Southwest Airlines 2015 Annual Report Download - page 107

Download and view the complete annual report

Please find page 107 of the 2015 Southwest Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 148

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148

7. LEASES
The Company’s fleet included 28 aircraft on capital lease as of December 31, 2015, compared with 16
aircraft on capital lease, including two B717s, as of December 31, 2014. Amounts applicable to these
aircraft that are included in property and equipment were:
(in millions) 2015 2014
Flight equipment $ 435 $ 214
Less: accumulated amortization 29 22
$ 406 $ 192
Total rental expense for operating leases, both aircraft and other, charged to operations in 2015, 2014,
and 2013 was $909 million, $931 million, and $997 million, respectively. The majority of the
Company’s terminal operations space, as well as 95 aircraft, were under operating leases at
December 31, 2015. For aircraft operating leases and for terminal operations leases, expense is
included in Aircraft rentals and in Landing fees and other rentals, respectively, in the Consolidated
Statement of Income. Future minimum lease payments under capital leases and noncancelable
operating leases and rentals to be received under subleases with initial or remaining terms in excess of
one year at December 31, 2015, were:
(in millions)
Capital
leases
Operating
leases Subleases
LFMP
facility lease*
Operating
leases, net
2016 $ 46 $ 636 $ (103)$ 24 $ 557
2017 46 624 (103) 24 545
2018 45 551 (102) 25 474
2019 45 479 (97) 25 407
2020 44 359 (78) 26 307
Thereafter 209 961 (66) 634 1,529
Total minimum lease payments $ 435 $ 3,610 $ (549)$ 758 $ 3,819
Less amount representing interest 79
Present value of minimum lease
payments 356
Less current portion 32
Long-term portion $ 324
* See Note 4 for further details
The aircraft leases generally can be renewed for one to five years at rates based on fair market value at
the end of the lease term. Most aircraft leases have purchase options at or near the end of the lease term
at fair market value, generally limited to a stated percentage of the lessor’s defined cost of the aircraft.
On July 9, 2012, the Company signed an agreement with Delta Air Lines, Inc. and Boeing Capital
Corp. to lease or sublease all 88 of AirTran’s B717s to Delta at agreed-upon lease rates. The first
converted B717 was delivered to Delta in September 2013, and as of December 31, 2015, the
Company had delivered a total of 87 B717s to Delta. As the Company previously announced, all
99