<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 33-59113
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 9, 1995)
$100,000,000
[SOUTHWEST AIRLINES LOGO]
7 3/8% DEBENTURES DUE 2027
------------------------
INTEREST PAYABLE MARCH 1 AND SEPTEMBER 1
------------------------
Southwest Airlines Co. (the "Company" or "Southwest") is offering
$100,000,000 aggregate principal amount of 7 3/8% Debentures Due 2027 (the
"Debentures"). Interest on the Debentures is payable semiannually on March 1 and
September 1 of each year, commencing September 1, 1997. The Debentures will be
redeemable at the option of the Company, in whole at any time or in part from
time to time, at a redemption price equal to the greater of (i) 100% of their
principal amount and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the date of
redemption, on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months), at the Treasury Rate (as defined herein) plus 20 basis points,
plus accrued interest thereon to the date of redemption. The Debentures will not
be subject to any sinking fund. See "Description of Debentures."
The Debentures will be general unsecured obligations of the Company and will
rank pari passu with the Company's existing and future unsecured and
unsubordinated indebtedness. The Debentures will be issued and represented by
one certificate and will be registered in the name of the nominee of The
Depository Trust Company ("DTC") or any successor depository (the "Depository")
and such nominee will be the sole holder of the Debentures. An owner of an
interest in the Debentures ("Beneficial Owner") will not be entitled to the
delivery of a definitive security except in limited circumstances. A Beneficial
Owner's interest in the Debentures will be recorded on the records of the
Depository's participants, in integral multiples of $1,000, and shall entitle
the Beneficial Owner to certain rights which may be exercised only through the
Depository and the Depository's book-entry system. The Debentures are expected
to trade in the DTC's Same-Day Funds Settlement System until maturity, and
secondary market trading activity for the Debentures will therefore settle in
immediately available funds. See "Description of Debentures -- Global
Securities."
The Debentures are an issue of the Company's Debt Securities described in
the accompanying Prospectus (the "Prospectus") to which this Prospectus
Supplement relates.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=====================================================================================================================
UNDERWRITING
PRICE TO DISCOUNT AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Debenture........................... 99.639% .875% 98.764%
- ------------------------------------------------------------------------------------------------------------------
Total................................... $99,639,000 $875,000 $98,764,000
==================================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from February 28, 1997.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act of 1933,
as amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated to be $150,000.
------------------------
The Debentures offered by this Prospectus Supplement are offered by the
Underwriters subject to prior sale, withdrawal, cancellation or modification of
the offer without notice, to delivery to and acceptance by the Underwriters and
to certain further conditions. It is expected that delivery of the Debentures
will be made through the book-entry facilities of the Depository on or about
February 28, 1997.
------------------------
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
FEBRUARY 25, 1997
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE DEBENTURES PURSUANT TO EXEMPTIONS FROM RULES 10b-6 AND
10b-7 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
INCORPORATION OF ADDITIONAL DOCUMENTS BY REFERENCE
In addition to the documents referred to in the Prospectus under
"Incorporation of Certain Documents by Reference," the Company incorporates
herein by reference its Current Report on Form 8-K dated February 24, 1997,
including the Company's Consolidated Financial Statements and related
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
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<PAGE> 3
THE COMPANY
Southwest Airlines Co. ("Southwest" or the "Company") is a major domestic
airline which provides single class air transportation characterized by
frequent, high-quality service at affordable prices. Southwest primarily serves
shorthaul city pairs, targeting the business commuter as well as leisure
travelers.
The Company was incorporated in Texas and commenced customer service on
June 18, 1971 with three Boeing 737 aircraft serving three Texas
cities -- Dallas, Houston and San Antonio. At December 31, 1996, Southwest
operated 243 Boeing 737 aircraft and provided service to 50 airports in 49
cities in 24 states throughout the United States.
