costly and take asignificant
amountoftimetoimplement.
TheCOVID-19pandemic may alsomateriallyandadversely affect theCompany’ssupplychain.For example,theCompanyisdependent on
Boeingasitssolesupplierformanyofitsaircraftparts.TheCompanyisalsodependenton(i)soleorlimitedsuppliersforaircraftenginesand
certainotheraircraftparts,equipment,andservices;(ii)thirdpartyvendors;and(iii)serviceproviders.TheCOVID-19pandemichasresulted,
andcouldcontinuetoresult,indelaysandotherperformanceissues,ceasedoperations,orevenbankruptciesamongthesesuppliers,thirdparty
vendors, and service providers.Further failures ofsuppliers, third party vendors, orservice providers totimely provide adequate products or
supportfortheirproducts,orotherwisefulfilltheircommitmentstotheCompany,couldmateriallyadverselyaffecttheCompany’soperations.
TheeffectsoftheCOVID-19pandemiconthefinancialmarketsmaymateriallyandadverselyaffecttheCompany’saccesstocapitalandcostof
capital,includingitsabilitytoraisefundsthroughequityordebtfinancings.Forexample,asaresultoftheeconomiceffectsoftheCOVID-19
pandemic,inthefirsthalfof2020,Moody’s,S&PGlobal,andFitchdowngradedtheCompany’sseniorunsecureddebtratingsandissuerratings.
IftheCompany’screditratingsweretobefurtherdowngraded,orgeneralmarketconditionsweretoascribehigherrisktotheCompany’srating
levels,theairlineindustry,ortheCompany,theCompany’saccesstocapitalandthecostofanydebtfinancingwouldbenegativelyaffected.The
terms of future debt agreements could include more restrictive covenants or require incremental collateral, which could further restrict the
Company’s business operations. There is no guarantee that debt or equity financings will be available in the future to fund the Company’s
obligations,orthattheywillbeavailableontermsconsistentwiththeCompany’sexpectations.
Even once the pandemic and fears of travel subside, demand for air travel may remain weak for a significant period of time. In particular,
consumer behaviorrelated to traveling may be negatively impactedby adverse changes inbusiness travel patterns or adverse changes inthe
perceived or actualeconomic climate, including declines in income levels and/or loss of wealth resulting from the impact of the COVID-19
pandemic.The COVID-19pandemiccontinues toevolve.The ultimateimpact oftheCOVID-19 pandemicishighly uncertainand subjectto
change.
In response to the COVID-19 pandemic, federal, state, and local agencies have issued laws, regulations, and orders relating to health and
occupational safety. Laws, regulations, orders, or other government actions requiring that employees be vaccinated could materially adversely
affect the Company's operations.
InSeptember2021,thePresidentoftheUnitedStatesissuedanExecutiveOrderestablishingavaccinationrequirementforemployeesofcovered
federalcontractors.Thefederalgovernmentrequiredthatfederalcontractorshavetheirworkforcevaccinated(orrequestanaccommodation)by
December8,2021.ThedeadlinewaslaterextendedtoJanuary4,2022.TheCompanystartedanactivecampaigntonotifyEmployeesofthe
need to submit proof of COVID-19 vaccination, or apply for an accommodation, by January 4, 2022. On December 3, 2021, the company
announced that 93 percent of its Employees were vaccinated, or had requested an accommodation. Due to legal challenges to the vaccine
mandate,theCompanyannouncedonDecember20,2021,thatitisnolongertargetingaJanuary4,2022,deadlineforcompliance.However,if
thevaccine mandate is revived, the Company expectsto resumeefforts towork withEmployees whohave notyet eithersubmitted proofof
vaccinationorrequestedanaccommodation.
TheextenttowhichtheCompany'sEmployeeschoosenottogetvaccinatedordonotqualifyforanaccommodationcouldresultinanegative
impact to the Company's operations. Furthermore, the Company’s ability to effectively hire and retain new Employees could be negatively
impacted if potential candidates are unable or unwilling to comply with the vaccination requirement. Federal agencies employing personnel
criticaltotheCompany’soperations,suchasairtrafficcontrol,security,andcustomsstaffing,couldbesimilarlyimpactedbytheExecutive
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Order requiring the vaccination of federal employees. A reduction in the number of federal employees available to support the Company's
operationscouldmateriallyadverselyaffecttheCompany'soperations.
The Company is also dependent on third party vendors and serviceproviders to supportits operations. To theextent thirdparty vendors or
service providersare subject to vaccination laws, regulations, orders,or other government actionsand they or their employees are unableor
unwillingtocomplywithapplicablerequirements,theCompany’sarrangementswiththosevendorsorproviderscouldbeadverselyimpacted,
theCompanymightnotbeabletomaintainitsarrangementwithsuchparties,oratcompetitiveterms,andtheCompany'soperationscouldbe
materiallyadverselyaffected.
The Company has entered into agreements with Treasury with respect to funding support; pursuant to these agreements the Company has
agreed to certain restrictions on how it operates its business and uses its cash, which could limit the ability of the Company to take actions
that it otherwise might have determined were in the best interests of the Company and its Shareholders.
Sincethestartofthepandemic,theCompanyenteredintodefinitivedocumentationwithTreasurywithrespecttoPayrollSupportpursuantto
threeseparatePayrollSupportprograms:the"PSP1PayrollSupportProgram"inApril2020undertheCoronavirusAid,Relief,andEconomic
SecurityAct;the "PSP2PayrollSupport Program”inJanuary2021 undertheConsolidated AppropriationsAct, 2021;andthe "PSP3Payroll
SupportProgram"inApril2021undertheAmericanRescuePlanActof2021.Pursuanttotheseagreements,theCompanyhasagreedtocertain
ongoingrestrictionson,andrequirementswithrespectto,itsbusinessandoperations,includingthefollowing:
• TheCompanyisprohibitedfromrepurchasingitscommonstockandfrompayingdividendsormakingcapitalcontributionswithrespect
toitscommonstockthroughSeptember30,2022;
• 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April1,2023;and
• The Company must maintain certain internal controls and records relating to the Payroll Support funds, and is subject to additional
reportingrequirements.
TheserestrictionsandrequirementsmaynecessitatethattheCompanytake,orlimittaking,actionsitmightotherwisebelievetobeinthebest
interests of the Company and its Shareholders. For example, the restrictions could require that the Company change certain of its business
practices,risktheCompany'sabilitytoretainkeypersonnel,andexposetheCompanytoadditionalcosts(includingincreasedcompliancecosts).
Financial Risks
The airline industry is particularly sensitive to changes in economic conditions; in the event of continued or future unfavorable economic
conditions or economic uncertainty, the Company's results of operations could be further negatively affected, which could require the
Company to further adjust its business strategies.
Theairline industry, whichis subjectto relativelyhigh fixed costs and highlyvariable andunpredictable demand,is particularly sensitiveto
changesineconomicconditions.Historically,unfavorableU.S.economicconditionshavedrivenchangesintravelpatternsandhaveresultedin
reducedspendingforbothleisureandbusinesstravel.Forsomeconsumers,leisuretravelisadiscretionaryexpense,andshort-haultravelers,in
particular,havetheoptiontoreplaceairtravelwithsurfacetravel.AshasbecomeparticularlyevidentasaresultoftheCOVID-19pandemic,
businesses and other travelers are able to forego air travel by using communication alternatives such as videoconferencing, business
communicationplatforms,andtheInternet.Inaddition,totheextentbusinessescontinuetopermitairtravelduringtheCOVID-19pandemic,
theyaremorelikelytorequirethepurchaseoflessexpensiveticketstoreducecosts.This,inturn,canresultinadecreaseinaveragerevenueper
seat.Also,ashasbecomeparticularlyevidentasaresultoftheCOVID-19pandemic,unfavorableeconomicconditions,whenlowfaresareoften
usedtostimulatetraffic,hampertheabilityofairlinestoraisefarestocounteractanyincreasesin
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fuel,labor,andothercosts.AnycontinuingorfutureU.S.orglobaleconomicuncertaintycouldfurthernegativelyaffecttheCompany'sresultsof
operations and could cause the Company to further adjust its business strategies. Additionally, because expenses of a flight do not vary
significantlywiththenumberofpassengerscarried,arelativelysmallchangeinthenumberofpassengerscanhaveadisproportionateeffecton
anairline’s operating andfinancial results. Therefore,any general reduction in airlinepassenger traffic couldadversely affectthe Company's
resultsofoperations.
The Company's business can be significantly impacted by high and/or volatile fuel prices, and the Company's operations are subject to
disruption in the event of any delayed supply of fuel; therefore, the Company's strategic plans and future profitability are likely to be
impacted by the Company's ability to effectively address fuel price increases and fuel price volatility and availability.
Airlinesareinherentlydependentuponenergytooperate,andjetfuelandoilrepresentedapproximately23.5percentoftheCompany'soperating
expensesfor2021.Asdiscussedaboveunder"Business-CostStructure,"Fuelandoilexpensefor2021increasedsignificantlycomparedwith
2020,primarilyduetohighermarketjetfuelprices,andinpartduetohighercapacityinresponsetoconsumerdemand.Thecostoffuelcanbe
extremelyvolatileandunpredictable,andevenasmallchangeinmarketfuelpricescansignificantlyaffectprofitability.Furthermore,volatility
infuelpricescanbeduetomanyexternalfactorsthatarebeyondtheCompany'scontrol.Forexample,fuelpricescanbeimpactedbypolitical,
environmental,andeconomicfactors,suchas(i)dependencyonforeignimportsofcrudeoilandthepotentialforhostilitiesorotherconflictsin
oilproducingareas;(ii)limitationsand/ordisruptionsindomesticrefiningorpipelinecapacityduetoweather,naturaldisasters,orotherfactors;
(iii) worldwide demand for fuel, particularly in developing countries, which can result in inflated energy prices; (iv) changes in U.S.
governmentalpoliciesonfuelproduction,transportation,taxes,andmarketing;and(v)changesincurrencyexchangerates.
The Company's ability to effectively mitigate the impact of fuel price increases could be limited by factors such as its historical low-fare
reputation,theportionofitsCustomerbasethatpurchasestravelforleisurepurposes,thecompetitivenatureoftheairlineindustrygenerally,and
theriskthathigherfareswilldriveadecreaseindemand.TheCompanyattemptstomanageitsriskassociatedwithvolatilejetfuelpricesby
utilizingover-the-counter fuelderivativeinstruments tohedgea portionof itsfuturejet fuelpurchases.However, energyprices canfluctuate
significantlyinarelativelyshortamountoftime.BecausetheCompanyusesavarietyofdifferentderivativeinstrumentsatdifferentpricepoints,
theCompanyissubjecttotheriskthatthefuelderivativesituseswillnotprovideadequateprotectionagainstsignificantincreasesinfuelprices
andinsomecasescouldinfactresultinhedginglosses,whichcouldresultintheCompanyeffectivelypayinghigherthanmarketpricesforfuel,
thuscreatingadditionalvolatilityintheCompany'searnings.
Inaddition,theCompanyissubjecttotheriskthatitsfuelderivativeswillnolongerqualifyforhedgeaccountingunderapplicableaccounting
standards,whichcancreateadditionalearningsvolatility.AdjustmentsintheCompany'soverallfuelhedgingstrategy,aswellastheabilityof
thecommoditiesusedinfuelhedgingtoqualifyforspecialhedgeaccounting,couldcontinuetoaffecttheCompany'sresultsofoperations.In
addition,therecanbenoassurancethattheCompanywillbeabletocost-effectivelyhedgeagainstincreasesinfuelprices.
The Company's fuel hedging arrangements and the various potential impacts of hedge accounting on the Company's financial position, cash
flows,andresultsofoperationsarediscussedinmoredetailunder"Management’sDiscussionandAnalysisofFinancialConditionandResultsof
Operations,""QuantitativeandQualitativeDisclosuresAboutMarketRisk,"andinNote1andNote11totheConsolidatedFinancialStatements.
TheCompanyisalsoreliantuponthereadilyavailablesupplyandtimelydeliveryofjetfueltotheairportsthatitserves.Adisruptioninthat
supplycouldpresentsignificantchallengestotheCompany'soperationsandcouldultimatelycausethecancellationofflightsand/ortheinability
ofthe Companytoprovide serviceto aparticularairport. Theairlineindustry facespotential fuel shortagesin 2022dueto pipelineshipping
spaceconstraintsresultingfromtheshiftingofallocationsduringtheCOVID-19pandemicaswellasanationalshortageofinterstatetrucking
capacity.TheCompanyisworkingwithaviationindustrystakeholderstoaddresstheseissues.However,
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unlessthere isadditional jetfuel distributioncapacity, whetherby pipelineand/or bytruck, therecould betemporary disruptions (e.g., flight
cancellationsorpassengerlids)atoneormoreoftheCompany’sairportsin2022,especiallyduringpeaktravelperiods.
The Company's low-cost structure has historically been one of its primary competitive advantages, and many factors have affected and
could continue to affect the Company's ability to control its costs.
TheCompany'slow-coststructurehashistoricallybeenoneofitsprimarycompetitiveadvantages,asithasenabledittoofferlowfares,drive
trafficvolume,growmarketshare,and,priorto2020,protectprofits;however,ashasbeenthecasefortheCompany,theCOVID-19pandemic
hasforcedtheCompany'scompetitorstoimplementsignificantcostreductionmeasures.Competitorcostreductionmeasuressuchasaccelerated
fleetretirements,capacitycuts,andnetworkreductions,couldhaveanegativeimpactontheCompany'srelativecostposition.
Even before the pandemic, the Company's low-cost position had been challenged by the significant growth of "Ultra-Low Cost Carriers"
("ULCCs"), which in some cases have surpassed theCompany's costadvantage withlarger aircraft, increased seat density,and lowerwages.
ULCCshavefurtherintroduced"unbundled"serviceofferingswhichappealtoprice-sensitivetravelersthroughpromotiontoconsumersofan
extremelylowrelativebasefareforaseat,whileseparatelychargingforrelatedservicesandproducts.Inresponse,mostmajorU.S.airlinesnow
offerexpandedcabinsegmentationfareproducts,suchas"basiceconomy"and"premiumeconomy"products.Abasiceconomyproductprovides
foralowerbasefaretocompetewithaULCCbasefare,butmayincludesignificantadditionalrestrictionsonamenitiessuchasseatassignments
(including restrictions on group and family seating), order of boarding, checked baggage and use of overhead bin space, flight changes and
refunds,and eligibilityfor upgrades. A"premium economy"faretargets consumerswilling topaya premiumfor certainamenitiesthat were
previouslyincludedinthecarriers'basefare(e.g.,morefavorableseatinglocationsinthemaincabin).AlsoinresponsetocompetitiveULCC
pricing,somecarriersremovedfarefloorsforcertainroutes,leadingtoalowerfareofferingacrosstheindustry.
TheCompany's low-cost structurecanalsobenegativelyimpactedbycostsoverwhichtheCompany haslimitedcontrol.Theseincludecosts
suchasfuel,labor,airport,andregulatorycompliancecosts.Jetfuelandoilconstitutedapproximately23.5percentoftheCompany'soperating
expensesduring2021,andtheCompany'sabilitytocontrolthecostoffuelissubjecttotheexternalfactorsdiscussedinthefifthRiskFactor
above.
Salaries,wages,andbenefitsconstitutedapproximately55.0percentoftheCompany'soperatingexpensesduring2021.TheCompany'sabilityto
controllaborcostsislimitedbythetermsofitscollective-bargainingagreements,andthislimitedcontrolhasnegativelyimpactedtheCompany's
low-costposition,inparticularinthecontextoftheCompany'scostreductioneffortsduringtheCOVID-19pandemic.Asdiscussedfurtherunder
"Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations,"theCompany'sunionizedworkforce,whichmakes
upapproximately82percentofitsEmployees,hashadpayscaleincreasesasaresultofcontractualrateincreases,whichhasputpressureonthe
Company'slaborcosts.Additionally,asindicatedaboveunder"Business-Employees,"themajorityofSouthwest'sunionizedEmployeework
groups, including its Pilots; Flight Attendants; Ramp, Operations, Provisioning, and Freight Agents; Customer Service Agents, Customer
Representatives,andSourceofSupportRepresentatives;AircraftAppearanceTechnicians;Dispatchers;Meteorologists;FacilitiesMaintenance
Technicians;andFlightInstructorsareinunionscurrentlyinnegotiationsforlaboragreementsorhavelaboragreementsthatbecomeamendable
in2022,whichcouldresultinadditionalpressureontheCompany'slow-coststructure.Further,during2021,inresponsetostaffingchallenges,
theCompanyincreasedtheminimumpayforcertainofitsworkforce,andprovidedincentivepayincertaininstances.
Asdiscussedaboveunder"Business-Regulation,"theairlineindustryisheavilyregulated,andtheCompany'sregulatorycompliancecostsare
subject to potentially significant increases from time to time based on actions by regulatory agencies that are out of the Company's control.
Additionally,because ofairportinfrastructure updatesandother factors,theCompany hasexperiencedincreased spacerentalrates atvarious
airportsinitsnetwork.Further,theCompanycannotcontroldecisionsbyotherairlinestoreducetheircapacity.Whenthisoccurs,asithas
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attimesduringthepandemic,certainfixedairportcostsareallocatedamongafewernumberoftotalflights,whichcanresultinincreasedlanding
feesandothercostsfortheCompany.
TheCompanyisreliantuponthirdpartyvendorsandserviceproviders,andtheCompany'slow-costadvantageisdependentinpartonitsability
toobtainandmaintaincommerciallyreasonabletermswiththoseparties.Disruptionstocapitalmarkets,shortagesofskilledpersonnel,supply
chaindisruptions,geopoliticaldevelopments,and/oradverseeconomicconditionscouldsubjectcertainoftheCompany'sthirdpartyvendorsand
service providers to significant financial pressures, which could lead to delays and other performance issues, ceased operations, or even
bankruptcies among these third party vendors and service providers. If a third party vendor or service provider is unable to fulfill its
commitmentstotheCompany,theCompanymaybeunabletoreplacethatthirdpartyvendororserviceproviderinashortperiodoftime,orat
competitiveterms,whichcouldhaveamaterialadverseeffectontheCompany'sresultsofoperations.
As discussed above under "Business - Insurance," the Company carries insurance of types customary in the airline industry. Although the
Companyhasbeenabletopurchaseaviation,property,liability,andprofessionalinsuranceviathecommercialinsurancemarketplace,available
commercialinsurance couldbemore expensiveinthe futureand/or havematerialdifferences incoveragethan insurancethat hashistorically
beenprovidedand maynot be adequatetoprotectagainst theCompany's riskoflossfromfuture events,includingactsof terrorism. Further,
availablecyber-securityinsurancewithregardstodataprotectionandbusinessinterruptioncouldbemoreexpensiveinthefutureand/orhave
materialdifferencesincoveragethaninsurancethathashistoricallybeenprovidedandmaynotbeadequatetoprotecttheCompany'sriskofloss.
With respectto any insuranceclaims, policy coverages and claimsare subject toacceptance by themany insurers involvedand may require
arbitrationand/ormediationtoeffectivelysettletheclaimsoverprolongedperiodsoftime.Inaddition,anaccidentorotherincidentinvolving
Southwestaircraftcouldresultincostsinexcessofitsrelatedinsurancecoverage,whichcostscouldbesubstantial.Anyaircraftaccidentorother
incident, even if fully insured, could also have a material adverse effect on the public's perception of the Company, which could harm its
reputationandbusiness.
Asdiscussedbelowunder"Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations,"theCompanyexperienced
significantunitcostpressurein2020and2021followingtheonsetoftheCOVID-19pandemic.Historically,exceptforchangesinthepriceof
fuel,changesinoperatingexpensesforairlineshavebeenlargelydrivenbychangesincapacity.However,theCompany'soperatingexpensesare
largely fixed once flight schedulesare published; and the Company experienced capacity lower than 2019 during 2020and 2021 due to the
COVID-19pandemic,whichhascontinuedtopressureunitcosts.DuringtheCOVID-19pandemic,theCompanyhasmadescheduleadjustments
basedonconsumerdemand,bookingtrends,andavailablecrewresources.ThecontinuedimpactoftheCOVID-19pandemic,andtheavailability
ofcrewresources,isexpectedtocontinuetorequiretheCompanytomakeadditionalscheduleadjustmentsandcouldhaveamaterialadverse
impactontheCompany'sresultsofoperations.
The Company's results of operations could be adversely impacted if it is unable to effectively execute its strategic plans.
TheCompanyisreliantonthesuccessofitsrevenuestrategiesandotherstrategicplansandinitiativestogrowandtohelpoffsetincreasingcosts.
TheexecutionoftheCompany'sstrategicplanshasbeensignificantlynegativelyaffectedbytheimpactsoftheCOVID-19pandemic,andthe
Companycannotpredictthedurationorscopeofcontinuedimpactsfromthepandemic.Nevertheless,theCompanybegantotakeactionsin2021
toaddstaffingandincreasethestartingwagerateforcertainworkgroups,manageitsfleetandfleetorderbook,andbetteroptimizeitsnetworkin
anefforttopositionitselftoopportunisticallyrecoverandgrowasthepandemicsubsides.ThetimelyandeffectiveexecutionoftheCompany's
strategiesisdependentupon,amongotherfactors,(i)theCompany'sabilitytobalanceitsnetworkscheduleandcapacitywiththeavailabilityand
location of its crew resources; (ii) the Company's ability to effectively balance its investment of incremental operating expenses and capital
expendituresrelatedtoitsstrategiesagainsttheneedtoeffectivelycontrolcosts;(iii)theCompany'sabilitytotimelyandeffectivelyimplement,
transition,andmaintainrelatedinformationtechnologysystemsandinfrastructure;(iv)asdiscussedbelow,theCompany’sabilitytomaintain
satisfactoryrelationswithitsEmployeesoritsEmployees’
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representatives;and(v)theCompany'sdependenceonthirdpartieswithrespecttotheexecutionofitsstrategicplans.
The airline industry is intensely competitive.
As discussed in more detail above under "Business - Competition," the airline industry is intensely competitive. The Company's primary
competitors include other major domestic airlines, as well as regional and new entrant airlines, surface transportation, and alternatives to
transportation such as videoconferencing, business communication platforms, and the Internet. The Company's revenues are sensitive to the
actionsofothercarrierswithrespecttopricing,routes,loyaltyprograms,scheduling,capacity,customerservice,operationalreliability,comfort
andamenities,coststructure,aircraftfleet,strategicalliances,andcode-sharingandsimilaractivities.
Information Technology Risks
The Company is increasingly dependent on technology to operate its business and continues to implement substantial changes to its
information systems; any failure, disruption, breach, or delay in implementation of the Company's information systems could materially
adversely affect its operations.
TheCompanyisincreasinglydependentontheuseofcomplextechnologyandsystemstorunitsongoingoperationsandsupportitsstrategic
objectives.Thesetechnologiesandsystemsinclude,amongothers,theCompany'swebsiteandreservationsystem;flightdispatchandtracking
systems; flight simulators; check-in kiosks; aircraft maintenance, planning, and record keeping systems; telecommunications systems; flight
planning and scheduling systems; crew scheduling systems; human resources systems; and financial planning, management, and accounting
systems. The performance, reliability, and security of the Company's technology infrastructure and supporting systems are critical to the
Company'soperationsandinitiatives.
Implementation and integration of complex systems and technology present significant challenges in terms of costs, human resources, and
developmentofeffectiveinternalcontrols.Implementationandintegrationrequireabalancingbetweentheintroductionofnewcapabilitiesand
themanagingofexistingsystems,andpresenttheriskofoperationalorsecurityinadequacyorinterruption,whichcouldmateriallyaffectthe
Company'sabilitytoeffectivelyoperateitsbusinessand/orcouldnegativelyimpacttheCompany'sresultsofoperations.
TheCompanyisalsoreliantupontheperformanceofitsthirdpartyvendorsfortimelyandeffectiveimplementationandsupportofmanyofits
technologyinitiativesandformaintainingadequateinformationsecuritymeasureswithintheservicesand/orsoftwaretheydeliver.Ifanyofthe
Company'ssignificanttechnologiesorautomatedsystemsweretoceasefunctioning,orifitsthirdpartyvendorserviceprovidersweretofailto
adequatelyandtimelyprovidetechnicalsupport,systemmaintenance,security,orsoftwareupgradesforanyoftheCompany'sexistingsystems,
theCompany couldexperience service interruptions,delays, andlossof criticaldata, whichcouldharm itsoperations, andresultin financial
lossesandreputationaldamage.
Intheordinarycourseofbusiness,theCompany'ssystemswillcontinuetorequiremodificationandrefinementstoaddressgrowthandchanging
businessrequirements.Inaddition,theCompany'ssystemsmayrequiremodificationtoenabletheCompanytocomplywithchangingregulatory
requirements.ModificationsandrefinementstotheCompany'ssystemshavebeenandareexpectedtocontinuetobeexpensivetoimplementand
candivertmanagement’sattentionfromothermatters.Inparticular,during2020,inconnectionwiththeCompany'seffortstoreducecapitaland
operatingexpendituresinresponsetotheCOVID-19pandemic,theCompanydeferredasignificantnumberoftechnologyprojects.Inaddition,
theCompany'soperationscouldbeadverselyaffected,ortheCompanycouldfaceimpositionofregulatorypenalties,ifitwereunabletotimely
or effectivelymodify its systemsas necessary or appropriatelybalance the introductionof new capabilities with the management ofexisting
systems.
The Company has experienced system interruptions and delays that have made its websites and operational systems unavailable or slow to
respond,whichhaspreventedtheCompanyfromefficientlyprocessingCustomer
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transactions or providing services. Any future system interruptions or delays could reduce the Company's operating revenues and the
attractivenessofitsservices,aswellasincreasetheCompany'scosts.
TheCompany'stechnologiesandsystemsandfunctionscouldbedamagedorinterruptedbycatastrophiceventsbeyonditscontrolsuchasfires,
floods,earthquakes,tornadoesandhurricanes,powerloss,computerandtelecommunicationsfailures,actsofwarorterrorism,computerviruses,
securitybreaches,andsimilareventsordisruptions.Anyoftheseeventscouldcausesysteminterruptions,delays,andlossofcriticaldata,and
could prevent the Company from processing Customer transactions or providing services, which could make the Company's business and
serviceslessattractive andsubjecttheCompanytoliability. AnyoftheseeventscoulddamagetheCompany'sreputation andbeexpensiveto
remedy.
Developing and expanding data security and privacy requirements could increase the Company's operating costs, and any failure of the
Company to maintain the security of certain Customer, Employee, and business-related information could result in damage to the Company's
reputation and could be costly to remediate.
The Company must receive information related to its Customers and Employees in order to run its business, and the Company's operations
depend upon secure retention and the secure transmission of information over public networks, including information permitting cashless
payments. This information is subject to the continually evolving risk of intrusion, tampering, and theft. Although the Company maintains
systemstopreventordefendagainsttheserisks,thesesystemsrequireongoingmonitoringandupdatingastechnologieschange,andsecurity
couldbecompromised,personalorconfidentialinformationcouldbemisappropriated,orsystemdisruptionscouldoccur.Intheordinarycourse
ofitsbusiness,theCompanyalsoprovidescertainconfidential,proprietary,andpersonalinformationtothirdparties.WhiletheCompanyseeks
to obtain assurances that these third parties will protect this information, there is a risk the security of data held by third parties could be
breached.AcompromiseoftheCompany'ssecuritysystemscouldadverselyaffecttheCompany'sreputationanddisruptitsoperationsandcould
alsoresultinlitigationagainsttheCompanyortheimpositionofpenalties.Inaddition,itcouldbecostlytoremediate.AlthoughtheCompany
hasnotexperiencedcyberincidentsthatareindividually,orintheaggregate,material,theCompanyhasexperiencedcyber-attacksinthepast,
whichhavethusfarbeenmitigatedbypreventative,detective,andresponsivemeasuresputinplacebytheCompany.
Inaddition,inresponsetothesetypesofthreats,therehasbeenheightenedlegislativeandregulatoryfocusondataprivacyandsecurityinthe
UnitedStates and elsewhere.Asa result,theCompany mustmonitora growing andfast-evolvingset oflegalrequirements inthisarea. This
regulatory environment is increasingly challenging and may present material obligations and risks to the Company's business, including
significantlyexpandedcompliancerequirements,costs,andenforcementrisks.
The Company has a dedicated cyber-security team and program that focuses on current and emerging data security matters. The Company
continuestoassessandinvestinthegrowingneedsofthecyber-securityteamthroughtheallocationofskilledpersonnel,ongoingtraining,and
supportoftheadoptionandimplementationoftechnologiescoupledwithcyber-securityriskmanagementframeworks.
During themajority of 2020,and continuing through2021, 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EmployeesattheCompany'sheadquarterscampus.Maintainingaremotework
forcesignificantly increasesthe risk ofcyber incidentsandevents, suchas computervirusesand securitybreaches, duetoincreased targeted
attacks,whichhavethusfarbeenmitigatedbypreventative,detective,andresponsivemeasuresputinplacebytheCompany.
TheCompany carriesacyber-securityinsurancepolicywithregardstodataprotectionandbusinessinterruptionassociatedwithbothsecurity
breachesfrommaliciouspartiesandfromcertainsystemfailures.However,availablecyber-securityinsurancewithregardstodataprotectionand
businessinterruptioncouldbemoreexpensiveinthefutureand/orhavematerialdifferencesincoveragethaninsurancethathashistoricallybeen
providedandmaynotbeadequatetoprotecttheCompany'sriskofloss.
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Operational Risks
The Company is currently dependent on Boeing as the sole manufacturer of the Company's aircraft. Prolonged delays in the FAA issuing
required certifications or approvals for the -7, or further regulatory actions by the FAA with respect to the MAX aircraft, could materially
and adversely affect the Company’s business plans, strategies, and results of operations.
TheBoeing737MAXaircraftarecrucialtotheCompany’sgrowthplansandfleetmodernizationinitiatives.TheCompany'scontractualdelivery
scheduleforthe-7isdependentontheFAAissuingrequiredcertificationsandapprovalstoBoeingandtheCompany.TheFAAwillultimately
determinethetimingofthe-7certificationandentryintoservice,andtheCompanythereforeoffersnoassurancesthatcurrentestimationsand
timelinesarecorrect.
Boeingnolongermanufacturesversionsofthe737otherthanthe737MAXfamilyofaircraft.Ifthe737MAXaircraftweretoagainbecome
unavailablefortheCompany’sflightoperations,theCompany’sgrowthwouldberestrictedunlessanduntilitcouldprocureandoperateother
typesofaircraftfromBoeingoranothermanufacturer,seller,orlessor,andtheCompany’soperationswouldbemateriallyadverselyaffected.In
particular,iftheCompany’sgrowthweretobedependentupontheintroductionofanewaircraftmakeandmodeltotheCompany’sfleet,the
Company would need to, among other things, (i) develop and implement new maintenance, operating, and training programs; (ii) secure
extensiveregulatoryapprovals;and(iii)implementnewtechnologies.Therequirementsassociatedwithoperatinganewaircraftmakeandmodel
couldtakeanextendedperiodoftimetofulfillandwouldlikelyimposesubstantialcostsontheCompany.Ashiftawayfromasinglefleettype
couldalsoaddcomplexitytotheCompany’soperations,presentoperationalandcompliancerisks,andmateriallyincreasetheCompany'scosts.
Anyoftheseeventswouldhaveamaterial,adverseeffectontheCompany'sbusiness,operatingresults,andfinancialcondition.TheCompany
couldalsobemateriallyadverselyaffectedifthepricingoroperationalattributesofitsaircraftweretobecomelesscompetitive.
The Company's business is labor intensive; therefore, the Company could be materially adversely affected in the event of conflict with its
Employees or its Employees' representatives.
The airline business is labor intensive, and for the year ended December 31, 2021, Salaries, wages, and benefits expense represented
approximately 55.0 percent of the Company's operating expenses. As of December 31, 2021, approximately 82 percent of the Company's
Employeeswererepresentedforcollectivebargainingpurposesbylaborunions,makingtheCompanyparticularlyexposedintheeventoflabor-
related job actions. Employment-related matters (some of which relate to negotiated items) that have impacted the Company's results of
operationsincludehiring/retentionrates,attendance,payrates,outsourcing,workrules,healthcarecosts,andretirementbenefits.Theimpactof
the COVID-19 pandemic has heightened the Company’s exposure and demonstrated the risk that the Company’s results could be materially
adverselyaffectedintheeventofconflictswithitsEmployeesoritsEmployees’representatives.
The Company’s business is labor intensive; therefore, the Company would continue to be adversely affected if it were to continue to be
unable to employ sufficient numbers of qualified Employees to maintain its operations.
TheCompany’ssuccessdependsonitsabilitytoattractandretainskilledpersonnel.Inconnectionwiththedrasticreductionintraveldemand
due to the pandemic, in 2020 the Company offered voluntary separation and extended time-off programs to Employees. As a result, as of
December31,2021,theCompanyhadasignificantlysmallerworkforcethanitdidpriortotheCOVID-19pandemic.Thisnegativelyimpacted
theCompany'sabilitytostaffappropriatelywhendemandforleisuretravelreturnedin2021.Atthesametime,competitionforskilledpersonnel
becamefierce,whichalongwithCOVID-19decreasesinEmployeesavailabletosupporttheoperations,ledtooperationalchallengesthathave
continuedinto2022. Inaddition,the Company hasbeenrequired toprovideincentivepay andincreasecertain starting wageratesto address
these challenges. Staffing-related challenges could continue to intensify and limit the Company's ability to optimally adjust capacity. The
inabilitytorecruitandretain
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skilledpersonnelortheunexpectedlossofkeyskilledpersonnelcouldcontinuetoadverselyaffecttheCompany’soperations.
The Company is currently dependent on a single engine supplier, as well as single suppliers of certain other aircraft parts and equipment;
therefore, the Company could be materially adversely affected (i) if it were unable to obtain timely or sufficient delivery of aircraft parts or
equipment from Boeing or other suppliers or adequate maintenance or other support from any of these suppliers, or (ii) in the event of a
mechanical or regulatory issue associated with the Company's aircraft parts or equipment.
The Company is dependent on Boeing as its sole supplier for many of its aircraft parts. The Company is also dependent on sole or limited
suppliersforaircraftenginesandcertainotheraircraftparts,equipment,andservices.IfBoeing,orothersuppliers,wereunableorunwillingto
timelyprovideadequateproducts or supportfor theirproducts, orin theevent ofa mechanicalor regulatoryissue associatedwith enginesor
otherparts,the Company'soperationscould be materiallyadverselyaffected. TheCompanycould also bematerially adverselyaffected ifthe
pricingoroperationalattributesofitsaircraftequipmentweretobecomelesscompetitive.
The airline industry has faced on-going security concerns and related cost burdens; further threatened or actual terrorist attacks, or other
hostilities, even if not made directly on the airline industry, could significantly harm the airline industry and the Company's operations.
Terroristattacksorothercrimesandhostilities,actualandthreatened,havefromtimetotimemateriallyadverselyaffectedthedemandforair
travelandalsohavenecessitatedincreasedsafetyandsecuritymeasuresandrelated costs for theCompanyandtheairline industry generally.
Safetyand securitymeasures can create delays and inconveniences, which in turncan reducethe Company'scompetitiveness againstsurface
transportation for short-haul routes and alternatives to transportation such as videoconferencing, business communication platforms, and the
Internet. Additionalterrorist attacks orother hostilities, evenif not madedirectly on theairline industry, or the fear of suchattacks or other
hostilities (including elevated national threat warnings, government travel warnings to certain destinations, travel restrictions, or selective
cancellationorredirectionofflightsduetoterrorthreats)wouldlikelyhaveafurthersignificantnegativeimpactontheCompanyandtheairline
industry.
The airline industry is affected by many conditions that are beyond its control, which can impact the Company's business strategies and
results of operations.
Inadditiontotheunpredictableeconomicconditionsandfuelcostsdiscussedabove,theCompany,liketheairlineindustryingeneral,isaffected
byconditionsthatarelargelyunforeseeableandoutsideofitscontrol,including,amongothers:
• adverseweatherandnaturaldisasters;
• changesinconsumerpreferences,perceptions,spendingpatterns,ordemographictrends(including,withoutlimitation,changesintravel
patternsduetogovernmentshutdownsorsequestration);
• actualorpotentialdisruptionsintheairtrafficcontrolsystem(including,forexample,asaresultofinadequateFAAstaffinglevelsdueto
governmentshutdownsorsequestration);
• actualorperceiveddelaysatvariousairportsresultingfromgovernmentshutdowns(including,forexample,longerwait-timesatTSA
checkpointsduetoinadequateTSAstaffinglevels);
• changesinthecompetitiveenvironmentduetoindustryconsolidation,industrybankruptcies,andotherfactors;
• delaysindeliveriesofnewaircraft(including,withoutlimitation,duetodelaysinFAAcertificationorduetotheclosureoftheFAA's
aircraftregistryduringgovernmentshutdowns);
• outbreaksofdiseasesuchastheCOVID-19pandemic;and
• actualorthreatenedwar,terroristattacks,governmenttravelwarningstocertaindestinations,travelrestrictions,andpoliticalinstability.
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Legal, Regulatory, Compliance, and Reputational Risks
The Company is subject to extensive FAA regulation that may necessitate modifications to the Company’s operations, business plans, and
strategies.
The FAApromulgates and enforces regulations affecting the airline industry, and exercises extensive regulatory oversight of the Company’s
operations.TheFAAfrom time totime alsoissues ordersor directivesrelating tothe maintenanceand operationof aircraft.FAA ordersand
directives can be issued with little or no notice, and in certain instances, require the temporary grounding of aircraft and/or the responsive
investmentofoperationalandfinancialresources.TheissuanceofnewFAAregulations,regulatoryamendments,orordersordirectives,suchas
FAA restrictions associated with certain wireless telecommunications systems, could result in flight schedule adjustments and groundings or
delaysinaircraftdeliveries,aswellasloweroperatingrevenues,operatingincome,andnetincomeduetoavarietyoffactors,including,among
others,(i)lostrevenueduetoflightcancellationsanddisruptionsasaresultofasmalleroperatingaircraftfleet,(ii)thelackofabilitytomake
correspondingreductionsinexpensesbecauseofthefixednatureofmanyexpenses,and(iii)possiblenegativeeffectsonCustomerconfidence
andairlinechoice.GovernmentregulationaffectingtheCompanyisdiscussedinmoredetailinthebelowriskfactorandaboveunder“Business-
Regulation.”
Airport capacity constraints and air traffic control inefficiencies have limited and could continue to limit the Company's growth; changes
in or additional governmental regulation could increase the Company's operating costs or otherwise limit the Company's ability to conduct
business.
Almostallcommercialserviceairportsareownedand/oroperatedbyunitsoflocalorstategovernments.Airlinesarelargelydependentonthese
governmentalentitiestoprovideadequateairportfacilitiesandcapacityatanaffordablecost.Inordertooperateefficiently,aswellastoadd
serviceincurrentandnewmarkets,theCompanymustbeabletomaintainand/orobtainspaceandfacilitiesatdesirableairportswithadequate
infrastructure. Airport space, facility, and infrastructure constraints may prevent the Company from maintaining existing service and/or
implementingnewserviceinacommerciallyviablemanner.
Similarly,thefederalgovernmentsingularlycontrolsallU.S.airspace,andairlinesaredependentontheFAAcontrollingthatairspaceinasafe
and efficient manner. The current air traffic control system is mainly radar-based, supported in large part by antiquated equipment and
technologies,andheavilydependentonskilledpersonnel.Asaresult,theairtrafficcontrolsystemmaynotbeabletoeffectivelykeeppacewith
futureairtrafficgrowth.TheFAA'sprotractedtransitiontomodernizedairtrafficcontrolsystemsandnewertechnologiescouldadverselyimpact
airspacecapacityandtheoverallefficiencyofthesystem,resultinginlimitedopportunitiesfortheCompanytogrow,longerscheduledflight
times,increased delaysand cancellations,andincreased fuelconsumption andaircraft emissions.Thecontinuation ofthese airtraffic control
constraintsortheFAA'sinabilitytomeetstaffingneedsonalong-termbasismayhaveamaterialadverseeffectontheCompany'soperations.
Asdiscussedaboveunder"Business-Regulation,"airlinesarealsosubjecttootherextensiveregulatoryrequirements.Theserequirementsoften
imposesubstantialcostsonairlines.TheCompany'sstrategicplansandresultsofoperationscouldbenegativelyaffectedbychangesinlawand
futureactionstakenbydomesticandforeigngovernmentalagencieshavingjurisdictionoveritsoperations,including,butnotlimitedto:
• increasesinairportratesandcharges;
• limitationsonairportgatecapacityoruseofotherairportfacilities;
• limitationsonrouteauthorities;
• actionsanddecisionsthatcreatedifficultiesinobtainingaccessatslot-controlledairports(a"slot"istherightofanaircarrier,pursuantto
regulationsoftheFAAorlocalauthorities,tooperateatakeofforlandingatcertainairports);
• actionsanddecisionsthatcreatedifficultiesinobtainingoperatingpermitsandapprovals;
• changestoenvironmentalregulations;
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• neworincreasedtaxesorfees,includingwithrespecttopotentialincreasestothefederalcorporateincometaxrateorpotentialnewtaxes
imposedonsharerepurchases;
• changestolawsthataffecttheservicesthatcanbeofferedbyairlinesinparticularmarketsandatparticularairports;
• restrictionsoncompetitivepractices;
• changesinlawsthatincreasecostsforsafety,security,compliance,orotherCustomerServicestandards;
• changesinlawsthatmaylimittheCompany'sabilitytoenterintofuelderivativecontractstohedgeagainstincreasesinfuelprices;
• changesinlawsthatmaylimitorregulatetheCompany'sabilitytopromotetheCompany’sbusinessorfares;
• airspaceclosuresorrestrictions,suchasrestrictionsonoperationsinmarketswherecertainwirelesstelecommunicationssystemsmay
causeinterferencewithcertainaircraftavionics;
• groundingofcommercialairtrafficbytheFAA;and
• theadoptionofmorerestrictivelocally-imposednoiseregulations.
The Company is subject to various environmental requirements and risks associated with climate change, including increased regulation,
changing consumer preferences, and the potential increased impacts of severe weather events on the Company's operations and
infrastructure.
TheCompanyissubjecttofederal,state,local,andinternationallawsand regulations relating totheprotectionofthe environment, including
those relating to aircraft and ground-based emissions, discharges to water systems, safe drinking water, and the management of hazardous
substancesandwastematerials.Inaddition,federal,state,local,andinternationallegislativeandregulatorybodiesareincreasinglyfocusedon
climate change and reducing greenhouse gas emissions (“GHG”), including CO emissions. For example, as discussed in more detail under
“Business–Regulation,” thefederal government,aswell as severalstateandlocal governments,thegovernmentsof othercountries, andthe
United Nations’ International Civil Aviation Organization have implemented legislative and regulatory proposals and voluntary measures
intended to reduce GHG emissions. Future policy, legal, regulatory, or other market developments could require the Company to reduce its
emissions,modifyitssupply chain practicesor aspectsof itsoperations, makecapital investmentsto purchasespecific typesof equipmentor
technologies,securecarbonoffsetcredits,orotherwiseincuradditionalcostsrelatedtoclimateobjectives.
Inadditiontorespondingtolegislativeandregulatoryrequirements,theCompanyhasvoluntarilysetenvironmentalsustainabilityplans,targets,
andgoals, theachievementof whichismaterially dependentonthe performanceofthird parties,inparticular withrespect to theproduction,
transport,storage,anddistributionofsustainableaviationfuel.Anynon-performancebyanysuchthirdparties,oranyinabilityoftheCompany
to timely and effectively implement and maintain the necessary processes to support the utilization of sustainable aviation fuel, could
compromisethe Company’sability tomeet itsenvironmental sustainabilityplans, targetsand goals;increase theCompany’s costsassociated
withmeetingsuchplans,targets,andgoals;and/orhaveanadverseimpactontheCompany’sreputationorbrand.Furthermore,totheextentthat
theCompanymayseektoachieveitsvoluntaryclimatetargetsthroughtheuseofcarbonoffsets,itmaybeexposedtoadditionalcostsassociated
withtheprocurementofoffsetsorlimitedsupplyinthevoluntarycarbonoffsetsmarket.
Inaddition,concernamongconsumersoftheimpactsofclimatechangemaymeansomecustomerschooseto flylessfrequentlyorflyonan
airlinetheyperceiveasoperatinginamannerthatismoresustainabletotheclimate.Businesscustomersmaychoosetousealternativestotravel,
such as virtual meetings and workspaces. Greater development of high-speed rail in markets now served by short-haul flights could provide
passengerswithlower-carbonalternativestoflying.TheCompany’scollateraltosecureloans,includingintheformofaircraft,couldlosevalue
as customer demand shifts and economies move tolow-carbon alternatives, which may increasethe Company’s financing costs. In addition,
major financial institutions have begun to announce greenhouse gas emissions reductions targets for their financed activities in the aviation
sector.TotheextentthattheCompany'sclimatetargetsarenotperceivedtoalignwiththoseofitslenders,theCompany'saccesstocreditmaybe
adverselyimpacted.
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Finally,thepotentialacuteandchronicphysicaleffectsofclimatechange,suchasincreasedfrequencyandseverityofstorms,floods,fires,sea-
level rise, excessive heat, longer-term changes in weather patterns, and other climate-related events, could affect the Company’s operations,
infrastructure,andfinancialresults.Operationalimpacts,suchasthecancelingofflights,couldresultinlossofrevenue.TheCompanycould
incursignificantcoststoimprovetheclimateresiliencyofitsinfrastructureand otherwise prepare for,respondto,andmitigate such physical
effects of climate change. The Company is not able to predictaccurately the materialityof any potential lossesor costsassociated with the
physicaleffectsofclimatechange.
The Company's future results will suffer if it is unable to effectively manage its international operations and/or Extended Operations
("ETOPS").
TheCompany'sinternationalflightsaresubjecttoCBP-mandatedprocedures,whichcanaffecttheCompany'soperations,costs,andCustomer
experience.TheCompanyhasmadesignificantinvestmentsinfacilities,equipment,andtechnologiesatcertainairportsinordertoimprovethe
CustomerexperienceandtoassistCBPwithitsinspectionandprocessingduties;however,theCompanyisnotabletopredicttheimpact,ifany,
thatvariousCBPmeasuresorthelackofCBPresourceswillhaveonCompanyrevenuesandcosts,eitherintheshort-termorthelong-term.
InternationalflyingrequirestheCompanytomodifycertainprocesses,astheairportenvironmentisdramaticallydifferentincertaininternational
locations with respect to, among other things, common-use ticket counters and gate areas, passenger entry requirements (including health
requirements imposed in response to the COVID-19 pandemic), local operating requirements, and cultural preferences. Certain international
routesservedbytheCompanyarealsosubjecttospecificaircraftequipagerequirementsanduniqueconsumerbehavior.Route-specificequipage
requirementsand unique consumerbehavior, togetheror individually, may(i) restrictthe Company'sflexibility when schedulingand routing
aircraftandcrews;(ii)requiretheCompanytomodifyitspoliciesorprocedures;and(iii)impacttheCompany'soperationalperformance,costs,
andCustomer Experience.In addition,international flyingexposes the Companyto certainforeign currencyrisks tothe extentthe Company
choosesto,orisrequiredto,transactincurrenciesotherthantheU.S.dollar.TotheextenttheCompanyseekstoserveadditionalinternational
destinationsinthefuture,ortorenewitsauthoritytoservecertainroutes,itmayberequiredtoobtainnecessaryauthorityfromtheDOTand/or
approvalsfromtheFAA,aswellasanyapplicableforeigngovernmententity.
TheCompany'soperationsinnon-U.S.jurisdictionsmaysubjecttheCompanytothelawsofthosejurisdictionsratherthan,orinadditionto,U.S.
laws.LawsinsomejurisdictionsdifferinsignificantrespectsfromthoseintheUnitedStates,andthesedifferencescanaffecttheCompany's
abilitytoreacttochangesinitsbusiness,anditsrightsorabilitytoenforcerightsmaybedifferent thanwouldbeexpectedunderU.S.laws.
Furthermore,enforcementoflawsinsomejurisdictionscanbeinconsistentandunpredictable,whichcanaffectboththeCompany'sabilityto
enforceitsrightsandtoundertakeactivitiesthatitbelievesarebeneficialtoitsbusiness.Asaresult,theCompany'sabilitytogeneraterevenue
and its expenses in non-U.S. jurisdictions may differ from what would be expected if U.S. laws governed these operations. Although the
Companyhaspoliciesandproceduresinplacethataredesignedtopromotecompliancewiththelawsofthejurisdictionsinwhichitoperates,a
violation by the Company's Employees, contractors, or agents or other intermediaries could nonetheless occur. Any violation (or alleged or
perceivedviolation),evenifprohibitedbytheCompany'spolicies,couldhaveanadverseeffectontheCompany'sreputationand/oritsresultsof
operations.
In2019,theCompanybeganservicetoHawaiiafterreceivingapprovalfromtheFAAforETOPS,aregulatoryrequirementtooperatebetween
the U.S. mainland and the Hawaiian Islands. The Company is subject to additional, ongoing, ETOPS-specific regulatory and procedural
requirements,whichpresentoperationalandcomplianceriskstotheCompany’sbusiness,includingcostsassociatedtherewith.
The Company is currently subject to pending litigation, and if judgment were to be rendered against the Company in the litigation, such
judgment could adversely affect the Company's operating results.
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Asdiscussedbelowunder"LegalProceedings,"theCompanyissubjecttopendinglitigation.Regardlessofmerit,theselitigationmattersand
anypotentialfutureclaimsagainsttheCompanymaybebothtimeconsuminganddisruptivetotheCompany'soperationsandcausesignificant
expenseanddiversionofmanagementattention.ShouldtheCompanyfailtoprevailintheseorothermatters,theCompanymaybefacedwith
significant monetary damages or injunctive relief that could materially adversely affect its business and might materially affect its financial
conditionandoperatingresultsandcouldcausereputationalharm.
The Company’s reputation and brand could be harmed if it were to experience significant negative publicity through social media or
otherwise, including with respect to the Company's voluntary sustainability and ESG-related disclosures.
TheCompanyoperates in apublic-facingindustrywith significant exposuretosocialmedia.Negative publicity,whetherornotjustified, can
spreadrapidlythroughsocialmedia.TheCompanyalsomakescertaindisclosuresregardingsustainabilityandcertainESGmatters,includingthe
Company’s goals to achieve carbon neutrality and minimize carbon emissions, and many of these disclosures are necessarily based on (i)
estimatesandassumptionsthatareinherentlydifficulttoassessandmayinvolvethirdpartydatathattheCompanydoesnotindependentlyverify,
and(ii)timelinesthatarelongerthanthetimelinesassociatedwiththeCompany’srequireddisclosures.Giventheestimates,assumptions,and
timelinesusedtocreatethesedisclosures,thematerialityofthesedisclosuresisinherentlydifficulttoassessinadvance,andgiventheuncertainty
oftheestimatesandassumptionsusedtocreatethesedisclosures,theCompanymaynotbeabletoanticipateinadvancewhetherorthedegreeto
whichitwillorwillnotbeabletomeetitssustainabilityandESG-relatedplans,targets,orgoals,orhowexpensiveitwillbetodoso.
TheCompany’sreputationorbrandcouldbeadverselyimpactedby,amongotherthings,(i)anyfailuretomeetitssustainabilityorESGplans,
targets,orgoals,includingthosethatrelatetoclimatechange;(ii)theCompany’simpactontheenvironment;(iii)publicpressurefrominvestors
or policy groups to change the Company's policies; (iv) customer perceptions of the Company’s advertising campaigns, sponsorship
arrangementsormarketingprograms;(v)customerperceptionsoftheCompany’suseofsocialmedia;or(vi)customerperceptionsofstatements
madebytheCompany,itsEmployeesandexecutives,agents,orotherthirdparties.Inthefuture,theCompany'seffortstomeetitssustainability
orESGplans,targets,orgoalsmaydivertCompanyresourcesormanagement'sattentionfromothermatters.
TotheextentthattheCompanyisunabletorespondtimelyandappropriatelytonegativepublicity,theCompany’sreputationandbrandcanbe
harmed. Damage to the Company’s overall reputation and brand could have a negative impact on its financial results and require additional
resourcesfortheCompanytorebuilditsreputation.
The Company’s Bylaws provide, to the fullest extent permitted by applicable law, that the United States District Court for the Northern
District of Texas or, if such court lacks jurisdiction, the state district court of Dallas County, Texas, will be the exclusive forum for certain
legal actions between the Company and its Shareholders, which could increase costs to bring a claim, discourage claims, or limit the ability of
the Company’s Shareholders to bring a claim in a judicial forum viewed by the Shareholders as more favorable for disputes with the
Company or the Company’s directors, officers, or other Employees.
The Company’s Bylaws provide, to the fullest extent permitted by law, that, unless the Company consents in writing to the selection of an
alternativeforum,theUnitedStatesDistrictCourtfortheNorthernDistrictofTexasor,ifsuchcourtlacksjurisdiction,thestatedistrictcourtof
DallasCounty,Texas, will,tothe fullest extentpermittedby applicable law,bethe soleand exclusiveforumfor (a)any derivativeactionor
proceedingbroughtonbehalfoftheCompany;(b)anyactionassertingaclaimofbreachofafiduciarydutyowedbyanydirector,officer,or
otherEmployeeoftheCompanytotheCompanyortheCompany’sShareholders;(c)anyactionassertingaclaimagainsttheCompanyorany
director,officer,orotherEmployeeoftheCompanypursuanttoanyprovisionoftheCompany’sRestatedCertificateofFormationorBylaws(as
eithermaybeamendedfromtimetotime)ortheTexas
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TableofContents
Business Organizations Code; and (d) any action asserting a claim against the Company or any director, officer, or other Employee of the
Companygovernedbytheinternalaffairsdoctrine.
Theforumselectionprovisionmayincreasecoststobringaclaim,discourageclaims,orlimitaShareholder’sabilitytobringaclaiminajudicial
forumthatsuchShareholderfindsfavorablefordisputeswiththeCompanyortheCompany’sdirectors,officers,orotherEmployees,whichmay
discouragesuchlawsuitsagainsttheCompanyortheCompany’sdirectors,officers,andotherEmployees.Alternatively,ifacourtweretofind
theforumselectionprovision contained inthe Company’sBylaws tobe inapplicableor unenforceablein anaction, theCompany couldincur
additionalcostsassociatedwithresolvingsuchactioninotherjurisdictions.TheexclusiveforumprovisionintheBylawswillnotprecludeor
contractthescope of exclusivefederalorconcurrent jurisdiction foractionsbroughtunderthe federalsecuritieslawsincludingthe Securities
ExchangeActof1934ortheSecuritiesActof1933,ortherespectiverulesandregulationspromulgatedthereunder.
Item 1B. Unresolved Staff Comments
None.
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TableofContents
Item 2. Properties
Aircraft
Southwestoperatedatotalof728Boeing737aircraftasofDecember31,2021,ofwhich59and70wereunderoperatingandfinanceleases,
respectively.Thefollowingtabledetailsinformationonthe728aircraftasofDecember31,2021:
Type Seats
Average
Age
(Yrs)
Number of
Aircraft
Number
Owned (a)
Number
Leased (b)
737-700 143 17 452 369 83
737-800 175 6 207 190 17
737MAX8 175 2 69 40 29
Totals
13 728 599 129
(a) AsdiscussedfurtherinNote7totheConsolidatedFinancialStatements,89oftheCompany'saircraftwerepledgedascollateralasofDecember31,2021,for
securedborrowings.
(b) During2021,theCompanyhad7leasedBoeing737-700aircraft,forwhichtheleaseexpiredandtheaircraftwassubsequentlypurchasedfromthelessor,and
thustheaircraftisnowrepresentedasowned.
Thedeliveryschedulebelowreflectscontractualcommitments,althoughthetimingoffuturedeliveriesisuncertain.Thedeliveryscheduleforthe
-7isdependentontheFAAissuingrequiredcertificationsandapprovalstoBoeingandtheCompany.TheFAAwillultimatelydeterminethe
timingofthe-7certificationandentryintoservice,andtheCompanythereforeoffersnoassurancesthatcurrentestimationsandtimelinesare
correct.AsofDecember31,2021,theCompanyhadfirmdeliveriesandoptionsforBoeing737MAX7and737MAX8aircraftasfollows:
The Boeing Company
-7 Firm Orders -8 Firm Orders -7 or -8 Options Total
2022 72 — 42 114
2023 52 — 38 90
2024 30 — 56 86
2025 30 — 56 86
2026 15 15 40 70
2027 15 15 6 36
2028 15 15 — 30
2029 20 30 — 50
2030 15 45 — 60
2031 — 10 — 10
264 130
(a)
238
(b)
632
(a)TheCompanyhasflexibilitytodesignatefirmordersoroptionsas-7sor-8s,uponwrittenadvancenotificationasstatedinthecontract.
(b)SubsequenttoDecember31,2021,andthroughFebruary3,2022,theCompanyhasexercised12-8optionsfordeliveryin2022and12-7optionsfordeliveryin
2023.
Ground Facilities and Services
Southwesteitherleasesorpaysausagefeeforterminalpassengerservicefacilitiesateachoftheairportsitserves,towhichvariousleasehold
improvementshavebeenmade.TheCompanyleasesthelandand/orstructuresonalong-termbasisforitsaircraftmaintenancecenters(located
at Dallas Love Field,Houston Hobby, Phoenix Sky Harbor, Chicago Midway, Hartsfield-Jackson AtlantaInternational Airport, and Orlando
InternationalAirport)anditsmaincorporateheadquartersbuilding,alsolocatednearDallasLoveField.TheCompanyalsoleasesa
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warehouseandenginerepairfacilityinAtlanta.TheCompanyhasannounceditsintenttobuildanewaircraftmaintenancefacility,scheduledto
be completed in first quarter 2022, at Denver International Airport. The Company has also announced its intent to build a new aircraft
maintenancefacility,expectedtobecompletedin2025,atBaltimore-WashingtonInternationalAirport.
The Company has commitments associated with various airport improvement projects, including construction at Los Angeles International
Airport.Theseprojectsincludetheconstructionofnewfacilitiesandtherebuildingormodernizationofexistingfacilities.Additionalinformation
regardingtheseprojectsisprovidedbelowunder"Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations"and
inNote5totheConsolidatedFinancialStatements.
TheCompany ownstwo additionalheadquarters buildings, locatedacross thestreet fromthe Company'smain headquartersbuilding, onland
ownedbytheCompanyincluding(a)anenergy-efficient,modernbuilding,calledTOPS,whichhousescertainoperationalandtrainingfunctions,
including the Company's 24-hour operations and (b) the Wings Complex, consisting of a Leadership Education and Aircrew Development
(LEAD)Center(housingtheCompany's23Boeing737flightsimulatorsandclassroomspaceforPilottraining),anadditionalofficebuilding,
andaparkinggarage.ConstructionhasbeencompletedonanexpansionoftheLEADCenter,andtheLEADCenterhasoverallspaceforatotal
of26Boeing737flightsimulators.
AsofDecember31,2021,theCompanyoperatedsevenCustomerSupportandServicescallcenters.ThecenterslocatedinAtlanta,SanAntonio,
Chicago,Albuquerque,andOklahomaCityoccupyleasedspace.TheCompanyownsitsHoustonandPhoenixcenters.
TheCompanyperformssubstantiallyalllinemaintenanceonitsaircraftandprovidesgroundsupportservicesatmostoftheairportsitserves.
However, the Company has arrangements with certain aircraft maintenance providers for major component inspections and repairs for its
airframesandengines,whichcomprisethemajorityoftheCompany'sannualaircraftmaintenancecosts.
Item 3. Legal Proceedings
On June 30, 2015, the U.S. Department of Justice ("DOJ") issued a Civil Investigative Demand ("CID") to the Company. The CID sought
information and documents about the Company’s capacity from January 2010 to the date of the CID, including public statements and
communications with third parties about capacity. In June 2015, the Company also received a letter from the Connecticut Attorney General
requestinginformationaboutcapacity.TheCompanyiscooperatingfullywiththeDOJCIDandthestateinquiry.
Further,onJuly1,2015,acomplaintwasfiledintheUnitedStatesDistrictCourtfortheSouthernDistrictofNewYorkonbehalfofputative
classes of consumers alleging collusion among the Company, American Airlines, Delta Air Lines, and United Airlines to limit capacity and
maintainhigher faresinviolation ofSection1 ofthe Sherman Act.Since then,anumber ofsimilarclass actioncomplaintswere filedin the
United States District Courts for the Central District of California, the Northern District of California, the District of Columbia, the Middle
DistrictofFlorida,theSouthernDistrictofFlorida,theNorthernDistrictofGeorgia,theNorthernDistrictofIllinois,theSouthernDistrictof
Indiana,theEasternDistrictofLouisiana,theDistrictofMinnesota,theDistrictofNewJersey,theEasternDistrictofNewYork,theSouthern
DistrictofNewYork,theMiddleDistrictofNorthCarolina,theDistrictofOklahoma,theEasternDistrictofPennsylvania,theNorthernDistrict
ofTexas,theDistrictofVermont,andtheEasternDistrictofWisconsin.OnOctober13,2015,theJudicialPanelonMulti-DistrictLitigation
centralized the cases to the United States District Court in the District of Columbia. On March 25, 2016, the plaintiffs filed a Consolidated
AmendedComplaintintheconsolidatedcasesallegingthatthedefendantsconspiredtorestrictcapacityfrom2009topresent.Theplaintiffsseek
tobringtheirclaimsonbehalfofaclassofpersonswhopurchasedticketsfordomesticairlinetravelonthedefendants'airlinesfromJuly1,2011
topresent.Theyseektrebledamages,injunctiverelief,andattorneys'feesandexpenses.OnMay11,2016,thedefendantsmovedtodismissthe
ConsolidatedAmendedComplaint,whichtheCourtdeniedonOctober28,2016.OnDecember20,
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2017,theCompanyreachedanagreementtosettlethesecaseswithaproposedclassofallpersonswhopurchaseddomesticairlinetransportation
servicesfromJuly1,2011,tothedateofthesettlement.TheCompanyagreedtopay$15millionandtoprovidecertaincooperationwiththe
plaintiffs as set forth in the settlement agreement. After notice was provided to the proposed settlement class and the Court held a fairness
hearing,theCourtissuedanordergrantingfinalapprovalofthesettlementonMay9,2019.OnJune10,2019,certainobjectorsfilednoticesof
appeal to the United States Court of Appeals for the District of Columbia Circuit, which the Court dismissed on July 9, 2021, for lack of
jurisdiction because the district court's order approving the settlements was not a final appealable order. The case is continuing as to the
remainingdefendants.TheCompanydeniesallallegationsofwrongdoing.
OnJuly11,2019,acomplaintallegingviolationsoffederalandstatelawsandseekingcertificationasaclassactionwasfiledagainstBoeingand
the Company in the United States District Court for the Eastern District of Texas in Sherman. The complaint alleges that Boeing and the
Company colluded to conceal defects with the Boeing 737 MAX ("MAX") aircraft in violation of the Racketeer Influenced and Corrupt
OrganizationAct("RICO")andalsoassertsrelatedstatelawclaimsbaseduponthesameallegedfacts.Thecomplaintseeksdamagesonbehalf
ofputativeclassesofcustomerswhopurchasedticketsforairtravelfromeithertheCompanyorAmericanAirlinesbetweenAugust29,2017,
and March 13, 2019. The complaint generally seeks money damages, equitable monetary relief, injunctive relief, declaratory relief, and
attorneys’ fees and other costs. On September 13, 2019, the Company filed a motion to dismiss the complaint and to strike certain class
allegations.Boeingalsomovedtodismiss.OnFebruary14,2020,thetrialcourtissuedarulingthatgrantedinpartanddeniedinpartthemotions
todismissthecomplaint.Thetrialcourtorder,amongotherthings:(i)dismissedwithoutprejudicevariousstatelawclaimsthattheplaintiffs
abandonedinresponsetothemotions,(ii)dismissedwithprejudicetheremaining state law claims,includingfraudbyconcealment, fraud by
misrepresentation, and negligent misrepresentation on the grounds that federal law preempts those claims, and (iii) found that plaintiffs lack
ArticleIIIstandingtopursueoneoftheplaintiffs’theoriesofRICOinjury.TheorderdeniedthemotiontodismisswithrespecttotwoRICO
claimspremiseduponasecondtheoryofRICOinjuryanddeniedthemotiontostriketheclassallegationsatthepleadingsstage.OnSeptember
3,2021,thetrialcourtissuedanorderunderRule23(a)and23(b)(3)certifyingfourclassesofpersonsassociatedwithticketpurchasesforflights
duringthe periodofAugust 29,2017,through March13,2019, comprisedof(i) thosewhopurchased tickets(without being reimbursed)for
flights on Southwest Airlines during the class period, except for those whose flights were solely on routes where, at the time of the ticket
purchase(s),aMAXplanewasnotscheduledforuse(oractuallyused)andhadnotpreviouslybeenused,(ii)thosewhoreimbursedaSouthwest
AirlinesticketpurchaserandthusboretheeconomicburdenforaSouthwestAirlinesticketforaflightmeetingtheprecedingcriteriasetforthin
(i)above,(iii)thosewhopurchasedtickets(withoutbeingreimbursed)forflightsonAmericanAirlinesduringtheclassperiod,exceptforthose
whoseflightsweresolelyonrouteswhere,atthetimeofticketpurchase(s),aMAXplanewasnotscheduledforuse(oractuallyused)andhad
not previously been used, and (iv) those who reimbursed an American Airlines ticket purchaser and thus bore the economic burden for an
AmericanAirlinesticketforaflightmeetingtheprecedingcriteriasetforthin(iii)above.OnSeptember17,2021,theCompanyfiledapetition
for permission immediately to appeal the class certification ruling to the Fifth Circuit Court of Appeals. Boeing also filed such a petition.
PlaintiffsfiledtheiroppositionstothepetitionsonSeptember27,2021.OnSeptember30,2021,theFifthCircuitCourtofAppealsgrantedthe
Company(andBoeing)permissiontoappealtheclasscertificationruling.OnDecember22,2021,inresponsetoamotiontostaythetrialcourt
proceedingsfiledbytheCompanyandBoeing,theFifthCircuitstayedallproceedings,includingthepursuitofanydiscovery,inthetrialcourt
pendingdispositionoftheclasscertificationappealbytheFifthCircuit.TheCompanyintendstostrenuouslypursuetheappeal.OnJanuary7,
2022,theCompanyandBoeingeachfiledbriefsinsupportoftheappeal.TheplaintiffshaveadeadlineofMarch9,2022,tofileresponsebriefs.
TheCompanyfurtherdeniesallallegationsofwrongdoing,includingthoseinthecomplaintthatwerenotoriginallydismissed.TheCompany
believestheplaintiffs'positionsarewithoutmeritandintendstovigorouslydefenditselfinallrespects.
OnFebruary19,2020,acomplaintallegingviolationsoffederalsecuritieslawsandseekingcertificationasaclassactionwasfiledagainstthe
Companyandcertain ofits officersintheUnited StatesDistrict CourtfortheNorthern Districtof TexasinDallas.A leadplaintiff hasbeen
appointedinthecase,andanamendedcomplaintwasfiledonJuly2,2020.Theamendedcomplaintseeksdamagesonbehalfofaputativeclass
of persons who purchased the Company’s common stock between February 7, 2017, and January 29, 2020. The amended complaint asserts
claims
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underSections10(b)and20oftheSecuritiesExchangeActandallegesthattheCompanymadematerialmisstatementstoinvestorsregardingthe
Company’ssafetyandmaintenancepracticesanditscompliancewithfederalregulationsandrequirements.Theamendedcomplaintgenerally
seeksmoneydamages,pre-judgmentandpost-judgmentinterest,andattorneys’feesandothercosts.OnAugust17,2020,theCompanyandthe
individualdefendantsfiledamotiontodismiss.OnOctober1,2020,theleadplaintifffiledaresponseinoppositiontothemotiontodismiss.The
CompanyfiledareplyonoraboutOctober21,2020,suchthatthemotionisnowfullybriefed,althoughthepartieshaveeachsupplementedtheir
priorbriefingwithregardtomorerecentcaseholdingsinothermatters.TheCompanydeniesallallegationsofwrongdoing,includingthosein
theamendedcomplaint.TheCompanybelievestheplaintiffs'positionsarewithoutmeritandintendstovigorouslydefenditself.
OnJune22,2020,aderivativeactionforbreachoffiduciarydutywasfiledintheUnitedStatesDistrictCourtfortheNorthernDistrictofTexas
namingthemembersoftheCompany'sBoardofDirectorsasdefendantsandtheCompanyasanominaldefendant(the"DerivativeAction").The
plaintiffallegesunspecified damage toCompany’sreputation,goodwill, and standinginthecommunity,as wellasdamagefromexposure to
civilandregulatoryliabilityanddefensecosts.Accordingtothelawsuit,thesedamagesarisefromtheCompany’sallegedfailuretocomplywith
safetyandrecordmaintenanceregulationsandfalsestatementsinpublicfilingsregardingtheCompany’ssafetypractices.Theplaintiffalleges
theBoard,intheabsenceofgoodfaith,exhibitedrecklessdisregardforitsdutiesofoversight.OnOctober7,2020,theCourtenteredanorder
staying and administratively closing the Derivative Action. The plaintiff in the Derivative Action shall have the right to reopen the action
following the resolution of the Company's motion to dismiss in the ongoing litigation brought under the federal securities laws or upon the
occurrenceofcertainotherconditions.TheBoardandCompanydenyallallegationsofwrongdoingmadeintheDerivativeAction.
OnAugust26,2021, acomplaint allegingbreachofcontract and seekingcertificationasaclass actionwas filedagainsttheCompanyin the
UnitedStatesDistrictCourtfortheWesternDistrictofTexasinWaco.ThecomplaintallegesthattheCompanybreacheditsContractofCarriage
andotherallegedagreementsinconnectionwithitsuseoftheallegedlydefective737MAXaircraftmanufacturedbyTheBoeingCompany.The
complaintseeksdamagesonbehalfofputativeclassesofcustomerswhoprovidedvaluableconsideration,whetherinmoneyorotherform(e.g.,
voucher,miles/points,etc.),inexchangeforaticketforairtransportationwiththeCompany,whichtransportationtookplacebetweenAugust29,
2017,andMarch13,2019.Thecomplaintgenerallyseeksmoneydamages,declaratoryrelief,andattorneys’feesandothercosts.OnOctober27,
2021,the Companyfiled amulti-faceted motionchallenging thecomplaint, includingseeking astay ortransfer ofthe casebased uponprior
pendinglitigation,dismissaloftheComplaintbaseduponlackofsubjectmatterjurisdiction,impropervenue,andfailuretostateaclaim,and
seekingtohavethecomplaint’sclasscontentionsstricken.ThatmotionwasfullybriefedbybothpartiesasofDecember22,2021,andisnow
awaitingdeterminationbythecourt.TheCompanydeniesallallegationsofwrongdoingandbelievestheplaintiffs'positionsarewithoutmerit
andintendstovigorouslydefenditselfinallrespects.
TheCompanyisfromtimetotimesubjecttovariouslegalproceedingsandclaimsarisingintheordinarycourseofbusiness,including,butnot
limitedto,examinationsbytheInternalRevenueService.
TheCompany’smanagementdoesnotexpectthattheoutcomeinanyofitscurrentlyongoinglegalproceedingsortheoutcomeofanyproposed
adjustmentspresentedtodatebytheInternalRevenueService,individuallyorcollectively,willhaveamaterialadverseeffectontheCompany’s
financialcondition,resultsofoperations,orcashflow.
Item 4. Mine Safety Disclosures
Notapplicable.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
ThefollowinginformationregardingtheCompany’sexecutiveofficersisasofFebruary3,2022.
Name Position Age
GaryC.Kelly ExecutiveChairmanoftheBoard 66
RobertE.Jordan ChiefExecutiveOfficer 61
MichaelG.VandeVen President&ChiefOperatingOfficer 60
TammyRomo ExecutiveVicePresident&ChiefFinancialOfficer 59
LindaB.Rutherford ExecutiveVicePresidentPeople&Communications 55
MarkR.Shaw ExecutiveVicePresident&ChiefLegal&RegulatoryOfficer 59
AndrewM.Watterson ExecutiveVicePresident&ChiefCommercialOfficer 55
SetforthbelowisadescriptionofthebackgroundofeachoftheCompany’sexecutiveofficers.
Gary C. KellyhasservedastheCompany'sExecutiveChairmanoftheBoardsinceFebruary2022andhasservedastheCompany'sChairmanof
theBoard sinceMay 2008.Mr. Kellyalso servedas ChiefExecutive Officerfrom July 2004to February2022, Presidentfrom July2008 to
January2017,ExecutiveVicePresident&ChiefFinancialOfficerfromJune2001toJuly2004,andVicePresidentFinance&ChiefFinancial
Officerfrom1989to2001.Mr.KellyjoinedtheCompanyin1986asitsController.
Robert E. JordanhasservedastheCompany'sChiefExecutiveOfficersinceFebruary2022andhasbeenamemberoftheCompany'sBoardof
Directors since February 2022. Mr. Jordan also served as Executive Vice President & Incoming Chief Executive Officer from June 2021 to
February 2022, Executive Vice President Corporate Services from July 2017 to June 2021, Executive Vice President & Chief Commercial
OfficerfromSeptember2011toJuly2017,ExecutiveVicePresidentStrategy&PlanningfromMay2008toSeptember2011,ExecutiveVice
PresidentStrategy&TechnologyfromSeptember2006toMay2008,SeniorVicePresidentEnterpriseSpendManagementfromAugust2004to
September2006,VicePresidentTechnologyfrom2002to2004,VicePresidentPurchasingfrom2001to2002,Controllerfrom1997to2001,
DirectorRevenueAccountingfrom1994to1997,andManagerSalesAccountingfrom1990to1994.Mr.JordanjoinedtheCompanyin1988as
aprogrammer.
Michael G. Van de VenhasservedastheCompany'sPresidentsinceSeptember2021andasitsChiefOperatingOfficersinceMay2008.Mr.
Van deVen also served as Executive Vice President & Chief Operating Officer from May2008 to January 2017,Chief of Operations from
September2006toMay2008,ExecutiveVicePresidentAircraftOperationsfromNovember2005throughAugust2006,SeniorVicePresident
Planningfrom August 2004 to November2005, VicePresident FinancialPlanning &Analysis from2001 to 2004, Senior DirectorFinancial
Planning&Analysisfrom2000to2001,andDirectorFinancialPlanning&Analysisfrom1997to2000.Mr.VandeVenjoinedtheCompanyin
1993asitsDirectorInternalAudit.
Tammy RomohasservedastheCompany'sExecutiveVicePresident&ChiefFinancialOfficersinceJuly2015.Ms.RomoalsoservedasSenior
VicePresidentFinance&ChiefFinancialOfficerfromSeptember2012toJuly2015,SeniorVicePresidentofPlanningfromFebruary2010to
September2012,VicePresidentofFinancialPlanningfromSeptember2008toFebruary2010,VicePresidentControllerfromFebruary2006to
August 2008, Vice President Treasurer from September 2004 to February 2006, Senior Director of Investor Relations from March 2002 to
September2004,DirectorofInvestorRelationsfromDecember1994toMarch2002,ManagerofInvestorRelationsfromSeptember1994to
December1994,andManagerofFinancialReportingfromSeptember1991toSeptember1994.
Linda B. RutherfordhasservedastheCompany’sExecutiveVicePresident People &Communicationssince June2021.Ms.Rutherford also
servedasSeniorVicePresident&ChiefCommunicationsOfficerfromOctober2017toJune2021,VicePresident&ChiefCommunications
Officer from January 2016 to October 2017, Vice President Communications & Strategic Outreach from April 2007 to January 2016, Vice
PresidentPublicRelations&CommunityAffairsfromDecember2005toApril2007,DirectorPublicRelationsfromMay2001toDecember
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2005,SeniorManagerPublicRelationsfromFebruary1999toMay2001,andManagerPublicRelationsfromFebruary1997toFebruary1999.
Ms.RutherfordjoinedtheCompanyin1992asaPublicRelationsCoordinator.
Mark R. ShawhasservedastheCompany'sExecutiveVicePresident&ChiefLegal&RegulatoryOfficersinceNovember2018.Mr.Shawalso
servedasExecutiveVicePresident,ChiefLegal&RegulatoryOfficer,&CorporateSecretaryfromAugust2018toNovember2018,SeniorVice
President,General Counsel,& CorporateSecretaryfrom July2015 toAugust 2018,VicePresident, GeneralCounsel, &Corporate Secretary
fromFebruary 2013to July2015, andas AssociateGeneral Counsel- Corporate& Transactionsfrom February2008 toFebruary 2013.Mr.
ShawjoinedtheCompanyin2000asanAttorneyintheGeneralCounselDepartment.
Andrew M. WattersonhasservedastheCompany'sExecutiveVicePresident&ChiefCommercialOfficersinceJanuary2020.Mr.Watterson
also servedas Executive Vice President& Chief Revenue Officerfrom July 2017 toJanuary 2020, Senior VicePresident & Chief Revenue
OfficerfromJanuary2017toJuly2017,SeniorVicePresidentofNetwork&RevenuefromJanuary2016toJanuary2017,andasVicePresident
ofNetworkPlanning&PerformancefromOctober2013toJanuary2016.
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PART II
Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
The Company’s common stock is listed on the New York StockExchange ("NYSE") andis traded underthe symbol "LUV."Although the
Companyhasahistoryofdeclaringdividendsonaquarterlybasis,theCompanyhasnotpaidadividendsinceits174thconsecutivequarterly
dividendwhichwasdeclaredandpaidinfirstquarter2020.Pursuanttothe"PSP1PayrollSupportProgram"undertheCoronavirusAid,Relief,
andEconomicSecurityAct("CARESAct"),assupplementedbythe"PSP2PayrollSupportProgram”undertheConsolidatedAppropriations
Act, 2021, and the "PSP3 Payroll Support Program" under the AmericanRescue Plan Actof 2021, theCompany is prohibitedfrom paying
dividendswithrespecttoitscommonstockthroughSeptember30,2022.Followingtheexpirationoftheserestrictions,theCompany’sBoardof
Directors will have sole discretion regarding the timing, amount, and payment of dividends on the basis of operational results, financial
condition, cash requirements, future prospects, and other factors deemed relevant by the Board. As of February 2, 2022, there were
approximately11,553holdersofrecordoftheCompany’scommonstock.
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Stock Performance Graph
The following Performance Graph and related information shall not be deemed "soliciting material" or "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities
Exchange Act of 1934.
The following graph compares the cumulative total shareholder return on the Company’s common stock over the five-year period ended
December 31, 2021, with the cumulative total return during such period of the Standard and Poor’s 500 Stock Index and the NYSE ARCA
AirlineIndex.Thecomparisonassumes$100wasinvestedonDecember31,2016,intheCompany’scommonstockandineachoftheforegoing
indicesandassumesreinvestmentofdividends.Thestockperformanceshownonthegraphbelowrepresentshistoricalstockperformanceandis
notnecessarilyindicativeoffuturestockpriceperformance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG SOUTHWEST AIRLINES CO., S&P 500 INDEX, AND NYSE ARCA
AIRLINE INDEX
12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021
Southwest Airlines Co. $ 100 $ 132 $ 95 $ 112 $ 97 $ 89
S&P 500 $ 100 $ 122 $ 116 $ 153 $ 181 $ 233
NYSE ARCA Airline $ 100 $ 106 $ 83 $ 102 $ 78 $ 76
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Issuer Repurchases
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.Subjectto
certain conditions, including restrictions on the Company pursuant to the PSP3 Payroll Support Program through September 30, 2022,
repurchasesmaybemadeinaccordancewithapplicablesecuritieslawsinopenmarketorprivate,includingaccelerated,repurchasetransactions
fromtimetotime,dependingonmarketconditions.TheCompanyhasannouncedithassuspendedfurthersharerepurchaseactivityuntilfurther
notice.TheCompanyhasapproximately$899millionremainingunderitscurrentsharerepurchaseauthorization.
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Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations
YEAR IN REVIEW
InlateFebruary2020,theCompanybegantoseeanegativeimpactfromtheCOVID-19pandemic,whichquicklyacceleratedduringfirstquarter
2020andcontinuedthroughout2021.Whilethepandemichascontinuedtonegativelyimpactresults,theCompanysawsteadyimprovementas
theyearprogressed,withintermittentperiodsofdecelerateddemandthatcoincidedwithCOVID-19surges.TheCompany'sfinancialresultsin
both years, on both a GAAP and Non-GAAP basis, were significantly impacted by the pandemic and the resulting effect on demand and
passengerbookings.
TheCompany recordedGAAP andnon-GAAP resultsfor 2021 and2020 asnoted inthe followingtables. SeeNoteRegarding Useof Non-
GAAPFinancialMeasuresandtheReconciliationofReportedAmountstoNon-GAAPFinancialMeasuresforadditionaldetailregardingnon-
GAAPfinancialmeasures.
Year ended
(inmillions,exceptpershareamounts) December 31,
GAAP 2021 2020 Percent Change
Operatingincome(loss) $ 1,721 $ (3,816) n.m.
Netincome(loss) $ 977 $ (3,074) n.m.
Netincome(loss)pershare,diluted $ 1.61 $ (5.44) n.m.
Non-GAAP
Operatingloss $ (1,281) $ (5,032) (74.5)
Netloss $ (1,271) $ (3,512) (63.8)
Netlosspershare,diluted $ (2.15) $ (6.22) (65.4)
ThesignificantimprovementinbothGAAPNetincome(loss)andOperatingincome(loss),year-over-year,wasprimarilyduetothereboundin
domestic leisure demand and bookings in 2021 as impacts from the COVID-19 pandemic eased. This resulted in a 74.5 percent increase in
Operatingrevenuesin2021versus2020,although2021Operatingrevenueswerestillwellbelow2019levels.Further,theCompanyreceived
$2.7billioningrantallocationsofpayrollfundingsupport("PayrollSupport")fromtheUnitedStatesDepartmentofTreasury("Treasury")in
2021,comparedwith$2.3billionreceivedin2020,whichtheCompanyutilizedinbothyearstooffsetaportionofsalaries,wages,andbenefits.
SeebelowandNote2totheConsolidatedFinancialStatementsforfurtherinformation.
Onaquarterlybasis,demandforairtravelimprovedeachperiodof2021.AlthoughtheCompany'sGAAPfinancialresultsbenefitedfromthe
impactofPayrollSupportrecognizedduringthefirstthreequartersoftheyear,theCompanywasabletogenerateaprofitduringfourthquarter
2021despitehavingnofurtherallocationofPayrollSupport.
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Operating Statistics
TheCompanyprovidestheoperatingdatabelowforthethreeyearsendedDecember31,2021,becausethesestatisticsarecommonlyusedinthe
airlineindustryand,therefore,allowreaderstocomparetheCompany’sperformanceagainstitsresultsforpriorperiods,aswellasagainstthe
performanceoftheCompany’speers.
Year ended December 31,
2021 2020
2021 Change
to 2020
2019
2020 Change
to 2019
2021 Change
to 2019
Operating Data:
Revenuepassengerscarried(000s) 99,111 54,088 83.2 % 134,056 (59.7) % (26.1) %
Enplanedpassengers(000s) 123,264 67,785 81.8 % 162,681 (58.3) % (24.2) %
Revenuepassengermiles(RPMs)(inmillions) 103,562 54,221 91.0 % 131,345 (58.7) % (21.2) %
Availableseatmiles(ASMs)(inmillions) 132,006 103,456 27.6 % 157,254 (34.2) % (16.1) %
Loadfactor 78.5% 52.4% 26.1pts. 83.5% (31.1)pts. (5.0)pts.
Averagelengthofpassengerhaul(miles) 1,045 1,002 4.3 % 980 2.2 % 6.6 %
Averageaircraftstagelength(miles) 790 743 6.3 % 748 (0.7) % 5.6 %
Tripsflown 1,066,934 897,540 18.9 % 1,367,727 (34.4) % (22.0) %
Seatsflown(000s) 165,580 137,405 20.5 % 206,390 (33.4) % (19.8) %
Seatspertrip 155.2 153.1 1.4 % 150.9 1.5 % 2.8 %
Averagepassengerfare $ 141.92 $ 141.72 0.1 % $ 154.98 (8.6) % (8.4) %
PassengerrevenueyieldperRPM(cents) 13.58 14.14 (4.0) % 15.82 (10.6) % (14.2) %
OperatingrevenuesperASM(cents) 11.96 8.75 36.7 % 14.26 (38.6) % (16.1) %
PassengerrevenueperASM(cents) 10.66 7.41 43.9 % 13.21 (43.9) % (19.3) %
OperatingexpensesperASM(cents) 10.66 12.43 (14.2) % 12.38 0.4 % (13.9) %
OperatingexpensesperASM,excludingfuel(cents) 8.15 10.65 (23.5) % 9.62 10.7 % (15.3) %
OperatingexpensesperASM,excludingfuelandprofitsharing
(cents) 7.98 10.65 (25.1) % 9.19 15.9 % (13.2) %
Fuelcostspergallon,includingfueltax $ 1.98 $ 1.45 36.6 % $ 2.09 (30.6) % (5.3) %
Fuelcostspergallon,includingfueltax,economic $ 2.01 $ 1.49 34.9 % $ 2.09 (28.7) % (3.8) %
Fuelconsumed,ingallons(millions) 1,668 1,273 31.0 % 2,077 (38.7) % (19.7) %
ActivefulltimeequivalentEmployees(j) 55,093 56,537 (2.6) % 60,767 (7.0) % (9.3) %
Aircraftatendofperiod(k) 728 718 1.4 % 747 (3.9) % (2.5) %
(a) Arevenuepassengermileisonepayingpassengerflownonemile.Alsoreferredtoas"traffic,"whichisameasureofdemandforagivenperiod.
(b) Anavailableseatmileisoneseat(emptyorfull)flownonemile.Alsoreferredtoas"capacity,"whichisameasureofthespaceavailabletocarrypassengersina
givenperiod.
(c) Revenuepassengermilesdividedbyavailableseatmiles.
(d) Seatsflowniscalculatedusingtotalnumberofseatsavailablebyaircrafttypemultipliedbythetotaltripsflownbythesameaircrafttypeduringaparticular
period.
(e) Seatspertripiscalculatedbydividingseatsflownbytripsflown.
(f) Calculatedaspassengerrevenuedividedbyrevenuepassengermiles.Alsoreferredtoas"yield,"thisistheaveragecostpaidbyapayingpassengertoflyone
mile,whichisameasureofrevenueproductionandfares.
(g) Calculatedasoperatingrevenuesdividedbyavailableseatmiles.Alsoreferredtoas"operatingunitrevenues"or"RASM,"thisisameasureofoperatingrevenue
productionbasedonthetotalavailableseatmilesflownduringaparticularperiod.
(h) Calculatedaspassengerrevenuedividedbyavailableseatmiles.Alsoreferredtoas"passengerunitrevenues,"thisisameasureofpassengerrevenueproduction
basedonthetotalavailableseatmilesflownduringaparticularperiod.
(i) Calculatedasoperatingexpensesdividedbyavailableseatmiles.Alsoreferredtoas"unitcosts"or"costperavailableseatmile,"thisistheaveragecosttoflyan
aircraftseat(emptyorfull)onemile,whichisameasureofcostefficiencies.
(j) Includedlessthan250and10,421EmployeesparticipatingintheExtendedEmergencyTimeOffprogramasofDecember31,2021and2020,respectively.See
Note2totheConsolidatedFinancialStatementsforfurtherinformation.
(l)
(a)
(b)
(c)
(d)
(e)
(f)
(g)(j)
(h)
(i)
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(k) IncludedsixBoeing737NextGenerationaircraftintemporarystorageand60inlong-termstorageasofDecember31,2021and2020,respectively.Also
included32and34BoeingMAX737inlong-termstorageasofDecember31,2020and2019,respectively.SeeNote17totheConsolidatedFinancial
Statementsforfurtherinformation.
(l) TheCompanybelievescertaincomparisonswith2019aremorerelevantmeasuresofperformancethanyear-over-yearcomparisonsduetothesignificantimpacts
in2020duetothepandemic.
2022 Outlook
Thefollowingtablespresentselectedfinancialguidanceforfirstquarterandfullyear2022:
1Q 2022 Estimation Previousestimation
Operating revenue compared with 2019 (a) Down 10% to 15% (e)
Load factor 75% to 80% (e)
ASMs compared with 2019 Down ~9% (e)
Economic fuel costs per gallon $2.25 to $2.35 (e)
Fuel hedging premium expense per gallon $0.06 (e)
Fuel hedging cash settlement gains per gallon $0.35 (e)
ASMs per gallon (fuel efficiency) Nominally in line with 4Q21 (e)
CASM-X (b) compared with 2019 Up 20% to 24% (e)
Debt repayments (millions) ~$60 (e)
Interest expense (millions) ~$90 (e)
Aircraft (c) 725 (e)
2022 Estimation Previousestimation
ASMs compared with 2019 Down ~4% (e)
Economic fuel costs per gallon $2.25 to $2.35 (e)
Fuel hedging premium expense per gallon $0.05 (e)
Fuel hedging cash settlement gains per gallon $0.28 (e)
CASM-X (b) compared with 2019 Up 12% to 16% (e)
Debt repayments (millions) ~$455 (e)
Interest expense (millions) ~$360 (e)
Aircraft (c) 814 (e)
Effective tax rate 23% to 25% (e)
Capital spending (billions) (d) ~$5.0 (e)
(a)TheCompanybelievesthatoperatingrevenuescomparedwith2019isamorerelevantmeasureofperformancethanayear-over-yearcomparisonduetothesignificantimpactsin
2021duetothepandemic.
(b)Operatingexpensesperavailableseatmile,excludingfuelandoilexpense,profitsharing,andspecialitems.
(c)Aircraftonproperty,endofperiod;netof6and28retirementsplannedinfirstquarter2022andfullyear2022,respectively.Twoaircraftoriginallyplannedfordeliveryinfirst
quarter2022haveshiftedintotheCompany'ssecondquarter2022planneddeliveryschedule.Reflects12optionsexercisedthroughFebruary3,2022,fiveandsevenfordeliveryin
firstquarterandsecondquarter2022,respectively,andtheassumptionthattheCompanyexercisesall30remaining2022options.ThedeliveryschedulefortheBoeing737-7(-7)is
dependent on the Federal Aviation Administration ("FAA") issuing required certifications and approvals to The Boeing Company ("Boeing") and the Company. The FAA will
ultimatelydeterminethetimingofthe-7certificationandentryintoservice,andtheCompanythereforeoffersnoassurancesthatcurrentestimatesandtimelinesarecorrect.
(d)RepresentscurrentcontractualpaymentstoBoeingforfirmaircraftandtheassumptionsthattheCompanyexercisesall30remaining2022options,inadditionto~$900million
non-aircraftcapital spending.Excluding anyfurther optionexercises in2022, theCompany's 2022capitalspending wouldbe ~$3.4billion, alsoincluding ~$900million innon-
aircraftcapitalspending
(e)Remainsunchangedfrompreviouslyreportedestimation.
Followingstrongtraveldemandduringthefourthquarter2021holidayperiod,theCompanyisexperiencingarevenueheadwindinfirstquarter
2022duetoasoftnessinbookingsandanincreaseintripcancellationsassociatedwiththeOmicronvariant.JanuaryandFebruaryareseasonally
weakertimeperiodsforleisuretraveldemand,butfurthersoftnessinleisurebookingsrelatedtotheOmicronvariant,combinedwithlowerthan
expectedbusiness
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traveldemand,isestimatedtoreduceoperatingrevenuesinJanuaryandFebruary2022by$330million,combined.TheCompanycanceledmore
than5,600flightsinJanuary2022,withthemajorityattributabletoavailablestaffingchallengesasaresultoftheOmicronvariant,aswellas
weather-relatedcancellations,drivinganestimated$50millionnegativeimpacttoJanuary2022operatingrevenues.Firstquarter2022managed
businessrevenuesareexpectedtobedown45percentto55percentversusfirstquarter2019levels.TheCompanyremainsoptimisticaboutthe
returnofbusinesstraveldemandin2022basedonthemomentumexperiencedinfourthquarter2021beforetheimpactoftheOmicronvariant.
TheCompanyisalsoencouragedbyrecentimprovementsinbookingtrends,especiallyforMarch2022,andcurrentrevenuetrendsforspring
breaktravelappeartobeinlinewithtypicalseasonalexpectations.
Basedoncurrentcosttrendsandreducedcapacityplans,firstquarter2022operatingexpenses,excludingfuelandoilexpense,specialitems,and
profitsharing,areexpectedtoincreaseintherangeof20percentto24percentonaunitbasisascomparedwithfirstquarter2019.Theprojection
does not reflect the potential impact of Fuel and oil expense, special items, and profitsharing expense because the Company cannot reliably
predictor estimate theseitems or expensesortheir impacttotheCompany's financialstatements infutureperiods, especiallyconsidering the
significantvolatilityoftheFuelandoilexpenselineitem.Accordingly,theCompanybelievesareconciliationofnon-GAAPfinancialmeasures
to the equivalent GAAP financial measures for projected results is not meaningful or available without unreasonable effort. The Company
continuestoexperiencecostpressureduetoinflationinlaborratesandairportcosts,aswellasunitcostheadwindsfromoperatingatsuboptimal
productivitylevels.Additionally,theCompanyhastemporarilyextendedincentivepaytoitsOperationsEmployeesthroughearlyFebruary2022,
whichisexpectedtoresultin an additional$150 million ofsalaries, wages, andbenefits expense infirstquarter 2022,comparedto the$100
millioninincentivepayearnedbyEmployeesduringfourthquarter2021.Furthermore,theCompanyisreducingitsfirstquarter2022capacityto
provideadditionalstabilityduringthischallengingenvironment.
WiththeOmicronvariantandweatherimpacting theCompany's results,theCompany expectslosses in January andFebruary and areturnto
profitabilityin March 2022.Basedon theCompany'scurrent plan,whilethe Company nolongerexpects tobeprofitable infirstquarter, the
Companyexpectstobeprofitablefortheremainingthreequartersofthisyear,andforfullyear2022.
COVID-19 Pandemic Impacts
Inresponsetothefar-reachingimpactsoftheCOVID-19pandemic,theCompanytook,andcontinuestoassessandmodify,measurestosupport
thewell-beingofbothitsEmployeesandpassengers,includingproceduresandpoliciesintendedtomaintainanelevatedlevelofcleanlinesson
aircraftandatfacilities,andmitigatethespreadofthevirus.TheCompanyalsocontinuestomonitorguidelinesandrecommendationsfromthe
Centers for Disease Control and Prevention applicable to the Company’s daily operations, and the manner in which the majority of the
Company’sofficeandclericalEmployeesworkonadailybasis.
AsdetailedinNote2totheConsolidatedFinancialStatements,inconnectionwiththemajornegativeimpactofCOVID-19onaircarriers,the
Companyhas received significantfinancial assistance fromTreasuryin theformof PayrollSupport,and thisassistancehas hadasignificant
impactontheCompany'sreportedGAAPfinancialresultsin2021.Suchimpactendedinthirdquarter2021,andtheCompany'sfourthquarter
2021resultsdonotreflectthebenefitofthisPayrollSupport,anditsfutureperiodresultsarenotexpectedtobenefitfromsuchPayrollSupport.
However,futurecashflowswillbeimpactedthroughtheportionofPayrollSupportthatwasintheformofloansthatwillhavetoberepaidto
Treasury.
Duringsecondquarter2020,theCompanyintroducedVoluntarySeparationProgram2020("VoluntarySeparationProgram")andtheExtended
EmergencyTimeOff ("ExtendedETO")program whichhelpedcloseralign staffingtoreduced flightschedules andenabledthe Companyto
avoidinvoluntaryfurloughsandlayoffsassociatedwiththeimpactsofthepandemic.Approximately16,000Employeeselectedtoparticipatein
oneoftheseprograms.During2021,approximately11,400EmployeesreturnedfromtheExtendedETOprogramandlessthan250Employees
remainedonExtendedETOleaveasofDecember31,2021.Inaccordancewithapplicableaccountingguidance,the
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Company accrued a total charge of $1.4 billion in 2020 related to the special termination benefits for Employees who had accepted the
Company'soffertoparticipateinitsVoluntarySeparationProgramandthespecialbenefitsforEmployeeswhoparticipatedinitsExtendedETO
program.TheaccrualisbeingreducedasprogrambenefitsarepaidorasitbecomesnolongerprobablethatEmployeeswillremainonleavefor
theirelectedterms.TheCompanyrealizedapproximately$1.1billionoffullyear2021costsavingsfromtheVoluntarySeparationProgramand
ExtendedETOcomparedwithfullyear2019,andexpectsnomaterialcostsavingsfromtheseprogramsin2022andbeyond.SeeNote2tothe
ConsolidatedFinancialStatementsforfurtherinformation.
TheCompanycontinuestohaveasmallerworkforcethanitdidpriortotheCOVID-19pandemic.However,inadditiontorecallingnearlyallof
the Employees that participated in Extended ETO, the Company met its 2021 hiring goals and is planning to add at least 8,000 additional
Employees during 2022 as it strives to provide sufficient staffing to support its anticipated flight schedule plans for 2022 and beyond. The
Companyismakingadditionalinvestmentstoattractandretaintalent,includingtherecentdecisiontofurtherraisetheCompany'sstartinghourly
payrates from$15per hourto$17 perhourfor (i)SouthwestRamp, Operations,Provisioning,and FreightAgents, (ii) SouthwestCustomer
Service Agents, Customer Representatives, and Source of Support Representatives, (iii) Southwest Flight Simulator Technicians, and (iv)
SouthwestAircraftAppearanceTechnicians.TheCompanyiscurrentlyindiscussionswithitsworkgroupstoenactthisincreaseinpayrates.The
Companycontinuestoevaluatestaffingneedstoalignwithplannedflightactivity.
InSeptember2021,thePresidentoftheUnitedStatesissuedanExecutiveOrderestablishingavaccinationrequirementforemployeesofcovered
federalcontractors.Thefederalgovernmentrequiredthatfederalcontractorshavetheirworkforcevaccinated(orrequestanaccommodation)by
December8,2021.ThedeadlinewaslaterextendedtoJanuary4,2022.TheCompanystartedanactivecampaigntonotifyEmployeesofthe
need to submit proof of COVID-19 vaccination, or apply for an accommodation, by January 4, 2022. On December 3, 2021, the company
announced that 93 percent of its Employees were vaccinated, or had requested an accommodation. Due to legal challenges to the vaccine
mandate, the Company announced on December 20, 2021, that it is no longer imposing a deadline for compliance. However, if the vaccine
mandate is revived, the Company will resume efforts to work with Employees who have not yet either submitted proof of vaccination or
requestedanaccommodation.
Company Overview
TheCompanyhasenteredintosupplementalagreementswithTheBoeingCompany("Boeing")toincreaseaircraftordersandacceleratecertain
optionswiththegoalofimprovingpotentialgrowthopportunities,restoringitsnetworkclosertopre-pandemiclevels,loweringoperatingcosts,
andfurthermodernizingitsfleetwithlesscarbon-intensiveaircraft.Duringfourthquarter2021,theCompanyexercised22Boeing737MAX7
("-7") optionsfor delivery in2023, and throughFebruary 3, 2022,the Company hasexercised another 24Boeing options- 12-8 options for
deliveryin2022,and12-7optionsfordeliveryin2023.TheCompany'sorderbookwithBoeingasofDecember31,2021,consistsofatotalof
394MAXfirmorders(264-7aircraftand130Boeing737MAX-8("-8")aircraft)and238MAXoptions(-7sor-8s)foryears2022through
2031.TheCompanycontinuestoexpectthatmorethanhalfoftheMAXaircraftinitsfirmorderbookwillreplaceasignificantamountofits
452Boeing737-700("-700")aircraftoverthenext10to15yearstosupportthemodernizationofitsfleet,akeycostinitiativeandcomponentof
itsenvironmentalsustainabilityefforts.
TheCompanyended2021with728Boeing737aircraft,including69-8aircraft.During2021,theCompanyretired8owned-700aircraft,which
wereacceleratedfrom2022intofourthquarter2021,andreturned10leased-700aircraft,ofwhichoneoccurredduringfourthquarter2021.In
addition,theCompanytookdeliveryof28-8aircraftduring2021.AsofDecember31,2021,six-700aircraftremainedintemporarystoragedue
tofourthquarter2021andfirstquarter2022capacityremainingbelowrespective2019levels.
TheCompanyhaspublisheditsflightschedulethroughSeptember5,2022.During2021,theCompanypursuedadditionalrevenueopportunities
thatutilizeidleaircrafttoprovideservicetonew,populardestinations.TheCompanyisleveragingadditionalairportsinornearcitieswhereits
Customerbaseislarge,alongwithaddingeasieraccesstopopularleisure-orienteddestinationsfromacrossitsdomestic-focusednetwork.These
additionalservicepointsontheCompany'sroutemapareopportunitiesitcanprovideCustomersnow,allwhilebetter
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positioningtheCompanyforatraveldemandrebound.During2021,theCompanybeganservicetonewdestinationsincluding:
• ChicagoO'HareInternationalAirportandSarasotaBradentonInternationalAirport-February14,2021
• ColoradoSpringsMunicipalAirportandSavannah/HiltonHeadInternationalAirport-March11,2021
• Houston'sGeorgeBushIntercontinentalAirportandSantaBarbaraAirport-April12,2021
• FresnoYosemiteInternationalAirport-April25,2021
• Destin-FortWaltonBeachAirport-May6,2021
• MyrtleBeachInternationalAirport-May23,2021
• BozemanYellowstoneInternationalAirport-May27,2021
• Jackson-MedgarWileyEversInternationalAirportinMississippi-June6,2021
• EugeneAirportinOregon-August29,2021
• BellinghamInternationalAirportinWashington-November7,2021
• SyracuseHancockInternationalAirportinNewYork-November14,2021
TheCOVID-19pandemichadaparticularlynegativeimpactontheCompany'sinternationaloperationsandledtotheCompany'ssuspensionof
internationaloperationsatthebeginningofthepandemic.TheCompanyhassinceresumedserviceto13ofits14internationaldestinations.The
Company’soperationstotheCaymanIslandsaretemporarilysuspendedduetoimpactsfromtheCOVID-19pandemic,butwiththeeasingof
governmentrestrictionsandthecontinuedincreaseindemandforbeachandleisuredestinations,theCompanyintendstoresumeservicetothe
CaymanIslandsin2022.
In2021,theCompanyannouncedgoalsto(i)achievecarbonneutralityby2050,(ii)maintaincarbonneutralgrowth(to2019levels)throughthe
endofthedecade,and(iii)reducecarbonemissionsintensityperavailableseatmile(includingscope1andscope2emissions)byatleast20
percent by 2030. The Company also announced a series of actions and initiatives designed to assist the Company in achieving these goals,
including agreements with various third parties intended to facilitate the development, production, and usage of commercialized sustainable
aviationfuel;thelaunchofacarbon-offsetprogramthatallowsCustomerstocontributefundsforthepurchaseofcarbonoffsetsforSouthwest;
andarrangementswithnonprofitorganizationsseekingtoaddressclimatechangeandreducecarbonemissionsinaviation.
As part of its commitment to corporate sustainability, the Company has published the Southwest One Report describing the Company's
sustainability strategies, which include the Company’s fuel conservation and emissions reduction initiatives and other efforts to reduce
greenhousegasemissionsandaddressotherenvironmentalmatterssuchasenergyandwaterconservation,wasteminimization,andrecycling.
InformationcontainedintheSouthwestOneReportisnotincorporatedbyreferenceinto,anddoesnotconstituteapartof,thisForm10-K.While
the Company believes that the disclosures contained in the Southwest One Report and other voluntary disclosures regarding environmental,
social,andgovernance(“ESG”)mattersareresponsivetovariousareasofinvestorinterest,theCompanybelievesthatthesedisclosuresdonot
currently address matters that are material in the near term to the Company’s operations, strategy, financial condition, or financial results,
althoughthisviewmaychangeinthefuturebasedonnewinformationthatcouldmateriallyaltertheestimates,assumptions,ortimelinesusedto
createthesedisclosures.Giventheestimates,assumptionsandtimelinesusedtocreatetheSouthwestOneReportandothervoluntarydisclosures,
thematerialityofthesedisclosuresisinherentlydifficulttoassessinadvance.
2021 Compared with 2020
Operating Revenues
Passengerrevenuesfor2021increasedby$6.4billion,or83.5percent,comparedwith2020.Onaunitbasis,Passengerrevenuesincreased43.9
percent,year-over-year.TheincreaseinPassengerrevenuesonbothadollarandunitbasiswereprimarilyduetotheimprovementsinleisure
Passengerdemandandbookingsin2021,comparedwiththeseveredeclineindemandandbookingsresultingfromtheCOVID-19pandemicfor
themajorityof2020.
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Freight revenues for 2021 increased by $26 million, or 16.1 percent, compared with 2020, primarily due to increased demand for consumer
goods.
Other revenues for 2021 increased by $315 million, or 25.8 percent, compared with 2020. The increase was primarily due to an increase in
incomefrombusiness partners,includingChaseBank USA,N.A. ("Chase").Theimproving economy throughout2021and rebound intravel
demandresultedinhigherspendontheCompany'sco-brandedcreditcard,aswellasadditionalrevenuesearnedthroughtheCompany'srental
carandhotelpartners.
Operating Expenses
Operatingexpensesfor2021increasedby$1.2billion,or9.4percent,comparedwith2020,whilecapacityincreased27.6percentoverthesame
period.Historically,exceptforchangesinthepriceoffuel,changesinOperatingexpensesforairlineshavebeenlargelydrivenbychangesin
capacity,orASMs.However,theCompany'sOperatingexpensesarelargelyfixedonceflightschedulesarepublished,andASMreductionsasa
result of flight schedule adjustments have a negative impact on Operating expenses per ASM. The following table presents the Company's
Operating expenses per ASM for 2021 and 2020, followed by explanations of these changes on a dollar basis. Unless otherwise specified,
changes on a per ASM basis were driven by changes in capacity, which increased with the improvement of travel demand, causing the
Company'sfixedcoststobespreadoversignificantlymoreASMs.
Year ended December 31, Per ASM Percent
(incents,exceptforpercentages) 2021 2020 change change
Salaries,wages,andbenefits 5.87¢ 6.58¢ (0.71)¢ (10.8)%
PayrollsupportandvoluntaryEmployeeprograms,net (2.24) (0.94) (1.30) 138.3
Fuelandoil 2.51 1.78 0.73 41.0
Maintenancematerialsandrepairs 0.65 0.72 (0.07) (9.7)
Landingfeesandairportrentals 1.10 1.21 (0.11) (9.1)
Depreciationandamortization 0.96 1.21 (0.25) (20.7)
Otheroperatingexpenses 1.81 1.87 (0.06) (3.2)
Total
10.66¢ 12.43¢ (1.77)¢ (14.2)%
Operating expenses per ASM for 2021 decreased by 14.2 percent, compared with 2020. The year-over-year unit cost decrease in 2021 was
enhanced by the increase in Payroll Support funding as such allocations are accounted for as a direct reduction to the Company's operating
expenses.Thisdecreaseinoperatingexpenseswaspartiallyoffsetbyan increase inbothjetfuel prices and fuelgallonsconsumed,and $222
millionofgainsfromthesale-leasebackof20aircrafttothirdpartiesintwoseparatetransactionsduringsecondquarter2020,whichreduced
Other operating expenses in second quarter 2020. See Note 8 to the Consolidated Financial Statements for further information. Operating
expensesperASMfor2021,excludingFuelandoilexpense,profitsharing,andspecialitems(anon-GAAPfinancialmeasure),decreased13.3
percent,year-over-year.SeeNoteRegardingUseofNon-GAAPFinancialMeasuresandtheReconciliationofReportedAmountstoNon-GAAP
FinancialMeasuresforadditionaldetailregardingnon-GAAPfinancialmeasures.
Salaries,wages,andbenefitsexpensefor2021increasedby$932million,or13.7percent,comparedwith2020.OnaperASMbasis,Salaries,
wages,andbenefitsexpensefor2021decreased10.8percent,comparedwith2020.Onadollarbasis,approximately55percentoftheincrease
wasduetohighersalariesandwagesduetosignificantlymoretrips,stepincreasesforcertainworkgroups,recallsfromExtendedETO(which
ledtohighersalaries),incentivepayofferedtocertainworkgroups,andincreasedovertimehoursacrossthenetwork.Thelargestportionofthe
remainderoftheincreasewasduetothe$230millionprofitsharingexpenseaccrualin2021,comparedwithnoprofitsharingexpenseaccrualin
2020.
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TableofContents
The following table sets forth the Company’s unionized Employee groups with amendable contracts that are currently in negotiations on
collective-bargainingagreements:
Employee Group
Approximate Number of
Employees Representatives Amendable Date
SouthwestPilots 8,300 SouthwestAirlinesPilots'Association
("SWAPA")
September2020
SouthwestFlightAttendants 14,600 TransportationWorkersofAmerica,AFL-
CIO,Local556("TWU556")
November2018
SouthwestRamp,Operations,
Provisioning,FreightAgents
12,600 TransportationWorkersofAmerica,AFL-
CIO,Local555("TWU555")
February2021
SouthwestCustomerServiceAgents,
CustomerRepresentatives,andSourceof
SupportRepresentatives
6,100 InternationalAssociationofMachinistsand
AerospaceWorkers,AFL-CIO("IAM142")
December2018
SouthwestAircraftAppearance
Technicians
170 AMFA
November2020
SouthwestDispatchers 400 TransportationWorkersofAmerica,AFL-
CIO,Local550("TWU550")
June2019
SouthwestFlightCrewTraining
Instructors
130 TransportationWorkersofAmerica,AFL-
CIO,Local557("TWU557")
January2022
SouthwestMeteorologists 10 TWU550
June2019
During August 2021, the Company reached a tentative collective-bargaining agreement with IAM 142, which represents the Company's
approximately6,100EmployeesintheCustomerServiceAgents,CustomerRepresentatives,andSourceofSupportRepresentativesworkgroup.
However,theIAM142membershipvotednottoratifytheagreement.TheCompanywillcontinuetoengageindiscussionsonanewagreement
withIAM142.
Payroll support and voluntary Employee programs, net (a reduction to expense) for 2021 was an increase of $2.0 billion, or 206.1 percent,
comparedwith2020.OnaperASMbasis,PayrollsupportandvoluntaryEmployeeprograms,netfor2021increasedby138.3percent.Onbotha
dollarandperASMbasis,thechangeswereduetothecomponentsofthislineitemasnotedbelow:
• The$745millionaccrualforchargesrelatedtotheVoluntarySeparationProgramin2020;
• The$140millionnetreductionintheExtendedETOliabilityin2021,comparedwiththe$625millionaccrualforchargesrelatedtothe
ExtendedETOliabilityin2020;
• ThePayrollSupportprograms'grantallocationof$2.7billionin2021,comparedwitha$2.3billionallocationin2020;and
• The$117millioninEmployeeRetentionTaxCreditsrecordedin2021forcontinuingtopayEmployees'salariesduringthetimethey
werenotworking,asallowedundertheCARESAct,andsubsequentlegislation.
SeeNote2totheConsolidatedFinancialStatementsforfurtherinformation.
Fuelandoilexpensefor2021increasedby$1.5billion,or79.0percent,comparedwith2020.OnaperASMbasis,Fuelandoilexpensefor2021
increased41.0percent.Onadollarbasis,approximately60percentoftheincreasewasattributabletoanincreaseinjetfuelpricespergallon,and
theremainderoftheincreasewasduetoanincreaseinfuelgallonsconsumed.OnaperASMbasis,theincreasewasprimarilyduetohigherjet
fuelprices.The
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TableofContents
following table provides more information on the Company's economic fuel cost per gallon, including the impact of fuel hedging premium
expenseandfuelderivativecontracts:
Year ended December 31,
(per gallon) 2021 2020
Economicfuelcostspergallon $ 2.01 $ 1.49
Fuelhedgingpremiumexpense(inmillions) $ 100 $ 98
Fuelhedgingpremiumexpensepergallon $ 0.06 $ 0.08
Fuelhedgingcashsettlementgainspergallon $ 0.05 $ —
SeeNoteRegardingUseofNon-GAAPFinancialMeasuresandtheReconciliationofReportedAmountstoNon-GAAPFinancialMeasuresfor
additionaldetailregardingnon-GAAPfinancialmeasures.
TheCompany'sfourthquarter2021availableseatmilespergallon("fuelefficiency")declined4.2percent,year-over-year,duetotheremoval
from storage and return to service of more of the Company's least fuel-efficient aircraft, the -700, to support sequentially increasing flight
schedules.Whencomparedwithfourthquarter2019,fuelefficiencyimproved3.8percentinfourthquarter2021duetotheMarch2021returnto
serviceoftheCompany'smostfuel-efficientaircraft,theMAX.TheMAXremainscriticaltotheCompany'seffortstomodernizeitsfleet,reduce
carbonemissionsintensity,andachieveitsnear-termenvironmentalsustainabilitygoals.SeeNote17totheConsolidatedFinancialStatements
forfurtherinformation.
AsofJanuary20, 2022, onan economicbasis, theCompany hadderivative contractsin placerelated toexpected futurefuel consumptionas
follows:
Period Maximum fuel hedged (gallons in millions) (a)(b)
2022 1,220
2023 769
2024 358
(a)TheCompany’shedgepositionincludespricesatwhichtheCompanyconsiders"catastrophic"coverage.Themaximumgallonsprovidedarenotindicativeofthe
Company'shedgecoverageateveryprice,butrepresentthehighestlevelofcoverageatasingleprice.SeeNote11totheConsolidatedFinancialStatementsforfurther
information.
(b)The Company's gallons that arecoveredbyderivative contractsrepresent the maximum numberofgallonshedgedfor each respective period, which maybeat
differentstrikepricesandatstrikepricesmateriallyhigherthanthecurrentmarketprices.Thevolumeofgallonscoveredbyderivativecontractsthatultimatelyget
exercised in any given period may vary significantly from the volumes provided, as market prices and the Company's fuel consumption fluctuates. Based on the
Company'savailableseatmileplansforfull year2022,itsmaximum percentofestimatedfuel consumptioncovered byfuelderivativecontracts is64percent.The
Companybelievesthatprovidingthemaximumpercentoffuelconsumptioncoveredbyderivativecontractsinfutureyearsrelativeto2019fuelgallonsconsumedisa
morerelevantmeasureforfuturecoverage,duetouncertaintyregardingavailableseatmileplansinfutureyears.Basedon2019fuelgallonsconsumed,theCompany's
maximumpercentoffuelconsumptioncoveredbyfuelderivativecontractsis37percentin2023and17percentin2024.
As a result of applying hedge accounting in prior periods, the Company has amounts in Accumulated other comprehensive income (loss)
("AOCI")thatwillberecognizedinearningsinfutureperiodswhentheunderlyingfuelderivativecontractssettle.Thefollowingtabledisplays
the Company's estimated fair value of remaining fuel derivative contracts (not considering the impact of the cash collateral provided to or
receivedfromcounterparties-seeNote11totheConsolidatedFinancialStatementsforfurtherinformation),aswellasthedeferredamountsin
AOCIatDecember31,2021,andtheexpectedfutureperiodsinwhichtheseitemsareexpectedtosettleand/orberecognizedinearnings(in
millions):
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Year
Fair value of fuel
derivative contracts
at December 31, 2021
Amount of gains deferred
in AOCI at December 31,
2021 (net of tax)
2022 $ 409 $ 234
2023 221 117
2024 66 26
Total
$ 696 $ 377
AssumingnochangestotheCompany'scurrentfuelderivativeportfolio,butincludingallprevioushedgeactivityforfuelderivativesthathave
not yet settled, and considering only the expected net cash receipts related to hedges that will settle, the Company is providing the below
sensitivitytableforfirstquarter2022andfullyear2022jetfuelpricesatdifferentcrudeoilassumptionsasofJanuary20,2022,andforexpected
premiumcostsassociatedwithsettlingcontractseachperiod,respectively.
Estimated economic fuel price per gallon, including taxes and fuel hedging premiums
(e)
Average Brent Crude Oil
price per barrel First Quarter 2022 (c) Full Year 2022 (d)
$60 $1.80-$1.90 $1.85-$1.95
$70 $2.00-$2.10 $2.05-$2.15
Current Market (a) $2.25 - $2.35 $2.25 - $2.35
$90 $2.35-$2.45 $2.40-$2.50
$100 $2.45-$2.55 $2.55-$2.65
Estimatedfuelhedgingpremiumexpensepergallon(b) $0.06 $0.05
Estimatedpremiumcosts(b) $26million $96million
(a)BrentcrudeoilaveragemarketpricesasofJanuary20,2022,wereapproximately$87and$84perbarrelforfirstquarter2022andfullyear2022,respectively.
(b)FuelhedgingpremiumexpensepergallonisincludedintheCompany'sestimatedeconomicfuelpricepergallonestimatesabove.
(c)BasedontheCompany'sexistingfuelderivativecontractsandmarketpricesasofJanuary20,2022,firstquarter2022economicfuelcostsareestimatedtobeinthe
$2.25to$2.35pergallonrange,includingfuelhedgingpremiumexpenseofapproximately$26million,or$0.06pergallon,and$0.35pergalloninfavorablecash
settlementsfromfuelderivativecontracts.SeeNoteRegardingUseofNon-GAAPFinancialMeasures.
(d)BasedontheCompany'sexistingfuelderivativecontractsandmarketpricesasofJanuary20,2022,fullyear2022economicfuelcostsareestimatedtobeinthe
$2.25to$2.35pergallonrange,includingfuelhedgingpremiumexpenseofapproximately$96million,or$0.05pergallon,and$0.28pergalloninfavorablecash
settlementsfromfuelderivativecontracts.SeeNoteRegardingUseofNon-GAAPFinancialMeasures.
(e)TheCompany'scurrentfuelderivativecontractscontainacombinationofinstrumentsbasedinWestTexasIntermediate("WTI")andBrentcrudeoil;however,the
economicfuelpricepergallonsensitivitiesprovided,assumetherelationshipbetweenBrentcrudeoilandrefinedproductsbasedonmarketpricesasofJanuary20,
2022.EconomicfuelcostprojectionsdonotreflectthepotentialimpactofspecialitemsbecausetheCompanycannotreliablypredictorestimatethehedgeaccounting
impactassociated with the volatility oftheenergy markets, the impactofCOVID-19cases onairtraveldemand, or theimpacttoits financial statements in future
periods.Accordingly,theCompanybelievesareconciliationofnon-GAAPfinancialmeasurestotheequivalentGAAPfinancialmeasuresforprojectedresultsisnot
meaningfuloravailablewithoutunreasonableeffort.SeeNoteRegardingUseofNon-GAAPFinancialMeasures.
Maintenance materials and repairs expensefor 2021 increased by $104 million, or 13.9 percent, compared with 2020.On a per ASM basis,
Maintenance materials and repairs expense decreased 9.7 percent, compared with 2020. On a dollar basis, approximately 50 percent of the
increasewasduetothetimingofregularairframemaintenancechecksassomecostshadpreviouslybeendeferredwhileaportionofthefleet
was placedinto temporary storageduring the COVID-19 pandemic. Themajority of theremainder of theincrease was dueto higher engine
maintenanceexpenseduetotheincreaseinflighthours.
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TableofContents
Landingfeesandairportrentalsexpensefor2021increasedby$216million,or17.4percent,comparedwith2020.OnaperASMbasis,Landing
feesandairportrentalsexpensedecreased9.1percent,comparedwith2020.Onadollarbasis,approximately50percentoftheincreasewasdue
tohigherlandingfeesfromtheincreasednumberofTripsflown,andtheremainderoftheincreasewasduetoanincreaseinspacerentalratesat
manyairports.
Depreciation and amortization expense for 2021 increased by $17 million, or 1.4 percent, compared with 2020. On a per ASM basis,
Depreciation and amortization expense decreased 20.7 percent, compared with 2020. On a dollar basis, the majority of the increase was
associatedwiththedeploymentofnewtechnologyassetsduring2021.
Otheroperatingexpensesfor2021increasedby$468million,or24.3percent,comparedwith2020.Includedwithinthislineitemwasaircraft
rentalsexpensesintheamountof$205millionand$209millionfor2021and2020,respectively.OnaperASMbasis,Otheroperatingexpenses
decreased3.2percent,comparedwith2020.Onadollarbasis,theincreasewasprimarilydueto$222millioningainsfromthesale-leasebackof
20aircrafttothirdpartiesintwoseparatetransactionsduringsecondquarter2020,whichreducedOtheroperatingexpensesinsecondquarter
2020.Excluding the impactofthis 2020sale-leasebackgain, theincreasein Other operatingexpenseson adollarbasis wasprimarilydue to
higher revenue related expenses, including credit card processing charges. See Note 8 to the Consolidated Financial Statements for more
information.
Other
Otherexpenses(income)includeinterestexpense,capitalizedinterest,interestincome,andothergainsandlosses.
Interestexpensefor2021increasedby$118million,or33.8percent,comparedwith2020,primarilyduetohigherdebtbalances.SeeNote7to
theConsolidatedFinancialStatementsformoreinformation.
Capitalizedinterestfor2021increasedby$1million,or2.9percent,comparedwith2020,primarilyduetoBoeingresumingproductionofthe
Company'sundeliveredMAXaircraft.
Interestincomefor2021decreasedby$19million,or59.4percent,comparedwith2020,duetolowerinterestrates.
Other(gains)losses,net,primarilyincludesamountsrecordedasaresultoftheCompany'shedgingactivities.SeeNote11totheConsolidated
FinancialStatementsforfurtherinformationontheCompany'shedgingactivities.ThefollowingtabledisplaysthecomponentsofOther(gains)
losses,net,for2021and2020:
Year ended December 31,
(inmillions) 2021 2020
Mark-to-marketimpactfromfuelcontractssettlingincurrentandfutureperiods $ (7) $ 40
Premiumcostoffuelcontractsnotdesignatedashedges 43 34
Mark-to-marketimpactfrominterestrateswapagreements — 28
Mark-to-marketgainondeferredcompensationplaninvestment (33) —
Correctiononinvestmentgainsrelatedtopriorperiods (60) —
Lossonpartialextinguishmentofconvertiblenotes 28 —
Post-retirementcurtailmentcharge — 53
Other 7 3
$ (22) $ 158
Income Taxes
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TableofContents
TheCompany'sannual2021effectivetaxratewas26.3percent,comparedwith27.8percentin2020.Thehighertaxratefor2020wasprimarily
duetothenetlossincurredduring2020,resultinginataxbenefitandrefundofpreviouslypaidtaxes,whentheCompanywassubjecttoahigher
federalstatutorytaxrate,aswasallowedundertheCARESact.
2020 Compared with 2019
TheCompany'scomparisonof2020resultsto2019resultsisincludedintheCompany'sAnnualReportonForm10-Kforthefiscalyearended
December31,2020,underPartIIItem7,Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations.
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TableofContents
Reconciliation of Reported Amounts to Non-GAAP Financial Measures (excluding special items) (unaudited) (in millions, except per
share amounts and per ASM amounts)
Year ended December 31, Percent
2021 2020 Change
Fuel and oil expense, unhedged $ 3,350 $ 1,810
Add:Premiumcostoffuelcontractsdesignatedashedges 57 64
Deduct:FuelhedgegainsincludedinFuelandoilexpense,net (97) (25)
Fuel and oil expense, as reported $ 3,310 $ 1,849
Add:Fuelhedgecontractssettlinginthecurrentperiod,butforwhichlosseswerereclassifiedfromAOCI(a) 8 25
Add:Premiumcostoffuelcontractsnotdesignatedashedges 43 34
Fuel and oil expense, excluding special items (economic)
$ 3,361 $ 1,908
76.2%
Total operating expenses, net, as reported $ 14,069 $ 12,864
Add:PayrollsupportandvoluntaryEmployeeprograms,net 2,960 967
Add:Fuelhedgecontractssettlinginthecurrentperiod,butforwhichlosseswerereclassifiedfromAOCI(a) 8 25
Add:Interestrateswapagreementsterminatedinapriorperiod,butforwhichlosseswerereclassifiedfrom
AOCI(a) 3 —
Add:Premiumcostoffuelcontractsnotdesignatedashedges 43 34
Add:Gainfromaircraftsale-leasebacktransactions — 222
Deduct:Impairmentoflong-livedassets (12) (32)
Total operating expenses, excluding special items $ 17,071 $ 14,080 21.2%
Deduct:Fuelandoilexpense,excludingspecialitems(economic) (3,361) (1,908)
Operating expenses, excluding Fuel and oil expense and special items $ 13,710 $ 12,172 12.6%
Deduct:Profitsharingexpense (230) —
Operating expenses, excluding Fuel and oil expense, special items, and profitsharing
$ 13,480 $ 12,172
10.7%
Operating income (loss), as reported $ 1,721 $ (3,816)
Deduct:PayrollsupportandvoluntaryEmployeeprograms,net (2,960) (967)
Deduct:Fuelhedgecontractssettlinginthecurrentperiod,butforwhichlosseswerereclassifiedfromAOCI(a) (8) (25)
Deduct:Interestrateswapagreementsterminatedinapriorperiod,butforwhichlosseswerereclassifiedfrom
AOCI(a) (3) —
Deduct:Premiumcostoffuelcontractsnotdesignatedashedges (43) (34)
Deduct:Gainfromaircraftsale-leasebacktransactions — (222)
Add:Impairmentoflong-livedassets 12 32
Operating loss, excluding special items
$ (1,281) $ (5,032)
(74.5)%
Other (gains) losses, net, as reported $ (22) $ 158
Add(Deduct):Mark-to-marketimpactfromfuelcontractssettlingincurrentandfutureperiods 7 (40)
Deduct:Premiumcostoffuelcontractsnotdesignatedashedges (43) (34)
Deduct:Mark-to-marketimpactfrominterestrateswapagreements — (28)
Deduct:Lossonpartialextinguishmentofconvertiblenotes (28) —
Deduct:Post-retirementcurtailmentcharge — (53)
Other (gains) losses, net, excluding special items
$ (86) $ 3
n.m.
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Year ended December 31, Percent
2021 2020 Change
Income (loss) before income taxes, as reported $ 1,325 $ (4,256)
Deduct:PayrollsupportandvoluntaryEmployeeprograms,net (2,960) (967)
Deduct:Fuelhedgecontractssettlinginthecurrentperiod,butforwhichlosseswerereclassifiedfromAOCI(a) (8) (25)
Deduct:Interestrateswapagreementsterminatedinapriorperiod,butforwhichlosseswerereclassifiedfrom
AOCI(a) (3) —
Deduct:Gainfromaircraftsale-leasebacktransactions — (222)
Add:Impairmentoflong-livedassets 12 32
Add(Deduct):Mark-to-marketimpactfromfuelcontractssettlingincurrentandfutureperiods(a) (7) 40
Add:Mark-to-marketimpactfrominterestrateswapagreements — 28
Add:Lossonpartialextinguishmentofconvertiblenotes 28 —
Add:Post-retirementcurtailmentcharge — 53
Loss before income taxes, excluding special items
$ (1,613) $ (5,317)
(69.7)%
Provision (benefit) for income taxes, as reported $ 348 $ (1,182)
Deduct:Netincome(loss)taximpactoffuelandspecialitems(b) (690) (376)
Deduct:GAAPtoNon-GAAPtaxratedifference(c) — (247)
Benefit for income taxes, net, excluding special items
$ (342) $ (1,805)
(81.1)%
Net income (loss), as reported $ 977 $ (3,074)
Deduct:PayrollsupportandvoluntaryEmployeeprograms,net (2,960) (967)
Deduct:Fuelhedgecontractssettlinginthecurrentperiod,butforwhichlosseswerereclassifiedfromAOCI(a) (8) (25)
Deduct:Interestrateswapagreementsterminatedinapriorperiod,butforwhichlosseswerereclassifiedfrom
AOCI(a) (3) —
Deduct:Gainfromaircraftsale-leasebacktransactions — (222)
Add:Impairmentoflong-livedassets 12 32
Add(Deduct):Mark-to-marketimpactfromfuelcontractssettlingincurrentandfutureperiods(a) (7) 40
Add:Mark-to-marketimpactfrominterestrateswapagreements — 28
Add:Lossonpartialextinguishmentofconvertiblenotes 28 —
Add:Post-retirementcurtailmentcharge — 53
Add:Netincome(loss)taximpactofspecialitems(b) 690 376
Add:GAAPtoNon-GAAPtaxratedifference(c) — 247
Net loss, excluding special items
$ (1,271) $ (3,512)
(63.8)%
Net income (loss) per share, diluted, as reported $ 1.61 $ (5.44)
Deduct:Impactofspecialitems (4.80) (1.83)
Deduct:Netimpactofnetincome(loss)abovefromfuelcontractsdividedbydilutiveshares (0.02) (0.04)
Add:Netincome(loss)taximpactofspecialitems(b) 1.12 0.66
Add:GAAPtoNon-GAAPtaxratedifference(c) — 0.43
Deduct:GAAPtoNon-GAAPdilutedweightedaveragesharesdifference(d) (0.06) —
Net loss per share, diluted, excluding special items
$ (2.15) $ (6.22)
(65.4)%
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Year ended December 31, Percent
2021 2020 Change
Operating expenses per ASM (cents) 10.66¢ 12.43¢
Add:Impactofspecialitems 2.23 1.18
Deduct:FuelandoilexpensedividedbyASMs (2.51) (1.84)
Deduct:ProfitsharingexpensedividedbyASMs (0.17) —
Operating expenses per ASM, excluding Fuel and oil expense, profitsharing, and special items (cents)
10.21¢ 11.77¢
(13.3)%
(a)SeeNote11toConsolidatedFinancialStatementsforfurtherinformation.
(b)TaxamountsforeachindividualspecialitemarecalculatedattheCompany'seffectiveratefortheapplicableperiodandtotaledinthislineitem.
(c) Adjustment related to GAAP and Non-GAAP tax rate differences, primarily due to the Payroll Support being excluded as a special item, and reflecting the
anticipatedbenefitofcarryingbackfullyear2020projectednetlossestoclaimtaxrefundsagainstpreviouscashtaxespaidrelatingtotaxyears2015through2019,
someofwhichwereathigherratesthanthecurrentyear.
(d)AdjustmentrelatedtoGAAPandNon-GAAPdilutedweightedaveragesharesdifference,duetotheCompanybeinginaNetincomepositiononaGAAPbasis
versusaNetlosspositiononaNon-GAAPbasisfortheyearendedDecember31,2021.SeeNote4totheConsolidatedFinancialStatementsforfurtherinformation.
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Note Regarding Use of Non-GAAP Financial Measures
TheCompany'sConsolidatedFinancialStatementsarepreparedinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStates
("GAAP").TheseGAAPfinancialstatementsmayinclude(i)unrealizednoncashadjustmentsandreclassifications,whichcanbesignificant,asa
resultofaccountingrequirementsandelectionsmadeunderaccountingpronouncementsrelatingtoderivativeinstrumentsandhedgingand(ii)
otherchargesandbenefitstheCompanybelievesareunusualand/orinfrequentinnatureandthusmaymakecomparisonstoitspriororfuture
performancedifficult.
Asaresult,theCompanyalsoprovidesfinancialinformationinthisfilingthatwasnotpreparedinaccordancewithGAAPandshouldnotbe
consideredasanalternativetotheinformationpreparedinaccordancewithGAAP.TheCompanyprovidessupplementalnon-GAAPfinancial
information(alsoreferredtoas"excludingspecialitems"),includingresultsthatitreferstoas"economic,"whichtheCompany'smanagement
utilizes to evaluate its ongoing financial performance and the Company believes provides additional insight to investors as supplemental
informationtoitsGAAPresults.Thenon-GAAPmeasuresprovidedthatrelatetotheCompany’sperformanceonaneconomicfuelcostbasis
include Fuel and oil expense, non-GAAP; Total operating expenses, non-GAAP; Operating expenses, non-GAAP excluding Fuel and oil
expense;Operatingexpenses,non-GAAPexcludingFuelandoilexpenseandprofitsharing;Operatingloss,non-GAAP;Other(gains)losses,net,
non-GAAP;Lossbeforeincometaxes,non-GAAP;Benefitforincometaxes,net,non-GAAP;Netloss,non-GAAP;Netlosspershare,diluted,
non-GAAP;andOperatingexpensesperASM,non-GAAP,excludingFuelandoilexpenseandprofitsharing(cents).TheCompany'seconomic
Fuel and oil expense results differ from GAAP results in that they only include the actual cash settlements from fuel hedge contracts - all
reflectedwithinFuelandoilexpenseintheperiodofsettlement.Thus,Fuelandoilexpenseonaneconomicbasishashistoricallybeenutilized
bytheCompany,aswellassomeoftheotherairlinesthatutilizefuelhedging,asitreflectstheCompany’sactualnetcashoutlaysforfuelduring
theapplicableperiod,inclusiveofsettledfuelderivativecontracts.Anynetpremiumcostspaidrelatedtooptioncontractsthataredesignatedas
hedgesarereflectedasacomponentofFuelandoilexpense, for bothGAAPandnon-GAAP (including economic) purposesintheperiod of
contractsettlement.TheCompanybelievestheseeconomicresultsprovidefurtherinsightintotheimpactoftheCompany'sfuelhedgesonits
operating performance and liquidity since they exclude the unrealized, noncash adjustments and reclassifications that are recorded in GAAP
resultsinaccordancewithaccountingguidancerelatingtoderivativeinstruments,andtheyreflectallcashsettlementsrelatedtofuelderivative
contracts within Fuel and oil expense. This enables the Company's management, as well as investors and analysts, to consistently assess the
Company'soperatingperformanceonayear-over-yearorquarter-over-quarterbasisafterconsideringalleffortsinplacetomanagefuelexpense.
However,becausethesemeasuresarenotdeterminedinaccordancewithGAAP,suchmeasuresaresusceptibletovaryingcalculations,andnot
allcompaniescalculatethemeasuresinthesamemanner.Asaresult,theaforementionedmeasures,aspresented,maynotbedirectlycomparable
tosimilarlytitledmeasurespresentedbyothercompanies.
Further information on (i) the Company's fuel hedging program, (ii) the requirements of accounting for derivative instruments, and (iii) the
causesofhedge ineffectiveness and/ormark-to-marketgainsor losses fromderivativeinstrumentsisincluded inNote11tothe Consolidated
FinancialStatements.
The Company’s GAAPresults in the applicable periods mayinclude other charges or benefits thatare also deemed "special items," that the
Company believes make its results difficult to compare to prior periods, anticipated future periods, or industry trends. Financial measures
identifiedasnon-GAAP(orasexcludingspecialitems)havebeenadjustedtoexcludespecialitems.Fortheperiodspresented,inadditiontothe
itemsdiscussedabove,specialitemsinclude:
1. ProceedsrelatedtothePayrollSupportprograms,whichwereusedtopayaportionofEmployeesalaries,wages,andbenefits;
2. ChargesandadjustmentstopreviouslyaccruedamountsrelatedtotheCompany'sextendedleaveprograms;
3. AdjustmentsforpriorperiodlossesreclassifiedfromAOCIassociatedwithforward-startinginterestrateswapagreementsthatwere
terminatedinpriorperiodsrelatedto12-8aircraftleases;
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4. Gainsassociatedwiththesale-leasebackoftenBoeing737-800aircraftandtenBoeing-8aircrafttothirdparties;
5. Anoncashimpairmentchargerelatedto20Boeing737-700aircraftthatwereretiredduring2020and8Boeing737-700aircraftthat
wereretiredin2021;
6. Unrealizedlossesrelatedto12forward-startinginterestrateswapagreements.During2020,theinterestrateswapagreements,which
wererelatedto12-8aircraftleases(withdeliveriesoriginallyscheduledbetweenJune2020andSeptember2020),werede-designatedas
hedgesduetothescheduleddeliveryrangenolongerbeingprobable,resultinginthemark-to-marketchangesbeingrecordedtoearnings;
7. LossesassociatedwiththepartialextinguishmentoftheCompany'sconvertiblenotes;and
8. Apost-retirementcurtailmentchargerelatedtoEmployeeswhoacceptedVoluntarySeparationProgram2020andelectedtoparticipate
intheCompany'sretireemedicalbenefitsplan.
Because management believes special items can distort the trends associated with the Company’s ongoing performance as an airline, the
Companybelievesthatevaluationofitsfinancialperformancecanbeenhancedbyasupplementalpresentationofresultsthatexcludetheimpact
ofspecialitemsinordertoenhanceconsistencyandcomparativenesswithresultsinpriorperiodsthatdonotincludesuchitemsandasabasisfor
evaluatingoperatingresultsinfutureperiods.Thefollowingmeasuresareoftenprovided,excludingspecialitems,andutilizedbytheCompany’s
management,analysts,andinvestorstoenhancecomparabilityofyear-over-yearresults,aswellastoindustrytrends:Fuelandoilexpense,non-
GAAP;Totaloperatingexpenses,non-GAAP;Operatingexpenses,non-GAAPexcludingFuelandoilexpense;Operatingexpenses,non-GAAP
excludingFuelandoilexpenseandprofitsharing;Operatingloss,non-GAAP;Other(gains)losses,net,non-GAAP;Lossbeforeincometaxes,
non-GAAP;Benefitforincometaxes,net,non-GAAP;Netloss,non-GAAP;Netlosspershare,diluted,non-GAAP;andOperatingexpensesper
ASM,non-GAAP,excludingFuelandoilexpenseandprofitsharing(cents).
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Liquidity and Capital Resources
Theenormous impactofthe COVID-19pandemicon theU.S.travel industrycreatedan urgentliquiditycrisis forthe entire airlineindustry,
including the Company. However, due to the Company's pre-pandemic low balance sheet leverage, large base of unencumbered assets, and
investment-gradecreditratings,theCompanywasabletoquicklyaccessadditionalliquidityduring2020,asCustomercancellationsandticket
refundsspikedandsalesandrevenuesdroppedwhiletheCompanycontinuedtoexperiencesignificantfixedoperatingexpenses.SeeNote2and
Note 7 to the Consolidated Financial Statements for further information regarding the impact of the COVID-19 pandemic, as well as the
transactionscompletedandassistanceobtainedunderPayrollSupportprograms.
Netcashprovidedbyoperatingactivitiesfor2021was$2.3billion,andnetcashusedinoperatingactivitiesfor2020was$1.1billion.Operating
cashinflowsarehistoricallyprimarilyderivedfromticketsalesassociatedwithprovidingairtransportationtoCustomers.Thevastmajorityof
ticketsarepurchasedpriortothedayonwhichtravelisprovidedand,insomecases,severalmonthsbeforetheanticipatedtraveldate.Operating
cashoutflowsarerelatedtotherecurringexpensesofairlineoperations.Operatingcashflowsfor2021included$2.7billioninPayrollSupport
programgrant proceedsreceived.The net increasein operatingcashflows was alsoa resultofa $591 millionincrease inAirtraffic liability
drivenbyincreasedticketsalesrelatedtoanincreaseinleisuretraveldemand.Theoperatingcashflowsfor2020wereaffectedprimarilyby(i)
the initial, mostsignificant, impacts of the COVID-19 pandemic, which resulted in a significant drop in travel demand, sales, and revenues,
leading to the Company's Net loss (as adjusted for noncash items), and (ii) the Company's funding of its $667 million 2019 profitsharing
distributiontoEmployeesin2020.In2020,thesenetdecreasesincashfromoperatingactivitieswerepartiallyoffsetbya$1.6billionincreasein
Airtrafficliabilityandby$2.4billioninPayrollSupportprogramgrantproceedsreceived.TheincreaseinAirtrafficliabilitywasduetoticket
salesinearly2020forfuturetravelthathavenotbeenflownasaresultofthesignificantnumberofCustomertripcancellationsassociatedwith
theCOVID-19 pandemic, and growth inRapid Rewardspoints earneddue tomultiple loyaltycredit card promotions throughout 2020.Cash
flows associated with entering into new fuel derivatives, which are classified as Other, net, operating cash flows, were net outflows of $34
millionin2021and$129millionin2020.SeeNote11totheConsolidatedFinancialStatementsforfurtherinformation.Netcashprovidedby
operatingactivitiesisprimarilyusedtofinancecapitalexpenditures,repaydebt,andprovideworkingcapital.Historically,theCompanyhasalso
usednetcashprovidedbyoperatingactivitiestofundstockrepurchasesandpaydividends;howevertheseshareholderreturnactivitieshavebeen
suspendedduetorestrictionsassociatedwiththepayrollassistanceunderthePayrollSupportprogramsandtheCompany's$1.0billionamended
andrestatedrevolvingcreditfacility(the"AmendedA&RCreditAgreement").SeeNote7totheConsolidatedFinancialStatementsforfurther
information.
Netcashusedininvestingactivitiesfor2021and2020was$1.3billionand$16million,respectively.Investingactivitiesinbothyearsincluded
Capitalexpenditures,andchangesinthebalanceoftheCompany'sshort-termandnoncurrentinvestments.During2020,theCompanyalsoraised
$815millionfromthesale-leasebackof20aircraft(seeNote8totheConsolidatedFinancialStatementsformoredetailsonthesale-leaseback
transactions)and received$428 millionof Supplierproceeds, which theCompany considersan offsetto itsaircraft capitalexpenditures. See
Note17totheConsolidatedFinancialStatementsforfurtherinformation.During2021,Capitalexpenditureswere$505million,comparedwith
$515 million in the same prior year period. The Company continues to estimate its 2022 capital spending to be approximately $5.0 billion,
includingapproximately$900millioninnon-aircraftcapitalspending.Thisincludes122022-8optionsexercisedthroughFebruary3,2022,and
assumestheCompanyexercisesall30remaining2022options.FleetandothercapitalinvestmentplansareexpectedtoevolveastheCompany
continuestomanagethroughthepandemic,andtheCompanyintendstocontinueevaluatingtheexerciseofitsremaining30MAXoptionsfor
2022asdecisiondeadlinesoccur.
Net cash provided by financing activities for 2021 and 2020 was $359 million and $9.7 billion, respectively. During 2021, the Company
borrowed $1.1 billion under Payroll Support programs. See Note 2 to the Consolidated Financial Statements for further information. The
Companyrepaid$905millionindebtandfinanceleaseobligations,includingtheextinguishmentof$203millioninprincipalofitsconvertible
notesforcashpaymentstotaling$293millionduring2021.During2020,theCompanyborrowed$13.6billion,throughvarioustransactions,in
ordertoimproveitsliquiditypositionasaresultofthepandemic.Anadditional$2.3billionwasraisedfroma
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publicofferingof80.5millionsharesofcommonstock.Thesefinancingswerepartiallyoffsetbythefullrepaymentof$3.7billionborrowed
underthe Company'sAmended andRestated364-Day CreditAgreement and$1.0 billion drawnunder theCompany's Amended A&RCredit
Agreement. The Company also repurchased $451 million of its outstanding common stock and paid $188 million in cash dividends to
Shareholdersin2020priortorestrictionsassociatedwiththepayrollassistanceunderthePayrollSupportprograms.Additionally,theCompany
repaid$839millioninotherdebtandfinanceleaseobligationsduring2020.
AdiscussionoftheCompany'smostsignificantdriversimpactingcashflowfor2019areincludedintheCompany'sAnnualReportonForm10-
KforthefiscalyearendedDecember31,2020,underPartIIItem7,LiquidityandCapitalResources.
TheCompanyisa"well-knownseasonedissuer"andcurrentlyhasaneffectiveshelfregistrationstatementregisteringanindeterminateamount
ofdebtandequitysecuritiesforfuturesales.TheCompanycurrentlyintendstousetheproceedsfromanyfuturesecuritiessalesoffthisshelf
registrationstatementforgeneralcorporatepurposes.
TheCompanyhasaccessto$1.0billionunderitsAmendedA&RCreditAgreement.TheAmendedA&RCreditAgreementhasanaccordion
featurethatwouldallowtheCompany,subjectto,amongotherthings,theprocurementofincrementalcommitments,toincreasethesizeofthe
facilityto$1.5billion.InterestonthefacilityisbasedontheCompany'screditratingsatthetimeofborrowing.AttheCompany'scurrentratings,
the interestcost would be LIBOR plusa spread of 200basis points. The facility contains a financial covenant tomaintain total liquidity, as
definedin theAmended A&RCredit Agreement,of $1.5billion atall timesunder theAmended A&RCredit Agreement;the Companywas
