Southwest Airlines (LUV) secures new $2B revolver with potential increase to $3B
Rhea-AI Filing Summary
Southwest Airlines Co. entered into a new $2 billion five-year revolving credit facility with a syndicate of lenders, replacing its prior facility dated August 3, 2016, which had been scheduled to expire on August 4, 2028. The new Revolving Credit Agreement includes an uncommitted accordion feature that could increase total commitments to $3 billion, subject to incremental lender commitments. As of the agreement date, no borrowings are outstanding. Borrowings bear interest at either the Term SOFR Rate (subject to a 1.00% floor) plus a margin of 0.875%–1.625%, or the Alternate Base Rate plus a margin of 0.000%–0.625%, depending on the Company’s Index Debt Rating. The facility is supported by a lien-free pool of specified aircraft and related assets that must maintain an appraised value of at least 1.25 times the total commitments and includes a financial covenant requiring a Coverage Ratio of 1.25 to 1.00, with a one-time option to reduce this to 0.80 to 1.00 for two consecutive fiscal quarters. The facility matures on August 10, 2031, with up to two optional one-year maturity extensions, subject to lender consent.
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8-K Event Classification
4 items: 1.01, 1.02, 2.03, 9.01
4 items
Item 1.01
Entry into a Material Definitive Agreement
Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 1.02
Termination of a Material Definitive Agreement
Business
A significant contract was terminated, which may affect business operations or revenue.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
Financial
The company incurred a new significant debt or off-balance-sheet obligation.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Revolving credit facility size: $2,000,000,000
Accordion feature maximum size: $3,000,000,000
Term SOFR margin range: 0.875%–1.625% per annum
+5 more
8 metrics
Revolving credit facility size
$2,000,000,000
Commitment under new five-year Revolving Credit Agreement
Accordion feature maximum size
$3,000,000,000
Potential increased total commitments under uncommitted accordion
Term SOFR margin range
0.875%–1.625% per annum
Applicable margin on Term SOFR loans based on Index Debt Rating
Alternate Base Rate margin range
0.000%–0.625% per annum
Applicable margin on Alternate Base Rate loans
Term SOFR floor
1.00% per annum
Minimum Term SOFR Rate applied to SOFR-based loans
Collateral Coverage Test multiple
1.25 times
Minimum appraised value of lien-free aircraft assets vs total commitments
Coverage Ratio covenant
1.25 to 1.00
Required Coverage Ratio, with option to reduce to 0.80 to 1.00 for two quarters
Facility maturity date
August 10, 2031
Stated maturity of the Revolving Credit Agreement
Key Terms
Revolving Credit Agreement, Term SOFR Rate, Alternate Base Rate, accordion feature, +2 more
6 terms
Revolving Credit Agreement financial
"entered into a new $2 billion five-year revolving credit facility agreement (the “Revolving Credit Agreement”)"
A revolving credit agreement is a flexible loan arrangement where a borrower can borrow, repay, and borrow again up to a set limit, similar to a credit card. It matters because it gives businesses or individuals quick access to funds whenever needed, helping manage cash flow and cover expenses without applying for a new loan each time.
Term SOFR Rate financial
"either the Term SOFR Rate for designated interest periods selected by the Company"
Term SOFR rate is a forward-looking interest rate for a set period (for example one or three months) based on the overnight cost of borrowing cash using Treasury securities as collateral. Think of it as a quoted, agreed-upon lending rate for a future interval, like locking in the expected short-term borrowing cost ahead of time. Investors care because it is used to price loans, bonds and derivatives as a transparent replacement for older benchmarks, affecting interest payments and valuation.
Alternate Base Rate financial
"or the Alternate Base Rate, plus an applicable margin ranging"
accordion feature financial
"has an uncommitted accordion feature that would allow the Company"
An accordion feature is a clause in a loan or financing agreement that allows a company to expand the size of a credit line or the amount of securities available under the same contract without drafting a completely new deal. Like a suitcase that can be extended to hold more items, it gives a company quick flexibility to raise extra money, which can help fund growth but may increase debt or dilute existing shareholders—so investors watch it for changes in risk and ownership.
Collateral Coverage Test financial
"includes a Collateral Coverage Test that requires that a lien-free pool"
Coverage Ratio financial
"includes a financial covenant that requires the Company to maintain a Coverage Ratio of 1.25 to 1.00"
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
What new credit facility did Southwest Airlines (LUV) enter into?
Southwest Airlines entered into a new $2 billion five-year revolving credit facility with a syndicate of lenders. It replaces a prior facility and provides committed borrowing capacity through August 10, 2031, subject to covenant compliance and customary terms.
How large can Southwest Airlines’ (LUV) revolving credit facility become?
The Revolving Credit Agreement includes an uncommitted accordion feature that can increase total commitments to up to $3 billion. Any increase depends on securing incremental lender commitments and meeting the agreement’s conditions.
What are the interest rates on Southwest Airlines’ (LUV) new revolving credit facility?
Borrowings bear interest at the Term SOFR Rate (with a 1.00% floor) plus 0.875%–1.625%, or the Alternate Base Rate plus 0.000%–0.625%. The applicable margin depends on Southwest’s Index Debt Rating.
What collateral and covenants back Southwest Airlines’ (LUV) new facility?
