PURCHASE AGREEMENT
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Relating to Boeing Model 737-7H4 Aircraft
Purchase Agreement Number 1810
*** Pursuant to 17 CFR, 240.24b-2, confidential
information has been omitted and has been filed
separately with the Securities and Exchange
Commission pursuant to a Confidential Treatment
Application filed with the Commission.
TABLE OF CONTENTS
Page SA
Number Number
ARTICLES
1. Subject Matter of Sale 1-1 SA-9
2. Delivery, Title and Risk
of Loss 2-1 SA-12
3. Price of Aircraft 3-1 SA-12
4. Taxes 4-1
5. Payment 5-1
6. Excusable Delay 6-1
7. Changes to the Detail
Specification 7-1 SA-1
8. Federal Aviation Requirements and
Certificates and Export License 8-1
9. Representatives, Inspection,
Flights and Test Data 9-1
10. Assignment, Resale or Lease 10-1
11. Termination for Certain Events 11-1
12. Product Assurance; Disclaimer and
Release; Exclusion of Liabilities;
Customer Support; Indemnification
and Insurance 12-1
13. Buyer Furnished Equipment and
Spare Parts 13-1
14. Contractual Notices and Requests 14-1
15. Miscellaneous 15-1
TABLE OF CONTENTS
SA
Number
EXHIBITS
A Aircraft Configuration SA-1
B Product Assurance Document SA-1
C Customer Support Document
D Price Adjustments Due to
Economic Fluctuations - Aircraft
E Buyer Furnished Equipment
Provisions Document
F Defined Terms Document
LETTER AGREEMENTS
1810-1 Waiver of Aircraft Demonstration Flight
TABLE OF CONTENTS
SA
Number
RESTRICTED LETTER AGREEMENTS
6-1162-RLL-932R1 *** SA-11
6-1162-RLL-933R8 Option Aircraft SA-9
6-1162-RLL-934R1 Disclosure of Confidential SA-1
Information
6-1162-RLL-935R1 *** SA-1
6-1162-RLL-936R4 Certain Contractual Matters SA-4
6-1162-RLL-937 Alternate Advance Payment Schedule
6-1162-RLL-938 ***
6-1162-RLL-939R1 Certification Flight Test Aircraft SA-1
6-1162-RLL-940R1 Training Matters SA-1
6-1162-RLL-941R1 Other Matters SA-1
6-1162-RLL-942 Open Configuration Matters
6-1162-RLL-943R1 Substitution Rights SA-6
6-1162-RLL-944 Airframe Maintenance Material Cost
Protection Program
6-1162-RLL-945 Comparison of 737-7H4 and 737-3H4
Block Fuel Burn
6-1162-RLL-1855R3 Additional Contractual Matters SA-4
6-1162-RLL-1856 *** SA-1
6-1162-RLL-1857 Service Ready Validation Program SA-1
Field Test
6-1162-RLL-1858R1 Escalation Matters SA-4
TABLE OF CONTENTS CON'T
SA
Number
RESTRICTED LETTER AGREEMENTS
6-1162-RLL-2036 Amortization of Costs for
Customer Unique Changes SA-1
6-1162-RLL-2037 Reconciliation of the Aircraft SA-1
Basic Price
6-1162-RLL-2073 Maintenance Training Matters SA-1
ARTICLE 2. Delivery, Title and Risk of Loss.
