(Bloomberg) -- Southwest Airlines Co. will gain $92 million from selling and leasing back 35 of its Boeing Co. 737-800 aircraft, the first move in the carrier’s broader plan to monetize part of its large fleet and extensive aircraft order book.
The airline received gross proceeds of $871 million from the transaction that closed in December with Babcock & Brown Aircraft Management, Southwest said in a statement on Tuesday. The $92 million gain will be recorded in 2024’s fourth quarter. A sale-leaseback on an additional plane is expected to be completed in January, the airline said.
Southwest’s effort to wring additional value from its fleet of more than 800 Boeing 737 jets and the almost 700 planes it has on order is part of sweeping changes at the Dallas-based carrier to improve investor returns that have lagged peers in recent years. Other moves include stepping away from its traditional model and offering assigned seating and premium fares with more leg room.
The fleet transactions aim to capitalize on aircraft demand and pricing that have soared as Boeing and Airbus SE face production challenges that have limited the supply of new jetliners. Sale-leaseback deals allow the carrier to sell some of its mid-life 737-800 jets to a lessor and then lease them back for a fixed time period. — in this case from 26 to 37 months. The transaction will add $2.6 million a year in rent payments for the airline.
The carrier has said it also may sell some planes in its fleet outright, as well as new 737 Max aircraft after receiving them from Boeing. It doesn’t currently need the aircraft, and will lose existing credits from past delays if it doesn’t take the ordered planes. Southwest has Boeing orders through 2031.
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