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<PAGE> 4
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
FINANCIAL DATA:
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Operating revenues.................................... $3,406,170 $2,872,751 $2,591,933
Operating expenses.................................... 3,055,335 2,559,220 2,275,224
---------- ---------- ----------
Operating income...................................... 350,835 313,531 316,709
Other expenses, net................................... 9,473 8,391 17,186
---------- ---------- ----------
Income before income taxes............................ 341,362 305,140 299,523
Provision for income taxes............................ 134,025 122,514 120,192
---------- ---------- ----------
Net Income............................................ $ 207,337 $ 182,626 $ 179,331
========== ========== ==========
Net income per common and common equivalent share..... $ 1.37 $ 1.23 $ 1.22
Cash dividends per common share....................... $ .04284 $ .04000 $ .04000
Total assets at period-end............................ $3,723,479 $3,256,122 $2,823,071
Long-term obligations at period-end................... $ 650,226 $ 661,010 $ 583,071
Stockholders' equity at period-end.................... $1,648,312 $1,427,318 $1,238,706
OPERATING DATA:
Revenue passengers carried............................ 49,621,504 44,785,573 42,742,602(1)
Revenue passenger miles (RPMs)(000s).................. 27,083,483 23,327,804 21,611,266
Available seat miles (ASMs)(000s)..................... 40,727,495 36,180,001 32,123,974
Load factor........................................... 66.5% 64.5% 67.3%
Average length of passenger haul (miles).............. 546 521 506
Trips flown........................................... 748,634 685,524 624,476
Average passenger fare................................ $ 65.88 $ 61.64 $ 58.44
Passenger revenue yield per RPM....................... 12.07c 11.83c 11.56c
Operating revenue yield per ASM....................... 8.36c 7.94c 8.07c
Operating expenses per ASM............................ 7.50c 7.07c 7.08c
Fuel cost per gallon (average)........................ 65.47c 55.22c 53.92c
Number of employees at period-end..................... 22,944 19,933 16,818
Size of fleet at period-end (includes leased
aircraft).......................................... 243 224 199
</TABLE>
- ---------------
(1) Includes certain estimates for Morris Air Corporation, a wholly-owned
subsidiary of the Company whose operations were absorbed by Southwest in
October 1994.
S-4
<PAGE> 5
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at December 31, 1996 and as adjusted for the issuance and sale of the
Debentures offered hereby.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Current maturities of long-term debt.................... $ 12,327 $ 12,327
========== ==========
Long-term debt less current maturities:(1)
9 1/4% Notes due 1998................................. $ 100,000 $ 100,000
9.40% Notes due 2001.................................. 100,000 100,000
8 3/4% Notes due 2003................................. 100,000 100,000
7 7/8% Notes due 2007................................. 100,000 100,000
8% Notes due 2005..................................... 100,000 100,000
7 3/8% Debentures due 2027............................ -- 100,000
Capital leases........................................ 165,610 165,610
Other................................................. 10 10
---------- ----------
653,293 753,293
Debt discount........................................... (3,067) (3,428)
---------- ----------
Total long-term debt less current maturities.......... 650,226 749,865
---------- ----------
Stockholders' Equity:
Common stock, $1.00 par value;
authorized -- 680,000,000 shares, issued and
outstanding -- 145,112,090 shares(2)............... 145,112 145,112
Capital in excess of par value........................ 181,650 181,650
Retained earnings..................................... 1,321,550 1,321,550
---------- ----------
Total Stockholders' Equity....................... 1,648,312 1,648,312
---------- ----------
Total Capitalization.......................... $2,298,538 $2,398,177
========== ==========
</TABLE>
- ---------------
(1) For additional information as to long-term debt and lease obligations, see
the Consolidated Financial Statements of the Company and the accompanying
notes incorporated by reference herein.
(2) Excludes 35,257,962 shares of Common Stock reserved for issuance pursuant to
Employee stock benefit plans and 180,370,052 shares reserved for issuance
pursuant to the Common Stock Rights Agreement.
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<PAGE> 6
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges for the periods shown.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratios of Earnings to Fixed Charges*................ 2.73 2.62 2.93 2.83 2.25
</TABLE>
- ---------------
* The ratios for years prior to 1996 have been restated from those previously
published, to reflect the Company's revised estimate of the portion of
aircraft rental charges representative of an interest factor.
The ratios of earnings to fixed charges have been computed using earnings
which are the sum of net income, income taxes and fixed charges adjusted to
exclude interest capitalized during the period. Fixed charges are interest,
whether expensed or capitalized, amortization of debt discount and expense, and
that portion of rental charges estimated to be representative of an interest
factor.
DESCRIPTION OF DEBENTURES
The following description of the particular terms of the Debentures
(referred to in the Prospectus as the "Offered Debt Securities") supplements,
and to the extent inconsistent therewith replaces, the description of the
general terms and provisions of Debt Securities set forth in the Prospectus, to
which description reference is hereby made.
GENERAL
The Debentures are to be issued as a series of Debt Securities under the
Indenture, which is more fully described in the Prospectus. The maximum
aggregate principal amount of Debentures which may be issued is limited to
$100,000,000. Interest at the annual rate set forth on the cover page of this
Prospectus Supplement is to accrue from February 28, 1997 and is to be payable
semi-annually on March 1 and September 1, commencing September 1, 1997, to the
person in whose names the Debentures are registered at the close of business on
the preceding February 15 or August 15, respectively, and, if the Debentures are
no longer in book-entry form, will be paid by check mailed on or before the
payment date, by first class mail to such persons. The Debentures will mature on
March 1, 2027.
