<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
AMENDMENT TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1996
Commission File No. 1-7259
SOUTHWEST AIRLINES CO.
(Exact name of registrant as specified in its charter)
TEXAS 74-1563240
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
P.O. BOX 36611
DALLAS, TEXAS 75235-1611
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 792-4000
The undersigned registrant hereby amends the following items, financial
statements, exhibits, or other portions of its Annual Report for the year
ended December 31, 1996 on Form 10-K as set forth in the pages attached
hereto:
(List all such items, financial statements, exhibits or other portions
amended)
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
3. Exhibits:
10.3 Purchase Agreement No. 1810, dated January 19, 1994
between The Boeing Company and Southwest (incorporated by
reference to Exhibit 10.4 to Southwest's Annual Report on
Form 10-K for the year ended December 13, 1993 (File No.
1-7259)); Supplemental Agreement No. 1 (filed herewith).
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.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 9, 1997 SOUTHWEST AIRLINES CO.
Registrant
By: /s/ Gary C. Kelly
Gary C. Kelly
Vice President - Finance, Chief Financial Officer
<PAGE>
<PAGE> 1
Amended
Exhibit 10.3
Supplemental Agreement No. 1
to
Purchase Agreement No. 1810
between
The Boeing Company
and
SOUTHWEST AIRLINES CO.
Relating to Boeing Model 737-7H4 Aircraft
THIS SUPPLEMENTAL AGREEMENT, entered into as of February 26, 1997, by
and between THE BOEING COMPANY, a Delaware corporation with its principal
offices in Seattle, Washington, (Boeing) and SOUTHWEST AIRLINES CO., a
Texas corporation with its principal offices in City of Dallas, State of
Texas (Buyer);
WHEREAS, the parties hereto entered into Purchase Agreement No. 1810
dated January 19, 1994, relating to Boeing Model 737-7H4 aircraft (the
Agreement) and;
WHEREAS, the parties desire to supplement the Agreement as hereinafter
set forth to update the description of the Aircraft, revise the price for
Special Features, Aircraft Basic Price and Advance Payment Base Price,
delete any reference to Program Changes, update Exhibit A, change the
warranty period in Exhibit B Part A, revise the Option Aircraft letter
agreement, update the performance guarantees, revise the number of flight
test hours, revise the training letter agreement, revise program changes in
the Other Matters letter agreement, add new letter agreements for
additional considerations, galley interchangeability, service ready
validation program field test, escalation sharing, amortization of costs
for customer unique changes, maintenance training and a price
reconciliation for the Aircraft Basic Price.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree to amend the Agreement as follows:
_____________________
*** 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.
SA-1-1
<PAGE>
<PAGE> 2
1. The Table of Contents of the Agreement is deleted in its entirety and
a new Table of Contents is attached hereto and incorporated into the
Agreement by this reference.
2. Article 1, entitled "Subject Matter of Sale," paragraph 1.1 entitled
"The Aircraft" is deleted in its entirety and replaced by a new paragraph
1.1. Such new paragraph 1.1 provides a new date of October 30, 1996 for
the Boeing Detail Specification. Such new page 1-1 is attached hereto and
incorporated into the Agreement by this reference.
3. Article 3, entitled "Price of Aircraft", paragraph 3.2 entitled
"Aircraft Basic Price" is revised by ***. Paragraph 3.3 entitled "Aircraft
Price," subparagraph 3.3.1 is revised ***. Such new paragraph 3.2 and
subparagraph 3.3.1 provide the new Aircraft Basic Price for the Aircraft.
Paragraph 3.4 entitled "Advance Payment Base Price," subparagraph 3.4.1
entitled "Advance Payment Base Price" is revised by updating the Advance
Payment Base Prices because of the new Aircraft Basic Price and by using
current escalation factors as of the date of this Supplemental Agreement.
Such new pages 3-1 and 3-2 are attached hereto and incorporated into the
Agreement by this reference.
4. Article 7, entitled "Changes to the Detail Specification," paragraph
7.2 "Program Changes" is deleted in its entirety because Program Changes
are not a part of the Agreement. Paragraph 7.3 entitled "Change Orders"
becomes paragraph 7.2 and page 7-2 is deleted in its entirety. Such new
page 7-1 is attached hereto and incorporated into the Agreement by this
reference.
5. Exhibit A, entitled "Aircraft Configuration" is deleted in its
entirety and replaced by a new Exhibit A reflecting the configuration
reached between Buyer and Boeing. Such new Exhibit A is attached hereto
and incorporated into the Agreement by this reference.
6. Exhibit B, entitled "Product Assurance Document," Part A entitled
"Boeing Warranty," paragraph 4 entitled "Warranty Periods and Claims,"
subparagraphs 4.1.1 and 4.1.2 and Paragraph 8 entitled "Reimbursement for
Certain Inspection Labor Costs," subparagraph 8.1.1 is revised by deleting
36 months and inserting 48 months. A new revised Part A is attached hereto
and incorporated into the Agreement by this reference.
SA-1-2
<PAGE>
<PAGE> 3
7. Letter Agreement No. 6-1162-RLL-933 entitled "Option Aircraft" is
deleted in its entirety and replaced with Letter Agreement No. 6-1162-RLL-933R1
attached hereto and incorporated herein by this reference. The
letter agreement was revised by adding four (4) Option Aircraft in the
preamble for a total of sixty-seven (67) Option Aircraft. Article 1,
entitled "Delivery of Option Aircraft" is revised by adding two (2) each
737-7H4 Option Aircraft to the Block G delivery stream in the months August
and October 1999. Article 2 entitled "Delivery of Rollover Option
Aircraft," subparagraph 2.2.1 is revised by changing the quantity of Option
Aircraft from sixty-three (63) to sixty-seven (67). *** August and October
1999. Paragraph 5 entitled "Option Exercise," subparagraph 5.2 is revised
by deleting in the last sentence of the paragraph the words advance payment
and inserting the words option deposit. A new paragraph 8 entitled
"Confidential Treatment" is added to the body of the letter agreement.
Attachment A, Paragraph 1 entitled "Option Aircraft Description and
Changes", subparagraph 1.1 entitled "Aircraft Description" is revised by
inserting a new date for the Detail Specification and deleting reference to
items 1, 2, and subparagraphs a, b, c, and d. The configuration items
listed in paragraphs 1, 2, and subparagraphs a, b, c, and d are now
included in the Detail Specification with the new date. Paragraph 1.3
entitled "Program Changes" is deleted in its entirety because Program
Changes are no longer a part of the Agreement. Paragraph 1.4 entitled
"Effect of Changes" becomes paragraph 1.3. Paragraph 2 entitled "Price
Description," subparagraph 2.1 entitled "Price Elements Per Aircraft" is
revised by adding the August and October 1999 Option Aircraft to the
Aircraft Delivery Mo. and Yr. column and by deleting the Aircraft and
Estimated Special Features Price, Estimated Escalation and Advance Payment
Base Price Columns and replacing the columns with the respective new
pricing elements. Paragraph 2 entitled "Price Description," paragraph 2.3
entitled "Price Adjustments for Option Aircraft Delivering from January
2002 through December 2006," subparagraph 2.3.5 entitled "Base Price
Adjustments," is revised by ***.
8. Letter Agreement No. 6-1162-RLL-934 entitled "Disclosure of
Confidential Information" is deleted in its entirety and replaced with
Letter Agreement No. 6-1162-RLL-934R1 which is attached hereto and
incorporated herein by this reference. The letter agreement was revised to
update the list of confidential letter agreements.
9. Letter Agreement No. 6-1162-RLL-935 entitled "Aircraft Performance
Guarantees" is deleted in its entirety and replaced with Letter Agreement
SA-1-3
<PAGE>
<PAGE> 4
No. 6-1162-RLL-935R1 which is attached hereto and incorporated herein by
this reference. The letter agreement was revised to ***.
10. Letter Agreement No. 6-1162-RLL-936 entitled "Certain Contractual
Matters," is deleted in its entirety and replaced with Letter Agreement No.
6-1162-RLL-936R1 which is attached hereto and incorporated herein by this
reference. ***
11. Letter Agreement No. 6-1162-RLL-939 entitled "Certification Flight
Test Aircraft" is deleted in its entirety and replaced with Letter
Agreement No. 6-1162-RLL-939R1 which is attached hereto and incorporated
herein by this reference. ***
12. Letter Agreement No. 6-1162-RLL-940 entitled "Training Matters" is
deleted in its entirety and replaced with Letter Agreement No. 6-1162-RLL-940R1
which is attached hereto and incorporated herein by this reference.
The letter agreement was revised to incorporate our mutual agreement based
upon ***.
13. Letter Agreement No. 6-1162-RLL-941 entitled "Other Matters," is
deleted in its entirety and replaced with Letter Agreement No. 6-1162-RLL-941R1
which is attached hereto and incorporated herein by this reference.
The letter agreement was revised by deleting paragraph 4 entitled "Program
Changes" because Article 7.2 of the Agreement and Article 1.3 of Attachment
A to Letter Agreement No 6-1162-RLL-933, both entitled "Program Changes"
have been deleted from the Agreement.
14. Letter Agreement No. 6-1162-RLL-1855 entitled "Additional Contractual
Matters" is incorporated into the Agreement by this reference.
15. Letter Agreement No. 6-1162-RLL-1856 entitled *** is incorporated into
the Agreement by this reference.
16. Letter Agreement No. 6-1162-RLL-1857 entitled "Service Ready
Validation Program Field Test" is incorporated into the Agreement by this
reference.
17. Letter Agreement No. 6-1162-RLL-1858 entitled "Escalation Matters" is
incorporated into the Agreement by this reference.
SA-1-4
<PAGE>
<PAGE> 5
18. Letter Agreement No. 6-1162-RLL-2036 entitled "Amortization of Costs
for Customer Unique Change Requests" is incorporated into the Agreement by
this reference.
19. Letter Agreement No. 6-1162-RLL-2037 entitled "Reconciliation of the
Aircraft Basic Price" is incorporated into the Purchase Agreement by this
reference.
20. Letter Agreement No. 6-1162-RLL-2073 entitled "Maintenance Training
Matters" is incorporated into the Purchase Agreement by this reference.
21. This Supplemental Agreement will become effective upon its execution
and the execution of Supplemental Agreement No. 22 to Purchase Agreement
No. 1405.
22. Within three business days of execution of this Supplemental
Agreement, Boeing will return ***.
The Agreement will be deemed to be supplemented to the extent herein
provided and as so supplemented will continue in full force and effect.
EXECUTED IN DUPLICATE as of the day and year first above written.
THE BOEING COMPANY SOUTHWEST AIRLINES CO.
By: /s/ R. Leo Lyons By: /s/ Gary A. Barron
----------------------- ----------------------
Its: Attorney-In-Fact Its: EVP-COO
--------------------- ---------------------
SA-1-5
<PAGE>
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page SA
Number Number
------ -------
ARTICLES
--------
<S> <C> <C>
1. Subject Matter of Sale . . . . . . . . . . . 1-1 SA-1
2. Delivery, Title and Risk
of Loss. . . . . . . . . . . . . . . . . . . 2-1
3. Price of Aircraft. . . . . . . . . . . . . . 3-1 SA-1
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>
SA-1-6
<PAGE>
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SA
Number
------
EXHIBITS
--------
<S> <C> <C> <C>
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>
SA-1-7
<PAGE>
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SA
Number
------
RESTRICTED LETTER AGREEMENTS
----------------------------
<S> <C> <C>
6-1162-RLL-932 Promotional Support
6-1162-RLL-933R1 Option Aircraft SA-1
6-1162-RLL-934R1 Disclosure of Confidential SA-1
Information
6-1162-RLL-935R1 Aircraft Performance Guarantees SA-1
6-1162-RLL-936R1 Certain Contractual Matters SA-1
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-943 Substitution Rights
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-1855 Additional Contractual Matters SA-1
6-1162-RLL-1856 *** SA-1
6-1162-RLL-1857 Service Ready Validation Program
Field Test SA-1
6-1162-RLL-1858 Escalation Matters SA-1
</TABLE>
SA-1-8
<PAGE>
<PAGE> 9
TABLE OF CONTENTS CON'T
<TABLE>
<CAPTION>
SA
Number
------
<S> <C> <C>
RESTRICTED LETTER AGREEMENTS
6-1162-RLL-2036 Amortization of Costs for
Customer Unique Change Requests SA-1
6-1162-RLL-2037 Reconciliation of the Aircraft
Basic Price SA-1
6-1162-RLL-2073 Maintenance Training Matters SA-1
</TABLE>
SA-1-9
<PAGE>
<PAGE> 10
ARTICLE 1. Subject Matter of Sale.
1.1 The Aircraft. Subject to the terms and conditions of this
Agreement, Boeing will manufacture and deliver to Buyer and Buyer will
purchase and accept delivery from Boeing of sixty-three (63) Boeing Model
737-7H4 aircraft (the Aircraft) manufactured in accordance with Boeing
Detail Specification D6-38808-1, dated October 30, 1996, as described in
Exhibit A, as modified from time to time in accordance with this Agreement
(Detail Specification).
1.2 Additional Goods and Services. In connection with the
sale of the Aircraft, Boeing will also provide to Buyer certain other things
under this Agreement, including data, documents, training and services, all
as described in this Agreement.
1.3 Performance Guarantees. Any performance guarantees
applicable to the Aircraft will be expressly included in this Agreement.
Where performance guarantees are included in this Agreement other than
within the Detail Specification, such guarantees will be treated as being
incorporated in the Detail Specification by this reference.
1.4 Defined Terms. For ease of use, certain terms are
treated as defined terms in this Agreement. Such terms are identified with a
capital letter and set forth and/or defined in Exhibit F.
1-1
<PAGE>
<PAGE> 11
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 Aircraft Price: $***
Special Features $***
Aircraft Basic Price $***
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 ***; 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.
3-1
<PAGE>
<PAGE> 12
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:
<TABLE>
<CAPTION>
Month and Year of Advance Payment Base
Scheduled Delivery Price per Aircraft
------------------ --------------------
<S> <C> <C>
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 $
September 1999 $
Block D Aircraft ***
January 2000 $
March 2000 $
July 2000 $
September 2000 $
</TABLE>
3-2
<PAGE>
<PAGE> 13
<TABLE>
<S> <C> <C>
Block E Aircraft ***
January 2001 $
March 2001 $
July 2001 $
September 2001 $
</TABLE>
ARTICLE 7. Changes to the Detail Specification.
7.1 Development Changes. Boeing may, at its own expense and
without Buyer's consent, incorporate Development Changes in the Detail
Specification and the Aircraft prior to delivery to Buyer. Development
Changes are defined as changes to the basic specification for Model 737-700
aircraft that do not affect the Aircraft Purchase Price or adversely affect
Aircraft delivery, guaranteed weight, guaranteed performance or compliance
with the interchangeability or replaceability requirements set forth in the
Detail Specification. If Boeing makes changes pursuant to this paragraph,
Boeing will promptly notify Buyer of such changes.
7.2 Change Orders. The Detail Specification and associated
provisions of this Agreement may be amended by Change Order or other
written agreement, which will state the particular changes to be made and
any effect on design, performance, weight, balance, time of delivery,
Aircraft Basic Price and Advance Payment Base Price.
15-1
<PAGE>
<PAGE> 14
AIRCRAFT CONFIGURATION
between
THE BOEING COMPANY
and
SOUTHWEST AIRLINES CO.
Exhibit A to Purchase Agreement Number 1810
<PAGE>
<PAGE> 15
AIRCRAFT CONFIGURATION
Dated February 26, 1997
relating to
BOEING MODEL 737-7H4 AIRCRAFT
The Detail Specification is Boeing Detail Specification D6-38808-1,
dated October 30, 1996. Such Detail Specification will be comprised of
Boeing Configuration Specification DC-38808, dated September 7, 1993, as
amended to incorporate the applicable specification language to reflect the
effect of the changes set forth in the Change Requests listed below,
including the effects of such changes on Manufacturer's Empty Weight (MEW)
and Operating Empty Weight (OEW). Such Change Requests are set forth in
Boeing Document D6-38808-1. As soon as practicable, Boeing will furnish to
Buyer copies of the Detail Specification, which copies will reflect the
effect of such changes. The Aircraft Basic Price reflects and includes all
effects of such changes of price, except such Aircraft Basic Price does not
include the price effects of Change Requests changing Buyer Furnished
Equipment to Seller Purchased Equipment.
<PAGE>
<PAGE> 16
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92$
========================================================= ==========
<S> <C>
0000DC3182 NC
MISCELLANEOUS DEVELOPMENT CHANGES
STATUS: ACCEPT
0110CG3018 IB
737-700 CONFIGURATION
STATUS: ACCEPT
0160MS3171 NC
AIRPLANE IDENTIFICATION NUMBERS - SERIAL,
REGISTRY, MODE S, FLIGHT RECORDER ID
STATUS: ACCEPT
0310CH3332 ***
INCREASE CERTIFIED MAXIMUM TAKEOFF WEIGHT -
138,500 IN LIEU OF 133,000
STATUS: ACCEPT
0352CG3023 NC
AIRPLANE LOADING SYSTEM FOR WEIGHT AND
BALANCE CONTROL
STATUS: ACCEPT
0370CH3014 ***
AIR CONDITIONING TRANSITION DUCT UNDER
FLOOR - ADD 17 MIL DAMPING TAPE FOR NOISE
REDUCTION
STATUS: ACCEPT
0370CH3019 ***
INSTALLATION OF STRINGER DAMPING FROM
STATION 540-727
STATUS: ACCEPT
</TABLE>
A-1
<PAGE>
<PAGE> 17
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
=========================================================== =========
<S> <C>
1110CH3003 NC
CROWN METRO EXTERIOR PAINT - BMS 10-72 TYPE
VI SYSTEM
STATUS: ACCEPT
1110MP3290 NC
EXTERIOR DECORATIVE FINISH - DESOTO SERIES
420 HIGH SOLID TOPCOAT IN LIEU OF EXISTING
TOPCOAT
STATUS: ACCEPT
2123CH3042 ***
AIR CONDITIONING SYSTEM REVISION - 737-200
TYPE GASPER SYSTEM
STATUS: ACCEPT
2160CG3011 NC
CABIN TEMPERATURE INDICATOR - DEGREES
FAHRENHEIT IN LIEU OF CELSIUS
STATUS: ACCEPT
2210CG3204 ***
DIGITAL FLIGHT CONTROL SYSTEM (DFCS) -
PADDLE AUTOPILOT ENGAGE MODE CONTROL PANEL
STATUS: ACCEPT
2210MP3227 NC
DIGITAL FLIGHT CONTROL SYSTEM (DFCS) -
PUSH-BUTTON AUTOPILOT ENGAGE IN LIEU OF
PADDLE
STATUS: ACCEPT
2230CH3028 NC
AUTOTHROTTLE DEACTIVATION - UNIT TO REMAIN
INSTALLED AND BITE FEATURES OPERATIONAL
STATUS: ACCEPT
</TABLE>
A-2
<PAGE>
<PAGE> 18
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
========================================================== =========
<S> <C>
2312CH3284 NC
DUAL VHF COMMUNICATIONS - INSTALLATION -
BFE ALLIEDSIGNAL/GABLES ENGINEERING INC
STATUS: ACCEPT
2319CH3020 ***
CLAIRCOM AIR TO GROUND PASSENGER
COMMUNICATION SYSTEM - COMPLETE BFE
INSTALLATION PROVISIONS
STATUS: ACCEPT
2319MP3021 ***
CLAIRCOM PHONES - CANCEL INSTALLATION
INTENDED FROM 2319CH3020
STATUS: ACCEPT
2320CH3020 ***
ATSCALL INSTALLATION - PARTIAL PROVISIONS -
AFT ELECTRONICS PANEL
STATUS: ACCEPT
2321CH3498 ***
SELECTIVE CALLING EQUIPMENT - SELCAL -
DELETE PARTIAL PROVISIONS
STATUS: ACCEPT
2331CH3158 NC
DELETION OF BFE MATSUSHITA PASSENGER
ADDRESS TAPE REPRODUCER
STATUS: ACCEPT
2331CH3159 NC
PASSENGER ADDRESS SYSTEM - COLLINS ARINC
700 IN LIEU OF COLLINS ARINC 560
STATUS: ACCEPT
</TABLE>
A-3
<PAGE>
<PAGE> 19
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
=========================================================== ==========
<S> <C>
2334SP3210 NC
PASSENGER ENTERTAINMENT SYSTEM (AUDIO) -
DELETE SPACE PROVISIONS
STATUS: ACCEPT
2340MP3095 NC
BFE BOOM MICROPHONE/HEADSET REVISION
STATUS: ACCEPT
2342MP3011 NC
FLIGHT ATTENDANT HANDSET - REVISION TO
FUNCTION AND FACEPLATE
STATUS: ACCEPT
2350CH3139 NC
PA MICROPHONE - ADD ELECTROVOICE P/N
602-4183
STATUS: ACCEPT
2350CH3162 NC
DTMF MICROPHONE INSTALLATION - FIRST
OBSERVER
STATUS: ACCEPT
2350CH3163 NC
DIGITAL AUDIO REMOTE ELECTRONICS UNIT
REVISION TO DELETE HEADSET AURAL ALERTS
STATUS: ACCEPT
2350MP3220 NC
DIGITAL AUDIO REMOTE ELECTRONICS UNIT
REVISION - ADD PREDICTIVE WINDSHEAR WITHOUT
HEADSET AURAL ALERTS - 737-700
STATUS: ACCEPT
</TABLE>
A-4
<PAGE>
<PAGE> 20
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
========================================================= =========
<S> <C>
2370CG3166 NC
SOLID STATE VOICE RECORDER - INSTALLATION -
BFE ALLIEDSIGNAL INC
STATUS: ACCEPT
2500CH3453 NC
DOOR WARNING STRAP - SHOCK CORD
STATUS: ACCEPT
2501CH3076 NC
FORWARD MODULE WITH GALLEY G1 AND LAVATORY
LA
STATUS: ACCEPT
2501MP3080 NC
REVISE FORWARD MODULE WITH GALLEY G1 AND
LAVATORY LA FROM SEAT TRACK MOUNT TO
HARD POINT
STATUS: ACCEPT
2502CH3066 NC
AFT MODULE WITH GALLEY G3, G4 AND LAVATORY
LB
STATUS: ACCEPT
2502MP3069 NC
REVISE MODULE WITH GALLEY G3, G4 AND
LAVATORY LB TO HARPOINT IN LIEU OF SEAT
TRACK MOUNT
STATUS: ACCEPT
2510CH3058 NC
FLIGHT COMPARTMENT - MISCELLANEOUS
REVISIONS
STATUS: ACCEPT
</TABLE>
A-5
<PAGE>
<PAGE> 21
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
=========================================================== ==========
<S> <C>
2510CH3059 NC
TRIP COUNTER REVISION - SFE - DEXTER WILSON
STATUS: ACCEPT
2510CH3060 NC
CONTROL COLUMN CHECKLIST DELETION
STATUS: ACCEPT
2511CG3057 ***
SECOND OBSERVER'S STATION
STATUS: ACCEPT
2511CH3059 NC
LOG BOOK POCKET INSTALLATION - ON SECOND
OBSERVERS SEAT LEGS
STATUS: ACCEPT
2520CH3538 ***
INTERIOR ARRANGEMENT - 137 TOURIST CLASS AT
33/32" PITCH WITH LAVS LA AND LB AND
GALLEYS G1, G3 AND G4
STATUS: ACCEPT
2520MP3667 NC
STOWAGE BIN REVISION - ADD BULLNOSE ON
INBOARD LOWER SURFACE
STATUS: ACCEPT
2523CH3109 NC
PSU REVISION - ADD PLACARD TO PASSENGER
VIEWING SURFACE IN LOUNGE AREAS ONLY
STATUS: ACCEPT
</TABLE>
A-6
<PAGE>
<PAGE> 22
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
=========================================================== ==========
<S> <C>
2523CH3112 NC
INSTALL NON STANDARD COLOR PSU
STATUS: ACCEPT
2523MP3119 NC
INTERIOR REVISION - PSU AND PARTITION
RELOCATION TO SUPPORT SEAT RE-PITCH
REQUIRED FOR 16G COMPLIANCE
STATUS: ACCEPT
2524CH3431 ***
BFE FWD RIGHT HAND WINDSCREEN/STOWAGE UNIT
IN LIEU OF SFE
STATUS: ACCEPT
2524MP3488 NC
FULL HEIGHT BFE STOWAGE UNIT REVISION - ADD
BFE FLASHLIGHTS AND BFE LITERATURE POCKETS
STATUS: ACCEPT
2524MP3500 NC
PARTITION DECORATIVE COVERING REVISION -
ULTRALEATHER IN LIEU OF LEATHER
STATUS: ACCEPT
2524MP3513 NC
EMERGENCY EQUIPMENT BRACKET COMMONALITY -
SFE
STATUS: ACCEPT
2525MP3159 NC
PASSENGER SEAT REVISION - ALL FORWARD
FACING SEATS WITH 137 PAX
STATUS: ACCEPT
</TABLE>
A-7
<PAGE>
<PAGE> 23
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
=========================================================== ==========
<S> <C>
2528CH3189 ***
SFE HALF HEIGHT STOWAGE UNIT/WINDSCREEN -
AFT LH CABIN WITH THE AFT FACE AT STATION
955 - WITH MEGAPHONE
STATUS: ACCEPT
2528CH3191 ***
SFE FULL HEIGHT STOWAGE UNIT/WINDSCREEN -
FWD LH CABIN WITH THE AFT FACE AT STATION
355
STATUS: ACCEPT
2528CH3194 ***
BFE HALF HEIGHT STOWAGE UNIT/WINDSCREEN -
AFT LH CABIN WITH THE AFT FACE AT STATION
955 - WITH MEGAPHONE
STATUS: ACCEPT
2528CH3195 ***
BFE FULL HEIGHT STOWAGE UNIT/WINDSCREEN IN
LIEU OF SFE - FWD LH CABIN WITH THE AFT
FACE AT STATION 355
STATUS: ACCEPT
2528MP3217 NC
CREW LUGGAGE SECURITY DEVICE
STATUS: ACCEPT
2530MP3613 NC
G3 EXTERIOR DECORATIVE COVERING REVISION -
ULTRASUEDE IN LIEU OF LEATHER
STATUS: ACCEPT
2541CH3034 NC
LIQUID SOAP DISPENSER INSTALLATION
STATUS: ACCEPT
</TABLE>
A-8
<PAGE>
<PAGE> 24
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
========================================================= ===========
<S> <C>
2550CH3153 NC
CARGO COMPARTMENT LINING REVISION
STATUS: ACCEPT
2550CH3233 NC
FWD AND AFT CARGO COMPARTMENT FLOOR PANEL
REVISION - ALUMINUM PANELS IN LIEU OF
CONOLITE AT ENTRYWAY
STATUS: ACCEPT
2550MP3259 NC
TRANSVERSE CARGO NET INSTALLATION - FORWARD
AND AFT CARGO COMPARTMENTS
STATUS: ACCEPT
2550MP3267 NC
FORWARD AND AFT CARGO COMPARTMENT CARGO
RESTRAINT SYSTEM
STATUS: ACCEPT
2622CH3013 NC
APU FIRE BOTTLE REVISION - INTERCHANGEABLE
WITH ENGINE BOTTLE
STATUS: ACCEPT
2841CG3095 NC
FUEL QUANTITY INDICATORS ON RIGHT WING
FUELING PANEL
STATUS: ACCEPT
2844CG3038 NC
MEASURING STICK CONVERSION TABLES TO U.S.
