Southwest Airlines 2004 Annual Report Download - page 26

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In total, at December 31, 2004, the Company had Ñrm orders and options to purchase Boeing 737 aircraft as
follows:
Firm Orders and Options to Purchase Boeing 737-700 Aircraft
Delivery Year Firm Orders Options Purchase Rights
2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 34 Ì Ì
2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 26 8 Ì
2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 25 9 20
2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6 25 20
2009-2012 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 177
Totals ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 91 42 217
Ground Facilities and Services Islip. In return for constructing the new concourse,
Southwest will receive Ñxed-rent abatements for a total
Southwest leases terminal passenger service facili- of 25 years; however, the Company will still be required
ties at each of the airports it serves, to which it has to pay variable rents for common use areas and manage
added various leasehold improvements. The Company the new concourse.
leases land on a long-term basis for its maintenance
centers located at Dallas Love Field, Houston Hobby, The Company performs substantially all line main-
Phoenix Sky Harbor, and Chicago Midway, its training tenance on its aircraft and provides ground support
center near Love Field, which houses six 737 simulators, services at most of the airports it serves. However, the
and its corporate headquarters, also located near Love Company has arrangements with certain aircraft main-
Field. The maintenance, training center, and corporate tenance Ñrms for major component inspections and
headquarters buildings on these sites were built and are repairs for its airframes and engines, which comprise the
owned by Southwest. During Ñrst quarter 2004, the majority of the annual aircraft maintenance costs.
Company closed its Dallas, Salt Lake City, and Little
Rock reservations centers. At December 31, 2004, the Item 3. Legal Proceedings
Company operated six reservation centers. The reserva- The Company is subject to various legal proceed-
tion centers located in Chicago, Albuquerque, and ings and claims arising in the ordinary course of busi-
Oklahoma City occupy leased space. The Company ness, including, but not limited to, examinations by the
owns its Houston, Phoenix, and San Antonio reserva- Internal Revenue Service (IRS). The IRS regularly
tion centers. examines the Company's federal income tax returns and,
Southwest has entered into a concession agreement in the course of those examinations, proposes adjust-
with the Town of Islip, New York which gives the ments to the Company's federal income tax liability
Company the right to construct, furnish, occupy, and reported on such returns. It is the Company's practice
maintain a new concourse at the airport. Once all phases to vigorously contest those proposed adjustments that it
of the project are completed, the concourse could have deems lacking of merit. The Company's management
up to eight gates. Phase I of this project, which began does not expect that the outcome in any of its currently
operations in August 2004, includes four gates. The ongoing legal proceedings or the outcome of any pro-
Company has announced plans to construct Phase II of posed adjustments presented to date by the IRS, individ-
the project, which includes an additional 4 gates. When ually or collectively, will have a material adverse eÅect
all phases of construction are complete, the entire new on the Company's Ñnancial condition, results of opera-
concourse will become the property of the Town of tions or cash Öows.
8