REDEMPTION
Optional Redemption. The Debentures will be redeemable, at the option of
the Company, in whole at any time or in part from time to time, on at least 30
days but not more than 60 days prior notice mailed to the registered address of
each holder of Debentures to be so redeemed, at a redemption price equal to the
greater of (i) 100% of the principal amount of the Debentures to be so redeemed
plus accrued interest thereon to the date of redemption and (ii) the sum of the
present values of the remaining scheduled payments of principal of the
Debentures to be so redeemed and interest thereon discounted to the date of
redemption, on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months), at the Treasury Rate (as defined herein) plus 20 basis points,
plus accrued interest thereon to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Debentures to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Debentures. "Independent Investment Banker" means the
Reference Treasury Dealer.
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<PAGE> 7
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, the average of
the Reference Treasury Dealer Quotations for such redemption date. "Reference
Treasury Dealer Quotations" means, with respect to the Reference Treasury Dealer
and any redemption date, the average, as determined by the Trustee, of the bid
and asked prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Trustee by the
Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such
redemption date.
"Reference Treasury Dealer" means Lehman Brothers Inc. and its successors;
provided, however, that if Lehman Brothers Inc. shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), the
Company shall substitute therefor another Primary Treasury Dealer.
Selection and Notice of Redemption. In the event that less than all of the
Debentures are to be redeemed at any time, selection of Debentures for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Debentures are
listed or, if the Debentures are not listed on a national securities exchange,
on a pro rata basis, provided, however, that the Debentures will be redeemed
only in the amount of $1,000 or integral multiples thereof. Notice of redemption
to the holders of Debentures to be redeemed as a whole or in part shall be given
by mailing notice of such redemption by first-class mail, postage prepaid, at
least 30 days and not more than 60 days prior to the date fixed for redemption
to such holders of Debentures at their last addresses as they shall appear upon
the registry books. Unless the Company defaults in payment of the redemption
price, on and after the redemption date, interest ceases to accrue on Debentures
or portions thereof called for redemption.
Sinking Fund. There will be no sinking fund for the Debentures.
DEFEASANCE
Subject to certain conditions described in the Prospectus, the Company
shall be deemed to have paid and discharged the entire indebtedness on all the
outstanding Debentures by depositing with the Trustee (i) as trust funds in
trust an amount sufficient to pay and discharge the entire indebtedness on all
outstanding Debentures for principal and interest, or (ii) as obligations in
trust such amount of direct obligations of, or obligations as the principal of
and interest on which are fully guaranteed, by, the United States of America as
will, together with the income to accrue thereon without consideration of any
reinvestment thereof, be sufficient to pay and discharge the entire indebtedness
on all outstanding Debentures.
GLOBAL SECURITIES
The Debentures initially will be represented by one or more global
securities (the "Global Securities") deposited with DTC and registered in the
name of DTC or any successor depository (the "Depository") or its nominee. The
Depository will maintain the Debentures in denominations of $1,000 and integral
multiples thereof through its book-entry facilities. Unless and until Debentures
are issued in definitive certificated form under the limited circumstance
described in the Prospectus under "Description of Debt Securities -- Global Debt
Securities," no beneficial owner of a Debenture shall be entitled to receive a
definitive certificate representing a Debenture. See "Description of Debt
Securities -- Global Debt Securities" in the Prospectus for additional
information concerning the Global Securities and book-entry procedures.
DTC has advised the Company and the Underwriters as follows: DTC is a
limited-purpose trust company organized under the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered pursuant
to the provisions of Section 17A of the Securities Exchange Act of 1934, as
amended. DTC was created to hold securities of its participants and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
S-7
<PAGE> 8
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include securities brokers and
dealers (including the Underwriters), banks, trust companies, clearing
corporations and certain other organizations, some of which (and/or their
representatives) own interests in DTC. Access to DTC's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain custodial relationship with a participant, either
directly or indirectly.
Settlement for the Debentures will be made in same-day funds. All payments
of principal and interest will be made by the Company in immediately available
funds. To the extent any Debentures are held by DTC, such Debentures will trade
in DTC's Same-Day Funds Settlement System until maturity, and therefore DTC will
require secondary trading activity in the Debentures to be settled in
immediately available funds.
UNDERWRITING
Subject to the terms and conditions set forth in the Terms Agreement (which
incorporates by reference the terms of the Underwriting Agreement, except to the
extent inconsistent therewith), the Company has agreed to sell to each of the
Underwriters named below, and each of the Underwriters has severally agreed to
purchase from the Company, the principal amount of Debentures set forth opposite
its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
UNDERWRITER DEBENTURES
----------- -------------------
<S> <C>
Lehman Brothers Inc......................................... $ 33,400,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... 33,300,000
Salomon Brothers Inc........................................ 33,300,000
------------
Total............................................. $100,000,000
============
</TABLE>
In the Underwriting Agreement, the Underwriters have severally agreed,
subject to the terms and conditions set forth therein, to purchase all the
Debentures offered hereby if any of the Debentures are purchased. In the event
of a default by any Underwriter, the Underwriting Agreement provides that, in
certain circumstances, the purchase commitments of the nondefaulting
Underwriters may be increased or the Underwriting Agreement may be terminated.
