Southwest Airlines (NYSE: LUV) expands secured term loans to $1.5B total
Rhea-AI Filing Summary
Southwest Airlines Co. entered into an amendment to its senior secured term loan facility, adding $1.0 billion of incremental term loans and increasing total outstanding term loans under the facility to $1.5 billion.
The amended term loans mature on March 11, 2029, bear interest on substantially the same terms as the original agreement, and may be prepaid at any time without premium or penalty, although repaid amounts cannot be reborrowed. The obligations are secured by a pool of aircraft and related assets, subject to a minimum collateral coverage ratio and flexibility to add, remove, or replace collateral if that ratio is maintained.
The amendment also updates the uncommitted incremental feature to permit up to an additional $1.0 billion of future incremental term loan commitments under the same credit agreement, while the company’s existing revolving credit facility remains unchanged.
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Insights
Southwest adds $1.0B secured term debt, extending funding flexibility to 2029.
Southwest Airlines Co. has expanded its senior secured term loan facility with $1.0 billion of incremental term loans, bringing total term loans to $1.5 billion. The debt is secured by aircraft and related assets and shares terms with the existing facility.
The loans mature on March 11, 2029 and can be prepaid without penalty, which offers flexibility if cash flows or refinancing conditions improve. A revised uncommitted incremental feature allows up to an additional $1.0 billion of future term loan commitments, potentially increasing leverage depending on usage.
Credit risk centers on maintaining the required collateral coverage ratio over time, since the facility is secured by aircraft whose values can change. Future company filings should clarify the extent to which the remaining incremental capacity is utilized and how that interacts with the unchanged revolving credit facility.
8-K Event Classification
Key Figures
Key Terms
Term Loan Facility financial
incremental term loans financial
collateral coverage ratio financial
off-balance sheet arrangement financial
senior secured term loan credit facility financial
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Item 1.01. Entry into a Material Definitive Agreement.
The information included pursuant to Item 2.03 is incorporated by reference into this Item 1.01.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On May 19, 2026, Southwest Airlines Co. (the “Company”) entered into that certain Increase Joinder Agreement No. 1 and First Amendment to Credit Agreement (the “Increase Joinder”) with the lenders party thereto and BNP Paribas, in its separate capacity as administrative and collateral agent for the lenders (the “Agent”).
The Increase Joinder amends that certain Term Loan Credit Agreement, dated March 11, 2026 (the “Original Credit Agreement”, and the Original Credit Agreement, as amended by the Increase Joinder, the “Amended Credit Agreement”), which established a senior secured term loan credit facility (the “Term Loan Facility”) and initial term loans in an original principal amount of $500 million. The Increase Joinder provides for the extension of additional credit to the Company in the form of incremental term loans in an aggregate principal amount equal to $1.0 billion (the “First Incremental Term Loans” and, together with the existing term loans under the Original Credit Agreement, the “Term Loans”). Additionally, the Increase Joinder amends the uncommitted incremental term loan feature under the Original Credit Agreement to allow up to $1.0 billion in incremental term loan commitments to be established from time to time after the Increase Joinder effective date in accordance with the terms and conditions set forth in the Amended Credit Agreement.
The Term Loans and related obligations mature in full on March 11, 2029, and the Company has the right at any time to prepay the Term Loans, in whole or in part, without premium or penalty, upon at least three business days’ prior written notice to the Agent. Amounts prepaid under the Amended Credit Agreement may not be reborrowed.
As of the date hereof, after giving effect to the Increase Joinder and the incurrence of the First Incremental Term Loans, the aggregate outstanding principal amount of Term Loans under the Amended Credit Agreement is $1.5 billion. Generally, amounts outstanding under the Amended Credit Agreement bear interest at the same interest rates described in the Original Credit Agreement.
The terms of the First Incremental Term Loans are substantially the same as the other existing Term Loans under the Original Credit Agreement with respect to the interest rate, prepayment terms, maturity, representations, warranties, covenants, and events of default. The Term Loans and other obligations under the Amended Credit Agreement are secured by a grant of a security interest in certain aircraft and related assets serving as collateral under the Original Credit Agreement, as well as additional aircraft and related assets added to the collateral pool in connection with the Increase Joinder, with a minimum collateral coverage ratio requirement. The Company is permitted to supplement, replace or remove assets included in the collateral pool, subject to certain conditions including satisfaction of the collateral coverage ratio. The Company may also request the release of liens on collateral pool assets, provided that the collateral coverage ratio is satisfied
through remaining collateral, loan prepayment, and/or the addition of replacement collateral. Amounts outstanding under the Term Loan Facility may be accelerated upon the occurrence of an event of default. The Company’s existing revolving credit facility was not amended in connection with the entry into the Amended Credit Agreement.
The foregoing description of the Increase Joinder does not purport to be complete and is qualified in its entirety by reference to the text of the Increase Joinder, a copy of which will be filed with the Company’s Quarterly Report for the fiscal quarter ending June 30, 2026, and the previously filed Original Credit Agreement, which was filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, each of which is incorporated by reference into this Item 2.03.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SOUTHWEST AIRLINES CO. | ||||||
| May 19, 2026 | By: | /s/ Tom Doxey | ||||
| Tom Doxey | ||||||
| Executive Vice President & Chief Financial Officer (Principal Financial Officer) | ||||||