SOUTHWEST AIRLINES AND BABCOCK & BROWN AIRCRAFT MANAGEMENT ("BBAM") ANNOUNCE THE SALE AND LEASEBACK OF 36 AIRCRAFT

Rhea-AI Summary

Southwest Airlines (NYSE: LUV) has announced a significant sale and leaseback agreement with BBAM for 36 Boeing 737-800 aircraft. The aircraft will be owned and leased back to Southwest through BBAM's Incline Aviation III investment fund.

This strategic transaction is part of Southwest's 'Southwest. Even Better.' transformation plan unveiled in September. According to Tammy Romo, Southwest's EVP and CFO, the deal aims to monetize surplus value from their existing Boeing 737 fleet, generating substantial cash to support fleet modernization and offset capital expenditures in line with their capital allocation strategy.

The partnership involves BBAM, a major aircraft lessor managing over 500 aircraft and serving more than 100 airline customers across 50+ countries. Southwest Airlines, which carried over 137 million customers in 2023, operates at 117 airports across 11 countries with more than 73,000 employees.

Positive

• Strategic monetization of existing fleet assets to generate significant cash
• Support for fleet modernization program
• Partnership with major global aircraft lessor enhancing financial flexibility

Negative

• Reduction in directly owned aircraft assets
• New lease obligations adding to long-term financial commitments

News Market Reaction – LUV

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In the trading session that priced this news, LUV declined 2.81%, reflecting a moderate negative market reaction.

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DALLAS, Jan. 7, 2025 /PRNewswire/ -- Southwest Airlines Co. (NYSE: LUV) and BBAM today announced the sale and leaseback of 36 Boeing 737-800 aircraft. The aircraft will be owned and leased to Southwest Airlines by Incline Aviation III, the third in BBAM's flagship aviation investment fund series.

Steve Zissis, President and CEO of BBAM, said: "We are excited to partner with Southwest Airlines, one of the world's most admired and awarded airlines, on this landmark sale-leaseback transaction. The transaction underscores BBAM's commitment to delivering tailored fleet financing solutions and certainty of execution to our airline partners. We look forward to a long and successful relationship with Southwest Airlines."

Tammy Romo, Executive Vice President and CFO of Southwest Airlines, said: "This transaction is part of our 'Southwest. Even Better.' transformational plan introduced in September at Investor Day. By opportunistically monetizing surplus value from a portion of our existing all-Boeing 737 fleet, Southwest is generating significant cash to drive fleet modernization and offset capital expenditures in support of our capital allocation strategy. We are very pleased to partner with BBAM, one of the world's leading aircraft lessors, on this transaction."

For further information regarding this transaction, please refer to the Southwest Airlines Form 8-K filed with the SEC today.

About BBAM

BBAM is one of the world's largest and longest standing aircraft lessors providing over 100 airline customers in more than 50 countries with fleet and financing solutions, and the only significant manager in its sector focused exclusively on generating investment returns on third party capital. With more than 500 aircraft under management, BBAM employs over 150 professionals globally with offices in Dallas, San Francisco, Puerto Rico, Tokyo, Singapore, Zurich, and Dublin. BBAM is a full-service lessor and maintains its own in-house capabilities encompassing aircraft origination, disposition, lease marketing, technical maintenance, regulatory compliance, capital markets activity, tax structuring, legal, contracts and finance, for all asset types and strategies. Learn more by visiting www.bbam.com.

About Southwest Airlines Co.

Southwest Airlines Co. operates one of the world's most admired and awarded airlines, offering its one-of-a-kind value and Hospitality at 117 airports across 11 countries. Southwest took flight in 1971 to democratize the sky through friendly, reliable, and low-cost air travel and now carries more air travelers flying nonstop within the United States than any other airline¹. By empowering its more than 73,000² People to deliver unparalleled Hospitality, the maverick airline cherishes a passionate loyalty among more than 137 million Customers carried in 2023. Southwest leverages a unique legacy and mission to serve communities around the world including harnessing the power of its People and Purpose to put communities at the Heart of its success. Learn more by visiting Southwest.com/citizenship.

¹Based on U.S. Dept. of Transportation quarterly Airline Origin & Destination Survey since Q1 2021
²Fulltime-equivalent active Employees

View original content:https://www.prnewswire.com/news-releases/southwest-airlines-and-babcock--brown-aircraft-management-bbam-announce-the-sale-and-leaseback-of-36-aircraft-302343811.html

SOURCE Southwest Airlines Co.

FAQ

How many aircraft are involved in Southwest Airlines' (LUV) sale and leaseback deal with BBAM?

Southwest Airlines' sale and leaseback deal with BBAM involves 36 Boeing 737-800 aircraft.

What is the purpose of Southwest Airlines' (LUV) sale and leaseback transaction in 2025?

The transaction aims to monetize surplus value from Southwest's existing fleet, generate cash for fleet modernization, and offset capital expenditures as part of their 'Southwest. Even Better.' transformation plan.

How does the 2025 BBAM deal align with Southwest Airlines' (LUV) strategic plans?

The deal aligns with Southwest's 'Southwest. Even Better.' transformation plan announced in September, supporting their capital allocation strategy and fleet modernization efforts.

What type of aircraft are included in Southwest Airlines' (LUV) 2025 sale and leaseback agreement?

The sale and leaseback agreement includes Boeing 737-800 aircraft from Southwest's existing fleet.