GALLONS
STATUS: ACCEPT
</TABLE>
A-9
<PAGE>
<PAGE> 25
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
========================================================== ===========
<S> <C>
2910CH3082 NC
HYDRAULIC PUMPS - AC ELECTRIC MOTOR DRIVEN
- VICKERS IN LIEU OF ABEX
STATUS: ACCEPT
2910CG3087 ***
ENGINE DRIVEN HYDRAULIC PUMP WITH VESPEL
SPLINE - VICKERS 10-62167-3 IN LIEU OF ABEX
10-62167-2
STATUS: ACCEPT
3040CH3041 NC
INSTALL A TWO LRU WINDOW HEAT CONTROL
SYSTEM - PED 1231-1 IN LIEU OF TBD
STATUS: ACCEPT
3040MP3049 NC
INSTALL A 4 UNIT WINDOW HEAT CONTROL SYSTEM
- OLIN 231-2 IN LIEU OF 1231-1
STATUS: ACCEPT
3040MP3053 ***
INSTALL A BFE WINDOW HEAT CONTROL SYSTEM
WHICH CONTAINS BITE - OLIN 231-3 IN LIEU OF
231-2
STATUS: ACCEPT
3043MP3022 NC
WINDSHIELD WIPER SWITCH REVISION - SINGLE
SWITCH FOR BOTH WIPERS IN LIEU OF TWO
SWITCHES
STATUS: ACCEPT
</TABLE>
A-10
<PAGE>
<PAGE> 26
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
=========================================================== =========
<S> <C>
3120CH3016 NC
CLOCK WIRING REVISION - FMC, DFDAU AND
VOICE RECORDER INPUT FROM FIRST OFFICER'S
CLOCK IN LIEU OF CAPTAIN'S CLOCK
STATUS: ACCEPT
3131CG3673 NC
ACCELEROMETER - INSTALLATION - BFE
ALLIEDSIGNAL INC
STATUS: ACCEPT
3131CG3692 NC
SOLID STATE DIGITAL FLIGHT DATA RECORDER -
INSTALLATION - BFE ALLIEDSIGNAL INC - 128
WPS
STATUS: ACCEPT
3131CH3721 NC
DIGITAL FLIGHT DATA ACQUISITION UNIT
(DFDAU) - INSTALLATION - BFE ALLIEDSIGNAL
STATUS: ACCEPT
3162CG3013 NC
EFIS/MAP DISPLAY FORMAT
STATUS: ACCEPT
3162CG3016 NC
FLIGHT DIRECTOR COMMAND DISPLAY - FILLED
INTEGRATED CUE
STATUS: ACCEPT
3162CG3017 NC
MACH AIRSPEED DISPLAY
STATUS: ACCEPT
</TABLE>
A-11
<PAGE>
<PAGE> 27
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
=========================================================== ========
<S> <C>
3162CG3019 NC
RADIO ALTITUDE DISPLAY - ROUND DIAL
STATUS: ACCEPT
3162CG3020 NC
RADIO ALTITUDE - ABOVE ADI
STATUS: ACCEPT
3162CG3022 NC
RISING RUNWAY DISPLAY
STATUS: ACCEPT
3162CG3025 NC
RADIO ALTITUDE HEIGHT ALERT DISPLAY - 2500
FEET
STATUS: ACCEPT
3162CG3026 NC
ATTITUDE COMPARATOR - STEADY
STATUS: ACCEPT
3162CG3029 NC
LOCALIZER BACKCOURSE POLARITY - REVERSAL
STATUS: ACCEPT
3162CG3032 NC
MAP MODE ORIENTATION - TRACK UP
STATUS: ACCEPT
3162CG3038 NC
MANUALLY TUNED VOR SELECTED COURSE LINES -
DISPLAYED
STATUS: ACCEPT
3162CG3041 NC
ADF POINTER(S) IN MAP MODE - SUPPRESSED
STATUS: ACCEPT
</TABLE>
A-12
<PAGE>
<PAGE> 28
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
=========================================================== ========
<S> <C>
3162CG3042 NC
POSITION DIFFERENCE - AUTOMATIC DISPLAY
STATUS: ACCEPT
3162CG3046 NC
WEATHER RADAR MODE/GAIN/TILT ANGLE -
DISPLAYED
STATUS: ACCEPT
3162CG3050 NC
TCAS TRAFFIC ON MAP
STATUS: ACCEPT
3162CG3052 NC
TCAS RESOLUTION ADVISORY ON ADI
STATUS: ACCEPT
3162CG3053 NC
TCAS RESOLUTION ADVISORY ON IVSI
STATUS: ACCEPT
3162CG3057 NC
ANALOG FAILURE FLAGS - DISPLAYED
STATUS: ACCEPT
3162CH3066 NC
MACH AIRSPEED INDICATOR BUG #5 - 80 KNOTS
STATUS: ACCEPT
3162CH3068 NC
SUPPLEMENTAL METRIC DATA INDICATIONS -
DEACTIVATION
STATUS: ACCEPT
</TABLE>
A-13
<PAGE>
<PAGE> 29
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
========================================================== =========
<S> <C>
3162CH3075 NC
EFIS CONTROL PANEL - EFIS/MAP DISPLAY
FORMAT
STATUS: ACCEPT
3162MP3128 NC
ANALOG FAILURE FLAG - DELETE
STATUS: ACCEPT
3162MP3129 NC
SUPPLEMENTAL METRIC DATA INDICATIONS -
ACTIVATION
STATUS: ACCEPT
3162MP3131 NC
ENHANCED MACH AIRSPEED DISPLAY
STATUS: ACCEPT
3162MP3132 NC
WEATHER RADAR RANGE INDICATORS - RANGE
MARKS
STATUS: ACCEPT
3240CH3220 NC
NOSE LANDING GEAR WHEELS - BENDIX
STATUS: ACCEPT
3240CH3221 NC
MAIN LANDING GEAR WHEELS AND BRAKES -
BENDIX
STATUS: ACCEPT
3240MP3258 NC
NOSE LANDING GEAR - INSTALL 737-300
ALLIEDSIGNAL WHEEL IN LIEU OF EXISTING
STATUS: ACCEPT
</TABLE>
A-14
<PAGE>
<PAGE> 30
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
=========================================================== =========
<S> <C>
3245CH3029 NC
TIRES - INSTALLATION OF SFE GOODYEAR TIRES
STATUS: ACCEPT
3324CH3010 NC
CEILING MOUNTED LIGHTED EXIT SIGN -
RELOCATION
STATUS: ACCEPT
3343CH3034 NC
ANTI-COLLISION LIGHT - SWITCH NOMENCLATURE
REVISION
STATUS: ACCEPT
3345CH3020 NC
LOGO LIGHTS - SYSTEM DEACTIVATION
STATUS: ACCEPT
3345MP3029 NC
REACTIVATION OF LOGO LIGHT SYSTEM
STATUS: ACCEPT
3350MP3079 NC
EGRESS LIGHTING REVISION TO ACCOMMODATE ALL
FORWARD FACING SEAT CONFIGURATION
STATUS: ACCEPT
3423CH3021 NC
INSTALL BFE STANDBY ATTITUDE INDICATOR
WITHOUT ILS DEVIATION DISPLAY IN LIEU OF
SFE INDICATOR
STATUS: ACCEPT
3423CH3026 NC
STANDBY INDICATOR - SFE SEXTANT IN LIEU OF
BFE JET
STATUS: ACCEPT
</TABLE>
A-15
<PAGE>
<PAGE> 31
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
======================================================== ===========
<S> <C>
3431CG3051 NC
ILS - INSTALLATION - BFE ALLIEDSIGNAL INC
STATUS: ACCEPT
3433CG3058 NC
LOW RANGE RADIO ALTIMETER (LRRA) -
INSTALLATION - BFE ALLIEDSIGNAL INC
STATUS: ACCEPT
3435CH3028 ***
FLIGHT DYNAMICS CAPTAIN ONLY HEAD UP
GUIDANCE SYSTEM - PARTIAL PROVISIONS
STATUS: ACCEPT
3443CH3118 ***
WEATHER RADAR SYSTEM - ARINC 708A SINGLE
WEATHER RADAR SYSTEM WITH PREDICTIVE
WINDSHEAR - PARTIAL PROVISIONS
STATUS: ACCEPT
3443CH3154 NC
ARINC 708 WEATHER RADAR SYSTEM -
INSTALLATION - BFE ALLIEDSIGNAL INC (WITH
DEACTIVATED PREDICTIVE WINDSHEAR FEATURE
R/T RDR-4B)
STATUS: ACCEPT
3445CH3197 NC
TCAS II - INSTALLATION - BFE ALLIEDSIGNAL
INC
STATUS: ACCEPT
</TABLE>
A-16
<PAGE>
<PAGE> 32
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
======================================================== ===========
<S> <C>
3451CG3005 NC
VOR/MARKER BEACON - INSTALLATION - BFE
ALLIEDSIGNAL INC
STATUS: ACCEPT
3455CG3120 NC
DISTANCE MEASURING EQUIPMENT (DME) -
INSTALLATION - BFE ALLIEDSIGNAL INC
(SCANNING)
STATUS: ACCEPT
3457CG3088 NC
AUTOMATIC DIRECTION FINDER (ADF) -
INSTALLATION - BFE ALLIEDSIGNAL INC
STATUS: ACCEPT
3457CG3092 NC
AUTOMATIC DIRECTION FINDER (ADF) CONTROL
PANEL - INSTALLATION - BFE GABLES
ENGINEERING INC
STATUS: ACCEPT
3457MP3132 NC
ADF CONTROL PANEL REVISION - ADD GABLES
G7402-05 IN LIEU OF EXISTING
STATUS: ACCEPT
3457MP3133 NC
ADF ANTENNA REVISION - ADD ALLIEDSIGNAL
2041683-7507 IN LIEU OF EXISITNG
STATUS: ACCEPT
</TABLE>
A-17
<PAGE>
<PAGE> 33
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
======================================================== ==========
<S> <C>
3458CH3091 NC
GPS PROVISIONS - ADD COMPONENTS REQUIRED TO
PROVIDE COMPLETE PROVISIONS
STATUS: ACCEPT
3458CH3092 ***
GLOBAL POSITIONING SYSTEM (GPS) -
INSTALLATION - HONEYWELL INC (SUPPLEMENTAL
NAVIGATION CERTIFICATION)
STATUS: ACCEPT
3461CG3403 NC
BUYER FURNISHED NAVIGATION DATA BASE
STATUS: ACCEPT
3461CH3485 NC
VERTICAL NAVIGATION (VNAV)
ACTIVATE/DEACTIVATE SERVICE BULLETIN
STATUS: ACCEPT
3461CH3489 ***
FLIGHT MANAGEMENT COMPUTER SYSTEM REVISION
- CERTIFICATION FOR SINGLE COMPUTER
OPERATION ONLY
STATUS: ACCEPT
3510CG3089 NC
CREW OXYGEN - 114 CU. FT. IN LIEU OF 76 CU.
FT. CYLINDER
STATUS: ACCEPT
3830MP3025 NC
INSTALLATION OF PNEUDRAULICS INC. 4"
SERVICE PANEL LAVATORY DRAIN VALVE P/N 9569
IN LIEU OF CURRENT SHAW VALVE
STATUS: ACCEPT
</TABLE>
A-18
<PAGE>
<PAGE> 34
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
======================================================== ==========
<S> <C>
3831MP3019 ***
GRAY WATER DRAIN ROUTING REVISION - LEVEL
LINE IN LIEU OF SLANTED LINE
STATUS: ACCEPT
3832CH3071 NC
VACUUM LAVATORY SYSTEM IN LIEU OF
RECIRCULATING LAVATORY - LAVS A AND B
STATUS: ACCEPT
3910CH3113 NC
RELOCATE ATC CONTROL PANEL
STATUS: ACCEPT
3910CH3122 NC
AFT ELECTRONICS PANEL ARRANGEMENT
STATUS: ACCEPT
5100CH3026 NC
ADDITIONAL CORROSION PROTECTION BENEATH
GALLEYS AND LAVS
STATUS: ACCEPT
5100CH3027 NC
FWD AND AFT CARGO DOOR REVISION - INSTALL
HEAVY DUTY SKIN
STATUS: ACCEPT
5100MP3030 NC
REMOVE ADDITIONAL CORROSION PROTECTION
ADDED BY CR 5100CH3026
STATUS: ACCEPT
</TABLE>
<PAGE>
<PAGE> 35
<TABLE>
<CAPTION>
PRICE
PER A/P
SWA3701
CR / TITLE 92 $
========================================================= ===========
<S> <C>
5220MP3012 NC
OVERWING HATCH ASSIST HANDLE REVISION -
INSTALL RECESSED HANDLE IN LIEU OF
PROTRUDING HANDLE
STATUS: ACCEPT
7200CG3244 IB
AIRPLANE PERFORMANCE: CFM56-7 ENGINES WITH
OPERATIONAL THRUST OF 22,000 LBS. FOR
737-600,-700
STATUS: ACCEPT
7900CG3026 NC
LUBRICATING OIL - ESSO/EXXON TURBO OIL 2380
STATUS: ACCEPT
CR'S 138 TOTAL ***
</TABLE>
A-20
<PAGE>
<PAGE> 36
PART A
BOEING WARRANTY
1. Warranties.
Subject to the exceptions set forth in paragraph 2, Boeing warrants
that, at the time of delivery, each Aircraft, including all installed
systems, accessories, equipment and parts, will:
1.1 conform to the Detail Specification, as it may be changed
pursuant to this Agreement, except such portions stated to be estimates,
approximations, design objectives, or design criteria, or described as not
guaranteed;
1.2 be free from defects in material and workmanship, including
process of manufacture; and
1.3 be free from defects in design, including selection of (i)
materials and (ii) process of manufacture, in view of the state of the art
at the time of design.
For purposes of this Boeing Warranty, nonconformance with the Detail
Specification, defects in material or workmanship and defects in design may
hereinafter be called "defects" or a "defect", and the term "system",
"accessory", "equipment" or "part" may hereinafter be called "item" or
"items."
2. Exceptions.
The warranties above will not apply to BFE. The warranty above
covering material and workmanship and the warranty above covering design
will not apply to Engines or to any other item purchased by Boeing but not
manufactured to Boeing's detailed design. However, any defect in the
Boeing workmanship installing such BFE, Engines or other items in an
Aircraft will, including any failure by Boeing to conform to the
installation instructions of the manufacturer of such items that
invalidates any applicable warranty from such manufacturer, constitute a
defect in workmanship and be covered by the warranty set forth in
paragraph 1.
3. Survival of Warranties.
Neither the warranty of conformance to the Detail Specification
applicable to Engines and other items purchased by Boeing but not
manufactured to Boeing's detailed design, nor any Performance Guarantees,
will survive delivery of the Aircraft. The remaining warranties set forth
A-1
<PAGE>
<PAGE> 37
herein will survive delivery of the Aircraft, subject to the limitations
and conditions set forth herein.
4. Warranty Periods and Claims.
4.1 The warranty periods are:
4.1.1 As to a defect in conformance to the Detail
Specification, 48 months after delivery of such Aircraft, and
4.1.2 As to a defect in material, workmanship or design in
any item, 48 months after delivery of each Aircraft in which such item was
initially installed.
4.2 Boeing must receive the warranty claim in writing at the
earliest practicable time after the defect becomes apparent to Buyer but in
no event later than 90 days after expiration of the applicable warranty
period.
4.3 Such warranty claim must include the data set forth below and,
if requested by Boeing, reasonable evidence that the claimed defect did not
result from any act or omission of Buyer.
4.3.1 Identity of the item or Aircraft involved, including
Boeing part number, serial number if applicable, nomenclature and the
quantity claimed to be defective;
4.3.2 Identity of the Aircraft on which the claimed item was
installed as original equipment;
4.3.3 Date the claimed defect became apparent to Buyer; and
4.3.4 Description of the claimed defect and circumstances,
including Boeing service bulletin or Boeing service letter number if claim
involves a service bulletin or letter.
4.4 Upon completion of Boeing's warranty claim investigation,
including examination of any item or Aircraft returned to Boeing, Boeing
will provide a written disposition of its warranty claim findings to Buyer.
In the event Boeing must reject Buyer's warranty claim, Boeing will provide
reasonable substantiation of such rejection in its disposition.
A-2
<PAGE>
<PAGE> 38
5. Remedies.
Buyer's remedies under this Boeing Warranty are as follows:
5.1 As to a defect in conformance to the Detail Specification,
the correction at Boeing's expense of such defect; provided, however, that
Boeing will not be obligated to correct any defect that Boeing and Buyer
agree has no material adverse effect on the maintenance, use or operation
of the Aircraft. The warranty period for the corrected item will be the
unexpired warranty period for the defective item.
5.2 As to a defect in material or workmanship, (i) the repair at
Boeing's expense of such defect or, (ii) at Boeing's option, the
replacement of such item with a similar item free from defect or the
issuance of a credit memorandum to Buyer for a spare part previously
purchased from Boeing as the replacement for such defective item. The
warranty period for either correction will be the unexpired warranty period
for the defective item.
5.3 As to a defect in design, the correction at Boeing's expense
of such defect. The warranty period for such correction is 18 months from
receipt by Buyer of corrective material or the end of the original design
warranty period for the defective item, whichever is later.
5.4 Boeing will reimburse Buyer at the Warranty Labor Rate for
the direct labor hours required for removal from the Aircraft of a defective
item and the reinstallation in the Aircraft of the corrected item.
6. Returned Items.
Unless otherwise provided in this Agreement, the Aircraft or item
claimed to be defective must be returned to Boeing as soon as practicable.
Buyer may also provide specific technical repair or correction instructions
with such return. The absence of such instructions will evidence Buyer's
authorization for Boeing to proceed using Boeing information and data. The
following criteria will apply with respect to return of Aircraft or items
to Boeing:
6.1 As to Aircraft:
6.1.1 An Aircraft may be returned only if
6.1.1.1 substantially all the work to be performed by
Boeing is covered by this Boeing Warranty and
6.1.1.2 Buyer does not have the capability to
perform, nor is it practical for Boeing personnel to perform, the warranty
work away from Boeing's facilities.
A-3
<PAGE>
<PAGE> 39
6.1.2 All warranty work will be performed at Boeing's
expense, with reasonable efforts to minimize Aircraft out-of-service time.