compliantwiththisrequirementasofDecember31,2021.TherewerenoamountsoutstandingundertheAmendedA&RCreditAgreementasof
December31,2021.
Although not the case at December 31, 2021 due to the Company's significant financing activities in 2020 and 2021, the Company has
historicallycarriedaworkingcapitaldeficit,inwhichitscurrentliabilitiesexceeditscurrentassets.Thisiscommonwithintheairlineindustry
andisprimarilyduetothenatureoftheAirtrafficliabilityaccount,whichisrelatedtoadvanceticketsales,unusedfundsavailabletoCustomers,
andloyaltydeferredrevenue,whichareperformanceobligationsforfutureCustomerflights, do not requirefuturesettlementincash, and are
mostlynonrefundable.SeeNote6totheConsolidatedFinancialStatementsforfurtherinformation.
TheCompanybelievesithasvariousoptionsavailabletomeetitscapitalandoperatingcommitments,includingunrestrictedcashandshort-term
investmentsof$15.5billionasofDecember31,2021,andanticipatedfutureinternallygeneratedfundsfromoperations.However,theCOVID-
19 pandemic continues to evolve and could have a material adverse impact on the Company's ability to meet its capital and operating
commitments.SeeNote2totheConsolidatedFinancialStatementsforfurtherinformationontheimpactsoftheCOVID-19pandemic.
Thefollowingdiscussionincludesvariousshort-termandlong-termmaterialcashrequirementsfromknowncontractualandotherobligations,
butdoes notinclude amountsthat arecontingent onevents orother factorsthat areuncertain orunknown atthistime. Giventhe Company's
currentliquidityposition,availableresources,andprevailingoutlook,itexpectstobeabletofulfillbothitsshort-termandlong-termmaterial
cash requirements. The amounts disclosed are based on various estimates, including estimates regarding the timing of payments, prevailing
interestrates,volumespurchased,theoccurrenceofcertaineventsandotherfactors.Accordingly,theactualresultsmayvarymateriallyfromthe
amountsdiscussedherein.
Debt
SeeNote7totheConsolidated FinancialStatements forfurtherdetailontheCompany's debt andthe timing ofexpected andfuture principal
payments.TheCompanyalsohassignificantfutureobligationsassociatedwithfixedinterestpaymentsassociatedwithitsdebt.AsofDecember
31,2021, futureinterest paymentsassociated withits fixedrate debt(excluding interestassociated withfinance leases)were $343 million in
2022,$301millionin2023,$271millionin2024,$217millionin2025,$163millionin2026,and$193millionthereafter.
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TheCompany'sConvertible Notes didnot meetthecriteria tobe converted byholders asof the dateof the financialstatements,andthusare
classifiedasLong-term debtinthe accompanying ConsolidatedBalanceSheet asofDecember31, 2021.Ifthe provisions weremetto allow
holders to exercise their conversion option on these instruments, all of the remaining convertible notes would be reclassified as a current
obligation. Also, the Company has engaged in transactions with certain convertible debt holders to purchase their instruments in private
transactionsfromtimetotimeincash,andmaycontinuetodosoinfutureperiods.TheCompanyconsidersitsprevailingstockprice,thetrading
priceofitsconvertibledebtinstruments,anditsavailableliquidityindetermininghowmuchoftheseinstrumentsitmayattempttorepurchasein
suchtransactions.
Leases
TheCompanyentersintoleasesforaircraft,airportsandotherrealproperty,andothertypesofequipmentinthenormalcourseofbusiness.See
Note8totheConsolidatedFinancialStatementsforfurtherdetail.
Aircraft purchase commitments
TheCompanyisrequiredtomakecashdepositstowardthepurchaseofaircraftinadvance.ThesedepositsareclassifiedasDepositsonflight
equipment purchase contracts in the Consolidated Balance Sheet until the aircraft is delivered, at which time deposits previously made are
deducted from the final purchase price of aircraft and are reclassified as Flight equipment. See Part I, Item 2 for a complete table of the
Company'scontractualfirmdeliveriesandoptionsfor-7and-8aircraft,andNote5totheConsolidatedFinancialStatementsforthefinancial
commitmentsrelatedtothesefirmdeliveries.
Other
TheCompany'sothermaterialcashrequirementsprimarilyconsistofoutlaysassociatedwithnormaloperatingexpensesoftheairline,including
payroll,fuel,airportcosts,etc.Whilemanyoftheseexpensesarevariableinnature,someoftheexpenditurescanbesomewhatfixedintheshort-
termduetothelead-timeinvolvedinpublishingtheCompany'sflightscheduleinadvanceandprovidingforresourcestobeavailabletooperate
thoseschedules.
TheCompanyhasalargenetdeferredtaxliabilityonitsConsolidatedBalanceSheet.Thedeferralofincometaxeshasresultedinasignificant
benefittotheCompanyanditsliquidityposition.SincetheCompanypurchasesthemajorityoftheaircraftitacquires,ithasbeenabletoutilize
accelerateddepreciationmethods(includingbonusdepreciation)availableundertheInternalRevenueCodeof1986,asamended,in2021andin
previousyears,whichhasenabledtheCompanytoacceleratecashtaxbenefitsofdepreciation.BasedontheCompany’sscheduledfutureaircraft
deliveriesfromBoeingandexistingtaxlawsineffect,theCompanywillcontinuetoacceleratethecashincometaxbenefitsrelatedtoaircraft
purchases.However,duetotheCompany'snettaxablelossincurredin2020,andaprovisionwithintheCARESActthatallowsentitiestocarry
backsuch2020lossestopriorperiodsofuptofiveyears,andclaimrefundsoffederaltaxespaid,theCompanyexpectstoreceiveasignificant
cashtaxrefundof$472millionassociatedwiththistaxablelossfromtheInternalRevenueServiceinthefirstsixmonthsof2022.SeeNote15to
the Consolidated Financial Statements for further information. The Company has paid in the past, and will continue to pay in the future,
significantcashtaxestothevarioustaxingjurisdictionswhereitoperates.TheCompanyexpectstobeabletocontinuetomeetsuchobligations
utilizingcashandinvestmentsonhand,aswellascashgeneratedfromitsongoingoperations.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company’s Consolidated Financial Statements have been prepared in accordance with GAAP. The Company’s significant accounting
policiesare described in Note 1to theConsolidated FinancialStatements. Thepreparation offinancial statements in accordance withGAAP
requires the Company’s management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial
Statements and accompanying footnotes. The Company’s estimates and assumptions are based on historical experience and changes in the
businessenvironment.However,actualresultsmaydifferfromestimatesunderdifferentconditions,sometimesmaterially.Criticalaccounting
policiesandestimatesaredefinedasthosethatboth(i)aremostimportanttotheportrayaloftheCompany’sfinancialconditionandresultsand
(ii)requiremanagement’smostsubjectivejudgments.TheCompany’scriticalaccountingpoliciesandestimatesaredescribedbelow.
Revenue Recognition
Tickets sold for Passenger air travel are initially deferred as Air traffic liability. Passenger revenue is recognized and Air traffic liability is
reducedwhentheserviceisprovided(i.e.,whentheflighttakesplace).Airtrafficliabilityprimarilyrepresentsticketssoldforfuturetraveldates,
fundsthatarepastflightdateandremainunused,butareexpectedtobeusedinthefuture,andtheCompany’sliabilityforloyaltybenefitsthat
areexpectedtoberedeemedinthefuture.Airtrafficliabilitytypicallyfluctuatesthroughouttheyearbasedonseasonaltravelpatterns,faresale
activity,andactivityassociatedwiththeCompany’sloyaltyprogram.SeeNote1totheConsolidatedFinancialStatementsforinformationabout
theCompany'srevenuerecognitionpolicies.
ForairtravelonSouthwest,theamountofticketsthatwill expire unused,referredtoas breakage, are estimatedandrecognizedin Passenger
revenueoncethescheduledflightdatehaspassed,inproportiontothepatternofrightsexercisedbytheCustomer,asperAccountingStandards
Codification606, Revenue From Contracts WithCustomers. Estimatingthe amountof ticketsthat willexpire unused involves some levelof
subjectivityandjudgment.The majority ofthe Company'stickets soldare nonrefundable,although thefunds remainreusable, fora periodof
time,intheformofaflightcreditthatcanbeappliedtowardsthepurchaseoffuturetravel.FlightcreditsaretypicallycreatedwhenaCustomer
cancelsormodifiesanexistingflightitinerary.Theseunusedflightcreditsaretheprimarysourceofbreakage.Breakageestimatesarebasedon
historicalexperienceovermanyyears,andtheCompanyhasconsistentlyappliedthisaccountingmethodtoestimaterevenuefromunusedtickets
atthedateofscheduledtravel.Fullyrefundableticketsrarelyexpireunused.
AsaresultoftheCOVID-19pandemic,forallCustomerflightcreditscreatedorscheduledtoexpirebetweenMarch1andSeptember7,2020
associated with flight cancellations, the Company has extended the expiration date to September 7, 2022. See Note 6 to the Consolidated
FinancialStatementsforfurtherinformationregardingtheseextendedflightcredits.SincetheCompanydidnothavehistoricaldatatoenableit
to accurately estimatethe pattern of usage of theseextended credits, these credits have beenclassified as a current liability throughout their
history. Due to the significant increase in time allowed by the Company for these Customers to redeem such credits for future travel, the
percentageoftheextendedcreditsthatwillultimatelyexpireunusediscurrentlyexpectedtobelowerthantheCompany’shistoricalexperience
withflightcreditsthatwerenotextended(“normal”flightcredits),andthislackofhistoricalexperiencealsoimpactstheCompany'sabilityto
estimate ultimate expirations. Therefore, asa result of the significant volume of these extended credits and the Company's lack of historical
experienceassociatedwithsuchextendedtravelcredits,recognitionofexpectedbreakagewilllikelycreatevolatilityincertainPassengerrevenue
metricsthroughSeptember2022.FortheyearendedDecember31,2021,holdingotherfactorsconstant,a10percentchangeintheCompany’s
estimateof theamount ofthese extendedcredits thatwill expireunused wouldhave resultedin animmaterial changein Passengerrevenues
recognized.
AlsoasaresultofchangesinobservedCustomertravelhabitsandbehaviorsduring2021,theCompanyhasincreaseditsestimatesof“normal”
Customerflightcreditsthatareexpectedtoexpireunused.Althoughverylittleofthesefundshaveyettoreachtheirexpirationdates,Customer
redemptionsofthese"normal"creditshavebeenataslowerratethantheCompany’shistoricaldatawouldsuggestforsimilarcreditsinperiods
priortotheCOVID-19pandemic.BasedonhistoricalCustomerbehavior,holdingotherfactorsconstant,a10percentchangeinthe
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Company’sestimateoftheamountof"normal"ticketsand/orflightcreditsthatwillexpireunusedwouldhaveresultedina$59million,orless
thanonepercent,changeinPassengerrevenuesrecognizedfortheyearendedDecember31,2021.
Observed Customer behavior that differs from historical experience can cause actual ticket breakage to differ significantly from estimates.
AssumptionsaboutCustomerbehaviorarereviewedfrequentlyandcorrespondingadjustmentsaremadetobreakageestimates,asneeded,when
observedbehaviorsdifferfromhistoricalexperience.AssumptionsaboutCustomerbehaviorcanbeimpactedbyseveralfactorsincluding,but
notlimited to:fareincreases,faresales,changestotheCompany'sticketingpolicies,changestotheCompany’srefund,exchangeandunused
fundspolicies,seatavailability,andeconomicfactors.TheCompany’sestimationtechniqueshavebeenconsistentlyappliedfromyeartoyear;
however,aswithanyestimates,actualticketbreakagemayvaryfromestimatedamounts.Giventheunprecedentedamountof2020Customer
flight cancellationsand the amountof travel funds availableto Customers foruse through September 2022, the Company expectsadditional
variabilityintheamountofbreakagerecordedinfutureperiods,especiallyasapercentageofrevenues,astheestimatesoftheportionofsold
ticketsthatwillexpireunusedmaydifferfromhistoricalexperienceandtheCompany'soverallrevenuesremainbelowpre-COVID-19pandemic
levels.
Fair Value Measurements and Financial Derivative Instruments
TheCompanyutilizesunobservable(Level3)inputsindeterminingthefairvalueofcertainassetsandliabilities.AtDecember31,2021,these
consisted of its fuel derivative option contracts, whichwere an asset of $696 million.The Company utilizes financial derivative instruments
primarilytomanageitsriskassociatedwithchangingjetfuelprices.See"QuantitativeandQualitativeDisclosuresaboutMarketRisk"formore
informationontheseriskmanagementactivities,Note11totheConsolidatedFinancialStatementsformoreinformationontheCompany’sfuel
hedgingprogram andfinancial derivative instruments, and Note 12 to the ConsolidatedFinancial Statementsfor moreinformation aboutfair
valuemeasurements.
AllderivativesarerequiredtobereflectedatfairvalueandrecordedontheConsolidatedBalanceSheet.AtDecember31,2021,theCompany
wasapartytoover175separatefinancialderivativeinstrumentsrelatedtoitsfuelhedgingprogramforfutureperiods.Changesinthefairvalues
oftheseinstrumentscanvarydramaticallybasedonchangesintheunderlyingcommodityprices.Forexample,during2021,market"spot"prices
forBrentcrudeoilpeakedatahighaveragedailypriceofapproximately$86perbarrelandhitalowaveragedailypriceofapproximately$51
perbarrel.During2020,marketspotpricesrangedfromahighaveragedailypriceofapproximately$69perbarreltoalowaveragedailypriceof
approximately $19 per barrel. Market price changes can be driven by factors such as supply and demand, inventory levels, weather events,
refinery capacity, political agendas, the value of the U.S. dollar, geopolitical events, the extent of the COVID-19 pandemic, and general
economicconditions,amongotheritems.Historically,thefinancialderivativeinstrumentsutilizedbytheCompanyprimarilyareacombination
ofcollars,purchasedcalloptions,callspreads,putspreads,andfixedpriceswapagreements.
TheCompanyentersintofinancialderivativeinstrumentswiththirdpartyinstitutionsin"over-the-counter"markets.Sincethemajorityofthe
Company’sfinancialderivativeinstrumentsarenottradedonamarketexchange,theCompanyestimatestheirfairvalues.Dependingonthetype
ofinstrument,thevaluesaredeterminedbytheuseofpresentvaluemethodsorstandardoptionvaluemodelswithassumptionsaboutcommodity
pricesbasedonthoseobservedinunderlyingmarkets.
TheCompanydeterminesthefairvalueoffuelderivativeoptioncontractsutilizinganoptionpricingmodelbasedoninputsthatareeitherreadily
available in public markets, can be derived from information available in publicly quoted markets, or are quoted by its counterparties. In
situationswheretheCompanyobtainsinputsviaquotesfromitscounterparties,itverifiesthereasonablenessofthesequotesviasimilarquotes
fromanothercounterparty as ofeachdatefor which financialstatementsareprepared.The Companyhasconsistentlyappliedthese valuation
techniquesinallperiodspresentedandbelievesithasobtainedthemostaccurateinformationavailableforthetypesofderivativecontractsit
holds.Duetothefactthatcertaininputsusedindeterminingtheestimatedfairvalueofits
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option contracts are considered unobservable (primarily implied volatility), the Company has categorized these option contracts as Level 3.
Althoughimpliedvolatilityisnotdirectlyobservable,itisderivedprimarilyfromchangesinmarketprices,whichareobservable.Basedonthe
Company’sportfolioofoptioncontractsasofDecember31,2021,a10percentchangeinimpliedvolatility,holdingallotherfactorsconstant,
wouldhaveresultedinachangeinthefairvalueofthisportfoliooflessthan$105million.
Fair valuesfor financial derivativeinstruments are estimated priorto the timethat the financial derivative instruments settle. However,once
settlementofthefinancialderivativeinstrumentsoccursandthehedgedjetfuelispurchasedandconsumed,allvaluesandpricesareknownand
are recognized in the financial statements. Although the Company continues to use a prospective assessment to determine that commodities
continuetoqualifyforhedgeaccountinginspecificlocationswheretheCompanyhedges,therearenoassurancesthatthesecommoditieswill
continuetoqualifyinthefuture.Thisisduetothefactthatfuturepricechangesintheserefinedproductsmaynotbeconsistentwithhistorical
pricechanges.Increasedvolatilityinthesecommoditymarketsforanextendedperiodoftime,especiallyifsuchvolatilityweretoworsen,could
causetheCompanytolosehedgeaccountingaltogetherforthecommoditiesusedinitsfuelhedgingprogram.Further,shouldtheanticipatedfuel
purchasescoveredbytheCompany'sfuelhedgesnolongerbeprobableofoccurring,theCompanywoulddiscontinuehedgeaccounting.Theloss
ofhedgeaccountingwouldcreatefurthervolatilityintheCompany’sGAAPfinancialresults.
AsdiscussedinNote11totheConsolidatedFinancialStatements,anychangesinfairvalueofcashflowderivativesdesignatedashedgesare
offsetwithinAOCIuntiltheperiodinwhichtheexpectedfuturecashflowimpactsearnings.Anychangesinthefairvalueoffuelderivativesthat
donotqualifyforhedgeaccountingarereflectedinearningswithinOther(gains)losses,net,intheperiodofthechange.BecausetheCompany
has extensive historical experience in valuing the derivative instruments it holds, and such experience is continually evaluated against its
counterpartieseachperiodwhensuchinstrumentsexpireandaresettledforcash,theCompanybelievesitisunlikelythatanindependentthird
party would value the Company’s derivative contracts at a significantly different amount than what is reflected in the Company’s financial
statements.Inaddition,theCompanyalsohasbilateralcreditprovisionsinsomeofitscounterpartyagreements,whichprovideforparties(orthe
Company)toprovidecashcollateralwhenthefairvalueoffuelderivativeswithasinglepartyexceedscertainthresholdlevels.Sincethiscash
collateral is based on the estimated fair value of the Company’s outstanding fuelderivative contracts, this provides further validationto the
Company’sestimateoffairvalues.
Loyalty Accounting
The Company utilizes estimates in the recognition of revenues and liabilities associated with its loyalty program. These estimates primarily
includetheliabilityassociatedwithRapidRewardsloyaltymember("Member")accountbalancesthatareexpectedtoberedeemedfortravelor
otherproductsatafuturedate.Loyaltyaccountbalancesincludepointsearnedthroughflightstaken,pointssoldtoCustomers,orpointsearned
throughbusinesspartnersparticipatingintheloyaltyprogram.
UndertheSouthwestRapidRewardsloyaltyprogram,MembersearnpointsforeverydollarspentonSouthwestbasefares.Theamountofpoints
earnedundertheprogramisbasedonthefareamountandfaretype,withhigherfaretypes(e.g.,BusinessSelect)earningmorepointsthanlower
fare types (e.g., Wanna Get Away). Each fare type is associated with a points earning multiplier, and points for flights are calculated by
multiplyingthefareamountfortheflightbythefaretypemultiplier.Likewise,theamountofpointsrequiredtoberedeemedforaflightcan
differbasedonthefaretypepurchased.Undertheprogram,(i)Membersareabletoredeemtheirpointsforeveryavailableseat,everyday,on
everyflight,withnoblackoutdates;and(ii)pointsdonotexpire.Inaddition,Membersareabletoredeemtheirpointsforitemsotherthantravel
on Southwest Airlines, such as international flights on other airlines, cruises, hotel stays, rental cars, gift cards, event tickets, and more. In
additiontoearningpointsforrevenueflightsandqualifyingpurchaseswithRapidRewardsPartners,Membersalsohavetheabilitytopurchase,
gift,andtransferpoints,aswellastheabilitytodonatepointstoselectedcharities.
TheCompanyutilizesthedeferredrevenuemethodofaccountingforpointsearnedthroughflightstakeninitsloyaltyprogram.TheCompany
alsosellspointsandrelatedservicestobusinesspartnersparticipatingintheloyaltyprogram.Liabilitiesarerecordedfortherelativestandalone
sellingpriceoftheRapidRewardspointswhichare
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awardedeachperiod.TheliabilitiesrecordedrepresentthetotalnumberofpointsexpectedtoberedeemedbyMembers,regardlessofwhether
theMembersmayhaveenoughtoqualifyforafulltravelaward.AtDecember31,2021,theloyaltyliabilitieswereapproximately$4.8billion,
including$2.6billionclassifiedwithinAirtrafficliabilityand$2.2billionclassifiedasAirtrafficliability–noncurrent.
Inordertodeterminethevalueofeachloyaltypoint,certainassumptionsmustbemadeatthetimeofmeasurement,whichincludeanallocation
ofpassengerrevenuebetweentheflightandloyaltypointsearnedbypassengers,andthefairvalueofRapidRewardspoints,whicharegenerally
basedontheirredemptionvaluetotheCustomer.SeeNote6totheConsolidatedFinancialStatementsforfurtherinformationondeterminingthe
estimatedfairvalueofeachloyaltypoint.
ThemajorityofthepointssoldtobusinesspartnersarethroughtheSouthwestco-brandedcreditcardagreement("Agreement")withChaseBank
USA,N.A.ConsiderationreceivedaspartofthisAgreementissubjecttoAccountingStandardsCodification606,RevenueFromContractsWith
Customers.TheAgreementhasthefollowingmultipleelements:travelpointstobeawarded,useoftheSouthwestAirlines’brandandaccessto
Rapid Rewards Member lists, advertising elements, and the Company’s resource team. These elements are combined into two performance
obligations, transportation and marketing, and consideration from the Agreement is allocated based on the relative selling price of each
performanceobligation.
SignificantmanagementjudgmentwasusedtoestimatethesellingpriceofeachoftheperformanceobligationsintheAgreementatinception,
includingeachtimeinwhichtheAgreementhasbeenmateriallyamended.TheobjectiveistodeterminethepriceatwhichtheCompanywould
transactasaleiftheproductorservicewassoldonastand-alonebasis.TheCompanydeterminesthebestestimateofsellingpricebyconsidering
multipleinputsandmethodsincluding,butnotlimitedto,theestimatedsellingpriceofcomparabletravel,discountedcashflows,brandvalue,
publishedsellingprices,numberofpointsawarded,andthenumberofpointsredeemed.TheCompanyestimatesthesellingpricesandvolumes
overthetermoftheAgreementinordertodeterminetheallocationofproceedstoeachofthemultipleperformanceobligations.TheCompany
records revenue related to air transportation when the transportation is delivered and revenue related to marketing elements when the
performanceobligationissatisfied.AonepercentincreaseordecreaseintheCompany'sestimateofthestandalonesellingprices,implemented
asofJanuary1,2021,causingachangetotheallocationofproceedstoairtransportationwouldnothavehadamaterialimpactontheCompany's
OperatingrevenuesfortheyearendedDecember31,2021.
Underitscurrentprogram,Southwestestimatestheportionofloyaltypointsthatwillnotberedeemed.Inestimatingthebreakage,theCompany
takesintoaccounttheMember’spastbehavior,aswellasseveralfactorsrelatedtotheMember’saccountthatareexpectedtobeindicativeofthe
likelihoodoffuturepointredemption.ThesefactorsaretypicallyrepresentativeofaMember’slevelofengagementintheloyaltyprogram.They
include, but are not limited to, tenure with the program, points accrued in the program, and points redeemed in the program. The Company
believesithasobtainedsufficienthistoricalbehavioraldatatodevelopapredictivestatisticalmodeltoanalyzetheamountofbreakageexpected
forallloyaltypoints.TheCompanyupdatesthismodelatleastannually,andappliesthenewbreakagerateseffectiveOctober1steachyear,or
morefrequentlyifrequiredbychangesinthebusiness.Changesinthebreakageratesappliedannuallyinrecentyearshavenothadamaterial
impactonPassengerrevenues.FortheyearendedDecember31,2021,basedonactualredemptionsofpointssoldtobusinesspartnersandearned
throughflights,ahypotheticalonepercentagepointchangeintheestimatedbreakageratewouldhaveresultedinachangetoPassengerrevenue
ofapproximately$100million(anincreaseinbreakagewouldhaveresultedinanincreaseinrevenueandadecreaseinbreakagewouldhave
resulted in a decrease in revenue). Given that Member behavior will continue to develop as the program matures, the Company expects the
current estimates may change in future periods. However, the Company believes its current estimates are reasonable given current facts and
circumstances.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
TheCompanyhasinterestrateriskinitsfloating-ratedebtobligationsandinterestrateswaps,commoditypriceriskinjetfuelrequiredtooperate
itsaircraftfleet,andmarketriskinthederivativesusedtomanageitsfuelhedgingprogramandintheformoffixed-ratedebtinstruments.Asof
December31,2021,theCompanyoperatedatotalof129aircraftunderoperatingandfinanceleases.However,exceptforasmallnumberof
aircraftthathaveleasepaymentsthatfluctuatebasedinpartonchangesinmarketinterestrates,theremainderoftheleasesarenotconsidered
marketsensitivefinancialinstrumentsand,therefore,arenotincludedintheinterestratesensitivityanalysisbelow.TheCompanyalsohas14
aircraftunderoperatingleasesthathavebeensubleasedtoanothercarrier.FurtherinformationabouttheseleasesisdisclosedinNote8tothe
ConsolidatedFinancialStatements.TheCompanydoesnotpurchaseorholdanyderivativefinancialinstrumentsfortradingpurposes.SeeNote
11totheConsolidatedFinancialStatementsforinformationontheCompany’saccountingforitshedgingprogramandforfurtherdetailsonthe
Company’sfinancialderivativeinstruments.
Hedging
The Company purchases jet fuel at prevailing market prices, but seeks to manage market risk through execution of a documented hedging
strategy.TheCompanyutilizesfinancialderivativeinstruments,onbothashort-termandalong-termbasis,asaformofinsuranceagainstthe
potentialforsignificantincreasesinfuelprices.TheCompanybelievestherecanbesignificantriskinnothedgingagainstthepossibilityofsuch
fuelpriceincreases,especiallyinenergymarketsinwhichpricesarehighand/orrising.TheCompanyexpectstoconsumeapproximately1.9
billion gallons of jet fuel in 2022. Based on this anticipated usage, a change in jet fuel prices of just one cent per gallon would impact the
Company’sFuelandoilexpensebyapproximately$19millionfor2022,excludinganyimpactassociatedwithfuelderivativeinstrumentsheld.
AsofDecember31,2021,theCompanyheldanetpositionoffuelderivativeinstrumentsthatrepresentedahedgeforaportionofitsanticipated
jetfuelpurchasesforfutureperiods.SeeNote11totheConsolidatedFinancialStatementsforfurtherinformation.TheCompanymayincreaseor
decreasethevolumeoffuelhedgedbasedonitsexpectationoffuturemarketpricesanditsforecastedfuelconsumptionlevels,whileconsidering
the significant cost that can be associated with different types of hedging strategies.The gross fair value of outstandingfinancial derivative
instrumentsrelatedtotheCompany’sjetfuelmarketpriceriskatDecember31,2021,wasanassetof$696million.Inaddition,$175millionin
cashcollateraldepositswereheldbytheCompanyinconnectionwiththeseinstrumentsbasedontheirfairvalueasofDecember31,2021.The
fairvalues of thederivative instruments,depending on the type ofinstrument, weredetermined by useof presentvalue methods or standard
option value models with assumptions about commodity prices based on those observed in underlying markets. An immediate 10 percent
increaseor decreasein underlying fuel-related commodity prices from the December 31,2021, priceswould correspondinglychange thefair
value of the commodity derivative instruments in place by approximately $185 million. Fluctuations in the related commodity derivative
instrumentcashflowsmaychangebymoreorlessthanthisamountbaseduponfurtherfluctuationsinfuturesprices,aswellasrelatedincome
taxeffects.Inaddition,thisdoesnotconsiderchangesincashorlettersofcreditutilizedascollateralprovidedtoorbycounterparties,which
wouldfluctuateinanamountequaltoorlessthanthisamount,dependingonthetypeofcollateralarrangementinplacewitheachcounterparty.
ThissensitivityanalysisusesindustrystandardvaluationmodelsandholdsallinputsconstantatDecember31,2021,levels,exceptunderlying
futuresprices.
TheCompany’screditexposurerelatedtofuelderivativeinstrumentsisrepresentedbythefairvalueofcontractsthatareinanassetpositionto
the Company. At such times, these outstanding instruments expose the Company to credit loss in the event of nonperformance by the
counterpartiestotheagreements.AsofDecember31,2021,theCompanyhadninecounterpartiesforwhichthederivativesheldwereanasset.
Tomanagecreditrisk,theCompanyselectsandperiodicallyreviewscounterpartiesbasedoncreditratings,limitsitsexposurewithrespectto
each counterparty, and monitors the market position of the fuel hedging program and its relative market position with each counterparty.
However,ifoneormoreofthesecounterpartieswereinaliabilitypositiontotheCompanyandwereunabletomeettheirobligations,anyopen
derivativecontracts withthe counterpartycould besubject toearly termination,which couldresult insubstantial lossesfor the Company. At
December31,2021,theCompanyhad
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agreements with all of its active counterparties containing early termination rights and/or bilateral collateral provisions whereby security is
required if market risk exposure exceeds a specified threshold amount based on the counterparty’s credit rating. TheCompany also had
agreementswithcounterpartiesinwhichcashdepositsand/orlettersofcreditarerequiredtobepostedascollateralwheneverthenetfairvalueof
derivativesassociatedwiththosecounterpartiesexceedsspecificthresholds.Refertothecounterpartycreditriskandcollateraltableprovidedin
Note 11 tothe Consolidated Financial Statements for the fair values of fuel derivatives, amounts held as collateral, and applicable collateral
postingthresholdamountsasofDecember31,2021,atwhichsuchpostingsaretriggered.
TheCompanyisalsosubjecttotheriskthatthefuelderivativesitusestohedgeagainstfuelpricevolatilitydonotprovideadequateprotection.
TheCompanyhasfoundthatfinancialderivativeinstrumentsincommodities,suchasWTIcrudeoil,Brentcrudeoil,andrefinedproducts,such
asheatingoilandunleadedgasoline,canbeusefulindecreasingitsexposuretojetfuelpricevolatility.Inaddition,toaddfurtherprotection,the
Company may periodically enter into jet fuel derivatives for short-term timeframes. Jet fuel is not widely traded on an organized futures
exchangeand,therefore,therearelimitedopportunitiestohedgedirectlyinjetfuelfortimehorizonslongerthanapproximately24monthsinto
thefuture.
TheCompanyalsohasagreementswitheachofitscounterpartiesassociatedwithitsoutstandinginterestrateswapagreementsinwhichcash
collateralmayberequiredbasedonthefairvalueofoutstandingderivativeinstruments,aswellastheCompany’sanditscounterparty’scredit
ratings.AsofDecember31,2021,nocashcollateraldepositswereprovidedbyorheldbytheCompanybasedonitsoutstandinginterestrate
swapagreements.
DuetothesignificanceoftheCompany’sfuelhedgingprogramandtheemphasisthattheCompanyplacesonutilizingfuelderivativestoreduce
itsfuelpricerisk,theCompanyhascreatedasystemofgovernanceandmanagementoversightandhasputinplaceanumberofinternalcontrols
designedsothatproceduresareproperlyfollowedandaccountabilityispresentattheappropriatelevels.Forexample,theCompanyhasputin
place controls designed to: (i) create and maintain a comprehensive risk management policy; (ii) provide for proper authorization by the
appropriatelevelsofmanagement;(iii)provideforpropersegregationofduties;(iv)maintainanappropriatelevelofknowledgeregardingthe
executionofandtheaccountingforderivativeinstruments;and(v)havekeyperformanceindicatorsinplaceinordertoadequatelymeasurethe
performance of its hedging activities. The Company believes the governance structure that it has in place is adequate given the size and
sophisticationofitshedgingprogram.
Financial Market Risk
The vastmajority of the Company’s tangible assets areaircraft, which are long-lived.The Company’s strategy is to maintain aconservative
balance sheet and grow capacity steadily and profitably under the right conditions. While the Company uses financial leverage, it strives to
maintainastrongbalancesheetandhasa"BBB+"ratingwithFitch,a"BBB"ratingwithStandard&Poor’s,anda"Baa1"creditratingwith
Moody’sasofDecember31,2021,allofwhichareconsidered"investmentgrade."SeeNote7totheConsolidatedFinancialStatementsformore
informationonthematerialtermsoftheCompany’sshort-termandlong-termdebt.
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ThefollowingtablepresentstheCompany'sfixed-rateseniorunsecurednotesoutstandingasofDecember31,2021:
(in millions) December 31, 2021
2.75%Notesdue2022 $ 300
4.75%Notesdue2023 1,250
5.25%Notesdue2025 1,550
3.00%Notesdue2026 300
3.45%Notesdue2027 300
5.125%Notesdue2027 2,000
7.375%Debenturesdue2027 100
2.625%Notesdue2030 500
The$100million7.375%debenturesdue2027hadatonepointbeenconvertedtoafloatingrate,buttheCompanysubsequentlyterminatedthe
fixed-to-floating interest rate swap agreements related to it. The effect of this termination was that the interest associated with this debt
prospectively reverted back to its original fixed rate. As a result of the gain realized on this transaction, which is being amortized over the
remainingtermof thecorresponding notes,andbasedon projectedinterestratesat thedate oftermination,theCompany doesnot believeits
futureinterestexpense,basedonprojectedfutureinterestratesatthedateoftermination,associatedwiththesenoteswillsignificantlydifferfrom
theexpenseitwouldhaverecordedhadthenotesremainedatfloatingrates.
TheCompany'stotaldebtdividedbytotalassetswas29.5percentasofDecember31,2021.
TheCompanyalsohassomeriskassociatedwithchanginginterestratesduetotheshort-termnatureofitsinvestedcash,whichtotaled$12.5
billion, and short-term investments, which totaled $3.0 billion at December 31, 2021. See Notes 1 and 12 to the Consolidated Financial
Statements for further information. The Company currently invests available cash in certificates of deposit, highly rated money market
instruments, investment grade commercial paper, treasury securities, U.S. government agency securities, and other highly rated financial
instruments,dependingonmarketconditionsandoperatingcashrequirements.Becauseoftheshort-termnatureoftheseinvestments,thereturns
earned parallel closely with short-term floating interest rates. The Company has not undertaken any additional actions to cover interest rate
marketriskandisnotapartytoanyothermaterialmarketinterestrateriskmanagementactivities.
Ahypothetical10percentchangeinmarketinterestratesasofDecember31,2021,wouldhaveresultedinanapproximate$37millionchangein
thefairvalueoftheCompany’sfixed-ratedebtinstruments.SeeNote12totheConsolidatedFinancialStatementsforfurtherinformationonthe
fairvalueoffinancialinstruments.Achange inmarketinterest rates could,however, have acorresponding effect onearnings and cashflows
associatedwiththeCompany’sinvestedcash(excludingcashcollateraldepositsheld,ifapplicable)andshort-terminvestmentsbecauseofthe
floating-ratenatureoftheseitems.AssumingfloatingmarketratesineffectasofDecember31,2021wereheldconstantthroughouta12-month
period,ahypothetical10percentchangeinthoserateswouldhaveanimmaterialimpactontheCompany’snetearningsandcashflows.Utilizing
these assumptions and considering the Company’s cash balance (excluding the impact of cash collateral deposits held from or provided to
counterparties,ifapplicable)andshort-terminvestmentsoutstandingatDecember31,2021,anincreaseinrateswouldhaveanetpositiveeffect
ontheCompany’searningsandcashflows,whileadecreaseinrateswouldhaveanetnegativeeffectontheCompany’searningsandcashflows.
However,a10percentchangeinmarketrateswouldnotimpacttheCompany’searningsorcashflowassociatedwiththeCompany’spublicly
tradedfixed-ratedebt.
TheCompanyisalso subject toa financialcovenant includedin itsAmended A&RCredit Agreement,and issubject tocredit ratingtriggers
relatedtoitscreditcardtransactionprocessingagreements,thepricingrelatedtoanyfundsdrawnunderitsAmendedA&RCreditAgreement,
andsomeofitshedgingcounterpartyagreements.Certaincovenantsincludethemaintenanceofminimumcreditratingsand/ortriggersthatare
basedonchangesintheseratings.TheCompany’sAmendedA&RCreditAgreementcontainsafinancialcovenanttomaintaintotalliquidity,
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asdefinedtherein,of$1.5billionatalltimes.AsofDecember31,2021,theCompanywasincompliancewiththiscovenantandtherewereno
amountsoutstandingundertheAmendedA&RCreditAgreement.However,ifconditionschangeandtheCompanyfailstomeettheminimum
standardssetforthintheAmendedA&RCreditAgreement,therecouldbeareductionintheavailabilityofcashunderthefacility,oranincrease
in the costs to keep the facility intact as written. The Company’s hedging counterparty agreements contain ratings triggers in which cash
collateralcouldberequiredtobepostedwiththecounterpartyiftheCompany’screditratingweretofallbelowinvestmentgradebytwoofthe
threemajorratingagencies,andiftheCompanywereinanetliabilitypositionwiththecounterparty.SeeNote11 totheConsolidatedFinancial
Statementsforfurtherinformation.
TheCompanycurrentlyhasagreementswithorganizationsthatprocesscreditcardtransactionsarisingfrompurchasesofairtravelticketsbyits
Customers utilizing American Express, Discover, and MasterCard/VISA. Credit card processors have financial risk associated with tickets
purchased for travel because the processor generally forwards the cash related to the purchase to the Company soon after the purchase is
completed, but the air travel generally occurs after that time; therefore, the processor will have liability if the Company does not ultimately
provide the air travel. Under these processing agreements, and based on specified conditions, increasing amounts of cash reserves could be
requiredtobepostedwiththecounterparty.TherewasnocashreservedforthispurposeasofDecember31,2021.
AmajorityoftheCompany’ssalestransactionsareprocessedbyChasePaymentech.ShouldchargebacksprocessedbyChasePaymentechreach
acertainlevel,proceedsfromadvanceticketsalescouldbeheldbackandusedtoestablishareserveaccounttocoversuchchargebacksandany
otherdisputedchargesthatmightoccur.Additionally,cashreservesarerequiredtobeestablishediftheCompany’screditratingfallstospecified
levelsbelowinvestmentgrade.CashreserverequirementsarebasedontheCompany’spublicdebtratingandacorrespondingpercentageofthe
Company’sAirtrafficliability.AsofDecember31,2021,noholdbackswereinplace.
AsofDecember31, 2021, theCompany wasin compliancewith allcredit cardprocessing agreements.The inabilityto enterinto creditcard
processing agreements would have a material adverse effect on the business of the Company. The Company believes that it will be able to
continuetorenewitsexistingcreditcardprocessingagreementsorwillbeabletoenterintonewcreditcardprocessingagreementswithother
processorsinthefuture.
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Item 8.Financial Statements and Supplementary Data
Southwest Airlines Co.
Consolidated Balance Sheet
(inmillions,exceptsharedata)
December 31, 2021 December 31, 2020
ASSETS
Currentassets:
Cashandcashequivalents $ 12,480 $ 11,063
Short-terminvestments 3,024 2,271
Accountsandotherreceivables 1,357 1,130
Inventoriesofpartsandsupplies,atcost 537 414
Prepaidexpensesandothercurrentassets 638 295
Totalcurrentassets 18,036 15,173
Propertyandequipment,atcost:
Flightequipment 21,226 20,877
Groundpropertyandequipment 6,342 6,083
Depositsonflightequipmentpurchasecontracts — 305
Assetsconstructedforothers 6 309
27,574 27,574
Lessallowancefordepreciationandamortization 12,732 11,743
14,842 15,831
Goodwill 970 970
Operatingleaseright-of-useassets 1,590 1,892
Otherassets 882 722
$ 36,320 $ 34,588
LIABILITIES AND STOCKHOLDERS' EQUITY
Currentliabilities:
Accountspayable $ 1,282 $ 931
Accruedliabilities 1,624 2,259
Currentoperatingleaseliabilities 239 306
Airtrafficliability 5,566 3,790
Currentmaturitiesoflong-termdebt 453 220
Totalcurrentliabilities 9,164 7,506
Long-termdebtlesscurrentmaturities 10,274 10,111
Airtrafficliability-noncurrent 2,159 3,343
Deferredincometaxes 1,770 1,634
Constructionobligation — 309
Noncurrentoperatingleaseliabilities 1,315 1,562
Othernoncurrentliabilities 1,224 1,247
Stockholders'equity:
Commonstock,$1.00parvalue:2,000,000,000sharesauthorized;
888,111,634sharesissuedin2021and2020 888 888
Capitalinexcessofparvalue 4,224 4,191
Retainedearnings 15,774 14,777
Accumulatedothercomprehensiveincome(loss) 388 (105)
Treasurystock,atcost:295,991,525and297,637,297shares
in2021and2020,respectively (10,860) (10,875)
Totalstockholders'equity 10,414 8,876
$ 36,320 $ 34,588
Seeaccompanyingnotes.
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Southwest Airlines Co.
Consolidated Statement of Income (Loss)
(inmillions,exceptpershareamounts)
Year ended December 31,
2021 2020 2019
OPERATING REVENUES:
Passenger $ 14,066 $ 7,665 $ 20,776
Freight 187 161 172
Other 1,537 1,222 1,480
Totaloperatingrevenues 15,790 9,048 22,428
OPERATING EXPENSES, NET:
Salaries,wages,andbenefits 7,743 6,811 8,293
PayrollsupportandvoluntaryEmployeeprograms,net (2,960) (967) —
Fuelandoil 3,310 1,849 4,347
Maintenancematerialsandrepairs 854 750 1,223
Landingfeesandairportrentals 1,456 1,240 1,363
Depreciationandamortization 1,272 1,255 1,219
Otheroperatingexpenses 2,394 1,926 3,026
Totaloperatingexpenses,net 14,069 12,864 19,471
OPERATING INCOME (LOSS) 1,721 (3,816) 2,957
OTHER EXPENSES (INCOME):
Interestexpense 467 349 118
Capitalizedinterest (36) (35) (36)
Interestincome (13) (32) (90)
Other(gains)losses,net (22) 158 8
Totalotherexpenses(income) 396 440 —
INCOME (LOSS) BEFORE INCOME TAXES 1,325 (4,256) 2,957
PROVISION (BENEFIT) FOR INCOME TAXES 348 (1,182) 657
NET INCOME (LOSS)
$ 977 $ (3,074) $ 2,300
NET INCOME (LOSS) PER SHARE, BASIC
$ 1.65 $ (5.44) $ 4.28
NET INCOME (LOSS) PER SHARE, DILUTED
$ 1.61 $ (5.44) $ 4.27
Seeaccompanyingnotes.
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Southwest Airlines Co.
Consolidated Statement of Comprehensive Income (Loss)
(inmillions)
Year ended December 31,
2021 2020 2019
NET INCOME (LOSS)
$ 977 $ (3,074) $ 2,300
Unrealizedgain(loss)onfuelderivativeinstruments,netof
deferredtaxesof$142,$2,and($16) 469 4 (53)
Unrealizedgain(loss)oninterestratederivativeinstruments,netof
deferredtaxesof$2,($8),and($8) 7 (25) (25)
Unrealizedgain(loss)ondefinedbenefitplanitems,netofdeferred
taxesof$25,($15),and($9) 84 (48) (29)
Other,netofdeferredtaxesof($13),$7,and$8 (47) 25 26
OTHER COMPREHENSIVE INCOME (LOSS)
$ 513 $ (44) $ (81)
COMPREHENSIVE INCOME (LOSS)
$ 1,490 $ (3,118) $ 2,219
Seeaccompanyingnotes.
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Southwest Airlines Co.
Consolidated Statement of Stockholders' Equity
(inmillions,exceptpershareamounts)
Year ended December 31, 2021, 2020, and 2019
Common
Stock
Capital in
excess of
par value
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Treasury
stock Total
BalanceatDecember31,2018(asreported)
$ 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
— — — — (2,000) (2,000)
Issuanceofcommonandtreasurystockpursuantto
Employeestockplans — 16 — — 11 27
Share-basedcompensation — 55 — — — 55
Cashdividends,$0.700pershare — — (377) — — (377)
Comprehensiveincome — — 2,300 (81) — 2,219
BalanceatDecember31,2019
$ 808 $ 1,581 $ 17,945 $ (61) $ (10,441) $ 9,832
Repurchaseofcommonstock
— — — — (451) (451)
Issuanceofcommonstock,netofissuancecosts 80 2,144 — — — 2,224
Issuanceofcommonandtreasurystockpursuantto
Employeestockplans — 17 — — 17 34
Share-basedcompensation — 17 — — — 17
Cashdividends,$0.180pershare — — (94) — — (94)
Stockwarrants — 40 — — — 40
Equityfeatureofconvertiblenotes,netofissuancecosts — 392 — — — 392
Comprehensiveloss — — (3,074) (44) — (3,118)
BalanceatDecember31,2020
$ 888 $ 4,191 $ 14,777 $ (105) $ (10,875) $ 8,876
CumulativeeffectofadoptingAccountingStandardsUpdate
No.2016-01,FinancialInstruments — — 20 (20) — —
Issuanceofcommonandtreasurystockpursuantto
Employeestockplans — 22 — — 15 37
Share-basedcompensation — 58 — — — 58
Stockwarrants — 45 — — — 45
Equityfeatureofpartialextinguishmentofconvertiblenotes — (92) — — — (92)
Comprehensiveincome — — 977 513 — 1,490
BalanceatDecember31,2021
$ 888 $ 4,224 $ 15,774 $ 388 $ (10,860) $ 10,414
Seeaccompanyingnotes.
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Southwest Airlines Co.
Consolidated Statement of Cash Flows
(inmillions)
Year ended December 31,
2021 2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Netincome(loss) $ 977 $ (3,074) $ 2,300
Adjustmentstoreconcilenetincome(loss)tocashprovidedby(usedin)operatingactivities:
Depreciationandamortization 1,272 1,255 1,219
Impairmentoflong-livedassets 12 32 —
Unrealized/realized(gain)lossonfuelderivativeinstruments (15) 15 —
Deferredincometaxes (21) (716) (55)
Gainonsale-leasebacktransactions — (222) —
Lossonpartialextinguishmentofconvertiblenotes 28 — —
Changesincertainassetsandliabilities:
Accountsandotherreceivables (701) (294) (94)
Otherassets 75 415 239
Accountspayableandaccruedliabilities 38 231 298
Airtrafficliability 591 1,623 440
Otherliabilities (103) (306) (277)
Cashcollateralreceivedfromderivativecounterparties 141 9 25
Other,net 28 (95) (108)
Netcashprovidedby(usedin)operatingactivities 2,322 (1,127) 3,987
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalexpenditures (505) (515) (1,027)
Supplierproceeds — 428 400
Proceedsfromsale-leasebacktransactions — 815 —
Assetsconstructedforothers (6) — —
Purchasesofshort-terminvestments (5,824) (5,080) (2,122)
Proceedsfromsalesofshort-termandotherinvestments 5,071 4,336 2,446
Netcashusedininvestingactivities (1,264) (16) (303)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuanceofcommonstock — 2,294 —
Proceedsfromissuanceoflong-termdebt — 5,622 —
Proceedsfromtermloancreditfacility — 3,683 —
Proceedsfromrevolvingcreditfacility — 1,000 —
Proceedsfromconvertiblenotes — 2,300 —
ProceedsfromPayrollSupportProgramloanandwarrants 1,136 1,016 —
ProceedsfromEmployeestockplans 51 48 40
Repurchaseofcommonstock — (451) (2,000)
Paymentsoflong-termdebtandfinanceleaseobligations (612) (839) (615)
Paymentsoftermloancreditfacility — (3,683) —
Paymentsofrevolvingcreditfacility — (1,000) —
Paymentsofcashdividends — (188) (372)
Paymentsofterminatedinterestratederivativeinstruments — (59) —
Paymentsforrepurchasesandconversionsofconvertibledebt (293) — —
Capitalizedfinancingitems — (134) —
Other,net 77 49 (43)
Netcashprovidedby(usedin)financingactivities 359 9,658 (2,990)
NET CHANGE IN CASH AND CASH EQUIVALENTS 1,417 8,515 694
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 11,063 2,548 1,854
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 12,480 $ 11,063 $ 2,548
CASH PAYMENTS FOR:
Interest,netofamountcapitalized $ 336 $ 212 $ 88
Incometaxes $ 445 $ 19 $ 779
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
Flightequipmentacquiredagainstsuppliercreditmemo $ 569 $ — $ —
Assetsconstructedforothers $ 309 $ 145 $ 65
Supplierreceivables $ — $ — $ 428
Remeasurementofright-of-useassetandleaseliability $ 343 $ — $ —
Seeaccompanyingnotes.
84
TableofContents
Southwest Airlines Co.
Notes to Consolidated Financial Statements
1.SummaryofSignificantAccountingPolicies
2.WorldwidePandemic
3.NewAccountingPronouncements
4.NetIncome(Loss)PerShare
5.CommitmentsandContingencies
6.Revenue
7.FinancingActivities
8.Leases
9.CommonStock
10.StockPlans
11.FinancialDerivativeInstruments
12.FairValueMeasurements
13.AccumulatedOtherComprehensiveIncome(Loss)
14.EmployeeRetirementPlans
15.IncomeTaxes
16.SupplementalFinancialInformation
17.Boeing737MAXGroundingandReturntoService
ReportofIndependentRegisteredPublicAccountingFirm
85
NotestoConsolidatedFinancialStatements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Southwest Airlines Co. (the "Company" or "Southwest") operates Southwest Airlines, a major domestic airline. The Consolidated Financial
Statements includethe accounts ofthe Company and itswholly owned subsidiaries,which include AirTran Holdings, LLC, the successorto
AirTran Holdings, Inc., the former parent company of AirTran Airways, Inc., and Triple Crown Assurance Co., an insurance captive. The
accompanyingConsolidatedFinancial Statementsincludetheresults ofoperations andcashflows for allperiodspresented and allsignificant
inter-entity balances and transactions have been eliminated. The preparation of financial statements in conformity with generally accepted
accountingprinciplesintheUnitedStates("GAAP")requiresmanagementtomakeestimatesandassumptionsthataffecttheamountsreportedin
thefinancialstatementsandaccompanyingnotes.Actualresultscoulddifferfromtheseestimates.
Cash and Cash Equivalents
Cashinexcessofthatnecessaryforoperatingrequirementsisinvestedinshort-term,highlyliquid,income-producinginvestments.Investments
withoriginalmaturitiesofthreemonthsorlesswhenpurchasedareclassifiedascashandcashequivalents,whichprimarilyconsistofcertificates
ofdeposit,moneymarketfunds,andinvestmentgradecommercialpaperissuedbymajorcorporationsandfinancialinstitutions.Cashandcash
equivalentsarestatedatcost,whichapproximatesfairvalue.
AsofDecember31,2021and2020,$175millionand$34million,respectively,incashcollateraldepositswereheldbytheCompanyfromits
fuelhedgecounterparties,andnocashcollateraldepositswereheldbyorprovidedbytheCompanytoitsinterestratehedgecounterpartiesfor
eitherperiod.Cashcollateralamountsprovidedorheldassociatedwithfuelandinterestratederivativeinstrumentsarenotrestrictedinanyway
and earn interest income at an agreed upon rate that approximatesthe rates earnedon short-term securitiesissued by theU.S. Government.
DependingonthefairvalueoftheCompany’sfuelandinterestratederivativeinstruments,theamountsofcollateraldepositsheldorprovidedat
anypointintimecanfluctuatesignificantly.SeeNote11forfurtherinformationonthesecollateraldepositsandfuelderivativeinstruments.
Short-term and Noncurrent Investments
Short-terminvestmentsconsistofinvestmentswithoriginalmaturitiesofgreaterthanthreemonthsbutlessthantwelvemonthswhenpurchased.
These are primarily short-term securities issued by the U.S. Government and certificates of deposit issued by domestic banks. All of these
investmentsareclassifiedasavailable-for-salesecuritiesandarestatedatfairvalue,whichapproximatescost.Forallshort-terminvestments,at
eachresetperiodoruponreinvestment,theCompanyaccountsforthetransactionasProceedsfromsalesofshort-termandotherinvestmentsfor
thesecurityrelinquished,andPurchasesofshort-terminvestmentsforthesecuritypurchased,intheaccompanyingConsolidatedStatementof
CashFlows.Unrealizedgainsandlosses,netoftax,ifany,arerecognizedinAccumulatedothercomprehensiveincome(loss)("AOCI")inthe
accompanyingConsolidatedBalanceSheet.Realizednetgainsandlossesonspecificinvestments,ifany,arereflectedinInterestincomeinthe
accompanying Consolidated Statement of Income (Loss). Both unrealized and realized gains and/or losses associated with investments were
immaterialforallyearspresented.
Noncurrent investments consist of investments with maturities of greater than twelve months. Noncurrent investments are included as a
componentofOtherassetsintheConsolidatedBalanceSheet.
Accounts and Other Receivables
Accountsandotherreceivablesareinitiallyrecordedatcostandareevaluatedforcollectabilityineveryperiod.Theyprimarilyconsistofthe
amountsduefromtheCompany'sbusinesspartnersandothersuppliers,amountsduefromcreditcardcompaniesassociatedwithsalesoftickets
forfuturetravel,amountsduefrombusinesspartnersin
86
NotestoConsolidatedFinancialStatements
theCompany’sloyaltyprogram,andtaxreceivablesfromoverpaymentornetoperatinglossesthatareallowedtobecarriedbacktopriorperiods
to claim refunds against prior taxes paid. See Note 16 for further information. The allowance for doubtful accounts was immaterial at
December31,2021and2020.Inaddition,theprovisionfordoubtfulaccountsandwrite-offsfor2021,2020,and2019wereeachimmaterial.
Inventories
Inventories primarily consist of aircraftfuel and flight equipment expendable parts, materials, and supplies. All ofthese items are carried at
averagecost,lessanallowanceforobsolescence.Theseitemsaregenerallychargedtoexpensewhenissuedforuse.Thereserveforobsolescence
wasimmaterialatDecember31,2021,and2020.Inaddition,theCompany’sprovisionforobsolescenceandwrite-offsfor2021,2020,and2019
wereeachimmaterial.
Property and Equipment
Property and equipment is stated at cost. Capital expenditures include payments made for aircraft, other flight equipment, purchase deposits
relatedtofutureaircraftdeliveries,airportandotherfacilityconstructionprojects,andgroundandotherpropertyandequipment.Depreciationis
providedbythestraight-linemethodtoestimatedresidualvaluesoverperiodsofapproximately25yearsforflightequipment,and5to30years
forgroundpropertyandequipment.Residualvaluesestimatedforaircraftareapproximately15percent,andgenerallyrangefrom0to10percent
forgroundpropertyandequipment.AssetsconstructedforothersconsistsofairportimprovementprojectsinwhichtheCompanyisconsideredto
havecontroloftheassetduringtheconstructionperiod.Onceconstructioniseffectivelycompleted,thesale-leasebackmodelwouldapplywhen
controlpassesfromthelesseetothelessor.SeeNote5forfurtherinformation.
TheCompanyevaluatesitslong-livedassetsusedinoperationsforimpairmentwheneventsandcircumstances indicate thattheundiscounted
cashflowstobegeneratedbythatassetgrouparelessthanthecarryingamountsoftheassetgroupandmaynotberecoverable.Factorsthat
wouldindicate potentialimpairment include,but arenot limitedto, significantdecreases inthe marketvalue ofthe long-livedasset group,a
significantchangeinthelong-livedassetgroup’sphysicalcondition,andoperatingorcashflowlossesassociatedwiththeuseofthelong-lived
assetgroup.Ifanassetgroupisdeemedtobeimpaired,animpairmentlossisrecordedfortheexcessoftheassetgroup'sbookvalueinrelation
to its estimated fair value. During 2021 and 2020, the Company recorded impairment charges of $12 million and $32 million, respectively,
associatedwiththeacceleratedretirementof8and20ofits737-700aircraft.
Leases
TheCompanydeterminesifanarrangementisaleaseatinception.OperatingleasesareincludedinOperatingleaseright-of-useassets,Current
operatingleaseliabilities,andNoncurrentoperatingleaseliabilitiesintheConsolidatedBalanceSheet.FinanceleasesareincludedinProperty
andequipment,Currentmaturitiesoflong-termdebt,andLong-termdebtlesscurrentmaturitiesintheConsolidatedBalanceSheet.
Right-of-use assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent the Company's
obligationtomakeleasepaymentsarisingfromthelease.Theleaseliabilityismeasuredasthepresentvalueoftheunpaidleasepayments,and
theright-of-useassetvalueisderivedfromthecalculationoftheleaseliability.Leasepaymentsincludefixedandin-substancefixedpayments,
variablepaymentsbasedonanindexorrate,reasonablycertainpurchaseoptions,terminationpenalties,feespaidbythelesseetotheownersofa
special-purpose entity for restructuring the transaction, and probable amounts the lessee will owe under a residual value guarantee. Lease
paymentsdo notinclude (i)variable leasepayments other than those that depend onan indexor rate,(ii) anyguarantee bythe lesseeof the
lessor’s debt, or (iii) any amount allocated to non-lease components, if such election was made upon adoption, per the provisions of the
AccountingStandardsCodification("ASC")842.TheCompanyusesitsestimatedincrementalborrowingrate,whichisderivedfrominformation
availableat the leasecommencement date,in determining the present valueof leasepayments, since theCompany doesnot know the actual
implicitratesinitsleases.TheCompanygivesconsiderationtoitsrecentdebtissuancesaswellas
87
NotestoConsolidatedFinancialStatements
publiclyavailabledataforinstrumentswithsimilarcharacteristicswhencalculatingitsincrementalborrowingrate.Leaseexpenseforoperating
leasepaymentsisrecognizedonastraight-linebasisovertheleaseterm.TheCompanycombinesleaseandnon-leasecomponentsforallasset
groups.TheCompany'sleasetermincludesanyoptiontoextendtheleasewhenitisreasonablycertaintobeexercisedbasedonconsideringall
relevanteconomicfactors.
Aircraft and Engine Maintenance
ThecostofscheduledinspectionsandrepairsandroutinemaintenancecostsforallaircraftandenginesarechargedtoMaintenancematerialsand
repairsexpensewithintheaccompanyingConsolidatedStatementofIncome(Loss)asincurred.
The Company has maintenance agreements related to certain aircraft engines with external service providers, including agreements that
effectivelytransfertheriskofperformanceofsuchworktotheserviceprovider.Undertheagreementswheretheriskofperformanceisdeemed
transferredtothecounterparty,theappropriateexpenseisrecordedcommensuratewiththeperiodinwhichthecorrespondinglevelofserviceis
provided. Forits engine maintenancecontracts that donot transfer riskto the serviceprovider, the Companyrecords expense ona time and
materialsbasiswhenanenginerepaireventtakesplace.
Modificationsthatsignificantlyenhancetheoperatingperformanceorextendtheusefullivesofaircraftorenginesarecapitalizedandamortized
overtheremaininglifeoftheasset.
Goodwill and Intangible Assets
The Company applies a fairvalue based impairment test to the carrying value of goodwill andindefinite-lived intangible assets annually on
October 1st, or more frequently if certain events or circumstances indicate that an impairment loss may have been incurred. The Company
assesses the value of goodwill and indefinite-lived intangible assets under either a qualitative or quantitative approach. Under a qualitative
approach,theCompanyconsidersvariousmarket factors, includingapplicable keyassumptionsalsousedinthequantitativeassessmentlisted
below. These factors are analyzed to determine if events and circumstances could reasonably have affected the fair value of goodwill and
indefinite-livedintangibleassets.IftheCompanydeterminesthatitismorelikelythannotthatanindefinite-livedintangibleassetorreporting
unitgoodwillis impaired,thequantitative approach isusedto assess theassetor reportingunit fairvalueand theamount oftheimpairment.
Under a quantitative approach, the fair value of the Company's indefinite-lived intangible asset or reporting unit is calculated based on key
marketparticipantassumptions. If theindefinite-livedintangibleassets' carrying valueexceedsthefair value calculatedusingthequantitative
approach,animpairmentchargeisrecordedforthedifferenceinfairvalueandcarryingvalue.Ifthereportingunitcarryingvalueexceedsthe
reportingunitfairvaluecalculatedusingthequantitativeapproach,animpairmentchargeisrecordedforthedifferencebetweenfairvalueand
carryingvalue,limitedtotheamountofgoodwillinthereportingunit.
TheCompany’sintangibleassetsprimarilyconsistofacquiredrightstocertainairportownedtakeoffandlandingslots(a"slot"istherightofan
aircarrier,pursuanttoregulationsoftheFederalAviationAdministration("FAA"),tooperateatakeofforlandingataspecifictimeatcertain
airports)at certaindomesticslot-controlled airports.Indefinitelived slotsof$295 millionareincluded asacomponent ofOther assets inthe
Company'sConsolidatedBalanceSheet,asofDecember31,2021and2020.
TheCompany applied thequalitative approach duringits2021 impairmenttests,and noimpairmentwas determinedtoexist forGoodwillor
indefinite-livedintangibleassets.
Revenue Recognition
TicketssoldareinitiallydeferredasAirtrafficliability.PassengerrevenueisrecognizedandAirtrafficliabilityisreducedwhentransportationis
provided.Airtrafficliabilityprimarilyrepresentsticketssoldforfuturetraveldates,fundsthatarepastflightdateandremainunused,butare
expectedtobeusedinthefuture,andtheCompany’sliabilityforloyaltybenefitsthatareexpectedtoberedeemedinthefuture.Themajorityof
theCompany’stickets
88
NotestoConsolidatedFinancialStatements
soldarenonrefundable.SouthwesthasaNoShowpolicythatappliestofaresthatarenotcanceledorchangedbyaCustomeratleasttenminutes
priortoaflight'sscheduleddeparture.Nonrefundableticketsthataresoldbutnotflownonthetraveldate,andarecanceledinaccordancewith
theNoShowpolicy,canbeappliedtofuturetravel.Refundableticketsthataresoldbutnotflownonthetraveldatecanalsobeappliedtofuture
travel. Asmall percentage of tickets(or partial tickets) expireunused. The Company estimatesthe amount of ticketsthat expire unused and
recognizessuchamounts inPassenger revenueinproportionto thepatternofflights takenby theCustomers,oncethe flightdate haslapsed.
BasedontheCompany'srevenuerecognitionpolicy,revenueisrecordedattheflightdateforaCustomerwhodoesnotchangehis/heritinerary
andloseshis/herfundsastheCompanyhasthenfulfilleditsperformanceobligation.Amountscollectedfrompassengersforancillaryservices
arealsorecognizedwhentheserviceisprovided,whichistypicallytheflightdate.
Initialbreakageestimatesforbothticketsandfundsavailableforfutureuseareroutinelyadjustedandultimatelyfinalizedoncetheticketsexpire,
which is typically twelve months after the original purchase date. However, during 2020, the Company extended the expiration dates for a
significantamountofticketsandfundsbeyonditsnormaltwelvemonths.BreakageestimatesarebasedontheCompany'sCustomers'historical
travelbehavioraswellasassumptionsabouttheCustomers'futuretravelbehavior.AssumptionsabouttheCustomers'futuretravelbehaviorcan
beimpactedbyseveralfactorsincluding,butnotlimitedto:fareincreases,faresales,changestotheCompany'sticketingpolicies,changestothe
Company’srefund,exchange,andunusedfundspolicies,seatavailability,andeconomicfactors.Giventheunprecedentedamountof2020and
2021 Customer flight cancellations and the amount of flight credits provided, the Company expects additional variability in the amount of
breakagerevenue recordedinfuture periods,as theestimatesof theportionof soldtickets that willexpire unusedmaydiffer fromhistorical
experience.SeeNote6forfurtherinformation.
Approximately$475million,approximately$184million,andapproximately$615millionoftheCompany'sOperatingrevenuesin2021,2020,
and2019,respectively,wereattributabletoforeignoperations.TheremainderoftheCompany'sOperatingrevenues,approximately$15.3billion,
approximately$8.9billion,andapproximately$21.8billionin2021,2020,and2019,respectively,wereattributabletodomesticoperations.
Loyalty Program
TheCompanyrecords aliabilityfor the relativefairvalue of providingfreetravel underits loyaltyprogramfor allpoints earnedfromflight
activity or sold to companies participating in the Company’s Rapid Rewards loyalty program as business partners that are expected to be
redeemedforfuturetravel.TheloyaltyliabilityrepresentsperformanceobligationsthatwillbesatisfiedwhenaRapidRewardsloyaltymember
redeemspointsfortravelorothergoodsandservices.Pointsearnedfromflightactivityarevaluedattheirrelativestandalonesellingpriceby
applyingfairvaluebasedonhistoricalredemptionpatterns.Pointsearnedfrombusinesspartneractivity,whichprimarilyconsistofpointssold,
alongwithrelatedmarketingservices,tocompaniesparticipatingintheRapidRewardsloyaltyprogram,arevaluedusingarelativefairvalue
methodologybasedonthecontractualratewhichpartnerspaytoSouthwesttoawardRapidRewardspointstothebusinesspartner’scustomers.
Forpointsthatareexpectedtoremainunused,theCompanyrecognizesbreakageinproportiontothepatternofpointsusedbytheCustomer,
which approximates the average period over which the population of Rapid Reward Members redeem their points. The Company records
passengerrevenuerelatedtoairtransportationwhenthetransportationisdelivered.ThemarketingelementsarerecognizedasOther-netrevenue
whenearned.TheCompany’sliabilityforloyaltybenefitsincludesaportionthatisexpectedtoberedeemedduringthefollowingtwelvemonths
(classified as a component of Air traffic liability), and a portion that is not expected to be redeemed during the following twelve months
(classifiedasAir trafficliability -noncurrent).The Company continuallyupdatesthisanalysis andadjuststhesplit betweencurrent andnon-
currentliabilitiesasappropriate.SeeNote6forfurtherinformation.
89
NotestoConsolidatedFinancialStatements
Advertising
Advertisingcostsarechargedtoexpenseasincurred.AdvertisingandpromotionsexpensefortheyearsendedDecember31,2021,2020,and
2019 was $185 million, $156 million, and $212 million, respectively, and is included as a component of Other operating expense in the
accompanyingConsolidatedStatementofIncome(Loss).
Share-based Employee Compensation
The Company has share-based compensation plans covering certain Employees, including a plan that also covers the Company’s Board of
Directors.TheCompanyaccountsforshare-basedcompensationbasedonitsgrantdatefairvalue.SeeNote10forfurtherinformation.
Financial Derivative Instruments
TheCompany accountsforfinancialderivativeinstrumentsatfairvalueandapplieshedgeaccountingruleswhereappropriate.TheCompany
utilizesvariousderivativeinstruments,includingjetfuel,crudeoil,unleadedgasoline,andheatingoil-basedderivatives,toattempttoreducethe
riskofitsexposuretojetfuelpriceincreases.Theseinstrumentsareaccountedforascashflowhedgesuponproperqualification.TheCompany
alsohasinterestrateswapagreementstoconvertcertainfloating-ratedebttoafixed-rate.TheCompanyhasforward-startinginterestrateswap
agreements,theprimaryobjectiveofwhichistohedgeforecasteddebtissuances.Theseinterestratehedgesareappropriatelydesignatedascash
flowhedges.
Since themajority of the Company’s financial derivative instrumentsare not traded ona market exchange, the Company estimates theirfair
values. Depending on the type of instrument, the values are determined by the use of present value methods or option value models with
assumptionsaboutcommoditypricesbasedonthoseobservedinunderlyingmarkets.
AllcashflowsassociatedwithpurchasingandsellingderivativesareclassifiedasoperatingcashflowsintheConsolidatedStatementofCash
Flows,withinChangesincertainassetsandliabilities.TheCompanyclassifiesitscashcollateralprovidedtoorheldfromcounterpartiesina
"net"presentationontheConsolidatedBalanceSheetagainstthefairvalueofthederivativepositionswiththosecounterparties.SeeNote11for
furtherinformation.
Software Capitalization
The Company capitalizes certain internal and external costs related to the acquisition and development of internal use software during the
applicationdevelopmentstagesofprojects.TheCompanyamortizesthesecostsusingthestraight-linemethodovertheestimatedusefullifeof
thesoftware,whichistypicallyfivetofifteenyears.Costsincurredduringthepreliminaryprojectorthepost-implementation/operationstagesof
the project are expensed as incurred. Capitalized computer software, included as a component of Ground property and equipment in the
accompanying Consolidated Balance Sheet, net of accumulated depreciation,was $886 million and $697million at December 31, 2021, and
2020,respectively.Computersoftwaredepreciationexpensewas$213million,$203million,and$177millionfortheyearsendedDecember31,
2021,2020,and2019,respectively,andisincludedasacomponentofDepreciationandamortizationexpenseintheaccompanyingConsolidated
StatementofIncome(Loss).TheCompanyevaluatesinternalusesoftwareforimpairmentonaquarterlybasis;ifitisdeterminedthevalueofan
assetwasnotrecoverableoritqualifiesforimpairment,achargewillberecordedtowritedownthesoftwaretothelowerofitscarryingvalueor
fairvalue.TheCompanyhadnosignificantimpairmentsduring2021,2020,or2019.
Insurance Reserves
The Company uses a combination of insurance and self-insurance mechanisms, including a wholly-owned captive insurance entity and
participation in a reinsurance treaty, to provide for the potential liabilities associated with certain risks, including workers’ compensation,
healthcarebenefits,generalliability,andaviationliability.
90
NotestoConsolidatedFinancialStatements
Liabilitiesassociated with therisks thatare retained by the Companyare notdiscounted and areestimated, inpart, by considering historical
claimsexperience,demographics,exposureandseverityfactorsandotheractuarialassumptions.
Income Taxes
The Company accounts for deferred income taxes utilizing an asset and liability method, whereby deferred tax assets and liabilities are
recognized based on the tax effect of temporary differences between the financial statements and the tax basis of assets and liabilities, as
measuredbycurrentenactedtaxrates.TheCompanyalsoevaluatestheneedforavaluationallowancetoreducedeferredtaxassetstoestimated
recoverableamounts.
The Company’spolicy for recordinginterest and penalties associated withuncertain tax positionsis to recordsuch items asa component of
Income(loss)beforeincometaxes.PenaltiesarerecordedinOther(gains)losses,net,andinterestpaidorreceivedisrecordedinInterestexpense
orInterestincome,respectively,intheaccompanyingConsolidatedStatementofIncome(Loss).Therewerenomaterialamountsrecordedfor
penaltiesandinterestrelatedtouncertaintaxpositionsforallyearspresented.SeeNote15forfurtherinformation.
Concentration Risk
Approximately82percentoftheCompany’sfull-timeequivalentEmployeesareunionizedandarecoveredbycollective-bargainingagreements.
AportionoftheCompany'sunionizedEmployees,includingitsPilots,FlightAttendants,CustomerServiceAgents,RampAgents,Dispatchers,
Aircraft Appearance Technicians, and Meteorologists, which had contracts that became amendable on or before December 31, 2021, are in
discussionsonlaboragreements.ThoseunionizedEmployeegroupsindiscussionsrepresentapproximately77percentoftheCompany’sfull-
timeequivalentEmployeesasofDecember31,2021.
The Company attempts to minimize its concentration risk with regards to its cash, cash equivalents, and its investment portfolio. This is
accomplished by diversifying and limiting amounts among different counterparties, the type of investment, and the amount invested in any
individualsecurityormoneymarketfund.
Tomanageriskassociatedwithfinancialderivativeinstrumentsheld,theCompanyselectsandwillperiodicallyreviewcounterpartiesbasedon
creditratings,limitsitsexposuretoasinglecounterparty,andmonitorsthemarketpositionoftheprogramanditsrelativemarketpositionwith
eachcounterparty.TheCompanyalsohasagreementswithcounterpartiescontainingearlyterminationrightsand/orbilateralcollateralprovisions
wherebysecurityisrequiredifmarketriskexposureexceedsaspecifiedthresholdamountorcreditratingsfallbelowcertainlevels.Collateral
deposits provided to or held from counterparties serve to decrease, but not totally eliminate, the credit risk associated with the Company’s
hedgingprogram.SeeNote11forfurtherinformation.
As of December31, 2021, the Company operated an all-Boeingfleet, all of which are variations of the Boeing 737. The Boeing 737MAX
aircraft ("MAX") are crucial to the Company’s growth plans and fleet modernization initiatives. On March 13, 2019, the FAA issued an
emergencyorderforallU.S.airlinestogroundtheMAXaircraft,includingthe34MAXaircraftintheCompany'sfleet.OnNovember18,2020,
theFAArescinded theemergencyorder and issuedofficialrequirements toenableU.S.airlines toreturnthe MAX toservice.The Company
returnedtheMAXtorevenueserviceonMarch11,2021,aftertheCompanymetallFAArequirementsanditsPilotscompletedupdated,MAX-
relatedtraining.
Boeingnolongermanufacturesversionsofthe737otherthantheMAXfamilyofaircraft.IftheMAXaircraftweretoagainbecomeunavailable
for the Company’s flight operations,the Company’s growth would be restricted unless and until it could procureand operate other types of
aircraft from Boeing or another manufacturer, seller, or lessor, and the Company’s operations would be materially adversely affected. In
particular,iftheCompany’sgrowthweretobedependentupontheintroductionofanewaircraftmakeandmodeltotheCompany’sfleet,the
Company would need to, among other things, (i) develop and implement new maintenance, operating, and training programs, (ii) secure
extensiveregulatoryapprovals,and(iii)implementnewtechnologies.Therequirementsassociatedwith
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NotestoConsolidatedFinancialStatements
operating a new aircraft make and model could take an extended period of time to fulfill and would likely impose substantial costs on the
Company.A shift awayfrom a singlefleettype couldalsoadd complexitytothe Company’soperations,present operationalandcompliance
risks, and materially increase the Company's costs. Any of these events would have a material, adverse effect on the Company's business,
operatingresults,andfinancialcondition.TheCompanycouldalsobemateriallyadverselyaffectedifthepricingoroperationalattributesofits
aircraftweretobecomelesscompetitive.SeeNote17forfurtherinformation.
TheCompanyisalsodependentonsoleorlimitedsuppliersforaircraftenginesandcertainotheraircraftpartsandservicesandwould,therefore,
alsobemateriallyadverselyimpactedintheeventoftheunavailabilityof,inadequatesupportfor,oramechanicalorregulatoryissueassociated
with,enginesandotherparts.
TheCompanyhashistoricallyenteredintoagreementswithsomeofitsco-brand,payment,andloyaltypartnersthatcontainexclusivityaspects
whichplacecertainconfidentialrestrictionsontheCompanyfromenteringintocertainarrangementswithotherpaymentandloyaltypartners.
Thesearrangementsgenerallyextendforthetermsoftheagreements,noneofwhichcurrentlyextendbeyondOctober31,2030.Someofthese
agreementsautomaticallyrenewonanannualbasis,unlesseitherpartyobjectstosuchextension.Noneoftheseagreementsaremorethan10
years in length. The Company believes the financial benefits generated by the exclusivity aspects of these arrangements outweigh the risks
involvedwithsuchagreements.
2. WORLDWIDE PANDEMIC
Asaresultoftherapidspreadofthenovelcoronavirus,COVID-19,throughouttheworld,includingintotheUnitedStates,onMarch11,2020,
theWorldHealthOrganizationclassifiedthevirusasapandemic.ThespeedwithwhichtheeffectsoftheCOVID-19pandemicchangedtheU.S.
economiclandscape,outlook,andinparticularthetravelindustry,wasswiftandunexpected.TheCompanysawanegativeimpactonbookings
forfuturetravelthroughout2020.TheCompanyproactivelycanceledasignificantportionofitsscheduledflightsinMarch2020andcontinued
adjustingcapacitythroughout2020,astheCompanygroundedasignificantportionofitsfleetandoperatedasignificantlyreducedportionofits
previouslyscheduledcapacity.TheCompanycontinuedtoexperiencenegativeimpactstopassengerdemandandbookingsearlyin2021dueto
thepandemic, inparticular withrespect tobusiness travel,although asa resultof decliningreported COVID-19cases throughout the United
States,easingtravelrestrictions,liftingofbusinessrestrictions,andanincreaseinthenumberofindividualsvaccinated,domesticleisuretravel
demandandbookingsimprovedduringsecondquarter2021.Inthirdquarter2021,theCompanyexperiencedsoftnessinbookingsandelevated
tripcancellations, especially close-in,asa resultofthe riseinCOVID-19 cases associatedwiththe Deltavariant.In fourthquarter2021, the
Company experienced increased leisure travel bookings due to holiday demand, despite the surge in COVID-19 cases associated with the
Omicronvariant.TheCompanycontinuestomonitordemandforairtravelandproactivelyadjustitspublishedflightschedulesandcapacityin
response.
Sincethestartofthepandemic,theCompanyenteredintodefinitivedocumentationwiththeUnitedStatesDepartmentofTreasury("Treasury")
with respect to payroll funding support ("Payroll Support") pursuant to three separate Payroll Support programs: the "PSP1 Payroll Support
Program"inApril2020undertheCoronavirusAid,Relief,andEconomicSecurityAct("CARESAct");the"PSP2PayrollSupportProgram”in
January 2021 under theConsolidated Appropriations Act,2021; and the "PSP3 PayrollSupport Program" inApril 2021 under the American
RescuePlanActof2021.
Asconsideration foreach ofthese PayrollSupport programs, theCompany issueda promissorynote infavor ofTreasuryand enteredinto a
warrant agreement with Treasury, pursuant to which the Company agreed to issue warrants to purchase common stock of the Company to
Treasury,subjecttoadjustmentpursuanttothetermsofthewarrants.UndereachofthethreePayrollSupportprograms,fundswerereceivedin
multiple disbursements. Upon each initial disbursement of Payroll Support under each of the three Payroll Support programs, the Company
provideda promissory noteand issuedwarrants toTreasury. Upon each subsequent disbursementof PayrollSupport undereach of thethree
PayrollSupportprograms,(i)theprincipalamountoftheapplicablepromissory
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NotestoConsolidatedFinancialStatements
notewas increased and(ii) theCompany issued additional warrants toTreasury. Thefollowing table providesthe detailsfrom each of these
programs:
(in millions, except shares in thousands) Grant Promissory Note Warrants
Total Payroll
Support Proceeds Warrants (shares)
PSP1 Payroll Support Program
April21,2020 $ 1,152 $ 459 $ 18 $ 1,630 1,258
May29,2020 448 196 8 652 536
June30,2020 448 196 9 652 536
July30,2020 225 97 3 326 268
September30,2020 64 28 2 94 78
$ 2,337 $ 976 $ 40 $ 3,354 2,676
PSP2 Payroll Support Program
January15,2021 $ 625 $ 229 $ 9 $ 864 495
March5,2021 591 259 14 864 560
April23,2021 177 78 4 259 168
$ 1,393 $ 566 $ 27 $ 1,987 1,223
PSP3 Payroll Support Program
April23,2021 $ 670 $ 248 $ 9 $ 926 424
June3,2021 640 278 9 926 475
$ 1,310 $ 526 $ 18 $ 1,852 899
Total
$ 5,040 $ 2,068 $ 85 $ 7,193 4,798
Thepromissory noteunderthe PSP1Payroll SupportProgram("PSP1 Note")maturesin fullon April 19,2030, andissubject tomandatory
prepayment requirements in connection with certain change of control triggering events that may occur prior to its maturity. Amounts
outstandingunder thePSP1 Notebear interestat a rate of 1.00 percent beforeApril 20,2025, andafterwards, ata rateequal tothe Secured
OvernightFinancingRate("SOFR")orotherbenchmarkreplacementrateconsistentwithcustomarymarketconventionsplusamarginof2.00
percent. The PSP1 Note contains customary representations and warranties andevents ofdefault. Each warrantissued pursuant tothe PSP1
PayrollSupportProgramisexercisableatastrikepriceof$36.47pershareofcommonstockandwillexpireonthefifthanniversaryoftheissue
dateofsuchwarrant.
ThepromissorynoteunderthePSP2PayrollSupportProgram("PSP2Note")maturesinfullonJanuary15,2031,andissubjecttomandatory
prepayment requirements in connection with certain change of control triggering events that may occur prior to its maturity. Amounts
outstandingunderthePSP2Notebearinterestatarateof1.00percentbeforeJanuary15,2026,and,afterwards,atarateequaltotheSOFRor
other benchmark replacement rate consistent with customary market conventions plus a margin of 2.00 percent. The PSP2 Note contains
customaryrepresentationsandwarrantiesandeventsofdefault.EachwarrantissuedpursuanttothePSP2PayrollSupportProgramisexercisable
atastrikepriceof$46.28pershareofcommonstockandwillexpireonthefifthanniversaryoftheissuedateofsuchwarrant.
Thepromissory noteunderthe PSP3Payroll SupportProgram("PSP3 Note")maturesin fullon April 23,2031, andissubject tomandatory
prepayment requirements in connection with certain change of control triggering events that may occur prior to its maturity. Amounts
outstandingunderthePSP3Notebearinterestatarateof1.00percentbeforeApril23,2026,andafterwards,atarateequaltotheSOFRorother
benchmarkreplacementrateconsistentwithcustomarymarketconventionsplusamarginof2.00percent.ThePSP3Notecontainscustomary
representationsandwarrantiesandeventsofdefault.EachwarrantissuedpursuanttothePSP3PayrollSupport
93
NotestoConsolidatedFinancialStatements
Programisexercisableatastrikepriceof$58.51pershareofcommonstockandwillexpireonthefifthanniversaryoftheissuedateofsuch
warrant.
InconnectionwiththereceiptofPayrollSupport,theCompanyissubjecttocertainrestrictions,includingtheeliminationofsharerepurchases
anddividendsthroughSeptember30,2022;andlimitsonexecutivecompensationuntilApril1,2023.
UndereachofthethreePayrollSupportprograms,fundsreceivedwereusedsolelytopayqualifyingemployeesalaries,wages,andbenefits.As
ofDecember31,2021,allgrantportionsofthePayrollSupportprogramsreceivedhadbeenallocatedandclassifiedasacontra-expenselineitem
in the Consolidated Statement of Income (Loss). Although there is no directly applicable U.S. GAAP guidance related to such government
assistance received, the Company analogized its facts and circumstances, and has utilized the accounting principles within International
AccountingStandards 20, Accountingfor GovernmentGrants and Disclosureof GovernmentAssistance, with respect to thePayroll Support
fundsreceived.TheCompanyhasanoptiontoprepaythepromissorynotesatanytimewithoutpremiumorpenalty.Warrantswillbesettled
through net share settlement or net cash settlement, at the Company’s option. The Company has also granted Treasury certain demand
underwrittenofferingandpiggybackregistrationrightswithrespecttothewarrantsandtheunderlyingcommonstock.Thewarrantsdonothave
votingrightsandincludeadjustmentsforbelowmarketissuances,paymentofdividends,andothercustomaryanti-dilutionprovisions.
On June 1, 2020, the Company announced Voluntary Separation Program 2020 ("Voluntary Separation Program"), a voluntary separation
programthatallowedeligibleEmployeestheopportunitytovoluntarilyseparatefromtheCompanyinexchangeforseverance,medical/dental
coverage for aspecified period of time, and travel privilegesbased on years of service. A total of over 4,200 Employees initially electedto
participateinVoluntarySeparationProgram.
InconjunctionwithVoluntarySeparationProgram,theCompanyalsoofferedcertaincontractEmployeestheoptiontotakevoluntaryExtended
EmergencyTimeOff("ExtendedETO"),forperiodsbetweensixand18months,withtheexceptionofPilots,whocouldelecttotakeExtended
ETOforperiodsuptofiveyears, allsubjectto early recalls.Approximately 12,000 Employeesparticipated in theExtended ETO programin
2020 and 2021 combined. During 2021, approximately 11,400 Employees returned from the Extended ETO program and less than 250
Employees remained on Extended ETO as of December 31, 2021. The Company expects all remaining Employees on Extended ETO to be
recalledinfirstquarter2022.ContractemployeeswhoelectedtotakeExtendedETOforperiodsbetween12and18monthsandhad10ormore
yearsofserviceweregiventheopportunitytoconverttotheVoluntarySeparationProgrambeginningonSeptember1,2020,untilupto90days
beforetheendoftheirrespectiveExtendedETOterm.Approximately360Employeeselectedthisconversionoptionduring2021.
ThepurposeofVoluntarySeparationProgramandExtendedETOwastomaintainareducedworkforcetooperateatreducedcapacityrelativeto
theCompany'soperationspriortotheCOVID-19pandemic.InaccordancewiththeaccountingguidanceinAccountingStandardsCodification
Topic712(Compensation—NonretirementPostemploymentBenefits),theCompanyaccruedchargesrelatedtothespecialterminationbenefits
describedabove uponEmployeesaccepting VoluntarySeparationProgram orExtended ETO offers.The Companyaccruedexpenses totaling
$1.4billionforitsVoluntarySeparationProgramandExtendedETOprogramin2020,whicharebeingreducedasprogrambenefitsarepaid.For
both the Voluntary Separation Program and Extended ETO programs combined, approximately $446 million of the liability balances were
relievedduring2021throughpaymentstoEmployees,leavingabalanceof$328millionasofDecember31,2021.During2021,theCompany
determinedthatitwasnolongerprobablethataportionoftheEmployeesonExtendedETOwouldremainonsuchleavefortheirentireelected
term.Therefore,aportionoftheaccrualspreviouslyrecordedwerereversed,resultinginanet$140millioncredittoexpenseduring2021.Both
theinitial charge and the partialreversal wereclassified withinPayroll supportand voluntaryEmployee programs, net, in theaccompanying
ConsolidatedStatementofIncome(Loss),andareinadditiontotheallocationofthePSP2PayrollSupportProgramandPSP3PayrollSupport
Programfundsutilizedtofundsalaries,wages,andbenefits,whichtotaled$2.7billionfortheyearendedDecember31,2021.
94
NotestoConsolidatedFinancialStatements
InresponsetoflightscheduleadjustmentsduetotheeffectsoftheCOVID-19pandemic,anumberofaircraftweretakenoutoftheCompany’s
schedulebeginninginlateMarch2020,andplacedinshort-termstorage,aswellassomeinalongertermstorageprogram.AsofDecember31,
2021,sixaircraftremainedinstorage,andgiventheexpectationthatthisstoragewastemporaryinnature,theCompanyhascontinuedtorecord
depreciationexpenseassociatedwiththem.
3. NEW ACCOUNTING PRONOUNCEMENTS AND ACCOUNTING CHANGES
OnNovember 17,2021, the FinancialAccounting StandardsBoard(the "FASB")issued ASU2021-10,Government Assistance(Topic 832):
DisclosuresbyBusinessEntitiesaboutGovernmentAssistance.Thenewstandardincreasestransparencyofgovernmentassistancebyfocusing
onthetypesofassistancegiven,anentity'saccountingfortheassistance,andtheeffectoftheassistanceontheentity'sfinancialstatementsto
allowformorecomparableinformationforinvestorsandotherfinancialstatementusers.Thisstandardiseffectiveforallentitiesunderthescope
forfinancialstatementsissuedforannualperiodsbeginningafterDecember15,2021,butearlyadoptionispermitted.TheCompanyadoptedthe
standardearlyasofDecember31,2021.SeeNote2forfurtherinformationontheCompany'streatmentofgovernmentassistancereceived.
OnMay3,2021,theFASBissuedASU2021-04,EarningsPerShare(Topic260),Debt—ModificationsandExtinguishments(Subtopic470-50),
Compensation—StockCompensation(Topic718),andDerivativesandHedging—ContractsinEntity’sOwnEquity(Subtopic815-40):Issuer’s
Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides
clarificationandreducesdiversityinanissuer’saccountingformodificationsorexchangesoffreestandingequity-classifiedwrittencalloptions
(such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after
December15,2021,includinginterimperiodswithinthosefiscalyears.Underthisstandard,issuersshouldapplythenewstandardprospectively
tomodificationsorexchangesoccurringaftertheeffectivedateofthenewstandard.Earlyadoptionispermitted,includingadoptioninaninterim
period.Ifanissuerelectstoearlyadoptthenewstandardinaninterimperiod,theguidanceshouldbeappliedasofthebeginningofthefiscal
yearthat includesthat interimperiod. TheCompany isevaluating thisnew standard,but doesnot expectit tohave amaterial impacton the
Company'sfinancialstatementsordisclosures.
OnJanuary7,2021,theFASBissuedASUNo.2021-01,ReferenceRateReform(Topic848).Thisnewstandardprovidesoptionaltemporary
guidance for entities transitioning away from London Interbank Offered Rate ("LIBOR") to new reference interest rates so that derivatives
affectedbythediscountingtransitionareexplicitlyeligibleforcertainoptionalexpedientsandexceptionswithTopic848.Theseamendmentsdo
notapplytoanycontractmodificationsmadeafterDecember31,2022,anynewhedgingrelationshipsenteredintoafterDecember31,2022,or
toexistinghedgingrelationshipsevaluatedforeffectivenessexistingasofDecember31,2022,thatapplycertainoptionalpracticalexpedients.
Thisstandard waseffectiveimmediately andmaybe applied(i) on afull retrospectivebasisas ofanydate fromthebeginning ofan interim
periodthat includesor issubsequentto March12, 2020,or (ii)ona prospectivebasis tonew modificationsfromany datewithin aninterim
periodthatincludesorissubsequenttothedateoftheissuanceofafinalupdate,uptothedatethatfinancialstatementsareavailabletobeissued.
TheCompanyhadnomaterialLIBOR-relatedcontractmodificationsduringtheyearendedDecember31,2021.
OnAugust5,2020,theFASBissuedASUNo.2020-06,Debt—DebtwithConversionandOtherOptions(Subtopic470-20)andDerivativesand
Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own
Equity. This new standardreduces the number of accountingmodels for convertibledebt instrumentsand convertible preferredstock, makes
targetedimprovementstothedisclosuresforconvertibleinstrumentsandearnings-per-share(EPS)guidance,andamendstheguidanceforthe
derivativesscopeexceptionforcontractsinanentity’sownequitytoreduceform-over-substance-basedaccountingconclusions.Thisstandardis
effective for fiscal years beginning after December 15, 2021 and the Company will adopt this standard as of January 1, 2022, utilizing the
modified retrospective method. Under the modified approach, the Company will apply the guidance to all financial instruments that are
outstandingasofthe
95
NotestoConsolidatedFinancialStatements
beginning ofthe year of adoptionwith the cumulative effectrecognized as an adjustmentto the opening balanceof retained earnings. Upon
adoption,theCompanywillreclassifytheremainingequitycomponent,estimatedat$300million,fromAdditionalpaid-incapitaltoLong-term
debtassociatedwithitsconvertiblenotes,andnolongerrecordamortizationofthedebtdiscounttoInterestexpense.Thecumulativeeffectfrom
amortizationofthedebtdiscountthathasbeenrecordedtoInterestexpense,offsetbyreductionstoCapitalinexcessofparvaluerelatedtothe
requisitionoftheequitycomponentthroughrepurchases,willresultinanestimated$56millionadjustmenttotheopeningbalanceofretained
earningsuponadoption.Thecomputationofdilutednetincome(loss)persharewillbeaffectedinthenumeratorastheCompanywillnolonger
recordthedebtdiscountamortizationinInterestexpenseandmayhavetoaddbackInterestexpensetothenumerator.Thedenominatorcould
alsobeaffectedastheCompanywillberequiredtousetheif-convertedmethodtocalculatedilutedshares,whichassumesallsharestohave
beenconvertedatthebeginningoftheperiod.
4. NET INCOME (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted net income (loss) per share (in millions except per share amounts). An
immaterial number of shares related to the Company's restricted stock units, stock warrants, and convertible notes were excluded from the
denominatorforthefiscalyearendedDecember31,2020,becauseinclusionofsuchshareswouldbeantidilutive.
Year ended December 31,
2021 2020 2019
NUMERATOR:
Netincome(loss) $ 977 $ (3,074) $ 2,300
DENOMINATOR:
Weighted-averagesharesoutstanding,basic 592 565 538
Dilutiveeffectsofconvertiblenotes(a) 15 — —
Dilutiveeffectsofstockwarrants 1 — —
Dilutiveeffectofrestrictedstockunits 1 — 1
Adjustedweighted-averagesharesoutstanding,diluted
609 565 539
NET INCOME (LOSS) PER SHARE:
Basic
$ 1.65 $ (5.44) $ 4.28
Diluted
$ 1.61 $ (5.44) $ 4.27
(a)BecausetheCompanyintendstosettleconversionsbypayingcashuptotheprincipalamountoftheconvertiblenotes,withanyexcessconversionvaluesettledin
cashorsharesofcommonstock,theconvertiblenotesarebeingaccountedforusingthetreasurystockmethodforthepurposesofNetincome(loss)pershare.Using
thismethod,thedenominatorwillbeaffectedwhentheaveragesharepriceoftheCompany'scommonstockforagivenperiodisgreaterthantheconversionpriceof
approximately$38.48pershare,andtheCompanyreportsNetincomeforthegivenperiod.FortheyearendedDecember31,2021,theaveragemarketpriceofthe
Company'scommon stock exceeded this conversionpriceper share and as such,the commonshares underlyingthe convertiblenotes wereincluded inthediluted
calculation.SeeNote7forfurtherinformationontheconvertiblenotes.
5. COMMITMENTS AND CONTINGENCIES
Commitments
TheCompanyhascontractualobligationsandcommitmentsprimarilywithregardtofuturepurchasesofaircraft,repaymentofdebt(seeNote7),
and lease arrangements (see Note 8). During the year ended December 31, 2021, the Company leased nine new Boeing 737 MAX 8 ("-8")
aircraft.TheCompanyhadfirmordersinplacewithBoeing
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for130-8aircraftand264737MAX7("-7")aircraft,aswellasoptionsfor238-8aircraft,asofDecember31,2021.SeeNote17forfurther
informationontheCompany'sMAXaircraft.
BasedontheCompany'sexistingagreementwithBoeing,capitalcommitmentsassociatedwithitsfirmordersasofDecember31,2021,were:
$1.8 billion in 2022, $1.6 billion in 2023, $1.1 billion in 2024, $837 million in 2025, $961 million in 2026, and $6.9 billion thereafter. In
addition,subsequenttoDecember31,2021,andthroughFebruary3,2022,theCompanyhasexercised12-8optionsfordeliveryin2022and12
-7optionsfordeliveryin2023,resultinginadditionalcapitalcommitmentsassociatedwithfirmordersof$474millionand$254millionin2022
and2023,respectively.
Los Angeles International Airport
InOctober 2017, theCompany executed aleaseagreement withLosAngeles WorldAirports("LAWA") (the"T1.5Lease"). UndertheT1.5
Lease, the Company oversaw and managed the design, development, financing, construction, and commissioning of a passenger processing
facility between Terminals 1 and 2 (the "Terminal 1.5 Project"). The Terminal 1.5 Project included ticketing, baggage claim, passenger
screening, and a bus gate. Construction on the Terminal 1.5 Project began during third quarter 2017 and was substantially completed at
December31,2020.Theprojectfinalcostwasapproximately$410million.Duringsecondquarter2021,LAWArepaidtheoutstandingloanand
purchasedtheremainingcompletedassetsforaccountingpurposes,atwhichtimetheTerminal1.5Projectright-of-useassetandleaseliabilityof
$365milliononthebalancesheetwerede-recognizedinaccordancewithapplicableaccountingguidance.Thisrepaymentwasalsoreportedasa
supplementalnoncashtransactionontheConsolidatedStatementofCashFlows,netofAssetsconstructedforothersadditionsduringtheperiod.
Dallas Love Field
During 2008, the City of Dallas approved the Love Field Modernization Project ("LFMP"), a project to reconstruct Dallas Love Field with
modern, convenient air travel facilities. Pursuant to a Program Development Agreement with the City of Dallas and the Love Field Airport
ModernizationCorporation(orthe"LFAMC,"aTexasnon-profit"localgovernmentcorporation"establishedbytheCityofDallastoactonthe
City of Dallas' behalf to facilitate the development of the LFMP), the Company managed this project. Major construction was effectively
completedin2014.Duringsecondquarter2017,theCityofDallasapprovedusingtheremainingbondfundsforadditionalterminalconstruction
projects,whichwereeffectivelycompletedin2018.
AlthoughtheCityofDallasreceivedcommitmentsfromvarioussourcesthathelpedtofundportionsoftheLFMPproject,includingtheFAA,
the TransportationSecurity Administration, and theCity of Dallas' AviationFund, the majority ofthe funds used were from the issuance of
bonds.TheCompanyguaranteedprincipalandinterestpaymentsonbondsissuedbyLFAMC(the"Series2010"bondsandthe"Series2012"
bonds).GiventheCompany’sguaranteeassociatedwiththebondsissuedtofundLFMP,theremainingdebtserviceamountwasconsidereda
minimumleasepaymentundertheadoptionofASCTopic842,Leases,andthereforewasrecordedasaleaseliabilitywithacorrespondingright-
of-useassetwithintheCompany’sConsolidatedBalanceSheet.
All of the outstanding Series 2010 bonds, in the principal amount of $310 million, were redeemed by LFAMC on September 28, 2021
(RedemptionDate)attheredemptionpriceplusaccruedinterestof$7million.Thesourceofthefundsusedtopaytheprincipalandintereston
the Series 2010 bonds was proceeds from the sale of LFAMC General Airport Revenue Bonds, Series 2021, which also occurred on the
RedemptionDate.AstheSeries2010bondshavebeenfullyrepaidfollowingtheRedemptionDate,theCompany’sguaranteeassociatedwiththe
Series2010bondsnolongerexists.Thisrefinancingtransactionwasconsideredaleasemodificationinaccordancewithapplicableguidance,and
theCompany'sobligationwasremeasuredasofthetransactiondate.ThisremeasurementresultedinareductionoftheCompany'sright-of-use
assetandleaseliabilityintheamountof$343million,whichhasbeenreflectedintheConsolidatedBalanceSheetasofDecember31,2021.
AsofDecember31,2021,$79millionofprincipalremainedoutstandingassociatedwiththeSeries2012bonds.Thenetpresentvaluesofthe
futureprincipalandinterestpaymentsassociatedwiththebondswere$89millionand
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$433millionasofDecember31,2021and2020,respectively,andwerereflectedaspartoftheCompany'soperatingleaseright–of–useassets
andleaseobligationsintheConsolidatedBalanceSheet.
Contingencies
TheCompanyisfromtimetotimesubjecttovariouslegalproceedingsandclaimsarisingintheordinarycourseofbusiness,including,butnot
limitedto,examinations bytheInternalRevenueService("IRS").TheCompany's managementdoesnotexpectthattheoutcome ofanyofits
currentlyongoinglegalproceedingsortheoutcomeofanyadjustmentspresentedbytheIRS,individuallyorcollectively,willhaveamaterial
adverseeffectontheCompany'sfinancialcondition,resultsofoperations,orcashflow.
6. REVENUE
Passenger Revenues
TheCompany’scontractswithitsCustomersprimarilyconsistofitsticketssold,whichareinitiallydeferredasAirtrafficliability.Passenger
revenueassociatedwith ticketsis recognizedwhenthe performance obligationtotheCustomer issatisfied,whichis primarilywhen travelis
provided.
RevenueiscategorizedbyrevenuesourceastheCompanybelievesitbestdepictsthenature,amount,timing,anduncertaintyofrevenueand
cashflow.The followingtable providesthecomponents of Passengerrevenuerecognizedfor theyearsendedDecember 31,2021, 2020,and
2019:
Year ended December 31,
(in millions) 2021 2020 2019
Passengernon-loyalty $ 11,377 $ 6,303 $ 17,578
Passengerloyalty-airtransportation 2,136 1,003 2,487
Passengerancillarysoldseparately 553 359 711
Total passenger revenues
$ 14,066 $ 7,665 $ 20,776
Passengernon-loyaltyincludesallrevenuesrecognizedfromPassengersforflightspurchasedprimarilywithcashorcreditcard.AllCustomers
purchasingaticketonSouthwestAirlinesaregenerallyabletocheckuptotwobagsatnoextracharge(withcertainexceptionsasstatedinthe
Company'spublishedContractofCarriage),andtheCompanyalsodoesnotchargeafeeforaCustomertomakeachangetotheirflightafter
initial purchase, although fare differences may apply. Passenger loyalty - air transportation primarily consists of the revenue associated with
awardflightstaken byloyaltyprogrammembers uponredemption ofloyaltypoints. Passenger ancillarysoldseparately includes anyrevenue
associatedwithancillaryfeeschargedseparately,suchasin-flightpurchases,EarlyBirdCheck-In ,andUpgradedBoarding.
Inordertodeterminethevalueofeachloyaltypoint,certainassumptionsmustbemadeatthetimeofmeasurement,whichincludethefollowing:
• Allocation of Passenger Revenue-RevenuesfromPassengers,relatedtotravel,whoalsoearnRapidRewardsPointshavebeenallocated
betweenflight(recognizedasrevenuewhentransportationisprovided)andRapidRewardsPoints(deferreduntilpointsareredeemed)
basedoneachobligation’srelativestandalonesellingprice.TheCompanyutilizeshistoricalearningpatternstoassistinthisallocation.
• Fair Value of Rapid Rewards Points- Determined from the base fare value of tickets which were purchased using prior point
redemptions for travel and other products and services, which the Company believes to be indicative of the fair value of points as
perceivedbyCustomersandrepresentativeofthevalueofeachpointatthetimeofredemption.TheCompany’sbookingsiteallowsa
Customertotogglebetweenfaresutilizingeithercashorpointredemptions,whichprovidestheCustomerwithanapproximationofthe
equivalentvalueoftheirpoints.Thevaluecandiffer,however,basedondemand,theamountoftimepriortothe
®
98
NotestoConsolidatedFinancialStatements
flight,andotherfactors.Themixoffareclassesduringtheperiodmeasuredrepresentsaconstraint,whichcouldresultintheassumptions
abovechangingatthemeasurementdate,asfareclassescanhavedifferentcoefficientsusedtodeterminethetotalloyaltypointsneeded
topurchaseanawardticket.ThemixtureofthesefareclassesandchangesinthecoefficientsusedbytheCompanycouldcausethefair
valueperpointtofluctuate.
Forpointsthatareexpectedtoremainunused,theCompanyrecognizesbreakageinproportiontothepatternofpointsusedbytheCustomer,
which approximates the average period over which the population of Rapid Reward Members redeem their points. The Company utilizes
historicalbehavioraldatatodevelopapredictivestatisticalmodeltoanalyzetheamountofbreakageexpectedforpointssoldtobusinesspartners
and earnedthrough flight. TheCompany continues toevaluate expected breakage annually and applies appropriateadjustments in thefourth
quarterof each year,or other times,ifsignificant changesinCustomer behavioraredetected. Changestobreakage estimatesimpactrevenue
recognitionprospectively.DuetothesizeoftheCompany’sliabilityforloyaltybenefits,changesinCustomerbehaviorand/orexpectedfuture
redemptionpatternscouldresultinsignificantvariationsinPassengerrevenue.
TheCompanyallocatesconsiderationreceivedtoperformanceobligationsbasedontherelativefairvalueofthoseobligations.TheCompanyhas
aco-brandedcreditcardagreement(“Agreement”)withChaseBankUSA,N.A.(“Chase”),throughwhichtheCompanysellsloyaltypointsand
certainmarketingcomponents,whichconsistoftheuseoftheSouthwestAirlinesbrandandaccesstoRapidRewardsMemberlists,licensingand
advertising elements, and the use of the Company’s resource team. In fourth quarter 2021, Chase and the Company executed a multi-year
extensionoftheAgreement,extendingthedecades-longrelationshipbetweentheparties.TheCompanyestimatedthesellingpricesandvolumes
overthe termof theAgreement inorder todetermine theallocation ofproceeds to eachof thetwo performanceobligations identifiedin the
Agreement,whichhavebeencharacterizedasatransportationcomponentandamarketingcomponent.Theallocationsutilizedarereviewedto
determine if adjustment is necessary any time there is a modification to the Agreement. The Company records Passenger revenue related to
loyalty point redemptions for air travel when the travel is delivered, and the marketing elements are recognized as Other revenue when the
performanceobligationsrelatedtothoseservicesaresatisfied,whichisgenerallythesameperiodconsiderationisreceivedfromChase.
AsperformanceobligationstoCustomersaresatisfied,therelatedrevenueisrecognized.Theeventsthatresultinrevenuerecognitionthatare
associatedwithperformanceobligationsidentifiedasapartoftheRapidRewardsProgramareasfollows:
• Tickets and Rapid Rewards Points-Whenaflightoccurs,therelatedperformanceobligationissatisfiedandtherelatedvalueprovided
bytheCustomer,whetherfrompurchasedticketsorRapidRewardsPoints,isrecognizedasrevenue.
• Loyalty points redeemed for goods and/or services other than travel-RapidRewards Membershave theoptionto redeempointsfor
goodsandservicesoffered through athird partyvendor, whoacts asprincipal. Theperformance obligationrelated tothe purchaseof
thesegoodsandservicesissatisfiedwhenthegoodand/orserviceisdeliveredtotheCustomer.
• Marketing Royalties - As part of its Agreement with Chase, Southwest provides certain deliverables, including use of the Southwest
Airlines’ brand, access toRapid Rewards Member lists, advertising elements, and the Company’sresource team. These performance
obligationsaresatisfiedeachmonththattheAgreementisactive.
AsoftheyearsendedDecember31,2021and2020,thecomponentsofAirtrafficliability,includingcontractliabilitiesbasedonticketssoldand
unusedflightcreditsavailabletotheCustomer,bothofwhicharenetofrecordedbreakage,andloyaltypointsavailableforredemption,within
theConsolidatedBalanceSheetwereasfollows:
99
NotestoConsolidatedFinancialStatements
Balance as of
(in millions) December 31, 2021 December 31, 2020
Airtrafficliability-passengertravelandancillarypassengerservices $ 2,936 $ 2,686
Airtrafficliability-loyaltyprogram 4,789 4,447
Total Air traffic liability
$ 7,725 $ 7,133
ThebalanceinAirtrafficliability-passengertravelandancillary passenger servicesalsoincludesunused funds that areavailableforuse by
Customersandarenotcurrentlyassociatedwithaticket,althoughtheyremainreusable,foraperiodoftime,intheformofaflightcreditthatcan
beappliedtowardsthepurchaseoffuturetravel.Theseflightcreditsaretypicallycreatedasaresultofapriorticketcancellationorexchange.
Rollforwards of the Company's Air traffic liability - loyalty program for the years ended December 31, 2021 and 2020 were as follows (in
millions):
Year ended December 31,
2021 2020
Airtrafficliability-loyaltyprogram-beginningbalance $ 4,447 $ 3,385
Amountsdeferredassociatedwithpointsawarded 2,523 1,958
Revenuerecognizedfrompointsredeemed-Passenger (2,136) (1,003)
Revenuerecognizedfrompointsredeemed-Other (45) (60)
Unusedfundsconvertedtoloyaltypoints — 167
Airtrafficliability-loyaltyprogram-endingbalance
$ 4,789 $ 4,447
Airtrafficliabilityincludesconsiderationreceivedforticketandloyaltyrelatedperformanceobligationswhichhavenotbeensatisfiedasofa
givendate.RollforwardsoftheamountsincludedinAirtrafficliabilityasofDecember31,2021and2020wereasfollows(inmillions):
Air traffic liability
BalanceatDecember31,2020 $ 7,133
Currentperiodsales(passengertravel,ancillaryservices,flightloyalty,andpartnerloyalty) 14,702
Revenuefromamountsincludedincontractliabilityopeningbalances (2,945)
Revenuefromcurrentperiodsales (11,165)
BalanceatDecember31,2021
$ 7,725
Air traffic liability
BalanceatDecember31,2019 $ 5,510
Currentperiodsales(passengertravel,ancillaryservices,flightloyalty,andpartnerloyalty) 9,348
Revenuefromamountsincludedincontractliabilityopeningbalances (2,317)
Revenuefromcurrentperiodsales (5,408)
BalanceatDecember31,2020
$ 7,133
During2020andinpartsof2021,theCompanyexperiencedasignificantlyhighernumberofCustomer-drivenflightcancellationsasaresultof
the COVID-19 pandemic,including those associated with the Delta variant of the virus. See Note 2for further information. As a result,the
amountofCustomertravelfundsheldinAirtrafficliabilitythatareestimatedtoberedeemedforfuturetravelasofDecember31,2021,remains
muchhigherthanhistoricallevels.TheamountofsuchCustomerfundsrepresentsapproximately16percentand28percentofthetotalAirtraffic
liabilitybalance,netofbreakage,atDecember31,2021,andDecember31,2020,respectively,comparedtoapproximately2percentoftheAir
trafficliabilitybalanceasofDecember31,2019.InordertoprovideadditionalflexibilitytoCustomerswhoholdthesefunds,theCompanyhas
significantlyrelaxeditspreviouspolicieswithregardstothetimeperiodwithinwhichthesefundscanberedeemed,whichistypicallytwelve
monthsfromtheoriginaldateofpurchase.ForallCustomertravelfundscreatedorthatwouldhaveotherwiseexpired
100
NotestoConsolidatedFinancialStatements
betweenMarch1andSeptember7,2020associatedwithflightcancellations,theCompanyextendedtheexpirationdatetoSeptember7,2022.At
December 31 2021, $1.3 billion of extended Customer travel funds remain in Air traffic liability with a September 7, 2022 expiration date,
although the Company has estimated that a portion of those will not be redeemed. The Company has limited data available to predict the
occurrence or timing of performance obligation satisfaction onthese funds due to certain constraintsincluding, but not limited to, consumer
confidence,economic health,vaccines,anduncertaintyregardingcustomertravelfundredemptionpatternsforfundsthatexistlongerthan12
monthsasthisisunprecedentedinCompanyhistory.Asaresult,recognitionofthesetravelfundsasflownrevenue,refunds,orbreakagerevenue
willlikelybemorevolatilefromperiodtoperiodcomparedtowhatpreviousCustomerbehaviormayindicate,ascumulativerevenuerecognized
isconstrainedtoamountsthatarenotprobableofbeingreversed.
Recognition ofrevenue associated with theCompany’s loyalty liability canbe difficult to predict,as the number ofaward seats available to
membersisnotcurrentlyrestrictedandtheycouldchoosetoredeemtheirpointsatanytimethataseatisavailable.Theperformanceobligations
classified as a current liability related to the Company’s loyalty program were estimated based on expected redemptions utilizing historical
redemption patterns, and forecasted flight availability, and fares. The entire balance classified as Air traffic liability—noncurrent relates to
loyaltypointsthatwereestimatedtoberedeemedinperiodsbeyondthetwelvemonthsfollowingtherepresentativebalancesheetdate.Basedon
historical experience as well as current forecasted redemptions, the Company expects the majority of loyalty points to be redeemed within
approximatelytwoyearsofthedatethepointsareissued.
Allperformanceobligationsrelatedtofreightservicessoldarecompletedwithintwelvemonthsorless;therefore,theCompanyhaselectedto
notdisclosetheamountoftheremainingtransactionpriceanditsexpectedtimingofrecognitionforfreightshipments.
Otherrevenues primarily consistof marketingroyalties associatedwith the Company’s co-branded Chase Visa creditcard, butalso include
commissionsandadvertisingassociatedwithSouthwest.com .AllamountsclassifiedasOtherrevenuesarepaidmonthly,coincidingwiththe
Company fulfillingits deliverables;therefore, the Companyhas elected tonot disclose theamount of the remaining transactionprice and its
expectedtimingofrecognitionforsuchservicesprovided.
TheCompanyrecognizedrevenuerelatedtothemarketing,advertising,andothertravel-relatedbenefitsoftherevenueassociatedwithvarious
loyalty partner agreements including, but not limited to, the Agreement with Chase, within Other operating revenues. For the years ended
December31,2021,2020,and2019theCompanyrecognized$1.4billion,$1.1billion,and$1.3billion,respectively.
TheCompanyisalsorequiredtocollectcertaintaxesandfeesfromCustomersonbehalfofgovernmentagenciesandremitthesebacktothe
applicablegovernmentalentityonaperiodicbasis;however,someofthesetickettaxesweresuspendedduring2020asallowedbytheCARES
Act.ThesetaxesandfeesincludeforeignandU.S.federaltransportationtaxes,federalsecuritycharges,andairportpassengerfacilitycharges.
These items are collected from Customers at the time they purchase their tickets, are excluded from the contract transaction price, and are
thereforenotincludedinPassengerrevenue.TheCompanyrecordsaliabilityuponcollectionfromtheCustomerandrelievestheliabilitywhen
paymentsareremittedtotheapplicablegovernmentalagency.
®
®
101
NotestoConsolidatedFinancialStatements
7. FINANCING ACTIVITIES
(in millions) December 31, 2021 December 31, 2020
2.75%Notesdue2022 $ 300 $ 300
PassThroughCertificatesdue2022-6.24% 71 137
4.75%Notesdue2023 1,250 1,250
1.25%ConvertibleNotesdue2025 1,842 1,945
5.25%Notesdue2025 1,550 1,550
TermLoanAgreementpayablethrough2025 — 119
3.00%Notesdue2026 300 300
TermLoanAgreementpayablethrough2026 — 159
3.45%Notesdue2027 300 300
5.125%Notesdue2027 2,000 2,000
7.375%Debenturesdue2027 116 119
TermLoanAgreementpayablethrough2028 — 184
2.625%Notesdue2030 500 500
1.000%PayrollSupportProgramLoandueApril2030(SeeNote2) 976 976
1.000%PayrollSupportProgramLoandueJanuary2031(SeeNote2) 566 —
1.000%PayrollSupportProgramLoandueApril2031(SeeNote2) 526 —
Financeleases 459 542
$ 10,756 $ 10,381
Lesscurrentmaturities 453 220
Lessdebtdiscountandissuancecosts 29 50
$ 10,274 $ 10,111
During2020,theCompanyenteredintoagreementswithafinancinginstitutiontoborrow$125million($121million,netoffees)securedby
fourBoeing 737-800 aircraft.These borrowings,whichwere recordedasafinancing transactionin theCompany's ConsolidatedStatement of
CashFlows,andasdebtintheaccompanyingConsolidatedBalanceSheet,boreinterestatarateequaltothe3monthLIBORplus1.4percent,
andwerepayableinquarterlyinstallmentsthroughSeptember29,2025.TheCompanyprepaidtheloansinfullonDecember29,2021,utilizing
availablecashonhand.
During2020,theCompanyissued$2.0billionofunsecurednotesdue2027,ofwhich$1.3billionwasissuedJune8,2020(the“$1.3billion2027
Notes”)and$700millionwasissuedJuly31,2020(the“$700million2027Notes”).Thenotesbearinterestat5.125%.Interestispayablesemi-
annuallyin arrears onJune15 andDecember15, beginningDecember15, 2020. The$700million 2027Noteswere offeredasan additional
issuanceoftheCompany’s $1.3 billion2027 Notesissued onJune 8,2020. The$700 million2027 Noteswere issuedat apremium andthis
premiumhasbeenincludedwithinCapitalizedfinancingitemsintheConsolidatedStatementofCashFlows.Aportionoftheproceedsfromthe
$1.3billion2027NoteswasusedtorepayaportionoftheoutstandingAmendedandRestated364-DayCreditAgreementbalance.Seebelowfor
moreinformationregardingtheAmendedandRestated364-DayCreditAgreement.
During 2020, the Company, through special purpose entities, entered into agreements with a financing institution and trusts to borrow
$197 million ($190 million, net of fees) secured by six Boeing 737-800 aircraft. These borrowings, which were recorded as a financing
transactionintheCompany'sConsolidatedStatementofCashFlows,andasdebtintheaccompanyingConsolidatedBalanceSheet,boreinterest
atarateequaltothe3monthLIBORplus1.4percent.Thespecialpurposeentitiesweredeterminedtobevariableinterestentitiesforwhichthe
Companywastheprimarybeneficiary,andthereforewereconsolidatedintheaccompanyingConsolidatedFinancialStatementsasofDecember
31,2020.TheCompanyprepaidtheloansinfullonDecember31,2021,utilizingavailablecashonhand.
102
NotestoConsolidatedFinancialStatements
During2020,theCompanyissued$1.55billionofunsecurednotesdue2025,ofwhich$1.25billionwasissuedMay4,2020(the“$1.25billion
2025Notes”)and$300millionwasissuedJuly31,2020(the“$300million2025Notes”).Thenotesbearinterestat5.250%.Interestispayable
semi-annuallyinarrearsonMay4andNovember4,beginningNovember4,2020.The$300million2025Noteswereofferedasanadditional
issuanceoftheCompany’s$1.25billion2025NotesissuedonMay4,2020.The$300million2025Noteswereissuedatapremiumandthis
premiumhasbeenincludedwithinCapitalizedfinancingitemsintheConsolidatedStatementofCashFlows.Theproceedsfromthe$1.25billion
2025NoteswereusedtorepayaportionoftheoutstandingAmendedandRestated364-DayCreditAgreementbalance.
During2020,theCompanyissued$1.25billionofunsecurednotesdue2023,ofwhich$750millionwasissuedMay4,2020(the“$750million
2023Notes”)and$500millionwasissuedJune8,2020(the“$500million2023Notes”).Thenotesbearinterestat4.750%.Interestispayable
semi-annuallyinarrearsonMay4andNovember4,beginningNovember4,2020.The$500million2023Noteswereofferedasanadditional
issuanceoftheCompany's$750million2023NotesissuedonMay4,2020.The$500million2023Noteswereissuedatapremiumandthis
premiumhasbeenincludedwithinCapitalizedfinancingitemsintheConsolidatedStatementofCashFlows.Theproceedsfromthe$750million
2023Notesandaportionoftheproceedsofthe$500million2023NoteswereusedtorepayaportionoftheoutstandingAmendedandRestated
364-DayCreditAgreementbalance.
OnMay1,2020,theCompanycompletedthepublicofferingof$2.3billionaggregateprincipalamountof1.250%ConvertibleSeniorNotesdue
2025(the“ConvertibleNotes”).TheConvertibleNotesbearinterestatarateof1.25%andwillmatureonMay1,2025.Interestonthenotesis
payablesemi-annuallyinarrearsonMay1andNovember1,beginningNovember1,2020.Uponconversion,theCompanywillpayordeliver,as
thecasemaybe,cash,sharesoftheCompany’scommonstockoracombinationofcashandsharesofcommonstock,attheCompany’selection.
TheCompanyintendstosettleconversionsbypayingcashuptotheprincipalamountoftheConvertibleNotes,withanyexcessconversionvalue
settled in cash or shares of common stock. The initial conversion rate is 25.9909 shares of common stock per $1,000 principal amount of
ConvertibleNotes(equivalenttoaninitialconversionpriceofapproximately$38.48pershareofcommonstock).
Uponissuance,theCompanybifurcatedtheConvertibleNotesforaccountingpurposesbetweenaliabilitycomponentandanequitycomponent
utilizing applicable guidance. The liability component was determinedby estimating the fair value ofa hypothetical issuance of an identical
offeringexcludingtheconversionfeatureoftheConvertibleNotes.Theinitialcarryingamountoftheequitycomponentwascalculatedasthe
difference between the liability component and the face amount of the Convertible Notes. During the year ended December 31, 2021, the
Companyrepurchased$203millioninprincipaloftheConvertibleNotesfor$293millionincash.TheCompanyaccountedfortheserepurchases
as a partial debt extinguishment, which resulted in (i) a loss of $28 million reflected in Other (gains) losses, net, in the accompanying
ConsolidatedStatement ofIncome (Loss)for theyear endedDecember 31,2021, (ii)a $30million reductionin remaining unamortized debt
discountandissuancecosts,and(iii)a$92millionreductiontoCapitalinexcessofparvaluerelatedtothereacquisitionoftheequitycomponent
intheaccompanyingConsolidatedBalanceSheet.Additionally,animmaterialnumberofconversionswereexercisedandsettledduring2021.
ThefollowingtabledetailstheequityandliabilitycomponentrecognizedrelatedtotheConvertibleNotesasofDecember31,2021and2020:
(in millions) December 31, 2021 December 31, 2020
Carryingamountofequitycomponent $ 311 $ 403
Liabilitycomponent:
Principalamount $ 2,097 $ 2,300
Unamortizeddebtdiscount (255) (355)
Netcarryingamount $ 1,842 $ 1,945
The effective interest rate on the liability component was approximately 5.2 percent for the year ended December 31, 2021. The Company
recognized $110 million of interest expense associated with the Convertible Notes during the year ended December 31, 2021, including
$73millionofnon-cashamortizationofthedebt
103
NotestoConsolidatedFinancialStatements
discount, $9 million of non-cash amortization of debt issuance costs, and $28 million of contractual coupon interest. The unamortized debt
issuancecostshavehistoricallybeenrecognizedasnon-cashinterestexpensebasedonthe5-yeartermofthenotes,throughMay1,2025,less
amounts that wereor will be required to beaccelerated immediately upon conversion or repurchases.Upon adoption of ASU 2020-06 as of
January1,2022,thedebtdiscountamortizationwillceasetoberecordedtoInterestexpense.SeeNote3forfurtherinformation.
Asof December31,2021, theif-convertedvalue oftheConvertible Notesexceededthe principalamountby $238million, using theclosing
stockpriceonDecember31,2021.TheConvertibleNotesdidnotmeetthecriteriatobeconvertedasofthedateofthefinancialstatements,and
thusareclassifiedasLong-termdebtintheaccompanyingConsolidatedBalanceSheetasofDecember31,2021.
OnMarch12,2020,theCompanyenteredintoa$1.0billion364-daytermloancreditfacilityagreement(the“364-DayCreditAgreement”)with
asyndicateoflendersidentifiedinthe364-DayCreditAgreement.The364-DayCreditAgreementwasdrawninfullontheclosingdate.On
March30,2020,theCompanyamendedandrestatedthe364-DayCreditAgreement(the“AmendedandRestated364-DayCreditAgreement”)
with a syndicate of lendersidentified in the Amended and Restated 364-Day Credit Agreement to addadditional term loan commitments of
approximately $2.3 billion, add an uncommitted accordion increase provision topermit additionalterm loans inan aggregate amountnot to
exceedapproximately$417million,amendthepricing,amendcertaincovenants,addcertaincovenants,andprovideforthegrantofasecurity
interestincertainaircraftandrelatedassets.TheCompanydrewapproximately$2.3billionundertheAmendedandRestated364-DayCredit
AgreementonApril1,2020.OnApril24,2020,theCompanydrewanadditional$350millionunderthe$417millionaccordionfeature.The
Amended and Restated 364-Day Credit Agreement was originally set to mature in full on March 29, 2021. The outstanding Amended and
Restated364-DayCreditAgreementbalancewasrepaidinfullinsecondquarter2020,andtheagreementwasterminated.
Concurrently with entering into the Amended and Restated 364-Day Credit Agreement on March 30, 2020, the Company also amended its
existing$1.0billionrevolvingcreditfacility(the“AmendedandRestatedRevolvingCreditAgreement”)to(i)amendthepricingandfees,(ii)
amendcertaincovenantsandprovisions,(iii)addcertaincovenants,and(iv) provide forthegrantof a security interestincertainaircraft and
related assets. In second quarter 2020, the Company repaid in full the $1.0 billion drawn on the Amended and Restated Revolving Credit
Agreement.
OnNovember23,2020,theCompanyamendedtheAmendedandRestatedRevolvingCreditAgreementto(i)amendthepricingandfees,(ii)
amendcertaincovenantsandprovisions,(iii)removeafinancialcovenant,and(iv)amendanexhibitforconformingchangestothecompliance
certificate(the"SecondAmendment").OnJuly28,2021,theCompanyamendedtheAmendedandRestated Revolving CreditAgreement,as
amendedbytheSecondAmendment,to(i)extendthematuritytoAugust3,2023;(ii)addacovenanttoprohibittheCompanyfrompurchasing
anyequitysecurityoftheCompanylistedonanationalsecuritiesexchangeandpaymentofdividendsorothercapitaldistributionswithrespect
tothecommonstockoftheCompanyduringtheperiodfromJuly28,2021,throughSeptember30,2022;(iii)updatecertainprovisionsregarding
a successor interest rate to LIBOR and certain other market changes; and (iv) amend certain other covenants and provisions (the “Third
Amendment,”andtheAmendedandRestatedRevolvingCreditAgreementasamendedbytheSecondAmendmentandtheThirdAmendment,
the"AmendedA&RCreditAgreement").TheamountoftheloancommitmentsandthecollateralundertheAmendedandRestatedRevolving
CreditAgreementremainunchangedbytheSecondAmendmentandtheThirdAmendment.AsofDecember31,2021,therewerenoamounts
outstandingundertheAmendedA&RCreditAgreement.
Generally, amounts outstanding under the Amended A&R Credit Agreement bear interest at interest rates based on either the LIBOR rate
(selectedbytheCompanyfordesignatedinterestperiods)orthe“alternatebaserate”(beingthehighestof(1)theWallStreetJournalprimerate,
(2)one-monthadjustedLIBOR(one-monthLIBORplusastatutoryreserverate)plus1percent,and(3)theNewYorkFedBankRate,plus0.5
percent).TheunderlyingLIBORrateissubjecttoafloorof1percentperannumandthe“alternatebaserate”issubjecttoafloorof1percentper
annum.
104
NotestoConsolidatedFinancialStatements
TheAmendedA&RCreditAgreementcontainscustomaryrepresentationsandwarranties,covenants,andeventsofdefault.TheAmendedA&R
Credit Agreement is secured by a pool of 73 aircraft and related assets, each with a minimum appraised value ratio requirement. Under the
AmendedA&RCreditAgreement,theCompanyisrequiredtomaintainaminimumlevelofliquidityof$1.5billion(definedasthesumof(i)the
aggregateamountavailabletobeborrowedundertheAmendedA&RCreditAgreementplus(ii)theaggregateamountofunrestrictedcashand
cash equivalentsof the Companyplus (iii) the aggregate amountof short-term investmentsof the Company).As of December31, 2021, the
CompanywasincompliancewiththiscovenantandallothercovenantsintheAmendedA&RCreditAgreement.TheAmendedA&RCredit
Agreement is aseries of short-term borrowings; at the endof each borrowing the Company must electto roll the facility over into thenext
borrowingorpaydownthefacility.TheAmendedA&RCreditAgreementhasanaccordionfeaturethatwouldallowtheCompany,subjectto,
amongotherthings,theprocurementofincrementalcommitments,toincreasethesizeofthefacilityto$1.5billion.
DuringFebruary2020,theCompanyissued$500millionseniorunsecurednotesdue2030.Thenotesbearinterestat2.625percent.Interestis
payablesemi-annuallyinarrearsonFebruary10andAugust10,beginningin2020.
DuringNovember2017,theCompanyissued$300millionseniorunsecurednotesdue2022.Thenotesbearinterestat2.75percent.Interestis
payablesemi-annuallyinarrearsonMay16andNovember16.
AlsoduringNovember2017,theCompanyissued$300millionseniorunsecurednotesdue2027.Thenotesbearinterestat3.45percent.Interest
ispayablesemi-annuallyinarrearsonMay16andNovember16.
DuringNovember2016,theCompanyissued$300millionseniorunsecurednotesdue2026.Thenotesbearinterestat3.00percent.Interestis
payablesemi-annuallyinarrearsonMay15andNovember15.
DuringOctober2016,theCompanyenteredintoatermloanagreementprovidingforloanstotheCompanyaggregatingupto$215million,tobe
securedbymortgagesonsevenoftheCompany's737-800aircraft.TheCompanyborrowedthefull$215millionandsecuredthisloanwiththe
requisitesevenaircraftmortgages.TheloanwassettomatureonOctober31,2026,andwasrepayableviasemi-annualinstallmentsofprincipal
thatbeganonApril30,2018.TheloanboreinterestattheLIBORate(asdefinedinthetermloanagreement)plus1.10percent,andinterestwas
payablesemi-annuallyininstallments.TheCompanyprepaidtheloaninfullonNovember1,2021,utilizingavailablecashonhand.
OnOctober3,2007,grantortrustsestablishedbytheCompanyissued$500millionPassThroughCertificatesconsistingof$412million6.15
percentSeriesAcertificatesand$88million6.65percentSeriesBcertificates.Aseparatetrustwasestablishedforeachclassofcertificates.The
trustsusedtheproceedsfromthesaleofcertificatestoacquireequipmentnotesinthesameamounts,whichwereissuedbytheCompanyona
full recourse basis. Payments on the equipment notes held in each trust are passed through to the holders of certificates of such trust. The
equipmentnoteswereissuedforeachof16Boeing737-700aircraftownedbytheCompanyandaresecuredbyamortgageoneachaircraft.
Beginning February 1, 2008, principal and interest payments on the equipment notes held for both series of certificates became due semi-
annuallyuntilthebalanceofthecertificatesmatureonAugust1,2022.Priortotheirissuance,theCompanyalsoenteredintoswapagreementsto
hedge the variability in interest rates on the Pass Through Certificates. The swap agreements were accounted for as cash flow hedges, and
resultedinapaymentbytheCompanyof$20millionuponissuanceofthePassThroughCertificates.Theeffectiveportionofthehedgeisbeing
amortizedtointerestexpenseconcurrentwiththeamortizationofthedebtandisreflectedintheabovetableasareductioninthedebtbalance.
Theineffectivenessofthehedgetransactionwasimmaterial.
OnFebruary28,1997,theCompanyissued$100millionofseniorunsecured7.375percentdebenturesdueMarch1,2027.Interestispayable
semi-annuallyonMarch1andSeptember1.Thedebenturesmayberedeemed,attheoptionoftheCompany,inwholeatanytimeorinpartfrom
timetotime,ataredemptionpriceequaltothegreateroftheprincipalamountofthedebenturesplusaccruedinterestatthedateofredemptionor
thesumofthepresentvaluesoftheremainingscheduledpaymentsofprincipalandinterestthereon,discountedtothedateofredemptionatthe
comparabletreasuryrateplus20basispoints,plusaccruedinterestatthedateofredemption.
105
NotestoConsolidatedFinancialStatements
TheCompanyisrequiredtoprovidestandbylettersofcredittosupportcertainobligationsthatariseintheordinarycourseofbusiness.Although
thelettersofcreditareanoff-balancesheetitem,themajorityoftheobligationstowhichtheyrelatearereflectedasliabilitiesintheConsolidated
BalanceSheet.Outstandinglettersofcredittotaled$124millionatDecember31,2021.
ThenetbookvalueoftheassetspledgedascollateralfortheCompany’ssecuredborrowings,primarilyaircraft,was$2.2billionatDecember31,
2021.
AsofDecember31,2021,aggregateannualprincipalmaturitiesofdebtandfinanceleases(notincludingamountsassociatedwithintereston
financeleases)forthefive-yearperiodendingDecember31,2026,andthereafter,were$453millionin2022,$1.3billionin2023,$81millionin
2024,$3.7billionin2025,$350millionin2026,and$5.1billionthereafter.
8. LEASES
TheCompanyentersintoleasesforaircraft,property,andothertypesofequipmentinthenormalcourseofbusiness.Theaccountingforthese
leasesfollowstherequirementsofASC842,Leases.
As of December 31, 2021, the Company held aircraft leases with remaining terms ranging from one month to 12 years. The aircraft leases
generallycan berenewedfor threemonthsto threeyearsat ratesbasedon thefairmarket valueatthe endofthe leaseterm.Residual value
guaranteesincludedintheCompany'sleaseagreementsarenotmaterial.
OnJuly9,2012,theCompanysignedanagreementwithDeltaAirLines,Inc.andBoeingCapitalCorp.toleaseorsublease88AirTranAirways,
Inc. Boeing 717-200 aircraft ("B717s") to Delta at agreed-upon lease rates. The Company's future sublease income associated with the 14
remainingB717sonoperatingleaseasofDecember31,2021,wasasfollows:$17millionin2022,$7millionin2023,and$1millionin2024.
Therearenocontingentpaymentsandnosignificantresidualvalueconditionsassociatedwiththetransaction.
Insecondquarter2020,theCompanyenteredintotransactionswiththirdparties,involvingtenoftheCompany’sBoeing737-800aircraftandten
oftheCompany'sBoeing737MAX8aircraftthatqualifiedassale-leasebackarrangementsunderapplicableaccountingguidance.TheCompany
sold the ten 737-800 aircraft to a third party for $405 million, then immediately leased the aircraft back for approximately ten years. The
Companysoldtheten737MAX8aircrafttoathirdpartyfor$410million,thenimmediatelyleasedtheaircraftbackforapproximately13years.
As such, the aircraft were de-recognized from Property and equipment at their remaining net book values. All of the leases from the sale-
leasebacksareaccountedforasoperatingleases, andthusare now reflectedas part ofthe Company’s Operatinglease right-of-use assetsand
operatingleaseliabilitiesintheaccompanyingConsolidatedBalanceSheet.For2020,the737-800and737MAX8sale-leasebacktransactions
resultedinarecognizedgainof$153millionand$69million,respectively,reflectedwithinOtheroperatingexpenses,netintheaccompanying
ConsolidatedStatementofIncome(Loss).
At each airport where the Company conducts flight operations, the Company has lease agreements, generally with a governmental unit or
authority, for the use of airport terminals, airfields, office space, cargo warehouses, gates, and/or maintenance facilities. These leases are
classifiedasoperatingleaseagreementsandhaveleasetermsremainingrangingfromonemonthto39years.Certainleasescanberenewedfrom
1 year toten years. The majority of the airport terminal leases contain certain provisions forperiodic adjustments to rates that dependupon
airportoperatingcostsoruseofthefacilities,andareresetatleastannually.Duetothenatureandvariabilityoftherates,themajorityofthese
leasesarenotrecordedontheConsolidatedBalanceSheet.
TheCompanyalsoleasescertaintechnologyassets,fuelstoragetanks,andvariousotherequipmentthatqualifyasleasesundertheapplicable
accountingguidance.Theremainingleasetermsrangefromthreemonthstofiveyears.Certainleasescanberenewedfromsixmonthstothree
years.
106
NotestoConsolidatedFinancialStatements
Lease-relatedassetsandliabilitiesrecordedontheConsolidatedBalanceSheetwereasfollows:
(in millions) Balance Sheet location December 31, 2021 December 31, 2020
Assets
Operating Operatingleaseright-of-useassets(net) $ 1,590 $ 1,892
Finance Propertyandequipment(netofallowancefordepreciationand
amortizationof$679millionand$567million) 556 667
Totalleaseassets
$ 2,146 $ 2,559
Liabilities
Current
Operating Currentoperatingleaseliabilities $ 239 $ 306
Finance Currentmaturitiesoflong-termdebt 82 83
Noncurrent
Operating Noncurrentoperatingleaseliabilities 1,315 1,562
Finance Long-termdebtlesscurrentmaturities 377 459
Totalleaseliabilities
$ 2,013 $ 2,410
Thecomponentsofleasecosts,includedintheConsolidatedStatementofIncome(Loss),wereasfollows:
(in millions)
Statement of Comprehensive
Income (Loss) location
Year ended December
31, 2021
Year ended December
31, 2020
Year ended December
31, 2019
Operatingleasecost-aircraft(a) Otheroperatingexpenses $ 204 $ 216 $ 182
Operatingleasecost-other
Landingfeesandairportrentals,
andOtheroperatingexpenses 81 89 89
Short-termleasecost Otheroperatingexpenses 1 1 4
Variableleasecost
Landingfeesandairportrentals,
andOtheroperatingexpenses 1,406 1,260 1,377
Financeleasecost:
Amortizationofleaseliabilities Depreciationandamortization 112 113 116
Interestonleaseliabilities Interestexpense 19 22 26
Totalnetfinanceleasecost
$ 131 $ 135 $ 142
(a)Netofsubleaseincomeof$41million,$78million,and$97millionfortheyearsendedDecember31,2021,2020,and2019.
Supplementalcashflowinformationrelatedtoleases,includedintheConsolidatedStatementofCashFlows,wasasfollows:
107
NotestoConsolidatedFinancialStatements
(in millions)
Year ended December 31,
2021
Year ended December 31,
2020
Year ended December 31,
2019
Cashpaidforamountsincludedinthemeasurementofleaseliabilities:
Operatingcashflowsforoperatingleases $ 346 $ 398 $ 379
Operatingcashflowsforfinanceleases 19 22 26
Financingcashflowsforfinanceleases 83 85 85
Right-of-useassetsobtainedinexchangeforleaseobligations:
Operatingleases 327 915 230
Financeleases — — 1
AsofDecember31,2021,maturitiesofleaseliabilitieswereasfollows:
(in millions) Operating leases Finance leases
2022
$ 285 $ 98
2023 249 94
2024 221 90
2025 184 74
2026 176 54
Thereafter 680 102
Totalleasepayments
$ 1,795 $ 512
Lessimputedinterest (241) (53)
Totalleaseobligations
1,554 459
Lesscurrentobligations (239) (82)
Long-termleaseobligations
$ 1,315 $ 377
ThetablebelowpresentsadditionalinformationrelatedtotheCompany'sleases:
Weighted average remaining lease term December 31, 2021 December 31, 2020
Operatingleases
8years 10years
Financeleases 6years 7years
Weighted average discount rate
Operatingleases(a) 3.5 % 3.8 %
Financeleases 3.8 % 3.8 %
(a)UponadoptionofASUNo.2016-02,Leases,codifiedinASC842,theincrementalborrowingrateusedforexistingleaseswasestablishedasofJanuary1,2019.
9. COMMON STOCK
TheCompanyhasoneclassofcapitalstock,itscommonstock.OnMay1,2020,theCompanycompletedthepublicofferingof80.5million
sharesof$1.00parvaluecommonstockoftheCompany,whichincludedthefullexerciseoftheunderwriters’optiontopurchaseanadditional
10.5millionsharesofcommonstock,atapublicofferingpriceof$28.50pershare.AsdiscussedfurtherinNote2,inconnectionwithfunding
thattheCompanyhasreceivedunderthePSP1PayrollSupportProgram,PSP2PayrollSupportProgram,andPSP3PayrollSupportProgram,the
CompanyissuedWarrantstoacquireupto4.8millionsharesoftheCompany'scommonstocktoTreasury.
HoldersofsharesofcommonstockareentitledtoreceivedividendswhenandifdeclaredbytheBoardofDirectorsandareentitledtoonevote
pershareonallmatterssubmittedtoavoteoftheShareholders.InconnectionwiththereceiptofPayrollSupport,theCompanyisprohibited
frompayingdividendswithrespecttoitscommonstockthroughSeptember30,2022.SeeNote2forfurtherinformationonthePayrollSupport
programs.AtDecember31,
108
NotestoConsolidatedFinancialStatements
2021,theCompanyhad60millionsharesofcommonstockreservedforissuancepursuanttoEmployeeequityplans(ofwhich22millionshares
had not been granted) through various share-based compensation arrangements. See Note 10 to the Consolidated Financial Statements for
informationregardingtheCompany'sequityplans.
10. STOCK PLANS
Share-based Compensation
The Company accounts for share-based compensation utilizing fair value, which is determined on the date of grant for all instruments. The
ConsolidatedStatementofIncome(Loss)fortheyearsendedDecember31,2021,2020,and2019,reflectsshare-basedcompensationexpenseof
$58million,$17million,and$55million,respectively.Thetotaltaximpactrecognizedinearningsfromshare-basedcompensationarrangements
fortheyearsendedDecember31,2021,2020,and2019,wasnotmaterial.AsofDecember31,2021,therewas$36millionoftotalunrecognized
compensationcostrelatedtoshare-basedcompensationarrangements,whichisexpectedtoberecognizedoveraweighted-averageperiodof1.7
years.TheCompanyexpectssubstantiallyallunvestedsharesassociatedwithtime-basedrestrictedstockunitawardstovest.
Restricted Stock Units and Stock Grants
UndertheCompany’sAmendedandRestated2007EquityIncentivePlan("2007EquityPlan"),whichhasbeenapprovedbyShareholders,the
Companygrantedrestrictedstockunits("RSUs")andperformance-basedrestrictedstockunits("PBRSUs")tocertainEmployeesduring2021,
2020,and2019.
The RSUs are scheduled to vest with respect to one-third of the shares covered thereby annually. Other than in connection with death or
disability,vestingissubjecttotheindividual’scontinuedserviceasanEmployee,Boardmember,oradvisorthroughthevestingdate.However,
withrespecttotheRSUsgrantedin2021,providedthattheindividual'sservicehasterminatednoearlierthan12monthsafterthedateofgrant,in
theeventofa“qualifiedretirement,”anyoutstandingunvestedRSUswillremainoutstandingasiftheindividual’sservicehasnotterminatedand
willcontinuetovestinaccordancewiththeschedulesetforthinthenoticeofthegrant.Anindividual'sterminationofservicewillbeconsidered
a"qualifiedretirement"if(a)theindividualhascompletedatleast10yearsofcontinuousservice;(b)theindividual’sagepluscompletedyears
ofcontinuousserviceequalatleast65atthetimeoftheindividual’sterminationofservice;and(c)theindividualhasnotbeenterminatedfor
cause.
With respect to PBRSUs granted in 2021, the number of PBRSUs vesting on the vesting date will be interpolated based on the Company's
cumulativeAdjustedEarningsBeforeInterest,Taxes,Depreciation,andAmortization(EBITDA)fortheyears2022and2023andrangesfrom
10percentofgrantedPBRSUsto300percentofgrantedPBRSUs,onlyafteraminimumperformancelevelhasbeenachieved.However,inthe
event the Company's pre-tax return on invested capital exceeds the median (i.e., 50th percentile) return on invested capital of certain of the
Company'speergroupofdomesticmainlinecarrierssubjecttotheSecuritiesandExchangeCommission'sreportingrequirements,theminimum
numberofPBRSUsthatwillvest,asofthevestingdate,willbeequaltothegrantamounttimes50percent.WithrespecttoPBRSUsgrantedin
2021, provided that the individual's service has terminated no earlier than 12 months after the date of grant, in the event of a “qualified
retirement,”suchindividual’sPBRSUswillremainoutstandingasiftheindividual’sservicehasnotterminatedandwillotherwisebesettleable
in accordancewith the notice ofgrant and applicable termsand conditions; however, thenumber of shares receivedupon settlement will be
proratedbasedontheindividual’snumberofdaysofservicebetweenthedateofgrantandtheendoftheperformanceperiod.
Under the2019 and 2020grants, PBRSUs granted are subjectto the Company’sperformance with respectto a three-yearsimple average of
return on invested capital, after taxes and excluding special items, for the defined performance period and are also subject generally to the
individual’s continued employment or service. Under the 2019 and 2020 grants, the number of PBRSUs vesting on the vesting date will be
interpolatedbasedontheCompany'sreturnoninvestedcapitalperformanceandrangesfromzeroPBRSUsto200percentofgranted
109
NotestoConsolidatedFinancialStatements
PBRSUs.Forfeitureratesareestimatedat the timeof grant basedon historical actualsfor similar grants,andare trued-uptoactuals overthe
vestingperiod. TheCompanyrecognizes allexpense onastraight-line basisoverthe vestingperiod, with anychanges inexpensedue tothe
numberofPBRSUsexpectedtovestbeingmodifiedonaprospectivebasis.
AggregatedinformationregardingtheCompany’sRSUsandPBRSUsissummarizedbelow:
All Restricted Stock Units
Units (000)
Wtd. Average
Fair Value
(per share)
OutstandingDecember31,2018
1,342 $ 52.56
Granted 994 (a) 57.49
Vested (744) 42.42
Surrendered (47) 57.72
OutstandingDecember31,2019
1,545 57.65
Granted 1,235 (b) 56.89
Vested (715) 54.70
Surrendered (103) 58.04
OutstandingDecember31,2020,Unvested
1,962 57.81
Granted 1,463 (c) 46.58
Vested (790) 59.48
Surrendered (74) 51.36
OutstandingDecember31,2021,Unvested
2,561
51.81
(a)Includes387thousandPBRSUs
(b)Includes519thousandPBRSUs
(c)Includes466thousandPBRSUs
Inaddition,theCompanygrantedapproximately27thousandsharesofunrestrictedstockataweightedaveragegrantpriceof$60.39in2021,
approximately54 thousand sharesat aweighted average grant price of$29.60 in2020, and approximately31 thousandshares at a weighted
averagegrantpriceof$52.01in2019,tomembersofitsBoardofDirectors.
Aremainingbalanceofupto17millionsharesoftheCompany’scommonstockmaybeissuedpursuanttograntsunderthe2007EquityPlan.
Employee Stock Purchase Plan
UndertheAmendedandRestated1991EmployeeStockPurchasePlan("ESPP"),whichhasbeenapprovedbyShareholders,theCompanyis
authorizedtoissueuptoaremainingbalanceof5millionsharesoftheCompany’scommonstocktoEmployeesoftheCompany.Theseshares
maybeissuedatapriceequalto90percentofthemarketvalueattheendofeachmonthlypurchaseperiod.Commonstockpurchasesarepaid
forthroughperiodicpayrolldeductions.
110
NotestoConsolidatedFinancialStatements
ThefollowingtableprovidesinformationabouttheCompany’sESPPactivityduring2021,2020,and2019:
Employee Stock Purchase Plan
(a)
Total number Weighted-average
of shares Average fair value of each
purchased price paid purchase right
Year ended (inthousands) per share under the ESPP
December31,2019 821 $ 47.60 $ 5.29
December31,2020 1,386 $ 34.39 $ 3.82
December31,2021 1,083 $ 47.31 $ 5.19
(a)Theweighted-averagefairvalueofeachpurchaserightundertheESPPgrantedisequaltoatenpercentdiscountfromthemarketvalueoftheCommonStockatthe
endofeachmonthlypurchaseperiod.
Taxes
GrantsofRSUsresultinthecreationofadeferredtaxasset,whichisatemporarydifference,untilthetimetheRSUvests.Allexcesstaxbenefits
andtaxdeficienciesarerecordedthroughtheincomestatement.DuetothetreatmentofRSUsfortaxpurposes,theCompany’seffectivetaxrate
fromyeartoyearissubjecttovariability.
111
NotestoConsolidatedFinancialStatements
11. FINANCIAL DERIVATIVE INSTRUMENTS
Fuel Contracts

