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49
Aircraft Acquisitions, Purchase Commitments, and Financings
In 2008, to respond to the challenges of a volatile fuel-cost environment, a recessionary macroeconomic
environment, and adverse capital market conditions, we recast our business plan to defer previously planned
growth. We reduced capacity, principally by deferring scheduled aircraft deliveries, and by selling B737
aircraft. In 2008, we entered into agreements to defer delivery dates for 37 B737 aircraft originally scheduled
for delivery between 2008 and 2012 to delivery dates between 2013 and 2016. During 2008, we sold two new
B737 aircraft (that we took delivery of and subsequently sold) and we also sold six used B737 aircraft in our
fleet. In 2008, we took delivery of eight aircraft, including the aforementioned two new aircraft that we sold in
2008.
We had four B737 aircraft scheduled for delivery during 2009. In 2009, we permitted The Boeing Company
(“Boeing”) to sell two of the B737 aircraft to a foreign airline and we were released from our obligation to
purchase such aircraft. During 2009, we took delivery of two B737 aircraft that we had previously agreed to sell
to another foreign airline. The foreign airline defaulted on its obligation to us to purchase the two aircraft. We
placed these aircraft in service in October 2009.
The table below summarizes, as of December 31, 2009, all aircraft scheduled for delivery to us:
Scheduled
Firm Aircraft Deliveries
B737
2010 -
2011 7
2012 8
2013 6
2014 12
2015 8
2016 10
Total 51
Our aircraft purchase commitments for the next five years and thereafter, in aggregate, are (in millions): 2010—
$50; 2011—$270; 2012—$335; 2013—$260; and 2014—$500; and thereafter, $720. These amounts include
payment commitments, including payment of pre-delivery deposits, for aircraft on firm order. Aircraft purchase
commitments include the forecasted impact of contractual price escalations. Our intention is to finance the
aircraft on order through either debt financing, lease financing, or a mix thereof. We have financing
commitments from a lender to finance a portion of the acquisition price of two B737 aircraft scheduled for
delivery to us in 2011. The financing commitment for the second aircraft is conditioned upon our refinancing by
March 31, 2010 existing indebtedness owed to the lender on another B737 aircraft. Except for the financing
commitment for two aircraft, we have not yet arranged for aircraft financing for any of the other firm aircraft
deliveries.
There are multiple variables including capital market conditions, asset valuations, and our own operating
performance that could affect the availability of satisfactory financing for our future B737 aircraft deliveries.
While there was limited availability of satisfactory aircraft financing in early 2009, it is our view that the
aircraft financing market has improved. While we cannot provide assurance that sufficient financing will be
available, we expect to be able to obtain acceptable financing for future deliveries. Our view is based upon our
discussions with prospective lenders and lessors, the consummation of aircraft financing transactions by other