The Underwriters propose initially to offer the Debentures to the public at
the price to public set forth on the cover page of this Prospectus Supplement
and to certain dealers at such price less a concession of not in excess of .50%
of the principal amount of the Debentures. The Underwriters may allow and such
dealers may reallow concessions not in excess of .25% of such principal amount
of the Debentures to certain other dealers. After the initial public offering,
the public offering price and such concessions may be changed.
The Company does not intend to apply for listing of the Debentures on a
national securities exchange, but has been advised by the Underwriters that they
currently intend to make a market in the Debentures, as permitted by applicable
laws and regulations. The Underwriters are not obligated, however, to make a
market in the Debentures and any such market making may be discontinued at any
time at the sole discretion of the Underwriters. Accordingly, no assurance can
be given as to the liquidity of, or trading markets for, the Debentures.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments the Underwriters may be required to make in respect
of such liabilities.
The Underwriters (except Lehman Brothers Inc.) acted as underwriters of a
public offering in September 1996 of certain pass-through trust certificates
relating to six aircraft leased by the Company, for which they received
customary underwriting commissions. In addition, the Underwriters and their
respective affiliates may engage in transactions with and perform services for
the Company in the ordinary course of business.
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<PAGE> 9
LEGAL OPINIONS
The validity of the Debentures will be passed upon for the Company by
Deborah Ackerman, Associate General Counsel, who beneficially owns approximately
18,000 shares of the common stock of the Company and for the Underwriters by
Vinson & Elkins L.L.P., Houston, Texas. Vinson & Elkins L.L.P. also acts as
counsel to the Company in matters unrelated to the offering of the Debentures.
Members of the firm of Vinson & Elkins L.L.P. having responsibility for the
Company's legal matters beneficially own approximately 5,500 shares of common
stock of the Company.
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<PAGE> 10
PROSPECTUS
SOUTHWEST AIRLINES CO.
DEBT SECURITIES
---------------------
Southwest Airlines Co. (the "Company") intends to issue from time to time
unsecured debt securities (the "Debt Securities") from which the Company will
receive up to an aggregate of $400,000,000 in proceeds and which will be offered
on terms determined by market conditions at the time of sale. The Debt
Securities may be issued in one or more series with the same or various
maturities, at par or with an original issue discount. The specific designation,
aggregate principal amount, authorized denominations, offering or purchase
price, maturity, rate and time of payment of any interest, any redemption terms
or other specific terms and any listing on a securities exchange of the Debt
Securities in respect of which this Prospectus is being delivered (the "Offered
Debt Securities") are set forth in the accompanying Prospectus Supplement (the
"Prospectus Supplement"), together with any other terms of offering of the
Offered Debt Securities.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
This Prospectus may not be used to consummate sales of the Debt Securities
unless accompanied by a Prospectus Supplement.
---------------------
The date of this Prospectus is May 9, 1995.
<PAGE> 11
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports, proxy or
information statements and other information with the Securities and Exchange
Commission (the "Commission") relating to its business, financial position,
results of operations and other matters. Such reports, proxy or information
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 and at certain of its Regional
Offices, located at Citicorp Center, 500 West Madison Street, Chicago, Illinois
60661-2511; and Seven World Trade Center, New York, New York 10048. Copies of
such material can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Such material can also be inspected and copied at the offices of the New
York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement under
the Securities Act of 1933 with respect to the Debt Securities offered hereby.
This Prospectus does not contain all of the information set forth in such
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Reference is made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Debt Securities offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1994, heretofore filed with the Commission, is incorporated by reference
herein and made a part hereof.
In addition, all documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 subsequent to the date
of this Prospectus and prior to the termination of the offering of the Debt
Securities offered hereby shall be deemed incorporated herein by reference and
such documents shall be deemed to be a part hereof from the date of filing such
documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein or in the accompanying Prospectus
Supplement modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A
COPY OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED HEREIN BY REFERENCE
(OTHER THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE INTO THE DOCUMENTS THAT THIS PROSPECTUS INCORPORATES).
WRITTEN OR TELEPHONE REQUESTS SHOULD BE DIRECTED TO: SOUTHWEST AIRLINES CO.,
P.O. BOX 36611, DALLAS, TEXAS 75235, ATTENTION: JOHN D. OWEN, TREASURER
(TELEPHONE 214/792-4334).
2
<PAGE> 12
THE COMPANY
Southwest Airlines Co. ("Southwest" or the "Company") is a major domestic
airline which provides single class air transportation characterized by
frequent, high quality service at affordable prices. Southwest primarily serves
short-haul city pairs, targeting the business commuter as well as leisure
travelers.
The Company was incorporated in Texas in 1967. The Company's principal
executive offices are located at 2702 Love Field Drive, Dallas, Texas 75235. The
Company's mailing address is P.O. Box 36611, Love Field, Dallas, Texas 75235,
where its telephone number is 214/792-4000.
RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratios of Earnings to Fixed Charges..................... 2.93 2.83 2.25 1.46 2.22
</TABLE>
The ratios of earnings to fixed charges have been computed using earnings
which are the sum of net income, income taxes and fixed charges adjusted to
exclude interest capitalized during the period. Fixed charges are interest,
whether expensed or capitalized, amortization of debt discount and expense and
that portion of rental charges estimated to be representative of an interest
factor.
A statement setting forth the calculation of the ratios of earnings to
fixed charges is filed as an exhibit to the Registration Statement of which this
Prospectus is a part.
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities offered hereby will
be added to working capital of the Company and will be available for general
corporate purposes, including the acquisition of aircraft and related equipment,
unless otherwise indicated in the Prospectus Supplement relative to the Offered
Debt Securities.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Offered Debt Securities. The
particular terms of the Offered Debt Securities and the extent, if any, to which
such general provisions may not apply to the Offered Debt Securities are
described in the Prospectus Supplement.
The Debt Securities are to be issued under an Indenture (the "Indenture")
between the Company and U.S. Trust Company of Texas, N.A. (the "Trustee"), as
Trustee. The following statements are subject to the detailed provisions of the
Indenture, a copy of which is filed as an exhibit to the Registration Statement.
Wherever any particular provision of the Indenture or terms defined therein are
referred to, such provisions and terms are incorporated by reference as a part
of the statements made herein and such statements are qualified in their
entirety by such references. Parenthetical references in italic type are to the
Indenture.
GENERAL
The Indenture does not limit the amount of Debt Securities that can be
issued thereunder. Debt Securities will be issued from time to time and offered
on terms determined by market conditions at the time of sale.
The Debt Securities may be issued in one or more series with the same or
various maturities at par or at a discount. (Section 2.03) Any Debt Securities
bearing no interest or interest at a rate which at the time of issuance is below
market rates ("Original Issue Discount Securities") will be sold at a discount
(which may be substantial) below their stated principal amount. Federal income
tax consequences and other special
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<PAGE> 13
considerations applicable to any such substantially discounted Debt Securities
will be described in the Prospectus Supplement relating thereto.
Reference is made to the Prospectus Supplement for the following terms of
the Offered Debt Securities: (i) the designation, aggregate principal amount and
authorized denominations of the Offered Debt Securities; (ii) the percentage of
their principal amount at which such Offered Debt Securities will be issued;
(iii) the date or dates on which the Offered Debt Securities will mature; (iv)
the rate per annum, if any, at which the Offered Debt Securities will bear
interest, or the method of determining such rate or rates; (v) the times at
which any such interest will be payable; (vi) whether such Debt Securities are
to be issued in whole or in part in the form of one or more temporary or
permanent global securities and, if so, the identity of the depositary for such
global security or securities; (vii) any redemption terms; and (viii) any other
terms and conditions that apply to such Offered Debt Securities. Principal,
premium, if any, and interest, if any, will be payable and the Offered Debt
Securities will be transferable at the Corporate Trust Office of the Trustee in
Dallas, Texas. (Sections 2.03, 3.02)
The Debt Securities will be unsecured and will rank equally and ratably
with other unsecured and unsubordinated debt of the Company.
Neither the Indenture nor any of the outstanding senior indebtedness of the
Company contains any provisions which would afford holders protection in the
event of a highly leveraged or other transaction involving the Company that may
adversely affect holders.
The Offered Debt Securities will be issued only in fully registered form
without coupons and in denominations of $1,000 and any multiple thereof, unless
otherwise specified in the Prospectus Supplement. No service charge will be made
for any transfer or exchange of any Debt Securities but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. (Sections 2.03, 2.06)
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more fully registered global securities (a "Registered Global
Security") that will be deposited with a depositary (the "Depositary") or with a
nominee for the Depositary identified in the applicable Prospectus Supplement.
In such a case, one or more Registered Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding Debt Securities of the series to be represented
by such Registered Global Security or Securities. Unless and until it is
exchanged in whole or in part for Debt Securities in definitive certificated
form, a Registered Global Security may not be registered for transfer or
exchange except as a whole by the Depositary for such Registered Global Security
to a nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or any
such nominee to a successor Depositary for such series or a nominee of such
successor Depositary and except in the circumstances described below or in the
applicable Prospectus Supplement. (Section 2.10)
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Registered Global
Security will be described in the applicable Prospectus Supplement. The Company
expects that the following provisions will apply to depositary arrangements.
