Southwest Airlines 2011 Annual Report Download - page 95

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4. Commitments and Contingencies
The Company’s contractual purchase commitments primarily consist of scheduled aircraft acquisitions
from Boeing. As of December 31, 2011, the Company had the following contractual purchase commitments with
Boeing for aircraft deliveries:
The Boeing Company
737NG
The Boeing Company
737MAX
-700
Firm
Orders
-800
Firm
Orders Options
Additional
-800s
Firm
Orders Options Total
(in millions)
Commitment
2012 ............... 28 5 33 $ 952
2013 ............... 41 41 1,188
2014 ............... 35 4 15 54 1,151
2015 ............... 36 12 48 1,186
2016 ............... 31 12 43 1,157
2017 ............... 15 25 4 44 905
2018 ............... 10 28 15 53 1,126
2019 ............... 33 33 1,461
2020 ............... 34 34 1,184
2021 ............... 34 18 52 1,214
2022 ............... 30 19 49 1,097
2023 ............... 23 23 —
2024 ............... 23 23 —
Through 2027 ....... 67 67 —
Total .......... 127(a) 73 92 5(b) 150(c) 150 597 $ 12,621(d)
(a) The Company has flexibility to substitute 737-800s or 737-600s in lieu of 737-700 firm orders.
(b) New delivery leased aircraft.
(c) The Company has flexibility to accept MAX 7 or MAX 8 deliveries.
(d) Firm orders from Boeing. The Company has flexibility as to the timing for certain of the firm orders in 2013
through 2017, but has classified the amounts in the earliest year they could be considered a commitment.
During 2008, the City of Dallas approved the Love Field Modernization Program (“LFMP”), a project to
reconstruct Dallas Love Field (“Airport”) with modern, convenient air travel facilities. Pursuant to a Program
Development Agreement (“PDA”) with the City of Dallas, and the Love Field Airport Modernization
Corporation (or “LFAMC,” a Texas non-profit “local government corporation” established by the City to act on
the City’s behalf to facilitate the development of the LFMP), the Company is managing this project. Major
construction commenced during 2010, with completion of the project scheduled for the second half of 2014.
Although subject to change, at the current time the project is expected to include the renovation of the Airport
airline terminals and complete replacement of gate facilities with a new 20-gate facility, including infrastructure,
systems and equipment, aircraft parking apron, fueling system, roadways and terminal curbside, baggage
handling systems, passenger loading bridges and support systems, and other supporting infrastructure.
It is currently expected that the total amount spent on the LFMP project will be approximately
$519 million. Although the City of Dallas has received commitments from various sources that are expected to
fund portions of the LFMP project, including the Federal Aviation Administration, the Transportation Security
Administration, and the City’s Aviation Fund, the majority of the funds used are expected to be from the issuance
of bonds. During fourth quarter 2010, $310 million of such bonds were issued by the LFAMC, and the Company
has guaranteed principal and interest payments on the bonds. Depending on funding needs and the timing of
these funds from other sources, an additional tranche of bonds is expected to be issued during 2012.
The Company has agreed to manage the majority of the LFMP project, and as a result, has evaluated its
ongoing accounting requirements in consideration of accounting guidance provided for lessees involved in asset
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