The facility includes a Collateral Coverage Test requiring a lien-free pool of specified aircraft and related assets valued at least 1.25 times total commitments, plus a Coverage Ratio covenant of 1.25 to 1.00, with a temporary reduction option.
When does Southwest Airlines’ (LUV) new revolving credit facility mature?
The Revolving Credit Agreement matures on August 10, 2031. Southwest may request up to two one-year extensions of the maturity date, subject to consent from the extending lenders and other stated conditions.
Did Southwest Airlines (LUV) terminate its prior revolving credit facility?
Yes. In connection with entering the new facility, Southwest terminated its prior revolving credit facility dated August 3, 2016, which otherwise would have expired on August 4, 2028 under its existing terms.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 10, 2026
| (Exact name of registrant as specified in its charter) | ||
| (State or other jurisdiction | (Commission | (I.R.S. Employer | ||||||||||||
| of incorporation) | File Number) | Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
Registrant's telephone number, including area code: (214 ) 792-4000
| Not Applicable | ||
| Former name or former address, if changed since last report | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
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. ☐
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 1.02 Termination of a Material Definitive Agreement.
As of August 10, 2026, in connection with the entry by Southwest Airlines Co. (the “Company”) into the new revolving credit agreement described in Item 2.03 hereof, the Company terminated the revolving credit facility dated as of August 3, 2016, as amended, with a syndicate of lenders. The prior credit facility would have expired August 4, 2028.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On August 10, 2026, the Company entered into a new $2 billion five-year revolving credit facility agreement (the “Revolving Credit Agreement”) with a syndicate of lenders identified in the Revolving Credit Agreement. JPMorgan Chase Bank, N.A. and Citibank, N.A. act as co-administrative agents and JPMorgan Chase Bank, N.A. acts as paying agent under the Revolving Credit Agreement. The Revolving Credit Agreement has an uncommitted 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 $3 billion.
As of the date hereof, there are no amounts outstanding under the Revolving Credit Agreement. Generally, amounts outstanding under the Revolving Credit Agreement bear interest at rates based on the Company’s Index Debt Rating: either the Term SOFR Rate for designated interest periods selected by the Company or the Alternate Base Rate, plus an applicable margin ranging from 0.875% to 1.625% per annum, in the case of loans based on the Term SOFR Rate, and from 0.000% to 0.625% per annum, in the case of loans based on the Alternate Base Rate. The underlying Term SOFR Rate is subject to a floor of 1.00% per annum. The commitments under the Revolving Credit Agreement may also be used by the Company for the issuance by certain of the lenders party thereto of letters of credit for our account. The Company is required to pay certain fees in connection with the Revolving Credit Agreement. For example, the Company must pay Commitment Fees on a quarterly basis in respect of the unutilized portion of the commitments under the Revolving Credit Agreement. Additionally, the Company is required to pay certain fees to the paying agent for administrative services and certain fees in connection with issuances of letters of credit.
The Revolving Credit Agreement (i) contains customary representations and warranties, covenants, and events of default, (ii) includes a Collateral Coverage Test that requires that a lien-free pool of specified aircraft and related assets have a minimum aggregate appraised value of not less than an amount equal to 1.25 times the total commitment under the Revolving Credit Agreement, and (iii) includes a financial covenant that requires the Company to maintain a Coverage Ratio of 1.25 to 1.00, subject to the Company's one-time option to reduce this ratio requirement to 0.80 to 1.00 for two consecutive fiscal quarters. Amounts outstanding under the Revolving Credit Agreement may be accelerated upon the occurrence of an event of default. The maturity date of the Revolving Credit Agreement is August 10, 2031, and the Company may request up to two one-year extensions of the maturity date, subject to, among other things, the consent of the extending lenders.
The Revolving Credit Agreement has been filed herewith to provide investors with the agreed upon terms of the transactions described in this Form 8-K. The Revolving Credit Agreement is not intended to be a source of factual, business or operational information about the Company or its subsidiaries. The representations, warranties and covenants contained in the Revolving Credit Agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement, and may be subject to limitations agreed upon by the parties, including being qualified by disclosures for the purpose of allocating contractual risk between the parties instead of establishing matters as facts; and may be subject to standards of materiality
applicable to the contracting parties that differ from those applicable to investors or security holders. Accordingly, investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties.
The description of the Revolving Credit Agreement in this Item 2.03 is qualified in its entirety by reference to the full text of the Revolving Credit Agreement, a copy of which is attached to this report as Exhibit 10.1.
Capitalized terms used but not defined herein have the meanings ascribed to them in the Revolving Credit Agreement.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
10.1 $2,000,000,000 Revolving Credit Facility Agreement among Southwest Airlines Co., the Banks party thereto, Barclays Bank PLC, Bank of America, N.A., BNP Paribas, Goldman Sachs Bank USA, Morgan Stanley Senior Funding, Inc., PNC Bank, National Association, Standard Chartered Bank, 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 10, 2026.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
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. | ||||||||
Date: August 12, 2026 | By: | /s/ Tom Doxey | ||||||
| Tom Doxey | ||||||||
| Executive Vice President & Chief Financial Officer | ||||||||
| (Principal Financial Officer) | ||||||||