Southwest Secures New $2B Revolving Credit Facility
Southwest Airlines Co. has secured a new $2 billion five-year revolving credit facility, replacing its previous agreement. The new facility, maturing on August 10, 2031, includes an uncommitted accordion feature that could expand it to $3 billion. Interest rates are tied to Term SOFR or the Alternate Base Rate, plus a margin, and the agreement contains customary covenants, including a Collateral Coverage Test and a financial covenant requiring a Coverage Ratio of 1.25 to 1.00. The prior credit facility, which would have expired in August 2028, was terminated as of August 10, 2026.
Key Highlights
- Southwest Airlines entered into a new $2 billion five-year revolving credit facility.
- The new facility matures on August 10, 2031, with options for two one-year extensions.
- It includes an uncommitted accordion feature allowing an increase to $3 billion.
- Interest rates are based on Term SOFR or Alternate Base Rate, plus applicable margins.
- The facility requires a Collateral Coverage Test of 1.25 times the total commitment.
- A financial covenant mandates a Coverage Ratio of 1.25:1.00, with a temporary reduction option.
- The company terminated its prior revolving credit facility dated August 3, 2016.
Price Impact
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