2.1 Time of Delivery. The Aircraft will be
delivered to Buyer by Boeing, assembled and ready for flight
and Buyer will accept delivery of the Aircraft, in
accordance with the following schedule:
Month and Year
of Delivery Quantity of Aircraft
Block A Aircraft
October 1997 Two (2)
November 1997 Two (2)
Block B Aircraft
January 1998 Two (2)
February 1998 Three (3)
March 1998 Two (2)
April 1998 Two (2)
May 1998 Two (2)
June 1998 One (1)
July 1998 Two (2)
September 1998 Two (2)
Block C Aircraft
February 1999 Four (4)
May 1999 Four (4)
July 1999 Four (4)
August 1999 One (1)
September 1999 Three (3)
Block D Aircraft
November 1999 Two (2)
December 1999 One (1)
January 2000 One (1)
March 2000 Four (4)
July 2000 Four (4)
August 2000 One (1)
September 2000 Two (2)
Block E Aircraft
January 2001 Three (3)
March 2001 Three (3)
July 2001 Three (3)
September 2001 Three (3)
Block F Aircraft
October 1998 One (1)
November 1998 Two (2)
December 1998 Two (2)
Block G Aircraft
March 1999 Two (2)
Block H Aircraft
June 1999 Two (2)
July 1999 One (1)
August 1999 One (1)
September 1999 Two (2)
October 1999 One (1)
March 2000 One (1)
April 2000 Two (2)
October 2000 Three (3)
April 2001 Three (3)
October 2001 Three (3)
Block I Aircraft
January 2002 Four (4)
March 2002 Four (4)
April 2002 Two (2)
July 2002 Four (4)
October 2002 Four (4)
Block J Aircraft
January 2003 Four (4)
March 2003 One (1)
Block K Aircraft
April 2004 Two (2)
July 2004 Three (3)
Block L Aircraft
October 1999 One (1)
November 1999 Two (2)
December 1999 One (1)
June 2000 Three (3)
July 2000 Three (3)
September 2000 One (1)
October 2000 One (1)
November 2000 Three (3)
December 2000 Two (2)
January 2001 One (1)
February 2001 One (1)
July 2001 One (1)
September 2001 One (1)
October 2001 One (1)
September 2002 Three (3)
2.2 Notice of Target Delivery Date. Boeing will
give Buyer notice of the Target Delivery Date of the
Aircraft approximately 30 days prior to the scheduled
month of delivery.
2.3 Notice of Delivery Date. If Boeing gives
Buyer at least 7 days' notice of the delivery date of the
Aircraft, and an Aircraft delivery is delayed beyond such
delivery date due to the responsibility of Buyer, Buyer will
reimburse Boeing for all costs incurred by Boeing as a
result of such delay, including amounts for storage,
insurance, Taxes, preservation or protection of the Aircraft
and interest on payments due.
2.4 Place of Delivery. The Aircraft will be
delivered at an airport facility selected by Boeing in the
State of Washington, unless mutually agreed otherwise.
2.5 Title and Risk of Loss. Title to and risk of
loss of an Aircraft will pass from Boeing to Buyer upon
delivery of such Aircraft, but not prior thereto.
2.6 Bill of Sale. Upon delivery of an Aircraft
Boeing will deliver to Buyer a bill of sale conveying good
title to such Aircraft, free of all liens, claims, charges
and encumbrances of every kind whatsoever, and such other
appropriate documents of title as Buyer may reasonably
request.
ARTICLE 3. Price of Aircraft.
3.1 Definitions.
3.1.1 Special Features are the features
incorporated in Exhibit A which have been selected by Buyer.
3.1.2 Base Aircraft Price is the Aircraft
Basic Price excluding the price of Special Features.
3.1.3 Aircraft Basic Price is comprised of
the Base Aircraft Price and the price of the Special
Features.
3.1.4 Economic Price Adjustment is the
adjustment to the Aircraft Basic Price (Base Aircraft and
Special Features) as calculated pursuant to Exhibit D.
3.1.5 Aircraft Price is the total amount
Buyer is to pay for the Aircraft at the time of delivery.
