Southwest Airlines 2014 Annual Report Download - page 46

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Ground Facilities and Services
Southwest either leases or pays a usage fee for terminal passenger service facilities at each of
the airports it serves, to which various leasehold improvements have been made. The Company leases
the land and structures on a long-term basis for its aircraft maintenance centers (located at Dallas Love
Field, Houston Hobby, Phoenix Sky Harbor, Chicago Midway, Hartsfield-Jackson Atlanta
International Airport and Orlando International Airport), its flight training center at Dallas Love Field
(which houses ten 737 simulators), and its main corporate headquarters building, also located at Dallas
Love Field. The Company also leases a warehouse and engine repair facility in Atlanta. During 2013
the Company completed construction of a new, owned, energy-efficient, modern building designed to
house certain operational and training functions, including its 24-hour operations. This additional
headquarters building is located across the street from the Company’s current headquarters building on
land owned by the Company.
As part of the Company’s expansion of international service, the Company has agreed with the
City of Houston (“City”) to expand the existing Houston Hobby airport facility. Pursuant to the
agreement, the Company and the City have entered into an Airport Use and Lease Agreement to
control the execution of this expansion and the financial terms thereof. This project provides for a new
five-gate international terminal with international passenger processing facilities, expansion of the
existing security checkpoint, and upgrades to the Southwest ticketing area. Construction began during
third quarter 2013 and is estimated to be completed during the second half of 2015. Additional
information regarding this project is provided below under “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and in Note 4 to the Consolidated Financial
Statements.
The Company has also agreed with Broward County, Florida, which owns and operates Fort
Lauderdale-Hollywood International Airport, to oversee and manage the design and construction of the
airport’s Terminal 1 Modernization Project. In addition to significant improvements to the existing
Terminal 1, the project includes the design and construction of a new five-gate Concourse A with an
international processing facility. Construction is expected to begin in mid to late 2015. Additional
information regarding this project is provided below under “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and in Note 4 to the Consolidated Financial
Statements.
In March 2013, the Company executed a lease agreement with Los Angeles World Airports,
which owns and operates Los Angeles International Airport. Under the lease agreement, which was
amended in June 2014, the Company will oversee and manage the design, development, financing,
construction and commissioning of the airport’s Terminal 1 Modernization Project. Construction on
the project began during fourth quarter 2014. Additional information regarding this project is provided
below under “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and in Note 4 to the Consolidated Financial Statements.
During 2008, the City of Dallas approved the Love Field Modernization Program (“LFMP”), a
project to reconstruct Dallas Love Field with modern, convenient air travel facilities. Pursuant to a
Program Development Agreement with the City of Dallas and the Love Field Airport Modernization
Corporation (a Texas non-profit “local government corporation” established by the City of Dallas to
act on the City of Dallas’ behalf to facilitate the development of the LFMP), the Company is managing
this project. Major construction commenced during 2010. New ticketing and checkin areas opened
during fourth quarter 2012, 12 new gates and new concessions opened in 2013, and the remaining
gates opened during October 2014. The majority of the project had been completed as of December 31,
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