01—Abstract
Summary
Summary of the 8-K filed August 12, 2026. Cited figures are marked; the original filing is the authoritative source.
Southwest Airlines Co. (LUV) filed this Form 8-K to report two related actions taken in connection with its credit facilities.
On August 10, 2026, the Company entered into a new $2 billiona five-year revolving credit facility agreement with a syndicate of lenders, with JPMorgan Chase Bank, N.A. and Citibank, N.A. as co-administrative agents and JPMorgan Chase Bank, N.A. as paying agent. As of the filing date, no amounts were outstanding under the facility. The facility has an uncommitted accordion feature that could increase its size to $3 billion, subject to procuring incremental commitments.
As of August 10, 2026, the Company terminated its existing revolving credit facility dated August 3, 2016, as amended, which would otherwise have expired August 4, 2028. The new facility's maturity date is August 10, 2031, and the Company may request up to two one-year extensions, subject to lender consent. Borrowings bear interest at Term SOFR (subject to a 1.00%b floor) plus a margin of 0.875% to 1.625%, or at the Alternate Base Rate plus a margin of 0.000% to 0.625%, based on the Company's Index Debt Rating.
The Company also pays quarterly commitment fees on unused commitments. The agreement includes a Collateral Coverage Test requiring a lien-free pool of specified aircraft and related assets with a minimum appraised value of 1.25 times the total commitment, and a financial covenant requiring a Coverage Ratio of 1.25 to 1.00.
The Company has a one-time option to reduce this ratio requirement to 0.80 to 1.00 for two consecutive fiscal quarters. The full agreement is filed as Exhibit 10.1.
02—Key points
Key Highlights
- Entered a new $2 billion five-year revolving credit facility on August 10, 2026, with an uncommitted accordion option to increase it to $3 billion.
- No amounts were outstanding under the new revolving credit agreement as of the filing date.
- Terminated the prior revolving credit facility dated August 3, 2016, as amended, which would have expired August 4, 2028.
- Pricing is Term SOFR (1.00% floor) plus 0.875% to 1.625%, or Alternate Base Rate plus 0.000% to 0.625%, based on the Company's Index Debt Rating.
- Maturity is August 10, 2031, with up to two one-year extensions available subject to lender consent.
- Financial covenants include a Collateral Coverage Test (lien-free aircraft pool at 1.25 times total commitment) and a Coverage Ratio of 1.25 to 1.00, with a one-time option to reduce it to 0.80 to 1.00 for two consecutive fiscal quarters.
- The full credit agreement is filed as Exhibit 10.1.
03—Questions
Frequently Asked Questions
How large is the new revolving credit facility and can it grow?
The new facility is $2 billion. It includes an uncommitted accordion feature that would allow the Company, subject to procuring incremental commitments, to increase the size to $3 billion.
Did the Company draw on the new facility?
No. As of the date of the filing, there are no amounts outstanding under the Revolving Credit Agreement.
What happened to the existing credit facility?
As of August 10, 2026, the Company terminated its revolving credit facility dated August 3, 2016, as amended. That facility would have expired August 4, 2028.
What are the key conditions the Company must maintain under the new facility?
The agreement requires a Collateral Coverage Test under which a lien-free pool of specified aircraft and related assets must have a minimum aggregate appraised value of at least 1.25 times the total commitment. It also requires a Coverage Ratio of 1.25 to 1.00, though the Company has a one-time option to lower this to 0.80 to 1.00 for two consecutive fiscal quarters. Amounts outstanding may be accelerated upon an event of default.
What is the cost of borrowing and when does the facility mature?
Borrowings bear interest at Term SOFR (subject to a 1.00% floor) plus 0.875% to 1.625%, or the Alternate Base Rate plus 0.000% to 0.625%, based on the Company's Index Debt Rating. The Company also pays quarterly commitment fees on unused amounts. The facility matures August 10, 2031, with up to two one-year extensions available subject to lender consent.
04—Continue