SOUTHWEST AIRLINES CO 8-K

What Happened

• Southwest Airlines Co. announced (Item 1.01 / 2.03) that on March 11, 2026 it entered into a $500 million senior secured Term Loan Credit Agreement with BNP Paribas as administrative and collateral agent and initial lender. The Term Loan Facility was drawn in full at closing and matures on March 11, 2029. The loan is secured by a pool of aircraft and related assets.

Key Details

• Principal: $500 million drawn in full; outstanding principal as of the filing date is $500 million.
• Maturity & prepayment: Matures March 11, 2029; Company may prepay in whole or part without premium/penalty with ≥3 business days’ notice; prepayments cannot be reborrowed.
• Interest: Loans bear interest either at Term SOFR + 1.10% (SOFR floored at 0.00%) or an Alternate Base Rate + 0.10% (ABR floored at 1.00%).
• Collateral & features: Facility is senior secured by specified aircraft and related assets, requires a minimum collateral coverage ratio, allows asset swaps/releases subject to coverage, and includes an uncommitted incremental term loan feature up to $500 million. The Company’s existing revolver was not amended.

Why It Matters

• This transaction creates a new $500M direct financial obligation and increases Southwest’s secured debt on its balance sheet. For investors, it provides near‑term liquidity but also adds scheduled debt maturing in 2029 and ongoing interest costs tied to market rates (SOFR/ABR). The aircraft collateral and collateral‑coverage provisions limit flexibility on those assets unless coverage tests are met. The incremental feature could allow further borrowing (up to $500M) under the same agreement if lenders agree.