Upon the issuance of any Registered Global Security, and the deposit of
such Registered Global Security with or on behalf of the Depositary for such
Registered Global Security, the Depositary will credit, on its book-entry
registration and transfer system, the respective principal amounts of the Debt
Securities represented by such Registered Global Security to the accounts of
institutions ("participants") that have accounts with the Depositary or its
nominee. The accounts to be credited will be designated by the underwriters or
agents engaging in the distribution of such Debt Securities or by the Company,
if such Debt Securities are offered and sold directly by the Company. Ownership
of beneficial interests in a Registered Global Security will be limited to
participants or persons that may hold interests through participants. Ownership
of beneficial interests by participants in such Registered Global Security will
be shown on, and the
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<PAGE> 14
transfer of that ownership interest will be effected only through, records
maintained by the Depositary for such Registered Global Security or by its
nominee. Ownership of beneficial interests in such Registered Global Security by
persons that hold through participants will be shown on, and the transfer of
that ownership interest within such participant will be effected only through,
records maintained by such participant. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in certificated form. The foregoing limitations and such laws may impair the
ability to transfer beneficial interests in such Registered Global Securities.
So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such Registered Global Security for all
purposes under the Indenture. Unless otherwise specified in the applicable
Prospectus Supplement and except as specified below, owners of beneficial
interests in such Registered Global Security will not be entitled to have Debt
Securities of the series represented by such Registered Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of such series in certificated form and will not be
considered the holders thereof for any purposes under the Indenture. (Section
2.10) Accordingly, each person owning a beneficial interest in such Registered
Global Security must rely on the procedures of the Depositary and, if such
person is not a participant, on the procedures of the participant through which
such person owns its interest, to exercise any rights of a holder under the
Indenture. The Depositary may grant proxies and otherwise authorize participants
to give or take any request, demand, authorization, direction, notice, consent,
waiver or other action which a holder is entitled to give or take under the
Indenture. The Company understands that, under existing industry practices, if
the Company requests any action of holders or an owner of a beneficial interest
in such Registered Global Security desires to give any notice or take any action
a holder is entitled to give or take under the Indenture, the Depositary would
authorize the participants to give such notice or take such action, and
participants would authorize beneficial owners owning through such participants
to give such notice or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
Unless otherwise specified in the applicable Prospectus Supplement,
payments with respect to principal, premium, if any, and interest, if any, on
Debt Securities represented by a Registered Global Security registered in the
name of a Depositary or its nominee will be made to such Depositary or its
nominee, as the case may be, as the registered owner of such Registered Global
Security.
The Company expects that the Depositary for any Debt Securities represented
by a Registered Global Security, upon receipt of any payment of principal,
premium or interest, will immediately credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Registered Global Security as shown on the records
of such Depositary. The Company also expects that payments by participants to
owners of beneficial interests in such Registered Global Security held through
such participants will be governed by standing instructions and customary
practices, as is now the case with the securities held for the accounts of
customers registered in "street names," and will be the responsibility of such
participants. None of the Company, the Trustee or any agent of the Company shall
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests of a Registered
Global Security, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests. (Section 2.06)
Unless otherwise specified in the applicable Prospectus Supplement, if the
Depositary for any Debt Securities represented by a Registered Global Security
is at any time unwilling or unable to continue as Depositary and a successor
Depositary is not appointed by the Company within 90 days, or an Event of
Default (or an event which, with the giving of notice or lapse of time would
constitute an Event of Default) with respect to the Debt Securities has occurred
and is continuing, then the Company will issue such Debt Securities in
definitive certificated form in exchange for such Registered Global Security. In
addition, the Company may at any time and in its sole discretion determine not
to have any of the Debt Securities of a series represented by one or more
Registered Global Securities and, in such event, will issue Debt Securities of
such series in definitive certificated form in exchange for all of the
Registered Global Security or Securities representing such Debt Securities.
(Section 2.06)
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<PAGE> 15
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The Indenture provides that the Company may, without the consent of the
holders of the Debt Securities, consolidate with, or sell or convey all or
substantially all of its properties and assets to, or merge into or with another
corporation, provided that in any such case (i) if the Company is not the
continuing corporation, the successor corporation shall assume by a supplemental
indenture the Company's obligations under the Indenture and (ii) immediately
after giving effect to such transaction no Event of Default, and no event which
after notice or lapse of time would become an Event of Default, shall have
occurred and be continuing. (Section 10.01) In case of any such consolidation,
merger, sale or conveyance and upon any such assumption by the successor
corporation, such successor corporation shall succeed to and be substituted for
the Company as obligor on the Debt Securities, with the same effect as if it had
been named in the Indenture as the Company. (Section 10.02)
EVENTS OF DEFAULT
The following events are "Events of Default" under the Indenture with
respect to Debt Securities of each series: (a) failure with respect to such
series to pay principal (including any sinking fund installment) or premium, if
any, when due; (b) failure with respect to such series for a period of 30 days
to pay interest; (c) failure for a period of 90 days after notice to perform in
any material respect any other covenants in respect of such series; (d) default
under any instrument under which there may be issued or by which they may be
secured or evidenced any indebtedness for money borrowed by the Company
(including the Indenture) resulting in the acceleration of such indebtedness in
excess of $50 million, without such indebtedness having been discharged, or such
acceleration having been rescinded or annulled, within 10 days after notice; or
(e) certain events in bankruptcy, insolvency, or reorganization of the Company.