Airlineoperatorsareinherentlydependentuponenergytooperateand,therefore,areimpactedbychangesinjetfuelprices.Furthermore,jetfuel
andoiltypicallyrepresentsoneofthelargestoperatingexpensesforairlines.TheCompanyendeavorstoacquirejetfuelatthelowestpossible
costandtoreducevolatilityinoperatingexpensesthroughitsfuelhedgingprogram.AlthoughtheCompanymayperiodicallyenterintojetfuel
derivativesforshort-termtimeframes,becausejetfuelisnotwidelytradedonanorganizedfuturesexchange,therearelimitedopportunitiesto
hedgedirectlyinjetfuelfortimehorizonslongerthanapproximately24monthsintothefuture.However,theCompanyhasfoundthatfinancial
derivativeinstrumentsinothercommodities,suchasWestTexasIntermediate("WTI")crudeoil,Brentcrudeoil,andrefinedproducts,suchas
heatingoilandunleadedgasoline,canbeusefulindecreasingitsexposuretojetfuelpricevolatility.TheCompanydoesnotpurchaseorholdany
financialderivativeinstrumentsfortradingorspeculativepurposes.

TheCompanyhasusedfinancialderivativeinstrumentsforbothshort-termandlong-termtimeframes,andprimarilyusesamixtureofpurchased
calloptions,collarstructures(whichincludebothapurchasedcalloptionandasoldputoption),callspreads(whichincludeapurchasedcall
optionandasoldcalloption),putspreads(whichincludeapurchasedputoptionandasoldputoption),andfixedpriceswapagreementsinits
portfolio.Althoughtheuseofcollarstructuresandswapagreementscanreducetheoverallcostofhedging,theseinstrumentscarrymorerisk
thanpurchasedcalloptionsinthattheCompanycouldendupinaliabilitypositionwhenthecollarstructureorswapagreementsettles.Withthe
use of purchased calloptions and callspreads, theCompany cannot bein a liability position atsettlement, but doesnot havecoverage once
marketpricesfallbelowthestrikepriceofthepurchasedcalloption.
Forthepurposeofevaluatingitsnetcashspendforjetfuelandforforecastingitsfutureestimatedjetfuelexpense,theCompanyevaluatesits
hedgevolumesstrictlyfroman"economic"standpointandthusdoesnotconsiderwhetherthehedgeshavequalifiedorwillqualifyforhedge
accounting.TheCompanydefinesits"economic"hedgeasthenetvolumeoffuelderivativecontractsheld,includingtheimpactofpositionsthat
havebeenoffsetthroughsoldpositions,regardlessofwhetherthosecontractsqualifyforhedgeaccounting.ThelevelatwhichtheCompanyis
economically hedged for a particular period is also dependent on current market prices for that period, as well as the types of derivative
instruments held and the strike prices of those instruments. For example, the Company may enter into "out-of-the-money" option contracts
(including"catastrophic"protection), whichmay notgenerateintrinsic gains atsettlementifmarket pricesdonotrise abovethe optionstrike
price. Therefore, even though the Company may have an economic hedge in place for a particular period, that hedge may not produce any
hedginggainsatsettlementandmayevenproducehedginglossesdependingonmarketprices,thetypesofinstrumentsheld,andthestrikeprices
ofthoseinstruments.
AsofDecember31,2021,theCompanyhadfuelderivativeinstrumentsinplacetoprovidecoverageatvaryingpricelevels.Thefollowingtable
providesinformationabouttheCompany’svolumeoffuelhedgingonaneconomicbasis:
Maximum fuel hedged as of
December 31, 2021 Derivative underlying commodity type as of
Period (by year) (gallons in millions) (a) December 31, 2021
2022 1,220 WTIcrudeoilandBrentcrudeoil
2023 769 WTIcrudeoilandBrentcrudeoil
2024 358 WTIcrudeoil
(a)DuetothetypesofderivativesutilizedbytheCompanyanddifferentpricelevelsofthosecontracts,thesevolumesrepresentthemaximumeconomichedgeinplace
andmayvarysignificantlyasmarketpricesandtheCompany'sflightschedulefluctuate.
112
NotestoConsolidatedFinancialStatements
Uponproperqualification,theCompanyaccountsforitsfuelderivativeinstrumentsascashflowhedges.Qualificationisre-evaluatedquarterly,
andallperiodicchangesinfairvalueofthederivativesdesignatedashedgesarerecordedinAOCIuntiltheunderlyingjetfuelisconsumed.See
Note13.
Ifaderivativeceasestoqualifyforhedgeaccounting,anychangeinthefairvalueofderivativeinstrumentssincethelastreportingperiodwould
be recorded in Other(gains) losses,net, in theConsolidated Statementof Income (Loss)in the period of thechange; however,any amounts
previouslyrecordedtoAOCIwouldremainthereuntilsuchtimeastheoriginalforecastedtransactionoccurs,atwhichtimetheseamountswould
bereclassifiedtoFuelandoilexpense.Factorsthathaveandmaycontinuetoleadtothelossofhedgeaccountinginclude:significantfluctuation
inenergyprices,significantweathereventsaffectingrefinerycapacityandtheproductionofrefinedproducts,andthevolatilityofthedifferent
typesofproductstheCompanyusesinhedging.Increasedvolatilityinthesecommoditymarketsforanextendedperiodoftime,especiallyif
such volatility were to worsen, could cause the Company to lose hedge accounting altogether for the commodities used in its fuel hedging
program,whichwouldcreatefurthervolatilityintheCompany’sGAAPfinancialresults.However,eventhoughderivativesmaynotqualifyfor
hedge accounting, the Company continues to hold the instruments as management believes derivative instruments continue to afford the
Companytheopportunitytostabilizejetfuelcosts.WhentheCompanyhassoldderivativepositionsinordertoeffectively"close"oroffseta
derivativealreadyheldaspartofitsfuelderivativeinstrumentportfolio,anysubsequentchangesinfairvalueofthosepositionsaremarkedto
marketthroughearnings.Likewise,anychangesinfairvalueofthosepositionsthatwereoffsetbyenteringintothesoldpositionsandwerede-
designatedashedgesareconcurrentlymarkedtomarketthroughearnings.However,anychangesinvaluerelatedtohedgesthatweredeferredas
part of AOCI while designated as a hedge would remain until the originally forecasted transaction occurs. In a situation where it becomes
probablethatafuelhedgedforecastedtransactionwillnotoccur,anygainsand/orlossesthathavebeenrecordedtoAOCIwouldberequiredto
beimmediatelyreclassifiedintoearnings.
During2020and2021,asaresultofthedrasticdropindemandforairtravelduetotheCOVID-19pandemic,theCompany'sforecastfor2020
and 2021 fuel purchases and consumption was significantly reduced, causing the Company to be in an estimated "over-hedged" position for
second,third,andfourth quarter2020, and fullyear2021.Therefore,theCompanyde-designatedaportionofitsfuelhedgesrelatedtothese
periods,andhasreclassifiedapproximately$39millionand$6millioninlossesfromAOCIintoOther(gains)losses,net,during2020and2021,
respectively.TheCompanydidnothaveanysuchsituationsoccurduring2019.
Accounting pronouncements pertaining to derivative instruments and hedging are complex with stringent requirements, including the
documentation of a Company hedging strategy, statistical analysis to qualify a commodity for hedge accounting both on a historical and a
prospective basis, and strict contemporaneous documentation that is required at the time each hedge is designated by the Company. This
statisticalanalysisinvolvesutilizingregressionanalysesthatcomparechangesinthepriceofjetfueltochangesinthepricesofthecommodities
usedforhedgingpurposes.
AllcashflowsassociatedwithpurchasingandsellingfuelderivativesareclassifiedasOtheroperatingcashflowsintheConsolidatedStatement
ofCashFlows.ThefollowingtablepresentsthelocationofallassetsandliabilitiesassociatedwiththeCompany’sderivativeinstrumentswithin
theConsolidatedBalanceSheet:
113
NotestoConsolidatedFinancialStatements
Asset derivatives Liability derivatives
Balance Sheet Fair value at Fair value at Fair value at Fair value at
(in millions) location 12/31/2021 12/31/2020 12/31/2021 12/31/2020
Derivatives designated as hedges (a)
Fuelderivativecontracts(gross) Prepaidexpensesandother
currentassets $ 409 $ 9 $ — $ —
Fuelderivativecontracts(gross) Otherassets 287 121 — —
Interestratederivativecontracts Othernoncurrentliabilities — — 4 6
Total derivatives designated as hedges $ 696 $ 130 $ 4 $ 6
Derivatives not designated as hedges (a)
Fuelderivativecontracts(gross) Prepaidexpensesandother
currentassets $ — $ 4 $ — $ —
Total derivatives
$ 696 $ 134 $ 4 $ 6
(a)Representsthepositionofeachtradebeforeconsiderationofoffsettingpositionswitheachcounterpartyanddoesnotincludetheimpactofcashcollateraldeposits
providedtoorreceivedfromcounterparties.SeediscussionofcreditriskandcollateralfollowinginthisNote.
In addition, the Company had the following amounts associated with fuel derivative instruments and hedging activities in its Consolidated
BalanceSheet:
Balance Sheet December 31, December 31,
(in millions) location 2021 2020
Cashcollateraldepositsheldfromcounterpartiesforfuelcontracts-
current
OffsetagainstPrepaidexpensesandother
currentassets $ 80 $ 3
Cashcollateraldepositsheldfromcounterpartiesforfuelcontracts-
noncurrent OffsetagainstOtherassets 95 31
Receivablefromthirdpartiesforfuelcontracts Accountsandotherreceivables 8 —
All of the Company's fuel derivative instruments and interest rate swaps are subject to agreements that follow the netting guidance in the
applicable accountingstandards for derivativesand hedging. Thetypes of derivative instruments the Company hasdetermined are subjectto
nettingrequirementsintheaccompanyingConsolidatedBalanceSheetarethoseinwhichtheCompanypaysorreceivescashfortransactions
withthesamecounterpartyandinthesame currencyviaonenetpaymentorreceipt.ForcashcollateralheldbytheCompanyorprovidedto
counterparties,theCompanynetssuchamountsagainstthefairvalueoftheCompany'sderivativeportfoliobyeachcounterparty.TheCompany
haselectedtoutilizenettingforbothitsfuelderivativeinstrumentsandinterestrateswapagreementsandalsoclassifiessuchamountsaseither
currentornoncurrent,basedonthenetfairvaluepositionwitheachoftheCompany'scounterpartiesintheConsolidatedBalanceSheet.Ifitsfuel
derivativeinstruments are ina net assetpositionwith acounterparty,cash collateralamountsheld arefirstnetted againstcurrentoutstanding
derivativeassetamountsassociatedwiththatcounterpartyuntilthatbalanceiszero,andthenanyremainderisappliedagainstthefairvalueof
noncurrentoutstandingderivativeinstruments.AsofDecember31,2021,nocashcollateraldepositswereprovidedbyorheldbytheCompany
basedonitsoutstandinginterestrateswapagreements.
TheCompanyhasthefollowingrecognizedfinancialassetsandfinancialliabilitiesresultingfromthosetransactionsthatmeetthescopeofthe
disclosurerequirementsasnecessitatedbyapplicableaccountingguidanceforbalancesheetoffsetting:
114
NotestoConsolidatedFinancialStatements
Offsetting of derivative assets
(inmillions)
(i) (ii) (iii)=(i)+(ii) (i) (ii) (iii)=(i)+(ii)
December 31, 2021 December 31, 2020
Description
Balance Sheet
location
Gross amounts
of recognized
assets
Gross amounts
offset in the
Balance Sheet
Net amounts of
assets presented in
the Balance Sheet
Gross amounts
of recognized
assets
Gross amounts
offset in the
Balance Sheet
Net amounts of
assets presented in
the Balance Sheet
Fuelderivative
contracts
Prepaidexpensesand
othercurrentassets $ 409 $ (80) $ 329 $ 13 $ (3) $ 10
Fuelderivative
contracts Otherassets $ 287 $ (95) $ 192 (a) $ 121 $ (31) $ 90 (a)
(a)ThenetamountsofderivativeassetsandliabilitiesarereconciledtotheindividuallineitemamountspresentedintheConsolidatedBalanceSheetinNote16.
Offsetting of derivative liabilities
(inmillions)
(i) (ii) (iii)=(i)+(ii) (i) (ii) (iii)=(i)+(ii)
December 31, 2021 December 31, 2020
Description
Balance Sheet
location
Gross amounts
of recognized
liabilities
Gross amounts
offset in the
Balance Sheet
Net amounts of
liabilities presented in
the Balance Sheet
Gross amounts
of recognized
liabilities
Gross amounts
offset in the
Balance Sheet
Net amounts of
liabilities presented
in the Balance Sheet
Fuelderivative
contracts
Prepaidexpensesand
othercurrentassets $ 80 $ (80) $ — $ 3 $ (3) $ —
Fuelderivative
contracts Otherassets $ 95 $ (95) $ — (a) $ 31 $ (31) $ — (a)
Interestrate
derivativecontracts
Othernoncurrent
liabilities $ 4 $ — $ 4 $ 6 $ — $ 6
(a)ThenetamountsofderivativeassetsandliabilitiesarereconciledtotheindividuallineitemamountspresentedintheConsolidatedBalanceSheetinNote16.
115
NotestoConsolidatedFinancialStatements
ThefollowingtablespresenttheimpactofderivativeinstrumentsandtheirlocationwithintheConsolidatedStatementofIncome(Loss)forthe
yearsendedDecember31,2021and2020:
Location and amount recognized in income on cash flow and fair value hedging relationships
Year ended December 31, 2021 Year ended December 31, 2020
(in millions)
Fuel and oil
Other
(gains)/losses, net
Other
operating
expenses
Fuel and oil
Other
(gains)/losses,
net
Interest
expense
Total $ 4 $ 6 $ 6 $ 70 $ 39 $ 6
Lossoncashflowhedgingrelationships
Commoditycontracts:
AmountoflossreclassifiedfromAOCIintoincome 4 6 — 70 39 —
Interestcontracts:
AmountoflossreclassifiedfromAOCIintoincome — — 6 — — 1
Impactoffairvaluehedgingrelationships:
Interestcontracts:
Hedgeditems — — — — — 11
Derivativesdesignatedashedginginstruments — — — — — (6)
Derivatives designated and qualified in cash flow hedging relationships
(Gain) Loss recognized in AOCI on derivatives, net
of tax
Year ended
December 31,
(in millions)
2021 2020
Fuelderivativecontracts $ (461) $ 80
Interestratederivatives (2) 26
Total $ (463) $ 106
Derivatives not designated as hedges
(Gain) Loss recognized in income on
derivatives
Year ended
December 31,
Location of (gain) loss recognized in income
on derivatives
(in millions)
2021 2020
Fuelderivativecontracts $ (13) $ 1 Other(gains)losses,net
Interestratederivatives — 28 Other(gains)losses,net
Total $ (13) $ 29
The Companyalso recorded expenseassociated with premiumspaid for fuel derivative contracts that settled/expiredduring 2021, 2020,and
2019. Gainsand/or losses associated with fuel derivatives thatqualify for hedge accountingare ultimately recorded to Fuel and oilexpense.
Gainsand/orlossesassociatedwithfuelderivativesthatdonotqualifyforhedgeaccountingarerecordedtoOther(gains)andlosses,net.The
followingtablepresentstheimpact
116
NotestoConsolidatedFinancialStatements
of premiums paid for fuel derivative contracts and their location within the Consolidated Statement of Income (Loss) during the period the
contractsettles:
Premium expense recognized in income on derivatives
Year ended December 31,
Location of premium expense recognized in
income on derivatives
(in millions)
2021 2020 2019
Fuelderivativecontractsdesignatedashedges
$ 57 $ 64 $ 95
Fuelandoil
Fuelderivativecontractsnotdesignatedashedges $ 43 $ 34 $ — Other(gains)losses,net
Thefairvaluesofthederivativeinstruments,dependingonthetypeofinstrument,weredeterminedbytheuseofpresentvaluemethodsoroption
valuemodelswithassumptionsaboutcommoditypricesbasedonthoseobservedinunderlyingmarketsorprovidedbythirdparties.Includedin
theCompany’scumulativenetunrealizedgainsfromfuelhedgesasofDecember31,2021,recordedinAOCI,wereapproximately$234million
inunrealizedgains,netoftaxes,whichareexpectedtoberealizedinearningsduringthetwelvemonthssubsequenttoDecember31,2021.
Interest Rate Swaps
TheCompanyispartytocertaininterestrateswapagreementsthatareaccountedforascashflowhedges,andhasinthepastheldinterestrate
swap agreements that have qualified as fair value hedges, as defined in the applicable accounting guidance for derivative instruments and
hedging.SeveraloftheCompany'sinterestrateswapagreementsqualifyforthe"shortcut"or"criticaltermsmatch"methodsofaccountingfor
hedges,whichdictatethatthehedgeswereassumedtobeperfectlyeffectiveatorigination,and,thus,therewasnoineffectivenesstoberecorded
inearnings.
During2019,theCompanyhadenteredintoforward-startinginterestrateswapagreementsrelatedtoaseriesof12-8aircraftleasesforaircraft
originallyscheduledtobereceivedbetweenJuly2019andFebruary2020.TheseleasecontractsexposedtheCompanytointerestrateriskasthe
rentalpaymentsweresubjecttoadjustment and wouldbecome fixed basedon the 9-yearswap rate atthe time ofdelivery. Asaresult ofthe
grounding ofthe MAX aircraft,those deliveries weresignificantly delayed. Theseoriginal agreements weresubsequently terminated inthird
quarter2019,andtheCompanyenteredintonewinterestrateswapagreementsbasedonrevisedexpectedaircraftdeliverydates.Astherevised
deliverydateswerealsonotmet,thesesubsequentagreementsweresubsequentlyde-designatedashedgesandtheagreementsterminated.Allof
theassociatedaircrafthadbeendeliveredtotheCompanyasofSeptember30,2021.Asaresultofthediscontinuedhedges,theCompanyhad
cumulativelosses"frozen"inAOCIasofDecember31,2021,of$57million,whichwillberecognizedinearningsoverthe9-yearleasetermsof
eachaircraft.
For the Company’s interest rate swap agreements that do not qualify for the "shortcut" or "critical terms match" methods of accounting,
ineffectivenessisassessedateachreportingperiod.Ifhedgeaccountingisachieved,allperiodicchangesinfairvalueoftheinterestrateswaps
arerecordedinAOCI.
Thefairvaluesoftheinterestrateswapagreements,whichareadjustedregularly,havebeenaggregatedbycounterpartyforclassificationinthe
Consolidated Balance Sheet. Agreements totaling a liability of $4 million are cash flow hedges and are classified as components of Other
noncurrent liabilities. The corresponding offsetting adjustment related to the liability associated with the Company’s cash flow hedges is to
AOCI.SeeNote13.

Credit Risk and Collateral
117
NotestoConsolidatedFinancialStatements
Credit exposure related to fuel derivative instruments is represented by the fair value of contracts that are an asset to the Company at the
reporting date. At such times, these outstanding instruments expose the Company to credit loss in the event of nonperformance by the
counterparties to the agreements. However, the Company has not experienced any significant credit loss as a result of counterparty
nonperformanceinthepast.Tomanagecreditrisk,theCompanyselectsandperiodicallyreviewscounterpartiesbasedoncreditratings,limitsits
exposurewithrespecttoeachcounterparty,andmonitorsthemarketpositionofthefuelhedgingprogramanditsrelativemarketpositionwith
eachcounterparty.AtDecember31,2021,theCompanyhadagreementswithallofitsactivecounterpartiescontainingearlyterminationrights
and/or bilateral collateral provisions whereby security is requiredif market risk exposure exceeds aspecified threshold amount based on the
counterparty'screditrating.TheCompanyalsohadagreementswithcounterpartiesinwhichcashdepositsandlettersofcreditwererequiredto
be posted as collateral whenever the net fair value ofderivatives associatedwith those counterpartiesexceeds specific thresholds.In certain
cases,theCompanyhastheabilitytosubstituteamongthesedifferentformsofcollateralatitsdiscretion.
Thefollowingtableprovidesthefairvaluesoffuelderivatives,amountspostedascollateral,andapplicablecollateralpostingthresholdamounts
asofDecember31,2021,atwhichsuchpostingsaretriggered:
Counterparty (CP)
(inmillions) A B C D E F G Other (a) Total
Fairvalueoffuelderivatives $ 160 $ 90 $ 162 $ 78 $ 77 $ 55 $ 59 $ 15 $ 696
CashcollateralheldfromCP 175 — — — — — — — 175
Lettersofcredit(LC) — — — — — — — —
OptiontosubstituteLCforcash N/A N/A (b) (b) (b) N/A (b)
If credit rating is investment
grade, fair value of fuel
derivative level at which:
CashisprovidedtoCP >(100) >(50) >(75) >(125) >(40) >(65) >(100)
CashisreceivedfromCP >0(c) >150(c) >250(c) >125(c) >100(c) >70(c) >100(c)
If credit rating is non-investment
grade, fair value of fuel derivative
level at which:
CashisreceivedfromCP (d) (d) (d) (d) (d) (d) (d)
(a)Individualcounterpartieswithfairvalueoffuelderivatives<$10million.
(b)TheCompanyhastheoptiontosubstitutelettersofcreditfor100percentofcashcollateralrequirement.
(c)Thresholdsmayvarybasedonchangesincreditratingswithininvestmentgrade.
(d)Cashcollateralisprovidedat100percentoffairvalueoffuelderivativecontracts.
118
NotestoConsolidatedFinancialStatements
12. FAIR VALUE MEASUREMENTS
Accounting standards pertaining to fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in
measuringfairvalue.Thesetiersinclude:Level1,definedasobservableinputssuchasquotedpricesinactivemarkets;Level2,definedasinputs
otherthanquotedpricesinactivemarketsthatareeitherdirectlyorindirectlyobservable;andLevel3,definedasunobservableinputsinwhich
littleornomarketdataexists,thereforerequiringanentitytodevelopitsownassumptions.
AsofDecember31,2021,theCompanyheldcertainitemsthatarerequiredtobemeasuredatfairvalueonarecurringbasis.Theseincludedcash
equivalents, short-term investments (primarily treasury bills and certificates of deposit), interest rate derivative contracts, fuel derivative
contracts,andavailable-for-salesecurities.ThemajorityoftheCompany’sshort-terminvestmentsconsistofinstrumentsclassifiedasLevel1.
However,theCompanyhascertificatesofdeposit,commercialpaper,andtimedepositsthatareclassifiedasLevel2,duetothefactthatthefair
valuefor theseinstruments is determinedutilizing observableinputsin non-activemarkets. Equitysecuritiesprimarily consistof investments
withreadilydeterminablemarketvaluesassociatedwiththeCompany’sexcessbenefitplan.
TheCompany’sfuelandinterestratederivativeinstrumentsconsistofover-the-countercontracts,whicharenottradedonapublicexchange.
Fuelderivativeinstrumentscurrentlyconsistsolelyofoptioncontracts,whereasinterestratederivativesconsistsolelyofswapagreements.See
Note11forfurtherinformationontheCompany’sderivativeinstrumentsandhedgingactivities.Thefairvaluesofswapcontractsaredetermined
basedoninputsthatarereadilyavailableinpublicmarketsorcanbederivedfrominformationavailableinpubliclyquotedmarkets.Therefore,
the Company has categorized these swap contracts as Level 2. The Company’s Treasury Department, which reports to the Chief Financial
Officer, determines thevalue of option contracts utilizing anoption pricing model based on inputsthat are either readily available in public
markets,canbederivedfrominformationavailableinpubliclyquotedmarkets,orareprovidedbyfinancialinstitutionsthattradethesecontracts.
The option pricing model used by the Company is an industry standard model for valuing options and is a similar model used by the
broker/dealer community(i.e., the Company’scounterparties). The inputsto this option pricing model are theoption strike price,underlying
price,riskfreerateofinterest,timetoexpiration,andvolatility.Becausecertaininputsusedtodeterminethefairvalueofoptioncontractsare
unobservable(principallyimpliedvolatility),theCompanyhascategorizedtheseoptioncontractsasLevel3.Volatilityinformationisobtained
fromexternal sources, but is analyzedby theCompany forreasonableness andcompared tosimilar information received from otherexternal
sources.Thefairvalueofoptioncontractsconsidersboththeintrinsicvalueandanyremainingtimevalueassociatedwiththosederivativesthat
havenotyetsettled.TheCompanyalsoconsiderscounterpartycreditriskanditsowncreditriskinitsdeterminationofallestimatedfairvalues.
TovalidatethereasonablenessoftheCompany’soptionpricingmodel,onamonthlybasis,theCompanycomparesitsoptionvaluationstothird
party valuations. If any significant differences were to be noted, they would be researched in order to determine the reason. However,
historically,nosignificantdifferenceshavebeennoted.TheCompanyhasconsistentlyappliedthesevaluationtechniquesinallperiodspresented
andbelievesithasobtainedthemostaccurateinformationavailableforthetypesofderivativecontractsitholds.
IncludedinOtheravailable-for-salesecuritiesaretheCompany'sinvestmentsassociatedwithitsdeferredcompensationplans,whichconsistof
mutualfunds thatarepublicly tradedandfor whichmarket pricesarereadily available.Theseplans arenon-qualified deferredcompensation
plansdesignedtoholdcontributionsinexcessoflimitsestablishedbytheInternalRevenueCodeof1986,asamended.Thedistributiontiming
andpaymentamountsundertheseplansaremadebasedontheparticipant'sdistributionelectionandplanbalance.Assetsrelatedtothefunded
portions ofthe deferred compensation plans are held in a rabbi trust, and the Companyremains liable to theseparticipants for the unfunded
portionoftheplans.TheCompanyrecordschangesinthefairvalueofplanobligationsandplanassets,whichnettozero,withintheSalaries,
wages,andbenefitslineandOther(gains)lossesline,respectively,oftheConsolidatedStatementofIncome(Loss).
119
NotestoConsolidatedFinancialStatements
ThefollowingtablespresenttheCompany’sassetsandliabilitiesthataremeasuredatfairvalueonarecurringbasisatDecember31,2021,and
December31,2020:
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, 2021 (Level 1) (Level 2) (Level 3)
Assets (in millions)
Cashequivalents:
Cashequivalents(a) $ 12,340 $ 12,340 $ — $ —
Commercialpaper 90 — 90 —
Timedeposits 50 — 50 —
Short-terminvestments:
Treasurybills 2,399 2,399 — —
Timedeposits 625 — 625 —
Fuelderivatives:
Optioncontracts(b) 696 — — 696
EquitySecurities 288 288 — —
Total assets
$ 16,488 $ 15,027 $ 765 $ 696
Liabilities
Interestratederivatives(seeNote11) $ (4) $ — $ (4) $ —
(a)Cashequivalentsareprimarilycomposedofmoneymarketinvestments.
(b)IntheConsolidatedBalanceSheetamountsarepresentedasanasset.SeeNote11.
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, 2020 (Level 1) (Level 2) (Level 3)
Assets (inmillions)
Cashequivalents:
Cashequivalents(a) $ 10,663 $ 10,663 $ — $ —
Commercialpaper 90 — 90 —
Certificatesofdeposit 10 — 10 —
Timedeposits 300 — 300 —
Short-terminvestments:
Treasurybills 1,800 1,800 — —
Certificatesofdeposit 46 — 46 —
Timedeposits 425 — 425 —
Fuelderivatives:
Optioncontracts(b) 134 — — 134
EquitySecurities 259 259 — —
Total assets
$ 13,727 $ 12,722 $ 871 $ 134
Liabilities
Interestratederivatives(seeNote11) $ (6) $ — $ (6) $ —
(a)Cashequivalentsareprimarilycomposedofmoneymarketinvestments.
120
NotestoConsolidatedFinancialStatements
(b)IntheConsolidatedBalanceSheetamountsarepresentedasanasset.SeeNote11.
TheCompanydidnothaveanymaterialassetsorliabilitiesmeasuredatfairvalueonanonrecurringbasisasofDecember31,2021or2020.The
followingtablespresenttheCompany’sactivityforitemsmeasuredatfairvalueonarecurringbasisusingsignificantunobservableinputs(Level
3)for2021and2020:
Fair value measurements using significant unobservable inputs (Level 3)
(inmillions) Fuel derivatives
BalanceatDecember31,2020
$ 134
Totalgainsfortheperiod
Includedinearnings 7 (a)
Includedinothercomprehensiveincome 609
Purchases 41 (b)
Sales (7) (b)
Settlements (88)
BalanceatDecember31,2021
$ 696
Theamountoftotalgainsfortheperiodincludedinothercomprehensiveincomeattributabletothe
changeinunrealizedgainsorlossesrelatingtoassetsstillheldatDecember31,2021
$ 541
(a)IncludedinOther(gains)losses,net,withintheConsolidatedStatementofIncome(Loss).
(b)Thepurchaseandsaleoffuelderivativesisrecordedgrossbasedonthestructureofthederivativeinstrumentandwhetheracontractwithmultiplederivativeswas
purchasedasasingleinstrumentorseparateinstruments.
Fair value measurements using significant unobservable inputs (Level 3)
(inmillions) Fuel derivatives
BalanceatDecember31,2019 $ 110
Totallossesfortheperiod
Includedinearnings (40) (a)
Includedinothercomprehensiveloss (65)
Purchases 129 (b)
BalanceatDecember31,2020
$ 134
Theamountoftotallossesfortheperiodincludedinearningsattributabletothechangeinunrealizedgainsor
lossesrelatingtoassetsstillheldatDecember31,2020
$ (15)
(a)
Theamountoftotallossesfortheperiodincludedinothercomprehensivelossattributabletothechangein
unrealizedgainsorlossesrelatingtoassetsstillheldatDecember31,2020
$ (41)
(a)IncludedinOther(gains)losses,net,withintheConsolidatedStatementofIncome(Loss).
(b) The purchase of fuel derivatives is recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives was
purchasedasasingleinstrumentorseparateinstruments.
ThesignificantunobservableinputusedinthefairvaluemeasurementoftheCompany’sderivativeoptioncontractsisimpliedvolatility.Holding
otherinputsconstant,anincrease(decrease)inimpliedvolatilitywouldhaveresultedinahigher(lower)fairvaluemeasurement,respectively,
fortheCompany’sderivativeoptioncontracts.
121
NotestoConsolidatedFinancialStatements
ThefollowingtablepresentsarangeandweightedaverageoftheunobservableinputsutilizedinthefairvaluemeasurementsoftheCompany’s
fuelderivativesclassifiedasLevel3atDecember31,2021:
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 2022 21-53% 41 %
2023 29-40% 34 %
2024 26-33% 28 %
(a)Impliedvolatilityweightedbythenotionalamount(barrelsoffuel)thatwillsettleinrespectiveperiod.

ThecarryingamountsandestimatedfairvaluesoftheCompany’sshort-termandlong-termdebt(includingcurrentmaturities),aswellasthe
applicablefairvaluehierarchytier,atDecember31,2021,arepresentedinthetablebelow.ThefairvaluesoftheCompany’spubliclyheldlong-
termdebtaredeterminedbasedoninputsthatarereadilyavailableinpublicmarketsorcanbederivedfrominformationavailableinpublicly
quotedmarkets;therefore,theCompanyhascategorizedtheseagreementsasLevel2.AllprivatelyhelddebtagreementsarecategorizedasLevel
3.TheCompanyhasdeterminedtheestimatedfairvalueofthisdebttobeLevel3,ascertaininputsusedtodeterminethefairvalueofthese
agreementsareunobservable.TheCompanyutilizesindicativepricingfromcounterpartiesandadiscountedcashflowmethodtoestimatethefair
valueoftheLevel3items.
(in millions) Carrying value Estimated fair value Fair value level hierarchy
2.75%Notesdue2022 $ 300 $ 305 Level2
PassThroughCertificatesdue2022-6.24% 71 73 Level2
4.75%Notesdue2023 1,250 1,311 Level2
1.25%ConvertibleNotesdue2025 1,842 2,802 Level2
5.25%Notesdue2025 1,550 1,724 Level2
3.00%Notesdue2026 300 314 Level2
3.45%Notesdue2027 300 321 Level2
5.125%Notesdue2027 2,000 2,294 Level2
7.375%Debenturesdue2027 116 140 Level2
2.625%Notesdue2030 500 499 Level2
1.000%PayrollSupportProgramLoandueApril2030 976 958 Level3
1.000%PayrollSupportProgramLoandueJanuary2031 566 548 Level3
1.000%PayrollSupportProgramLoandueApril2031 526 507 Level3
122
NotestoConsolidatedFinancialStatements
13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Comprehensiveincome (loss)includes changes in the fair value of certain financialderivative instrumentsthat qualifyfor hedgeaccounting,
unrealizedgainsandlossesoncertaininvestments,andactuarialgains/lossesarisingfromtheCompany’spostretirementbenefitobligation.A
rollforwardoftheamountsincludedinAOCI,netoftaxes,isshownbelowfor2021and2020:
(in millions) Fuel derivatives
Interest rate
derivatives
Defined benefit
plan items Other
Deferred tax
impact
Accumulated other
comprehensive income
(loss)
BalanceatDecember31,2019 $ (125) $ (33) $ 20 $ 59 $ 18 $ (61)
Changesinfairvalue (103) (34) (63) 32 39 (129)
Reclassificationtoearnings 109 1 — — (25) 85
BalanceatDecember31,2020
$ (119) $ (66) $ (43) $ 91 $ 32 $ (105)
CumulativeeffectofadoptingASU2016-01
asofJanuary1,2018
— — — (31) 11 (20)
Changesinfairvalue 601 3 109 — (166) 547
Reclassificationtoearnings 10 6 — (60) (a) 10 (34)
BalanceatDecember31,2021
$ 492 $ (57) $ 66 $ — $ (113) $ 388
(a)InvestmentgainsrelatedtopriorperiodsthatwerereclassifiedfromAOCIintoOther(gains)losses,net.SeeNote1.
ThefollowingtableillustratesthesignificantamountsreclassifiedoutofeachcomponentofAOCIfortheyearendedDecember31,2021:
Year ended December 31, 2021
(in millions)
Amounts reclassified from
AOCI
Affected line item in the
Consolidated Statement of Income
(Loss)AOCI components
Unrealizedlossonfuelderivativeinstruments $ 4 Fuelandoilexpense
6 Other(gains)losses,net
2 Less:Taxexpense
$ 8 Netoftax
Unrealizedlossoninterestratederivativeinstruments 6 Otheroperatingexpenses
1 Less:Taxexpense
$ 5 Netoftax
Unrealizedgainondeferredcompensationplaninvestment $ (60) Other(gains)losses,net
(13) Less:Taxexpense
$ (47) Netoftax
Totalreclassificationsfortheperiod
$ (34)
Netoftax
14. EMPLOYEE RETIREMENT PLANS
Defined Contribution Plans
Southwest has defined contribution plans covering substantially all of its Employees. Contributions under all defined contribution plans are
primarilybasedonEmployeecompensationand performance ofthe Company.TheCompanysponsorsEmployeesavingsplansundersection
401(k)oftheInternalRevenueCodeof1986,asamended.TheSouthwestAirlinesCo.401(k)PlanincludesCompanymatchingcontributions
andtheSouthwest
123
NotestoConsolidatedFinancialStatements
Airlines Pilots Retirement Saving Plan has non-elective Company contributions. In addition, the Southwest Airlines Co. ProfitSharing Plan
(ProfitSharingPlan)isadefinedcontributionplantowhichtheCompanymaycontributeapercentageofitseligiblepre-taxprofits,asdefined,
onanannualbasis.NoEmployeecontributionstotheProfitSharingPlanareallowed.
Amounts associated withthe Company's defined contribution plans expensed in 2021, 2020, and2019, reflected as acomponent of Salaries,
wages,andbenefits,were$749million,$561million,and$1.2billion,respectively.
Postretirement Benefit Plans
TheCompanyprovidespostretirementbenefitstoqualifiedretireesintheformofmedicalanddentalcoverage.Employeesmustmeetminimum
levelsofserviceandagerequirementsassetforthbytheCompany,orasspecifiedincollective-bargainingagreementswithspecificworkgroups.
Employeesmeetingtheserequirements,asdefined,mayuseaccruedunusedsicktimetopayformedicalanddentalpremiumsfromtheageof
retirementuntilage65.
Thefollowingtableshowsthechangeintheaccumulatedpostretirementbenefitobligation("APBO")fortheyearsendedDecember31,2021
and2020:
(in millions) 2021 2020
APBOatbeginningofperiod $ 428 $ 288
Servicecost 25 22
Interestcost 10 10
Benefitspaid (24) (10)
Actuarial(gain)/loss (109) 63
Curtailment — 53
Specialterminationbenefits — 2
APBOatendofperiod
$ 330 $ 428
During2021, theCompany recordeda $109million actuarialgain asa decreaseto theAPBO withan offsetto AOCI.This actuarialgain is
reflectedabove andresulted fromchangesin certainkey assumptionsused todeterminethe Company’syear-end obligation.The assumption
changes that resulted in the largest portion of the actuarial gain were the expected participation and retirement rates in the Plan for future
qualifyingretirees,whichreflectlowerexpectationsastoutilizationofbenefitsbasedonrecenthistory,combinedwithcensusdataandother
demographicchanges.
Allplansareunfunded,andbenefitsarepaidastheybecomedue.Estimatedfuturebenefitpaymentsexpectedtobepaidare$21millionin2022,
$20millionin2023,$19millionin2024,$20millionin2025,$21millionin2026,and$115millionforthenextfiveyearsthereafter.
ThefollowingtablereconcilesthefundedstatusoftheplanstotheaccruedpostretirementbenefitcostrecognizedinOthernon-currentliabilities
ontheCompany’sConsolidatedBalanceSheetatDecember31,2021and2020.
(in millions) 2021 2020
Fundedstatus $ (330) $ (428)
Unrecognizednetactuarial(gain)loss (69) 40
Unrecognizedpriorservicecost 3 3
Accumulatedothercomprehensiveincome(loss) 66 (43)
ConsolidatedBalanceSheetliability
$ (330) $ (428)
124
NotestoConsolidatedFinancialStatements
TheconsolidatedperiodicpostretirementbenefitcostfortheyearsendedDecember31,2021,2020,and2019,includedthefollowing:
(in millions) 2021 2020 2019
Servicecost $ 25 $ 22 $ 17
Interestcost 10 10 10
Amortizationofpriorservicecost — 1 1
Amortizationofnetgain — — (2)
Curtailment — 53 —
Specialterminationbenefits — 2 —
Netperiodicpostretirementbenefitcost
$ 35 $ 88 $ 26
ServicecostandSpecialterminationbenefitsarerecognizedwithinSalaries,wages,andbenefitsexpense,andallothercostsarerecognizedin
Other (gains) losses, net in the Consolidated Statement of Income (Loss). Unrecognized prior service cost is expensed using a straight-line
amortizationofthecostovertheaveragefutureserviceofEmployeesexpectedtoreceivebenefitsundertheplans.Actuarialgainsareamortized
utilizingtheminimumamortizationmethod.ThefollowingactuarialassumptionswereusedtoaccountfortheCompany’spostretirementbenefit
plansatDecember31,2021,2020,and2019:
2021 2020 2019
Weighted-averagediscountrate
2.90% 2.45% 3.30%
Assumedhealthcarecosttrendrate(a) 6.25% 6.75% 7.13%
(a) Theassumedhealthcarecosttrendrateisexpectedtobe6.25%for2022,thendeclinegraduallyto4.75%by2028andremainlevelthereafter.
The selection of adiscount rate ismade annuallyand is selectedby the Company based uponcomparison of theexpected futurecash flows
associated with the Company’s future payments under its consolidated postretirement obligations to a yield curve created using high quality
bondsthatcloselymatchthoseexpectedfuturecashflows.Thisrateincreasedduring2021duetomarketconditions.Theassumedhealthcare
trendrateisalsoreviewedatleastannuallyandisdeterminedbaseduponbothhistoricalexperiencewiththeCompany’shealthcarebenefitspaid
andexpectationsofhowthosetrendsmayormaynotchangeinfutureyears.
125
NotestoConsolidatedFinancialStatements
15. INCOME TAXES
Deferredincome taxesreflect thenet taxeffects oftemporary differencesbetween thecarrying amountsof assetsand liabilities for financial
reportingpurposesandtheamountsusedforincometaxpurposes.ThecomponentsofdeferredtaxassetsandliabilitiesatDecember31,2021
and2020,areasfollows:
(in millions) 2021 2020
DEFERRED TAX LIABILITIES:
Accelerateddepreciation $ 2,883 $ 2,939
Prepaidinsurance 189 190
Operatingleaseright-of-useassets 356 423
Other 188 67
Totaldeferredtaxliabilities 3,616 3,619
DEFERRED TAX ASSETS:
Accruedemployeebenefits 341 491
Rapidrewardsloyaltyliability 636 632
Operatingleaseliabilities 371 443
Customertravelcredits 305 117
Constructionobligation — 72
Netoperatinglossesandtaxcredits 36 (a) 60
Other 157 170
Totaldeferredtaxassets 1,846 1,985
Netdeferredtaxliability
$ 1,770 $ 1,634
(a)AtDecember31,2021and2020,theCompanyhadapproximately$44millionand$65million,respectively,ofstatenetoperatinglosscarryforwards(taxeffected)
toreducefuturestatetaxableincome.Thesestatenetoperatinglosscarryforwardswillexpireinyears2025-2040ifunused.
Theprovision(benefit)forincometaxesiscomposedofthefollowing:
(in millions) 2021 2020 2019
CURRENT:
Federal(a) $ 337 $ (273) $ 610
State 33 (5) 102
Changeinfederalstatutoryrate(b) (2) (188) —
Totalcurrent
368 (466) 712
DEFERRED:
Federal(a) (43) (589) (18)
State 2 (76) (6)
Statenetoperatinglosses 21 (51) —
Changeinfederalstatutorytaxrate(c) — — (31)
Totaldeferred
(20) (716) (55)
$ 348 $ (1,182) $ 657
(a)TheCARESActallowsentitiestocarryback2020lossestopriorperiodsofuptofiveyears,andclaimrefundsoffederaltaxespaid.TheCompanyhasfiledthe
refundclaimwiththeIRS,andexpectsarefundof$472millioninthefirstsixmonthsof2022.
(b)Thebenefitisrepresentativeoftheexcessrefundgeneratedastheresultofcarryingthe2020lossesbacktoaperiodwhenthefederalstatutorytaxrate was35
percentasopposedtothecurrenttaxrateof21percent.
(c)TheTaxCutsandJobsActwasenactedinDecember2017,whichreducedtheU.S.federalcorporatetaxratefromthepreviousrateof35percentto21percent.
126
NotestoConsolidatedFinancialStatements
TheeffectivetaxrateonIncome(loss)beforeincometaxesdifferedfromthefederalincometaxstatutoryrateforthefollowingreasons:
(in millions) 2021 2020 2019
TaxatstatutoryU.S.taxrates $ 278 $ (894) $ 621
Stateincometaxes,netoffederalbenefit 45 (115) 76
Changeinfederalstatutorytaxrate (2) (188) (a) (31) (b)
Other,net 27 15 (9)
Totalincometaxprovision(benefit)
$ 348 $ (1,182) $ 657
(a)Thebenefitisrepresentativeoftheexcessrefundgeneratedastheresultofcarryingthe2020lossesbacktoaperiodwhenthefederalstatutorytaxrate was35
percentasopposedtothecurrenttaxrateof21percent.
(b)TheTaxCutsandJobsActwasenactedinDecember2017,whichreducedtheU.S.federalcorporatetaxratefromthepreviousrateof35percentto21percent.
TheonlyperiodssubjecttoexaminationfortheCompany’sfederaltaxreturnarethe2020and2021taxyears.TheCompanyisalsosubjectto
variousexaminationsfromstateandlocalincometaxjurisdictionsintheordinarycourseofbusiness.Theseexaminationsarenotexpectedto
haveamaterialeffectonthefinancialresultsoftheCompany.
16. SUPPLEMENTAL FINANCIAL INFORMATION
(in millions) December 31, 2021 December 31, 2020
Tradereceivables $ 58 $ 46
Creditcardreceivables 83 35
Businesspartnersandothersuppliers 432 274
Taxesreceivable(a) 699 740
Other 85 35
Accountsandotherreceivables(b)
$ 1,357 $ 1,130
(in millions) December 31, 2021 December 31, 2020
Derivativecontracts $ 192 $ 90
Intangibleassets,net 295 295
Other 395 337
Otherassets
$ 882 $ 722
(in millions) December 31, 2021 December 31, 2020
Accountspayabletrade $ 156 $ 111
Salariespayable 287 201
Taxespayableexcludingincometaxes 200 49
Aircraftmaintenancepayable 42 95
Fuelpayable 170 66
Otherpayable 427 409
Accountspayable
$ 1,282 $ 931
127
NotestoConsolidatedFinancialStatements
(in millions) December 31, 2021 December 31, 2020
ExtendedEmergencyTimeOff $ 3 $ 393
VoluntarySeparationProgram 92 143
Profitsharingandsavingsplans 262 25
Vendorprepayment(b) — 600
Vacationpay 451 436
Health 152 111
Workerscompensation 141 161
Propertyandincometaxes 65 84
Interest 46 49
Deferredsupplierpayments(c) 80 —
Other 332 257
Accruedliabilities
$ 1,624 $ 2,259
(in millions) December 31, 2021 December 31, 2020
ExtendedEmergencyTimeOff $ — $ 57
VoluntarySeparationProgram 233 321
Postretirementobligation 330 428
Otherdeferredcompensation 369 353
Other 292 88
Othernoncurrentliabilities
$ 1,224 $ 1,247
(a)Thisamountincludesapproximately$472millionand$470million,asofDecember31,2021and2020,respectively,associatedwithasignificantcashtaxrefund
expectedasaresultoftheCARESActallowingentitiestocarryback2020lossestopriorperiodsofuptofiveyears,andclaimrefundsoffederaltaxespaid.These
amountsalsoincludesexcisetaxesremittedtotaxingauthoritiesforwhichthesubsequentflightswerecanceledbyCustomers,resultinginamountsduebacktothe
Company.SeeNote15forfurtherinformation.
(b)Infourthquarter2020,theCompanyreceiveda$600millionprepaymentfromChaseforRapidRewardspointsthatweresubsequentlyissuedtoMembersduring
thefirsthalfof2021,basedoncardholderactivityontheVisacreditcardassociatedwithitsloyaltyprogram.ThisresultedinareductionincashreceiptsfromChase
during2021,whichwereclassifiedwithinAccountsandotherreceivablesintheConsolidatedStatementofCashFlows.
(c)Representsamountsowedforaircraftdeliveriesreceivedthatwillberelievedviafuturepaymentstosupplier.SeeNote17forfurtherinformation.
Forfurtherinformationonfuelderivativeandinterestratederivativecontracts,seeNote11.
Other Operating Expenses
Other operating expenses consist of aircraft rentals, distribution costs, advertising expenses, personnel expenses, professional fees, and other
operatingcosts,noneofwhichindividuallyexceed10percentofOperatingexpenses.
17. BOEING 737 MAX AIRCRAFT GROUNDING AND RETURN TO SERVICE
OnMarch13,2019,theFAAissuedanemergencyorderforallU.S.airlinestogroundallMAXaircraft.TheCompanyimmediatelycomplied
withtheorderandgroundedall34MAXaircraftinitsfleet.OnNovember18,2020,theFAArescindedtheemergencyorderandissuedofficial
requirementstoenableU.S.airlinestoreturnthe
128
NotestoConsolidatedFinancialStatements
MAXto service. TheCompanyreturned theMAXto revenueserviceon March 11,2021,after theCompanymet allFAArequirements and
Pilotsreceivedupdated,MAX-relatedtraining.
ThemostsignificantfinancialimpactsofthegroundingresultingfromtheFAA'semergencyorderwerethelostrevenues,operatingincome,and
operatingcashflows,anddelayedcapitalexpenditures,directlyassociatedwiththeCompany'sgroundedMAXfleetandothernewaircraftthat
werenotabletobedelivered.
During2019,theCompanyenteredintoaMemorandumofUnderstandingwithBoeingtocompensateSouthwestforestimatedfinancialdamages
incurred during2019 related to the groundingof the MAX. Theterms of the agreement are confidential, but were intendedto provide for a
substantialportionoftheCompany’sfinancialdamagesassociatedwithboththe34MAXaircraftthatweregroundedasofMarch13,2019,as
wellasthe41additionalMAXaircrafttheCompanywasscheduledtoreceive(28ownedMAXfromBoeingand13leasedMAXfromthird
parties)fromMarch13,2019throughDecember31,2019.Inaccordancewithapplicableaccountingprinciples,theCompanywillaccountfor
substantially all of the proceeds received from Boeing as a reduction in cost basis spread across both the existing 31 owned MAX in the
Company’sfleetatthetime,andtheCompany’sfuturefirmaircraftdeliveriesasofthedateoftheagreement.Atotalof$428millioninproceeds
receivedincashfromBoeingarereflectedwithinInvestingActivitiesintheConsolidatedStatementofCashFlowsfortheyearendedDecember
31,2020.NomaterialfinancialimpactsoftheagreementwererealizedintheCompany’searningsduringtheyearsendedDecember31,2019,
2020,or2021.
During December 2020, the Company entered into an agreement with Boeing to compensate the Company for estimated financial damages
incurredduring2020relatedtothegroundingoftheMAX.Thetermsoftheagreementareconfidential,butthecompensationisintheformof
credit memostaken against future paymentsdue to Boeing asaircraft have been andare delivered in accordancewith the amended delivery
schedule, or as future progress payments are due. In accordance with applicable accounting principles, the Company has accounted for
substantially all of the compensation received from Boeing as a reduction in cost basis spread across both the existing owned MAX in the
Company’sfleet,andtheCompany’sfuturefirmaircraftdeliveriesfromBoeingasofthedateoftheagreement.Nomaterialfinancialimpactsof
theagreementwererealizedintheCompany’searningsfortheyearendedDecember31,2021.
129
NotestoConsolidatedFinancialStatements
Report of Independent Registered Public Accounting Firm
TotheShareholdersandtheBoardofDirectorsofSouthwestAirlinesCo.
Opinion on the Financial Statements
WehaveauditedtheaccompanyingconsolidatedbalancesheetsofSouthwestAirlinesCo.(theCompany)asofDecember31,2021and2020,
the relatedconsolidated statements ofincome (loss), comprehensive income(loss), stockholders’ equityand cash flows for each of thethree
yearsintheperiodendedDecember31,2021,andtherelatednotes(collectivelyreferredtoasthe“financialstatements”).Inouropinion,the
financialstatementspresentfairly,inallmaterialrespects,theconsolidatedfinancialpositionoftheCompanyatDecember31,2021and2020,
andtheresultsofitsoperationsanditscashflowsforeachofthethreeyearsintheperiodendedDecember31,2021,inconformitywithU.S.
generallyacceptedaccountingprinciples.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated
February4,2022expressedanunqualifiedopinionthereon.
Basis for Opinion
ThesefinancialstatementsaretheresponsibilityoftheCompany’smanagement.OurresponsibilityistoexpressanopinionontheCompany’s
financialstatementsbasedonouraudits.WeareapublicaccountingfirmregisteredwiththePCAOBandarerequiredtobeindependentwith
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
ExchangeCommissionandthePCAOB.
WeconductedourauditsinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanandperformtheaudittoobtain
reasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement,whetherduetoerrororfraud.Ourauditsincluded
performingprocedures toassess the risksof materialmisstatementof thefinancial statements,whetherdue toerror orfraud,and performing
proceduresthatrespondtothoserisks.Suchproceduresincludedexamining,onatestbasis,evidenceregardingtheamountsanddisclosuresin
thefinancialstatements.Ourauditsalsoincludedevaluatingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,as
wellasevaluatingtheoverallpresentationofthefinancialstatements.Webelievethatourauditsprovideareasonablebasisforouropinion.
Critical audit matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were
communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the
financialstatementsand(2)involvedourespeciallychallenging,subjective,orcomplexjudgments.Thecommunicationofcriticalauditmatters
doesnotalterinanywayouropiniononthefinancialstatements,takenasawhole,andwearenot,bycommunicatingthecriticalauditmatters
below,providingseparateopinionsonthecriticalauditmattersorontheaccountsordisclosurestowhichtheyrelate.
130
NotestoConsolidatedFinancialStatements
Valuation of financial derivative instruments
Description of the Matter
As explained in Notes 1, 11, and 12 to the financial statements, the Company’s fuel derivative instruments consist of over-the-counter
contracts,whicharenottradedonapublicexchangeandrequiretheCompanytoestimatetheirfairvalues.Thefairvalueoffueloption
contracts are determined using optionpricing models with inputs aboutcommodity prices, strike prices, risk-free interest rates,term to
expirationandvolatility.Becausecertaininputsusedtodeterminethefairvalueofoptioncontractsareunobservable(principallyimplied
volatility), the Company has categorized these option contracts as Level 3 fair value measures. The Company analyzes volatility
informationforreasonablenessandcomparesittosimilarinformationreceivedfromexternalsourcesandlimitedobservablemarketdata.
Thefairvalueoftheoptioncontractsconsidersboththeintrinsicvalueandanyremainingtimevalueassociatedwiththederivativesthat
have not settled. Auditingthe fair valuemeasurement of fueloption contracts is complexand requires significantjudgment in orderto
evaluatetheapplicationoftheoptionpricingmodelandevaluatingthereasonablenessoftheunobservableinputofimpliedvolatilityused
inthefairvaluemeasurementoftheCompany’sfueloptioncontracts.
How We Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process to
calculatethefairvalueoffueloptionderivativecontracts,includingcontrolsthatrelatedtothevolatilityinput.
Weinvolvedinternal valuation specialists toassist in the testing ofthe significant inputsin the option pricing modelby comparing the
marketdatainputs,includingvolatility,toexternalsources.Withthesupportofourspecialists,wealsotestedtheapplication ofandthe
computationalaccuracyoftheoptionpricingmodelbyperformingindependentcorroborativecalculations.Additionally,wecomparedthe
Company’s fuel option contract valuations to the counterparty valuations, which were independently obtained as part of our audit
procedures.
Air traffic liability breakage
Description of the Matter
AsexplainedinNotes1and6,ticketssold,butnotyetused,areinitiallydeferredasAirtrafficliability,andarerecognizedinpassenger
revenuewhentransportationisprovided.TheCompanyestimatestheamountofticketsthatexpireunusedandrecognizessuchamountsin
Passengerrevenue oncethescheduled flightdatepasses inproportiontothepattern offlightstaken bythecustomers. During2020,the
Company experienced a significantly higher number of customer-driven flight cancellations related to the COVID-19 pandemic, and
extendedtheexpiration date for certain travel funds toSeptember7,2022. At December 31,2021,$1.3billion of these extended funds
remainedavailableforcustomerstouseonfuturetravel.
Auditing the Company’s breakage estimates on these extended funds requires judgment, as the Company has limited historical data
availabletopredictboththeamountofthesefundsestimatedtoexpireandtheexpectedpatternofflightstobetakenbycustomersholding
extended travel funds, sincehistorically travel fundsexpired within12 months of the originaldate of sale. Inmaking its estimates, the
Company considers historical customer travel behavior, as well as assumptions about customers’ future travel behavior, which can be
impactedbymanyfactorsincludingticketingandotherpolicies,fares,seatavailability,andothereconomicfactors.
How We Addressed the
Matter in Our Audit
Weobtainedanunderstanding,evaluatedthedesignandtestedtheoperatingeffectivenessofcontrolsovermanagement’sdeterminationof
thebreakageestimate,includingcontrolsovermanagement’sreviewoftheestimationofbreakageandthecompletenessandaccuracyof
thehistoricaldataanalyzedaspartofthebreakageestimate.
Weevaluatedmanagement’s assumptions used in the breakage calculation bycomparing current andhistorical actual expirationsto the
Company’sestimates.Additionally,amongotherprocedures,weassessedthereasonablenessofotherassumptionsmadebytheCompany
aspartofthebreakageestimate,includingtheconsiderationoftheconstraintonvariableconsiderationoncumulativerevenuerecognized.

/s/Ernst&YoungLLP
WehaveservedastheCompany’sauditorsince1971.
Dallas,Texas
February4,2022
131
NotestoConsolidatedFinancialStatements
Report of Independent Registered Public Accounting Firm
TotheShareholdersandtheBoardofDirectorsofSouthwestAirlinesCo.
Opinion on Internal Control over Financial Reporting
Wehave auditedSouthwest Airlines Co.’sinternal controloverfinancial reportingas ofDecember31, 2021,based oncriteriaestablished in
InternalControl-IntegratedFrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(2013Framework),
(theCOSOcriteria).Inouropinion,SouthwestAirlinesCo.(theCompany)maintained,inallmaterialrespects,effectiveinternalcontrolover
financialreportingasofDecember31,2021,basedontheCOSOcriteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
consolidatedbalancesheetsofSouthwestAirlinesCo.asofDecember31,2021and2020,therelatedconsolidatedstatementsofincome(loss),
comprehensiveincome(loss),stockholders’equityandcashflowsforeachofthethreeyearsintheperiodendedDecember31,2021,andthe
related notes (collectively referred to as the “financial statements”) of the Company and our report dated February 4, 2022 expressed an
unqualifiedopinionthereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the
effectivenessofinternalcontroloverfinancialreportingincludedintheaccompanying“Management’sAnnualReportonInternalControlOver
FinancialReporting”.OurresponsibilityistoexpressanopinionontheCompany’sinternalcontroloverfinancialreportingbasedonouraudit.
WeareapublicaccountingfirmregisteredwiththePCAOBandarerequiredtobeindependentwithrespecttotheCompanyinaccordancewith
theU.S.federalsecuritieslawsandtheapplicablerulesandregulationsoftheSecuritiesandExchangeCommissionandthePCAOB.
WeconductedourauditinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanandperformtheaudittoobtain
reasonableassuranceaboutwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedinallmaterialrespects.
Our auditincluded obtaining anunderstanding of internal controlover financial reporting,assessing the risk that a material weaknessexists,
testingandevaluatingthedesignandoperatingeffectivenessofinternalcontrolbasedontheassessedrisk,andperformingsuchotherprocedures
asweconsiderednecessaryinthecircumstances.Webelievethatourauditprovidesareasonablebasisforouropinion.
Definition and Limitations of Internal Control over Financial Reporting
Acompany’sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A
company’sinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat(1)pertaintothemaintenanceofrecordsthat,in
reasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofthecompany;(2)providereasonableassurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonableassurance regarding prevention or timelydetection of unauthorized acquisition, use, or
dispositionofthecompany’sassetsthatcouldhaveamaterialeffectonthefinancialstatements.
132
NotestoConsolidatedFinancialStatements
Becauseofits inherent limitations,internalcontrolover financial reportingmaynotpreventor detectmisstatements.Also,projectionsof any
evaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthat
thedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.
/s/Ernst&YoungLLP
Dallas,Texas
February4,2022
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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures.TheCompanymaintainsdisclosurecontrolsandprocedures(asdefinedinRule13a-15(e)of
theSecuritiesExchangeAct(the“ExchangeAct”))designedtoprovidereasonableassurancethattheinformationrequiredtobedisclosedbythe
CompanyinthereportsthatitfilesorsubmitsundertheExchangeActisrecorded,processed,summarized,andreportedwithinthetimeperiods
specified in the SEC’s rules and forms. These include controls and procedures designed to ensure that this information is accumulated and
communicatedtotheCompany’smanagement,includingitsChiefExecutiveOfficerandChiefFinancialOfficer,asappropriatetoallowtimely
decisions regarding required disclosure. Management, with the participation of the Company’s Chief Executive Officer and Chief Financial
Officer,evaluatedtheeffectivenessoftheCompany’sdisclosurecontrolsandproceduresasofDecember31,2021.Basedonthisevaluation,the
Company’sChiefExecutive Officer andChiefFinancialOfficer haveconcluded thatthe Company’sdisclosurecontrolsand procedures were
effectiveasofDecember31,2021,atthereasonableassurancelevel.
Management’s Annual Report on Internal Control over Financial Reporting.ManagementoftheCompanyisresponsibleforestablishingand
maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act). The Company’s internal
control over financial reporting is a process, under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer,
designedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternal
purposesinaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStates.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those
systemsdeterminedtobeeffectivecanprovideonlyreasonableassuranceofachievingtheircontrolobjectives.
Management,withtheparticipationoftheCompany’sChiefExecutiveOfficerandChiefFinancialOfficer,evaluated the effectivenessofthe
Company’sinternalcontroloverfinancialreportingasofDecember31,2021.Inmakingthisassessment,managementusedthecriteriasetforth
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013
Framework). Based on this evaluation, management, with the participation of the Company’s Chief Executive Officer and Chief Financial
Officer,concludedthat,asofDecember31,2021,theCompany’sinternalcontroloverfinancialreportingwaseffective.
Ernst&Young,LLP,theindependentregisteredpublicaccountingfirmwhoauditedtheCompany’sConsolidatedFinancialStatementsincluded
inthisForm10-K,hasissuedanattestationreportontheCompany’sinternalcontroloverfinancialreporting,whichisincludedherein.
Changes in Internal Control over Financial Reporting.There were nochangesinthe Company’sinternal controloverfinancialreporting (as
definedinRule13a-15(f)oftheExchangeAct)duringthequarterendedDecember31,2021,thathavemateriallyaffected,orarereasonably
likelytomateriallyaffect,theCompany’sinternalcontroloverfinancialreporting.
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Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Notapplicable.
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PART III
Item 10. Directors, Executive Officers, and Corporate Governance
Directors and Executive Officers
The information required by this Item 10 regarding the Company’s directors will be set forth under the heading “Proposal 1 - Election of
Directors” in the Proxy Statement for the Company’s 2022 Annual Meeting of Shareholders and is incorporated herein by reference. The
informationrequiredbythisItem10regardingtheCompany’sexecutiveofficersissetforthundertheheading“InformationaboutourExecutive
Officers”inPartIofthisForm10-Kandisincorporatedhereinbyreference.
Section 16(a) Compliance
Ifapplicable,theinformationrequiredbythisItem10regardingcompliancewithSection16(a)oftheExchangeActwillbesetforthunderthe
heading“DelinquentSection16(a)Reports”intheProxyStatementfortheCompany’s2022AnnualMeetingofShareholdersandisincorporated
hereinbyreference.
Corporate Governance
Exceptassetforthinthefollowingparagraph,theremaininginformationrequiredbythisItem10willbesetforthundertheheading“Corporate
Governance”intheProxyStatementfortheCompany’s2022AnnualMeetingofShareholdersandisincorporatedhereinbyreference.
TheCompanyhasadoptedaCodeofEthicsthatappliestoitsprincipalexecutiveofficer,principalfinancialofficer,andprincipalaccounting
officerorcontroller.TheCompany’sCodeofEthics,aswellasitsCorporateGovernanceGuidelinesandthechartersofitsAudit,Compensation,
and Nominating and Corporate Governance Committees, are available on the Company’s website, www.southwest.com. Copies of these
documents arealso available uponrequest to Investor Relations,Southwest Airlines Co.,P.O. Box 36611, Dallas, TX 75235. TheCompany
intendstodiscloseanyamendmentsto,orwaiversfrom,itsCodeofEthicsthatapplytotheCompany’sprincipalexecutiveofficer,principal
financialofficer,andprincipalaccountingofficerorcontrollerontheCompany’swebsite,www.southwest.com,underthe“AboutSouthwest”
caption,promptlyfollowingthedateofanysuchamendmentorwaiver.
Item 11. Executive Compensation
TheinformationrequiredbythisItem11willbesetforthundertheheadings“CompensationofExecutiveOfficers”and“Compensationof
Directors”intheProxyStatementfortheCompany’s2022AnnualMeetingofShareholdersandisincorporatedhereinbyreference.
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Exceptassetforthbelowregardingsecuritiesauthorizedforissuanceunderequitycompensationplans,theinformationrequiredbythisItem12
will be set forth under the heading “Voting Securities and Principal Shareholders” in the Proxy Statement for the Company’s 2022 Annual
MeetingofShareholdersandisincorporatedhereinbyreference.
Securities Authorized for Issuance under Equity Compensation Plans
ThefollowingtableprovidesinformationasofDecember31,2021,regardingcompensationplansunderwhichequitysecuritiesoftheCompany
areauthorizedforissuance.
Equity Compensation Plan Information
Plan Category
Number of Securities
to be Issued Upon
Exercise of
Outstanding
Options,
Warrants, and
Rights
(a)
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants, and
Rights
(b)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected
in Column (a))
(c)
EquityCompensationPlansApprovedbySecurity
Holders 2,561,384 (1) $ — (2) 22,036,227 (3)
EquityCompensationPlansnotApprovedby
SecurityHolders — $ — —
Total 2,561,384 $ — (2) 22,036,227
(1) RestrictedshareunitssettleableinsharesoftheCompany’scommonstock.
(2) Restrictedshareunitsdiscussedinfootnote(1)abovedonothaveaweightedaverageexercisepricebecausetherestrictedshareunitsdonothaveanexercise
priceuponvesting.
(3)Oftheseshares,(i)4,879,534sharesremained availableforissuanceundertheCompany’stax-qualified employeestockpurchaseplan;and(ii)17,156,693
shares remained available for issuance under the Company’s 2007 Equity Incentive Plan in connection with the exercise of stock options and stock
appreciationrights,thesettlementofawardsofrestrictedstock,restrictedstockunits,andphantomshares,andthegrantofunrestrictedsharesofcommon
stock;however,nomorethan1,071,969sharesremainavailableforgrantinconnectionwithawardsofunrestricted sharesofcommonstock,stock-settled
phantomshares,andawardstonon-EmployeemembersoftheBoard.Thesesharesareinadditiontothesharesreservedforissuancepursuanttooutstanding
awardsincludedincolumn(a).
SeeNote10totheConsolidatedFinancialStatementsforinformationregardingthematerialfeaturesoftheaboveplans.Eachoftheaboveplans
provides that the number of shares with respect to which options may be granted, the number of shares of common stock subject to an
outstanding option, and the number of restricted share units granted shall be proportionately adjusted in the event of a subdivision or
consolidationofsharesorthepaymentofastockdividendoncommonstock,andthepurchasepricepershareofoutstandingoptionsshallbe
proportionatelyrevised.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item 13 will be set forth under the heading “Certain Relationships and Related Transactions, and Director
Independence”intheProxyStatementfortheCompany’s2022AnnualMeetingofShareholdersandisincorporatedhereinbyreference.
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Item 14. Principal Accounting Fees and Services
TheCompany'sindependentregisteredpublicaccountingfirmisErnst&Young,LLP,Dallas,TX,AuditorFirmID:42.
TheinformationrequiredbythisItem14willbesetforthundertheheading“RelationshipwithIndependentAuditors”intheProxyStatementfor
theCompany’s2022AnnualMeetingofShareholdersandisincorporatedhereinbyreference.
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PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)1.Financial Statements:
ThefinancialstatementsincludedinItem8.FinancialStatementsandSupplementaryDataabovearefiledaspartofthisannualreport.
2.Financial Statement Schedules:
There are no financial statement schedules filed as part of thisannual report, sincethe required informationis included inthe Consolidated
FinancialStatements,includingthenotesthereto,orthecircumstancesrequiringinclusionofsuchschedulesarenotpresent.
3.Exhibits:
3.1

RestatedCertificateofFormationoftheCompany,effectiveMay18,2012(incorporatedbyreferencetoExhibit3.1tothe
Company’sQuarterlyReportonForm10-QforthequarterendedJune30,2012(FileNo.1-7259)).
3.2

SecondAmendedandRestatedBylawsoftheCompany,effectiveNovember17,2016(incorporatedbyreferencetoExhibit3.1to
theCompany’sCurrentReportonForm8-KfiledNovember21,2016(FileNo.1-7259)).
4.1

SpecimencertificaterepresentingcommonstockoftheCompany(incorporatedbyreferencetoExhibit4.2totheCompany’s
AnnualReportonForm10-KfortheyearendedDecember31,1994(FileNo.1-7259)).
4.2 IndenturedatedasofSeptember17,2004,betweentheCompanyandWellsFargoBank,N.A.,Trustee
4.3

IndenturedatedasofFebruary25,1997,betweentheCompanyandU.S.TrustCompanyofTexas,N.A.(incorporatedbyreference
toExhibit4.12totheCompany’sAnnualReportonForm10-KfortheyearendedDecember31,1996(FileNo.1-7259)).
4.4

FirstSupplementalIndenture,datedMay1,2020,betweentheCompanyandWellsFargoBank,N.A.,astrustee(incorporatedby
referencetoExhibit4.1totheCompany'sCurrentReportonForm8-KfiledMay1,2020(FileNo.1-7259)).
4.5 DescriptionofCommonStock(incorporatedbyreferencetoExhibit4.5totheCompany'sAnnualReportonForm10-Kforthe
yearendedDecember31,2019(FileNo.1-7259)).

TheCompanyisnotfilinganyotherinstrumentsevidencinganyindebtednessbecausethetotalamountofsecuritiesauthorized
underanysinglesuchinstrumentdoesnotexceed10percentofitstotalconsolidatedassets.Copiesofsuchinstrumentswillbe
furnishedtotheSecuritiesandExchangeCommissionuponrequest.
10.1 FormofAmendedandRestatedExecutiveServiceRecognitionPlanExecutiveEmploymentAgreementbetweentheCompanyand
certainOfficersoftheCompany(incorporatedbyreferencetoExhibit10.2totheCompany’sAnnualReportonForm10-Kforthe
yearendedDecember31,2008(FileNo.1-7259)).(2)
10.2

LetterAgreementbetweenSouthwestAirlinesCo.andGaryC.Kelly,effectiveasofFebruary1,2011(incorporatedbyreference
toExhibit99.1totheCompany’sCurrentReportonForm8-KfiledFebruary1,2011(FileNo.1-7259)).(2)
10.3

SouthwestAirlinesCo.AmendedandRestatedSeverancePlanforDirectors(asamendedandrestatedeffectiveMay19,2009)
(incorporatedbyreferencetoExhibit10.1totheCompany’sQuarterlyReportonForm10-QforthequarterendedJune30,2009
(FileNo.1-7259)).
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TableofContents
10.4

SouthwestAirlinesCo.OutsideDirectorIncentivePlan(asamendedandrestatedeffectiveMay16,2007)(incorporatedby
referencetoExhibit10.2totheCompany’sQuarterlyReportonForm10-QforthequarterendedJune30,2007(FileNo.1-
7259)).
10.5

SouthwestAirlinesCo.2002SWAPIANon-QualifiedStockOptionPlan(incorporatedbyreferencetoExhibit4.1tothe
Company’sRegistrationStatementonFormS-8filedOctober30,2002(FileNo.333-100862)).
10.6

SouthwestAirlinesCo.AmendedandRestated2007EquityIncentivePlan(incorporatedbyreferencetoExhibit99.1tothe
Company’sCurrentReportonForm8-KfiledMay18,2015(FileNo.1-7259)).(2)
10.7

SouthwestAirlinesCo.ExcessBenefitPlan(incorporatedbyreferencetoExhibit10.32totheCompany’sAnnualReporton
Form10-KfortheyearendedDecember31,2008(FileNo.1-7259)).(2)
10.8

AmendmentNo.1totheSouthwestAirlinesCo.ExcessBenefitPlan(incorporatedbyreferencetoExhibit10.33tothe
Company’sAnnualReportonForm10-KfortheyearendedDecember31,2008(FileNo.1-7259)).(2)
10.9

AmendmentNo.2totheSouthwestAirlinesCo.ExcessBenefitPlan(incorporatedbyreferencetoExhibit10.34tothe
Company’sAnnualReportonForm10-KfortheyearendedDecember31,2008(FileNo.1-7259)).(2)
10.10

AmendedandRestatedSouthwestAirlinesCo.2005ExcessBenefitPlan(asamendedandrestated,effectiveasofJanuary1,
2018)(incorporatedbyreferencetoExhibit10.5totheCompany’sQuarterlyReportonForm10-Qforthequarterended
September30,2017(FileNo.1-7259)).(2)
10.11

FormofIndemnificationAgreementbetweentheCompanyanditsDirectors(incorporatedbyreferencetoExhibit10.1tothe
Company’sCurrentReportonForm8-KfiledJanuary22,2009(FileNo.1-7259)).
10.12

SouthwestAirlinesCo.AmendedandRestated2007EquityIncentivePlanFormofNoticeofGrantandTermsandConditions
forRestrictedStockUnitgrants(incorporatedbyreferencetoExhibit10.3totheCompany'sQuarterlyReportonForm10-Qfor
thequarterendedJune30,2014(FileNo.1-7259)).(2)
10.12(a) SouthwestAirlinesCo.AmendedandRestated2007EquityIncentivePlanFormofNoticeofGrantandTermsandConditions
forRestrictedStockUnitgrants(effective2021)(incorporatedbyreferencetoExhibit10.13(a)totheCompany'sAnnualReport
onForm10-KfortheyearendedDecember31,2020(FileNo.1-7259)).(2)
10.13

$1,000,000,000RevolvingCreditFacilityAgreementamongtheCompany,theBankspartythereto,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,JPMorganChaseBank,N.A.and
Citibank,N.A.,asCo-AdministrativeAgents,andJPMorganChaseBank,N.A.,asPayingAgent,datedasofAugust3,2016
(incorporatedbyreferencetoExhibit10.1totheCompany’sCurrentReportonForm8-KfiledAugust9,2016(FileNo.1-
7259)).
10.14 FirstAmendmenttoRevolvingCreditFacilityAgreementdatedasofAugust3,2016,amongSouthwestAirlinesCo.,thebanks
partythereto,JPMorganChaseBank,N.A.,asPayingAgentandCollateralAgent,andJPMorganChaseBank,N.A.and
Citibank,N.A.,asCo-AdministrativeAgents,datedasofMarch30,2020(incorporatedbyreferencetoExhibit10.3tothe
Company'sQuarterlyReportonForm10-QforthequarterendedMarch31,2020(FileNo.1-7259)).
10.15 SecondAmendmenttoRevolvingCreditFacilityAgreementdatedasofAugust3,2016,asamendedbytheFirstAmendment
datedasofMarch30,2020,amongSouthwestAirlinesCo.,thebankspartythereto,JPMorganChaseBank,N.A.,asPaying
AgentandCollateralAgent,andJPMorganChaseBank,N.A.,andCitibank,N.A.,asCo-AdministrativeAgents,datedasof
November23,2020(incorporatedbyreferencetoExhibit10.16totheCompany'sAnnualReportonForm10-Kfortheyear
endedDecember31,2020(FileNo.1-7259)).
10.16 MortgageandSecurityAgreementSupplementNo.1,datedMarch30,2021,betweenSouthwestAirlinesCo.andJPMorgan
ChaseBank,N.A.,actingasanadministrativeagent,pursuanttotheRevolvingCreditFacilityAgreementdatedasofAugust3,
2016,asamended(incorporatedbyreferencetoExhibit10.3totheCompany'sQuarterlyReportonForm10-Qforthequarter
endedMarch31,2021(FileNo.1-7259)).
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TableofContents
10.17 ThirdAmendmenttoRevolvingCreditFacilityAgreementdatedasofAugust3,2016,asamendedbytheFirstAmendmentdated
asofMarch30,2020,andtheSecondAmendmentdatedasofNovember23,2020,amongSouthwestAirlinesCo.,thebanks
partythereto,JPMorganChaseBank,N.A.,asPayingAgentandCollateralAgent,andJPMorganChaseBank,N.A.andCitibank,
N.A.,asCo-AdministrativeAgents,datedasofJuly28,2021(incorporatedbyreferencetoExhibit10.1totheCompany's
QuarterlyReportonForm10-QforthequarterendedSeptember30,2021(FileNo.1-7259)).
10.18

PurchaseAgreementNo.3729andAircraftGeneralTermsAgreement,datedDecember13,2011,betweenTheBoeing
CompanyandtheCompany;SupplementalAgreementNo.1;SupplementalAgreementNo.2;SupplementalAgreementNo.3;
SupplementalAgreementNo.4;SupplementalAgreementNo.5;SupplementalAgreementNo.6;SupplementalAgreementNo.
7;SupplementalLetterAgreementNo.6-1162-KLK-0059R3;SupplementalAgreementNo.8;SupplementalAgreementNo.9;
SupplementalAgreementNo.10;andSupplementalLetterAgreementNo.03729-LA-1808800.(1)
10.18(a) SupplementalAgreementNo.11(incorporatedbyreferencetoExhibit10.16(a)totheCompany'sAnnualReportonForm10-K
fortheyearendedDecember31,2019(FileNo.1-7259));SupplementalLetterAgreementNo.03729-MISC-2001512
(incorporatedbyreferencetoExhibit10.1totheCompany'sQuarterlyReportonForm10-QforthequarterendedJune30,2020
(FileNo.1-7259));SupplementalLetterAgreement,datedApril23,2020(incorporatedbyreferencetoExhibit10.2tothe
Company'sQuarterlyReportonForm10-QforthequarterendedJune30,2020(FileNo.1-7259));SupplementalLetter
AgreementNo.6-1162-CJM-039(incorporatedbyreferencetoExhibit10.3totheCompany'sQuarterlyReportonForm10-Q
forthequarterendedJune30,2020(FileNo.1-7259));SupplementalAgreementNo.12(incorporatedbyreferencetoExhibit
10.1totheCompany'sQuarterlyReportonForm10-QforthequarterendedMarch31,2021(FileNo.1-7259));Supplemental
LetterAgreementNo.6-1162-CAF-0390R2(incorporatedbyreferencetoExhibit10.2totheCompany'sQuarterlyReporton
Form10-QforthequarterendedMarch31,2021(FileNo.1-7259));SupplementalAgreementNo.13(incorporatedbyreference
toExhibit10.1totheCompany'sQuarterlyReportonForm10-QforthequarterendedJune30,2021(FileNo.1-7259));
SupplementalAgreementNo.14(incorporatedbyreferencetoExhibit10.2totheCompany'sQuarterlyReportonForm10-Q
forthequarterendedJune30,2021(FileNo.1-7259));SupplementalAgreementNo.15(incorporatedbyreferencetoExhibit
10.3totheCompany'sQuarterlyReportonForm10-QforthequarterendedJune30,2021(FileNo.1-7259)).(1)
10.19

SouthwestAirlinesCo.SeniorExecutiveShortTermIncentivePlan(incorporatedbyreferencetoExhibit99.1totheCompany’s
CurrentReportonForm8-KfiledJanuary30,2013(FileNo.1-7259)).(2)
10.20

SouthwestAirlinesCo.DeferredCompensationPlanforSeniorLeadershipandNon-EmployeeMembersoftheSouthwest
AirlinesCo.BoardofDirectors(asamendedandrestated,effectiveasofJanuary1,2018)(incorporatedbyreferenceto
Exhibit10.6totheCompany’sQuarterlyReportonForm10-QforthequarterendedSeptember30,2017(FileNo.1-7259)).(2)
10.21

SouthwestAirlinesCo.AmendedandRestated2007EquityIncentivePlanFormofNoticeofGrantandTermsandConditions
forPerformance-BasedRestrictedStockUnitgrants(incorporatedbyreferencetoExhibit10.4totheCompany'sQuarterly
ReportonForm10-QforthequarterendedJune30,2014(FileNo.1-7259)).(2)
10.21(a) SouthwestAirlinesCo.AmendedandRestated2007EquityIncentivePlanFormofNoticeofGrantandTermsandConditions
forPerformance-BasedRestrictedStockUnitgrants(effective2021)(incorporatedbyreferencetoExhibit10.20(a)tothe
Company'sAnnualReportonForm10-KfortheyearendedDecember31,2020(FileNo.1-7259)).(2)
10.22 PayrollSupportProgramAgreementbyandbetweenSouthwestAirlinesCo.andtheUnitedStatesDepartmentoftheTreasury,
datedApril20,2020(incorporatedbyreferencetoExhibit10.4totheCompany'sQuarterlyReportonForm10-Qforthequarter
endedMarch31,2020(FileNo.1-7259)).
10.23 WarrantAgreementbyandbetweenSouthwestAirlinesCo.andtheUnitedStatesDepartmentoftheTreasury,datedApril20,
2020(incorporatedbyreferencetoExhibit10.5totheCompany'sQuarterlyReportonForm10-QforthequarterendedMarch
31,2020(FileNo.1-7259)).
10.24 PromissoryNote,fromSouthwestAirlinesCo.totheUnitedStatesDepartmentoftheTreasury,datedApril20,2020
(incorporatedbyreferencetoExhibit10.6totheCompany'sQuarterlyReportonForm10-QforthequarterendedMarch31,
2020(FileNo.1-7259)).
141
TableofContents
10.25 PayrollSupportProgramExtensionAgreementbyandbetweenSouthwestAirlinesCo.andtheUnitedStatesDepartmentofthe
Treasury,datedJanuary15,2021(incorporatedbyreferencetoExhibit10.1totheCompany’sCurrentReportonForm8-Kfiled
January15,2021(FileNo.1-7259)).
10.26 WarrantAgreementbyandbetweenSouthwestAirlinesCo.andtheUnitedStatesDepartmentoftheTreasury,datedJanuary15,
2021(incorporatedbyreferencetoExhibit10.2totheCompany’sCurrentReportonForm8-KfiledJanuary15,2021(FileNo.1-
7259)).
10.27 PromissoryNote,fromSouthwestAirlinesCo.totheUnitedStatesDepartmentoftheTreasury,datedJanuary15,2021
(incorporatedbyreferencetoExhibit10.3totheCompany’sCurrentReportonForm8-KfiledJanuary15,2021(FileNo.1-
7259)).
10.28 FormofPerformance-BasedCashAwardandTermsandConditions(incorporatedbyreferencetoExhibit10.27totheCompany's
AnnualReportonForm10-KfortheyearendedDecember31,2020(FileNo.1-7259)).(2)
10.29 PayrollSupportProgram3AgreementbyandbetweenSouthwestAirlinesCo.andtheUnitedStatesDepartmentoftheTreasury,
datedApril23,2021(incorporatedbyreferencetoExhibit10.4totheCompany'sQuarterlyReportonForm10-Qforthequarter
endedMarch31,2021(FileNo.1-7259)).
10.30 WarrantAgreementbyandbetweenSouthwestAirlinesCo.andtheUnitedStatesDepartmentoftheTreasury,datedApril23,
2021(incorporatedbyreferencetoExhibit10.5totheCompany'sQuarterlyReportonForm10-QforthequarterendedMarch31,
2021(FileNo.1-7259)).
10.31 PromissoryNote,fromSouthwestAirlinesCo.totheUnitedStatesDepartmentoftheTreasury,datedApril23,2021
(incorporatedbyreferencetoExhibit10.6totheCompany'sQuarterlyReportonForm10-QforthequarterendedMarch31,2021
(FileNo.1-7259)).
21