In addition, Boeing will reimburse Buyer for the cost of fuel, oil and
landing fees incurred in ferrying the Aircraft to Boeing's facilities and
in ferrying the Aircraft back to Buyer's facilities. Buyer will use its
best efforts to minimize the length of both ferry flights.
6.1.3 Any nonwarranty work performed by Boeing will be paid
for by Buyer at Boeing's then-standard rates and shall in no event exceed
the rates charged other commercial carriers of Boeing during substantially
the same time period.
6.1.4 A separate agreement containing the above provisions
and their mutually agreeable terms and conditions based on Boeing's
then-standard form will be entered into to cover the return of and work on
such Aircraft.
6.2 As to any system, accessory, equipment or part:
6.2.1 All warranty work will be performed at Boeing's
expense, with reasonable efforts to minimize item out-of-service time for
items returned.
6.2.2 Boeing's turnaround-time objectives for repair or
replacement are: 10 working days for avionic and electronic items and 30
working days for other items when corrected at Boeing's facilities, or 40
working days when corrected at the facilities of a Boeing subcontractor.
Turnaround time starts the date Boeing receives the returned item, together
with Buyer's warranty claim describing the work, and ends the date of
shipment by Boeing of such item. If a turnaround-time objective is not
achieved and a resultant critical parts shortage is experienced by Buyer,
and Buyer has procured spare parts for such item substantially in
accordance with the Boeing Recommended Spare Parts List, Boeing will, upon
request from Buyer, either:
6.2.2.1 expedite repair or replacement of the item or
6.2.2.2 provide a similar item on a no-charge loan or
no-charge lease basis until the repaired or replaced item is provided to
Buyer.
6.2.3 The freight charge for shipment to Boeing of any item
will be paid by Buyer; however, Boeing will reimburse Buyer for such charge
for any item determined to be defective under this Boeing Warranty. The
A-4
<PAGE>
<PAGE> 40
freight charge for the return shipment to Buyer of any such defective item
which has been repaired, replaced or corrected pursuant to this Boeing
Warranty will be paid by Boeing.
6.3 Title to and risk of loss of any Aircraft or item returned to
Boeing will at all times remain with Buyer and/or any other owner of such
Aircraft or item, except that at the time Boeing ships a replacement item
to Buyer, title to and risk of loss (i) for the returned item will pass to
Boeing and (ii) for the replacement item will pass to Buyer. While Boeing
has care, custody and control of an Aircraft or item, Boeing will have only
such liabilities as a bailee for mutual benefit would have, but will not be
liable for loss of use.
7. Nonrepairable Items.
Buyer may scrap any defective nonrepairable item having a
then-current Boeing spare part selling price of $2,000 or less and make a
claim for a replacement item. For a defective nonrepairable item having a
then-current Boeing spare part selling price greater than $2,000, an
authorized Boeing representative must confirm the nonrepairability of any
such item. Buyer's claim for an item with a spare part selling price
exceeding $2,000 must include such confirmation.
8. Reimbursement for Certain Inspection Labor Costs.
8.1 In addition to the remedies set forth in this Boeing Warranty,
Boeing will reimburse Buyer at the Warranty Labor Rate for the direct labor
hours expended by Buyer in performing inspections of the Aircraft to
determine whether or not a covered defect exists in any system, accessory,
equipment or part manufactured to Boeing's detailed design, provided that:
8.1.1 such inspections are recommended by a Boeing service
bulletin or service letter issued by Boeing within 48 months after delivery
of such Aircraft, and
8.1.2 such reimbursement will not apply to any inspections
performed as an alternative to accomplishing corrective action when such
corrective action is available to Buyer at the time such inspections are
performed.
9. Wear and Tear.
Normal wear and tear and the need for regular maintenance and
overhaul will not constitute a defect.
A-4
<PAGE>
<PAGE> 41
10. Disclaimer and Release; Exclusion of Liabilities.
This Part A and the rights and remedies of Buyer and obligations of
Boeing herein are subject to the Disclaimer and Release and Exclusion of
Consequential and Other Damages provisions of Article 12 of this Agreement.
11. Buyer's Indemnification of Boeing.
The provisions of Part E, "Buyer's Indemnification of Boeing and
Insurance" of Exhibit C, will apply to all warranty work performed by
Boeing hereunder in accordance with Buyer's specific technical repair or
correction instructions, to the extent any legal liability of Boeing is
based upon the content of such instructions.
A-5
<PAGE>
<PAGE> 42
6-1162-RLL-933R1
Southwest Airlines Co.
P.O. Box 36611 - Love Field
Dallas, Texas 75235
Subject: Letter Agreement No. 6-1162-RLL-933R1 to
Purchase Agreement No. 1810 -
Option Aircraft
This Letter Agreement amends Purchase Agreement No. 1810 dated as of
January 19, 1994 (the Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Buyer) relating to Model 737-7H4 aircraft
(Aircraft).
All terms used and not defined herein will have the same meaning as in the
Agreement.
In consideration of the purchase by Buyer of the Aircraft, Boeing hereby
agrees to manufacture and sell to Buyer sixty-seven (67) additional
Model 737-7H4 aircraft as described in paragraph 1 of Attachment A hereto
(Option Aircraft) and forty-nine (49) Model 737-7H4 Rollover Option
Aircraft (Rollover Option Aircraft), subject to the terms and conditions
set forth below.
1. Delivery of Option Aircraft.
The Option Aircraft will be delivered to Buyer during or before
the months set forth in the following schedule:
<TABLE>
<CAPTION>
Number of Option
Month and Year Option Aircraft
of Delivery Aircraft Block
============== ========== ========
<S> <C> <C> <C>
October 1998 One (1) F
November 1998 Two (2) F
December 1998 Two (2) F
March 1999 Two (2) G
June 1999 Two (2) G
August 1999 Two (2) G
September 1999 One (1) G
October 1999 Two (2) G
April 2000 Three (3) H
October 2000 Three (3) H
</TABLE>
<PAGE>
<PAGE> 43
Southwest Airlines Co.
6-1162-RLL-933R1 Page 2
<TABLE>
<CAPTION>
Month and Year Number of Option
of Delivery Option Aircraft
(continued) Aircraft Block
============== ========= =========
<S> <C> <C> <C>
April 2001 Three (3) I
October 2001 Three (3) I
January 2002 Four (4) J
March 2002 Four (4) J
April 2002 Two (2) J
July 2002 Four (4) J
October 2002 Four (4) J
January 2003 Four (4) K
March 2003 Four (4) K
April 2003 Two (2) K
July 2003 Four (4) K
October 2003 Four (4) K
April 2004 Two (2) L
July 2004 Three (3) L
</TABLE>
2. Delivery of Rollover Option Aircraft.
2.1 The Rollover Option Aircraft will be delivered to Buyer
during or before the years set forth in the following schedule:
<TABLE>
<CAPTION>
Option
Year of Number of Aircraft
Delivery Option Aircraft Block
======== =============== =========
<S> <C> <C> <C>
2004 Thirteen (13) M
2005 Eighteen (18) N
2006 Eighteen (18) O
</TABLE>
2.2 The forty-nine (49) Rollover Option Aircraft are offered to
Buyer subject to the following conditions:
2.2.1 Buyer can exercise any forty-nine (49) of the
sixty-seven (67) Option Aircraft, and will be offered a Rollover Option
Aircraft for each option aircraft exercised up to and including
forty-nine (49).
2.2.2 Conversely to Article 2.2.1 above, if Buyer does
not exercise a minimum of forty-nine (49) Option Aircraft, one Rollover Option
Aircraft will be deleted for each Option Aircraft not exercised by Buyer.
<PAGE>
<PAGE> 44
Southwest Airlines Co.
6-1162-RLL-933R1 Page 3
2.2.3 When Buyer exercises one or more Option Aircraft,
Boeing will offer the same quantity of Rollover Option Aircraft to Buyer in
the years identified in Article 2.1 above.
2.2.4 The Rollover Option Aircraft delivery month
offered by Boeing to Buyer will be at least 24 months from the Option exercise
date of the corresponding option.
2.2.5 When Boeing offers the Rollover Option Aircraft
to Buyer, Buyer will accept such Rollover Option Aircraft by wire transferring
$100,000 to Boeing. In the event Buyer exercises its option to purchase
the Rollover Option Aircraft, such application will be in accordance with
Article 4.1 herein.
3. Price.
3.1 The advance payment base prices of the Option Aircraft
set forth below and in paragraph 2.1 of Attachment A represent the estimated
delivery prices of the Option Aircraft. The Option Aircraft pricing
elements and associated pricing terms and conditions are given in
Attachment A.
3.2 Price and escalation provisions for Model 737-7H4
aircraft delivering after 2001, are not currently available. The estimated
Advance Payment Base Prices shown in paragraph 3.3 below and in paragraph 2.1 of
Attachment A are based on currently available price and escalation
provisions. As price and escalation provisions become available for
Model 737-7H4 aircraft delivering after 2001, such price and escalation
provisions will be appropriately applied to the applicable Option Aircraft.
For additional information relating to price and escalation provisions
applicable to Option Aircraft delivering after 2001 refer to paragraphs 2.3
and 3.2 of Attachment A.
3.3 The Advance Payment Base Prices of the Option Aircraft
indicated below do include an amount for special features in addition to
those specifically described in Attachment A but do not include any amount
for items of Buyer Furnished Equipment (BFE). An estimate for typical
special features is $*** per Aircraft (expressed in 1992 STE dollars) and
for BFE is $*** per Aircraft (expressed in delivery year dollars).
<PAGE>
<PAGE> 45
Southwest Airlines Co.
6-1162-RLL-933R1 Page 4
<TABLE>
<CAPTION>
Month and Year Advance Payment Base
of Delivery Price per Option Aircraft
============== ==========================
<S> <C> <C>
Block F Aircraft ***
October 1998 $
November 1998 $
December 1998 $
Block G Aircraft ***
March 1999 $
June 1999 $
August 1999 $
September 1999 $
October 1999 $
Block H Aircraft ***
April 2000 $
October 2000 $
Block I Aircraft ***
April 2001 $
October 2001 $
Block J Aircraft ***
January 2002 $
March 2002 $
April 2002 $
July 2002 $
October 2002 $
Block K Aircraft ***
January 2003 $
March 2003 $
April 2003 $
July 2003 $
October 2003 $
Block L Aircraft ***
April 2004 $
July 2004 $
</TABLE>
3.4 The Option Aircraft purchase price will be the applicable
basic price thereof at the time of Option Aircraft delivery adjusted in
accordance with Boeing's Aircraft escalation provisions contained in the
<PAGE>
<PAGE> 46
Southwest Airlines Co.
6-1162-RLL-933R1 Page 5
definitive agreement to purchase the Option Aircraft. The purchase price
will include the price for Seller Purchased Equipment (SPE) if Buyer has
elected to change Buyer Furnished Equipment (BFE) to SPE.
4. Option Aircraft Payment.
4.1 In consideration of the granting of the option as set forth
herein, on or before the date Boeing and Buyer enter into a definitive
agreement to purchase the Aircraft, Buyer will pay a deposit to Boeing of
$100,000 for each Option Aircraft (Deposit). In the event Buyer exercises
its option herein, the amount of the Deposit will be credited against the
first advance payment due for such Option Aircraft pursuant to the advance
payment schedule set forth in paragraph 3 of Attachment A. The Deposits
for the Option Aircraft will be refunded to Buyer, without interest, if the
parties do not enter into a definitive Agreement for the Aircraft.
In the event that, after the parties enter into a definitive agreement to
purchase the Aircraft, Buyer does not exercise its option to purchase the
Option Aircraft pursuant to the terms and conditions set forth herein,
Boeing will be entitled to retain the Deposits for the Option Aircraft
except as provided in paragraphs 6 herein.
4.2 Advance payments in the amount of 30% of the advance
payment base price will be payable on the Option Aircraft in accordance
with paragraph 3 of Attachment A. The remainder of the Option Aircraft
purchase price is due at the time of delivery of the Option Aircraft.
5. Option Exercise.
5.1 To exercise its Option, Buyer will give written or
telegraphic notice thereof to Boeing on or before eighteen (18) months
prior to the first day of the delivery month of each Option Aircraft.
In such notice Buyer will select the Option Model type, and the applicable
delivery positions.
5.2 It is understood and agreed that Boeing may accelerate
the option exercise dates specified above if Boeing must make production
decisions which are dependent on Buyer's decision to buy the Option
Aircraft. If Boeing elects to accelerate the option exercise dates, Boeing
will do so by giving written or telegraphic notice thereof to Buyer. Such
<PAGE>
<PAGE> 47
Southwest Airlines Co.
6-1162-RLL-933R1 Page 6
notice will specify the revised option exercise dates, which will not be
earlier than 30 days after the date of transmittal of such notice, and the
Option Aircraft delivery positions affected by such revision. If Buyer
fails to exercise its option for any Option Aircraft affected by such
revised dates, the Deposit applicable to such Option Aircraft will be
promptly refunded, with interest, to Buyer. The interest rate for
calculation of the interest associated with such refund is the rate of two
percent (2%) below the Citibank base rate in effect from time to time
during the period the option deposit is held by Boeing.
6. Contract Terms.
It is understood that Boeing and Buyer will use their best efforts
to enter into a definitive agreement for the Option Aircraft within thirty
(30) days after Buyer exercises an option to purchase Option Aircraft
pursuant to paragraph 5 covering the detailed terms and conditions for the
sale of such Option Aircraft.
Such definitive agreement will include the terms and conditions contained
herein together with the terms and conditions, not inconsistent herewith,
contained in Boeing's then-current standard form of purchase agreement for
the sale of Model 737-700 aircraft in effect as of the date of option
exercise and such additional terms and conditions as may be mutually agreed
upon. In the event the parties have not entered into such an agreement
within the time period contemplated herein, either party may, exercisable
by written or telegraphic notice given to the other within thirty (30) days
after such period, terminate the purchase of such Option Aircraft.
<PAGE>
<PAGE> 48
Southwest Airlines Co.
6-1162-RLL-933R1 Page 7
7. Termination of Option to Purchase.
Either Boeing or Buyer may terminate the option to purchase an
Option Aircraft if any of the following events are not accomplished by the
respective dates contemplated in this letter agreement, or in the
Agreement, as the case may be:
(i) termination of the purchase of the Aircraft under the Agreement for
any reason;
(ii) payment by Buyer of the Deposit with respect to an Option Aircraft
pursuant to paragraph 4.1 herein;
(iii) exercise of an option to purchase an Option Aircraft pursuant to the
terms hereof.
Any termination of an option to purchase by Boeing which is based on the
termination of the purchase of Aircraft under the Agreement will be on a
one-for-one basis, for each Aircraft so terminated.
Any cancellation of an option to purchase which is based on failure to make
the required Deposit or to exercise the option to purchase shall only apply
to the Option Aircraft so canceled.
Termination of an option to purchase provided by this letter agreement will
be caused by either party giving written notice to the other within 10 days
after the applicable date. Upon receipt of such notice, all rights and
obligations of the parties with respect to an Option Aircraft for which the
option to purchase has been terminate will thereupon terminate.
If termination is result of a revision of an option exercise date by Boeing
pursuant to paragraph 5.2, Boeing will promptly refund to Buyer, without
interest, any payments received from Buyer, including the Deposit, with
respect to the Option Aircraft for which the option is terminated. If
termination is for any other reason, Boeing will promptly refund to Buyer,
without interest, any payments received from Buyer with respect to the
affected Option Aircraft, except the Deposit, which Buyer may apply to any
model Boeing aircraft purchased by Buyer from Boeing at a future date.
<PAGE>
<PAGE> 49
Southwest Airlines Co.
6-1162-RLL-933R1 Page 8
8. Confidential Treatment. Buyer understands that certain commercial
and financial information contained in this Letter Agreement including any
attachments hereto is considered by Boeing as confidential. Buyer agrees
that it will treat this Letter Agreement and the information contained
herein as confidential and will not, without the prior written consent of
Boeing, disclose this Letter Agreement or any information contained herein
to any other person or entity except as provided in Letter Agreement
No. 6-1162-RLL-934R1.
Very truly yours,
THE BOEING COMPANY
By /s/ R. Leo Lyons
--------------------------
Its Attorney-in-Fact
------------------------
ACCEPTED AND AGREED TO this
date: February 26, 1997
-----------------------
SOUTHWEST AIRLINES CO.
By /s/ Gary A. Barron
--------------------------
Its EVP-COO
-------------------------
Attachments
<PAGE>
<PAGE> 50
Attachment A to
6-1162-RLL-933R1
Page 1
Model 737-7H4 Aircraft
1. Option Aircraft Description and Changes.
1.1 Aircraft Description. The Option Aircraft is described by
Boeing Detail Specification D6-38808-1, Dated October 30 ,1996.
1.2 Changes. The Detail Specification will be revised to
include:
(1) Changes applicable to the basic Model 737-700
aircraft which are developed by Boeing between the date of the Detail
Specification and the signing of a definitive agreement to purchase the
Option Aircraft.
(2) Changes mutually agreed upon.
(3) Changes required to obtain a Standard Certificate of
Airworthiness.
(4) To provide sufficient Option Aircraft manufacturing
and procurement lead time it is necessary for Boeing and Buyer to reach
final agreement on the Option Aircraft configuration, including BFE/SPE
vendor selection fifteen (15) months prior to delivery of each Option
Aircraft. If such items are not resolved by the indicated dates, Boeing
reserves the right to amend this letter agreement:
(i) to adjust the scheduled delivery of the Option
Aircraft to a later time period and,
(ii) to make such other changes as are appropriate
and consistent with the revised Option Aircraft deliveries.
1.3 Effect of Changes. Changes to the Detail Specification
incorporated pursuant to the provisions of the clauses above will include
the effects of such changes upon Option Aircraft weight, balance, design
and performance. Performance guarantees for the Option Aircraft which are
mutually acceptable to the parties will be included in the definitive
agreement for the Option Aircraft.
<PAGE>
<PAGE> 51
Attachment A to
6-1162-RLL-933R1
Page 2
2. Price Description
2.1 Price Elements Per Aircraft
<TABLE>
<CAPTION>
1 2 3
AIRCRAFT & ADV. PMT.
AIRCRAFT ESTIMATED SPECIAL BASE PRICE
DELIVERY FEATURES PRICE ESTIMATED (ELEMENTS)
MO. & YR. (JULY 1992$) ESCALATION 1 + 2 + 3
--------- ------------------ ---------- ----------
<S> <C> <C> <C>
October 1998 *** *** ***
November 1998
December 1998
March 1999
June 1999
August 1999
September 1999
October 1999
April 2000
October 2000
April 2001
October 2001
January 2002
March 2002
April 2002
July 2002
October 2002
January 2003
March 2003
April 2003
July 2003
October 2003
April 2004
July 2004
</TABLE>
<PAGE>
<PAGE> 52
Attachment A to
6-1162-RLL-933R1
Page 3
2. Price Description. (Continued)
2.2 Price Adjustments For Option Aircraft Delivering From
October 1998 to October 2001.
2.2.1 Special Features. The price for Special Features
incorporated in the Option Aircraft Detail Specification will be adjusted
to Boeing's then-current prices for such features as of the date of
execution of the definitive agreement for the Option Aircraft.
2.2.2 Escalation Adjustments. For Option Aircraft
delivering from October 1998 to October 2001, the Aircraft Basic Price and
Special Features price will be escalated according to the provisions of
Attachment B to this letter agreement.
2.2.3 Price Adjustments for Changes. Boeing may adjust the
Aircraft Basic Price and the Advance Payment Base Price for any changes
mutually agreed upon subsequent to the date that Buyer and Boeing enter
into a definitive agreement for the Option Aircraft.
2.2.4 Base Price Adjustments. The Aircraft Basic Price of
the Option Aircraft will be adjusted for any FAA mandated changes
incorporated into the Option Aircraft.
2.3 Price Adjustments For Option Aircraft
Delivering From January 2002 through December 2006.
2.3.1 Special Features. The price for Special Features
incorporated in the Option Aircraft Detail Specification will be adjusted
to Boeing's then-current prices for such features as of the date of
execution of the definitive agreement for the Option Aircraft.
2.3.2 Escalation Adjustments. For escalation provisions
applicable to Option Aircraft delivering after 2001, see paragraph 2.3.6
below.
2.3.3 Base Price Adjustments for FAA Changes. The Aircraft
Basic Price of the Option Aircraft will be adjusted for any FAA mandated
changes incorporated into the Aircraft.
2.3.4 Price Adjustments for Changes. Boeing may adjust the
Aircraft Basic Price and the Advance Payment Base Price for any changes
<PAGE>
<PAGE> 53
Attachment A to
6-1162-RLL-933Rl
Page 4
mutually agreed upon subsequent to the date that Buyer and Boeing enter
into a definitive agreement for the Option Aircraft.
2.3.5 Base Price Adjustments. The Aircraft Basic Price of
the Option Aircraft will be adjusted to Boeing's then-current prices as of
the date of execution of the definitive agreement for the Option Aircraft
in accordance with the agreement reached below. The Aircraft Basic Price
starting point for options delivering from January 2002 through December
2006 is $*** (July 1992 STE). Such Aircraft Basic Price may increase in
accordance with paragraphs 2.3.1, 2.3.2, 2.3.3 and 2.3.4. For any other
changes to the Aircraft Basic Price, Boeing may increase the Aircraft Basic
Price by a maximum of $*** (July 1992 STE) per year or portion thereof
starting in January 2002.
2.3.6 Prices for Long Lead Time Aircraft. Boeing has not
established escalation provisions for Model 737-700 aircraft for delivery
2002 and after. Such escalation provisions (i) will be incorporated into
the Option Aircraft definitive agreement when such information is available
and (ii) will be the then-current escalation provisions applicable to the
same model aircraft and engines delivering in the same time period as the
Option Aircraft. The resulting revisions to the definitive agreement will
include but not be limited to, adjustment of the Aircraft Basic Price of
the Option Aircraft, the Advance Payment Base Price, the Aircraft
escalation provisions and the advance payment amounts due on the Option
Aircraft.
2.3.7 BFE to SPE. An estimate of the total price for items
of Buyer Furnished Equipment (BFE) changed to Seller Purchased Equipment
(SPE) pursuant to the Configuration Specification is included in the Option
Aircraft price build-up. The purchase price of the Option Aircraft will be
adjusted by the price charged to Boeing for such items plus 10% of such
price. If all BFE except developmental avionics is converted to SPE,
Boeing will waive the 10% fee.
3. Advance Payment Schedules, Prices and Adjustments.
3.1 Buyer will pay to Boeing advance payments for the Option
Aircraft on the dates and in the amounts determined below.
