Southwest Airlines 2005 Annual Report Download - page 56

SOUTHWEST AIRLINES CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
ble preferred stock. The 2005 agreement is subject to from Boeing. As of December 31, 2005, the Company
certain conditions including ATA's successful emer- had contractual purchase commitments with Boeing for
gence from bankruptcy on or before February 28, 2006. 33 737-700 aircraft deliveries in 2006, 28 scheduled for
delivery in 2007, and six in 2008. During January 2006,
Southwest and ATA agreed on a code share ar- the Company exercised an additional option for 2007 to
rangement, which was approved by the Department of bring our commitment to 29 aircraft for that year. In
Transportation in January 2005. Under the agreement, addition, the Company has options and purchase rights
which has since been expanded, each carrier can ex- for an additional 249 737-700s that it may acquire
change passengers on certain designated flights. Sales of during 2007-2012, following the January 2006 option
the code share flights began January 16, 2005, with exercise. The Company has the option, which must be
travel dates beginning February 4, 2005. As part of the exercised two years prior to the contractual delivery
December 2005 agreement with ATA, Southwest has date, to substitute 737-600s or 737-800s for the
enhanced its codeshare arrangement with ATA, subject 737-700s. As of December 31, 2005, aggregate funding
to certain conditions, including ATA's confirmation of needed for firm commitments is approximately $1.3 bil-
a Plan of Reorganization, which must be fulfilled by lion, subject to adjustments for inflation, due as follows:
February 28, 2006. $740 million in 2006, $458 million in 2007, and
$80 million in 2008.
4. Commitments
The Company's contractual purchase commit-
ments primarily consist of scheduled aircraft acquisitions
5. Accrued Liabilities
2005 2004
(In millions)
Retirement plans (Note 14) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 142 $89
Aircraft rentals ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 116 127
Vacation payÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 135 120
Advances and deposits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 955 334
Deferred income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 489 218
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 237 159
Accrued liabilitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $2,074 $1,047
6. Revolving Credit Facility drawn, the spread over LIBOR would be 62.5 basis
points given Southwest's credit rating at December 31,
The Company has a revolving credit facility under 2005. The facility also contains a financial covenant
which it can borrow up to $600 million from a group of requiring a minimum coverage ratio of adjusted pretax
banks. The facility expires in August 2010 and is income to fixed obligations, as defined. As of Decem-
unsecured. At the Company's option, interest on the ber 31, 2005, the Company is in compliance with this
facility can be calculated on one of several different covenant, and there are no outstanding amounts bor-
bases. For most borrowings, Southwest would anticipate rowed under this facility.
choosing a floating rate based upon LIBOR. If fully
37