(Section 5.01)
The Indenture provides that if an Event of Default described above occurs
and is continuing with respect to any series, either the Trustee or the holders
of not less than 25% in aggregate principal amount of the Debt Securities of
such series then outstanding may declare the principal (or, in the case of
Original Issue Discount Securities, the portion thereof specified in the terms
thereof) of all outstanding Debt Securities of such series and the interest
accrued thereon, if any, to be due and payable immediately, but under certain
conditions such declarations may be annulled and past defaults (except for a
default in the payment of principal of or interest or premium, if any, on such
Debt Securities) may be waived by the holders of a majority in aggregate
principal amount of the then outstanding Debt Securities of each such series.
(Sections 5.01 and 5.06)
Under the Indenture the Trustee must give to the holders of each series of
Debt Securities notice of all uncured defaults known to it with respect to such
series within 90 days after the occurrence of such a default (the term default
to include the events specified above without grace periods); provided that,
except in the case of default in the payment of principal of, or interest on,
any of the Debt Securities, the Trustee shall be protected in withholding such
notice if it in good faith determines that the withholding of such notice is in
the interests of the Debt Securityholders of such series. (Section 5.07)
The Company must furnish to the Trustee annually an officer's certificate
as to his or her knowledge of the Company's compliance with all of the
conditions and covenants under the Indenture. (Section 4.03)
No holder of any Debt Securities of any series may institute any legal
action unless he shall have given the Trustee written notice of default and
unless (i) the holders of not less than 25% in aggregate principal amount of the
Debt Securities of such series then outstanding shall have requested the Trustee
to act, (ii) such holders shall have offered the Trustee such reasonable
indemnity as the Trustee may require, (iii) the Trustee shall have failed to
institute an action for 60 days thereafter and (iv) no inconsistent direction
shall have been given to the Trustee by the holders of a majority in aggregate
principal amount of Debt Securities of all series affected (voting as one
class). (Section 5.04)
The holders of a majority in aggregate principal amount of the Debt
Securities of any or all series affected and then outstanding (voting as one
class) will have the right, subject to certain limitations, to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee. (Section
5.06) The Indenture provides that in case an Event of Default
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<PAGE> 16
shall occur (which shall not have been cured or waived), the Trustee in
exercising its rights and powers under the Indenture, will be required to use
the degree of care of a prudent man in the conduct of his own affairs. (Section
6.01) Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
of the Debt Securityholders unless they shall have offered to the Trustee
reasonable security or indemnity. (Section 6.02)
MODIFICATION OF THE INDENTURE
The Company and the Trustee, with the consent of the holders of not less
than 66 2/3% in aggregate principal amount of the Debt Securities of all series
then outstanding and affected (voting as one class), may add any provisions to,
or change in any manner or eliminate any of the provisions of, the Indenture or
modify in any manner the rights of the holders of the Debt Securities of each
such series; but no such modification may be made which would (a) extend the
fixed maturity of the Debt Securities or reduce the rate or extend the time of
payment of interest, if any, thereon, or reduce any amount payable on redemption
thereof or reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon an acceleration of the maturity
thereof pursuant to Section 5.01, or impair or affect the right of any Debt
Securityholder to institute suit for the payment thereof or the right of
repayment, if any, at the option of the Debt Securityholder, without the consent
of the holder of each Debt Security so affected; or (b) reduce the percentage of
aggregate principal amount of Debt Securities of any series, or of all series
(voting as one class), as the case may be, the consent of the holders of which
is required for any such modification without the consent of the holders of all
Debt Securities of each such series so affected. (Section 9.02)
DEFEASANCE
If the terms of any series of Debt Securities so provide, the Company shall
be deemed to have paid and discharged the entire indebtedness on all outstanding
Debt Securities of such series by depositing with the Trustee (i) as trust funds
in trust an amount sufficient to pay and discharge the entire indebtedness on
all Debt Securities of such series for principal and interest, or (ii) as
obligations in trust such amount of direct obligations of, or obligations the
principal of and interest on which are fully guaranteed by, the United States of
America as will, together with the income to accrue thereon without
consideration of any reinvestment thereof, be sufficient to pay and discharge
the entire indebtedness on all such Debt Securities for principal and interest.
Such a trust may be established only if, among other things, (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling, or (ii) since the date of the Indenture there has been a change in
applicable federal income tax law, in either case to the effect that holders of
such Debt Securities will not recognize income, gain or loss for federal income
tax purposes as a result of such deposit, defeasance and discharge and will be
subject to federal income tax on the same amounts and in the same manner and at
the same times as would have been the case if such deposit, defeasance and
discharge had not occurred. (Section 11.05) In the event of any such defeasance,
the holders of such Debt Securities would thereafter be able to look only to
such trust fund for payment of principal, premium, if any, and interest.
