Sep. 20--Southwest Airlines Co., under pressure from some investors to increase its financial leverage, plans to borrow $500 million against its fleet of aircraft.
Southwest is issuing "enhanced equipment trust certificates," or EETCs, secured by the value of 16 Boeing 737-700 jets delivered between Nov. 1, 2006, and May 31. The appraised value of the airplanes is $634 million, according to disclosures filed Wednesday with the Securities and Exchange Commission.
Southwest chief executive Gary Kelly and chief financial officer Laura Wright recently acknowledged that the company's ratio of debt to equity was below ideal levels, although Southwest prides itself on keeping its debt levels far below those of its major competitors.
Some shareholders have been pushing Southwest to increase its share buybacks or otherwise increase shareholder return.
Southwest shares rose 6 cents Wednesday to $15.13. They're down 25 cents since Jan. 1 and down $1.64 from a year ago.
To see more of The Dallas Morning News, or to subscribe to the newspaper, go to http://www.dallasnews.com. Copyright (c) 2007, The Dallas Morning News Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
