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8 | SOUTHWEST AIRLINES CO. 2002 10-K
Item 2. Properties
Aircraft
Southwest operated a total of 375 Boeing 737
aircraft as of December 31, 2002, of which 90
and seven were under operating and capital
leases, respectively. The remaining 278 aircraft
were owned.
Southwest was the launch customer for the
Boeing 737-700 aircraft, the newest generation of
the Boeing 737 aircraft type. The first 737-700
aircraft was delivered in December 1997 and
entered revenue service in January 1998. At
December 31, 2002, Southwest had 129 Boeing
737-700 aircraft in service. In total, at February 1,
2003, the Company had firm orders and options
to purchase Boeing 737 aircraft as follows:
Firm Orders and Options to Purchase Boeing 737-700 Aircraft
Deliver
y
Year Firm Orders O
p
tions Purchase Ri
g
hts
2003 17 - -
2004 23 11 -
2005 24 18 -
2006 22 16 -
2007 25 9 20
2008–2012 6 25 197
Totals 117 79 217
The Company currently intends to retire its fleet
of 27 Boeing 737-200 aircraft over the next three
years. The average age of the Company’s fleet at
December 31, 2002, was 9.2 years.
Ground Facilities and Services
Southwest leases terminal passenger service
facilities at each of the airports it serves, to
which it has added various leasehold improve-
ments. The Company leases land on a long-term
basis for its maintenance centers located at
Dallas Love Field, Houston Hobby, Phoenix Sky
Harbor, and Chicago Midway; its training center
near Love Field, which houses six 737 simula-
tors; and its corporate headquarters, also located
near Love Field. The maintenance, training
center, and corporate headquarters buildings on
these sites were built and are owned by
Southwest. At December 31, 2002, the Company
operated nine reservations centers. The
reservations centers located in Little Rock,
Arkansas; Chicago, Illinois; Albuquerque, New
Mexico; and Oklahoma City, Oklahoma, occupy
leased space. The Company owns its Dallas,
Texas; Houston, Texas; Phoenix, Arizona; Salt
Lake City, Utah; and San Antonio, Texas,
reservations centers.
Southwest has entered into a concession
agreement with the Town of Islip, New York,
which gives the Company the right to construct,
furnish, occupy, and maintain a new concourse
at the airport. Once all phases of the project are
completed, the concourse would have up to a
total of eight gates and is expected to cost
approximately $65 million. The Company is
currently expected to be able to begin operations
from this new concourse in 2004, at which time
the new concourse will become the property of
the Town of Islip. In return for constructing the
new concourse, Southwest will receive fixed-rent
abatements for a total of 25 years; however, the
Company will still be required to pay variable
rents for common use areas.
The Company performs substantially all line
maintenance on its aircraft and provides ground
support services at most of the airports it serves.
However, the Company has arrangements with
certain aircraft maintenance firms for major
component inspections and repairs for its