Southwest Airlines Co 8-K, filed Aug 4, 2023
Southwest Airlines Co (LUV)
8-K
2023-08-04
For: 2023-08-04
View Original
Added on
April 10, 2026
About this 8-K
Southwest Airlines Co filed this 8-K on August 4, 2023.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.03: New debt or off-balance-sheet obligation
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 4, 2023
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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 August 4, 2023, Southwest Airlines Co. (the “Company”) amended its revolving credit facility agreement with a syndicate of lenders expiring in August 2025 (the “A&R Credit Agreement”) to (i) extend the maturity to August 4, 2028, (ii) release all aircraft and other assets constituting collateral securing the loans made under the A&R Credit Agreement, (iii) delete all provisions and terminate all agreements, in each case, relating to the grant of such collateral, (iv) eliminate the role of “Collateral Agent” under the A&R Credit Agreement after giving effect to the amendment, terminations, and releases, (v) eliminate the minimum liquidity covenant, (vi) add a Coverage Ratio financial covenant, (vii) amend the Collateral Coverage Test covenant requiring that a pool of lien-free specified aircraft and related assets have a minimum aggregate appraised value, and add certain covenants with respect to such pool of assets, (viii) amend the pricing and fees, (ix) increase certain materiality thresholds, (x) grant longer grace periods for certain defaults, and (xi) update and amend certain other provisions (collectively, the “Amendment,” and the A&R Credit Agreement as amended by the Amendment, the “Amended A&R Credit Agreement”). The amount of the loan commitments under the A&R Credit Agreement remain unchanged by the Amendment. 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 Amended A&R Credit Agreement.
As of the date hereof, there are 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: (a) an Adjusted Term SOFR Rate (selected by the Company for designated interest periods); or (b) the “alternate base rate” (being the highest of (1) the Wall Street Journal prime rate, (2) one-month Adjusted Term SOFR Rate plus 1%, and (3) the NYFRB Rate plus 0.5%). The underlying Adjusted Term SOFR Rate is subject to a floor of 1% per annum, and the “alternate base rate” is subject to a floor of 1% per annum. The Amendment includes revisions and additions to change the amount of interest rate margin that the Company must pay above the Adjusted Term SOFR Rate and the “alternate base rate” to lower pricing margins based on the Company's Index Debt Rating. The Company remains required to pay certain fees in connection with, and as amended by, the Amended A&R 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 Amended A&R Credit Agreement. The Amendment includes revisions and additions to reduce the amount of such Commitment Fees payable by the Company. Additionally, the Company is required to pay certain fees to the paying agent for administrative services.
The Amended A&R Credit Agreement (i) continues to contain 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 Amended A&R 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 Amended A&R Credit
Agreement may be accelerated upon the occurrence of an event of default. The maturity of the revolving facility was extended to August 4, 2028, by the Amendment.
The description of the Amended A&R Credit Agreement in this Item 2.03 is qualified in its entirety by reference to the full text of the Amended A&R Credit Agreement, a copy of which will be filed with the Company's Quarterly Report on Form 10-Q for the fiscal quarter ending September 30, 2023.
The Amended A&R 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 Amended A&R Credit Agreement were made only for purposes of such agreements and as of specific dates; were solely for the benefit of the parties to such agreements; 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.
Capitalized terms used but not defined herein have the meanings ascribed to them in the Amended A&R Credit Agreement.
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. | ||||||||
| August 4, 2023 | By: | /s/ Tammy Romo | ||||||
| Tammy Romo | ||||||||
| Executive Vice President & Chief Financial Officer | ||||||||
| (Principal Financial and Accounting Officer) | ||||||||