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 sale and leaseback agreement with BBAM for 36 Boeing 737-800 aircraft. The aircraft will be owned and leased back to Southwest through Incline Aviation III, BBAM's third aviation investment fund.

The transaction is part of Southwest's 'Southwest. Even Better.' transformation plan announced in September at Investor Day. The deal aims to monetize surplus value from the existing fleet to generate significant cash, which will be used to drive fleet modernization and offset capital expenditures in support of the airline's capital allocation strategy.

Positive

• Generates significant cash through asset monetization
• Supports fleet modernization without immediate capital outlay
• Improves capital allocation flexibility
• Maintains operational consistency with existing Boeing 737 fleet

Negative

• Increases long-term lease obligations
• Reduces owned aircraft assets
• Creates recurring lease expenses

News Market Reaction

-2.81%

1 alert

-2.81% News Effect

On the day this news was published, LUV declined 2.81%, reflecting a moderate negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

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.

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

For further information, please contact:

BBAM Contact:
Sabah Sulaiman, BBAM Director of Corporate Administration
Email: sabah.sulaiman@bbam.com
Phone: +1-415-848-5481

Southwest Airlines Investor Contact:
Southwest Airlines Investor Relations
214-792-4415

Southwest Airlines Media Contact:
Southwest Airlines Media Relations
214-792-4847
swamedia@wnco.com

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/southwest-airlines-and-babcock--brown-aircraft-management-bbam-announce-the-sale-and-leaseback-of-36-aircraft-302344319.html

SOURCE BBAM US LP

FAQ

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

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

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

The transaction aims to generate significant cash for fleet modernization and offset capital expenditures as part of Southwest's capital allocation strategy.

How does the sale-leaseback deal fit into Southwest Airlines' (LUV) broader strategy?

The deal is part of Southwest's 'Southwest. Even Better.' transformational plan introduced in September at Investor Day.

Which investment fund will own the Southwest Airlines (LUV) aircraft under the sale-leaseback agreement?

The aircraft will be owned by Incline Aviation III, BBAM's third flagship aviation investment fund series.