Southwest Airlines 1999 Annual Report Download - page 37

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6. LEASES
Total rental expense for operating leases charged to operations in 1999, 1998, and
1997 was $318.2 million, $305.2 million, and $296.5 million, respectively. The majority of
the Company’s terminal operations space, as well as 96 aircraft, was under operating
leases at December 31, 1999. The amounts applicable to capital leases included in
property and equipment were:
(In thousands)1999 1998
Flight equipment $164,957 $230,486
Less accumulated amortization 85,722 133,073
$79,235 $97,413
Future minimum lease payments under capital leases and noncancelable operating leases with
initial or remaining terms in excess of one year at December 31, 1999, were:
(In thousands)Capital Leases Operating Leases
2000 $ 16,871 $ 278,328
2001 17,391 261,419
2002 17,561 235,601
2003 17,750 210,667
2004 17,650 186,500
After 2004 102,399 1,832,541
Total minimum lease payments 189,622 $3,005,056
Less amount representing interest 65,788
Present value of minimum lease payments 123,834
Less current portion 4,384
Long-term portion $119,450
The aircraft leases generally can be renewed, at rates based on fair market value at the end of
the lease term, for one to five years. Most aircraft leases have purchase options at or near the end of the
lease term at fair market value, but generally not to exceed a stated percentage of the lessor’ s defined
cost of the aircraft.
7. FINANCIAL INSTRUMENTS
The Company has historically utilized purchased crude oil call options and fixed
price swap agreements to hedge a portion of its exposure to fuel price increases. During
1999, the Company recognized gains of $14.8 million from hedging activities. At
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