Southwest Airlines 2011 Annual Report Download - page 97

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borrowing capacity, the Company’s new facility is substantially the same as its previous facility. At the
Company’s option, interest on the new facility can be calculated on one of several different bases. The new
facility also contains a financial covenant requiring a minimum coverage ratio of adjusted pre-tax income to
fixed obligations, as defined. As of December 31, 2011 and 2010, the Company was in compliance with this
covenant and there were no amounts outstanding under the previous or current revolving credit facility.
7. Long-Term Debt
(in millions)
December 31,
2011
December 31,
2010
10.5% Notes due 2011 .......................... $ — $ 404
French Credit Agreements due 2012 ............... 7 14
6.5% Notes due 2012 ........................... 387 400
5.25% Notes due 2014 .......................... 375 385
5.75% Notes due 2016 .......................... 329 309
5.25% Convertible Senior Notes due 2016 .......... 118 —
5.125% Notes due 2017 ......................... 336 345
Fixed-rate 717 Aircraft Notes payable through 2017—
10.38% .................................... 67 —
French Credit Agreements due 2018 ............... 64 73
Fixed-rate 737 Aircraft Notes payable through 2018—
7.02% ..................................... 42 —
Term Loan Agreement due 2019 - 6.315% .......... 269 296
Term Loan Agreement due 2019 - 6.84% ........... 106 115
Term Loan Agreement due 2020 - 5.223% .......... 487 522
Floating-rate 737 Aircraft Notes payable through 2020
- 1.91% .................................... 604 —
Pass Through Certificates due 2022 ............... 411 428
7.375% Debentures due 2027 .................... 135 117
Capital leases (Note 8) .......................... 40 —
3,777 3,408
Less current maturities .......................... 644 505
Less debt discount and issuance costs .............. 26 28
$3,107 $2,875
AirTran Long-Term Debt
As discussed in Note 2, in connection with the acquisition of AirTran, the Company became the holder of
$1.1 billion of debt previously issued by AirTran Holdings. Subsequent to the acquisition date, holders of all of
the approximately $70 million (par value) in 5.5% convertible notes due 2015 converted such securities receiving
$73 million in cash and 6.2 million shares of the Company’s common stock. All of the approximately $5 million
(par value) of 7.0% convertible notes due 2023 were called by Southwest and fully repaid with cash. In addition,
the Company terminated AirTran Holdings’ $100 million combined revolving credit and letter of credit facility.
AirTran Holdings previously entered into aircraft purchase financing facilities, under which a total of 30
aircraft were financed as of December 31, 2011.
As of December 31, 2011, 27 Boeing 737 aircraft were financed under floating-rate facilities. Each note is
secured by a first mortgage on the aircraft to which it relates. The notes bear interest at a floating rate per annum
equal to a margin plus the three or six-month London Interbank Offered Rate (“LIBOR” or “LIBO rate”) in
91