SubsidiariesoftheCompany.
23

ConsentofErnst&YoungLLP,IndependentRegisteredPublicAccountingFirm.
31.1

Rule13a-14(a)CertificationofChiefExecutiveOfficer.
31.2

Rule13a-14(a)CertificationofChiefFinancialOfficer.
32

Section1350CertificationofChiefExecutiveOfficerandChiefFinancialOfficer.(3)
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).
(1) Certainconfidentialinformationcontainedinthisagreementhasbeenomittedbecauseitisbothnotmaterialandisofthetypethattheregistranttreatsas
privateorconfidential.
(2) Managementcontractorcompensatoryplanorarrangement.
(3) Thisexhibitisbeingfurnishedratherthanfiledandshallnotbedeemedincorporatedbyreferenceintoanyfiling,inaccordancewithItem601of
RegulationS-K.
Acopyofeachexhibitmaybeobtained atapriceof15centsperpage,$10.00minimumorder,bywritingto:InvestorRelations,Southwest
AirlinesCo.,P.O.Box36611,Dallas,Texas75235-1611.
Item 16. 10-K Summary
None.
142
TableofContents
SIGNATURES
Pursuantto therequirements ofSection13 or15(d) ofthe SecuritiesExchangeAct of1934, theRegistrant hasdulycaused thisreport tobe
signedonitsbehalfbytheundersignedthereuntodulyauthorized.
SOUTHWESTAIRLINESCO.
February4,2022 By /s/TammyRomo
TammyRomo
Executive Vice President & Chief Financial Officer
(On behalf of the Registrant and in
her capacity as Principal Financial
& Accounting Officer)
143
TableofContents
PursuanttotherequirementsoftheSecuritiesExchangeActof1934,thisreporthasbeensignedbelowbythefollowingpersonsonFebruary4,
2022,onbehalfoftheregistrantandinthecapacitiesindicated.
Signature Title
/s/ROBERTE.JORDAN
ChiefExecutiveOfficerandDirector
(PrincipalExecutiveOfficer)
Robert E. Jordan
/s/TAMMYROMO
ExecutiveVicePresident&ChiefFinancialOfficer(Principal
Financial&AccountingOfficer)
Tammy Romo
/s/GARYC.KELLY ExecutiveChairmanoftheBoard
Gary C. Kelly
/s/RONRICKS ViceChairmanoftheBoard
Ron Ricks
/s/DAVIDW.BIEGLER Director
David W. Biegler
/s/J.VERONICABIGGINS Director
J. Veronica Biggins
/s/DOUGLASH.BROOKS Director
Douglas H. Brooks
/s/WILLIAMH.CUNNINGHAM Director
William H. Cunningham
/s/JOHNG.DENISON Director
John G. Denison
/s/THOMASW.GILLIGAN Director
Thomas W. Gilligan
/s/DAVIDP.HESS Director
David P. Hess
/s/GRACED.LIEBLEIN Director
Grace D. Lieblein
/s/NANCYB.LOEFFLER Director
Nancy B. Loeffler
/s/JOHNT.MONTFORD Director
John T. Montford
144
--------------
SOUTHWESTAIRLINESCO.
AND
WELLSFARGOBANK,N.A.,
TRUSTEE
--------------
INDENTURE
DatedasofSeptember17,2004
--------------
TABLEOFCONTENTS
Page
PARTIES 1
RECITALS:
PurposeofIndenture 1
CompliancewithLegalRequirements 1
PurposeofandConsiderationforIndenture 1
ARTICLEONE
DEFINITIONS
SECTION1.01.CertainTermsDefined
1
Affiliate 2
BankruptcyCode 2
BoardofDirectors 2
BusinessDay 2
Commission 2
Company 2
Depositary 2
EventofDefault 2
GlobalSecurity 2
Indenture 3
Interest 3
Officers’Certificate 3
OpinionofCounsel 3
OriginalIssueDiscountSecurity 3
Outstanding 3
PayingAgent 4
ResponsibleOfficer 4
SecurityorSecurities 4
Securityholder 4
Subsidiary 4
Trustee;principaloffice 4
TrustIndentureActof1939 4
YieldtoMaturity 5
SECTION1.02.ReferencesaretoIndenture 5
SECTION1.03.ConflictwithTrustIndentureActof1939 5
i
ARTICLETWO
ISSUE,DESCRIPTION,EXECUTION,REGISTRATION
ANDEXCHANGEOFSECURITIES
SECTION2.01.FormsGenerally 5
SECTION2.02.FormofTrustee'sCertificateofAuthentication 5
SECTION2.03.AmountUnlimited;IssuableinSeries 6
SECTION2.04.AuthenticationandDeliveryofSecurities 7
SECTION2.05.ExecutionofSecurities 8
SECTION2.06.ExchangeofSecurities 9
SECTION2.07.TemporarySecurities 10
SECTION2.08.Mutilated,Destroyed,LostorStolenSecurities 11
SECTION2.09.CancellationofSurrenderedSecurities 11
SECTION2.10.SecuritiesinGlobalForm 12
ARTICLETHREE
PARTICULARCOVENANTSOFTHECOMPANY
SECTION3.01.PaymentofPrincipalof(andPremium,ifany)andIntereston
Securities 12
SECTION3.02.MaintenanceofOfficeorAgencyforRegistrationofTransfer,ExchangeandPaymentofSecurities 13
SECTION3.03.AppointmenttoFillaVacancyintheOfficeofTrustee 13
SECTION3.04.ProvisionastoPayingAgent 13
SECTION3.05.MaintenanceofCorporateExistence 14
SECTION3.06.Officers’CertificateastoDefault 14
SECTION3.07.FurtherAssurance 14
ARTICLEFOUR
SECURITYHOLDERS'LISTSANDREPORTSBYTHECOMPANY
ANDTHETRUSTEE
SECTION4.01.CompanytoFurnishTrusteeInformationastoNamesandAddresses
toSecurityholders 14
SECTION4.02.PreservationandDisclosureofLists 15
SECTION4.03.ReportsbytheCompany 15
SECTION4.04.ReportsbytheTrustee 16
ARTICLEFIVE
REMEDIESOFTHETRUSTEEANDSECURITYHOLDERS
ONEVENTOFDEFAULT
SECTION5.01.EventsofDefaultDefined;AccelerationofMaturity;Waiverof
Default 17
SECTION5.02.PaymentofSecuritiesonDefault;SuitTherefor 19
SECTION5.03.ApplicationofMoneysCollectedbyTrustee 20
ii
SECTION5.04.LimitationonSuitsbyHoldersofSecurities 21
SECTION5.05.ProceedingsbyTrustee;RemediesCumulativeandContinuing 22
SECTION5.06.RightsofHoldersofMajorityinPrincipalAmountofSecuritiesto
DirectTrusteeandtoWaiveDefaults 22
SECTION5.07.TrusteetoGiveNoticeofDefaultsKnowntoIt,ButMayWithhold
inCertainCircumstances 23
SECTION5.08.RequirementofanUndertakingtoPayCostsinCertainSuitsUnder
thisIndentureorAgainsttheTrustee 23
ARTICLESIX
CONCERNINGTHETRUSTEE
SECTION6.01.DutiesandResponsibilitiesofTrustee 23
SECTION6.02.RelianceonDocuments,Opinions,etc. 25
SECTION6.03.NoResponsibilityforRecitals,etc. 26
SECTION6.04.Trustee,PayingAgentorSecurityRegistrarMayOwnSecurities 26
SECTION6.05.MoneysReceivedbyTrusteetobeHeldinTrustWithoutInterest 26
SECTION6.06.CompensationandExpensesofTrustee 26
SECTION6.07.RightofTrusteetoRelyonOfficers’CertificateWhereNoOther
EvidenceSpecificallyPrescribed 27
SECTION6.08.ConflictingInterestofTrustee 27
SECTION6.09.RequirementsforEligibilityofTrustee 27
SECTION6.10.ResignationorRemovalofTrustee 28
SECTION6.11.AcceptancebySuccessortoTrustee;NoticeofSuccessionofa
Trustee 29
SECTION6.12.SuccessortoTrusteebyMerger,Consolidation,orSuccessiontoBusiness
30
SECTION6.13.LimitationsonRightsofTrusteeasaCreditor 30
ARTICLESEVEN
CONCERNINGTHESECURITYHOLDERS
SECTION7.01.EvidenceofActionbySecurityholders
31
SECTION7.02.ProofofExecutionofInstrumentsandofHoldingofSecurities 31
SECTION7.03.WhoMaybeDeemedOwnersofSecurities 31
SECTION7.04.SecuritiesOwnedbyCompanyorControlledorControllingPersonsDisregardedforCertainPurposes 31
SECTION7.05.RecordDateforActionbySecurityholders
32
SECTION7.06.InstrumentsExecutedbySecurityholdersBindFutureHolders
32
ARTICLEEIGHT
SECURITYHOLDERS'MEETINGS
SECTION8.01.PurposesforWhichMeetingsMaybeCalled 33
SECTION8.02.MannerofCallingMeetings;RecordDate 33
SECTION8.03.CallofMeetingbyCompanyorSecurityholders
34
iii
SECTION8.04.WhoMayAttendandVoteatMeetings 34
SECTION8.05.Regulations 34
SECTION8.06.MannerofVotingatMeetingsandRecordtobeKept 35
SECTION8.07.ExerciseofRightsofTrusteeandSecurityholdersNottobeHindered
orDelayed 35
SECTION8.08.WrittenConsentinLieuofMeetingofSecurityholders
36
ARTICLENINE
SUPPLEMENTALINDENTURES
SECTION9.01.PurposesforWhichSupplementalIndenturesMaybeEnteredinto
WithoutConsentofSecurityholders 36
SECTION9.02.ModificationofIndenturewithConsentofHoldersofaMajorityin
PrincipalAmountofSecurities 37
SECTION9.03.EffectofSupplementalIndentures 38
SECTION9.04.SecuritiesMayBearNotationofChangesbySupplementalIndentures 38
SECTION9.05.OpinionofCounsel 38
ARTICLETEN
CONSOLIDATION,MERGERANDSALE
SECTION10.01.CompanyMayConsolidate,etc.,onCertainTerms 39
SECTION10.02.SuccessortobeSubstituted 39
ARTICLEELEVEN
SATISFACTIONANDDISCHARGEOFINDENTURE;
UNCLAIMEDMONEYS
SECTION11.01.SatisfactionandDischargeofIndenture 40
SECTION11.02.ApplicationbyTrusteeofFundsDepositedforPaymentofSecurities 41
SECTION11.03.RepaymentofMoneysHeldbyPayingAgent 41
SECTION11.04.RepaymentofMoneysHeldbyTrustee 41
SECTION11.05.Satisfaction,DischargeandDefeasanceofSecuritiesofanySeries 42
ARTICLETWELVE
IMMUNITYOFINCORPORATORS,SHAREHOLDERS,OFFICERS
ANDOTHERS
SECTION12.01.Incorporators,Shareholders,OfficersandOthersExemptfrom
IndividualLiability 44
ARTICLETHIRTEEN
MISCELLANEOUSPROVISIONS
SECTION13.01.SuccessorsandAssignsofCompanyBoundbyIndenture 44
iv
SECTION13.02.ActsofBoard,CommitteeorOfficerofSuccessorEntityValid 44
SECTION13.03.RequiredNoticesorDemandsMaybeServedbyMail;Waiver 44
SECTION13.04.IndentureandSecuritiestobeConstruedinAccordancewiththe
LawsoftheStateofTexas 45
SECTION13.05.EvidenceofCompliancewithConditionsPrecedent 45
SECTION13.06.PaymentsDueonSaturdays,Sundays,andHolidays 46
SECTION13.07.ProvisionsRequiredbyTrustIndentureActof1939toControl 46
SECTION13.08.ProvisionsofthisIndentureandSecurityfortheSoleBenefitof
thePartiesandtheSecurityholders 46
SECTION13.09.IndentureMaybeExecutedinCounterparts 47
SECTION13.10.ArticleandSectionHeadings 47
SECTION13.11.Severability 47
ARTICLEFOURTEEN
REDEMPTIONOFSECURITIESANDSINKINGFUNDS
SECTION14.01.ApplicabilityofArticle 47
SECTION14.02.NoticeofRedemption;PartialRedemptions 47
SECTION14.03.PaymentofSecuritiesCalledforRedemption 48
SECTION14.04.ExclusionofCertainSecuritiesfromEligibilityforSelectionfor
Redemption 49
SECTION14.05.MandatoryandOptionalSinkingFunds 49
v
THISINDENTURE,datedasofSeptember17,2004;betweenSouthwestAirlinesCo.,acorporationdulyorganizedandexistingunder
thelawsoftheStateofTexas(hereinaftersometimesreferredtoasthe“Company”),partyofthefirstpart,andWellsFargoBank,N.A.,a
nationalbankingassociation(hereinaftersometimesreferredtoasthe“Trustee”),partyofthesecondpart;
WITNESSETH:
WHEREAS,foritslawfulcorporatepurposes,theCompanyhasdulyauthorizedtheissuefromtimetotimeofitsdebentures,notesor
otherunsecuredevidencesofindebtedness,whicharetobeissuedinoneormoreseries(the"Securities"),eachsuchseriesrankingparipassu
witheachotherseriesincontractualrightofpayment,asunsecuredobligationsoftheCompany,uptosuchprincipalamountoramountsasmay
fromtimetotimebeauthorizedinaccordancewiththetermsofthisIndenture;andtoprovide,amongotherthings,fortheauthentication,
deliveryandadministrationthereof,theCompanyhasdulyauthorizedtheexecutionofthisIndenture;and
WHEREAS,allactsandthingsnecessarytomaketheSecurities,whenexecutedbytheCompanyandauthenticatedanddeliveredbythe
TrusteeasinthisIndentureprovided,thevalid,bindingandlegalobligationsoftheCompany,andtoconstitutethesepresentsavalidindenture
andagreementaccordingtoitsterms,havebeendoneandperformed,andtheexecutionofthisIndentureandtheissuehereunderoftheSecurities
haveinallrespectsbeendulyauthorized,andtheCompany,intheexerciseofthelegalrightandpowervestedinit,executesthisIndentureand
proposestomake,execute,issueanddelivertheSecurities;
NOW,THEREFORE,THISINDENTUREWITNESSETH:
ThatinordertodeclarethetermsandconditionsuponwhichtheSecuritiesareauthenticated,issued,deliveredandheld,andin
considerationofthepremises,ofthepurchaseandacceptanceoftheSecuritiesbytheholdersthereofandofthesumofonedollartoitdulypaid
bytheTrusteeattheexecutionofthesepresents,thereceiptwhereofisherebyacknowledged,theCompanycovenantsandagreeswiththe
Trustee,forthebenefitoftherespectiveholdersfromtimetotimeoftheSecurities,asfollows:
ARTICLEONE
DEFINITIONS
SECTION1.01.CertainTermsDefined.ThetermsdefinedinthisSection1.01(exceptasotherwiseexpresslyprovidedorunlessthe
contextotherwiserequires),forallpurposesofthisIndentureandofanyindenturesupplementalhereto,shallhavetherespectivemeanings
specifiedinthisSection1.01.AllothertermsusedinthisIndenturethataredefinedintheTrustIndentureActof1939,orthatarebyreference
thereindefinedintheSecuritiesActof1933,asamended(exceptashereinotherwiseexpresslyprovidedorunlessthecontextotherwise
requires),shallhavethemeaningsassignedtosuchtermsintheTrustIndentureActof1939andinsaid
SecuritiesActastheywereinforceatthedateoftheexecutionofthisIndenture,unlesssaidTrustIndentureActof1939orsaidSecuritiesAct
expresslyprovideforapplicationofsuchstatutesasofanotherdate.
Affiliate:Theterm“Affiliate”shallmeananypersondirectlyorindirectlycontrolling,controlledby,orunderdirectorindirect
commoncontrolwith,theCompany.
BankruptcyCode:Theterm“BankruptcyCode”shallmeanTitle11,U.S.Code,oranysimilarfederalorstatelawforthereliefof
debtors.
BoardofDirectors:Theterm“BoardofDirectors,”whenusedwithreferencetotheCompany,shallmeantheBoardofDirectorsofthe
CompanyortheExecutiveCommitteeoftheBoardofDirectorsoftheCompany.
BusinessDay:Theterm“BusinessDay”shallmean,withrespecttoanySecurity,adayotherthanaSaturday,aSundayoradaythat
shallbeinthecity(orinanyofthecities,ifmorethanone),inwhichamountsarepayable,asspecifiedonthefaceoftheformofsuchSecurity,
adayonwhichbankinginstitutionsareauthorizedorobligatedbylawtoclose.
Commission:Theterm“Commission”shallmeantheSecuritiesandExchangeCommission,asfromtimetotimeconstituted,.created
undertheSecuritiesExchangeActof1934,orifatanytimeaftertheexecutionanddeliveryofthisIndenturesuchCommissionisnotexisting
andperformingthedutiesnowassignedtoitundertheTrustIndentureActof1939,thenthebodyperformingsuchdutiesonsaiddate.
Company:Theterm“Company”shallmeanSouthwestAirlinesCo.,aTexascorporation,and,subjecttotheprovisionsofArticleTen,
shallalsoincludeitssuccessorsandassigns.
Depositary:Theterm“Depositary”shallmean,withrespecttotheSecuritiesofanyseriesissuableorissuedinwholeorinpartinthe
formofoneormoreGlobalSecurities,thepersondesignatedasDepositaryforsuchseriesbytheCompanypursuanttoSection2.03orotherwise
appointedbytheCompanyasasuccessortosuchpersonintheeventsuchpersonisunwillingorunabletocontinuetoserveinsuchcapacity.
EventofDefault:Theterm“EventofDefault”shallmeananyeventspecifiedinSection5.01,continuedfortheperiodoftime,ifany,
andafterthegivingofnotice,ifany,thereindesignated.
GlobalSecurity:Theterm“GlobalSecurity”shallmeanaSecurityissuedinaccordancewithSection2.10evidencingallorpartofa
seriesofSecurities,whichineachcaseisissuedtotheDepositaryforsuchseries,orpartofaseries,oritsnomineeandregisteredinthenameof
suchDepositaryornominee.
2
Indenture:Theterm“'Indenture”shallmeanthisinstrumentasoriginallyexecuted,or,ifamendedorsupplementedashereinprovided,
assoamendedorsupplementedorboth,andshallincludetheformsandtermsofparticularseriesofSecuritiesestablishedascontemplated
hereunder.
Interest:Theterm“interest,”whenusedwithrespecttoanon-interestbearingSecurity,shallmeaninterestpayableaftertheprincipal
thereofhasbecomedueandpayable,whetheraftermaturity,bydeclarationofacceleration,bycallforredemptionpursuanttoasinkingfund,or
otherwise.
Officers’Certificate:Theterm“Officers’Certificate”shallmeanacertificatesignedbytheChairmanoftheBoardorthePresidentor
anyViceChairmanoftheBoardoranyVicePresidentandbytheTreasureroranAssistantTreasurerortheSecretaryoranAssistantSecretary
oftheCompany.EachsuchcertificateshallincludethestatementsprovidedforinSection13.05,ifandtotheextentrequiredbytheprovisions
thereof.
OpinionofCounsel:Theterm“OpinionofCounsel”shallmeananopinioninwritingsignedbylegalcounsel,whomaybean
employeeof,orofcounselto,theCompanyormaybeothercounsel.EachsuchopinionshallincludethestatementsprovidedforinSection
13.05,ifandtotheextentrequiredbytheprovisionsthereof.
OriginalIssueDiscountSecurity:Theterm"OriginalIssueDiscountSecurity”shallmeananySecuritythatprovidesforanamountless
thantheprincipalamountthereoftobedueandpayableuponadeclarationofaccelerationofthematuritythereofpursuanttoSection5.01.
Outstanding:Theterm“outstanding,”whenusedwithreferencetoSecurities,shall,subjecttotheprovisionsofSection7.04,mean,as
ofanyparticulartime,allSecuritiesauthenticatedanddeliveredbytheTrusteeunderthisIndentureexcept:
(a)SecuritiestheretoforecanceledbytheTrusteeordeliveredtotheTrusteeforcancellation;
(b)Securities,orportionsthereof,forthepaymentorredemptionofwhichmoneysinthenecessaryamountshallhavebeen
depositedintrustwiththeTrusteeorwithanyPayingAgent(otherthantheCompany)orshallhavebeensetasideandsegregatedintrust
bytheCompanyfortheholdersofsuchSecurities(iftheCompanyshallactasitsownPayingAgent),providedthatifsuchSecuritiesare
toberedeemedpriortothematurityhereof,noticeofsuchredemptionshallhavebeengivenashereinprovided,orprovisionsatisfactory
totheTrusteeshallhavebeenmadeforgivingsuchnotice,and,ifallsuchSecuritiesareredeemed,suchdepositshallbeinaccordance
withArticleElevenand
(c)SecuritiesinlieuoforinsubstitutionforwhichotherSecuritiesshallhavebeenauthenticatedanddelivered,orwhichshall
havebeenpaid,pursuanttothetermsofSection2.08,unlessproofsatisfactorytotheTrusteeispresentedthatanysuchSecurities
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areheldbyapersoninwhosehandssuchSecurityisalegal,validandbindingobligationoftheCompany.
IndeterminingwhethertheholdersoftherequisiteprincipalamountofoutstandingSecuritiesofanyorallserieshavegivenanyrequest,
demand,authorization,direction,notice,consentorwaiverhereunder,theprincipalamountofanOriginalIssueDiscountSecuritythatshallbe
deemedtobeoutstandingforsuchpurposesshallbetheamountoftheprincipalthereofthatwouldbedueandpayableasofthedateofsuch
determinationuponadeclarationofaccelerationofthematuritythereofpursuanttoSection5.01.
PayingAgent:AnypersonauthorizedbytheCompanytopaytheprincipalof,premium,ifany,orinterestonanysecuritiesonbehalfof
theCompany.
ResponsibleOfficer:Theterm“ResponsibleOfficer,”whenusedwithrespecttotheTrustee,shallmeananyofficerwithinthe
corporatetrustandagencygroupordepartmentoftheTrustee,includinganyVicePresident,anytrustofficeroranyotherofficeroftheTrustee
performingfunctionssimilartothoseperformedbyanyoftheabove-designatedofficersandalsomeans,withrespecttoaparticularcorporate
trustmatter,anyotherofficertowhomsuchmatterisreferredbecauseofhisknowledgeofandfamiliaritywiththeparticularsubject.
SecurityorSecurities:Theterm“Security”or“Securities”shallmeananySecurityorSecurities,asthecasemaybe,authenticatedand
deliveredunderthisIndenture.
Securityholder:Theterm“Securityholder,”“holderofSecurities,”orothersimilarterm,shallmeananypersonwhoshallatthetimebe
theregisteredholderofanySecurityorSecuritiesonthebooksoftheCompanykeptforthatpurposeinaccordancewiththeprovisionsofthis
Indentureandshallalsomeantheexecutors,administratorsandotherlegalrepresentativesofsuchperson.
Subsidiary:Theterm“Subsidiary”shallmeananycorporationorotherentityatleastamajorityoftheoutstandingvotingsharesof
whichisatthetimedirectlyorindirectlyownedorcontrolled(eitheraloneorthroughSubsidiariesortogetherwithSubsidiaries)bythe
CompanyoranotherSubsidiary.
Trustee;principaloffice:Theterm"Trustee"shallmeanWellsFargoBank,N.A.,and,subjecttotheprovisionsofArticleSix,shall
alsoincludeitssuccessors.Theterm"principaloffice"oftheTrusteeshallmeantheprincipalofficeoftheTrusteeatwhichatanyparticulartime
itscorporatetrustbusinessmaybeadministered,whichofficeatthedateofexecutionofthisIndentureis505MainStreet,Suite301,FortWorth,
Texas.
TrustIndentureActof1939:Theterm"TrustIndentureActof1939"shallmeantheTrustIndentureActof1939,asamended,asin
effectonthedateofthisIndenture,exceptasprovidedinSection9.01or9.02andexcepttotheextentthatanysubsequentamendmenttothe
TrustIndentureActof1939shallretroactivelyapplytothisinstrument.
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YieldtoMaturity:Theterm“YieldtoMaturity”shallmeantheyieldtomaturityonaseriesofSecurities,calculatedatthetimeofthe
issuanceofsuchseries,or,ifapplicable,atthemostrecentredeterminationofinterestonsuchseries,andcalculatedinaccordancewithaccepted
financialpractice.
SECTION1.02.ReferencesaretoIndenture.Unlessthecontextotherwiserequires,allreferenceshereinto"Articles,""Sections"and
othersubdivisionsrefertothecorrespondingArticles,SectionsandothersubdivisionsofthisIndenture,andthewords"herein,""hereof,"
"hereby,""hereunder"andwordsofsimilarimportrefertothisIndentureasawholeandnottoanyparticularArticle,Sectionorother
subdivisionhereof.
SECTION1.03.ConflictwithTrustIndentureActof1939.Ifanyprovisionhereoflimits,qualifiesorconflictswithaprovisionofthe
TrustIndentureActof1939thatisrequiredundersuchActtobepartofandgovernthisIndenture,thelatterprovisionshallcontrol.Ifany
provisionofthisIndenturemodifiesorexcludesanyprovisionoftheTrustIndentureActof1939thatmaybesomodifiedorexcluded,thelatter
provisionshallbedeemedtoapplytothisIndentureassomodifiedortobeexcluded,asthecasemaybe.
ARTICLETWO
ISSUE,DESCRIPTION,EXECUTION,REGISTRATION
ANDEXCHANGEOFSECURITIES
SECTION2.01.FormsGenerally.TheSecuritiesofeachseriesshallbesubstantiallyintheform(notinconsistentwiththisIndenture)as
shallbeestablishedbytheBoardofDirectorsorinoneormoreindenturessupplementalhereto,ineachcasewithsuchappropriateinsertions,
omissions,substitutionsandothervariationsasarerequiredorpermittedbythisIndenture,andincasesuchformisnotestablishedby
supplementalindenture,suchformshallbeapprovedbytheTrusteeiftheTrustee'srightsorobligationsareadverselyaffectedtherebyandmay
haveimprintedorotherwisereproducedthereonsuchlegendorlegends,notinconsistentwiththeprovisionsofthisIndenture,asmayberequired
tocomplywithanylaworwithanyrulesorregulationspursuantthereto,orwithanyrulesofanysecuritiesexchangeortoconformtogeneral
usage,consistentlyherewith,allasmybedeterminedbytheofficerexecutingsuchSecurities,asevidencedbyhisexecutionoftheSecurities.
ThedefinitiveSecuritiesshallbeprinted,lithographedorengravedonsteelengravedbordersor,withtheconsentoftheTrustee,maybe
producedinanyothermanner,allasdeterminedbytheofficerexecutingsuchSecurities,asevidencedbyhisexecutionofsuchSecurities.
SECTION2.02.FormofTrustee'sCertificateofAuthentication.TheTrustee'scertificateofauthenticationofallSecuritiesshallbein
substantiallythefollowingform:
ThisisoneoftheSecuritiesoftheseriesdesignatedhereinreferredtointhewithinmentionedIndenture.
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WELLSFARGOBANK,N.A.,
asTrustee
By:______________________________
AuthorizedSignatory
SECTION2.03.AmountUnlimited;IssuableinSeries.TheaggregateprincipalamountofSecuritiesthatmaybeauthenticatedand
deliveredunderthisIndentureisunlimited.
TheSecuritiesmaybeissuedinoneormoreseries.ThereshallbeestablishedbytheBoardofDirectorsandsetforthinanOfficers’
Certificateorestablishedinoneormoreindenturessupplementalhereto,priortotheissuanceofSecuritiesofanyseries,thefollowingterms,
whichtermsshallbeapprovedbytheTrusteeiftheTrustee’srightsorobligationsareadverselyaffectedthereby,andthereaftersuchtermsshall
bedeemedtobeapartofthisIndenture:
(1)thetitleoftheSecuritiesoftheseries(whichshalldistinguishtheSecuritiesoftheseriesfromallotherSecurities);
(2)anylimitupontheaggregateprincipalamountoftheSecuritiesortheseriesthatmaybeauthenticatedanddeliveredunder
thisIndenture(exceptforSecuritiesauthenticatedanddelivereduponregistrationoftransferof,or.inexchangefor,orinlieuof,other
SecuritiesoftheseriespursuanttoSections2.06,2.07,2.08,5.03,9.04andArticleFourteen);
(3)thedateordatesonwhichtheprincipaloftheSecuritiesoftheseriesispayable;
(4)therateorrates;ormethodbywhichtherateorratesaredetermined,atwhichtheSecuritiesoftheseriesshallbearinterest,
ifany,thedateordatesfromwhichsuchinterestshallaccrue,theinterestpaymentdatesonwhichsuchinterestshallbepayableandthe
recorddatesforthedeterminationofSecurityholderstowhominterestispayable;
(5)theofficesoragenciesoftheCompanyintheUnitedStatesofAmericawheretheprincipalofandanyinterestonSecurities
oftheseriesshallbepayable;
(6)thepriceorpricesatwhich,theperiodorperiodswithinwhichandthetermsandconditionsuponwhichSecuritiesofthe
seriesmayberedeemed,inwholeorinpart,attheoptionoftheCompany,pursuanttoanysinkingfundorotherwise;
6
(7)theobligation,ifany,oftheCompanytoredeem,purchaseorrepaySecuritiesoftheseriespursuanttoanysinkingfundor
analogousprovisionsorattheoptionofaholderthereofandthepriceorpricesatwhichandtheperiodorperiodswithinwhichandthe
termsandconditionsuponwhichSecuritiesoftheseriesshallberedeemed,purchasedorrepaid,inwholeorinpart,pursuanttosuch
obligation;
(8)ifotherthandenominationsof$1,000andanymultiplethereof,thedenominationsinwhichSecuritiesoftheseriesshallbe
issuable;
(9)ifotherthantheprincipalamountthereof,theportionoftheprincipalamountofSecuritiesoftheseriesthatshallbepayable
upondeclarationofaccelerationofthematuritythereoforprovableinbankruptcy;
(10)anytrustees,authenticatingorPayingAgents,warrantagents,transferagentsorregistrarswithrespecttotheSecuritiesof
suchseries;
(11)theapplicability,ifany,ofSection11.05tosuchseries;
(12)whethertheSecuritiesoftheseriesshallbeissuedinwholeorinpartintheformofoneormoreGlobalSecuritiesandin
suchcase,theDepositaryforsuchGlobalSecurityorSecurities,whichDepositaryshallbeaclearingagencyregisteredunderthe
SecuritiesExchangeActof1934,asamended;and
(13)anyothertermsoftheseries(whichtermsshallnotbeinconsistentwiththeprovisionsofthisIndenture),includingany
additionalcovenantswithrespecttosuchseries.
AllSecuritiesofanyoneseriesshallbesubstantiallyidenticalexceptastodenominationandexceptasmayotherwisebeprovidedbythe
BoardofDirectorsandsetforthinsuchOfficers'Certificateorasmaybeother-wiseprovidedinanysuchindenturesupplementalhereto.
SECTION2.04.AuthenticationandDeliveryofSecurities.Atanytimeandfromtimetotimeaftertheexecutionanddeliveryofthis
Indenture,theCompanymaydeliverSecuritiesofanyseriesexecutedbytheCompanytotheTrusteeforauthentication,andtheTrusteeshall
thereuponauthenticateanddeliversaidSecuritiestooruponthewrittenorderoftheCompany,signedonbehalfoftheCompanybyitsChairman
oftheBoardoritsPresidentoraViceChairmanoftheBoardoraVicePresidentandattestedtobyitsSecretaryoranAssistantSecretaryorby
itsTreasureroranAssistantTreasurer,withoutanyfurtheractionbytheCompany.InauthenticatingsuchSecuritiesandacceptingtheadditional
responsibilitiesunder
7
thisIndentureinrelationtosuchSecurities,theTrusteeshallbeentitledtoreceive,and(subjecttoSection6.01)shallbefullyprotectedinrelying
upon:
(1)certifiedcopiesoftheArticlesofIncorporationandbylawsoftheCompany(oranOfficers'Certificatewithrespecttoany
amendmentthereto)andofanyresolutionsoftheBoardofDirectorsauthorizingtheactiontakenpursuanttotheresolutionsdelivered
pursuanttoclause(2)below;
(2)acopyofanyresolutionsoftheBoardofDirectorsrelatingtosuchSecurities,ineachcasecertifiedbytheSecretaryoran
AssistantSecretaryoftheCompany;
(3)anexecutedsupplementalindenture,ifany;
(4)anOfficer'CertificatesettingforththeformorformsandtermsoftheSecuritiesunder,Sections2.01and2.03,respectively,and
statingthatnoEventofDefaultthenexistsand,inthecase01aseriesofOriginalIssueDiscountSecurities,theYieldtoMaturityofsuch
series;and
(5)anOpinionofCounsel,whichshallstate
(a)thattheformorformsandtermsofsuchSecuritieshavebeenestablishedbytheBoardofDirectorsorbya
supplementalindentureaspermittedby,andinconformitywith,theprovisionsofthisIndenture;
(b)thatsuchSecurities,whenauthenticatedanddeliveredbytheTrusteeandissuedbytheCompanyinthemannerand
subjecttoanyconditionsspecifiedinsuchOpinionofCounsel,willconstitutevalid,bindingandenforceableobligationsofthe
Company,subjecttocustomaryexceptions;and
(c)suchothermattersastheTrusteemayreasonablyrequest.
TheTrusteeshallhavetherighttodeclinetoauthenticateanddeliveranySecuritiesunderthisSectioniftheTrustee,beingadvisedby
counsel,determinesthatsuchactionmaynotlawfullybetakenbytheCompanyoriftheTrusteeingoodfaithshalldeterminethatsuchaction
wouldexposetheTrusteetopersonalliabilitytoexistingSecurityholders.
SECTION2.05.ExecutionofSecurities.TheSecuritiesshallbesignedonbehalfoftheCompany,manuallyorinfacsimile,byits
ChairmanoftheBoardoritsPresidentoraViceChairmanoftheBoardoraVicePresidenteitherunderitscorporateseal(whichmaybein
facsimile)reproducedthereonandattested,manuallyorinfacsimile,byitsSecretaryoranAssistantSecretaryoritsTreasureroranAssistant
Treasurer,ornotunderitscorporateseal,astheCompanymayelect.Typographicalandotherminorerrorsordefectsinanysuchreproductionof
thesealoranysuchsignatureshallnotaffectthevalidityorenforceabilityofanySecuritythathasbeendulyauthorizedanddeliveredbythe
Trustee.
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IncaseanyofficeroftheCompanywhosesignatureappearsonanyoftheSecurities,manuallyorinfacsimile,shallceasetobesuch
officerbeforesuchSecuritiessosignedshallhavebeenauthenticatedanddeliveredbytheTrustee,ordisposedofbytheCompany,such
SecuritiesneverthelessmaybeauthenticatedanddeliveredbytheTrustee,ordisposedofbytheCompany,asthoughthepersonwhosesignature
appearsonsuchSecuritieshadnotceasedtobesuchofficeroftheCompany;andanySecuritymaybesignedandthecorporatesealreproduced
thereonmaybeattested,onbehalfoftheCompany,manuallyorinfacsimile,bysuchpersonsas,attheactualdateoftheexecutionofsuch
Security,shallbetheproperofficersoftheCompany,althoughatthedateoftheexecutionofthisIndentureanysuchpersonwasnotsuch
officer.
OnlysuchSecuritiesasshallbearthereonacertificateofauthenticationsubstantiallyintheformhereinbeforereceipted,signedmanually
byanauthorizedsignatoryoftheTrustee,shallbeentitledtothebenefitsofthisIndentureorbevalidorobligatoryformypurpose.Such
certificatebytheTrusteeuponanySecurityexecutedbytheCompanyshallbeconclusiveevidencethattheSecuritysoauthenticatedhasbeen
dulyauthenticatedanddeliveredhereunderandthattheholderisentitledtothebenefitsofthisIndenture.
SECTION2.06.ExchangeofSecurities.SecuritiesofanyseriesmaybeexchangedforalikeaggregateprincipalamountofSecuritiesof
thesameseriesinotherauthorizeddenominations.TheSecuritiesofanyseriestobeexchangedshallbesurrenderedattheofficesoragenciesto
bemaintainedbytheCompanyinaccordancewiththeprovisionsofSection3.02,andtheCompanyshallexecuteandtheTrusteeshall
authenticateanddeliverinexchangetherefortheSecurityorSecuritiesthattheSecurityholdermakingtheexchangeshallbeentitledtoreceive.
TheCompanyshallkeep,atoneoftheofficesoragenciestobemaintainedbytheCompanyinaccordancewiththeprovisionsofSection
3.02,aregisterorregistersinwhich,subjecttosuchreasonableregulationsasitortheSecuritiesregistrarmayprescribe,theCompanyshall
registerSecuritiesandshallregisterthetransferofSecuritiesasinthisArticleTwoprovided.Uponsurrenderforregistrationoftransferofany
Securityatsuchofficeoragency,theCompanyshallexecuteandtheTrusteeshallauthenticateanddeliverinthenameofthetransfereeor
transfereesanewSecurityorSecuritiesofthesameseriesthattheSecurityholdermakingtheexchangeshallbeentitledtoreceive,foralike
aggregateprincipalamount.
AllSecuritiespresentedorsurrenderedforexchange,registrationoftransfer,redemptionorpaymentshall,ifsorequiredbytheCompany
ortheTrustee,bedulyendorsedby,oraccompaniedbyawritteninstrumentorinstrumentsoftransferinformsatisfactorytotheCompanyand
theTrustee,dulyexecutedbytheSecurityholderorbyhisattorneywhoshallbesodulyauthorizedinwriting.
NoservicechargeshallbemadeforanyexchangeorregistrationoftransferofSecurities,buttheCompanyortheSecuritiesregistrar
mayrequirepaymentofasumsufficienttocoveranytaxorothergovernmentalchargethatmaybeimposedinrelationthereto.
9
TheCompanyshallnotberequiredtoexchangeorregisteratransferof(i)anySecuritiesofanyseriesforaperiodof15daysnext
precedingthefirstmailingofnoticeofredemptionofSecuritiesofsuchseriestoberedeemed,or(ii)anySecuritiesselected,calledorbeing
calledforredemptionexcept,inthecaseofanySecuritywherepublicnoticehasbeengiventhatsuchSecurityistoberedeemedinpart,the
portionthereofnotso.toberedeemed.
Notwithstandingtheforegoing,anyGlobalSecurityshallbeexchangeablepursuanttothisSection2.06forSecuritiesregisteredinthe
namesofpersonsotherthantheDepositaryforsuchSecurityoritsnomineeonlyif(i)suchDepositarynotifiestheCompanythatitisunwilling
orunabletocontinueasDepositaryforsuchGlobalSecurityorifatanytimesuchDepositaryceasestobeaclearingagencyregisteredunderthe
SecuritiesExchangeActof1934,asamended,andtheCompanyfailstoappointasuccessorDepositaryforsuchGlobalSecuritywithin90days
aftertheCompanyreceivessuchnoticeorbecomesawareofsuchevent,(ii)theCompanyexecutesanddeliverstotheTrusteewritten
instructionsthatsuchGlobalSecurityshallbesoexchangeable,or(iii)thereshallhaveoccurredandbecontinuinganEventofDefaultoran
eventwhich,withthegivingofnoticeorlapseoftime,orboth,wouldconstituteanEventofDefaultwithrespecttotheSecurities.AnyGlobal
SecuritythatisexchangeablepursuanttotheprecedingsentenceshallbeexchangeableforSecuritiesregisteredinsuchnamesasthedepositary
shalldirect.
Exceptasprovidedintheimmediatelyprecedingparagraph,aGlobalSecuritymaynotbetransferredexceptasawholebythe
DepositarywithrespecttosuchGlobalSecuritytoanomineeofsuchDepositaryorbyanomineeofsuchDepositarytosuchDepositaryor
anothernomineeofsuchDepositaryorbysuchDepositaryoranysuchnomineetoasuccessorofsuchDepositaryoranomineeofsuch
successor.
NoneoftheCompany,theTrustee,anyPayingAgentortheSecurityRegistrarwillhaveanyresponsibilityorliabilityforanyaspectof
therecordsrelatingtoorpaymentsmadeonaccountofbeneficialownershipinterestsofaGlobalSecurityorformaintaining,supervisingor
reviewinganyrecordsrelatingtosuchbeneficialownershipinterests.
SECTION2.07.TemporarySecurities.PendingthepreparationofdefinitiveSecuritiesofanyseries,theCompanymayexecuteandthe
TrusteeauthenticateanddelivertemporarySecuritiesofsuchseries(printed,typewrittenorotherwisereproduced)ofanyauthorized
denominationandsubstantiallyintheformofthedefinitiveSecuritiesofsuchseries,butwithsuchomission,insertionsandvariationsasmaybe
appropriatefortemporarySecuritiesofsuchseries,allasmaybedeterminedbytheCompany.TemporarySecuritiesofanyseriesmaycontain
referencetoanyprovisionsofthisIndentureasmaybeappropriate.EverysuchtemporarySecurityshallbeauthenticatedbytheTrusteeuponthe
conditionsandinsubstantiallythesamemanner,andwiththesameeffect,asthedefinitiveSecuritiesofsuchseries.Withoutunnecessarydelay,
theCompanywillexecuteanddelivertotheTrusteedefinitiveSecuritiesofsuchseriesandthereuponanyoralltemporarySecuritiesofsuch
seriesmaybesurrenderedinexchangetherefor,attheofficesoragenciestobemaintainedbytheCompanyinaccordancewiththeprovisionsof
Section3.02,andtheTrusteesallauthenticateanddeliverinexchangeforsuchtemporarySecuritiesofsuchseriesanequalaggregateprincipal
amountofdefinitiveSecuritiesofsuchseries.Untilsoexchanged,thetemporarySecuritiesofsuchseriesshallinall
10
respectsbeentitledtothesamebenefitsunderthisIndentureasdefinitiveSecuritiesofsuchseriesauthenticatedanddeliveredhereunder.
SECTION2.08.Mutilated,Destroyed,LostorStolenSecurities.IncaseanytemporaryordefinitiveSecurityofanyseriesshallbecome
mutilatedorbedestroyed;lostorstolen,theCompany,inthecaseofanymutilatedSecurityofanyseriesshall,andinthecaseofanydestroyed,
lostorstolenSecurityofanyseriesinitsdiscretionmay,executeanduponitsrequesttheTrusteeshallauthenticateanddeliver,anewSecurity
ofthesameseriesbearinganumbernotcontemporaneouslyoutstandinginexchangeandsubstitutionforthemutilatedSecurity,orinlieuofand
substitutionfortheSecuritysodestroyed,lostorstolen,or,ifanysuchSecurityshallhavematuredorshallbeabouttomature,insteadofissuing
asubstitutedSecurity,theCompanymaypaythesamewithoutsurrenderthereofexceptinthecaseofamutilatedSecurity.
IneverycasetheapplicantforasubstitutedSecurityorforsuchpaymentshallfurnishtotheCompanyandtotheTrusteesuchsecurityor
indemnityasmayberequiredbythemtosaveeachofthemharmlessfromallrisk,howeverremote,and,ineverycaseofdestruction,lossor
theft,theapplicantshallalsofurnishtotheCompanyandtotheTrusteeevidencetotheirsatisfactionofthedestruction,lossortheftofsuch
Securityandoftheownershipthereof.TheTrusteemayauthenticateanysuchsubstitutedSecurityanddeliverthesame,ortheTrusteeorany
PayingAgentoftheCompanymaymakeanysuchpayment,uponthewrittenrequestorauthorizationofanyofficeroftheCompany,andshall
incurnoliabilitytoanyonebyreasonofanythingdoneoromittedtobedonebyitingoodfaithundertheprovisionsofthisSection2.08.Upon
theissueofanysubstitutedSecurity,theCompanymayrequirethepaymentofasumsufficienttocoveranytaxorothergovernmentalcharge
thatmaybeimposedinrelationtheretoandanyexpensesconnectedtherewith(includingthefeesandexpensesoftheTrustee).
EverysubstitutedSecurityissuedpursuanttotheprovisionsofthisSection2.08insubstitutionforanydestroyed,lostorstolenSecurities
shallconstituteanadditionalcontractualobligationoftheCompany,whetherornotthedestroyed,lostorstolenSecurityshallbefoundatany
time,andshallbeentitledtoallthebenefitsof(butshallbesubjecttoallthelimitationsofrightssetforthin)thisIndentureequallyand
proportionatelywithanyandallotherSecuritiesdulyissuedhereunder.
AllSecuritiesshallbeheldandownedupontheexpressconditionthattheforegoingprovisionsareexclusivewithrespecttothe
replacementorpaymentofmutilated,destroyed,lostorstolenSecurities,andshallpreclude(totheextentlawful)anyandallotherrightsor
remedies,notwithstandinganylaworstatuteexistingorhereafterenactedtothecontrarywithrespecttothereplacementorpaymentof
negotiableinstrumentsorothersecuritieswithouttheirsurrender.
SECTION2.09.CancellationofSurrenderedSecurities.AllSecuritiessurrenderedforthepurposeofpayment,redemption,exchange,
substitutionorregistrationoftransfer,shall,ifsurrenderedtotheCompanyoranyPayingAgentorregistrar,bedeliveredtotheTrusteeandthe
same,togetherwithsecuritiessurrenderedtotheTrusteeforcancellation,shallbepromptlycanceledbyit,andnoSecuritiesshallbeissuedin
lieuthereofexceptasexpresslypermittedbyanyoftheprovisionsofthisIndenture.TheTrusteeshalldestroycanceledSecuritiesandshall
delivercertificatesofdestructionthereoftotheCompanyfromtimetotime.IftheCompany
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shallpurchaseorotherwiseacquireanyoftheSecurities,however,suchpurchaseoracquisitionshallnotoperateasapayment,redemptionor
satisfactionoftheindebtednessrepresentedbysuchSecuritiesunlessanduntiltheCompany,atitsoption,shalldeliverorsurrenderthesameto
theTrusteeforcancellation.
SECTION2.10.SecuritiesinGlobalForm.IfSecuritiesoforwithinaseriesareissuableinwholeorinpartintemporaryorpermanent
globalform,asspecifiedascontemplatedbySection2.03,then,notwithstandingclause(8)ofSection2.03,anysuchSecurityshallrepresent
suchoftheoutstandingSecuritiesofsuchseriesasshallbespecifiedthereinandmayprovidethatitshallrepresenttheaggregateamountof
outstandingSecuritiesfromtimetotimeendorsedthereonandthattheaggregateamountofoutstandingSecuritiesrepresentedtherebymayfrom
timetotimebereducedtoreflectexchanges.AnyendorsementofaSecurityinglobalformtoreflecttheamount,oranyincreaseordecreasein
theamount,orchangesintherightsofholders,ofoutstandingSecuritiesrepresentedthereby,shallbemadebytheTrusteeinsuchmannerand
uponinstructionsgivenbysuchpersonorpersonsasshallbespecifiedthereinorintheinstructionsbytheCompanytobedeliveredtothe
TrusteepursuanttoSection2.04or2.07.SubjecttotheprovisionsofSection2.04and,ifapplicable,Section2.07,theTrusteeshalldeliverand
redeliveranySecurityinglobalforminthemanneranduponinstructionsgivenbythepersonorpersonsspecifiedthereinorintheapplicable
Companyinstructions.AnyinstructionsbytheCompanywithrespecttoendorsementordeliveryorredeliveryofaSecurityinglobalformshall
beinwritingbutneednotcomplywithSection13.05hereofandneednotbeaccompaniedbyanOpinionofCounsel.
ARTICLETHREE
PARTICULARCOVENANTSOFTHECOMPANY
TheCompanycovenantsasfollows:
SECTION3.01.PaymentofPrincipalof(andPremium,ifany)andInterestonSecurities.TheCompanywilldulyandpunctuallypayor
causetobepaidtheprincipalof(andpremium,ifany)andinterestoneachseriesoftheSecuritiesattherespectivetimesandplacesandinthe
mannerprovidedinsuchSecuritiesandthisIndenture.EachpaymentfromtheCompanytotheTrusteeortothePayingAgentshallbe
accompaniedbyawrittennoticethatdesignatestheseriestowhichsuchpaymentrelates.Asaconditionprecedenttothepaymentofanyinterest
onaSecurity,theCompanyorthePayingAgentmayrequiretheholderofsuchSecuritytofurnishsuchevidenceaswillenabletheCompanyto
determinewhetheritisrequiredbylawtodeductortoretainanytaxortaxesfromtheinterestsopayable.Aninstallmentofprincipal,premium
orinterestshallbeconsideredpaidonthedateitisdueiftheTrusteeorPayingAgentholdsby11:00a.m.,NewYorkCitytime,onthatdate
moneydesignatedforandsufficienttopaytheinstallment.
SECTION3.02.MaintenanceofOfficeorAgencyforRegistrationofTransfer,ExchangeandPaymentofSecurities.Solongasanyof
theSecuritiesshallremainoutstanding,theCompanywillmaintainanofficeoragencyinthecontinentalUnitedState,wheretheSecuritiesmay
besurrenderedforexchangeorregistrationoftransferasinthisIndentureprovided,and
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wherenoticesanddemandstoorupontheCompanyinrespectoftheSecuritiesorofthisIndenturemaybeserved,andwheretheSecuritiesmay
bepresentedorsurrenderedforpayment.TheCompanywillgivetotheTrusteepromptwrittennoticeofthelocationofanysuchofficeor
agencyandofanychangeoflocationthereof.IncasetheCompanyshallfailtomaintainanysuchrequiredofficeoragencyorshallfailtogive
suchnoticeofthelocationorofanychangeinthelocationthereof,suchsurrenders,presentationsanddemandsmaybemadeandnoticesmaybe
servedattheprincipalofficeoftheTrustee,andtheCompanyherebyappointstheTrusteeitsagenttoreceiveattheaforesaidofficeallsuch
surrenders,presentations,noticesanddemands.
TheCompanymayfromtimetotimedesignate-oneormoreotherofficesoragencieswheretheSecuritiesmaybepresentedor
surrenderedforanyorallsuchpurposes,andmayfromtimetotimerescindsuchdesignations;provided,however,thatnosuchdesignationor
rescissionshallinanymannerrelievetheCompanyofitsobligationtomaintainanofficeoragencyinthecontinentalUnitedStates,forsuch
purposesasstatedinthisSection.TheCompanywillgivepromptwrittennoticetotheTrusteeofanysuchdesignationorrescissionandany
changeinthelocationofanysuchofficeoragency.
SECTION3.03.AppointmenttoFillaVacancyintheOfficeofTrustee.TheCompany,whenevernecessarytoavoidorfillavacancyin
theofficeofTrustee,willappoint,inthemannerprovidedinSection6.10,aTrustee,sothatthereshallatalltimesbeaTrusteehereunder.
SECTION3.04.ProvisionastoPayingAgent.(a)IftheCompanyshallappointaPayingAgentotherthantheTrustee,itwillcausesuch
PayingAgenttoexec1:1.teanddelivertotheTrusteeaninstrumentinwhichsuchagentshallagreewiththeTrustee,subjecttotheprovisionsof
thisSection3.04,
(1)thatitwillholdallsumsheldbyitassuchagentforthepaymentoftheprincipalof(andpremium,ifany)orinterestonany
seriesofSecurities(whethersuchsumshavebeenpaidtoitbytheCompanyorbyanyotherobligoronsuchseriesofSecurities)intrust
forthebenefitofthepersonsentitledtheretountilsuchsumsshallbepaidtosuchpersonsorotherwisedisposedofashereinprovided,
and
(2)thatitwillgivetheTrusteewrittennoticeofanyfailurebytheCompany(orbyanyotherobligoronanyseriesofSecurities)
tomakeanypaymentoftheprincipalof(andpremium,ifany)orinterestonsuchseriesofSecuritieswhenthesameshallbedueand
payable;and
(3)atanytimeduringthecontinuanceofanEventofDefault,uponthewrittenrequestoftheTrustee,forthwithpaytothe
TrusteeallsumssoheldintrustbysuchPayingAgent.
(b)TheCompanywill,priortoeachduedateoftheprincipalof(andpremium,ifany)orinterestonanyseriesofSecurities,depositwith
thePayingAgentasumsufficienttopaytheprincipal(andpremium,ifany)orinterestsobecomingdue,suchsumtobeheldintrustforthe
benefitoftheholdersofsuchseriesofSecuritiesentitledtosuchprincipal,premiumorinterest,
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and(unlesssuchPayingAgentistheTrustee)theCompanywillpromptlynotifytheTrusteeinwritingofitsfailuresotoact
(c)IftheCompanyshallactasitsownPayingAgent,itwill,onorbeforeeachduedateoftheprincipalof(andpremium,ifany)or
interestonanyseriesofSecurities,setaside,segregateandholdintrustforthebenefitofthepersonsentitledthereto,asumsufficienttopaysuch
principal(andpremium,ifany)orinterestsobecomingdueuntilsuchsumsshallbepaidtosuchpersonsorotherwisedisposedofasherein
providedandwillpromptlynotifytheTrusteeinwritingofanysuchactionorfailuretotakesuchaction.
(d)AnythinginthisSection3.04tothecontrarynotwithstanding,theCompanymay,atanytime,forthepurposeofobtaininga
satisfactionanddischargewithrespecttooneormoreorallseriesofSecuritieshereunder,orforanyotherreason,butonlyinaccordancewith
ArticleEleven,payorcausetobepaidtotheTrusteeoranyPayingAgentallsumsheldintrustforanysuchseriesbyit,oranyPayingAgent
hereunder,asrequiredbythisSection3.04,suchsumstobeheldbytheTrusteeorsuchPayingAgentuponthetrustshereincontained.Upon
suchpaymentbyanyPayingAgenttotheTrustee,suchPayingAgentshallbereleasedfromallfurtherliabilitywithrespecttosuchmoney.
(e)AnythinginthisSection3.04tothecontrarynotwithstanding,theagreementtoholdsumsintrustasprovidedinthisSection3.04is
subject.totheprovisionsofSections11.03and11.04.
SECTION3.05.MaintenanceofCorporateExistence.SubjecttoArticleTen,theCompanywillatalltimesdoorcausetobedoneall
thingsnecessarytopreserveandkeepinfullforceandeffectitscorporateexistenceandits-franchisetobeacorporation.
SECTION3.06.Officers’CertificateastoDefault.TheCompanywill,solongasanyseriesofSecuritiesisoutstanding,delivertothe
Trustee,forthwithuponbecomingawareofanydefaultordefaultsintheperformanceofanycovenant,agreementorconditioncontainedinthis
Indenture,anOfficers’Certificatespecifyingsuchdefaultordefaults.
SECTION3.07.FurtherAssurance.FromtimetotimewheneverreasonablydemandedbytheTrustee,theCompanywillmake,execute
andeliverorcausetobemade,executedanddeliveredanyandallsuchfurtherandotherinstrumentsandassurancesasmaybereasonably
necessaryorpropertocarryouttheintentionofortofacilitatetheperformanceofthetermsofthisIndentureortosecuretherightsandremedies
hereunderoftheholdersofanyseriesofSecurities.
ARTICLEFOUR
SECURITYHOLDERS'LISTSANDREPORTSBYTHECOMPANY
ANDTHETRUSTEE
SECTION4.01.CompanytoFurnishTrusteeInformationastoNamesandAddressestoSecurityholders.TheCompanywillfurnishor
causetobefurnishedtotheTrusteealistinsuch
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formastheTrusteemayreasonablyrequirecontainingallinformationinthepossessionorcontroloftheCompany,oranyofitsPayingAgents
otherthantheTrustee,astothenamesandaddressesoftheholdersoftheSecuritiesofeachseriesobtainedsincethedateasofwhichthenext
previouslistifany,wasfurnished:
(a)semi-annually,notmorethan15daysaftereachrecorddateforthepaymentofsemi-annualinterestonsuchSecurities,as
hereinabovespecified,asofsuchrecorddateandnotlessthanonceeverysixmonthsfornon-interestbearingSecuritiesineachyear,and
(b)atsuchothertimesastheTrusteemayrequestinwriting,within30daysafterthereceiptbytheCompanyofanysuch
request,alistofsimilarformandcontentasofadatenotmorethan15dayspriortothetimesuchlistisfurnished;provided,thatsuch
listneednotincludeinformationreceivedaftersuchdate,provided;however,thatsolongastheTrusteeistheSecurityregistrar,nosuch
listshallberequiredtobefurnished.
SECTION4.02.PreservationandDisclosureofLists.(a)TheTrusteeshallpreserve,inascurrentaformasisreasonablypracticable,all
informationastothenamesandaddressesoftheholdersofSecurities(1)containedinthemostrecentlistfurnishedtoitasprovidedinSection
4.01and(2)receivedbyitinthecapacityofPayingAgent(ifsoacting)andSecurityregistrar(ifsoacting).
TheTrusteemaydestroyanylistfurnishedtoitasprovidedinSection4.01uponreceiptofanewlistsofurnished.
(b)SecurityholdersmaycommunicatepursuanttoSection312(b)oftheTrustIndentureActof1939withotherSecurityholderswith
respecttotheirrightsunderthisIndentureoranyorallseriesoftheSecurities.
(c)EachandeverySecurityholder,byreceivingandholdingthesame,agreeswiththeCompanyandtheTrusteethatneitherthe
CompanynortheTrusteenoranyPayingAgentnortheSecurityregistrarshallbeheldaccountablebyreasonofthedisclosureofanysuch
informationastothenamesandaddressesoftheholdersofSecuritiesinaccordancewiththeprovisionsofsubsection(b)ofthisSection4.02,
regardlessofthesourcefromwhichsuchinformationwasderived,andthattheTrusteeshallnotbeheldaccountablebyreasonofmailingany
materialpursuanttoarequestmadeundersaidsubsection(b).
SECTION4.03.ReportsbytheCompany.(a)TheCompanycovenantsandagreestofilewiththeTrustee,within30daysafterthe
CompanyisrequiredtofilethesamewiththeCommission,copiesoftheannualreportsandoftheinformation,documentsandotherreports(or
copiesofsuchportionsofanyoftheforegoingastheCommissionmayfromtimetotimebyrulesandregulationsprescribe)thattheCompany
mayberequiredtofilewiththeCommissionpursuanttoSection13orSection15(d)oftheSecuritiesExchangeActof1934,asamended;or,if
theCompanyisnotrequiredtofileinformation,documentsorreportspursuanttoeitherofsuchsections,thentofilewiththeTrusteeandthe
Commission,inaccordancewithrulesandregulationsprescribedfromtimetotimebytheCommission,suchofthesupplementaryandperiodic
information,documentsandreportsthatmayberequiredpursuanttoSection13ofthe
15
SecuritiesExchangeActof1934,asamended,inrespectofasecuritylistedandregisteredonanationalsecuritiesexchangeasmaybeprescribed
fromtimetotimeinsuchrulesandregulations.
(b)TheCompanycovenantsandagreestofilewiththeTrusteeandtheCommission,inaccordancewiththerulesandregulations
prescribedfromtimetotimebytheCommission,suchadditionalinformation,documents,andreportswithrespecttocompliancebythe
CompanywiththeconditionsandcovenantsprovidedforinthisIndentureasmayberequiredfromtimetotimebysuchrulesandregulations.
(c)TheCompanycovenantsandagreestotransmittotheholdersofSecuritieswithin30daysafterthefilingthereofwiththeTrustee,in
themannerandtotheextentprovidedinsubsection(c)ofSection4.04withrespecttoreportspursuanttosubsection(a)ofsaidSection4.04,
suchsummariesofanyinformation,documentsandreportsrequiredtobefiledbytheCompanypursuanttosubsection(a)and(b)ofthisSection
4.03asmayberequiredbyrulesandregulationsprescribedfromtimetotimebytheCommission.
(d)TheCompanycovenantsandagreestofurnishtotheTrustee,notlessoftenthanannually,abriefcertificatefromtheprincipal
executiveofficer,principalfinancialofficerorprincipalaccountingofficeroftheCompanyastohisorherknowledgeoftheCompany's
compliancewithallconditionsandcovenantsunderthisIndenture;provided,forpurposesofthisparagraph,suchcomplianceshallbedetermined
withoutregardtoanyperiodofgraceorrequirementofnoticeprovidedunderthisIndenture.
SECTION4.04.ReportsbytheTrustee.(a)OnorbeforeJuly14,2005,andonorbeforeJuly14thineveryyearthereafter,solongas
anySecuritiesareoutstandinghereunder,ifsuchreportisrequiredbytheTrustIndentureActof1939,theTrusteeshalltransmittothe
Securityholdersofeachseries,ashereinafterinthisSection4.04provided,abriefreportdatedasofMay15thoftheyearinwhichsuchreportis
madethatcomplieswithSection313(a)oftheTrustIndentureActof1939.
(b)TheTrusteeshallalsocomplywithSection313(b)(2)oftheTrustIndentureActof1939.
(c)ReportspursuanttothisSection4.04shallbetransmittedbymailtoallSecurityholders,asthenamesandaddressesofsuchholders
appearupontheregistrybooksoftheCompanyandtoallotherpersontowhomsuchreportsarerequiredtobetransmittedpursuanttoSection
313(c)oftheTrustIndentureActof1939.
(d)Acopyofeachsuchreportshall,atthetimeofsuchtransmissiontoholdersofSecurities,befiledbytheTrusteewitheachstock
exchangeuponwhichtheSecuritiesofanyapplicableseriesarelistedandalsowiththeCommission.TheCompanywillnotifytheTrusteewhen
andastheSecuritiesofsuchseriesbecomelistedonanystockexchange.
16
ARTICLEFIVE
REMEDIESOFTHETRUSTEEANDSECURITYHOLDERS
ONEVENTOFDEFAULT
SECTION5.01.EventsofDefaultDefined;AccelerationofMaturity;WaiverofDefault.IncaseoneormoreofthefollowingEventsof
DefaultwithrespecttoSecuritiesofanyseriesshallhaveoccurredandbecontinuing,thatistosay:
(a)defaultinthepaymentofanyinstallmentofinterestuponanyoftheSecuritiesofsuchseriesasandwhenthesameshall
becomedueandpayable,andcontinuanceofsuchdefaultforaperiodof30days;
(b)defaultinthepaymentoftheprincipalof(andpremium,ifany,on)anyoftheSecuritiesofsuchseriesasandwhenthesame
shallbecomedueandpayableeitheratstatedmaturity,bydeclarationorotherwise;
(c)failureonthepartoftheCompanydulytoobserveorperforminanymaterialrespectanyotherofthecovenantsor
agreementsonthepartoftheCompanyintheSecuritiesofsuchseriesorcontainedinthisIndentureforaperiodof90daysafterthedate
onwhichwrittennoticespecifyingsuchfailure,statingthatsuchnoticeisa“NoticeofDefault”hereunderand,requiringthesametobe
remedied,shallhavebeengiventotheCompanybytheTrustee,ortotheCompanyandtheTrusteebytheholdersofatleast25%in
aggregateprincipalamountoftheSecuritiesofsuchseriesatthetimeoutstanding;
(d)defaultunderthetermsofanyagreementorinstrumentevidencing,orunderwhichtheCompanyhasatthedateofthis
Indentureorhereafteroutstanding,anyindebtednessforborrowedmoneyandsuchindebtednessshallbeacceleratedsothatthesame
shallbeorbecomedueandpayablepriortothedateonwhichthesamewouldotherwisebecomedueandpayableandtheaggregate
principalamountthereofsoacceleratedexceeds$50,000,000andsuchaccelerationisnotrescindedorannulledwithintendaysafter
therehasbeengiven,byregisteredorcertifiedmail,totheCompanybytheTrusteeortotheCompanyandtheTrusteebytheholdersof
atleast25%inaggregateprincipalamountoftheoutstandingSecuritiesofthatseriesawrittennoticespecifyingsuchdefaultandstating
thatsuchnoticeisa“NoticeofDefault”hereunder;(itbeingunderstoodhowever,that,subjecttotheprovisionsofSection6.01,the
Trusteeshallnotbedeemedtohaveknowledgeofsuchdefaultundersuchagreementorinstrumentunlesseither(A)aResponsible
OfficeroftheTrusteeshallhaveactualknowledgeofsuchdefaultor(B)aResponsibleOfficeroftheTrusteeshallhavereceivedwritten
noticethereoffromtheCompany,fromanySecurityholder,fromtheholderofanysuchindebtednessorfromthetrusteewideranysuch
agreementorotherinstrument);provided,however,thatifsuchdefaultundersuchagreementorinstrumentisremediedorcuredbythe
Companyorwaivedbytheholdersofsuchindebtedness,thentheEventofDefaulthereunderbyreasonthereofshallbedeemedlikewise
tohavebeenthereupon
17
remedied,curedorwaivedwithoutfurtheractionuponthepartofeithertheTrusteeoranyofsuchSecurityholders;
(e)acourthavingjurisdictioninthepremisesshallenteradecreeororderforreliefinrespectoftheCompanyinaninvoluntary
caseunderanyapplicablebankruptcy,insolvencyorothersimilarlawnoworhereafterineffect,orappointingareceiver,liquidator,
assignee,custodian,trustee,sequestrator(orsimilarofficial)oftheCompanyorforanysubstantialpartofitsproperty,ororderingthe
winding-uporliquidationofitsaffairs,andsuchdecreeorordershallremainunstayedandineffectforaperiodof60consecutivedays;
or
(f)theCompanyshallcommenceavoluntarycaseunderanyapplicablebankruptcy,insolvencyorothersimilarlawnowor
hereafterineffect,orshallconsenttotheentryofanorderforreliefinaninvoluntarycaseunderanysuchlaw,orshallconsenttothe
appointmentof,ortakingpossessionby,areceiver,liquidator,assignee,trustee,custodian,sequestrator(orsimilarofficial)ofthe
Companyorforallorsubstantiallyallofitsproperty,orshallmakeanygeneralassignmentforthebenefitofcreditors,orshallfail
generallytopayitsdebtsastheybecomedueorshalltakeanycorporateactioninfurtheranceofanyoftheforegoing,
thenandineachandeverysuchcase,unlesstheprincipalofalltheSecuritiesofsuchseriesshallhavealreadybecomedueandpayable,either
theTrusteeortheholdersofnotlessthan25%inaggregateprincipalamountoftheSecuritiesofsuchseriesthenoutstandinghereunder,by
noticeinwritingtotheCompany(andtotheTrusteeifgivenbySecurityholders),maydeclaretheprincipalofalltheSecuritiesofsuchseries
(or,iftheSecuritiesofsuchseriesareOriginalIssueDiscountSecurities,suchportionoftheprincipalamountasmaybespecifiedinthetermsof
thatseries)ofallSecuritiesofsuchseriesandtheinterestaccruedthereon,ifany,tobedueandpayableimmediately,anduponanysuch
declarationthesameshallbecomeandshallbeimmediatelydueandpayable,anythinginthisIndentureorintheSecuritiescontainedtothe
contrarynotwithstanding.Thisprovision,however,issubjecttotheconditionthatif,atanytimeaftertheprincipal(or,iftheSecuritiesare
OriginalIssueDiscountSecurities,suchportionoftheprincipalasmaybespecifiedinthetermsthereof)oftheSecuritiesofanyseries(orofall
theSecurities,asthecasemaybe)shallhavebeensodeclareddueandpayable,andbeforeanyjudgmentordecreeforthepaymentofthe
moneysdueshallhavebeenobtainedorenteredashereinafterprovided,theCompanyshallpayorshalldepositwiththeTrusteeasumsufficient
topayallmaturedinstallmentsofinterestuponalltheSecuritiesofsuchseries(orofalltheSecurities,asthecasemaybe)andtheprincipalof
(andpremium,ifany,on)allSecuritiesofsuchseries(orofalltheSecurities,asthecasemaybe)thatshallhavebecomedueotherwisethanby
declaration(withinterestonoverdueinstallmentsofinteresttotheextentpermittedbylaw,andonsuchprincipalandpremium,ifany,-atthe
rateofinterestbornebytheSecuritiesorYieldtoMaturity(inthecaseofOriginalIssueDiscountSecurities)applicabletotheSecurities·ofsuch
series(orattherespectiveratesofinterestorYieldstoMaturityofalltheSecurities,asthecasemaybe)tothedateofsuchpaymentordeposit)
andtheexpensesoftheTrustee,andanyandalldefaultsunderthisIndenture,otherthanthenonpaymentofprincipalofandaccruedintereston
Securitiesthatshallhavebecomeduebydeclaration,shallhavebeenremedied,thenandineverysuchcasetheSecurityholdersofamajorityin
aggregateprincipalamountofthe
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Securitiesofsuchseries(orofalltheSecurities,asthecasemaybe)thenoutstanding,bywrittennoticetotheCompanyandtotheTrustee,may
waivealldefaultswithrespecttothatseries,eachsuchseriesvotingasaseparateclass(orwithrespecttoallSecurities,asthecasemaybe,in
suchcasetreatedasasingleclass)andrescindandannulsuchdeclarationanditsconsequences;butnosuchwaiverofrescissionandannulment
shallextendtoorshallaffectanysubsequentdefault,orshallimpairanyrightconsequentthereon.
IncasetheTrusteeshallhaveproceededtoenforceanyrightunderthisIndentureandsuchproceedingsshallhavebeendiscontinuedor
abandonedbecauseofsuchrescissionorannulmentorforanyotherreasonorshallhavebeendeterminedadverselytotheTrustee,thenandin
everysuchcasetheCompany,theTrusteeandtheholdersoftheSecuritiesofsuchseriesshallberestoredrespectivelytotheirformerpositions
andrightshereunder,andallrights,remediesandpowersoftheCompanyandtheTrusteeshallcontinueasthoughnosuchproceedingshadbeen
taken.
SECTION5.02.PaymentofSecuritiesonDefault;SuitTherefor.TheCompanycovenantsthat(1)incasedefaultshallbemadeinthe
paymentofanyinstallmentofinterestonanyoftheSecuritiesofanyseries,asandwhenthesameshallbecomedueandpayable,andsuch
defaultshallhavecontinuedforaperiodof30daysor(2)incasedefaultshallbemadeinthepaymentoftheprincipalof(orpremium,ifany,on)
anyoftheSecuritiesofanyserieswhenthesameshallhavebecomedueandpayable,whetheruponmaturityoftheSecuritiesforsuchseriesor
otherwise,includinganysinkingfundpayment,then,upondemandoftheTrustee,theCompanywillpaytotheTrusteeforthebenefitofthe
holdersoftheSecuritiesofsuchseries(andshalldesignatewhichseries)thewholeamountthatthenshallhavebecomedueandpayableonall
Securitiesofsuchseriesforprincipal(andpremium,ifany)orinterest,orboth,asthecasemaybe,withinterestontheoverdueprincipal(and
premium,ifany)andinstallmentsofinterest(totheextentpermittedbylaw)attherateofinterestorYieldtoMaturity(inthecaseofOriginal
IssueDiscountSecurities)bornebysuchseriesofSecurities;and,inadditionthereto,suchfurtheramountasshallbesufficienttocoverthecosts
andexpensesofcollection,includingareasonablecompensationtotheTrustee,itsagents,attorneysandcounsel,andanyexpensesorliabilities
incurredbytheTrusteehereunderotherthanthroughitsnegligenceorbadfaith.
UntilsuchdemandismadebytheTrustee,theCompanymaypaytheprincipalof(andpremium,ifany,on)andinterestontheSecurities
ofanyseriestotheholdersthereof,whetherornottheSecuritiesofsuchseriesbeoverdue.
IncasetheCompanyshallfailforthwithtopaysuchamountsuponsuchdemand,theTrustee,initsownnameandastrusteeofan
expresstrust,shallbeentitledandempoweredtoinstituteanyactionorproceedingsatlaworinequityforthecollectionofthesumssodueand
unpaid,andmayprosecuteanysuchactionorproceedingtojudgmentorfinaldecree,andmayenforceanysuchjudgmentorfinaldecreeagainst
theCompanyoranyotherobligoruponsuchSecurities,andcollectinthemannerprovidedbylawoutofthepropertyoftheCompanyorany
otherobligoruponsuchSecuritieswhereversituatedthemoneysadjudgedordecreedtobepayable.
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IncasethereshallbependingproceedingsforthebankruptcyorforthereorganizationoftheCompanyoranyotherobligoruponthe
SecuritiesofanyseriesundertheBankruptcyCodeoranyotherapplicablelaworinconnectionwiththeinsolvencyoftheCompanyoranyother
obligoruponanySecuritiesorinthecaseareceiverortrusteeshallhavebeenappointedforitsproperty,orincaseofanyotherjudicial
proceedingsrelativetotheCompanyoranyotherobligoruponsuchseriesofSecuritiesortocreditorsorpropertyoftheCompanyorsuchother
obligor,theTrustee,irrespectiveofwhethertheprincipalofsuchseriesofSecuritiesshallthenbedueandpayableasthereinexpressedorby
declarationor0therwiseandirrespectiveofwhethertheTrusteeshallhavemadeanydemandpursuanttotheprovisionsofthisSection5.02,shall
beentitledandempoweredbyinterventioninsuchproceedingsorotherwise,tofileandproveaclaimorclaimsforthewholeamountof
principal,premium,ifany,andinterest(oriftheSecuritiesofanyseriesareOriginalIssueDiscountSecurities,suchportionoftheprincipal
amountasmaybespecifiedinthetermsofthatseries)owingandunpaidinrespectoftheSecuritiesofanyseries,andtofilesuchotherpapersor
documentsasmaybenecessaryoradvisableinordertohavetheclaimsoftheTrustandoftheSecurityholdersallowedinanyjudicial
proceedingsrelativetotheCompanyoranyotherobligorupontheSecuritiesofanyseries,itscreditors,oritsproperty,andtocollectandreceive
anymoneysorotherpropertypayableordeliverableonanysuchclaims,andtodistributethesameafterthedeductionofitschargesand
expenses;andanyreceiver,assigneeortrusteeinbankruptcyorreorganizationisherebyauthorizedbyeachofsuchholderstomakesuch
paymentstotheTrustee,and,intheeventthattheTrusteeshallconsenttothemakingofsuchpaymentsdirectlytotheholders,topaytothe
Trusteeanyamountdueitforcompensationandexpenses,includingcounselfeesincurredbyituptothedateofsuchdistribution.Totheextent
thatsuchpaymentofreasonablecompensation,expenses,liabilitiesandcounselfeesoutoftheestateinanysuchproceedingsshallbedeniedfor
anyreason(exceptasaresultofnegligenceorbadfaith),paymentofthesameshallbesecuredbyalienon,andshallbepaidoutof,anyandall
distributions,dividends,moneys,securitiesandotherpropertythattheholdersoftheSecuritiesofanyseriesmaybeentitledtoreceiveinsuch
proceedings,whetherinliquidationorunderanyplanofreorganizationorarrangementorotherwise.
AllrightsofactionandofassertingclaimsunderthisIndenture,orunderanyoftheSecuritiesofanyseries,maybeenforcedbythe
TrusteewithoutthepossessionofanyoftheSecurities,ortheproductionthereofatanytrialorotherproceedingrelativethereto,andanysuch
suitorproceedinginstitutedbytheTrusteeshallbebroughtinitsownnameandastrusteeofanexpresstrust,andanyrecoveryofjudgmentshall
befortheratablebenefitoftheholdersoftheSecuritiesaridtheTrustee.
SECTION5.03.ApplicationofMoneysCollectedbyTrustee.AnymoneyscollectedbytheTrusteepursuanttoSection5.02withrespect
toanyoneormoreseriesshallbeappliedintheorderfollowing,atthedateordatesfixedbytheTrusteeforthedistributionofsuchmoneysand,
inthecaseofthedistributionofsuchmoneysonaccountofprincipalorinterest,uponpresentationoftheseveralSecuritiesofaseriesinrespect
ofwhichmoneyshavebeencollected,andstamping(orotherwisenoting)thereonthepayment,orissuingSecuritiesofsuchseriesinreduced
principalamountsinexchangeforthepresentedSecuritiesofsuchseriesifonlypartiallypaid,anduponsurrenderthereofiffullypaid:
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FIRST:Tothepaymentofcostsandexpensesofcollectionapplicabletosuchseries,andreasonablecompensationtotheTrustee,
itsagent,attorneysandcounsel,andofallotherexpensesandliabilitiesincurred,andalladvancesmade,bytheTrusteewithrespectto
suchseries,exceptasaresultofitsnegligenceorbadfaith;
SECOND:IncasenoprincipaloftheoutstandingSecuritiesofsuchseriesshallhavebecomedueandbeunpaid,tothepayment
ofinterestontheSecuritiesofsuchseriesindefault,intheorderofthematurityoftheinstallmentsofsuchinterest,withinterestuponthe
overdueinstallmentsofinterest(sofaraspermittedbylawandtotheextentthatsuchinteresthasbeencollectedbytheTrustee)atthe
rateofinterestorYieldtoMaturity(inthecaseofOriginalIssueDiscountSecurities)bornebytheSecuritiesofsuchseries;andincase
suchmoneysshallbeinsufficienttopay-infullthewholeamountsodueandunpaidupontheSecuritiesofsuchseries,thentothe
paymentofsuchprincipal(andpremium,ifany)andinterest,withoutpreferenceorpriorityofprincipal(andpremium,ifany)over
interest,orofinterestoverprincipal(andpremium,ifany),orofanyinstallmentofinterestoveranyotherinstallmentofinterestorof
anySecurityofsuchseriesoveranyotherSecurityofsuchseries,ratablyaccordingtotheaggregateofsuchprincipal(andpremium,if
any)andaccruedandunpaidinterest;and
THIRD:Tothepaymentoftheremainder,ifany,totheCompany,itssuccessorsorassigns,ortowhosoevermaybelawfully
entitledtoreceivethesameorasacourtofcompetentjurisdictionmaydirect.
SECTION5.04.LimitationonSuitsbyHoldersofSecurities.NoholderofaSecurityofanyseriesshallhaveanyrightbyvirtueorby
availingofanyprovisionofthisIndenturetoinstituteanysuit,actionorproceedinginequityoratlaworinbankruptcyorotherwise,uponor
underorwithrespecttothisIndentureorfortheappointmentofareceiver,liquidatingcustodian,trusteeorsimilarofficial,orforanyother
remedyhereunder,unlesssuchholderpreviouslyshallhavegiventotheTrusteewrittennoticeofdefaultandofthecontinuancethereof,as
hereinaboveprovided,andunlessalsotheholdersofnotlessthan25%inaggregateprincipalamountofsuchseriesofSecuritiesthenoutstanding
shallhavemadewrittenrequestupontheTrusteetoinstitutesuchaction,suitorproceedinginitsownnameasTrusteehereunderandshallhave
offeredtotheTrusteesuchreasonableindemnityasitmayrequireagainstthecosts,expensesandliabilitiestobeincurredthereinorthereby,and
theTrustee,for60daysafteritsreceiptofsuchnotice,requestandofferofindemnity,shallhaveneglectedorrefusedtoinstituteanysuchaction,
suitorproceedingandnodirectioninconsistentwithsuchwrittenrequestshallhavebeengiventotheTrusteepursuanttoSection5.06;itbeing
understoodandintended,andbeingexpresslycovenantedbytheholderofeverySecurityofaserieswitheveryotherSecurityholderandthe
Trustee,thatnooneormoreholdersofsuchseriesofSecuritiesshallhaveanyrightinanymannerwhatsoeverbyvirtueorbyavailingfany
provisionofthisIndenturetoaffect,disturborprejudicetherightsoftheholdersofanyotherseriesofSecurities,ortoobtainorseektoobtain
priorityoverorpreferencetoanyothersuchholder,ortoenforceanyrightunderthisIndenture,exceptinthemannerhereinprovidedandforthe
equal,ratableandcommonbenefitofallholdersofSecurities.FortheprotectionandenforcementoftheprovisionsofthisSection
21
5.04eachandeverySecurityholderandtheTrusteeshallbeentitledtosuchreliefascanbegiveneitheratlaworinequity.
NotwithstandinganyotherprovisionsinthisIndenture,therightofanyholderofanySecuritytoreceivepaymentoftheprincipalof(and
premium,ifany)andinterestonsuchSecurity,onoraftertherespectiveduedatesexpressedinsuchSecurity,ortoinstitutesuitforthe
enforcementofanysuch,paymentonoraftersuchrespectivedates,shallnotbeimpairedoraffectedwithouttheconsentofsuchholder.
SECTION5.05.ProceedingsbyTrustee;RemediesCumulativeandContinuing.IncaseanEventofDefaulthasoccurred,hasnotbeen
waived,andiscontinuing,theTrusteemayinitsdiscretionproceedtoprotectandenforcetherightsvestedinitbythisIndenturebysuch
appropriatejudicialproceedingsastheTrusteeshalldeemmosteffectualtoprotectandenforceanyofsuchrights,eitherbysuitinequityorby
actionatlaworbyproceedinginbankruptcyorotherwise,whetherforthe-specificenforcementofanycovenantoragreementcontainedinthis
IndentureorinaidoftheexerciseofanypowergrantedinthisIndenture,ortoenforceanyotherlegalorequitablerightvestedintheTrusteeby
thisIndentureorbylaw.AllpowersandremediesgivenbythisArticleFivetotheTrusteeortotheSecurityholdersshall,totheextentpermitted
bylaw,bedeemedcumulativeandnotexclusiveofanythereoforanyotherpowersandremediesavailabletotheTrusteeortotheholdersofthe
Securities,byjudicialproceedingsorotherwise,toenforcetheperformanceorobservanceofthecovenantsandagreementscontainedinthis
Indenture,andnodelayoromissionoftheTrusteeorofanyholderofanyoftheSecuritiestoexerciseanyrightorpoweraccruinguponany
defaultoccurringandcontinuingasaforesaidshallimpairanysuchrightorpower,orshallbeconstruedtobeawaiverofanysuchdefaultorany
acquiescencetherein;and,subjecttotheprovisionsofSection5.04,everypowerandremedygivenbythisArticleFiveorbylawtotheTrustee
ortotheSecurityholdersmaybeexercisedfromtimetotime,andasoftenasshallbedeemedexpedient,bytheTrusteeorbytheSecurityholders.
SECTION5.06.RightsofHoldersofMajorityinPrincipalAmountofSecuritiestoDirectTrusteeandtoWaiveDefaults.Theholdersof
amajorityinaggregateprincipalamountoftheSecuritiesofallseriesaffected(votingasoneclass)atthetimeoutstanding(determinedas
providedinSection7.04),·or,ifarecorddateissetinaccordancewithSection7.05,asofsuchrecorddate,shallhavetherighttodirectthetime,
method,andplaceofconductinganyproceedingforanyremedyavailabletotheTrustee,orexercisinganytrustorpowerconferredonthe
TrusteebythisIndenturewithrespecttotheSecuritiesofsuchseries;provided,however,thatsubjecttotheprovisionsofSection6.01,the
TrusteeshallhavetherighttodeclinetofollowanysuchdirectioniftheTrusteebeingadvisedbycounselshalldeterminethattheactionso
directedmaynotlawfullybetaken,oriftheTrusteeingoodfaithshall,byaResponsibleOfficerorOfficersoftheTrustee,determinethatthe
proceedingssodirectedwouldbeillegalorinvolveitinpersonalliabilityorbeunjustlyprejudicialtotheSecurityholdersnotconsenting,and
providedfurtherthatnothinginthis-IndentureshallimpairtherightoftheTrusteeinitsdiscretiontotakeanyactiondeemedproperbythe
TrusteeandwhichisnotinconsistentwithsuchdirectionbytheSecurityholders.PriortothedeclarationofthematurityoftheSecuritiesofany
seriesasprovidedinSection5.01,theholdersofamajorityinaggregateprincipalamountoftheSecuritiesofsuchseriesatthetimeoutstanding
(eachsuchseriesvotingasaseparateclass)
22
(determinedasprovidedinSections7.04and7.05)mayonbehalfoftheholdersofalloftheSecuritiesofsuchserieswaiveanypastdefault
hereunderanditsconsequences,exceptadefaultinthepaymentofinterestorpremiumon,ortheprincipalof,anyoftheSecurities.Inthecaseof
anysuchwaivertheCompany,theTrusteeandtheholdersoftheSecuritiesofsuchseriesshallberestoredtotheirformerpositionsandrights
hereunder,respectively;butnosuchwaivershallextendtoanysubsequentorotherdefaultorimpairanyrightconsequenthereon.
SECTION5.07.TrusteetoGiveNoticeofDefaultsKnowntoIt,ButMayWithholdinCertainCircumstances.TheTrusteeshall,within
90daysaftertheoccurrenceofadefaulthereunder,givetotheSecurityholders,inthemannerandtotheextentprovidedinsubsection(c)of
Section4.04withrespecttoreportspursuanttosubsection(a)ofSection4.04,noticeofsuchdefaultsknowntotheTrusteeunlesssuchdefault
shallhavebeencuredorwaivedbeforethegivingofsuchnotice(theterm"defaults"forthepurposesofthisSection5.07beingherebydefinedto
betheeventsspecifiedinclauses(a),(b),(c),(d),(e)and(f)ofSection5.01,notincludinganyperiodsofgraceprovidedfortherein,and
irrespectiveofthegivingofanyrequirednotice);providedthat,exceptinthecaseofdefaultinthepaymentoftheprincipalof(andpremium,if
any)orinterestonanyoftheSecuritiesofsuchseries,theTrusteeshallbeprotectedinwithholdingsuchnoticeifandsolongastheboardof
directors,theexecutivecommittee,oratrustcommitteeofdirectorsand/orResponsibleOfficersoftheTrusteeingoodfaithdeterminedthatthe
withholdingofsuchnoticeisintheinterestoftheSecurityholdersofsuchseries.
SECTION5.08.RequirementofanUndertakingtoPayCostsinCertainSuitsUnderthisIndentureorAgainsttheTrustee.Allpartiesto
thisIndentureagree,andeachholderofanySecuritybyhisacceptancethereofshallbedeemedtohaveagreed,thatanycourtmayinits
discretionrequire,inanysuitfortheenforcementoranyrightorremedyunderthisIndenture,orinanysuitagainsttheTrusteeforanyaction
takenoromittedbyitasTrustee,thefilingbyanypartylitigantinsuchsuitofanundertakingtopaythecostsofsuchsuit,andthatsuchcourt
mayinitsdiscretionassessreasonablecosts,includingreasonableattorney'sfees,againstanypartylitigantinsuchsuit,havingdueregardtothe
meritsandgoodfaithoftheclaimsordefensesmadebysuchpartylitigant;buttheprovisionsofthisSection5.08shallnotapplytoanysuit
institutedbytheTrustee,toanysuitinstitutedbyanySecurityholder,orgroupofSecurityholdersofanyseries,holdingintheaggregatemore
thantenpercentinaggregateprincipalamountoftheSecuritiesofsuchseriesoutstanding,ortoanysuitinstitutedbyanySecurityholderforthe
enforcementofthepaymentoftheprincipalof(andpremium,ifany)orinterestonanySecurity,onoraftertheduedateexpressedinsuch
Security.
ARTICLESIX
CONCERNINGTHETRUSTEE
SECTION6.01.DutiesandResponsibilitiesofTrustee.TheTrustee,priortotheoccurrenceofanEventofDefaultandafterthecuringor
waivingofallEventsofDefaultthatmayhaveoccurredwithrespecttotheSecuritiesofaseries,undertakestoperformsuchdutiesandonly
suchdutiesasarespecificallysetforthinthisIndenture.IncaseanEventofDefaulthasoccurredofwhichaResponsibleOfficeroftheTrustee
hasactualknowledge(whichhasnotbeencuredorwaived)theTrusteeshallexercisesuchoftherightsandpowersvestedinitbythis
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IndenturewithrespecttotheSecuritiesofaseries,andusethesamedegreeofcareandskillintheirexerciseasaprudentmanwouldexerciseor
useunderthecircumstancesintheconductofhisownaffairs.
NoprovisionofthisIndentureshallbeconstruedtorelievetheTrusteefromliabilityforitsownnegligentaction,itsownnegligent
failuretoact,oritsownwillfulmisconduct,provided,however,that:
(a)priortotheoccurrenceofanEventofDefaultwithrespecttotheSecuritiesofanyseriesandafterthecuringorwaivingofall
Eventsofdefaultwithrespecttosuchseriesthatmayhaveoccurred
(1)thedutiesandobligationsoftheTrusteeshallbedeterminedsolelybytheexpressprovisionsofthisIndenture,and
theTrusteeshallonlybeliablefortheperformanceofsuchdutiesandobligationsasarespecificallysetforthinthisIndenture,
andnoimpliedcovenantsorobligationsshallbereadintothisIndentureagainsttheTrustee;and
(2)intheabsenceofbadfaithonthepartoftheTrustee,theTrusteemayconclusivelyrely,astothetruthofthe
statementandthecorrectnessoftheopinionsexpressedtherein,uponanycertificatesoropinionsfurnishedtotheTrusteeand
conformingtotherequirementsofthisIndenture;butinthecaseofanysuchcertificatesoropinionsthatbyanyprovisionhereof
arespecificallyrequiredtobefurnishedtotheTrustee,theTrusteeshallbeunderadutytoexaminethesametodetermine
whetherornottheyconformtotherequirementsofthisIndenture;
(b)theTrusteeshallnotbeliableforanyerrorofjudgmentmadeingoodfaithbyaResponsibleOfficerorOfficersofthe
Trustee,unlessitshallbeprovedthattheTrusteewasnegligentinascertainingthepertinentfacts;and
(c)theTrusteeshallnotbeliablewithrespecttoanyactiontakenoromittedtobetakenbyitingoodfaithinaccordancewiththe
directionoftheholdersofnotlessthanamajorityinprincipalamountoftheSecuritiesofallseriesaffected(votingasaclass)atthetime
outstanding(determinedasprovidedinSections7.04and7.05)relatingtothetime,methodandplaceofconductinganyproceedingfor
anyremedyavailabletotheTrustee,orexercisinganytrustorpowerconferredupontheTrustee,underthisIndenture.
NoneoftheprovisionscontainedinthisIndentureshallrequiretheTrusteetoexpendorriskitsownfundsorotherwiseincurpersonal
financialliabilityintheperformanceofanyofitsdutieshereunderorintheexerciseofanyofitsrightsorpowers,ifthereisreasonablegrounds
forbelievingthattherepaymentofsuchfundsoradequateindemnityagainstsuchriskorliabilityisnotreasonablyassuredtoit.
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SECTION6.02.RelianceonDocuments,Opinions,etc.SubjecttotheprovisionsofSection6.01:
(a)TheTrusteemayrelyandshallbeprotectedinactingorrefrainingfromactinguponanyresolution,certificate,statement,
instrument,opinion,report,notice,request,consent,order,approval,bond,noteorotherpaperordocumentbelievedbyittobegenuine
andtohavebeensignedorpresentedbytheproperpartyorparties;
(b)Anyrequest,direction,orderordemandoftheCompanymentionedhereinshallbesufficientlyevidencedbyanOfficers’
Certificate(unlessotherevidenceinrespectthereofbehereinspecificallyprescribed);andtheTrusteebyacopythereofcertifiedbythe
SecretaryoranyAssistantSecretaryoftheCompany;
(c)TheTrusteemayconsultwithcounselandtheadviceofsuchcounseloranyOpinionofCounselshallbefullandcomplete
authorizationandprotectioninrespectofanyactiontaken,sufferedoromittedbyithereunderingoodfaithandinaccordancewithsuch
adviceorOpinionofCounsel;
(d)TheTrusteeshallbeundernoobligationtoexerciseanyoftherightsorpowersvestedinitbythisIndentureattherequest,
orderordirectionofanyoftheSecurityholders,pursuanttotheprovisionsofthisIndenture,unlesssuchSecurityholdersshallhave
offeredtotheTrusteereasonablesecurityorindemnityagainstthecosts,expensesandliabilitiesthatmaybeincurredthereinorthereby;
butnothinghereincontainedshall,however,relievetheTrusteeoftheobligation,upontheoccurrenceofanEventofDefault(whichhas
notbeencuredorwaived),toexercisesuchoftherightsandpowersvestedinitbythisIndenture,andtousethesamedegreeofcareand
skillintheirexercise,asaprudentmanwouldexerciseoruseunderthecircumstancesintheconductofhisownaffairs;
(e)TheTrusteeshallnotbeliableforanyactiontakenoromittedbyitingoodfaithandbelievedbyittobeauthorizedorwithin
thediscretionorrightsorpowersconferreduponitbythisIndenture;
(f)TheTrusteeshallnotbeboundtomakeanyinvestigationintothefactsormattersstatedinanyresolution,certificate,
statement,instrument,opinionreport,notice,request,consent,orderapproval,bond,noteorotherpaperordocumentunlessrequestedin
writingsotodobytheholdersofnotlessthanamajorityinaggregateprincipalamountoftheSecuritiesofallseriesaffectedthen
outstandingvotingasoneclass(determinedasprovidedinSections7.04and7.05);provided,however,thatifthepaymentwithina
reasonabletimetotheTrusteeofthecosts,expensesorliabilitieslikelytobeincurredbyitinthemakingofsuchinvestigationis,inthe
opinionoftheTrustee,notreasonablyassuredtotheTrustee-bythesecurityaffordedtoitbythetermsofthisIndenture,theTrusteemay
requirereasonableindemnityagainstsuchexpenseorliabilityasaconditiontosoproceeding.Thereasonableexpenseofeverysuch
examinationshallbepaidbytheCompanyor,ifpaidbytheTrustee,shallberepaidbytheCompanyupondemand;and
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(g)TheTrusteemayexecuteanyofthetrustsorpowershereunderorperformanydutieshereundereitherdirectlyorbyor
throughagentsorattorneys.TheTrusteeshallnotberesponsibleforanymisconductornegligenceonthepartofanyagentorattorney
appointedwithduecarebyithereunder.
SECTION6.03.NoResponsibilityforRecitals,etc.ThestatementsandrecitalscontainedhereinandintheSecuritiesandinanyother
documentinconnectionwiththesaleoftheSecurities(otherthanthecertificateofauthenticationoftheSecurities)shallbetakenasthe
statementsoftheCompany,andtheTrusteeassumesnoresponsibilityforthecorrectnessofthesame.TheTrusteemakesnorepresentationasto
thevalidityorsufficiencyofthisIndentureoroftheSecurities.TheTrusteeshallnotbeaccountablefortheuseorapplicationbytheCompanyof
anyoftheSecuritiesoroftheproceedsofsuchSecurities,orfortheuseorapplicationofanymoneyspaidoverbytheTrusteeinaccordance
withanyprovisionofthisIndenture,orfortheuseorapplicationofanymoneysreceivedbyanyPayingAgentotherthantheTrustee.
SECTION6.04.Trustee,PayingAgentorSecurityRegistrarMayOwnSecurities.TheTrusteeoranyPayingAgentorSecurityregistrar,
initsindividualoranyothercapacity,maybecometheownerorpledgeeofSecuritiesandmayotherwisedealwiththeCompanyoranyAffiliate
oftheCompanywiththesamerightsitwouldhaveifitwerenotTrustee,PayingAgentorSecurityregistrar.
SECTION6.05.MoneysReceivedbyTrusteetobeHeldinTrustWithoutInterest.SubjecttotheprovisionsofSection11.04,allmoneys
receivedbytheTrusteeshall,untilusedorappliedashereinprovided,beheldintrustforthepurposesforwhichtheywerereceived,butneednot
besegregatedfromotherfundsexcepttotheextentrequiredbylaw.TheTrusteeshallbeundernoliabilityforinterestonmoneysreceivedbyit
hereunderexceptsuchasitmayagreewiththeCompanytopaythereon.SolongasnoEventofDefaultshallhaveoccurredandbecontinuing,
allinterestallowedonanysuchmoneysshallbepaidfromtimetotimeuponthewrittenorderoftheCompany,signedbyitsChairmanofthe
Board,anyViceChairmanoftheBoard,itsPresidentoranyVicePresidentoritsTreasureroranyAssistantTreasurer.
SECTION6.06.CompensationandExpensesofTrustee.TheCompanycovenantsandagreestopaytotheTrusteefromtimetotime,and
theTrusteeshallbeentitledto,reasonablecompensation(whichshallnotbelimitedbyanyprovisionoflawinregardtothecompensationofa
Trusteeofanexpresstrust),andtheCompanywillpromptlypayorreimbursetheTrusteeuponitsrequestforallreasonableexpenses,
disbursementsandadvancesincurredormadebytheTrusteeinconnectionwiththeacceptanceoradministrationofitstrustunderthisIndenture
(includingthereasonablecompensationandtheexpensesanddisbursementsofitscounselandofallpersonsnotregularlyinitsemploy)except
anysuchexpense,disbursementoradvanceasmayarisefromitsnegligenceorbadfaith.TheCompanyalsocovenantstoindemnifytheTrustee
for,andtoholditharmlessagainst,anyloss,liabilityorexpenseincurredwithoutnegligenceorbadfaithonthepartoftheTrusteeandarising
(a)outoforinconnectionwiththeacceptanceoradministrationofthistrust,or(b)fromanyactionorfailuretoactasauthorizedorwithinthe
discretionorrightsorpowersconferredupontheTrusteehereunder,includingthe
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costsandexpensesofdefendingitselfagainstanyclaimofliabilityinthepremises.TheobligationsoftheCompanyunderthisSection6.06to
compensatetheTrusteeandtopayorreimbursetheTrusteeforexpenses,disbursements,losses,liabilitiesandadvancesshallconstitute
additionalindebtednesshereunderandshallsurvivetheresignationorremovaloftheTrusteeandthesatisfactionanddischargeofthisIndenture.
SuchadditionalindebtednessshallbesecuredbyalienpriortothatoftheSecuritiesuponallpropertyandfundsheldorcollectedbytheTrustee
assuch,exceptfundsheldintrustforthebenefitoftheholdersofparticularSecurities.
SECTION6.07.RightofTrusteetoRelyonOfficers’CertificateWhereNoOtherEvidenceSpecificallyPrescribed.Subjecttothe
provisionsofSection6.01,wheneverintheadministrationoftheprovisionsofthisIndenturetheTrusteeshalldeemitnecessaryordesirablethat
amatterbeprovedorestablishedpriortotaking,sufferingoromittinganyactionhereunder,suchmatter(unlessotherevidenceinrespectthereof
behereinspecificallyprescribed)may,intheabsenceofnegligenceorbadfaithonthepartoftheTrustee,bedeemedtobeconclusivelyproved
andestablishedbyanOfficers'CertificatedeliveredtotheTrustee,andsuchCertificate,intheabsenceofnegligenceorbadfaithonthepartof
theTrustee,shallbefullwarranttotheTrusteeforanyactiontaken,sufferedoromittedbyitundertheprovisionsofthisIndentureuponthefaith
thereof.
SECTION6.08.ConflictingInterestofTrustee.(a)If,afteranEventofDefaulthasoccurredandiscontinuing,theTrusteehasorshall
acquireanyconflictinginterest,asdefinedinthisSection6.08,itshall,within90daysafterascertainingthatithassuchconflictinginterest,
eithereliminatesuchconflictinginterestor,unlesstheTrustee'sdutytoresignisstayedasprovidedinSection310(b)oftheTrustIndentureAct
of1939,resigninthemannerandwiththeeffectspecifiedinSection6.10,suchresignationtobecomeeffectiveupontheappointmentofa
successortrusteeandsuchsuccessor'sacceptanceofsuchappointment,andtheCompanyshalltakepromptstepstohaveasuccessorappointedin
themannerprovidedinSection6.10.
(b)IntheeventthattheTrusteeshallfailtocomplywiththeprovisionsofsubsection(a)ofthisSection6.08,theTrusteeshall,within10
daysaftertheexpirationofsuch90-dayperiod,or,iftheTrustee'sdutytoresignisstayed,aftertheendofsuchstay,transmitnoticeofsuch
failuretotheSecurityholdersinthemannerandtotheextentprovidedinsubsection(c)ofSection4.04withrespecttoreportspursuantto
subsection(a)ofSection4.04.
(c)ForthepurposesofthisSection6.08,theTrusteeshallbedeemedtohaveaconflictinginterestiftheTrusteehasaconflictwithinthe
provisionsofSection310(b)oftheTrustIndentureActof1939.
SECTION6.09.RequirementsforEligibilityofTrustee.TheTrusteehereundershallatalltimesbeacorporationorganizedanddoing
businessunderthelawsoftheUnitedStatesoranyStateorterritorythereoforoftheDistrictofColumbiaauthorizedundersuchlawstoexercise
corporatetrustpowers,havingacombinedcapitalandsurplusofatleastfivemilliondollars,subjecttosupervisionorexaminationbyFederal,
State,Territorial,orDistrictofColumbiaauthority.Ifsuchcorporationpublishesreportsofconditionatleastannually,pursuanttolawortothe
requirementsoftheaforesaidsupervisingorexaminingauthority,then
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forthepurposesofthisSection6.09,thecombinedcapitalandsurplusofsuchcorporationshallbedeemedtobeitscombinedcapitalandsurplus
assetforthinitsmostrecentreportofconditionsopublished.IncaseatanytimetheTrusteeshallceasetobeeligibleinaccordancewiththe
provisionsofthisSection6.09,theTrusteeshallresignimmediatelyinthemannerandwiththeeffectspecifiedinSection6.10.Neitherthe
Companynoranypersonsdirectlyorindirectlycontrolling,controlledby,orundercommoncontrolwiththeCompanyshallserveasTrustee.
SECTION6.10.ResignationorRemovalofTrustee.(a)TheTrustee,oranyTrusteehereafterappointed,mayatanytimeresignwith
respecttooneormoreseriesofSecuritiesbygivingwrittennoticeofsuchresignationtotheCompanyortotheSecurityholders,suchnoticeto
theSecurityholdersofapplicableseriesofSecuritiestobegivenbymailing(byfirstclassmail)thesame.Uponreceivingsuchnoticeof
resignation,theCompanyshallpromptlyappointasuccessortrusteewithrespecttotheapplicableseriesbywritteninstrument,induplicate,
executedbyorderoftheBoardofDirectorsoftheCompany,onecopyofwhichinstrumentshallbedeliveredtotheresigningTrusteeandone
copytothesuccessortrustee.Ifnosuccessortrusteeshallhavebeenso'appointedandhaveacceptedappointmentwithin60daysafterthe
mailingofsuchnoticeofresignation,theresigningTrusteemaypetitionanycourtofcompetentjurisdictionfortheappointmentofasuccessor
trustee,oranySecurityholderwhohasbeenabonafideholderofaSecurityorSecuritiesforatleastsixmonthsmay,subjecttotheprovisionsof
Section5.08,onbehalfofhimselfandallotherssimilarlysituated,petitionanysuchcourtfortheappointmentofasuccessortrustee.Suchcourt
maythereupon,aftersuchnotice;ifany,asitmaydeemproperandprescribe,appointasuccessortrustee.
(b)Incaseatanytimeanyofthefollowingshalloccur:
(1)theTrusteeshallfailtocomplywiththeprovisionsofsubsection(a)ofSection6.08withrespecttoanyseriesofSecurities
afterwrittenrequestthereforbytheCompanyorbyanySecurityholderwhohasbeenabonafideholderofaSecurityorSecuritiesof
suchseriesforatleastsixmonths,or
(2)theTrusteeshallceasetobeeligibleinaccordancewiththeprovisionsofSection6.09andshallfailtoresignafterwritten
requestthereforbytheCompanyorbyanysuchSecurityholder,or
(3)theTrusteeshallbecomeincapableofacting,orshallbeadjudgedabankruptorinsolvent,orareceiveroftheTrusteeorofa
substantialportionofitspropertyshallbeappointed,oranypublicofficershalltakechargeorcontroloftheTrusteeorofasubstantial
portionofitspropertyoraffairsforthepurposeofrehabilitation,conservationorliquidation,
then,inanysuchcase,theCompanymayremovetheTrusteewithrespecttotheapplicableseriesandappointasuccessortrusteeforsuchseries
bywritteninstrument,induplicate,executedbyorderoftheBoardofDirectorsoftheCompany,onecopyofwhichinstrumentshallbedelivered
totheTrusteesoremovedandonecopytothesuccessortrustee,or,subjecttotheprovisionsofSection5.08,anySecurityholderwhohasbeena
bonafideholderofaSecurityor
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Securitiesofsuchseriesforatleastsixmonthsmay,onbehalfofhimselfandallotherssimilarlysituated,petitionanycourtofcompetent
jurisdictionfortheremovaloftheTrusteeandtheappointmentofasuccessortrusteewithrespecttosuchseries.Suchcourtmaythereupon,after
suchnotice,ifany,asitmaydeemproperandprescribe,removetheTrusteeandappointasuccessortrustee.
(c)TheholdersofamajorityinaggregateprincipalamountoftheSecuritiesofallseriesatthetimeoutstandingvotingasoneclass
(determinedasprovidedinSection7.04)mayatanytimeremovetheTrusteewithrespecttoSecuritiesofallseriesandappointasuccessor
trusteewithrespecttosecuritiesofallseriesbywritteninstrumentorinstrumentssignedbysuchholdersortheirattorneys-in-factduly
authorized,orbytheaffidavitsofthepermanentchairmanandsecretaryofameetingoftheSecurityholdersevidencingthevoteupona
resolutionorresolutionssubmittedtheretowithrespecttosuchremovalandappointment(asprovidedinArticleEight),andbydeliverythereof
totheTrusteesoremoved,tothesuccessortrusteeandtotheCompany.
(d)AnyresignationorremovaloftheTrusteeandappointmentofanysuccessortrusteepursuanttoanyoftheprovisionsofthisSection
6.10shallbecomeeffectiveuponacceptanceofappointmentbythesuccessortrusteeasprovidedinSection6.11.
SECTION6.11.AcceptancebySuccessortoTrustee;NoticeofSuccessionofaTrustee.Anysuccessortrusteeappointedasprovidedin
Section6.10shallexecute,acknowledgeanddelivertotheCompanyandtoitspredecessortrusteeaninstrumentacceptingsuchappointment
hereunder,andthereupontheresignationorremovalofthepredecessortrusteewithrespecttoalloranyparticularseriesshallbecomeeffective
andsuchsuccessortrustee,withoutanyfurtheract,deedorconveyance,shallbecomevestedwithalltherights,powers,dutiesandobligations
withrespecttosuchseriesofitspredecessorhereunder,withlikeeffectasiforiginallynamedasTrusteeherein;but,nevertheless,onthewritten
requestoftheCompanyorofthesuccessortrustee,theTrusteeceasingtoactshall,uponpaymentofanyamountsthendueitpursuanttothe
provisionsofSection6.06,payovertothesuccessortrustee,subjecttoSection11.04,allmoniesatthetimeheldbyithereunderwithrespectto
suchseries,andexecuteanddeliveraninstrumenttransferringtosuchsuccessortrusteealltherightsandpowersofthetrusteesoceasingtoact.
Uponrequestofanysuchsuccessortrustee,theCompanyshallexecuteanyandallinstrumentsinwritingformorefullyandcertainlyvestingin
andconfirmingtosuchsuccessortrusteeallsuchrightsandpowers.AnyTrusteeceasingtoactshall,nevertheless,retainalienuponallproperty
orfundsheldorcollectedbysuchTrustee,exceptfundsheldintrustforthebenefitoftheholdersofparticularSecurities,tosecureanyamounts
thendueitpursuanttotheprovisionsofSection6.06.
IfasuccessortrusteeisappointedwithrespecttotheSecuritiesofoneormore(butnotall)series,theCompany,thepredecessorTrustee
andeachsuccessortrusteewithrespecttotheSecuritiesofanyapplicableseriesshallexecuteanddeliveranindenturesupplementalheretothat
shallcontainsuchprovisionsasshallbedeemednecessaryordesirabletoconfirmthatalltherights,powers,trustsanddutiesofthepredecessor
TrusteewithrespecttotheSecuritiesofanyseriesastowhichthepredecessorTrusteeisnotretiringshallcontinuetobevestedinthe
predecessorTrustee,andshalladdtoorchangeanyoftheprovisionsofthisIndentureasshallbe
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necessarytoprovidefororfacilitatetheadministrationofthetrustshereunderbymorethanoneTrustee,itbeingunderstoodthatnothingherein
orinsuchsupplementalindentureshallconstitutesuchTrusteesasco-trusteesofthesametrustandthateachsuchTrusteeshallbeTrusteeofa
trustortrustsunderseparateindentures.
NosuccessortrusteewithrespecttoanyseriesofSecuritiesshallacceptappointmentasprovidedinthisSection6.11unlessatthetimeof
suchacceptancesuchsuccessortrusteeshallbequalifiedundertheprovisionsofSection6.08andeligibleundertheprovisionsofSection6.09.
UponacceptanceofappointmentbyasuccessortrusteeasprovidedinthisSection6.11,theCompanyshallmailtotheholdersof
Securitiesofanyseriesbyfirst-classmailnoticethereof.IftheCompanyfailstomailsuchnoticewithin30daysafteracceptanceofappointment
bythesuccessortrustee,thesuccessortrusteeshall,initsdiscretion,causesuchnoticetobemailedattheexpenseoftheCompany.
SECTION6.12.SuccessortoTrusteebyMerger,ConsolidationorSuccessiontoBusiness.AnycorporationintowhichtheTrusteemay
bemergedorconvertedorwithwhichitmaybeconsolidated,oranycorporationresultingfromanymergerorconversionorconsolidationto
whichtheTrusteeshallbeaparty,oranycorporationsucceedingtothecorporatetrustbusinessoftheTrustee,shallbethesuccessorofthe
Trusteehereunder,providedsuchcorporationshallbequalifiedundertheprovisionsofSection6.08andeligibleundertheprovisionsofSection
6.09,withouttheexecutionorfilingofanypaperoranyfurtheractonthepartofanyofthepartieshereto,anythinghereintothecontrary
notwithstanding.
IncaseatthetimesuchsuccessortotheTrusteeshallsucceedtothetrustscreatedbythisIndentureandtheSecuritiesofanyseriesshall
havebeenauthenticatedbutnotdelivered,anysuchsuccessortotheTrusteemayadoptthecertificateofauthenticationofanypredecessor
Trustee,anddeliversuchSecuritiessoauthenticated;andincaseatthattimetheSecuritiesofanyseriesshallnothavebeenauthenticated,any
successortotheTrusteemayauthenticatesuchSecuritieseitherinthenameofanypredecessorhereunderorinthenameofthesuccessor
Trustee;andinallsuchcasessuchcertificatesshallhavethefullforcethatitisanywhereintheSecuritiesofsuchseriesorinthisIndenture
providedthatthecertificateoftheTrusteeshallhave;provided,however,thattherighttoadoptthecertificateofauthenticationofany
predecessorTrusteeorauthenticateSecuritiesofanyseriesinthenameofanypredecessorTrusteeshallapplyonlytoitssuccessororsuccessors
bymerger,conversionorconsolidation.
SECTION6.13.LimitationsonRightsofTrusteeasaCreditor.TheTrusteeshallcomplywithSection311oftheTrustIndentureActof
1939.
ARTICLESEVEN
CONCERNINGTHESECURITYHOLDERS
SECTION7.01.EvidenceofActionbySecurityholders.WheneverinthisIndentureitisprovidedthattheholdersofaspecified
percentageinaggregateprincipalamountoftheSecuritiesofanyorallseriesmaytakeanyaction(includingthemakingofanydemandor
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request,thegivingofanynotice,consent,orwaiverorthetakingofanyotheraction)thefactthattheholdersofsuchspecifiedpercentage,
determinedasofthetimesuchactionwastakenor,ifarecorddatewassetwithrespecttheretopursuanttoSection7.05,asofsuchrecorddate,
havejoinedthereinmaybeevidenced(a)byanyinstrumentoranynumberofinstrumentsofsimilartenorexecutedbySecurityholdersinperson
orbyagentorproxyappointedinwriting,or(b)bytherecordoftheholdersofSecuritiesvotinginfavorthereofatanymeetingof
SecurityholdersdulycalledandheldinaccordancewiththeprovisionsofArticleEight,or(c)byacombinationofsuchinstrumentorinstruments
andanysuchrecordofsuchameetingofSecurityholders,or(d)inthecaseofSecuritiesevidencedbyaGlobalSecurity,byanyelectronic
transmissionorothermessage,whetherornotinwrittenformat,thatcomplieswiththeDepositary'sapplicableprocedures.
SECTION7.02.ProofofExecutionofInstrumentsandofHoldingofSecurities.SubjecttotheprovisionsofSections6.01,6.02and
8.05,proofoftheexecutionofanyinstrumentbyaSecurityholderorhisagentorproxyshallbesufficientifmadeinaccordancewithsuch
reasonablerulesandregulationsasmaybeprescribedbytheTrusteeorinsuchmannerasshallbesatisfactorytotheTrustee.
TheownershipofSecuritiesshallbeprovedbytheregisterofsuchSecurities,orbyacertificateoftheregistrarthereof.
TheTrusteemayacceptsuchotherprooforrequiresuchadditionalproofofanymatterreferredtointhisSection7.02asitshalldeem
reasonable,includingelectronicorothermessagestransmittedbytheDepositaryinaccordancewithitsapplicableprocedures.
TherecordofanySecurityholders’meetingshallbeprovedinthemannerprovidedinSection8.06.
SECTION7.03.WhoMaybeDeemedOwnersofSecurities.TheCompany,theTrustee,anyPayingAgentandanySecurityregistrar
maydeemandtreatthepersoninwhosenameanySecurityshallberegistereduponthebooksoftheCompanyforsuchseriesontheapplicable
recorddateastheabsoluteownerofsuchSecurity(whetherornotsuchSecurityshallbeoverdueandnotwithstandinganynotationofownership
orotherwritingthereon)forthepurposeofreceivingpaymentoforonaccountoftheprincipalof,premium,ifany,andinterestsuchSecurity
andforallotherpurposesandneithertheCompanynortheTrusteenoranyPayingAgentnoranySecurityregistrarshallbeaffectedbyany
noticetothecontrary.Allsuchpaymentssomadeto;orupontheorderof,anysuchholdershallbevalid,and,totheextentofthesumorsumsso
paid,effectualtosatisfyanddischargetheliabilityformoneyspayableuponanysuchSecurity.
SECTION7.04.SecuritiesOwnedbyCompanyorControlledorControllingPersonsDisregardedforCertainPurposes.Indetermining
whethertheholdersoftherequisiteaggregateprincipalamountofSecuritieshaveconcurredinanydemand,direction,request,notice,consent,
waiverorotheractionunderthisIndenture,SecuritiesthatareownedbytheCompanyoranyotherobligorontheSecuritiesorbyanyperson
directlyorindirectlycontrollingorcontrolledbyorunderdirect-orindirectcommoncontrolwiththeCompanyoranyotherobligoronthe
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Securitiesshallbedisregardedanddeemednottobeoutstandingforthepurposeofanysuchdetermination,providedthatforthepurposesof
determiningwhethertheTrusteeshallbeprotectedinrelyingonanysuchdemand,direction,request,notice,consentorwaiver,onlySecurities
thattheTrusteeknowsaresoownedshallbesodisregarded.Securitiessoownedthathavebeenpledgedingoodfaithmayberegardedas
outstandingforthepurposesofthisSection7.04,ifthepledgeeshallestablishtothesatisfactionoftheTrusteethepledgee'srighttovotesuch
Securitiesandthatthepledgeeisnotapersondirectlyorindirectlycontrollingorcontrolledbyorunderdirectorindirectcommoncontrolwith
theCompanyoranysuchobligor.Incaseofadisputeastosuchright,anydecisionbytheTrusteetakenupontheadviceofcounselshallbefull
protectiontotheTrustee.
SECTION7.05.RecordDateforActionbySecurityholders.WheneverinthisIndentureitisprovidedthatholdersofaspecified
percentageinaggregateprincipalamountoftheSecuritiesofaseriesmaytakeaction(includingthemakingofanydemandorrequest,thegiving
ofanydirection,notice,consentorwaiverorthetakingofanyaction),otherthananyactiontakenatameetingofSecurityholderscalledpursuant
toArticleEight,theCompany,pursuanttoaresolutionofitsBoardofDirectors,ortheholdersofatleasttenpercentinaggregateprincipal
amountoftheSecuritiesofsuchseriesthenoutstanding,mayrequesttheTrusteetofixarecorddatefordeterminingSecurityholdersentitledto
noticeofandtotakeanysuchaction.IncasetheCompanyortheholdersofSecuritiesofsuchseriesintheamountabovespecifiedshalldesireto
requestSecurityholdersofsuchseriestotakeanysuchactionandshallrequesttheTrusteetofixarecorddatewithrespecttheretobywritten
noticesettingforthinreasonabledetailtheSecurityholderactiontoberequested,theTrusteeshallpromptly(butinanyeventwithinfivedaysof
receiptofsuchrequest)fixarecorddatethatshallbeaBusinessDaynotlessthan15normorethan20daysafterthedateonwhichtheTrustee
receivessuchrequest.IftheTrusteeshallfailtofixarecorddateashereinaboveprovided,thentheCompanyortheholdersofSecuritiesofsuch
seriesintheamountabovespecifiedmayfixthesamebymailingwrittennoticethereof(therecorddatesofixedtobeaBusinessDaynotless
than15normorethan20daysafterthedateonwhichsuchwrittennoticeshallbegiven)totheTrustee.Ifarecorddateisfixedaccordingtothis
Section7.05,onlypersonsshownasSecurityholdersofsuchseriesontheregistrationbooksfortheCompanyatthecloseofbusinessonthe
recorddatesofixedshallbeentitledtotaketherequestedactionandthetakingofanysuchactionbytheholdersontherecorddateofthe
requiredpercentageoftheaggregateprincipalamountoftheSecuritiesofsuchseriesshallbebindingonallSecurityholdersofsuchseries,
providedthatthetakingoftherequestedactionbytheholdersontherecorddateofthepercentageinaggregateprincipalamountoftheSecurities
ofsuchseriesinconnectionwithsuchactionshallhavebeenevidencedtotheTrustee,asprovidedinSection7.01,notlaterthan180daysafter
suchrecorddate.
SECTION7.06.InstrumentsExecutedbySecurityholdersBindFutureHolders.Atanytimepriorto(butnotafter)theevidencingtothe
Trustee,asprovidedinSection7.01,ofthetakingofanyactionbytheholdersofthepercentageinaggregateprincipalamountoftheSecurities
ofanyorallseriesinconnectionwithsuchaction,anyholderofaSecurityofsuchseriestheserialnumberofwhichisshownbytheevidenceto
beincludedintheSecuritiesofsuchseriestheholdersofwhichhaveconsentedtosuchactionmay,byfilingwrittennoticewiththeTrusteeatits
principalofficeanduponproofofholdingasprovidedinSection7.02,revoke
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suchactionsofarasconcernssuchSecurity.ExceptasaforesaidanysuchactiontakenbytheholderofanySecurityofsuchseriesandany
direction,demand,request,waiver,consent,voteorotheractionoftheholderofanySecurityofsuchseriesthatbyanyprovisionsofthis
Indentureisrequiredorpermittedtobegivenshallbeconclusiveandbindinguponsuchholderanduponallfutureholdersandownersofsuch
Security,andofanySecurityissuedinlieuthereof,irrespectiveofwhetherornotanynotationinregardtheretoismadeuponsuchSecurity.Any
actiontakenbytheholdersofthepercentageinaggregateprincipalamountoftheSecuritiesofsuchseriesinconnectionwithsuchactionshallbe
conclusivelybindingastheactofsuchholdersupontheCompany,theTrusteeandtheholdersoftheSecuritiesofsuchseries.
ARTICLEEIGHT
SECURITYHOLDERS'MEETINGS
SECTION8.01.PurposesforWhichMeetingsMaybeCalled.AmeetingofholdersofSecuritiesofanyorallseries,thecasemay·be,
maybecalledatanytimeandfromtimetotimepursuanttotheprovisionsofthisArticleEightforanyofthefollowingpurposes:
(1)togiveanynoticetotheCompanyortotheTrustee,ortogiveanydirectionstotheTrustee,ortoconsenttothewaivingof
anydefaultorEventofDefaulthereunderanditsconsequences,ortotakeanyotheractionauthorizedtobetakenbySecurityholdersof
anyorallseriespursuanttoanyoftheprovisionsofArticleFive;
(2)toremovetheTrusteeandappointasuccessorTrusteepursuanttotheprovisionsofArticleSix;
(3)toconsenttotheexecutionofanindentureorindenturessupplementalheretopursuanttotheprovisionsofSection9.02;or
(4)totakeanyotheractionauthorizedtobetakenbyoronbehalfoftheholdersofthepercentageinaggregateprincipalamount
oftheSecuritiesofanyorallseriesunderanyotherprovisionsofthisIndentureorunderapplicablelaw.
SECTION8.02.MannerofCallingMeetings;RecordDate.TheTrusteemayatanytimecallameetingofSecurityholdersofanyorall
seriestotakeanyactionspecifiedinSection8.01,tobeheldatsuchtimeandatsuchplaceintheCityofDallas,Texas,astheTrusteeshall
determine.NoticeofeverymeetingoftheSecurityholdersofanyorallseries,settingforththetimeandtheplaceofsuchmeetingandingeneral
termstheactionproposedtobetakenatsuchmeeting,shallbemailednorlessthanthirtynormorethansixtydayspriortothedatefixedforthe
meetingtosuchSecurityholdersattheirregisteredaddresses.ForthepurposeofdeterminingSecurityholdersentitledtonoticeofanymeetingof
Securityholders,theTrusteeshallfixinadvanceadateastherecorddateforsuchdetermination,suchdatetobeaBusinessDaynotmorethan
tendayspriortothedateofthemailingofsuchnoticeashereinaboveprovided.OnlypersonsinwhosenameanySecurityshallberegistered
uponthebooksoftheCompanyonaRecordDatefixedbytheTrusteeasaforesaid,orbytheCompanyortheSecurityholdersasin
33
Section8.03provided,shallbeentitledtonoticeofthemeetingofSecurityholderswithrespecttowhichsuchrecorddatewassofixed.
SECTION8.03.CallofMeetingbyCompanyorSecurityholders.IncaseatanytimetheCompany,pursuanttoaresolutionofitsBoard
ofDirectors,ortheholdersofatleasttenpercentinaggregateprincipalamountoftheSecuritiesthenoutstandingofanyorallseries,asthecase
maybe,shallhaverequestedtheTrusteetocallameetingofsuchSecurityholderstotakeanyactionauthorizedinSection8.01bywrittenrequest
settingforthinreasonabledetailtheactionproposedtobetakenatthemeeting,andtheTrusteeshallnothavemailednoticeofsuchmeeting
withintwentydaysafterreceiptofsuchrequest,thentheCompanyortheholdersofsuchSecuritiesintheamountabovespecified,asthecase
maybe,mayfixtherecorddatewithrespectto,anddeterminethetimeandtheplaceinsaidCityofDallas,Texasfor,suchmeetingandmaycall
suchmeetingtotakeanyactionauthorizedinSection8.01,bymailingnoticethereofasprovidedinSection8.02.Therecorddatefixedas
providedintheprecedingsentenceshallbesetforthinawrittennoticetotheTrusteeandshallbeaBusinessDaynotlessthan15normorethan
20daysafterthedateonwhichsuchnoticeissenttotheTrustee.
SECTION8.04.WhoMayAttendandVoteatMeetings.TobeentitledtovoteatanymeetingofSecurityholdersapersonshallbe(i)a
holderofoneormoreSecuritiesoftheserieswithrespecttowhichthemeetingiscalledor,shouldthemeetingbecalledwithrespecttothe
Securitiesofallseries,aholderofoneormoreofsuchseries,or(ii)apersonappointedbyaninstrumentinwritingasproxybyaholderofone
ormoreSecuritiesoftheseries.TheonlypersonswhoshallbeentitledtobepresentortospeakatanymeetingofSecurityholdersshallbethe
personsentitledtovoteatsuchmeetingandtheircounselandanyrepresentativesoftheTrusteeanditscounselandanyrepresentativesofthe
Companyanditscounsel.WhenadeterminationofSecurityholdersentitledtovoteatanymeetingofSecurityholdershasbeenmadeasprovided
inthisSection8.04,suchdeterminationshallapplytoanyadjournmentthereof.
SECTION8.05.Regulations.NotwithstandinganyotherprovisionsofthisIndenture,theTrusteemaymakesuchreasonableregulations
asitmaydeemadvisableforanymeetingofSecurityholders,inregardtoproofoftheholdingofSecuritiesoftheserieswithrespecttowhichthe
meetingiscalledandoftheappointmentofproxies,andinregardtotheappointmentanddutiesofinspectorsofvotes,thesubmissionand
examinationofproxies,certificatesandotherevidenceoftherighttovote,andsuchothermattersconcerningtheconductofthemeetingasit
shallthinkfit.Exceptasotherwisepermittedorrequiredbyanysuchregulations,theholdingofsuchSecuritiesandtheappointmentofany
proxyshallbeprovedinthemannerspecifiedinSection7.02.
TheTrusteeshall,byaninstrumentinwriting,appointatemporarychairmanofthemeeting,unlessthemeetingshallhavebeencalledby
theCompanyorbySecurityholdersasprovidedinSection8.03,inwhichcasetheCompanyortheSecurityholderscallingthemeeting,asthe
casemaybe,shallinlikemannerappointatemporarychairman.Apermanentchairmanandapermanentsecretaryofthemeetingshallbeelected
byavoteoftheholdersofamajorityinprincipalamountoftheSecuritiesrepresentedatthemeetingandentitledtovote.
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SubjecttotheprovisionsofSection7.04,atanymeetingeachSecurityholderorproxyentitledtovotethereatshallbeentitledtoonevote
foreach$1,000principalamountofSecuritiesheldorrepresentedbyhim;provided,however,thatnovoteshallbecastorcountedatany
meetinginrespectofanySecuritychallengedasnotoutstandingandruledbythechairmanofthemeetingtobenotoutstanding.Thechairmanof
themeetingshallhavenorighttovoteotherthanbyvirtueofSecuritiesheldbyhimorinstrumentsinwritingasaforesaiddulydesignatinghim
asthepersontovoteonbehalfofotherSecurityholders.AnymeetingofSecurityholdersdulycalledpursuanttotheprovisionsofSection8.02or
8.03maybeadjournedfromtimetotime,andthemeetingmaybeheldassoadjournedwithoutfurthernotice.
AtanymeetingofSecurityholders,thepresenceofpersonswhoheld,orwhoareactingasproxyforpersonswhoheld,anaggregate
principalamountofSecuritiesoftheserieswithrespecttowhichthemeetingiscalledontherecorddateforsuchmeetingsufficienttotake
actiononthebusinessforthetransactionofwhichsuchmeetingwascalledshallconstituteaquorum,but,iflessthanaquorumispresent,the
personsholdingorrepresentingamajorityinaggregateprincipalamountoftheSecuritiesoftheserieswithrespecttowhichthemeetingiscalled
representedatthemeetingmayadjournsuchmeetingwiththesameeffect,forallintentsandpurposes,asthoughaquorumhadbeenpresent.
SECTION8.06.MannerofVotingatMeetingsandRecordtobeKept.Thevoteuponanyresolutionsubmittedtoanymeetingof
SecurityholdersshallbebywrittenballotsoneachofwhichshallbesubscribedthesignatureoftheSecurityholderorproxycastingsuchballot
andtheidentifyingnumberornumbersoftheSecuritiesheldorrepresentedinrespectofwhichsuchballotiscast.Thepermanentchairmanof
themeetingshallappointtwoinspectorsofvoteswhoshallcountallvotescastatthemeetingfororagainstanyresolutionandwhoshallmake
andfilewiththesecretaryofthemeetingtheirverifiedwrittenreportsinduplicateofallvotescastatthemeeting.Arecordinduplicateofthe
proceedingsofeachmeetingofSecurityholdersshallbepreparedbythesecretaryofthemeetingandthereshallbeattachedtosaidrecordthe
originalreportsoftheinspectorsofvotesonanyvotebyballottakenthereatandaffidavitsbyoneormorepersonshavingknowledgeofthefacts
settingforthacopyofthenoticeofthemeetingandshowingthatsaidnoticewasmailedasprovidedinSection8.02.Therecordshallshowthe
identifyingnumbersoftheSecuritiesvotinginfavoroforagainstanyresolution.Eachcounterpartofsuchrecordshallbesignedandverifiedby
theaffidavitsofthepermanentchairmanandsecretaryofthemeetingandoneofthecounterpartsshallbedeliveredtotheCompanyandtheother
totheTrusteetobepreservedbytheTrustee.
Anycounterpartrecordsosignedandverifiedshallbeconclusiveevidenceofthemattersthereinstatedandshallbetherecordreferredto
inclause(b)ofSection7.01.
SECTION8.07.ExerciseofRightsofTrusteeandSecurityholdersNottobeHinderedorDelayed.NothinginthisArticleEight
containedshallbedeemedorconstruedtoauthorizeorpermit,byreasonofanycallofameetingofSecurityholdersoranyrightsexpresslyor
impliedlyconferredhereundertomakesuchcall,anyhindranceordelayintheexerciseofanyrightorrightsconferreduponorreservedtothe
TrusteeortotheSecurityholdersunderanyoftheprovisionsofthisIndentureoroftheSecuritiesofanyorallseries.
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SECTION8.08.WrittenConsentinLieuofMeetingofSecurityholders.Thewrittenauthorizationorconsentoftherequisitepercentage
ofSecurityholdershereinprovided,entitledtovoteatanysuchmeeting,evidencedasprovidedinArticleSevenandfiledwiththeTrustee,shall
beeffectiveinlieuofameetingofSecurityholders,withrespecttoanymatterprovidedforinthisArticleEight.
ARTICLENINE
SUPPLEMENTALINDENTURES
SECTION9.01.PurposesforWhichSupplementalIndenturesMaybeEnteredintoWithoutConsentofSecurityholders.TheCompany,
whenauthorizedbyaresolutionofitsBoardofDirectors,andtheTrusteemayfromtimetotimeandatanytimeenterintoanindentureor
indenturessupplementalhereto(whichshallcomplywiththeprovisionsoftheTrustIndentureActof1939asthenineffect)foroneormoreof
thefollowingpurposes:
(a)toevidencethesuccessionofanotherentitytotheCompany,orsuccessivesuccessions,andtheassumptionbythesuccessor
entityofthecovenants,agreementsandobligationsoftheCompanypursuanttoArticleTen;
(b)toaddtothecovenantsoftheCompanysuchfurthercovenants,restrictionsorconditionsasitsBoardofDirectorsandthe
TrusteeshallconsidertobefortheprotectionoftheholdersofalloranyseriesoftheSecurities(and,ifsuchcovenantsaretobeforthe
benefitoflessshallseriesofSecuritiesstatingthatsuchcovenantsareexpresslybeingincludedforthebenefitofsuchseries),andto
maketheoccurrence,ortheoccurrenceandcontinuance,ofadefaultinanyofsuchadditionalcovenants,restrictionsorconditionsan
EventofDefaultpermittingtheenforcementofalloranyoftheseveralremediesprovidedinthisIndentureashereinsetforth;provided,
however,thatinrespectofanysuchadditionalcovenant,restrictionorconditionsuchsupplementalindenturemayprovidefora
particularperiodofgraceafterdefault(whichperiodmaybeshorterorlongerthanthatallowdinthecaseofotherdefaults)ormay
provideforanimmediateenforcementuponsuchEventofDefaultormaylimittheremediesavailabletotheTrusteeuponsuchEventof
DefaultormaylimittherightoftheholdersofamajorityinaggregateprincipalamountoftheSecuritiesofsuchseriestowaivesuchan
EventofDefault;
(c)tocureanyambiguityortocorrectorsupplementanyprovisioncontainedhereinorinanysupplementalindenturethatmay
bedefectiveorinconsistentwithanyotherprovisioncontainedhereinorinanysupplementalindenture,ortomakesuchotherprovisions
inregardtomattersorquestionsarisingunderthisIndentureoranysupplementalindentureasshallnotadverselyaffecttheinterestsof
theholdersoftheSecurities;
(d)toprovidefortheissuanceunderthisIndentureofSecurities,whetherornotthenoutstanding,incouponform(including
Securitiesregistrableastoprincipalonly)
36
andtoprovideforexchangeabilityofsuchSecuritieswithSecuritiesissuedhereunderinfullyregisteredformandtomakeallappropriate
changesforsuchpurpose;
(e)toestablishtheformortermsandtoprovidefortheissuanceofSecuritiesofanyseriesaspermittedbySections2.01and
2.03;and
(f)toevidenceandprovidefortheacceptanceofappointmenthereunderbyasuccessortrusteewithrespecttotheSecuritiesof
oneormoreseriesandtoaddtoorchangeanyoftheprovisionsofthisIndentureasshallbenecessarytoprovidefororfacilitatethe
administrationofthetrustshereunderbymorethanonetrustee.
TheTrusteeisherebyauthorizedtojoinwiththeCompanyintheexecutionofanysuchsupplementalindenture,tomakeanyfurther
appropriateagreementsandstipulationsthatmaybethereincontainedandtoaccepttheconveyance,transferorassignmentofanyproperty
thereunder,providedthatifanysuchsupplementalindentureaffectstheTrustee'sownrights,dutiesorimmunitiesunderthisIndentureor
otherwise,theTrusteemayinitsdiscretion,butshallnotbeobligatedto,enterintosuchsupplementalindenture.
AnysupplementalindentureauthorizedbytheprovisionsofthisSection9.01maybeexecutedbytheCompanyandtheTrusteewithout
theconsentoftheholdersofanyoftheSecuritiesatthetimeoutstanding,notwithstandinganyoftheprovisionsofSection9.02.
SECTION9.02.ModificationofIndenturewithConsentofHoldersofaMajorityinPrincipalAmountofSecurities.Withtheconsent
(evidencedasprovidedinSection7.01)oftheholdersofnotlessthanamajorityinaggregateprincipalamountoftheSecuritiesatthetime
outstandingofallSecuritiesaffectedbysuchsupplement(votingasoneclass)(determinedasprovidedinSection7.04),or,ifarecorddateisset
withrespecttosuchconsentinaccordancewithSection7.05,asofsuchrecorddate,theCompany,whenauthorizedbyaresolutionofitsBoard
ofDirectors,andtheTrusteemayfromtimetotimeandatanytimeenterintoanindentureorindenturessupplementalhereto(whichshall
complywiththeprovisionsoftheTrustIndentureActof1939asthenineffect)forthepurposeofaddinganyprovisionstoorchanginginany
manneroreliminatinganyoftheprovisionsofthisIndentureorofanysupplementalindentureorofmodifyinginanymannertherightsofthe
holdersoftheSecuritiesofeachsuchseries;provided,however,thatnosuchsupplementalindentureshall(i)extendthestatedmaturityofany
Security,orreducetherateorextendthetimeofpaymentofinterestthereonorreduceanyamountpayableonredemptionthereoforreducethe
amountoftheprincipalofanOriginalIssueDiscountSecuritythatwouldbedueandpayableuponanaccelerationofthematuritythereto
pursuanttoSection5.01,orimpairoraffecttherightofanySecurityholdertoinstitutesuitforthepaymentthereofortherightofrepaymentif
any,attheoptionoftheSecurityholder,withouttheconsentoftheholderofeachSecuritysoaffectedor(ii)reducetheaforesaidpercentageof
Securitiesofanyseriesorofallseries(votingasoneclass),asecasemaybe,theconsentoftheholdersofwhichisrequiredforanysuch
supplementalindenture,withouttheconsentoftheholdersofallSecuritiesofeachsuchseriessoaffected.
AsupplementalindenturethatchangesoreliminatesanycovenantorotherprovisionofthisIndenturethathasexpresslybeenincluded
solelyforthebenefitofoneormoreparticular
37
seriesofSecurities,orthatmodifiedtherightsofholdersofsuchserieswithrespecttosuchcovenantorprovision,shallbedeemednottoaffect
therightsunderthisIndentureoftheholdersofanyotherseries.
UpontherequestoftheCompany,accompaniedbyacopyofaresolutionofitsBoardofDirectorscertifiedbytheSecretaryoran
AssistantSecretaryoftheCompanyauthorizingtheexecutionanysuchsupplementalindenture,anduponthefilingwiththeTrusteeofevidence
oftheconsentofSecurityholdersasaforesaid,theTrusteeshalljoinwiththeCompanyintheexecutionofsuchsupplementalindenture,provided
thatifsuchsupplementalindentureaffectstheTrustee’sownrights,dutiesorimmunitiesunderthisIndentureorotherwise,theTrusteemayinits
discretion,butshallnotbeobligatedto,enterintosuchsupplementalindenture.
ItshallnotbenecessaryfortheconsentoftheSecurityholdersunderthisSection9.02toapprovetheparticularformofanyproposed
supplementalindenture,butitshallbesufficientifsuchconsentshallapprovethesubstancethereof.
PromptlyaftertheexecutionbytheCompanyandtheTrusteeofanysupplementalindenturepursuanttotheprovisionsofthisSection
9.02,theCompanyshallmailanoticetotheSecurityholdersofeachseriesaffectedthereby,settingforthingenealtermsthesubstanceofsuch
supplementalindenture.AnyfailureoftheCompanytomailsuchnotice,oranydefecttherein,shallnot,however,inanywayimpairoraffectthe
validityofanysuchsupplementalindenture.
SECTION9.03.EffectofSupplementalIndentures.Upontheexecutionofanysupplementalindenturepursuanttotheprovisionsofthis
ArticleNine,thisIndentureshallbeandbedeemedtobemodifiedandamendedinaccordancetherewithandtherespectiverights,limitationof
rights,obligations,dutiesandimmunitiesunderthisIndentureoftheTrustee,theCompanyandtheholdersofSecuritiesofeachseriesaffected
therebyshallthereafterbedetermined,exercisedandenforcedhereundersubjectinallrespectstosuchmodificationsandamendments,andall
thetermsandconditionsofanysuchsupplementalindentureshallbeandbedeemedtobepartofthetermsandconditionsofthisIndenturefor
anyandallpurposes.
SECTION9.04.SecuritiesMayBearNotationofChangesbySupplementalIndentures.Securitiesofanyseriesauthenticatedand
deliveredaftertheexecutionofanysupplementalindentureaffectingsuchseriespursuanttotheprovisionsofthisArticleNine,orafterany
actiontakenataSecurityholders’meetingpursuanttoArticleEight,maybearanotationinformapprovedbytheTrusteeastoanymatter
providedforinsuchsupplementalindentureorastoanyactiontakenatanysuchmeeting.IftheCompanyortheTrusteeshallsodetermine,new
Securitiesofanyseriessomodifiedastoconform,intheopinionoftheTrusteeandtheBoardofDirectorsoftheCompany,toanymodification
ofthisIndenturecontainedinanysuchsupplementalindenturemaybepreparedbytheCompany,authenticatedbytheTrusteeanddeliveredin
exchangefortheSecuritiesofsuchseriesthenoutstanding.
SECTION9.05.OpinionofCounsel.TheTrustee,subjecttotheprovisionsofSections6.01and6.02,mayrelyupon,andshallbe
entitledtoreceive,anOpinionofCounselas
38
conclusiveevidencethatanysuchsupplementalindenturecomplieswiththeprovisionsofthisArticleNine.
ARTICLETEN
CONSOLIDATION,MERGERANDSALE
SECTION10.01.CompanyMayConsolidate,etc.,onCertainTerms.NothingcontainedinthisIndentureorinanyoftheSecuritiesshall
preventanyconsolidationormergeroftheCompanywithorintoanyothercorporation,limitedpartnership,limitedliabilitycompanyorother
entity(whetherornotaffiliatedwiththeCompany)orsuccessiveconsolidationsormergersinwhichtheCompanyoritssuccessororsuccessors
shallbeapartyorparties,orshallpreventanysaleorconveyanceofthepropertyoftheCompanyasanentirety,orsubstantiallyasanentirety,to
anyothercorporation,limitedpartnership,limitedliabilitycompanyorotherentity(whetherornotaffiliatedwiththeCompany)authorizedto
acquireandoperatethesame;provided,however,andtheCompanyherebycovenantsandagrees,thatanysuchconsolidation,merger,saleor
conveyanceshallbeupontheconditionthat(a)immediatelyaftersuchconsolidationmerger,saleorconveyancenoEventofDefault,andno
eventthatuponnoticeorlapseoftime,orboth,wouldbecomeanEventofDefault,shallhaveoccurredandbecontinuingwithrespecttothe
entity(whethertheCompanyorsuchotherentity)formedbyorsurvivinganysuchconsolidationormerger,ortowhichsuchsaleorconveyance
shallhavebeenmade;(b)theentity(ifotherthantheCompany)formedbyorsurvivinganysuchconsolidationormerger,ortowhichsuchsale
orconveyanceshallhavebeenmade,shallbeorganizedunderthelawsoftheUnitedStatesofAmericaoranyStatethereof;and(c)thedueand
punctualpaymentoftheprincipalof,premium,ifany,andinterestonalloftheSecurities,accordingtotheirtenor,andthedueandpunctual
performanceandobservanceofallthecovenantsandconditionsofthisIndenturetobeperformedorobservedbytheCompany,shallbe
expresslyassumed,bysupplementalindenturecomplyingwiththerequirementsofArticleNine,satisfactoryformtotheTrustee,executedand
deliveredtotheTrusteebytheentityformedbysuchconsolidation,orintowhichtheCompanyshallhavebeenmerged,orbytheentitythatshall
haveacquiredsuchproperty.Ifatanytimethereshallbeanyconsolidationormergerorsaleorconveyanceofpropertytowhichthecovenantof
thisSection10.01isapplicable,theninanysucheventthesuccessorentitywillpromptlydelivertotheTrustee:
(1)anOfficers’Certificatestatingthatasofthetimeimmediatelyaftertheeffectivedateofanysuchtransactionthecovenantsof
theCompanyandconditionscontainedinthisSection10.01havebeencompliedwithandthesuccessorentityisnotindefaultunderthe
provisionsofthisIndenture;and
(2)anOpinionofCounselstatingthatintheopinionofsuchcounselsuchcovenantshavebeencompliedwithandthatany
instrumentorinstrumentsexecutedintheperformanceofsuchcovenantscomplywiththerequirementsthereof.
SECTION10.02.SuccessortobeSubstituted.Incaseofanysuchconsolidation,merger,saleorconveyanceandupontheassumptionby
thesuccessorentity,inthemannerhereinaboveprovided,ofthedueandpunctualpaymentoftheprincipalorpremium,ifany,and
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interestonalloftheSecuritiesandthedueandpunctualperformanceandobservanceofallofthecovenantsandconditionsofthisIndentureto
beperformedorobservedbytheCompany,suchsuccessorentityshallsucceedtoandbesubstitutedfortheCompany,withthesameeffectasif
ithadbeennamedhereinasthepartyofthefirstpart.Suchsuccessorentitythereuponmaycausetobesigned,andmayissueeitherinitsown
nameorinthenameofSouthwestAirlinesCo.,anyoralloftheSecuritiesissuablehereunderthattheretoforeshallnothavebeensignedbythe
CompanyanddeliveredtotheTrustee;and,upontheorderofsuchsuccessorentity(insteadoftheCompany)andsubjecttoalltheterms,
conditionsandlimitationsinthisIndentureprescribed,theTrusteeshallauthenticateandshalldeliveranySecuritiesthatpreviouslyshallhave
beensignedanddeliveredbytheofficersoftheCompanytotheTrusteeofauthentication,andanySecuritiesthatsuchsuccessorentitythereafter
shallcausetobesignedanddeliveredtotheTrusteeforthatpurpose.AlltheSecuritiessoissuedshallinallrespectshavethesamelegalrank
andbenefitunderthisIndentureastheSecuritiestheretoforeorthereafterissuedinaccordancewiththetermsofthisIndentureasthoughallof
suchSecuritieshadbeenissuedatthedateoftheexecutionhereof.Intheeventofanysuchsaleorconveyanceanduponanysuchassumption,
theCompanyoranysuccessorentitythatshalltheretoforehavebecomesuchinthemannerdescribedinthisArticleTenshallbedischargedfrom
allobligationsandcovenantsunderthisIndentureandtheSecuritiessoassumedandmaybeliquidatedanddissolved.
Incaseofanysuchconsolidation,merger,saleorconveyancesuchchangesinphraseologyandform(butnotinsubstance)maybemade
intheSecuritiesthereaftertobeissuedasmaybeappropriate.
ARTICLEELEVEN
SATISFACTIONANDDISCHARGEOFINDENTURE:
UNCLAIMEDMONEYS
SECTION11.01.SatisfactionandDischargeofIndenture.Ifatanytime(a)theCompanyshallhavepaidorcausedtobepaidthe
principalofandinterestonalltheSecuritiesofeachseriesoutstandinghereunder,asandwhenthesameshallhavebecomedueandpayable,or
(b)theCompanyshallhavedeliveredtotheTrusteeforcancellation(i)allsecuritiesofanyseriestheretoforeauthenticated(otherthanany
Securitiesofanyseriesthatshallhavebeendestroyed,lostorstolenandthatshallhavebeenreplacedorpaidasprovidedinSection2.08)and
(ii)SecuritiesforwhosepaymentmoneyshavetheretoforebeendepositedintrustandsegregatedandheldintrustbytheCompanyandthereafter
returnedtotheCompanyordischargedfromsuchtrust,asprovidedinSection11.04or(c)(i)allsuchSecuritiesnottheretoforedeliveredtothe
Trusteeforcancellationshallhavebecomeduepayable,orarebytheirtermstobecomedueandpayablewithinoneyearoraretobecalledfor
redemptionunderarrangementssatisfactorytotheTrusteeforthegivingofnoticeofredemption,and(ii)theCompanyshallhaveirrevocably
depositedorcausedtobedepositedwiththeTrusteeastrustfundsanamount(otherthanmoneysreturnedbytheTrusteeoranyPayingAgentto
theCompanyinaccordancewithSection11.04)sufficienttopayatmaturityoruponredemptionallsuchSecuritiesnottheretoforedeliveredto
theTrusteeforcancellation,includingprincipalandinterestdueortobecomeduetosuchdateofmaturityordateofredemption,asthecasemay
be,andif,inanysuchcase,theCompanyshallalsopayorcausetobepaidallothersumspayable
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hereunderbytheCompanywithrespecttoSecuritiesofsuchseries,thenthisIndentureshallceasetobeoffurthereffectwithrespectto
Securitiesofsuchseries(exceptasto(i)rightsofregistrationoftransferandexchange,(ii)substitutionofapparentlymutilated,defaced,
destroyed,lostorstolenSecurities,(iii)therights,obligationsandimmunitiesoftheTrusteehereunderand(iv)therightsoftheSecurityholders
ofsuchseriesasbeneficiarieshereofwithrespecttothepropertysodepositedwiththeTrusteepayabletoalloranyofthem),andtheTrustee,on
demandoftheCompanyaccompaniedbyanOfficers’CertificateandanOpinionofCounsel(eachstatingthatallconditionsprecedentherein
providedforrelatingtothesatisfactionanddischargeofthisIndenturehavebeencompliedwith)andatthecostandexpenseoftheCompany,
shallexecuteproperinstrumentsacknowledgingsuchsatisfactionofanddischargingthisIndenturewithrespecttosuchseries;providedthatthe
rightsofholdersoftheSecuritiesofsuchseriestoreceiveamountsinrespectofprincipalofandinterestontheSecuritiesheldbythemshallnot
bedelayedlongerthanrequiredbythenapplicablemandatoryrulesorpolicesofanysecuritiesexchangeuponwhichtheSecuritiesofsuchseries
arelistedandprovidedfurtherthattheCompanyshallnotbedischargedfromanypaymentobligationsinrespectofanySecurities,andsuch
obligationsshallbereinstated,iftheTrusteeisunabletoapplyanymoneyinaccordancewiththisSectionbyreasonofanylegalproceedingor
anyorderorjudgmentofanycourtorgovernmentalauthorityenjoining,restrainingorotherwiseprohibitingsuchapplicationuntilsuchtimeas
theTrusteeisabletoapplysuchmoneyortheobligationsareotherwisesatisfied.TheCompanyagreestoreimbursetheTrusteeofanycostsor
expensesthereafterreasonablyandproperlyincurredandtocompensatetheTrusteeforanyservicesthereafterreasonablyandproperlyrendered
bytheTrusteeinconnectionwiththisIndentureortheSecuritiesofsuchseries.
SECTION11.02.ApplicationbyTrusteeofFundsDepositedforPaymentofSecurities.SubjecttoSection11.04,allmoneysdeposited
withtheTrusteepursuanttoSection11.01shallbeheldintrustandappliedbyittothepayment,eitherdirectlyorthroughanyPayingAgent
(includingtheCompanyactingasitsownPayingAgent),totheholdersoftheparticularSecuritiesofsuchseries,forthepaymentorredemption
ofwhichsuchmoneyshavebeendepositedwiththeTrustee,ofallsumsdueandtobecomeduethereonforprincipal,interestandpremium,if
any.
SECTION11.03.RepaymentofMoneysHeldbyPayingAgent.InconnectionwiththesatisfactionanddischargeofthisIndenturewith
respecttosuchseriesofSecurities,allmoneysthenheldbyanyPayingAgentundertheprovisionsofthisIndenturewithrespecttoanysuch
seriesofSecuritiesshall,upondemandoftheCompanyortheTrustee,bepaidtotheTrusteeandthereuponsuchPayingAgentshallbereleased
fromallfurtherliabilitywithrespecttosuchmoneys.
SECTION11.04.RepaymentofMoneysHeldbyTrustee.Unlessotherwiserequiredbymandatoryprovisionsofescheatorabandonedor
unclaimedpropertylaws,anymoneysdepositedwiththeTrusteeoranyPayingAgent,orthenheldbytheCompany,forthepaymentofthe
principalof,premium,ifany,orinterestonanySecuritiesofanyseriesandnotappliedbutremainingunclaimedbytheholdersofSecuritiesfor
twoyearsafterthedateuponwhichsuchpaymentshallhavebecomedue,shallberepaidtotheCompanybytheTrusteeorbysuchPaying
Agentondemand;or,ifthenheldbytheCompany,shallbedischargedfromsuchtrust;
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andthereupontheTrusteeandsuchPayingAgentortheCompanyastrusteeshallbereleasedfromallfurtherliabilitywithrespecttosuch
moneys,andtheholderofanyoftheSecuritiesofsuchseriesentitledtoreceivesuchpaymentshall,unlessotherwiserequiredbymandatory
provisionsofapplicableescheatorabandonedorunclaimedpropertylaws,thereafterlookonlytotheCompanyforthepaymentthereof;
providedhowever,thattheTrusteeorPayingAgent,beforebeingrequiredtomakeanysuchpayment,mayattheexpenseoftheCompanycause
tobepublishedonce,inanewspaperpublishedintheEnglishlanguage,customarilypublishedoneachBusinessDayandofgeneralcirculation
inNewYorkCity,orcausetobemailedtoeachSecurityholderofsuchseries,noticethatsuchmoneyremainsunclaimedandthat,afteradate
specifiedthereinwhichshallnotbelessthan30daysfromthedateofsuchpublication,anyunclaimedbalanceofsuchmoneythenremaining
willberepaidtotheCompany.
SECTION11.05.Satisfaction,DischargeandDefeasanceofSecuritiesofanySeries.IfthisSection11.05isspecified,ascontemplated
bySection2.03,tobeapplicabletoSecuritiesofanyseries,theCompanyshallbedeemedtohavepaidanddischargedtheentireindebtednesson
alltheSecuritiesofanysuchseriesatthetimeoutstanding,andtheTrustee,attheexpenseoftheCompany,shallexecuteproperinstruments
acknowledgingsatisfactiondischargeanddefeasanceofsuchindebtedness,when
(1)either
(A)withrespecttoallSecuritiesofsuchseriesatthetimeoutstanding,
(i)theCompanyhasdepositedorcausedtobedepositedwiththeTrusteeastrustfundsintrustforthepurposean
amountsufficienttopayanddischargetheentireindebtednessonallsuchSecuritiesforprincipal,premium,ifany,andinterest,
onthedaysonwhichsuchprincipal,premium,ifany,orinterest,asthecasemaybe,isdueandpayableinaccordancewiththe
termsofthisIndentureandsuchSecurities,tothedateofmaturityordateofredemptionthereofascontemplatedbythe
penultimateparagraphofthisSection11.05,asthecasemaybe;or
(ii)theCompanyhasdepositedorcausedtobedepositedwiththeTrusteeasobligationsintrustforthepurposesuch
amountofnon-callabledirectobligationsof,orobligationstheprincipalofandinterestonwhicharefullyguaranteedby,the
UnitedStatesofAmericaaswill,togetherwiththeincometoaccruethereonwithoutconsiderationofanyreinvestmentthereof,
besufficienttopayanddischargetheentireindebtednessonallsuchSecuritiesforprincipal,premium,ifany,andinterest,onthe
daysonwhichsuchprincipal,premium,ifany,orinterest,asthecasemaybe,isdueandpayableinaccordancewiththetermsof
thisIndentureandsuchSecurities,tothedateofmaturityordateofredemptionthereofascontemplatedbythepenultimate
paragraphofthisSection11.05,asthecasemaybe;or
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(B)theCompanyhasproperlyfulfilledsuchothermeansofsatisfactionanddischargeasisspecified,ascontemplatedby
Section2.03,tobeapplicabletotheSecuritiesofsueseries;
(2)theCompanyhaspaidorcausedtobepaidallothersumspayablewithrespecttotheSecuritiesofsuchseriesatthetime
outstandingandallotheramountsdueunderthisIndenturewithrespecttosuchseries;
(3)suchdepositwillnotresultinabreachorviolationof,orconstituteadefaultunder,thisIndentureoranyotheragreementor
instrumenttowhichtheCompanyisapartyorbywhichitisbound;
(4)noEventofDefaultoreventthat,afternoticeorlapseoftimeorboth,wouldbecomeanEventofDefaultshallhaveoccurredand
becontinuingonthedateofsuchdeposit;
(5)CompanyhasdeliveredtotheTrusteeanOfficers'CertificateandanOpinionofCounseltotheeffectthat(i)theCompanyhas
receivedfrom,orthattherehasbeenpublishedby,theInternalRevenueServicearuling,or(ii)sincethedateofthisIndenturetherehasbeena
changeinapplicablefederalincometaxlaw,ineithercasetotheeffectthatholdersoftheSecuritiesofsuchserieswillnotrecognizeincome,
gainorlossforfederalincometaxpurposesasaresultofsuchdeposit,satisfaction,dischargeanddefeasanceandwillbesubjecttofederal
incometaxonthesameamountsandinthesamemannerandatthesametimes,aswouldhavebeenthecaseifsuchdeposit,satisfaction,
dischargeanddefeasancehadnotoccurred;and
(6)theCompanyhasdeliveredtotheTrusteeanOfficers'CertificateandanOpinionofCounsel,eachstatingthatallconditions
precedenthereinprovidedforrelatingtothesatisfaction,dischargeanddefeasanceoftheentireindebtednessonallSecuritiesofanysuchseries
atthetimeoutstandinghavebeencompliedwith.
AnydepositswiththeTrusteereferredtoinSection11.05(l)(A)aboveshallbeirrevocableandshallbemadeunderthetermsofan
escrowtrustagreementinformandsubstancesatisfactorytotheTrustee.IfanySecuritiesofsuchseriesatthetimeoutstandingaretobe
redeemedpriortotheirstatedmaturity,whetherpursuanttoanyoptionalredemptionprovisionsorinaccordancewithanymandatorysinking
fundrequirement,theCompanyshallmakesucharrangementsasaresatisfactorytotheTrusteeforthegivingofnoticeofredemptionbythe
Trusteeinthename,andattheexpense,oftheCompany.
UponthesatisfactionoftheconditionssetforthinthisSection11.05withrespecttoalltheSecuritiesofanyseriesatthetime
outstanding,thetermsandconditionsofsuchseries,includingthetermsandconditionswithrespecttheretosetforthinthisIndenture,shallno
longerbebindingupon,orapplicableto,theCompany,providedthattheCompanyshallnotbedischargedfromanypaymentobligationsin
respectofSecuritiesofsuchseriesthataredeemednottobeoutstandingunderclause(c)ofthedefinitionthereofifsuchobligationscontinueto
bevalidobligationsinaccordancewiththisSectionbyreasonofanylegalproceedingoranyorderorjudgmentofanycourtorgovernmental
authorityenjoining,restrainingorotherwiseprohibitingsuchapplication.
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ARTICLETWELVE
IMMUNITYOFINCORPORATORS,SHAREHOLDERS,OFFICERS
ANDOTHERS
SECTION12.01.Incorporators,Shareholders,OfficersandOthersExemptfromIndividualLiability.Norecourseunderoruponany
obligation,covenantoragreementofthisIndenture,orofanySecurity,orforanyclaimbasedthereonorotherwiseinrespectthereofshallbehad
againstanyincorporator,shareholder,officer,partner,memberordirector,assuch,past,presentorfuture,oftheCompanyorofanysuccessor
entity,eitherdirectlyorthroughtheCompanyorsuchsuccessorentity,whetherbyvirtueofanyconstitution,statuteorruleoflaw,orbythe
enforcementofanyassessmentorpenaltyorotherwise;itbeingexpresslyunderstoodthatthisIndentureandtheobligationsissuedhereunderare
solelycorporateorsimilarobligations,andthatnosuchpersonalliabilitywhatevershallattachto,orisorshallbeincurredby,theincorporators,
shareholders,officers,partners,membersordirectors,assuch,past,presentorfuture,oftheCompanyorofanysuccessorentity,oranyofthem,
becauseofthereasonoftheindebtednessherebyauthorized,orunderorbyreasonoftheobligations,covenantsoragreementscontainedinthis
IndentureorinanyoftheSecuritiesorimpliedtherefrom;andthatanyandallsuchpersonalliabilityofeverynameandnature,eitheratcommon
laworinequityorbyconstitutionorstatute,ofandanyandallsuchrightsandclaimsagainst,everysuchincorporator,shareholder,officer,
partner,memberordirector,assuch,becauseofthecreationoftheindebtednessherebyauthorized,orunderorbyreasonoftheobligations,
covenantsoragreementscontainedinthisIndentureorinanyoftheSecuritiesorimpliedtherefromareherebyexpresslywaivedandreleasedas
aconditionof,andasaconsiderationfor,theexecutionofthisIndentureandtheissueofsuchSecurities.
ARTICLETHIRTEEN
MISCELLANEOUSPROVISIONS
SECTION13.01.SuccessorsandAssignsofCompanyBoundbyIndenture.Allthecovenants,stipulations,promisesandagreementsin
thisIndenturecontainedbyoronbehalfoftheCompanyshallbinditssuccessorsandassigns,whethersoexpressedornot.
SECTION13.02.ActsofBoard,CommitteeorOfficerofSuccessorEntityValid.Anyactorproceedingbyanyprovisionofthis
Indentureauthorizedorrequiredtobedoneorperformedbyanyboard,committeeorofficeroftheCompanyshallandmaybedoneand
performedwithlikeforceandeffectbythelikeboard,committeeorofficer(orpersonsperformingsimilarduties)ofanyentitythatshallatthe
timebethelawfulsolesuccessoroftheCompany.
SECTION13.03.RequiredNoticesorDemandsMaybeServedbyMail;Waiver.Anynotice,direction,requestordemandthatbyany
provisionsofthisIndentureisrequiredorpermittedtobegivenorservedbytheTrusteeorbytheholdersofSecuritiestoorontheCompany
shallbeintheEnglishlanguageandmaybegivenorservedbybeingdeposited,
44
postageprepaid,certifiedorregisteredmail,addressed(untilanotheraddressisfiledbytheCompanywiththeTrusteeforsuchpurpose),as
follows:SouthwestAirlinesCo.,P.O.Box3661l,Dallas,Texas75235,Attention:Treasurer.Anynotice,direction,requestordemandbyany
SecurityholdertoorupontheTrusteeshallbedeemedtohavebeensufficientlygivenormade,forallpurposes,ifgivenormadeattheprincipal
officeoftheTrustee.
WherethisIndentureprovidesfornoticetoSecurityholders,suchnoticeshallbesufficientlygiven(unlessotherwisehereinexpressly
provided)ifinwritingintheEnglishlanguageandmailed,firstclass,postageprepaid,toeachholderentitledthereto,athislastaddressasit
appearsintheSecurityregisterorregisters.Inanycasewherenoticetoholdersisgivenbymail,neitherthefailuretomailsuchnotice,norany
defectinanynoticesomailed,toanyparticularholdershallaffectthesufficiencyofsuchnoticewithrespecttootherholders.
Incase,byreasonofthesuspensionoforirregularitiesinregularmailservice,itshallbeimpracticabletomailnoticetotheCompany-or
SecurityholderswhensuchnoticeisrequiredtobegivenpursuanttoanyprovisionofthisIndenture,thenanymannerofgivingsuchnoticeas
shallbesatisfactorytotheTrusteeshallbedeemedtobeasufficientgivingofsuchnotice.
WherethisIndentureprovidesfornoticeinanymanner,suchnoticemaybewaivedinwritingbythepersonentitledtoreceivesuch
notice,eitherbeforeoraftertheeventoractionrelatingthereto,andsuchwaivershallbetheequivalentofsuchnotice.Waiversofnoticeby
SecurityholdersshallbefiledwiththeTrustee,butsuchfilingshallnotbeaconditionprecedenttothevalidityofanyactiontakeninreliance
uponsuchwaiver.
SECTION13.04.IndentureandSecuritiestobeConstruedinAccordancewiththeLawsoftheStateofTexas.ThisIndentureandeach
SecurityshallbedeemedtobeacontractmadeunderthelawsoftheStateofTexas,andforallpurposesshallbeconstruedinaccordancewith
thelawsofsaidState,exceptasotherwiserequiredbymandatoryprovisionsoflaw.
SECTION13.05.EvidenceofCompliancewithConditionsPrecedent.UponanyrequestorapplicationbytheCompanytotheTrusteeto
takeanyactionunderanyoftheprovisionsasofthisIndenture,theCompanyshallfurnishtotheTrusteeanOfficers'Certificatestatingthatall
conditionsprecedent,ifany,providedforinthisIndenturerelatingtotheproposedactionhavebeencompliedwith,andanOpinionofCounsel
statingthatintheopinionofsuchcounselallsuchconditionsprecedenthavebeencompliedwith,exceptthatinthecaseofanysuchapplication
ordemandastowhichthefurnishingofsuchdocumentsisspecificallyrequiredbyanyprovisionofthisIndenturerelatingtosuchparticular
applicationordemand,noadditionalcertificateoropinionneedbefurnished.
EachcertificateoropinionprovidedforinthisIndentureanddeliveredtotheTrusteewithrespecttocompliancewithaconditionor
covenantprovidedforinthisIndentureshallinclude(1)astatementthatthepersonmakingsuchcertificateoropinionhasreadsuchcovenantor
condition;(2)abriefstatementastothenatureandscopeoftheexaminationorinvestigationuponwhichthestatementsoropinionscontainedin
suchcertificateoropinionarebased;(3)astatementthat,intheopinionofsuchperson,hehasmadesuchexaminationorinvestigationasis
necessarytoenablehimtoexpressaninformedopinionastowhetherornotsuchcovenantor
45
conditionhasbeencompliedwith;and(4)astatementastowhetherornot,intheopinionofsuchperson,suchconditionorcovenanthasbeen
compliedwith.
Anycertificate,statementoropinionofanofficeroftheCompanymaybebased,insofarasitrelatestolegalmatters,uponacertificate
oropinionoforrepresentationsbycounsel,unlesssuchofficerknowsthatthecertificateoropinionorrepresentationswithrespecttothematters
uponwhichhiscertificate,statementoropinionmaybebasedasaforesaidareerroneous,orintheexerciseofreasonablecareshouldknowthat
thesameareerroneous.Anycertificate,statementoropinionofcounselmaybebased;insofarasitrelatestofactualmatters,oninformationthat
isinthepossessionoftheCompany,uponthecertificate,statementoropinionoforrepresentationsbyanofficerorofficersoftheCompany,
unlesssuchcounselknowsthatthecertificate,statementoropinionorrepresentationswithrespecttothemattersuponwhichhiscertificate,
statementoropinionmaybebasedasaforesaidareerroneous,orintheexerciseofreasonablecareshouldknowthatthesameareerroneous.
Anycertificate,statementoropinionofanofficeroftheCompanyorofcounselmaybebased,insofarasitrelatestoaccountingmatters,
uponacertificateoropinionoforrepresentationsbyanaccountantorfirmofaccountantsunlesssuchofficerorcounsel,asthecasemaybe,
knowsthatthecertificateoropinionorrepresentationswithrespecttotheaccountingmattersuponwhichhiscertificate,statementoropinion
maybebasedasaforesaidareerroneous,orintheexerciseofreasonablecareshouldknowthatthesameareerroneous.Anycertificateor
opinionofanyindependentfirmofpublicaccountantsfiledwiththeTrusteeshallcontainastatementthatsuchfirmisindependent.
SECTION13.06.PaymentsDueonSaturdays,Sundays,andHolidays.Inanycasewherethedateofpaymentofinterestonorprincipal
oftheSecuritiesofanyseries,orthedatefixedforredemptionorrepaymentofanysuchSecurity,shallnotbeaBusinessDay,thenpaymentof
interestorprincipal(andpremium,ifany)neednotbemadeonsuchdate,butmaybemadeonthenextsucceedingBusinessDaywiththesame
forceandeffectasifmadeonthedateofpaymentorthedatefixedforredemption,andnointerestshallaccruefortheperiodaftersuchdate.
SECTION13.07.ProvisionsRequiredbyTrustIndentureActof1939toControl.IfandtotheextentthatanyprovisionofthisIndenture
limits,qualifiesorconflictswiththedutiesimposedbyoperationofsubsection(c)ofSection318oftheTrustIndentureActof1939,the
imposeddutiesshallcontrol.
SECTION13.08.ProvisionsofthisIndentureandSecurityfortheSoleBenefitofthePartiesandtheSecurityholders.Nothinginthis
IndentureorintheSecurities,expressedorimplied,shallgiveorbeconstruedtogiveanyperson,firmorcorporation,otherthantheparties
heretoandtheirsuccessorsandtheholdersoftheSecurities,anylegalorequitableright,remedyorclaimunderorinrespectofthisIndenture,or
underanycovenant;conditionorprovisionhereincontained;allitscovenants,conditionsandprovisionsbeingforthesolebenefitoftheparties
heretoandtheirsuccessorsandtheholdersoftheSecurities.
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SECTION13.09.IndentureMaybeExecutedinCounterparts.ThisIndenturemaybeexecutedinanynumberofcounterparts,eachof
whichshallbeanoriginal;butsuchcounterpartsshalltogetherconstitutebutoneandthesameinstrument.
SECTION13.10.ArticleandSectionHeadings.TheArticleandSectionheadingreferenceshereinandintheTableofContentsarefor
convenienceonlyandshallnotaffecttheconstructionhereof.
SECTION13.11.Severability.Ifanyprovisionhereofshallbeheldtobeinvalid,illegalorunenforceableunderapplicablelaw,thenthe
remainingprovisionshereofshallbeconstruedasthoughsuchinvalid,illegalorunenforceableprovisionwerenotcontainedherein.
ARTICLEFOURTEEN
REDEMPTIONOFSECURITIESANDSINKINGFUNDS
SECTION14.01.ApplicabilityofArticle.TheprovisionsofthisArticleshallbeapplicabletotheSecuritiesofanyseriesthatare
redeemablebeforetheirmaturityortoanysinkingfundfortheretirementofSecuritiesofaseries,ineithercaseasspecifiedascontemplatedby
Section2.03forSecuritiesofsuchseries.
SECTION14.02.NoticeofRedemption;PartialRedemptions.NoticeofredemptiontotheholdersofSecuritiesofanyseriestobe
redeemedasawholeorinpartshallbegivenbymailingnoticeofsuchredemptionbyfirstclassmail,postageprepaid,atleast20daysandnot
morethan60dayspriortothedatefixedforredemptiontosuchholdersofSecuritiesofsuchseriesattheirlastaddressesastheyshallappear
upontheSecurityregisterorregisters.Anynoticethatismailedinthemannerhereinprovidedshallbeconclusivelypresumedtohavebeenduly
given,whetherornottheholderreceivesthenotice.Failuretogivenoticebymail,oranydefectinthenoticetotheholderofanySecurityofa
seriesdesignatedforredemptionasawholeorinpartshallnotaffectthevalidityoftheproceedingsfortheredemptionofanyotherSecurityof
suchseries.
ThenoticeofredemptiontoeachsuchboldershallspecifytheprincipalamountofeachSecurityofsuchseriesheldbysuchholdertobe
redeemed,thedatefixedforredemption,theredemptionprice(orthemethodofcalculatingtheredemptionprice),theplaceorplacesof
payment,thatpaymentwillbemadeuponpresentationandsurrenderofsuchSecurities,thatsuchredemptionispursuanttothemandatoryor
optionalsinkingfund,orboth,ifsuchbethecase,thatinterestaccruedtothedatefixedforredemptionwillbepaidasspecifiedinsaidnotice
andthatonandaftersaiddateinterestthereonorontheportionsthereoftoberedeemedwillceasetoaccrue.IncaseanySecurityofaseriesisto
beredeemedinpartonlythenoticeofredemptionshallstatetheportionoftheprincipalamountthereoftoberedeemedandshallstatethaton
andafterthedatefixedforredemption,uponsurrenderofsuchSecurity,anewSecurityorSecuritiesofsuchseriesinprincipalamountequalto
theunredeemedportionthereofwillbeissued.
47
ThenoticeofredemptionofSecuritiesofanyseriestoberedeemedattheoptionoftheCompanyshallbegivenbytheCompanyor,at
theCompany'srequest,bytheTrusteeforsuchseriesinthenameandattheexpenseoftheCompany.
Nolaterthan11:00a.m.,NewYorkCitytime,ontheredemptiondatespecifiedinthenoticeofredemptiongivenasprovidedinthis
Section,theCompanywilldepositwiththeTrusteeorwithoneormorePayingAgents(or,iftheCompanyisactingasitsownPayingAgent,set
aside,segregateandholdintrustasprovidedinSection3.04)anamountofmoneysufficienttoredeemontheredemptiondatealltheSecurities
ofsuchseriessocalledforredemptionattheappropriateredemptionprice,togetherwithaccruedinteresttothedatefixedforredemption.Ifless
thanalltheoutstandingSecuritiesofaseriesaretoberedeemed,theCompanywilldelivertotheTrusteeatleast70days(orsuchshorterperiod
acceptabletotheTrustee)priortothedatefixedforredemptionanOfficers’CertificatestatingtheaggregateprincipalamountofSecuritiestobe
redeemed.
IflessthanalltheSecuritiesofaseriesaretoberedeemed,theTrusteeshallselect,insuchmannerasitshalldeemappropriateandfair,
Securitiesofsuchseriestoberedeemedinwholeorinpart.Securitiesmayberedeemedinpartinmultiplesequaltotheminimumauthorized
denominationforSecuritiesofsuchseriesoranyintegralmultiplethereof.TheTrusteeshallpromptlynotifytheCompanyinwritingofthe
Securitiesofsuchseriesselectedforredemptionand,inthecaseofanySecuritiesofsuchseriesselectedforpartialredemption,theprincipal
amountofeachsuchSecuritytoberedeemed.ForallpurposesofthisIndenture,unlessthecontextotherwiserequires,allprovisionsrelatingto
theredemptionoftheSecuritiesofanyseriesshallrelate,inthecaseofanySecurityredeemedortoberedeemedonlyinpart,totheportionof
theprincipalamountofsuchSecuritywhichhasbeenoristoberedeemed.
SECTION14.03.PaymentofSecuritiesCalledforRedemption.Ifnoticeofredemptionhasbeengivenasaboveprovided,theSecurities
orportionsofSecuritiesspecifiedinsuchnoticeshallbecomedueandpayableonthedateandattheplaceorplacesstatedinsuchnoticeatthe
applicableredemptionprice,togetherwithinterestaccruedtothedatefixedforredemption,andonandaftersaiddate(unlesstheCompanyshall
defaultinthepaymentofsuchSecuritiesattheredemptionprice,togetherwithinterestaccruedtosaiddate)interestontheSecuritiesorportions
ofSecuritiessocalledforredemptionshallceasetoaccrueand,exceptasprovidedinSections6.05and11.04,suchSecuritiesshallceasefrom
andafterthedatefixedforredemptiontobeentitledtoanybenefitorsecurityunderthisIndenture,andtheholdersthereofshallhavenorightin
respectofsuchSecuritiesexcepttherighttoreceivetheredemptionpricethereofandunpaidinteresttothedatefixedforredemption.On
presentationandsurrenderofsuchSecuritiesataplaceofpaymentspecifiedin-saidnotice,saidSecuritiesorthespecifiedportionsthereofshall
bepaidandredeemedbytheCompanyattheapplicableredemptionprice,togetherwithinterestaccruedthereontothedatefixedforredemption;
providedthatanysemiannualpaymentofinterestbecomingdueonthedatefixedforredemptionshallbepayabletotheholdersofsuch
SecuritiesregisteredassuchontherelevantrecorddatesubjecttothetermsandprovisionsofSection2.03hereof.
IfanySecuritycalledforredemptionshallnotbesopaiduponsurrenderthereofforredemption,theprincipalshall,untilpaidorduly
providedfor,bearinterestfromthedatefixed
48
forredemptionattherateofinterestorYieldtoMaturity(inthecaseofanOriginalIssueDiscountSecurity)bornebytheSecurity.
UponpresentationofanySecurityredeemedinpartonly,theCompanyshallexecuteandtheTrusteeshallauthenticateanddelivertoor
ontheorderoftheholderthereof,attheexpenseoftheCompany,anewSecurityorSecuritiesofsuchseries,ofauthorizeddenominations,in
principalamountequalto.theunredeemedportionoftheSecuritysopresented.
SECTION14.04.ExclusionofCertainSecuritiesfromEligibilityforSelectionforRedemption.Securitiesshallbeexcludedfrom
eligibilityforselectionforredemptioniftheyareidentifiedbyregistrationandcertificatenumberinawrittenstatementsignedbyanauthorized
offic.eroftheCompanyanddeliveredtotheTrusteeatleast10(orsuchlessernumberastheTrusteemaypermit)dayspriortothelastdateon
whichnoticeofredemptionmaybegivenasbeingownedby,andnotpledgedorhypothecatedby,either(i)theCompanyor(ii)anAffiliate
specificallyidentifiedinsuchwrittenstatement.
SECTION14.05.MandatoryandOptionalSinkingFunds.Theminimumamountofanysinkingfundpaymentprovidedforbytheterms
ofSecuritiesofanyseriesishereinreferredtoasa“mandatorysinkingfundpayment,”andanypaymentinexcessofsuchminimumamount
providedforbythetermsofSecuritiesofanyseriesishereinreferredtoasan“optionalsinkingfundpayment.”Thelastdateonwhichasinking
fundpaymentmaybemadeineachyearishereinreferredtoasthe“sinkingfundpaymentdate.”
InlieuofmakingalloranypartofanymandatorysinkingfundpaymentwithrespecttoanyseriesofSecuritiesincash,theCompany
mayatitsoption(i)delivertotheTrusteeSecuritiesofsuchseriestheretoforepurchasedorotherwiseacquired(exceptuponredemptionpursuant
tothemandatorysinkingfund)bytheCompanyorreceivecreditforSecuritiesofsuchseries(notpreviouslysocredited)theretoforepurchased
orotherwiseacquired(exceptasaforesaid)bytheCompanyanddeliveredtotheTrusteeforcancellationpursuanttoSection2.09,(ii)receive
creditforoptionalsinkingfundpayments(notpreviouslysocredited)madepursuanttothisSection,or(iii)receivecreditforSecuritiesofsuch
