SOUTHWEST AIRLINES COLUV
SOUTHWEST AIRLINES CO Debt Disclosure
FINANCING ACTIVITIES
| (in millions) | Maturity Dates | December 31, 2025 | December 31, 2024 | ||||||||||||||
| Unsecured | |||||||||||||||||
1.25% Convertible Notes | 2025 | — | 1,611 | ||||||||||||||
3.00% Notes | 2026 | 300 | 300 | ||||||||||||||
7.375% Debentures | 2027 | 104 | 107 | ||||||||||||||
3.45% Notes | 2027 | 300 | 300 | ||||||||||||||
5.125% Notes | 2027 | 1,727 | 1,727 | ||||||||||||||
4.375% Notes | 2028 | 750 | — | ||||||||||||||
2.625% Notes | 2030 | 500 | 500 | ||||||||||||||
1.000% Payroll Support Program Loan | 2030 | — | 976 | ||||||||||||||
1.000% Payroll Support Program Loan | 2031 | — | 566 | ||||||||||||||
1.000% Payroll Support Program Loan (a) | 2031 | 426 | 526 | ||||||||||||||
5.25% Notes | 2035 | 734 | — | ||||||||||||||
| Finance leases | 78 | 91 | |||||||||||||||
| $ | 4,919 | $ | 6,704 | ||||||||||||||
| Less current maturities | 324 | 1,630 | |||||||||||||||
| Less debt discount and issuance costs | 18 | 5 | |||||||||||||||
| $ | 4,577 | $ | 5,069 | ||||||||||||||
(a) The interest rate will change to Secured Overnight Financing Rate plus two percent on the fifth anniversary of the loan, which occurs in April 2026.
Senior Unsecured Notes due through 2035
During November 2025, the Company issued $750 million senior unsecured notes due 2035. The notes bear interest at 5.250 percent. Interest is payable semi-annually in arrears on May 15 and November 15. Concurrently, the Company entered into a fixed-to-floating interest rate swap to convert the interest on these unsecured notes to a floating rate until their maturity. See Note 10 for further information on the interest-rate swap agreement. Additionally, the Company issued $750 million senior unsecured notes due 2028. The notes bear interest at 4.375 percent. Interest is payable semi-annually in arrears. The Company expects to use the net proceeds from this offering for general corporate purposes, which may include, but are not limited to, repayment or redemption of indebtedness or other corporate obligations.
During 2020, the Company issued $2.0 billion of unsecured notes due 2027, of which $1.3 billion was issued June 8, 2020 (the “$1.3 billion 2027 Notes”) and $700 million was issued July 31, 2020 (the “$700 million 2027 Notes”). The notes bear interest at 5.125 percent. Interest is payable semi-annually in arrears. The $700 million 2027 Notes were offered as an additional issuance of the Company’s $1.3 billion 2027 Notes issued on June 8, 2020. The Company made early prepayments on the notes of $273 million throughout 2022, utilizing available cash on hand.
During February 2020, the Company issued $500 million senior unsecured notes due 2030. The notes bear interest at 2.625 percent. Interest is payable semi-annually in arrears.
During November 2017, the Company issued $300 million senior unsecured notes due 2027. The notes bear interest at 3.45 percent. Interest is payable semi-annually in arrears.
During November 2016, the Company issued $300 million senior unsecured notes due 2026. The notes bear interest at 3.00 percent. Interest is payable semi-annually in arrears.
On February 28, 1997, the Company issued $100 million of senior unsecured 7.375 percent debentures due March 1, 2027. Interest is payable semi-annually.
Convertible Notes due 2025
On May 1, 2020, the Company completed the public offering of $2.3 billion aggregate principal amount of the Convertible Notes, bearing interest at a rate of 1.25 percent, payable semi-annually in arrears. The Company repurchased $689 million during the two year period ending December 31, 2022, and the remaining $1.6 billion principal amount of the Convertible Notes was repaid at maturity during second quarter 2025 utilizing available cash on hand. An immaterial amount of Convertible Note conversions settled at maturity.