<PAGE>
<PAGE> 54
Attachment A to
6-1162-RLL-933R1
Page 5
Amount Due per Aircraft
(Percentage times
Due Date of Payment Advance Payment Base Price)
Deposit $100,000 (if applicable)
18 months prior to the first 15% (less the
day of the scheduled delivery Deposit if any)
month of the Aircraft
12 months prior to the first 5%
day of the scheduled delivery
month of the Aircraft
9 months prior to the first 5%
day of the scheduled delivery
month of the Aircraft
6 months prior to the first 5%
day of the scheduled delivery
month of the Aircraft
Total 30%
Any advance payments that would be past due as of the date of signing the
definitive purchase agreement for the Option Aircraft in accordance with
the above schedule are due and payable on such date.
3.2 Option Aircraft advance payment base prices will be increased
or decreased, as appropriate, at the time of signing of the definitive
purchase agreement for the Option Aircraft, using the then-current
forecasted aircraft escalation factors used by Boeing, to determine the
amount of the advance payments to be made by Buyer on the Option Aircraft.
<PAGE>
<PAGE> 55
Attachment B to
6-1162-RLL-933R1
Page 1
PRICE ADJUSTMENT DUE TO
ECONOMIC FLUCTUATIONS
AIRCRAFT PRICE ADJUSTMENT
(July 1992 Base Price)
1. Formula.
The Aircraft Price Adjustment will be determined at the time of
Aircraft delivery in accordance with the following formula:
Pa = (P)(L + M - 1)
Where:
Pa = Aircraft Price Adjustment.
L = .65 x ECI
116.2
M = .35 x ICI
115.9
P = Aircraft Basic Price (as set forth in Article 3.2 of this
Agreement).
ECI = A value using the "Employment Cost Index for workers in
aerospace manufacturing" (aircraft manufacturing, standard
industrial classification code 3721, compensation, base month
and year June 1989 = 100), as released by the Bureau of Labor
Statistics, U.S. Department of Labor on a quarterly basis for
the months of March, June, September and December, calculated
as follows: A three-month arithmetic average value (expressed
as a decimal and rounded to the nearest tenth) will be
determined using the months set forth in the table below for
the applicable Aircraft, with the released Employment Cost
Index value described above for the month of March also being
used for the months of January and February; the value for June
also used for April and May; the value for September also used
for July and August; and the value for December also used for
October and November.
<PAGE>
<PAGE> 56
Attachment B to
6-1162-RLL-933R1
Page 2
ICI = The three-month arithmetic average of the released
monthly values for the Industrial Commodities Index as set
forth in the "Producer Prices and Price Index" (Base Year 1982
= 100) as released by the Bureau of Labor Statistics, U.S.
Department of Labor values (expressed as a decimal and rounded
to the nearest tenth) for the months set forth in the table
below for the applicable Aircraft.
In determining the value of L, the ratio of ECI divided by 116.2
will be expressed as a decimal rounded to the nearest ten-thousandth and
then multiplied by .65 with the resulting value also expressed as a decimal
and rounded to the nearest ten-thousandth.
In determining the value of M, the ratio of ICI divided by 115.9
will be expressed as a decimal rounded to the nearest ten-thousandth and
then multiplied by .35 with the resulting value also expressed as a decimal
and rounded to the nearest ten-thousandth.
<TABLE>
<CAPTION>
Months to be Utilized
Month of Scheduled in Determining the
Aircraft Delivery Value of ECI and ICI
------------------ --------------------------
<S> <C>
January June B, July B, Aug. B
February July B, Aug. B, Sept. B
March Aug. B, Sept. B, Oct. B
April Sept. B, Oct. B, Nov. B
May Oct. B, Nov. B, Dec. B
June Nov. B, Dec. B, Jan. D
July Dec. B, Jan. D, Feb. D
August Jan. D, Feb. D, Mar. D
September Feb. D, Mar. D, Apr. D
October Mar. D, Apr. D, May D
November Apr. D, May D, June D
December May D, June D, July D
</TABLE>
The following definitions of B and D will apply:
B = The calendar year before the year in which the scheduled month
of delivery as set forth in Paragraph 1 occurs.
D = The calendar year during which the scheduled month of delivery
as set forth in Paragraph 1 occurs.
<PAGE>
<PAGE> 57
Attachment B to
6-1162-RLL-933R1
Page 3
2. If at the time of delivery of an Aircraft Boeing is unable to
determine the Aircraft Price Adjustment because the applicable values to be
used to determine the ECI and ICI have not been released by the Bureau of
Labor Statistics, then:
2.1 The Aircraft Price Adjustment, to be used at the time of
delivery of each of the Aircraft, will be determined by utilizing the
escalation provisions set forth above. The values released by the Bureau
of Labor Statistics and available to Boeing 30 days prior to scheduled
Aircraft delivery will be used to determine the ECI and ICI values for the
applicable months (including those noted as preliminary by the Bureau of
Labor Statistics) to calculate the Aircraft Price Adjustment. If no values
have been released for an applicable month, the provisions set forth in
Paragraph 2.2 below will apply. If prior to delivery of an Aircraft the
U.S. Department of Labor changes the base year for determination of the ECI
or ICI values as defined above, such rebased values will be incorporated in
the Aircraft Price Adjustment calculation. The payment by Buyer to Boeing
of the amount of the Purchase Price for such Aircraft, as determined at the
time of Aircraft delivery, will be deemed to be the payment for such
Aircraft required at the delivery thereof.
2.2 If prior to delivery of an Aircraft the U.S. Department of
Labor substantially revises the methodology used for the determination of
the values to be used to determine the ECI and ICI values (in contrast to
benchmark adjustments or other corrections of previously released values),
or for any reason has not released values needed to determine the
applicable Aircraft Price Adjustment, the parties will, prior to delivery
of any such Aircraft, select a substitute for such values from data
published by the Bureau of Labor Statistics or other similar data reported
by non-governmental United States organizations, such substitute to lead in
application to the same adjustment result, insofar as possible, as would
have been achieved by continuing the use of the original values as they may
have fluctuated during the applicable time period. Appropriate revision of
the formula will be made as required to reflect any substitute values.
However, if within 24 months from delivery of the Aircraft the Bureau of
Labor Statistics should resume releasing values for the months needed to
determine the Aircraft Price Adjustment, such values will be used to
<PAGE>
<PAGE> 58
Attachment B to
6-1162-RLL-933R1
Page 4
determine any increase or decrease in the Aircraft Price Adjustment for the
Aircraft from that determined at the time of delivery of such Aircraft.
2.3 In the event escalation provisions are made non-enforceable
or otherwise rendered null and void by any agency of the United States
Government, the parties agree, to the extent they may lawfully do so, to
equitably adjust the Purchase Price of any affected Aircraft to reflect an
allowance for increases or decreases in labor compensation and material
costs occurring since February, 1992, which is consistent with the
applicable provisions of paragraph 1 of this Exhibit D.
3. For the calculations herein, the values released by the Bureau of
Labor Statistics and available to Boeing 30 days prior to scheduled
Aircraft delivery will be used to determine the ECI and ICI values for the
applicable months (including those noted as preliminary by the Bureau of
Labor Statistics) to calculate the Aircraft Price Adjustment.
Note: Any rounding of a number, as required under this Exhibit D with
respect to escalation of the airframe price, will be accomplished as
follows: if the first digit of the portion to be dropped from the
number to be rounded is five or greater, the preceding digit will be
raised to the next higher number.
<PAGE>
<PAGE> 59
6-1162-RLL-934R1
Southwest Airlines Co.
P.O. Box 36611 - Love Field
Dallas, Texas 75235
Subject: Letter Agreement No. 6-1162-RLL-934R1 to
Purchase Agreement No. 1810 -
Disclosure of Confidential Information
This Letter Agreement amends Purchase Agreement No. 1810 dated January 19,
1994 (the Agreement) between The Boeing Company (Boeing) and Southwest
Airlines Co. (Buyer) relating to Model 737-7H4 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein, will
have the same meaning as in the Agreement.
1. Buyer understands that certain commercial and financial information
contained in the documents listed below (Confidential Documents) is
considered by Boeing as confidential.
2. Buyer agrees that it will treat the Confidential Documents and the
information contained therein as confidential and will not, without the
prior written consent of Boeing, disclose such Confidential Documents or
any information contained therein to any other person or entity except as
may be required by (i) applicable law or governmental regulations, or (ii)
for financing the Aircraft in accordance with the provisions of Article 10
of the Agreement.
3. In connection with any such disclosure or filing of the Confidential
Documents, or the information contained therein pursuant to any such
applicable law or governmental regulation, Buyer will request and use its
best reasonable efforts to obtain confidential treatment of such
Confidential Documents and the information contained therein. Boeing
agrees to cooperate with Buyer in making and supporting its request for
confidential treatment.
Schedule of Confidential Documents
1. Letter Agreement No. 6-1162-RLL-932
2. Letter Agreement No. 6-1162-RLL-933R1
3. Letter Agreement No. 6-1162-RLL-934R1
4. Letter Agreement No. 6-1162-RLL-935R1
5. Letter Agreement No. 6-1162-RLL-936R1
6. Letter Agreement No. 6-1162-RLL-937
7. Letter Agreement No. 6-1162-RLL-938
<PAGE>
<PAGE> 60
Southwest Airlines Co.
6-1162-RLL-934R1 Page 2
8. Letter Agreement No. 6-1162-RLL-939R1
9. Letter Agreement No. 6-1162-RLL-940R1
10. Letter Agreement No. 6-1162-RLL-941R1
11. Letter Agreement No. 6-1162-RLL-942
12. Letter Agreement No. 6-1162-RLL-943
13. Letter Agreement No. 6-1162-RLL-944
14. Letter Agreement No. 6-1162-RLL-945
15. Letter Agreement No. 6-1162-RLL-1855
16. Letter Agreement No. 6-1162-RLL-1856
17. Letter Agreement No. 6-1162-RLL-1857
18. Letter Agreement No. 6-1162-RLL-1858
19. Letter Agreement No. 6-1162-RLL-2036
20. Letter Agreement No. 6-1162-RLL-2037
21. Letter Agreement No. 6-1162-RLL-2073
4. Confidential Treatment.
Buyer understands that certain commercial and financial information
contained in this Letter Agreement is considered by Boeing as confidential.
Buyer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written
consent of Boeing, disclose this Letter Agreement.
Very truly yours,
THE BOEING COMPANY
By /s/ R. Leo Lyons
----------------------
Its Attorney-in-Fact
---------------------
ACCEPTED AND AGREED TO as of this
date: February 26, 1997
SOUTHWEST AIRLINES CO.
By /s/ Gary A. Barron
----------------------
Its EVP-COO
---------------------
<PAGE>
<PAGE> 61
6-1162-RLL-935R1
Southwest Airlines Co.
P.O. Box 36611 - Love Field
Dallas, Texas 75235
Subject: Letter Agreement No. 6-1162-RLL-935R1 to
Purchase Agreement No. 1810 -
Aircraft Performance Guarantees
This Letter Agreement amends Purchase Agreement No. 1810 dated January 19,
1994 (the Agreement) between The Boeing Company (Boeing) and Southwest
Airlines Co. (Buyer) relating to the Model 737-7H4 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein will
have the same meaning as in the Agreement.
1. Aircraft Performance Guarantees. The only performance guarantees
applicable to the Aircraft are those set forth in the Attachment hereto.
2. ***. Buyer has requested a *** is specifically described in
paragraph 2.4.1 of the Attachment.
In addition to the *** made in the *** in paragraph 2.4.1 and
notwithstanding the tolerance in such paragraph, Boeing agrees that if, at
the time of Aircraft delivery, the *** is subject to the adjustment
described in paragraph 4.2 of the Attachment.
3. Confidential Treatment. Buyer understands that certain commercial
and financial information contained in this Letter Agreement including any
attachments hereto is considered by Boeing as confidential. Buyer agrees
that it will treat this Letter Agreement and the information contained
herein as confidential and will not, without the prior written consent of
Boeing, disclose this Letter Agreement or any information contained herein
to any other person or entity except as provided in Letter Agreement
No. 6-1162-RLL-934R1.
Very truly yours,
THE BOEING COMPANY
By /s/ R. Leo Lyons
--------------------
Its Attorney-in-Fact
-------------------
<PAGE>
<PAGE> 62
Southwest Airlines Co.
6-162-RLL-935R1 Page 2
ACCEPTED AND AGREED TO as of this
date: February 26, 1997
SOUTHWEST AIRLINES CO.
By /s/ Gary A. Barron
---------------------
Its EVP-COO
--------------------
Attachment
<PAGE>
<PAGE> 63
Attachment to Letter Agreement
No. 6-1162-RLL-935R1
Page 1
MODEL 737-7H4 PERFORMANCE GUARANTEES
<TABLE>
<CAPTION>
SECTION CONTENTS
<S> <C> <C>
1 AIRCRAFT MODEL APPLICABILITY
2 FLIGHT PERFORMANCE
3 MANUFACTURER'S EMPTY WEIGHT
4 AIRCRAFT CONFIGURATION
5 GUARANTEE CONDITIONS
6 GUARANTEE COMPLIANCE
7 EXCLUSIVE GUARANTEES
</TABLE>
<PAGE>
<PAGE> 64
Attachment to Letter Agreement
No. 6-1162-RLL-935R1
Page 2
1 AIRCRAFT MODEL APPLICABILITY
The guarantees contained in this Attachment (the "Performance
Guarantees") are applicable to the 737-7H4 Aircraft with a maximum
takeoff weight of 138,500 pounds and equipped with Boeing furnished
CFM56-7 engines operated at a sea level, static, uninstalled takeoff
thrust rating of 22,000 pounds.
2 FLIGHT PERFORMANCE
2.1 Takeoff
The FAA approved takeoff field length at a gross weight at the start
of the ground roll of 138,500 pounds, at a temperature of 86 F, at a
sea level altitude and using maximum takeoff thrust, shall not be
more than the following guarantee value:
NOMINAL: *** Feet
TOLERANCE: *** Feet
GUARANTEE: *** Feet
2.2 Landing
The FAA approved landing field length at a gross weight of 128,000
pounds and at a sea level altitude, shall not be more than the
following guarantee value:
NOMINAL: *** Feet
TOLERANCE: *** Feet
GUARANTEE: *** Feet
2.3 Cruise Specific Air Range
The cruise specific air range at a gross weight of 125,000 pounds on
a standard day, at an altitude of 39,000 feet, at 0.787 Mach number
<PAGE>
<PAGE> 65
Attachment to Letter Agreement
No. 6-1162-RLL-935R1
Page 3
and using not more than maximum cruise thrust, shall not be less
than the following guarantee value:
NOMINAL: *** NAM/Pound
TOLERANCE: *** NAM/Pound
GUARANTEE: *** NAM/Pound
2.4 Mission
2.4.1 Mission Payload
The payload for a stage length of 1,555 nautical miles in still air
(equivalent to a distance of 1,303 nautical miles with a 77 knot
headwind) using the conditions and operating rules defined below,
shall not be less than the following guarantee value:
NOMINAL: ***
TOLERANCE: ***
GUARANTEE: ***
Conditions and operating rules:
<TABLE>
<S> <C> <C>
Stage The stage length is defined as the sum of the
Length: distances for the climbout maneuver, climb,
cruise, and descent.
Takeoff: The airport altitude is 599 feet.
The airport temperature is 56 F.
The runway length is 10,230 feet.
The runway slope is 0.4 percent downhill
</TABLE>
<PAGE>
<PAGE> 66
Attachment to Letter Agreement
No. 6-1162-RLL-935R1
Page 4
The following obstacle definition is based on a
straight-out departure where obstacle height and
distance are specified with reference to the
liftoff end of the runway:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Distance Height
1. 285 Feet 43 Feet
2. 2,716 Feet 79 Feet
3. 38,530 Feet 423 Feet
4. 69,491 Feet 719 Feet
</TABLE>
<TABLE>
<S> <C> <C>
Maximum takeoff thrust is used for the takeoff.
The takeoff gross weight shall conform to FAA
Regulations.
Climbout Following the takeoff to 35 feet, the Aircraft
Maneuver: accelerates to 250 KCAS while climbing to 1,500
feet above the departure airport altitude and
retracting flaps and landing gear.
Climb: The Aircraft climbs from 1,500 feet above the
departure airport altitude to 10,000 feet
altitude at 250 KCAS.
The Aircraft then accelerates at a rate of climb
of 500 feet per minute to a climb speed 280 KCAS.
The climb continues at 280 KCAS until 0.78 Mach
number is reached.
The climb continues at 0.78 Mach number to the
cruise altitude.
</TABLE>
<PAGE>
<PAGE> 67
Attachment to Letter Agreement
No. 6-1162-RLL-935R1
Page 5
<TABLE>
<S> <C> <C>
The temperature is ISA+10 C during climb.
Maximum climb thrust is used during climb.
Cruise: The Aircraft cruises at 0.788 Mach number.
The initial cruise altitude is not less than
35,000 feet.
A step climb of 4,000 feet altitude may be used
when beneficial to minimize fuel burn.
The temperature is ISA+10 C during cruise.
The cruise thrust is not to exceed maximum cruise
thrust except during a step climb when maximum
climb thrust may be used.
Descent: The Aircraft descends from the cruise altitude at
0.78 Mach number until 250 KCAS is reached.
The descent continues at 250 KCAS to an altitude
of 1,500 feet above the destination airport altitude.
Throughout the descent, the cabin pressure will
be controlled to a maximum rate of descent
equivalent to 300 feet per minute at sea level.
The temperature is ISA+10 C during descent.
</TABLE>
<PAGE>
<PAGE> 68
Attachment to Letter Agreement
No. 6-1162-RLL-935R1
Page 6
<TABLE>
<S> <C> <C>
Approach The Aircraft decelerates to the final approach
and Landing speed while extending landing gear and flaps,
Maneuver: then descends and lands.
The destination airport altitude is 1,133 feet.
Fixed For the purpose of this guarantee and for the
Allowances: purpose of establishing compliance with this
guarantee, the following shall be used as fixed
quantities and allowances:
Taxi-out:
Fuel 243 Pounds
Takeoff and Climbout Maneuver:
Fuel 462 Pounds
Distance 3.6 Nautical Miles
Approach and Landing Maneuver:
Fuel 188 Pounds
Taxi-in (shall be consumed from the
reserve fuel):
Fuel 135 Pounds
Usable reserve fuel remaining upon completion
of the approach and landing maneuver: 7,424
Pounds
</TABLE>
2.4.2 Mission Block Fuel
The block fuel for a stage length of 557 nautical miles in still air
(equivalent to a distance of 500 nautical miles with a 50 knot
<PAGE>
<PAGE> 69
Attachment to Letter Agreement
No. 6-1162-RLL-935R1
Page 7
headwind) with a 30,825 pound payload using the conditions and
operating rules defined below, shall not be more than the following
guarantee value:
NOMINAL: ***
TOLERANCE: ***
GUARANTEE: ***
Conditions and operating rules are the same as Paragraph 2.4.1
except as follows:
<TABLE>
<S> <C> <C>
Block Fuel: The block fuel is defined as the sum of the fuel used
for taxi-out, takeoff and climbout maneuver, climb,
cruise, descent, approach and landing maneuver, and
taxi-in.
Takeoff: The airport altitude is sea level.
The takeoff gross weight is not limited by the
airport conditions.
Climb: The temperature is standard day during climb.
Cruise: The Aircraft cruises at 0.785 Mach number.
The cruise altitude is 39,000 feet. There is no step
climb.
The temperature is standard day during cruise.
Descent: The temperature is standard day during descent.
</TABLE>
<PAGE>
<PAGE> 70
Attachment to Letter Agreement
No. 6-1162-RLL-935R1
Page 8
<TABLE>
<S> <C> <C>
Approach
and Landing
Maneuver: The destination is a sea level airport.
Fixed
Allowances: For the purpose of this guarantee and for the purpose
of establishing compliance with this guarantee, the
following shall be used as fixed quantities and
allowances:
Takeoff and Climbout Maneuver:
Fuel 417 Pounds
Distance 3.1 Nautical Miles
Approach and Landing Maneuver:
Fuel 194 Pounds
Taxi-in (shall be consumed from the reserve fuel):
Fuel 135 Pounds
Usable reserve fuel remaining upon completion of the
approach and landing maneuver: 6,992 Pounds
</TABLE>
2.4.3 Operational Empty Weight Basis
The Operational Empty Weight (OEW) derived in Paragraph 2.4.4 is the
basis for the mission guarantees of Paragraph 2.4.1 and 2.4.2.
<PAGE>
<PAGE> 71
Attachment to Letter Agreement
No. 6-1162-RLL-935R1
Page 9
2.4.4 737-7H4 Weight Summary - Southwest Airlines
<TABLE>
<CAPTION>
Pounds
--------
<S> <C>
Standard Model Specification MEW 77,300
Configuration Specification D6-38808 Rev. B
dated 4-15-94
140 (0F/140Y) Passengers
CFM56-7 Engines
133,500 Pounds Maximum Taxi Weight
7,150 U.S. Gallons Fuel Capacity
Anticipated Changes to Config. Spec. D6-38808
6,878 U.S. Gallons Fuel Capacity 0
Customer Requested Changes:
Interior Change to 137 (0F/137Y) Passengers* 1,152
(Ref: CR 2520CH3538, LOPS-XXX-XXXX)
MTW 139,000 lb ilo 133,500 lb (CR 0310CH3332) 0
Air Condition Rev, Gasper Air (CR 2123CH3042) 61
ECS Recirc. Filter - Charcoal (CR 2123CH3043) 33
Second Observer's Station (CR 2511CH3049) 35
Cargo Compartment Lining Rev. (CR 2550CH3153) 212
Additional Change Requests Allowance 100
Manufacturer's Empty Weight (MEW) 78,893
Standard and Operational Items Allowance 4,113
(Paragraph 2.4.5)
Operational Empty Weight (OEW) 83,006
</TABLE>
<PAGE>
<PAGE> 72
Attachment to Letter Agreement
No. 6-1162-RLL-935R1
Page 10
<TABLE>
<CAPTION>
Quantity Pounds Pounds
<S> <C> <C> <C>
*Seat Weight Included: 3,571
Economy Class Doubles 1 62
Economy Class Triples 45 3,509
</TABLE>
<TABLE>
<CAPTION>
2.4.5 Standard and Operational Items Allowance
Qty Pounds Pounds Pounds
<S> <C> <C> <C> <C>
Standard Items Allowance 930
Unusable Fuel 157
Oil 152
Oxygen Equipment 51
Passenger Portable 4 48
Crew Masks 3
Miscellaneous Equipment 13
Crash Axe 1 2
Megaphones 2 6
Flashlights 4 4
Smoke Goggles 1 1
Galley Structure &
Fixed Inserts 557
Operational Items Allowance 3,183
Crew and Crew Baggage 910
Flight Crew 2 340
Cabin Crew 3 420
Baggage 5 125
Briefcases 1 25
Catering Allowance (X meals) 1,529
First Class x
Business Class x
Economy Class 139 1,529
<PAGE>
<PAGE> 73
Attachment to Letter Agreement
No. 6-1162-RLL-935R1
Page 11
Passenger Service Equipment 137 274
Potable Water - 30 Gallons 263
Waste Tank Disinfectant 2 34
Emergency Equipment 173
Escape Slides - Forward 2 106
Escape Slides - Aft 2 67
Total Standard and Operational Items Allowance 4,113
</TABLE>
3 MANUFACTURER'S EMPTY WEIGHT
The Manufacturer's Empty Weight (MEW) is guaranteed not to exceed the
value in Section 03-60-00 of Detail Specification D6-38808-1 plus two
percent.