series(notpreviouslysocredited)redeemedbytheCompanythroughanyoptionalredemptionprovisionscontainedinthetermsofsuch
Securities.SecuritiessodeliveredorcreditedshallbereceivedorcreditedbytheTrusteeatthesinkingfundredemptionpricespecifiedinsuch
Securities.
Onorbeforethesixtiethday(orsuchlaterday,nolaterthanthetwentieth,astheTrusteemaypermit)nextprecedingeachsinkingfund
paymentdateforanyseries,theCompanywilldelivertotheTrusteeawrittenstatement(whichneednotcontainthestatementsrequiredby
Section13.05)signedbyanauthorizedofficeroftheCompany(i)specifyingtheportionofthemandatorysinkingfundpaymenttobesatisfied
bypaymentofcashandtheportiontobesatisfiedbycreditofSecuritiesofsuchseries,(ii)statingthatnoneoftheSecuritiesofsuchserieshas
theretoforebeensocredited,(iii)statingthatnodefaultsinthepaymentofinterestorEventsofDefaultwithrespecttosuchserieshaveoccurred
(whichhavenotbeenwaivedorcured)andarecontinuingand(iv)statingwhetherornottheCompanyintendstoexerciseitsrighttomakean
optionalsinkingfundpaymentwithrespecttosuchseries,and,ifso,specifyingtheamountofsuchoptionalsinkingfundpaymentthatthe
Companyintendstopayonorbefore
49
thenextsucceedingsinkingfundpaymentdate.AnySecuritiesofsuchseriestobecreditedandrequiredtobedeliveredtotheTrusteeinorder
fortheCompanytobeentitledtocreditthereforasaforesaidthathavenottheretoforebeendeliveredtotheTrusteeshallbedeliveredfor
cancellationpursuanttoSection2.09totheTrusteewithsuchwrittenstatement(orreasonablypromptlythereafterifacceptabletotheTrustee).
SuchwrittenstatementshallbeirrevocableanduponitsreceiptbytheTrusteetheCompanyshallbecomeunconditionallyobligatedtomakeall
thecashpaymentsthereinreferredto,ifany,onorbeforethenextsucceedingsinkingfundpaymentdate.FailureoftheCompany,onorbefore
anysuchsixtiethday(orsuchlaterdayastheTrusteemayhavepermitted),todeliversuchwrittenstatementandSecuritiesspecifiedinthis
paragraph,ifany,shallnotconstituteadefaultbutshallconstitute1onandasofsuchdate,theirrevocableelectionoftheCompany(i)thatthe
mandatorysinkingfundpaymentforsuchseriesdueonthenextsucceedingsinkingfundpaymentdateshallbepaidentirelyincashwithoutthe
optiontodeliverorcreditSecuritiesofsuchseriesinrespectthereofand(ii)thattheCompanywillmakenooptionalsinkingfundpaymentwith
respecttosuchseriesasprovidedinthisSection.
Ifthesinkingfundpaymentorpayments(mandatoryoroptionalorboth)madeincashplusanyunusedbalanceofanyprecedingsinking
fundpaymentsmadeincashshallexceed$50,000(oralessersumiftheCompanyshallsorequest)withrespecttotheSecuritiesofany
particularseries,suchcashshallbeappliedonthenextsucceedingsinkingfundpaymentdatetotheredemptionofSecuritiesofsuchseriesatthe
sinkingfundredemptionpricetogetherwithaccruedinteresttothedatefixedforredemption.Ifsuchamountshallbe$50,000orlessandthe
Companymakesnosuchrequestthenitshallbecarriedoveruntilasuminexcessof$50,000isavailable.TheTrusteeshallselect,inthemanner
providedinSection14.02,forredemptiononsuchsinkingfundpaymentdateasufficientprincipalamountofSecuritiesofsuchseriestoabsorb
saidcash,asnearlyasmaybe,andshall(ifrequestedinwritingbytheCompany)informtheCompanyoranentityknownbytheTrusteetobe
anAffiliate,asshownbytheSecurityregisterorregisters,andnotknowntotheTrusteetohavebeenpledgedorhypothecatedbytheCompany
oranysuchentityor(ii)identifiedinawrittenstatementdeliveredtotheTrusteepursuanttoSection14.04asbeingownedby,andnotpledged
orhypothecatedby,theCompanyoranAffiliateshallbeexcludedfromSecuritiesofsuchseries-eligibleforselectionforredemption.The
Trustee,inthenameandattheexpenseoftheCompany(ortheCompany,ifitshallsorequesttheTrusteeinwriting)shallcausenoticeof
redemptionoftheSecuritiesofsuchseriestobegiveninsubstantiallythemannerprovidedinSection14.02(andwiththeeffectprovidedin
Section14.03)fortheredemptionofSecuritiesofsuchseriesinpartattheoptionoftheCompany.Theamountofanysinkingfundpaymentsnot
soappliedorallocatedtotheredemptionofSecuritiesofsuchseriesshallbeaddedtothenextcashsinkingfundpaymentand,togetherwithsuch
payment,shallbeappliedinaccordancewiththeprovisionsofthisSection14.05.Anyandallsinkingfundmoneysheldonthestatedmaturity
dateoftheSecuritiesofanyparticularseries(orearlier,ifsuchmaturityisaccelerated),thatarenotheldforthepaymentorredemptionof
particularSecuritiesofsuchseriesshallbeapplied,togetherwithothermoneysifnecessary,sufficientforthepurpose,tothepaymentofthe
principalof,andintereston,theSecuritiesofsuchseriesatmaturity.
TheTrusteeshallnotredeemorcausetoberedeemedanySecuritiesofaserieswithsinkingfundmoneysormailanynoticeof
redemptionofSecuritiesforsuchseriesbyoperation
50
ofthesinkingfundsduringthecontinuanceofadefaultinpaymentofinterestonsuchSecuritiesorofanyEventofDefaultexceptthat,where
themailingofnoticeofredemptionofanySecuritiesshalltheretoforehavebeenmade,theTrusteeshallredeemorcausetoberedeemedsuch
Securities,providedthatitshallhavereceivedfromtheCompanyasumsufficientforsuchredemption.Exceptasaforesaid,anymoneysinthe
sinkingfundforsuchseriesatthetimewhenanysuchdefaultorEventofDefaultshalloccur,andanymoneysthereafterpaidintothesinking
fund,shall,duringthecontinuanceofsuchdefaultorEventofDefault,bedeemedtohavebeencollectedunderArticleFiveandheldforthe
paymentofallsuchSecurities.IncasesuchEventofDefaultshallhavebeenwaivedasprovidedinArticleFiveorthedefaultcuredonorbefore
thesixtiethdayprecedingthesinkingfundpaymentdateinanyyear,suchmoneysshallthereafterbeappliedonthenextsucceedingsinkingfund
paymentdateinaccordancewiththisSectiontotheredemptionofsuchSecurities.
WELLSFARGOBANK,N.A.,thepartyofthesecondpart,herebyacceptsthetrustinthisIndenturedeclaredandprovided,uponthe
termsandconditionshereinabovesetforth.
INWITNESSWHEREOF,SOUTHWESTAIRLINESCO.thepartyofthefirstpart,hascausedthisIndenturetobesignedbyits
ChairmanoftheBoard,aViceChairmanoftheBoard,itsPresidentoroneofitsVicePresidents;andWELLSFARGOBANK,N.A.,theparty
ofthesecondpart,hascausedthisIndenturetobesignedbyoneofitsVicePresidents,allasofthedayandyearfirstwrittenabove.
SOUTHWESTAIRLINESCO.
By:/s/LauraWright
Sr.VicePresident-FinanceandChiefFinancialOfficer
WELLSFARGOBANK,N.A.
By:/s/MelissaScott
(Title)VicePresident
51
PURCHASE AGREEMENT NUMBER PA-03729
between
THE BOEING COMPANY
and
Southwest Airlines Co.
Relating to Boeing Model 737-8 Aircraft
[***] = Certain identified information has been excluded from the exhibits because it is both not material and is of
the type that the registrant treats as private or confidential.
SWA-PA-03729 Page 1
BOEING PROPRIETARY
TABLE OF CONTENTS
ARTICLES TITLES
Article 1 Quantity, Model and Description
Article 2 Delivery Schedule
Article 3 Price
Article 4 Payment
Article 5 Additional Terms
TABLE TITLE
1 Aircraft Information Table
EXHIBIT
A Aircraft Configuration
B Aircraft Delivery Requirements and Responsibilities
SUPPLEMENTAL EXHIBITS TITLES
AE1
Escalation Adjustment/Airframe and Optional Features
BFE1 BFE Variables
CS1 Customer Support Variables
EE1
Engine Escalation/Engine Warranty and Patent Indemnity
SLP1 Service Life Policy Components
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106463 Open Matters
SWA-PA-03729-LA-1106464 [***]
SWA-PA-03729-LA-1106465 [***]
SWA-PA-03729-LA-1106466 [***]
SWA-PA-03729 Page 2
BOEING PROPRIETARY
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106467 [***]
SWA-PA-03729-LA-1106468 [***]
SWA-PA-03729-LA-1106469 [***]
SWA-PA-03729-LA-1106470 [***]
SWA-PA-03729-LA-1106471 Substitute Aircraft
SWA-PA-03729-LA-1106472 [***]
SWA-PA-03729-LA-1106473 [***]
SWA-PA-03729-LA-1106474 Option Aircraft
SWA-PA-03729-LA-1106475 [***]
SWA-PA-03729-LA-1106476 [***]
SWA-PA-03729-LA-1106477 [***]
SWA-PA-03729-LA-1106478 [***]
SWA-PA-03729-LA-1106479 [***]
SWA-PA-03729-LA-1106480 [***]
SWA-PA-03729-LA-1106481 [***]
SWA-PA-03729-LA-1106482 [***]
SWA-PA-03729-LA-1106483 [***]
SWA-PA-03729-LA-1106484 [***]
SWA-PA-03729-LA-1106485 [***]
SWA-PA-03729 Page 3
BOEING PROPRIETARY
Purchase Agreement No. PA-03729
between
The Boeing Company
and
Southwest Airlines Co.
This Purchase Agreement No. PA-03729 between The Boeing Company, a Delaware corporation, (Boeing) and Southwest
Airlines Co., a Texas corporation, (Customer) relating to the purchase and sale of Model 737-8 aircraft together with all
tables, exhibits, supplemental exhibits, letter agreements and other attachments thereto, if any, (Purchase Agreement)
incorporates the terms and conditions (except as specifically set forth below) of the Aircraft General Terms Agreement
dated as of December 13, 2011 between the parties, identified as SWA-AGTA (AGTA).
1. Quantity, Model and Description.
The aircraft to be delivered to Customer will be designated as Model 737-8 aircraft (Aircraft). Boeing will manufacture and
sell to Customer Aircraft conforming to the configuration described in Exhibit A in the quantities listed in Table 1 to the
Purchase Agreement.
2. Delivery Schedule.
The scheduled months of delivery of the Aircraft are listed in the attached Table 1. Exhibit B describes certain
responsibilities for both Customer and Boeing in order to accomplish the delivery of the Aircraft.
3. Price.
3.1 Aircraft Basic Price. The Aircraft Basic Price is listed in Table 1 and is subject to escalation in accordance with
the terms of this Purchase Agreement.
3.2 Advance Payment Base Prices. The Advance Payment Base Prices listed in Table 1 were calculated utilizing
the latest escalation factors available to Boeing on the date of this Purchase Agreement projected to the scheduled delivery
month of each Aircraft.
4. Payment.
4.1 Boeing acknowledges receipt of a deposit in the amount shown in Table 1 for each Aircraft (Deposit).
4.2 The standard advance payment schedule for the Model 737-8 aircraft requires Customer [***], on the effective
date of the Purchase Agreement for the
SWA-PA-03729 Page 4
BOEING PROPRIETARY
Aircraft. Additional advance payments for each Aircraft are due as specified in and on the first business day of the months listed in
the attached Table 1.
4.3 For any Aircraft whose scheduled month of delivery is less than twenty-four (24) months from the date of this Purchase
Agreement, the total amount of advance payments due for payment upon signing of this Purchase Agreement will include all
advance payments which are past due in accordance with the standard advance payment schedule set forth in paragraph 4.2
above.
4.4 Customer will pay the balance of the Aircraft Price of each Aircraft at delivery.
5. Additional Terms.
5.1 Aircraft Information Table. Table 1 consolidates information contained in Articles 1, 2, 3 and 4 with respect to
(i) quantity of Aircraft, (ii) applicable Detail Specification, (iii) month and year of scheduled deliveries, (iv) Aircraft Basic Price,
(v) applicable escalation factors and (vi) Advance Payment Base Prices and advance payments and their schedules.
5.2 Escalation Adjustment/Airframe and Optional Features. Supplemental Exhibit AE1 contains the applicable airframe and
optional features escalation formula.
5.3 Buyer Furnished Equipment Variables. Supplemental Exhibit BFE1 contains supplier selection dates, on dock dates
and other variables applicable to the Aircraft.
5.4 Customer Support Variables. Information, training, services and other things furnished by Boeing in support of
introduction of the Aircraft into Customer’s fleet are described in Supplemental Exhibit CS1.
5.5 Engine Escalation Variables. Supplemental Exhibit EE1 contains the applicable engine escalation formula, the engine
warranty and the engine patent indemnity for the Aircraft describes the applicable engine escalation formula and contains the
engine warranty and the engine patent indemnity for the Aircraft.
5.6 Service Life Policy Component Variables. Supplemental Exhibit SLP1 lists the SLP Components covered by the
Service Life Policy for the Aircraft.
5.7 Public Announcement. Each of Customer and Boeing reserves the right to make a public announcement regarding
Customer’s purchase of the Aircraft upon approval from the authorized representative of the other party hereto.
5.8 Negotiated Agreement; Entire Agreement. This Purchase Agreement, including the provisions of Article 8.2 of the
AGTA relating to insurance, and Article 11 of Part 2 of Exhibit C of the AGTA relating to DISCLAIMER AND RELEASE and
EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES, has been the subject of discussion and negotiation and is
understood by the parties; the Aircraft Price and other agreements of the parties stated in this Purchase Agreement were arrived at
in consideration of such provisions. This Purchase Agreement, including the AGTA,
SWA-PA-03729 Page 5
BOEING PROPRIETARY
contains the entire agreement between the parties and supersedes all previous proposals, understandings, commitments or
representations whatsoever, oral or written, and may be changed only in writing signed by authorized representatives of the
parties.
AGREED AND ACCEPTED this
December 13, 2011
Date
THE BOEING COMPANY SOUTHWEST AIRLINES CO.
/s/ Cheri A Fischer /s/ Michael Van de Ven
Signature Signature
Cheri A Fischer Michael Van de Ven
Printed name Printed name
Attorney-in-Fact EVP & Chief Operating Officer
Title Title
SWA-PA-03729 Page 6
BOEING PROPRIETARY
Table 1 To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
Airframe Model/MTOW: 737-8 175900pounds Detail Specification: D019A001-TBD(10/27/2011)
Engine Model/Thrust: CFMLEAP-1B24 tbdpounds Airframe Price Base Year/Escalation Formula: Jul-11 ECI-MFG/CPI
Airframe Price: [***] Engine Price Base Year/Escalation Formula: N/A N/A
Optional Features: [***]
Sub-Total of Airframe and Features: [***] Airframe Escalation Data:
Engine Price (Per Aircraft): [***] Base Year Index (ECI): [***]
Aircraft Basic Price (Excluding BFE/SPE):
[***]
Base Year Index (CPI): [***]
Buyer Furnished Equipment (BFE) Estimate: [***]
Seller Purchased Equipment (SPE) Estimate: [***]
Deposit per Aircraft: [***]
Escalation Escalation Estimate Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Number of Factor Adv Payment Base At Signing 24 Mos. 21/18/12/9/6 Mos. Total
Date Aircraft (Airframe) Price Per A/P [***] [***] [***] [***]
2017 4 [***] [***] [***] [***] [***] [***]
2018 15 [***] [***] [***] [***] [***] [***]
2019 33 [***] [***] [***] [***] [***] [***]
2020 34 [***] [***] [***] [***] [***] [***]
2021 34 [***] [***] [***] [***] [***] [***]
2022 30 [***] [***] [***] [***] [***] [***]
Total: 150
¹ The escalation factor estimate reflects a July escalation factor which is used for determining the annual average Advance Payment Base Price per Aircraft. [***]
1
SWA-PA-03729
APR 58681-1F.TXT Page 1
BOEING PROPRIETARY
AIRCRAFT CONFIGURATION
between
THE BOEING COMPANY
and
Southwest Airlines Co.
Exhibit A to Purchase Agreement Number PA-03729
SWA-PA-03729-EXA
Purchase Agreement 03729
EXA Page 1
BOEING PROPRIETARY
Exhibit A
AIRCRAFT CONFIGURATION
Dated December 13, 2011
relating to
BOEING MODEL 737-8 AIRCRAFT
The initial configuration of Customer's Model 737-8 Aircraft has been defined by Boeing 7378 Airplane Description
Document No. D019A007 Rev New dated November 4, 2011 and is more fully discussed in Letter Agreement SWA-PA-
03729-LA-1106463 entitled “Open Matters.”
SWA-PA-03729-EXA
Purchase Agreement 03729
EXA Page 2
BOEING PROPRIETARY
AIRCRAFT DELIVERY REQUIREMENTS AND RESPONSIBILITIES
between
THE BOEING COMPANY
and
Southwest Airlines Co.
Exhibit B to Purchase Agreement Number PA-03729
SWA-PA-03729-EXB
Page 1
BOEING PROPRIETARY
Exhibit B
AIRCRAFT DELIVERY REQUIREMENTS AND RESPONSIBILITIES
relating to
BOEING MODEL 737-8 AIRCRAFT
Both Boeing and Customer have certain documentation and approval responsibilities at various times during the
construction cycle of Customer’s Aircraft that are critical to making the delivery of each Aircraft a positive experience for
both parties. This Exhibit B documents those responsibilities and indicates recommended completion deadlines for the
actions to be accomplished.
1. GOVERNMENT DOCUMENTATION REQUIREMENTS.
Certain actions are required to be taken by Customer in advance of the scheduled delivery month of each Aircraft with
respect to obtaining certain government issued documentation.
1.1 Airworthiness and Registration Documents. Not later than six (6) months prior to delivery of each Aircraft,
Customer will notify Boeing of the registration number to be painted on the side of the Aircraft. In addition, and not
later than three (3) months prior to delivery of each Aircraft, Customer will, by letter to the regulatory authority
having jurisdiction, authorize the temporary use of such registration numbers by Boeing during the pre-delivery
testing of the Aircraft.
Customer is responsible for furnishing any Temporary or Permanent Registration Certificates required by any governmental
authority having jurisdiction to be displayed aboard the Aircraft after delivery.
1.2 Certificate of Sanitary Construction.
1.2.1 U.S. Registered Aircraft. Boeing will obtain from the United States Public Health Service, a United
States Certificate of Sanitary Construction to be provided by Boeing to Customer and displayed aboard each Aircraft after
delivery to Customer.
1.2.2 Non-U.S. Registered Aircraft. If Customer requires a United States Certificate of Sanitary Construction
at the time of delivery of the Aircraft, Customer will give written notice thereof to Boeing at least three (3) months prior to
delivery. Boeing will then use commercially reasonable efforts to obtain the Certificate from the United States Public Health
Service and present it to Customer at the time of Aircraft delivery. The above Boeing obligation only applies to commercial
passenger-configured aircraft.
1.3 Customs Documentation.
1.3.1 Import Documentation. If the Aircraft is intended to be exported from the United States, Customer
must notify Boeing not later than three (3) months prior to delivery of each Aircraft of any documentation required by the
customs authorities or by any other agency of the country of import.
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1.3.2 General Declaration - U.S. If the Aircraft is intended to be exported from the United States, Boeing will
prepare Customs Form 7507, General Declaration, for execution by U.S. Customs immediately prior to the ferry flight of the
Aircraft. For this purpose, Customer will furnish to Boeing not later than twenty (20) days prior to delivery all information
required by U.S. Customs and Border Protection, including without limitation (i) a complete crew and passenger list
identifying the names, birth dates, passport numbers and passport expiration dates of all crew and passengers and (ii) a
complete ferry flight itinerary, including point of exit from the United States for the Aircraft.
If Customer intends, during the ferry flight of an Aircraft, to land at a U.S. airport after clearing Customs at delivery,
Customer must notify Boeing not later than twenty (20) days prior to delivery of such intention. If Boeing receives such
notification, Boeing will provide to Customer the documents constituting a Customs permit to proceed, allowing such Aircraft
to depart after any such landing. Sufficient copies of completed Form 7507, along with passenger manifest, will be
furnished to Customer to cover U.S. stops scheduled for the ferry flight.
1.3.3 Export Declaration U.S. If the Aircraft is intended to be exported from the United States following
delivery, and (i) Customer is a non-U.S. customer, Boeing will file an export declaration electronically with U.S. Customs
and Border Protection (CBP), or (ii) Customer is a U.S. customer, it is the responsibility of the U.S. customer, as the
exporter of record, to file the export declaration with CBP.
2. Insurance Certificates.
Unless provided earlier, Customer will provide to Boeing not later than thirty (30) days prior to delivery of the first Aircraft,
a copy of the requisite annual insurance certificate in accordance with the requirements of Article 8 of the AGTA.
3. NOTICE OF FLYAWAY CONFIGURATION.
Not later than twenty (20) days prior to delivery of the Aircraft, Customer will provide to Boeing a configuration letter
stating the requested "flyaway configuration" of the Aircraft for its ferry flight. This configuration letter should include:
(i) the name of the company which is to furnish fuel for the ferry flight and any scheduled post-delivery
flight training, the method of payment for such fuel, and fuel load for the ferry flight;
(ii) the cargo to be loaded and where it is to be stowed on board the Aircraft, the address where cargo is to
be shipped after flyaway and notification of any hazardous materials requiring special handling;
(iii) any BFE equipment to be removed prior to flyaway and returned to Boeing BFE stores for installation
on Customer's subsequent Aircraft;
(iv) a complete list of names and citizenship of each crew member and non-revenue passenger who will be
aboard the ferry flight; and
(v) a complete ferry flight itinerary.
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BOEING PROPRIETARY
4. DELIVERY ACTIONS BY BOEING.
4.1 Schedule of Inspections. All FAA, Boeing, Customer and, if required, U.S. Customs Bureau inspections will be
scheduled by Boeing for completion prior to delivery or departure of the Aircraft. Customer will be informed of such schedules.
4.2 Schedule of Demonstration Flights. All FAA and Customer demonstration flights will be scheduled by Boeing for
completion prior to delivery of the Aircraft.
4.3 Schedule for Customer's Flight Crew. Boeing will inform Customer of the date that a flight crew is required for
acceptance routines associated with delivery of the Aircraft.
4.4 Fuel Provided by Boeing. Boeing will provide to Customer, [***] the amount of fuel shown in U.S. gallons in the table
below for the model of Aircraft being delivered and full capacity of engine oil at the time of delivery or prior to the ferry flight of the
Aircraft.
Aircraft Model Fuel Provided
737 1,000
4.5 Flight Crew and Passenger Consumables. Boeing will provide reasonable quantities of food, coat hangers, towels,
toilet tissue, drinking cups and soap for the first segment of the ferry flight for the Aircraft.
4.6 Delivery Papers, Documents and Data. Boeing will have available at the time of delivery of the Aircraft certain delivery
papers, documents and data for execution and delivery with drafts, to the extent reasonably available, to be provided to Customer
not less than five (5) days prior thereto. If title for the Aircraft will be transferred to Customer through a Boeing sales subsidiary and
if the Aircraft will be registered with the FAA, Boeing will preposition in Oklahoma City, Oklahoma, for filing with the FAA at the time
of delivery of the Aircraft an executed original Form 8050-2, Aircraft Bill of Sale, indicating transfer of title to the Aircraft from
Boeing's sales subsidiary to Customer.
4.6.1 Boeing agrees that to the extent that the Cape Town Convention may be applicable to the sale of the Aircraft
to Customer, Boeing as seller shall consent to the sale as reasonably requested by Customer (at Customer’s cost and expense) to
permit Customer to register the sale of the Aircraft on the International Registry (as defined in the Cape Town Convention) in favor
of Customer.
4.6.1.1 Definitions applicable to Article 0 herein.
(i) “Cape Town Convention” means Convention on International Interests in Mobile Equipment,
concluded in Cape Town, South Africa, on November 16, 2001 (including the Protocol and as
amended, supplemented or modified from time to time).
(ii) “Protocol” means Protocol to the Convention on International Interests in Mobile Equipment on
Matters Specific to Aircraft (as amended, modified or supplemented from time to time)
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4.7 Delegation of Authority. Boeing will present a certified copy of a Resolution of Boeing's Board of Directors,
designating and authorizing certain persons to act on its behalf in connection with delivery of the Aircraft.
5. DELIVERY ACTIONS BY CUSTOMER.
5.1 Aircraft Radio Station License. At delivery Customer will provide its Aircraft Radio Station License to be placed
on board the Aircraft following delivery.
5.2 Aircraft Flight Log. At delivery Customer will provide the Aircraft Flight Log for the Aircraft.
5.3 Delegation of Authority. Customer will present to Boeing at delivery of the Aircraft an original or certified copy of
Customer's Delegation of Authority designating and authorizing certain persons to act on its behalf in connection with
delivery of the specified Aircraft.
5.4 TSA Waiver Approval. Customer may be required to have an approved Transportation Security Administration
(TSA) waiver for the ferry flight depending upon the Customer’s en-route stop(s) and destination unless the Customer
already has a TSA approved security program in place. Customer is responsible for application for the TSA waiver and
obtaining TSA approval. Customer will provide a copy of the approved TSA waiver to Boeing upon arrival at the Boeing
delivery center.
5.5 Electronic Advance Passenger Information System. Should the ferry flight of an Aircraft leave the United
States, the Department of Homeland Security office requires Customer to comply with the Electronic Advance Passenger
Information System (eAPIS). Customer needs to establish their own account with US Customs and Border Protection in
order to file for departure. A copy of the eAPIS forms is to be provided by Customer to Boeing upon arrival of Customer’s
acceptance team at the Boeing delivery center.
SWA-PA-03729-EXB
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BOEING PROPRIETARY
ESCALATION ADJUSTMENT
AIRFRAME AND OPTIONAL FEATURES
between
THE BOEING COMPANY
and
Southwest Airlines Co.
Supplemental Exhibit AE1
to Purchase Agreement Number PA-03729
SWA-PA-03729-AE1 Page 1
BOEING PROPRIETARY
ESCALATION ADJUSTMENT
AIRFRAME AND OPTIONAL FEATURES
relating to
BOEING MODEL 737-8 AIRCRAFT
1. [***]
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2. [***]
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BUYER FURNISHED EQUIPMENT VARIABLES
between
THE BOEING COMPANY
and
Southwest Airlines Co.
Supplemental Exhibit BFE1
to Purchase Agreement Number PA-03729
SWA-PA-03729-BFE1 Page 1
BOEING PROPRIETARY
BUYER FURNISHED EQUIPMENT VARIABLES
relating to
BOEING MODEL 737-8 AIRCRAFT
This Supplemental Exhibit BFE1 contains supplier selection dates, on-dock dates and other requirements applicable to the
Aircraft.
1. Supplier Selection.
Customer will:
Select and notify Boeing of the suppliers and part numbers of the following BFE items by the following dates:
Galley System tbd
Galley Inserts tbd
Seats (passenger) tbd
Overhead & Audio System tbd
In-Seat Video System tbd
Miscellaneous Emergency Equipment tbd
Cargo Handling Systems*
(Single Aisle Programs only)
tbd
*For a new certification, supplier requires notification ten (10) months prior to Cargo Handling System on-dock date.
2. On-dock Dates and Other Information.
On or before _______tbd__________, Boeing will provide to Customer the BFE Requirements electronically through My
Boeing Fleet (MBF in My Boeing Configuration (MBC). These requirements may be periodically revised, setting forth the
items, quantities, on-dock dates and shipping instructions and other requirements relating to the in-sequence installation of
BFE. For planning purposes, preliminary BFE on-dock dates are set forth below:
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BOEING PROPRIETARY
Item Preliminary On-Dock Dates
[Month of Delivery]
Aircraft
Seats TBD
Galleys/Furnishings TBD
Antennas & Mounting Equipment TBD
Avionics TBD
Cabin Systems Equipment TBD
Miscellaneous Emergency Equipment TBD
Textiles/Raw Material TBD
Cargo Systems
(Single Aisle Programs)
TBD
Provision Kits
(Single Aisle Programs)
TBD
Radomes (Single Aisle Programs) TBD
Additional Delivery Requirements - Import.
Customer will be the “importer of record” (as defined by the U.S. Customs and Border Protection) for all BFE imported into
the United States, and as such, it has the responsibility to ensure all of Customer’s BFE shipments comply with U.S.
Customs Service regulations. In the event Customer requests Boeing, in writing, to act as importer of record for Customer’s
BFE, and Boeing agrees to such request, Customer is responsible for ensuring Boeing can comply with all U.S. Customs
Import Regulations by making certain that, at the time of shipment, all BFE shipments comply with the requirements in the
“International Shipment Routing Instructions”, including the Customs Trade Partnership Against Terrorism (C-TPAT), as set
out on the Boeing website referenced below. Customer agrees to include the International Shipment Routing Instructions,
including C-TPAT requirements, in each contract between Customer and BFE supplier.
http://www.boeing.com/companyoffices/doingbiz/supplier_portal/index_general.html
SWA-PA-03729-BFE1 Page 3
BOEING PROPRIETARY
CUSTOMER SUPPORT VARIABLES
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Supplemental Exhibit CS1
to Purchase Agreement Number PA-03729
SWA-PA-03729-CS1 Page 1
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ENGINE ESCALATION,
ENGINE WARRANTY AND PATENT INDEMNITY
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Supplemental Exhibit EE1
to Purchase Agreement Number PA-03729
SWA-PA-03729-EE1 Page 1
BOEING PROPRIETARY
ENGINE ESCALATION
ENGINE WARRANTY AND PATENT INDEMNITY
relating to
BOEING MODEL 737-8 AIRCRAFT
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SERVICE LIFE POLICY COMPONENTS
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Supplemental Exhibit SLP1
to Purchase Agreement Number PA-03729
SWA-PA-03729-SLP1 Page 1
BOEING PROPRIETARY
SERVICE LIFE POLICY COMPONENTS
relating to
BOEING MODEL 737-8 AIRCRAFT
This is the listing of SLP Components for the Aircraft which relate to Part 3, Boeing Service Life Policy of Exhibit C, Product
Assurance Document to the AGTA and is a part of Purchase Agreement No. PA-03729.
1. Wing.
(i) Upper and lower wing skins and stiffeners between the forward and rear wing spars.
(ii) Wing spar webs, chords and stiffeners.
(iii) Inspar wing ribs.
(iv) Inspar splice plates and fittings.
(v) Main landing gear support structure.
(vi) Wing center section lower beams, spanwise beams and floor beams, but not the seat tracks
attached to floor beams.
(vii) Wing-to-body structural attachments.
(viii) Engine strut support fittings attached directly to wing primary structure.
(ix) Support structure in the wing for spoilers and spoiler actuators; for aileron hinges and reaction
links; for leading edge devices and trailing edge flaps; and the winglets.
(x) Trailing edge flap tracks and carriages.
(xi) Aileron leading edge device and trailing edge flap internal, fixed attachment and actuator
support structure.
2. Body.
(i) External surface skins and doublers, longitudinal stiffeners, longerons and circumferential rings
and frames between the forward pressure bulkhead and the vertical stabilizer rear spar
bulkhead and structural support and enclosure for the APU but excluding all system
components and related installation and connecting devices, insulation, lining, and decorative
panels and related installation and connecting devices.
(ii) Window and windshield structure but excluding the windows and windshields.
(iii) Fixed attachment structure of the passenger doors, cargo doors and emergency exits, excluding
door mechanisms and movable hinge components. Sills and frames around the body openings
for the passenger doors, cargo doors and emergency exits, excluding scuff plates and pressure
seals.
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(iv) Nose wheel well structure, including the wheel well walls, pressure deck, bulkheads, and
gear support structure.
(v) Main gear wheel well structure including pressure deck and landing gear beam support
structure.
(vi) Floor beams and support posts in the control cab and passenger cabin area, but
excluding seat tracks.
(vii) Forward and aft pressure bulkheads.
(viii) Keel structure between the wing front spar bulkhead and the main gear wheel well aft
bulkhead including splices.
(ix) Wing front and rear spar support bulkheads, and vertical and horizontal stabilizer front
and rear spar support bulkheads including terminal fittings but excluding all system
components and related installation and connecting devices, insulation, lining, and
decorative panels and related installation and connecting devices.
(x) Support structure in the body for the stabilizer pivot and stabilizer screw.
3. Vertical Stabilizer.
(i) External skins between front and rear spars.
(ii) Front, rear and auxiliary spar chords, webs and stiffeners and attachment fittings.
(iii) Inspar ribs.
(iv) Rudder hinges and supporting ribs, excluding bearings.
(v) Support structure in the vertical stabilizer for rudder hinges, reaction links and actuators.
(vi) Rudder internal, fixed attachment and actuator support structure.
4. Horizontal Stabilizer.
(i) External skins between front and rear spars.
(ii) Front and rear spar chords, webs and stiffeners.
(iii) Inspar ribs.
(iv) Stabilizer center section including hinge and screw support structure.
(v) Support structure in the horizontal stabilizer for the elevator hinges, reaction links and
actuators.
(vi) Elevator internal, fixed attachment and actuator support structure.
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5. Engine Strut.
(i) Strut external surface skin and doublers and stiffeners.
(ii) Internal strut chords, frames and bulkheads.
(iii) Strut to wing fittings and diagonal brace.
(iv) Engine mount support fittings attached directly to strut structure and including the
enginemounted support fittings.
6. Main Landing Gear.
(i) Outer cylinder.
(ii) Inner cylinder, including axles.
(iii) Upper and lower side struts, including spindles, universals and reaction links.
(iv) Drag strut.
(v) Orifice support tube.
(vi) Downlock links including spindles and universals.
(vii) Torsion links.
(viii) Bell crank.
(ix) Trunnion link.
(x) Actuator beam, support link and beam arm.
7. Nose Landing Gear.
(i) Outer cylinder.
(ii) Inner cylinder, including axles.
(iii) Orifice support tube.
(iv) Upper and lower drag strut, including lock links.
(v) Steering plates and steering collars.
(vi) Torsion links.
NOTE: The Service Life Policy does not cover any bearings, bolts, bushings, clamps, brackets, actuating mechanisms or
latching mechanisms used in or on the SLP Components.
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BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124-2207
SWA-PA-03729-LA-1106463
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: Open Matters
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
Given the long period of time between Purchase Agreement signing and delivery of the first Aircraft and the
continued development of the 737-8 program, certain elements have not yet been defined. In consideration, Boeing and
Customer agree to work together as the 737-8 program develops as follows:
1. Aircraft Delivery Schedule.
1.1 [***]
1.2 Customer and Boeing will consult on a frequent basis to keep each other informed as to Customer’s fleet plans
and Boeing’s production plans in order to meet the requirements of both parties. Based on such review and discussions,
Boeing will use its best commercially reasonable efforts to meet Customer’s fleet needs.
2. Aircraft Configuration.
2.1 The initial configuration of Customer's Model Aircraft has been defined by Boeing 737-8 Airplane Description
Document No. D019A007 Rev New dated November 4, 2011 as described in Article 1 and Exhibit A of the Purchase
Agreement (Initial
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Configuration). [***]
2.1.1 [***]
2.1.2 [***]
2.1.3 [***]
2.1.4 [***]
2.1.4.1 [***]
2.1.4.2 [***]
2.1.4.3 [***]
2.1.4.4 [***]
2.1.4.5 [***]
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3. [***]
4. Other Letter Agreements.
Boeing and Customer acknowledge that as they work together to develop the 737-8 program and as Boeing refines the
definition of the Aircraft and associated production processes, there may be a need to execute additional letter agreements
or amend letter agreements addressing one or more of the following:
4.1 Software. Additional provisions relating to software and software loading.
4.2 Seller Purchased Equipment (SPE) and/or In-Flight Entertainment (IFE). Provisions relating to the terms under which
Boeing may offer or install SPE in the Aircraft.
4.3 Buyer Furnished Equipment (BFE). Provisions relating to the terms under which Boeing may install and certify
Customer’s BFE in the Aircraft.
5. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is considered by
Boeing as confidential and has value precisely because it is not available generally to other parties. Customer agrees to limit the
disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b) employees of Customer with a need to know
the contents for performing its
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obligations (including, without limitation, those employees performing accounting, finance, administration and other
functions necessary to finance and purchase, deliver or lease the Aircraft) and who understand they are not to disclose its
contents to any other person or entity (other than those to whom disclosure is permitted by this Article) without the prior
written consent of Boeing and (c) any auditors and attorneys of Customer who have a need to know such information and
have signed a confidentiality agreement in the same form and substance similar to this Article, or are otherwise bound by a
confidentiality obligation. Disclosure to other parties is not permitted without Boeing’s consent except as may be required by
applicable law or governmental regulations. Customer shall be fully responsible to Boeing for compliance with such
obligations.
Very truly yours,
THE BOEING COMPANY
By
/s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
SOUTHWEST AIRLINES CO.
By
/s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
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The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106464
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
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9. Order of Precedence.
In the event of any inconsistency between the terms of this Letter Agreement and the terms of any other provisions of the
CSGTA, the terms of this Letter Agreement will control.
10. Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance,
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administration and other functions necessary to finance and purchase, deliver or lease the Aircraft) and who understand
they are not to disclose its contents to any other person or entity (other than those to whom disclosure is permitted by this
Article) without the prior written consent of Boeing and (c) any auditors and attorneys of Customer who have a need to
know such information and have signed a confidentiality agreement in the same form and substance similar to this Article,
or are otherwise bound by a confidentiality obligation. Disclosure to other parties is not permitted without Boeing’s consent
except as may be required by applicable law or governmental regulations. Customer shall be fully responsible to Boeing
for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By
/s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13, 2011
SOUTHWEST AIRLINES CO.
By
/s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
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The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106465
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
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6. Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
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Very truly yours,
THE BOEING COMPANY
By
/s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
SOUTHWEST AIRLINES CO.
By
/s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
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The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106466
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
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1. Definitions.
1.1 Commitment Limit shall have the meaning set forth in Article 2, below.
1.2 Covered Aircraft shall mean those Aircraft identified on Table 1 to the Purchase Agreement as of the date of
signing of this Letter Agreement.
1.3 [***]
1.4 [***]
1.5 [***]
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2. [***]
3. [***]
4. [***]
5. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be
assigned in whole or, in part, without the prior written consent of Boeing.
SWA-PA-03729-LA-1106466 Page 2
[***]
BOEING PROPRIETARY
6. Confidential Treatment.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By
/s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
SOUTHWEST AIRLINES CO.
By
/s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
SWA-PA-03729-LA-1106466 Page 3
[***]
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106467
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
SWA-PA-03729-LA-1106467 Page 1
[***]
BOEING PROPRIETARY
2. [***]
3. Assignment.
Unless otherwise noted herein, [***] described in this Letter Agreement are provided as a financial accommodation to
Customer and in consideration of Customer’s taking title to the Aircraft at time of delivery and becoming the operator of the
Aircraft. This Letter Agreement cannot be assigned, in whole or in part, without the prior written consent of Boeing.
4. Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
SWA-PA-03729-LA-1106467 Page 2
[***]
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By
/s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13, 2011
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its EVP & Chief Operating Officer
SWA-PA-03729-LA-1106467 Page 3
[***]
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106468
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
Definition of Terms:
[***]
SWA-PA-03729-LA-1106468 Page 1
[***]
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By
/s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
SOUTHWEST AIRLINES CO.
By
/s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
SWA-PA-03729-LA-1106468 Page 2
[***]
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106469
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
References: 1) Purchase Agreement No. PA03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 7378 aircraft (Aircraft)
2) Letter Agreement SWA-PA-03729-LA-1106471, “Substitute Aircraft,” to the Purchase Agreement
(Substitution Letter Agreement)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
SWA-PA-03729-LA-1106469 Page 1
[***]
BOEING PROPRIETARY
2. [***]
3. [***]
SWA-PA-03729-LA-1106469 Page 2
[***]
BOEING PROPRIETARY
4. [***]
5. [***]
6. [***]
7. [***]
.
8. [***]
SWA-PA-03729-LA-1106469 Page 3
[***]
BOEING PROPRIETARY
9. [***]
10. [***]
11. Assignment.
Unless otherwise noted herein, [***] described in this Letter Agreement are provided [***] to Customer and in consideration
of Customer’s taking title to the Aircraft at time of delivery and becoming the operator of the Aircraft. This Letter Agreement
cannot be assigned, in whole or in part, without the prior written consent of Boeing.
12. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
SWA-PA-03729-LA-1106469 Page 4
[***]
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By
/s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
SOUTHWEST AIRLINES CO.
By
/s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
SWA-PA-03729-LA-1106469 Page 5
[***]
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106470
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
2. [***]
3. [***]
SWA-PA-03729-LA-1106470 Page 1
[***]
BOEING PROPRIETARY
4. [***]
5. [***]
6. [***]
SWA-PA-03729-LA-1106470 Page 2
[***]
BOEING PROPRIETARY
7. [***]
8. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be
assigned in whole or, in part.
9. Confidential Treatment.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Section) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Section, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
SWA-PA-03729-LA-1106470 Page 3
[***]
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By /s/ Cheri A Fischer
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its EVP & Chief Operating Officer
SWA-PA-03729-LA-1106470 Page 4
[***]
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106471
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: Substitute Aircraft
References: 1) Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing)
and Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
2) Letter Agreement No. SWA-PA-03729-LA-1106469, [***]
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
2. [***]
SWA-PA-03729-LA-1106471 Page 1
Aircraft Model Substitution
BOEING PROPRIETARY
3. [***]
4. [***]
SWA-PA-03729-LA-1106471 Page 2
Aircraft Model Substitution
BOEING PROPRIETARY
5. [***]
SWA-PA-03729-LA-1106471 Page 3
Aircraft Model Substitution
BOEING PROPRIETARY
6. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be
assigned in whole or, in part.
7. Confidential Treatment.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By
/s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
SOUTHWEST AIRLINES CO.
By
/s/ Michael Van de Van
Its
EVP & Chief Operating Officer
SWA-PA-03729-LA-1106471 Page 4
Aircraft Model Substitution
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
=
SWA-PA-03729-LA-1106472
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
2. [***]
SWA-PA-03729-LA-1106472 Page 1
[***]
BOEING PROPRIETARY
3. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13, 2011
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
SWA-PA-03729-LA-1106472 Page 2
[***]
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106473
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
References: 1) Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing)
and Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
2) Letter Agreement SWA-PA-03729-1106471 entitled “Aircraft Model Substitution” (Substitution Letter)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
SWA-PA-03729-LA-1106473 Page 1
[***]
BOEING PROPRIETARY
2. [***]
3. Assignment.
Unless otherwise noted herein, [***] to Customer and in consideration of Customer’s taking title to the Substitute Aircraft at
time of delivery and becoming the operator of the Substitute Aircraft. This Letter Agreement cannot be assigned, in whole or
in part, without the prior written consent of Boeing.
4. Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
SWA-PA-03729-LA-1106473 Page 2
[***]
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By /s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
SWA-PA-03729-LA-1106473 Page 3
[***]
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106474
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: Option Aircraft
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. Right to Purchase Option Aircraft.
Subject to the terms and conditions contained in this Letter Agreement, in addition to the Aircraft described in Table
1 to the Purchase Agreement as of the date of execution of this Letter Agreement, Customer will have the option to
purchase additional Boeing Model 7378 aircraft as option aircraft (Option Aircraft).
2. Delivery.
The number of aircraft and delivery years are listed in the Attachment 1 to this Letter Agreement.
3. Configuration.
3.1 Subject to the provisions of Article 3.2, below, the configuration for the Option Aircraft will be the Detail
Specification for Boeing Model 7378 aircraft at the revision level in effect at the time of Definitive Agreement (as defined in
Article 8). Such Detail Specification will be revised to include (i) changes applicable to the Detail Specification that are
developed by Boeing between the Option Exercise Date (as defined below) and the signing of the Definitive Agreement, (ii)
changes required to obtain required regulatory certificates, and (iii) other changes as mutually agreed.
3.2 Boeing reserves the right to configure the Option Aircraft starting from a different configuration specification,
provided that it can achieve the same configuration which would result pursuant to the provisions of Article 3.1.
SWA-PA-03729-LA-1106474 Page 1
Option Aircraft
BOEING PROPRIETARY
4. [***]
5. [***]
6. [***]
SWA-PA-03729-LA-1106474 Page 2
Option Aircraft
BOEING PROPRIETARY
7. [***]
8. [***]
.
9. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be
assigned in whole or in part.
SWA-PA-03729-LA-1106474 Page 3
Option Aircraft
BOEING PROPRIETARY
10. Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
SWA-PA-03729-LA-1106474 Page 4
Option Aircraft
BOEING PROPRIETARY
Attachment 1 To
Letter Agreement No. SWA-PA-03729-LA-1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Airframe Model/MTOW: 737-8 175900pounds Detail Specification: D019A007-NEW(11/4/2011)
Engine Model/Thrust: CFMLEAP-1B24 TBDpounds Airframe Price Base Year/Escalation Formula: Jul-11 ECI-MFG/CPI
Airframe Price: [***] Engine Price Base Year/Escalation Formula: N/A N/A
Optional Features: [***]
Sub-Total of Airframe and Features: [***] Airframe Escalation Data:
Engine Price (Per Aircraft): [***] Base Year Index (ECI): [***]
Aircraft Basic Price (Excluding BFE/SPE):
[***]
Base Year Index (CPI): [***]
Buyer Furnished Equipment (BFE) Estimate: [***]
Seller Purchased Equipment (SPE) Estimate: [***]
Non-Refundable Deposit/Aircraft at Def Agreemt: [***]
Escalation
Escalation
Estimate Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Number of Factor
Adv Payment
Base At Signing 24 Mos. 21/18/12/9/6 Mos. Total
Date Aircraft (Airframe) Price Per A/P [***] [***] [***] [***]
Jul-2021 18 [***] [***] [***] [***] [***] [***]
Jul-2022 19 [***] [***] [***] [***] [***] [***]
Jul-2023 23 [***] [***] [***] [***] [***] [***]
Jul-2024 23 [***] [***] [***] [***] [***] [***]
Jul-2025 23 [***] [***] [***] [***] [***] [***]
Jul-2026 23 [***] [***] [***] [***] [***] [***]
Jul-2027 21 [***] [***] [***] [***] [***] [***]
Total: 150
The escalation factors reflect July 2Q2011 external forecast factors and are used for determining the annual average estimated advance payment price per
aircraft. [***]
1
1
SWA-PA-03729-LA-1106474 58911-
10.TXT
BOEING PROPRIETARY
Page 1
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106475
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
References: 1) Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing)
and Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
2) Letter Agreement SWA-PA-03729-6474 entitled “Option Aircraft” (Option Aircraft Letter Agreement)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
SWA-PA-03729-LA-1106475 Page 1
[***]
BOEING PROPRIETARY
2. [***]
3. Assignment.
Unless otherwise noted herein, [***]
and in consideration of Customer’s taking title to the Option Aircraft at time of delivery and becoming the operator of the
Option Aircraft. This Letter Agreement cannot be assigned, in whole or in part, without the prior written consent of Boeing.
4. Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
SWA-PA-03729-LA-1106475 Page 2
[***]
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By /s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
SWA-PA-03729-LA-1106475 Page 3
[***]
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106476
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
The Purchase Agreement incorporates the terms and conditions of Aircraft General Terms Agreement dated as of
December 13, 2011 identified as SWA-AGTA between Boeing and Customer (AGTA). This Letter Agreement modifies
certain terms and conditions of the AGTA with respect to the Aircraft.
1. [***]
SWA-PA-03729-LA-1106476 Page 1
[***]
BOEING PROPRIETARY
2. [***]
3. Assignment. Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described
in this Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and
cannot be assigned in whole or, in part.
Confidentiality. Customer understands that certain commercial and financial information contained in this Letter
Agreement is considered by Boeing as confidential and has value precisely because it is not available generally to other
parties. Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
SWA-PA-03729-LA-1106476 Page 2
[***]
BOEING PROPRIETARY
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
SWA-PA-03729-LA-1106476 Page 3
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BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106477
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
Recitals
1. [***]
2. [***]
Agreement
1. Covered Aircraft.
The Program shall apply to each of the Aircraft operated by Customer on Customer's routes during the Program Term
(Covered Aircraft).
2. [***]
SWA-PA-03729-LA-1106477 Page 1
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3. [***]
4. [***]
SWA-PA-03729-LA-1106477 Page 2
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5. [***]
SWA-PA-03729-LA-1106477 Page 3
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6. [***]
7. [***]
SWA-PA-03729-LA-1106477 Page 4
[***]
BOEING PROPRIETARY
8. [***]
SWA-PA-03729-LA-1106477 Page 5
[***]
BOEING PROPRIETARY
9. [***]
SWA-PA-03729-LA-1106477 Page 6
[***]
BOEING PROPRIETARY
SWA-PA-03729-LA-1106477 Page 7
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BOEING PROPRIETARY
10. Notice.
10.1 All reports submitted to Boeing will be addressed to the attention of:
Director - BCA Warranty and Product Assurance
Boeing Commercial Airplanes
P.O. Box 3707 Mail Code 2L-46
Fax: 425-237-1706
Seattle, Washington 98124-2207
SWA-PA-03729-LA-1106477 Page 8
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BOEING PROPRIETARY
10.2 All reports submitted to Customer will be addressed to the attention of:
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235
11. [***]
12. [***]
13. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be
assigned in whole or, in part.
14. Confidential Treatment.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article)
SWA-PA-03729-LA-1106477 Page 9
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BOEING PROPRIETARY
without the prior written consent of Boeing and (c) any auditors and attorneys of Customer who have a need to know such
information and have signed a confidentiality agreement in the same form and substance similar to this Article, or are
otherwise bound by a confidentiality obligation. Disclosure to other parties is not permitted without Boeing’s consent except
as may be required by applicable law or governmental regulations. Customer shall be fully responsible to Boeing
for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Cheri A Fischer
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
SWA-PA-03729-LA-1106477 Page 10
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BOEING PROPRIETARY
Attachment A: [***]
[***]
Year 1:____ Year 2:____ Year 3:____ Year 4:____ Year 5:____
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
SWA-PA-03729-LA-1106477 Page 11
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BOEING PROPRIETARY
Attachment B: [***]
[***]
1. [***]
2. [***]
3. [***]
SWA-PA-03729-LA-1106477 Page 12
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SWA-PA-03729-LA-1106477 Page 13
[***]
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4. [***]
SWA-PA-03729-LA-1106477 Page 14
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5. [***]
SWA-PA-03729-LA-1106477 Page 15
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The rest of the page is intentionally blank.
SWA-PA-03729-LA-1106477 Page 16
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BOEING PROPRIETARY
[***]
SWA-PA-03729-LA-1106477 Page 17
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[***]
SWA-PA-03729-LA-1106477 Page 18
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Attachment C: [***]
To: Southwest Airlines Co.
Reference: Letter Agreement No. SWA-PA-03729-LA-1106477 to Agreement No. PA-03729 (Purchase Agreement) and
[***]
Subject: [***]
SWA-PA-03729-LA-1106477 Page 19
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Attachment D
To: [***]
Reference: Letter Agreement No. SWA-PA-03729-LA-1106477 to Agreement No. PA-03729 (Purchase Agreement) and
[***]
Subject: Data reported pursuant to Article 6 of the referenced Letter Agreement.
Reporting Period No. _____
Beginning date _________ ending date _________
[***]
SWA-PA-03729-LA-1106477 Page 20
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[***]
Southwest Airlines Co.
By
Its
SWA-PA-03729-LA-1106477 Page 21
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Attachment E
To: Southwest Airlines Co.
Reference: Letter Agreement No. SWA-PA-03729-LA-1106477 to Agreement No. PA-03729 (Purchase Agreement) and
[***]
Subject: Data reported pursuant to Article 7 of the referenced Letter Agreement.
Reporting Period No. _____
Beginning date _________ ending date _________
[***]
SWA-PA-03729-LA-1106477 Page 22
[***]
BOEING PROPRIETARY
[***]
THE BOEING COMPANY
Reported By
Its
Date
SWA-PA-03729-LA-1106477 Page 23
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BOEING PROPRIETARY
Attachment F: [***]
To: Southwest Airlines Co.
Reference: Letter Agreement No. SWA-PA-03729-LA-1106477 to Agreement No. PA-03729 (Purchase Agreement) and
[***]
Subject: Data reported pursuant to Article 5.3 of the referenced Letter Agreement.
[***]
One $ + $ + $ =
Two $ + $ + $ =
Three $ + $ + $ =
Four $ + $ + $ =
Five $ + $ + $ =
SWA-PA-03729-LA-1106477 Page 24
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BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106478
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
References: 1) Purchase Agreement No. A-03729 (Purchase Agreement) between The Boeing Company (Boeing)
and Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
2) Supplemental Exhibit CS1 to the Purchase Agreement (Supplemental Exhibit CS1)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
SWA-PA-03729-LA-1106478 Page 1
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2. [***]
3. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
SWA-PA-03729-LA-1106478 Page 2
[***]
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By /s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13, 2011
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
SWA-PA-03729-LA-1106478 Page 3
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Attachment 1 to SWA-PA-03729-LA-1106478
[***]
SWA-PA-03729-LA-1106478 Page 1
[***]
BOEING PROPRIETARY
Attachment 1 to SWA-PA-03729-LA-1106478
[***]
SWA-PA-03729-LA-1106478 Page 2
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The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106479
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
SWA-PA-03729-LA-1106479 Page 1
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2. Assignment. Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described
in this Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and
cannot be assigned in whole or, in part.
3. Confidentiality. Customer understands that certain commercial and financial information contained in this Letter
Agreement is considered by Boeing as confidential and has value precisely because it is not available generally to other
parties. Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Section) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Section, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
SWA-PA-03729-LA-1106479 Page 2
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Very truly yours,
THE BOEING COMPANY
By /s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
SWA-PA-03729-LA-1106479 Page 3
[***]
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWAPA03729LA1106480
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
2. [***]
3. Assignment. Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in
this Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and
cannot be assigned in whole or, in part.
SWA-PA-03729-LA-1106480 Page 1
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Confidentiality. Customer understands that certain commercial and financial information contained in this Letter
Agreement is considered by Boeing as confidential and has value precisely because it is not available generally to other
parties. Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 ,2011
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
SWA-PA-03729-LA-1106480 Page 2
[***]
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The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106481
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
2. [***]
.
3. [***]
SWA-PA-03729-LA-1106481 Page 1
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BOEING PROPRIETARY
4. [***]
5. [***]
6. [***]
7. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be
assigned in whole or, in part.
SWA-PA-03729-LA-1106481 Page 2
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8. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Cheri A Fischer
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
Southwest Airlines Co.
By /s/ Michael Van de Ven
Its EVP & Chief Operating Officer
SWA-PA-03729-LA-1106481 Page 3
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The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106482
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
[***]
[***]
1. [***]
2. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be
assigned in whole or, in part.
SWA-PA-03729-LA-1106482 Page 1
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3. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Cheri A Fischer
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
SWA-PA-03729-LA-1106482 Page 2
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The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106483
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
2. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be
assigned in whole or, in part.
3. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its
SWA-PA-03729-LA-1106483 Page 1
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obligations (including, without limitation, those employees performing accounting, finance, administration and other
functions necessary to finance and purchase, deliver or lease the Aircraft) and who understand they are not to disclose its
contents to any other person or entity (other than those to whom disclosure is permitted by this Article) without the prior
written consent of Boeing and (c) any auditors and attorneys of Customer who have a need to know such information and
have signed a confidentiality agreement in the same form and substance similar to this Article, or are otherwise bound by a
confidentiality obligation. Disclosure to other parties is not permitted without Boeing’s consent except as may be required by
applicable law or governmental regulations. Customer shall be fully responsible to Boeing for compliance with such
obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
SWA-PA-03729-LA-1106483 Page 2
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The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106484
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. Defined Terms: The following capitalized terms have the following meaning:
1.1. [***]
1.2. [***]
1.3. Program Aircraft means each Aircraft specified in Table 1 of the Purchase Agreement as of the date of this
Letter.
2. [***]
3. [***]
SWA-PA-03729-LA-1106484 Page 1
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4. [***]
5. [***]
SWA-PA-03729-LA-1106484 Page 2
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6. [***]
7. Assignment. Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described
in this Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and
cannot be assigned in whole or, in part.
8. Confidentiality. Customer understands that certain commercial and financial information contained in this Letter
Agreement is considered by Boeing as confidential and has value precisely because it is not available generally to other
parties. Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a
SWA-PA-03729-LA-1106484 Page 3
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confidentiality agreement in the same form and substance similar to this Article, or are otherwise bound by a confidentiality
obligation. Disclosure to other parties is not permitted without Boeing’s consent except as may be required by applicable
law or governmental regulations. Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Cheri A Fischer
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its
EVP & Chief Operating Officer
SWA-PA-03729-LA-1106484 Page 4
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[***]
SWA-PA-03729-LA-1106484 Page 1
[***]
BOEING PROPRIETARY
[***]
SWA-PA-03729-LA-1106484 Page 1
[***]
BOEING PROPRIETARY
[***]
SWA-PA-03729-LA-1106484 Page 2
[***]
BOEING PROPRIETARY
[***]
SWA-PA-03729-LA-1106484 Page 3
[***]
BOEING PROPRIETARY
[***]
SWA-PA-03729-LA-1106484 Page 4
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The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106485
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Aircraft General Terms Agreement No. SWA-AGTA (AGTA) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer)
Purchase Agreement No. PA-03729 (Purchase Agreement) between Boeing and Customer relating to Model 737-8
aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement, including the AGTA. All
terms used but not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
SWA-AGTA-03729-LA-1106485 Page 1
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SWA-AGTA-03729-LA-1106485 Page 2
[***]
BOEING PROPRIETARY
SWA-PA-03729-LA-1106485 Page 3
[***]
BOEING PROPRIETARY
SWA-PA-03729-LA-1106485 Page 4
[***]
BOEING PROPRIETARY
2. [***]
SWA-PA-03729-LA-1106485 Page 5
[***]
BOEING PROPRIETARY
SWA-PA-03729-LA-1106485 Page 6
[***]
BOEING PROPRIETARY
3. [***]
SWA-PA-03729-LA-1106485 Page 7
[***]
BOEING PROPRIETARY
SWA-PA-03729-LA-1106485 Page 8
[***]
BOEING PROPRIETARY
4. [***]
SWA-PA-03729-LA-1106485 Page 9
[***]
BOEING PROPRIETARY
SWA-PA-03729-LA-1106485 Page 10
[***]
BOEING PROPRIETARY
SWA-PA-03729-LA-1106485 Page 11
[***]
BOEING PROPRIETARY
SWA-PA-03729-LA-1106485 Page 12
[***]
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5. Confidential Treatment.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the aircraft) and who understand they are not to disclose its contents to any other person or entity (other than those
to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise
SWA-PA-03729-LA-1106485 Page 13
[***]
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bound by a confidentiality obligation. Disclosure to other parties is not permitted without Boeing’s consent except as may be
required by applicable law or governmental regulations. Customer shall be fully responsible to Boeing for compliance with
such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Cheri A Fischer
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
Southwest Airlines Co.
By /s/ Michael Van de Ven
Its EVP & Chief Operating Officer
SWA-PA-03729-LA-1106485 Page 14
[***]
BOEING PROPRIETARY
AIRCRAFT GENERAL TERMS AGREEMENT
SWA-AGTA
between
THE BOEING COMPANY
and
Southwest Airlines Co.
SWA-AGTA-EXA EXA Page 1
TABLE OF CONTENTS
ARTICLES
PAGE
NUMBER
1. Subject Matter of Sale 3
2. Price, Taxes, and Payment 3
3. Regulatory Requirements and Certificates 5
4. Detail Specification; Changes 5
5. Representatives, Inspection, Demonstration Flights,
Test Data and Performance Guarantee Compliance 6
6. Delivery 6
7. Excusable Delay 7
8. Risk Allocation/Insurance 8
9. Assignment, Resale, or Lease 9
10. Termination of Purchase Agreements for Certain Events 10
11. Notices 10
12. Miscellaneous 11
EXHIBITS
PAGE
NUMBER
A Buyer Furnished Equipment Provisions Document EXA 1
B Customer Support Document EXB 1
C Product Assurance Document EXC 1
APPENDICES
PAGE
NUMBER
I Insurance Certificate A-1
II Purchase Agreement Assignment A-5
III Post-Delivery Sale Notice A-11
IV Post-Delivery Lease Notice A-13
V Purchaser’s/Lessee’s Agreement A-16
VI Owner Appointment of Agent – Warranties A-19
VII Contractor Confidentiality Agreement A-22
VIII Post-Delivery Sale with Lease to Seller A-26
IX Sale with Lease A-29
X Post-Delivery Security A-33
SWA-AGTA-EXA AGTA Page 2
AIRCRAFT GENERAL TERMS AGREEMENT NUMBER SWA-AGTA
Between
The Boeing Company
And
Southwest Airlines Co.
Relating to
BOEING AIRCRAFT
This Aircraft General Terms Agreement Number SWA-AGTA (AGTA) between The Boeing Company, a Delaware
corporation, (Boeing) and Southwest Airlines Co., a Texas corporation, (Customer) will apply to all Boeing aircraft
contracted for purchase from Boeing by Customer after the effective date of this AGTA.
Subject Matter of Sale.
Aircraft. Boeing will manufacture and sell to Customer and Customer will purchase from Boeing aircraft under purchase
agreements that incorporate the terms and conditions of this AGTA.
Buyer Furnished Equipment. Exhibit A, Buyer Furnished Equipment Provisions Document to the AGTA, contains the
obligations of Customer and Boeing with respect to equipment purchased and provided by Customer, which Boeing will
receive, inspect, store, and install in an aircraft before delivery to Customer. This equipment is defined as Buyer Furnished
Equipment (BFE).
Customer Support. Exhibit B, Customer Support Document to the AGTA, contains the obligations of Boeing relating to
Materials (as defined in Part 3 thereof), training, services, and other things in support of aircraft.
Product Assurance. Exhibit C, Product Assurance Document to the AGTA, contains the obligations of Boeing and the
suppliers of equipment installed in each aircraft at delivery relating to warranties, patent indemnities, software copyright
indemnities, and service life policies.
Price, Taxes, and Payment.
Price.
Airframe Price is defined as the price of the airframe for a specific model of aircraft described in a purchase agreement.
(For Models 737-600, 737-700, 737-800, 737-900, 737-7, 737-8, 737-9, 747-8, 777-200LR, and 777-300ER the Airframe
Price includes the engine price at its basic thrust level.)
Optional Features Prices are defined as the prices for optional features selected by Customer for a specific model of
aircraft described in a purchase agreement.
Engine Price is defined as the price set by the engine manufacturer for a specific engine to be installed on the model of
aircraft described in a purchase agreement (not applicable
SWA-AGTA-EXA AGTA Page 3
to Models 737-600, 737-700, 737-800, 737-900, 737-7, 737-8, 737-9, 747-8, 777-200LR and 777-300ER).
Aircraft Basic Price is defined as the sum of the Airframe Price, Optional Features Prices, and the Engine Price, if
applicable.
Escalation Adjustment is defined as the price adjustment to the Airframe Price (which includes the basic engine price for
Models 737-600, 737-700 737-800, 737-900, 737-7, 737-8, 737-9, 747-8, 777-200LR and 777-300ER) and the Optional
Features Prices resulting from the calculation using the economic price formula contained in the Airframe and Optional
Features Escalation Adjustment supplemental exhibit to the applicable purchase agreement. The price adjustment to the
Engine Price for all other models of aircraft will be calculated using the economic price formula in the Engine Escalation
Adjustment supplemental exhibit to the applicable purchase agreement.
Advance Payment Base Price is defined as the estimated price of an aircraft rounded to the nearest thousand U. S.
dollars, as of the date of signing a purchase agreement, for the scheduled month of delivery of such aircraft using
commercial forecasts of the Escalation Adjustment.
Aircraft Price is defined as the total amount Customer is to pay for an aircraft at the time of delivery, which is the sum of
the Aircraft Basic Price, the Escalation Adjustment, and other price adjustments made pursuant to the purchase agreement.
Taxes.
Taxes are defined as all taxes, fees, charges, or duties and any interest, penalties, fines, or other additions to tax,
including, but not limited to sales, use, value added, gross receipts, stamp, excise, transfer, and similar taxes imposed by
any domestic or foreign taxing authority, arising out of or in connection with the performance of the applicable purchase
agreement or the sale, delivery, transfer, or storage of any aircraft, BFE, or other things furnished under the applicable
purchase agreement. Except for U.S. federal income taxes imposed on Boeing or Boeing’s assignee, and Washington
State business and occupation taxes imposed on Boeing or Boeing’s assignee, Customer will be responsible for and pay all
Taxes. Customer is responsible for filing all tax returns, reports, declarations and payment of any taxes related to or
imposed on BFE.
Reimbursement of Boeing. Customer will promptly reimburse Boeing on demand, net of additional taxes thereon, for any
Taxes that are imposed on and paid by Boeing or that Boeing is responsible for collecting.
Payment.
Advance Payment Schedule. Customer will make advance payments to Boeing for each aircraft in the amounts and on the
dates indicated in the schedule set forth in the applicable purchase agreement.
Payment at Delivery. Customer will pay any unpaid balance of the Aircraft Price at the time of delivery of each aircraft.
Form of Payment. Customer will make all payments to Boeing by unconditional wire transfer of immediately available funds
in United States Dollars in a bank account in the United States designated by Boeing.
SWA-AGTA-EXA AGTA Page 4
Monetary and Government Regulations. Customer is responsible for complying with all monetary control regulations and for
obtaining necessary governmental authorizations related to payments.
Regulatory Requirements and Certificates.
Certificates. Boeing will manufacture each aircraft to conform to the appropriate Type Certificate issued by the United
States Federal Aviation Administration (FAA) for the specific model of aircraft and will obtain from the FAA and furnish to
Customer at delivery of each aircraft either a Standard Airworthiness Certificate or an Export Certificate of Airworthiness
issued pursuant to Part 21 of the Federal Aviation Regulations.
FAA or Applicable Regulatory Authority Manufacturer Changes.
A Manufacturer Change is defined as any change to an aircraft, data relating to an aircraft, or testing of an aircraft
required by the FAA to obtain a Standard Airworthiness Certificate or by the country of import and/or registration to obtain
an Export Certificate of Airworthiness.
Boeing will bear the cost of incorporating all Manufacturer Changes into the aircraft:
resulting from requirements issued by the FAA prior to the date of the Type Certificate for the applicable aircraft;
resulting from requirements issued by the FAA prior to the date of the applicable purchase agreement; and
for any aircraft delivered during the eighteen (18) month period immediately following the date of the applicable purchase
agreement (regardless of when the requirement for such change was issued by the FAA).
Customer will pay Boeing's charges for incorporating all other Manufacturer Changes into the aircraft, including all changes
for validation of an aircraft required by any governmental agency of the country of import and/or registration.
FAA Operator Changes.
An Operator Change is defined as a change in equipment that is required by Federal Aviation Regulations which (i) is
generally applicable to transport category aircraft to be used in United States certified air carriage and (ii) the required
compliance date is on or before the scheduled delivery month of the aircraft.
Boeing will deliver each aircraft with Operator Changes incorporated or, at Boeing’s option, with suitable provisions for the
incorporation of such Operator Changes, and Customer will pay Boeing's applicable charges.
Export License. If an export license is required by United States law or regulation for any aircraft or any other things
delivered under the purchase agreement, it is Customer's obligation to obtain such license. If requested, Boeing will assist
Customer in applying for any such export license. Customer will furnish any required supporting documents.
Detail Specification; Changes.
Configuration Changes. The Detail Specification is defined as the Boeing document that describes the configuration of
each aircraft purchased by Customer. The Detail Specification for each aircraft may be amended (i) by Boeing to reflect the
incorporation of Manufacturer Changes and Operator Changes or (ii) by the agreement of the parties. In either case the
amendment will describe the particular changes to be made and any
SWA-AGTA-EXA AGTA Page 5
effect on design, performance, weight, balance, scheduled delivery month, Aircraft Basic Price, Aircraft Price, and/or
Advance Payment Base Price.
Development Changes. Development Changes are defined as changes to aircraft that do not affect the Aircraft Price or
scheduled delivery month, and do not adversely affect guaranteed weight, guaranteed performance, or compliance with the
interchangeability or replaceability requirements set forth in the applicable Detail Specification. Boeing may, at its option,
incorporate Development Changes into the Detail Specification and into an aircraft prior to delivery to Customer.
Notices. Boeing will promptly notify Customer of any amendments to a Detail Specification.
Representatives, Inspection, Demonstration Flights, Test Data and Performance Guarantee Compliance.
Office Space. Twelve (12) months before delivery of the first aircraft purchased, and continuing until the delivery of the last
aircraft on firm order, Boeing will furnish, free of charge, suitable office space and equipment for the accommodation of up
to three representatives of Customer in or conveniently located near the assembly plant.
Inspection. Customer's representatives may inspect each aircraft at any reasonable time, provided such inspection does not
interfere with Boeing's performance.
Demonstration Flights. Prior to delivery, Boeing will fly each aircraft up to four hours to demonstrate to Customer the
function of the aircraft and its equipment using Boeing's production flight test procedures. Customer may designate up to
five representatives to participate as observers.
Test Data; Performance Guarantee Compliance. Performance Guarantees are defined as the written guarantees in a
purchase agreement regarding the operational performance of an aircraft. Boeing will furnish to Customer flight test data
obtained on an aircraft of the same model to evidence compliance with the Performance Guarantees. Performance
Guarantees will be met if reasonable engineering interpretations and calculations based on the flight test data establish that
the particular aircraft being delivered under the applicable purchase agreement would, if actually flown, comply with the
guarantees.
Special Aircraft Test Requirements. Boeing may use an aircraft for flight and ground tests prior to delivery, without reduction
in the Aircraft Price, if the tests are considered necessary by Boeing (i) to obtain or maintain the Type Certificate or
Certificate of Airworthiness for the aircraft or (ii) to evaluate potential improvements that may be offered for production or
retrofit incorporation.
Delivery.
Notices of Delivery Dates. Boeing will notify Customer of the approximate delivery date of each aircraft at least thirty (30)
days before the scheduled month of delivery and again at least fourteen (14) days before the scheduled delivery date.
Place of Delivery. Each aircraft will be delivered at a facility selected by Boeing in the same state as the primary assembly
plant for the aircraft.
Bill of Sale. At delivery of an aircraft, Boeing will provide Customer a bill of sale conveying good title, free of encumbrances.
SWA-AGTA-EXA AGTA Page 6
Delay. If Customer delays acceptance of an aircraft beyond the scheduled delivery date, Customer will reimburse Boeing
for all costs incurred by Boeing as a result of the delay.
Excusable Delay.
General. Boeing will not be liable for any delay in the scheduled delivery month of an aircraft or other performance under a
purchase agreement caused by (i) acts of God; (ii) war or armed hostilities; (iii) government acts or priorities; (iv) fires,
floods, or earthquakes; (v) strikes or labor troubles causing cessation, slowdown, or interruption of work; (vi) inability, after
due and timely diligence, to procure materials, systems, accessories, equipment or parts; or (vii) any other cause to the
extent such cause is beyond Boeing's control and not occasioned by Boeing's fault or negligence. A delay resulting from
any such cause is defined as an Excusable Delay.
Notice. Boeing will give written notice to Customer (i) of a delay as soon as Boeing concludes that an aircraft will be
delayed beyond the scheduled delivery month due to an Excusable Delay and, when known, (ii) of a revised delivery month
based on Boeing’s appraisal of the facts.
Delay in Delivery of Twelve (12) Months or Less. If the revised delivery month is twelve (12) months or less after the
scheduled delivery month, Customer will accept such aircraft when tendered for delivery, subject to the following:
The calculation of the Escalation Adjustment will be based on the previously scheduled delivery month.
The advance payment schedule will be adjusted to reflect the revised delivery month.
All other provisions of the applicable purchase agreement, including the BFE on-dock dates for the delayed aircraft, are
unaffected by an Excusable Delay.
Delay in Delivery of More Than Twelve (12) Months. If the revised delivery month is more than twelve (12) months after the
scheduled delivery month, either party may terminate the applicable purchase agreement with respect to such aircraft within
30 days of the notice. If either party does not terminate the applicable purchase agreement with respect to such aircraft, all
terms and conditions of the applicable purchase agreement will remain in effect.
Aircraft Damaged Beyond Repair. If an aircraft is destroyed or damaged beyond repair for any reason before delivery,
Boeing will give written notice to Customer specifying the earliest month possible, consistent with Boeing's other contractual
commitments and production capabilities, in which Boeing can deliver a replacement. Customer will have thirty (30) days
from receipt of such notice to elect to have Boeing manufacture a replacement aircraft under the same terms and conditions
of purchase, except that the calculation of the Escalation Adjustment will be based upon the scheduled delivery month in
effect immediately prior to the date of such notice, or, failing such election, the applicable purchase agreement will
terminate with respect to such aircraft. Boeing will not be obligated to manufacture a replacement aircraft if reactivation of
the production line for the specific model of aircraft would be required.
Termination. Termination under this Article will discharge all obligations and liabilities of Boeing and Customer with respect
to any aircraft and all related undelivered Materials (as defined in Exhibit B, Customer Support Document), training,
services, and other things terminated under the applicable purchase agreement, except that Boeing will return to Customer,
without interest, an amount equal to all advance payments paid by
SWA-AGTA-EXA AGTA Page 7
Customer for the aircraft. If Customer terminates the applicable purchase agreement as to any aircraft, Boeing may elect,
by written notice to Customer within thirty (30) days, to purchase from Customer any BFE related to the aircraft at the
invoice prices paid, or contracted to be paid, by Customer.
Exclusive Rights. The termination rights in this Article are in substitution for all other rights of termination or any claim
arising by operation of law due to delays in performance covered by this Article.
Risk Allocation/Insurance.
Title and Risk with Boeing.
Boeing's Indemnification of Customer. Until transfer of title to an aircraft to Customer, Boeing will indemnify and hold
harmless Customer and Customer's observers from and against all claims and liabilities, including all expenses and
attorneys' fees incident thereto or incident to establishing the right to indemnification, for injury to or death of any person(s),
including employees of Boeing but not employees of Customer, or for loss of or damage to any property, including an
aircraft, arising out of or in any way related to the operation of an aircraft during all demonstration and test flights conducted
under the provisions of the applicable purchase agreement, whether or not arising in tort or occasioned by the negligence of
Customer or any of Customer’s observers.
Definition of Customer. For the purposes of this Article, "Customer" is defined as Southwest Airlines Co., its divisions,
subsidiaries, affiliates, the assignees of each, and their respective directors, officers, employees, and agents.
Insurance.
Insurance Requirements. Customer will purchase and maintain insurance acceptable to Boeing and will provide a certificate
of such insurance that names Boeing as an additional insured for any and all claims and liabilities for injury to or death of
any person or persons, including employees of Customer but not employees of Boeing, or for loss of or damage to any
property, including any aircraft, arising out of or in any way relating to Materials, training, services, or other things provided
under Exhibit B of the AGTA, which will be incorporated by reference into the applicable purchase agreement, whether or
not arising in tort or occasioned by the negligence of Boeing, except with respect to legal liability to persons or parties other
than Customer or Customer's assignees arising out of an accident caused solely by a product defect in an aircraft.
Customer will provide such certificate of insurance at least thirty (30) days prior to the scheduled delivery of the first aircraft
under a purchase agreement. The insurance certificate will reference each aircraft delivered to Customer pursuant to each
applicable purchase agreement. Annual renewal certificates will be submitted to Boeing before the expiration of the policy
periods. The form of the insurance certificate, attached as Appendix I, states the terms, limits, provisions, and coverages
required by this Article 8.2.1. The failure of Boeing to demand compliance with this Article 8.2.1 in any year will not in any
way relieve Customer of its obligations hereunder nor constitute a waiver by Boeing of these obligations.
Noncompliance with Insurance Requirements. If Customer fails to comply with any of the insurance requirements of
Article 8.2.1 or if any of the insurers fails to pay a claim covered by the insurance or otherwise fails to meet any of insurer’s
obligations required by Appendix I, Customer will provide the same protection to Boeing as that required by Article 8.2.1
above.
SWA-AGTA-EXA AGTA Page 8
Definition of Boeing. For purposes of this article, Boeing is defined as The Boeing Company, its divisions, subsidiaries,
affiliates, assignees of each, and their respective directors, officers, employees, and agents.
Assignment, Resale, or Lease.
Assignment. This AGTA and each applicable purchase agreement are for the benefit of the parties and their respective
successors and assigns. No rights or duties of either party may be assigned or delegated, or contracted to be assigned or
delegated, without the prior written consent of the other party, except:
Either party may assign its interest to a corporation that (i) results from any merger, reorganization, or acquisition of such
party and (ii) acquires substantially all the assets of such party;
Boeing may assign any of its rights and duties to any wholly-owned subsidiary of Boeing.
Transfer by Customer at Delivery. Boeing will take any requested action reasonably required for the purpose of causing an
aircraft, at time of delivery, to be subject to an equipment trust, conditional sale, lien, or other arrangement for Customer to
finance the aircraft. However, no such action will require Boeing to divest itself of title to or possession of the aircraft until
delivery of and payment for the aircraft. A sample form of assignment acceptable to Boeing is attached as Appendix II.
Post-Delivery Sale or Lease by Customer. If, following delivery of an aircraft, Customer sells or leases the aircraft (including
any sale and lease-back to seller for financing purposes), Customer may assign some or all of its rights with respect to the
aircraft under the applicable purchase agreement to the purchaser or lessee of such aircraft, and all such rights will inure to
the benefit of such purchaser or lessee effective upon Boeing's receipt of the written agreement of the purchaser or lessee,
in a form satisfactory to Boeing, to comply with all applicable terms and conditions of the applicable purchase agreement.
Sample forms of notice to Boeing of such assignments giving examples of language acceptable to Boeing are attached as
Appendices III, IV, VIII, IX and X.
Notice of Post-Delivery Sale or Lease. Customer will give notice to Boeing as soon as practicable of the sale or lease of an
aircraft, including in the notice the name of the entity or entities with title and/or possession of such aircraft.
Exculpatory Clause in Post-Delivery Sale or Lease. If, following the delivery of an aircraft, Customer sells or leases such
aircraft and obtains from the transferee any form of exculpatory clause protecting Customer from liability for loss of or
damage to the aircraft, and/or related incidental or consequential damages, including without limitation loss of use, revenue,
or profit, Customer shall obtain for Boeing the purchaser’s or lessee’s written agreement to be bound by terms and
conditions substantially as set forth in Appendix V. This Article 9.5 applies only if purchaser or lessee has not provided to
Boeing the written agreement described in Article 9.3 above.
Appointment of Agent - Warranty Claims. If, following delivery of an aircraft, Customer appoints an agent to act directly with
Boeing for the administration of claims relating to the warranties under the applicable purchase agreement, Boeing will deal
with the agent for that purpose, effective upon Boeing's receipt of the agent's written agreement, in a form satisfactory to
Boeing, to comply with all applicable terms and conditions of the applicable purchase agreement. A sample form of
agreement acceptable to Boeing is attached as Appendix VI.
SWA-AGTA-EXA AGTA Page 9
No Increase in Boeing Liability. No action taken by Customer or Boeing relating to the resale or lease of an aircraft or the
assignment of Customer's rights under the applicable purchase agreement will subject Boeing to any liability beyond that in
the applicable purchase agreement or modify in any way Boeing's obligations under the applicable purchase agreement.
Termination of Purchase Agreements for Certain Events.
Termination. If either party:
ceases doing business as a going concern, or suspends all or substantially all its business operations, or makes an
assignment for the benefit of creditors, or generally does not pay its debts as they become due, or admits in writing its
inability to pay its debts; or
petitions for or acquiesces in the appointment of any receiver, trustee or similar officer to liquidate or conserve its business
or any substantial part of its assets; commences any legal proceeding such as bankruptcy, reorganization, readjustment of
debt, dissolution, or liquidation available for the relief of financially distressed debtors; or becomes the object of any such
proceeding, unless the proceeding is dismissed or stayed within a reasonable period, not to exceed sixty (60) days,
the other party may terminate any purchase agreement with respect to any undelivered aircraft, Materials, training,
services, and other things by giving written notice of termination.
Repayment of Advance Payments. If Customer terminates the applicable purchase agreement under this Article, Boeing
will repay to Customer, without interest, an amount equal to any advance payments received by Boeing from Customer with
respect to undelivered aircraft.
Notices.
All notices required by this AGTA or by any applicable purchase agreement will be written in English, will be effective
on the date of receipt, and will be delivered or transmitted by any customary means to the appropriate address or number
listed below:
Customer Mail: Southwest Airlines Co.
Attention: Laura Wright, Treasurer
2707 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235
Email: [email protected].
Facsimile: (214) 792-4022
Telephone: (214) 792-4459
SWA-AGTA-EXA AGTA Page 10
Boeing Delivery or Courier: Boeing Commercial Airplanes
1901 Oakesdale Avenue SW
Renton, Washington 98055
U.S.A.
Attention: Vice President - Contracts
Mail Code 21-34
Mail: Boeing Commercial Airplanes
P.O. Box 3707
Seattle, Washington 98124-2207
U.S.A.
Attention: Vice President - Contracts
Mail Code 21-34
Facsimile: (425) 237-1706
Telephone: (206) 766-2400
Miscellaneous.
Government Approval. Boeing and Customer will assist each other in obtaining any governmental consents or approvals
required to effect certification and sale of aircraft under the applicable purchase agreement.
Headings. Article and paragraph headings used in this AGTA and in any purchase agreement are for convenient reference
only and are not intended to affect the interpretation of this AGTA or any purchase agreement.
GOVERNING LAW. THIS AGTA AND ANY PURCHASE AGREEMENT WILL BE INTERPRETED UNDER AND
GOVERNED BY THE LAWS OF THE STATE OF WASHINGTON, U.S.A., EXCEPT THAT WASHINGTON'S CHOICE OF
LAW RULES SHALL NOT BE INVOKED FOR THE PURPOSE OF APPLYING THE LAW OF ANOTHER JURISDICTION.
Waiver/Severability. Failure by either party to enforce any provision of this AGTA or any purchase agreement will not be
construed as a waiver. If any provision of this AGTA or any provision of any purchase agreement is held unlawful or
otherwise ineffective by a court of competent jurisdiction, the remainder of the AGTA or the applicable purchase agreement
will remain in effect.
Survival of Obligations. The Articles and Exhibits of this AGTA including but not limited to those relating to insurance,
DISCLAIMER AND RELEASE and the EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES will survive
termination or cancellation of any purchase agreement or part thereof.
AGTA Changes. The intent of the AGTA is to simplify the standard contracting process for terms and conditions which are
related to the sale and purchase of all Boeing aircraft. This AGTA has been mutually agreed to by the parties as of the date
indicated below. From time to time the parties may elect, by mutual agreement to update, or modify the existing articles as
written. If such changes are made, any existing executed Purchase Agreement(s) will be governed by the terms and
conditions of the Revision level of the AGTA in effect on the date of the executed Purchase Agreement.
SWA-AGTA-EXA AGTA Page 11
AGREED AND ACCEPTED this
December 13 , 2011
Date
THE BOEING COMPANY SOUTHWEST AIRLINES CO.
/s/ Cheri A Fischer /s/ Michel Van de Ven
Signature Signature
C. A. Fischer Michael Van de Ven
Printed name Printed name
Attorney-in-Fact Chief Operating Officer
Title Title
SWA-AGTA-EXA AGTA Page 12
EXHIBIT A
to
AIRCRAFT GENERAL TERMS AGREEMENT
SWA-AGTA
between
THE BOEING COMPANY
and
Southwest Airlines Co.
BUYER FURNISHED EQUIPMENT PROVISIONS
DOCUMENT
SWA-AGTA-EXA EXA Page 1
EXHIBIT A
BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT
1. General.
Certain equipment to be installed in the aircraft is furnished to Boeing by Customer at Customer's expense. This
equipment is designated Buyer Furnished Equipment (BFE) and is listed in the Detail Specification. Boeing will provide to
Customer a BFE Requirements On-Dock/Inventory Document (BFE Document) or an electronically transmitted BFE
Report which may be periodically revised, setting forth the items, quantities, on-dock dates and shipping instructions
relating to the in sequence installation of BFE as described in the applicable supplemental exhibit to a purchase agreement
at the time of aircraft purchase.
2. Supplier Selection.
Customer will:
2.1 Select and notify Boeing of the suppliers of BFE items by those dates appearing in the applicable supplemental
exhibit to a purchase agreement at the time of aircraft purchase.
2.2 Meet with Boeing and such selected BFE suppliers promptly after such election to:
2.2.1 complete BFE configuration design requirements for such BFE; and
2.2.2 confirm technical data submittal requirements for BFE certification.
3. Customer's Obligations.
Customer will:
3.1 comply with and cause the supplier to comply with the provisions of the BFE Document or BFE Report;
including, without limitation,
3.1.1 deliver technical data (in English) to Boeing as required to support installation and FAA certification in
accordance with the schedule provided by Boeing or as mutually agreed upon during the BFE meeting referred to in
Article 2.2 above;
3.1.2 deliver BFE including production and/or flight training spares and BFE Aircraft Software to Boeing in
accordance with the quantities, schedule, and other instructions provided therein; and
3.1.3 ensure that all BFE Aircraft Software is delivered in compliance with Boeing’s then current standards
for loadable systems;
3.1.4 ensure that all BFE parts are delivered to Boeing with appropriate quality assurance documentation;
3.2 authorize Boeing to discuss all details of the BFE directly with the BFE suppliers;
3.3 authorize Boeing to conduct or delegate to the supplier quality source inspection and supplier hardware
acceptance of BFE at the supplier location;
3.3.1 require supplier's contractual compliance to Boeing defined quality assurance requirements, source
inspection programs and supplier delegation programs, including availability of adequate facilities for Boeing resident
personnel; and
SWA-AGTA-EXA AGTA Page 2
3.3.2 ensure that all BFE supplier's quality systems are approved to Boeing’s then current standards for
such systems;
3.4 obtain from supplier a non-exclusive, perpetual, royalty-free, irrevocable license for Boeing to copy BFE Aircraft
Software. The license is needed to enable Boeing to load the software copies in (i) the aircraft’s mass storage device
(MSD), (ii) media (e.g., diskettes, CD-ROMs, etc.), (iii) the BFE hardware and/or (iv) an intermediate device or other media
to facilitate copying of the BFE Aircraft Software into the aircraft’s MSD, BFE hardware and/or media, including media as
Boeing may deliver to Customer with the aircraft;
3.5 grant Boeing a license, extending the same rights set forth in paragraph 3.4 above, to copy: (i) BFE Aircraft
Software and data Customer has modified and/or (ii) other software and data Customer has added to the BFE Aircraft
Software;
3.6 provide necessary field service representation at Boeing's facilities to support Boeing on all issues related to
the installation and certification of BFE;
3.7 obtain, directly from BFE suppliers, the overhaul data, provisioning data, related product support
documentation and any warranty provisions applicable to the BFE;
3.8 resolve any difficulties that arise, including defective equipment, by working closely with Boeing and BFE
suppliers;
3.9 modify, adjust, calibrate, re-test and/or update BFE and data to the extent necessary to obtain applicable FAA
and U.S. Food and Drug Administration (FDA) approval and shall bear the resulting expenses;
3.10 ensure that a proprietary information agreement is in place between Boeing and BFE suppliers prior to Boeing
providing any documentation to such suppliers;
3.11 warrant that the BFE will comply with all applicable FARs and FDA sanitation requirements for installation and
use in the aircraft at the time of delivery;
3.12 warrant that the BFE will meet the requirements of the applicable detail specification; and
3.13 provide equipment which is FAA certifiable at time of aircraft delivery, or obtain waivers from the applicable
regulatory agency for non-FAA certifiable equipment.
4. Boeing's Obligations.
Other than as set forth below, Boeing will provide for the installation of and install the BFE and obtain certification of
the aircraft with the BFE installed.
5. Nonperformance by Customer.
If Customer’s nonperformance of obligations in this Exhibit and in the applicable supplemental exhibit to a purchase
agreement, BFE Document or BFE Report causes a delay in the delivery of the aircraft or causes Boeing to perform out-of-
sequence or additional work, Customer will reimburse Boeing for all resulting expenses and be deemed to have agreed to
any such delay in aircraft delivery. In addition Boeing will have the right to:
5.1 provide and install specified equipment or suitable alternate equipment and increase the price of the aircraft
accordingly; and/or
SWA-AGTA-EXA AGTA Page 3
5.2 deliver the aircraft to Customer without the BFE installed.
6. Return of Equipment.
BFE not installed in the aircraft will be returned to Customer in accordance with Customer's instructions and at
Customer's expense.
7. Title and Risk of Loss.
Title to and risk of loss of BFE will at all times remain with Customer or other owner. Boeing will have only such
liability for BFE as a bailee for mutual benefit would have, but will not be liable for loss of use.
8. Interchange of BFE.
To properly maintain Boeing’s production flow and to preserve Boeing’s delivery commitments, Boeing reserves the
right, if necessary, due to equipment shortages or failures, to interchange new items of BFE acquired from or for Customer
with new items of the same part numbers acquired from or for other customers of Boeing. Used BFE acquired from
Customer or from other customers of Boeing will not be interchanged.
9. Indemnification of Boeing.
Customer hereby indemnifies and holds harmless Boeing from and against all claims and liabilities, including costs
and expenses (including attorneys' fees) incident thereto or incident to successfully establishing the right to indemnification,
for injury to or death of any person or persons, including employees of Customer but not employees of Boeing, or for loss of
or damage to any property, including any aircraft, arising out of or in any way connected with any nonconformance or defect
in any BFE and whether or not arising in tort or occasioned by the negligence of Boeing. This indemnity will not apply with
respect to any nonconformance or defect caused solely by Boeing's installation of the BFE.
10. Patent Indemnity.
Customer hereby indemnifies and holds harmless Boeing from and against all claims, suits, actions, liabilities,
damages and costs arising out of any actual or alleged infringement of any patent or other intellectual property rights by
BFE or arising out of the installation, sale or use of BFE by Boeing.
11. Definitions.
For the purposes of the above indemnities, the term "Boeing" includes The Boeing Company, its divisions,
subsidiaries and affiliates, the assignees of each, and their directors, officers, employees and agents.
SWA-AGTA-EXA AGTA Page 4
EXHIBIT B
to
AIRCRAFT GENERAL TERMS AGREEMENT
SWA-AGTA
between
THE BOEING COMPANY
and
Southwest Airlines Co.
CUSTOMER SUPPORT DOCUMENT
This document contains:
Part 1: Boeing Maintenance and Flight Training Programs; Operations Engineering Support
Part 2: Field and Engineering Support Services
Part 3: Technical Information and Materials
Part 4: Alleviation or Cessation of Performance
Part 5: Protection of Proprietary Information and Proprietary Materials
SWA-AGTA-EXB EXB Page 1
EXHIBIT B
CUSTOMER SUPPORT DOCUMENT
PART 1: BOEING MAINTENANCE AND FLIGHT TRAINING PROGRAMS;
OPERATIONS ENGINEERING SUPPORT
1. Boeing Training Programs.
1.1 Boeing will provide maintenance training and flight training programs to support the introduction of a specific
model of aircraft into service. The training programs will consist of general and specialized courses and will be described in
a Supplemental Exhibit to the applicable purchase agreement.
1.2 Boeing will conduct all training at Boeing's primary training facility for the model of aircraft purchased unless
otherwise agreed.
1.3 All training will be presented in the English language. If translation is required, Customer will provide
interpreters.
1.4 Customer will be responsible for all expenses of Customer's personnel. Boeing will transport Customer's
personnel between their local lodging and Boeing's training facility.
2. Training Planning Conferences.
Customer and Boeing will conduct planning conferences approximately twelve (12) months before the scheduled
delivery month of the first aircraft of a model to define and schedule the maintenance and flight training programs.
3. Operations Engineering Support.
3.1 As long as an aircraft purchased by Customer from Boeing is operated by Customer in scheduled revenue
service, Boeing will provide operations engineering support. Such support will include:
3.1.1 assistance with the analysis and preparation of performance data to be used in establishing operating
practices and policies for Customer's operation of aircraft;
3.1.2 assistance with interpretation of the minimum equipment list, the definition of the configuration deviation
list and the analysis of individual aircraft performance;
3.1.3 assistance with solving operational problems associated with delivery and route-proving flights;
3.1.4 information regarding significant service items relating to aircraft performance or flight operations; and
3.1.5 if requested by Customer, Boeing will provide operations engineering support during an aircraft ferry
flight.
SWA-AGTA-EXB EXB Page 2
4. Training at a Facility Other Than Boeing's.
If requested by Customer, Boeing will conduct the classroom portions of the maintenance and flight training (except
for the Performance Engineer training courses) at a mutually acceptable alternate training site, subject to the following
conditions:
4.1 Customer will provide acceptable classroom space, simulators (as necessary for flight training) and training
equipment required to present the courses;
4.2 Customer will pay Boeing's then current per diem charge for each Boeing instructor for each day, or fraction
thereof, that the instructor is away from their home location, including travel time;
4.3 Customer will reimburse Boeing for the actual costs of roundtrip transportation for Boeing's instructors and the
shipping costs of training Materials between the primary training facility and the alternate training site;
4.4 Customer will be responsible for all taxes, fees, duties, licenses, permits and similar expenses incurred by
Boeing and its employees as a result of Boeing's providing training at the alternate site or incurred as a result of Boeing
providing revenue service training; and
4.5 Those portions of training that require the use of training devices not available at the alternate site will be
conducted at Boeing's facility or at some other alternate site.
5. General Terms and Conditions.
5.1 Boeing flight instructor personnel will not be required to work more than five days per week, or more than eight
hours in any one 24 hour period, of which not more than five hours per eight hour workday will be spent in actual flying.
These foregoing restrictions will not apply to ferry assistance or revenue service training services, which will be governed by
FAA rules and regulations.
5.2 Normal Line Maintenance is defined as line maintenance that Boeing might reasonably be expected to
furnish for flight crew training at Boeing's facility, and will include ground support and aircraft storage in the open, but will
not include provision of spare parts. Boeing will provide Normal Line Maintenance services for any aircraft while the aircraft
is used for flight crew training at Boeing's facility in accordance with the Boeing Maintenance Plan (Boeing document D6-
82076) and the Repair Station Operation and Inspection Manual (Boeing document D6-25470). Customer will provide such
services if flight crew training is conducted elsewhere. Regardless of the location of such training, Customer will be
responsible for providing all maintenance items (other than those included in Normal Line Maintenance) required during the
training, including, but not limited to, fuel, oil, landing fees and spare parts.
5.3 If the training is based at Boeing's facility, and the aircraft is damaged during such training, Boeing will make
all necessary repairs to the aircraft as promptly as possible. Customer will pay Boeing's reasonable charge, including the
price of parts and materials, for making the repairs. If Boeing's estimated labor charge for the repair exceeds Twenty-five
Thousand U.S. Dollars ($25,000), Boeing and Customer will enter into an agreement for additional services before
beginning the repair work.
5.4 If the flight training is based at Boeing's facility, several airports in surrounding states may be used, at
Boeing’s option. Unless otherwise agreed in the flight training planning conference, it will be Customer's responsibility to
make arrangements for the use of such airports.
SWA-AGTA-EXB EXB Page 3
5.5 If Boeing agrees to make arrangements on behalf of Customer for the use of airports for flight training, Boeing
will pay on Customer's behalf any landing fees charged by any airport used in conjunction with the flight training. At least
thirty (30) days before flight training, Customer will provide Boeing an open purchase order against which Boeing will
invoice Customer for any landing fees Boeing paid on Customer's behalf. The invoice will be submitted to Customer
approximately sixty (60) days after flight training is completed, when all landing fee charges have been received and
verified. Customer will pay to Boeing within thirty (30) days of the date of the invoice.
5.6 If requested by Boeing, in order to provide the flight training or ferry flight assistance, Customer will make
available to Boeing an aircraft after delivery to familiarize Boeing instructor or ferry flight crew personnel with such aircraft. If
flight of the aircraft is required for any Boeing instructor or ferry flight crew member to maintain an FAA license for flight
proficiency or landing currency, Boeing will be responsible for the costs of fuel, oil, landing fees and spare parts attributable
to that portion of the flight.
5.7 If any part of the training described in Article 1.1 of this Exhibit is not used by Customer within twelve (12)
months after the delivery of the last aircraft under the relevant purchase agreement, Boeing will not be obligated to provide
such training.
SWA-AGTA-EXB EXB Page 4
EXHIBIT B
CUSTOMER SUPPORT DOCUMENT
PART 2: FIELD AND ENGINEERING SUPPORT SERVICES
1. Field Service Representation.
Boeing will furnish field service representation to advise Customer with respect to the maintenance and operation of
an aircraft (Field Service Representatives).
1.1. Field Service representation will be available at or near Customer’s main maintenance or engineering facility
beginning before the scheduled delivery month of the first aircraft and ending twelve (12) months after delivery of the last
aircraft covered by a specific purchase agreement.
1.2. Customer will provide at no charge to Boeing suitable enclosed office space with walls and a lockable door
that is separated from other OEMs and the airline, located at the Customer’s facility or other site as mutually agreed.
Customer will provide the necessary infrastructure (i.e. Local Area Network (LAN) lines) to enable wired high-speed internet
capability in the office. As required, Customer will assist each Field Service Representative with visas, work permits,
customs, mail handling, identification passes and formal introduction to local airport authorities.
1.3. Boeing Field Service Representatives are assigned to various airports around the world. Whenever
Customer's aircraft are operating through any such airport, the services of Boeing's Field Service Representatives are
available to Customer.
2. Engineering Support Services.
Boeing will, if requested by Customer, provide technical advisory assistance for any aircraft and Boeing Product (as
defined in Part I of Exhibit C). Technical advisory assistance, provided from the Seattle area or at a base designated by
Customer as appropriate, will include:
2.1 Operational Problem Support. If Customer experiences operational problems with an aircraft, Boeing will
analyze the information provided by Customer to determine the probable nature and cause of the problem and to suggest
possible solutions.
2.2 Schedule Reliability Support. If Customer is not satisfied with the schedule reliability of a specific model of
aircraft, Boeing will analyze information provided by Customer to determine the nature and cause of the problem and to
suggest possible solutions.
2.3 Maintenance Cost Reduction Support. If Customer is concerned that actual maintenance costs of a specific
model of aircraft are excessive, Boeing will analyze information provided by Customer to determine the nature and cause of
the problem and to suggest possible solutions.
2.4 Aircraft Structural Repair Support. If Customer is designing structural repairs and desires Boeing's support,
Boeing will analyze and comment on Customer's engineering releases relating to structural repairs not covered by Boeing's
Structural Repair Manual.
2.5 Aircraft Modification Support. If Customer is designing aircraft modifications and requests Boeing's support,
Boeing will analyze and comment on
SWA-AGTA-EXB EXB Page 5
Customer's engineering proposals for changes in, or replacement of, systems, parts, accessories or equipment
manufactured to Boeing's detailed design. Boeing will not analyze or comment on any major structural change unless
Customer's request for such analysis and comment includes complete detailed drawings, substantiating information
(including any information required by applicable government agencies), all stress or other appropriate analyses, and a
specific statement from Customer of the substance of the review and the response requested.
2.6 Maintenance Engineering. Boeing will, at Customer’s request, provide certain maintenance and ground
operations support to Customer as further described in Supplemental Exhibit CS1 to the applicable purchase agreement.
2.7 Post-Delivery Service Support. Boeing will, at Customer's request, perform work on an aircraft after delivery but
prior to the initial departure flight or upon the return of the aircraft to Boeing's facility prior to completion of that flight. In that
event the following provisions will apply.
2.7.1 Boeing may rely upon the commitment authority of the Customer's personnel requesting the work.
2.7.2 As title and risk of loss has passed to Customer, the insurance provisions of Article 8.2 of the AGTA
apply.
2.7.3 The provisions of the Boeing warranty in Part 2 of Exhibit C of this AGTA apply.
2.7.4 Customer will pay Boeing for requested work not covered by the Boeing warranty, if any.
2.7.5 The DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES
provisions in Article 11 of Part 2 of Exhibit C of this AGTA apply.
2.8 Additional Services. Boeing may, at Customer's request, provide additional services for an aircraft after
delivery, which may include, but not be limited to, retrofit kit changes (kits and/or information), training, flight services,
maintenance and repair of aircraft. Such additional services will be subject to a mutually acceptable price, schedule, scope
of work and other applicable terms and conditions. The DISCLAIMER AND RELEASE and the EXCLUSION OF
CONSEQUENTIAL AND OTHER DAMAGES provisions in Article 11 of Part 2 of Exhibit C of this AGTA and the insurance
provisions in Article 8.2 of this AGTA will apply to any such work. Title to and risk of loss of any such aircraft will always
remain with Customer.
SWA-AGTA-EXB EXB Page 6
EXHIBIT B
CUSTOMER SUPPORT DOCUMENT
PART 3: TECHNICAL INFORMATION AND MATERIALS
1. General.
Materials are defined as any and all items that are created by Boeing or a third party, which are provided directly or
indirectly from Boeing and serve primarily to contain, convey or embody information. Materials may include either tangible
embodiments (for example, documents or drawings), or intangible embodiments (for example, software and other electronic
forms) of information but excludes Aircraft Software. Aircraft Software is defined as software that is installed on and used
in the operation of the aircraft.
Boeing will furnish to Customer certain Materials to support the maintenance and operation of the aircraft to
Customer. Such Materials will, if applicable, be prepared generally in accordance with Air Transport Association of America
(ATA) iSpec 2200, entitled "Information Standards for Aviation Maintenance". Materials not covered by iSpec 2200 will be
provided in a structure suitable for the Material’s intended use. Materials will be in English and in the units of measure used
by Boeing to manufacture an aircraft.
2. Materials Planning Conferences.
Customer and Boeing will conduct planning conferences approximately twelve (12) months before the scheduled
delivery month of the first aircraft of a model in order to mutually determine the proper format and quantity of Materials to be
furnished to Customer in support of the aircraft.
Customer may select one Boeing digital format as the delivery medium. Should a Boeing digital format not be
available, Customer may select a reasonable quantity of printed format.
3. Information and Materials Incremental Increase.
Should the delivery medium be of printed format, until one year after the month of delivery of the last aircraft covered
by a specific purchase agreement, Customer may annually request in writing a reasonable increase in the quantity of
printed Materials. Boeing will provide the additional quantity of printed Materials at no additional charge beginning with the
next normal revision cycle. Customer may request a decrease in revision quantities at any time.
4. Advance Representative Copies.
All advance representative copies of Materials will be selected by Boeing from available sources. Such advance
copies will be for advance planning purposes only.
5. Customized Materials.
All customized Materials will reflect the configuration of each aircraft as delivered.
6. Revisions.
6.1. Revision Service. The schedule for updating certain Materials will be identified in the planning conference. Such
updates will reflect changes to Materials developed by Boeing.
SWA-AGTA-EXB EXB Page 7
6.2. Revisions Based on Boeing Service Bulletin Incorporation. If Boeing receives written notice that Customer intends to
incorporate, or has incorporated, any Boeing service bulletin in an aircraft, Boeing will issue revisions to Materials
with revision service reflecting the effects of such incorporation into such aircraft.
7. Supplier Technical Data.
7.1. For supplier-manufactured programmed airborne avionics components and equipment classified as Seller
Furnished Equipment (SFE) which contain computer software designed and developed in accordance with Radio Technical
Commission for Aeronautics Document No. RTCA/DO-178B dated December 1, 1992 (with an errata issued on March 26,
1999), or later as available, Boeing will request that each supplier of the components and equipment make software
documentation available to Customer.
7.2. The provisions of this Article will not be applicable to items of BFE.
7.3. Boeing will furnish to Customer a document identifying the terms and conditions of the product support
agreements between Boeing and its suppliers requiring the suppliers to fulfill Customer's requirements for information and
services in support of the specific model of aircraft.
8. Buyer Furnished Equipment Data.
Boeing will incorporate BFE maintenance information into the customized Materials providing Customer makes the
information available to Boeing at least nine (9) months prior to the scheduled delivery month of each of Customer’s aircraft
purchased under a purchase agreement. Boeing will incorporate such BFE maintenance information into the Materials prior
to delivery of each such aircraft reflecting the configuration of that aircraft as delivered. Upon Customer’s request, Boeing
may provide update service after delivery to such information subject to the terms of Part 2, Article 2.8 (Additional
Services). Customer agrees to furnish all BFE maintenance information in Boeing’s standard digital format if Materials are
to be delivered in Boeing’s standard digital format.
9. Materials Shipping Charges.
Boeing will pay the reasonable transportation costs of the Materials. Customer is responsible for any customs
clearance charges, duties, and taxes.
10. Customer's Shipping Address.
The Materials furnished to Customer hereunder are to be sent to a single address to be specified. Customer will
promptly notify Boeing of any change to the address.
SWA-AGTA-EXB EXB Page 8
EXHIBIT B
CUSTOMER SUPPORT DOCUMENT
PART 4: ALLEVIATION OR CESSATION OF PERFORMANCE
1. Boeing will not be required to provide any services, training or other things at a facility designated by Customer if any
of the following conditions exist:
1.1. a labor stoppage or dispute in progress involving Customer;
1.2. wars or warlike operations, riots or insurrections in the country where the facility is located;
1.3. any condition at the facility which, in the opinion of Boeing, is detrimental to the general health, welfare or
safety of its personnel or their families;
1.4. the United States Government refuses permission to Boeing personnel or their families to enter into the
country where the facility is located, or recommends that Boeing personnel or their families leave the country; or
1.5. After the location of Boeing personnel at the facility, Boeing further reserves the right, upon the occurrence of
any of such events, to immediately and without prior notice to Customer relocate its personnel and their families.
1.6. Boeing will not be required to provide any Materials at a facility designated by Customer if the United States
Government refuses permission to Boeing to deliver Materials to the country where the facility is located.
SWA-AGTA-EXB EXB Page 9
EXHIBIT B
CUSTOMER SUPPORT DOCUMENT
PART 5: PROTECTION OF PROPRIETARY INFORMATION
AND PROPRIETARY MATERIALS
1. General.
All Materials provided by Boeing to Customer and not covered by a Boeing CSGTA or other agreement between
Boeing and Customer defining Customer's right to use and disclose the Materials and included information will be covered
by, and subject to the terms of this AGTA. Title to all Materials containing, conveying or embodying confidential, proprietary
or trade secret information (Proprietary Information) belonging to Boeing or a third party (Proprietary Materials), will at
all times remain with Boeing or such third party. Customer will treat all Proprietary Materials and all Proprietary Information
in confidence and use and disclose the same only as specifically authorized in this AGTA.
2. License Grant.
Boeing grants to Customer a worldwide, non-exclusive, nontransferable license to use and disclose Proprietary
Materials in accordance with the terms and conditions of this AGTA. Customer is authorized to make copies of Materials
(except for Materials bearing the copyright legend of a third party), and all copies of Proprietary Materials will belong to
Boeing and be treated as Proprietary Materials under this AGTA. Customer will preserve all proprietary legends, and all
copyright notices on all Materials and insure the inclusion of those legends and notices on all copies.
3. Use of Proprietary Materials and Proprietary Information.
Customer is authorized to use Proprietary Materials and Proprietary Information for the purpose of: (i) operation,
maintenance, repair, or modification of Customer's aircraft for which the Proprietary Materials and Proprietary Information
have been specified by Boeing and (ii) development and manufacture of training devices and maintenance tools for use by
Customer.
4. Providing of Proprietary Materials to Contractors.
Customer is authorized to provide Proprietary Materials to Customer's contractors for the sole purpose of
maintenance, repair, or modification of Customer's aircraft for which the Proprietary Materials have been specified by
Boeing. In addition, Customer may provide Proprietary Materials to Customer's contractors for the sole purpose of
developing and manufacturing training devices and maintenance tools for Customer's use. Before providing Proprietary
Materials to its contractor, Customer will first obtain a written agreement from the contractor by which the contractor agrees
(i) to use the Proprietary Materials only on behalf of Customer, (ii) to be bound by all of the restrictions and limitations of this
Part 5, and (iii) that Boeing is a third party beneficiary under the written agreement. Customer agrees to provide copies of
all such written agreements to Boeing upon request and be liable to Boeing for any breach of those agreements by a
contractor. A sample agreement acceptable to Boeing is attached as Appendix VII.
SWA-AGTA-EXB EXB Page 10
5. Providing of Proprietary Materials and Proprietary Information to Regulatory Agencies.
When and to the extent required by a government regulatory agency having jurisdiction over Customer or an aircraft,
Customer is authorized to provide Proprietary Materials and to disclose Proprietary Information to the agency for use in
connection with Customer's operation, maintenance, repair, or modification of such aircraft. Customer agrees to take all
reasonable steps to prevent the agency from making any distribution, disclosure, or additional use of the Proprietary
Materials and Proprietary Information provided or disclosed. Customer further agrees to notify Boeing immediately upon
learning of any (i) distribution, disclosure, or additional use by the agency, (ii) request to the agency for distribution,
disclosure, or additional use, or (iii) intention on the part of the agency to distribute, disclose, or make additional use of
Proprietary Materials or Proprietary Information.
SWA-AGTA-EXB EXB Page 11
EXHIBIT C
to
AIRCRAFT GENERAL TERMS AGREEMENT
SWA-AGTA
between
THE BOEING COMPANY
and
Southwest Airlines Co.
PRODUCT ASSURANCE DOCUMENT
This document contains:
Part 1: Exhibit C Definitions
Part 2: Boeing Product Warranty
Part 3: Boeing Service Life Policy
Part 4: Supplier Warranty Commitment
Part 5: Boeing Interface Commitment
Part 6 Boeing Indemnities against Patent and Copyright Infringement
SWA-AGTA-EXC EXC Page 1
EXHIBIT C
PRODUCT ASSURANCE DOCUMENT
PART 1: EXHIBIT C DEFINITIONS
Authorized Agent - Agent appointed by Customer to perform corrections and to administer warranties (see
Appendix VI to the AGTA for a form acceptable to Boeing).
Average Direct Hourly Labor Rate - The average hourly rate (excluding all fringe benefits, premiumtime
allowances, social charges, business taxes and the like) paid by Customer to its Direct Labor employees.
Boeing Product - Any system, accessory, equipment, part or Aircraft Software that is manufactured by Boeing or
manufactured to Boeing's detailed design with Boeing’s authorization.
Boeing Warranty - The organization within Boeing responsible for administration of warranties between Boeing and
Customer.
Correct(s) - To repair, modify, provide modification kits or replace with a new product.
Correction - A repair, a modification, a modification kit or replacement with a new product.
Corrected Boeing Product - A Boeing Product which is free of defect as a result of a Correction.
Direct Labor - Labor spent by Customer’s direct labor employees to access, remove, disassemble, modify, repair,
inspect and bench test a defective Boeing Product, and to reassemble, reinstall a Corrected Boeing Product and perform
final inspection and testing.
Direct Materials - Items such as parts, gaskets, grease, sealant and adhesives, installed or consumed in performing
a Correction, excluding allowances for administration, overhead, taxes, customs duties and the like.
Rogue Unit - A Boeing Product, on which an unscheduled removal due to breach of warranty occurs three or more
times both (i) within the warranty period and (ii) within either twelve (12) consecutive months or one thousand (1,000)
consecutive operating hours.
Specification Control Drawing (SCD) - A Boeing document defining specifications for certain Supplier Products.
Supplier - The manufacturer of a Supplier Product.
Supplier Product - Any system, accessory, equipment, Part or Aircraft Software that is not manufactured to
Boeing's detailed design. This includes but is not limited to parts manufactured to a SCD, all standards, and other parts
obtained from nonBoeing sources.
SWA-AGTA-EXC EXC Page 2
EXHIBIT C
PRODUCT ASSURANCE DOCUMENT
PART 2: BOEING PRODUCT WARRANTY
1. Applicability.
This warranty applies to all Boeing Products. Warranties applicable to Supplier Products are in Part 4. Warranties
applicable to engines will be provided by Supplemental Exhibits to individual purchase agreements.
2. Warranty.
2.1 Coverage. Boeing warrants that at the time of delivery:
(i) the aircraft will conform to the Detail Specification except for portions stated to be estimates,
approximations or design objectives;
(ii) all Boeing Products will be free from defects in material, process of manufacture and
workmanship, including the workmanship utilized to install Supplier Products, engines
and BFE, and;
(iii) all Boeing Products will be free from defects in design, including selection of materials and
the process of manufacture, in view of the state of the art at the time of design.
2.1 Exceptions. The following conditions do not constitute a defect under this warranty:
(i) conditions resulting from normal wear and tear;
(ii) conditions resulting from acts or omissions of Customer; and
(iii) conditions resulting from failure to properly service and maintain a Boeing Product.
3. Warranty Periods.
3.1 Warranty. The warranty period begins on the date of aircraft or Boeing Product delivery (Delivery) and ends at
the applicable time specified in subsections 3.1 (i) through 3.1 (iii) below:
(i) for Boeing aircraft models 777F, 777-200, -300, 737-600, -700, -800, -900, 737-7, -8, -9,
787 or new aircraft models designed and manufactured with similar, new technology and
for the model 747-8, the warranty period ends forty-eight (48) months after Delivery;
(ii) in addition, for a Boeing Product installed at the time of delivery in a 787 model aircraft but
not inspected during the initial forty-eight (48) month warranty period, the warranty period
continues until the date upon which Customer first inspects such Boeing Product
pursuant to its Boeing Maintenance Planning Data Document
SWA-AGTA-EXC EXC Page 3
but not later than twelve (12) years after Delivery of such 787 aircraft;
(iii) for any other Boeing aircraft model the warranty period ends thirty-six (36) months after
Delivery.
3.2 Warranty on Corrected Boeing Products. The warranty period applicable to a Corrected Boeing Product shall
begin on the date of delivery of the Corrected Boeing Product or date of delivery of the kit or kits furnished to Correct the
Boeing Product and shall be for the period specified immediately below:
(i) For Corrected Boeing Products which have been Corrected because of a defect in material,
the applicable warranty period is the remainder of the initial warranty period for the
defective Boeing Product.
(ii) For Corrected Boeing Products which have been Corrected because of defect in
workmanship, the applicable warranty period is the remainder of the initial warranty or
twelve (12) months following the date of delivery of the Corrected Boeing Product,
whichever is longer.
(iii) For Corrected Boeing Products which have been Corrected because of a defect in design,
the applicable warranty period is eighteen (18) months or the remainder of the initial
warranty period, whichever is longer.
3.3 Survival of Warranties. All warranty periods are stated above. The Performance Guarantees will not survive
delivery of the aircraft.
4. Remedies.
4.1 Correction Options. Customer may, at its option, either perform a Correction of a defective Boeing Product or
return the Boeing Product to Boeing for Correction. During the warranty period, Boeing will not charge Customer for tests
on Boeing Products returned to Boeing for Correction on which Boeing is unable to confirm the failure claimed, provided:
(i) Boeing's written instructions were followed by the Customer for testing the Boeing Product
prior to its return to Boeing, and
(ii) Customer’s claim includes all applicable documentation of such tests with the returned
Boeing Product, including but not limited to: Central Maintenance Computer (CMC), Flight
Maintenance Computer System, (FMCS), Fault Isolation Manual (FIM), Engine Indicating
and Crew Alerting System (EICAS) or Built In Test Equipment (BITE) messages.
4.2 Warranty Inspections. In addition to the remedies to Correct defects in Boeing Products described in
Article 7.3, below, Boeing will reimburse Customer for the cost of Direct Labor to perform certain inspections of the aircraft
to determine the occurrence of a condition Boeing has identified as a covered defect, provided the
SWA-AGTA-EXC EXC Page 4
inspections are recommended by a service bulletin or service letter issued by Boeing during the warranty period.
Such reimbursement will not apply to any inspections performed after a Correction is available to Customer and
Customer has had a reasonable time to incorporate the Correction, given the Customer’s fleet size and maintenance
schedule.
4.3 Rogue Units.
4.3.1 Upon written request, Boeing will lend Customer at no charge an interchangeable Boeing Product in
exchange for a Rogue Unit. Within ten (10) calendar days of its receipt of the loaned Boeing Product, Customer will ship the
Rogue Unit to Boeing. Customer will provide with the Rogue Unit verification of the following requirements:
(i) The removed Boeing Product failed three times within twelve (12) consecutive months or
one thousand (1,000) consecutive operating hours during the warranty period following
initial delivery,
(ii) Removals were performed in compliance with flight or maintenance manuals approved by
the FAA or the comparable regulatory agency for the country in which the aircraft is
registered, and
(iii) Any Corrections or tests to the Boeing Product were performed by Customer according to
the latest revision of the Boeing Component Maintenance Manual (CMM), according to
written instructions from Boeing, or by Boeing.
4.3.2 Upon receipt of a Rogue Unit and the required verifications, Boeing will, at no-charge to Customer,
either replace the Rogue Unit with a new Boeing Product or, if otherwise agreed, allow Customer to retain the loaned,
Boeing Product.
5. Discovery and Notice.
5.1 For notice to be effective:
(i) the defect must be discovered during the warranty period; and
(ii) Boeing Warranty must receive written notice of the discovery no later than one hundred
eighty (180) days after expiration of the warranty period. The notice must include
sufficient information to substantiate the claim.
5.2 Receipt of Customer's or its Authorized Agent’s notice of the discovery of a defect secures Customer's rights to
remedies under this Exhibit C, even though a Correction is performed after the expiration of the warranty period.
5.3 Once Customer has given valid notice of the discovery of a defect, a claim will be submitted as soon as
practicable after performance of the Correction.
5.4 Boeing may release service bulletins or service letters advising Customer of the availability of certain warranty
remedies. When such advice is provided, Customer will be deemed to have fulfilled the requirements for discovery of the
defect and submittal
SWA-AGTA-EXC EXC Page 5
of notice under this Exhibit C as of the in-warranty date specified in industry support information in a service bulletin or
service letter.
6. Filing a Claim.
6.1 Authority to File. Claims may be filed by Customer or its Authorized Agent. Appointment of an Authorized Agent
will only be effective upon Boeing's receipt of the Authorized Agent's express written agreement, in a form satisfactory to
Boeing, to be bound by and to comply with all applicable terms and conditions of this Aircraft General Terms Agreement.
6.2 Claim Information.
6.2.1 Claimant is responsible for providing sufficient information to substantiate Customer's rights to
remedies under this Exhibit C. Boeing may reject a claim for lack of sufficient information. At a minimum, such information
must include:
(i) identity of claimant;
(ii) serial or block number of the aircraft on which the defective Boeing Product was delivered;
(iii) part number and nomenclature of the defective Boeing Product;
(iv) purchase order number and date of delivery of the defective spare part;
(v) description and substantiation of the defect;
(vi) date the defect was discovered;
(vii) date the Correction was completed;
(viii) the total flight hours or cycles accrued, if applicable;
(ix) an itemized account of direct labor hours expended in performing the Correction;
(x) an itemized account of any direct materials incorporated in the Correction; and
(xi) for 787 model aircraft claims submitted after the forty-eight (48) month warranty period, the
specific reference within the Boeing Maintenance Planning Data Document to the
inspection requirement for such Boeing Product.
6.2.2 Additional information may be required based on the nature of the defect and the remedies requested.
6.3 Boeing Claim Processing.
6.3.1 Any claim for a Boeing Product returned by Customer or its Authorized Agent to Boeing for Correction
must accompany the Boeing Product. Any claim not associated with the return of a Boeing Product must be submitted
signed and in writing directly by Customer or its Authorized Agent to Boeing Warranty by any of the methods identified in
Article 11, “Notice,” of the AGTA or through an internet portal and process specified by Boeing.
SWA-AGTA-EXC EXC Page 6
6.3.2 Boeing will promptly review the claim and will give notification of claim approval or rejection. If the
claim is rejected, Boeing will provide a written explanation.
7. Corrections Performed by Customer or Its Authorized Agent.
7.1 Facilities Requirements. Provided Customer, its Authorized Agent or its third party contractor, as appropriate,
are certified by the appropriate Civil Aviation Authority or Federal Aviation Authority, Customer or its Authorized Agent may,
at its option, Correct defective Boeing Products at its facilities or may subcontract Corrections to a third party contractor.
7.2 Technical Requirements. All Corrections done by Customer, its Authorized Agent or a third party contractor
must be performed in accordance with Boeing's applicable service manuals, bulletins or other written instructions, using
parts and materials furnished or approved by Boeing.
7.3 Reimbursement.
7.3.1 Boeing will reimburse Customer’s reasonable costs of Direct Materials and Direct Labor by credit
memorandum (excluding labor hours expended for overhaul) at Customer’s Warranty Labor Rate to Correct a defective
Boeing Product. Claims for reimbursement must contain sufficient information to substantiate Direct Labor hours expended
and Direct Materials consumed. Customer or its Authorized Agent may be required to produce invoices for materials.
7.3.2 Customer’s established Warranty Labor Rate will be the greater of the standard labor rate or one
hundred fifty percent (150%) of Customer's Average Direct Hourly Labor Rate. The standard labor rate paid by Boeing to its
customers is established and published annually. Prior to or concurrently with submittal of Customer's first claim for Direct
Labor reimbursement, Customer may notify Boeing of Customer's then current Average Direct Hourly Labor Rate and
thereafter notify Boeing of any material change in such rate. Boeing will require information from Customer to substantiate
such rates.
7.3.3 Reimbursement for Direct Labor hours to perform Corrections stated in a service bulletin will be based
on the labor estimates in the service bulletin.
7.3.4 Boeing will provide to Customer a single, lump sum credit memorandum for Customer’s Direct Labor
hours expended to incorporate the Corrections (other than of random anomalies) identified in service bulletins and service
letters in all in-warranty aircraft covered by such service bulletins or service letters after Customer’s submission of a
warranty claim and verification of the incorporation of such Corrections with respect to the first affected in-warranty aircraft.
Such credit memoranda will not be provided in response to any other requests for reimbursement including, without
limitation, those arising out of program letters or other special offers provided by Boeing.
7.3.5 Boeing will reimburse Customer’s freight charges associated with a Correction of a defect on a Boeing
Product performed by its Authorized Agent or a third party contractor.
7.3.6 Maximum Reimbursement. Unless previously agreed in writing, the maximum reimbursement for
Direct Labor and Direct materials for repair of a defective Boeing Product will not exceed 65% of Boeing’s then current
sales price for a new replacement Boeing Product. Inspection, removal, reinstallation labor, final testing, inspection and
transportation costs are separate and are not to be included in the cost
SWA-AGTA-EXC EXC Page 7
elements used to determine the 65% limit. By mutual agreement between Customer and Boeing, Boeing may provide a
replacement Product to Customer in lieu of credit reimbursement.
7.4 Disposition of Defective Boeing Products Beyond Economical Repair.
7.4.1 A defective Boeing Product found to be beyond economical repair (see paragraph 7.3.6) will be
retained for a period of thirty (30) days from the date Boeing receives Customer's claim. During the thirty (30) day period,
Boeing may request return of such Boeing Products for inspection and confirmation of a defect.
7.4.2 After the thirty (30) day period, a defective Boeing Product with a value of Four Thousand dollars
($4,000) or less may be scrapped without notification to Boeing. Boeing will reimburse Customer or its Authorized Agent for
the charge for any item determined to be defective under this Aircraft General Terms Agreement. If such Boeing Product
has a value greater than Four Thousand dollars ($4,000), Customer must obtain confirmation of unrepairability by Boeing's
on-site field service representative prior to scrapping. Confirmation may be in the form of the representative's signature on
Customer's claim or through direct communication between the representative and Boeing Warranty.
8. Corrections Performed by Boeing.
8.1 Freight Charges. Customer or its Authorized Agent will pre-pay freight charges to return a Boeing Product to
Boeing. If during the period of the applicable warranty Boeing determines the Boeing Product to be defective, Boeing will
pre-pay shipping charges to return the Corrected Boeing Product. Boeing will reimburse Customer or its Authorized Agent
for freight charges for Boeing Products returned to Boeing for Correction and determined to be defective.
8.2 Customer Instructions. The documentation shipped with the returned defective Boeing Product may include
specific technical instructions for additional work to be performed on the Boeing Product. The absence of such instructions
will evidence Customer's authorization for Boeing to perform all necessary Corrections and work required to return the
Boeing Product to a serviceable condition.
8.3 Correction Time Objectives.
8.3.1 Boeing's objective for making Corrections is ten (10) working days for avionics and electronic Boeing
Products, thirty (30) working days for Corrections of other Boeing Products performed at Boeing's facilities and forty (40)
working days for Corrections of other Boeing Products performed at a Boeing subcontractor's facilities. The objectives are
measured from the date Boeing receives the defective Boeing Product and a valid claim to the date Boeing ships the
Corrected Boeing Product.
8.3.2 If Customer has a critical parts shortage because Boeing has exceeded a Correction time objective
and Customer has procured spare Boeing Products for the defective Boeing Product in quantities shown in Boeing's
Recommended Spare Parts List then Boeing will either expedite the Correction or provide an interchangeable Boeing
Product, on a no charge loan basis, until the Corrected Boeing Product is returned.
8.4 Title Transfer and Risk of Loss.
8.4.1 Title to and risk of loss of any Boeing Product returned to Boeing will at all times remain with Customer
or any other title holder of such Boeing Product. While
SWA-AGTA-EXC EXC Page 8
Boeing has possession of the returned Boeing Product, Boeing will have only such liabilities as a bailee for mutual benefit
would have but will not be liable for loss of use.
8.4.2 If a Correction requires shipment of a new Boeing Product, then at the time Boeing ships the new
Boeing Product, title to and risk of loss for the returned Boeing Product will pass to Boeing, and title to and risk of loss for
the new Boeing Product will pass to Customer.
9. Returning an Aircraft.
9.1 Conditions. An aircraft may be returned to Boeing's facilities for Correction only if:
(i) Boeing and Customer agree a covered defect exists;
(ii) Customer lacks access to adequate facilities, equipment or qualified personnel to perform