The Company recognized interest expense associated with the Convertible Notes as follows:
| (in millions) | December 31, 2025 | December 31, 2024 | |||||||||
| Non-cash amortization of debt issuance costs | $ | 3 | $ | 10 | |||||||
| Contractual coupon interest | 7 | 20 | |||||||||
| Total interest expense | $ | 10 | $ | 30 | |||||||
The unamortized debt issuance costs were recognized as non-cash interest expense based on the 5-year term of the notes, through May 1, 2025, less amounts that were required to be accelerated immediately upon conversion or repurchases. The Company had no changes to contingencies with regards to the Convertible Notes through the settlement date, May 1, 2025.
Payroll Support Program Loans due through 2031
During 2020 and 2021, the Company entered into definitive documentation with the United States Department of the Treasury ("Treasury") with respect to payroll funding support ("Payroll Support") pursuant to three separate Payroll Support programs: the "PSP1 Payroll Support Program" in April 2020 under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"); the "PSP2 Payroll Support Program” in January 2021 under the Consolidated Appropriations Act, 2021; and the "PSP3 Payroll Support Program" in April 2021 under the American Rescue Plan Act of 2021.
As consideration for its receipt of funding under each of these Payroll Support programs, the Company issued promissory notes in favor of Treasury (each initially classified as a component of Long-term debt less current maturities in the unaudited Condensed Consolidated Balance Sheet). The note associated with the PSP1 Payroll Support Program was originally due in April 2030 but was redeemed early on April 17, 2025, in the amount of $976 million. The note associated with the PSP2 Payroll Support Program was originally due in January 2031 but was redeemed early on December 29, 2025, in the amount of $566 million. The note associated with the PSP3 Payroll Support Program is due in April 2031. On December 30, 2025, the Company made a partial prepayment on the note associated with the PSP3 Payroll Support Program in the amount of $100 million. All payments were made utilizing available cash on hand.
On the day after the fifth anniversary of the note associated with the PSP3 Payroll Support Program during April 2026, the applicable interest rate is scheduled to change to SOFR plus two percent.
Revolving Credit Facility
As of December 31, 2025, the Company has access to $1.5 billion under its amended and restated revolving credit facility (the "Amended Credit Agreement"), which expires in August 2028, reflecting the Company's exercise of the accordion feature to increase the size of the facility on July 22, 2025. For the twelve months ended December 31, 2025 and 2024 there were no amounts outstanding under the Amended Credit Agreement.
Generally, amounts outstanding under the Amended Credit Agreement bear interest at rates based on either the SOFR rate (selected by the Company for designated interest periods) or the “alternate base rate” (being the highest of (1) the Wall Street Journal prime rate, (2) one-month adjusted SOFR (one-month SOFR plus 0.1 percent) plus 1 percent, and (3) the Federal Reserve Bank of New York Rate, plus 0.5 percent). The underlying SOFR rate is subject to a floor of 1 percent per annum and the “alternate base rate” is subject to a floor of 1 percent per annum.
The facility contains a financial covenant requiring a minimum coverage ratio of adjusted pre-tax income to fixed obligations, as defined. As of December 31, 2025, the Company was in compliance with this covenant and all other covenants in the Amended Credit Agreement.
The Company is required to provide standby letters of credit to support certain obligations that arise in the ordinary course of business. Although the letters of credit are an off-balance sheet item, the majority of the obligations to which they relate are reflected as liabilities in the Consolidated Balance Sheet. Outstanding letters of credit totaled $272 million as of December 31, 2025.
The Company had no assets pledged as collateral for its borrowings as of December 31, 2025.
Maturities
As of December 31, 2025, aggregate annual principal maturities of debt and finance leases (not including amounts associated with interest on finance leases) are as follows:
| (in millions) | |||||
| 2026 | $ | 321 | |||
| 2027 | 2,150 | ||||
| 2028 | 766 | ||||
| 2029 | 11 | ||||
| 2030 | 504 | ||||
| Thereafter | 1,177 | ||||
| Total | $ | 4,929 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 5, 2026 | Showing above |
| 2019 | Feb 4, 2020 | |
| 2018 | Feb 5, 2019 | |
| 2017 | Feb 7, 2018 | |
| 2016 | Feb 7, 2017 | |
| 2015 | Feb 3, 2016 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.