4 AIRCRAFT CONFIGURATION
4.1 The guarantees contained in this Attachment are based on the Aircraft
configuration as defined in the original release of Detail
Specification D6-38808-1 (hereinafter referred to as the Detail
Specification). Appropriate adjustment shall be made for changes in
such Detail Specification approved by the Buyer and Boeing or
otherwise allowed by the Purchase Agreement which cause changes to
the performance, and/or weight and balance of the Aircraft. Such
adjustment shall be accounted for by Boeing in its evidence of
compliance with the guarantees.
4.2 ***
(1) Changes to the Detail Specification including Change Requests,
Master Changes, Change Orders or any other changes mutually agreed
upon between the Buyer and Boeing or otherwise allowed by the
Purchase Agreement.
<PAGE>
<PAGE> 74
Attachment to Letter Agreement
No. 6-1162-RLL-935R1
Page 12
(2) The difference between the component weight allowances given in
Appendix IV of the Detail Specification and the actual weights.
5 GUARANTEE CONDITIONS
5.1 All guaranteed performance data are based on the ICAO International
Standard Atmosphere (ISA) and specified variations therefrom;
altitudes are pressure altitudes.
5.2 The FAA Regulations (FAR) referred to in this Attachment are, unless
otherwise specified, defined to be the 737-500 Certification Basis
regulations specified in the Type Certificate Data Sheet A16WE,
Revision 13, dated February 12, 1990. Those regulations do not
include the all-engine refused takeoff of Amendment 25-42.
5.3 In the event a change is made to any law, governmental regulation or
requirement, or in the interpretation of any such law, governmental
regulation or requirement that affects the certification basis for
the Aircraft as described in Paragraph 5.2, and as a result thereof,
a change is made to the configuration and/or the performance of the
Aircraft in order to obtain certification, the guarantees set forth
in this Attachment shall be appropriately modified to reflect any
such change.
5.4 The takeoff and landing guarantees and the takeoff portion of the
mission payload guarantee are based on hard surface, level and dry
runways with no wind or obstacles, no clearway or stopway, 225 mph
H43.5" x 16"-21" tires, and with anti-skid operative unless otherwise
specified. The takeoff performance is based on no engine bleed for
air conditioning or thermal anti-icing and the Auxiliary Power Unit
(APU) turned off unless otherwise specified. The improved climb
performance procedure will be used for takeoff as required. The
landing performance is based on the use of automatic spoilers.
<PAGE>
<PAGE> 75
Attachment to Letter Agreement
No. 6-1162-RLL-935R1
Page 13
5.5 The cruise specific air range guarantee and the climb, cruise, and
descent portions of the mission guarantees include allowances for
normal power extraction and engine bleed for normal operation of the
air conditioning system. Normal electrical power extraction shall be
defined as not less than a 50 kilowatts total electrical load.
Normal operation of the air conditioning system shall be defined as
pack switches in the "Auto" position, the temperature control
switches in the "Auto" position that results in a nominal cabin
temperature of 75 F, and all air conditioning systems operating
normally. This operation allows a maximum cabin pressure
differential of 8.35 pounds per square inch at higher altitudes, with
a nominal Aircraft cabin ventilation rate of 2,200 cubic feet per
minute including passenger cabin recirculation (nominal recirculation
is 33 percent). The APU is turned off unless otherwise specified.
5.6 The cruise specific air range guarantee and the climb, cruise, and
descent portions of the mission guarantees are based on H43.5" x
16"-21" tires and an Aircraft center of gravity location, as determined
by Boeing, not to be aft of 24 percent of the mean aerodynamic chord.
5.7 Performance, where applicable, is based on a fuel Lower Heating Value
(LHV) of 18,580 BTU per pound and a fuel density of 6.75 pounds per
U.S. gallon.
6 GUARANTEE COMPLIANCE
6.1 Compliance with the guarantees of Sections 2 and 3 shall be based on
the conditions specified in those sections, the Aircraft
configuration of Section 4 and the guarantee conditions of Section 5.
6.2 Compliance with the takeoff and landing guarantees and the takeoff
portion of the mission payload guarantee shall be based on the FAA
approved Airplane Flight Manual for the Model 737-700 which includes
digital performance information.
<PAGE>
<PAGE> 76
Attachment to Letter Agreement
No. 6-1162-RLL-935R1
Page 14
6.3 Compliance with the cruise specific air range guarantee and with the
climb, cruise, and descent portions of the mission guarantee shall be
established by calculations based on flight test data obtained from
an aircraft in a configuration similar to that defined by the Detail
Specification.
6.4 The data derived from tests shall be adjusted as required by
conventional methods of correction, interpolation or extrapolation in
accordance with established engineering practices to show compliance
with these guarantees.
6.5 The OEW used for compliance with the mission guarantees shall be the
actual MEW plus the Standard and Operational Items Allowance in
Paragraph 03-60-00 of the Detail Specification.
6.6 Compliance with the Manufacturer's Empty Weight guarantee shall be
based on information in the "Weight and Balance Control and Loading
Manual - Aircraft Report."
6.7 Compliance shall be based on the performance of the airframe and
engines in combination, and shall not be contingent on the engine
meeting its manufacturer's performance specifications.
7 EXCLUSIVE GUARANTEES
The only performance guarantees applicable to the Aircraft are those
set forth in this Attachment.
<PAGE>
<PAGE> 77
6-1162-RLL-936R1
Southwest Airlines Co.
P.O. Box 36611 - Love Field
Dallas, Texas 75235
Subject: Letter Agreement No. 6-1162-RLL-936R1 to
Purchase Agreement No. 1810 -
Certain Contractual Matters
This Letter Agreement amends Purchase Agreement No. 1810 dated January 19,
1994 (the Agreement) between The Boeing Company (Boeing) and Southwest
Airlines Co. (Buyer) relating to Model 737-7H4 aircraft (the Aircraft) and
Letter Agreement 6-1162-RLL-933R1, dated even date herewith, entitled "Option
Aircraft", relating to the sale by Boeing and the purchase by Buyer of
sixty-seven (67) additional Model 737-7H4 aircraft (the Option Aircraft) and
forty-nine (49) Model 737-7H4 Rollover Option Aircraft (Rollover Option
Aircraft).
The commitments made herein to Buyer are provided from Boeing and CFM
International Inc. (CFM).
All terms used herein and in the Agreement, and not defined herein, will have
the same meaning as in the Agreement.
1. Credit Memorandum - Aircraft - Firm Aircraft.
In consideration of Buyer's purchase of the Aircraft, Boeing will issue
to Buyer at the time of delivery of each Aircraft a credit memorandum which
may be used by Buyer for the purchase of Boeing goods and services or applied
to the final delivery payment for the Aircraft for which the credit was
issued. The amount of this credit memorandum applicable to each Aircraft will
be *** of the Aircraft Basic Price (July 1992 STE $) ***.
2. Credit Memorandum - Aircraft - Option Aircraft and Rollover Option
Aircraft.
In consideration of Buyer's purchase of the Option Aircraft and Rollover
Option Aircraft, Boeing will issue to Buyer at the time of delivery of each
Option Aircraft and Rollover Option Aircraft a credit memorandum which may be
<PAGE>
<PAGE> 78
Southwest Airlines Co.
6-1162-RLL-936R1 Page 2
used by Buyer for the purchase of Boeing goods and services was issued. The
amount of the credit memorandum applicable to each Aircraft will be *** of the
Aircraft Basic Price (July 1992 STE $) ***.
3. Simulation Data Credits.
If Buyer purchases one subsequent simulator data package for a price of
$*** dollars (July 1992 STE $), Boeing will issue offsetting credit memoranda
in amounts equal to Boeing's invoice price of such simulator data concurrent
with the issuance of such invoice. If Buyer purchases one concurrent
simulator data package for a price of $***, Boeing will issue an offsetting
credit memorandum in an amount equal to Boeing's invoice price of such
simulator data package concurrent with the issuance of such invoice. Buyer
understands that the concurrent data package price of $*** (July 1992 STE $)
is valid only if the second simulator is manufactured by the same simulator
manufacturer as the subsequent simulator and the concurrent simulator is
ordered within eight years of the signing of the Agreement.
4. Credits.
The Aircraft Basic Price for Buyer's 737-7H4 Aircraft does not include
a price for Dual Flight Management Computer and Five Channel SELCAL. These
two features will be installed in the Aircraft but deactivated. If Buyer
decides at anytime (whether before or after delivery) to activate this
capability, Buyer will pay Boeing an amount equal to *** (July 1992 STE $)
escalated to the month and year of delivery of that Aircraft in accordance
with the aircraft escalation formula (Exhibit D - Aircraft Price Adjustment)
for this installed capability. If Buyer sells or leases the Aircraft for
operation by a third party and the features are subsequently activated, Buyer
will pay or cause the subsequent buyer or lessee to pay the above described
activation charge to Boeing.
5. Maximum Takeoff Weight Credit Memoranda.
Buyer has purchased a Maximum Takeoff Weight of 138,500 pounds for the
Aircraft. Boeing will, at the time of Aircraft delivery, issue to Buyer a
credit memoranda in the amount of $*** (July 1992 STE $), *** to offset the
price for 500 pounds of Maximum Takeoff Weight.
<PAGE>
<PAGE> 79
Southwest Airlines Co.
6-1162-RLL-936R1 Page 3
6. Confidential Treatment.
Buyer understands that certain commercial and financial information
contained in this Letter Agreement is considered by Boeing as confidential.
Buyer agrees that it will treat this Letter Agreement and the information
contained herein as confidential and will not, without the prior written
consent of Boeing, disclose this Letter Agreement or any information contained
herein to any other person or entity, except as provided in Letter Agreement
6-1162-RLL-934R1.
Very truly yours,
THE BOEING COMPANY
By /s/ R. Leo Lyons
-----------------------
Its Attorney-in-Fact
---------------------
ACCEPTED AND AGREED TO as of this
date: February 26, 1997
SOUTHWEST AIRLINES CO.
By /s/ Gary A. Barron
------------------------
Its EVP-COO
-----------------------
<PAGE>
<PAGE> 80
6-1162-RLL-939R1
Southwest Airlines Co.
P.O. Box 36611 - Love Field
Dallas, Texas 75235
Subject: Letter Agreement No. 6-1162-RLL-939R1 to
Purchase Agreement No. 1810 -
Certification Flight Test Aircraft
This Letter Agreement amends Purchase Agreement No. 1810 dated January 19,
1994 (the Agreement) between The Boeing Company (Boeing) and Southwest
Airlines Co. (Buyer) relating to Model 737-7H4 Aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein, will have
the same meaning as in the Agreement.
It is understood that *** Aircraft will be used by Boeing in its flight
test program for obtaining the FAA Type and Airworthiness Certificates
required under Article 8.1 of the Agreement, prior to delivery to Buyer
(Test Aircraft). Buyer will accept delivery of each Test Aircraft ***.
The Test Aircraft will be delivered in the delivery months specified in
Article 2 herein.
1. Aircraft Refurbishment.
Boeing shall refurbish each Test Aircraft prior to delivery
thereof to Buyer to ensure each Test Aircraft is in compliance with the
Detail Specification. Reasonable wear and tear shall be permissible is
all areas of the Test Aircraft except interior areas exposed to
passenger view. Such interior areas shall be in a condition, at time
of delivery to Buyer, comparable to the same areas of other Model
737-7H4 aircraft delivered to Buyer in the same time period as the Test
Aircraft.
2. PRR and Service Bulletin Incorporation.
During the refurbishment of each Test Aircraft, Boeing will
incorporate therein all applicable PRR's and Service Bulletins which are
released by Boeing for production incorporation in other Model 737-7H4
aircraft scheduled for delivery to Buyer prior to scheduled delivery of
<PAGE>
<PAGE> 81
Southwest Airlines Co.
6-1162-RLL-939R1 Page 2
the Test Aircraft, except for any such PRR's and/or Service Bulletins
which Boeing determines, and Buyer agrees, are impracticable to retrofit
on the Test Aircraft. Buyer's agreement shall not be unreasonably
withheld. ***.
3. Warranty.
The Boeing warranty for airframe and components of each Test
Aircraft shall run full term from delivery of each Test Aircraft. If
any Boeing supplier, except engine manufacturer, refuses to honor any
Buyer valid warranty claim solely on the basis of use or time expiration
relating to flight test or refurbishment, ***.
4. Wheels, Tires and Brakes.
Boeing shall install new tires, wheels and brakes on each Test
Aircraft, after such flight test and prior to delivery of each Test
Aircraft.
5. Accomplishment of "C" Check.
Boeing will accomplish a Boeing-recommended "C" Check or
equivalent on each Test Aircraft prior to delivery thereof.
6. List of Greases, Oils and Other Fluids.
Boeing will provide Buyer in a timely manner a list of part
and/or specification numbers and suppliers of the greases, oils and
other fluids used to service the Test Aircraft during the flight test
program.
7. Flight Test Engines.
Boeing confirms that CFM International (CFM) shall inspect and
repair as necessary any engines installed on and used on the Test
Aircraft in such flight test program and installed either on the Test
Aircraft or installed on subsequent Model 737-7H4 aircraft to be
delivered under the Agreement at the time of delivery to Buyer and the
engine and parts warranty shall apply to such engines recognizing the
flight hours and the flight cycles accumulated thereon during such
testing, as of their delivery to Buyer. Boeing also confirms that in
any CFM direct agreement with Buyer, CFM shall include such engines in
<PAGE>
<PAGE> 82
Southwest Airlines Co.
6-1162-RLL-939R1 Page 3
all applicable product support plans and guarantees on terms to be
agreed upon between CFM and Buyer. Buyer agrees to accept delivery of
such engines on any of the aforementioned Aircraft.
8. Special Remuneration.
***
9. Other Terms and Conditions.
All terms and conditions relating to the manufacture, purchase
and sale of the Test Aircraft as set forth in the Purchase Agreement
shall remain in full force and effect except as amended by the
provisions herein.
10. Flight Test Standby Spares.
In accordance with the provisions of Exhibit E to the Purchase
Agreement, Buyer shall provide BFE Standby Spares for Test Aircraft in
the flight test program in accordance with requirements mutually agreed
to by Boeing and Buyer. The identification and scheduled requirement
dates for such BFE Standby Spares will be identified by Boeing in
Document PED 263 referenced in Exhibit E to the Purchase Agreement.
Upon completion of the flight test program, standby spares provisioned
for flight test shall be allocated to fulfill open production
requirements for Buyer's Aircraft, or returned to Buyer, at Buyer's
option.
11. Confidential Treatment.
Buyer understands that certain commercial and financial
information contained in this Letter Agreement is considered by Boeing
as confidential. Buyer agrees that it will treat this Letter Agreement
and the information contained herein as confidential and will not,
without the prior written consent of Boeing, disclose this Letter
Agreement or any information contained herein to any other person or
entity, except as provided in Letter Agreement 6-1162-RLL-934R1.
<PAGE>
<PAGE> 83
Southwest Airlines Co.
6-1162-RLL-939R1 Page 4
Very truly yours,
THE BOEING COMPANY
By /s/ R. Leo Lyons
-----------------------
Its Attorney-in-Fact
----------------------
ACCEPTED AND AGREED TO as of this
date: February 26, 1997
SOUTHWEST AIRLINES CO.
By /s/ Gary A. Barron
-----------------------
Its EVP-COO
----------------------
<PAGE>
<PAGE> 84
6-1162-RLL-940R1
Southwest Airlines Co.
P.O. Box 36611 - Love Field
Dallas, Texas 75235
Subject: Letter Agreement No. 6-1162-RLL-940R1 to
Purchase Agreement No. 1810 -
Training Matters
This Letter Agreement amends Purchase Agreement No. 1810 dated January
19, 1994 (the Agreement) between The Boeing Company (Boeing) and
Southwest Airlines Co. (Buyer) relating to Model 737-7H4 aircraft (the
Aircraft).
All terms used herein and in the Agreement, and not defined herein, will
have the same meaning as in the Agreement.
1. Model 737-700 Pilot Type Rating.
Boeing has established that the same pilot type rating for
Buyer's 737-700 and the current 737-200, -300, -400 and -500 aircraft
is a major program objective. Boeing is confident that the foregoing
objective is attainable and Boeing will use its best reasonable efforts
in this matter.
1.1 Master Difference Requirements (MDR) Table.
Boeing will use its best reasonable efforts to obtain FAA
Flight Standards Board (FSB) approval of the MDR table which will
include:
A. Reference to Buyer's ***.
B. Training, checking and currency levels within the MDR
table that reflect no levels beyond *** (other than CBT), simulator or
aircraft to maintain currency in the 737-700.
1.2 Required currency intervals will be the same as with Buyer's
current Model 737-2H4, 737-3H4 and 737-5H4 Aircraft.
2. Model 737-300, -500 to Model 737-700 Pilot Training Differences
Program.
Boeing will use its best reasonable efforts to obtain FAA approval
for a pilot training differences program of no more than *** duration
comprised of only Computer Based Training (CBT).
<PAGE>
<PAGE> 85
Southwest Airlines Co.
6-1162-RLL-940R1 Page 2
3. Mixed Fleet Operation.
Buyer will be able to operate the 737-700 interchangeably in mixed
fleet operation with Buyer's existing fleet of 737-200/-300/-500
aircraft. There will not be any additional currency requirements
arising out of the resulting mixed fleet operation that will cause such
mixed fleet operations to be impractical. Events which would cause such
mixed fleet operation to be impractical include, but are not limited to:
(a) the currency level described in 1.1B above falls below level B,
which specifically results in a mixed fleet operation being impractical,
or (b) the Buyer is required to maintain landing currency in the 737-700
Aircraft, as specified in F.A.R. 121.439 or any successor provision.
The foregoing items are not intended to be an exhaustive list, or to
represent the level of impracticality required to implement Paragraph 5.
4. Cockpit Configuration.
The objectives set forth in paragraphs 1-3 above are based on
Buyer's 737-7H4 cockpit configuration (as described by Detail
Specification D6-38808-1, dated October 30, 1996, as further described
in Exhibit A attached hereto) being essentially the same as Buyer's
current 737-300 (D6-76300-2 Rev. AD dated 3/22/96) and 737-500
(D6-38500-3 Rev. G dated 5/1/92) configuration. In addition, the objectives
set forth in paragraphs 1 through 3 are based upon the understanding
that the 737-700 will be operated with the same level of *** used in
Buyer's 737-3H4/5H4 aircraft at the time of delivery of the first 737-7H4
Aircraft.
5. Consequence to Boeing if Mixed Fleet Operation Objective Sought by
Boeing is Not Achieved.
If, due to any FAA requirements, or impracticality as described in
Paragraph 3 above, Buyer is unable to operate the 737-700 in a mixed
fleet operation, ***.
6. Consequence to Boeing if the 737-300 and 737-500 to 737-700 Pilot
Training Differences Objective Sought by Boeing is not Achieved.
If the pilot training differences program levied by the FAA (as
identified in paragraph 2 above), exceeds *** and/or requires the need
for flight simulator training, or training requires the use of a
training device other than Computer Based Training delivery hardware,
***.
<PAGE>
<PAGE> 86
Southwest Airlines Co.
6-1162-RLl-940R1 Page 3
7. Flight Crew Computer Based Training.
7.1 See Exhibit C, Part C, Paragraph 4.1 of the Purchase
Agreement, Computer Based Training.
7.2 Recognizing that CBT authoring technologies will continue to
change, Boeing agrees to hold discussions with Buyer to develop a
mutually agreeable solution by January 1, 1996. The CBT program will
contain 100 percent CBT coverage and support on airline Advanced
Qualification Program Applicable.
8. Maintenance Training Computer Based Training.
At the conclusion of the Maintenance Training Program, Boeing will
provide one set of the standard Computer Based Training courseware
utilized by Boeing to conduct Maintenance training. Revision service
will not be provided for these materials.
9. 737-7H4 Structural Repair Manual.
In response to Buyer's request, Boeing will provide to Buyer an
improved Structural Repair Manual (SRM) that will standardize and
improve composite repairs. Boeing will also expand the allowable damage
and repair limits in applicable areas.
10. Delivery of Flight Manual and Operations Manual.
Buyer has a requirement to receive its initial flight and
operations manual earlier than on the actual delivery day of Buyers
first Aircraft. Boeing will provide an advanced representative copy of
the flight and operations manual on or before August 15, 1997. Boeing
will provide the FAA approved flight manual and operations manual to
Buyer immediately after the FAA approves the flight manual.
11. Confidential Treatment.
Buyer understands that certain commercial and financial
information contained in this Letter Agreement are considered by Boeing
as confidential. Buyer agrees that it will treat this Letter Agreement
and the information contained herein as confidential and will not,
without the prior written consent of Boeing, disclose this Letter
Agreement or any information contained herein to any other person or
entity, except as provided in Letter Agreement 6-1162-RLL-934R1.
<PAGE>
<PAGE> 87
Southwest Airlines Co.
6-1162-RLL-940R1 Page 4
Very truly yours,
THE BOEING COMPANY
By /s/ R. Leo Lyons
-------------------------
Its Attorney-in-Fact
------------------------
ACCEPTED AND AGREED TO as of this
date: February 26, 1997
SOUTHWEST AIRLINES CO.
By /s/ Gary A. Barron
-------------------------
Its EVP-COO
------------------------
<PAGE>
<PAGE> 88
6-1162-RLL-941R1
Southwest Airlines Co.
P.O. Box 36611 - Love Field
Dallas, Texas 75235
Subject: Letter Agreement No. 6-1162-RLL-941R1 to
Purchase Agreement No. 1810 -
Other Matters
This Letter Agreement amends Purchase Agreement No. 1810 dated January
19, 1994 (the Agreement) between The Boeing Company (Boeing) and
Southwest AIRLINES Co.. (Buyer) relating to Model 737-7H4 Aircraft (the
Aircraft) and to Letter Agreement No. 6-1162-RLL-933 dated even date
herewith, entitled "Option Aircraft," relating to the sale by Boeing and
purchase by Buyer of sixty-seven (67) additional Model 737-7H4 aircraft
(the Option Aircraft) and forty-nine (49) Model 737-7H4 Rollover Option
Aircraft (Rollover Option Aircraft).
All terms used herein and in the Agreement, and not defined herein, will
have the same meaning as in the Agreement.
1. Delivery Delay.
Notwithstanding the language set forth in Article 2.3 "Notice of
Delivery Date," if Buyer requests a delivery delay for any Aircraft
within the contract delivery month, Buyer shall not be charged for costs
of the first ten (10) days of such delay.