the Correction; and
(iii) it is not practical, in Boeing's estimation, to dispatch Boeing personnel to perform the
Correction at a remote site.
9.2 Correction Costs. Boeing will perform the Correction at no charge to Customer. Subject to the conditions of
Article 9.1, Boeing will reimburse Customer for the costs of fuel, oil, other required fluids and landing fees incurred in
ferrying the aircraft to Boeing and back to Customer's facilities. Customer will minimize the length of both flights.
9.3 Separate Agreement. Prior to the return of an aircraft to Boeing, Boeing and Customer will enter into a
separate agreement covering return of the aircraft and performance of the Correction. Authorization by Customer for Boeing
to perform additional work that is not part of the Correction must be received within twenty-four (24) hours of Boeing’s
request. If such authorization is not received within twenty-four (24) hours, Customer will be invoiced for work performed by
Boeing that is not Part of the Correction.
10. Insurance.
The provisions of Article 8.2 "Insurance", of this AGTA, will apply to any work performed by Boeing in accordance
with Customer's specific technical instructions to the extent any legal liability of Boeing is based upon the content of such
instructions.
11. Disclaimer and Release; Exclusion of Liabilities.
11.1 DISCLAIMER AND RELEASE. THE WARRANTIES, OBLIGATIONS AND LIABILITIES OF BOEING AND
THE REMEDIES OF CUSTOMER IN THIS EXHIBIT C ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND
CUSTOMER HEREBY WAIVES, RELEASES AND RENOUNCES, ALL OTHER WARRANTIES, OBLIGATIONS AND
LIABILITIES OF BOEING AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF CUSTOMER AGAINST BOEING,
EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY NONCONFORMANCE OR
DEFECT IN ANY AIRCRAFT, MATERIALS, TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THIS AGTA
AND THE APPLICABLE PURCHASE AGREEMENT, INCLUDING, BUT NOT LIMITED TO:
SWA-AGTA-EXC EXC Page 9
(i) ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;
(ii) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE
OF DEALING OR USAGE OF TRADE;
(iii) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR
NOT ARISING FROM THE NEGLIGENCE OF BOEING; AND
(iv) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR
DAMAGE TO ANY AIRCRAFT.
11.2 EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES. BOEING WILL HAVE NO OBLIGATION OR
LIABILITY, WHETHER ARISING IN CONTRACT (INCLUDING WARRANTY), TORT, WHETHER OR NOT ARISING
FROM THE NEGLIGENCE OF BOEING, OR OTHERWISE, FOR LOSS OF USE, REVENUE OR PROFIT, OR FOR ANY
OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT
IN ANY AIRCRAFT, MATERIALS, TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THIS AGTA AND THE
APPLICABLE PURCHASE AGREEMENT.
11.3 Definitions. For the purpose of this Article, "BOEING" or "Boeing" is defined as The Boeing Company, its
divisions, subsidiaries, affiliates, the assignees of each, and their respective directors, officers, employees and agents.
SWA-AGTA-EXC EXC Page 10
EXHIBIT C
PRODUCT ASSURANCE DOCUMENT
PART 3: BOEING SERVICE LIFE POLICY
1. Definitions.
Service Life Policy (SLP) Component - any of the primary structural elements (excluding industry standard parts),
such as landing gear, wing, fuselage, vertical or horizontal stabilizer, listed in the applicable purchase agreement for a
specific model of aircraft, either installed in the aircraft at time of delivery or purchased from Boeing by Customer as a spare
part. The detailed SLP Component listing will be in Supplemental Exhibit SLP1 to each Purchase Agreement.
2. Service Life Policy.
2.1. SLP Commitment. If a failure is discovered in a SLP Component within the time periods specified in Article 2.2
below, Boeing will provide Customer a replacement SLP Component at the price calculated pursuant to Article 3.1, below. If
requested by Customer as an alternative remedy, Boeing will reimburse Customer in accordance with the provisions of
Exhibit C, Part 2, Article 7.3, for Direct Labor and Direct Material for repair of a failed SLP Component an amount not to
exceed the difference between Boeing’s then current spare parts price for such SLP Component and the price determined
pursuant to Article 3, below.
2.2. SLP Policy Periods.
2.2.1. The policy period for SLP Components initially installed on an aircraft is twelve (12) years after the date
of delivery of the aircraft except that for SLP Components initially installed on a 787 aircraft the policy period is fifteen (15)
years after the date of delivery of the aircraft.
2.2.2. The policy period for SLP Components purchased from Boeing by Customer as spare parts is
twelve (12) years from delivery of such SLP Component or twelve (12) years from the date of delivery of the last aircraft
produced by Boeing of a specific model, whichever first expires, except that for the 787 aircraft such policy period is
fifteen (15) years from delivery of such SLP Component or fifteen (15) years from the date of delivery of the last 787 aircraft
produced by Boeing, whichever first expires.
3. Price.
The price Customer will pay for replacement of a failed SLP Component will be calculated pursuant to the following
formulas:
(i) For 787 aircraft only:
P = C(T-48)
132
where:
P = price to Customer for the replacement part
C = SLP Component sales price at time of replacement
T = total age in months of the failed SLP Component from the date of delivery to Customer to
the date of discovery of such condition and is greater than forty-eight (48) months.
(ii) For all other aircraft models:
P = CT
144
SWA-AGTA-EXC EXC Page 11
where:
P = price to Customer for the replacement part
C = SLP Component sales price at time of replacement
T = total age in months of the failed SLP Component from the date of delivery to Customer to the
date of discovery of such condition.
4. Conditions.
Boeing's obligations under this Part 3 of Exhibit C, “Boeing Service Life Policy,” (Policy) are conditioned upon the
following:
4.1. Customer must notify Boeing in writing of the failure within three months after it is discovered.
4.2. Customer must provide reasonable evidence that the claimed failure is covered by this Policy and if requested
by Boeing, that such failure was not the result of:
4.2.2.1.1. a defect or failure in a component not covered by this Policy,
4.2.2.1.2. an extrinsic force,
4.2.2.1.3. an act or omission of Customer, or
4.2.2.1.4. operation or maintenance contrary to applicable governmental regulations or
Boeing's instructions.
4.3. If return of a failed SLP Component is practicable and requested by Boeing, Customer will return such SLP
Component to Boeing at Boeing's expense.
4.4. Customer's rights and remedies under this Policy are limited to the receipt of a Correction pursuant to Article 2
above.
5. Disclaimer and Release; Exclusion of Liabilities.
This Part 3 and the rights and remedies of Customer and the obligations of Boeing are subject to the DISCLAIMER
AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES provisions of Article 11 of Part 2 of this
Exhibit C.
SWA-AGTA-EXC EXC Page 12
EXHIBIT C
PRODUCT ASSURANCE DOCUMENT
PART 4: SUPPLIER WARRANTY COMMITMENT
1. Supplier Warranties and Supplier Patent and Copyright Indemnities.
Boeing will use diligent efforts to obtain warranties and indemnities against patent and copyright infringement
enforceable by Customer from Suppliers of Supplier Products (except for BFE and engines) installed on the aircraft at the
time of delivery that were selected and purchased by Boeing, but not manufactured to Boeing's detailed design. Boeing will
furnish copies of the warranties and patent and copyright indemnities to Customer contained in Supplier Product Support
and Assurance Agreements, prior to the scheduled delivery month of the first aircraft under the initial purchase agreement
to the AGTA.
2. Boeing Assistance in Administration of Supplier Warranties.
Customer will be responsible for submitting warranty claims directly to Suppliers; however, if Customer experiences
problems enforcing any Supplier warranty obtained by Boeing for Customer, Boeing will conduct an investigation of the
problem and assist Customer in the resolution of those claims.
3. Boeing Support in Event of Supplier Default.
3.1 If the Supplier defaults in the performance of a material obligation under its warranty, and Customer provides
evidence to Boeing that a default has occurred, then Boeing will furnish the equivalent warranty terms as provided by the
defaulting Supplier.
3.2 At Boeing's request, Customer will assign to Boeing, and Boeing will be subrogated to, its rights against the
Supplier provided by the Supplier warranty.
SWA-AGTA-EXC EXC Page 13
EXHIBIT C
PRODUCT ASSURANCE DOCUMENT
PART 5: BOEING INTERFACE COMMITMENT
1. Interface Problems.
An Interface Problem is defined as a technical problem in the operation of an aircraft or its systems experienced by
Customer, the cause of which is not readily identifiable by Customer but which Customer believes to be attributable to
either the design characteristics of the aircraft or its systems or the workmanship used in the installation of Supplier
Products. In the event Customer experiences an Interface Problem, Boeing will, without additional charge to Customer,
promptly conduct an investigation and analysis to determine the cause or causes of the Interface Problem. Boeing will
promptly advise Customer at the conclusion of its investigation of Boeing's opinion as to the causes of the Interface
Problem and Boeing's recommendation as to corrective action.
2. Boeing Responsibility.
If Boeing determines that the Interface Problem is primarily attributable to the design or installation of any Boeing
Product, Boeing will Correct the design or workmanship to the extent of any then existing obligations of Boeing under the
provisions of the applicable Boeing Product warranty.
3. Supplier Responsibility.
If Boeing determines that the Interface Problem is primarily attributable to the design or installation of a Supplier
Product, Boeing will assist Customer in processing a warranty claim against the Supplier.
4. Joint Responsibility.
If Boeing determines that the Interface Problem is partially attributable to the design or installation of a Boeing
Product and partially to the design or installation of a Supplier Product, Boeing will seek a solution to the Interface Problem
through the cooperative efforts of Boeing and the Supplier and will promptly advise Customer of the resulting corrective
actions and recommendations.
5. General.
Customer will, if requested by Boeing, assign to Boeing any of its rights against any supplier as Boeing may require
to fulfill its obligations hereunder.
6. Disclaimer and Release; Exclusion of Liabilities.
This Part 5 and the rights and remedies of Customer and the obligations of Boeing herein are subject to the
DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES provisions of Article 11
of Part 2 of this Exhibit C.
SWA-AGTA-EXC EXC Page 14
EXHIBIT C
PRODUCT ASSURANCE DOCUMENT
PART 6: BOEING INDEMNITIES AGAINST PATENT AND COPYRIGHT
INFRINGEMENT
1. Indemnity Against Patent Infringement.
Boeing will defend and indemnify Customer with respect to all claims, suits and liabilities arising out of any actual or
alleged patent infringement through Customer’s use, lease or resale of any aircraft or any Boeing Product installed on an
aircraft at delivery.
2. Indemnity Against Copyright Infringement.
Boeing will defend and indemnify Customer with respect to all claims, suits and liabilities arising out of any actual or
alleged copyright infringement through Customer’s use, lease or resale of any Boeing created Materials and Aircraft
Software installed on an aircraft at delivery.
3. Exceptions, Limitations and Conditions.
3.1. Boeing's obligation to indemnify Customer for patent infringement will extend only to infringements in
countries which, at the time of the infringement, were party to and fully bound by either: (i) Article 27 of the Chicago
Convention on International Civil Aviation of December 7, 1944, or (ii) the International Convention for the Protection of
Industrial Property (Paris Convention).
3.2. Boeing's obligation to indemnify Customer for copyright infringement is limited to infringements in countries
which, at the time of the infringement, are members of The Berne Union and recognize computer software as a "work"
under The Berne Convention.
3.3. The indemnities provided under this Part 6 will not apply to any BFE engines, Supplier Product, Boeing
Product used other than for its intended purpose, or Aircraft Software not created by Boeing.
3.4. Customer must deliver written notice to Boeing (i) within ten (10) days after Customer first receives notice of
any suit or other formal action against Customer and (ii) within twenty (20) days after Customer first receives any other
allegation or written claim of infringement covered by this Part 6.
3.5. At any time, Boeing will have the right at its option and expense to: (i) negotiate with any party claiming
infringement, (ii) assume or control the defense of any infringement allegation, claim, suit or formal action, (iii) intervene in
any infringement suit or formal action, and/or (iv) attempt to resolve any claim of infringement by replacing an allegedly
infringing Boeing Product or Aircraft Software with a noninfringing equivalent.
3.6. Customer will promptly furnish to Boeing all information, records and assistance within Customer’s possession
or control which Boeing considers relevant or material to any alleged infringement covered by this Part 6.
3.7. Except as required by a final judgment entered against Customer by a court of competent jurisdiction from
which no appeals can be or have been filed, Customer will obtain Boeing's written approval prior to paying, committing to
pay,
SWA-AGTA-EXC EXC Page 15
assuming any obligation or making any material concession relative to any infringement covered by these indemnities.
3.8. BOEING WILL HAVE NO OBLIGATION OR LIABILITY UNDER THIS PART 6 FOR LOSS OF USE,
REVENUE OR PROFIT, OR FOR ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES. THE OBLIGATIONS OF
BOEING AND REMEDIES OF CUSTOMER IN THIS PART 6 ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND
CUSTOMER HEREBY WAIVES, RELEASES AND RENOUNCES ALL OTHER INDEMNITIES, OBLIGATIONS AND
LIABILITIES OF BOEING AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF CUSTOMER AGAINST BOEING,
EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY ACTUAL OR ALLEGED
PATENT, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY INFRINGEMENT OR THE LIKE BY ANY AIRCRAFT,
AIRCRAFT SOFTWARE, MATERIALS, TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THIS AGTA AND
THE APPLICABLE PURCHASE AGREEMENT.
3.9. For the purposes of this Part 6, "BOEING or Boeing" is defined as The Boeing Company, its divisions,
subsidiaries, affiliates, the assignees of each and their respective directors, officers, employees and agents.
SWA-AGTA-EXC EXC Page 16
Appendix I
SAMPLE
Insurance Certificate
BROKER'S LETTERHEAD
Date: +
Certificate of Insurance
ISSUED TO: The Boeing Company
Post Office Box 3707
Mail Code 13-57
Seattle, Washington 98124
Attn: Manager - Aviation Insurance for
Vice President - Employee Benefits,
Insurance and Taxes
CC: Boeing Commercial Airplanes
P.O. Box 3707
Mail Code 21-34
Seattle, Washington 98124-2207
U.S.A.
Attn: Vice President - Contracts
NAMED INSURED: Southwest Airlines Co.
We hereby certify that in our capacity as Brokers to the Named Insured, the following described insurance is in force
on this date:
Insurer Policy No. Participation
POLICY PERIOD: From [date and time of inception of the Policy(ies)] to [date and time of expiration].
GEOGRAPHICAL LIMITS: Worldwide (however, as respects "Aircraft Hull War and Allied Perils" Insurance, as agreed by
Boeing).
SWA-AGTA-APPEND Appendix I Page A-1
Appendix I
SAMPLE
Insurance Certificate
AIRCRAFT INSURED: All Boeing manufactured aircraft owned or operated by the Named Insured which are the subject of
the following purchase agreement(s), entered into between The Boeing Company and _________________ (hereinafter
Aircraft):
Purchase Agreement No. __________ dated __________, 20_____
Purchase Agreement No. __________ dated __________, 20_____
COVERAGES:
2. Aircraft "all risks" Hull (Ground and Flight)
3. Aircraft Hull War and Allied Perils (as per LSW 555, or its successor wording)
4. Airline Liability
Including, but not limited to, Bodily Injury, Property Damage, Aircraft Liability, Liability War Risks, Passenger Legal
Liability, //Premises/Operations// Liability, Completed //Operations/Products// Liability, Baggage Legal Liability (checked and
unchecked), Cargo Legal Liability, Contractual Liability and Personal Injury.
The above-referenced Airline Liability insurance coverage is subject to War and Other Perils Exclusion Clause
(AV48B) but all sections, other than Section (b) are reinstated as per AV52C, or their successor endorsements.
LIMITS OF LIABILITY: To the fullest extent of the Policy limits that the Named Insured carries from the time of delivery of
the first Aircraft under the first Purchase Agreement listed under "Aircraft Insured" and thereafter at the inception of each
policy period, but in any event no less than the following:
Combined Single Limit Bodily Injury and Property Damage: U.S. Dollars ($) any one occurrence each Aircraft (with
aggregates as applicable).
SWA-AGTA-APPEND Appendix I Page A-2
Appendix I
SAMPLE
Insurance Certificate
(737-500/600) US$350,000,000
(737-300/700) US$400,000,000
(737-400) US$450,000,000
(737-800/900) US$500,000,000
(737-7/8/9) TBD
(757-200) US$525,000,000
(757-300) US$550,000,000
(767-200) US$550,000,000
(767-300) US$700,000,000
(767-400ERX) US$750,000,000
(787) US$700,000,000
(777) US$800,000,000
(747) US$900,000,000
(In regard to all other models and/or derivatives, to be specified by Boeing).
(In regard to Personal Injury coverage, limits are Twenty-five million U.S. Dollars ($25,000,000) any one
//offense/aggregate//.)
DEDUCTIBLES / SELF-INSURANCE: Any deductible and/or self-insurance amount (other than standard market
deductibles) are to be disclosed and agreed by Boeing.
SPECIAL PROVISIONS APPLICABLE TO BOEING: It is certified that Insurers are aware of the terms and conditions of
SWA-AGTA and the following purchase agreements:
Purchase Agreement No. __________ dated __________, 20_____
Purchase Agreement No. __________ dated __________, 20_____
Purchase Agreement No. __________ dated __________, 20_____
Each Aircraft manufactured by Boeing which is delivered to the Insured pursuant to the applicable purchase
agreement during the period of effectivity of the policies represented by this Certificate will be covered to the extent
specified herein.
Insurers have agreed to the following:
1. In regard to Aircraft "all risks" Hull Insurance and Aircraft Hull War and Allied Perils Insurance, Insurers agree to waive
all rights of subrogation or recourse against Boeing in accordance with SWA-AGTA which was incorporated by
reference into the applicable purchase agreement.
SWA-AGTA-APPEND Appendix I Page A-3
Appendix I
SAMPLE
Insurance Certificate
2. In regard to Airline Liability Insurance, Insurers agree:
2.1. To include Boeing as an additional insured in accordance with Customer's undertaking in Article 8.2.1 of
SWA-AGTA which was incorporated by reference into the applicable purchase agreement.
2.2. To provide that such insurance will be primary and not contributory nor excess with respect to any other
insurance available for the protection of Boeing;
2.3. To provide that with respect to the interests of Boeing, such insurance shall not be invalidated or minimized by
any action or inaction, omission or misrepresentation by the Insured or any other person or party (other than Boeing)
regardless of any breach or violation of any warranty, declaration or condition contained in such policies;
2.4. To provide that all provisions of the insurance coverage’s referenced above, except the limits of liability, will
operate to give each Insured or additional insured the same protection as if there were a separate Policy issued to each.
3. In regard to all of the above referenced policies:
3.1. Boeing will not be responsible for payment, set-off, or assessment of any kind or any premiums in connection
with the policies, endorsements or coverage’s described herein;
3.2. If a policy is canceled for any reason whatsoever, or any substantial change is made in the coverage which
affects the interests of Boeing or if a policy is allowed to lapse for nonpayment of premium, such cancellation, change or
lapse shall not be effective as to Boeing for thirty (30) days (in the case of war risk and allied perils coverage seven (7) days
after sending, or such other period as may from time to time be customarily obtainable in the industry) after receipt by
Boeing of written notice from the Insurers or the authorized representatives or Broker of such cancellation, change or lapse;
and
3.3. For the purposes of the Certificate, "Boeing" is defined as The Boeing Company, its divisions, subsidiaries,
affiliates, the assignees of each and their respective directors, officers, employees and agents.
Subject to the terms, conditions, limitations and exclusions of the relative policies.
____________________
[Signature]
Name: ____________________
Title: ____________________
SWA-AGTA-APPEND Appendix I Page A-4
Appendix II
SAMPLE
Purchase Agreement Assignment
THIS PURCHASE AGREEMENT ASSIGNMENT (Assignment) dated as of __________, 20_____ is between
____________________, a company organized under the laws of ____________________ (Assignor) and
____________________, a company organized under the laws of ____________________ (Assignee). Capitalized terms
used herein without definition will have the same meaning as in the Boeing Purchase Agreement.
Assignor and The Boeing Company, a Delaware corporation (Boeing), are parties to the Boeing Purchase
Agreement, providing, among other things, for the sale by Boeing to Assignor of certain aircraft, engines and related
equipment, including the Aircraft.
Assignee wishes to acquire the Aircraft and certain rights and interests under the Boeing Purchase Agreement and
Assignor, on the following terms and conditions, is willing to assign to Assignee certain of Assignor's rights and interests
under the Boeing Purchase Agreement. Assignee is willing to accept such assignment.
It is agreed as follows:
1. For all purposes of this Assignment, the following terms will have the following meanings:
Aircraft - one Boeing Model _____ aircraft, bearing manufacturer's serial number __________, together with all
engines and parts installed on such aircraft on the Delivery Date.
Boeing - Boeing shall include any wholly-owned subsidiary of Boeing, and its successors and assigns.
Boeing Purchase Agreement - Purchase Agreement No. __________ dated as of ____________________
between Boeing and Assignor, as amended, but excluding ____________________, providing, among other things, for the
sale by Boeing to Assignor of the Aircraft, as said agreement may be further amended to the extent permitted by its terms.
The Purchase Agreement incorporated by reference Aircraft General Terms Agreement SWA-AGTA (AGTA).
Delivery Date - the date on which the Aircraft is delivered by Boeing to Assignee pursuant to and subject to the
terms and conditions of the Boeing Purchase Agreement and this Assignment.
2. Assignor does hereby assign to Assignee all of its rights and interests in and to the Boeing Purchase Agreement, as
and to the extent that the same relate to the Aircraft and the purchase and operation thereof, except as and to the extent
expressly reserved below, including, without limitation, in such assignment: [TO BE COMPLETED BY THE PARTIES.]
SWA-AGTA October 28, 2011
Appendix II Page A-5
Appendix II
SAMPLE
Purchase Agreement Assignment
{EXAMPLES
(i) the right upon valid tender to purchase the Aircraft pursuant to the Boeing Purchase
Agreement subject to the terms and conditions thereof and the right to take title to the
Aircraft and to be named the "Buyer" in the bill of sale for the Aircraft;
(ii) the right to accept delivery of the Aircraft;
(iii) all claims for damages arising as a result of any default under the Boeing Purchase
Agreement in respect of the Aircraft;
(iv) all warranty and indemnity provisions contained in the Boeing Purchase Agreement, and
all claims arising thereunder, in respect of the Aircraft; and
(v) any and all rights of Assignor to compel performance of the terms of the Boeing Purchase
Agreement in respect of the Aircraft.}
Reserving exclusively to Assignor, however:
{EXAMPLES
(i) all Assignor's rights and interests in and to the Boeing Purchase Agreement as and to the
extent the same relates to aircraft other than the Aircraft, or to any other matters not
directly pertaining to the Aircraft;
(ii) all Assignor's rights and interests in or arising out of any advance or other payments or
deposits made by Assignor in respect of the Aircraft under the Boeing Purchase
Agreement and any amounts credited or to be credited or paid or to be paid by Boeing in
respect of the Aircraft;
(iii) the right to obtain services, training, information and demonstration and test flights
pursuant to the Boeing Purchase Agreement; and
(iv) the right to maintain plant representatives at Boeing's plant pursuant to the Boeing
Purchase Agreement.}
SWA-AGTA October 28, 2011
Appendix II Page A-6
Appendix II
SAMPLE
Purchase Agreement Assignment
Assignee hereby accepts such assignment.
3. Notwithstanding the foregoing, so long as no event of default or termination under [specify document] has occurred
and is continuing, Assignee hereby authorizes Assignor, to the exclusion of Assignee, to exercise in Assignor's name all
rights and powers of Customer under the Boeing Purchase Agreement in respect of the Aircraft.
4. For all purposes of this Assignment, Boeing will not be deemed to have knowledge of or need recognize the
occurrence, continuance or the discontinuance of any event of default or termination under [specify document] unless and
until Boeing receives from Assignee written notice thereof, addressed to its Vice President - Contracts, Boeing Commercial
Airplanes at P.O. Box 3707, Seattle, Washington 98124, if by mail, or to 425-237-1706, if by facsimile. Until such notice has
been given, Boeing will be entitled to deal solely and exclusively with Assignor. Thereafter, until Assignee has provided
Boeing written notice that any such events no longer continue, Boeing will be entitled to deal solely and exclusively with
Assignee. Boeing may act with acquittance and conclusively rely on any such notice.
5. It is expressly agreed that, anything herein contained to the contrary notwithstanding: (a) prior to the Delivery Date
Assignor will perform its obligations with respect to the Aircraft to be performed by it on or before such delivery, (b) Assignor
will at all times remain liable to Boeing under the Boeing Purchase Agreement to perform all obligations of Customer
thereunder to the same extent as if this Assignment had not been executed, and (c) the exercise by Assignee of any of the
assigned rights will not release Assignor from any of its obligations to Boeing under the Boeing Purchase Agreement,
except to the extent that such exercise constitutes performance of such obligations.
6. Notwithstanding anything contained in this Assignment to the contrary (but without in any way releasing Assignor
from any of its obligations under the Boeing Purchase Agreement), Assignee confirms for the benefit of Boeing that, insofar
as the provisions of the Boeing Purchase Agreement relate to the Aircraft, in exercising any rights under the Boeing
Purchase Agreement, or in making any claim with respect to the Aircraft or other things (including, without limitation,
Material, training and services) delivered or to be delivered, the terms and conditions of the Boeing Purchase Agreement,
including, without limitation, the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER
DAMAGES in Article 11 of Part 2 of Exhibit C to the Aircraft General Terms Agreement which was incorporated by
reference into the Boeing Purchase Agreement and the insurance provisions in Article 8.2 of the Aircraft General Terms
Agreement which was incorporated by reference into the Boeing Purchase Agreement therein, will apply to and be binding
on Assignee to the same extent as if Assignee had been the original "Customer" thereunder. Assignee further agrees,
expressly for the benefit of Boeing, upon the written request of Boeing, Assignee will promptly execute and deliver such
further assurances and documents and take such further action as Boeing may reasonably request in order to obtain the full
benefits of Assignee's agreements in this paragraph.
SWA-AGTA October 28, 2011
Appendix II Page A-7
Appendix II
SAMPLE
Purchase Agreement Assignment
7. Nothing contained herein will subject Boeing to any liability to which it would not otherwise be subject under the
Boeing Purchase Agreement or modify in any respect the contract rights of Boeing thereunder, or require Boeing to divest
itself of title to or possession of the Aircraft or other things until delivery thereof and payment therefore as provided therein.
8. Notwithstanding anything in this Assignment to the contrary, after receipt of notice of any event of default or
termination under [specify document], Boeing will continue to owe to Assignor moneys in payment of claims made or
obligations arising before such notice, which moneys may be subject to rights of set-off available to Boeing under applicable
law. Similarly, after receipt of notice that such event of default or termination no longer continues, Boeing will continue to
owe to Assignee moneys in payment of claims made or obligations arising before such notice, which moneys may be
subject to rights of set-off available to Boeing under applicable law.
9. Effective at any time after an event of default has occurred, and for so long as such event of default is continuing,
Assignor does hereby constitute Assignee, Assignor's true and lawful attorney, irrevocably, with full power (in the name of
Assignor or otherwise) to ask, require, demand, receive, and give acquittance for any and all moneys and claims for
moneys due and to become due under or arising out of the Boeing Purchase Agreement in respect of the Aircraft, to the
extent assigned by this Assignment.
10. Assignee agrees, expressly for the benefit of Boeing and Assignor that it will not disclose, directly or indirectly, any
terms of the Boeing Purchase Agreement; provided, that Assignee may disclose any such information (a) to its special
counsel and public accountants, (b) as required by applicable law to be disclosed or to the extent that Assignee may have
received a subpoena or other written demand under color of legal right for such information, but it will first, as soon as
practicable upon receipt of such requirement or demand, furnish an explanation of the basis thereof to Boeing, and will
afford Boeing reasonable opportunity, to obtain a protective order or other reasonably satisfactory assurance of confidential
treatment for the information required to be disclosed, and (c) to any bona fide potential purchaser or lessee of the Aircraft.
Any disclosure pursuant to (a) and (c) above will be subject to execution of a confidentiality agreement substantially similar
to this paragraph 10.
11. This Assignment may be executed by the parties in separate counterparts, each of which when so executed and
delivered will be an original, but all such counterparts will together constitute but one and the same instrument.
12. This Assignment will be governed by, and construed in accordance with, the laws of ____________________.
SWA-AGTA October 28, 2011
Appendix II Page A-8
Appendix II
SAMPLE
Purchase Agreement Assignment
__________________________ __________________________
as Assignor as Assignee
By _________________________ By _________________________
Name: Name:
Title: Title:
[If the Assignment is further assigned by Assignee in connection with a financing, the following language needs to
be included.]
Attest:
The undersigned, as ///Indenture Trustee/Agent// for the benefit of the Loan //Participants/Mortgagee/// and as
assignee of, and holder of a security interest in, the estate, right, and interest of the Assignee in and to the foregoing
Purchase Agreement Assignment and the Purchase Agreement pursuant to the terms of a certain //Trust
Indenture/Mortgage// dated as of __________, 20_____, agrees to the terms of the foregoing Purchase Agreement
Assignment and agrees that its rights and remedies under such //Trust Indenture/Mortgage// shall be subject to the terms
and conditions of the foregoing Purchase Agreement Assignment, including, without limitation, paragraph 6.
[Name of Entity]
as //Indenture Trustee/Agent//
By:____________________________
Name:
Title:
SWA-AGTA October 28, 2011
Appendix II Page A-9
Appendix II
SAMPLE
Purchase Agreement Assignment
CONSENT AND AGREEMENT OF
THE BOEING COMPANY
THE BOEING COMPANY, a Delaware corporation (Boeing), hereby acknowledges notice of and consents to the
foregoing Purchase Agreement Assignment (Assignment) as it relates to Boeing in respect of the Aircraft. Boeing confirms
to Assignee that: all representations, warranties, indemnities and agreements of Boeing under the Boeing Purchase
Agreement with respect to the Aircraft will, subject to the terms and conditions thereof and of the Assignment, inure to the
benefit of Assignee to the same extent as if Assignee were originally named "Customer" therein.
This Consent and Agreement will be governed by, and construed in accordance with, the law of the State of
Washington, excluding the conflict of laws principles thereof.
Dated as of __________, 20_____.
THE BOEING COMPANY
By _________________________
Name:
Title: Attorney-in-Fact
Aircraft Manufacturer’s Serial Number(s) ____________________
SWA-AGTA October 28, 2011
Appendix II Page A-10
Appendix III
SAMPLE
Post-Delivery Sale Notice
Boeing Commercial Airplanes
P.O. Box 3707
Seattle, Washington 98124-2207
U.S.A.
By Courier
1901 Oakesdale Ave. SW
Renton, WA 98055
U.S.A.
Attention: Vice President - Contracts
Mail Code 21-34
In connection with the sale by Southwest Airlines Co. (Seller) to ____________________ (Purchaser) of the aircraft
identified below, reference is made to Purchase Agreement No. __________ dated as of __________, 20_____, between
The Boeing Company (Boeing) and Seller (Purchase Agreement) under which Seller purchased certain Boeing
Model _____ aircraft, including the aircraft bearing Manufacturer's Serial No.(s) ____________________ (Aircraft). The
Purchase Agreement incorporated by reference Aircraft General Terms Agreement SWA-AGTA (AGTA).
Capitalized terms used herein without definition will have the same meaning as in the Purchase Agreement.
Seller has sold the Aircraft, including in that sale the assignment to Purchaser of all remaining rights related to the
Aircraft under the Purchase Agreement. To accomplish this transfer of rights, as authorized by the provisions of the
Purchase Agreement:
1. Purchaser acknowledges it has reviewed those provisions of the Purchase Agreement related to those rights
assigned and agrees to be bound by and comply with all applicable terms and conditions of the Purchase Agreement,
including, without limitation, the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER
DAMAGES in Article 11 of Part 2 of Exhibit C to the AGTA and the insurance provisions in Article 8.2 of the AGTA.
Purchaser further agrees upon the written request of Boeing, to promptly execute and deliver such further assurances and
documents and take such further action as Boeing may reasonably request in order to obtain the full benefits of Purchaser’s
agreements in this paragraph; and
2. Seller will remain responsible for any payments due Boeing as a result of obligations relating to the Aircraft incurred
by Seller to Boeing prior to the effective date of this letter.
SWA-AGTA October 28, 2011
Appendix III Page A-11
Appendix III
SAMPLE
Post-Delivery Sale Notice
We request that Boeing acknowledge receipt of this letter and confirm the transfer of rights set forth above by signing
the acknowledgment and forwarding one copy of this letter to each of the undersigned.
Very truly yours,
Southwest Airlines Co. Purchaser
By By
Its Its
Dated Dated
Receipt of the above letter is acknowledged and the assignment of rights under the Purchase Agreement with
respect to the Aircraft described above is confirmed, effective as of this date.
THE BOEING COMPANY
By _________________________
Its Attorney-in-Fact
Dated _______________________
Aircraft Manufacturer’s Serial Number ____________________
SWA-AGTA October 28, 2011
Appendix III Page A-12
Appendix IV
SAMPLE
Post-Delivery Lease Notice
Boeing Commercial Airplanes
P.O. Box 3707
Seattle, Washington 98124-2207
U.S.A.
By Courier
1901 Oakesdale Ave. SW
Renton, WA 98055
U.S.A.
Attention: Vice President - Contracts
Mail Code 21-34
In connection with the lease by Southwest Airlines Co. (Lessor) to ____________________ (Lessee) of the aircraft
identified below, reference is made to Purchase Agreement No. __________ dated as of __________, 20_____, between
The Boeing Company (Boeing) and Lessor (Purchase Agreement) under which Lessor purchased certain Boeing
Model _____ aircraft, including the aircraft bearing Manufacturer’s Serial No.(s) ____________________ (Aircraft). The
Purchase Agreement incorporated by reference Aircraft General Terms Agreement SWA-AGTA (AGTA).
Capitalized terms used herein without definition will have the same meaning as in the Purchase Agreement.
Lessor has leased the Aircraft, including in that lease the transfer to Lessee of all remaining rights related to the
Aircraft under the Purchase Agreement. To accomplish this transfer of rights, as authorized by the provisions of the
Purchase Agreement:
1. Lessor authorizes Lessee to exercise, to the exclusion of Lessor, all rights and powers of Lessor with respect to the
remaining rights related to the Aircraft under the Purchase Agreement. This authorization will continue until Boeing receives
written notice from Lessor to the contrary, addressed to Vice President – Contracts, Mail Code 21-34, Boeing Commercial
Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207. Until Boeing receives such notice, Boeing is entitled to deal
exclusively with Lessee with respect to the Aircraft under the Purchase Agreement. With respect to the rights and
obligations of Lessor under the Purchase Agreement, all actions taken or agreements entered into by Lessee during the
period prior to Boeing’s receipt of this notice are final and binding on Lessor. Further, any payments made by Boeing as a
result of claims made by Lessee will be made to the credit of Lessee.
SWA-AGTA October 28, 2011
Appendix IV Page A-13
Appendix IV
SAMPLE
Post-Delivery Lease Notice
2. Lessee accepts the authorization above, acknowledges it has reviewed those provisions of the Purchase Agreement
related to the authority granted and agrees to be bound by and comply with all applicable terms and conditions of the
Purchase Agreement including, without limitation, the DISCLAIMER AND RELEASE and EXCLUSION OF
CONSEQUENTIAL AND OTHER DAMAGES in Article 11 of Part 2 of Exhibit C of the AGTA and the insurance provisions
in Article 8.2 of the AGTA. Lessee further agrees, upon the written request of Boeing, to promptly execute and deliver such
further assurances and documents and take such further action as Boeing may reasonably request in order to obtain the full
benefits of Lessee’s agreements in this paragraph.
3. Lessor will remain responsible for any payments due Boeing as a result of obligations relating to the Aircraft incurred
by Lessor to Boeing prior to the effective date of this letter.
We request that Boeing acknowledges receipt of this letter and confirm the transfer of rights set forth above by
signing the acknowledgment and forwarding one copy of this letter to each of the undersigned.
Very truly yours,
Southwest Airlines Co. Lessee
By By
Its Its
Dated Dated
Receipt of the above letter is acknowledged and transfer of rights under the Purchase Agreement with respect to the
Aircraft described above is confirmed, effective as of this date.
THE BOEING COMPANY
By ________________________
Its Attorney-in-Fact
Dated ______________________
Aircraft Manufacturer’s Serial Number ____________________
SWA-AGTA October 28, 2011
Appendix IV Page A-14
Appendix V
SAMPLE
Purchaser’s/Lessee’s Agreement
Boeing Commercial Airplanes
P. O. Box 3707
Seattle, Washington 98124-2207
U.S.A.
By Courier
1901 Oakesdale Ave. SW
Renton, WA 98055
U.S.A.
Attention Vice President – Contracts
Mail Code 21-34
In connection with the sale/lease by Southwest Airlines Co. (//Seller/Lessor//) to ____________________
(//Purchaser/Lessee//) of the aircraft identified below, reference is made to the following documents:
(i) Purchase Agreement No. _____ dated as of __________, 20_____, between The Boeing
Company (Boeing) and //Seller/Lessor// (Purchase Agreement) under which
//Seller/Lessor// purchased certain Boeing Model _____ aircraft, including the aircraft
bearing Manufacturer’s Serial No.(s) ____________________ (Aircraft); and
(ii) Aircraft //Sale/Lease// Agreement dated as of __________, 20_____, between
Seller/Lessor and //Purchaser/Lessee// (Aircraft Agreement) under which
//Seller/Lessor// is //selling/leasing// the Aircraft.
Capitalized terms used herein without definition will have the same meaning as in the Purchase Agreement.
1. //Seller/Lessor// has sold/leased the Aircraft under the Aircraft Agreement, including therein a form of exculpatory
clause protecting //Seller/Lessor// from liability for loss of or damage to the aircraft, and/or related incidental or
consequential damages, including without limitation loss of use, revenue or profit.
2. Disclaimer and Release; Exclusion of Consequential and Other Damages.
2.1. In accordance with //Seller/Lessor// obligation under Article 9.5 of the AGTA which was incorporated by
reference into the Purchase Agreement, Purchaser/Lessee hereby agrees that:
SWA-AGTA October 28, 2011
Appendix V Page A-15
Appendix V
SAMPLE
Purchaser’s/Lessee’s Agreement
2.2. DISCLAIMER AND RELEASE. IN CONSIDERATION OF THE SALE/LEASE OF THE AIRCRAFT,
PURCHASER/LESSEE HEREBY WAIVES, RELEASES AND RENOUNCES ALL WARRANTIES, OBLIGATIONS AND
LIABILITIES OF BOEING AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF PURCHASER/LESSEE AGAINST
BOEING, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY NONCONFORMANCE
OR DEFECT IN ANY AIRCRAFT, BOEING PRODUCT, MATERIALS, TRAINING, SERVICES OR OTHER THING
PROVIDED UNDER THE AIRCRAFT AGREEMENT, INCLUDING, BUT NOT LIMITED TO:
(i) ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;
(ii) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE
OF DEALING OR USAGE OF TRADE;
(iii) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR
NOT ARISING FROM THE NEGLIGENCE OF BOEING; AND
(iv) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR
DAMAGE TO ANY AIRCRAFT.
2.3. EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES. BOEING WILL HAVE NO OBLIGATION OR
LIABILITY, WHETHER ARISING IN CONTRACT (INCLUDING WARRANTY), TORT, WHETHER OR NOT ARISING
FROM THE NEGLIGENCE OF BOEING, OR OTHERWISE, FOR LOSS OF USE, REVENUE OR PROFIT, OR FOR ANY
OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY NONCONFORMANCE OR DEFECT
IN ANY AIRCRAFT, MATERIALS, TRAINING, SERVICES OR OTHER THING PROVIDED UNDER THE AIRCRAFT
AGREEMENT.
2.4. Definitions. For the purpose of this paragraph 2, BOEING or Boeing is defined as The Boeing Company, its
divisions, subsidiaries, affiliates, the assignees of each, and their respective directors, officers, employees and agents.
SWA-AGTA October 28, 2011
Appendix V Page A-16
Appendix V
SAMPLE
Purchaser’s/Lessee’s Agreement
Very truly yours,
Southwest Airlines Co. //Purchaser/Lessee//
By By
Its Its
Dated Dated
SWA-AGTA October 28, 2011
Appendix V Page A-17
Appendix VI
SAMPLE
Post-Delivery Owner Appointment of Agent - Warranties
Boeing Commercial Airplanes
P. O. Box 3707
Seattle, Washington 98124-2207
U.S.A.
By Courier
1901 Oakesdale Ave. SW
Renton, WA 98055
U.S.A.
Attention Vice President – Contracts
Mail Code 21-34
Reference is made to Purchase Agreement No. _____ dated as of __________, 20__ (Purchase Agreement),
between The Boeing Company (Boeing) and Southwest Airlines Co. (Customer), under which Customer purchased
certain Boeing Model __________ aircraft including the aircraft bearing Manufacturer's Serial No(s) _______________
(Aircraft). The Purchase Agreement incorporated by reference Aircraft General Terms Agreement SWA-AGTA (AGTA).
Capitalized terms used herein without definition will have the same meaning as in the Purchase Agreement.
To accomplish the appointment of an agent, Customer confirms:
1. Customer has appointed _________________________ as agent (Agent) to act directly with Boeing with respect to
the remaining warranties under the Purchase Agreement and requests Boeing to treat Agent as Customer for the
administration of claims with respect to such warranties; provided however, Customer remains liable to Boeing to perform
the obligations of Customer under the Purchase Agreement.
2. Boeing may continue to deal exclusively with Agent concerning the matters described herein unless and until Boeing
receives written notice from Customer to the contrary, addressed to Vice President - Contracts, Mail Code 21-34, Boeing
Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207, U.S.A. With respect to the rights and obligations
of Customer under the Purchase Agreement, all actions taken by Agent or agreements entered into by Agent during the
period prior to Boeing's receipt of such notice are final and binding on Customer. Further, any payments made by Boeing as
a result of claims made by Agent will be made to the credit of Agent unless otherwise specified when each claim is
submitted.
3. Customer will remain responsible for any payments due Boeing as a result of obligations relating to the Aircraft
incurred by Customer to Boeing prior to the effective date of this letter.
SWA-AGTA October 28, 2011
Appendix VI Page A-18
Appendix VI
SAMPLE
Post-Delivery Owner Appointment of Agent - Warranties
We request that Boeing acknowledge receipt of this letter and confirm the appointment of Agent as stated above by
signing the acknowledgment and forwarding one copy of this letter to each of the undersigned.
Very truly yours,
Southwest Airlines Co.
By _______________________
Its _______________________
Dated ____________________
By
Its
Dated
SWA-AGTA October 28, 2011
Appendix VI Page A-19
Appendix VI
SAMPLE
Post-Delivery Owner Appointment of Agent - Warranties
AGENT'S AGREEMENT
Agent accepts the appointment as stated above, acknowledges it has reviewed the those portions of the Purchase
Agreement related to the authority granted it under the Purchase Agreement and agrees that, in exercising any rights or
making any claims thereunder, Agent will be bound by and comply with all applicable terms and conditions of the Purchase
Agreement including, without limitation, the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND
OTHER DAMAGES in Article 11 of Part 2 of Exhibit C to the AGTA. Agent further agrees, upon the written request of
Boeing, to promptly execute and deliver such further assurances and documents and take such further action as Boeing
may reasonably request in order to obtain the full benefits of the warranties under the Purchase Agreement.
Very truly yours,
Southwest Airlines Co.
Agent
By _______________________
Its _______________________
Dated ____________________
Receipt of the above letter is acknowledged and the appointment of Agent with respect to the above-described rights
under the Purchase Agreement is confirmed, effective as of this date.
THE BOEING COMPANY
By _______________________
Its _______________________
Dated ____________________
Aircraft Manufacturer’s Serial Number __________
SWA-AGTA October 28, 2011
Appendix VI Page A-20
Appendix VII
SAMPLE
Contractor Confidentiality Agreement
Boeing Commercial Airplanes
P. O. Box 3707
Seattle, Washington 98124-2207
U.S.A.
By Courier
1901 Oakesdale Ave. SW
Renton, WA 98055
U.S.A.
Attention Vice President – Contracts
Mail Code 21-34
This agreement (Agreement) is entered into between _________________________ (Contractor) and Southwest
Airlines Co. (Customer) and will be effective as of the date set forth below.
In connection with Customer’s provision to Contractor of certain Materials, Proprietary Materials and Proprietary
Information; reference is made to Purchase Agreement No. _____ dated as of __________ between The Boeing Company
(Boeing) and Customer (Purchase Agreement), which incorporates by this reference SWA-AGTA.
Capitalized terms used herein without definition will have the same meaning as in the Purchase Agreement.
Boeing has agreed to permit Customer to make certain Materials, Proprietary Materials and Proprietary Information
relating to Customer's Boeing Model _____ aircraft, Manufacturer’s Serial Number _______________, Registration
No. __________ (Aircraft) available to Contractor in connection with Customer's contract with Contractor to
maintain/repair/modify the Aircraft (Contract). In consideration of the Contract, and as a condition of receiving the
Proprietary Materials and Proprietary Information, Contractor agrees as follows:
1. For purposes of this Agreement:
Aircraft Software means software intended to fly with and be utilized in the operation of an Aircraft, but excludes
software furnished by Customer.
Materials means any and all items that are created by Boeing or a Third Party, are provided directly or indirectly to
Contractor from Boeing or from Customer, and serve primarily to contain, convey or embody information. Materials may
include either tangible forms (for example, documents or drawings) or intangible embodiments (for example, software and
other electronic forms) of information, but excludes Aircraft Software and software furnished by Customer.
SWA-AGTA October 28, 2011
Appendix VII Page A-21
Appendix VII
SAMPLE
Contractor Confidentiality Agreement
Proprietary Information means any and all proprietary, confidential and/or trade secret information owned by
Boeing or a Third Party which is contained, conveyed or embodied in Materials.
Proprietary Materials means Materials that contain, convey, or embody Proprietary Information.
Third Party means anyone other than Boeing, Customer and Contractor.
2. Boeing has authorized Customer to grant to Contractor a worldwide, non-exclusive, personal and nontransferable
license to use Proprietary Materials and Proprietary Information, owned by Boeing, internally in connection with
performance of the Contract or as may otherwise be authorized by Boeing in writing. Contractor will keep confidential and
protect from disclosure to any person, entity or government agency, including any person or entity affiliated with Contractor,
all Proprietary Materials and Proprietary Information. Individual copies of all Materials and Aircraft Software are provided to
Contractor subject to copyrights therein, and all such copyrights are retained by Boeing or, in some cases, by Third Parties.
Contractor is authorized to make copies of Materials (except for Materials bearing the copyright legend of a Third Party)
provided, however, Contractor preserves the restrictive legends and proprietary notices on all copies. All copies of
Proprietary Materials will belong to Boeing and be treated as Proprietary Materials under this Agreement.
3. Contractor specifically agrees not to use Proprietary Materials or Proprietary Information in connection with the
manufacture or sale of any part or design. Unless otherwise agreed with Boeing in writing, Proprietary Materials and
Proprietary Information may be used by Contractor only for work on the Aircraft for which such Proprietary Materials have
been specified by Boeing. Customer and Contractor recognize and agree that they are responsible for ascertaining and
ensuring that all Materials are appropriate for the use to which they are put.
4. Contractor will not attempt to gain access to information by reverse engineering, decompiling, or disassembling any
portion of any software or Aircraft Software provided to Contractor pursuant to this Agreement.
5. Upon Boeing's request at any time, Contractor will promptly return to Boeing (or, at Boeing's option, destroy) all
Proprietary Materials, together with all copies thereof and will certify to Boeing that all such Proprietary Materials and copies
have been so returned or destroyed.
SWA-AGTA October 28, 2011
Appendix VII Page A-22
Appendix VII
SAMPLE
Contractor Confidentiality Agreement
6. When and to the extent required by a government regulatory agency having jurisdiction over Contractor, Customer or
the Aircraft, Contractor is authorized to provide Proprietary Materials and disclose Proprietary Information to the agency for
the agency's use in connection with Contractor’s authorized use of such Proprietary Materials and/or Proprietary
Information in connection with Contractor’s maintenance, repair, or modification of the Aircraft. Contractor agrees to take
reasonable steps to prevent such agency from making any distribution or disclosure, or additional use of the Proprietary
Materials and Proprietary Information so provided or disclosed. Contractor further agrees to promptly notify Boeing upon
learning of any (i) distribution, disclosure, or additional use by such agency, (ii) request to such agency for distribution,
disclosure, or additional use, or (iii) intention on the part of such agency to distribute, disclose, or make additional use of the
Proprietary Materials or Proprietary Information.
7. Boeing is an intended third party beneficiary under this Agreement, and Boeing may enforce any and all of the
provisions of the Agreement directly against Contractor. Contractor hereby submits to the jurisdiction of the Washington
state courts and the United States District Court for the Western District of Washington with regard to any Boeing claims
under this Agreement. It is agreed that Washington law (excluding Washington's conflict-of-law rules) will apply to this
Agreement and to any claim or dispute under this Agreement.
8. No disclosure or physical transfer by Boeing or Customer to Contractor, of any Proprietary Materials or Proprietary
Information covered by this Agreement will be construed as granting a license, other than as expressly set forth in this
Agreement or any ownership right in any patent, patent application, copyright or proprietary information.
9. The provisions of this Agreement will apply notwithstanding any markings or legends, or the absence thereof, on any
Proprietary Materials.
10. This Agreement is the entire agreement of the parties regarding the ownership and treatment of Proprietary Materials
and Proprietary Information, and no modification of this Agreement will be effective as against Boeing unless embodied in
writing and signed by authorized representatives of Contractor, Customer and Boeing.
11. Failure by either party to enforce any of the provisions of this Agreement will not be construed as a waiver of such
provisions. If any of the provisions of this Agreement are held unlawful or otherwise ineffective by a court of competent
jurisdiction, the remainder of the Agreement will remain in full force.
12. The obligations of Customer and Contractor relating to Proprietary Materials and Proprietary Information under this
Agreement will remain in effect and will survive cancellation or termination of this Agreement.
SWA-AGTA October 28, 2011
Appendix VII Page A-23
Appendix VII
SAMPLE
Contractor Confidentiality Agreement
AGREED AND ACCEPTED this
Date: ____________________
Contractor Southwest Airlines Co.
Signature ___________________
Printed Name ________________
Title _______________________
Signature ____________________
Printed Name _________________
Title _________________________
SWA-AGTA October 28, 2011
Appendix VII Page A-24
Appendix VIII
SAMPLE
Post-Delivery Sale with Lease to Seller
[Notice from Owner/Seller and subsequent Buyer regarding post-delivery sale and lease back of an aircraft and
transfer of all remaining Purchase Agreement rights.]
Boeing Commercial Airplanes
P. O. Box 3707
Seattle, Washington 98124-2207
U.S.A.
By Courier
1901 Oakesdale Ave. SW
Renton, WA 98055
U.S.A.
Attention Vice President – Contracts
Mail Code 21-34
In connection with ________________'s (Seller's) sale to and lease back from ________________ (Buyer) of the
aircraft identified below, reference is made to the following documents:
1. Purchase Agreement No. _______ dated as of _________________, between The Boeing Company (Boeing) and
Seller (Agreement) under which Seller purchased certain Boeing Model _____________ aircraft, including the aircraft
bearing Manufacturer's Serial No.(s) _________(Aircraft). The Agreement incorporates by reference the terms of SWA-
AGTA dated __________ ___, between Seller and Boeing.
2. Aircraft Sale Agreement dated as of ___________________, between Seller and
___________________________________ (Buyer).
3. Aircraft Lease Agreement dated as of ___________________, between Buyer and Seller.
Capitalized terms used herein without definition will have the same meaning as in the Agreement.
Seller confirms for the benefit of Boeing it owns and controls the rights it purports to assign herein.
Seller has sold the Aircraft, including in that sale the transfer to Buyer of all remaining rights related to the Aircraft
under the Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Agreement:
SWA-AGTA October 28, 2011
Appendix VIII Page A-25
Appendix VIII
SAMPLE
Post-Delivery Sale with Lease to Seller
1. Buyer acknowledges it has reviewed the Agreement and agrees that in exercising any rights under the Agreement or
asserting any claims with respect to the Aircraft or other things (including without limitation, Materials, training and services)
delivered or to be delivered, it is bound by and will comply with all applicable terms, conditions, and limitations of the
Agreement including but not limited to those related to any exclusion or limitation of liabilities or warranties, indemnity and
insurance; and
2. Buyer authorizes Seller to exercise, to the exclusion of Buyer all rights and powers of “Customer” with respect to the
remaining rights related to the Aircraft under the Agreement. This authorization will continue until Boeing receives written
notice from Buyer to the contrary, addressed to Vice President - Contracts, Mail Code 21-34, Boeing Commercial Airplanes,
P.O. Box 3707, Seattle, Washington 981242207 (if by mail) or (425) 237-1706 (if by facsimile). Until Boeing receives this
notice, Boeing is entitled to deal exclusively with Seller as “Customer” with respect to the Aircraft under the Agreement.
With respect to the rights, powers, duties and obligations of “Customer” under the Agreement, all actions taken by Seller or
agreements entered into by Seller during the period prior to Boeing's receipt of that notice are final and binding on Buyer.
Further, any payments made by Boeing as a result of claims made by Seller prior to receipt of such notice are to be made
to the credit of Seller.
3. Seller accepts the authorization set forth in paragraph 2 above, acknowledges it has reviewed the Agreement and
agrees that in exercising any rights under the Agreement or asserting any claims with respect to the Aircraft or other things
(including without limitation, Materials, training and services) delivered or to be delivered, it is bound by and will comply with
all applicable terms, conditions, and limitations of the Agreement including but not limited to those relating to any exclusion
or limitation of liabilities or warranties, indemnity and insurance.
4. Seller agrees to remain responsible for any payments due Boeing as a result of obligations relating to the Aircraft
incurred by Seller to Boeing prior to the effective date of this letter.
We request that Boeing acknowledge receipt of this letter and confirm the transfer of rights set forth above by signing
the acknowledgment and forwarding one copy of this letter to each of the undersigned.
SWA-AGTA October 28, 2011
Appendix VIII Page A-26
Appendix VIII
SAMPLE
Post-Delivery Sale with Lease to Seller
Very truly yours,
Seller Buyer
By By
Its Its
Dated Dated
Receipt of the above letter is acknowledged and transfer of rights under the Agreement with respect to the Aircraft
described above is confirmed, effective as of the date indicated below.
THE BOEING COMPANY
By _________________________
Its Attorney-in-Fact
Dated _______________________
SWA-AGTA October 28, 2011
Appendix VIII Page A-27
Appendix IX
SAMPLE
SALE WITH LEASE
[NOTE: From 1 tier Owner/Seller and subsequent Buyer regarding post-delivery sale and lease of an aircraft.
Remaining PA rights have been assigned to the new owner; the new owner authorizes a lessee to exercise such
rights during the term of a lease. ]
Boeing Commercial Airplanes
P. O. Box 3707
Seattle, Washington 98124-2207
U.S.A.
By Courier
1901 Oakesdale Ave. SW
Renton, WA 98055
U.S.A.
Attention Vice President – Contracts
Mail Code 21-34
In connection with the sale by ___________________ (Seller) to ___________________ (Purchaser) and
subsequent lease of the aircraft identified below, reference is made to the following documents:
1. Purchase Agreement No. ______ dated as of __________, _____, between The Boeing Company (Boeing) and
Seller (Agreement) under which Seller purchased certain Boeing Model _________ aircraft, including the aircraft bearing
Manufacturer's Serial No(s). ____________ (Aircraft).
2. Aircraft sale agreement dated as of __________, between Seller and Purchaser.
3. Aircraft lease agreement dated as of __________, between Purchaser and _________ (Lessee)(Lease).
Capitalized terms used herein without definition will have the same meaning as in the Agreement.
Seller has sold the Aircraft, including in that sale the assignment to Purchaser of all remaining rights related to the
Aircraft under the Agreement. To accomplish this transfer of rights, as authorized by the provisions of the Agreement:
3.1. Seller confirms for the benefit of the Manufacturer it owns and controls the rights it purports to have assigned.
st
SWA-AGTA October 28, 2011
Appendix IX Page A-28
Appendix IX
SAMPLE
SALE WITH LEASE
3.2. Purchaser agrees that in exercising any rights under the Agreement or asserting any claims with respect to
the Aircraft or other things (including without limitation, [data and documents/Materials], training and services) delivered or
to be delivered, it is bound by and will comply with all applicable terms, conditions, and limitations of the Agreement
including but not limited to those related to any exclusion or limitation of liabilities or warranties, indemnity and insurance;
and
3.3. Seller will remain responsible for any payment due Boeing as a result of obligations relating to the Aircraft
incurred by Seller to Boeing prior to the effective date of this letter.
3.4. Purchaser authorizes Lessee during the term of the Lease to exercise, to the exclusion of Purchaser all rights
and powers of Buyer/Customer with respect to the remaining rights related to the Aircraft under the Agreement. This
authorization will continue until Boeing receives written notice from Purchaser to the contrary, addressed to Vice President -
Contracts, Mail Code 21-34, Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 981242207 (if by mail) or
(425)237-1706 (if by facsimile). Until Boeing receives this notice, Boeing is entitled to deal exclusively with Lessee as
Buyer/Customer with respect to the Aircraft under the Agreement. With respect to the rights, powers, duties and obligations
of Buyer/Customer under the Agreement, all actions taken by Lessee or agreements entered into by Lessee during the
period prior to Boeing's receipt of that notice are final and binding on Purchaser. Further, any payments made by Boeing as
a result of claims made by Lessee prior to receipt of this notice are to be made to the credit of Lessee.
3.5. Lessee accepts the authorization set forth in paragraph 3 above, acknowledges it has reviewed the
Agreement and agrees that in exercising any rights under the Agreement or asserting any claims with respect to the Aircraft
or other things (including without limitation, data and documents/Materials, training and services) delivered or to be
delivered, it is bound by and will comply with all applicable terms, conditions, and limitations of the Agreement including but
not limited to those related to any exclusion or limitation of liabilities or warranties, indemnity and insurance.
We request that Boeing acknowledge receipt of this letter and confirm the transfer of rights set forth above by signing
the acknowledgment and forwarding one copy of this letter to each of the undersigned.
SWA-AGTA October 28, 2011
Appendix IX Page A-29
Appendix IX
SAMPLE
SALE WITH LEASE
Very truly yours,
Seller Purchaser
By By
Its Its
Dated Dated
__________________(Lessee)
By _______________________
Its _______________________
Dated ____________________
SWA-AGTA October 28, 2011
Appendix IX Page A-30
Appendix IX
SAMPLE
SALE WITH LEASE
Receipt of the above letter is acknowledged and the transfers of rights under the Agreement with respect to the
Aircraft described above are confirmed, effective as of the date indicated below.
THE BOEING COMPANY
By _________________________
Its Attorney-in-Fact
Dated _______________________
MSN_______________________
SWA-AGTA October 28, 2011
Appendix IX Page A-31
Appendix X
SAMPLE
Post-Delivery Security
Boeing Commercial Airplanes
P. O. Box 3707
Seattle, Washington 98124-2207
U.S.A.
By Courier
1901 Oakesdale Ave. SW
Renton, WA 98055
U.S.A.
Attention Vice President – Contracts
Mail Code 21-34
Reference is made to Purchase Agreement No. ________ dated as of _______________, (Agreement) between
The Boeing Company (Boeing) and __________________________ (Borrower) pursuant to which Borrower purchased
from Boeing one (1) Boeing model _______ aircraft bearing Manufacturer’s Serial Number _______(Aircraft). The
Agreement incorporates by reference the terms of Aircraft General Terms Agreement SWA-AGTA (AGTA), dated
________, between Borrower and Boeing.
Capitalized terms used herein without definition will have the same meanings as in the Agreement.
Borrower confirms for the benefit of Boeing it owns and controls the rights it purports to assign herein.
In connection with Borrower’s financing of the Aircraft, Borrower is entering into a Trust Indenture/Mortgage, dated
as of ___________, between Borrower and Indenture Trustee/Mortgagee (Trust Indenture/Mortgage), which grants a
security interest in [the warranty rights/ all of its rights] contained in the Agreement related to the Aircraft (Assigned
Rights). Borrower is authorized to exercise the Assigned Rights until such time as the Indenture Trustee/Mortgagee notifies
Boeing as provided below that an Event of Default under the Trust Indenture/Mortgage has occurred and is continuing. In
connection with this assignment for security purposes, as authorized by the provisions of the Agreement:
SWA-AGTA October 28, 2011
Appendix X Page A-32
Appendix X
SAMPLE
Post-Delivery Security
1. Indenture Trustee/Mortgagee, as assignee of, and holder of a security interest in, the estate, right, and interest of the
Borrower in and to the Agreement pursuant to the terms of a certain Trust Indenture/Mortgage, acknowledges that it has
received copies of the applicable provisions of the Agreement and agrees that in exercising any rights under the Agreement
or asserting any claims with respect to the Aircraft or other things (including without limitation, Materials, training and
services) delivered or to be delivered, its rights and remedies under the Trust Indenture/Mortgage shall be subject to the
terms and conditions of the Agreement including but not limited to those related to any exclusion or limitation of liabilities or
warranties, indemnity and insurance.
2. Borrower is authorized to exercise, to the exclusion of [Indenture Trustee/Mortgagee] all rights and powers of
“Customer” under the Agreement, unless and until Boeing receives a written notice from Indenture Trustee/Mortgagee,
addressed to its Vice President - Contracts, Boeing Commercial Airplanes at P.O. Box 3707, Seattle, Washington 98124,
Mail Code 21-34 (if by mail), or (425) 237-1706 (if by facsimile) that an event of default under the Trust Indenture/Mortgage
has occurred and is continuing. Until such notice has been given, Boeing will be entitled to deal solely and exclusively with
Borrower. Thereafter, until Indenture Trustee/Mortgagee has provided Boeing written notice that any such event no longer
continues, Boeing will be entitled to deal solely and exclusively with Indenture Trustee/Mortgagee. Boeing may act with
acquittance and conclusively rely on any such notice.
Borrower will remain responsible to Boeing for any amounts due Boeing with respect to the Aircraft under the
Agreement prior to Boeing’s receipt of such notice. We request that Boeing acknowledge receipt of this letter and confirm
the transfer of rights set forth above by signing its acknowledgment and forwarding one copy of this letter to each of the
undersigned.
Very truly yours,
Indenture Trustee/Mortgagee
By _______________________
Its _______________________
Dated ____________________
By ______________________
Its ______________________
Dated ___________________
By By
Its Its
Dated Dated
SWA-AGTA October 28, 2011
Appendix X Page A-33
Appendix X
SAMPLE
Post-Delivery Security
Receipt of the above letter is acknowledged and the transfer of rights under the Agreement with respect to the
Aircraft described above is confirmed, effective as of the date indicated below.
THE BOEING COMPANY
By _________________________
Its Attorney-in-Fact
Dated _______________________
MSN_______________________
SWA-AGTA October 28, 2011
Appendix X Page A-34
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
6-1162-CAF-0390
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement Nos. 1810 and 3729 between The Boeing Company (Boeing) and Southwest Airlines
Co. (Customer) relating to Model 737-700, -800 and 737-7/8/9 aircraft (Purchase Agreements)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreements. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreements.
[***]
6-1162-CAF-0390
[***] Page 1
BOEING PROPRIETARY
Customer understands that certain information contained in this Letter Agreement is considered by Boeing as
confidential and has value precisely because it is not available generally to other parties. Customer agrees to limit the
disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b) employees of Customer with a need
to know the
contents for performing its obligations specifically relating to this Letter Agreement and who understand they are not to
disclose its contents to any other person or entity without the prior written consent of Boeing and (c) attorneys of Customer
who have a need to know such information and have signed a confidentiality agreement in the same form and substance
similar to this clause, or are otherwise bound by a confidentiality obligation. Disclosure to other parties is not permitted
without Boeing’s consent except as may be required by applicable law or governmental regulations. Customer shall be fully
responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Cheri A Fischer
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 13 , 2011
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its EVP & Chief Operating Officer
6-1162-CAF-0390
[***] Page 2
BOEING PROPRIETARY
SUPPLEMENTAL AGREEMENT NO. 1
to
Purchase Agreement No. 3729
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Relating to Boeing Model 737-8 Aircraft
THIS SUPPLEMENTAL AGREEMENT, entered into as of May 13, 2013, is made between THE BOEING COMPANY, a
Delaware corporation (Boeing), and SOUTHWEST AIRLINES CO. a Texas corporation (Customer);
Customer and Boeing entered into Purchase Agreement Number PA-03729 dated December 13, 2011 as amended and
supplemented (Purchase Agreement), relating to the purchase and sale of Boeing Model 737-8 aircraft; and this
Supplemental Agreement No. 1 is an amendment to and is incorporated into the Purchase Agreement:
WHEREAS, Customer and Boeing desire to amend the Purchase Agreement to i) add reference to letter agreement
number SWA-PA-03729-LA-1209080, [***], which was previously executed on July 8, 2012; ii) revise certain terms of letter
agreement number SWA-PA-03729-LA-1106481, [***]; and iii) add letter agreement number SWA-PA-03729-LA-1210419,
[***];
NOW, THEREFORE, the parties agree that the Purchase Agreement is amended as set forth below and otherwise agree
as follows:
1. The Table of Contents is deleted in its entirety and a new Table of Contents is attached hereto and incorporated into
the Purchase Agreement by this reference.
2. Letter Agreement SWA-PA-03729-LA-1106481, [***], is deleted in its entirety and replaced with a revised Letter
Agreement SWA-PA-03729-LA-1106481R1, attached hereto and incorporated into the Purchase Agreement by this
reference.
3. To document its previous execution and as an administrative matter, Letter Agreement SWA-PA-03729-LA-1209080,
[***] and dated July 8, 2012 is hereby added and, by this reference, is incorporated into the Purchase Agreement.
SWA-PA-3729 1 SA-1
BOEING PROPRIETARY
4. Letter Agreement SWA-PA-03729-LA-1210419, [***], is hereby added and, by this reference, is incorporated into the
Purchase Agreement.
5. The Purchase Agreement is amended as set forth above, and all other terms and conditions of the Purchase
Agreement remain unchanged and are in full force and effect.
6. This Supplemental Agreement must be executed by Boeing and Customer on or before May 15, 2012.
AGREED AND ACCEPTED this
May 13, 2013
Date
THE BOEING COMPANY SOUTHWEST AIRLINES CO.
/s/ Jeff Solomon /s/ Michael Van de Ven
Signature Signature
Jeffery J. Solomon Michael Van de Ven
Printed name Printed name
Attorney-in-Fact Executive Vice President
Title Title
SWA-PA-3729 2 SA-1
BOEING PROPRIETARY
TABLE OF CONTENTS
ARTICLES TITLES
Article 1 Quantity, Model and Description
Article 2 Delivery Schedule
Article 3 Price
Article 4 Payment
Article 5 Additional Terms
TABLE TITLE
1 Aircraft Information Table
EXHIBIT
A Aircraft Configuration
B Aircraft Delivery Requirements and Responsibilities
SUPPLEMENTAL EXHIBITS TITLES
AE1
Escalation Adjustment/Airframe and Optional Features
BFE1 BFE Variables
CS1 Customer Support Variables
EE1
Engine Escalation/Engine Warranty and Patent Indemnity
SLP1 Service Life Policy Components
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106463 Open Matters
SWA-PA-03729-LA-1106464 [***]
SWA-PA-03729-LA-1106465 [***]
SWA-PA-03729-LA-1106466 [***]
SWA-PA-3729 Page 1
SA-1
BOEING PROPRIETARY
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106467 [***]
SWA-PA-03729-LA-1106468 [***]
SWA-PA-03729-LA-1106469 [***]
SWA-PA-03729-LA-1106470 [***]
SWA-PA-03729-LA-1106471 Substitute Aircraft
SWA-PA-03729-LA-1106472 [***]
SWA-PA-03729-LA-1106473 [***]
SWA-PA-03729-LA-1106474 Option Aircraft
SWA-PA-03729-LA-1106475 [***]
SWA-PA-03729-LA-1106476 [***]
SWA-PA-03729-LA-1106477 [***]
SWA-PA-03729-LA-1106478 [***]
SWA-PA-03729-LA-1106479 [***]
SWA-PA-03729-LA-1106480 [***]
SWA-PA-03729-LA-1106481R1
[***] SA-1
SWA-PA-03729-LA-1106482 [***]
SWA-PA-03729-LA-1106483 [***]
SWA-PA-03729-LA-1106484 [***]
SWA-PA-03729-LA-1106485 [***]
SWA-PA-03729-LA-1209080 [***] SA-1
SWA-PA-03729-LA-1210419 [***] SA-1
SWA-PA-3729 Page 2
SA-1
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106481R1
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
2. [***]
3. [***]
SWA-PA-03729-LA-1106481R1
[***] Page 1
BOEING PROPRIETARY
4. [***]
5. [***]
6. [***]
7. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in
SWA-PA-03729-LA-1106481R1
[***] Page 2
BOEING PROPRIETARY
consideration of Customer’s becoming the operator of the Aircraft and cannot be assigned in whole or, in part.
8. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Jeff Solomon
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 13, 2013
SOUTHWEST AIRLINES CO.
By Michael Van de Ven
Its Executive Vice President
SWA-PA-03729-LA-1106481R1
[***] Page 3
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1209080
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference:
Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
2. Assignment.
This Letter Agreement cannot be assigned, in whole or in part, without the prior written consent of Boeing.
3. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees
SWA-PA-03729-LA-1209080
[***] Page 1
BOEING PROPRIETARY
to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b) employees of Customer
with a need to know the contents for performing its obligations (including, without limitation, those employees performing
accounting, finance, administration and other functions necessary to finance and purchase, deliver or lease the Aircraft) and
who understand they are not to disclose its contents to any other person or entity (other than those to whom disclosure is
permitted by this Article) without the prior written consent of Boeing and (c) any auditors and attorneys of Customer who
have a need to know such information and have signed a confidentiality agreement in the same form and substance similar
to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties is not permitted without
Boeing’s consent except as may be required by applicable law or governmental regulations. Customer shall be fully
responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Jeff Solomon
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: July 8, 2012
SOUTHWEST AIRLINES CO.
By
Its
EVP & Chief Operating Officer
SWA-PA-03729-LA-1209080
[***] Page 2
BOEING PROPRIETARY
to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b) employees of Customer
with a need to know the contents for performing its obligations (including, without limitation, those employees performing
accounting, finance, administration and other functions necessary to finance and purchase, deliver or lease the Aircraft) and
who understand they are not to disclose its contents to any other person or entity (other than those to whom disclosure is
permitted by this Article) without the prior written consent of Boeing and (c) any auditors and attorneys of Customer who
have a need to know such information and have signed a confidentiality agreement in the same form and substance similar
to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties is not permitted without
Boeing’s consent except as may be required by applicable law or governmental regulations. Customer shall be fully
responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: , 2012
SOUTHWEST AIRLINES CO.
By /s/ Laura Wright
Its
SWA-PA-03729-LA-1209080
[***] Page 2
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1210419
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
2. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be
assigned in whole or, in part.
SWA-PA-03729-LA-1210419
[***] LA Page 1
BOEING PROPRIETARY
3. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Jeff Solomon
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 13, 2013
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its Executive Vice President
SWA-PA-03729-LA-1210419
[***] LA Page 2
BOEING PROPRIETARY
SUPPLEMENTAL AGREEMENT NO. 2
to
Purchase Agreement No. 3729
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Relating to Boeing Model 737-8 and 737-7 Aircraft
THIS SUPPLEMENTAL AGREEMENT, entered into as of May 13, 2013, is made between THE BOEING COMPANY, a
Delaware corporation (Boeing), and SOUTHWEST AIRLINES CO. a Texas corporation (Customer);
Customer and Boeing entered into Purchase Agreement Number PA-03729 dated December 13, 2011 as amended and
supplemented (Purchase Agreement), relating to the purchase and sale of Boeing Model 737-8 aircraft; and this
Supplemental Agreement No. 2 is an amendment to and is incorporated into the Purchase Agreement:
WHEREAS, Boeing and Customer agree to amend the Purchase Agreement to document Customer’s substitution of thirty
(30) firm Model 737-700 aircraft (Substitution Aircraft) to firm Model 737-8 aircraft (New Firm -8 Aircraft), exercised
pursuant to the terms of SA-83 to Purchase Agreement No. 1810 between Customer and Boeing (SA-83);
WHEREAS, Boeing and Customer agree to amend the Purchase Agreement to document Customer’s substitution of forty-
one (41) Model 737-700 option aircraft to Model 737-8 option aircraft (New Option -8 Aircraft), exercised pursuant to the
terms of SA-83;
WHEREAS, Boeing and Customer agree that Customer will be the launch customer for the Model 737-7 aircraft and,
accordingly, Customer elects to exercise its right to substitute thirty (30) firm Model 737-8 aircraft to Model 737-7 aircraft (New Firm
-7 Aircraft) in accordance with Letter Agreement SWA-PA-03729-LA-1106471, “Substitute Aircraft”;
WHEREAS, Boeing and Customer agree to amend the Purchase Agreement to revise the scheduled delivery stream and
identify nominal delivery months for the aircraft;
WHEREAS, Boeing and Customer agree to amend the Purchase Agreement to make certain of its terms applicable to 737-
7 Aircraft;
SWA-PA-03729 1 SA-2
BOEING PROPRIETARY
NOW, THEREFORE, the parties agree that the Purchase Agreement is amended as set forth below and otherwise agree
as follows:
1. The cover page and Table of Contents of the Purchase Agreement are deleted in their entirety and a new cover page
and Table of Contents are attached hereto and incorporated into the Purchase Agreement by this reference, which reflect
the addition of the Model 737-7 aircraft.
2. Article 1 of the Purchase Agreement is deleted in its entirety and a new Article 1 is attached hereto and incorporated
into the Purchase Agreement by this reference, which reflects (i) the addition of Model 737-7 aircraft, (ii) reference to new
Exhibits A1 and A2 and (iii) reference to new Tables 1A and 1B.
3. Article 4 of the Purchase Agreement is deleted in its entirety and a new Article 4 is attached hereto and incorporated
into the Purchase Agreement by this reference, which reflects the addition of Model 737-7 aircraft.
4. Table 1, “Aircraft Delivery, Description, Price and Advance Payments”, to the Purchase Agreement is deleted in its
entirety.
5. Table 1A, “737-8 Aircraft Delivery, Description, Price and Advance Payments”, to the Purchase Agreement is hereby
added and is incorporated into the Purchase Agreement by this reference. Table 1A (i) adds the New Firm -8 Aircraft, (ii)
accelerates the scheduled delivery of certain 2018 and 2019 737-8 Aircraft, (iii) identifies the Nominal Delivery Month for
each 737-8 Aircraft and (iv) designates blocks of 737-8 Aircraft to differentiate applicable business terms.
6. Table 1B, “737-7 Aircraft Delivery, Description, Price and Advance Payments”, to the Purchase Agreement is hereby
added and, by this reference, is incorporated in the Purchase Agreement. Table 1B contains description, price, advance
payment and Nominal Delivery Month information for the 737-7 Aircraft.
7. Exhibit A, “Aircraft Configuration”, to the Purchase Agreement is deleted in its entirety.
8. New Exhibit A1, “737-8 Aircraft Configuration”, is attached hereto and incorporated into the Purchase Agreement by
this reference, containing the aircraft configuration for 737-8 Aircraft.
9. New Exhibit A2, “737-7 Aircraft Configuration”, is attached hereto and incorporated into the Purchase Agreement by
this reference, containing the aircraft configuration for 737-7 Aircraft.
10. New Supplemental Exhibit CS1-7MAX, “Customer Support Variables”, is attached hereto and incorporated into the
Purchase Agreement by this reference, containing the customer support variables applicable to the 737-7 Aircraft.
11. Letter Agreement SWA-PA-03729-LA-1106463, “Open Matters”, is deleted in its entirety and replaced with the
attached revised Letter Agreement SWA-PA-03729-LA-1106463R1, “Open Matters”, which reflects the addition of the
Model 737-7 Aircraft.
12. Letter Agreement SWA-PA-03729-LA-1106469, [***], is deleted in its entirety and replaced with the attached revised
Letter Agreement SWA-PA-03729-LA-1106469R1, [***], which reflects the addition of the Model 737-7 Aircraft.
SWA-PA-03729 2 SA-2
BOEING PROPRIETARY
13. Letter Agreement SWA-PA-03729-LA-1106470, [***], is deleted in its entirety and replaced with the attached revised
Letter Agreement SWA-PA-03729-LA-1106470R1, [***], which reflects the addition of the Model 737-7 aircraft.
14. Letter Agreement SWA-PA-03729-LA-1106471, “Substitute Aircraft”, is deleted in its entirety and replaced with the
attached revised Letter Agreement SWA-PA-03729-LA-1106471R1, “Substitute Aircraft”, which removes language made
superfluous by this Supplemental Agreement.
15. Letter Agreement SWA-PA-03729-LA-1106472, [***], is deleted in its entirety and replaced with the attached revised
Letter Agreement SWA-PA-03729-LA-1106472R1, [***], which revises the quantity of Eligible Aircraft and updates
document references consistent with this Supplemental Agreement.
16. Attachment 1 to Letter Agreement SWA-PA-03729-LA-1106474, “Option Aircraft”, is deleted in its entirety and
replaced with a new Attachment 1 (identified by “SA-2”) attached hereto and incorporated into the Purchase Agreement by
this reference. This new Attachment 1 reflects the addition of the New Option -8 Aircraft and designates a block of Option
Aircraft to differentiate applicable business terms.
17. Letter Agreement SWA-PA-03729-LA-1106479, [***], is deleted in its entirety and replaced with the attached revised
and re-titled Letter Agreement SWA-PA-03729-LA-1106479R1, [***], which reflects the addition of the Model 737-7 Aircraft.
18. Letter Agreement SWA-PA-03729-LA-1106480, [***], is deleted in its entirety and replaced with the attached revised
Letter Agreement SWA-PA-03729-LA-1106480R1, [***], which reflects the addition of the Model 737-7 Aircraft.
19. Letter Agreement SWA-PA-03729-LA-1106481R1, [***] is deleted in its entirety and replaced with the attached
revised Letter Agreement SWA-PA-03729-LA-1106481R2, [***], which reflects the addition of the Model 737-7 aircraft.
20. Attachment A to Letter Agreement SWA-PA-03729-LA-1106484, [***], is deleted in its entirety and replaced with a
new Attachment A, which reflects the revised aircraft delivery stream extending through 2024.
21. Attachment B to Letter Agreement SWA-PA-03729-LA-1106484, [***], is deleted in its entirety and replaced with a
new Attachment B, which reflects the revised aircraft delivery stream extending through 2024.
22. Page 1 or Page 2, as applicable, of each of the following Exhibits, Supplemental Exhibits and Letter Agreements are
hereby deleted and replaced with the attached pages, which include revisions to add reference to 737-7 Aircraft:
EXHIBIT
B Aircraft Delivery Requirements and Responsibilities
SUPPLEMENTAL EXHIBITS
AE1 Escalation Adjustment/Airframe and Optional Features
BFE1 BFE Variables
SWA-PA-03729 3 SA-2
BOEING PROPRIETARY
EE1 Engine Escalation/Engine Warranty and Patent Indemnity
SLP1 Service Life Policy Components
LETTER AGREEMENTS
SWA-PA-03729-LA-1106464 [***]
SWA-PA-03729-LA-1106465 [***]
SWA-PA-03729-LA-1106468 [***]
SWA-PA-03729-LA-1106476 [***]
SWA-PA-03729-LA-1106477 [***]
SWA-PA-03729-LA-1106482 [***]
SWA-PA-03729-LA-1106483 [***]
SWA-PA-03729-LA-1106484 [***]
SWA-PA-03729-LA-1106485 [***]
23. New Letter Agreement SWA-PA-03729-LA-1300943, [***], is attached hereto and, by this reference, incorporated
into the Purchase Agreement, [***]
24. New Letter Agreement SWA-PA-03729-LA-1301168, [***], is attached hereto and, by this reference, incorporated
into the Purchase Agreement, [***].
25. New Letter Agreement SWA-PA-01810/03729-LA-1301169, [***], is attached hereto and, by this reference,
incorporated into the Purchase Agreement, [***].
26. New Letter Agreement SWA-PA-03729-LA-1301170, [***], is attached hereto and, by this reference, incorporated
into the Purchase Agreement, [***]
27. If Customer owes Boeing any additional Advance Payment amounts as a result of the execution of this Supplemental
Agreement, Customer will pay such amounts to Boeing. If as a result of the execution of this Supplemental Agreement,
there is any excess in Advance Payments made by Customer to Boeing, Boeing will retain such excess amounts until the
next Advance Payment is due, at which time Customer may reduce the amount of such Advance Payment by the amount of
such excess. A reconciliation regarding changes in Advance Payments arising from this Supplemental Agreement will be
provided separately to Customer by Boeing.
28. The Purchase Agreement is amended as set forth above, and all other terms and conditions of the Purchase
Agreement remain unchanged and are in full force and effect.
29. This Supplemental Agreement is contingent upon the prior execution of Supplemental Agreement No. 1 to the
Purchase Agreement and must be executed by Boeing and Customer concurrently with Supplemental Agreement No. 83 to
Purchase Agreement No. 1810 on or before May 17, 2013.
SWA-PA-03729 4 SA-2
BOEING PROPRIETARY
AGREED AND ACCEPTED this
May 13, 2013
Date
THE BOEING COMPANY SOUTHWEST AIRLINES CO.
/s/ Jeff Solomon /s/ Michael Van de Ven
Signature Signature
Jeffery J. Solomon Michael Van de Ven
Printed name Printed name
Attorney-in-Fact Executive Vice President
Title Title
SWA-PA-03729 5 SA-2
BOEING PROPRIETARY
PURCHASE AGREEMENT NUMBER PA-03729
between
THE BOEING COMPANY
and
Southwest Airlines Co.
Relating to Boeing Model 737-8 and 737-7 Aircraft
SWA-PA-03729 SA-2
BOEING PROPRIETARY Page 1
TABLE OF CONTENTS
ARTICLES TITLES
Article 1 Quantity, Model and Description SA-2
Article 2 Delivery Schedule
Article 3 Price
Article 4 Payment SA-2
Article 5 Additional Terms
TABLE TITLE
1A 737-8 Aircraft Information Table SA-2
1B 737-7 Aircraft Information Table SA-2
EXHIBIT
A1 737-8 Aircraft Configuration SA-2
A2 737-7 Aircraft Configuration SA-2
B* Aircraft Delivery Requirements and Responsibilities
SUPPLEMENTAL EXHIBITS TITLES
AE1*
Escalation Adjustment/Airframe and Optional Features
BFE1* BFE Variables
CS1 Customer Support Variables
CS1-7MAX Customer Support Variables SA-2
EE1*
Engine Escalation/Engine Warranty and Patent Indemnity
SLP1* Service Life Policy Components
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106463R1 Open Matters SA-2
SWA-PA-03729 SA-2
BOEING PROPRIETARY Page 2
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106464* [***]
SWA-PA-03729-LA-1106465* [***]
SWA-PA-03729-LA-1106466 [***]
SWA-PA-03729-LA-1106467 [***]
SWA-PA-03729-LA-1106468* [***]
SWA-PA-03729-LA-1106469R1 [***] SA-2
SWA-PA-03729-LA-1106470R1 [***] SA-2
SWA-PA-03729-LA-1106471R1 Substitute Aircraft SA-2
SWA-PA-03729-LA-1106472R1 [***] SA-2
SWA-PA-03729-LA-1106473 [***]
SWA-PA-03729-LA-1106474 Option Aircraft
Attachment 1 SA-2
SWA-PA-03729-LA-1106475 [***]
SWA-PA-03729-LA-1106476* [***]
SWA-PA-03729-LA-1106477* [***]
SWA-PA-03729-LA-1106478 [***]
SWA-PA-03729-LA-1106479R1 [***] SA-2
SWA-PA-03729-LA-1106480R1 [***] SA-2
SWA-PA-03729-LA-1106481R2 [***] SA-2
SWA-PA-03729-LA-1106482* [***]
SWA-PA-03729-LA-1106483* [***]
SWA-PA-03729-LA-1106484* [***]
Attachment A SA-2
Attachment B SA-2
SWA-PA-03729-LA-1106485* [***]
SWA-PA-03729 SA-2
BOEING PROPRIETARY Page 3
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1209080 [***] SA-1
SWA-PA-03729-LA-1210419 [***]
SA-1
SWA-PA-03729-LA-1300943 [***] SA-2
SWA-PA-03729-LA-1301168 [***] SA-2
SWA-PA-01810/03729-LA-1301169 [***] SA-2
SWA-PA-03729-LA-1301170 [***] SA-2
* Denotes revision to Page 1 or Page 2 only to reference 737-7 (SA-2)
SWA-PA-03729 SA-2
BOEING PROPRIETARY Page 4
Purchase Agreement No. PA-03729
between
The Boeing Company
and
Southwest Airlines Co.
This Purchase Agreement No. PA-03729 between The Boeing Company, a Delaware corporation, (Boeing) and Southwest
Airlines Co., a Texas corporation, (Customer) relating to the purchase and sale of Model 737-8 and 737-7 aircraft together with all
tables, exhibits, supplemental exhibits, letter agreements and other attachments thereto, if any, (Purchase Agreement)
incorporates the terms and conditions (except as specifically set forth below) of the Aircraft General Terms Agreement dated as of
December 13, 2011 between the parties, identified as SWA-AGTA (AGTA).
1. Quantity, Model and Description.
The aircraft to be delivered to Customer will be designated as Model 737-8 and 737-7 aircraft (Aircraft). Boeing will
manufacture and sell to Customer Aircraft conforming to the configurations described in Exhibits A1 and A2 (collectively referred to
as Exhibit A) in the quantities listed in Tables 1A and 1B respectively (collectively referred to as Table 1) to the Purchase
Agreement.
2. Delivery Schedule.
The scheduled months of delivery of the Aircraft are listed in the attached Table 1. Exhibit B describes certain responsibilities
for both Customer and Boeing in order to accomplish the delivery of the Aircraft.
3. Price.
3.1 Aircraft Basic Price. The Aircraft Basic Price is listed in Table 1 and is subject to escalation in accordance with the
terms of this Purchase Agreement.
3.2 Advance Payment Base Prices. The Advance Payment Base Prices listed in Table 1 were calculated utilizing the
latest escalation factors available to Boeing on the date of this Purchase Agreement projected to the scheduled delivery month of
each Aircraft.
4. Payment.
4.1 Boeing acknowledges receipt of a deposit in the amount shown in Table 1 for each Aircraft (Deposit).
4.2 The standard advance payment schedule for the Aircraft requires Customer [***] on the effective date of the Purchase
Agreement for the
SWA-PA-03729 SA-2
BOEING PROPRIETARY Page 5
Aircraft. Additional advance payments for each Aircraft are due as specified in and on the first business day of the months listed in
the attached Table 1.
4.3 For any Aircraft whose scheduled month of delivery is less than twenty-four (24) months from the date of this
Purchase Agreement, the total amount of advance payments due for payment upon signing of this Purchase Agreement will include
all advance payments which are past due in accordance with the standard advance payment schedule set forth in paragraph 4.2
above.
4.4 Customer will pay the balance of the Aircraft Price of each Aircraft at delivery.
5. Additional Terms.
5.1 Aircraft Information Table. Table 1 consolidates information contained in Articles 1, 2, 3 and 4 with respect to
(i) quantity of Aircraft, (ii) applicable Detail Specification, (iii) month and year of scheduled deliveries, (iv) Aircraft Basic Price,
(v) applicable escalation factors and (vi) Advance Payment Base Prices and advance payments and their schedules.
5.2 Escalation Adjustment/Airframe and Optional Features. Supplemental Exhibit AE1 contains the applicable airframe
and optional features escalation formula.
5.3 Buyer Furnished Equipment Variables. Supplemental Exhibit BFE1 contains supplier selection dates, on dock dates
and other variables applicable to the Aircraft.
5.4 Customer Support Variables. Information, training, services and other things furnished by Boeing in support of
introduction of the Aircraft into Customer’s fleet are described in Supplemental Exhibit CS1.
5.5 Engine Escalation Variables. Supplemental Exhibit EE1 contains the applicable engine escalation formula, the engine
warranty and the engine patent indemnity for the Aircraft describes the applicable engine escalation formula and contains the
engine warranty and the engine patent indemnity for the Aircraft.
5.6 Service Life Policy Component Variables. Supplemental Exhibit SLP1 lists the SLP Components covered by the
Service Life Policy for the Aircraft.
5.7 Public Announcement. Each of Customer and Boeing reserves the right to make a public announcement regarding
Customer’s purchase of the Aircraft upon approval from the authorized representative of the other party hereto.
5.8 Negotiated Agreement; Entire Agreement. This Purchase Agreement, including the provisions of Article 8.2 of the
AGTA relating to insurance, and Article 11 of Part 2 of Exhibit C of the AGTA relating to DISCLAIMER AND RELEASE and
EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES, has been the subject of discussion and negotiation and is
understood by the parties; the Aircraft Price and other agreements of the parties stated in this Purchase Agreement were arrived at
in consideration of such provisions. This Purchase Agreement, including the AGTA,
SWA-PA-03729 SA-2
BOEING PROPRIETARY Page 6
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Airframe Model/MTOW: 737-8 175900 pounds Detail Specification: D019A001-TBD (10/27/2011)
Engine Model/Thrust: CFMLEAP-1B26 tbd Airframe Price Base Year/Escalation
Formula:
Jul-11 ECI-MFG/CPI
Airframe Price: [***] Engine Price Base Year/Escalation
Formula:
N/A N/A
Optional Features: [***]
Sub-Total of Airframe and Features: [***] Airframe Escalation Data:
Engine Price (Per Aircraft): [***] Base Year Index (ECI): [***]
Aircraft Basic Price (Excluding BFE/SPE): [***] Base Year Index (CPI): [***]
Buyer Furnished Equipment (BFE) Estimate: [***]
//Seller Purchased Equipment (SPE)/In-Flight [***]
Entertainment (IFE)// Estimate:
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number
Aircraft
Block
Notes
Escalation
Estimate
Adv Payment
Base
Price Per A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Jul-2017 1 [***] 36929 A Note 1 [***] [***] [***] [***] [***]
Jul-2017 2 [***] C Note 1 [***] [***] [***] [***] [***]
Aug-2017 3 [***] 36979, 36930, 36984 A Note 1 [***] [***] [***] [***] [***]
Aug-2017 3 [***] C Note 1 [***] [***] [***] [***] [***]
Sep-2017 1 [***] 36934 A Note 1 [***] [***] [***] [***] [***]
Oct-2017 1 [***] 36988 A [***] [***] [***] [***] [***]
Oct-2017 1 [***] C [***] [***] [***] [***] [***]
Nov-2017 1 [***] 36989 A [***] [***] [***] [***] [***]
Nov-2017 1 [***] C [***] [***] [***] [***] [***]
Jan-2018 1 [***] 42544 A [***] [***] [***] [***] [***]
Jan-2018 1 [***] C [***] [***] [***] [***] [***]
Mar-2018 1 [***] C [***] [***] [***] [***] [***]
Jun-2018 1 [***] 42546 A [***] [***] [***] [***] [***]
Jul-2018 1 [***] 42547 A [***] [***] [***] [***] [***]
Jul-2018 1 [***] C [***] [***] [***] [***] [***]
Aug-2018 1 [***] 42548 A [***] [***] [***] [***] [***]
Sep-2018 1 [***] [***] [***] [***] [***] [***]
SWA-PA-03729 58680-1F.TXT BOEING PROPRIETARY
SA-2
Page 1
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number
Aircraft
Block
Notes
Escalation
Estimate
Adv Payment
Base
Price Per A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Sep-2018 1 [***] 37019 A [***] [***] [***] [***] [***]
Oct-2018 1 [***] [***] [***] [***] [***] [***]
Oct-2018 1 [***] 42549 A [***] [***] [***] [***] [***]
Nov-2018 1 [***] [***] [***] [***] [***] [***]
Dec-2018 1 [***] [***] [***] [***] [***] [***]
Jan-2019 1 [***] [***] [***] [***] [***] [***]
Jan-2019 1 [***] 37042 A [***] [***] [***] [***] [***]
Feb-2019 1 [***] 42550 A [***] [***] [***] [***] [***]
Mar-2019 1 [***] 42551 A [***] [***] [***] [***] [***]
Jul-2019 1 [***] [***] [***] [***] [***] [***]
Jul-2019 1 [***] 37034 A [***] [***] [***] [***] [***]
Sep-2019 1 [***] [***] [***] [***] [***] [***]
Oct-2019 1 [***] [***] [***] [***] [***] [***]
Oct-2019 1 [***] 42552 A [***] [***] [***] [***] [***]
Dec-2019 1 [***] [***] [***] [***] [***] [***]
Jan-2020 1 [***] 42553 A [***] [***] [***] [***] [***]
Feb-2020 1 [***] [***] [***] [***] [***] [***]
Feb-2020 1 [***] 35970 B [***] [***] [***] [***] [***]
Mar-2020 1 [***] [***] [***] [***] [***] [***]
Mar-2020 1 [***] 35968 B [***] [***] [***] [***] [***]
Apr-2020 1 [***] [***] [***] [***] [***] [***]
Apr-2020 1 [***] 35972 B [***] [***] [***] [***] [***]
May-2020 1 [***] [***] [***] [***] [***] [***]
May-2020 1 [***] 36736 B [***] [***] [***] [***] [***]
Jun-2020 1 [***] [***] [***] [***] [***] [***]
Jun-2020 1 [***] 33941 B [***] [***] [***] [***] [***]
Jul-2020 1 [***] [***] [***] [***] [***] [***]
Jul-2020 1 [***] 35963 B [***] [***] [***] [***] [***]
SWA-PA-03729 58680-1F.TXT BOEING PROPRIETARY
SA-2
Page 2
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number
Aircraft
Block
Notes
Escalation
Estimate
Adv Payment
Base
Price Per A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Aug-2020 1 [***] [***] [***] [***] [***] [***]
Aug-2020 1 [***] 36733 B [***] [***] [***] [***] [***]
Sep-2020 1 [***] [***] [***] [***] [***] [***]
Sep-2020 1 [***] 35971 B [***] [***] [***] [***] [***]
Oct-2020 1 [***] [***] [***] [***] [***] [***]
Oct-2020 1 [***] 38804 B [***] [***] [***] [***] [***]
Nov-2020 1 [***] [***] [***] [***] [***] [***]
Nov-2020 1 [***] 38805 B [***] [***] [***] [***] [***]
Dec-2020 1 [***] [***] [***] [***] [***] [***]
Jan-2021 1 [***] [***] [***] [***] [***] [***]
Jan-2021 1 [***] 36729 B [***] [***] [***] [***] [***]
Feb-2021 3 [***] [***] [***] [***] [***] [***]
Mar-2021 3 [***] [***] [***] [***] [***] [***]
Apr-2021 3 [***] [***] [***] [***] [***] [***]
May-2021 3 [***] [***] [***] [***] [***] [***]
Jun-2021 3 [***] [***] [***] [***] [***] [***]
Jul-2021 3 [***] [***] [***] [***] [***] [***]
Aug-2021 3 [***] [***] [***] [***] [***] [***]
Sep-2021 3 [***] [***] [***] [***] [***] [***]
Oct-2021 3 [***] [***] [***] [***] [***] [***]
Nov-2021 2 [***] [***] [***] [***] [***] [***]
Dec-2021 2 [***] [***] [***] [***] [***] [***]
Jan-2022 3 [***] [***] [***] [***] [***] [***]
Feb-2022 3 [***] [***] [***] [***] [***] [***]
Mar-2022 3 [***] [***] [***] [***] [***] [***]
Apr-2022 3 [***] [***] [***] [***] [***] [***]
May-2022 3 [***] [***] [***] [***] [***] [***]
Jun-2022 3 [***] [***] [***] [***] [***] [***]
SWA-PA-03729 58680-1F.TXT BOEING PROPRIETARY
SA-2
Page 3
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number
Aircraft
Block
Notes
Escalation
Estimate
Adv Payment
Base
Price Per A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Jul-2022 2 [***] [***] [***] [***] [***] [***]
Aug-2022 2 [***] [***] [***] [***] [***] [***]
Sep-2022 2 [***] [***] [***] [***] [***] [***]
Oct-2022 2 [***] [***] [***] [***] [***] [***]
Nov-2022 2 [***] [***] [***] [***] [***] [***]
Dec-2022 2 [***] [***] [***] [***] [***] [***]
Jan-2023 2 [***] [***] [***] [***] [***] [***]
Feb-2023 2 [***] [***] [***] [***] [***] [***]
Mar-2023 1 [***] [***] [***] [***] [***] [***]
Apr-2023 1 [***] [***] [***] [***] [***] [***]
May-2023 1 [***] [***] [***] [***] [***] [***]
Jun-2023 1 [***] [***] [***] [***] [***] [***]
Jul-2023 1 [***] [***] [***] [***] [***] [***]
Aug-2023 1 [***] [***] [***] [***] [***] [***]
Sep-2023 1 [***] [***] [***] [***] [***] [***]
Oct-2023 1 [***] [***] [***] [***] [***] [***]
Nov-2023 1 [***] [***] [***] [***] [***] [***]
Dec-2023 1 [***] [***] [***] [***] [***] [***]
Jan-2024 2 [***] [***] [***] [***] [***] [***]
Feb-2024 2 [***] [***] [***] [***] [***] [***]
Mar-2024 1 [***] [***] [***] [***] [***] [***]
Apr-2024 1 [***] [***] [***] [***] [***] [***]
May-2024 1 [***] [***] [***] [***] [***] [***]
Jun-2024 1 [***] [***] [***] [***] [***] [***]
Jul-2024 1 [***] [***] [***] [***] [***] [***]
Aug-2024 1 [***] [***] [***] [***] [***] [***]
Sep-2024 1 [***] [***] [***] [***] [***] [***]
Oct-2024 1 [***] [***] [***] [***] [***] [***]
SWA-PA-03729 58680-1F.TXT BOEING PROPRIETARY
SA-2
Page 4
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number
Aircraft
Block
Notes
Escalation
Estimate
Adv Payment
Base
Price Per A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Nov-2024 1 [***] [***] [***] [***] [***] [***]
Dec-2024 1 [***] [***] [***] [***] [***] [***]
Total: 150
*[***]
Notes:
1) [***]
SWA-PA-03729 58680-1F.TXT BOEING PROPRIETARY
SA-2
Page 5
Table 1B To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-7 Aircraft
Airframe Model/MTOW: 737-7 155500 pounds Detail Specification: D019A001-TBD (10/27/2011)
Engine Model/Thrust: CFMLEAP-1B20 tbd Airframe Price Base Year/Escalation
Formula:
Jul-11 ECI-MFG/CPI
Airframe Price: [***] Engine Price Base Year/Escalation
Formula:
N/A N/A
Optional Features: [***]
Sub-Total of Airframe and Features: [***] Airframe Escalation Data:
Engine Price (Per Aircraft): [***] Base Year Index (ECI): [***]
Aircraft Basic Price (Excluding BFE/SPE): [***] Base Year Index (CPI): [***]
Buyer Furnished Equipment (BFE) Estimate:
[***]
Seller Purchased Equipment (SPE) Estimate: [***]
Deposit per Aircraft: [***]
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Escalation Estimate
Adv Payment Base
Price Per A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Apr-2019 3 [***] [***] [***] [***] [***] [***]
May-2019 2 [***] [***] [***] [***] [***] [***]
Jun-2019 2 [***] [***] [***] [***] [***] [***]
Jul-2019 1 [***] [***] [***] [***] [***] [***]
Aug-2019 2 [***] [***] [***] [***] [***] [***]
Oct-2019 2 [***] [***] [***] [***] [***] [***]
Nov-2019 1 [***] [***] [***] [***] [***] [***]
Dec-2019 2 [***] [***] [***] [***] [***] [***]
Feb-2020 1 [***] [***] [***] [***] [***] [***]
Mar-2020 2 [***] [***] [***] [***] [***] [***]
Apr-2020 1 [***] [***] [***] [***] [***] [***]
May-2020 2 [***] [***] [***] [***] [***] [***]
Jun-2020 1 [***] [***] [***] [***] [***] [***]
SWA-PA-03729 58680-1F.TXT BOEING PROPRIETARY
SA-2
Page 1
Table 1B To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-7 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Escalation Estimate
Adv Payment Base
Price Per A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Jul-2020 1 [***] [***] [***] [***] [***] [***]
Aug-2020 1 [***] [***] [***] [***] [***] [***]
Sep-2020 1 [***] [***] [***] [***] [***] [***]
Oct-2020 2 [***] [***] [***] [***] [***] [***]
Nov-2020 1 [***] [***] [***] [***] [***] [***]
Dec-2020 1 [***] [***] [***] [***] [***] [***]
Jan-2021 1 [***] [***] [***] [***] [***] [***]
Total: 30
* [***]
SWA-PA-03729 58680-1F.TXT BOEING PROPRIETARY
SA-2
Page 2
737-8 AIRCRAFT CONFIGURATION
between
THE BOEING COMPANY
and
Southwest Airlines Co.
Exhibit A1 to Purchase Agreement Number PA-03729
SWA-PA-03729-EXA1
Page 1 SA-2
BOEING PROPRIETARY
Exhibit A1
737-8 AIRCRAFT CONFIGURATION
Dated December 13, 2011
relating to
BOEING MODEL 737-8 AIRCRAFT
The initial configuration of Customer's Model 737-8 Aircraft has been defined by Boeing 737-8 Airplane Description
Document No. D019A007 Rev New dated November 4, 2011 and is more fully discussed in Letter Agreement SWA-PA-
03729-LA-1106463 entitled “Open Matters.”
SWA-PA-03729-EXA1
Page 2 SA-2
BOEING PROPRIETARY
737-7 AIRCRAFT CONFIGURATION
between
THE BOEING COMPANY
and
Southwest Airlines Co.
Exhibit A2 to Purchase Agreement Number PA-03729
SWA-PA-03729-EXA2
SA-2
Page 1
BOEING PROPRIETARY
Exhibit A2
AIRCRAFT CONFIGURATION
Dated May 13, 2013
relating to
BOEING MODEL 737-7 AIRCRAFT
The contents of Exhibit A2 will be defined in accordance with the provisions of Letter Agreement SWA-PA-03729-LA-
1106463R1, “Open Matters”, to the Purchase Agreement.
SWA-PA-03729-EXA2
SA-2
Page 2
BOEING PROPRIETARY
Exhibit B
AIRCRAFT DELIVERY REQUIREMENTS AND RESPONSIBILITIES
relating to
BOEING MODEL 737-8 and 737-7 AIRCRAFT
Both Boeing and Customer have certain documentation and approval responsibilities at various times during the construction
cycle of Customer’s Aircraft that are critical to making the delivery of each Aircraft a positive experience for both parties. This
Exhibit B documents those responsibilities and indicates recommended completion deadlines for the actions to be accomplished.
1. GOVERNMENT DOCUMENTATION REQUIREMENTS.
Certain actions are required to be taken by Customer in advance of the scheduled delivery month of each Aircraft with
respect to obtaining certain government issued documentation.
1.1 Airworthiness and Registration Documents. Not later than six (6) months prior to delivery of each Aircraft,
Customer will notify Boeing of the registration number to be painted on the side of the Aircraft. In addition, and not later than
three (3) months prior to delivery of each Aircraft, Customer will, by letter to the regulatory authority having jurisdiction, authorize
the temporary use of such registration numbers by Boeing during the pre-delivery testing of the Aircraft.
Customer is responsible for furnishing any Temporary or Permanent Registration Certificates required by any governmental
authority having jurisdiction to be displayed aboard the Aircraft after delivery.
1.2 Certificate of Sanitary Construction.
1.2.1 U.S. Registered Aircraft. Boeing will obtain from the United States Public Health Service, a United States
Certificate of Sanitary Construction to be provided by Boeing to Customer and displayed aboard each Aircraft after delivery to
Customer.
1.2.2 Non-U.S. Registered Aircraft. If Customer requires a United States Certificate of Sanitary Construction at the
time of delivery of the Aircraft, Customer will give written notice thereof to Boeing at least three (3) months prior to delivery.
Boeing will then use commercially reasonable efforts to obtain the Certificate from the United States Public Health Service and
present it to Customer at the time of Aircraft delivery. The above Boeing obligation only applies to commercial passenger-configured
aircraft.
1.3 Customs Documentation.
1.3.1 Import Documentation. If the Aircraft is intended to be exported from the United States, Customer must notify
Boeing not later than three (3) months prior to delivery of each Aircraft of any documentation required by the customs authorities
or by any other agency of the country of import.
SWA-PA-03729-EXB
SA-2
Page 2
BOEING PROPRIETARY
ESCALATION ADJUSTMENT
AIRFRAME AND OPTIONAL FEATURES
relating to
BOEING MODEL 737-8 and 737-7 AIRCRAFT
1. [***]
SWA-PA-03729-AE1
SA-2
Page 2
BOEING PROPRIETARY
BUYER FURNISHED EQUIPMENT VARIABLES
relating to
BOEING MODEL 737-8 and 737-7 AIRCRAFT
This Supplemental Exhibit BFE1 contains supplier selection dates, on-dock dates and other requirements applicable
to the Aircraft.
1. Supplier Selection.
Customer will:
Select and notify Boeing of the suppliers and part numbers of the following BFE items by the following dates:
Galley System tbd
Galley Inserts tbd
Seats (passenger) tbd
Overhead & Audio System tbd
In-Seat Video System tbd
Miscellaneous Emergency Equipment tbd
Cargo Handling Systems*
(Single Aisle Programs only)
tbd
*For a new certification, supplier requires notification ten (10) months prior to Cargo Handling System on-dock date.
2. On-dock Dates and Other Information.
On or before _______tbd__________, Boeing will provide to Customer the BFE Requirements electronically through
My Boeing Fleet (MBF in My Boeing Configuration (MBC). These requirements may be periodically revised, setting forth
the items, quantities, on-dock dates and shipping instructions and other requirements relating to the in-sequence installation
of BFE. For planning purposes, preliminary BFE on-dock dates are set forth below:
SWA-PA-03729-BFE1
SA-2
Page 2
BOEING PROPRIETARY
CUSTOMER SUPPORT VARIABLES
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Supplemental Exhibit CS1-7MAX
to Purchase Agreement Number PA-03729
SWA-PA-03729-CS1-7MAX SA-2
Page 1
BOEING PROPRIETARY
[***]
SWA-PA-03729-CS1-7MAX SA-2
Page 2
BOEING PROPRIETARY
SWA-PA-03729-CS1-7MAX SA-2
Page 3
BOEING PROPRIETARY
ENGINE ESCALATION
ENGINE WARRANTY AND PATENT INDEMNITY
relating to
BOEING MODEL 737-8 and 737-7 AIRCRAFT
[***]
SWA-PA-03729-EE1
SA-2
Page 2
BOEING PROPRIETARY
SERVICE LIFE POLICY COMPONENTS
relating to
BOEING MODEL 737-8 and 737-7 AIRCRAFT
This is the listing of SLP Components for the Aircraft which relate to Part 3, Boeing Service Life Policy of Exhibit C, Product
Assurance Document to the AGTA and is a part of Purchase Agreement No. PA-03729.
9. Wing.
(i) Upper and lower wing skins and stiffeners between the forward and rear wing spars.
(ii) Wing spar webs, chords and stiffeners.
(iii) Inspar wing ribs.
(iv) Inspar splice plates and fittings.
(v) Main landing gear support structure.
(vi) Wing center section lower beams, spanwise beams and floor beams, but not the seat tracks attached to
floor beams.
(vii) Wingtobody structural attachments.
(viii) Engine strut support fittings attached directly to wing primary structure.
(ix) Support structure in the wing for spoilers and spoiler actuators; for aileron hinges and reaction links; for
leading edge devices and trailing edge flaps; and the winglets.
(x) Trailing edge flap tracks and carriages.
(xi) Aileron leading edge device and trailing edge flap internal, fixed attachment and actuator support
structure.
3. Body.
(i) External surface skins and doublers, longitudinal stiffeners, longerons and circumferential rings and
frames between the forward pressure bulkhead and the vertical stabilizer rear spar bulkhead and structural
support and enclosure for the APU but excluding all system components and related installation and
connecting devices, insulation, lining, and decorative panels and related installation and connecting devices.
(ii) Window and windshield structure but excluding the windows and windshields.
(iii) Fixed attachment structure of the passenger doors, cargo doors and emergency exits, excluding door
mechanisms and movable hinge components. Sills and frames around the body openings for the passenger
doors, cargo doors and emergency exits, excluding scuff plates and pressure seals.
SWA-PA-03729-SLP1
SA-2
Page 2
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106463R1
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: Open Matters
Reference:
Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft
(Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
Given the long period of time between Purchase Agreement signing and delivery of the first Aircraft and the
continued development of the Aircraft program, certain elements have not yet been defined. In consideration, Boeing and
Customer agree to work together as the Aircraft program develops as follows:
1. Aircraft Delivery Schedule.
1.1 [***]
1.2 Customer and Boeing will consult on a frequent basis to keep each other informed as to Customer’s fleet plans
and Boeing’s production plans in order to meet the requirements of both parties. Based on such review and discussions,
Boeing will use its best commercially reasonable efforts to meet Customer’s fleet needs.
SWA-PA-03729-LA-1106463R1
Open Matters
SA-2
Page 1
BOEING PROPRIETARY
2. Aircraft Configuration.
2.1 Model 737-8. The initial configuration of Customer's Model 737-8 Aircraft has been defined by Boeing 737-8
Airplane Description Document No. D019A007 Rev New dated November 4, 2011 as described in Article 1 and Exhibit A1
of the Purchase Agreement (Initial Configuration). [***]
SWA-PA-03729-LA-1106463R1
Open Matters
SA-2
Page 2
BOEING PROPRIETARY
SWA-PA-03729-LA-1106463R1
Open Matters
SA-2
Page 3
BOEING PROPRIETARY
3. [***]
4. Other Letter Agreements.
Boeing and Customer acknowledge that as they work together to develop the Aircraft program and as Boeing refines the
definition of the Aircraft and associated production processes, there may be a need to execute additional letter agreements or
amend letter agreements addressing one or more of the following:
4.1 Software. Additional provisions relating to software and software loading.
4.2 Seller Purchased Equipment (SPE) and/or In-Flight Entertainment (IFE). Provisions relating to the terms under which
Boeing may offer or install SPE in the Aircraft.
4.3 Buyer Furnished Equipment (BFE). Provisions relating to the terms under which Boeing may install and certify
Customer’s BFE in the Aircraft.
5. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is considered by
Boeing as confidential and has
SWA-PA-03729-LA-1106463R1
Open Matters
SA-2
Page 4
BOEING PROPRIETARY
value precisely because it is not available generally to other parties. Customer agrees to limit the disclosure of the contents
of this Letter Agreement to (a) its directors and officers, (b) employees of Customer with a need to know the contents for
performing its obligations (including, without limitation, those employees performing accounting, finance, administration and
other functions necessary to finance and purchase, deliver or lease the Aircraft) and who understand they are not to
disclose its contents to any other person or entity (other than those to whom disclosure is permitted by this Article) without
the prior written consent of Boeing and (c) any auditors and attorneys of Customer who have a need to know such
information and have signed a confidentiality agreement in the same form and substance similar to this Article, or are
otherwise bound by a confidentiality obligation. Disclosure to other parties is not permitted without Boeing’s consent except
as may be required by applicable law or governmental regulations. Customer shall be fully responsible to Boeing
for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Jeff Solomon
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 13, 2013
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Van
Its
Executive Vice President
SWA-PA-03729-LA-1106463R1
Open Matters
SA-2
Page 5
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106464
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
SWA-PA-03729-LA-1106464
SA-2
[***] Page 1
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106465
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
SWA-PA-03729-LA-1106465
SA-2
[***] Page 1
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106468
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference:
Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft
(Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
Definition of Terms:
[***]
SWA-PA-03729-LA-1106468
SA-2
[***] Page 1
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106469R1
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
References: 1)
Purchase Agreement No. PA03729 (Purchase Agreement) between The Boeing
Company (Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8
and 737-7 aircraft (Aircraft)
2)
Letter Agreement SWA-PA-03729-LA-1106471, “Substitute Aircraft,” to the Purchase
Agreement (Substitution Letter Agreement)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
SWA-PA-03729-LA-1106469R1
SA-2
[***] Page 1
BOEING PROPRIETARY
2. [***]
3. [***]
SWA-PA-03729-LA-1106469R1
SA-2
[***] Page 2
BOEING PROPRIETARY
4. [***]
5. [***]
6. [***]
7. [***]
8. [***]
SWA-PA-03729-LA-1106469R1
SA-2
[***] Page 3
BOEING PROPRIETARY
9. [***]
10. [***]
11. Assignment.
Unless otherwise noted herein, [***] described in this Letter Agreement are provided [***] in consideration of Customer’s
taking title to the Aircraft at time of delivery and becoming the operator of the Aircraft. This Letter Agreement cannot be assigned, in
whole or in part, without the prior written consent of Boeing.
12. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is considered by
Boeing as confidential and has value precisely because it is not available generally to other parties. Customer agrees to limit the
disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b) employees of Customer with a need to know
the contents for performing its obligations (including, without limitation, those employees performing accounting, finance,
administration and other functions necessary to finance and purchase, deliver or lease the Aircraft) and who understand they are
not to disclose its contents to any other person or entity (other than those to whom disclosure is permitted by this Article) without the
prior written consent of Boeing and (c) any auditors and attorneys of Customer who have a need to know such information and have
signed a confidentiality agreement in the same form and substance similar to this Article, or are otherwise bound by a confidentiality
obligation. Disclosure to other parties is not permitted without Boeing’s consent except as may be required by applicable law or
governmental regulations. Customer shall be fully responsible to Boeing for compliance with such obligations.
SWA-PA-03729-LA-1106469R1
SA-2
[***] Page 4
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By /s/ Jeff Solomon
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 13 , 2013
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its Executive Vice President
SWA-PA-03729-LA-1106469R1
SA-2
[***] Page 5
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106470R1
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference:
Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft
(Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
2. [***]
3. [***]
SWA-PA-03729-LA-1106470R1
SA-2
[***] Page 1
BOEING PROPRIETARY
4. [***]
5. [***]
6. [***]
SWA-PA-03729-LA-1106470R1
SA-2
[***] Page 2
BOEING PROPRIETARY
7. [***]
8. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be
assigned in whole or, in part.
9. Confidential Treatment.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Section) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Section, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
SWA-PA-03729-LA-1106470R1
SA-2
[***] Page 3
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By /s/ Jeff Solomon
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 13 , 2013
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its Executive Vice President
SWA-PA-03729-LA-1106470R1
SA-2
[***] Page 4
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106471R1
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: Substitute Aircraft
References: 1)
Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing
Company (Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and
737-7 aircraft (Aircraft)
2) Letter Agreement No. SWA-PA-03729-LA-1106469, [***]
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
2. Deleted.
3. [***]
SWA-PA-03729-LA-1106471R1
SA-2
Aircraft Model Substitution Page 1
BOEING PROPRIETARY
4. [***]
5. [***]
SWA-PA-03729-LA-1106471R1
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Aircraft Model Substitution Page 2
BOEING PROPRIETARY
6. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be
assigned in whole or, in part.
7. Confidential Treatment.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
SWA-PA-03729-LA-1106471R1
SA-2
Aircraft Model Substitution Page 3
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By
/s/ Jeff Solomon
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 13 , 2013
SOUTHWEST AIRLINES CO.
By
/s/ Michael Van de Ven
Its
Executive Vice President
SWA-PA-03729-LA-1106471R1
SA-2
Aircraft Model Substitution Page 4
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106472R1
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference:
Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft
(Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
2. [***]
SWA-PA-03729-LA-1106472R1
SA-2
[***] Page 1
BOEING PROPRIETARY
3. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Jeff Solomon
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 13, 2013
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its
Executive Vice President
SWA-PA-03729-LA-1106472R1
SA-2
[***] Page 2
BOEING PROPRIETARY
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Airframe Model/MTOW: 737-8 175900 pounds Detail Specification: D019A007-NEW (11/4/2011)
Engine Model/Thrust: CFMLEAP-1B26 0 pounds Airframe Price Base Year/Escalation Formula: Jul-11 ECI-MFG/CPI
Airframe Price: [***] Engine Price Base Year/Escalation Formula: N/A N/A
Optional Features: [***]
Sub-Total of Airframe and Features: [***] Airframe Escalation Data:
Engine Price (Per Aircraft): [***] Base Year Index (ECI): [***]
Aircraft Basic Price (Excluding BFE/SPE): [***] Base Year Index (CPI): [***]
Buyer Furnished Equipment (BFE) Estimate: [***]
//Seller Purchased Equipment (SPE)/In-Flight Entertainment
(IFE)// Estimate:
[***]
Non-Refundable Deposit/Aircraft at Def Agreemt: [***]
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Aircraft
Block
Escalation Estimate
Adv Payment Base
Price Per A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Jan-2021 1 [***] D [***] [***] [***] [***] [***]
Jan-2021 1 [***] [***] [***] [***] [***] [***]
Feb-2021 1 [***] D [***] [***] [***] [***] [***]
Mar-2021 1 [***] [***] [***] [***] [***] [***]
Apr-2021 1 [***] D [***] [***] [***] [***] [***]
Apr-2021 1 [***] [***] [***] [***] [***] [***]
May-2021 1 [***] D [***] [***] [***] [***] [***]
May-2021 1 [***] [***] [***] [***] [***] [***]
Jun-2021 1 [***] D [***] [***] [***] [***] [***]
Jul-2021 2 [***] [***] [***] [***] [***] [***]
Jul-2021 1 [***] D [***] [***] [***] [***] [***]
Aug-2021 1 [***] D [***] [***] [***] [***] [***]
Sep-2021 1 [***] [***] [***] [***] [***] [***]
SWA‑PA‑03729‑LA1106474 58960-10.TXT
BOEING PROPRIETARY
SA-2
Page 1
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Aircraft
Block
Escalation Estimate
Adv Payment Base
Price Per A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Oct-2021 1 [***] D [***] [***] [***] [***] [***]
Oct-2021 1 [***] [***] [***] [***] [***] [***]
Nov-2021 1 [***] D [***] [***] [***] [***] [***]
Dec-2021 1 [***] [***] [***] [***] [***] [***]
Jan-2022 1 [***] D [***] [***] [***] [***] [***]
Jan-2022 1 [***] [***] [***] [***] [***] [***]
Feb-2022 1 [***] D [***] [***] [***] [***] [***]
Feb-2022 1 [***] [***] [***] [***] [***] [***]
Mar-2022 1 [***] D [***] [***] [***] [***] [***]
Mar-2022 1 [***] [***] [***] [***] [***] [***]
Apr-2022 1 [***] D [***] [***] [***] [***] [***]
May-2022 1 [***] [***] [***] [***] [***] [***]
Jun-2022 1 [***] D [***] [***] [***] [***] [***]
Jul-2022 1 [***] [***] [***] [***] [***] [***]
Jul-2022 1 [***] D [***] [***] [***] [***] [***]
Aug-2022 1 [***] [***] [***] [***] [***] [***]
Sep-2022 1 [***] D [***] [***] [***] [***] [***]
Oct-2022 1 [***] [***] [***] [***] [***] [***]
Oct-2022 1 [***] D [***] [***] [***] [***] [***]
Nov-2022 1 [***] [***] [***] [***] [***] [***]
Nov-2022 1 [***] D [***] [***] [***] [***] [***]
Dec-2022 1 [***] [***] [***] [***] [***] [***]
Dec-2022 1 [***] D [***] [***] [***] [***] [***]
Jan-2023 1 [***] [***] [***] [***] [***] [***]
Jan-2023 1 [***] D [***] [***] [***] [***] [***]
SWA‑PA‑03729‑LA1106474 58960-10.TXT
BOEING PROPRIETARY
SA-2
Page 2
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Aircraft
Block
Escalation Estimate
Adv Payment Base
Price Per A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Feb-2023 1 [***] [***] [***] [***] [***] [***]
Feb-2023 1 [***] D [***] [***] [***] [***] [***]
Mar-2023 1 [***] [***] [***] [***] [***] [***]
Mar-2023 1 [***] D [***] [***] [***] [***] [***]
Apr-2023 1 [***] [***] [***] [***] [***] [***]
Apr-2023 1 [***] D [***] [***] [***] [***] [***]
May-2023 1 [***] [***] [***] [***] [***] [***]
May-2023 1 [***] D [***] [***] [***] [***] [***]
Jun-2023 1 [***] [***] [***] [***] [***] [***]
Jun-2023 1 [***] D [***] [***] [***] [***] [***]
Jul-2023 1 [***] [***] [***] [***] [***] [***]
Aug-2023 1 [***] D [***] [***] [***] [***] [***]
Aug-2023 1 [***] [***] [***] [***] [***] [***]
Sep-2023 1 [***] D [***] [***] [***] [***] [***]
Sep-2023 1 [***] [***] [***] [***] [***] [***]
Oct-2023 1 [***] D [***] [***] [***] [***] [***]
Oct-2023 1 [***] [***] [***] [***] [***] [***]
Nov-2023 1 [***] D [***] [***] [***] [***] [***]
Nov-2023 1 [***] [***] [***] [***] [***] [***]
Dec-2023 1 [***] D [***] [***] [***] [***] [***]
Dec-2023 1 [***] [***] [***] [***] [***] [***]
Jan-2024 1 [***] D [***] [***] [***] [***] [***]
Jan-2024 1 [***] [***] [***] [***] [***] [***]
Feb-2024 1 [***] D [***] [***] [***] [***] [***]
Feb-2024 1 [***] [***] [***] [***] [***] [***]
SWA‑PA‑03729‑LA1106474 58960-10.TXT
BOEING PROPRIETARY
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Page 3
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Aircraft
Block
Escalation Estimate
Adv Payment Base
Price Per A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Mar-2024 1 [***] D [***] [***] [***] [***] [***]
Mar-2024 1 [***] [***] [***] [***] [***] [***]
Apr-2024 1 [***] D [***] [***] [***] [***] [***]
Apr-2024 1 [***] [***] [***] [***] [***] [***]
May-2024 1 [***] D [***] [***] [***] [***] [***]
May-2024 1 [***] [***] [***] [***] [***] [***]
Jun-2024 1 [***] D [***] [***] [***] [***] [***]
Jun-2024 1 [***] [***] [***] [***] [***] [***]
Jul-2024 1 [***] D [***] [***] [***] [***] [***]
Aug-2024 1 [***] [***] [***] [***] [***] [***]
Aug-2024 1 [***] D [***] [***] [***] [***] [***]
Sep-2024 1 [***] [***] [***] [***] [***] [***]
Sep-2024 1 [***] D [***] [***] [***] [***] [***]
Oct-2024 1 [***] [***] [***] [***] [***] [***]
Oct-2024 1 [***] D [***] [***] [***] [***] [***]
Nov-2024 1 [***] [***] [***] [***] [***] [***]
Nov-2024 1 [***] D [***] [***] [***] [***] [***]
Dec-2024 2 [***] [***] [***] [***] [***] [***]
Jan-2025 3 [***] [***] [***] [***] [***] [***]
Feb-2025 3 [***] [***] [***] [***] [***] [***]
Mar-2025 3 [***] [***] [***] [***] [***] [***]
Apr-2025 3 [***] [***] [***] [***] [***] [***]
May-2025 3 [***] [***] [***] [***] [***] [***]
Jun-2025 3 [***] [***] [***] [***] [***] [***]
Jul-2025 3 [***] [***] [***] [***] [***] [***]
SWA‑PA‑03729‑LA1106474 58960-10.TXT
BOEING PROPRIETARY
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Page 4
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Aircraft
Block
Escalation Estimate
Adv Payment Base
Price Per A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Aug-2025 3 [***] [***] [***] [***] [***] [***]
Sep-2025 3 [***] [***] [***] [***] [***] [***]
Oct-2025 3 [***] [***] [***] [***] [***] [***]
Nov-2025 3 [***] [***] [***] [***] [***] [***]
Dec-2025 3 [***] [***] [***] [***] [***] [***]
Jan-2026 3 [***] [***] [***] [***] [***] [***]
Feb-2026 3 [***] [***] [***] [***] [***] [***]
Mar-2026 3 [***] [***] [***] [***] [***] [***]
Apr-2026 3 [***] [***] [***] [***] [***] [***]
May-2026 3 [***] [***] [***] [***] [***] [***]
Jun-2026 3 [***] [***] [***] [***] [***] [***]
Jul-2026 3 [***] [***] [***] [***] [***] [***]
Aug-2026 3 [***] [***] [***] [***] [***] [***]
Sep-2026 3 [***] [***] [***] [***] [***] [***]
Oct-2026 3 [***] [***] [***] [***] [***] [***]
Nov-2026 3 [***] [***] [***] [***] [***] [***]
Dec-2026 3 [***] [***] [***] [***] [***] [***]
Jan-2027 3 [***] [***] [***] [***] [***] [***]
Feb-2027 3 [***] [***] [***] [***] [***] [***]
Mar-2027 3 [***] [***] [***] [***] [***] [***]
Apr-2027 3 [***] [***] [***] [***] [***] [***]
May-2027 3 [***] [***] [***] [***] [***] [***]
Jun-2027 3 [***] [***] [***] [***] [***] [***]
Jul-2027 3 [***] [***] [***] [***] [***] [***]
Aug-2027 3 [***] [***] [***] [***] [***] [***]
SWA‑PA‑03729‑LA1106474 58960-10.TXT
BOEING PROPRIETARY
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Page 5
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Aircraft
Block
Escalation Estimate
Adv Payment Base
Price Per A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Sep-2027 3 [***] [***] [***] [***] [***] [***]
Oct-2027 3 [***] [***] [***] [***] [***] [***]
Nov-2027 3 [***] [***] [***] [***] [***] [***]
Dec-2027 3 [***] [***] [***] [***] [***] [***]
Total: 191
* [***]
SWA‑PA‑03729‑LA1106474 58960-10.TXT
BOEING PROPRIETARY
SA-2
Page 6
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106476
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference:
Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft
(Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
The Purchase Agreement incorporates the terms and conditions of Aircraft General Terms Agreement dated as of
December13, 2011 identified as SWA-AGTA between Boeing and Customer (AGTA). This Letter Agreement modifies
certain terms and conditions of the AGTA with respect to the Aircraft.
1. [***]
SWA-PA-03729-LA-1106476
SA-2
[***] Page 1
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106477
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference:
Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft
(Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
Recitals
1. [***]
2. [***]
Agreement
3. Covered Aircraft.
The Program shall apply to each of the Aircraft operated by Customer on Customer's routes during the Program
Term (Covered Aircraft).
4. [***]
SWA-PA-03729-LA-1106477
SA-2
[***] Page 1
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106479R
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference:
Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft
(Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
SWA-PA-03729-LA-1106479R1
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[***] Page 1
BOEING PROPRIETARY
2. Assignment. Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described
in this Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and
cannot be assigned in whole or, in part.
3. Confidentiality. Customer understands that certain commercial and financial information contained in this Letter
Agreement is considered by Boeing as confidential and has value precisely because it is not available generally to other
parties. Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Section) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Section, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
SWA-PA-03729-LA-1106479R1
SA-2
[***] Page 2
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By /s/ Jeff Solomon
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 13, 2013
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its
Executive Vice President
SWA-PA-03729-LA-1106479R1
SA-2
[***] Page 3
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106480R1
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference:
Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft
(Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
2. [***]
3. Assignment. Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this
Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be
assigned in whole or, in part.
SWA-PA-03729-LA-100648R1
SA-2
[***] Page 1
BOEING PROPRIETARY
Confidentiality. Customer understands that certain commercial and financial information contained in this Letter
Agreement is considered by Boeing as confidential and has value precisely because it is not available generally to other
parties. Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Jeff Solomon
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 13, 2013
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its
Executive Vice President
SWA-PA-03729-LA-100648R1
SA-2
[***] Page 2
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106481R2
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference:
Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft
(Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
2. [***]
3. [***]
SWA-PA-03729-LA-1106481R2
SA-2
[***] Page 1
BOEING PROPRIETARY
4. [***]
5. [***]
6. [***]
7. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in
SWA-PA-03729-LA-1106481R2
SA-2
[***] Page 2
BOEING PROPRIETARY
consideration of Customer’s becoming the operator of the Aircraft and cannot be assigned in whole or, in part.
8. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Jeff Solomon
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 13 , 2013
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its Executive Vice President
SWA-PA-03729-LA-1106481R2
SA-2
[***] Page 3
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106482
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference:
Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft
(Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
[***]
[***]
1. [***]
2. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be
assigned in whole or, in part.
SWA-PA-03729-LA-1106481R2
SA-2
[***] Page 1
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106483
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference:
Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft
(Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
2. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be
assigned in whole or, in part.
3. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its
SWA-PA-03729-LA-1106483
SA-2
[***] Page 1
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106484
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference:
Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft
(Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. Defined Terms: The following capitalized terms have the following meaning:
1.1[***]
1.2[***]
1.3Program Aircraft means each Aircraft specified in Table 1 of the Purchase Agreement as of the date of this Letter.
2. [***]
3. [***]
SWA-PA-03729-LA-1106484
SA-2
[***] Page 1
BOEING PROPRIETARY
[***]
SWA-PA-03729-LA-110684R1 SA-2
[***] Page 5
BOEING PROPRIETARY
[***]
SWA-PA-03729-LA-110684R1 SA-2
[***] Page 6
BOEING PROPRIETARY
[***]
SWA-PA-03729-LA-110684R1 SA-2
[***] Page 7
BOEING PROPRIETARY
[***]
SWA-PA-03729-LA-110684R1 SA-2
[***] Page 8
BOEING PROPRIETARY
[***]
SWA-PA-03729-LA-110684R1 SA-2
[***] Page 9
BOEING PROPRIETARY
[***]
SWA-PA-03729-LA-110684R1 SA-2
[***] Page 10
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106485
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Aircraft General Terms Agreement No. SWA-AGTA (AGTA) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer)
Purchase Agreement No. PA-03729 (Purchase Agreement) between Boeing and Customer
relating to Model 737-8 and 737-7 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement, including the AGTA.
All terms used but not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
SWA-PA-03729-LA-1106485
SA-2
[***] Page 1
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1300943
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft
(Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
2. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the
same form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other
parties is not permitted without Boeing’s consent except as may be required by applicable law or governmental
regulations. Customer shall be fully responsible to Boeing for compliance with such obligations.
SWA-PA-03729-LA-1300943
SA-2
[***] LA Page 1
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By /s/ Jeff Solomon
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 13, 2013
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its Executive Vice President
SWA-PA-03729-LA-1300943
SA-2
[***] LA Page 2
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1301168
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235
Subject: [***]
Reference: Purchase Agreement No. 3729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-7 and 737-8 aircraft
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
[***]
1. [***]
SWA-PA-03729-LA-1301168
SA-2
[***] Page 1
BOEING PROPRIETARY
2. Assignment.
[***] described in this Letter Agreement are provided [***] in consideration of Customer’s taking title to the applicable
Firm Aircraft or Block D Option Aircraft at time of delivery and becoming the operator of the applicable Firm Aircraft or Block
D Option Aircraft. Under no circumstances will Customer be permitted to assign the business terms set forth herein.
3. Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this paragraph) without the prior written consent of Boeing and (c) any auditors
and attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the
same form and substance similar to this paragraph, or
SWA-PA-03729-LA-1301168
SA-2
[***] Page 2
BOEING PROPRIETARY
are otherwise bound by a confidentiality obligation. Disclosure to other parties is not permitted without Boeing’s consent
except as may be required by applicable law or governmental regulations. Customer shall be fully responsible to Boeing
for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Jeff Solomon
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 13, 2013
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its Executive Vice President
SWA-PA-03729-LA-1301168
SA-2
[***] Page 3
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-01810/03729-LA-1301169
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235
Subject: [***]
Reference: (a) Purchase Agreement No. 1810 between The Boeing Company (Boeing) and Southwest
Airlines Co. (Customer) relating to Model 737-700 and 737-800 aircraft (NG Purchase
Agreement)
(b) Purchase Agreement No. 3729 between Boeing and Customer relating to Model 737-7 and
737-8 aircraft (MAX Purchase Agreement)
(c) Letter Agreement SWA-PA-01810-LA-1105884, “Option Aircraft”, (Option Letter
Agreement).
This letter agreement (Letter Agreement) amends and supplements the NG Purchase Agreement and MAX
Purchase Agreement. All terms used but not defined in this Letter Agreement shall have the same meaning as in the NG
Purchase Agreement and MAX Purchase Agreement.
1. [***]
2. [***]
SWA-PA-03729-LA-01810/1301169
SA-2
[***] Page 1
BOEING PROPRIETARY
3. [***]
4. Assignment.
[***] described in this Letter Agreement are provided [***] in consideration of Customer’s taking title to the Firm
Aircraft and Option Aircraft at time of delivery and becoming the operator of the Firm Aircraft and Option Aircraft. Under no
circumstances will Customer be permitted to assign the business terms set forth herein.
SWA-PA-03729-LA-01810/1301169
SA-2
[***] Page 2
BOEING PROPRIETARY
5. Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this paragraph) without the prior written consent of Boeing and (c) any auditors
and attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the
same form and substance similar to this paragraph, or are otherwise bound by a confidentiality obligation. Disclosure to
other parties is not permitted without Boeing’s consent except as may be required by applicable law or governmental
regulations. Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Jeff Solomon
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 13, 2013
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its Executive Vice President
SWA-PA-03729-LA-01810/1301169
SA-2
[***] Page 3
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1301170
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference:
Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
2. [***]
SWA-PA-03729-LA-1301170
SA-2
[***] Page 1
BOEING PROPRIETARY
3. Assignment.
Unless otherwise noted herein, [***] described in this Letter Agreement are provided [***] in consideration of
Customer’s taking title to the 737-7 Aircraft at time of delivery and becoming the operator of the 737-7 Aircraft. This Letter
Agreement cannot be assigned, in whole or in part, without the prior written consent of Boeing.
4. Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
SWA-PA-03729-LA-1301170
SA-2
[***] Page 2
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By /s/ Jeff Solomon
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: May 13 , 2013
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its
Executive Vice President
SWA-PA-03729-LA-1301170
SA-2
[***] Page 3
BOEING PROPRIETARY
SUPPLEMENTAL AGREEMENT NO. 3
to
Purchase Agreement No. 3729
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Relating to Boeing Model 737-8 and 737-7 Aircraft
THIS SUPPLEMENTAL AGREEMENT, entered into as of November 4, 2013, is made between THE BOEING COMPANY,
a Delaware corporation (Boeing), and SOUTHWEST AIRLINES CO., a Texas corporation (Customer);
Customer and Boeing entered into Purchase Agreement Number PA-03729 dated December 13, 2011, as amended and
supplemented, (Purchase Agreement) relating to the purchase and sale of Boeing Model 737-8 and Model 737-7 aircraft;
and this Supplemental Agreement No. 3 is an amendment to and is incorporated into the Purchase Agreement:
WHEREAS, Boeing and Customer agree to amend the Purchase Agreement to document Customer’s substitution of twenty
(20) firm Model 737-700 and Model 737-800 aircraft (Substitution Aircraft) to firm Model 737-8 aircraft (New Firm -8
Aircraft), exercised pursuant to the terms of SA-85 to Purchase Agreement No. 1810 between Customer and Boeing (SA-
85);
NOW, THEREFORE, the parties agree that the Purchase Agreement is amended as set forth below and otherwise agree
as follows:
1. The Table of Contents of the Purchase Agreement is deleted in its entirety and a new Table of Contents is attached hereto
and incorporated into the Purchase Agreement by this reference.
2. Table 1A, “737-8 Aircraft Delivery, Description, Price and Advance Payments”, to the Purchase Agreement is deleted in its
entirety and a new Table 1A (identified by “SA-3”) is attached hereto and incorporated into the Purchase Agreement by this
reference.
3. Attachment 1 to Letter Agreement SWA-PA-03729-LA-1106474, “Option Aircraft”, is deleted in its entirety and replaced with
a new Attachment 1 (identified by
SWA-PA-03729 1 SA-3
BOEING PROPRIETARY
“SA-3”) attached hereto and incorporated into the Purchase Agreement by this reference.
4. Letter Agreement SWA-PA-03729-LA-1301168, [***], is deleted in its entirety and replaced with the attached revised
Letter Agreement SWA-PA-03729-LA-1301168R1, [***].
5. If Customer owes Boeing any additional Advance Payment amounts as a result of the execution of this Supplemental
Agreement, Customer will pay such amounts to Boeing. If as a result of the execution of this Supplemental Agreement,
there is any excess in Advance Payments made by Customer to Boeing, Boeing will retain such excess amounts until the
next Advance Payment is due, at which time Customer may reduce the amount of such Advance Payment by the amount of
such excess. A reconciliation regarding changes in Advance Payments arising from this Supplemental Agreement will be
provided separately to Customer by Boeing.
6. The Purchase Agreement is amended as set forth above, and all other terms and conditions of the Purchase
Agreement remain unchanged and are in full force and effect.
AGREED AND ACCEPTED this