3.2 Aircraft Basic Price.
The Aircraft Basic Price, expressed in
July 1992 dollars, is set forth below:
Base Special Aircraft
Aircraft Price Features Basic Price
Block A, B, C,
D & E Aircraft *** *** ***
Block F & G
Aircraft *** *** ***
Block H
Aircraft *** *** ***
Block I
Aircraft *** *** ***
Block J
Aircraft *** *** ***
Block K
Aircraft *** *** ***
Block L
Aircraft *** *** ***
3.3 Aircraft Price. The Aircraft Price will be
established at the time of delivery of such Aircraft to
Buyer and will be the sum of:
3.3.1 the Aircraft Basic Price, which is ***
for the Block A, B, C, D and E Aircraft, *** for the Block F
and G Aircraft, *** for the Block H Aircraft, *** for the
Block I Aircraft, *** for the Block J Aircraft, *** for the
Block K Aircraft and *** for the Block L Aircraft; plus
3.3.2 the Economic Price Adjustments for the
Aircraft Basic Price, as calculated pursuant to the formulas
set forth in Exhibit D (Price Adjustments Due to Economic
Fluctuations - Aircraft); plus
3.3.3 other price adjustments made pursuant
to this Agreement or other written agreements executed by
Boeing and Buyer.
3.4 Advance Payment Base Price.
3.4.1 Advance Payment Base Price. For
advance payment purposes, the following estimated delivery
prices of the Aircraft (Advance Payment Base Price) have
been established, using currently available forecasts of the
escalation factors used by Boeing as of the date of signing
this Agreement. The Advance Payment Base Price of each
Aircraft is set forth below:
Month and Year of Advance Payment Base
Scheduled Delivery Price per Aircraft
Block A Aircraft
October 1997 ***
November 1997 ***
Block B Aircraft
January 1998 ***
February 1998 ***
March 1998 ***
April 1998 ***
May 1998 ***
June 1998 ***
July 1998 ***
September 1998 ***
Block C Aircraft
February 1999 ***
May 1999 ***
July 1999 ***
August 1999 ***
September 1999 ***
Block D Aircraft
November 1999 ***
December 1999 ***
January 2000 ***
March 2000 ***
July 2000 ***
August 2000 ***
September 2000 ***
Block E Aircraft
January 2001 ***
March 2001 ***
July 2001 ***
September 2001 ***
Block F Aircraft
October 1998 ***
November 1998 ***
December 1998 ***
Block G Aircraft
March 1999 ***
Block H Aircraft
June 1999 ***
July 1999 ***
August 1999 ***
September 1999 ***
October 1999 ***
March 2000 ***
April 2000 ***
October 2000 ***
April 2001 ***
October 2001 ***
Block I Aircraft
January 2002 ***
March 2002 ***
April 2002 ***
July 2002 ***
October 2002 ***
Block J Aircraft
January 2003 ***
March 2003 ***
Block K Aircraft
April 2004 ***
July 2004 ***
Block L Aircraft
October 1999 ***
November 1999 ***
December 1999 ***
June 2000 ***
July 2000 ***
August 2000 ***
September 2000 ***
October 2000 ***
November 2000 ***
December 2000 ***
January 2001 ***
February 2001 ***
July 2001 ***
September 2001 ***
October 2001 ***
September 2002 ***
3.4.2 Adjustment of Advance Payment Base
Prices - Long-Lead Aircraft. For Aircraft scheduled for
delivery 36 months or more after the date of this Agreement,
the Advance Payment Base Prices appearing in Article 3.4.1
will be used to determine the amount of the first advance
payment to be made by Buyer on the Aircraft. No later than
25 months before the scheduled month of delivery of each
affected Aircraft, Boeing will increase or decrease the
Advance Payment Base Price of such Aircraft as required to
reflect the effects of (i) any adjustments in the Aircraft
Basic Price pursuant to this Agreement and (ii) the
then-current forecasted escalation factors used by Boeing.
Boeing will provide the adjusted Advance Payment Base Prices
for each affected Aircraft to Buyer, and the advance payment
schedule will be considered amended to substitute such
adjusted Advance Payment Base Prices.
P.A. No. 1810
K/SWA