2. Purchase Price - Excusable Delay/Destroyed Aircraft.
2.1. If the Article 2.1 delivery month for any Aircraft is
delayed because of an excusable delay under Article 6.1, Boeing agrees
that the Aircraft Price shall be determined as if the delayed Aircraft
had been delivered during the original Article 2.1 delivery month.
2.2. In the event any Aircraft is destroyed and Boeing offers
Buyer a replacement Aircraft under Article 6.3, Boeing agrees that the
Aircraft Price shall be determined as if the replacement aircraft had
been delivered during the original Article 2.1 delivery month of the
destroyed Aircraft.
<PAGE>
<PAGE> 89
Southwest Airlines Co.
6-1162-RLL-941R1 Page 2
3. Advance Payment - Repayment.
***
4. Confidential Treatment.
Buyer understands that certain commercial and financial
information contained in this Letter Agreement is considered by Boeing
as confidential. Buyer agrees that it will treat this Letter Agreement
and the information contained herein as confidential and will not,
without the prior written consent of Boeing, disclose this Letter
Agreement or any information contained herein to any other person or
entity, except as provided in Letter Agreement 6-1162-RLL-934R1.
Very truly yours,
THE BOEING COMPANY
By /s/ R. Leo Lyons
------------------------
Its Attorney-in-Fact
-----------------------
ACCEPTED AND AGREED TO as of this
date: February 26, 1997
SOUTHWEST AIRLINES CO.
By /s/ Gary A. Barron
-------------------------
Its EVP-COO
------------------------
<PAGE>
<PAGE> 90
6-1162-RLL-1855
Southwest Airlines Co.
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: Letter Agreement No. 6-1162-RLL-1855 to
Purchase Agreement No. 1810
Additional Contractual Matters
Gentlemen:
This Letter Agreement amends Purchase Agreement No. 1810 (the Agreement)
between The Boeing Company (Boeing) and Southwest Airlines Co. (Buyer)
relating to the sale by Boeing and the purchase by Buyer of sixty-three
(63) Model 737-7H4 aircraft (the Aircraft) and Letter Agreement
6-1162-RLL-933R1, dated even date herewith, entitled "Option Aircraft",
relating to the sale by Boeing and the purchase by Buyer of sixty-seven
(67) additional Model 737-7H4 aircraft (the Option Aircraft).
All terms used herein and in the Agreement, and not defined herein, will
have the same meaning as in the Agreement.
1. ***
for the Aircraft.
In further consideration of Buyer's purchase of the Aircraft,
Boeing will issue at the time of delivery of each Aircraft a ***
escalated to the month of delivery of the specific Aircraft in
accordance with Exhibit D "Aircraft Price adjustment" to be used by
Buyer for the purchase of Boeing and or CFMI goods and services or
applied to the final delivery payment for the Aircraft for which such
***.
2. ***
for the Option Aircraft delivering from October 1998 through
December 31, 2001.
In further consideration of Buyer's purchase of the Option
Aircraft delivering from October 1998 through December 31, 2001, Boeing
will issue at the time of delivery of each such Option Aircraft ***
escalated to the month of delivery of the specific Aircraft in
accordance with Exhibit D "Aircraft Price adjustment" to be used by
Buyer for the purchase of Boeing and or CFMI goods and services or
applied to the final delivery payment for the Option Aircraft for which
such ***.
<PAGE>
<PAGE> 91
Southwest Airlines Co.
6-1162-RLL-1855 Page 2
3. Confidential Treatment
Buyer understands that certain commercial and financial
information contained in this Letter Agreement are considered by Boeing
as confidential. Buyer agrees that it will treat this Letter Agreement
and the information contained herein as confidential and will not,
without the prior written consent of Boeing, disclose this Letter
Agreement or any information contained herein to any other person or
entity, except as provided in Letter Agreement 6-1162-RLL-934R1.
Very truly yours,
THE BOEING COMPANY
By /s/ R. Leo Lyons
-------------------------
Its Attorney-in-Fact
------------------------
ACCEPTED AND AGREED TO as of this
date: February 26, 1997
SOUTHWEST AIRLINES CO.
By /s/ Gary A. Barron
------------------------
Its EVP-COO
------------------------
<PAGE>
<PAGE> 92
6-1162-RLL-1856
Southwest Airlines Co.
P.O. Box 36611 - Love Field
Dallas, Texas 75235
Subject: Letter Agreement No. 6-1162-RLL-1856 to
Purchase Agreement No. 1810 -
***
This Letter Agreement amends Purchase Agreement No. 1810 (the Agreement)
between The Boeing Company (Boeing) and Southwest Airlines Co. (Buyer)
relating to the Model 737-7H4 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein will
have the same meaning as in the Agreement.
***
2. Confidential Treatment.
Buyer understands that certain commercial and financial information
contained in this Letter Agreement and attachment(s) hereto are
considered by Boeing as confidential. Buyer agrees that it will treat
this Letter Agreement and the information contained herein as
confidential and will not, without the prior written consent of Boeing,
disclose this Letter Agreement or any information contained herein to
any other person or entity, except as provided in Letter Agreement No.
6-1162-RLL-934R1.
Very truly yours,
THE BOEING COMPANY
By /s/ R. Leo Lyons
-----------------------
Its Attorney-in-Fact
----------------------
ACCEPTED AND AGREED TO as of this
date: February 26, 1997
SOUTHWEST AIRLINES CO.
By /s/ Gary A. Barron
----------------------
Its EVP-COO
----------------------
<PAGE>
<PAGE> 93
6-1162-RLL-1857
Southwest Airlines Co.
P. O. Box 36611 - Love Field
Dallas, Texas 75235
Subject: Letter Agreement No. 6-1162-RLL-1857 to
Purchase Agreement No. 1810 -
Service Ready Validation
Program Field Test
Gentlemen:
This Letter Agreement amends Purchase Agreement No. 1810 (the Agreement)
between The Boeing Company (Boeing) and Southwest Airlines Co. (Buyer)
relating to the sale by Boeing and the purchase by Buyer of sixty-three
(63) Model 737-7H4 aircraft (the Aircraft).
All terms used herein and in the Purchase Agreement, and not defined
herein, shall have the same meanings as in the Purchase Agreement.
1. Service Ready Validation Program Field Test
Boeing and Buyer agree it is mutually beneficial for the Aircraft to be
service ready at entry into service. Boeing and Buyer will implement
the Service Ready Validation Program Field Test (SRVP) which will aid
in validating the Aircraft for entry into service in October 1997.
Boeing and Buyer agree to use one of Buyer's Aircraft prior to delivery
as the SRVP Aircraft (SRVP Aircraft).
2. Non-Exclusivity of the SRVP
This Letter Agreement is not intended to prevent other AIRLINES from
participating in similar activities to support their efforts for being
service ready at delivery of the first Aircraft.
3. The SRVP
3.1 The areas of validation during the SRVP include but are
not limited to the basic aircraft systems, applicable BFE, routine
maintenance activities, selected non routine maintenance
activities, aircraft operations and aircraft documentation.
<PAGE>
<PAGE> 94
Southwest Airlines Co.
6-1162-RLL-1857 Page 2
3.2 The SRVP contemplates simulated in-service operations
on Buyer's route network. The current contemplated schedule of
such operations consists of approximately forty-eight (48) flight
sectors to be operated from July 11, 1997 through July 16, 1997.
3.3 The route network is currently contemplated to include
Dallas, Chicago and other cities yet to be identified.
4. Ownership and Control of SRVP Aircraft
4.1 Operation of the Aircraft
During the SRVP, the ownership and control of the Aircraft will at all
times remain with Boeing. During all SRVP flights the final authority
and responsibility for the SRVP Aircraft will at all times remain with
the Boeing pilot who will occupy one of the two pilots' seats. No
revenue passengers or cargo will be carried on the SRVP Aircraft, and
Boeing may, to the extent that it reasonably deems necessary, limit or
control (i) access to the SRVP Aircraft on the ground and (ii) the
carriage of participants, passengers or cargo on SRVP Aircraft flights;
for avoidance of doubt, Boeing and Buyer contemplate that only personnel
engaged in performing the SRVP will normally be carried on SRVP Aircraft
flights.
It is intended that flight operations during the SRVP be conducted in
accordance with Buyer's procedures to the maximum extent practicable.
However, circumstances may require Boeing procedures to be used. In
this event, the Boeing pilot-in-command may elect to conduct the
applicable flight phase(s) per Boeing procedures.
4.2. Participation Limited to Essential Personnel
4.2.1 The SRVP Aircraft will be operated under an FAA
Experimental Category Airworthiness Certificate. FAA Order 8130.2,
Paragraph 139 b (13) states that "No person may be carried in this
aircraft during flight unless that person is required for that flight."
Specific purposes mentioned in the order include: Research and
Development, Showing Compliance With Regulations, Crew Training and
Market Survey.
4.2.2 Buyer agrees that all of Buyer's personnel carried in
the Aircraft during flight will meet the requirements as stated above.
This condition applies to the entire SRVP. The final determination of
whether an individual meets the criteria of "Essential Personnel", as
defined above, will be left to the discretion of the Pilot-in-Command.
<PAGE>
<PAGE> 95
Southwest Airlines Co.
6-1162-RLL-1857 Page 3
4.3 Buyer's Participation During The SRVP
4.3.1 Buyer will submit to Boeing a list of flight
personnel, each identified for a specific evaluation. Participation on
any particular flight will be limited to those personnel identified as
linked to an evaluation scheduled to be conducted on that flight.
4.3.2 It is agreed that Buyer and Boeing will, in general,
conduct fights and maintenance activities according to a predefined test
plan jointly prepared by both the Buyer and Boeing. If changes to the
plan are desired by the Buyer, the Buyer shall coordinate the changes
with the Boeing Pilot and Test Director. Likewise if Boeing desires
changes to the plan, Boeing will coordinate these changes with a Buyer
designated focal point.
4.3.3 All Boeing and Buyer flight personnel scheduled to
participate on a given flight will be present for a preflight safety
briefing to be conducted prior to each flight. The Boeing Test Director
will coordinate the briefing.
4.4 Maintenance of the SRVP Aircraft
4.4.1 Responsibility
It is contemplated in the SRVP that Buyer's maintenance crews will
conduct all maintenance during the SRVP. It is anticipated that, during
the SRVP including agreed upon validation checks of various items of
Ground Support Equipment ("GSE") tools and maintenance procedures,
Buyer's mechanics will primarily utilize Buyer's Maintenance Manuals and
other documents. When Buyer's maintenance crews participate in the
SRVP, they shall work in conjunction with, and under the supervision of,
Boeing crews who will provide assistance and consultation as required.
4.4.2 Records
During the SRVP, Buyer's mechanics may utilize Buyer's records and forms
for documenting maintenance activity; however, Boeing will maintain a
separate record on Boeing's standard form to record that such work was
accomplished. Only Boeing records will be the official documentation
of the SRVP Aircraft.
<PAGE>
<PAGE> 96
Southwest Airlines Co.
6-1162-RLL-1857 Page 4
4.4.3 Fueling
Boeing agrees to use Buyer's guidelines for fueling the SRVP Aircraft.
If, however, a condition exists that, in Boeing's sole opinion,
jeopardizes the SRVP Aircraft or the safety of individuals, Boeing
reserves the right to limit such use, or revert to Boeing standard
fueling procedures.
5. Allocation of SRVP Costs.
5.1 As part of its basic program support for the Model 737-700
aircraft program, Boeing is planning to perform a SRVP. Accordingly,
as a general principle the basic costs of performing the SRVP are the
responsibility of Boeing. Boeing and Buyer specifically agree that the
following costs are the responsibility of Boeing:
5.2 Wages payable to Boeing's employees engaged directly or
indirectly in the performance of the SRVP, and benefits or taxes payable
with respect to Boeing's employment of such employees;
5.3 Transportation, accommodation and living expenses payable
with respect to Boeing's employees engaged directly or indirectly in the
performance of the SRVP;
5.4 Expedited transportation required for Boeing's employees in
support of the SRVP;
5.5 Boeing will maintain an inventory of spare parts, and will
also carry a kit of spare parts on board the Aircraft. If necessary,
Boeing may draw spare parts from Buyer's inventories, and such spare
parts shall thereafter be returned to Buyer with compensation for such
use at a reasonable mutually agreed lease rate or replaced in kind; and
provided further, that Buyer shall accept reasonable proposals by Boeing
to provide repaired parts previously removed from the SRVP Aircraft as
such replacements in kind or to install such repaired parts in
subsequent production Aircraft provided further that such repaired parts
installed in subsequent production aircraft are serviceable and retain
life limits (if any) as though such repaired parts were new and unused;
5.6 Fuel, lubricants and hydraulic fluid consumed during
the SRVP;
5.7 During the SRVP, Buyer will fuel and service the SRVP
Aircraft, or have such performed by Buyer's contracted provider. Such
fuel and service will be charged to Boeing at Buyer's standard internal
rate plus applicable taxes;
<PAGE>
<PAGE> 97
Southwest Airlines Co.
6-1162-RLL-1857 Page 5
5.8 In addition to the expenses described in this paragraph 5,
all other costs are for Boeing's account (except those identified in
paragraph 6 below and the use of Buyer's facilities and equipment as
contemplated in subparagraph 6.1.4 below) of maintaining and repairing
the SRVP Aircraft during the SRVP, specifically including third party
charges for repair and servicing of parts (including testing and return
of "no fault found" parts) removed from the SRVP Aircraft, including
Engine spare parts (for which Boeing will make arrangements with CFMI)
and BFE spare parts (except as contemplated by paragraph 6.1.3 below).
5.9 Refurbishment of the SRVP Aircraft after the SRVP (as such
refurbishment is contemplated and described in Letter Agreement
6-1162-RLL-939R1, Article 1 to Purchase Agreement No. 1810).
5.10 Landing fees incurred by the SRVP Aircraft during the SRVP
(including applicable taxes thereon):
5.11 The following expenses, incurred for the use of facilities,
equipment and personnel of third parties not affiliated with Buyer
during the SRVP:
5.11.1 Ramp charges, gate charges, ground handling
charges and similar costs;
5.11.2 Costs related to ground handling equipment and
other airline equipment;
5.11.3 Hangar costs associated with use of hangar(s)
for maintenance, repair or storage of the SRVP
Aircraft, storage charges and similar costs;
5.11.4 Taxes applicable to the costs in this paragraph
5.11.
5.12 Boeing Field Service representation at those locations listed
in Paragraph 3.3.
6. Cost of Buyer's Participation in the SRVP
6.1 Buyer's costs to participate in the SRVP are the
responsibility of Buyer. Boeing and Buyer specifically agree that the
following costs are the responsibility of Buyer:
6.1.1 Wages payable to Buyer's employees engaged directly or
<PAGE>
<PAGE> 98
Southwest Airlines Co.
6-1162-RLL-1857 Page 6
indirectly in the performance of the SRVP, and benefits or
taxes payable with respect to Buyer's employment of such
employees;
6.1.2 Transportation, accommodation and living expenses
payable with respect to Buyer's employees engaged directly or
indirectly in the performance of the SRVP;
6.1.3 BFE spare parts for the following cabin systems, to the
extent (i) that such systems consist of BFE and (ii) that Buyer
desires that such systems be operated and maintained during the
SRVP and elects to provide spare parts to support maintenance of
such systems:
Passenger Telephone System (23-18)
PA and Entertainment - CMS (23-30);
Passenger Entertainment - Video (23-32);
Passenger Entertainment System (23-34);
Flight Interphone System (23-51);
Oxygen (35-10/30);
Passenger Seats (25-25);
Floor Coverings (25-27);
Buffet/Galley (25-30/31);
Cargo Compartments (25-50);
Emergency (25-60/63/64); and
Fire Protection (26-20/26);
6.1.4 Costs of use during the SRVP of (i) facilities and
equipment of Buyer, including any maintenance and engineering
operations presently conducted by Buyer which Buyer transfers to
separate business entities prior to the SRVP, and (ii)
services of personnel of Buyer and its affiliates, including:
6.1.4.1 Hangar costs associated with use of
hangar(s) for maintenance, repair or
storage of the SRVP Aircraft, storage
charges;
6.1.4.2 Gate charges associated with operation
of the SRVP Aircraft during the SRVP;
6.1.4.3 Costs related to ground handling
equipment and other airline equipment
during the SRVP;
<PAGE>
<PAGE> 99
Southwest Airlines Co.
6-1162-RLL-1857 Page 7
6.1.4.4 Costs for training Boeing and/or Buyer
personnel on equipment or functions
that may be unique to a particular
airport used during the SRVP;
6.1.4.5 Costs for providing storage areas for
Boeing flight test spares and tools to
support the SRVP Aircraft and office
and working areas for Boeing support
personnel during the SRVP, each in
reasonable proximity to the area(s)
where the SRVP Aircraft is to be
maintained;
6.1.4.6 Incremental costs associated with a
Buyer-initiated planned diversion to
any location other than those listed in
Paragraph 3.3;
6.1.4.7 Costs for onboard food, beverages, and
other passenger-related amenities for
all passengers on flights that are
flown during the SRVP.
6.1.5 Boeing Field representation requested by Buyer at any
locations other than those listed in Paragraph 3.3 and, at the time of
the SRVP, not then staffed by Boeing;
6.1.6 If available, Buyer will provide any BFE software which
would ordinarily be installed on an Aircraft by or on behalf of Buyer
after delivery, including but not limited to Navigational Data Base
software.
6.1.7 Although Boeing and Buyer contemplate that from time
to time the SRVP plans may be revised by mutual agreement, for avoidance
of doubt neither Boeing nor Buyer shall be obligated to agree to any
revision of the SRVP which would have the effect of significantly
increasing the costs of the SRVP to be borne by that party.
<PAGE>
<PAGE> 100
Southwest Airlines Co.
6-1162-RLL-1857 Page 8
7. Travel Assistance
To the extent practicable, the personnel of Boeing and Buyer performing
the SRVP, and cargo required to support the SRVP (consisting of Boeing
spare parts and tool inventories, BFE spare parts and the personal
baggage of the Boeing and Buyer SRVP personnel), will be transported on
the SRVP Aircraft. To the extent that such personnel and cargo cannot
practicably be transported on the SRVP Aircraft, Buyer will make
reasonable efforts to transport such personnel and cargo on a priority
basis on Buyer's regularly scheduled service. Boeing will pay Buyer's
standard fares for Boeing passengers and cargo transported in this
manner.
8. SRVP Planning and Arrangements
8.1 As a general principle the planning and arrangements
for performing the SRVP are the responsibility of Boeing.
However, Buyer agrees that, when Buyer's established relationships
and on-site personnel and resources will enable Buyer to make
arrangements more easily, or to make more advantageous
arrangements, upon Boeing's reasonable request, Buyer will exert
reasonable efforts to make necessary arrangements on Boeing's
behalf (and for Boeing's account) for the SRVP or assist Boeing
in making such arrangements, as appropriate.
Generally, at SRVP locations where Buyer has existing contracts,
Buyer will purchase fuel and other goods and services for the SRVP
under such contracts whenever such purchase would minimize cost
of the SRVP. Boeing will reimburse Buyer promptly upon submission
of the paid invoices to Boeing at the following address:
Boeing Commercial Airplane Group
P.O. Box 3707, Mail Stop 14-HF
Seattle, Washington 98124-2207
Attention: Mr. Jim Vanauken,
Flight Test
Supporting Services
Telephone: (206) 655-5262
Facsimile: (206) 655-3694
Before finalizing any logistical arrangement exceeding U.S. $5,000
in expected aggregate value, Buyer shall obtain concurrence of
Boeing at the above address. For avoidance of doubt, hotel
accommodations and other traveling expenses of the Boeing
participants in the SRVP shall be arranged for payment directly
<PAGE>
<PAGE> 101
Southwest Airlines Co.
6-1162-RLL-1857 Page 9
by the individual participants, unless billing to Buyer and
rebilling to Boeing is significantly more advantageous to Boeing,
and is permitted by the respective vendor.
In addition, Boeing and Buyer contemplate that Buyer shall assist
Boeing with any emergency arrangements, or contingency
arrangements, for support of the SRVP Aircraft in the event of
accident or damage to the SRVP Aircraft or other difficulties
arising during the SRVP.
8.2 Boeing and Buyer agree that the Plan assumes that
arrangements can be made for the SRVP; in the event that SRVP
operations at particular locations prove to be unreasonably
difficult to arrange or unreasonably costly, Boeing and Buyer
shall mutually agree upon revisions to the Plan to substitute more
practicable operations.
8.3 During the course of SRVP operations, Buyer shall be
responsible for ensuring that the appropriate landing slots,
gates, and other operational requirements are allocated at all
airports where the Aircraft will land.
8.4 Buyer will have deployed trained personnel, spare
parts inventories and support equipment at the stations to be
visited.
8.5 Buyer will appropriately familiarize Boeing's SRVP
personnel (including but not limited to flight crew and
maintenance personnel) with Buyer's operations and procedures, at
no charge to Boeing.
9. Realization of Additional Objectives During SRVP
9.1 Primary Objective
Boeing and Buyer agree that the primary objectives of the SRVP are to
aid in the validation of the basic aircraft systems, BFE as applicable,
routine maintenance activities, selected non-routine maintenance
activities, aircraft operations and aircraft documentation. Other
objectives are secondary, and will be pursued during the SRVP solely
under conditions which in Boeing's reasonable judgment meet the
following criteria (the SRVP Inclusion Criteria): the pursuit of a
secondary objective will not: (i) interfere with nor jeopardize such
primary objectives of the SRVP, nor (ii) lengthen the SRVP nor
(iii) otherwise significantly increase the cost of the SRVP.
9.1.1 During the SRVP Boeing and Buyer each may
desire to conduct sales, marketing and public relations
activity involving the SRVP and the SRVP Aircraft. Boeing and Buyer
<PAGE>
<PAGE> 102
Southwest Airlines Co.
6-1162-RLL-1857 Page 10
will work together to satisfy such secondary objectives during the SRVP,
subject to the SRVP Inclusion Criteria set forth above. The incremental cost
of each revision to the SRVP to accommodate sales, marketing and
public relations activity will be borne by the party requesting such
activity; if revisions to the SRVP to accommodate sales, marketing and
public relations activity requested by Buyer cause a delay in delivery of any
Aircraft (including the SRVP Aircraft), such delay will be deemed to be an
Excusable Delay. During sales, marketing and public relations activity
involving the SRVP and the SRVP Aircraft, Boeing and Buyer agree to maintain
the confidentiality of each other's information in accordance with paragraph
12 below.
9.1.2 Buyer agrees that all costs associated with
the Excusable Delays (including, but not limited to, the cost
of money attributable to the delayed delivery) contemplated
in paragraph 9.1.1, to the extent requested solely by Buyer,
will be for Buyer's account.