November 4, 2013
Date
THE BOEING COMPANY SOUTHWEST AIRLINES CO.
/s/ Jeff Solomon /s/ Chris Monroe
Signature Signature
Jeff Solomon Chris Monroe
Printed name Printed name
Attorney-in-Fact VP Treasurer
Title Title
SWA-PA-03729 2 SA-3
BOEING PROPRIETARY
PURCHASE AGREEMENT NUMBER PA-03729
between
THE BOEING COMPANY
and
Southwest Airlines Co.
Relating to Boeing Model 737-8 and 737-7 Aircraft
SWA-PA-03729 SA-3
BOEING PROPRIETARY
Page 1
TABLE OF CONTENTS
ARTICLES TITLES
Article 1 Quantity, Model and Description SA-2
Article 2 Delivery Schedule
Article 3 Price
Article 4 Payment SA-2
Article 5 Additional Terms
TABLE TITLE
1A 737-8 Aircraft Information Table SA-3
1B 737-7 Aircraft Information Table SA-2
EXHIBIT
A1 737-8 Aircraft Configuration SA-2
A2 737-7 Aircraft Configuration SA-2
B* Aircraft Delivery Requirements and Responsibilities
SUPPLEMENTAL EXHIBITS TITLES
AE1*
Escalation Adjustment/Airframe and Optional Features
BFE1* BFE Variables
CS1 Customer Support Variables
CS1-7MAX Customer Support Variables SA-2
EE1*
Engine Escalation/Engine Warranty and Patent Indemnity
SLP1* Service Life Policy Components
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106463R1 Open Matters SA-2
SWA-PA-03729 SA-3
BOEING PROPRIETARY
Page 2
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106465* [***]
SWA-PA-03729-LA-1106466 [***]
SWA-PA-03729-LA-1106467 [***]
SWA-PA-03729-LA-1106468* [***]
SWA-PA-03729-LA-1106469R1 [***] SA-2
SWA-PA-03729-LA-1106470R1 [***] SA-2
SWA-PA-03729-LA-1106471R1 Substitute Aircraft SA-2
SWA-PA-03729-LA-1106472R1 [***] SA-2
SWA-PA-03729-LA-1106473 [***]
SWA-PA-03729-LA-1106474 Option Aircraft
Attachment 1 SA-3
SWA-PA-03729-LA-1106475 [***]
SWA-PA-03729-LA-1106476* [***]
SWA-PA-03729-LA-1106477* [***]
SWA-PA-03729-LA-1106478 [***]
SWA-PA-03729-LA-1106479R1 [***] SA-2
SWA-PA-03729-LA-1106480R1 [***] SA-2
SWA-PA-03729-LA-1106481R2 [***] SA-2
SWA-PA-03729-LA-1106482* [***]
SWA-PA-03729-LA-1106483* [***]
SWA-PA-03729-LA-1106484* [***]
Attachment A SA-2
Attachment B SA-2
SWA-PA-03729-LA-1106485* [***]
SWA-PA-03729 SA-3
BOEING PROPRIETARY
Page 3
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1209080 [***] SA-1
SWA-PA-03729-LA-1210419 [***] SA-1
SWA-PA-03729-LA-1300943 [***] SA-2
SWA-PA-03729-LA-1301168R1
[***] SA-3
SWA-PA-01810/03729-LA-1301169 [***] SA-2
SWA-PA-03729-LA-1301170 [***] SA-2
* Denotes revision to Page 1 or Page 2 only to reference 737-7 (SA-2)
SWA-PA-03729 SA-3
BOEING PROPRIETARY
Page 4
Table 1A to
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Airframe Model/MTOW: 737-8 175900pounds Detail Specification:
D019A001-TBD
(10/27/2011) 2Q11ExternalFcst
Engine Model/Thrust: CFMLEAP-1B26 tbd
Airframe Price Base Year/Escalation
Formula: Jul-11 ECI-MFG/CPI
Airframe Price: [***]
Engine Price Base Year/Escalation
Formula: N/A N/A
Optional Features: [***]
Sub-Total of Airframe and Features: [***] Airframe Escalation Data:
Engine Price (Per Aircraft): [***] Base Year Index (ECI): [***]
Aircraft Basic Price (Excluding BFE/SPE):
[***]
Base Year Index (CPI): [***]
Buyer Furnished Equipment (BFE) Estimate: [***]
//Seller Purchased Equipment (SPE)/In-Flight Entertainment
(IFE)// Estimate: [***]
Escalation Manufacturer
Escalation
Estimate
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
Delivery Number of Factor Serial Aircraft
Adv Payment
Base At Signing 24 Mos. 21/18/12/9/6 Mos. Total
Date* Aircraft (Airframe) Number Block Notes Price Per A/P [***] [***] [***] [***]
Jul-2017 1 [***] 36929 A Note1 [***] [***] [***] [***] [***]
Jul-2017 2 [***] C Note1 [***] [***] [***] [***] [***]
Aug-2017 3 [***] 36979,36930,36984 A Note1 [***] [***] [***] [***] [***]
Aug-2017 3 [***] C Note1 [***] [***] [***] [***] [***]
Sep-2017 1 [***] 36934 A Note1 [***] [***] [***] [***] [***]
Oct-2017 1 [***] 36988 A [***] [***] [***] [***] [***]
Oct-2017 1 [***] C [***] [***] [***] [***] [***]
Nov-2017 1 [***] 36989 A [***] [***] [***] [***] [***]
Nov-2017 1 [***] C [***] [***] [***] [***] [***]
Jan-2018 1 [***] 42544 A [***] [***] [***] [***] [***]
Jan-2018 1 [***] C [***] [***] [***] [***] [***]
Mar-2018 1 [***] C [***] [***] [***] [***] [***]
Jun-2018 1 [***] 42546 A [***] [***] [***] [***] [***]
Jul-2018 1 [***] 42547 A [***] [***] [***] [***] [***]
Jul-2018 1 [***] C [***] [***] [***] [***] [***]
Aug-2018 1 [***] 42548 A [***] [***] [***] [***] [***]
Sep-2018 1 [***] [***] [***] [***] [***] [***]
Sep-2018 1 [***] 37019 A [***] [***] [***] [***] [***]
SWA-PA-03729 58681.1F.TXT BOEING PROPRIETARY
SA-3
Page 1
Table 1A to
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Escalation Manufacturer
Escalation
Estimate
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
Delivery Number of Factor Serial Aircraft
Adv Payment
Base At Signing 24 Mos. 21/18/12/9/6 Mos. Total
Date* Aircraft (Airframe) Number Block Notes Price Per A/P [***] [***] [***] [***]
Oct-2018 1 [***] [***] [***] [***] [***] [***]
Oct-2018 1 [***] 42549 A [***] [***] [***] [***] [***]
Nov-2018 1 [***] [***] [***] [***] [***] [***]
Dec-2018 1 [***] [***] [***] [***] [***] [***]
Jan-2019 1 [***] [***] [***] [***] [***] [***]
Jan-2019 1 [***] 37042 A [***] [***] [***] [***] [***]
Feb-2019 1 [***] 42550 A [***] [***] [***] [***] [***]
Mar-2019 1 [***] 42551 A [***] [***] [***] [***] [***]
Jul-2019 1 [***] [***] [***] [***] [***] [***]
Jul-2019 1 [***] 37034 A [***] [***] [***] [***] [***]
Sep-2019 1 [***] [***] [***] [***] [***] [***]
Oct-2019 1 [***] [***] [***] [***] [***] [***]
Oct-2019 1 [***] 42552 A [***] [***] [***] [***] [***]
Dec-2019 1 [***] [***] [***] [***] [***] [***]
Jan-2020 1 [***] 42553 A [***] [***] [***] [***] [***]
Feb-2020 1 [***] [***] [***] [***] [***] [***]
Feb-2020 1 [***] 35970 B [***] [***] [***] [***] [***]
Mar-2020 1 [***] [***] [***] [***] [***] [***]
Mar-2020 1 [***] 35968 B [***] [***] [***] [***] [***]
Apr-2020 1 [***] [***] [***] [***] [***] [***]
Apr-2020 1 [***] 35972 B [***] [***] [***] [***] [***]
May-2020 1 [***] [***] [***] [***] [***] [***]
May-2020 1 [***] 36736 B [***] [***] [***] [***] [***]
Jun-2020 1 [***] [***] [***] [***] [***] [***]
Jun-2020 1 [***] 33941 B [***] [***] [***] [***] [***]
Jul-2020 1 [***] [***] [***] [***] [***] [***]
Jul-2020 1 [***] 35963 B [***] [***] [***] [***] [***]
Aug-2020 1 [***] [***] [***] [***] [***] [***]
Aug-2020 1 [***] 36733 B [***] [***] [***] [***] [***]
SWA-PA-03729 58681.1F.TXT BOEING PROPRIETARY
SA-3
Page 2
Table 1A to
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Escalation Manufacturer
Escalation
Estimate
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
Delivery Number of Factor Serial Aircraft
Adv Payment
Base At Signing 24 Mos. 21/18/12/9/6 Mos. Total
Date* Aircraft (Airframe) Number Block Notes Price Per A/P [***] [***] [***] [***]
Sep-2020 1 [***] [***] [***] [***] [***] [***]
Sep-2020 1 [***] 35971 B [***] [***] [***] [***] [***]
Oct-2020 1 [***] [***] [***] [***] [***] [***]
Oct-2020 1 [***] 38804 B [***] [***] [***] [***] [***]
Nov-2020 1 [***] [***] [***] [***] [***] [***]
Nov-2020 1 [***] 38805 B [***] [***] [***] [***] [***]
Dec-2020 1 [***] [***] [***] [***] [***] [***]
Jan-2021 1 [***] [***] [***] [***] [***] [***]
Jan-2021 1 [***] 36729 B [***] [***] [***] [***] [***]
Feb-2021 3 [***] [***] [***] [***] [***] [***]
Mar-2021 3 [***] [***] [***] [***] [***] [***]
Apr-2021 3 [***] [***] [***] [***] [***] [***]
May-2021 3 [***] [***] [***] [***] [***] [***]
Jun-2021 3 [***] [***] [***] [***] [***] [***]
Jul-2021 3 [***] [***] [***] [***] [***] [***]
Aug-2021 3 [***] [***] [***] [***] [***] [***]
Sep-2021 3 [***] [***] [***] [***] [***] [***]
Oct-2021 3 [***] [***] [***] [***] [***] [***]
Nov-2021 2 [***] [***] [***] [***] [***] [***]
Dec-2021 2 [***] [***] [***] [***] [***] [***]
Jan-2022 3 [***] [***] [***] [***] [***] [***]
Feb-2022 3 [***] [***] [***] [***] [***] [***]
Mar-2022 3 [***] [***] [***] [***] [***] [***]
Apr-2022 3 [***] [***] [***] [***] [***] [***]
May-2022 3 [***] [***] [***] [***] [***] [***]
Jun-2022 3 [***] [***] [***] [***] [***] [***]
Jul-2022 2 [***] [***] [***] [***] [***] [***]
Aug-2022 2 [***] [***] [***] [***] [***] [***]
Sep-2022 2 [***] [***] [***] [***] [***] [***]
SWA-PA-03729 58681.1F.TXT BOEING PROPRIETARY
SA-3
Page 3
Table 1A to
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Escalation Manufacturer
Escalation
Estimate
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
Delivery Number of Factor Serial Aircraft
Adv Payment
Base At Signing 24 Mos. 21/18/12/9/6 Mos. Total
Date* Aircraft (Airframe) Number Block Notes Price Per A/P [***] [***] [***] [***]
Oct-2022 2 [***] [***] [***] [***] [***] [***]
Nov-2022 2 [***] [***] [***] [***] [***] [***]
Dec-2022 2 [***] [***] [***] [***] [***] [***]
Jan-2023 2 [***] [***] [***] [***] [***] [***]
Feb-2023 2 [***] [***] [***] [***] [***] [***]
Mar-2023 1 [***] [***] [***] [***] [***] [***]
Mar-2023 1 [***] 36732 B [***] [***] [***] [***] [***]
Apr-2023 1 [***] [***] [***] [***] [***] [***]
Apr-2023 1 [***] 38806 B [***] [***] [***] [***] [***]
May-2023 1 [***] [***] [***] [***] [***] [***]
May-2023 1 [***] 37043 A [***] [***] [***] [***] [***]
Jun-2023 1 [***] [***] [***] [***] [***] [***]
Jun-2023 1 [***] 42536 A [***] [***] [***] [***] [***]
Jul-2023 1 [***] [***] [***] [***] [***] [***]
Jul-2023 1 [***] 36722 B [***] [***] [***] [***] [***]
Aug-2023 1 [***] [***] [***] [***] [***] [***]
Aug-2023 1 [***] 42537 A [***] [***] [***] [***] [***]
Sep-2023 1 [***] [***] [***] [***] [***] [***]
Sep-2023 1 [***] 36727 B [***] [***] [***] [***] [***]
Oct-2023 1 [***] [***] [***] [***] [***] [***]
Oct-2023 1 [***] 42538 A [***] [***] [***] [***] [***]
Nov-2023 1 [***] [***] [***] [***] [***] [***]
Nov-2023 1 [***] 38815 B [***] [***] [***] [***] [***]
Dec-2023 1 [***] [***] [***] [***] [***] [***]
Dec-2023 1 [***] 42539 A [***] [***] [***] [***] [***]
Jan-2024 2 [***] [***] [***] [***] [***] [***]
Feb-2024 2 [***] [***] [***] [***] [***] [***]
Mar-2024 1 [***] [***] [***] [***] [***] [***]
Mar-2024 1 [***] 38817 B [***] [***] [***] [***] [***]
SWA-PA-03729 58681.1F.TXT BOEING PROPRIETARY
SA-3
Page 4
Table 1A to
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Escalation Manufacturer
Escalation
Estimate Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Number of Factor Serial Aircraft
Adv Payment
Base At Signing 24 Mos. 21/18/12/9/6 Mos. Total
Date* Aircraft (Airframe) Number Block Notes Price Per A/P [***] [***] [***] [***]
Apr-2024 1 [***] [***] [***] [***] [***] [***]
Apr-2024 1 [***] 42540 A [***] [***] [***] [***] [***]
May-2024 1 [***] [***] [***] [***] [***] [***]
May-2024 1 [***] 42541 A [***] [***] [***] [***] [***]
Jun-2024 1 [***] [***] [***] [***] [***] [***]
Jun-2024 1 [***] 42542 A [***] [***] [***] [***] [***]
Jul-2024 1 [***] [***] [***] [***] [***] [***]
Jul-2024 1 [***] 35967 B [***] [***] [***] [***] [***]
Aug-2024 1 [***] [***] [***] [***] [***] [***]
Aug-2024 1 [***] 42543 A [***] [***] [***] [***] [***]
Sep-2024 1 [***] [***] [***] [***] [***] [***]
Sep-2024 1 [***] 36730 B [***] [***] [***] [***] [***]
Oct-2024 1 [***] [***] [***] [***] [***] [***]
Oct-2024 1 [***] 33940 B [***] [***] [***] [***] [***]
Nov-2024 1 [***] [***] [***] [***] [***] [***]
Nov-2024 1 [***] 35974 B [***] [***] [***] [***] [***]
Dec-2024 1 [***] [***] [***] [***] [***] [***]
Dec-2024 1 [***] 35975 B [***] [***] [***] [***] [***]
Total: 18
* [***]
Notes:
1) [***]
SWA-PA-03729 58681.1F.TXT BOEING PROPRIETARY
SA-3
Page 5
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Airframe Model/MTOW: 737-8 175900pounds Detail Specification:
D019A007-NEW
(11/4/2011) 2Q11ExternalFcs
Engine Model/Thrust: CFMLEAP-1B26 0pounds
Airframe Price Base Year/Escalation
Formula: Jul-11 ECI-MFG/CPI
Airframe Price: [***]
Engine Price Base Year/Escalation
Formula: N/A N/A
Optional Features: [***]
Sub-Total of Airframe and Features: [***] Airframe Escalation Data:
Engine Price (Per Aircraft): [***] Base Year Index (ECI): [***]
Aircraft Basic Price (Excluding BFE/SPE):
[***]
Base Year Index (CPI): [***]
Buyer Furnished Equipment (BFE) Estimate: [***]
//Seller Purchased Equipment (SPE)/In-Flight Entertainment (IFE)//
Estimate: [***]
Non-Refundable Deposit/Aircraft at Def Agreemt: [***]
Escalation Escalation Estimate
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
Delivery Number of Factor Aircraft Adv Payment Base At Signing 24 Mos. 21/18/12/9/6 Mos. Total
Date* Aircraft (Airframe) Block Price Per A/P [***] *** *** ***
Jan-2021 1 [***] D [***] *** *** *** ***
Jan-2021 1 [***] [***] *** *** *** ***
Feb-2021 1 [***] D [***] *** *** *** ***
Mar-2021 1 [***] [***] *** *** *** ***
Apr-2021 1 [***] D [***] *** *** *** ***
Apr-2021 1 [***] [***] *** *** *** ***
May-2021 1 [***] D [***] *** *** *** ***
May-2021 1 [***] [***] *** *** *** ***
Jun-2021 1 [***] D [***] *** *** *** ***
Jul-2021 2 [***] [***] *** *** *** ***
Jul-2021 1 [***] D [***] *** *** *** ***
Aug-2021 1 [***] D [***] *** *** *** ***
Sep-2021 1 [***] [***] *** *** *** ***
SWA-PA-03729-LA1106474 68969-1O.TXT BOEING PROPRIETARY
SA-3
Page 1
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Escalation Escalation Estimate
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
Delivery Number of Factor Aircraft Adv Payment Base At Signing 24 Mos. 21/18/12/9/6 Mos. Total
Date* Aircraft (Airframe) Block Price Per A/P [***] [***] [***] [***]
Oct-2021 1 [***] D [***] [***] [***] [***] [***]
Oct-2021 1 [***] [***] [***] [***] [***] [***]
Nov-2021 1 [***] D [***] [***] [***] [***] [***]
Dec-2021 1 [***] [***] [***] [***] [***] [***]
Jan-2022 1 [***] D [***] [***] [***] [***] [***]
Jan-2022 1 [***] [***] [***] [***] [***] [***]
Feb-2022 1 [***] D [***] [***] [***] [***] [***]
Feb-2022 1 [***] [***] [***] [***] [***] [***]
Mar-2022 1 [***] D [***] [***] [***] [***] [***]
Mar-2022 1 [***] [***] [***] [***] [***] [***]
Apr-2022 1 [***] D [***] [***] [***] [***] [***]
May-2022 1 [***] [***] [***] [***] [***] [***]
Jun-2022 1 [***] D [***] [***] [***] [***] [***]
Jul-2022 1 [***] [***] [***] [***] [***] [***]
Jul-2022 1 [***] D [***] [***] [***] [***] [***]
Aug-2022 1 [***] [***] [***] [***] [***] [***]
Sep-2022 1 [***] D [***] [***] [***] [***] [***]
Oct-2022 1 [***] [***] [***] [***] [***] [***]
Oct-2022 1 [***] D [***] [***] [***] [***] [***]
Nov-2022 1 [***] [***] [***] [***] [***] [***]
Nov-2022 1 [***] D [***] [***] [***] [***] [***]
Dec-2022 1 [***] [***] [***] [***] [***] [***]
Dec-2022 1 [***] D [***] [***] [***] [***] [***]
Jan-2023 1 [***] [***] [***] [***] [***] [***]
Jan-2023 1 [***] D [***] [***] [***] [***] [***]
SWA-PA-03729-LA1106474 68969-1O.TXT BOEING PROPRIETARY
SA-3
Page 2
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Escalation Escalation Estimate
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
Delivery Number of Factor Aircraft Adv Payment Base At Signing 24 Mos. 21/18/12/9/6 Mos. Total
Date* Aircraft (Airframe) Block Price Per A/P [***] [***] [***] [***]
Feb-2023 1 [***] [***] [***] [***] [***] [***]
Feb-2023 1 [***] D [***] [***] [***] [***] [***]
Mar-2023 1 [***] [***] [***] [***] [***] [***]
Mar-2023 1 [***] D [***] [***] [***] [***] [***]
Apr-2023 1 [***] [***] [***] [***] [***] [***]
Apr-2023 1 [***] D [***] [***] [***] [***] [***]
May-2023 1 [***] [***] [***] [***] [***] [***]
May-2023 1 [***] D [***] [***] [***] [***] [***]
Jun-2023 1 [***] [***] [***] [***] [***] [***]
Jun-2023 1 [***] D [***] [***] [***] [***] [***]
Jul-2023 1 [***] [***] [***] [***] [***] [***]
Aug-2023 1 [***] D [***] [***] [***] [***] [***]
Aug-2023 1 [***] [***] [***] [***] [***] [***]
Sep-2023 1 [***] D [***] [***] [***] [***] [***]
Sep-2023 1 [***] [***] [***] [***] [***] [***]
Oct-2023 1 [***] D [***] [***] [***] [***] [***]
Oct-2023 1 [***] [***] [***] [***] [***] [***]
Nov-2023 1 [***] D [***] [***] [***] [***] [***]
Nov-2023 1 [***] [***] [***] [***] [***] [***]
Dec-2023 1 [***] D [***] [***] [***] [***] [***]
Dec-2023 1 [***] [***] [***] [***] [***] [***]
Jan-2024 1 [***] D [***] [***] [***] [***] [***]
Jan-2024 1 [***] [***] [***] [***] [***] [***]
Feb-2024 1 [***] D [***] [***] [***] [***] [***]
Feb-2024 1 [***] [***] [***] [***] [***] [***]
SWA-PA-03729-LA1106474 68969-1O.TXT BOEING PROPRIETARY
SA-3
Page 3
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Escalation Escalation Estimate
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
Delivery Number of Factor Aircraft Adv Payment Base At Signing 24 Mos. 21/18/12/9/6 Mos. Total
Date* Aircraft (Airframe) Block Price Per A/P [***] [***] [***] [***]
Mar-2024 1 [***] D [***] [***] [***] [***] [***]
Mar-2024 1 [***] [***] [***] [***] [***] [***]
Apr-2024 1 [***] D [***] [***] [***] [***] [***]
Apr-2024 1 [***] [***] [***] [***] [***] [***]
May-2024 1 [***] D [***] [***] [***] [***] [***]
May-2024 1 [***] [***] [***] [***] [***] [***]
Jun-2024 1 [***] D [***] [***] [***] [***] [***]
Jun-2024 1 [***] [***] [***] [***] [***] [***]
Jul-2024 1 [***] D [***] [***] [***] [***] [***]
Aug-2024 1 [***] [***] [***] [***] [***] [***]
Aug-2024 1 [***] D [***] [***] [***] [***] [***]
Sep-2024 1 [***] [***] [***] [***] [***] [***]
Sep-2024 1 [***] D [***] [***] [***] [***] [***]
Oct-2024 1 [***] [***] [***] [***] [***] [***]
Oct-2024 1 [***] D [***] [***] [***] [***] [***]
Nov-2024 1 [***] [***] [***] [***] [***] [***]
Nov-2024 1 [***] D [***] [***] [***] [***] [***]
Dec-2024 2 [***] [***] [***] [***] [***] [***]
Jan-2025 3 [***] [***] [***] [***] [***] [***]
Feb-2025 3 [***] [***] [***] [***] [***] [***]
Mar-2025 3 [***] [***] [***] [***] [***] [***]
Apr-2025 3 [***] [***] [***] [***] [***] [***]
May-2025 3 [***] [***] [***] [***] [***] [***]
Jun-2025 3 [***] [***] [***] [***] [***] [***]
Jul-2025 3 [***] [***] [***] [***] [***] [***]
SWA-PA-03729-LA1106474 68969-1O.TXT BOEING PROPRIETARY
SA-3
Page 4
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Escalation Escalation Estimate Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Number of Factor Aircraft Adv Payment Base At Signing 24 Mos. 21/18/12/9/6 Mos. Total
Date* Aircraft (Airframe) Block Price Per A/P [***] [***] [***] [***]
Aug-2025 3 [***] [***] [***] [***] [***] [***]
Sep-2025 3 [***] [***] [***] [***] [***] [***]
Oct-2025 3 [***] [***] [***] [***] [***] [***]
Nov-2025 3 [***] [***] [***] [***] [***] [***]
Dec-2025 3 [***] [***] [***] [***] [***] [***]
Jan-2026 3 [***] [***] [***] [***] [***] [***]
Feb-2026 3 [***] [***] [***] [***] [***] [***]
Mar-2026 3 [***] [***] [***] [***] [***] [***]
Apr-2026 3 [***] [***] [***] [***] [***] [***]
May-2026 3 [***] [***] [***] [***] [***] [***]
Jun-2026 3 [***] [***] [***] [***] [***] [***]
Jul-2026 3 [***] [***] [***] [***] [***] [***]
Aug-2026 3 [***] [***] [***] [***] [***] [***]
Sep-2026 3 [***] [***] [***] [***] [***] [***]
Oct-2026 3 [***] [***] [***] [***] [***] [***]
Nov-2026 3 [***] [***] [***] [***] [***] [***]
Dec-2026 3 [***] [***] [***] [***] [***] [***]
Jan-2027 3 [***] [***] [***] [***] [***] [***]
Feb-2027 3 [***] [***] [***] [***] [***] [***]
Mar-2027 3 [***] [***] [***] [***] [***] [***]
Apr-2027 3 [***] [***] [***] [***] [***] [***]
May-2027 3 [***] [***] [***] [***] [***] [***]
Jun-2027 3 [***] [***] [***] [***] [***] [***]
Jul-2027 3 [***] [***] [***] [***] [***] [***]
Aug-2027 3 [***] [***] [***] [***] [***] [***]
SWA-PA-03729-LA1106474 68969-1O.TXT BOEING PROPRIETARY
SA-3
Page 5
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Escalation Escalation Estimate
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
Delivery Number of Factor Aircraft Adv Payment Base At Signing 24 Mos. 21/18/12/9/6 Mos. Total
Date* Aircraft (Airframe) Block Price Per A/P [***] [***] [***] [***]
Sep-2027 3 [***] [***] [***] [***] [***] [***]
Oct-2027 3 [***] [***] [***] [***] [***] [***]
Nov-2027 3 [***] [***] [***] [***] [***] [***]
Dec-2027 3 [***] [***] [***] [***] [***] [***]
Total: 12
* [***]
SWA-PA-03729-LA1106474 68969-1O.TXT BOEING PROPRIETARY
SA-3
Page 6
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1301168R1
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235
Subject: [***]
Reference: Purchase Agreement No. 3729 (Purchase Agreement) between The Boeing Company (Boeing)
and Southwest Airlines Co. (Customer) relating to Model 737-7 and 737-8 aircraft
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
[***]
1. [***]
SWA-PA-03729-LA1301168R1 SA-3
[***]
BOEING PROPRIETARY
Page 1
2. Assignment.
[***] described in this Letter Agreement are provided [***] in consideration of Customer’s taking title to the applicable
Firm Aircraft or Block D Option Aircraft at time of delivery and becoming the operator of the applicable Firm Aircraft or Block
D Option Aircraft. Under no circumstances will Customer be permitted to assign the business terms set forth herein.
3. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this paragraph) without the prior written consent of Boeing and (c) any auditors
and attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the
same form and substance similar to this paragraph, or
SWA-PA-03729-LA1301168R1 SA-3
[***]
BOEING PROPRIETARY
Page 2
are otherwise bound by a confidentiality obligation. Disclosure to other parties is not permitted without Boeing’s consent
except as may be required by applicable law or governmental regulations. Customer shall be fully responsible to Boeing
for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Jeff Solomon
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: November 4, 2013
SOUTHWEST AIRLINES CO.
By /s/ Chris Monroe
Its Chris Monroe
VP, Treasurer
SWA-PA-03729-LA1301168R1 SA-3
[***]
BOEING PROPRIETARY
Page 3
SUPPLEMENTAL AGREEMENT NO. 4
to
Purchase Agreement No. 3729
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Relating to Boeing Model 737-8 and 737-7 Aircraft
THIS SUPPLEMENTAL AGREEMENT No. 4 (SA-4), entered into as of December 21, 2015, is made between THE
BOEING COMPANY, a Delaware corporation (Boeing), and SOUTHWEST AIRLINES CO., a Texas corporation
(Customer).
RECITALS:
WHEREAS, Customer and Boeing entered into Purchase Agreement Number PA-03729 dated December 13, 2011, as
amended and supplemented, (Purchase Agreement) relating to the purchase and sale of Boeing Mode 737-8 (737-8
Aircraft) and Model 737-7 aircraft (737-7 Aircraft); collectively the “Aircraft”. This Supplemental Agreement No. 4 is an
amendment to and is incorporated into the Purchase Agreement. Capitalized terms used herein but not otherwise defined
shall have the meaning set forth in the Purchase Agreement.
WHEREAS, Boeing has agreed to modify certain business considerations applicable to the firm Block A Aircraft, Block B
Aircraft and Block C Aircraft identified in Table 1A of the Purchase Agreement.
WHEREAS, the parties desire to amend the Purchase Agreement as hereinafter set forth to make certain other changes;
NOW, THEREFORE, the parties agree that the Purchase Agreement is amended as set forth below and otherwise agree
as follows:
SWA-PA-03729 1 SA-4
BOEING PROPRIETARY
1. TABLE OF CONTENTS.
The Table of Contents of the Purchase Agreement is deleted in its entirety and replaced with a new Table of
Contents (attached), which lists Exhibits and Letter Agreements revised by this Supplemental Agreement No. 4 and
identified by “SA-4”. Such revised Table of Contents is incorporated into the Purchase Agreement by this reference.
2. LETTER AGREEMENTS.
2.1 Letter Agreement SWA-PA-03729-LA-1106472R1, [***], no longer applies, is deleted in its entirety and
removed from the Purchase Agreement.
2.2 Letter Agreement SWA-PA-03729-LA-1301168, [***], is deleted in its entirety and replaced with the attached
revised Letter Agreement SWA-PA-03729-LA-1301168R1, [***].
2.3 Letter Agreement SWA-PA-01810/03729-LA-1301169, [***], no longer applies, is deleted in its entirety and
removed from the Purchase Agreement.
The Purchase Agreement is deemed to be supplemented to the extent herein provided and as so supplemented will
continue in full force and effect.
EXECUTED IN DUPLICATE as of the day and year first above written.
THE BOEING COMPANY SOUTHWEST AIRLINES CO.
By: /s/ Jon W. Lewis_____ By: /s/ Michael Van de Ven_
Its: Attorney-In-Fact_____ Its: EVP & COO__________
SWA-PA-03729 2 SA-4
BOEING PROPRIETARY
PURCHASE AGREEMENT NUMBER PA-03729
between
THE BOEING COMPANY
and
Southwest Airlines Co.
Relating to Boeing Model 737-8 and 737-7 Aircraft
SWA-PA-03729 SA-4
BOEING PROPRIETARY
Page 1
TABLE OF CONTENTS
ARTICLES TITLES
Article 1 Quantity, Model and Description SA-2
Article 2 Delivery Schedule
Article 3 Price
Article 4 Payment SA-2
Article 5 Additional Terms
TABLE TITLE
1A 737-8 Aircraft Information Table SA-3
1B 737-7 Aircraft Information Table SA-2
EXHIBIT
A1 737-8 Aircraft Configuration SA-2
A2 737-7 Aircraft Configuration SA-2
B* Aircraft Delivery Requirements and Responsibilities
SUPPLEMENTAL EXHIBITS TITLES
AE1* Escalation Adjustment/Airframe and Optional Features
BFE1* BFE Variables
CS1 Customer Support Variables
CS1-7MAX Customer Support Variables SA-2
EE1* Engine Escalation/Engine Warranty and Patent Indemnity
SLP1* Service Life Policy Components
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106463R1 Open Matters SA-2
SWA-PA-03729-LA-1106464* [***]
SWA-PA-03729 SA-4
BOEING PROPRIETARY
Page 2
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106465* [***]
SWA-PA-03729-LA-1106466 [***]
SWA-PA-03729-LA-1106467 [***]
SWA-PA-03729-LA-1106468* [***]
SWA-PA-03729-LA-1106469R1 [***] SA-2
SWA-PA-03729-LA-1106470R1 [***] SA-2
SWA-PA-03729-LA-1106471R1 Substitute Aircraft SA-2
SWA-PA-03729-LA-1106473 [***]
SWA-PA-03729-LA-1106474 Option Aircraft
Attachment 1 SA-3
SWA-PA-03729-LA-1106475 [***]
SWA-PA-03729-LA-1106476* [***]
SWA-PA-03729-LA-1106477* [***]
SWA-PA-03729-LA-1106478 [***]
SWA-PA-03729-LA-1106479R1 [***] SA-2
SWA-PA-03729-LA-1106480R1 [***] SA-2
SWA-PA-03729-LA-1106481R2 [***] SA-2
SWA-PA-03729-LA-1106482* [***]
SWA-PA-03729-LA-1106483* [***]
SWA-PA-03729-LA-1106484* [***] SA-
2
Attachment A SA-
2
Attachment B
SWA-PA-03729-LA-1106485* [***]
SWA-PA-03729-LA-1209080 [***] SA-
1
SWA-PA-03729-LA-1210419 [***] SA-1
SWA-PA-03729 SA-4
BOEING PROPRIETARY
Page 3
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1300943 [***] SA-2
SWA-PA-03729-LA-1301168R2
[***] SA-4
SWA-PA-03729-LA-1301170 [***] SA-2
* Denotes revision to Page 1 or Page 2 only to reference 737-7 (SA-2)
SWA-PA-03729 SA-4
BOEING PROPRIETARY
Page 4
INACTIVE / DELETED TABLES, EXHIBITS, AND LETTER AGREEMENTS
RESTRICTED LETTER AGREEMENTS
Letter Agreement Title Last Updated under
SA
Current Status
SWA-PA-03729-LA-1106472R1 [***] SA-2 Deleted under SA-4
SWA-PA-01810/03729-LA-
1301169
[***] SA-2 Deleted under SA-4
SWA-PA-03729 SA-4
BOEING PROPRIETARY
Page 5
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1301168R2
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235
Subject: [***]
Reference: Purchase Agreement No. 3729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-7 and 737-8 aircraft
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
[***]
1. [***]
SA-4
BOEING PROPRIETARY
Page 1
SWA-PA-03729-LA-1301168R2 SA-4
[***]
BOEING PROPRIETARY
Page 2
2. Assignment.
[***] described in this Letter Agreement are provided [***] in consideration of Customer’s taking title to the applicable
Firm Aircraft at time of delivery and becoming the operator of the applicable Firm Aircraft. Under no circumstances will
Customer be permitted to assign the business terms set forth herein.
3. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this paragraph) without the prior written consent of Boeing and (c) any auditors
and attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the
same form and substance similar to this paragraph, or are otherwise bound by a confidentiality obligation. Disclosure to
other parties is not permitted without Boeing’s consent except as may be required by applicable law or governmental
regulations. Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Jon W. Lewis
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 21, 2015
SOUTHWEST AIRLINES CO.
By /s/ Michael Van de Ven
Its EVP & COO
SWA-PA-03729-LA-1301168R2 SA-4
[***]
BOEING PROPRIETARY
Page 3
SUPPLEMENTAL AGREEMENT NO. 5
to
Purchase Agreement No. 03729
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Relating to Boeing Model 737-8 and 737-7 Aircraft
THIS SUPPLEMENTAL AGREEMENT No. 5 (SA-5), entered into as of June 17, 2016, is made between THE BOEING
COMPANY, a Delaware corporation (Boeing), and SOUTHWEST AIRLINES CO., a Texas corporation (Customer).
RECITALS:
WHEREAS, Customer and Boeing entered into Purchase Agreement Number PA-03729 dated December 13, 2011, as
amended and supplemented, (Purchase Agreement) relating to the purchase and sale of Boeing Model 737-8 (737-8
Aircraft) and Model 737-7 aircraft (737-7 Aircraft); collectively the “Aircraft”. This SA5 is an amendment to and is
incorporated into the Purchase Agreement. Capitalized terms used herein but not otherwise defined shall have the meaning
set forth in the Purchase Agreement.
WHEREAS, Boeing and Customer agree to amend the Purchase Agreement by revising the delivery month of certain 737-8
Aircraft;
WHEREAS, Boeing and Customer agree to revise the delivery month and other contractual terms applicable to certain
Option Aircraft; and
WHEREAS, Customer has requested and Boeing has agreed to provide certain [***] and other business considerations;
NOW, THEREFORE, the parties agree that the Purchase Agreement is amended as set forth below and otherwise agree
as follows:
SWA-PA-03729 1 SA-5
BOEING PROPRIETARY
1. TABLE OF CONTENTS.
The Table of Contents of the Purchase Agreement is deleted in its entirety and replaced with a new Table of
Contents (attached), which lists Exhibits and Letter Agreements revised by this SA-5 and identified by “SA-5”. Such revised
Table of Contents is incorporated into the Purchase Agreement by this reference.
2. TABLE.
Table 1A, Aircraft Delivery, Description, Price and Advance Payments – 737-8 Aircraft is deleted in its entirety and replaced
by a new Table 1A (identified by "SA-5") is attached hereto and incorporated into the Purchase Agreement by this
reference.
3. LETTER AGREEMENTS.
3.1. Letter Agreement SWA-PA-03729-LA-1106467, [***], is deleted in its entirety and replaced with the attached revised
Letter Agreement SWA-PA-03729-LA-1106467R1;
3.2. Letter Agreement SWA-PA-03729-LA-1106473, [***], is deleted in its entirety and replaced with the attached revised
Letter Agreement SWA-PA-03729-LA-1106473R1;
3.3. Letter Agreement SWA-PA-03729-LA-1106474, Option Aircraft, including Attachment 1 thereof, is deleted in its
entirety and replaced with the attached revised Letter Agreement SWA-PA-03729-LA-1106474R1 and Attachment
1;
3.4. Letter Agreement SWA-PA-03729-LA-1106475, [***], is deleted in its entirety and replaced with the attached revised
Letter Agreement SWA-PA-03729-LA-1106475R1;
3.5. Letter Agreement SWA-PA-03729-LA-1106476, [***], is deleted in its entirety and replaced with the attached revised
Letter Agreement SWA-PA-03729-LA-1106476R1;
3.6. Letter Agreement SWA-PA-03729-LA-1301170, [***], is deleted in its entirety and replaced with the attached revised
Letter Agreement SWA-PA-03729-LA-1301170R1;
3.7. New Letter Agreement SWA-PA-03729-LA-1602486, [***], is hereby added to the Purchase Agreement.
SWA-PA-03729 2 SA-5
BOEING PROPRIETARY
4. MISCELLANEOUS.
[***]
[Signature page follows.]
[Remainder of page intentionally left blank.]
SWA-PA-03729 3 SA-5
BOEING PROPRIETARY
The Purchase Agreement is deemed to be supplemented to the extent herein provided and as so supplemented will
continue in full force and effect.
EXECUTED IN DUPLICATE as of the day and year first above written.
THE BOEING COMPANY SOUTHWEST AIRLINES CO.
By: /s/ Jon W. Lewis By: /s/ Tammy Romo
Its: Attorney-In-Fact Its: EVP & CFO
SWA-PA-03729 4 SA-5
BOEING PROPRIETARY
PURCHASE AGREEMENT NUMBER PA-03729
between
THE BOEING COMPANY
and
Southwest Airlines Co.
Relating to Boeing Model 737-8 and 737-7 Aircraft
SWA-PA-03729 SA-5
BOEING PROPRIETARY
Page 1
TABLE OF CONTENTS
ARTICLES TITLES
Article 1 Quantity, Model and Description SA-2
Article 2 Delivery Schedule
Article 3 Price
Article 4 Payment SA-2
Article 5 Additional Terms
TABLE TITLE
1A 737-8 Aircraft Information Table SA-5
1B 737-7 Aircraft Information Table SA-2
EXHIBIT
A1 737-8 Aircraft Configuration SA-2
A2 737-7 Aircraft Configuration SA-2
B* Aircraft Delivery Requirements and Responsibilities
SUPPLEMENTAL EXHIBITS TITLES
AE1* Escalation Adjustment/Airframe and Optional Features
BFE1* BFE Variables
CS1 Customer Support Variables
CS1-7MAX Customer Support Variables SA-2
EE1* Engine Escalation/Engine Warranty and Patent Indemnity
SLP1* Service Life Policy Components
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106463R1 Open Matters SA-2
SWA-PA-03729-LA-1106464* [***]
SWA-PA-03729 SA-5
BOEING PROPRIETARY
Page 2
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106465* [***]
SWA-PA-03729-LA-1106466 [***]
SWA-PA-03729-LA-1106467R1 [***] SA-5
SWA-PA-03729-LA-1106468* [***]
SWA-PA-03729-LA-1106469R1 [***] SA-2
SWA-PA-03729-LA-1106470R1 [***] SA-2
SWA-PA-03729-LA-1106471R1 Substitute Aircraft SA-2
SWA-PA-03729-LA-1106473R1 [***] SA-5
SWA-PA-03729-LA-1106474R1 Option Aircraft SA-5
Attachment 1 SA-5
SWA-PA-03729-LA-1106475R1 [***] SA-5
SWA-PA-03729-LA-1106476R1* [***] SA-5
SWA-PA-03729-LA-1106477*
[***]
SWA-PA-03729-LA-1106478 [***]
SWA-PA-03729-LA-1106479R1 [***] SA-2
SWA-PA-03729-LA-1106480R1 [***] SA-2
SWA-PA-03729-LA-1106481R2 [***] SA-2
SWA-PA-03729-LA-1106482* [***]
SWA-PA-03729-LA-1106483* [***]
SWA-PA-03729-LA-1106484* [***]
Attachment A SA-2
Attachment B SA-2
SWA-PA-03729-LA-1106485* [***]
SWA-PA-03729-LA-1209080 [***] SA-1
SWA-PA-03729-LA-1210419 [***] SA-1
SWA-PA-03729 SA-5
BOEING PROPRIETARY
Page 3
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1300943 [***] SA-2
SWA-PA-03729-LA-1301168R2 [***] SA-4
SWA-PA-03729-LA-1301170R1 [***] SA-5
SWA-PA-03729-LA-1602486 [***] SA-5
* Denotes revision to Page 1 or Page 2 only to reference 737-7 (SA-2)
SWA-PA-03729 SA-5
BOEING PROPRIETARY
Page 4
INACTIVE / DELETED TABLES, EXHIBITS, AND LETTER AGREEMENTS
RESTRICTED LETTER AGREEMENTS
Letter Agreement Title Last Updated under SA Current Status
SWA-PA-03729-LA-1106472R1 [***] SA-2 Deleted under SA-4
SWA-PA-01810/03729-LA-
1301169
[***] SA-2 Deleted under SA-4
SWA-PA-03729 SA-5
BOEING PROPRIETARY
Page 5
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Airframe Model/MTOW:
737-8
175900pounds Detail Specification: D019A001-TBD(10/27/2011)2Q11ExternalFcst
Engine Model/Thrust:
CFMLEAP-1B26
tbd
Airframe Price Base
Year/Escalation Formula:
Jul-11ECI-MFG/CPI
Airframe Price:
[***]
Engine Price Base
Year/Escalation Formula:
N/AN/A
Optional Features:
[***]
Sub-Total of Airframe and
Features:
[***]
Airframe Escalation Data:
Engine Price (Per Aircraft):
[***]
Base Year Index (ECI): [***]
Aircraft Basic Price (Excluding
BFE/SPE):
[***]
Base Year Index (CPI): [***]
Buyer Furnished Equipment
(BFE) Estimate:
[***]
Seller Purchased Equipment
(SPE) Estimate:
[***]
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Aircraft
Block
Notes
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Jul-2017 1 [***]
36929 A Note
1
[***] [***] [***] [***] [***]
Jul-2017 2 [***]
42558,42559 C Note
1
[***] [***] [***] [***] [***]
Aug-
2017
3 [***]
36979,36930,36984
A Note
1
[***] [***] [***] [***] [***]
Aug-
2017
3 [***]
42563,42566,42567 C Note
1
[***] [***] [***] [***] [***]
Sep-
2017
1 [***]
36934 A Note
1
[***] [***] [***] [***] [***]
Oct-2017 1 [***]
36988 A
[***] [***] [***] [***] [***]
Oct-2017 1 [***]
42556 C
[***] [***] [***] [***] [***]
Nov-
2017
1 [***]
36989 A
[***] [***] [***] [***] [***]
Nov-
2017
1 [***]
42554 C
[***] [***] [***] [***] [***]
Jan-2018 1 [***]
42544 A
[***] [***] [***] [***] [***]
Jan-2018 1 [***]
42570 C
[***] [***] [***] [***] [***]
Mar-
2018
1 [***]
42571 C
[***] [***] [***] [***] [***]
Jun-
2018
1 [***]
42546 A
[***] [***] [***] [***] [***]
Jul-2018 1 [***]
42547 A
[***] [***] [***] [***] [***]
Jul-2018 1 [***]
42572 C
[***] [***] [***] [***] [***]
Aug-
2018
1 [***]
42548 A
[***] [***] [***] [***] [***]
Sep-
2018
1 [***]
42574
[***] [***] [***] [***] [***]
Sep-
2018
1 [***]
37019 A
[***] [***] [***] [***] [***]
SWA-PA-03729 58681.1F.TXT BOEING PROPRIETARY
SA-5
Page 1
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Aircraft
Block
Notes
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Oct-
2018
1 [***]
42575
[***] [***] [***] [***] [***]
Oct-
2018
1 [***]
42549 A
[***] [***] [***] [***] [***]
Nov-
2018
1 [***]
42573
[***] [***] [***] [***] [***]
Dec-
2018
1 [***]
42576
[***] [***] [***] [***] [***]
Mar-
2021
1 [***]
42648
[***] [***] [***] [***] [***]
Apr-
2021
3 [***]
42649,42650,42651
[***] [***] [***] [***] [***]
May-
2021
3 [***]
42652,42653,42654
[***] [***] [***] [***] [***]
Jun-
2021
3 [***]
42655,42656,42670
[***] [***] [***] [***] [***]
Jul-
2021
3 [***]
42657,42658,42671
[***] [***] [***] [***] [***]
Mar-
2022
2 [***]
42678,42679
[***] [***] [***] [***] [***]
Apr-
2022
3 [***]
42680,42681,42688
[***] [***] [***] [***] [***]
May-
2022
3 [***]
42682,42683,42684
[***] [***] [***] [***] [***]
Jun-
2022
3 [***]
42685,42686,42687
[***] [***] [***] [***] [***]
Jul-
2022
2 [***]
42689,42690
[***] [***] [***] [***] [***]
Aug-
2022
2 [***]
42693,42695
[***] [***] [***] [***] [***]
Jan-
2023
3 [***]
42577, 42560,42565
[***] [***] [***] [***] [***]
Feb-
2023
2 [***]
42562,42564
[***] [***] [***] [***] [***]
Feb-
2023
1 [***]
37042 A
[***] [***] [***] [***] [***]
Mar-
2023
1 [***]
42557
[***] [***] [***] [***] [***]
Mar-
2023
1 [***]
42550 A
[***] [***] [***] [***] [***]
Mar-
2023
1 [***]
36732 B
[***] [***] [***] [***] [***]
Apr-
2023
1 [***]
42555
[***] [***] [***] [***] [***]
Apr-
2023
1 [***]
42551 A
[***] [***] [***] [***] [***]
Apr-
2023
1 [***]
38806 B
[***] [***] [***] [***] [***]
May-
2023
2 [***]
42594, 42568
[***] [***] [***] [***] [***]
May-
2023
1 [***]
37043 A
[***] [***] [***] [***] [***]
Jun-
2023
1 [***]
42581
[***] [***] [***] [***] [***]
Jun-
2023
2 [***]
37034, 42536
A
[***] [***] [***] [***] [***]
Jul-
2023
2 [***]
42597, 42582
[***] [***] [***] [***] [***]
SWA-PA-03729 58681.1F.TXT BOEING PROPRIETARY
SA-5
Page 2
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Aircraft
Block
Notes
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Jul-2023 1 [***]
36722 B
[***] [***] [***] [***] [***]
Aug-
2023
1 [***]
42593
[***] [***] [***] [***] [***]
Aug-
2023
2 [***]
42552, 42537
A
[***] [***] [***] [***] [***]
Sep-
2023
2 [***]
42601, 42578
[***] [***] [***] [***] [***]
Sep-
2023
1 [***]
36727 B
[***] [***] [***] [***] [***]
Oct-2023 2 [***]
42605, 42579
[***] [***] [***] [***] [***]
Oct-2023 1 [***]
42538 A
[***] [***] [***] [***] [***]
Nov-
2023
1 [***]
42580
[***] [***] [***] [***] [***]
Nov-
2023
1 [***]
38815 B
[***] [***] [***] [***] [***]
Dec-
2023
1 [***]
42583
[***] [***] [***] [***] [***]
Dec-
2023
1 [***]
42539 A
[***] [***] [***] [***] [***]
Jan-2024 3 [***]
42611, 42584,42585
[***] [***] [***] [***] [***]
Jan-
2024
1 [***]
42553 A
[***] [***] [***] [***] [***]
Feb-
2024
3 [***]
42612, 42596,42599
[***] [***] [***] [***] [***]
Feb-
2024
1 [***]
35970 B
[***] [***] [***] [***] [***]
Mar-
2024
1 [***]
42607
[***] [***] [***] [***] [***]
Mar-
2024
3 [***]
38817, 35968, 35972
B
[***] [***] [***] [***] [***]
Apr-
2024
2 [***]
42617, 42606
[***] [***] [***] [***] [***]
Apr-
2024
1 [***]
42540 A
[***] [***] [***] [***] [***]
Apr-
2024
1 [***]
36736 B
[***] [***] [***] [***] [***]
May-
2024
3 [***]
42619, 42622, 42608
[***] [***] [***] [***] [***]
May-
2024
1 [***]
42541 A
[***] [***] [***] [***] [***]
Jun-
2024
1 [***]
42610
[***] [***] [***] [***] [***]
Jun-
2024
1 [***]
42542 A
[***] [***] [***] [***] [***]
Jun-
2024
1 [***]
33941 B
[***] [***] [***] [***] [***]
Jul-2024 1 [***]
42615
[***] [***] [***] [***] [***]
Jul-2024 2 [***]
35963, 35967
B
[***] [***] [***] [***] [***]
Aug-
2024
2 [***]
42624, 42626
[***] [***] [***] [***] [***]
Aug-
2024
1 [***]
42543 A
[***] [***] [***] [***] [***]
SWA-PA-03729 58681.1F.TXT BOEING PROPRIETARY
SA-5
Page 3
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Aircraft
Block
Notes
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Sep-
2024
1 [***]
42630
[***] [***] [***] [***] [***]
Sep-
2024
2 [***]
36730, 36733
B
[***] [***] [***] [***] [***]
Oct-
2024
2 [***]
42625, 42636
[***] [***] [***] [***] [***]
Oct-
2024
1 [***]
33940 B
[***] [***] [***] [***] [***]
Nov-
2024
1 [***]
42639
[***] [***] [***] [***] [***]
Nov-
2024
2 [***]
35971, 35974
B
[***] [***] [***] [***] [***]
Dec-
2024
2 [***]
42628, 42640
[***] [***] [***] [***] [***]
Dec-
2024
1 [***]
35975 B
[***] [***] [***] [***] [***]
Jan-
2025
2 [***]
42633, 42634
[***] [***] [***] [***] [***]
Jan-
2025
2 [***]
38804, 38805 B
[***] [***] [***] [***] [***]
Feb-
2025
3 [***]
42637, 42641, 42643
[***] [***] [***] [***] [***]
Feb-
2025
1 [***]
36729 B
[***] [***] [***] [***] [***]
Mar-
2025
4 [***]
42644, 42645, 42646, 42647
[***] [***] [***] [***] [***]
Apr-
2025
4 [***]
42659, 42660, 42661, 42662
[***] [***] [***] [***] [***]
May-
2025
3 [***]
42663, 42664, 42666
[***] [***] [***] [***] [***]
Jun-
2025
3 [***]
42665, 42667, 42669
[***] [***] [***] [***] [***]
Jul-
2025
3 [***]
42668, 42672, 42673
[***] [***] [***] [***] [***]
Aug-
2025
3 [***]
42674, 42675, 42691
[***] [***] [***] [***] [***]
Sep-
2025
3 [***]
42676, 42677, 42694
[***] [***] [***] [***] [***]
Oct-
2025
3 [***]
42692, 42696, 42697
[***] [***] [***] [***] [***]
Nov-
2025
3 [***]
42698, 42699, 42700
[***] [***] [***] [***] [***]
Dec-
2025
3
[***]
42701, 42702, 42703
[***] [***] [***] [***] [***]
Total:170
* [***]
** Manufacturer Serial Numbers (MSN) are for reference only and are subject to change.
Notes:
[***]
SWA-PA-03729 58681.1F.TXT BOEING PROPRIETARY
SA-5
Page 4
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106467R1
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and Southwest
Airlines Co. (Customer) relating to Model 737-8 and Model 737-7 aircraft
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
SWA-PA-03729-LA-1106467R1 SA-5
[***] BOEING PROPRIETARY
Page 1
2.[***]
3. Assignment.
Unless otherwise noted herein, [***] described in this Letter Agreement are provided as a financial accommodation to
Customer and in consideration of Customer’s taking title to the 737-8 Aircraft at time of delivery and becoming the operator
of such 737-8 Aircraft. This Letter Agreement cannot be assigned, in whole or in part, without the prior written consent of
Boeing.
4. Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without
SWA-PA-03729-LA-1106467R1 SA-5
[***] BOEING PROPRIETARY
Page 2
Boeing’s consent except as may be required by applicable law or governmental regulations. Customer shall be fully
responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Jon W. Lewis
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: June 17, 2016
SOUTHWEST AIRLINES CO.
By /s/ Tammy Romo
Its
EVP & CFO
SWA-PA-03729-LA-1106467R1 SA-5
[***] BOEING PROPRIETARY
Page 3
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106473R1
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
References:
1) Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing
Company (Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and
Model 737-7 aircraft
2) Letter Agreement SWA-PA-03729-LA-1106471 entitled “Substitute Aircraft” (Substitution
Letter)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
SWA-PA-03729-LA-1106473R1
SA-5
[***] BOEING PROPRIETARY
Page 1
2. [***]
3. Assignment.
Unless otherwise noted herein, [***] to Customer and in consideration of Customer’s taking title to the Substitute
Aircraft at time of delivery and becoming the operator of the Substitute Aircraft. This Letter Agreement cannot be assigned,
in whole or in part, without the prior written consent of Boeing.
4. Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting,
SWA-PA-03729-LA-1106473R1
SA-5
[***] BOEING PROPRIETARY
Page 2
finance, administration and other functions necessary to finance and purchase, deliver or lease the Aircraft) and who
understand they are not to disclose its contents to any other person or entity (other than those to whom disclosure is
permitted by this Article) without the prior written consent of Boeing and (c) any auditors and attorneys of Customer who
have a need to know such information and have signed a confidentiality agreement in the same form and substance similar
to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties is not permitted without
Boeing’s consent except as may be required by applicable law or governmental regulations. Customer shall be fully
responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Jon W Lewis
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: June 17, 2016
SOUTHWEST AIRLINES CO.
By /s/ Tammy Romo
Its EVP & CFO
SWA-PA-03729-LA-1106473R1
SA-5
[***] BOEING PROPRIETARY
Page 3
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106474R1
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: Option Aircraft
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft and Model 737-7 aircraft
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. Right to Purchase Option Aircraft.
Subject to the terms and conditions contained in this Letter Agreement, in addition to the Aircraft described in Table
1 to the Purchase Agreement as of the date of execution of this Letter Agreement, Customer will have the option to
purchase additional Boeing Model 737-8 aircraft as option aircraft (Option Aircraft).
2. Delivery.
The number of aircraft and delivery years is listed in the Attachment 1 to this Letter Agreement.
3. Configuration.
3.1 Subject to the provisions of Article 3.2, below, the configuration for the Option Aircraft will be the Detail
Specification for Boeing Model 7378 aircraft at the revision level in effect at the time of Definitive Agreement (as defined in
Article 8). Such Detail Specification will be revised to include (i) changes applicable to the Detail Specification that are
developed by Boeing between the Option Exercise Date (as defined below) and the signing of the Definitive Agreement, (ii)
changes required to obtain required regulatory certificates, and (iii) other changes as mutually agreed.
3.2 Boeing reserves the right to configure the Option Aircraft starting from a different configuration specification,
provided that it can achieve the same configuration which would result pursuant to the provisions of Article 3.1.
SWA-PA-03729-LA-1106474R1
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Option Aircraft Page 1
BOEING PROPRIETARY
4. [***]
5. [***]
SWA-PA-03729-LA-1106474R1
SA-5
Option Aircraft Page 2
BOEING PROPRIETARY
6. [***]
7. [***]
SWA-PA-03729-LA-1106474R1
SA-5
Option Aircraft Page 3
BOEING PROPRIETARY
8. [***]
9. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Option Aircraft and
cannot be assigned in whole or in part.
10. Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
[Signature page follows.]
[Remainder of page intentionally left blank.]
SWA-PA-03729-LA-1106474R1
SA-5
Option Aircraft Page 4
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By /s/ Jon W Lewis
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: June 17, 2016
SOUTHWEST AIRLINES CO.
By /s/ Tammy Romo
Its
EVP & CFO
SWA-PA-03729-LA-1106474R1
SA-5
Option Aircraft Page 5
BOEING PROPRIETARY
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Airframe Model/MTOW: 737-8 175900pounds Detail Specification: D019A007-NEW(11/4/2011) 2Q11ExternalFcst
Engine Model/Thrust: CFMLEAP-1B26 0pounds Airframe Price Base Year/Escalation
Formula:
Jul-11 ECI-MFG/CPI
Airframe Price: [***] Engine Price Base Year/Escalation Formula: N/A N/A
Optional Features: [***]
Sub-Total of Airframe and Features: [***] Airframe Escalation Data:
Engine Price (Per Aircraft): [***] Base Year Index (ECI): [***]
Aircraft Basic Price (Excluding BFE/SPE): [***] Base Year Index (CPI): [***]
Buyer Furnished Equipment (BFE)
Estimate:
[***]
Seller Purchased Equipment (SPE)
Estimate:
[***]
Non-Refundable Deposit/Aircraft at Def
Agreemt:
[***]
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Jul-2019 2 [***]
[***]
[***] [***] [***] [***] [***]
Sep-2019 1 [***]
[***]
[***] [***] [***] [***] [***]
Oct-2019 2 [***]
[***]
[***] [***] [***] [***] [***]
Apr-2020 1 [***]
[***]
[***] [***] [***] [***] [***]
Jun-2020 1 [***]
[***]
[***] [***] [***]
[***]
[***]
Jul-2020 2 [***]
[***]
[***] [***] [***] [***] [***]
Aug-2020 2 [***]
[***]
[***] [***] [***] [***] [***]
Sep-2020 2 [***]
[***]
[***] [***] [***] [***] [***]
Jan-2021 1 [***]
[***]
D [***] [***] [***] [***] [***]
Jan-2021 1 [***]
[***]
[***] [***] [***] [***] [***]
Feb-2021 1 [***]
[***]
D [***] [***] [***] [***] [***]
Mar-2021 1 [***]
[***]
[***] [***] [***] [***] [***]
Apr-2021 1 [***]
[***]
D [***] [***] [***] [***] [***]
SWA‑PA‑03729‑LA1106474 58960-1O.TXT
BOEING PROPRIETARY
SA-5
Page 1
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At Signing
[***]
24
Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Apr-2021 1 [***]
***
[***] [***] [***] [***] [***]
May-2021 1 [***]
***
D [***] [***] [***] [***] [***]
May-2021 1 [***]
***
[***] [***] [***] [***] [***]
Jun-2021 1 [***]
***
D [***] [***] [***] [***] [***]
Jul-2021 2 [***]
***
[***] [***] [***] [***] [***]
Jul-2021 1 [***]
***
D [***] [***] [***] [***] [***]
Aug-2021 1 [***]
***
D [***] [***] [***] [***] [***]
Sep-2021 1 [***]
***
[***] [***] [***] [***] [***]
Oct-2021 1 [***]
***
D [***] [***] [***] [***] [***]
Oct-2021 1 [***]
***
[***] [***] [***] [***] [***]
Nov-2021 1 [***]
***
D [***] [***] [***] [***] [***]
Dec-2021 1 [***]
***
[***] [***] [***] [***] [***]
Jan-2022 1 [***]
***
D [***] [***] [***] [***] [***]
Jan-2022 1 [***]
***
[***] [***] [***] [***] [***]
Feb-2022 1 [***]
***
D [***] [***] [***] [***] [***]
Feb-2022 1 [***]
***
[***] [***] [***] [***] [***]
Mar-2022 1 [***]
***
D [***] [***] [***] [***] [***]
Mar-2022 1 [***]
***
[***] [***] [***] [***] [***]
Apr-2022 1 [***]
***
D [***] [***] [***] [***] [***]
May-2022 1 [***]
***
[***] [***] [***] [***] [***]
Jun-2022 1 [***]
***
D [***] [***] [***] [***] [***]
Jul-2022 1 [***]
***
[***] [***] [***] [***] [***]
Jul-2022 1 [***]
***
D [***] [***] [***] [***] [***]
Aug-2022 1 [***]
***
[***] [***] [***] [***] [***]
Sep-2022 1 [***]
***
D [***] [***] [***] [***] [***]
SWA‑PA‑03729‑LA1106474 58960-1O.TXT
BOEING PROPRIETARY
SA-5
Page 2
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Oct-2022 1 [***]
[***]
[***] [***] [***] [***] [***]
Oct-2022 1 [***]
[***]
D [***] [***] [***] [***] [***]
Nov-2022 1 [***]
[***]
[***] [***] [***] [***] [***]
Nov-2022 1 [***]
[***]
D [***] [***] [***] [***] [***]
Dec-2022 1 [***]
[***]
[***] [***] [***] [***] [***]
Dec-2022 1 [***]
[***]
D [***] [***] [***] [***] [***]
Jan-2023 1 [***]
[***]
[***] [***] [***] [***] [***]
Jan-2023 1 [***]
[***]
D [***] [***] [***] [***] [***]
Feb-2023 1 [***]
[***]
[***] [***] [***] [***] [***]
Feb-2023 1 [***]
[***]
D [***] [***] [***] [***] [***]
Mar-2023 1 [***]
[***]
[***] [***] [***] [***] [***]
Mar-2023 1 [***]
[***]
D [***] [***] [***] [***] [***]
Apr-2023 1 [***]
[***]
[***] [***] [***] [***] [***]
Apr-2023 1 [***]
[***]
D [***] [***] [***] [***] [***]
May-2023 1 [***]
[***]
[***] [***] [***] [***] [***]
May-2023 1 [***]
[***]
D [***] [***] [***] [***] [***]
Jun-2023 1 [***]
[***]
[***] [***] [***] [***] [***]
Jun-2023 1 [***]
[***]
D [***] [***] [***] [***] [***]
Jul-2023 1 [***]
[***]
[***] [***] [***] [***] [***]
Aug-2023 1 [***]
[***]
D [***] [***] [***] [***] [***]
Aug-2023 1 [***]
[***]
[***] [***] [***] [***] [***]
Sep-2023 1 [***]
[***]
D [***] [***] [***] [***] [***]
Sep-2023 1 [***]
[***]
[***] [***] [***] [***] [***]
Oct-2023 1 [***]
[***]
D [***] [***] [***] [***] [***]
Oct-2023 1 [***]
[***]
[***] [***] [***] [***] [***]
SWA‑PA‑03729‑LA1106474 58960-1O.TXT
BOEING PROPRIETARY
SA-5
Page 3
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Nov-
2023
1
[***] [***]
D
[***] [***]
[***] [***] [***]
Nov-
2023
1
[***] [***] [***] [***]
[***]
[***] [***]
Dec-
2023
1
[***] [***]
D
[***] [***]
[***]
[***] [***]
Dec-
2023
1
[***] [***] [***] [***]
[***]
[***] [***]
Jan-2024 1
[***] [***]
D
[***] [***]
[***]
[***] [***]
Jan-2024 1
[***] [***] [***] [***]
[***]
[***] [***]
Feb-2024 1
[***] [***]
D
[***] [***]
[***]
[***] [***]
Feb-2024 1
[***] [***] [***] [***]
[***]
[***] [***]
Mar-2024 1
[***] [***]
D
[***] [***]
[***]
[***] [***]
Mar-2024 1
[***] [***] [***] [***]
[***]
[***] [***]
Apr-2024 1
[***] [***]
D
[***] [***]
[***]
[***] [***]
Apr-2024 1
[***] [***] [***] [***]
[***]
[***] [***]
May-
2024
1
[***] [***]
D
[***] [***]
[***]
[***] [***]
May-
2024
1
[***] [***] [***] [***]
[***]
[***] [***]
Jun-2024 1
[***] [***]
D
[***] [***]
[***]
[***] [***]
Jun-2024 1
[***] [***] [***] [***]
[***]
[***] [***]
Jul-2024 1
[***] [***]
D
[***] [***]
[***]
[***] [***]
Aug-
2024
1
[***] [***] [***] [***]
[***]
[***] [***]
Aug-
2024
1
[***] [***]
D
[***] [***]
[***]
[***] [***]
Sep-2024 1
[***] [***] [***] [***]
[***]
[***] [***]
Sep-2024 1
[***] [***]
D
[***] [***]
[***]
[***] [***]
Oct-2024 1
[***] [***] [***] [***]
[***]
[***] [***]
Oct-2024 1
[***] [***]
D
[***] [***]
[***]
[***] [***]
Nov-
2024
1
[***] [***] [***] [***]
[***]
[***] [***]
Nov-
2024
1
[***] [***]
D
[***] [***]
[***]
[***] [***]
SWA‑PA‑03729‑LA1106474 58960-1O.TXT
BOEING PROPRIETARY
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Page 4
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv Payment
Base
Price Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At
Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Dec-
2024
2 [***]
[***]
[***] [***] [***] [***] [***]
Jan-2025 3
[***] [***] [***] [***] [***] [***] [***]
Feb-2025 3
[***] [***] [***] [***] [***] [***] [***]
Mar-2025 3
[***] [***] [***] [***] [***] [***] [***]
Apr-2025 3
[***] [***] [***] [***] [***] [***] [***]
May-
2025
3
[***] [***] [***] [***] [***] [***] [***]
Jun-2025 3
[***] [***] [***] [***] [***] [***] [***]
Jul-2025 3
[***] [***] [***] [***] [***] [***] [***]
Aug-
2025
3
[***] [***] [***] [***] [***] [***] [***]
Sep-2025 3
[***] [***] [***] [***] [***] [***] [***]
Oct-2025 3
[***] [***] [***] [***] [***] [***] [***]
Nov-
2025
3
[***] [***] [***] [***] [***] [***] [***]
Dec-
2025
3
[***] [***] [***] [***] [***] [***] [***]
Jan-2026 3
[***] [***] [***] [***] [***] [***] [***]
Feb-2026 3
[***] [***] [***] [***] [***] [***] [***]
Mar-2026 3
[***] [***] [***] [***] [***] [***] [***]
Apr-2026 3
[***] [***] [***] [***] [***] [***] [***]
May-
2026
3
[***] [***] [***] [***] [***] [***] [***]
Jun-2026 3
[***] [***] [***] [***] [***] [***] [***]
Jul-2026 3
[***] [***] [***] [***] [***] [***] [***]
Aug-
2026
3
[***] [***] [***] [***] [***] [***] [***]
Sep-2026 3
[***] [***] [***] [***] [***] [***] [***]
Oct-2026 3
[***] [***] [***] [***] [***] [***] [***]
Nov-
2026
3
[***] [***] [***] [***] [***] [***] [***]
Dec-
2026
3
[***] [***] [***] [***] [***] [***] [***]
SWA‑PA‑03729‑LA1106474 58960-1O.TXT
BOEING PROPRIETARY
SA-5
Page 5
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Jan-2027 3 [***]
[***]
[***] [***] [***] [***] [***]
Feb-2027 3 [***]
[***]
[***] [***] [***] [***] [***]
Mar-2027 3 [***]
[***]
[***] [***] [***] [***] [***]
Apr-2027 3 [***]
[***]
[***] [***] [***] [***] [***]
May-2027 3 [***]
[***]
[***] [***] [***] [***] [***]
Jun-2027 3 [***]
[***]
[***] [***] [***] [***] [***]
Jul-2027 3 [***]
[***]
[***] [***] [***] [***] [***]
Aug-2027 2
[***] [***] [***] [***] [***] [***] [***]
Total:191
* [***]
SWA‑PA‑03729‑LA1106474 58960-1O.TXT
BOEING PROPRIETARY
SA-5
Page 6
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106475R1
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
References:
1) Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing
Company (Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and
Model 737-7 aircraft
2) Letter Agreement SWA-PA-03729-LA-1106474 entitled “Option Aircraft” (Option Aircraft
Letter Agreement)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
SWA-PA-03729-LA-1106475R1 SA-5
[***] Page 1
BOEING PROPRIETARY
2. [***]
3. Assignment.
Unless otherwise noted herein, [***] to Customer and in consideration of Customer’s taking title to the Option Aircraft at time
of delivery and becoming the operator of the Option Aircraft. This Letter Agreement cannot be assigned, in whole or in part, without
the prior written consent of Boeing.
4. Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is considered by
Boeing as confidential and has value precisely because it is not available generally to other parties. Customer agrees to limit the
disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b) employees of Customer with a need to know
the contents for performing its
SWA-PA-03729-LA-1106475R1 SA-5
[***] Page 2
BOEING PROPRIETARY
obligations (including, without limitation, those employees performing accounting, finance, administration and other
functions necessary to finance and purchase, deliver or lease the Aircraft) and who understand they are not to disclose its
contents to any other person or entity (other than those to whom disclosure is permitted by this Article) without the prior
written consent of Boeing and (c) any auditors and attorneys of Customer who have a need to know such information and
have signed a confidentiality agreement in the same form and substance similar to this Article, or are otherwise bound by a
confidentiality obligation. Disclosure to other parties is not permitted without Boeing’s consent except as may be required by
applicable law or governmental regulations. Customer shall be fully responsible to Boeing for compliance with such
obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Jon W Lewis
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: June 17, 2016
SOUTHWEST AIRLINES CO.
By /s/ Tammy Romo
Its
EVP & CFO
SWA-PA-03729-LA-1106475R1 SA-5
[***] Page 3
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106476R1
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft and Model 737-7 aircraft
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
The Purchase Agreement incorporates the terms and conditions of Aircraft General Terms Agreement dated as of
December 13, 2011 identified as SWA-AGTA between Boeing and Customer (AGTA). This Letter Agreement modifies
certain terms and conditions of the AGTA with respect to the Aircraft.
1. [***]
SWA-PA-03729-LA-1106476R1 SA-5
[***] Page 1
BOEING PROPRIETARY
2. [***]
3. Assignment. Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this
Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be
assigned in whole or, in part.
SWA-PA-03729-LA-1106476R1 SA-5
[***] Page 2
BOEING PROPRIETARY
4. Confidentiality. Customer understands that certain commercial and financial information contained in this Letter
Agreement is considered by Boeing as confidential and has value precisely because it is not available generally to other
parties. Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the
same form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other
parties is not permitted without Boeing’s consent except as may be required by applicable law or governmental
regulations. Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Jon W Lewis
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: June 17, 2016
SOUTHWEST AIRLINES CO.
By /s/ Tammy Romo
Its
EVP & CFO
SWA-PA-03729-LA-1106476R1 SA-5
[***] Page 3
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1301170R1
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA03729 (Purchase Agreement) between The Boeing Company (Boeing) and Southwest
Airlines Co. (Customer) relating to Model 7378 and 737-7 aircraft
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
SWA-PA-03729-LA-1301170R1 SA-5
[***] Page 1
BOEING PROPRIETARY
2. [***]
3. Assignment.
Unless otherwise noted herein, [***] described in this Letter Agreement are provided [***] in consideration of Customer’s
taking title to the 737-7 Aircraft at time of delivery and becoming the operator of the 737-7 Aircraft. This Letter Agreement cannot be
assigned, in whole or in part, without the prior written consent of Boeing.
4. Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is considered by
Boeing as confidential and has value precisely because it is not available generally to other parties. Customer agrees to limit the
disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b) employees of Customer with a need to know
the contents for performing its obligations (including, without limitation, those employees performing accounting, finance,
administration and other functions necessary to finance and purchase, deliver or lease the Aircraft) and who understand they are
not to disclose its contents to any other person or entity (other than those to whom disclosure is permitted by this Article) without the
prior written consent of Boeing and (c) any auditors and attorneys of Customer who have a need to know such information and have
signed a confidentiality agreement in the same form and substance similar to this Article, or are otherwise bound by a confidentiality
obligation. Disclosure to other parties is not permitted without Boeing’s consent except as may be required by applicable law or
governmental regulations. Customer shall be fully responsible to Boeing for compliance with such obligations.
SWA-PA-03729-LA-1301170R1 SA-5
[***] Page 2
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By /s/ Jon W. Lewis
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: June 17, 2016
SOUTHWEST AIRLINES CO.
By /s/ Tammy Romo
Its
EVP & CFO
SWA-PA-03729-LA-1301170R1 SA-5
[***] Page 3
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1602486
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and Southwest
Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
[***]
1. Definitions.
In this Letter Agreement, the following terms have meanings as follows:
Aircraft refers to any of the Boeing Model 737-8 and 737-7 aircraft described in Table 1A and Table 1B, respectively, of the
Purchase Agreement.
[***]
[***]
Effective Date means the date on which SA-5 is mutually executed by the parties.
[***]
2. [***]
SWA PA 03729 LA 1602486 SA-5
[***] Page 1
BOEING PROPRIETARY
3. [***]
4. [***]
SWA PA 03729 LA 1602486 SA-5
[***] Page 2
BOEING PROPRIETARY
5. [***]
6. [***]
7. [***]
SWA PA 03729 LA 1602486 SA-5
[***] Page 3
BOEING PROPRIETARY
8. [***]
9. [***]
10. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be
assigned in whole or in part.
11. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
SWA PA 03729 LA 1602486 SA-5
[***] Page 4
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By /s/ Jon W Lewis
ACCEPTED AND AGREED TO this
Date: June 17, 2016
SOUTHWEST AIRLINES CO.
By /s/ Tammy Romo
Its
EVP & CFO
SWA PA 03729 LA 1602486 SA-5
[***] Page 5
BOEING PROPRIETARY
Attachment 1 To
Letter Agreement No. LA 1602486
[***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
SWA PA 03729 LA 1602486 SA-5
[***] Page 1
BOEING PROPRIETARY
SUPPLEMENTAL AGREEMENT NO. 6
to
Purchase Agreement No. 03729
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Relating to Boeing Model 737-8 and 737-7 Aircraft
THIS SUPPLEMENTAL AGREEMENT No. 6 (SA-6), entered into as of July 21, 2017, is made between THE BOEING
COMPANY, a Delaware corporation (Boeing), and SOUTHWEST AIRLINES CO., a Texas corporation (Customer).
RECITALS:
WHEREAS, Customer and Boeing entered into Purchase Agreement Number PA-03729 dated December 13, 2011, as
amended and supplemented, (Purchase Agreement) relating to the purchase and sale of Boeing Model 737-8 (737-8
Aircraft) and Model 737-7 aircraft (737-7 Aircraft); collectively the “Aircraft”. This SA6 is an amendment to and is
incorporated into the Purchase Agreement. Capitalized terms used herein but not otherwise defined shall have the meaning
set forth in the Purchase Agreement.
WHEREAS, Boeing and Customer agree to amend the Purchase Agreement to document Customer’s substitution of four
(4) Model 737-800 Option Aircraft (737-800 Substitution Option Aircraft) to four (4) Model 737-8 Option Aircraft (737-8
Substitution Option Aircraft), pursuant to the terms of SA-103 to Purchase Agreement No. 1810 between Customer and
Boeing (SA-103).
WHEREAS, Boeing and Customer agree to amend the Purchase Agreement to include [***] the first four (4) Boeing Model
737-8 Option Aircraft to be executed [***]
WHEREAS, Boeing and Customer agree to amend the Purchase Agreement to incorporate the Service Ready Validation
Program agreement.
NOW, THEREFORE, the parties agree that the Purchase Agreement is amended as set forth below and otherwise agree
as follows:
SWA-PA-03729 1 SA-6
BOEING PROPRIETARY
1. TABLE OF CONTENTS.
The Table of Contents of the Purchase Agreement is deleted in its entirety and replaced with a new Table of
Contents (attached), which lists Letter Agreements revised by this SA-6 and identified by “SA-6”. Such revised Table of
Contents is incorporated into the Purchase Agreement by this reference.
2. LETTER AGREEMENTS.
2.1. Attachment 1 to Letter Agreement SWA-PA-03729-LA-1106474R1, Option Aircraft, is deleted in its entirety
and replaced by a new Attachment 1 (attached). The new Attachment 1 reflects the addition of four (4) Boeing Model 737-8
Option Aircraft.
2.2. Letter Agreement SWA-PA-03729-LA-1106475R1, [***] , is deleted in its entirety and replaced with the attached
revised Letter Agreement -PA-03729-LA-1106475R2, which reflects the addition of the [***]
2.3. Letter Agreement SWA-PA-03729-LA-1503792, Service Ready Operational Validation, is added to the Purchase
Agreement.
2.4. Letter Agreement SWA-PA-03729-LA-1301168R2, [***], is deleted in its entirety and replaced with the attached
revised Letter Agreement SWA-PA-03729-LA-1301168R3, [***]
3. [***]
SWA-PA-03729 2 SA-6
BOEING PROPRIETARY
The Purchase Agreement is deemed to be supplemented to the extent herein provided and as so supplemented will
continue in full force and effect.
EXECUTED IN DUPLICATE as of the day and year first above written.
THE BOEING COMPANY SOUTHWEST AIRLINES CO.
By: /s/ Kyle Kersavage By: /s/ Chris Monroe
Chris Monroe
Its: Attorney-In-Fact Its: SVP, Finance
SWA-PA-03729 3 SA-6
BOEING PROPRIETARY
TABLE OF CONTENTS
ARTICLES TITLES
Article 1 Quantity, Model and Description SA-2
Article 2 Delivery Schedule
Article 3 Price
Article 4 Payment SA-2
Article 5 Additional Terms
TABLE TITLE
1A 737-8 Aircraft Information Table SA-5
1B 737-7 Aircraft Information Table SA-2
EXHIBIT
A1 737-8 Aircraft Configuration SA-2
A2 737-7 Aircraft Configuration SA-2
B* Aircraft Delivery Requirements and Responsibilities
SUPPLEMENTAL EXHIBITS TITLES
AE1* Escalation Adjustment/Airframe and Optional Features
BFE1* BFE Variables
CS1 Customer Support Variables
CS1-7MAX Customer Support Variables SA-2
EE1* Engine Escalation/Engine Warranty and Patent Indemnity
SLP1* Service Life Policy Components
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106463R1 Open Matters SA-2
SWA-PA-03729-LA-1106464* [***]
SWA-PA-03729 SA-6
Page 1
BOEING PROPRIETARY
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106465* [***]
SWA-PA-03729-LA-1106466 [***]
SWA-PA-03729-LA-1106467R1 [***] SA-5
SWA-PA-03729-LA-1106468* [***]
SWA-PA-03729-LA-1106469R1 [***] SA-2
SWA-PA-03729-LA-1106470R1 [***] SA-2
SWA-PA-03729-LA-1106471R1 Substitute Aircraft SA-2
SWA-PA-03729-LA-1106473R1 [***] SA-5
SWA-PA-03729-LA-1106474R1 Option Aircraft SA-5
Attachment 1 SA-6
SWA-PA-03729-LA-1106475R1 [***] SA-6
SWA-PA-03729-LA-1106476R1* [***] SA-5
SWA-PA-03729-LA-1106477* [***]
SWA-PA-03729-LA-1106478 [***]
SWA-PA-03729-LA-1106479R1 [***] SA-2
SWA-PA-03729-LA-1106480R1 [***] SA-2
SWA-PA-03729-LA-1106481R2 [***] SA-2
SWA-PA-03729-LA-1106482* [***]
SWA-PA-03729-LA-1106483* [***]
SWA-PA-03729-LA-1106484* [***]
Attachment A SA-2
Attachment B SA-2
SWA-PA-03729-LA-1106485* [***]
SWA-PA-03729-LA-1209080 [***] SA-1
SWA-PA-03729-LA-1210419 [***] SA-1
SWA-PA-03729 SA-6
Page 2
BOEING PROPRIETARY
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1300943 [***] SA-2
SWA-PA-03729-LA-1301168R3 [***] SA-6
SWA-PA-03729-LA-1301170R1 [***] SA-5
SWA-PA-03729-LA-1503792 Service Ready Operational Validation SA-6
SWA-PA-03729-LA-1602486 [***] SA-5
* Denotes revision to Page 1 or Page 2 only to reference 737-7 (SA-2)
SWA-PA-03729 SA-6
Page 3
BOEING PROPRIETARY
INACTIVE / DELETED TABLES, EXHIBITS, AND LETTER AGREEMENTS
RESTRICTED LETTER AGREEMENTS
Letter Agreement Title Last Updated under SA Current Status
SWA-PA-03729-LA-1106472R1 [***] SA-2 Deleted under SA-4
SWA-PA-01810/03729-LA-
1301169
[***]
SA-2 Deleted under SA-4
SWA-PA-03729 SA-6
Page 4
BOEING PROPRIETARY
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Airframe Model/MTOW: 737-8 175900pounds Detail Specification: D019A007-NEW
(11/4/2011)
2Q11ExternalFcst
Engine Model/Thrust: CFMLEAP-1B26
Airframe Price:
0pounds
[***]
Airframe Price Base
Year/Escalation Formula:
Engine Price Base Year/Escalation
Formula:
Jul-11
N/A
ECI-
MFG/CPI
N/A
Optional Features:
[***]
Sub-Total of Airframe and Features:
[***]
Airframe Escalation Data:
Engine Price (Per Aircraft): [***] Base Year Index (ECI):
[***]
Aircraft Basic Price (Excluding
BFE/SPE):
[***]
Base Year Index (CPI): [***]
Buyer Furnished Equipment (BFE)
Estimate:
[***]
Seller Purchased Equipment (SPE)
Estimate:
[***]
Non-Refundable Deposit/Aircraft at Def
Agreemt:
[***]
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos.
Prior to Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Jul-2019 2
[***]
[***]
[***] [***] [***] [***] [***]
Sep-2019 1
[***]
[***]
[***] [***] [***] [***] [***]
Oct-2019 2
[***]
[***]
[***] [***] [***] [***] [***]
Apr-2020 1
[***]
[***]
[***] [***] [***] [***] [***]
Jun-2020 1
[***]
[***]
[***] [***] [***] [***] [***]
Jul-2020 2
[***]
[***]
[***] [***] [***] [***] [***]
Aug-2020 2
[***]
[***]
[***] [***] [***] [***] [***]
Sep-2020 2
[***]
[***]
[***] [***] [***] [***] [***]
Jan-2021 1
[***]
[***] D
[***] [***] [***] [***] [***]
Jan-2021 1
[***]
[***]
[***] [***] [***] [***] [***]
Feb-2021 1
[***]
[***] D
[***] [***] [***] [***] [***]
Mar-2021 1
[***]
[***]
[***] [***] [***] [***] [***]
SWA‑PA‑03729‑LA1106474 58960-1O.TXT
BOEING PROPRIETARY
SA-6
Page 1
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos.
Prior to Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Apr-2021 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Apr-2021 1
[***]
[***]
[***] [***] [***] [***] [***]
May-
2021
1
[***]
[***] D
[***] [***] [***] [***] [***]
May-
2021
1
[***]
[***]
[***] [***] [***] [***] [***]
Jun-2021 1
[***]
[***] D
[***] [***] [***] [***] [***]
Jul-2021 2
[***]
[***]
[***] [***] [***] [***] [***]
Jul-2021 1
[***]
[***] D
[***] [***] [***] [***] [***]
Aug-
2021
1
[***]
[***] D
[***] [***] [***] [***] [***]
Sep-2021 2
[***]
[***]
[***] [***] [***] [***] [***]
Oct-2021 1
[***]
[***] D
[***] [***] [***] [***] [***]
Oct-2021 2
[***]
[***]
[***] [***] [***] [***] [***]
Nov-
2021
1
[***]
[***] D
[***] [***] [***] [***] [***]
Dec-
2021
1
[***]
[***]
[***] [***] [***] [***] [***]
Jan-2022 1
[***]
[***] D
[***] [***] [***] [***] [***]
Jan-2022 2
[***]
[***]
[***] [***] [***] [***] [***]
Feb-2022 1
[***]
[***] D
[***] [***] [***] [***] [***]
Feb-2022 2
[***]
[***]
[***] [***] [***] [***] [***]
Mar-2022 1
[***]
[***] D
[***] [***] [***] [***] [***]
Mar-2022 1
[***]
[***]
[***] [***] [***] [***] [***]
Apr-2022 1
[***]
[***] D
[***] [***] [***] [***] [***]
May-
2022
1
[***]
[***]
[***] [***] [***] [***] [***]
Jun-2022 1
[***]
[***] D
[***] [***] [***] [***] [***]
Jul-2022 1
[***]
[***]
[***] [***] [***] [***] [***]
Jul-2022 1
[***]
[***] D
[***] [***] [***] [***] [***]
SWA‑PA‑03729‑LA1106474 58960-1O.TXT
BOEING PROPRIETARY
SA-6
Page 2
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Aug-
2022
1
[***]
[***]
[***] [***] [***] [***] [***]
Sep-2022 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Oct-2022 1
[***]
[***]
[***] [***] [***] [***] [***]
Oct-2022 1
[***]
[***] D
[***] [***] [***] [***] [***]
Nov-
2022
1
[***]
[***]
[***] [***] [***] [***] [***]
Nov-
2022
1
[***]
[***] D
[***] [***] [***] [***] [***]
Dec-
2022
1
[***]
[***]
[***] [***] [***] [***] [***]
Dec-
2022
1
[***]
[***] D
[***] [***] [***] [***] [***]
Jan-2023 1
[***]
[***]
[***] [***] [***] [***] [***]
Jan-2023 1
[***]
[***] D
[***] [***] [***] [***] [***]
Feb-2023 1
[***]
[***]
[***] [***] [***] [***] [***]
Feb-2023 1
[***]
[***] D
[***] [***] [***] [***] [***]
Mar-
2023
1
[***]
[***]
[***] [***] [***] [***] [***]
Mar-
2023
1
[***]
[***] D
[***] [***] [***] [***] [***]
Apr-
2023
1
[***]
[***]
[***] [***] [***] [***] [***]
Apr-
2023
1
[***]
[***] D
[***] [***] [***] [***] [***]
May-
2023
1
[***]
[***]
[***] [***] [***] [***] [***]
May-
2023
1
[***]
[***] D
[***] [***] [***] [***] [***]
Jun-2023 1
[***]
[***]
[***] [***] [***] [***] [***]
Jun-2023 1
[***]
[***] D
[***] [***] [***] [***] [***]
Jul-2023 1
[***]
[***]
[***] [***] [***] [***] [***]
Aug-
2023
1
[***]
[***] D
[***] [***] [***] [***] [***]
Aug-
2023
1
[***]
[***]
[***] [***] [***] [***] [***]
Sep-2023 1
[***]
[***] D
[***] [***] [***] [***] [***]
SWA‑PA‑03729‑LA1106474 58960-1O.TXT
BOEING PROPRIETARY
SA-6
Page 3
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos.
Prior to Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Sep-2023 1
[***]
[***]
[***] [***] [***] [***] [***]
Oct-2023 1
[***]
[***] D
[***] [***] [***] [***] [***]
Oct-2023 1
[***]
[***]
[***] [***] [***] [***] [***]
Nov-2023 1
[***]
[***] D
[***] [***] [***] [***] [***]
Nov-2023 1
[***]
[***]
[***] [***] [***] [***] [***]
Dec-2023 1
[***]
[***] D
[***] [***] [***] [***] [***]
Dec-2023 1
[***]
[***]
[***] [***] [***] [***] [***]
Jan-2024 1
[***]
[***] D
[***] [***] [***] [***] [***]
Jan-2024 1
[***]
[***]
[***] [***] [***] [***] [***]
Feb-2024 1
[***]
[***] D
[***] [***] [***] [***] [***]
Feb-2024 1
[***]
[***]
[***] [***] [***] [***] [***]
Mar-2024 1
[***]
[***] D
[***] [***] [***] [***] [***]
Mar-2024 1
[***]
[***]
[***] [***] [***] [***] [***]
Apr-2024 1
[***]
[***] D
[***] [***] [***] [***] [***]
Apr-2024 1
[***]
[***]
[***] [***] [***] [***] [***]
May-2024 1
[***]
[***] D
[***] [***] [***] [***] [***]
May-2024 1
[***]
[***]
[***] [***] [***] [***] [***]
Jun-2024 1
[***]
[***] D
[***] [***] [***] [***] [***]
Jun-2024 1
[***]
[***]
[***] [***] [***] [***] [***]
Jul-2024 1
[***]
[***] D
[***] [***] [***] [***] [***]
Aug-2024 1
[***]
[***]
[***] [***] [***] [***] [***]
Aug-2024 1
[***]
[***] D
[***] [***] [***] [***] [***]
Sep-2024 1
[***]
[***]
[***] [***] [***] [***] [***]
Sep-2024 1
[***]
[***] D
[***] [***] [***] [***] [***]
SWA‑PA‑03729‑LA1106474 58960-1O.TXT
BOEING PROPRIETARY
SA-6
Page 4
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos.
Prior to Delivery):
At
Signing
[***]
24 Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Oct-2024 1
[***]
[***]
[***] [***]
[***]
[***]
[***]
Oct-2024 1
[***]
[***]
D [***] [***]
[***]
[***]
[***]
Nov-
2024
1
[***]
[***]
[***] [***]
[***]
[***]
[***]
Nov-
2024
1
[***]
[***]
D [***] [***]
[***]
[***]
[***]
Dec-2024 2
[***]
[***]
[***] [***]
[***]
[***]
[***]
Jan-2025 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
Feb-2025 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
Mar-2025 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
Apr-2025 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
May-2025 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
Jun-2025 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
Jul-2025 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
Aug-2025 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
Sep-2025 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
Oct-2025 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
Nov-2025 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
Dec-2025 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
Jan-2026 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
Feb-2026 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
Mar-2026 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
Apr-2026 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
May-2026 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
Jun-2026 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
Jul-2026 3
[***]
[***]
[***] [***]
[***]
[***]
[***]
SWA‑PA‑03729‑LA1106474 58960-1O.TXT
BOEING PROPRIETARY
SA-6
Page 5
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos.
Prior to Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Aug-
2026
3
[***]
[***] [***]
[***] [***] [***]
[***]
Sep-2026 3
[***]
[***] [***]
[***] [***] [***]
[***]
Oct-2026 3
[***]
[***] [***]
[***] [***] [***]
[***]
Nov-
2026
3
[***]
[***] [***]
[***] [***] [***]
[***]
Dec-2026 3
[***]
[***] [***]
[***] [***] [***]
[***]
Jan-2027 3
[***]
[***] [***]
[***] [***] [***]
[***]
Feb-2027 3
[***]
[***] [***]
[***] [***] [***]
[***]
Mar-2027 3
[***]
[***] [***]
[***] [***] [***]
[***]
Apr-2027 3
[***]
[***] [***]
[***] [***] [***]
[***]
May-2027 3
[***]
[***] [***]
[***] [***] [***]
[***]
Jun-2027 3
[***]
[***] [***]
[***] [***] [***]
[***]
Jul-2027 3
[***]
[***] [***]
[***] [***] [***]
[***]
Aug-2027 2
[***]
[***]
[***]
[***] [***] [***]
[***]
Total:
195
* [***]
SWA‑PA‑03729‑LA1106474 58960-1O.TXT
BOEING PROPRIETARY
SA-6
Page 6
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106475R2
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
References: 1)
Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing
Company (Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and
Model 737-7 aircraft
2)
Letter Agreement SWA-PA-03729-LA-1106474 entitled “Option Aircraft” (Option
Aircraft Letter Agreement)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. [***]
SWA-PA-03729 SA-6
[***] Page 1
BOEING PROPRIETARY
2. [***]
3. Assignment.
Unless otherwise noted herein, [***] to Customer and in consideration of Customer’s taking title to the Option Aircraft at time
of delivery and becoming the operator of the Option Aircraft. This Letter Agreement cannot be assigned, in whole or in part,
without the prior written consent of Boeing.
SWA-PA-03729 SA-6
[***] Page 2
BOEING PROPRIETARY
4. Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Kyle Kersavage
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: July 21 , 2017
SOUTHWEST AIRLINES CO.
By /s/ Chris Monroe
Its
Chris Monroe
SVP, Finance
SWA-PA-03729 SA-6
[***] Page 3
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1503792
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: Service Ready Operational Validation
References: 1) Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft
(Aircraft)
2) Letter Agreement SWA-PA-03729-LA-1106469R1, [***]
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All capitalized terms used
but not defined in this Letter Agreement will have the same meaning as in the Purchase Agreement.
1. Service Ready Operational Validation.
In order to ensure that the Aircraft is ready for entry into service upon delivery, Boeing and Customer will implement a service ready
operational validation program (SROV) which will aid in validating the combination of the Aircraft, support products and services as
well as Customer’s own preparation for entry into service. The SROV will use [***]
to accomplish the validation.
2. Validation Planning and Execution.
2.1 The SROV Plan will be carried out over the course of five (5) or fewer calendar days and simulate in-service operations.
2.2 The primary objectives of the SROV include validation in the following areas:(i) normal flight operations, (ii) limited non-normal
flight operations, (iii) routine maintenance activities, (iv) select non-routine maintenance activities, (v) airplane connectivity options
both on-ground and in-flight utilizing Customer’s IT infrastructure, (vi) typical aircraft operations (e.g. servicing, cargo operations),
and (vii) aircraft support products (e.g. flight data, maintenance data, parts data and ground support equipment/tooling).
2.2.1 SROV planning documentation will describe SROV conditions and activities (SROV Plan). Boeing and Customer will
jointly develop the SROV Plan in accordance with the following outline and constraints, to represent in-service operation.
SA-6
Page 1
BOEING PROPRIETARY
[***]
2.2.2 Prior to the start date of the SROV, a Boeing SROV project leader (SROV Project Lead) will be the primary
point of contact for communication and coordination between Customer and Boeing relating to the SROV Plan. After the
SROV begins, a Boeing test director (Boeing Test Director) will direct the SROV Plan and will serve as the primary
contact for Customer to discuss any matters relating to the SROV.
2.2.3 After the SROV begins, Customer will coordinate with the Boeing Test Director regarding any suggested
changes to the SROV Plan or additional validation conditions, examples of which are listed below. Inclusion of such
additional validation conditions will be at the discretion of the Boeing Test Director. If Boeing desires to make any changes
to the SROV Plan, then Boeing will coordinate such changes with Customer’s designated representative.
a) Non-routine activities – flaps-15 landing, simulated removal and replacement of an LRU or other “one-off” or
contingency scenarios related to normal operations.
b) Routine activities with intervals longer than the SROV execution duration – “A-check equivalent” maintenance
activity or demonstration of new (i) ground support equipment (GSE) or (ii) maintenance procedures.
c) Airline-specific scenarios – passenger-related preparations that depend on aircraft/airlines systems or procedures
to be successful.
3. Operation of the SROV Aircraft.
3.1 [***]
SWA-PA-03729-LA-1503792
SA-6
Service Ready Operational Validation Page 2
BOEING PROPRIETARY
3.2. [***]
3.3 Customer's Participation in the SROV.
3.3.1 Customer will submit to Boeing a list of personnel who may participate in flight activities as Essential Crew
under the conditions of 3.2 above, including a description of each person’s proposed role.
3.3.2 All Customer Essential Crew scheduled to participate in a given validation block will be required to attend a
mandatory preflight briefing scheduled by the Boeing Test Director which will be conducted prior to each validation block.
3.3.3 Customer will assist Boeing with any emergency arrangements or contingency arrangements in the event of
incident or damage to the SROV Aircraft or other difficulties.
3.3.4 Customer will appropriately familiarize Boeing personnel with Customer's operations and procedures, at no
charge to Boeing (including but not limited to Boeing flight crew and maintenance personnel).
3.4 Maintenance of the SROV Aircraft.
3.4.1 [***]
3.4.2 Records.
Boeing records will be the only official documentation of the SROV Aircraft.
SWA-PA-03729-LA-1503792
SA-6
Service Ready Operational Validation Page 3
BOEING PROPRIETARY
3.4.3 Fuel and Other Goods and Services.
3.4.3.1 Customer and Boeing will work together to ensure that appropriate landing slots, gates and other
operational requirements and services are arranged in advance at all airports where the SROV Aircraft will land. Where Customer's
established relationships and onsite personnel and resources will enable Customer to make more advantageous arrangements,
Customer will, upon Boeing request, make necessary arrangements on Boeing's behalf or will assist Boeing in making such
arrangements, as appropriate.
3.4.3.2 [***]
3.4.3.3[***]
Boeing Commercial Airplane Group
P.O. Box 3707, Mail Stop T
Seattle, Washington 981242207
Attention: TBD
Flight Test
Supporting Services
Telephone: (206) TBD
Facsimile: (206) TBD
3.4.3.3 [***]
4. [***]
SWA-PA-03729-LA-1503792
SA-6
Service Ready Operational Validation Page 4
BOEING PROPRIETARY
SWA-PA-03729-LA-1503792
SA-6
Service Ready Operational Validation Page 5
BOEING PROPRIETARY
5. Realization of Additional Objectives during SROV.
The primary objectives of the SROV are described in Paragraph 2.1 above. Other objectives are secondary, and may be
pursued when, in Boeing's and Customer’s reasonable judgment, such secondary objective will not: (i) interfere with nor
jeopardize the primary objectives, (ii) lengthen the SROV schedule or (iii) [***]
[***]
SWA-PA-03729-LA-1503792
SA-6
Service Ready Operational Validation Page 6
BOEING PROPRIETARY
6. Contingencies.
6.1 SROV Aircraft Airworthiness Certification.
Boeing shall make reasonable and timely efforts to obtain an experimental airworthiness certificate or make other
arrangements for airworthiness certification of the SROV Aircraft in order to conduct the SROV Plan. In the event that
Boeing is not successful in obtaining the necessary airworthiness certification and cannot make alternate arrangements in
support of the SROV Plan, Boeing and Customer will mutually agree to revisions to the SROV Plan to facilitate such
airworthiness certification of the SROV Aircraft. If Boeing and Customer (i) cannot agree on such revisions to the SROV
Plan or (ii) Boeing is unable to obtain an airworthiness certification of the SROV Aircraft, then Boeing may cancel any part
or all of the SROV.
6.2 Boeing Type Certificate Flight Testing.
Boeing will make every reasonable effort to ensure the SROV Aircraft is no longer required to support 737-8 type
certification during the SROV period. However, in the event that unplanned type certification testing requires use of the
SROV Aircraft during the period the parties plan to conduct the SROV, Boeing may (i) cancel the SROV (ii) re-schedule the
SROV and/ or (iii) adjust the scope of the SROV Plan as appropriate.
6.3 [***]
7. [***]
8. Confidentiality
8.1 The parties understand that certain commercial and financial information contained in this Letter Agreement is
considered by each party as confidential and has
SWA-PA-03729-LA-1503792
SA-6
Service Ready Operational Validation Page 7
BOEING PROPRIETARY
value precisely because it is not available generally to other parties. Each party agrees to limit the disclosure of the
contents of this Letter Agreement to each respective party’s (a) directors and officers, (b) employees with a need to know
the contents (including, without limitation, those employees performing accounting, finance, administration and other
functions necessary to finance and purchase, deliver or lease the Aircraft) and who understand they are not to disclose this
Letter Agreement’s contents to any other person or entity (other than those to whom disclosure is permitted by this
paragraph) without the prior written consent of the other party and (c) any independent auditors and attorneys of each party
who have a need to know such information and have signed a confidentiality agreement in the same form and substance
similar to this paragraph, or are otherwise bound by a confidentiality obligation. Disclosure to other parties is not permitted
without the other party's consent except as may be required by applicable law or governmental regulations. Each party shall
be fully responsible to the other for compliance with such obligations.
8.2 [***]
If the foregoing correctly sets forth your understanding of our agreement with respect to the matters treated above, please
indicate your acceptance and approval below.
Very truly yours,
THE BOEING COMPANY
By /s/ Jon W. Lewis
Its Attorney-in-Fact
ACCEPTED AND AGREED TO this
Date: August 30 , 2016
SOUTHWEST AIRLINES CO.
By /s/ Chris Monroe
Chris Monroe
Its VP, Treasurer
SWA-PA-03729-LA-1503792
SA-6
Service Ready Operational Validation Page 8
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1301168R3
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235
Subject: [***]
Reference: Purchase Agreement No. 03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-7 and 737-8 aircraft
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
[***]
1. [***]
SWA-PA-03729-LA-1301168R3 SA-6
[***] Page 1
BOEING PROPRIETARY
SWA-PA-03729-LA-1301168R3 SA-6
[***] Page 2
BOEING PROPRIETARY
2. Assignment.
The business terms described in this Letter Agreement are provided [***] in consideration of Customer’s taking title to
the applicable Firm Aircraft at time of delivery and becoming the operator of the applicable Firm Aircraft. Under no
circumstances will Customer be permitted to assign the business terms set forth herein.
3. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this paragraph) without the prior written consent of Boeing and (c) any auditors
and attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the
same form and substance similar to this paragraph, or are otherwise bound by a confidentiality obligation. Disclosure to
other parties is not permitted without Boeing’s consent except as may be required by applicable law or governmental
regulations. Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By /s/ Kyle Kersavage
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: July 21 , 2017
SOUTHWEST AIRLINES CO.
By /s/ Chris Monroe
Chris Monroe
Its SVP, Finance
SWA-PA-03729-LA-1301168R3 SA-6
[***] Page 3
BOEING PROPRIETARY
SUPPLEMENTAL AGREEMENT NO. 7
to
Purchase Agreement No. 03729
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Relating to Boeing Model 737-8 and 737-7 Aircraft
THIS SUPPLEMENTAL AGREEMENT No. 7 (SA-7), entered into as of August 25, 2017, is made between THE BOEING
COMPANY, a Delaware corporation (Boeing), and SOUTHWEST AIRLINES CO., a Texas corporation (Customer).
RECITALS:
WHEREAS, Customer and Boeing entered into Purchase Agreement Number PA-03729 dated December 13, 2011, as
amended and supplemented, (Purchase Agreement) relating to the purchase and sale of Boeing Model 737-8 (737-8
Aircraft) and Model 737-7 aircraft (737-7 Aircraft); collectively the “Aircraft”. This SA7 is an amendment to and is
incorporated into the Purchase Agreement. Capitalized terms used herein but not otherwise defined shall have the meaning
set forth in the Purchase Agreement.
WHEREAS, Boeing and Customer agree to amend the Purchase Agreement to incorporate a package of configuration
options and master changes previously accepted by Customer for 737-8 Aircraft, in accordance with LA-1106463R1,
paragraph 2, Open Matters.
WHEREAS, Boeing and Customer agree to amend the Purchase Agreement to document [***], in accordance with LA-
1106463R1, paragraph 3, Open Matters.
WHEREAS, Boeing and Customer agree to amend the Purchase Agreement to revise Supplemental Exhibit BFE1 to reflect
the selection dates and on dock dates of BFE for the 737-8 Aircraft, in accordance with LA-1106463R1, paragraph 2, Open
Matters.
NOW, THEREFORE, the parties agree that the Purchase Agreement is amended as set forth below and otherwise agree
as follows:
SWA-PA-03729
1 SA-7
BOEING PROPRIETARY
1. TABLE OF CONTENTS.
The Table of Contents of the Purchase Agreement is deleted in its entirety and replaced with a new Table of Contents
(attached), which lists the Tables, Exhibits, and Letter Agreements revised by this SA-7 and is identified by “SA-7”. Such
revised Table of Contents is incorporated into the Purchase Agreement by this reference.
2. TABLES.
Table 1A, Aircraft Delivery, Description, Price and Advance Payments – 737-8 Aircraft, is deleted in its entirety and
replaced by a new Table 1A (identified by "SA-7") attached hereto and incorporated into the Purchase Agreement by this
reference.
3. EXHIBITS.
3.1. Exhibit A1, 737-8 Aircraft Configuration, is deleted in its entirety and replaced by the updated Exhibit A1 attached
hereto and incorporated into the Purchase Agreement by this reference.
3.2. Exhibit BFE1, Buyer Furnished Equipment Variables, is deleted in its entirety and replaced by the updated Exhibit
BFE1 attached hereto and incorporated into the Purchase Agreement by this reference.
4. LETTER AGREEMENTS.
4.1. Letter Agreement SWA-PA-03729-LA-1400371, [***]
, is added to the Purchase Agreement.
4.2. Letter Agreement SWA-PA-03729-LA-1500831, [***]
, is added to the Purchase Agreement.
4.3. Attachment 1 to Letter Agreement SWA-PA-03729-LA-1106474R1, Option Aircraft, is deleted in its entirety and is
replaced by a new Attachment 1 (attached).
4.4. Letter Agreement SWA-PA-03729-LA-1106463R1, Open Matters, is deleted in its entirety and is replaced with the
attached revised Letter Agreement SWA-PA-03729-LA-1106463R2.
5. ADVANCE PAYMENT IMPACTS.
The revisions applied to Table 1A, Aircraft Delivery, Description, Price and Advance Payments – 737-8 Aircraft, result in
[***]
SWA-PA-03729 2 SA-7
BOEING PROPRIETARY
The Purchase Agreement is deemed to be supplemented to the extent herein provided and as so supplemented will
continue in full force and effect.
EXECUTED IN DUPLICATE as of the day and year first above written.
THE BOEING COMPANY SOUTHWEST AIRLINES CO.
By: /s/ Kyle Kersavage_______ By: /s/ Chris Monroe________
Chris Monroe
Its: __Attorney-In-Fact_______ Its: __SVP, Finance________
SWA-PA-03729 3 SA-7
BOEING PROPRIETARY
TABLE OF CONTENTS
ARTICLES TITLES
Article 1 Quantity, Model and Description SA-2
Article 2 Delivery Schedule
Article 3 Price
Article 4 Payment SA-2
Article 5 Additional Terms
TABLE TITLE
1A 737-8 Aircraft Information Table SA-7
1B 737-7 Aircraft Information Table SA-2
EXHIBIT
A1 737-8 Aircraft Configuration SA-7
A2 737-7 Aircraft Configuration SA-2
B* Aircraft Delivery Requirements and Responsibilities
SUPPLEMENTAL EXHIBITS TITLES
AE1* Escalation Adjustment/Airframe and Optional Features
BFE1 BFE Variables SA-7
CS1 Customer Support Variables
CS1-7MAX Customer Support Variables SA-2
EE1* Engine Escalation/Engine Warranty and Patent Indemnity
SLP1* Service Life Policy Components
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106463R2 Open Matters SA-7
SWA-PA-03729-LA-1106464* [***]
SWA-PA-03729
SA-7
Page 1
BOEING PROPRIETARY
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106465* [***]
SWA-PA-03729-LA-1106466 [***]
SWA-PA-03729-LA-1106467R1 [***] SA-5
SWA-PA-03729-LA-1106468* [***]
SWA-PA-03729-LA-1106469R1 [***] SA-2
SWA-PA-03729-LA-1106470R1 [***] SA-2
SWA-PA-03729-LA-1106471R1 Substitute Aircraft SA-2
SWA-PA-03729-LA-1106473R1 [***] SA-5
SWA-PA-03729-LA-1106474R1 Option Aircraft SA-5
Attachment 1 SA-7
SWA-PA-03729-LA-1106475R1 [***] SA-6
SWA-PA-03729-LA-1106476R1* [***] SA-5
SWA-PA-03729-LA-1106477* [***]
SWA-PA-03729-LA-1106478 [***]
SWA-PA-03729-LA-1106479R1 [***] SA-2
SWA-PA-03729-LA-1106480R1 [***] SA-2
SWA-PA-03729-LA-1106481R2 [***] SA-2
SWA-PA-03729-LA-1106482* [***]
SWA-PA-03729-LA-1106483* [***]
SWA-PA-03729-LA-1106484* [***]
Attachment A SA-2
Attachment B SA-2
SWA-PA-03729-LA-1106485* [***]
SWA-PA-03729-LA-1209080 [***]
SWA-PA-03729-LA-1210419 [***] SA-1
SWA-PA-03729
SA-7
Page 2
BOEING PROPRIETARY
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1300943 [***] SA-2
SWA-PA-03729-LA-1301168R3 [***] SA-6
SWA-PA-03729-LA-1301170R1 [***] SA-5
SWA-PA-03729-LA-1400371 [***] SA-7
SASWA-PA-03729-LA-1503792 Service Ready Operational Validation SA-6
SWA-PA-03729-LA-1500831
[***] SA-7
SWA-PA-03729-LA-1602486 [***] SA-
5
* Denotes revision to Page 1 or Page 2 only to reference 737-7 (SA-2)
SWA-PA-03729
SA-7
Page 3
BOEING PROPRIETARY
INACTIVE / DELETED TABLES, EXHIBITS, AND LETTER AGREEMENTS
RESTRICTED LETTER AGREEMENTS
Letter Agreement Title Last Updated under SA Current Status
SWA-PA-03729-LA-1106472R1
[***]
SA-2 Deleted under SA-4
SWA-PA-01810/03729-LA-1301169
[***]
SA-2 Deleted under SA-4
SWA-PA-03729
SA-7
Page 4
BOEING PROPRIETARY
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Airframe Model/MTOW: 737-8
Engine
Model/Thrust: CFMLEAP-1B28B1
181,200 pounds
28,800 pounds
Detail Specification:
Airframe Price Base
Year/Escalation
Formula:
D019A008-P
(5/1/2017)
Jul-11
ECI-
MFG/CPI
Airframe Price: [***]
***
***
Engine Price Base
Year/Escalation
Formula:
N/A N/A
Optional Features: [***]
Sub-Total of Airframe and Features: [***] Airframe Escalation
Data:
Engine Price (Per Aircraft): [***] Base Year Index (ECI): [***]
Aircraft Basic Price (Excluding
BFE/SPE):
[***]
Base Year Index (CPI): [***]
Buyer Furnished Equipment (BFE)
Estimate:
[***]
Seller Purchased Equipment (SPE)
Estimate:
[***]
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block
Notes
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Jul-2017 1 [***]
36929 [***] A Note1
[***] [***] [***] [***] [***]
Jul-2017 2 [***]
42558,42559
[***]
C Note1
[***] [***] [***] [***] [***]
Aug-
2017
3 [***]
36979,36930,36984
[***]
A Note1
[***] [***] [***] [***] [***]
Aug-
2017
3 [***]
42563,42566,42567
[***]
C Note1
[***] [***] [***] [***] [***]
Sep-
2017
1 [***]
36934
[***]
A Note1
[***] [***] [***] [***] [***]
Oct-2017 1 [***]
42544
[***]
A
[***] [***] [***] [***] [***]
Oct-2017 1 [***]
42570
[***]
C
[***] [***] [***] [***] [***]
Nov-
2017
1 [***]
36988
[***]
A
[***] [***] [***] [***] [***]
Dec-
2017
1 [***]
42554
[***]
C
[***] [***] [***] [***] [***]
Mar-
2018
1 [***]
36989
[***]
A
[***] [***] [***] [***] [***]
Mar-
2018
1 [***]
42571
[***]
C
[***] [***] [***] [***] [***]
Apr-
2018
1 [***]
42546
[***]
A
[***] [***] [***] [***] [***]
Jun-
2018
1 [***]
42572
[***]
C
[***] [***] [***] [***] [***]
Jul-2018 1 [***]
42547
[***]
A
[***] [***] [***] [***] [***]
Jul-2018 1 [***]
42556
[***]
C
[***] [***] [***] [***] [***]
Aug-
2018
1 [***]
42548
[***]
A
[***] [***] [***] [***] [***]
Sep-
2018
1 [***]
42574
[***]
[***] [***] [***] [***] [***]
Sep-
2018
1 [***]
37019
[***]
A
[***] [***] [***] [***] [***]
SWA‑PA‑03729 10697-1F.TXT
BOEING PROPRIETARY
SA-7
Page 1
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block
Notes
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Oct-2018 1 [***]
42575
[***]
[***] [***] [***] [***] [***]
Oct-2018 1 [***]
42549 A
[***] [***] [***] [***] [***]
Nov-
2018
1 [***]
42573
[***] [***] [***] [***] [***]
Dec-
2018
1 [***]
42576
[***] [***] [***] [***] [***]
Mar-
2021
1 [***]
42648
[***] [***] [***] [***] [***]
Apr-2021 3 [***]
42649,42650,42651
[***] [***] [***] [***] [***]
May-
2021
3 [***]
42652,42653,42654
[***] [***] [***] [***] [***]
Jun-2021 3 [***]
42655,42656,42670
[***] [***] [***] [***] [***]
Jul-2021 3 [***]
42657,42658,42671
[***] [***] [***] [***] [***]
Mar-
2022
2 [***]
42678,42679
[***] [***] [***] [***] [***]
Apr-2022 3 [***]
42680,42681,42688
[***] [***] [***] [***] [***]
May-
2022
3 [***]
42682,42683,42684
[***] [***] [***] [***] [***]
Jun-2022 3 [***]
42685,42686,42687
[***] [***] [***] [***] [***]
Jul-2022 2 [***]
42689,42690
[***] [***] [***] [***] [***]
Aug-
2022
2 [***]
42693,42695
[***] [***] [***] [***] [***]
Jan-2023 3 [***]
42577,42560,42565
[***] [***] [***] [***] [***]
Feb-
2023
2 [***]
42562,42564
[***] [***] [***] [***] [***]
Feb-
2023
1 [***]
37042 A
[***] [***] [***] [***] [***]
Mar-
2023
1 [***]
42557
[***] [***] [***] [***] [***]
Mar-
2023
1 [***]
42550 A
[***] [***] [***] [***] [***]
Mar-
2023
1 [***]
36732 B
[***] [***] [***] [***] [***]
Apr-2023 1 [***]
42555
[***] [***] [***] [***] [***]
Apr-2023 1 [***]
42551 A
[***] [***] [***] [***] [***]
Apr-2023 1 [***]
38806 B
[***] [***] [***] [***] [***]
May-
2023
2 [***]
42594,42568
[***] [***] [***] [***] [***]
May-
2023
1 [***]
37043 A
[***] [***] [***] [***] [***]
Jun-2023 1 [***]
42581
[***] [***] [***] [***] [***]
Jun-2023 2 [***]
[***] [***] [***] [***] [***]
37034,42536 A
Jul-2023 2 [***]
42597,42582
[***] [***] [***] [***] [***]
SWA‑PA‑03729 10697-1F.TXT
BOEING PROPRIETARY
SA-7
Page 2
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block
Notes
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Jul-2023 1 [***]
36722
B
[***] [***] [***] [***] [***]
Aug-
2023
1 [***]
42593
[***] [***] [***] [***] [***]
Aug-
2023
2 [***]
42552,42537 A
[***] [***] [***] [***] [***]
Sep-
2023
2 [***]
42601,42578
[***] [***] [***] [***] [***]
Sep-
2023
1 [***]
36727 B
[***] [***] [***] [***] [***]
Oct-2023 2 [***]
42605,42579
[***] [***] [***] [***] [***]
Oct-2023 1 [***]
42538 A
[***] [***] [***] [***] [***]
Nov-
2023
1 [***]
42580
[***] [***] [***] [***] [***]
Nov-
2023
1 [***]
38815 B
[***] [***] [***] [***] [***]
Dec-
2023
1 [***]
42583
[***] [***] [***] [***] [***]
Dec-
2023
1 [***]
42539 A
[***] [***] [***] [***] [***]
Jan-2024 3 [***]
42611,42584,42585
[***] [***] [***] [***] [***]
Jan-2024 1 [***]
42553 A
[***] [***] [***] [***] [***]
Feb-
2024
3 [***]
42612,42596,42599
[***] [***] [***] [***] [***]
Feb-
2024
1 [***]
35970 B
[***] [***] [***] [***] [***]
Mar-
2024
1 [***]
42607
[***] [***] [***] [***] [***]
Mar-
2024
3 [***]
38817,35968,35972 B
[***] [***] [***] [***] [***]
Apr-2024 2 [***]
42617,42606
[***] [***] [***] [***] [***]
Apr-2024 1 [***]
42540 A
[***] [***] [***] [***] [***]
Apr-2024 1 [***]
36736 B
[***] [***] [***] [***] [***]
May-
2024
3 [***]
42619,42622,42608
[***] [***] [***] [***] [***]
May-
2024
1 [***]
42541 A
[***] [***] [***] [***] [***]
Jun-2024 1 [***]
42610
[***] [***] [***] [***] [***]
Jun-2024 1 [***]
42542 A
[***] [***] [***] [***] [***]
Jun-2024 1 [***]
33941 B
[***] [***] [***] [***] [***]
Jul-2024 1 [***]
42615
[***] [***] [***] [***] [***]
Jul-2024 2 [***]
35963,35967 B
[***] [***] [***] [***] [***]
Aug-
2024
2 [***]
42624,42626
[***] [***] [***] [***] [***]
Aug-
2024
1 [***]
42543 A
[***] [***] [***] [***] [***]
SWA‑PA‑03729 10697-1F.TXT
BOEING PROPRIETARY
SA-7
Page 3
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block
Notes
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Sep-
2024
1 [***]
42630
[***] [***] [***] [***] [***]
Sep-
2024
2 [***]
36730,36733 B
[***] [***] [***] [***] [***]
Oct-2024 2 [***]
42625,42636
[***] [***] [***] [***] [***]
Oct-2024 1 [***]
33940 B
[***] [***] [***] [***] [***]
Nov-
2024
1 [***]
42639
[***] [***] [***] [***] [***]
Nov-
2024
2 [***]
35971,35974 B
[***] [***] [***] [***] [***]
Dec-
2024
2 [***]
42628,42640
[***] [***] [***] [***] [***]
Dec-
2024
1 [***]
35975 B
[***] [***] [***] [***] [***]
Jan-2025 2 [***]
42633,42634
[***] [***] [***] [***] [***]
Jan-2025 2 [***]
38804,38805 B
[***] [***] [***] [***] [***]
Feb-
2025
3 [***]
42637,42641,42643
[***] [***] [***] [***] [***]
Feb-
2025
1 [***]
36729 B
[***] [***] [***] [***] [***]
Mar-
2025
4 [***]
42644,42645,42646,42647
[***] [***] [***] [***] [***]
Apr-2025 4 [***]
42659,42660,42661,42662
[***] [***] [***] [***] [***]
May-
2025
3 [***]
42663,42664,42666
[***] [***] [***] [***] [***]
Jun-2025 3 [***]
42665,42667,42669
[***] [***] [***] [***] [***]
Jul-2025 3 [***]
42668,42672,42673
[***] [***] [***] [***] [***]
Aug-
2025
3 [***]
42674,42675,42691
[***] [***] [***] [***] [***]
Sep-
2025
3 [***]
42676,42677,42694
[***] [***] [***] [***] [***]
Oct-2025 3 [***]
42692,42696,42697
[***] [***] [***] [***] [***]
Nov-
2025
3 [***]
42698,42699,42700
[***] [***] [***] [***] [***]
Dec-
2025
3 [***]
42701,42702,42703
[***] [***] [***] [***] [***]
Total:
170
* [***]
** Manufacturer Serial Numbers (MSN) are for reference only and are subject to change.
Notes:
[***]
SWA‑PA‑03729 10697-1F.TXT
BOEING PROPRIETARY
SA-7
Page 4
737-8 AIRCRAFT CONFIGURATION
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Exhibit A1 to Purchase Agreement Number PA-03729
SWA-PA-03729
SA-7
Page A1-1
BOEING PROPRIETARY
Exhibit A1
737-8 AIRCRAFT CONFIGURATION
Dated December 13, 2011
relating to
BOEING MODEL 737-8 AIRCRAFT
The Detail Specification is Boeing document number D019A008SWA18P-1, revision NEW, released on June 30,
2017. The Detail Specification provides further description of Customer’s configuration set forth in this Exhibit A1. Such
Detail Specification will be comprised of Boeing configuration specification D019A008, Revision O, dated September 30,
2016 as amended to incorporate the optional features (Options) listed below, including the effects on Manufacturer's Empty
Weight (MEW) and Operating Empty Weight (OEW). As soon as practicable, Boeing will furnish to Customer copies of the
Detail Specification, which copies will reflect such Options. The Aircraft Basic Price reflects and includes all effects of such
Options, except such Aircraft Basic Price does not include the price effects of any Buyer Furnished Equipment or Seller
Purchased Equipment.
SWA-PA-03729
SA-7
Page A1-2
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
0110-000030 MAJORMODEL737AIRPLANE [***] [***] [***]
0110E131A08 MINORMODEL737-8AIRPLANE [***] [***] [***]
0170B401A73 CLIMATE-NORMALWEATHEROPERATIONS [***] [***] [***]
0170B871A31 GALLEYAFTCOMPLEX-G4BGALLEY-DOMEDAFTBULKHEAD(BASELINE) [***] [***] [***]
0170C204A96 CARGOLINERS-HEAVYDUTY-FORWARD [***] [***] [***]
0170C204A99 CARGOLINERS-HEAVYDUTY-AFT [***] [***] [***]
0170C430H07 PC-FLIGHTDECK-ROLLERSUNSHADES-DELETION-NUMBER2AND3
WINDOWS-FLIGHTDECK-SFE
[***] [***] [***]
0170C939A02 COMMUNICATIONS-BASICCOMMUNICATIONSCONFIGURATIONWITHHF [***] [***] [***]
0170D347B33 LAVATORYAFTCOMPLEX-TWOADVANCEDLAVATORIESWITHTWO
DOUBLEATTENDANTSEATS
[***] [***] [***]
0170D360B56 PC-LAVATORYAFTCOMPLEX-TWOLAVATORIESWITHTWODOUBLE
ATTENDANTSEATS,NOCURTAINANDUNIQUEHANDSETFACEPLATEDISPLAY
-BOEINGSKYINTERIOR
[***] [***] [***]
0170D387A08 AVIONICS-DUALFMCWITHMULTI-CONTROLDISPLAYUNIT [***] [***] [***]
0170D837A13 FLEXIBLECERTIFICATION [***] [***] [***]
0170E173B00 FLIGHTDECK-TWOOBSERVERS [***] [***] [***]
0170E656A04 AIRFRAME-737-8 [***] [***] [***]
0220E684A09 TYPECERTIFICATE&CERTIFICATEOFAIRWORTHINESS [***] [***] [***]
0221A609B52 DISPATCHWITHGEAREXTENDEDFORREVENUEFLIGHT [***] [***] [***]
0221B463A04 MP-CERT.OFTAKEOFF&LANDINGWITH15KNOTTAILWIND [***] [***] [***]
0221E029A02 SKID-RESISTANTRUNWAYTAKEOFFWITHANTISKIDSYSTEMINOPERATIVE [***] [***] [***]
0222E052A08 SHORTFIELDPERFORMANCEENHANCEMENT:INSTALLATIONOFTWO
POSITIONTAILSKID
[***] [***] [***]
0226B694H86 MP-GNSSLANDINGSYSTEM(GLS)-CATEGORYIAPPROACHCAPABILITY-
ACTIVATION-INLIEUOFPARTIALPROVISIONS
[***] [***] [***]
0226C594A28 GNSSLANDINGSYSTEM(GLS)-CATEGORYIAPPROACHCAPABILITY-PARTIAL
PROVISIONS
[***] [***] [***]
0226E437D67 MP-GNSSLANDINGSYSTEM(GLS)-CHANGEINCORP-CATEGORYIAPPROACH
CAPABILITY-ACTIVATION-INLIEUOFPARTIALPROVISIONS
[***] [***] [***]
0228E437A74 AIRPLANEFLIGHTMANUAL [***] [***] [***]
0252A541A02 ENGLISHUNITSFORFLIGHTANDOPERATIONSMANUALS,CDSINDICATIONS,
ANDFMCSPARAMETERS-CELSIUSTEMPERATURE
[***] [***] [***]
0254-000003 USPHSCERTIFICATEOFSANITARYCONSTRUCTION [***] [***] [***]
0315E684A03 CERTIFIEDOPERATIONALWEIGHTSANDSTRUCTURALDESIGNWEIGHTS [***] [***] [***]
1110E559D06 EXTERIORNON-REGULATORYMARKINGS [***] [***] [***]
1110E624B44 EXTERIORREGULATORYMARKINGSANDCOLORSCHEME [***] [***] [***]
1130E559D12 CARGOCOMPARTMENTPLACARDS [***] [***] [***]
1130E559D13 LIGHTEDSIGNS-BI-LINGUALSPANISH/ENGLISH [***] [***] [***]
1130E559D15 INTERIORPLACARDSANDMARKERS-737BOEINGSKYINTERIOR [***] [***] [***]
SWA-PA-03729
SA-7
Page A1-3
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
2103E437E01 MP-ACHEATEXCHANGEROUTLETTEMPERATUREMONITORINGSENSOR-
INSTALLATION
[***] [***] [***]
2103E437E14 MP-ACHEATEXCHANGEROUTLETTEMPERATUREMONITORINGSENSOR-
CHANGEINCORP-INSTALLATION
[***] [***] [***]
2130-000010 600FPMCABINPRESSUREASCENTRATE [***] [***] [***]
2130-000015 750FPMCABINPRESSUREDESCENTRATE [***] [***] [***]
2160-000025 CABINTEMPERATUREINDICATION-DEGREESFAHRENHEIT [***] [***] [***]
2170-000021 OZONECONTROL-SPACEPROVISIONSFORCATALYTICCONVERTERS [***] [***] [***]
2210-000003 AUTOFLIGHT-INHIBITGLIDESLOPECAPTUREPRIORTOLOCALIZERCAPTURE [***] [***] [***]
2210-000123 AUTOFLIGHT-FLIGHTDIRECTORTAKEOFFMODEWINGSLEVEL [***] [***] [***]
2210-000128 AUTOFLIGHT-CONTROLWHEELSTEERINGWARNING [***] [***] [***]
2210-000142 AUTOFLIGHT-ALTITUDEALERT-300/900FEET [***] [***] [***]
2210C175A38 AUTOFLIGHT-GO-AROUNDROLLMODE-LNAV [***] [***] [***]
2230-000137 AUTOTHROTTLE-FMCS-TAKEOFFPROFILETHRUSTREDUCTIONALTITUDE [***] [***] [***]
2310C410A91 COMMUNICATIONSCONTROLPANELS-DUALGABLESRADIOTUNINGPANELS
CAPABLEOF(2)HFSYSTEMSAND(3)VHFSYSTEMS(8.33KHZCAPABLE)-P/N
G7404-124-BFE/SPE
[***] [***] [***]
2312A639A46 VHFCOMMUNICATIONS-ACTIVATIONOFKEYLINETIMER [***] [***] [***]
2312E173A49 VHFCOMMUNICATIONS-TRIPLEHONEYWELLARINC750RTA-50DVHFFM
IMMUNETRANSCEIVERSWITH8.33KHZCHANNELSPACING,VDLMODE2,AND
CMCINTERFACECAPABILITY-P/N965-1696-021-BFE/SPE
[***] [***] [***]
2315E706A59 MP-SATCOM-INSTALLATIONOFPARTIALWIRINGANDMOUNTING
PROVISIONS-ICGMODELICS-300IRIDIUMSATCOMSYSTEMWITHASINGLE
TOPMOUNTEDDUALELEMENTIRIDIUMANTENNA
[***] [***] [***]
2321-000050 SELCAL-AVTECHFIVECHANNELDECODER-P/N1200008-000-BFE/SPE [***] [***] [***]
2321-000063 SELCAL-ANNUNCIATIONONAUDIOSELECTORPANELS [***] [***] [***]
2322C939A05 CMU-INSTALLATIONOFPARTIALPROVISIONSFORASINGLECMUIN
ACCORDANCEWITHARINC758
[***] [***] [***]
2322C939A06 COMMUNICATIONSMANAGEMENTUNIT(CMU)-DATALINKRECORDING
ACTIVATION
[***] [***] [***]
2322E437D59 MP-CMU-INSTALLATIONOFWIRINGPROVISIONSBETWEENTHEONBOARD
NETWORKSYSTEM(ONS)ANDTHECOMMUNICATIONMANAGEMENTUNIT
PROVISIONS
[***] [***] [***]
2322E516A03 CMU-INSTALLATIONOFHONEYWELLMARKIIARINC758LEVELAOACMU
W/ARINCSERVICEPROVIDER-DATALINKRECORDINGCAPABLE-P/N965-0758-
006-BFE/SPE
[***] [***] [***]
2324D197A18 EMERGENCYLOCATORTRANSMITTER(ELT)-ACRELECTRONICSAUTOMATIC
FIXED-WITHNAVIGATIONINTERFACEUNIT(NIU)-MODESBROADCAST-
WITHANTENNAP/N110-337-BFE/SPE
[***] [***] [***]
2331B754B15 PASSENGERADDRESS(PA)SYSTEM-ARINC715-ROCKWELLCOLLINS
AMPLIFIER-BFE/SPE
[***] [***] [***]
SWA-PA-03729
SA-7
Page A1-4
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
2331E097A10 PRAM/BMMSYSTEM-PANASONIC-FASTENSEATBELT/DECOMPRESSION
DISCRETESACTIVATED-BFE/SPE
[***] [***] [***]
2350A150D50 AUDIOINTEGRATING-INHIBITAURALALERTTRANSMISSIONSTHROUGH
CAPTAIN,FIRSTOFFICER'SANDFIRSTOBSERVER'SHEADPHONES
[***] [***] [***]
2350B872A08 AUDIOCONTROLPANEL-INTEGRATEDSELCAL,CREWCALL,ANDSATCOM
FUNCTIONS-INSTALLATION-3VHF/2HF
[***] [***] [***]
2351-000042 CONTROLWHEELPUSHTOTALK(PTT)SWITCH-STANDARDTHREEPOSITION [***] [***] [***]
2351A213A33 AUDIOINTEGRATION-INSTALLATION-TWO-PLUGAUDIOJACKSINTHEFLIGHT
DECK
[***] [***] [***]
2351A213B77 BOOMMICROPHONEHEADSETS-CAPTAINANDFIRSTOFFICER-TELEXAIRMAN
750-P/N64300-200-BFE/SPE
[***] [***] [***]
2351D360C80 PASSENGERCABINMEDICALCOMMUNICATIONSSYSTEM-BOEINGSKY
INTERIOR
[***] [***] [***]
2371B628B32 VOICERECORDERANDMICROPHONE/MONITOR-HONEYWELL-2HOUR
RECORDINGTIME-WITHDATALINKRECORDINGCAPABILITY-P/N980-6032-001
&P/N980-6116-001-BFE/SPE
[***] [***] [***]
2371B628B41 VOICERECORDER-RECORDERINDEPENDENTPOWERSUPPLY(RIPS)-AFT
LOWEREDCEILING
[***] [***] [***]
2371E437C25 MP-VOICERECORDER-REPLACEMENT-VOICERECORDERWITH90DAY
BATTERYINLIEUOFVOICERECORDERWITH30DAYBATTERY-HONEYWELL
INTERNATIONALINC-BFE
[***] [***] [***]
2451B750A96 GALLEYG2POWER-17.25KVA-COMPLETEPROVISIONS [***] [***] [***]
2451B815K32 POWERDISTRIBUTION-WIRINGINSTALLATIONFORADDITIONALCAPACITY [***] [***] [***]
2451D360M03 MP-MODSTDSEL-GALLEYG4BPOWER-REVISION-12KVAINSTALLATION
ANDPROVISIONSFOR17.25KVAINLIEUOFCOMPLETEINSTALLATION
[***] [***] [***]
2451E447B64 GALLEYG1&G7POWER-12KVA [***] [***] [***]
2454E484B59 IN-SEATPOWEROUTLETS-INSTALLATION-FULLCABINWITH59USBPOWER
SUPPLIESAND175HIGHPOWERUSBOUTLETS-ASTRONICSAES-BFE/SPE
[***] [***] [***]
2454E484C79 MP-IN-SEATPOWEROUTLETS-DELETION-FULLCABINWITH59USBPOWER
SUPPLIESAND175HIGHPOWERUSBOUTLETS-ASTRONICSAES-BFE
[***] [***] [***]
2500E559K65 MP-CLOSET-REPLACEMENT-FWDRHFULLHEIGHTCLOSETINLIEUOFFULL
HEIGHT/HALFHEIGHTG2GALLEY-STA325-343-ENCORE-BFE
[***] [***] [***]
2500E559K83 MP-INTERIORARRANGEMENT-REVISION-DETACHABLEEMERGENCY
EQUIPMENT-BFE
[***] [***] [***]
2500E559M56 MP-MODSTDSEL-CABININTERPHONESYSTEMS-ATTENDANTHANDSETS
WITHUNIQUEFACEPLATE
[***] [***] [***]
2500E559R44 MP-INTERIORARRANGEMENT-REVISION-ADDITIONOFSLIDE-OUTSTOWAGE
INLAVSD&EANDREVISIONTOEMERGENCYEQUIPMENT
[***] [***] [***]
2500E559Y62 MP-NON-CERTIFIEDFLYAWAYKIT-ADDITION-FIRSTAIDKITBRACKET [***] [***] [***]
2513C410C22 FLIGHTCOMPARTMENTACCOMMODATIONS-EMERGENCYEVACUATION
CHECKLISTPLACARDONTHECAPTAINANDFIRSTOFFICER'SCONTROL
COLUMNS
[***] [***] [***]
SWA-PA-03729
SA-7
Page A1-5
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
2513E437A99 LOGBOOKHOLDER-INSTALLATION-ONAFTFACEOFP8AISLESTAND [***] [***] [***]
2514E559T12 MP-SIDEWALLLININGANDAIRRETURNGRILLE-REVISION-ENHANCED
FASTENINGPROVISIONS
[***] [***] [***]
2520E559D17 INTERIORCOLORANDMATERIAL-STANDARDOFFERING [***] [***] [***]
2520E559L37 MP-PASSENGERCOMPARTMENT-REVISION-DECORATIVELAMINATE-
FORWARDMONUMENTS
[***] [***] [***]
2523E559E42 PASSENGERSERVICEUNITS-737BOEINGSKYINTERIOR [***] [***] [***]
2525A627A07 DOUBLEATTENDANTSEAT-WALLMOUNTED-STA304 [***] [***] [***]
2525C204F39 LARGELOWERSTOWAGEBOXFORDOUBLEATTENDANTSEAT-STA304LH [***] [***] [***]
2525C204F40 LARGELOWERSTOWAGEBOXFORDOUBLEATTENDANTSEAT-STA949LH [***] [***] [***]
2525C204F41 LARGELOWERSTOWAGEBOXFORDOUBLEATTENDANTSEAT-STA949RH [***] [***] [***]
2525C204K04 HICANDFEMURLOADCOMPLIANCE-ECONOMYCLASSSEATS [***] [***] [***]
2525C204K05 HICANDFEMURLOADCOMPLIANCE-ATTENDANTSEATS [***] [***] [***]
2525E559D22 ECONOMYCLASSSEATS-BFE/SPE [***] [***] [***]
2527E559H50 FLOORCOVERING-CARPET-BFE/SPE [***] [***] [***]
2527E559H51 FLOORCOVERING-GALLEYANDENTRYWAYFLOORMAT-BFE/SPE [***] [***] [***]
2528C204J16 FORWARDCENTEROVERHEADSTOWAGECOMPARTMENT-PROVISIONEDFOR
PALLETIZEDEQUIPMENTANDLIFERAFTS-737BOEINGSKYINTERIOR
[***] [***] [***]
2528C204J18 SECONDFORWARDCENTEROVERHEADSTOWAGECOMPARTMENT-
PROVISIONEDFORPALLETIZEDEQUIPMENTANDLIFERAFTS-737BOEING
SKYINTERIOR
[***] [***] [***]
2528C204J20 FIRSTMIDCABINCENTEROVERHEADSTOWAGECOMPARTMENT-
PROVISIONEDFORPALLETIZEDEQUIPMENTANDLIFERAFTS-737BOEING
SKYINTERIOR
[***] [***] [***]
2528C204J22 SECONDMID-CABINCENTEROVERHEADSTOWAGECOMPARTMENT-
PROVISIONEDFORPALLETIZEDEQUIPMENTANDLIFERAFTS-737BOEING
SKYINTERIOR
[***] [***] [***]
2528E559D23 LITERATUREPOCKETS [***] [***] [***]
2528E559D24 OVERHEADSTOWAGEBINS-ADDITIONALFEATURES-737BOEINGSKY
INTERIOR
[***] [***] [***]
2529D360B52 FORWARDATTENDANTWORKSTATION-PANEL&HANDSET-UNIQUE
FACEPLATEDISPLAY
[***] [***] [***]
2530D383A11 G1GALLEY-AFTSTATION297-BFE/SPE [***] [***] [***]
2530E559D10 GALLEYG2-STA325-343-BFE/SPE [***] [***] [***]
2530E559D27 G7GALLEY-AFTOFDOOR1,LEFT-AFTSTA374-BFE/SPE [***] [***] [***]
2530E559D29 GALLEYINSERTPARTNUMBERS-BFE/SPE [***] [***] [***]
2530E559K27 MP-GALLEY-REVISION-G1GALLEYAFTSTA293INLIEUOFSTA297 [***] [***] [***]
2530E624B45 GALLEYPARTNUMBERS-STANDARDEFFORT-BFE/SPE [***] [***] [***]
2530E624B63 GALLEYCHILLER-AFTG4BGALLEY-PROVISIONS [***] [***] [***]
2540D347A92 LAADVANCEDLAVATORY [***] [***] [***]
2540E559D31 LAADVANCEDLAVATORYSELECTABLES [***] [***] [***]
2540E559D32 LDADVANCEDLAVATORYSELECTABLES [***] [***] [***]
2540E559D33 LEADVANCEDLAVATORYSELECTABLES [***] [***] [***]
SWA-PA-03729
SA-7
Page A1-6
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
2540E559N20 MP-LAVATORIES-REVISION-LAVSDANDE-NON-SPACEWALLINLIEUOF
SPACEWALL
[***] [***] [***]
2560-000269 CREWLIFEVESTSTOWAGE-FLIGHTDECK,SECONDOBSERVER-CAPTAIN'S
SEATBACK
[***] [***] [***]
2560C410D09 CREWLIFEVESTS-FLIGHTDECK,WITHSECONDOBSERVER-EASTERNAERO
MARINEINC-P/NP01202-301C-BFE/SPE
[***] [***] [***]
2562E559E21 OVERWATEREMERGENCYEQUIPMENT-BFE/SPE-737BOEINGSKYINTERIOR [***] [***] [***]
2562E559K34 MP-OVERWATEREMERGENCYEQUIPMENT-DELETION-LIFERAFTS-
EASTERNAEROMARINE-BFE
[***] [***] [***]
2562E559U37 MP-OVERWATEREMERGENCYEQUIPMENT-REPLACEMENT-PASSENGERLIFE
VEST-EASTERNAEROMARINEINC-BFE
[***] [***] [***]
2564E559D98 DETACHABLEEMERGENCYEQUIPMENT-PASSENGERCOMPARTMENT-BFE/SPE
-737BOEINGSKYINTERIOR
[***] [***] [***]
2564E559X35 MP-DETACHABLEEMERGENCYEQUIPMENT-PASSENGERCOMPARTMENT-
DELETION-FIRSTAIDKIT-MINESAFETYAPPLIANCESCO-BFE
[***] [***] [***]
2622E088A14 APUFIREEXTINGUISHERBOTTLE-COMMONWITHENGINEBOTTLES [***] [***] [***]
2841-000004 STANDARDFUELSYSTEMACCURACY-NOFUELDENSITOMETERS [***] [***] [***]
2841-000012 FUELQUANTITYINDICATORSONRIGHTWINGFUELINGPANEL [***] [***] [***]
2844-000019 FUELMEASURINGSTICKSINLINEARUNITSWITHCONVERSIONTABLESINU.S.
GALLONS
[***] [***] [***]
2911-000042 ENGINE-DRIVENHYDRAULICPUMPSWITHVESPELSPLINE-EATON(VICKERS)-
10-62167
[***] [***] [***]
2911-000044 ACMOTOR-DRIVENHYDRAULICPUMPS-EATON(VICKERS)-10-60556 [***] [***] [***]
2911E684D00 MP-ACMOTORDRIVENHYDRAULICPUMPS-INSTALLTWOPARKER(ABEX)IN
LIEUOFTWOEATON(VICKERS)-SFE
[***] [***] [***]
3041-000003 NOHEATEDFLIGHTCOMPARTMENTNUMBER3WINDOW [***] [***] [***]
3131-000143 ACCELEROMETER-HONEYWELLP/N971-4193-001-BFE/SPE [***] [***] [***]
3131B628B16 DIGITALFLIGHTDATARECORDER(DFDR)-HONEYWELL-1024WORDSPER
SECONDMAXIMUMDATARATE-P/N980-4750-009-BFE/SPE
[***] [***] [***]
3131E103A15 DIGITALFLIGHTDATAACQUISITIONUNIT(DFDAU)-CATIIIB/IAN/GLS/NPS
CAPABLE-WITHACMSCAPABILITY-ONS-SFE
[***] [***] [***]
3131E437C26 MP-FLIGHTDATARECORDERSYSTEM-REPLACEMENT-FLIGHTDATA
RECORDERWITH90DAYBATTERYINLIEUOFFLIGHTDATARECORDERWITH
30DAYBATTERY-HONEYWELLINTERNATIONALINC-BFE
[***] [***] [***]
3132E437D35 MP-ARINC615PORTABLEDATALOADERCONNECTOR-INSTALLATION-
FLIGHTDECK-P61-4MAINTENANCEBITEPANEL
[***] [***] [***]
3133-000123 ARINC740PRINTERPROVISIONSINTHEFLIGHTDECKAISLESTAND [***] [***] [***]
3135E437D40 MP-ONBOARDNETWORKSYSTEM-QUICKACCESSRECORDER-DAROUTPUT
23300
[***] [***] [***]
SWA-PA-03729
SA-7
Page A1-7
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
3161-000133 ENGINEFUELFLOW-FULLTIMEDISPLAY-PRIMARYENGINEDISPLAYUNIT [***] [***] [***]
3161C175A22 ENGINEOILQUANTITYDISPLAY-PERCENT-ENGINEDISPLAY [***] [***] [***]
3162-000018 ATTITUDECOMPARATOR-FLASHING-ADI [***] [***] [***]
3162-000022 FLIGHTDIRECTORCOMMANDDISPLAY-SPLITAXIS-ADI [***] [***] [***]
3162-000028 RADIOALTITUDE-BELOWADI [***] [***] [***]
3162-000030 RISINGRUNWAY-DISPLAYEDONTHEADI [***] [***] [***]
3162-000036 LANDINGALTITUDEREFERENCEBAR-PRIMARYFLIGHTDISPLAY [***] [***] [***]
3162-000040 BAROMINIMUMSPOINTER-DISPLAYEDONSELECTIONOFRADIOALTITUDE
MINIMUMS-PRIMARYFLIGHTDISPLAY
[***] [***] [***]
3162-000044 TCASRESOLUTIONADVISORY-VSI [***] [***] [***]
3162-000051 ILSLOCALIZERDEVIATIONEXPANDEDSCALE-AUTOPILOTORFLIGHT
DIRECTORMODE
[***] [***] [***]
3162-000059 MAPMODEORIENTATION-TRACKUP-NAVIGATIONDISPLAY [***] [***] [***]
3162-000064 RANGEARCS-NAVIGATIONDISPLAY [***] [***] [***]
3162-000079 MANUALLYTUNEDVORSELECTEDCOURSELINESDISPLAYED-NAVIGATION
DISPLAY
[***] [***] [***]
3162-000084 TCAS3NMRANGERING-NAVIGATIONDISPLAY [***] [***] [***]
3162-000088 AIRSPEEDBUG-ENABLED-80KNOTSETTING-MACHAIRSPEEDINDICATOR [***] [***] [***]
3162A627A36 CDS-SOFTWAREACTIVATION-VNAVSPEEDBANDS-ENABLE [***] [***] [***]
3162C594A29 CDS-SOFTWAREACTIVATION-NAVIGATIONPERFORMANCESCALES-ENABLE [***] [***] [***]
3162E437C95 MP-FLIGHTANDNAVIGATIONDISPLAYS-LANDINGSYSELECTRONIC
PLACARDWORKSHEET-AUXILIARYDISPLAY
[***] [***] [***]
3244-000008 SERVICEINTERPHONECONNECTOR-EXTERNALPOWERPANEL [***] [***] [***]
3245B290A77 WHEELSANDTIRES-NOSELANDINGGEAR-WHEELS-GOODRICH-
INSTALLATIONWITHSFE12PR,235MPHRATEDRADIALTIRES
[***] [***] [***]
3245B290A92 BRAKES-CARBON-GOODRICH [***] [***] [***]
3245C927A08 WHEELSANDTIRES-MAINLANDINGGEAR-WHEELSFORCARBONBRAKES-
GOODRICH-INSTALLATIONWITH30-PR,235MPHRADIALTIRES
[***] [***] [***]
3321C869A65 PASSENGERCABINLIGHTING-SINGLE-ZONECONTROL-737BOEINGSKY
INTERIOR
[***] [***] [***]
3324C195A04 NOSMOKINGSIGN-SILKSCREENEDSYMBOLANDRETAINCHIMEFUNCTION [***] [***] [***]
3327D380B90 GALLEYLIGHTS-28VDCPOWER-GALLEYG7/CLOSET [***] [***] [***]
3327E559L81 MP-GALLEYLIGHTS-28VDCPOWER-DELETION-GALLEYG7/CLOSET [***] [***] [***]
3350E097A38 EMERGENCYESCAPEPATHLIGHTING-FLOORMOUNTED-NARROWCOLOR
PHOTOLUMINESCENT
[***] [***] [***]
3412-000022 DUALELEMENTNON-ASPIRATEDTATPROBE [***] [***] [***]
3430B866A28 ILS/GPSMULTI-MODERECEIVER(MMR)-HONEYWELL-P/N066-50029-1201-
BFE/SPE
[***] [***] [***]
SWA-PA-03729
SA-7
Page A1-8
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
3430E437D65 MP-MULTI-MODERECEIVER(MMR)ANDVOR/MARKERBEACON-
REPLACEMENT-HONEYWELL3GMMRP/N69002600-0101INLIEUOFEXISTING
HONEYWELLMMRP/N066-50029-1201ANDHONEYWELLVOR/MARKERBEACON
P/N69001410-100-BFE
[***] [***] [***]
3430E437D69 MP-MULTI-MODERECEIVER(MMR)ANDVOR/MARKERBEACON-CHANGE
INCORP-REPLACEMENT-HONEYWELL3GMMRP/N69002600-0101INLIEUOF
EXISTINGHONEYWELLMMRP/N066-50029-1201ANDHONEYWELL
VOR/MARKERBEACONP/N69001410-100-BFE
[***] [***] [***]
3431C175A06 NAVIGATIONCONTROLPANEL(NCP)-GNSSLANDINGSYSTEM(GLS)CAPABLE
-GABLES-P/NG7501-01-BFE/SPE
[***] [***] [***]
3433C594A98 LOWRANGERADIOALTIMETER(LRRA)-CATIIIBCAPABLE-HONEYWELL-P/N
066-50007-0531-BFE/SPE
[***] [***] [***]
3436E640B45 MP-HEADUPDISPLAY(HUD)SYSTEM-INSTALLATION-SINGLEROCKWELL
COLLINSHEAD-UPGUIDANCESYSTEM(HGS)MODEL6000WITHMCDU
INTERFACE-STCCERTIFIED-BFE
[***] [***] [***]
3443B696L73 SINGLEWEATHERRADARSYSTEMCONTROLPANEL-HONEYWELLRDR-4000
RADARSYSTEM-P/N930-5101-001-BFE/SPE
[***] [***] [***]
3443E032A44 SINGLEWEATHERRADARSYSTEM-WITHPREDICTIVEWINDSHEAR-
HONEYWELLRDR-4000,VERSION2TRANSCEIVER-930-2000-001-BFE/SPE
[***] [***] [***]
3445C594B01 TCASSYSTEM-HONEYWELLTCASCOMPUTERP/N940-0351-001-TCASCHANGE
7.1COMPLIANT-BFE/SPE
[***] [***] [***]
3446-000046 LOWVOLUMEFORALTITUDECALLOUTS [***] [***] [***]
3446-000049 500SMARTCALLOUTINHIBITED [***] [***] [***]
3446-000057 GROUNDPROXIMITYWARNINGSYSTEMALTITUDECALLOUTS-100,50,30,10 [***] [***] [***]
3446C174A14 ENHANCEDGROUNDPROXIMITYWARNINGSYSTEM(EGPWS)-BANKANGLE
CALLOUT(VARIABLECALLOUTBELOW130FT)-ENABLE
[***] [***] [***]
3451E097A30 VOR/MARKERBEACON-HONEYWELLRECEIVERP/N69001410-100-BFE/SPE [***] [***] [***]
3453E052A56 ATCSYSTEM-HONEYWELLINTERNATIONALINCATCTRANSPONDERP/N066-
01212-0301-ADS-BOUTDO-260BCOMPLIANT-HONEYWELLINTERNATIONAL
INCCONTROLPANELP/N071-01503-2601-BFE/SPE
[***] [***] [***]
3455D338A05 DISTANCEMEASURINGEQUIPMENT(DME)SCANNINGINTERROGATOR-
HONEYWELLP/N066-50013-0111-BFE/SPE
[***] [***] [***]
3461A150B73 FLIGHTMANAGEMENTCOMPUTERSYSTEM(FMCS)-ENGINE-OUTSTANDARD
INSTRUMENTDEPARTURES(SID'S)-ENABLE
[***] [***] [***]
3461A425A10 FLIGHTMANAGEMENTCOMPUTERSYSTEM(FMCS)-NAVIGATIONDATABASE-
CUSTOMERSUPPLIED
[***] [***] [***]
3461A425A17 FLIGHTMANAGEMENTCOMPUTERSYSTEM(FMCS)-AIRLINEOPERATIONAL
COMMUNICATIONDATALINK(AOCDL)-FEATUREACTIVATION
[***] [***] [***]
3461A425A30 FLIGHTMANAGEMENTCOMPUTERSYSTEM(FMCS)-ABEAMWAYPOINTS-
ENABLE
[***] [***] [***]
3461A425A48 FLIGHTMANAGEMENTCOMPUTERSYSTEM(FMCS)-ACTIVATECOLOR
OPERATION
[***] [***] [***]
SWA-PA-03729
SA-7
Page A1-9
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
3461A890A76 FLIGHTMANAGEMENTCOMPUTERSYSTEM(FMCS)-NAVIGATIONDISPLAY-
MISSEDAPPROACHINCYANUNTILACTIVE-ENABLE
[***] [***] [***]
3461B430C49 FLIGHTMANAGEMENTCOMPUTERSYSTEM(FMCS)-REQUIREDNAVIGATION
PERFORMANCE(RNP)DEFAULTVALUECHANGE
[***] [***] [***]
3461B696E14 MP-FMCE-ADDITIONALCONTROLDISPLAYUNITFIXPAGES-ENABLE [***] [***] [***]
3461B696K97 FLIGHTMANAGEMENTCOMPUTERSYSTEM(FMCS)-VERTICALRNPDEFAULT
VALUE-REVISION
[***] [***] [***]
3461C175A11 FLIGHTMANAGEMENTCOMPUTERSYSTEM(FMCS)-AIRTRAFFICSERVICES
DATALINK(ATSDL)-FANSFEATUREACTIVATION
[***] [***] [***]
3461C175A14 FLIGHTMANAGEMENTCOMPUTERSYSTEM(FMCS)-FANSCAPABLEMCDU
WITHATCKEYBOARD-INSTALLATION-SFE
[***] [***] [***]
3461C175A32 FLIGHTMANAGEMENTCOMPUTERSYSTEM(FMCS)-COMMONVNAV-ENABLE [***] [***] [***]
3461C175A34 FLIGHTMANAGEMENTCOMPUTERSYSTEM(FMCS)-SPEEDPROPAGATION
FROMTHECRUISEPAGETOTHEDESCENTPAGE-ENABLE
[***] [***] [***]
3461C430J05 FLIGHTMANAGEMENTCOMPUTINGSYSTEM(FMCS)-VORINHIBIT [***] [***] [***]
3461C594A26 FLIGHTMANAGEMENTCOMPUTINGSYSTEM(FMCS)-INTENTDATA
TRANSMITTEDTOACARS-ENABLE
[***] [***] [***]
3511B873B93 CREWOXYGENMASK-FULLFACEMASKWITHBUILT-INSMOKEGOGGLES-
SECONDOBSERVER-AV-OXINC-BFE/SPE
[***] [***] [***]
3511B873B94 CREWOXYGENMASK-FULLFACEMASKWITHBUILT-INSMOKEGOGGLES-
FIRSTOBSERVER-AV-OXINC-BFE/SPE
[***] [***] [***]
3511B873B95 CREWOXYGENMASKS-FULLFACEMASKWITHBUILT-INSMOKEGOGGLES-
CAPTAINANDFIRSTOFFICER-AV-OXINC-BFE/SPE
[***] [***] [***]
3811-000017 POTABLEWATER-SERVICEABLETO40GALLONS [***] [***] [***]
3812-000002 NOWATERQUANTITYGAUGE-WATERSERVICEPANEL [***] [***] [***]
3832-000076 NOSENSORFOULEDLIGHT-COVERPLATE [***] [***] [***]
3832-000078 NOWASTEQUANTITYGAUGE-COVERPLATE [***] [***] [***]
3910E437A86 AFTELECTRONICSPANELARRANGEMENTWITHTWORADIOTUNINGPANELS
ANDARINC740PRINTERPROVISIONS
[***] [***] [***]
4435E484C78 MP-HIGHSPEEDCOMMUNICATION-STRUCTURALPROVISIONS-KUBAND
RADOMEINSTALLATION-737BOEINGSKYINTERIOR159200
[***] [***] [***]
4435E484D01 MP-HIGHSPEEDCOMMUNICATION-PARTIALPROVISIONS-GLOBALEAGLE
ENTERTAINMENTCABINNETWORKSYSTEMWITHKUBANDCONNECTIVITY-
THREEWIRELESSACCESSPOINTS(WAP)-737BOEINGSKYINTERIOR
[***] [***] [***]
4435E484D80 MP-HIGH-SPEEDCOMMUNICATIONS-INSTALLATIONINTOPARTIAL
PROVISIONS-WIRELESSCABINNETWORKWITH3CWLU'SANDKUBAND
CONNECTIVITY-GLOBALEAGLEENTERTAINMENT-CSE/SPE
[***] [***] [***]
4435E484H13 MP-HIGHSPEEDCOMMUNICATION-REPLACEMENT-TRI-BANDRADOMEIN
LIEUOFKUBANDRADOME
[***] [***] [***]
SWA-PA-03729
SA-7
Page A1-10
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
4435E484H15 MP-HIGHSPEEDCOMMUNICATION-CHANGEINCORP-REPLACEMENT-
TRI-BANDRADOMEINLIEUOFKUBANDRADOME
[***] [***] [***]
4610E437C72 MP-GROUNDBASEDCONNECTIVITY-INSTALLATION-AIRCRAFT
WIRELESSLANUNITCELLULAR-TELEDYNECONTROLS-BFE
[***] [***] [***]
4610E437E26 MP-ONBOARDNETWORKSYSTEM-ACTIVATIONOFONS-ACARSCMU
INTERFACE
[***] [***] [***]
4610E437E28 MP-ONBOARDNETWORKSYSTEM-CHANGEINCORP-ACTIVATIONOF
ONS-ACARSCMUINTERFACE
[***] [***] [***]
4610E839A41 MP-ONBOARDNETWORKSYSTEM-REPLACEMENT-AIRCRAFTWIRELESS
LANUNIT-CELLULARANDWIFIINLIEUOFCELLULARGROUNDBASED
CONNECTIVITYONLY-TELEDYNECONTROLS-BFE
[***] [***] [***]
5231A561C54 CARGODOOR-SOLIDSKIN [***] [***] [***]
5300-000027 UNDERSEATFLOORPANELS,LOWTRAFFICCAPABILITY [***] [***] [***]
5352A298A28 RADOME-NORDAM-SFE [***] [***] [***]
7200D422A12 CFMLEAP-1BENGINES-1B28B1RATING [***] [***] [***]
7200E430E27 MP-CFMLEAP-1BENGINES-CHANGEINCORP-REVISION-1B28RATINGIN
LIEUOF1B28B1RATING
[***] [***] [***]
7200E684E22 MP-CFMLEAP-1BENGINES-REVISION-1B28RATINGINLIEUOF1B28B1
RATING
[***] [***] [***]
7900-000116 LUBRICATINGOIL-MOBILJETII [***] [***] [***]
MISC INTERIORALLOWANCE [***] [***] [***]
TOTALS: [***] [***] [***]
SWA-PA-03729
SA-7
Page A1-11
BOEING PROPRIETARY
BUYER FURNISHED EQUIPMENT VARIABLES
between
THE BOEING COMPANY
and
Southwest Airlines Co.
Supplemental Exhibit BFE1
to Purchase Agreement Number PA-03729
SWA-PA-03729-BFE1
SA-7
Page 1
BOEING PROPRIETARY
BUYER FURNISHED EQUIPMENT VARIABLES
relating to
BOEING MODEL 737-8 AIRCRAFT
This Supplemental Exhibit BFE1 contains supplier selection dates, on-dock dates and other requirements applicable
to the Aircraft.
1. Supplier Selection.
Customer will:
Select and notify Boeing of the suppliers and part numbers of the following BFE items by the following dates:
Galley System 5/1/2016
Galley Inserts 5/1/2016
Seats (passenger) 5/1/2016
Overhead & Audio System 5/1/2016
In-Seat Video System Same as seats
Miscellaneous Emergency Equipment 7/1/2016
Cargo Handling Systems*
(Single Aisle Programs only)
11/1/2016
*For a new certification, supplier requires notification ten (10) months prior to Cargo Handling System on-dock date.
2. On-dock Dates and Other Information.
On or before nine (9) months prior to aircraft delivery, Boeing will provide to Customer the BFE Requirements
electronically through My Boeing Fleet (MBF in My Boeing Configuration (MBC)). These requirements may be periodically
revised, setting forth the items, quantities, on-dock dates and shipping instructions and other requirements relating to the in-
sequence installation of BFE. For planning purposes, preliminary BFE on-dock dates are set forth below:
SWA-PA-03729-BFE1
SA-7
Page 2
BOEING PROPRIETARY
Nominal Del
Date
Aircraft Qty Seats
Galley /
Furnishings
Antennas &
Mounting
Equipment
Avionics
Cabin Systems
Equipment
Misc. Emergency
Equipment
Textiles / Raw
Materials
Cargo Systems Provision Kits Radomes
Jul-2017 3 05/23/17 05/16/17 03/27/17 05/16/17 05/16/17 05/16/17 02/09/17 05/02/17 01/09/17 04/17/17
Aug-2017 6 06/21/17 06/14/17 04/24/17 06/14/17 06/14/17 06/14/17 03/09/17 05/31/17 02/06/17 05/15/17
Sep-2017 1 07/25/17 07/18/17 05/25/17 07/18/17 07/18/17 07/18/17 04/11/17 07/03/17 03/09/17 06/16/17
Oct-2017 2 08/22/17 08/15/17 06/23/17 08/15/17 08/15/17 08/15/17 05/09/17 08/01/17 04/06/17 07/17/17
Nov-2017 2 09/22/17 09/15/17 07/26/17 09/15/17 09/15/17 09/15/17 06/09/17 08/31/17 05/08/17 08/16/17
Jan-2018 2 11/13/17 11/06/17 09/15/17 11/06/17 11/06/17 11/06/17 08/01/17 10/23/17 06/28/17 10/06/17
Mar-2018 1 01/22/18 01/15/18 11/14/17 01/15/18 01/15/18 01/15/18 09/29/17 12/22/17 08/28/17 12/07/17
Jun-2018 1 04/24/18 04/17/18 02/26/18 04/17/18 04/17/18 04/17/18 01/11/18 04/03/18 12/01/17 03/19/18
Jul-2018 2 05/23/18 05/16/18 03/27/18 05/16/18 05/16/18 05/16/18 02/09/18 05/02/18 01/09/18 04/17/18
Aug-2018 1 06/22/18 06/15/18 04/26/18 06/15/18 06/15/18 06/15/18 03/13/18 06/01/18 02/08/18 05/17/18
Sep-2018 2 07/25/18 07/18/18 05/29/18 07/18/18 07/18/18 07/18/18 04/13/18 07/04/18 03/13/18 06/19/18
Oct-2018 2 08/22/18 08/15/18 06/26/18 08/15/18 08/15/18 08/15/18 05/11/18 08/01/18 04/10/18 07/17/18
Nov-2018 1 09/24/18 09/17/18 07/27/18 09/17/18 09/17/18 09/17/18 06/13/18 09/03/18 05/11/18 08/17/18
Dec-2018 1 10/24/18 10/17/18 08/28/18 10/17/18 10/17/18 10/17/18 07/13/18 10/03/18 06/12/18 09/18/18
Mar-2021 1 01/20/21 01/13/21 11/24/20 01/13/21 01/13/21 01/13/21 10/09/20 12/30/20 09/08/20 12/15/20
Apr-2021 3 02/22/21 02/15/21 12/25/20 02/15/21 02/15/21 02/15/21 11/11/20 02/01/21 10/09/20 01/15/21
May-2021 3 03/24/21 03/17/21 01/26/21 03/17/21 03/17/21 03/17/21 12/11/20 03/03/21 11/10/20 02/16/21
Jun-2021 3 04/22/21 04/15/21 02/24/21 04/15/21 04/15/21 04/15/21 01/11/21 04/01/21 12/09/20 03/17/21
Jul-2021 3 05/24/21 05/17/21 03/26/21 05/17/21 05/17/21 05/17/21 02/10/21 05/03/21 01/08/21 04/16/21
Mar-2022 2 01/20/22 01/13/22 11/24/21 01/13/22 01/13/22 01/13/22 10/11/21 12/30/21 09/08/21 12/15/21
Apr-2022 3 02/22/22 02/15/22 12/27/21 02/15/22 02/15/22 02/15/22 11/11/21 02/01/22 10/11/21 01/17/22
May-2022 3 03/23/22 03/16/22 01/25/22 03/16/22 03/16/22 03/16/22 12/10/21 03/02/22 11/09/21 02/15/22
Jun-2022 3 04/22/22 04/15/22 02/24/22 04/15/22 04/15/22 04/15/22 01/11/22 04/01/22 12/09/21 03/17/22
Jul-2022 2 05/24/22 05/17/22 03/28/22 05/17/22 05/17/22 05/17/22 02/10/22 05/03/22 01/10/22 04/18/22
Aug-2022 2 06/22/22 06/15/22 04/26/22 06/15/22 06/15/22 06/15/22 03/11/22 06/01/22 02/08/22 05/17/22
Jan-2023 3 11/23/22 11/16/22 09/27/22 11/16/22 11/16/22 11/16/22 08/12/22 11/02/22 07/12/22 10/18/22
Feb-2023 3 12/23/22 12/16/22 10/27/22 12/16/22 12/16/22 12/16/22 09/13/22 12/02/22 08/11/22 11/17/22
Mar-2023 1 01/20/23 01/13/23 11/24/22 01/13/23 01/13/23 01/13/23 10/11/22 12/30/22 09/08/22 12/15/22
Mar-2023 2 01/20/23 01/13/23 11/24/22 01/13/23 01/13/23 01/13/23 10/11/22 12/30/22 09/08/22 12/15/22
Apr-2023 3 02/22/23 02/15/23 12/27/22 02/15/23 02/15/23 02/15/23 11/11/22 02/01/23 10/11/22 01/17/23
May-2023 3 03/22/23 03/15/23 01/24/23 03/15/23 03/15/23 03/15/23 12/09/22 03/01/23 11/08/22 02/14/23
Jun-2023 3 04/24/23 04/17/23 02/24/23 04/17/23 04/17/23 04/17/23 01/11/23 04/03/23 12/09/22 03/17/23
Jul-2023 3 05/24/23 05/17/23 03/28/23 05/17/23 05/17/23 05/17/23 02/10/23 05/03/23 01/10/23 04/18/23
Aug-2023 3 06/22/23 06/15/23 04/26/23 06/15/23 06/15/23 06/15/23 03/13/23 06/01/23 02/08/23 05/17/23
Sep-2023 3 07/25/23 07/18/23 05/29/23 07/18/23 07/18/23 07/18/23 04/13/23 07/04/23 03/13/23 06/19/23
Oct-2023 3 08/23/23 08/16/23 06/27/23 08/16/23 08/16/23 08/16/23 05/12/23 08/02/23 04/11/23 07/18/23
Nov-2023 2 09/22/23 09/15/23 07/27/23 09/15/23 09/15/23 09/15/23 06/13/23 09/01/23 05/11/23 08/17/23
Dec-2023 2 10/24/23 10/17/23 08/28/23 10/17/23 10/17/23 10/17/23 07/13/23 10/03/23 06/12/23 09/18/23
SWA-PA-03729-BFE1
SA-7
Page 3
BOEING PROPRIETARY
Nominal Del
Date
Aircraft Qty Seats
Galley /
Furnishings
Antennas &
Mounting
Equipment
Avionics
Cabin Systems
Equipment
Misc. Emergency
Equipment
Textiles / Raw
Materials
Cargo Systems Provision Kits Radomes
Jan-2024 4 11/22/23 11/15/23 09/26/23 11/15/23 11/15/23 11/15/23 08/11/23 11/01/23 07/11/23 10/17/23
Feb-2024 4 12/25/23 12/18/23 10/27/23 12/18/23 12/18/23 12/18/23 09/13/23 12/04/23 08/11/23 11/17/23
Mar-2024 4 01/23/24 01/16/24 11/27/23 01/16/24 01/16/24 01/16/24 10/12/23 01/02/24 09/11/23 12/18/23
Apr-2024 4 02/21/24 02/14/24 12/26/23 02/14/24 02/14/24 02/14/24 11/10/23 01/31/24 10/10/23 01/16/24
May-2024 4 03/22/24 03/15/24 01/25/24 03/15/24 03/15/24 03/15/24 12/12/23 03/01/24 11/09/23 02/15/24
Jun-2024 3 04/24/24 04/17/24 02/27/24 04/17/24 04/17/24 04/17/24 01/12/24 04/03/24 12/12/23 03/19/24
Jul-2024 3 05/22/24 05/15/24 03/26/24 05/15/24 05/15/24 05/15/24 02/09/24 05/01/24 01/09/24 04/16/24
Aug-2024 3 06/24/24 06/17/24 04/26/24 06/17/24 06/17/24 06/17/24 03/13/24 06/03/24 02/09/24 05/17/24
Sep-2024 3 07/24/24 07/17/24 05/28/24 07/17/24 07/17/24 07/17/24 04/12/24 07/03/24 03/12/24 06/18/24
Oct-2024 3 08/22/24 08/15/24 06/26/24 08/15/24 08/15/24 08/15/24 05/13/24 08/01/24 04/10/24 07/17/24
Nov-2024 3 09/24/24 09/17/24 07/29/24 09/17/24 09/17/24 09/17/24 06/13/24 09/03/24 05/13/24 08/19/24
Dec-2024 3 10/23/24 10/16/24 08/27/24 10/16/24 10/16/24 10/16/24 07/12/24 10/02/24 06/11/24 09/17/24
Jan-2025 4 11/22/24 11/15/24 09/26/24 11/15/24 11/15/24 11/15/24 08/13/24 11/01/24 07/11/24 10/17/24
Feb-2025 4 12/25/24 12/18/24 10/29/24 12/18/24 12/18/24 12/18/24 09/13/24 12/04/24 08/13/24 11/19/24
Mar-2025 4 01/22/25 01/15/25 11/26/24 01/15/25 01/15/25 01/15/25 10/11/24 01/01/25 09/10/24 12/17/24
Apr-2025 4 02/20/25 02/13/25 12/25/24 02/13/25 02/13/25 02/13/25 11/11/24 01/30/25 10/09/24 01/15/25
May-2025 3 03/24/25 03/17/25 01/24/25 03/17/25 03/17/25 03/17/25 12/11/24 03/03/25 11/08/24 02/14/25
Jun-2025 3 04/23/25 04/16/25 02/25/25 04/16/25 04/16/25 04/16/25 01/10/25 04/02/25 12/10/24 03/18/25
Jul-2025 3 05/22/25 05/15/25 03/26/25 05/15/25 05/15/25 05/15/25 02/10/25 05/01/25 01/08/25 04/16/25
Aug-2025 3 06/24/25 06/17/25 04/28/25 06/17/25 06/17/25 06/17/25 03/13/25 06/03/25 02/10/25 05/19/25
Sep-2025 3 07/23/25 07/16/25 05/27/25 07/16/25 07/16/25 07/16/25 04/11/25 07/02/25 03/11/25 06/17/25
Oct-2025 3 08/22/25 08/15/25 06/26/25 08/15/25 08/15/25 08/15/25 05/13/25 08/01/25 04/10/25 07/17/25
Nov-2025 3 09/24/25 09/17/25 07/29/25 09/17/25 09/17/25 09/17/25 06/13/25 09/03/25 05/13/25 08/19/25
Dec-2025 3 10/22/25 10/15/25 08/26/25 10/15/25 10/15/25 10/15/25 07/11/25 10/01/25 06/10/25 09/16/25
Total 170
1. Additional Delivery Requirements - Import.
Customer will be the “importer of record” (as defined by the U.S. Customs and Border Protection) for all BFE
imported into the United States, and as such, it has the responsibility to ensure all of Customer’s BFE shipments comply
with U.S. Customs Service regulations. In the event Customer requests Boeing, in writing, to act as importer of record for
Customer’s BFE, and Boeing agrees to such request, Customer is responsible for ensuring Boeing can comply with all U.S.
Customs Import Regulations by making certain that, at the time of shipment, all BFE shipments comply with the
requirements in the “International Shipment Routing Instructions”, including the Customs Trade Partnership Against
Terrorism (C-TPAT), as set out on the Boeing website referenced below. Customer agrees to include the International
Shipment Routing Instructions, including C-TPAT requirements, in each contract between Customer and BFE supplier.
http://www.boeing.com/companyoffices/doingbiz/supplier_portal/index_general.html
SWA-PA-03729-BFE1
SA-7
Page 4
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 981242207
SWA-PA-03729-LA-1400371
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235
Subject: 737-8 Aircraft [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement will have the same meaning as in the Purchase Agreement.
Boeing agrees to provide Customer with [***]
1. Assignment.
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in consideration of Customer becoming the operator of the Aircraft and cannot be
assigned in whole or in part.
2. Confidential Treatment.
The information contained herein represents confidential business information and has value precisely because it is
not available generally or to other parties. Customer will limit the disclosure of its contents to employees of Customer with a
need to know the contents for purposes of helping Customer perform its obligations under the Purchase Agreement and
who understand they are not to disclose its contents to any other person or entity without the prior written consent of
Boeing.
SWA-PA-03729-LA-1409371
737-8 [***] LA Page 1
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By /s/ Kyle Kersavage
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: August 25, 2017
SOUTHWEST AIRLINES CO.
By /s/ Chris Monroe
Chris Monroe
Its SVP, Finance
SWA-PA-03729-LA-1409371
737-8 [***] LA Page 2
BOEING PROPRIETARY
Attachment to Letter Agreement
No. LA-1400371
LEAP-1B28 Engines
Page 1
MODEL 737-8 [***]
FOR SOUTHWEST AIRLINES CO.
SECTION CONTENTS
1 [***]
2 [***]
3 [***]
4 [***]
5 [***]
6 [***]
P.A. No. 03729
AERO-B-BBA4-M13-1194C SS 15-0540
BOEING PROPRIETARY
Attachment to Letter Agreement
No. LA-1400371
LEAP-1B28 Engines
Page 2
1 [***]
2 [***]
P.A. No. 03729
AERO-B-BBA4-M13-1194C SS 15-0540
BOEING PROPRIETARY
Attachment to Letter Agreement
No. LA-1400371
LEAP-1B28 Engines
Page 3
P.A. No. 03729
AERO-B-BBA4-M13-1194C SS 15-0540
BOEING PROPRIETARY
Attachment to Letter Agreement
No. LA-1400371
LEAP-1B28 Engines
Page 4
P.A. No. 03729
AERO-B-BBA4-M13-1194C SS 15-0540
BOEING PROPRIETARY
Attachment to Letter Agreement
No. LA-1400371
LEAP-1B28 Engines
Page 5
P.A. No. 03729
AERO-B-BBA4-M13-1194C SS 15-0540
BOEING PROPRIETARY
Attachment to Letter Agreement
No. LA-1400371
LEAP-1B28 Engines
Page 6
P.A. No. 03729
AERO-B-BBA4-M13-1194C SS 15-0540
BOEING PROPRIETARY
Attachment to Letter Agreement
No. LA-1400371
LEAP-1B28 Engines
Page 7
P.A. No. 03729
AERO-B-BBA4-M13-1194C SS 15-0540
BOEING PROPRIETARY
Attachment to Letter Agreement
No. LA-1400371
LEAP-1B28 Engines
Page 8
P.A. No. 03729
AERO-B-BBA4-M13-1194C SS 15-0540
BOEING PROPRIETARY
Attachment to Letter Agreement
No. LA-1400371
LEAP-1B28 Engines
Page 9
P.A. No. 03729
AERO-B-BBA4-M13-1194C SS 15-0540
BOEING PROPRIETARY
Attachment to Letter Agreement
No. LA-1400371
LEAP-1B28 Engines
Page 10
P.A. No. 03729
AERO-B-BBA4-M13-1194C SS 15-0540
BOEING PROPRIETARY
Attachment to Letter Agreement
No. LA-1400371
LEAP-1B28 Engines
Page 11
3 [***]
4 [***]
P.A. No. 03729
AERO-B-BBA4-M13-1194C SS 15-0540
BOEING PROPRIETARY
Attachment to Letter Agreement
No. LA-1400371
LEAP-1B28 Engines
Page 12
5 [***]
P.A. No. 03729
AERO-B-BBA4-M13-1194C SS 15-0540
BOEING PROPRIETARY
Attachment to Letter Agreement
No. LA-1400371
LEAP-1B28 Engines
Page 13
6 [***]
P.A. No. 03729
AERO-B-BBA4-M13-1194C SS 15-0540
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1500831
Southwest Airlines Co.
2702 Love Field Drive
Dallas, Texas 75235
Attention: Jon Stephens, Director - Fleet Transactions
Subject: [***]
Reference: A) Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft (Aircraft)
B) Master Change Proposal No. 4435E484D80 [***]
provided under
correspondence letter no. 6-1131-CMM-LL0-16872, dated March
20, 2015 (Activation MC)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement will have the same meaning as in the Purchase Agreement.
1. [***]
2. [***]
3. Effectivity of the Activation MC.
Notwithstanding the aircraft effectivity set forth in the Activation MC, upon written Customer request on or before January 1,
2016, Boeing will [***]
March 20, 2015
LA Page 1
BOEING PROPRIETARY
4. Assignment.
Unless otherwise noted herein, [***]
described in this Letter Agreement is provided [***] to
Customer and in consideration of Customer's [***]
becoming the operator of the Aircraft. This Letter Agreement cannot be assigned, in whole or in part, without the prior written
consent of Boeing.
5. Confidentiality.
Customer understands and agrees that the information contained herein represents confidential business information and
has value precisely because it is not available generally or to other parties. Customer agrees to limit the disclosure of its contents to
employees of Customer with a need to know the contents for purposes of helping Customer perform its obligations under the
Purchase Agreement and who understand they are not to disclose its contents to any other person or entity without the prior written
consent of Boeing. [***]
This Letter Agreement is contingent upon the concurrent acceptance of the Activation MC. Please sign and return this offer
on or before March 23, 2015, the date on which this offer will otherwise expire.
Very truly yours,
THE BOEING COMPANY
By /s/ Jon W. Lewis
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: March 23, 2015
SOUTHWEST AIRLINES CO.
By /s/ Jon Stephens
Its Director Fleet Transactions
SWA-PA-03729-LA-1500831 March 20, 2015
[***]
LA Page #
BOEING PROPRIETARY
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Airframe Model/MTOW: 737-8 181,200 pounds Detail Specification: D019A007-NEW
(11/4/2011)
4Q16 External
Fcst
Engine Model/Thrust: CFMLEAP-1B28B1 28,800 pounds Airframe Price Base
Year/Escalation Formula:
Jul-11 ECI-MFG/CPI
Airframe Price: [***] Engine Price Base
Year/Escalation Formula:
N/A N/A
Optional Features: [***]
Sub-Total of Airframe and Features: [***] Airframe Escalation Data:
Engine Price (Per Aircraft): [***] Base Year Index (ECI):
[***]
Aircraft Basic Price (Excluding BFE/SPE): [***] Base Year Index (CPI):
[***]
Buyer Furnished Equipment (BFE) Estimate: [***]
Seller Purchased Equipment (SPE) Estimate: [***]
Non-Refundable Deposit/Aircraft at Def
Agreemt:
[***]
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Jul-2019 2
[***]
[***]
[***] [***] [***] [***] [***]
Sep-2019 1
[***]
[***]
[***] [***] [***] [***] [***]
Oct-
2019
2
[***]
[***]
[***] [***] [***] [***] [***]
Apr-
2020
1
[***]
[***]
[***] [***] [***] [***] [***]
Jun-2020 1
[***]
[***]
[***] [***] [***] [***] [***]
Jul-2020 2
[***]
[***]
[***] [***] [***] [***] [***]
Aug-
2020
2
[***]
[***]
[***] [***] [***] [***] [***]
Sep-2020 2
[***]
[***]
[***] [***] [***] [***] [***]
Jan-2021 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Jan-2021 1
[***]
[***]
[***] [***] [***] [***] [***]
Feb-2021 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Mar-
2021
1
[***]
[***]
[***] [***] [***] [***] [***]
SWA‑PA‑03729-LA 1106474 106097-1O.TXT
BOEING PROPRIETARY
SA-7
Page 1
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Apr-
2021
1
[***]
[***] D
[***] [***] [***] [***] [***]
Apr-
2021
1
[***]
[***]
[***] [***] [***] [***] [***]
May-
2021
1
[***]
[***]
D
[***] [***] [***] [***] [***]
May-
2021
1
[***]
[***]
[***] [***] [***] [***] [***]
Jun-2021 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Jul-2021 2
[***]
[***]
[***] [***] [***] [***] [***]
Jul-2021 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Aug-
2021
1
[***]
[***]
D
[***] [***] [***] [***] [***]
Sep-2021 2
[***]
[***]
[***] [***] [***] [***] [***]
Oct-2021 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Oct-2021 2
[***]
[***]
[***] [***] [***] [***] [***]
Nov-
2021
1
[***]
[***]
D
[***] [***] [***] [***] [***]
Dec-
2021
1
[***]
[***]
[***] [***] [***] [***] [***]
Jan-2022 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Jan-2022 2
[***]
[***]
[***] [***] [***] [***] [***]
Feb-2022 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Feb-2022 2
[***]
[***]
[***] [***] [***] [***] [***]
Mar-
2022
1
[***]
[***]
D
[***] [***] [***] [***] [***]
Mar-
2022
1
[***]
[***]
[***] [***] [***] [***] [***]
Apr-
2022
1
[***]
[***]
D
[***] [***] [***] [***] [***]
May-
2022
1
[***]
[***]
[***] [***] [***] [***] [***]
Jun-2022 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Jul-2022 1
[***]
[***]
[***] [***] [***] [***] [***]
Jul-2022 1
[***]
[***]
D
[***] [***] [***] [***] [***]
SWA‑PA‑03729-LA 1106474 106097-1O.TXT
BOEING PROPRIETARY
SA-7
Page 2
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Aug-
2022
1
[***]
[***]
[***] [***] [***] [***] [***]
Sep-2022 1
[***]
[***] D
[***] [***] [***] [***] [***]
Oct-2022 1
[***]
[***]
[***] [***] [***] [***] [***]
Oct-2022 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Nov-
2022
1
[***]
[***]
[***] [***] [***] [***] [***]
Nov-
2022
1
[***]
[***]
D
[***] [***] [***] [***] [***]
Dec-
2022
1
[***]
[***]
[***] [***] [***] [***] [***]
Dec-
2022
1
[***]
[***]
D
[***] [***] [***] [***] [***]
Jan-2023 1
[***]
[***]
[***] [***] [***] [***] [***]
Jan-2023 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Feb-2023 1
[***]
[***]
[***] [***] [***] [***] [***]
Feb-2023 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Mar-
2023
1
[***]
[***]
[***] [***] [***] [***] [***]
Mar-
2023
1
[***]
[***]
D
[***] [***] [***] [***] [***]
Apr-
2023
1
[***]
[***]
[***] [***] [***] [***] [***]
Apr-
2023
1
[***]
[***]
D
[***] [***] [***] [***] [***]
May-
2023
1
[***]
[***]
[***] [***] [***] [***] [***]
May-
2023
1
[***]
[***]
D
[***] [***] [***] [***] [***]
Jun-2023 1
[***]
[***]
[***] [***] [***] [***] [***]
Jun-2023 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Jul-2023 1
[***]
[***]
[***] [***] [***] [***] [***]
Aug-
2023
1
[***]
[***]
D
[***] [***] [***] [***] [***]
Aug-
2023
1
[***]
[***]
[***] [***] [***] [***] [***]
Sep-2023 1
[***]
[***]
D
[***] [***] [***] [***] [***]
SWA‑PA‑03729-LA 1106474 106097-1O.TXT
BOEING PROPRIETARY
SA-7
Page 3
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Sep-2023 1
[***]
[***]
[***] [***] [***] [***] [***]
Oct-2023 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Oct-2023 1
[***]
[***]
[***] [***] [***] [***] [***]
Nov-
2023
1
[***]
[***]
D
[***] [***] [***] [***] [***]
Nov-
2023
1
[***]
[***]
[***] [***] [***] [***] [***]
Dec-
2023
1
[***]
[***]
D
[***] [***] [***] [***] [***]
Dec-
2023
1
[***]
[***]
[***] [***] [***] [***] [***]
Jan-2024 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Jan-2024 1
[***]
[***]
[***] [***] [***] [***] [***]
Feb-2024 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Feb-2024 1
[***]
[***]
[***] [***] [***] [***] [***]
Mar-
2024
1
[***]
[***]
D
[***] [***] [***] [***] [***]
Mar-
2024
1
[***]
[***]
[***] [***] [***] [***] [***]
Apr-
2024
1
[***]
[***]
D
[***] [***] [***] [***] [***]
Apr-
2024
1
[***]
[***]
[***] [***] [***] [***] [***]
May-
2024
1
[***]
[***]
D
[***] [***] [***] [***] [***]
May-
2024
1
[***]
[***]
[***] [***] [***] [***] [***]
Jun-2024 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Jun-2024 1
[***]
[***]
[***] [***] [***] [***] [***]
Jul-2024 1
[***]
[***]
D
[***] [***] [***] [***] [***]
Aug-
2024
1
[***]
[***]
[***] [***] [***] [***] [***]
Aug-
2024
1
[***]
[***]
D
[***] [***] [***] [***] [***]
Sep-2024 1
[***]
[***]
[***] [***] [***] [***] [***]
Sep-2024 1
[***]
[***]
D
[***] [***] [***] [***] [***]
SWA‑PA‑03729-LA 1106474 106097-1O.TXT
BOEING PROPRIETARY
SA-7
Page 4
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Oct-2024 1
[***]
[***]
[***] [***] [***] [***] [***]
Oct-2024 1
[***]
[***] D
[***] [***] [***] [***] [***]
Nov-
2024
1
[***]
[***]
[***] [***] [***] [***] [***]
Nov-
2024
1
[***]
[***] D
[***] [***] [***] [***] [***]
Dec-
2024
2
[***]
[***]
[***] [***] [***] [***] [***]
Jan-2025 3
[***]
[***]
[***] [***] [***] [***] [***]
Feb-2025 3
[***]
[***]
[***] [***] [***] [***] [***]
Mar-