CONCERNING THE TRUSTEE
The Trustee under the Indenture is U.S. Trust Company of Texas, N.A.
The Indenture contains certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize for its own account on certain property received in
respect of any such claim as security or otherwise. (Section 6.13) The Trustee
will be permitted to engage in certain other transactions; however, if it
acquires any conflicting interest (as described in the Indenture) it must
eliminate such conflict or resign. (Section 6.08)
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<PAGE> 17
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in any of three ways: (i) through
underwriters or dealers; (ii) directly to a limited number of institutional
purchasers or to a single purchaser; or (iii) through agents. Any such
underwriter, dealer or agent may be deemed to be an underwriter within the
meaning of the Securities Act of 1933. The Prospectus Supplement relative to the
Offered Debt Securities sets forth the terms of the offering of the Offered Debt
Securities, including the name or names of any underwriters, the purchase price
of the Offered Debt Securities and the proceeds to the Company from such sale,
any underwriting discounts, commissions, and other items constituting
underwriters' compensation, any initial public offering price and any discounts
or concessions allowed or reallowed or paid to dealers and any securities
exchanges on which the Offered Debt Securities may be listed.
If underwriters are used in the sale, the Debt Securities will be acquired
by the underwriters for their own account and may be resold from time to time in
one or more transactions, at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, or at prices related to such
prevailing market price, or at negotiated prices. The Debt Securities may be
offered to the public either through underwriting syndicates represented by
managing underwriters or directly by the managing underwriters. Unless otherwise
set forth in the Prospectus Supplement, the obligations of the underwriters to
purchase the Offered Debt Securities will be subject to certain conditions
precedent and the underwriters will be obligated to purchase all the Offered
Debt Securities if any are purchased. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
Offered Debt Securities may be sold directly by the Company or through
agents designated by the Company from time to time. Any agent involved in the
offer or sale of the Offered Debt Securities in respect of which this Prospectus
is delivered will be named, and any commissions payable by the Company to such
agent will be set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
dealers acting as the Company's agents to solicit offers by certain institutions
to purchase Offered Debt Securities from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to Delayed Delivery
Contracts ("Contracts") providing for a payment and delivery on the date stated
in the Prospectus Supplement. Each Contract will be for an amount not less than,
and the aggregate principal amount of Offered Debt Securities sold pursuant to
Contract shall be not more than, the respective amounts stated in the Prospectus
Supplement. Institutions with whom Contracts, when authorized, may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions, and other
institutions but shall in all cases be subject to the approval of the Company.
Contracts will not be subject to any conditions except (i) the purchase by an
institution of the Offered Debt Securities covered by its Contract shall not at
the time of delivery be prohibited under the laws of any jurisdiction in the
United States to which such institution is subject, and (ii) if the Offered Debt
Securities are being sold to underwriters, the Company shall have sold to such
underwriters the total principal amount of the Offered Debt Securities less the
principal amount thereof covered by Contracts.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act of 1933, or to contribution by
the Company to payments they may be required to make in respect thereof. Agents
and underwriters may be customers of, engage in transactions with, or perform
services for, the Company in the ordinary course of business.
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<PAGE> 18
LEGAL OPINIONS
The validity of any series of Debt Securities will be passed upon for the
Company by Deborah Ackerman, Associate General Counsel of the Company, and for
any agents, dealers or underwriters by the firm designated in the Prospectus
Supplement applicable to such series.
EXPERTS
The consolidated financial statements of Southwest Airlines Co. appearing
in the Southwest Airlines Co. Annual Report (Form 10-K) for the year ended
December 31, 1994, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements have been incorporated herein
by reference in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
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NO DEALER, SALESPERSON OR INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION MAY NOT
LAWFULLY BE MADE.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF.
------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE COMPANY............................ S-3
CAPITALIZATION......................... S-5
RATIOS OF EARNINGS TO FIXED CHARGES.... S-6
DESCRIPTION OF DEBENTURES.............. S-6
UNDERWRITING........................... S-8
LEGAL OPINIONS......................... S-9
PROSPECTUS
AVAILABLE INFORMATION.................. 2
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE............................ 2
THE COMPANY............................ 3
RATIOS OF EARNINGS TO FIXED CHARGES.... 3
USE OF PROCEEDS........................ 3
DESCRIPTION OF DEBT SECURITIES......... 3
PLAN OF DISTRIBUTION................... 8
LEGAL OPINIONS......................... 9
EXPERTS................................ 9
</TABLE>
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================================================================================
$100,000,000
SOUTHWEST AIRLINES CO.
7 3/8% DEBENTURES DUE
MARCH 1, 2027
- --------------------------------------------------------------------------------
PROSPECTUS SUPPLEMENT
FEBRUARY 25, 1997
- --------------------------------------------------------------------------------
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
================================================================================