10. Contingencies
10.1 Aircraft Certification During SRVP
The SRVP assumes that Boeing will succeed in making practicable
arrangements for airworthiness certification of the SRVP Aircraft during
the SRVP and to otherwise comply with all applicable laws and
regulations. ("Practicable arrangements" are defined as being within
the context of Boeing's ongoing dialogue with the FAA, including the
normal procedures for applying for, and obtaining, either an
experimental or type certificate.) Boeing agrees to make reasonable and
timely efforts to arrange for conduct of the SRVP Aircraft and to
otherwise comply with all applicable laws and regulations. In the event
that Boeing can not make practicable arrangements, Boeing and Buyer
shall mutually agree to revisions to the SRVP to facilitate practicable
arrangements for airworthiness certification of the SRVP Aircraft. If
Boeing and Buyer can not agree on such revisions, or if regardless of
such revisions, Boeing cannot make practicable arrangements for
airworthiness certification of the SRVP Aircraft and otherwise comply
with all applicable laws and regulations, Boeing may in its reasonable
discretion, and only to the extent reasonably necessary, cancel part or
all of the SRVP.
<PAGE>
<PAGE> 103
Southwest Airlines Co.
6-1162-RLL-1857 Page 11
10.2 Collective Bargaining Agreements
The SRVP, and particularly the participation of Buyer's maintenance
personnel in the SRVP, assume that Boeing will succeed in making
practicable arrangements under its collective bargaining agreements to
facilitate the SRVP. In the event that Boeing can not make practicable
arrangements, Boeing and Buyer will mutually agree to revisions to the
SRVP to conform to Boeing's collective bargaining agreements. If Boeing
and Buyer can not agree on such revisions, or if regardless of such
revisions, Boeing can not make practicable arrangements for the SRVP
under its collective bargaining agreements, Boeing may in its reasonable
discretion restrict the participation of Buyer's maintenance personnel
to the SRVP, or, only to the extent reasonably necessary, cancel part
or all of the SRVP.
Should Buyer fail to make practicable arrangements with Buyer's
collective bargaining groups, Buyer may request, and Boeing shall agree
to, a revision to the SRVP to the extent reasonably necessary, without
in any way violating the provisions of Paragraph 9.1 herein.
11. Applicability of Purchase Agreement Provisions
Boeing and Buyer specifically agree that the SRVP shall be flight test
activity authorized under the Purchase Agreement, and that particular
provisions of the Purchase Agreement are applicable to SRVP occurrences.
11.1 Excusable Delay
Boeing and Buyer reaffirm that any delay resulting from any of the
causes specified in Article 6.1 of the Purchase Agreement which occurs
during the SRVP, and which otherwise would be an Excusable Delay, shall
be an Excusable Delay; and that the termination provisions in Articles
6.2 through 6.6 shall apply to the SRVP Aircraft.
11.2 Authorized Use of Aircraft
Boeing and Buyer reaffirm that the use of an Aircraft as the SRVP
Aircraft is authorized under Article 9.3 of the Purchase Agreement,
subject to the provisions of Letter Agreement No. 6-1162-RLL-939R1,
including but not limited to paragraph 1 (Aircraft Refurbishment) and
paragraph 5 ("Accomplishment of "C" Check") thereof.
<PAGE>
<PAGE> 104
Southwest Airlines Co.
6-1162-RLL-1857 Page 12
11.3 Indemnity and Insurance
11.3.1 Boeing's Indemnification of Buyer
Boeing shall indemnify and hold harmless Buyer and each of Buyer's
observers from and against all claims and liabilities, including costs
and expenses (including attorneys' fees) incident thereto or incident
to successfully establishing the right to indemnification, for injury
to or death of any person or persons, including employees of Boeing but
not employees of Buyer, or for loss of or damage to any property,
including the SRVP Aircraft, arising out of the operations of the
SRVP Aircraft conducted under the provisions of this Letter Agreement
or other performance under this Letter Agreement whether or not arising
in tort or occasioned in whole or in part by the negligence of Buyer or
any of Buyer's observers, whether active, passive or imputed.
Promptly upon Buyer having become aware of the same,
Buyer shall give Boeing written notice of any
circumstance which may be reasonably expected to give
rise to any claim or liability, or of any actual claim,
liability or lawsuit, which falls within the scope of
the foregoing indemnity obligation, and
Boeing shall have the right to control the defense of
any action related to such claim or liability, and
Buyer shall cooperate with Boeing in any such legal
defense.
11.3.2 Boeing's Insurance
(a) Certificates of Insurance
Thirty (30) days prior to the initiation of the SRVP, Boeing shall
provide certificates of insurance referencing this Letter Agreement with
the following coverages, endorsements and amounts:
(b) Hull, "All Risk" and "War Risk" Insurance
Insurers shall hold harmless and waive all rights of recourse and/or
subrogation against Buyer.
(c) Comprehensive Aircraft Liability Insurance
<PAGE>
<PAGE> 105
Southwest Airlines Co.
6-1162-RLL-1857 Page 13
i) Limits of not less than U.S.
$450,000,000.
ii) Buyer shall be named an additional
insured to the extent of and for
the duration of the SRVP, including
the indemnification of Buyer by
Boeing. However, Buyer shall not
be responsible for payment of any
premiums.
iii) Boeing's policies shall be primary
and not contributory nor excess
with respect to any other
available coverage provided to
Buyer.
iv) No act, omission, breach of any
warranty or condition, or
misrepresentation on the part of
Boeing shall void, exclude,
minimize, or adversely change this
coverage as it applies to Buyer.
v) A Severability of Interest Clause
which provides that the insurance
will operate to give each insured
the same protection as if there
were a separate policy issued to
each insured except that the
insurer's limit of liability shall
be as set forth in the policy.
vi) Boeing's policies shall include
coverage for those risks arising
out of or as a consequence of war
or other related perils as per
endorsement AVN52B or its
equivalent, to the fullest extent
available in the international
insurance market.
<PAGE>
<PAGE> 106
Southwest Airlines Co.
6-1162-RLL-1857 Page 14
(d) Under all coverages
i) Buyer shall receive from the issuer
of the certificate a 30-day written notice
of termination, cancellation or material
adverse change of the policy (seven days
or such lesser period as may be in effect
in the event of War Risk Coverage).
ii) Buyer shall not be responsible for payment,
set off, or assessment of any kind of any
premiums in connection with the policies,
endorsements or coverages described herein.
iii) Acknowledgment that the insurers are aware of
and have seen a copy of this Letter Agreement
and accept and insure the risks and
indemnities herein.
iv) All coverages will apply on a worldwide basis
to the fullest extent available in the
international aviation/war risk insurance
market or the geographical limit of the
SRVP Aircraft's operation.
11.4 Alleviation or Cessation of Performance
Boeing and Buyer agree that Part F (Alleviation or Cessation
of Performance, which relieves Boeing of requirements to
provide services, training, data or goods at a facility upon
the occurrence of certain specified events) of Exhibit C
(Customer Support Document) to the Agreement shall apply to
Boeing's performance of the SRVP operations.
<PAGE>
<PAGE> 107
Southwest Airlines Co.
6-1162-RLL-1857 Page 15
11.5 Buyer Furnished Equipment
Boeing and Buyer reaffirm that Exhibit E (Buyer Furnished
Equipment Provisions Document) to the Agreement shall apply
to the Buyer Furnished Equipment ("BFE") to be provided by
Buyer and installed in the SRVP Aircraft by Boeing. For
avoidance of doubt: (i) the BFE on-dock dates and quantities
provided in the BFE Requirements On-Dock/Inventory Document
also reflect the assumption that the SRVP Aircraft will be
the third Model 737-700 Aircraft manufactured by Boeing and
will be refurbished prior to delivery; (ii) the provisions
of Exhibit E relating to title and risk of loss shall apply
to the SRVP Aircraft and its installed BFE; (iii) the
provisions of Article 9 of the Purchase Agreement and Letter
Agreement No. 6-1162-RLL-939R1 shall apply to the
refurbishment of the SRVP Aircraft and its installed BFE.
12. Confidentiality
12.1 In accordance with Letter Agreement No. 6-1162-RLL-934R1,
the terms and conditions of this Letter Agreement are and will remain strictly
confidential between Boeing and Buyer and will not under any circumstances be
disclosed by either party to any third party (except, as reasonably necessary,
to its respective employees and professional advisers, and to Boeing's
insurers in connection with the insurance described in paragraph 11.3 above and
to the Federal Aviation Administration) without the prior written consent of
the other party, such consent not to be unreasonably withheld.
12.2 Boeing and Buyer recognize that the Model 737-700
development program, the "Working Together" partnership, and the SRVP
are unique and unprecedented activities. Boeing and Buyer agree to work
with each other in good faith to maintain the confidentiality of the
other party's drawings, specifications, models and other information
related to the 737-700 development (including development of 737-700
procedures, documentation and computer systems) which has not otherwise
entered the public domain through authorized disclosure by the party
with proprietary rights to such information.
12.2.1 The obligation of confidentiality set forth in 12.2
above shall not apply to information which:
(a) is independently known to Boeing or
Buyer at the time of the transfer, as evidenced by Boeing or Buyer's
written records; or
<PAGE>
<PAGE> 108
Southwest Airlines Co.
6-1162-RLL-1857 Page 16
(b) becomes known to the receiving party
prior to such use or disclosure without similar restrictions from an
independent source having the right to convey it; or
(c) is independently developed by the
receiving party.
12.2.2 Boeing Flight Test Data
During the SRVP Buyer shall incidentally have access to Boeing flight
test data recorded during the SRVP operations, and Boeing may have
access to data recorded by Buyer's Aircraft Maintenance Information
System ("AMIS"). Boeing deems all flight test data to be extremely
sensitive and highly proprietary to Boeing. Buyer considers all
information received by Boeing with respect to Buyer's systems to be
sensitive and proprietary to Buyer. Accordingly, Buyer agrees to keep
flight test data and Boeing agrees to keep information received by
Boeing in confidence, and disclose it only in accordance with the
provisions of paragraph 12.1 above.
The provisions set forth in this paragraph 12 relate only to
confidential information made available as a result of the SRVP and do
not supercede the provisions of Part D Technical Data and Documents of
Exhibit C to the Purchase Agreement.
12.2.3 Buyer's Interior Configuration
Buyer's Model 737-700 interior configuration and installations are
commercial, confidential information that could be deemed of value to
its competitors. Boeing will accordingly restrict access to the SRVP
Aircraft by third parties unless Buyer otherwise gives Boeing its
permission.
12.2.4 The Plan
For avoidance of doubt, Boeing and Buyer agree that the SRVP has been
and will continue to be disclosed to other parties, including regulatory
agencies and other prospective 737 operators, and that the actual
performance of the SRVP will be open to observation by such parties as
may be mutually agreed by Boeing and Buyer.
If the foregoing correctly sets forth your understanding of our
agreement with respect to the matters treated above, please indicate
your acceptance and approval below.
<PAGE>
<PAGE> 109
Southwest Airlines Co.
6-1162-RLL-1857 Page 17
Very truly yours,
THE BOEING COMPANY
By /s/ R. Leo Lyons
--------------------------
Its Attorney-in-Fact
-------------------------
ACCEPTED AND AGREED TO as of this
date: February 26, 1997
SOUTHWEST AIRLINES CO.
By /s/ Gary A. Barron
-------------------------
Its EVP-COO
-------------------------
<PAGE>
<PAGE> 110
6-1162-RLL-1858
Southwest Airlines Co.
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: Letter Agreement No. 6-1162-RLL-1858 to
Purchase Agreement No. 1810
Escalation Matters
Gentlemen:
This Letter Agreement amends Purchase Agreement No. 1810 (the Agreement)
between The Boeing Company (Boeing) and Southwest Airlines Co. (Buyer)
relating to the sale by Boeing and the purchase by Buyer of Model 737-7H4
aircraft (the Aircraft) and Letter Agreement 6-1162-RLL-933R1, dated
even date herewith, entitled "Option Aircraft", relating to the sale by
Boeing and the purchase by Buyer of sixty-seven (67) additional Model
737-7H4 aircraft (the Option Aircraft) and forty-nine (49) Model 737-7H4
Rollover Option Aircraft (Rollover Option Aircraft).
All terms used herein and in the Agreement, and not defined herein, will
have the same meaning as in the Agreement.
1. Escalation Sharing Commitment
Boeing agrees to share one-half of the escalation up to a maximum
of three percent (3%) per year in each of the years 1997 and 1998, as
more fully described in paragraph 2 below, for any Aircraft scheduled
to be delivered after December 31, 1996 (the Eligible Aircraft).
All escalation calculations under this Letter Agreement will be made in
accordance with Exhibit D to the Agreement entitled "Price Adjustment
Due to Economic Fluctuations - Aircraft Price Adjustment" (the Exhibit
D), using actual escalation indices published for the applicable period.
2. Calculation of Escalation Credit Memo
2.1 Eligible Aircraft Delivering in 1997
At the time of delivery of each Eligible Aircraft delivering in
1997, Boeing will issue to Buyer a credit memorandum (the 1997 Credit
Memorandum) which shall be applied to the Aircraft Price of such
Aircraft. The 1997 Credit Memorandum for each Eligible Aircraft
delivering in 1997 shall be calculated as follows:
One-half of the difference between the Base Aircraft Price and Special
Features escalation amount calculated for a
<PAGE>
<PAGE> 111
Southwest Airlines Co.
6-1162-RLL-1858 Page 2
December 1996 aircraft delivery position, and such escalation amount
calculated for the month of delivery of each 1997 Eligible Aircraft; provided
however;
The maximum amount of the 1997 Credit Memorandum shall not exceed three
percent (3%) pursuant to the following calculation:
At the time of the delivery of each 1997 Eligible Aircraft, the Aircraft
Basic Price will be escalated in accordance with the Exhibit D formula
to a December 1996 delivery month. The December 1996 escalated price
will be referred to in the following formula as the "December 1996 Index
Amount". The 1997 Credit Memorandum for each 1997 Eligible Aircraft
will not exceed an amount equal to the December 1996 Index Amount times
0.03.
2.2 Eligible Aircraft Delivering in 1998
At the time of delivery of each Eligible Aircraft delivering in
1998, Boeing will issue to Buyer a credit memorandum (the 1998 Credit
Memorandum) which shall be applied to the Aircraft Price of such Aircraft.
The 1998 Credit Memorandum for each Eligible Aircraft delivering in 1998
shall be calculated as follows:
(i) One-half of the difference between the Aircraft Basic Price
escalation amount calculated for a December 1997 aircraft delivery
position, and such escalation amount calculated for the month of
delivery of each 1998 Eligible Aircraft, provided however;
The maximum amount of the portion of the 1998 Credit Memorandum
calculated pursuant to this paragraph 2.2 (i) shall not exceed three
(3%) percent pursuant to the following calculation:
At the time of the delivery of each 1998 Eligible Aircraft, the Aircraft
Basic Price will be escalated in accordance with the Exhibit D formula
to a December 1997 delivery month. The December 1997 escalated price
will be referred to in the following formula as the "December 1997 Index
Amount." The portion of the 1998 Credit Memorandum calculated pursuant
to this paragraph 2.2 (i) for the 1998 Eligible Aircraft will not exceed
an amount equal to the December 1997 Index Amount times 0.03, plus;
(ii) The amount calculated above in paragraph 2.1 for the 1997 Credit
Memorandum calculated through December 1997.
2.3 Eligible Aircraft Delivering after 1998
For each Eligible Aircraft delivering after the calendar year 1998,
the amount of the Credit Memorandum will be the amount calculated
<PAGE>
<PAGE> 112
Southwest Airlines Co.
6-1162-RLL-1858 Page 3
pursuant to paragraph 2.2 above through a December 1998 aircraft
delivery position.
3. Advance Payment Base Price
It is agreed that the Advance Payment Base Prices for the Eligible
Aircraft set forth in Article 3.4 of the Agreement include an estimate
for the escalation sharing Credit Memoranda pursuant to this Letter
Agreement.
4. Escalating Credits (STE)
The credit memorandum specified in Article 1 of Letter Agreement
No. 6-1162-RLL-936R1 which is expressed as a percentage of the escalated
purchase price of the Aircraft, will be calculated using the same
factors used to develop the adjusted aircraft escalation pursuant to
this Letter Agreement.
5. Confidential Treatment
Buyer understands that certain commercial and financial
information contained in this Letter Agreement are considered by Boeing
as confidential. Buyer agrees that it will treat this Letter Agreement
and the information contained herein as confidential and will not,
without the prior written consent of Boeing, disclose this Letter
Agreement or any information contained herein to any other person or
entity, except as provided in Letter Agreement 6-1162-RLL-934R1.
Very truly yours,
THE BOEING COMPANY
By /s/ R. Leo Lyons
------------------------
Its Attorney-in-Fact
------------------------
<PAGE>
<PAGE> 113
Southwest Airlines Co.
6-1162-RLL-1858 Page 4
ACCEPTED AND AGREED TO as of this
date: February 26, 1997
SOUTHWEST AIRLINES CO.
By /s/ Gary A. Barron
-------------------------
Its EVP-COO
------------------------
<PAGE>
<PAGE> 114
6-1162-RLL-2036
Southwest Airlines Co.
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: Letter Agreement No. 6-1162-RLL-2036 to
Purchase Agreement No. 1810 Amortization of Costs for
Customer Unique Change Requests
Gentlemen:
This Letter Agreement amends Purchase Agreement No. 1810 (the Agreement)
between The Boeing Company (Boeing) and Southwest Airlines Co. (Buyer)
relating to the sale by Boeing and the purchase by Buyer of Model 737-7H4
aircraft (the Aircraft) and Letter Agreement 6-1162-RLL-933R1, dated
even date herewith, entitled "Option Aircraft", relating to the sale by
Boeing and the purchase by Buyer of sixty-seven (67) additional Model
737-7H4 aircraft (the Option Aircraft) and forty-nine (49) Model 737-7H4
Rollover Option Aircraft (Rollover Option Aircraft).
All terms used herein and in the Agreement, and not defined herein, will
have the same meaning as in the Agreement.
1. Amortization of Costs For Customer-Unique Change Requests.
Notwithstanding the provisions of Article 1.2 of Attachment A to
Letter Agreement No. 6-1162-RLL-933R1, when Buyer exercises its option
to purchase the Option Aircraft, the price for all customer-unique
changes listed in Attachment A will be the *** price as indicated in
Attachment A to this Letter Agreement No. 6-1162-RLL-2036. This
commitment relates solely to changes listed in Attachment A that have
a *** price listed. Any changes requested subsequent to the date of
this Letter Agreement will be handled on a case by case basis.
2. Confidential Treatment
Buyer understands that certain commercial and financial
information contained in this Letter Agreement are considered by Boeing
as confidential. Buyer agrees that it will treat this Letter Agreement
and the information contained herein as confidential and will not,
without the prior written consent of Boeing, disclose this Letter
Agreement or any information contained herein to any other person or
entity, except as provided in Letter Agreement 6-1162-RLL-934R1.
<PAGE>
<PAGE> 115
Southwest Airlines Co.
6-1162-RLL-2036 Page 2
Very truly yours,
THE BOEING COMPANY
By /s/ R. Leo Lyons
------------------------
Its Attorney-in-Fact
----------------------
ACCEPTED AND AGREED TO as of this
date: February 26, 1997
SOUTHWEST AIRLINES CO.
By /s/ Gary A. Barron
------------------------
Its EVP-COO
-----------------------
Attachment
<PAGE>
<PAGE> 116
Attachment to
Southwest Airlines Co.
6-1162-RLL-2036 Page 1
<TABLE>
<CAPTION>
PRICE F/O
PER A/P PRICE
SWA3701 SWA3701 F/O
CR / TITLE 92 $ 92$
========================================================================
<S> <C> <C>
0000DC3182 NC NC
MISCELLANEOUS DEVELOPMENT CHANGES
STATUS: ACCEPT
0110CG3018 IB IB
737-700 CONFIGURATION
STATUS: ACCEPT
0160MS3171 NC NC
AIRPLANE IDENTIFICATION NUMBERS - SERIAL,
REGISTRY, MODE S, FLIGHT RECORDER ID
STATUS: ACCEPT
0310CH3332 *** ***
INCREASE CERTIFIED MAXIMUM TAKEOFF WEIGHT -
138,500 IN LIEU OF 133,000
STATUS: ACCEPT
0352CG3023 NC NC
AIRPLANE LOADING SYSTEM FOR WEIGHT AND
BALANCE CONTROL
STATUS: ACCEPT
0370CH3014 *** NC
AIR CONDITIONING TRANSITION DUCT UNDER
FLOOR - ADD 17 MIL DAMPING TAPE FOR NOISE
REDUCTION
STATUS: ACCEPT
0370CH3019 *** ***
INSTALLATION OF STRINGER DAMPING FROM
STATION 540-727
STATUS: ACCEPT
1110CH3003 NC NC
CROWN METRO EXTERIOR PAINT - BMS 10-72 TYPE
VI SYSTEM
STATUS: ACCEPT
1110MP3290 NC NC
EXTERIOR DECORATIVE FINISH - DESOTO SERIES
420 HIGH SOLID TOPCOAT IN LIEU OF EXISTING
TOPCOAT
STATUS: ACCEPT
2123CH3042 *** ***
AIR CONDITIONING SYSTEM REVISION - 737-200
TYPE GASPER SYSTEM
STATUS: ACCEPT
2160CG3011 NC NC
CABIN TEMPERATURE INDICATOR - DEGREES
FAHRENHEIT IN LIEU OF CELSIUS
STATUS: ACCEPT
</TABLE>
<PAGE>
<PAGE> 117
Attachment to
Southwest Airlines Co.
6-1162-RLL-2036 Page 2
<TABLE>
<CAPTION>
PRICE F/O
PER A/P PRICE
SWA3701 SWA3701 F/O
CR / TITLE 92 $ 92 $
============================================================================
<S> <C> <C>
2210CG3204 *** ***
DIGITAL FLIGHT CONTROL SYSTEM (DFCS) -
PADDLE AUTOPILOT ENGAGE MODE CONTROL PANEL
STATUS: ACCEPT
2210MP3227 NC NC
DIGITAL FLIGHT CONTROL SYSTEM (DFCS) -
PUSH-BUTTON AUTOPILOT ENGAGE IN LIEU OF
PADDLE
STATUS: ACCEPT
2230CH3028 NC NC
AUTOTHROTTLE DEACTIVATION - UNIT TO REMAIN
INSTALLED AND BITE FEATURES OPERATIONAL
STATUS: ACCEPT
2312CH3284 NC NC
DUAL VHF COMMUNICATIONS - INSTALLATION -
BFE ALLIEDSIGNAL/GABLES ENGINEERING INC
STATUS: ACCEPT
2319CH3020 *** ***
CLAIRCOM AIR TO GROUND PASSENGER
COMMUNICATION SYSTEM - COMPLETE BFE
INSTALLATION PROVISIONS
STATUS: ACCEPT
2319MP3021 *** ***
CLAIRCOM PHONES - CANCEL INSTALLATION
INTENDED FROM 2319CH3020
STATUS: ACCEPT
2320CH3020 *** ***
ATSCALL INSTALLATION - PARTIAL PROVISIONS -
AFT ELECTRONICS PANEL
STATUS: ACCEPT
2321CH3498 *** ***
SELECTIVE CALLING EQUIPMENT - SELCAL -
DELETE PARTIAL PROVISIONS
STATUS: ACCEPT
2331CH3158 NC NC
DELETION OF BFE MATSUSHITA PASSENGER
ADDRESS TAPE REPRODUCER
STATUS: ACCEPT
2331CH3159 NC NC
PASSENGER ADDRESS SYSTEM - COLLINS ARINC
700 IN LIEU OF COLLINS ARINC 560
STATUS: ACCEPT
2334SP3210 NC NC
PASSENGER ENTERTAINMENT SYSTEM (AUDIO) -
DELETE SPACE PROVISIONS
STATUS: ACCEPT
</TABLE>
<PAGE>
<PAGE> 118
Attachment to
Southwest Airlines Co.