2025
3
[***]
[***]
[***] [***] [***] [***] [***]
Apr-
2025
3
[***]
[***]
[***] [***] [***] [***] [***]
May-
2025
3
[***]
[***]
[***] [***] [***] [***] [***]
Jun-2025 3
[***]
[***]
[***] [***] [***] [***] [***]
Jul-2025 3
[***]
[***]
[***] [***] [***] [***] [***]
Aug-
2025
3
[***]
[***]
[***] [***] [***] [***] [***]
Sep-2025 3
[***]
[***]
[***] [***] [***] [***] [***]
Oct-2025 3
[***]
[***]
[***] [***] [***] [***] [***]
Nov-
2025
3
[***]
[***]
[***] [***] [***] [***] [***]
Dec-
2025
3
[***]
[***]
[***] [***] [***] [***] [***]
Jan-2026 3
[***]
[***]
[***] [***] [***] [***] [***]
Feb-2026 3
[***]
[***]
[***] [***] [***] [***] [***]
Mar-
2026
3
[***]
[***]
[***] [***] [***] [***] [***]
Apr-
2026
3
[***]
[***]
[***] [***] [***] [***] [***]
May-
2026
3
[***]
[***]
[***] [***] [***] [***] [***]
Jun-2026 3
[***]
[***]
[***] [***] [***] [***] [***]
Jul-2026 3
[***]
[***]
[***] [***] [***] [***] [***]
SWA‑PA‑03729-LA 1106474 106097-1O.TXT
BOEING PROPRIETARY
SA-7
Page 5
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Aug-
2026
3
[***]
[***]
[***] [***] [***] [***] [***]
Sep-
2026
3
[***]
[***]
[***] [***] [***] [***] [***]
Oct-
2026
3
[***]
[***]
[***] [***] [***] [***] [***]
Nov-
2026
3
[***]
[***]
[***] [***] [***] [***] [***]
Dec-
2026
3
[***]
[***]
[***] [***] [***] [***] [***]
Jan-2027 3
[***]
[***]
[***] [***] [***] [***] [***]
Feb-2027 3
[***]
[***]
[***] [***] [***] [***] [***]
Mar-
2027
3
[***]
[***]
[***] [***] [***] [***] [***]
Apr-
2027
3
[***]
[***]
[***] [***] [***] [***] [***]
May-
2027
3
[***]
[***]
[***] [***] [***] [***] [***]
Jun-2027 3
[***]
[***]
[***] [***] [***] [***] [***]
Jul-2027 3
[***]
[***]
[***] [***] [***] [***] [***]
Aug-
2027
2
[***]
[***]
[***] [***] [***] [***] [***]
Total: 195
* [***]
SWA‑PA‑03729-LA 1106474 106097-1O.TXT
BOEING PROPRIETARY
SA-7
Page 6
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106463R2
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: Open Matters
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but
not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
Given the long period of time between Purchase Agreement signing and delivery of the first Aircraft and the
continued development of the Aircraft program, certain elements have not yet been defined. In consideration, Boeing and
Customer agree to work together as the Aircraft program develops as follows:
1. Aircraft Delivery Schedule.
[***]
1.2 Customer and Boeing will consult on a frequent basis to keep each other informed as to Customer’s fleet plans
and Boeing’s production plans in order to meet the requirements of both parties. Based on such review and discussions,
Boeing will use its best commercially reasonable efforts to meet Customer’s fleet needs.
SWA-PA-03729-LA-1106463R2 SA-7
Open Matters Page 1
BOEING PROPRIETARY
2. Aircraft Configuration.
2.1 Reserved.
2.2 Model 737-7. The initial configuration of Customer's Model 737-7 Aircraft has not been defined. [***]
SWA-PA-03729-LA-1106463R2 SA-7
Open Matters Page 2
BOEING PROPRIETARY
3. Other Letter Agreements.
Boeing and Customer acknowledge that as they work together to develop the Aircraft program and as Boeing refines
the definition of the Aircraft and associated production processes, there may be a need to execute additional letter
agreements or amend letter agreements addressing one or more of the following:
3.1 Software. Additional provisions relating to software and software loading.
3.2 Seller Purchased Equipment (SPE) and/or In-Flight Entertainment (IFE). Provisions relating to the terms under
which Boeing may offer or install SPE in the Aircraft.
3.3 Buyer Furnished Equipment (BFE) for 737-7. Provisions relating to the terms under which Boeing may install
and certify Customer’s BFE in the Aircraft.
4. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
SWA-PA-03729-LA-1106463R2 SA-7
Open Matters Page 3
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By /s/ Kyle Kersavage
Its
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: August 25 , 2017
SOUTHWEST AIRLINES CO.
By /s/ Chris Monroe
Its
Chris Monroe
SVP, Finance
SWA-PA-03729-LA-1106463R2 SA-7
Open Matters Page 4
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
29 September 2017
6-1162-KLK-0059R3
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
References: (a) Purchase Agreement No. 03729 (MAX Purchase Agreement) between The Boeing Company
(Boeing) and Southwest Airlines Co.
(Customer) relating to Model 737-8 and 737-7 (MAX Aircraft)
(b) Purchase Agreement No. PA-1810 (NG Purchase Agreement, and together with the MAX Purchase
Agreement, the Purchase Agreement) between Boeing and Customer relating to Model 737-7H4 and 737-
8H4 aircraft (NG Aircraft, and together with the MAX Aircraft, the Aircraft)
This letter agreement (Letter Agreement) amends and supplements the
Purchase Agreements. All terms used but not defined in this Letter Agreement shall
have the same meaning as in the respective referenced Purchase Agreements.
1. [***]
2. [***]
BOEING PROPRIETARY
3. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation.
Regards,
THE BOEING COMPANY
/s/ Kyle Kersavage
Kyle Kersavage
Regional Director
Boeing Commercial Airplanes, Contracts
ACCEPTED AND AGREED TO this
DATE: _September 29, 2017______
SOUTHWEST AIRLINES CO.
By__/s/ Chris Monroe ___________
Chris Monroe
Its___SVP, Finance_____________
Letter Agreement No. 6-1162-KLK-0059R2
[***] Page 2
BOEING PROPRIETARY
Attachment A To
Letter Agreement No. 6-1162-KLK-0059R1
[***]
Table 1
[***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***]
Table 2
[***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***]
Letter Agreement No. 6-1162-KLK-0059R2
[***] Page 3
BOEING PROPRIETARY
SUPPLEMENTAL AGREEMENT NO. 8
to
Purchase Agreement No. 03729
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Relating to Boeing Model 737-8 and 737-7 Aircraft
THIS SUPPLEMENTAL AGREEMENT No. 8 (SA-8), entered into as of December 20, 2017, is made between THE
BOEING COMPANY, a Delaware corporation (Boeing), and SOUTHWEST AIRLINES CO., a Texas corporation
(Customer).
RECITALS:
WHEREAS, Customer and Boeing entered into Purchase Agreement Number PA-03729 dated December 13, 2011, as
amended and supplemented, (Purchase Agreement) relating to the purchase and sale of Boeing Model 737-8 (737-8
Aircraft) and Model 737-7 aircraft (737-7 Aircraft); collectively the “Aircraft”. This SA8 is an amendment to and is
incorporated into the Purchase Agreement. Capitalized terms used herein but not otherwise defined will have the meaning
set forth in the Purchase Agreement.
WHEREAS, Customer has elected to exercise its right to purchase forty (40) option aircraft, and to accelerate the
scheduled deliveries of certain 737-8 Aircraft, all as identified in Table 1A, Aircraft Delivery, Description, Price, and Advance
Payments 737-8 Aircraft, attached hereto.
WHEREAS, Boeing and Customer agree to reschedule the deliveries of certain 737-7 Aircraft as identified in Table 1B,
Aircraft Delivery, Description, Price, and Advance Payments 737-7 Aircraft, attached hereto.
WHEREAS, Boeing and Customer agree to amend the Purchase Agreement to include [***]
exercised option aircraft [***]
in LA-1106475R3,
[***] attached hereto.
WHEREAS, Boeing and Customer agree to amend the Purchase Agreement to make certain changes to the Letter
Agreement entitled [***] in LA-1106467R1.
SWA-PA-3729 1 SA-8
BOEING PROPRIETARY
WHEREAS, Boeing and Customer agree to amend the Purchase Agreement to incorporate a package of configuration
options and master changes previously accepted by Customer for 737-7 Aircraft, in accordance with LA-1106463R3,
paragraph 2, Open Matters.
WHEREAS, Boeing and Customer agree to amend the Purchase Agreement to revise Supplemental Exhibit BFE2 to reflect
the selection dates and on dock dates of BFE for the 737-7 Aircraft, in accordance with LA-1106463R3, paragraph 3, Open
Matters.
NOW, THEREFORE, the parties agree that the Purchase Agreement is amended as set forth below and otherwise agree
as follows:
1. TABLE OF CONTENTS.
The Table of Contents of the Purchase Agreement is deleted in its entirety and replaced with a new Table of Contents
(attached), which lists the Tables, Exhibits, and Letter Agreements revised by this SA8 and is identified by “SA8”. Such
revised Table of Contents is incorporated into the Purchase Agreement by this reference.
1. TABLES.
Table 1A, Aircraft Delivery, Description, Price and Advance Payments – 737-8 Aircraft, is deleted in its entirety and
replaced by a new Table 1A (identified by "SA-8") attached hereto and incorporated into the Purchase Agreement by this
reference.
Table 1B, Aircraft Delivery, Description, Price and Advance Payments – 737-7 Aircraft, is deleted in its entirety and
replaced by a new Table 1B (identified by "SA-8") attached hereto and incorporated into the Purchase Agreement by this
reference.
1. EXHIBITS.
3.1. Exhibit A1, 737-8 Aircraft Configuration, is deleted in its entirety and replaced by the updated Exhibit A1 attached
hereto and incorporated into the Purchase Agreement by this reference.
3.2. Exhibit A2, 737-7 Aircraft Configuration, is deleted in its entirety and replaced by the updated Exhibit A2 attached
hereto and incorporated into the Purchase Agreement by this reference.
3.3. Exhibit BFE2, Buyer Furnished Equipment Variables, is added to and incorporated into the Purchase Agreement by
this reference.
4. LETTER AGREEMENTS.
SWA-PA-3729 2 SA-8
BOEING PROPRIETARY
4.1. Letter Agreement SWA-PA-03729-LA-1106463R2, Open Matters, is deleted in its entirety and is replaced with the
attached revised Letter Agreement SWA-PA-03729-LA-1106463R3.
4.2. Letter Agreement SWA-PA-03729-LA 1106467R1, [***]
is deleted in its entirety and is replaced with the attached revised Letter Agreement SWA-PA-03729-LA 1106467R2.
4.3. Letter Agreement SWA-PA-03729-LA-1106474R1, Option Aircraft, and its Attachment 1 are deleted in their entirety
and are replaced with the attached revised Letter Agreement SWA-PA-03729-LA-1106474R2 and its Attachment 1.
4.4. Letter Agreement SWA-PA-03729-LA-1106475R2, [***]
is deleted in its entirety and is replaced with the attached revised Letter Agreement SWA-PA-03729-LA-1106475R3.
4.5. Letter Agreement SWA-PA-03729-LA-1106476R1, [***]
4.6. is deleted in its entirety and is replaced with the attached revised Letter Agreement SWA-PA-03729-LA-1106476R2.
4.7. Letter Agreement SWA-PA-03729-LA-1106484, [***]
and its Attachments A and B are deleted in their entirety and are replaced with the attached revised Letter
Agreement SWA-PA-03729-LA-1106484R1 and its Attachments A and B.
4.8. Letter Agreement SWA-PA-03729-LA-1301170R1,[***]
is deleted in its entirety and is replaced with the attached revised Letter Agreement SWA-PA-03729-LA-1301170R2.
5. ADVANCE PAYMENT IMPACTS.
[***]
6. IMPACTS TO PREVIOUSLY DELIVERED AIRCRAFT.
6.1. In accordance with Letter Agreement SWA-PA-03729-LA-1106475R3.
[***]
SWA-PA-3729 3 SA-8
BOEING PROPRIETARY
6.2. In consideration of Boeing and Customer entering into an agreement to exercise (40) 737-8 options, [***]
7. SA-8 PAYMENT.
[***]
SWA-PA-3729 4 SA-8
BOEING PROPRIETARY
The Purchase Agreement is deemed to be supplemented to the extent herein provided and as so supplemented will
continue in full force and effect.
EXECUTED IN DUPLICATE as of the day and year first above written.
THE BOEING COMPANY SOUTHWEST AIRLINES CO.
By: /s/ Kyle Kersavage By: /s/ Chris Monroe
Its: Attorney-In-Fact Its: Chris Monroe
SVP, Finance
SWA-PA-3729 5 SA-8
BOEING PROPRIETARY
TABLE OF CONTENTS
ARTICLES TITLES
Article 1 Quantity, Model and Description SA-2
Article 2 Delivery Schedule
Article 3 Price
Article 4 Payment SA-2
Article 5 Additional Terms
TABLE TITLE
1A 737-8 Aircraft Information Table SA-8
1B 737-7 Aircraft Information Table SA-8
EXHIBIT
A1 737-8 Aircraft Configuration SA-8
A2 737-7 Aircraft Configuration SA-8
B* Aircraft Delivery Requirements and
Responsibilities
SUPPLEMENTAL EXHIBITS TITLES
AE1* Escalation Adjustment/Airframe and Optional
Features
BFE1 BFE Variables for 737-8 SA-7
BFE2 BFE Variables for 737-7 SA-8
CS1 Customer Support Variables
CS1-7MAX Customer Support Variables SA-2
EE1* Engine Escalation/Engine Warranty and Patent
Indemnity
SLP1* Service Life Policy Components
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106463R3 Open Matters SA-8
SWA-PA-03729 SA-8
Page 1
BOEING PROPRIETARY
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106464*
[***]
SWA-PA-03729-LA-1106465*
[***]
SWA-PA-03729-LA-1106466
[***]
SWA-PA-03729-LA-1106467R2
[***]
SA-8
SWA-PA-03729-LA-1106468*
[***]
SWA-PA-03729-LA-1106469R1
[***]
SA-2
SWA-PA-03729-LA-1106470R1
[***]
SA-2
SWA-PA-03729-LA-1106471R1
[***]
SA-2
SWA-PA-03729-LA-1106473R1
[***]
SA-5
SWA-PA-03729-LA-1106474R2
Option Aircraft
SA-8
Attachment 1
SA-8
SWA-PA-03729-LA-1106475R3
[***]
SA-8
SWA-PA-03729-LA-1106476R2
[***]
SA-8
SWA-PA-03729-LA-1106477*
[***]
SWA-PA-03729-LA-1106478
[***]
SWA-PA-03729-LA-1106479R1
[***]
SA-2
SWA-PA-03729-LA-1106480R1
[***]
SA-2
SWA-PA-03729-LA-1106481R2
[***]
SA-2
SWA-PA-03729-LA-1106482*
[***]
SWA-PA-03729-LA-1106483*
[***]
SWA-PA-03729-LA-1106484R1
[***]
SA-8
AttachmentA SA-8
AttachmentB SA-8
SWA-PA-03729-LA-1106485*
[***]
SWA-PA-03729-LA-1209080
[***]
SA-1
SWA-PA-03729 SA-8
Page 2
BOEING PROPRIETARY
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1210419
[***]
[***]
SA-1
SWA-PA-03729-LA-1300943
[***]
SA-2
SWA-PA-03729-LA-1301168R3
[***]
SA-6
SWA-PA-03729-LA-1301170R2
[***]
SA-8
SWA-PA-03729-LA-1400371
[***]
SA-7
SASWA-PA-03729-LA-1503792
[***]
SA-6
SWA-PA-03729-LA-1500831
[***]
[***]
SA-7
SWAPA03729LA1602486
[***]
SA-5
* Denotes revision to Page 1 or Page 2 only to reference 737-7 (SA-2)
SWA-PA-03729 SA-8
Page 3
BOEING PROPRIETARY
INACTIVE / DELETED TABLES, EXHIBITS, AND LETTER AGREEMENTS
RESTRICTED LETTER AGREEMENTS
Letter Agreement Title Last Updated under SA Current Status
SWA-PA-03729-LA-1106472R1
[***]
SA-2 Deleted under SA-4
SWA-PA-01810/03729-LA-
1301169
[***]
SA-2 Deleted under SA-4
SWA-PA-03729 SA-8
Page 4
BOEING PROPRIETARY
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Airframe Model/MTOW: 737-8 181,200pounds Detail Specification: D019A008-P(5/1/2017)
Engine Model/Thrust: CFMLEAP-1B28 28,800pounds Airframe Price Base Year/Escalation Formula: Jul-11 ECI-MFG/CPI
Airframe Price: [***] Engine Price Base Year/Escalation Formula: N/A N/A
Optional Features: [***]
Sub-Total of Airframe and Features:
[***] Airframe Escalation Data:
Engine Price (Per Aircraft): [***] Base Year Index (ECI): [***]
Aircraft Basic Price (Excluding BFE/SPE): [***] Base Year Index (CPI): [***]
Buyer Furnished Equipment (BFE) Estimate: [***]
Seller Purchased Equipment (SPE) Estimate: [***]
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block
Notes Escalation
Estimate
Adv Payment
Base
Price Per A/P
Advance Payment Per Aircraft (Amts. Due/Mos.
Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Jul-2017 1
[***]
36929†
[***]
A Note1
[***] [***] [***] [***] [***]
Jul-2017 2
[***]
42558†,42559†
[***]
C Note1
[***] [***] [***] [***] [***]
Aug-2017 3
[***]
36979,36930,36984
[***]
A Note1
[***] [***] [***] [***] [***]
Aug-2017 3
[***]
42563,42566†,42567
[***]
C Note1
[***] [***] [***] [***] [***]
Sep-2017 1
[***]
36934
[***]
A Note1
[***] [***] [***] [***] [***]
Oct-2017 1
[***]
42544
[***]
A
[***] [***] [***] [***] [***]
Oct-2017 1
[***]
42570
[***]
C
[***] [***] [***] [***] [***]
Nov-2017 1
[***]
36988†
[***]
A
[***] [***] [***] [***] [***]
Dec-2017 1
[***]
42554†
[***]
C
[***] [***] [***] [***] [***]
Mar-2018 1
[***]
36989†
[***]
A
[***] [***] [***] [***] [***]
Mar-2018 1
[***]
42571
[***]
C
[***] [***] [***] [***] [***]
Apr-2018 1
[***]
42546
[***]
A
[***] [***] [***] [***] [***]
Jun-2018 1
[***]
42572
[***]
C
[***] [***] [***] [***] [***]
Jun-2018 1
[***]
42547
[***]
A
[***] [***] [***] [***] [***]
Jul-2018 1
[***]
42556†
[***]
C
[***] [***] [***] [***] [***]
Aug-2018 3
[***]
42548, 37019, 42549
[***]
A
[***] [***] [***] [***] [***]
Aug-2018 1
[***]
42574
[***] [***] [***] [***] [***] [***]
Sep-2018 3
[***]
42575, 42573, 42576
[***] [***] [***] [***] [***] [***]
Jun-2019 1
[***]
42577
[***] [***] [***] [***] [***] [***]
Jun-2019 1
[***]
37042
[***]
A
[***] [***] [***] [***] [***]
SWA‑PA‑03729 107813.1F. TXT
BOEING PROPRIETARY
SA-8
Page 1
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block
Notes
Escalation
Estimate
Adv Payment
Base
Price Per
A/P
Advance Payment Per Aircraft (Amts.
Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Jul-2019 1
[***]
42550
[***]
A
[***] [***] [***] [***] [***]
Jul-2019 2
[***]
65437, 65436
[***]
E OPEX
[***] [***] [***] [***] [***]
Sep-2019 2
[***]
65471, 65438
[***]
E OPEX
[***] [***] [***] [***] [***]
Oct-2019 2
[***]
42551, 37043
[***]
A
[***] [***] [***] [***] [***]
Oct-2019 1
[***]
65439
[***]
OPEX
[***] [***] [***] [***] [***]
Oct-2019 1
[***]
65440
[***]
OPEX
[***] [***] [***] [***] [***]
Nov-2019 1
[***]
42536
[***]
A
[***] [***] [***] [***] [***]
Nov-2019 1
[***]
65473
[***]
D OPEX
[***] [***] [***] [***] [***]
Dec-2019 1
[***]
36722
[***]
B
[***] [***] [***] [***] [***]
Dec-2019 1
[***]
42537
[***]
A
[***] [***] [***] [***] [***]
Feb-2020 1
[***]
36727
[***]
B
[***] [***] [***] [***] [***]
Mar-2020 2
[***]
42579, 42580
[***] [***] [***] [***] [***] [***]
Apr-2020 1
[***]
42539
[***]
A
[***] [***] [***] [***] [***]
Apr-2020 1
[***]
65441
[***]
OPEX
[***] [***] [***] [***] [***]
May-2020 1
[***]
42553
[***]
A
[***] [***] [***] [***] [***]
May-2020 1
[***]
35970
[***]
B
[***] [***] [***] [***] [***]
Jun-2020 1
[***]
42607
[***] [***] [***] [***] [***] [***]
Jun-2020 1
[***]
65442
[***]
OPEX
[***] [***] [***] [***] [***]
Jul-2020 1
[***]
42540
[***]
A
[***] [***] [***] [***] [***]
Jul-2020 2
[***]
65443, 65444
[***]
OPEX
[***] [***] [***] [***] [***]
Aug-2020 1
[***]
42541
[***]
A
[***] [***] [***] [***] [***]
Aug-2020 2
[***]
65445, 65446
[***]
OPEX
[***] [***] [***] [***] [***]
Sep-2020 1
[***]
33941
[***]
B
[***] [***] [***] [***] [***]
Sep-2020 3
[***]
65447, 65448, 65472
[***]
OPEX
[***] [***] [***] [***] [***]
Oct-2020 1
[***]
42615
[***] [***] [***] [***] [***] [***]
Oct-2020 1
[***]
42543
[***]
A
[***] [***] [***] [***] [***]
Oct-2020 1
[***]
65474
[***]
OPEX
[***] [***] [***] [***] [***]
Nov-2020 1
[***]
36733
[***]
B
[***] [***] [***] [***] [***]
Nov-2020 1
[***]
65475
[***]
D OPEX
[***] [***] [***] [***] [***]
Dec-2020 1
[***]
33940
[***]
B
[***] [***] [***] [***] [***]
Jan-2021 1
[***]
35974 [***] B
[***] [***] [***] [***] [***]
SWA‑PA‑03729 107813.1F. TXT
BOEING PROPRIETARY
SA-8
Page 2
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block
Notes
Escalation
Estimate
Adv Payment
Base
Price Per
A/P
Advance Payment Per Aircraft (Amts.
Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Jan-2021 1
[***]
65450
[***]
D OPEX
[***] [***] [***] [***] [***]
Jan-2021 1
[***]
65449
[***]
OPEX
[***] [***] [***] [***] [***]
Feb-2021 1
[***]
65451
[***]
D OPEX
[***] [***] [***] [***] [***]
Mar-2021 1
[***]
42648
[***] [***] [***] [***] [***] [***]
Mar-2021 1
[***]
65452
[***]
OPEX
[***] [***] [***] [***] [***]
Apr-2021 3
[***]
42649,42650,42651
[***] [***] [***] [***] [***] [***]
Apr-2021 1
[***]
65454
[***]
D OPEX
[***] [***] [***] [***] [***]
Apr-2021 1
[***]
65453
[***]
OPEX
[***] [***] [***] [***] [***]
May-2021 3
[***]
42652,42653,42654
[***] [***] [***] [***] [***] [***]
May-2021 1
[***]
65455
[***]
D OPEX
[***] [***] [***] [***] [***]
May-2021 1
[***]
65456
[***]
OPEX
[***] [***] [***] [***] [***]
Jun-2021 3
[***]
42655,42656,42670
[***] [***] [***] [***] [***] [***]
Jun-2021 1
[***]
65457
[***]
D OPEX
[***] [***] [***] [***] [***]
Jul-2021 3
[***]
42657,42658,42671
[***] [***] [***] [***] [***] [***]
Jul-2021 1
[***]
65460
[***]
D OPEX
[***] [***] [***] [***] [***]
Jul-2021 2
[***]
65459, 65458
[***]
OPEX
[***] [***] [***] [***] [***]
Aug-2021 1
[***]
65461
[***]
D OPEX
[***] [***] [***] [***] [***]
Sep-2021 2
[***]
65463, 65462
[***]
OPEX
[***] [***] [***] [***] [***]
Oct-2021 1
[***]
65466
[***]
D OPEX
[***] [***] [***] [***] [***]
Oct-2021 2
[***]
65465, 65464
[***]
OPEX
[***] [***] [***] [***] [***]
Nov-2021 1
[***]
65467
[***]
D OPEX
[***] [***] [***] [***] [***]
Dec-2021 1
[***]
65468
[***]
OPEX
[***] [***] [***] [***] [***]
Jan-2022 1
[***]
65469
[***]
D OPEX
[***] [***] [***] [***] [***]
Jan-2022 1
[***]
65470
[***]
OPEX
[***] [***] [***] [***] [***]
Mar-2022 2
[***]
42678,42679
[***] [***] [***] [***] [***] [***]
Apr-2022 3
[***]
42680,42681,42688
[***] [***] [***] [***] [***] [***]
May-2022 3
[***]
42682,42683,42684
[***] [***] [***] [***] [***] [***]
Jun-2022 3
[***]
42685,42686,42687
[***] [***] [***] [***] [***] [***]
Jul-2022 2
[***]
42689,42690
[***] [***] [***] [***] [***] [***]
Aug-2022 2
[***] [***] [***] [***] [***] [***] [***]
42693,42695
Jan-2023 2
[***]
42560,42565
[***] [***] [***] [***] [***] [***]
SWA‑PA‑03729 107813.1F. TXT
BOEING PROPRIETARY
SA-8
Page 3
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block
Notes
Escalation
Estimate
Adv Payment Base
Price Per A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Feb-2023 2 [***]
42562,42564
[***] [***] [***] [***] [***] [***]
Mar-2023 1 [***]
42557
[***] [***] [***] [***] [***] [***]
Mar-2023 1 [***]
36732
[***]
B
[***] [***] [***] [***] [***]
Apr-2023 1 [***]
42555
[***] [***] [***] [***] [***] [***]
Apr-2023 1 [***]
38806
[***]
B
[***] [***] [***] [***] [***]
May-2023 2 [***]
42594,42568
[***] [***] [***] [***] [***] [***]
Jun-2023 1 [***]
42581
[***] [***] [***] [***] [***] [***]
Jun-2023 1 [***]
37034
[***]
A
[***] [***] [***] [***] [***]
Jul-2023 2 [***]
42597,42582
[***] [***] [***] [***] [***] [***]
Aug-2023 1 [***]
42593
[***] [***] [***] [***] [***] [***]
Aug-2023 1 [***]
42552
[***]
A
[***] [***] [***] [***] [***]
Sep-2023 2 [***]
42601,42578
[***] [***] [***] [***] [***] [***]
Oct-2023 1 [***]
42605
[***] [***] [***] [***] [***] [***]
Oct-2023 1 [***]
42538
[***]
A
[***] [***] [***] [***] [***]
Nov-2023 1 [***]
38815
[***]
B
[***] [***] [***] [***] [***]
Dec-2023 1 [***]
42583
[***] [***] [***] [***] [***] [***]
Jan-2024 3 [***]
42611,42584,42585
[***] [***] [***] [***] [***] [***]
Feb-2024 3 [***]
42612,42596,42599
[***] [***] [***] [***] [***] [***]
Mar-2024 3 [***]
38817,35968,35972
[***]
B
[***] [***] [***] [***] [***]
Apr-2024 2 [***]
42617,42606
[***] [***] [***] [***] [***] [***]
Apr-2024 1 [***]
36736
[***]
B
[***] [***] [***] [***] [***]
May-2024 3 [***]
42619,42622,42608
[***] [***] [***] [***] [***] [***]
Jun-2024 1 [***]
42610
[***] [***] [***] [***] [***] [***]
Jun-2024 1 [***]
42542
[***]
A
[***] [***] [***] [***] [***]
Jul-2024 2 [***]
35963,35967
[***]
B
[***] [***] [***] [***] [***]
Aug-2024 2 [***]
42624,42626
[***] [***] [***] [***] [***] [***]
Sep-2024 1 [***]
42630
[***] [***] [***] [***] [***] [***]
Sep-2024 1 [***]
36730
[***]
B
[***] [***] [***] [***] [***]
Oct-2024 2 [***] [***] [***] [***] [***] [***] [***]
42625,42636
Nov-2024 1 [***]
42639
[***] [***] [***] [***] [***] [***]
Nov-2024 1 [***]
35971
[***]
B
[***] [***] [***] [***] [***]
SWA‑PA‑03729 107813.1F. TXT
BOEING PROPRIETARY
SA-8
Page 4
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number
of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block
Notes
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Dec-2024
2 [***]
42628,42640
[***] [***] [***] [***] [***] [***]
Dec-2024
1 [***]
35975
[***]
B
[***] [***] [***] [***] [***]
Jan-2025
2 [***]
42633,42634
[***] [***] [***] [***] [***] [***]
Jan-2025
2 [***]
38804,38805
[***]
B
[***] [***] [***] [***] [***]
Feb-2025
3 [***]
42637,42641,42643
[***] [***] [***] [***] [***] [***]
Feb-2025
1 [***]
36729
[***]
B
[***] [***] [***] [***] [***]
Mar-2025
4 [***]
42644,42645,42646,42647
[***] [***] [***] [***] [***] [***]
Apr-2025
4 [***]
42659,42660,42661,42662
[***] [***] [***] [***] [***] [***]
May-2025
3 [***]
42663,42664,42666
[***] [***] [***] [***] [***] [***]
Jun-2025
3 [***]
42665,42667,42669
[***] [***] [***] [***] [***] [***]
Jul-2025
3 [***]
42668,42672,42673
[***] [***] [***] [***] [***] [***]
Aug-2025
3 [***]
42674,42675,42691
[***] [***] [***] [***] [***] [***]
Sep-2025
3 [***]
42676,42677,42694
[***] [***] [***] [***] [***] [***]
Oct-2025
3 [***]
42692,42696,42697
[***] [***] [***] [***] [***] [***]
Nov-2025
3 [***]
42698,42699,42700
[***] [***] [***] [***] [***] [***]
Dec-2025
3 [***]
42701,42702,42703
[***] [***] [***] [***] [***] [***]
Total:
210
* [***]
** Manufacturer Serial Numbers (MSN) are for reference only and are subject to change.
† [***]
Notes:
1)[***]
2)[***]
SWA‑PA‑03729 107813.1F. TXT
BOEING PROPRIETARY
SA-8
Page 5
Table 1B To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-7 Aircraft
Airframe Model/MTOW:
737-7 177,000 pounds Detail Specification: D019A008SWA17P-1
Engine Model/Thrust: CFMLEAP-1B27C 26,400 pounds Airframe Price Base Year/Escalation
Formula:
Jul-11 ECI-MFG/CPI
Airframe Price: [***] Engine Price Base Year/Escalation Formula N/A N/A
Optional Features: [***]
Sub-Total of Airframe and Features: [***] Airframe Escalation Data:
Engine Price (Per Aircraft): [***] Base Year Index (ECI): [***]
Aircraft Basic Price (Excluding BFE/SPE): [***] Base Year Index (CPI): [***]
Buyer Furnished Equipment (BFE) Estimate: [***]
Seller Purchased Equipment (SPE) Estimate: [***]
Escalation Escalation
Estimate
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Number of Factor Escalation Adv Payment
Base
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Date* Aircraft (Airframe) Factor Price Per A/P
[***] [***] [***] [***]
Apr-2019 3
[***] [***] [***] [***] [***] [***] [***]
May-2019 2
[***] [***] [***] [***] [***] [***] [***]
Aug-2019 2
[***] [***] [***] [***] [***] [***] [***]
Jan-2023 1
[***] [***] [***] [***] [***] [***] [***]
Feb-2023 1
[***] [***] [***] [***] [***] [***] [***]
Mar-2023 1
[***] [***] [***] [***] [***] [***] [***]
Apr-2023 1
[***] [***] [***] [***] [***] [***] [***]
May-2023 1
[***] [***] [***] [***] [***] [***] [***]
Jun-2023 1
[***] [***] [***] [***] [***] [***] [***]
Jul-2023 1
[***] [***] [***] [***] [***] [***] [***]
Aug-2023 1
[***] [***] [***] [***] [***] [***] [***]
Sep-2023 1
[***] [***] [***] [***] [***] [***] [***]
Oct-2023 1
[***] [***] [***] [***] [***] [***] [***]
Nov-2023 1
[***] [***] [***] [***] [***] [***] [***]
Dec-2023
1 [***] [***] [***] [***] [***] [***] [***]
(1)
SWA‑PA‑03729 107963.1F. TXT
BOEING PROPRIETARY
SA-8
Page 1
Table 1B To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-7 Aircraft
Escalation Escalation
Estimate
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
Delivery Number of Factor Escalation Adv Payment Base At Signing 24 Mos. 21/18/12/9/6 Mos. Total
Date* Aircraft (Airframe) Factor Price Per A/P
[***] [***] [***] [***]
Jan-2024 1
[***] [***] [***]
[***] [***] [***] [***]
Feb-2024 1
[***] [***] [***] [***] [***] [***] [***]
Mar-2024 1
[***] [***] [***] [***] [***] [***] [***]
Apr-2024 1
[***] [***] [***] [***] [***] [***] [***]
May-2024 1
[***] [***] [***] [***] [***] [***] [***]
Jun-2024 1
[***] [***] [***] [***] [***] [***] [***]
Jul-2024 1
[***] [***] [***] [***] [***] [***] [***]
Aug-2024 1
[***] [***] [***] [***] [***] [***] [***]
Sep-2024 1
[***] [***] [***] [***] [***] [***] [***]
Oct-2024 1
[***] [***] [***] [***] [***] [***] [***]
Nov-2024 1
[***] [***] [***] [***] [***] [***] [***]
Total: 30
*[***]
Notes:
[***]
SWA‑PA‑03729 107963.1F. TXT
BOEING PROPRIETARY
SA-8
Page 2
737-8 AIRCRAFT CONFIGURATION
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Exhibit A1 to Purchase Agreement Number PA-03729
PA-03729 SA-8
Page A1-1
BOEING PROPRIETARY
Exhibit A1
737-8 AIRCRAFT CONFIGURATION
Dated December 13, 2011
relating to
BOEING MODEL 737-8 AIRCRAFT
The Detail Specification is Boeing document number D019A008SWA18P-1, revision NEW, released on June 30,
2017. The Detail Specification provides further description of Customer’s configuration set forth in this Exhibit A1. Such
Detail Specification will be comprised of Boeing configuration specification D019A008, Revision O, dated September 30,
2016 as amended to incorporate the optional features (Options) listed below, including the effects on Manufacturer's Empty
Weight (MEW) and Operating Empty Weight (OEW). As soon as practicable, Boeing will furnish to Customer copies of the
Detail Specification, which copies will reflect such Options. The Aircraft Basic Price reflects and includes all effects of such
Options, except such Aircraft Basic Price does not include the price effects of any Buyer Furnished Equipment or Seller
Purchased Equipment.
PA-03729 SA-8
Page A1-2
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
0110-000030 MAJORMODEL737AIRPLANE [***] [***] [***]
0110E131A08 MINORMODEL737-8AIRPLANE [***] [***] [***]
0170B401A73 CLIMATE-NORMALWEATHEROPERATIONS [***] [***] [***]
0170B871A31 GALLEYAFTCOMPLEX-G4BGALLEY-DOMED
AFTBULKHEAD(BASELINE)
[***] [***] [***]
0170C204A96 CARGOLINERS-HEAVYDUTY-FORWARD [***] [***] [***]
0170C204A99 CARGOLINERS-HEAVYDUTY-AFT [***] [***] [***]
0170C430H07 PC-FLIGHTDECK-ROLLERSUNSHADES-
DELETION-NUMBER2AND3WINDOWS-FLIGHT
DECK-SFE
[***] [***] [***]
0170C939A02 COMMUNICATIONS-BASICCOMMUNICATIONS
CONFIGURATIONWITHHF
[***] [***] [***]
0170D347B33 LAVATORYAFTCOMPLEX-TWOADVANCED
LAVATORIESWITHTWODOUBLEATTENDANT
SEATS
[***] [***] [***]
0170D360B56 PC-LAVATORYAFTCOMPLEX-TWO
LAVATORIESWITHTWODOUBLEATTENDANT
SEATS,NOCURTAINANDUNIQUEHANDSET
FACEPLATEDISPLAY-BOEINGSKYINTERIOR
[***] [***] [***]
0170D387A08 AVIONICS-DUALFMCWITHMULTI-CONTROL
DISPLAYUNIT
[***] [***] [***]
0170D837A13 FLEXIBLECERTIFICATION [***] [***] [***]
0170E173B00 FLIGHTDECK-TWOOBSERVERS [***] [***] [***]
0170E656A04 AIRFRAME-737-8 [***] [***] [***]
0220E684A09 TYPECERTIFICATE&CERTIFICATEOF
AIRWORTHINESS
[***] [***] [***]
0221A609B52 DISPATCHWITHGEAREXTENDEDFORREVENUE
FLIGHT
[***] [***] [***]
0221B463A04 MP-CERT.OFTAKEOFF&LANDINGWITH15KNOT
TAILWIND
[***] [***] [***]
0221E029A02 SKID-RESISTANTRUNWAYTAKEOFFWITH
ANTISKIDSYSTEMINOPERATIVE
[***] [***] [***]
0222E052A08 SHORTFIELDPERFORMANCEENHANCEMENT:
INSTALLATIONOFTWOPOSITIONTAILSKID
[***] [***] [***]
0226B694H86 MP-GNSSLANDINGSYSTEM(GLS)-CATEGORYI
APPROACHCAPABILITY-ACTIVATION-INLIEU
OFPARTIALPROVISIONS
[***] [***] [***]
0226C594A28 GNSSLANDINGSYSTEM(GLS)-CATEGORYI
APPROACHCAPABILITY-PARTIALPROVISIONS
[***] [***] [***]
0226E437D67 MP-GNSSLANDINGSYSTEM(GLS)-CHANGE
INCORP-CATEGORYIAPPROACHCAPABILITY-
ACTIVATION-INLIEUOFPARTIALPROVISIONS
[***] [***] [***]
0228E437A74 AIRPLANEFLIGHTMANUAL [***] [***] [***]
0252A541A02 ENGLISHUNITSFORFLIGHTANDOPERATIONS
MANUALS,CDSINDICATIONS,ANDFMCS
PARAMETERS-CELSIUSTEMPERATURE
[***] [***] [***]
PA-03729 SA-8
Page A1-3
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
0254-000003 USPHSCERTIFICATEOFSANITARY
CONSTRUCTION
[***] [***] [***]
0315E684A03 CERTIFIEDOPERATIONALWEIGHTSAND
STRUCTURALDESIGNWEIGHTS
[***] [***] [***]
1110E559D06 EXTERIORNON-REGULATORYMARKINGS [***] [***] [***]
1110E624B44 EXTERIORREGULATORYMARKINGSANDCOLOR
SCHEME
[***] [***] [***]
1130E559D12 CARGOCOMPARTMENTPLACARDS [***] [***] [***]
1130E559D13 LIGHTEDSIGNS-BI-LINGUALSPANISH/ENGLISH [***] [***] [***]
1130E559D15 INTERIORPLACARDSANDMARKERS-737BOEING
SKYINTERIOR
[***] [***] [***]
2103E437E01 MP-ACHEATEXCHANGEROUTLET
TEMPERATUREMONITORINGSENSOR-
INSTALLATION
[***] [***] [***]
2103E437E14 MP-ACHEATEXCHANGEROUTLET
TEMPERATUREMONITORINGSENSOR-CHANGE
INCORP-INSTALLATION
[***] [***] [***]
2130-000010 600FPMCABINPRESSUREASCENTRATE [***] [***] [***]
2130-000015 750FPMCABINPRESSUREDESCENTRATE [***] [***] [***]
2160-000025 CABINTEMPERATUREINDICATION-DEGREES
FAHRENHEIT
[***] [***] [***]
2170-000021 OZONECONTROL-SPACEPROVISIONSFOR
CATALYTICCONVERTERS
[***] [***] [***]
2210-000003 AUTOFLIGHT-INHIBITGLIDESLOPECAPTURE
PRIORTOLOCALIZERCAPTURE
[***] [***] [***]
2210-000123 AUTOFLIGHT-FLIGHTDIRECTORTAKEOFFMODE
WINGSLEVEL
[***] [***] [***]
2210-000128 AUTOFLIGHT-CONTROLWHEELSTEERING
WARNING
[***] [***] [***]
2210-000142 AUTOFLIGHT-ALTITUDEALERT-300/900FEET [***] [***] [***]
2210C175A38 AUTOFLIGHT-GO-AROUNDROLLMODE-LNAV [***] [***] [***]
2230-000137 AUTOTHROTTLE-FMCS-TAKEOFFPROFILE
THRUSTREDUCTIONALTITUDE
[***] [***] [***]
2310C410A91 COMMUNICATIONSCONTROLPANELS-DUAL
GABLESRADIOTUNINGPANELSCAPABLEOF(2)
HFSYSTEMSAND(3)VHFSYSTEMS(8.33KHZ
CAPABLE)-P/NG7404-124-BFE/SPE
[***] [***] [***]
2312A639A46 VHFCOMMUNICATIONS-ACTIVATIONOF
KEYLINETIMER
[***] [***] [***]
2312E173A49 VHFCOMMUNICATIONS-TRIPLEHONEYWELL
ARINC750RTA-50DVHFFMIMMUNE
TRANSCEIVERSWITH8.33KHZCHANNEL
SPACING,VDLMODE2,ANDCMCINTERFACE
CAPABILITY-P/N965-1696-021-BFE/SPE
[***] [***] [***]
PA-03729 SA-8
Page A1-4
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
2315E706A59 MP-SATCOM-INSTALLATIONOFPARTIALWIRING
ANDMOUNTINGPROVISIONS-ICGMODELICS-300
IRIDIUMSATCOMSYSTEMWITHASINGLETOP
MOUNTEDDUALELEMENTIRIDIUMANTENNA
[***] [***] [***]
2321-000050 SELCAL-AVTECHFIVECHANNELDECODER-P/N
1200008-000-BFE/SPE
[***] [***] [***]
2321-000063 SELCAL-ANNUNCIATIONONAUDIOSELECTOR
PANELS
[***] [***] [***]
2322C939A05 CMU-INSTALLATIONOFPARTIALPROVISIONSFOR
ASINGLECMUINACCORDANCEWITHARINC758
[***] [***] [***]
2322C939A06 COMMUNICATIONSMANAGEMENTUNIT(CMU)-
DATALINKRECORDINGACTIVATION
[***] [***] [***]
2322E437D59 MP-CMU-INSTALLATIONOFWIRINGPROVISIONS
BETWEENTHEONBOARDNETWORKSYSTEM(ONS)
ANDTHECOMMUNICATIONMANAGEMENTUNIT
PROVISIONS
[***] [***] [***]
2322E516A03 CMU-INSTALLATIONOFHONEYWELLMARKII
ARINC758LEVELAOACMUW/ARINCSERVICE
PROVIDER-DATALINKRECORDINGCAPABLE-P/N
965-0758-006-BFE/SPE
[***] [***] [***]
2324D197A18 EMERGENCYLOCATORTRANSMITTER(ELT)-ACR
ELECTRONICSAUTOMATICFIXED-WITH
NAVIGATIONINTERFACEUNIT(NIU)-MODES
BROADCAST-WITHANTENNAP/N110-337-BFE/SPE
[***] [***] [***]
2331B754B15 PASSENGERADDRESS(PA)SYSTEM-ARINC715-
ROCKWELLCOLLINSAMPLIFIER-BFE/SPE
[***] [***] [***]
2331E097A10 PRAM/BMMSYSTEM-PANASONIC-FASTENSEAT
BELT/DECOMPRESSIONDISCRETESACTIVATED-
BFE/SPE
[***] [***] [***]
2350A150D50 AUDIOINTEGRATING-INHIBITAURALALERT
TRANSMISSIONSTHROUGHCAPTAIN,FIRST
OFFICER'SANDFIRSTOBSERVER'SHEADPHONES
[***] [***] [***]
2350B872A08 AUDIOCONTROLPANEL-INTEGRATEDSELCAL,
CREWCALL,ANDSATCOMFUNCTIONS-
INSTALLATION-3VHF/2HF
[***] [***] [***]
2351-000042 CONTROLWHEELPUSHTOTALK(PTT)SWITCH-
STANDARDTHREEPOSITION
[***] [***] [***]
2351A213A33 AUDIOINTEGRATION-INSTALLATION-TWO-PLUG
AUDIOJACKSINTHEFLIGHTDECK
[***] [***] [***]
PA-03729 SA-8
Page A1-5
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
2351A213B77 BOOMMICROPHONEHEADSETS-CAPTAINAND
FIRSTOFFICER-TELEXAIRMAN750-P/N64300-200-
BFE/SPE
[***] [***] [***]
2351D360C80 PASSENGERCABINMEDICALCOMMUNICATIONS
SYSTEM-BOEINGSKYINTERIOR
[***] [***] [***]
2371B628B32 VOICERECORDERANDMICROPHONE/MONITOR-
HONEYWELL-2HOURRECORDINGTIME-WITH
DATALINKRECORDINGCAPABILITY-P/N980-6032-
001&P/N980-6116-001-BFE/SPE
[***] [***] [***]
2371B628B41 VOICERECORDER-RECORDERINDEPENDENT
POWERSUPPLY(RIPS)-AFTLOWEREDCEILING
[***] [***] [***]
2371E437C25 MP-VOICERECORDER-REPLACEMENT-VOICE
RECORDERWITH90DAYBATTERYINLIEUOF
VOICERECORDERWITH30DAYBATTERY-
HONEYWELLINTERNATIONALINC-BFE
[***] [***] [***]
2451B750A96 GALLEYG2POWER-17.25KVA-COMPLETE
PROVISIONS
[***] [***] [***]
2451B815K32 POWERDISTRIBUTION-WIRINGINSTALLATIONFOR
ADDITIONALCAPACITY
[***] [***] [***]
2451D360M03 MP-MODSTDSEL-GALLEYG4BPOWER-REVISION
-12KVAINSTALLATIONANDPROVISIONSFOR17.25
KVAINLIEUOFCOMPLETEINSTALLATION
[***] [***] [***]
2451E447B64 GALLEYG1&G7POWER-12KVA [***] [***] [***]
2454E484B59 IN-SEATPOWEROUTLETS-INSTALLATION-FULL
CABINWITH59USBPOWERSUPPLIESAND175HIGH
POWERUSBOUTLETS-ASTRONICSAES-BFE/SPE
[***] [***] [***]
2454E484C79 MP-IN-SEATPOWEROUTLETS-DELETION-FULL
CABINWITH59USBPOWERSUPPLIESAND175HIGH
POWERUSBOUTLETS-ASTRONICSAES-BFE
[***] [***] [***]
2500E559K65 MP-CLOSET-REPLACEMENT-FWDRHFULL
HEIGHTCLOSETINLIEUOFFULLHEIGHT/HALF
HEIGHTG2GALLEY-STA325-343-ENCORE-BFE
[***] [***] [***]
2500E559K83 MP-INTERIORARRANGEMENT-REVISION-
DETACHABLEEMERGENCYEQUIPMENT-BFE
[***] [***] [***]
2500E559M56 MP-MODSTDSEL-CABININTERPHONESYSTEMS-
ATTENDANTHANDSETSWITHUNIQUEFACEPLATE
[***] [***] [***]
2500E559R44 MP-INTERIORARRANGEMENT-REVISION-
ADDITIONOFSLIDE-OUTSTOWAGEINLAVSD&E
ANDREVISIONTOEMERGENCYEQUIPMENT
[***] [***] [***]
PA-03729 SA-8
Page A1-6
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
2500E559Y62 MP-NON-CERTIFIEDFLYAWAYKIT-ADDITION-
FIRSTAIDKITBRACKET
[***] [***] [***]
2513C410C22 FLIGHTCOMPARTMENTACCOMMODATIONS-
EMERGENCYEVACUATIONCHECKLISTPLACARD
ONTHECAPTAINANDFIRSTOFFICER'SCONTROL
COLUMNS
[***] [***] [***]
2513E437A99 LOGBOOKHOLDER-INSTALLATION-ONAFT
FACEOFP8AISLESTAND
[***] [***] [***]
2514E559T12 MP-SIDEWALLLININGANDAIRRETURNGRILLE-
REVISION-ENHANCEDFASTENINGPROVISIONS
[***] [***] [***]
2520E559D17 INTERIORCOLORANDMATERIAL-STANDARD
OFFERING
[***] [***] [***]
2520E559L37 MP-PASSENGERCOMPARTMENT-REVISION-
DECORATIVELAMINATE-FORWARDMONUMENTS
[***] [***] [***]
2523E559E42 PASSENGERSERVICEUNITS-737BOEINGSKY
INTERIOR
[***] [***] [***]
2525A627A07 DOUBLEATTENDANTSEAT-WALLMOUNTED-
STA304
[***] [***] [***]
2525C204F39 LARGELOWERSTOWAGEBOXFORDOUBLE
ATTENDANTSEAT-STA304LH
[***] [***] [***]
2525C204F40 LARGELOWERSTOWAGEBOXFORDOUBLE
ATTENDANTSEAT-STA949LH
[***] [***] [***]
2525C204F41 LARGELOWERSTOWAGEBOXFORDOUBLE
ATTENDANTSEAT-STA949RH
[***] [***] [***]
2525C204K04 HICANDFEMURLOADCOMPLIANCE-ECONOMY
CLASSSEATS
[***] [***] [***]
2525C204K05 HICANDFEMURLOADCOMPLIANCE-
ATTENDANTSEATS
[***] [***] [***]
2525E559D22 ECONOMYCLASSSEATS-BFE/SPE [***] [***] [***]
2527E559H50 FLOORCOVERING-CARPET-BFE/SPE [***] [***] [***]
2527E559H51 FLOORCOVERING-GALLEYANDENTRYWAY
FLOORMAT-BFE/SPE
[***] [***] [***]
2528C204J16 FORWARDCENTEROVERHEADSTOWAGE
COMPARTMENT-PROVISIONEDFORPALLETIZED
EQUIPMENTANDLIFERAFTS-737BOEINGSKY
INTERIOR
[***] [***] [***]
2528C204J18 SECONDFORWARDCENTEROVERHEADSTOWAGE
COMPARTMENT-PROVISIONEDFORPALLETIZED
EQUIPMENTANDLIFERAFTS-737BOEINGSKY
INTERIOR
[***] [***] [***]
2528C204J20 FIRSTMIDCABINCENTEROVERHEADSTOWAGE
COMPARTMENT-PROVISIONEDFORPALLETIZED
EQUIPMENTANDLIFERAFTS-737BOEINGSKY
INTERIOR
[***] [***] [***]
PA-03729 SA-8
Page A1-7
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
2528C204J22 SECONDMID-CABINCENTEROVERHEAD
STOWAGECOMPARTMENT-PROVISIONEDFOR
PALLETIZEDEQUIPMENTANDLIFERAFTS-737
BOEINGSKYINTERIOR
[***] [***] [***]
2528E559D23 LITERATUREPOCKETS [***] [***] [***]
2528E559D24 OVERHEADSTOWAGEBINS-ADDITIONAL
FEATURES-737BOEINGSKYINTERIOR
[***] [***] [***]
2529D360B52 FORWARDATTENDANTWORKSTATION-PANEL
&HANDSET-UNIQUEFACEPLATEDISPLAY
[***] [***] [***]
2530D383A11 G1GALLEY-AFTSTATION297-BFE/SPE [***] [***] [***]
2530E559D10 GALLEYG2-STA325-343-BFE/SPE [***] [***] [***]
2530E559D27 G7GALLEY-AFTOFDOOR1,LEFT-AFTSTA374
-BFE/SPE
[***] [***] [***]
2530E559D29 GALLEYINSERTPARTNUMBERS-BFE/SPE [***] [***] [***]
2530E559K27 MP-GALLEY-REVISION-G1GALLEYAFTSTA
293INLIEUOFSTA297
[***] [***] [***]
2530E624B45 GALLEYPARTNUMBERS-STANDARDEFFORT-
BFE/SPE
[***] [***] [***]
2530E624B63 GALLEYCHILLER-AFTG4BGALLEY-
PROVISIONS
[***] [***] [***]
2540D347A92 LAADVANCEDLAVATORY [***] [***] [***]
2540E559D31 LAADVANCEDLAVATORYSELECTABLES [***] [***] [***]
2540E559D32 LDADVANCEDLAVATORYSELECTABLES [***] [***] [***]
2540E559D33 LEADVANCEDLAVATORYSELECTABLES [***] [***] [***]
2540E559N20 MP-LAVATORIES-REVISION-LAVSDANDE-
NON-SPACEWALLINLIEUOFSPACEWALL
[***] [***] [***]
2560-000269 CREWLIFEVESTSTOWAGE-FLIGHTDECK,
SECONDOBSERVER-CAPTAIN'SSEATBACK
[***] [***] [***]
2560C410D09 CREWLIFEVESTS-FLIGHTDECK,WITHSECOND
OBSERVER-EASTERNAEROMARINEINC-P/N
P01202-301C-BFE/SPE
[***] [***] [***]
2562E559E21 OVERWATEREMERGENCYEQUIPMENT-
BFE/SPE-737BOEINGSKYINTERIOR
[***] [***] [***]
2562E559K34 MP-OVERWATEREMERGENCYEQUIPMENT-
DELETION-LIFERAFTS-EASTERNAERO
MARINE-BFE
[***] [***] [***]
2562E559U37 MP-OVERWATEREMERGENCYEQUIPMENT-
REPLACEMENT-PASSENGERLIFEVEST-
EASTERNAEROMARINEINC-BFE
[***] [***] [***]
2564E559D98 DETACHABLEEMERGENCYEQUIPMENT-
PASSENGER
[***] [***] [***]
PA-03729 SA-8
Page A1-8
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
COMPARTMENT-BFE/SPE-737BOEINGSKY
INTERIOR
[***] [***] [***]
2564E559X35 MP-DETACHABLEEMERGENCYEQUIPMENT-
PASSENGERCOMPARTMENT-DELETION-FIRST
AIDKIT-MINESAFETYAPPLIANCESCO-BFE
[***] [***] [***]
2622E088A14 APUFIREEXTINGUISHERBOTTLE-COMMONWITH
ENGINEBOTTLES
[***] [***] [***]
2841-000004 STANDARDFUELSYSTEMACCURACY-NOFUEL
DENSITOMETERS
[***] [***] [***]
2841-000012 FUELQUANTITYINDICATORSONRIGHTWING
FUELINGPANEL
[***] [***] [***]
2844-000019 FUELMEASURINGSTICKSINLINEARUNITSWITH
CONVERSIONTABLESINU.S.GALLONS
[***] [***] [***]
2911-000042 ENGINE-DRIVENHYDRAULICPUMPSWITHVESPEL
SPLINE-EATON(VICKERS)-10-62167
[***] [***] [***]
2911-000044 ACMOTOR-DRIVENHYDRAULICPUMPS-EATON
(VICKERS)-10-60556
[***] [***] [***]
2911E684D00 MP-ACMOTORDRIVENHYDRAULICPUMPS-
INSTALLTWOPARKER(ABEX)INLIEUOFTWO
EATON(VICKERS)-SFE
[***] [***] [***]
3041-000003 NOHEATEDFLIGHTCOMPARTMENTNUMBER3
WINDOW
[***] [***] [***]
3131-000143 ACCELEROMETER-HONEYWELLP/N971-4193-001-
BFE/SPE
[***] [***] [***]
3131B628B16 DIGITALFLIGHTDATARECORDER(DFDR)-
HONEYWELL-1024WORDSPERSECOND
MAXIMUMDATARATE-P/N980-4750-009-BFE/SPE
[***] [***] [***]
3131E103A15 DIGITALFLIGHTDATAACQUISITIONUNIT(DFDAU)
-CATIIIB/IAN/GLS/NPSCAPABLE-WITHACMS
CAPABILITY-ONS-SFE
[***] [***] [***]
3131E437C26 MP-FLIGHTDATARECORDERSYSTEM-
REPLACEMENT-FLIGHTDATARECORDERWITH90
DAYBATTERYINLIEUOFFLIGHTDATA
RECORDERWITH30DAYBATTERY-HONEYWELL
INTERNATIONALINC-BFE
[***] [***] [***]
3132E437D35 MP-ARINC615PORTABLEDATALOADER
CONNECTOR-INSTALLATION-FLIGHTDECK-P61-
4MAINTENANCEBITEPANEL
[***] [***] [***]
3133-000123 ARINC740PRINTERPROVISIONSINTHEFLIGHT
DECKAISLESTAND
[***] [***] [***]
3135E437D40 MP-ONBOARDNETWORKSYSTEM-QUICK
ACCESSRECORDER-DAROUTPUT23300
[***] [***] [***]
3161-000133 ENGINEFUELFLOW-FULLTIMEDISPLAY-
PRIMARYENGINEDISPLAYUNIT
[***] [***] [***]
PA-03729 SA-8
Page A1-9
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
3161C175A22 ENGINEOILQUANTITYDISPLAY-PERCENT-
ENGINEDISPLAY
[***] [***] [***]
3162-000018 ATTITUDECOMPARATOR-FLASHING-ADI [***] [***] [***]
3162-000022 FLIGHTDIRECTORCOMMANDDISPLAY-SPLIT
AXIS-ADI
[***] [***] [***]
3162-000028 RADIOALTITUDE-BELOWADI [***] [***] [***]
3162-000030 RISINGRUNWAY-DISPLAYEDONTHEADI [***] [***] [***]
3162-000036 LANDINGALTITUDEREFERENCEBAR-PRIMARY
FLIGHTDISPLAY
[***] [***] [***]
3162-000040 BAROMINIMUMSPOINTER-DISPLAYEDON
SELECTIONOFRADIOALTITUDEMINIMUMS-
PRIMARYFLIGHTDISPLAY
[***] [***] [***]
3162-000044 TCASRESOLUTIONADVISORY-VSI [***] [***] [***]
3162-000051 ILSLOCALIZERDEVIATIONEXPANDEDSCALE-
AUTOPILOTORFLIGHTDIRECTORMODE
[***] [***] [***]
3162-000059 MAPMODEORIENTATION-TRACKUP-
NAVIGATIONDISPLAY
[***] [***] [***]
3162-000064 RANGEARCS-NAVIGATIONDISPLAY [***] [***] [***]
3162-000079 MANUALLYTUNEDVORSELECTEDCOURSE
LINESDISPLAYED-NAVIGATIONDISPLAY
[***] [***] [***]
3162-000084 TCAS3NMRANGERING-NAVIGATIONDISPLAY [***] [***] [***]
3162-000088 AIRSPEEDBUG-ENABLED-80KNOTSETTING-
MACHAIRSPEEDINDICATOR
[***] [***] [***]
3162A627A36 CDS-SOFTWAREACTIVATION-VNAVSPEED
BANDS-ENABLE
[***] [***] [***]
3162C594A29 CDS-SOFTWAREACTIVATION-NAVIGATION
PERFORMANCESCALES-ENABLE
[***] [***] [***]
3162E437C95 MP-FLIGHTANDNAVIGATIONDISPLAYS-
LANDINGSYSELECTRONICPLACARD
WORKSHEET-AUXILIARYDISPLAY
[***] [***] [***]
3244-000008 SERVICEINTERPHONECONNECTOR-EXTERNAL
POWERPANEL
[***] [***] [***]
3245B290A77 WHEELSANDTIRES-NOSELANDINGGEAR-
WHEELS-GOODRICH-INSTALLATIONWITHSFE
12PR,235MPHRATEDRADIALTIRES
[***] [***] [***]
3245B290A92 BRAKES-CARBON-GOODRICH
[***] [***] [***]
3245C927A08 WHEELSANDTIRES-MAINLANDINGGEAR-
WHEELSFORCARBONBRAKES-GOODRICH-
INSTALLATIONWITH30-PR,235MPHRADIAL
TIRES
[***] [***] [***]
3321C869A65 PASSENGERCABINLIGHTING-SINGLE-ZONE
CONTROL-737BOEINGSKYINTERIOR
[***] [***] [***]
PA-03729 SA-8
Page A1-10
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
3324C195A04 NOSMOKINGSIGN-SILKSCREENEDSYMBOLAND
RETAINCHIMEFUNCTION
[***] [***] [***]
3327D380B90 GALLEYLIGHTS-28VDCPOWER-GALLEYG7/
CLOSET
[***] [***] [***]
3327E559L81 MP-GALLEYLIGHTS-28VDCPOWER-DELETION-
GALLEYG7/CLOSET
[***] [***] [***]
3350E097A38 EMERGENCYESCAPEPATHLIGHTING-FLOOR
MOUNTED-NARROWCOLORPHOTOLUMINESCENT
[***] [***] [***]
3412-000022 DUALELEMENTNON-ASPIRATEDTATPROBE [***] [***] [***]
3430B866A28 ILS/GPSMULTI-MODERECEIVER(MMR)-
HONEYWELL-P/N066-50029-1201-BFE/SPE
[***] [***] [***]
3430E437D65 MP-MULTI-MODERECEIVER(MMR)AND
VOR/MARKERBEACON-REPLACEMENT-
HONEYWELL3GMMRP/N69002600-0101INLIEUOF
EXISTINGHONEYWELLMMRP/N066-50029-1201
ANDHONEYWELLVOR/MARKERBEACONP/N
69001410-100-BFE
[***] [***] [***]
3430E437D69 MP-MULTI-MODERECEIVER(MMR)AND
VOR/MARKERBEACON-CHANGEINCORP-
REPLACEMENT-HONEYWELL3GMMRP/N
69002600-0101INLIEUOFEXISTINGHONEYWELL
MMRP/N066-50029-1201ANDHONEYWELL
VOR/MARKERBEACONP/N69001410-100-BFE
[***] [***] [***]
3431C175A06 NAVIGATIONCONTROLPANEL(NCP)-GNSS
LANDINGSYSTEM(GLS)CAPABLE-GABLES-P/N
G7501-01-BFE/SPE
[***] [***] [***]
3433C594A98 LOWRANGERADIOALTIMETER(LRRA)-CATIIIB
CAPABLE-HONEYWELL-P/N066-50007-0531-
BFE/SPE
[***] [***] [***]
3436E640B45 MP-HEADUPDISPLAY(HUD)SYSTEM-
INSTALLATION-SINGLEROCKWELLCOLLINS
HEAD-UPGUIDANCESYSTEM(HGS)MODEL6000
WITHMCDUINTERFACE-STCCERTIFIED-BFE
[***] [***] [***]
3443B696L73 SINGLEWEATHERRADARSYSTEMCONTROL
PANEL-HONEYWELLRDR-4000RADARSYSTEM-
P/N930-5101-001-BFE/SPE
[***] [***] [***]
3443E032A44 SINGLEWEATHERRADARSYSTEM-WITH
PREDICTIVEWINDSHEAR-HONEYWELLRDR-
4000,VERSION2TRANSCEIVER-930-2000-001-
BFE/SPE
[***] [***] [***]
3445C594B01 TCASSYSTEM-HONEYWELLTCASCOMPUTER
P/N940-0351-001-TCASCHANGE7.1COMPLIANT
-BFE/SPE
[***] [***] [***]
PA-03729 SA-8
Page A1-11
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
3446-000046 LOWVOLUMEFORALTITUDECALLOUTS [***] [***] [***]
3446-000049 500SMARTCALLOUTINHIBITED [***] [***] [***]
3446-000057 GROUNDPROXIMITYWARNINGSYSTEM
ALTITUDECALLOUTS-100,50,30,10
[***] [***] [***]
3446C174A14 ENHANCEDGROUNDPROXIMITYWARNING
SYSTEM(EGPWS)-BANKANGLECALLOUT
(VARIABLECALLOUTBELOW130FT)-ENABLE
[***] [***] [***]
3451E097A30 VOR/MARKERBEACON-HONEYWELLRECEIVER
P/N69001410-100-BFE/SPE
[***] [***] [***]
3453E052A56 ATCSYSTEM-HONEYWELLINTERNATIONALINC
ATCTRANSPONDERP/N066-01212-0301-ADS-B
OUTDO-260BCOMPLIANT-HONEYWELL
INTERNATIONALINCCONTROLPANELP/N071-
01503-2601-BFE/SPE
[***] [***] [***]
3455D338A05 DISTANCEMEASURINGEQUIPMENT(DME)
SCANNINGINTERROGATOR-HONEYWELLP/N
066-50013-0111-BFE/SPE
[***] [***] [***]
3461A150B73 FLIGHTMANAGEMENTCOMPUTERSYSTEM
(FMCS)-ENGINE-OUTSTANDARDINSTRUMENT
DEPARTURES(SID'S)-ENABLE
[***] [***] [***]
3461A425A10 FLIGHTMANAGEMENTCOMPUTERSYSTEM
(FMCS)-NAVIGATIONDATABASE-CUSTOMER
SUPPLIED
[***] [***] [***]
3461A425A17 FLIGHTMANAGEMENTCOMPUTERSYSTEM
(FMCS)-AIRLINEOPERATIONAL
COMMUNICATIONDATALINK(AOCDL)-
FEATUREACTIVATION
[***] [***] [***]
3461A425A30 FLIGHTMANAGEMENTCOMPUTERSYSTEM
(FMCS)-ABEAMWAYPOINTS-ENABLE
[***] [***] [***]
3461A425A48 FLIGHTMANAGEMENTCOMPUTERSYSTEM
(FMCS)-ACTIVATECOLOROPERATION
[***] [***] [***]
3461A890A76 FLIGHTMANAGEMENTCOMPUTERSYSTEM
(FMCS)-NAVIGATIONDISPLAY-MISSED
APPROACHINCYANUNTILACTIVE-ENABLE
[***] [***] [***]
3461B430C49 FLIGHTMANAGEMENTCOMPUTERSYSTEM
(FMCS)-REQUIREDNAVIGATIONPERFORMANCE
(RNP)DEFAULTVALUECHANGE
[***] [***] [***]
3461B696E14 MP-FMCE-ADDITIONALCONTROLDISPLAY
UNITFIXPAGES-ENABLE
[***] [***] [***]
3461B696K97 FLIGHTMANAGEMENTCOMPUTERSYSTEM
(FMCS)-VERTICALRNPDEFAULTVALUE-
REVISION
[***] [***] [***]
PA-03729 SA-8
Page A1-12
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
3461C175A11 FLIGHTMANAGEMENTCOMPUTERSYSTEM
(FMCS)-AIRTRAFFICSERVICESDATALINK(ATS
DL)-FANSFEATUREACTIVATION
[***] [***] [***]
3461C175A14 FLIGHTMANAGEMENTCOMPUTERSYSTEM
(FMCS)-FANSCAPABLEMCDUWITHATC
KEYBOARD-INSTALLATION-SFE
[***] [***] [***]
3461C175A32 FLIGHTMANAGEMENTCOMPUTERSYSTEM
(FMCS)-COMMONVNAV-ENABLE
[***] [***] [***]
3461C175A34 FLIGHTMANAGEMENTCOMPUTERSYSTEM
(FMCS)-SPEEDPROPAGATIONFROMTHECRUISE
PAGETOTHEDESCENTPAGE-ENABLE
[***] [***] [***]
3461C430J05 FLIGHTMANAGEMENTCOMPUTINGSYSTEM
(FMCS)-VORINHIBIT
[***] [***] [***]
3461C594A26 FLIGHTMANAGEMENTCOMPUTINGSYSTEM
(FMCS)-INTENTDATATRANSMITTEDTOACARS-
ENABLE
[***] [***] [***]
3511B873B93 CREWOXYGENMASK-FULLFACEMASKWITH
BUILT-INSMOKEGOGGLES-SECONDOBSERVER-
AV-OXINC-BFE/SPE
[***] [***] [***]
3511B873B94 CREWOXYGENMASK-FULLFACEMASKWITH
BUILT-INSMOKEGOGGLES-FIRSTOBSERVER-
AV-OXINC-BFE/SPE
[***] [***] [***]
3511B873B95 CREWOXYGENMASKS-FULLFACEMASKWITH
BUILT-INSMOKEGOGGLES-CAPTAINANDFIRST
OFFICER-AV-OXINC-BFE/SPE
[***] [***] [***]
3811-000017 POTABLEWATER-SERVICEABLETO40GALLONS [***] [***] [***]
3812-000002 NOWATERQUANTITYGAUGE-WATERSERVICE
PANEL
[***] [***] [***]
3832-000076 NOSENSORFOULEDLIGHT-COVERPLATE [***] [***] [***]
3832-000078 NOWASTEQUANTITYGAUGE-COVERPLATE [***] [***] [***]
3910E437A86 AFTELECTRONICSPANELARRANGEMENTWITH
TWORADIOTUNINGPANELSANDARINC740
PRINTERPROVISIONS
[***] [***] [***]
4435E484C78 MP-HIGHSPEEDCOMMUNICATION-
STRUCTURALPROVISIONS-KUBANDRADOME
INSTALLATION-737BOEINGSKYINTERIOR
159200
[***] [***] [***]
4435E484D01 MP-HIGHSPEEDCOMMUNICATION-PARTIAL
PROVISIONS-GLOBALEAGLEENTERTAINMENT
CABINNETWORKSYSTEMWITHKUBAND
CONNECTIVITY-THREEWIRELESSACCESS
POINTS(WAP)-737BOEINGSKYINTERIOR
[***] [***] [***]
PA-03729 SA-8
Page A1-13
BOEING PROPRIETARY
CR Title
2011$
A/P1-4
Price
PerA/C
2011$
A/P5-8
Price
PerA/C
2011$
A/P9&on
Price
PerA/C
4435E484D80 MP-HIGH-SPEEDCOMMUNICATIONS-
INSTALLATIONINTOPARTIALPROVISIONS-
WIRELESSCABINNETWORKWITH3CWLU'SAND
KUBANDCONNECTIVITY-GLOBALEAGLE
ENTERTAINMENT-CSE/SPE
[***] [***] [***]
4435E484H13 MP-HIGHSPEEDCOMMUNICATION-
REPLACEMENT-TRI-BANDRADOMEINLIEUOF
KUBANDRADOME
[***] [***] [***]
4435E484H15 MP-HIGHSPEEDCOMMUNICATION-CHANGE
INCORP-REPLACEMENT-TRI-BANDRADOMEIN
LIEUOFKUBANDRADOME
[***] [***] [***]
4610E437C72 MP-GROUNDBASEDCONNECTIVITY-
INSTALLATION-AIRCRAFTWIRELESSLANUNIT
CELLULAR-TELEDYNECONTROLS-BFE
[***] [***] [***]
4610E437E26 MP-ONBOARDNETWORKSYSTEM-ACTIVATION
OFONS-ACARSCMUINTERFACE
[***] [***] [***]
4610E437E28 MP-ONBOARDNETWORKSYSTEM-CHANGE
INCORP-ACTIVATIONOFONS-ACARSCMU
INTERFACE
[***] [***] [***]
4610E839A41 MP-ONBOARDNETWORKSYSTEM-
REPLACEMENT-AIRCRAFTWIRELESSLANUNIT-
CELLULARANDWIFIINLIEUOFCELLULAR
GROUNDBASEDCONNECTIVITYONLY-
TELEDYNECONTROLS-BFE
[***] [***] [***]
5231A561C54 CARGODOOR-SOLIDSKIN [***] [***] [***]
5300-000027 UNDERSEATFLOORPANELS,LOWTRAFFIC
CAPABILITY
[***] [***] [***]
5352A298A28 RADOME-NORDAM-SFE [***] [***] [***]
7200D422A12 CFMLEAP-1BENGINES-1B28B1RATING [***] [***] [***]
7200E430E27 MP-CFMLEAP-1BENGINES-CHANGEINCORP-
REVISION-1B28RATINGINLIEUOF1B28B1
RATING
[***] [***] [***]
7200E684E22 MP-CFMLEAP-1BENGINES-REVISION-1B28
RATINGINLIEUOF1B28B1RATING
[***] [***] [***]
MISCTHRUST SIDELETTERPRICING [***] [***] [***]
7900-000116 LUBRICATINGOIL-MOBILJETII [***] [***] [***]
MISC INTERIORALLOWANCE [***] [***] [***]
TOTALS: [***] [***] [***]
PA-03729 SA-8
Page A1-14
BOEING PROPRIETARY
737-7 AIRCRAFT CONFIGURATION
between
THE BOEING COMPANY
and
Southwest Airlines Co.
Exhibit A2 to Purchase Agreement Number PA-03729
SWA-PA-03729-EXA2 SA-8
Page 1
BOEING PROPRIETARY
Exhibit A2
AIRCRAFT CONFIGURATION
Dated November 13, 2017
relating to
BOEING MODEL 737-7 AIRCRAFT
The Detail Specification is Boeing document number D019A008SWA17P-1, revision NEW, to be released on or
about April 1, 2019. The Detail Specification provides further description of Customer’s configuration set forth in this
Exhibit A2. Such Detail Specification will be comprised of Boeing configuration specification D019A008, Revision P, dated
May 1, 2017 as amended to incorporate the optional features (Options) listed below, including the effects on
Manufacturer's Empty Weight (MEW) and Operating Empty Weight (OEW). As soon as practicable, Boeing will furnish to
Customer copies of the Detail Specification, which copies will reflect such Options. The Aircraft Basic Price reflects and
includes all effects of such Options, except such Aircraft Basic Price does not include the price effects of any Buyer
Furnished Equipment or Seller Purchased Equipment.
SWA-PA-03729-EXA2 SA-8
Page 2
BOEING PROPRIETARY
Exhibit A To
Boeing Purchase Agreement
Price
CR Title Per A/C $
0110-000030 MAJOR MODEL 737 AIRPLANE [***]
0110E911A01 MINOR MODEL 737-7150 AIRPLANE [***]
0170B401A73 CLIMATE - NORMAL WEATHER OPERATIONS [***]
0170B871A31 GALLEY AFT COMPLEX - G4B GALLEY - DOMED AFT BULKHEAD (BASELINE) [***]
0170C430H07
PC - FLIGHT DECK - ROLLER SUNSHADES - DELETION - NUMBER 2 AND 3
WINDOWS - FLIGHT DECK - SFE
[***]
0170C939A02 COMMUNICATIONS - BASIC COMMUNICATIONS CONFIGURATION WITH HF [***]
0170D387A08 AVIONICS - DUAL FMC WITH MULTI-CONTROL DISPLAY UNIT [***]
0170D837A13 FLEXIBLE CERTIFICATION [***]
0170E173B00 FLIGHT DECK - TWO OBSERVERS [***]
0170E388X59
PC - GALLEY G4B POWER - 12 KVA INSTALLATION AND PROVISIONS FOR
17.25 KVA IN LIEU OF COMPLETE INSTALLATION
[***]
0170E388X60 PC - LAVATORY AFT COMPLEX - NO CURTAIN AND TRACK [***]
0170E526A93
LAVATORY AFT COMPLEX - TWO ADVANCED LAVATORIES WITH ONE
DOUBLE ATTENDANT SEAT
[***]
0170E806A23 CARGO LINERS- HEAVY DUTY - FORWARD [***]
0170E806A26 CARGO LINERS- HEAVY DUTY- AFT [***]
0170E911A03 AIRFRAME - 737-7 [***]
0220E308A03 TYPE CERTIFICATE & CERTIFICATE OF AIRWORTHINESS [***]
0221-000026 TAKEOFF AND LANDING WITH TAILWIND UP TO 15 KNOTS [***]
0221A609B52 DISPATCH WITH GEAR EXTENDED FOR REVENUE FLIGHT [***]
0221E029A02 SKID-RESISTANT RUNWAY TAKEOFF WITH ANTISKID SYSTEM INOPERATIVE [***]
0224E173A42 EXTENDED OPERATIONS (ETOPS) [***]
0226C594A32
GNSS LANDING SYSTEM (GLS) - CATEGORY I APPROACH CAPABILITY -
ACTIVATION
[***]
0228E308A06 AIRPLANE FLIGHT MANUAL [***]
0252A541A02
ENGLISH UNITS FOR FLIGHT AND OPERATIONS MANUALS, CDS
INDICATIONS, AND FMCS PARAMETERS - CELSIUS TEMPERATURE
[***]
0254-000003 USPHS CERTIFICATE OF SANITARY CONSTRUCTION [***]
0315E447F96 CERTIFIED OPERATIONAL WEIGHTS AND STRUCTURAL DESIGN WEIGHTS [***]
1110E388X57 EXTERIOR REGULATORY MARKINGS AND COLOR SCHEME [***]
1110E388X58 EXTERIOR NON-REGULATORY MARKINGS [***]
1110F086A19
MP - EXTERIOR COLOR SCHEMES AND MARKINGS - REPLACEMENT - ETOPS
HERO LIVERY
[***]
1130E308A14 LIGHTED SIGNS - BI-LINGUAL ENGLISH/SPANISH [***]
SWA-PA-03729-EXA2 SA-8
Page 3
BOEING PROPRIETARY
1130E388X53 INTERIOR PLACARDS AND MARKERS [***]
1130E559Y11 CARGO COMPARTMENT PLACARDS - ENGLISH ONLY [***]
2103D839A04
AC HEAT EXCHANGER OUTLET TEMPERATURE MONITORING SENSOR -
INSTALLATION
[***]
2130-000010 600 FPM CABIN PRESSURE ASCENT RATE [***]
2130-000015 750 FPM CABIN PRESSURE DESCENT RATE [***]
2160-000025 CABIN TEMPERATURE INDICATION - DEGREES FAHRENHEIT [***]
2170-000021 OZONE CONTROL - SPACE PROVISIONS FOR CATALYTIC CONVERTERS [***]
2210-000003
AUTOFLIGHT - INHIBIT GLIDE SLOPE CAPTURE PRIOR TO LOCALIZER
CAPTURE
[***]
2210-000123 AUTOFLIGHT - FLIGHT DIRECTOR TAKEOFF MODE WINGS LEVEL [***]
2210-000128 AUTOFLIGHT - CONTROL WHEEL STEERING WARNING [***]
2210-000142 AUTOFLIGHT - ALTITUDE ALERT - 300/900 FEET [***]
2210C175A38 AUTOFLIGHT - GO-AROUND ROLL MODE - LNAV [***]
2230-000137 AUTOTHROTTLE - FMCS - TAKEOFF PROFILE THRUST REDUCTION ALTITUDE [***]
2310C410A91
COMMUNICATIONS CONTROL PANELS - DUAL GABLES RADIO TUNING
PANELS CAPABLE OF (2) HF SYSTEMS AND (3) VHF SYSTEMS (8.33 KHZ
CAPABLE) - P/N G7404-124 - BFE/SPE
[***]
2310E437G55
MP - COMMUNICATIONS CONTROL PANELS - DELETION OF REDUNDANT
WIRING
[***]
2312A639A46 VHF COMMUNICATIONS - ACTIVATION OF KEYLINE TIMER [***]
2312E173A49
VHF COMMUNICATIONS - TRIPLE HONEYWELL ARINC 750 RTA-50D VHF FM
IMMUNE TRANSCEIVERS WITH 8.33 KHZ CHANNEL SPACING, VDL MODE 2,
AND CMC INTERFACE CAPABILITY - P/N 965-1696-021 - BFE/SPE
[***]
2315D347A65
SATCOM - PARTIAL WIRING AND MOUNTING PROVISIONS - ROCKWELL
COLLINS ICS-300 IRIDIUM SATCOM SYSTEM WITH A SINGLE TOP MOUNTED
DUAL ELEMENT IRIDIUM ANTENNA
[***]
2321-000050 SELCAL - AVTECH FIVE CHANNEL DECODER - P/N 1200008-000 - BFE/SPE [***]
2321-000063 SELCAL - ANNUNCIATION ON AUDIO SELECTOR PANELS [***]
2322C939A06
COMMUNICATIONS MANAGEMENT UNIT (CMU) - DATA LINK RECORDING
ACTIVATION
[***]
2322E516A03
CMU - INSTALLATION OF HONEYWELL MARK II ARINC 758 LEVEL AOA CMU
W/ARINC SERVICE PROVIDER - DATA LINK RECORDING CAPABLE - P/N 965-
0758-006 - BFE / SPE
[***]
2322E516A28
CMU - INSTALLATION OF PARTIAL PROVISIONS FOR A SINGLE CMU IN
ACCORDANCE WITH ARINC 758
[***]
2324D197A18
EMERGENCY LOCATOR TRANSMITTER (ELT) - ACR ELECTRONICS
AUTOMATIC FIXED - WITH NAVIGATION INTERFACE UNIT (NIU) - MODE S
BROADCAST - WITH ANTENNA P/N 110-337 - BFE/SPE
[***]
SWA-PA-03729-EXA2 SA-8
Page 4
BOEING PROPRIETARY
2331B754B15
PASSENGER ADDRESS (PA) SYSTEM - ARINC 715 - ROCKWELL COLLINS
AMPLIFIER - BFE/SPE
[***]
2331E097A10
PRAM/BMM SYSTEM - PANASONIC - FASTEN SEAT BELT/DECOMPRESSION
DISCRETES ACTIVATED - BFE/SPE
[***]
2342E559Y13
CABIN INTERPHONE SYSTEMS - ATTENDANT HANDSETS WITH UNIQUE
MARKINGS
[***]
2350A150D50
AUDIO INTEGRATING - INHIBIT AURAL ALERT TRANSMISSIONS THROUGH
CAPTAIN, FIRST OFFICER'S AND FIRST OBSERVER'S HEADPHONES
[***]
2350B872A08
AUDIO CONTROL PANEL - INTEGRATED SELCAL, CREW CALL, AND SATCOM
FUNCTIONS - INSTALLATION - 3 VHF/2 HF
[***]
2351-000042 CONTROL WHEEL PUSH TO TALK (PTT) SWITCH - STANDARD THREE POSITION [***]
2351A213A33
AUDIO INTEGRATION - INSTALLATION - TWO-PLUG AUDIO JACKS IN THE
FLIGHT DECK
[***]
2351A213B77
BOOM MICROPHONE HEADSETS - CAPTAIN AND FIRST OFFICER - TELEX
AIRMAN 750 - P/N 64300-200 - BFE/SPE
[***]
2351D360C80
PASSENGER CABIN MEDICAL COMMUNICATIONS SYSTEM - BOEING SKY
INTERIOR
[***]
2371B628B41
VOICE RECORDER - RECORDER INDEPENDENT POWER SUPPLY (RIPS) - AFT
LOWERED CEILING
[***]
2371E568A71
VOICE RECORDER AND MICROPHONE/MONITOR - HONEYWELL - 2 HOUR
RECORDING TIME - WITH DATALINK RECORDING CAPABILITY - P/N 980-6032-
003 AND P/N 980-6116-001 - BFE/SPE
[***]
2451-000036 GALLEY G1 POWER - 12 KVA [***]
2451A694A83 GALLEY G2 POWER PROVISIONS- 17.25 KVA [***]
2500E388Y03
ATTENDANT STATION - PARTIAL PROVISIONS - DOUBLE ATTENDANT SEAT,
HANDSET, ATTENDANT WORKLIGHT, EMERGENCY EQUIPMENT, AND
ATTENDANT SERVICE UNIT - STA 949 RH
[***]
2500E559Y59 NON-CERTIFIED FLYAWAY KIT - FIRST AID KIT BRACKETS [***]
2513C410C22
FLIGHT COMPARTMENT ACCOMMODATIONS - EMERGENCY EVACUATION
CHECKLIST PLACARD ON THE CAPTAIN AND FIRST OFFICER'S CONTROL
COLUMNS
[***]
2513E437A99 LOG BOOK HOLDER - INSTALLATION - ON AFT FACE OF P8 AISLESTAND [***]
2514E388X62
PASSENGER CABIN LINING - ENHANCED AIR RETURN GRILLE FASTENING
PROVISIONS
[***]
2520C995T39
INTERIOR COLOR AND MATERIAL - UNIQUE DECORATIVE LAMINATE -
VERTICAL WALLS
[***]
2520E388X63 INTERIOR COLOR AND MATERIAL - STANDARD OFFERING [***]
2523E388X64 PASSENGER SERVICE UNITS - 737 BOEING SKY INTERIOR [***]
2524E388X73 FULL HEIGHT WINDSCREEN/STOWAGE UNIT - AFT OF DOOR 1, LEFT - BFE/SPE [***]
SWA-PA-03729-EXA2 SA-8
Page 5
BOEING PROPRIETARY
2524E388X75 FORWARD RIGHT HAND FULL HEIGHT CLOSET - AFT STA 343 - BFE/SPE [***]
2525A627A07 DOUBLE ATTENDANT SEAT - WALL MOUNTED - STA 304 [***]
2525C204K04 HIC AND FEMUR LOAD COMPLIANCE - ECONOMY CLASS SEATS [***]
2525C204K05 HIC AND FEMUR LOAD COMPLIANCE - ATTENDANT SEATS [***]
2525E388X66 ECONOMY CLASS SEATS - BFE/SPE [***]
2525F135B11
MP - PASSENGER COMPARTMENT SEATS - REVISION - MERIDIAN SEAT
UPDATES - ROCKWELL COLLINS INC - BFE
[***]
2527E388X67 FLOOR COVERING - CARPET - BFE/SPE [***]
2527E388X68 FLOOR COVERING - GALLEY AND ENTRYWAY FLOOR MAT - BFE/SPE [***]
2528C204J16
FIRST FORWARD CENTER OVERHEAD STOWAGE COMPARTMENT -
PROVISIONED FOR PALLETIZED EQUIPMENT OR LIFE RAFT - 737 BOEING
SKY INTERIOR
[***]
2528C204J20
FIRST MID CABIN CENTER OVERHEAD STOWAGE COMPARTMENT -
PROVISIONED FOR PALLETIZED EQUIPMENT OR LIFE RAFT - 737 BOEING
SKY INTERIOR
[***]
2528C204J22
SECOND MID-CABIN CENTER OVERHEAD STOWAGE COMPARTMENT -
PROVISIONED FOR PALLETIZED EQUIPMENT OR LIFE RAFT - 737 BOEING
SKY INTERIOR
[***]
2528E388X69 LITERATURE POCKETS [***]
2528E388X71 OVERHEAD STOWAGE BINS - 737 BOEING SKY INTERIOR [***]
2529C204J81
FORWARD ATTENDANT WORKSTATION - PANEL & HANDSET - BOEING SKY
INTERIOR
[***]
2530E388X74 GALLEY PART NUMBERS - STANDARD EFFORT - BFE/SPE [***]
2530E388X76 GALLEY INSERT PART NUMBERS - BFE/SPE [***]
2530E388X77 GALLEY CHILLER - AFT G4B GALLEY - PROVISIONS [***]
2530E559K26 GALLEY G1 - AFT STATION 293 - BFE/SPE [***]
2540D347A92 LA ADVANCED LAVATORY [***]
2540E388X78 LA ADVANCED LAVATORY 2.0 SELECTABLES [***]
2540E388X79 LD ADVANCED LAVATORY 2.0 SELECTABLES [***]
2540E388X80 LE ADVANCED LAVATORY 2.0 SELECTABLES [***]
2560-000269
CREW LIFE VEST STOWAGE - FLIGHT DECK, SECOND OBSERVER -
CAPTAIN'S SEAT BACK
[***]
2560C410D09
CREW LIFE VESTS - FLIGHT DECK, WITH SECOND OBSERVER - EASTERN
AERO MARINE INC - P/N P01202-301C - BFE/SPE
[***]
2562E388X81
OVERWATER EMERGENCY EQUIPMENT - BFE/SPE - 737 BOEING SKY
INTERIOR
[***]
2564E388X93
DETACHABLE EMERGENCY EQUIPMENT - PASSENGER COMPARTMENT -
BFE/SPE - 737 BOEING SKY INTERIOR
[***]
SWA-PA-03729-EXA2 SA-8
Page 6
BOEING PROPRIETARY
2564F086A27
MP - DETACHABLE EMERGENCY EQUIPMENT - ADDITION - PASSENGER
COMPARTMENT - OXYGEN BOTTLE AND MASK - AVOX - BFE
[***]
2622E088A14 APU FIRE EXTINGUISHER BOTTLE - COMMON WITH ENGINE BOTTLES [***]
2841-000004 STANDARD FUEL SYSTEM ACCURACY - NO FUEL DENSITOMETERS [***]
2841-000012 FUEL QUANTITY INDICATORS ON RIGHT WING FUELING PANEL [***]
2844-000019
FUEL MEASURING STICKS IN LINEAR UNITS WITH CONVERSION TABLES IN
U.S. GALLONS
[***]
2911-000042
ENGINE-DRIVEN HYDRAULIC PUMPS WITH VESPEL SPLINE - EATON (VICKERS)
- 10-62167
[***]
2911-000043 AC MOTOR-DRIVEN HYDRAULIC PUMPS - PARKER (ABEX) - 10-60556 [***]
3041-000003 NO HEATED FLIGHT COMPARTMENT NUMBER 3 WINDOW [***]
3131-000143 ACCELEROMETER - HONEYWELL P/N 971-4193-001 - BFE/SPE [***]
3131E103A15
DIGITAL FLIGHT DATA ACQUISITION UNIT (DFDAU) - CATIIIB/IAN/GLS/NPS
CAPABLE - WITH ACMS CAPABILITY - ONS - SFE
[***]
3131E568A70
DIGITAL FLIGHT DATA RECORDER (DFDR) - HONEYWELL - 1024 WORDS PER
SECOND MAXIMUM DATA RATE - P/N 980-4750-003 - BFE/SPE
[***]
3132E437D33
ARINC 615 PORTABLE DATA LOADER CONNECTOR - INSTALLATION - FLIGHT
DECK - P61-4 MAINTENANCE BITE PANEL
[***]
3133-000123 ARINC 740 PRINTER PROVISIONS IN THE FLIGHT DECK AISLESTAND [***]
3135E526B33 ONBOARD NETWORK SYSTEM - QUICK ACCESS RECORDER - DAR OUTPUT [***]
3161-000133 ENGINE FUEL FLOW - FULL TIME DISPLAY - PRIMARY ENGINE DISPLAY UNIT [***]
3161C175A22 ENGINE OIL QUANTITY DISPLAY - PERCENT - ENGINE DISPLAY [***]
3162-000018 ATTITUDE COMPARATOR - FLASHING - ADI [***]
3162-000022 FLIGHT DIRECTOR COMMAND DISPLAY - SPLIT AXIS - ADI [***]
3162-000028 RADIO ALTITUDE - BELOW ADI [***]
3162-000030 RISING RUNWAY - DISPLAYED ON THE ADI [***]
3162-000036 LANDING ALTITUDE REFERENCE BAR - PRIMARY FLIGHT DISPLAY [***]
3162-000040
BARO MINIMUMS POINTER - DISPLAYED ON SELECTION OF RADIO ALTITUDE
MINIMUMS - PRIMARY FLIGHT DISPLAY
[***]
3162-000044 TCAS RESOLUTION ADVISORY - VSI [***]
3162-000051
ILS LOCALIZER DEVIATION EXPANDED SCALE - AUTOPILOT OR FLIGHT
DIRECTOR MODE
[***]
3162-000059 MAP MODE ORIENTATION - TRACK UP - NAVIGATION DISPLAY [***]
3162-000064 RANGE ARCS - NAVIGATION DISPLAY [***]
SWA-PA-03729-EXA2 SA-8
Page 7
BOEING PROPRIETARY
3162-000079
MANUALLY TUNED VOR SELECTED COURSE LINES DISPLAYED - NAVIGATION
DISPLAY
[***]
3162-000084 TCAS 3 NM RANGE RING - NAVIGATION DISPLAY [***]
3162-000088 AIRSPEED BUG - ENABLED - 80 KNOT SETTING - MACH AIRSPEED INDICATOR [***]
3162A627A36 CDS - SOFTWARE ACTIVATION - VNAV SPEED BANDS - ENABLE [***]
3162C594A29
CDS - SOFTWARE ACTIVATION - NAVIGATION PERFORMANCE SCALES -
ENABLE
[***]
3162E437C94
FLIGHT AND NAVIGATION DISPLAYS - LANDING SYS ELECTRONIC PLACARD
WORKSHEET - AUXILIARY DISPLAY
[***]
3244-000008 SERVICE INTERPHONE CONNECTOR - EXTERNAL POWER PANEL [***]
3245B290A77
WHEELS AND TIRES - NOSE LANDING GEAR - WHEELS - GOODRICH -
INSTALLATION WITH SFE 12 PR, 235 MPH RATED RADIAL TIRES
[***]
3245B290A92 BRAKES - CARBON - GOODRICH [***]
3245C927A08
WHEELS AND TIRES - MAIN LANDING GEAR - WHEELS FOR CARBON BRAKES -
GOODRICH - INSTALLATION WITH 30-PR, 235 MPH RADIAL TIRES
[***]
3321C869A65
PASSENGER CABIN LIGHTING - SINGLE-ZONE CONTROL - 737 BOEING SKY
INTERIOR
[***]
3324C195A04 NO SMOKING SIGN - SILK SCREENED SYMBOL AND RETAIN CHIME FUNCTION [***]
3350E097A38
EMERGENCY ESCAPE PATH LIGHTING - FLOOR MOUNTED - NARROW COLOR
PHOTOLUMINESCENT
[***]
3412-000022 DUAL ELEMENT NON-ASPIRATED TAT PROBE [***]
3430E717A25 MULTI-MODE RECEIVER (MMR) - HONEYWELL - P/N 69002600-0101 - BFE/SPE [***]
3431C175A06
NAVIGATION CONTROL PANEL (NCP) - GNSS LANDING SYSTEM (GLS)
CAPABLE - GABLES - P/N G7501-01- BFE/SPE
[***]
3433E954A02
LOW RANGE RADIO ALTIMETER (LRRA)- CAT IIIB CAPABLE - HONEYWELL - P/N
066-50007-0631 - BFE/SPE
[***]
3436D972A01
HEAD-UP DISPLAY (HUD) - PARTIAL PROVISIONS FOR SINGLE ROCKWELL
COLLINS HEAD-UP GUIDANCE SYSTEM (HGS) MODEL 6000 WITH MCDU
INTERFACE
[***]
3436D972A02
HEAD-UP DISPLAY (HUD) - INSTALLATION OF SINGLE ROCKWELL COLLINS
HEAD-UP GUIDANCE SYSTEM (HGS) MODEL 6000 WITH MCDU INTERFACE -
STC CERTIFIED - BFE/SPE
[***]
3443B696L73
SINGLE WEATHER RADAR SYSTEM CONTROL PANEL - HONEYWELL RDR-4000
RADAR SYSTEM - P/N 930-5101-001 - BFE/SPE
[***]
3443E032A44
SINGLE WEATHER RADAR SYSTEM - WITH PREDICTIVE WINDSHEAR -
HONEYWELL RDR-4000, VERSION 2 TRANSCEIVER - 930-2000-001 - BFE/SPE
[***]
SWA-PA-03729-EXA2 SA-8
Page 8
BOEING PROPRIETARY
3443E706F79
MP - WEATHER RADAR (WXR) SYSTEM - REPLACEMENT - HONEYWELL MODEL
RDR-4000 - WITH VERSION 2 SOFTWARE - WXR TRANSMITTER/RECEIVER P/N
930-2000-010 IN LIEU OF P/N 930-2000-001 - BFE
[***]
3445C594B01
TCAS SYSTEM - HONEYWELL TCAS COMPUTER P/N 940-0351-001 - TCAS
CHANGE 7.1 COMPLIANT - BFE/SPE
[***]
3446-000046 LOW VOLUME FOR ALTITUDE CALLOUTS [***]
3446-000049 500 SMART CALLOUT INHIBITED [***]
3446-000057 GROUND PROXIMITY WARNING SYSTEM ALTITUDE CALLOUTS - 100, 50, 30, 10 [***]
3446C174A14
ENHANCED GROUND PROXIMITY WARNING SYSTEM (EGPWS) - BANK ANGLE
CALLOUT (VARIABLE CALLOUT BELOW 130 FT) - ENABLE
[***]
3453E052A56
ATC SYSTEM - HONEYWELL ATC TRANSPONDER P/N 066-01212-0301 - ADS-B
OUT DO-260B COMPLIANT - HONEYWELL CONTROL PANEL P/N 071-01503-2601 -
BFE/SPE
[***]
3455E954A03
DISTANCE MEASURING EQUIPMENT (DME) - SCANNING INTERROGATOR -
HONEYWELL P/N 066-50013-1511 - BFE/SPE
[***]
3461A150B73
FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - ENGINE-OUT STANDARD
INSTRUMENT DEPARTURES (SID'S) - ENABLE
[***]
3461A425A10
FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - NAVIGATION DATABASE -
CUSTOMER SUPPLIED
[***]
3461A425A17
FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - AIRLINE OPERATIONAL
COMMUNICATION DATA LINK (AOC DL) - FEATURE ACTIVATION
[***]
3461A425A30
FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS)- ABEAM WAYPOINTS-
ENABLE
[***]
3461A425A48
FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - ACTIVATE COLOR
OPERATION
[***]
3461A890A76
FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - NAVIGATION DISPLAY -
MISSED APPROACH IN CYAN UNTIL ACTIVE - ENABLE
[***]
3461B430C49
FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - REQUIRED NAVIGATION
PERFORMANCE (RNP) DEFAULT VALUE CHANGE
[***]
3461B696K97
FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - VERTICAL RNP DEFAULT
VALUE - REVISION
[***]
3461C175A11
FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - AIR TRAFFIC SERVICES
DATA LINK (ATS DL) - FANS FEATURE ACTIVATION
[***]
3461C175A14
FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - FANS CAPABLE MCDU
WITH ATC KEYBOARD - INSTALLATION-SFE
[***]
3461C175A32 FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - COMMON VNAV - ENABLE [***]
3461C175A33
FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - ADDITIONAL CONTROL
DISPLAY UNIT (CDU) FIX PAGES - ENABLE
[***]
SWA-PA-03729-EXA2 SA-8
Page 9
BOEING PROPRIETARY
3461C175A34
FLIGHT MANAGEMENT COMPUTER SYSTEM (FMCS) - SPEED PROPAGATION
FROM THE CRUISE PAGE TO THE DESCENT PAGE - ENABLE
[***]
3461C430J05 FLIGHT MANAGEMENT COMPUTING SYSTEM (FMCS) - VOR INHIBIT [***]
3461C594A26
FLIGHT MANAGEMENT COMPUTING SYSTEM (FMCS) - INTENT DATA
TRANSMITTED TO ACARS - ENABLE
[***]
3511E837B11
CREW OXYGEN MASK - FULL FACE MASK WITH BUILT-IN SMOKE GOGGLES -
FIRST OBSERVER - AVOX - BFE/SPE
[***]
3511E837B17
CREW OXYGEN MASKS - FULL FACE MASK WITH BUILT-IN SMOKE GOGGLES -
CAPTAIN AND FIRST OFFICER - AVOX - BFE/SPE
[***]
3511E837B22
CREW OXYGEN MASK - FULL FACE MASK WITH BUILT-IN SMOKE GOGGLES -
SECOND OBSERVER - AVOX - BFE/SPE
[***]
3811-000017 POTABLE WATER - SERVICEABLE TO 40 GALLONS [***]
3812-000002 NO WATER QUANTITY GAUGE - WATER SERVICE PANEL [***]
3832-000076 NO SENSOR FOULED LIGHT - COVER PLATE [***]
3832-000078 NO WASTE QUANTITY GAUGE - COVER PLATE [***]
3910E437A86
AFT ELECTRONICS PANEL ARRANGEMENT WITH TWO RADIO TUNING PANELS
AND ARINC 740 PRINTER PROVISIONS
[***]
4435E484D00
HIGH SPEED COMMUNICATION - PARTIAL PROVISIONS - GLOBAL EAGLE
ENTERTAINMENT CABIN NETWORK SYSTEM WITH KU BAND CONNECTIVITY -
THREE WIRELESS ACCESS POINTS (WAP) - 737 BOEING SKY INTERIOR
[***]
4435E484D49
HIGH-SPEED COMMUNICATIONS - SYSTEM INSTALLATION INTO PARTIAL
PROVISIONS FOR A WIRELESS CABIN NETWORK WITH 3 CABIN WIRELESS
LAN UNITS (CWLU) AND KU BAND CONNECTIVITY - GLOBAL EAGLE
ENTERTAINMENT - CSE/SPE
[***]
4435E484D79
HIGH-SPEED COMMUNICATIONS - BROADBAND CONTROL PANEL WITH
THREE POSITION SWITCH
[***]
4435E484D92
HIGH-SPEED COMMUNICATIONS - INSTALLATION - OPERATIONAL SOFTWARE
- GLOBAL EAGLE ENTERTAINMENT - CSE/SPE
[***]
4435E526E63
HIGH-SPEED COMMUNICATIONS - STRUCTURAL PROVISIONS - TRI-BAND
RADOME
[***]
4435E837C85
HIGH-SPEED COMMUNICATIONS - TRI-BAND RADOME INSTALLATION - BLUE
COLOR (BAC 51705)
[***]
4610E526A81
ONBOARD NETWORK SYSTEM - PARTIAL PROVISIONS - GROUND BASED
CONNECTIVITY
[***]
4610E526B92
ONBOARD NETWORK SYSTEM - CELLULAR AND WIFI GROUND BASED
CONNECTIVITY - WIRELESS WIDE AREA NETWORK UNIT (WWU) - BFE/SPE
[***]
4610E526E60 ONBOARD NETWORK SYSTEM - ACTIVATION OF ONS-ACARS CMU INTERFACE [***]
5231A561C54 CARGO DOOR - SOLID SKIN [***]
SWA-PA-03729-EXA2 SA-8
Page 10
BOEING PROPRIETARY
5300-000027 UNDERSEAT FLOOR PANELS, LOW TRAFFIC CAPABILITY [***]
5352A298A28 RADOME- NORDAM- SFE [***]
7200D422A09 CFM LEAP-1B ENGINES - 1B27C RATING [***]
MISC THRUST-1 THRUST PRICING ADJUSTMENT FOR SIDE LETTER PRICING [***]
7900-000116 LUBRICATING OIL - MOBIL JET II [***]
MISC INTERIOR ALLOWANCE [***]
TOTALS: [***]
SWA-PA-03729-EXA2 SA-8
Page 11
BOEING PROPRIETARY
BUYER FURNISHED EQUIPMENT VARIABLES
Between
THE BOEING COMPANY
And
Southwest Airline
Supplemental Exhibit BFE2
to Purchase Agreement Number PA-03729
SWA-PA-03729-BFE2 SA-8
Page 1
BOEING PROPRIETARY
BUYER FURNISHED EQUIPMENT VARIABLES
relating to
BOEING MODEL 737-7 AIRCRAFT
This Supplemental Exhibit BFE2 contains supplier selection dates, on-dock dates and other requirements applicable to the
Aircraft.
1. Supplier Selection.
Customer will:
Select and notify Boeing of the suppliers and part numbers of the following BFE items by the following dates:
Galley System 2/1/2018
Galley Inserts 2/1/2018
Seats (passenger) 2/1/2018
Overhead & Audio System 2/1/2018
In-Seat Video System 2/1/2018
Miscellaneous Emergency Equipment 4/1/2018
Cargo Handling Systems*
(Single Aisle Programs only) 8/1/2018
*For a new certification, supplier requires notification ten (10) months prior to Cargo Handling System on-dock date.
Customer will enter into initial agreements with the selected Galley System, Galley Inserts, Seats, and In-Seat Video
System suppliers on or before ten (10) days after the above supplier selection dates to actively participate with Customer
and Boeing in coordination actions including the Initial Technical Coordination Meeting (ITCM).
SWA-PA-03729-BFE2 SA-8
Page 2
BOEING PROPRIETARY
2. On-dock Dates and Other Information
On or before nine (9) months prior to Aircraft delivery, Boeing will provide to Customer the BFE requirements electronically
through My Boeing Fleet (MBF) in My Boeing Configuration (MBC). These requirements may be periodically revised,
setting forth the items, quantities, on-dock dates and shipping instructions and other requirements relating to the in-
sequence installation of BFE. For planning purposes, preliminary BFE on-dock dates are set forth below:
Nominal Del
Date
Aircraft Qty Seats
Galley /
Furnishings
Antennas &
Mounting
Equipment
Avionics
Cabin Systems
Equipment
Misc. Emergency
Equipment
Textiles / Raw
Materials
Cargo Systems Provision Kits Radomes
Apr-2019 3 02/20/19 02/13/19 12/25/18 02/13/19 02/13/19 02/13/19 11/09/18 01/30/19 10/09/18 01/15/19
May-2019 2 03/22/19 03/15/19 01/24/19 03/15/19 03/15/19 03/15/19 12/11/18 03/01/19 11/08/18 02/14/19
Aug-2019 2 06/24/19 06/17/19 04/26/19 06/17/19 06/17/19 06/17/19 03/13/19 06/03/19 02/08/19 05/17/19
Jan-2023 1 11/23/22 11/16/22 09/27/22 11/16/22 11/16/22 11/16/22 08/12/22 11/02/22 07/12/22 10/18/22
Feb-2023 1 12/23/22 12/16/22 10/27/22 12/16/22 12/16/22 12/16/22 09/13/22 12/02/22 08/11/22 11/17/22
Mar-2023 1 01/20/23 01/13/23 11/24/22 01/13/23 01/13/23 01/13/23 10/11/22 12/30/22 09/08/22 12/15/22
Apr-2023 1 02/22/23 02/15/23 12/27/22 02/15/23 02/15/23 02/15/23 11/11/22 02/01/23 10/11/22 01/17/23
May-2023 1 03/22/23 03/15/23 01/24/23 03/15/23 03/15/23 03/15/23 12/09/22 03/01/23 11/08/22 02/14/23
Jun-2023 1 04/24/23 04/17/23 02/24/23 04/17/23 04/17/23 04/17/23 01/11/23 04/03/23 12/09/22 03/17/23
Jul-2023 1 05/24/23 05/17/23 03/28/23 05/17/23 05/17/23 05/17/23 02/10/23 05/03/23 01/10/23 04/18/23
Aug-2023 1 06/22/23 06/15/23 04/26/23 06/15/23 06/15/23 06/15/23 03/13/23 06/01/23 02/08/23 05/17/23
Sep-2023 1 07/25/23 07/18/23 05/29/23 07/18/23 07/18/23 07/18/23 04/13/23 07/04/23 03/13/23 06/19/23
Oct-2023 1 08/23/23 08/16/23 06/27/23 08/16/23 08/16/23 08/16/23 05/12/23 08/02/23 04/11/23 07/18/23
Nov-2023 1 09/22/23 09/15/23 07/27/23 09/15/23 09/15/23 09/15/23 06/13/23 09/01/23 05/11/23 08/17/23
Dec-2023 1 10/24/23 10/17/23 08/28/23 10/17/23 10/17/23 10/17/23 07/13/23 10/03/23 06/12/23 09/18/23
Jan-2024 1 11/22/23 11/15/23 09/26/23 11/15/23 11/15/23 11/15/23 08/11/23 11/01/23 07/11/23 10/17/23
Feb-2024 1 12/25/23 12/18/23 10/27/23 12/18/23 12/18/23 12/18/23 09/13/23 12/04/23 08/11/23 11/17/23
Mar-2024 1 01/23/24 01/16/24 11/27/23 01/16/24 01/16/24 01/16/24 10/12/23 01/02/24 09/11/23 12/18/23
Apr-2024 1 02/21/24 02/14/24 12/26/23 02/14/24 02/14/24 02/14/24 11/10/23 01/31/24 10/10/23 01/16/24
May-2024 1 03/22/24 03/15/24 01/25/24 03/15/24 03/15/24 03/15/24 12/12/23 03/01/24 11/09/23 02/15/24
Jun-2024 1 04/24/24 04/17/24 02/27/24 04/17/24 04/17/24 04/17/24 01/12/24 04/03/24 12/12/23 03/19/24
Jul-2024 1 05/22/24 05/15/24 03/26/24 05/15/24 05/15/24 05/15/24 02/09/24 05/01/24 01/09/24 04/16/24
Aug-2024 1 06/24/24 06/17/24 04/26/24 06/17/24 06/17/24 06/17/24 03/13/24 06/03/24 02/09/24 05/17/24
Sep-2024 1 07/24/24 07/17/24 05/28/24 07/17/24 07/17/24 07/17/24 04/12/24 07/03/24 03/12/24 06/18/24
Oct-2024 1 08/22/24 08/15/24 06/26/24 08/15/24 08/15/24 08/15/24 05/13/24 08/01/24 04/10/24 07/17/24
Nov-2024 1 09/24/24 09/17/24 07/29/24 09/17/24 09/17/24 09/17/24 06/13/24 09/03/24 05/13/24 08/19/24
Total 30
SWA-PA-03729-BFE2 SA-8
Page 3
BOEING PROPRIETARY
3. Additional Delivery Requirements - Import
Customer will be the “importer of record” (as defined by the U.S. Customs and Border Protection) for all BFE imported into
the United States, and as such, it has the responsibility to ensure all of Customer’s BFE shipments comply with U.S.
Customs Service regulations. In the event Customer requests Boeing, in writing, to act as importer of record for Customer’s
BFE, and Boeing agrees to such request, Customer is responsible for ensuring Boeing can comply with all U.S. Customs
Import Regulations by making certain that, at the time of shipment, all BFE shipments comply with the requirements in the
“International Shipment Routing Instructions”, including the Customs Trade Partnership Against Terrorism (C-TPAT), as set
out on the Boeing website referenced below. Customer agrees to include the International Shipment Routing Instructions,
including C-TPAT requirements, in each contract between Customer and BFE supplier.
http://www.boeing.com/companyoffices/doingbiz/supplier_portal/index_general.html
SWA-PA-03729-BFE2 SA-8
Page 4
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106463R3
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: Open Matters
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
Given the long period of time between Purchase Agreement signing and delivery of the first Aircraft and the
continued development of the Aircraft program, certain elements have not yet been defined. In consideration, Boeing and
Customer agree to work together as the Aircraft program develops as follows:
1. Aircraft Delivery Schedule.
1.1[***]
1.2 Customer and Boeing will consult on a frequent basis to keep each other informed as to Customer’s fleet plans
and Boeing’s production plans in order to meet the requirements of both parties. Based on such review and discussions,
Boeing will use its best commercially reasonable efforts to meet Customer’s fleet needs.
SWA-PA-03729-LA-1106463R3 SA-8
Open Matters Page 1
BOEING PROPRIETARY
2. Reserved.
3. Other Letter Agreements.
Boeing and Customer acknowledge that as they work together to develop the Aircraft program and as Boeing refines the
definition of the Aircraft and associated production processes, there may be a need to execute additional letter agreements
or amend letter agreements addressing one or more of the following:
3.1 Software. Additional provisions relating to software and software loading.
3.2 Reserved.
3.3 Reserved
4. Confidentiality.
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
SWA-PA-03729-LA-1106463R3 SA-8
Open Matters Page 2
BOEING PROPRIETARY
Very truly yours,
THE BOEING COMPANY
By: /s/ Kyle Kersavage
Its: Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 20, 2017
SOUTHWEST AIRLINES CO.
By /s/ Chris Monroe
Its Chris Monroe
SVP, Finance
SWA-PA-03729-LA-1106463R3 SA-8
Open Matters Page 3
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106474R2
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: Option Aircraft
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft and Model 737-7 aircraft
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. Right to Purchase Option Aircraft.
Subject to the terms and conditions contained in this Letter Agreement, in addition to the Aircraft described in Table
1 to the Purchase Agreement as of the date of execution of this Letter Agreement, Customer will have the option to
purchase additional Boeing Model 737-8 aircraft as option aircraft (Option Aircraft).
2. Delivery
The number of Option Aircraft and delivery dates are listed in the Attachment 1 to this Letter Agreement.
3. Configuration
3.1 Subject to the provisions of Article 3.2, below, the configuration for the Option Aircraft will be the Detail
Specification for Boeing Model 7378 aircraft at the revision level in effect at the time of Definitive Agreement (as defined in
Article 0). Such Detail Specification will be revised to include (i) changes applicable to the Detail Specification that are
developed by Boeing between the Option Exercise Date (as defined below) and the signing of the Definitive Agreement, (ii)
changes required to obtain required regulatory certificates, and (iii) other changes as mutually agreed.
3.2 Boeing reserves the right to configure the Option Aircraft starting from a different configuration specification,
provided that it can achieve the same configuration which would result pursuant to the provisions of Article 3.1.
SWA-PA-03729-LA-1106474R2 SA-8
Option Aircraft Page 1
BOEING PROPRIETARY
4.[***]
5.[***]
SWA-PA-03729-LA-1106474R2 SA-8
Option Aircraft Page 2
BOEING PROPRIETARY
6.[***]
7.Reserved
8.[***]
9. Assignment
Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter
Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Option Aircraft and
cannot be assigned in whole or in part.
10. Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations
SWA-PA-03729-LA-1106474R2 SA-8
Option Aircraft Page 3
BOEING PROPRIETARY
(including, without limitation, those employees performing accounting, finance, administration and other functions necessary
to finance and purchase, deliver or lease the Aircraft) and who understand they are not to disclose its contents to any other
person or entity (other than those to whom disclosure is permitted by this Article) without the prior written consent of Boeing
and (c) any auditors and attorneys of Customer who have a need to know such information and have signed a
confidentiality agreement in the same form and substance similar to this Article, or are otherwise bound by a confidentiality
obligation. Disclosure to other parties is not permitted without Boeing’s consent except as may be required by applicable
law or governmental regulations. Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By: /s/ Kyle Kersavage
Its: Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 20, 2017
SOUTHWEST AIRLINES CO.
By /s/ Chris Monroe
Its Chris Monroe
SVP, Finance
SWA-PA-03729-LA-1106474R2 SA-8
Option Aircraft Page 4
BOEING PROPRIETARY
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Airframe Model/MTOW: 737-8
Engine Model/Thrust: CFMLEAP-
1B28(1)
181,200pounds
28,800pounds
Detail Specification:
Airframe Price Base
Year/Escalation Formula:
D019A008-P (5/1/2017)
Jul-11
4Q16External
Fcst
ECI-MFG/CPI
Airframe Price:
[***]
Engine Price Base
Year/Escalation Formula:
N/A
N/A
Optional Features:
[***]
Sub-Total of Airframe and Features:
[***]
Airframe Escalation Data:
Engine Price (Per Aircraft):
[***]
Base Year Index (ECI): [***]
Aircraft Basic Price (Excluding
BFE/SPE):
[***]
Base Year Index (CPI): [***]
Buyer Furnished Equipment (BFE)
Estimate:
[***]
Seller Purchased Equipment (SPE)
Estimate:
[***]
Non-Refundable Deposit/Aircraft at Def Agreemt:
[***]
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv Payment
Base
Price
Per A/P
Advance Payment Per Aircraft (Amts.
Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Mar-2022 1
[***] [***] [***] [***] [***] [***] [***]
Apr-2022 1
[***] [***]
D
[***] [***] [***] [***] [***]
May-2022 1
[***] [***] [***] [***] [***] [***] [***]
Jun-2022 1
[***] [***]
D
[***] [***] [***] [***] [***]
Jul-2022 1
[***] [***] [***] [***] [***] [***] [***]
Jul-2022 1
[***] [***]
D
[***] [***] [***] [***] [***]
Aug-2022 1
[***] [***] [***] [***] [***] [***] [***]
Sep-2022 1
[***] [***]
D
[***] [***] [***] [***] [***]
Oct-2022 1
[***] [***] [***] [***] [***] [***] [***]
Oct-2022 1
[***] [***]
D
[***] [***] [***] [***] [***]
Nov-2022 1
[***] [***] [***] [***] [***] [***] [***]
Nov-2022 1
[***] [***]
D
[***] [***] [***] [***] [***]
Dec-2022 1 [***] [***] [***] [***] [***] [***] [***]
SWA‑PA‑03729-LA-1106474 107813. TXT
BOEING PROPRIETARY
SA-8
Page 1
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv Payment
Base
Price
Per A/P
Advance Payment Per Aircraft (Amts.
Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Dec-2022 1
[***] [***]
D
[***] [***] [***] [***] [***]
Jan-2023 1
[***] [***] [***] [***] [***] [***] [***]
Jan-2023 1
[***] [***]
D
[***] [***] [***] [***] [***]
Feb-2023 1
[***] [***] [***] [***] [***] [***] [***]
Feb-2023 1
[***] [***]
D
[***] [***] [***] [***] [***]
Mar-2023 1
[***] [***] [***] [***] [***] [***] [***]
Mar-2023 1
[***] [***]
D
[***] [***] [***] [***] [***]
Apr-2023 1
[***] [***] [***] [***] [***] [***] [***]
Apr-2023 1
[***] [***]
D
[***] [***] [***] [***] [***]
May-2023 1
[***] [***] [***] [***] [***] [***] [***]
May-2023 1
[***] [***]
D
[***] [***] [***] [***] [***]
Jun-2023 1
[***] [***] [***] [***] [***] [***] [***]
Jun-2023 1
[***] [***]
D
[***] [***] [***] [***] [***]
Jul-2023 1
[***] [***] [***] [***] [***] [***] [***]
Aug-2023 1
[***] [***]
D
[***] [***] [***] [***] [***]
Aug-2023 1
[***] [***] [***] [***] [***] [***] [***]
Sep-2023 1
[***] [***]
D
[***] [***] [***] [***] [***]
Sep-2023 1
[***] [***] [***] [***] [***] [***] [***]
Oct-2023 1
[***] [***]
D
[***] [***] [***] [***] [***]
Oct-2023 1
[***] [***] [***] [***] [***] [***] [***]
Nov-2023 1
[***] [***]
D
[***] [***] [***] [***] [***]
Nov-2023 1
[***] [***] [***] [***] [***] [***] [***]
Dec-2023 1
[***] [***]
D
[***] [***] [***] [***] [***]
Dec-2023 1
[***] [***] [***] [***] [***] [***] [***]
Jan-2024 1
[***] [***]
D
[***] [***] [***] [***] [***]
SWA‑PA‑03729-LA-1106474 107813. TXT
BOEING PROPRIETARY
SA-8
Page 2
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv Payment
Base
Price
Per A/P
Advance Payment Per Aircraft (Amts.
Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Jan-2024 1
[***] [***] [***] [***] [***] [***] [***]
Feb-2024 1
[***] [***]
D
[***] [***] [***] [***] [***]
Feb-2024 1
[***] [***] [***] [***] [***] [***] [***]
Mar-2024 1
[***] [***]
D
[***] [***] [***] [***] [***]
Mar-2024 1
[***] [***] [***] [***] [***] [***] [***]
Apr-2024 1
[***] [***]
D
[***] [***] [***] [***] [***]
Apr-2024 1
[***] [***] [***] [***] [***] [***] [***]
May-2024 1
[***] [***]
D
[***] [***] [***] [***] [***]
May-2024 1
[***] [***] [***] [***] [***] [***] [***]
Jun-2024 1
[***] [***]
D
[***] [***] [***] [***] [***]
Jun-2024 1
[***] [***] [***] [***] [***] [***] [***]
Jul-2024 1
[***] [***]
D
[***] [***] [***] [***] [***]
Aug-2024 1
[***] [***] [***] [***] [***] [***] [***]
Aug-2024 1
[***] [***]
D
[***] [***] [***] [***] [***]
Sep-2024 1
[***] [***] [***] [***] [***] [***] [***]
Sep-2024 1
[***] [***]
D
[***] [***] [***] [***] [***]
Oct-2024 1
[***] [***] [***] [***] [***] [***] [***]
Oct-2024 1
[***] [***]
D
[***] [***] [***] [***] [***]
Nov-2024 1
[***] [***] [***] [***] [***] [***] [***]
Nov-2024 1
[***] [***]
D
[***] [***] [***] [***] [***]
Dec-2024 2
[***] [***] [***] [***] [***] [***] [***]
Jan-2025 3
[***] [***] [***] [***] [***] [***] [***]
Feb-2025 3
[***] [***] [***] [***] [***] [***] [***]
Mar-2025 3
[***] [***] [***] [***] [***] [***] [***]
Apr-2025 3
[***] [***] [***] [***] [***] [***] [***]
SWA‑PA‑03729-LA-1106474 107813. TXT
BOEING PROPRIETARY
SA-8
Page 3
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv Payment
Base
Price
Per A/P
Advance Payment Per Aircraft (Amts.
Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
May-2025 3
[***] [***] [***] [***] [***] [***] [***]
Jun-2025 3
[***] [***] [***] [***] [***] [***] [***]
Jul-2025 3
[***] [***] [***] [***] [***] [***] [***]
Aug-2025 3
[***] [***] [***] [***] [***] [***] [***]
Sep-2025 3
[***] [***] [***] [***] [***] [***] [***]
Oct-2025 3
[***] [***] [***] [***] [***] [***] [***]
Nov-2025 3
[***] [***] [***] [***] [***] [***] [***]
Dec-2025 3
[***] [***] [***] [***] [***] [***] [***]
Jan-2026 3
[***] [***] [***] [***] [***] [***] [***]
Feb-2026 3
[***] [***] [***] [***] [***] [***] [***]
Mar-2026 3
[***] [***] [***] [***] [***] [***] [***]
Apr-2026 3
[***] [***] [***] [***] [***] [***] [***]
May-2026 3
[***] [***] [***] [***] [***] [***] [***]
Jun-2026 3
[***] [***] [***] [***] [***] [***] [***]
Jul-2026 3
[***] [***] [***] [***] [***] [***] [***]
Aug-2026 3
[***] [***] [***] [***] [***] [***] [***]
Sep-2026 3
[***] [***] [***] [***] [***] [***] [***]
Oct-2026 3
[***] [***] [***] [***] [***] [***] [***]
Nov-2026 3
[***] [***] [***] [***] [***] [***] [***]
Dec-2026 3
[***] [***] [***] [***] [***] [***] [***]
Jan-2027 3
[***] [***] [***] [***] [***] [***] [***]
Feb-2027 3
[***] [***] [***] [***] [***] [***] [***]
Mar-2027 3
[***] [***] [***] [***] [***] [***] [***]
Apr-2027 3
[***] [***] [***] [***] [***] [***] [***]
May-2027 3
[***] [***] [***] [***] [***] [***] [***]
SWA‑PA‑03729-LA-1106474 107813. TXT
BOEING PROPRIETARY
SA-8
Page 4
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv Payment
Base
Price Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos.
Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Jun-2027 3
[***] [***] [***] [***] [***] [***] [***]
Jul-2027 3
[***] [***] [***] [***] [***] [***] [***]
Aug-2027 2 [***] [***] [***] [***] [***] [***] [***]
Total: 155
* [***]
Note:
(1)[***]
SWA‑PA‑03729-LA-1106474 107813. TXT
BOEING PROPRIETARY
SA-8
Page 5
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106475R3
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
References: 1) Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing)
and Southwest Airlines Co. (Customer) relating to Model 737-8 and Model 737-7 aircraft
2) Letter Agreement SWA-PA-03729-LA-1106474 entitled “Option Aircraft” (Option Aircraft Letter
Agreement)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1.[***]
SWA-PA-03729-LA-1106475R3 SA-8
[***] Page 1
BOEING PROPRIETARY
SWA-PA-03729-LA-1106475R3 SA-8
[***] Page 2
BOEING PROPRIETARY
2.[***]
3. Assignment.
Unless otherwise noted herein, [***]
to Customer and in consideration
of Customer’s taking title to the Option Aircraft at time of delivery and becoming the operator of the Option Aircraft. This
Letter Agreement cannot be assigned, in whole or in part, without the prior written consent of Boeing.
4. Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is
considered by Boeing as confidential and has value precisely because it is not available generally to other parties.
Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance,
SWA-PA-03729-LA-1106475R3 SA-8
[***] Page 3
BOEING PROPRIETARY
administration and other functions necessary to finance and purchase, deliver or lease the Aircraft) and who understand
they are not to disclose its contents to any other person or entity (other than those to whom disclosure is permitted by this
Article) without the prior written consent of Boeing and (c) any auditors and attorneys of Customer who have a need to
know such information and have signed a confidentiality agreement in the same form and substance similar to this Article,
or are otherwise bound by a confidentiality obligation. Disclosure to other parties is not permitted without Boeing’s consent
except as may be required by applicable law or governmental regulations. Customer shall be fully responsible to Boeing
for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By: /s/ Kyle Kersavage
Its:
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 20, 2017
SOUTHWEST AIRLINES CO.
By /s/ Chris Monroe
Its Chris Monroe
SVP, Finance
SWA-PA-03729-LA-1106475R3 SA-8
[***] Page 4
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106476R2
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 aircraft and Model 737-7 aircraft
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
The Purchase Agreement incorporates the terms and conditions of Aircraft General Terms Agreement dated as of
December 13, 2011 identified as SWA-AGTA between Boeing and Customer (AGTA). This Letter Agreement modifies
certain terms and conditions of the AGTA with respect to the Aircraft.
1.
[***]
SWA-PA-03729-LA-1106476R2 SA-8
[***] Page 1
BOEING PROPRIETARY
2.[***]
3. Assignment. Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described
in this Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and
cannot be assigned in whole or, in part.
SWA-PA-03729-LA-1106476R2 SA-8
[***] Page 2
BOEING PROPRIETARY
4. Confidentiality. Customer understands that certain commercial and financial information contained in this Letter
Agreement is considered by Boeing as confidential and has value precisely because it is not available generally to other
parties. Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a confidentiality agreement in the same
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By: /s/ Kyle Kersavage
Its:
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 20, 2017
SOUTHWEST AIRLINES CO.
By /s/ Chris Monroe
Its Chris Monroe
SVP, Finance
SWA-PA-03729-LA-1106476R2 SA-8
[***] Page 3
BOEING PROPRIETARY
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
SWA-PA-03729-LA-1106484R1
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Customer) relating to Model 737-8 and 737-7 aircraft (Aircraft)
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1. Defined Terms: The following capitalized terms have the following meaning:
1.1 [***]
1.2 [***]
1.3 Program Aircraft means each Aircraft specified in Table 1 of the Purchase Agreement as of the date of this
Letter.
2.[***]
3.[***]
SWA-PA-03729-LA-1106484R1 SA-8
[***] Page 1
BOEING PROPRIETARY
4.[***]
5.[***]
SWA-PA-03729-LA-1106484R1 SA-8
[***] Page 2
BOEING PROPRIETARY
6.[***]
7. Assignment. Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described
in this Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and
cannot be assigned in whole or, in part.
8. Confidentiality. Customer understands that certain commercial and financial information contained in this Letter
Agreement is considered by Boeing as confidential and has value precisely because it is not available generally to other
parties. Customer agrees to limit the disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b)
employees of Customer with a need to know the contents for performing its obligations (including, without limitation, those
employees performing accounting, finance, administration and other functions necessary to finance and purchase, deliver
or lease the Aircraft) and who understand they are not to disclose its contents to any other person or entity (other than
those to whom disclosure is permitted by this Article) without the prior written consent of Boeing and (c) any auditors and
attorneys of Customer who have a need to know such information and have signed a
SWA-PA-03729-LA-1106484R1 SA-8
[***] Page 3
BOEING PROPRIETARY
confidentiality agreement in the same form and substance similar to this Article, or are otherwise bound by a confidentiality
obligation. Disclosure to other parties is not permitted without Boeing’s consent except as may be required by applicable
law or governmental regulations. Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By: /s/ Kyle Kersavage
Its:
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 20, 2017
SOUTHWEST AIRLINES CO.
By /s/ Chris Monroe
Its Chris Monroe
SVP, Finance
SWA-PA-03729-LA-1106484R1 SA-8
[***] Page 4
BOEING PROPRIETARY
Attachment A
[***]
SWA-PA-03729-LA-1106484R1 SA-8
[***] Page 5
BOEING PROPRIETARY
Attachment B
[***]
SWA-PA-03729-LA-1106484R1 SA-8
[***] Page 6
BOEING PROPRIETARY
SWA-PA-03729-LA-1106484R1 SA-8
[***] Page 7
BOEING PROPRIETARY
SWA-PA-03729-LA-1106484R1 SA-8
[***] Page 8
BOEING PROPRIETARY
SWA-PA-03729-LA-1106484R1 SA-8
[***] Page 9
BOEING PROPRIETARY
SWA-PA-03729-LA-1106484R1 SA-8
[***] Page 10
BOEING PROPRIETARY
SWA-PA-03729-LA-1301170R2
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No. PA-03729 (Purchase Agreement) between
The Boeing Company (Boeing) and Southwest Airlines Co. (Customer)
relating to Model 737-8 and 737-7 aircraft
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1.[***]
SWA-PA-03729-LA-1301170R2 SA-8
[***] Page 1
BOEING PROPRIETARY
2.[***]
3.Assignment.
Unless otherwise noted herein, [***]described in this Letter Agreement are provided [***]in consideration of Customer’s
taking title to the 737-7 Aircraft at time of delivery and becoming the operator of the 737-7 Aircraft. This Letter Agreement
cannot be assigned, in whole or in part, without the prior written consent of Boeing.
4.Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is considered by
Boeing as confidential and has value precisely because it is not available generally to other parties. Customer agrees to limit the
disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b) employees of Customer with a need to know
the contents for performing its obligations (including, without limitation, those employees performing accounting, finance,
SWA-PA-03729-LA-1301170R2 SA-8
[***] Page 2
BOEING PROPRIETARY
administration and other functions necessary to finance and purchase, deliver or lease the Aircraft) and who understand
they are not to disclose its contents to any other person or entity (other than those to whom disclosure is permitted by this
Article) without the prior written consent of Boeing and (c) any auditors and attorneys of Customer who have a need to
know such information and have signed a confidentiality agreement in the same form and substance similar to this Article,
or are otherwise bound by a confidentiality obligation. Disclosure to other parties is not permitted without Boeing’s consent
except as may be required by applicable law or governmental regulations. Customer shall be fully responsible to Boeing
for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By: /s/ Kyle Kersavage
Its:
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 20, 2017
SOUTHWEST AIRLINES CO.
By /s/ Chris Monroe
Its Chris Monroe
SVP, Finance
SWA-PA-03729-LA-1301170R2 SA-8
[***] Page 3
BOEING PROPRIETARY
SWA-PA-03729-LA-1106467R2
Southwest Airlines Co.
2702 Love Field Drive
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: [***]
Reference: Purchase Agreement No.PA-03729 (Purchase Agreement) between The Boeing Company (Boeing) and Southwest
Airlines Co. (Customer) relating to Model 737-8 and Model 737-7 aircraft
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.
1.[***]
SWA-PA-03729-LA-1106467R2 SA-8
[***] Page 1
BOEING PROPRIETARY
2.[***]
3.Assignment.
Unless otherwise noted herein, [***]described in this Letter Agreement are provided [***]in consideration of Customer’s taking
title to the 737-8 Aircraft at time of delivery and becoming the operator of such 737-8 Aircraft. This Letter Agreement cannot
be assigned, in whole or in part, without the prior written consent of Boeing.
4. Confidentiality
Customer understands that certain commercial and financial information contained in this Letter Agreement is considered by
Boeing as confidential and has value precisely because it is not available generally to other parties. Customer agrees to limit the
disclosure of the contents of this Letter Agreement to (a) its directors and officers, (b) employees of Customer with a need to know
the contents for performing its obligations (including, without limitation, those employees performing accounting, finance,
administration and other functions necessary to finance and purchase, deliver or lease the Aircraft) and who understand they are
not to disclose its contents to any other person or entity (other than those to whom disclosure is permitted by this Article) without the
prior written consent of Boeing and (c) any auditors and attorneys of Customer who have a need to know such information and have
signed a confidentiality agreement in the same
SWA-PA-03729-LA-1106467R2 SA-8
[***] Page 2
BOEING PROPRIETARY
form and substance similar to this Article, or are otherwise bound by a confidentiality obligation. Disclosure to other parties
is not permitted without Boeing’s consent except as may be required by applicable law or governmental regulations.
Customer shall be fully responsible to Boeing for compliance with such obligations.
Very truly yours,
THE BOEING COMPANY
By: /s/ Kyle Kersavage
Its:
Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: December 20, 2017
SOUTHWEST AIRLINES CO.
By /s/ Chris Monroe
Its Chris Monroe
SVP, Finance
SWA-PA-03729-LA-1106467R2 SA-8
[***] Page 3
BOEING PROPRIETARY
SUPPLEMENTAL AGREEMENT NO. 9
to
Purchase Agreement No. 03729
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Relating to Boeing Model 737-8 and 737-7 Aircraft
THIS SUPPLEMENTAL AGREEMENT No. 9 (SA-9), entered into as of February 8, 2018, is made between THE BOEING
COMPANY, a Delaware corporation (Boeing), and SOUTHWEST AIRLINES CO., a Texas corporation (Customer).
RECITALS:
WHEREAS, Customer and Boeing entered into Purchase Agreement Number PA-03729 dated December 13, 2011, as
amended and supplemented, (Purchase Agreement) relating to the purchase and sale of Boeing Model 737-8 (737-8
Aircraft) and Model 737-7 aircraft (737-7 Aircraft); collectively the “Aircraft”. This SA9 is an amendment to and is
incorporated into the Purchase Agreement. Capitalized terms used herein but not otherwise defined will have the meaning
set forth in the Purchase Agreement.
WHEREAS, Boeing and Customer agree to accelerate the deliveries of certain 737-8 Aircraft as identified in Table 1A,
Aircraft Delivery, Description, Price, and Advance Payments 737-8 Aircraft, attached hereto.
NOW, THEREFORE, the parties agree that the Purchase Agreement is amended as set forth below and otherwise agree
as follows:
1. TABLE OF CONTENTS.
The Table of Contents of the Purchase Agreement is deleted in its entirety and replaced with a new Table of Contents (attached),
which lists the Tables, Exhibits, and Letter Agreements revised by this SA-9 and is identified by “SA-9”. Such revised Table of
Contents is incorporated into the Purchase Agreement by this reference.
2. TABLES.
SWA-PA-03729 1 SA-9
BOEING PROPRIETARY
Table 1A, Aircraft Delivery, Description, Price and Advance Payments – 737-8 Aircraft, is deleted in its entirety and
replaced by a new Table 1A (identified by "SA-9") attached hereto and incorporated into the Purchase Agreement by this
reference.
3. ADVANCE PAYMENT IMPACTS.
3.1 The revisions applied to Table 1A, Aircraft Delivery, Description, Price and Advance Payments – 737-8 Aircraft,
result in [***]
The Purchase Agreement is deemed to be supplemented to the extent herein provided and as so supplemented will
continue in full force and effect.
EXECUTED IN DUPLICATE as of the day and year first above written.
THE BOEING COMPANY SOUTHWEST AIRLINES CO.
By: /s/ Kyle Kersavage By: /s/ Chris Monroe
Its: Attorney-In-Fact Its: Chris Monroe
SVP, Finance
SWA-PA-03729 2 SA-9
BOEING PROPRIETARY
TABLE OF CONTENTS
ARTICLES TITLES
Article 1 Quantity, Model and Description SA-2
Article 2 Delivery Schedule
Article 3 Price
Article 4 Payment SA-2
Article 5 Additional Terms
TABLE TITLE
1A 737-8 Aircraft Information Table SA-9
1B 737-7 Aircraft Information Table SA-8
EXHIBIT
A1 737-8 Aircraft Configuration SA-8
A2 737-7 Aircraft Configuration SA-8
B*
Aircraft Delivery Requirements and
Responsibilities
SUPPLEMENTAL EXHIBITS TITLES
AE1*
Escalation Adjustment/Airframe and Optional
Features
BFE1 BFE Variables for 737-8 SA-7
BFE2 BFE Variables for 737-7 SA-8
CS1 Customer Support Variables
CS1-7MAX Customer Support Variables SA-2
EE1* Engine Escalation/Engine Warranty and Patent
Indemnity
SLP1* Service Life Policy Components
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106463R3 Open Matters SA-8
SWA-PA-03729 SA-9
BOEING PROPRIETARY
Page 1
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106464* [***]
SWA-PA-03729-LA-1106465* [***]
SWA-PA-03729-LA-1106466 [***]
SWA-PA-03729-LA-1106467R2 [***] SA-8
SWA-PA-03729-LA-1106468* [***]
SWA-PA-03729-LA-1106469R1 [***] SA-2
SWA-PA-03729-LA-1106470R1
[***]
SA-2
SWA-PA-03729-LA-1106471R1 Substitute Aircraft SA-2
SWA-PA-03729-LA-1106473R1
[***]
SA-5
SWA-PA-03729-LA-1106474R2 Option Aircraft SA-8
Attachment 1 SA-8
SWA-PA-03729-LA-1106475R3 [***] SA-8
SWA-PA-03729-LA-1106476R2 [***] SA-8
SWA-PA-03729-LA-1106477* [***]
SWA-PA-03729-LA-1106478 [***]
SWA-PA-03729-LA-1106479R1 [***] SA-2
SWA-PA-03729-LA-1106480R1 [***] SA-2
SWA-PA-03729-LA-1106481R2 [***] SA-2
SWA-PA-03729-LA-1106482* [***]
SWA-PA-03729-LA-1106483* [***]
SWA-PA-03729-LA-1106484R1 [***] SA-8
Attachment A SA-8
Attachment B SA-8
SWA-PA-03729-LA-1106485* [***]
SWA-PA-03729-LA-1209080 [***] SA-1
SWA-PA-03729 SA-9
BOEING PROPRIETARY
Page 2
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1210419
[***]
SA-1
SWA-PA-03729-LA-1300943 [***] SA-2
SWA-PA-03729-LA-1301168R3 [***] SA-6
SWA-PA-03729-LA-1301170R2 [***] SA-8
SWA-PA-03729-LA-1400371
[***]
SA-7
SASWA-PA-03729-LA-1503792 Service Ready Operational Validation SA-6
SWA-PA-03729-LA-1500831
[***]
SA-7
SWA-PA-03729-LA-1602486 [***] SA-5
* Denotes revision to Page 1 or Page 2 only to reference 737-7 (SA-2)
SWA-PA-03729 SA-9
BOEING PROPRIETARY
Page 3
INACTIVE / DELETED TABLES, EXHIBITS, AND LETTER AGREEMENTS
RESTRICTED LETTER AGREEMENTS
Letter Agreement Title Last Updated under SA Current Status
SWA-PA-03729- [***] SA-2 Deleted under
LA-1106472R1 SA-4
SWA-PA- [***] SA-2 Deleted under
01810/03729-LA- SA-4
1301169
SWA-PA-03729 SA-9
BOEING PROPRIETARY
Page 4
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Airframe Model/MTOW: 737-8 181,200pounds Detail Specification:
Airframe Price Base Year/Escalation
Formula:
D019A008-P(5/1/2017)Jul-11
ECI-
MFG/CPI
Engine Model/Thrust: CFMLEAP-
1B288(2)
28,800pounds
Airframe Price: [***] Engine Price Base Year/Escalation
Formula:
N/A N/A
Optional Features: [***]
Sub-Total of Airframe and Features: [***] Airframe Escalation Data:
Engine Price (Per Aircraft): [***] Base Year Index (ECI): [***]
Aircraft Basic Price (Excluding
BFE/SPE):
[***]
Base Year Index (CPI): [***]
Buyer Furnished Equipment (BFE)
Estimate:
[***]
Seller Purchased Equipment (SPE)
Estimate:
[***]
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block
Notes
Escalation
Estimate
Adv Payment
Base
Price Per
A/P
Advance Payment Per Aircraft (Amts.
Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Jul-2017
1 [***]
36929† [***] A Note1
[***] [***] [***] [***] [***]
Jul-2017
2 [***]
42558†,42559† [***] C Note1
[***] [***] [***] [***] [***]
Aug-2017
3 [***]
36979,36930,36984 [***] A Note1
[***] [***] [***] [***] [***]
Aug-2017
3 [***]
42563,42566†,42567 [***] C Note1
[***] [***] [***] [***] [***]
Sep-2017
1 [***]
36934 [***] A Note1
[***] [***] [***] [***] [***]
Oct-2017
1 [***]
42544 [***] A
[***] [***] [***] [***] [***]
Oct-2017
1 [***]
42570 [***] C
[***] [***] [***] [***] [***]
Nov-2017
1 [***]
36988† [***] A
[***] [***] [***] [***] [***]
Dec-2017
1 [***]
42554† [***] C
[***] [***] [***] [***] [***]
Mar-2018
1 [***]
36989† [***] A
[***] [***] [***] [***] [***]
Mar-2018
1 [***]
42571 [***] C
[***] [***] [***] [***] [***]
Apr-2018
1 [***]
42546 [***] A
[***] [***] [***] [***] [***]
Jun-2018
1 [***]
42572 [***] C
[***] [***] [***] [***] [***]
Jun-2018
1 [***]
42547 [***] A
[***] [***] [***] [***] [***]
Jul-2018
1 [***]
42556† [***] C
[***] [***] [***] [***] [***]
Aug-2018
3 [***]
42548,37019,42549 [***] A
[***] [***] [***] [***] [***]
Aug-2018
1 [***]
42574 [***]
[***] [***] [***] [***] [***]
Aug-2018
1 [***]
42575 [***]
[***] [***] [***] [***] [***]
Sep-2018
2 [***]
42573,42576 [***]
[***] [***] [***] [***] [***]
Dec-2018
1 [***]
42577 [***]
[***] [***] [***] [***] [***]
SWA‑PA‑03729 107813 / 108198
BOEING PROPRIETARY
SA-9
Page 1
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block
Notes
Escalation
Estimate
Adv Payment
Base
Price Per
A/P
Advance Payment Per Aircraft (Amts.
Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Dec-2018 4 [***] 37042, 42550, 42551, 37043 [***] A [***] [***] [***] [***] [***]
Jul-2019 2 [***] 65437,65436 [***] EOPEX [***] [***] [***] [***] [***]
Sep-2019 2 [***] 65471,65438 [***] EOPEX [***] [***] [***] [***] [***]
Oct-2019 1 [***] 65439 [***] OPEX [***] [***] [***] [***] [***]
Oct-2019 1 [***] 65440 [***] OPEX [***] [***] [***] [***] [***]
Nov-2019 1 [***] 42536 [***] A [***] [***] [***] [***] [***]
Nov-2019 1 [***] 65473 [***] DOPEX [***] [***] [***] [***] [***]
Dec-2019 1 [***] 36722 [***] B [***] [***] [***] [***] [***]
Dec-2019 1 [***] 42537 [***] A [***] [***] [***] [***] [***]
Feb-2020 1 [***] 36727 [***] B [***] [***] [***] [***] [***]
Mar-2020 2 [***] 42579,42580 [***] [***] [***] [***] [***] [***]
Apr-2020 1 [***] 42539 [***] A [***] [***] [***] [***] [***]
Apr-2020 1 [***] 65441 [***] OPEX [***] [***] [***] [***] [***]
May-2020 1 [***] 42553 [***] A [***] [***] [***] [***] [***]
May-2020 1 [***] 35970 [***] B [***] [***] [***] [***] [***]
Jun-2020 1 [***] 42607 [***] [***] [***] [***] [***] [***]
Jun-2020 1 [***] 65442 [***] OPEX [***] [***] [***] [***] [***]
Jul-2020 1 [***] 42540 [***] A [***] [***] [***] [***] [***]
Jul-2020 2 [***] 65443,65444 [***] OPEX [***] [***] [***] [***] [***]
Aug-2020 1 [***] 42541 [***] A [***] [***] [***] [***] [***]
Aug-2020 2 [***] 65445,65446 [***] OPEX [***] [***] [***] [***] [***]
Sep-2020 1 [***] 33941 [***] B [***] [***] [***] [***] [***]
Sep-2020 3 [***] 65447,65448,65472 [***] OPEX [***] [***] [***] [***] [***]
Oct-2020 1 [***] 42615 [***] [***] [***] [***] [***] [***]
Oct-2020 1 [***] 42543 [***] A [***] [***] [***] [***] [***]
Oct-2020 1
[***]
65474
[***]
OPEX
[***] [***] [***] [***] [***]
Nov-2020 1 [***] 36733 [***] B [***] [***] [***] [***] [***]
Nov-2020 1 [***] 65475 [***] DOPEX [***] [***] [***] [***] [***]
Dec-2020 1 [***] 33940 [***] B [***] [***] [***] [***] [***]
Jan-2021 1 [***] 35974 [***] B [***] [***] [***] [***] [***]
Jan-2021 1 [***] 65450 [***] DOPEX [***] [***] [***] [***] [***]
SWA‑PA‑03729 107813 / 108198
BOEING PROPRIETARY
SA-9
Page 2
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block
Notes
Escalation
Estimate
Adv Payment
Base
Price
Per A/P
Advance Payment Per Aircraft (Amts.
Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Jan-2021 1
[***]
65449 [***] OPEX
[***] [***] [***] [***] [***]
Feb-2021 1
[***]
65451 [***] D
OPEX
[***] [***] [***] [***] [***]
Mar-2021 1
[***]
42648 [***]
[***] [***] [***] [***] [***]
Mar-2021 1
[***]
65452 [***] OPEX
[***] [***] [***] [***] [***]
Apr-2021 3
[***]
42649,42650,42651 [***]
[***] [***] [***] [***] [***]
Apr-2021 1
[***]
65454 [***] D
OPEX
[***] [***] [***] [***] [***]
Apr-2021 1
[***]
65453 [***] OPEX
[***] [***] [***] [***] [***]
May-2021 3
[***]
42652,42653,42654 [***]
[***] [***] [***] [***] [***]
May-2021 1
[***]
65455 [***] D
OPEX
[***] [***] [***] [***] [***]
May-2021 1
[***]
65456 [***] OPEX
[***] [***] [***] [***] [***]
Jun-2021 3
[***]
42655,42656,42670 [***]
[***] [***] [***] [***] [***]
Jun-2021 1
[***]
65457 [***] D
OPEX
[***] [***] [***] [***] [***]
Jul-2021 3
[***]
42657,42658,42671 [***]
[***] [***] [***] [***] [***]
Jul-2021 1
[***]
65460 [***] D
OPEX
[***] [***] [***] [***] [***]
Jul-2021 2
[***]
65459,65458 [***] OPEX
[***] [***] [***] [***] [***]
Aug-2021 1
[***]
65461 [***] D
OPEX
[***] [***] [***] [***] [***]
Sep-2021 2
[***]
65463,65462 [***] OPEX
[***] [***] [***] [***] [***]
Oct-2021 1
[***]
65466 [***] D
OPEX
[***] [***] [***] [***] [***]
Oct-2021 2
[***]
65465,65464 [***] OPEX
[***] [***] [***] [***] [***]
Nov-2021 1
[***]
65467 [***] D
OPEX
[***] [***] [***] [***] [***]
Dec-2021 1
[***]
65468 [***] OPEX
[***] [***] [***] [***] [***]
Jan-2022 1
[***]
65469 [***] D
OPEX
[***] [***] [***] [***] [***]
Jan-2022 1
[***]
65470 [***] OPEX
[***] [***] [***] [***] [***]
Mar-2022 2
[***]
42678,42679 [***]
[***] [***] [***] [***] [***]
Apr-2022 3
[***]
42680,42681,42688 [***]
[***] [***] [***] [***] [***]
May-2022 3
[***]
42682,42683,42684 [***]
[***] [***] [***] [***] [***]
Jun-2022 3
[***]
42685,42686,42687 [***]
[***] [***] [***] [***] [***]
Jul-2022 2
[***]
42689,42690 [***]
[***] [***] [***] [***] [***]
Aug-
2022
2
[***]
42693,42695 [***]
[***] [***] [***] [***] [***]
Jan-2023 2
[***]
42560,42565 [***]
[***] [***] [***] [***] [***]
Feb-2023 2
[***]
42562,42564 [***]
[***] [***] [***] [***] [***]
SWA‑PA‑03729 107813 / 108198
BOEING PROPRIETARY
SA-9
Page 3
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block
Notes
Escalation
Estimate
Adv Payment
Base
Price Per
A/P
Advance Payment Per Aircraft (Amts.
Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Mar-2023 1 [***]
42557 [***]
[***] [***] [***] [***] [***]
Mar-2023 1
[***]
36732 [***] B
[***] [***] [***] [***] [***]
Apr-2023 1
[***]
42555 [***]
[***] [***] [***] [***] [***]
Apr-2023 1
[***]
38806 [***] B
[***] [***] [***] [***] [***]
May-2023 2
[***]
42594,42568 [***]
[***] [***] [***] [***] [***]
Jun-2023 1
[***]
42581 [***]
[***] [***] [***] [***] [***]
Jun-2023 1
[***]
37034 [***] A
[***] [***] [***] [***] [***]
Jul-2023 2
[***]
42597,42582 [***]
[***] [***] [***] [***] [***]
Aug-2023 1
[***]
42593 [***]
[***] [***] [***] [***] [***]
Aug-2023 1
[***]
42552 [***] A
[***] [***] [***] [***] [***]
Sep-2023 2
[***]
42601,42578 [***]
[***] [***] [***] [***] [***]
Oct-2023 1
[***]
42605 [***]
[***] [***] [***] [***] [***]
Oct-2023 1
[***]
42538 [***] A
[***] [***] [***] [***] [***]
Nov-2023 1
[***]
38815 [***] B
[***] [***] [***] [***] [***]
Dec-2023 1
[***]
42583 [***]
[***] [***] [***] [***] [***]
Jan-2024 3
[***]
42611,42584,42585 [***]
[***] [***] [***] [***] [***]
Feb-2024 3
[***]
42612,42596,42599 [***]
[***] [***] [***] [***] [***]
Mar-2024 3
[***]
38817,35968,35972 [***] B
[***] [***] [***] [***] [***]
Apr-2024 2
[***]
42617,42606 [***]
[***] [***] [***] [***] [***]
Apr-2024 1
[***]
36736 [***] B
[***] [***] [***] [***] [***]
May-2024 3
[***]
42619,42622,42608 [***]
[***] [***] [***] [***] [***]
Jun-2024 1
[***]
42610 [***]
[***] [***] [***] [***] [***]
Jun-2024 1
[***]
42542 [***] A
[***] [***] [***] [***] [***]
Jul-2024 2
[***]
35963,35967 [***] B
[***] [***] [***] [***] [***]
Aug-2024 2
[***]
42624,42626 [***]
[***] [***] [***] [***] [***]
Sep-2024 1
[***]
42630 [***]
[***] [***] [***] [***] [***]
Sep-2024 1
[***]
36730 [***] B
[***] [***] [***] [***] [***]
Oct-2024 2
[***]
42625,42636 [***]
[***] [***] [***] [***] [***]
Nov-2024 1
[***]
42639 [***]
[***] [***] [***] [***] [***]
Nov-2024 1
[***]
35971 [***] B
[***] [***] [***] [***] [***]
Dec-2024 2
[***]
42628,42640 [***]
[***] [***] [***] [***] [***]
SWA‑PA‑03729 107813 / 108198
BOEING PROPRIETARY
SA-9
Page 4
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block
Notes
Escalation
Estimate
Adv Payment
Base
Price Per
A/P
Advance Payment Per Aircraft (Amts.
Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Dec-2024 1
[***]
35975 [***] B
[***] [***] [***] [***] [***]
Jan-2025 2
[***]
42633,42634 [***]
[***] [***] [***] [***] [***]
Jan-2025 2
[***]
38804,38805 [***] B
[***] [***] [***] [***] [***]
Feb-2025 3
[***]
42637,42641,42643 [***]
[***] [***] [***] [***] [***]
Feb-2025 1
[***]
36729
[***]
B
[***] [***] [***] [***] [***]
Mar-2025 4
[***]
42644,42645,42646,42647
[***] [***] [***] [***] [***] [***]
Apr-2025 4
[***]
42659,42660,42661,42662
[***] [***] [***] [***] [***] [***]
May-2025 3
[***]
42663,42664,42666
[***] [***] [***] [***] [***] [***]
Jun-2025 3
[***]
42665,42667,42669
[***] [***] [***] [***] [***] [***]
Jul-2025 3
[***]
42668,42672,42673
[***] [***] [***] [***] [***] [***]
Aug-2025 3
[***]
42674,42675,42691
[***] [***] [***] [***] [***] [***]
Sep-2025 3
[***]
42676,42677,42694
[***] [***] [***] [***] [***] [***]
Oct-2025 3
[***]
42692,42696,42697
[***] [***] [***] [***] [***] [***]
Nov-2025 3
[***]
42698,42699,42700
[***] [***] [***] [***] [***] [***]
Dec-2025 3
[***]
42701,42702,42703
[***] [***] [***] [***] [***] [***]
Total:
210
* [***]
** Manufacturer Serial Numbers (MSN) are for reference only and are subject to change.
† [***]
Notes:
(1) [***]
(2) [***]
SWA‑PA‑03729 107813 / 108198
BOEING PROPRIETARY
SA-9
Page 5
SUPPLEMENTAL AGREEMENT NO. 10
to
Purchase Agreement No. 03729
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Relating to Boeing Model 737-8 and 737-7 Aircraft
THIS SUPPLEMENTAL AGREEMENT No. 10 (SA-10), entered into as of March 29, 2018, is made between THE BOEING
COMPANY, a Delaware corporation (Boeing), and SOUTHWEST AIRLINES CO., a Texas corporation (Customer).
RECITALS:
WHEREAS, Customer and Boeing entered into Purchase Agreement Number PA-03729 dated December 13, 2011, as
amended and supplemented, (Purchase Agreement) relating to the purchase and sale of Boeing Model 737-8 (737-8
Aircraft) and Model 737-7 aircraft (737-7 Aircraft); collectively the “Aircraft”. This SA10 is an amendment to and is
incorporated into the Purchase Agreement. Capitalized terms used herein but not otherwise defined will have the meaning
set forth in the Purchase Agreement.
WHEREAS, Customer has elected to exercise its right to purchase forty (40) option aircraft (the “Exercised Option Aircraft”),
and to accelerate the scheduled deliveries of certain 737-8 Aircraft, as identified in Table 1A, Aircraft Delivery, Description,
Price, and Advance Payments 737-8 Aircraft, attached hereto.
NOW, THEREFORE, the parties agree that the Purchase Agreement is amended as set forth below and otherwise agree
as follows:
1. TABLE OF CONTENTS.
The Table of Contents of the Purchase Agreement is deleted in its entirety and replaced with a new Table of Contents
(attached), which lists the Tables, Exhibits, and Letter Agreements revised by this SA-10 and is identified by “SA-10”. Such
revised Table of Contents is incorporated into the Purchase Agreement by this reference.
SWA-PA-03729 1 SA-10
BOEING PROPRIETARY
2. TABLES.
Table 1A, Aircraft Delivery, Description, Price and Advance Payments – 737-8 Aircraft, is deleted in its entirety and
replaced by a new Table 1A (identified by "SA-10") attached hereto and incorporated into the Purchase Agreement by this
reference.
3. LETTER AGREEMENTS.
Attachment 1 to Letter Agreement SWA-PA-03729-LA-1106474R2, Option Aircraft, is deleted in its entirety and is replaced
with the attached revised Attachment 1 to Letter Agreement SWA-PA-03729-LA-1106474R2.
4. ADVANCE PAYMENT IMPACTS.
4.1 The revisions applied to Table 1A, Aircraft Delivery, Description, Price and Advance Payments – 737-8 Aircraft,
result in [***]
4.2 [***]
4.3 [***]
The Purchase Agreement is deemed to be supplemented to the extent herein provided and as so supplemented will
continue in full force and effect.
EXECUTED IN DUPLICATE as of the day and year first above written.
THE BOEING COMPANY SOUTHWEST AIRLINES CO.
By: /s/ Kyle Kersavage______ By: /s/ Chris Monroe________
Chris Monroe
Its: Attorney-In-Fact______ Its: SVP, Finance________
SWA-PA-03729 2 SA-10
BOEING PROPRIETARY
TABLE OF CONTENTS
ARTICLES TITLES
Article 1 Quantity, Model and Description SA-2
Article 2 Delivery Schedule
Article 3 Price
Article 4 Payment SA-2
Article 5 Additional Terms
TABLE TITLE
1A 737-8 Aircraft Information Table SA-10
1B 737-7 Aircraft Information Table SA-8
EXHIBIT
A1 737-8 Aircraft Configuration SA-8
A2 737-7 Aircraft Configuration SA-8
B* Aircraft Delivery Requirements and Responsibilities
SUPPLEMENTAL EXHIBITS TITLES
AE1* Escalation Adjustment/Airframe and Optional Features
BFE1 BFE Variables for 737-8 SA-7
BFE2 BFE Variables for 737-7 SA-8
CS1 Customer Support Variables
CS1-7MAX Customer Support Variables SA-2
EE1* Engine Escalation/Engine Warranty and Patent Indemnity
SLP1* Service Life Policy Components
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106463R3 Open Matters SA-8
SWA-PA-03729 SA-10
BOEING PROPRIETARY
Page 1
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1106464* [***]
SWA-PA-03729-LA-1106465* [***]
SWA-PA-03729-LA-1106466 [***]
SWA-PA-03729-LA-1106467R2 [***] SA-8
SWA-PA-03729-LA-1106468* [***]
SWA-PA-03729-LA-1106469R1 [***] SA-2
SWA-PA-03729-LA-1106470R1 [***] SA-2
SWA-PA-03729-LA-1106471R1 Substitute Aircraft SA-2
SWA-PA-03729-LA-1106473R1 [***] SA-5
SWA-PA-03729-LA-1106474R2 Option Aircraft SA-8
Attachment 1 SA-10
SWA-PA-03729-LA-1106475R3 [***] SA-8
SWA-PA-03729-LA-1106476R2 [***] SA-8
SWA-PA-03729-LA-1106477* [***]
SWA-PA-03729-LA-1106478 [***]
SWA-PA-03729-LA-1106479R1 [***] SA-2
SWA-PA-03729-LA-1106480R1 [***] SA-2
SWA-PA-03729-LA-1106481R2 [***] SA-2
SWA-PA-03729-LA-1106482* [***]
SWA-PA-03729-LA-1106483* [***]
SWA-PA-03729-LA-1106484R1 [***] SA-8
Attachment A SA-8
Attachment BSA-8
SWA-PA-03729-LA-1106485* [***]
SWA-PA-03729-LA-1209080 [***] SA-1
SWA-PA-03729 SA-10
BOEING PROPRIETARY
Page 2
LETTER AGREEMENTS TITLES
SWA-PA-03729-LA-1210419 [***] SA-1
SWA-PA-03729-LA-1300943 [***] SA-2
SWA-PA-03729-LA-1301168R3 [***] SA-6
SWA-PA-03729-LA-1301170R2 [***] SA-8
SWA-PA-03729-LA-1400371 [***] SA-7
SASWA-PA-03729-LA-1503792 Service Ready Operational Validation SA-6
SWA-PA-03729-LA-1500831 [***] SA-7
SWAPA03729LA1602486 [***] SA-5
* Denotes revision to Page 1 or Page 2 only to reference 737-7 (SA-2)
SWA-PA-03729 SA-10
BOEING PROPRIETARY
Page 3
INACTIVE / DELETED TABLES, EXHIBITS, AND LETTER AGREEMENTS
RESTRICTED LETTER AGREEMENTS
Letter Agreement Title Last Updated under SA Current Status
SWA-PA-03729-LA-1106472R1 [***] SA-2 Deleted under SA-4
SWA-PA-01810/03729-LA-
1301169
[***] SA-2 Deleted under SA-4
SWA-PA-03729 SA-10
BOEING PROPRIETARY
Page 4
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Airframe Model/MTOW:
737-8
181,200pounds Detail Specification:
D019A008-P(5/1/2017)
Engine Model/Thrust:
CFMLEAP-1B28(2)
28,800pounds Airframe Price Base
Year/Escalation Formula:
Jul-11 ECI-
MFG/CPI
Airframe Price: [***] Engine Price Base
Year/Escalation Formula:
N/A N/A
Optional Features: [***]
Sub-Total of Airframe
and Features:
[***] Airframe Escalation Data:
Engine Price (Per
Aircraft):
[***] Base Year Index (ECI): [***]
Aircraft Basic Price
(Excluding BFE/SPE):
[***] Base Year Index (CPI): [***]
Buyer Furnished
Equipment (BFE)
Estimate:
[***]
Seller Purchased
Equipment (SPE)
Estimate:
[***]
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block
Notes
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Jul-2017 1 [***]
36929†
[***]
A Note1
[***] [***] [***] [***] [***]
Jul-2017 2 [***]
42558†,42559†
[***]
C Note1
[***] [***] [***] [***] [***]
Aug-
2017
3 [***]
36979,36930,36984
[***]
A Note1
[***] [***] [***] [***] [***]
Aug-
2017
3 [***]
42563,42566†,42567
[***]
C Note1
[***] [***] [***] [***] [***]
Sep-2017 1 [***]
36934
[***]
A Note1
[***] [***] [***] [***] [***]
Oct-
2017
1 [***]
42544
[***]
A
[***] [***] [***] [***] [***]
Oct-
2017
1 [***]
42570
[***]
C
[***] [***] [***] [***] [***]
Nov-
2017
1 [***]
36988†
[***]
A
[***] [***] [***] [***] [***]
Dec-
2017
1 [***]
42554†
[***]
C
[***] [***] [***] [***] [***]
Mar-
2018
1 [***]
36989†
[***]
A
[***] [***] [***] [***] [***]
Mar-
2018
1 [***]
42571
[***]
C
[***] [***] [***] [***] [***]
Apr-
2018
1 [***]
42546
[***]
A
[***] [***] [***] [***] [***]
Jun-2018 1 [***]
42572
[***]
C
[***] [***] [***] [***] [***]
Jun-2018 1 [***]
42547
[***]
A
[***] [***] [***] [***] [***]
Jul-2018 1 [***]
42556†
[***]
C
[***] [***] [***] [***] [***]
Aug-
2018
3 [***]
42548,37019,42549
[***]
A
[***] [***] [***] [***] [***]
Aug-
2018
1 [***]
42574
[***]
[***] [***] [***] [***] [***]
Aug-
2018
1 [***]
42575
[***]
[***] [***] [***] [***] [***]
Sep-2018 2 [***]
42573,42576
[***]
[***] [***] [***] [***] [***]
Dec-
2018
1 [***]
42577
[***]
[***] [***] [***] [***] [***]
Dec-
2018
4 [***]
37042,42550,42551,37043
[***]
A
[***] [***] [***] [***] [***]
Jul-2019 1 [***]
42633
[***]
[***] [***] [***] [***] [***]
Jul-2019 2 [***]
65437,65436
[***]
EOPEX
[***] [***] [***] [***] [***]
Aug-
2019
3 [***]
42634, 42637, 42641
[***]
[***] [***] [***] [***] [***]
Sep-2019 2 [***]
65471,65438
[***]
EOPEX
[***] [***] [***] [***] [***]
Oct-
2019
4 [***]
42646, 42647, 42661, 42662
[***]
[***] [***] [***] [***] [***]
Oct-2019 1 [***]
65439 [***] OPEX
[***] [***] [***] [***] [***]
SWA-PA-03729107813/108198/108732
BOEING PROPRIETARY
SA-10
Page 1
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block Notes
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Oct-
2019
1 [***]
65440
[***]
OPEX
[***] [***] [***] [***] [***]
Nov-
2019
1 [***]
42664
[***]
[***] [***] [***] [***] [***]
Nov-
2019
1 [***]
42536
[***]
A
[***] [***] [***] [***] [***]
Nov-
2019
1 [***]
65473
[***]
D
OPEX
[***] [***] [***] [***] [***]
Dec-
2019
1 [***]
42666
[***]
[***] [***] [***] [***] [***]
Dec-
2019
1 [***]
36722
[***]
B
[***] [***] [***] [***] [***]
Dec-
2019
1 [***]
42537
[***]
A
[***] [***] [***] [***] [***]
Feb-
2020
1 [***]
36727
[***]
B
[***] [***] [***] [***] [***]
Mar-
2020
2 [***]
42579,42580
[***]
[***] [***] [***] [***] [***]
Apr-
2020
1 [***]
42539
[***]
A
[***] [***] [***] [***] [***]
Apr-
2020
1 [***]
65441
[***]
OPEX
[***] [***] [***] [***] [***]
May-
2020
1 [***]
42669
[***]
[***] [***] [***] [***] [***]
May-
2020
1 [***]
42553
[***]
A
[***] [***] [***] [***] [***]
May-
2020
1 [***]
35970
[***]
B
[***] [***] [***] [***] [***]
Jun-2020 1 [***]
42607
[***]
[***] [***] [***] [***] [***]
Jun-2020 1 [***]
65442
[***]
OPEX
[***] [***] [***] [***] [***]
Jul-2020 1 [***]
42665
[***]
[***] [***] [***] [***] [***]
Jul-2020 1 [***]
42540
[***]
A
[***] [***] [***] [***] [***]
Jul-2020 2 [***]
65443,65444
[***]
OPEX
[***] [***] [***] [***] [***]
Aug-
2020
2 [***]
42672, 42673
[***]
[***] [***] [***] [***] [***]
Aug-
2020
1 [***]
42541
[***]
A
[***] [***] [***] [***] [***]
Aug-
2020
2 [***]
65445,65446
[***]
OPEX
[***] [***] [***] [***] [***]
Sep-
2020
3 [***]
42691, 42674, 42694
[***]
[***] [***] [***] [***] [***]
Sep-2020 1 [***]
33941
[***]
B
[***] [***] [***] [***] [***]
Sep-2020 3 [***]
65447,65448,65472
[***]
OPEX
[***] [***] [***] [***] [***]
Oct-
2020
1 [***]
42615
[***]
[***] [***] [***] [***] [***]
Oct-
2020
1 [***]
42543
[***]
A
[***] [***] [***] [***] [***]
Oct-
2020
1 [***]
65474
[***]
OPEX
[***] [***] [***] [***] [***]
Nov-
2020
2 [***]
42697, 42699
[***]
[***] [***] [***] [***] [***]
Nov-
2020
1 [***]
36733
[***]
B
[***] [***] [***] [***] [***]
Nov-
2020
1 [***]
65475
[***]
D
OPEX
[***] [***] [***] [***] [***]
Dec-
2020
1 [***]
42703
[***]
[***] [***] [***] [***] [***]
Dec-
2020
1 [***]
33940
[***]
B
[***] [***] [***] [***] [***]
Jan-2021 1 [***]
35974
[***]
B
[***] [***] [***] [***] [***]
Jan-2021 1 [***]
65450
[***]
D
OPEX
[***] [***] [***] [***] [***]
Jan-2021 1 [***]
65449
[***]
OPEX
[***] [***] [***] [***] [***]
Feb-
2021
1 [***]
65451
[***]
D
OPEX
[***] [***] [***] [***] [***]
Feb-
2021
1 [***]
[***]
OPEX
Note 3
[***] [***] [***] [***] [***]
SWA-PA-03729107813/108198/108732
BOEING PROPRIETARY
SA-10
Page 2
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block Notes
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Mar-
2021
1 [***]
42648
[***]
[***] [***] [***] [***] [***]
Mar-
2021
1 [***]
65452
[***]
OPEX
[***] [***] [***] [***] [***]
Apr-
2021
3 [***]
42649,42650,42651
[***]
[***] [***] [***] [***] [***]
Apr-
2021
1 [***]
65454
[***]
D
OPEX
[***] [***] [***] [***] [***]
Apr-
2021
1 [***]
65453
[***]
OPEX
[***] [***] [***] [***] [***]
May-
2021
3 [***]
42652,42653,42654
[***]
[***] [***] [***] [***] [***]
May-
2021
1 [***]
65455
[***]
D
OPEX
[***] [***] [***] [***] [***]
May-
2021
1 [***]
65456
[***]
OPEX
[***] [***] [***] [***] [***]
Jun-2021 3 [***]
42655,42656,42670
[***]
[***] [***] [***] [***] [***]
Jun-2021 1 [***]
65457
[***]
D
OPEX
[***] [***] [***] [***] [***]
Jul-2021 3 [***]
42657,42658,42671
[***]
[***] [***] [***] [***] [***]
Jul-2021 1 [***]
65460
[***]
D
OPEX
[***] [***] [***] [***] [***]
Jul-2021 2 [***]
65459,65458
[***]
OPEX
[***] [***] [***] [***] [***]
Jul-2021 1 [***]
[***]
OPEX Note
3
[***] [***] [***] [***] [***]
Aug-
2021
1 [***]
65461
[***]
D
OPEX
[***] [***] [***] [***] [***]
Aug-
2021
4 [***]
[***]
OPEX Note
3
[***] [***] [***] [***] [***]
Sep-2021 2 [***]
65463,65462
[***]
OPEX
[***] [***] [***] [***] [***]
Sep-
2021
2 [***]
[***]
OPEX Note
3
[***] [***] [***] [***] [***]
Oct-
2021
1 [***]
65466
[***]
D
OPEX
[***] [***] [***] [***] [***]
Oct-
2021
2 [***]
65465,65464
[***]
OPEX
[***] [***] [***] [***] [***]
Nov-
2021
1 [***]
65467
[***]
D
OPEX
[***] [***] [***] [***] [***]
Dec-
2021
1 [***]
65468
[***]
OPEX
[***] [***] [***] [***] [***]
Dec-
2021
2 [***]
[***]
OPEX Note
3
[***] [***] [***] [***] [***]
Jan-2022 1 [***]
65469
[***]
D
OPEX
[***] [***] [***] [***] [***]
Jan-2022 1 [***]
65470
[***]
OPEX
[***] [***] [***] [***] [***]
Mar-
2022
2 [***]
42678,42679
[***]
[***] [***] [***] [***] [***]
Apr-
2022
3 [***]
42680,42681,42688
[***]
[***] [***] [***] [***] [***]
Apr-
2022
1 [***]
[***]
OPEX Note
3
[***] [***] [***] [***] [***]
May-
2022
3 [***]
42682,42683,42684
[***]
[***] [***] [***] [***] [***]
Jun-2022 3 [***]
42685,42686,42687
[***]
[***] [***] [***] [***] [***]
Jul-2022 2 [***]
42689,42690
[***]
[***] [***] [***] [***] [***]
Jul-2022 3 [***]
[***]
OPEX Note
3
[***] [***] [***] [***] [***]
Aug-
2022
2 [***]
42693,42695
[***]
[***] [***] [***] [***] [***]
Aug-
2022
3 [***]
[***]
OPEX Note
3
[***] [***] [***] [***] [***]
Oct-
2022
2 [***]
[***]
OPEX Note
3
[***] [***] [***] [***] [***]
Dec-
2022
1 [***]
[***]
OPEX Note
3
[***] [***] [***] [***] [***]
Jan-2023 2 [***]
42560,42565 [***]
[***] [***] [***] [***] [***]
Feb-2023 2 [***]
42562,42564 [***]
[***] [***] [***] [***] [***]
SWA-PA-03729107813/108198/108732
BOEING PROPRIETARY
SA-10
Page 3
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block
Notes
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Mar-
2023
1 [***]
42557
[***]
[***] [***] [***] [***] [***]
Mar-
2023
1 [***]
36732
[***]
B
[***] [***] [***] [***] [***]
Apr-
2023
1 [***]
42555
[***]
[***] [***] [***] [***] [***]
Apr-
2023
1 [***]
38806
[***]
B
[***] [***] [***] [***] [***]
May-
2023
2 [***]
42594,42568
[***]
[***] [***] [***] [***] [***]
Jun-2023 1 [***]
42581
[***]
[***] [***] [***] [***] [***]
Jun-2023 1 [***]
37034
[***]
A
[***] [***] [***] [***] [***]
Jul-2023 2 [***]
42597,42582
[***]
[***] [***] [***] [***] [***]
Aug-
2023
1 [***]
42593
[***]
[***] [***] [***] [***] [***]
Aug-
2023
1 [***]
42552
[***]
A
[***] [***] [***] [***] [***]
Sep-2023 2 [***]
42601,42578
[***]
[***] [***] [***] [***] [***]
Oct-
2023
1 [***]
42605
[***]
[***] [***] [***] [***] [***]
Oct-
2023
1 [***]
42538
[***]
A
[***] [***] [***] [***] [***]
Nov-
2023
1 [***]
38815
[***]
B
[***] [***] [***] [***] [***]
Dec-
2023
1 [***]
42583
[***]
[***] [***] [***] [***] [***]
Jan-2024 3 [***]
42611,42584,42585
[***]
[***] [***] [***] [***] [***]
Feb-
2024
3 [***]
42612,42596,42599
[***]
[***] [***] [***] [***] [***]
Mar-
2024
3 [***]
38817,35968,35972
[***]
B
[***] [***] [***] [***] [***]
Apr-
2024
2 [***]
42617,42606
[***]
[***] [***] [***] [***] [***]
Apr-
2024
1 [***]
36736
[***]
B
[***] [***] [***] [***] [***]
May-
2024
3 [***]
42619,42622,42608
[***]
[***] [***] [***] [***] [***]
Jun-2024 1 [***]
42610
[***]
[***] [***] [***] [***] [***]
Jun-2024 1 [***]
42542
[***]
A
[***] [***] [***] [***] [***]
Jul-2024 2 [***]
35963,35967
[***]
B
[***] [***] [***] [***] [***]
Aug-
2024
2 [***]
42624,42626
[***]
[***] [***] [***] [***] [***]
Sep-2024 1 [***]
42630
[***]
[***] [***] [***] [***] [***]
Sep-2024 1 [***]
36730
[***]
B
[***] [***] [***] [***] [***]
Oct-
2024
2 [***]
42625,42636
[***]
[***] [***] [***] [***] [***]
Nov-
2024
1 [***]
42639
[***]
[***] [***] [***] [***] [***]
Nov-
2024
1 [***]
35971
[***]
B
[***] [***] [***] [***] [***]
Dec-
2024
2 [***]
42628,42640
[***]
[***] [***] [***] [***] [***]
Dec-
2024
1 [***]
35975
[***]
B
[***] [***] [***] [***] [***]
Jan-2025 2 [***]
38804,38805
[***]
B
[***] [***] [***] [***] [***]
Jan-
2025
2 [***]
[***]
OPEX Note 3
[***] [***] [***] [***] [***]
Feb-2025 1 [***]
42643 [***]
[***] [***] [***] [***] [***]
Feb-2025 1 [***]
36729 [***] B
[***] [***] [***] [***] [***]
Feb-
2025
2 [***]
[***]
OPEX Note 3
[***] [***] [***] [***] [***]
Mar- 2 [***]
42644,42645 [***]
[***] [***] [***] [***] [***]
2025
SWA-PA-03729107813/108198/108732
BOEING PROPRIETARY
SA-10
Page 4
Table 1A To
Purchase Agreement No. PA-03729
Aircraft Delivery, Description, Price and Advance Payments
737-8 Aircraft
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Manufacturer
Serial
Number**
Escalation
Factor
Aircraft
Block
Notes
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Mar-
2025
2 [***]
[***]
OPEX Note 3
[***] [***] [***] [***] [***]
Apr-
2025
2 [***]
42659,42660
[***]
[***] [***] [***] [***] [***]
Apr-
2025
2 [***]
[***]
OPEX Note 3
[***] [***] [***] [***] [***]
May-
2025
1 [***]
42663
[***]
[***] [***] [***] [***] [***]
May-
2025
2 [***]
[***]
OPEX Note 3
[***] [***] [***] [***] [***]
Jun-2025 1 [***]
42667
[***]
[***] [***] [***] [***] [***]
Jun-
2025
2 [***]
[***]
OPEX Note 3
[***] [***] [***] [***] [***]
Jul-2025 1 [***]
42668
[***]
[***] [***] [***] [***] [***]
Jul-2025 2 [***]
[***]
OPEX Note 3
[***] [***] [***] [***] [***]
Aug-
2025
1 [***]
42675
[***]
[***] [***] [***] [***] [***]
Aug-
2025
2 [***]
[***]
OPEX Note 3
[***] [***] [***] [***] [***]
Sep-2025 2 [***]
42676,42677
[***]
[***] [***] [***] [***] [***]
Sep-
2025
1 [***]
[***]
OPEX Note 3
[***] [***] [***] [***] [***]
Oct-
2025
2 [***]
42692,42696
[***]
[***] [***] [***] [***] [***]
Oct-
2025
1 [***]
[***]
OPEX Note 3
[***] [***] [***] [***] [***]
Nov-
2025
2 [***]
42698,42700
[***]
[***] [***] [***] [***] [***]
Nov-
2025
1 [***]
[***]
OPEX Note 3
[***] [***] [***] [***] [***]
Dec-
2025
2 [***]
42701,42702
[***]
[***] [***] [***] [***] [***]
Dec-
2025
1 [***]
[***]
OPEX Note 3
[***] [***] [***] [***] [***]
Total:
250
* [***]
** Manufacturer Serial Numbers (MSN) are for reference only and are subject to change.
† [***]
Notes:
(1) [***]
(2) [***]
(3) [***]
SWA-PA-03729107813/108198/108732
BOEING PROPRIETARY
SA-10
Page 5
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Airframe Model/MTOW: 737-8 181,200pounds Detail Specification: D019A008-P (5/1/2017) 4Q16External
Fcst
Engine Model/Thrust: CFMLEAP-1B28(1) 28,800pounds Airframe Price Base Year/Escalation
Formula:
Jul-11 ECI-MFG/CPI
Airframe Price: [***] Engine Price Base Year/Escalation
Formula:
N/A N/A
Optional Features: [***]
Sub-Total of Airframe and Features: [***] Airframe Escalation Data:
Engine Price (Per Aircraft): [***] Base Year Index (ECI): [***]
Aircraft Basic Price (Excluding BFE/SPE): [***] Base Year Index (CPI): [***]
Buyer Furnished Equipment (BFE)
Estimate:
[***]
Seller Purchased Equipment (SPE) Estimate: [***]
Non-Refundable Deposit/Aircraft at Def
Agreemt:
[***]
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At Signing
[***]
24 Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Mar-
2022
1 [***] [***] [***] [***] [***] [***] [***]
Apr-
2022
1
[***] [***]
D [***] [***] [***] [***] [***]
May-
2022
1
[***] [***]
[***] [***] [***] [***] [***]
Jun-2022 1
[***] [***]
D [***] [***] [***] [***] [***]
Jul-2022 1
[***] [***]
[***] [***] [***] [***] [***]
Jul-2022 1
[***] [***]
D [***] [***] [***] [***] [***]
Aug-
2022
1
[***] [***]
[***] [***] [***] [***] [***]
Sep-
2022
1
[***] [***]
D [***] [***] [***] [***] [***]
Oct-
2022
1
[***] [***]
[***] [***] [***] [***] [***]
Oct-
2022
1
[***] [***]
D [***] [***] [***] [***] [***]
Nov-
2022
1
[***] [***]
[***] [***] [***] [***] [***]
Nov-
2022
1
[***] [***]
D [***] [***] [***] [***] [***]
Dec-
2022
1
[***] [***]
[***] [***] [***] [***] [***]
Dec-2022 1
[***] [***]
D
[***] [***] [***] [***] [***]
SWA-PA-03729-LA1106474107813.TXT
BOEING PROPRIETARY
SA-10
Page 1
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At Signing
[***]
24
Mos.
[***]
21/18/12/9/6 Mos.
[***]
Total
[***]
Jan-2023 1
[***] [***]
[***] [***] [***] [***] [***]
Jan-2023 1
[***] [***]
D [***] [***] [***] [***] [***]
Feb-
2023
1
[***] [***]
[***] [***] [***] [***] [***]
Feb-
2023
1
[***] [***]
D [***] [***] [***] [***] [***]
Mar-
2023
1
[***] [***]
[***] [***] [***] [***] [***]
Mar-
2023
1
[***] [***]
D [***] [***] [***] [***] [***]
Apr-
2023
1
[***] [***]
[***] [***] [***] [***] [***]
Apr-
2023
1
[***] [***]
D [***] [***] [***] [***] [***]
May-
2023
1
[***] [***]
[***] [***] [***] [***] [***]
May-
2023
1
[***] [***]
D [***] [***] [***] [***] [***]
Jun-2023 1
[***] [***]
[***] [***] [***] [***] [***]
Jun-2023 1
[***] [***]
D [***] [***] [***] [***] [***]
Jul-2023 1
[***] [***]
[***] [***] [***] [***] [***]
Aug-
2023
1
[***] [***]
D [***] [***] [***] [***] [***]
Aug-
2023
1
[***] [***]
[***] [***] [***] [***] [***]
Sep-
2023
1
[***] [***]
D [***] [***] [***] [***] [***]
Sep-
2023
1
[***] [***]
[***] [***] [***] [***] [***]
Oct-
2023
1
[***] [***]
D [***] [***] [***] [***] [***]
Oct-
2023
1
[***] [***]
[***] [***] [***] [***] [***]
Nov-
2023
1
[***] [***]
D [***] [***] [***] [***] [***]
[***] [***]
Nov-
2023
1 [***] [***] [***] [***] [***]
Dec-
2023
1
[***] [***]
D [***] [***] [***] [***] [***]
Dec-
2023
1
[***] [***]
[***] [***] [***] [***] [***]
Jan-2024 1
[***] [***]
D [***] [***] [***] [***] [***]
Jan-2024 1
[***] [***]
[***] [***] [***] [***] [***]
SWA-PA-03729-LA1106474107813.TXT
BOEING PROPRIETARY
SA-10
Page 2
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Feb-
2024
1
[***] [***]
D [***] [***] [***] [***] [***]
Feb-
2024
1
[***] [***]
[***] [***] [***] [***] [***]
Mar-
2024
1
[***] [***]
D [***] [***] [***] [***] [***]
Mar-
2024
1
[***] [***]
[***] [***] [***] [***] [***]
Apr-
2024
1
[***] [***]
D [***] [***] [***] [***] [***]
Apr-
2024
1
[***] [***]
[***] [***] [***] [***] [***]
May-
2024
1
[***] [***]
D [***] [***] [***] [***] [***]
May-
2024
1
[***] [***]
[***] [***] [***] [***] [***]
Jun-2024 1
[***] [***]
D [***] [***] [***] [***] [***]
Jun-2024 1
[***] [***]
[***] [***] [***] [***] [***]
Jul-2024 1
[***] [***]
D [***] [***] [***] [***] [***]
Aug-
2024
1
[***] [***]
[***] [***] [***] [***] [***]
Aug-
2024
1
[***] [***]
D [***] [***] [***] [***] [***]
Sep-
2024
1
[***] [***]
[***] [***] [***] [***] [***]
Sep-
2024
1
[***] [***]
D [***] [***] [***] [***] [***]
Oct-
2024
1
[***] [***]
[***] [***] [***] [***] [***]
Oct-
2024
1
[***] [***]
D [***] [***] [***] [***] [***]
Nov-
2024
1
[***] [***]
[***] [***] [***] [***] [***]
Nov-
2024
1
[***] [***]
D [***] [***] [***] [***] [***]
[***] [***]
Dec-
2024
2 [***] [***] [***] [***] [***]
Jan-2025 3
[***] [***]
[***] [***] [***] [***] [***]
Feb-
2025
3
[***] [***]
[***] [***] [***] [***] [***]
Mar-2025 3
[***] [***]
[***] [***] [***] [***] [***]
Apr-2025 3
[***] [***]
[***] [***] [***] [***] [***]
May-2025 3
[***] [***]
[***] [***] [***] [***] [***]
SWA-PA-03729-LA1106474107813.TXT
BOEING PROPRIETARY
SA-10
Page 3
Attachment 1 To
Letter Agreement No. LA 1106474
Option Aircraft Delivery, Description, Price and Advance Payments
Delivery
Date*
Number
of
Aircraft
Escalation
Factor
(Airframe)
Option
Exercise Date
Deadline
Aircraft
Block
Escalation
Estimate
Adv
Payment
Base
Price
Per
A/P
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
Delivery):
At
Signing
[***]
24
Mos.
[***]
21/18/12/9/6
Mos.
[***]
Total
[***]
Jun-2025 3
[***] [***]
[***] [***] [***] [***] [***]
Jul-2025 3
[***] [***]
[***] [***] [***] [***] [***]
Aug-
2025
3
[***] [***]
[***] [***] [***] [***] [***]
Sep-2025 3
[***] [***]
[***] [***] [***] [***] [***]
Oct-
2025
3
[***] [***]
[***] [***] [***] [***] [***]
Nov-
2025
3
[***] [***]
[***] [***] [***] [***] [***]
Dec-
2025
3
[***] [***]
[***] [***] [***] [***] [***]
Jan-2026 1
[***] [***]
[***] [***] [***] [***] [***]
Feb-2026 1
[***] [***]
[***] [***] [***] [***] [***]
Mar-
2026
1
[***] [***]
[***] [***] [***] [***] [***]
Apr-
2026
1
[***] [***]
[***] [***] [***] [***] [***]
May-
2026
2
[***] [***]
[***] [***] [***] [***] [***]
Jun-2026 2
[***] [***]
[***] [***] [***] [***] [***]
Jul-2026 1
[***] [***]
[***] [***] [***] [***] [***]
Aug-
2026
2
[***] [***]
[***] [***] [***] [***] [***]
Sep-2026 2
[***] [***]
[***] [***] [***] [***] [***]
Oct-
2026
2
[***] [***]
[***] [***] [***] [***] [***]
Nov-
2026
2
[***] [***]
[***] [***] [***] [***] [***]
Dec-
2026
2
[***] [***]
[***] [***] [***] [***] [***]
Total: 115
* [***]
Note:
(1) [***]
SWA-PA-03729-LA1106474107813.TXT
BOEING PROPRIETARY SA-10
Page 4
SWA-PA-03729-LA-1808800
Southwest Airlines Co.
2702 Love Field Drive
Dallas, Texas 75235
Attention: Jon Stephens, Director - Fleet Transactions
Subject: [***]
Reference: A) Purchase Agreement No. PA-03729 (Purchase Agreement) between The
Boeing Company (Boeing) and Southwest Airlines Co. (Customer) relating to
Model 737-8 aircraft (Aircraft)
B) [***]
This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not
defined in this Letter Agreement will have the same meaning as in the Purchase Agreement.
1. [***]
2. [***]
3. [***]
4. Assignment.
SWA-PA-03729-LA-1808800
[***]
BOEING PROPRIETARY
LA Page 1
Unless otherwise noted herein,[***] described in this Letter Agreement is provided [***] in consideration of Customer taking
delivery of the Aircraft [***] . This Letter Agreement cannot be assigned, in whole or in part, without the prior written consent of
Boeing.
5. Confidentiality.
Customer understands and agrees that the information contained herein represents confidential business information [***] .
Customer agrees to limit the disclosure of its contents to employees of Customer with a need to know the contents for purposes of
helping Customer perform its obligations under the Purchase Agreement and who understand they are not to disclose its contents
to any other person or entity without the prior written consent of Boeing. [***]
[***]
Very truly yours,
THE BOEING COMPANY
By
/s/ Kyle Kersavage
Its Attorney-In-Fact
ACCEPTED AND AGREED TO this
Date: 10 DECEMBER 2018
SOUTHWEST AIRLINES CO.
By /s/ Chris Monroe
Its SVP Finance and Treasurer
SWA-PA-03729-LA-1808800
[***]
BOEING PROPRIETARY
LA Page 2
Exhibit 21
Southwest Airlines Co.
Subsidiaries
Name 
State or Other Jurisdiction of Incorporation
or Organization
AirTranAirways717LeasingCorporation Delaware
AirTranAirways,Inc. Delaware
AirTranHoldings,LLC Texas
SouthwestJetFuelCo.  Texas
TripleCrownAssuranceCo.  Texas
Exhibit 23
ConsentofIndependentRegisteredPublicAccountingFirm
WeconsenttotheincorporationbyreferenceinthefollowingRegistrationStatements(FormS-8Nos.33-40652,33-40653,333-67627,
333-67631,333-46560,333-98761,333-100862,333-139362,333-146891,333-160762,333-166980,333-190268,333-205979,Form
S-3Nos.333-158397,333-180969,333-203761,333-222963,333-248077,333-252849,andFormS-4No.333-170742)ofSouthwest
AirlinesCo.andintherelatedProspectusesofourreportsdatedFebruary4,2022,withrespecttotheconsolidatedfinancialstatements
ofSouthwestAirlinesCo.,andtheeffectivenessofinternalcontroloverfinancialreportingofSouthwestAirlinesCo.,includedinthis
AnnualReport(Form10-K)fortheyearendedDecember31,2021.
/s/Ernst&Young,LLP
Dallas,Texas
February4,2022
Exhibit31.1
CERTIFICATION
I,RobertE.Jordan,ChiefExecutiveOfficerofSouthwestAirlinesCo.,certifythat:
1.IhavereviewedthisannualreportonForm10-KfortheyearendedDecember31,2021ofSouthwestAirlinesCo.;
2.Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethestatements
made,inlightofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport;
3.Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthefinancial
condition,resultsofoperationsandcashflowsoftheregistrantasof,andfor,theperiodspresentedinthisreport;
4.Theregistrant’sothercertifyingofficer(s)andIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures(asdefinedinExchange
ActRules13a-15(e)and15d-15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeActRules13a-15(f)and15d-15(f))fortheregistrantand
have:
(a)designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandprocedurestobedesignedunderoursupervision,toensurethat
materialinformationrelatingtotheregistrant,includingitsconsolidatedsubsidiaries,ismadeknowntousbyotherswithinthoseentities,particularlyduringtheperiod
inwhichthisreportisbeingprepared;
(b)designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobe
designedunderoursupervision,toprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternal
purposesinaccordancewithgenerallyacceptedaccountingprinciples;
(c)evaluatedtheeffectivenessoftheregistrant’sdisclosurecontrolsandproceduresandpresentedinthisreportourconclusionsabouttheeffectivenessofthe
disclosurecontrolsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedonsuchevaluation;and
(d)disclosedinthisreportanychangeintheregistrant’sinternalcontroloverfinancialreportingthatoccurredduringtheregistrant’smostrecentfiscalquarter
(theregistrant’sfourthfiscalquarterinthecaseofanannualreport)thathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,theregistrant’sinternal
controloverfinancialreporting;and
5.Theregistrant'sothercertifyingofficer(s)andIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancialreporting,tothe
registrant'sauditorsandtheauditcommitteeoftheregistrant'sboardofdirectors(orpersonsperformingtheequivalentfunctions):
(a)allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhicharereasonablylikelyto
adverselyaffecttheregistrant’sabilitytorecord,process,summarizeandreportfinancialinformation;and
(b)anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheregistrant’sinternalcontroloverfinancial
reporting.
Date:February4,2022
By:
/s/RobertE.Jordan
RobertE.Jordan
ChiefExecutiveOfficer
(PrincipalExecutiveOfficer)
Exhibit31.2
CERTIFICATION
I,TammyRomo,SeniorVicePresidentFinance&ChiefFinancialOfficerofSouthwestAirlinesCo.,certifythat:
1.IhavereviewedthisannualreportonForm10-KfortheyearendedDecember31,2021,ofSouthwestAirlinesCo.;
2.Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethestatements
made,inlightofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport;
3.Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthefinancial
condition,resultsofoperationsandcashflowsoftheregistrantasof,andfor,theperiodspresentedinthisreport;
4.Theregistrant’sothercertifyingofficer(s)andIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures(asdefinedinExchange
ActRules13a-15(e)and15d-15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeActRules13a-15(f)and15d-15(f))fortheregistrantand
have:
(a)designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandprocedurestobedesignedunderoursupervision,toensurethat
materialinformationrelatingtotheregistrant,includingitsconsolidatedsubsidiaries,ismadeknowntousbyotherswithinthoseentities,particularlyduringtheperiod
inwhichthisreportisbeingprepared;
(b)designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobe
designedunderoursupervision,toprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternal
purposesinaccordancewithgenerallyacceptedaccountingprinciples;
(c)evaluatedtheeffectivenessoftheregistrant’sdisclosurecontrolsandproceduresandpresentedinthisreportourconclusionsabouttheeffectivenessofthe
disclosurecontrolsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedonsuchevaluation;and
(d)disclosedinthisreportanychangeintheregistrant’sinternalcontroloverfinancialreportingthatoccurredduringtheregistrant’smostrecentfiscalquarter
(theregistrant’sfourthfiscalquarterinthecaseofanannualreport)thathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,theregistrant’sinternal
controloverfinancialreporting;and
5.Theregistrant'sothercertifyingofficer(s)andIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancialreporting,tothe
registrant'sauditorsandtheauditcommitteeoftheregistrant'sboardofdirectors(orpersonsperformingtheequivalentfunctions):
(a)allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhicharereasonablylikelyto
adverselyaffecttheregistrant’sabilitytorecord,process,summarizeandreportfinancialinformation;and
(b)anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheregistrant’sinternalcontroloverfinancial
reporting.
Date:February4,2022
By: /s/TammyRomo
TammyRomo
ExecutiveVicePresident&ChiefFinancialOfficer
(PrincipalFinancial&AccountingOfficer)
Exhibit32
CERTIFICATIONPURSUANTTO18U.S.C.SECTION1350,
ASADOPTEDPURSUANTTO
SECTION906OFTHESARBANES-OXLEYACTOF2002
InconnectionwiththeAnnualReportonForm10-KofSouthwestAirlinesCo.(the“Company”)fortheperiodendedDecember31,2021,asfiledwiththe
SecuritiesandExchangeCommission(the“Report”),RobertE.Jordan,ChiefExecutiveOfficeroftheCompany,andTammyRomo,SeniorVicePresidentFinance&
ChiefFinancialOfficeroftheCompany,eachcertifypursuantto18U.S.C.Section1350,asadoptedpursuanttoSection906oftheSarbanes-OxleyActof2002,that:
(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.
Date:February4,2022
By: /s/RobertE.Jordan
RobertE.Jordan
ChiefExecutiveOfficer
(PrincipalExecutiveOfficer)

By: /s/TammyRomo
TammyRomo
ExecutiveVicePresident&ChiefFinancialOfficer
(PrincipalFinancial&AccountingOfficer)