6-1162-RLL-2036 Page 3
<TABLE>
<CAPTION>
PRICE F/O
PER A/P PRICE
SWA3701 SWA3701 F/O
CR / TITLE 92 $ 92 $
=======================================================================
<S> <C> <C>
2340MP3095 NC NC
BFE BOOM MICROPHONE/HEADSET REVISION
STATUS: ACCEPT
2342MP3011 NC NC
FLIGHT ATTENDANT HANDSET - REVISION TO
FUNCTION AND FACEPLATE
STATUS: ACCEPT
2350CH3139 NC NC
PA MICROPHONE - ADD ELECTROVOICE P/N
602-4183
STATUS: ACCEPT
2350CH3162 NC NC
DTMF MICROPHONE INSTALLATION - FIRST
OBSERVER
STATUS: ACCEPT
2350CH3163 NC NC
DIGITAL AUDIO REMOTE ELECTRONICS UNIT
REVISION TO DELETE HEADSET AURAL ALERTS
STATUS: ACCEPT
2350MP3220 NC NC
DIGITAL AUDIO REMOTE ELECTRONICS UNIT
REVISION - ADD PREDICTIVE WINDSHEAR WITHOUT
HEADSET AURAL ALERTS - 737-700
STATUS: ACCEPT
2370CG3166 NC NC
SOLID STATE VOICE RECORDER - INSTALLATION -
BFE ALLIEDSIGNAL INC
STATUS: ACCEPT
2500CH3453 NC NC
DOOR WARNING STRAP - SHOCK CORD
STATUS: ACCEPT
2501CH3076 NC NC
FORWARD MODULE WITH GALLEY G1 AND LAVATORY
LA
STATUS: ACCEPT
2501MP3080 NC NC
REVISE FORWARD MODULE WITH GALLEY G1 AND
LAVATORY LA FROM SEAT TRACK MOUNT TO
HARD POINT
STATUS: ACCEPT
2502CH3066 NC NC
AFT MODULE WITH GALLEY G3, G4 AND LAVATORY
LB
STATUS: ACCEPT
</TABLE>
<PAGE>
<PAGE> 119
Attachment to
Southwest Airlines Co.
6-1162-RLL-2036 Page 4
<TABLE>
<CAPTION>
PRICE F/O
PER A/P PRICE
SWA3701 SWA3701 F/O
CR / TITLE 92 $ 92 $
=========================================================================
<S> <C> <C>
2502MP3069 NC NC
REVISE MODULE WITH GALLEY G3, G4 AND
LAVATORY LB TO HARPOINT IN LIEU OF SEAT
TRACK MOUNT
STATUS: ACCEPT
2510CH3058 NC NC
FLIGHT COMPARTMENT - MISCELLANEOUS
REVISIONS
STATUS: ACCEPT
2510CH3059 NC NC
TRIP COUNTER REVISION - SFE - DEXTER WILSON
STATUS: ACCEPT
2510CH3060 NC NC
CONTROL COLUMN CHECKLIST DELETION
STATUS: ACCEPT
2511CG3057 *** ***
SECOND OBSERVER'S STATION
STATUS: ACCEPT
2511CH3059 NC NC
LOG BOOK POCKET INSTALLATION - ON SECOND
OBSERVERS SEAT LEGS
STATUS: ACCEPT
2520CH3538 *** ***
INTERIOR ARRANGEMENT - 137 TOURIST CLASS AT
33/32" PITCH WITH LAVS LA AND LB AND
GALLEYS G1, G3 AND G4
STATUS: ACCEPT
2520MP3667 NC NC
STOWAGE BIN REVISION - ADD BULLNOSE ON
INBOARD LOWER SURFACE
STATUS: ACCEPT
2523CH3109 NC NC
PSU REVISION - ADD PLACARD TO PASSENGER
VIEWING SURFACE IN LOUNGE AREAS ONLY
STATUS: ACCEPT
2523CH3112 NC NC
INSTALL NON STANDARD COLOR PSU
STATUS: ACCEPT
2523MP3119 NC NC
INTERIOR REVISION - PSU AND PARTITION
RELOCATION TO SUPPORT SEAT RE-PITCH
REQUIRED FOR 16G COMPLIANCE
STATUS: ACCEPT
</TABLE>
<PAGE>
<PAGE> 120
Attachment to
Southwest Airlines Co.
6-1162-RLL-2036 Page 5
<TABLE>
<CAPTION>
PRICE F/O
PER A/P PRICE
SWA3701 SWA3701 F/O
CR / TITLE 92 $ 92 $
========================================================================
<S> <C> <C>
2524CH3431 *** ***
BFE FWD RIGHT HAND WINDSCREEN/STOWAGE UNIT
IN LIEU OF SFE
STATUS: ACCEPT
2524MP3488 NC NC
FULL HEIGHT BFE STOWAGE UNIT REVISION - ADD
BFE FLASHLIGHTS AND BFE LITERATURE POCKETS
STATUS: ACCEPT
2524MP3500 NC NC
PARTITION DECORATIVE COVERING REVISION -
ULTRALEATHER IN LIEU OF LEATHER
STATUS: ACCEPT
2524MP3513 NC NC
EMERGENCY EQUIPMENT BRACKET COMMONALITY -
SFE
STATUS: ACCEPT
2525MP3159 NC NC
PASSENGER SEAT REVISION - ALL FORWARD
FACING SEATS WITH 137 PAX
STATUS: ACCEPT
2528CH3189 *** ***
SFE HALF HEIGHT STOWAGE UNIT/WINDSCREEN -
AFT LH CABIN WITH THE AFT FACE AT STATION
955 - WITH MEGAPHONE
STATUS: ACCEPT
2528CH3191 *** ***
SFE FULL HEIGHT STOWAGE UNIT/WINDSCREEN -
FWD LH CABIN WITH THE AFT FACE AT STATION
355
STATUS: ACCEPT
2528CH3194 *** ***
BFE HALF HEIGHT STOWAGE UNIT/WINDSCREEN -
AFT LH CABIN WITH THE AFT FACE AT STATION
955 - WITH MEGAPHONE
STATUS: ACCEPT
2528CH3195 *** ***
BFE FULL HEIGHT STOWAGE UNIT/WINDSCREEN IN
LIEU OF SFE - FWD LH CABIN WITH THE AFT
FACE AT STATION 355
STATUS: ACCEPT
2528MP3217 NC NC
CREW LUGGAGE SECURITY DEVICE
STATUS: ACCEPT
</TABLE>
<PAGE>
<PAGE> 121
Attachment to
Southwest Airlines Co.
6-1162-RLL-2036 Page 6
<TABLE>
<CAPTION>
PRICE F/O
PER A/P PRICE
SWA3701 SWA3701 F/O
CR / TITLE 92 $ 92 $
=====================================================================
<S> <C> <C>
2530MP3613 NC NC
G3 EXTERIOR DECORATIVE COVERING REVISION -
ULTRASUEDE IN LIEU OF LEATHER
STATUS: ACCEPT
2541CH3034 NC NC
LIQUID SOAP DISPENSER INSTALLATION
STATUS: ACCEPT
2550CH3153 NC NC
CARGO COMPARTMENT LINING REVISION
STATUS: ACCEPT
2550CH3233 NC NC
FWD AND AFT CARGO COMPARTMENT FLOOR PANEL
REVISION - ALUMINUM PANELS IN LIEU OF
CONOLITE AT ENTRYWAY
STATUS: ACCEPT
2550MP3259 NC NC
TRANSVERSE CARGO NET INSTALLATION - FORWARD
AND AFT CARGO COMPARTMENTS
STATUS: ACCEPT
2550MP3267 NC NC
FORWARD AND AFT CARGO COMPARTMENT CARGO
RESTRAINT SYSTEM
STATUS: ACCEPT
2622CH3013 NC NC
APU FIRE BOTTLE REVISION - INTERCHANGEABLE
WITH ENGINE BOTTLE
STATUS: ACCEPT
2841CG3095 NC NC
FUEL QUANTITY INDICATORS ON RIGHT WING
FUELING PANEL
STATUS: ACCEPT
2844CG3038 NC NC
MEASURING STICK CONVERSION TABLES TO U.S.
GALLONS
STATUS: ACCEPT
2910CH3082 NC NC
HYDRAULIC PUMPS - AC ELECTRIC MOTOR DRIVEN
- VICKERS IN LIEU OF ABEX
STATUS: ACCEPT
2910CG3087 *** ***
ENGINE DRIVEN HYDRAULIC PUMP WITH VESPEL
SPLINE - VICKERS 10-62167-3 IN LIEU OF ABEX
10-62167-2
STATUS: ACCEPT
</TABLE>
<PAGE>
<PAGE> 122
Attachment to
Southwest Airlines Co.
6-1162-RLL-2036 Page 7
<TABLE>
<CAPTION>
PRICE F/O
PER A/P PRICE
SWA3701 SWA3701 F/O
CR / TITLE 92 $ 92 $
======================================================================
<S> <C> <C>
3040CH3041 NC NC
INSTALL A TWO LRU WINDOW HEAT CONTROL
SYSTEM - PED 1231-1 IN LIEU OF TBD
STATUS: ACCEPT
3040MP3049 NC NC
INSTALL A 4 UNIT WINDOW HEAT CONTROL SYSTEM
- OLIN 231-2 IN LIEU OF 1231-1
STATUS: ACCEPT
3040MP3053 *** ***
INSTALL A BFE WINDOW HEAT CONTROL SYSTEM
WHICH CONTAINS BITE - OLIN 231-3 IN LIEU OF
231-2
STATUS: ACCEPT
3043MP3022 NC NC
WINDSHIELD WIPER SWITCH REVISION - SINGLE
SWITCH FOR BOTH WIPERS IN LIEU OF TWO
SWITCHES
STATUS: ACCEPT
3120CH3016 NC NC
CLOCK WIRING REVISION - FMC, DFDAU AND
VOICE RECORDER INPUT FROM FIRST OFFICER'S
CLOCK IN LIEU OF CAPTAIN'S CLOCK
STATUS: ACCEPT
3131CG3673 NC NC
ACCELEROMETER - INSTALLATION - BFE
ALLIEDSIGNAL INC
STATUS: ACCEPT
3131CG3692 NC NC
SOLID STATE DIGITAL FLIGHT DATA RECORDER -
INSTALLATION - BFE ALLIEDSIGNAL INC - 128
WPS
STATUS: ACCEPT
3131CH3721 NC NC
DIGITAL FLIGHT DATA ACQUISITION UNIT
(DFDAU) - INSTALLATION - BFE ALLIEDSIGNAL
STATUS: ACCEPT
3162CG3013 NC NC
EFIS/MAP DISPLAY FORMAT
STATUS: ACCEPT
</TABLE>
<PAGE>
<PAGE> 123
Attachment to
Southwest Airlines Co.
6-1162-RLL-2026 Page 8
<TABLE>
<CAPTION>
PRICE F/O
PER A/P PRICE
SWA3701 SWA3701 F/O
CR / TITLE 92 $ 92 $
=======================================================================
<S> <C> <C>
3162CG3016 NC NC
FLIGHT DIRECTOR COMMAND DISPLAY - FILLED
INTEGRATED CUE
STATUS: ACCEPT
3162CG3017 NC NC
MACH AIRSPEED DISPLAY
STATUS: ACCEPT
3162CG3019 NC NC
RADIO ALTITUDE DISPLAY - ROUND DIAL
STATUS: ACCEPT
3162CG3020 NC NC
RADIO ALTITUDE - ABOVE ADI
STATUS: ACCEPT
3162CG3022 NC NC
RISING RUNWAY DISPLAY
STATUS: ACCEPT
3162CG3025 NC NC
RADIO ALTITUDE HEIGHT ALERT DISPLAY - 2500
FEET
STATUS: ACCEPT
3162CG3026 NC NC
ATTITUDE COMPARATOR - STEADY
STATUS: ACCEPT
3162CG3029 NC NC
LOCALIZER BACKCOURSE POLARITY - REVERSAL
STATUS: ACCEPT
3162CG3032 NC NC
MAP MODE ORIENTATION - TRACK UP
STATUS: ACCEPT
3162CG3038 NC NC
MANUALLY TUNED VOR SELECTED COURSE LINES -
DISPLAYED
STATUS: ACCEPT
3162CG3041 NC NC
ADF POINTER(S) IN MAP MODE - SUPPRESSED
STATUS: ACCEPT
3162CG3042 NC NC
POSITION DIFFERENCE - AUTOMATIC DISPLAY
STATUS: ACCEPT
3162CG3046 NC NC
WEATHER RADAR MODE/GAIN/TILT ANGLE -
DISPLAYED
STATUS: ACCEPT
</TABLE>
<PAGE>
<PAGE> 124
Attachment to
Southwest Airlines Co.
6-1162-RLL-2036 Page 9
<TABLE>
<CAPTION>
PRICE F/O
PER A/P PRICE
SWA3701 SWA3701 F/O
CR / TITLE 92 $ 92 $
======================================================================
<S> <C> <C>
3162CG3050 NC NC
TCAS TRAFFIC ON MAP
STATUS: ACCEPT
3162CG3052 NC NC
TCAS RESOLUTION ADVISORY ON ADI
STATUS: ACCEPT
3162CG3053 NC NC
TCAS RESOLUTION ADVISORY ON IVSI
STATUS: ACCEPT
3162CG3057 NC NC
ANALOG FAILURE FLAGS - DISPLAYED
STATUS: ACCEPT
3162CH3066 NC NC
MACH AIRSPEED INDICATOR BUG #5 - 80 KNOTS
STATUS: ACCEPT
3162CH3068 NC NC
SUPPLEMENTAL METRIC DATA INDICATIONS -
DEACTIVATION
STATUS: ACCEPT
3162CH3075 NC NC
EFIS CONTROL PANEL - EFIS/MAP DISPLAY
FORMAT
STATUS: ACCEPT
3162MP3128 NC NC
ANALOG FAILURE FLAG - DELETE
STATUS: ACCEPT
3162MP3129 NC NC
SUPPLEMENTAL METRIC DATA INDICATIONS -
ACTIVATION
STATUS: ACCEPT
3162MP3131 NC NC
ENHANCED MACH AIRSPEED DISPLAY
STATUS: ACCEPT
3162MP3132 NC NC
WEATHER RADAR RANGE INDICATORS - RANGE
MARKS
STATUS: ACCEPT
3240CH3220 NC NC
NOSE LANDING GEAR WHEELS - BENDIX
STATUS: ACCEPT
3240CH3221 NC NC
MAIN LANDING GEAR WHEELS AND BRAKES -
BENDIX
STATUS: ACCEPT
</TABLE>
<PAGE>
<PAGE> 125
Attachment to
Southwest Airlines Co.
6-1162-RLL-2036 Page 10
<TABLE>
<CAPTION>
PRICE F/O
PER A/P PRICE
SWA3701 SWA3701 F/O
CR / TITLE 92 $ 92 $
=======================================================================
<S> <C> <C>
3240MP3258 NC NC
NOSE LANDING GEAR - INSTALL 737-300
ALLIEDSIGNAL WHEEL IN LIEU OF EXISTING
STATUS: ACCEPT
3245CH3029 NC NC
TIRES - INSTALLATION OF SFE GOODYEAR TIRES
STATUS: ACCEPT
3324CH3010 NC NC
CEILING MOUNTED LIGHTED EXIT SIGN -
RELOCATION
STATUS: ACCEPT
3343CH3034 NC NC
ANTI-COLLISION LIGHT - SWITCH NOMENCLATURE
REVISION
STATUS: ACCEPT
3345CH3020 NC NC
LOGO LIGHTS - SYSTEM DEACTIVATION
STATUS: ACCEPT
3345MP3029 NC NC
REACTIVATION OF LOGO LIGHT SYSTEM
STATUS: ACCEPT
3350MP3079 NC NC
EGRESS LIGHTING REVISION TO ACCOMMODATE ALL
FORWARD FACING SEAT CONFIGURATION
STATUS: ACCEPT
3423CH3021 NC NC
INSTALL BFE STANDBY ATTITUDE INDICATOR
WITHOUT ILS DEVIATION DISPLAY IN LIEU OF
SFE INDICATOR
STATUS: ACCEPT
3423CH3026 NC NC
STANDBY INDICATOR - SFE SEXTANT IN LIEU OF
BFE JET
STATUS: ACCEPT
3431CG3051 NC NC
ILS - INSTALLATION - BFE ALLIEDSIGNAL INC
STATUS: ACCEPT
3433CG3058 NC NC
LOW RANGE RADIO ALTIMETER (LRRA) -
INSTALLATION - BFE ALLIEDSIGNAL INC
STATUS: ACCEPT
</TABLE>
<PAGE>
<PAGE> 126
Attachment to
Southwest Airlines Co.
6-1162-RLL-2036 Page 11
<TABLE>
<CAPTION>
PRICE F/O
PER A/P PRICE
SWA3701 SWA3701 F/O
CR / TITLE 92 $ 92 $
======================================================================
<S> <C> <C>
3435CH3028 *** ***
FLIGHT DYNAMICS CAPTAIN ONLY HEAD UP
GUIDANCE SYSTEM - PARTIAL PROVISIONS
STATUS: ACCEPT
3443CH3118 *** ***
WEATHER RADAR SYSTEM - ARINC 708A SINGLE
WEATHER RADAR SYSTEM WITH PREDICTIVE
WINDSHEAR - PARTIAL PROVISIONS
STATUS: ACCEPT
3443CH3154 NC NC
ARINC 708 WEATHER RADAR SYSTEM -
INSTALLATION - BFE ALLIEDSIGNAL INC (WITH
DEACTIVATED PREDICTIVE WINDSHEAR FEATURE
R/T RDR-4B)
STATUS: ACCEPT
3445CH3197 NC NC
TCAS II - INSTALLATION - BFE ALLIEDSIGNAL
INC
STATUS: ACCEPT
3451CG3005 NC NC
VOR/MARKER BEACON - INSTALLATION - BFE
ALLIEDSIGNAL INC
STATUS: ACCEPT
3455CG3120 NC NC
DISTANCE MEASURING EQUIPMENT (DME) -
INSTALLATION - BFE ALLIEDSIGNAL INC
(SCANNING)
STATUS: ACCEPT
3457CG3088 NC NC
AUTOMATIC DIRECTION FINDER (ADF) -
INSTALLATION - BFE ALLIEDSIGNAL INC
STATUS: ACCEPT
3457CG3092 NC NC
AUTOMATIC DIRECTION FINDER (ADF) CONTROL
PANEL - INSTALLATION - BFE GABLES
ENGINEERING INC
STATUS: ACCEPT
3457MP3132 NC NC
ADF CONTROL PANEL REVISION - ADD GABLES
G7402-05 IN LIEU OF EXISTING
STATUS: ACCEPT
3457MP3133 NC NC
ADF ANTENNA REVISION - ADD ALLIEDSIGNAL
2041683-7507 IN LIEU OF EXISTING
STATUS: ACCEPT
</TABLE>
<PAGE>
<PAGE> 127
Attachment to
Southwest Airlines Co.
6-1162-RLL-2036 Page 12
<TABLE>
<CAPTION>
PRICE F/O
PER A/P PRICE
SWA3701 SWA3701 F/O
CR / TITLE 92 $ 92 $
=====================================================================
<S> <C> <C>
3458CH3091 NC NC
GPS PROVISIONS - ADD COMPONENTS REQUIRED TO
PROVIDE COMPLETE PROVISIONS
STATUS: ACCEPT
3458CH3092 *** ***
GLOBAL POSITIONING SYSTEM (GPS) -
INSTALLATION - HONEYWELL INC (SUPPLEMENTAL
NAVIGATION CERTIFICATION)
STATUS: ACCEPT
3461CG3403 NC NC
BUYER FURNISHED NAVIGATION DATA BASE
STATUS: ACCEPT
3461CH3485 NC NC
VERTICAL NAVIGATION (VNAV)
ACTIVATE/DEACTIVATE SERVICE BULLETIN
STATUS: ACCEPT
3461CH3489 *** ***
FLIGHT MANAGEMENT COMPUTER SYSTEM REVISION
- CERTIFICATION FOR SINGLE COMPUTER
OPERATION ONLY
STATUS: ACCEPT
3510CG3089 NC NC
CREW OXYGEN - 114 CU. FT. IN LIEU OF 76 CU.
FT. CYLINDER
STATUS: ACCEPT
3830MP3025 NC NC
INSTALLATION OF PNEUDRAULICS INC. 4"
SERVICE PANEL LAVATORY DRAIN VALVE P/N 9569
IN LIEU OF CURRENT SHAW VALVE
STATUS: ACCEPT
3831MP3019 *** ***
GRAY WATER DRAIN ROUTING REVISION - LEVEL
LINE IN LIEU OF SLANTED LINE
STATUS: ACCEPT
3832CH3071 NC NC
VACUUM LAVATORY SYSTEM IN LIEU OF
RECIRCULATING LAVATORY - LAVS A AND B
STATUS: ACCEPT
3910CH3113 NC NC
RELOCATE ATC CONTROL PANEL
STATUS: ACCEPT
3910CH3122 NC NC
AFT ELECTRONICS PANEL ARRANGEMENT
STATUS: ACCEPT
</TABLE>
<PAGE>
<PAGE> 128
Attachment to
Southwest Airlines Co.
6-1162-RLL-2036 Page 13
<TABLE>
<CAPTION>
PRICE F/O
PER A/P PRICE
SWA3701 SWA3701 F/O
CR / TITLE 92 $ 92 $
=====================================================================
<S> <C> <C>
5100CH3026 NC NC
ADDITIONAL CORROSION PROTECTION BENEATH
GALLEYS AND LAVS
STATUS: ACCEPT
5100CH3027 NC NC
FWD AND AFT CARGO DOOR REVISION - INSTALL
HEAVY DUTY SKIN
STATUS: ACCEPT
5100MP3030 NC NC
REMOVE ADDITIONAL CORROSION PROTECTION
ADDED BY CR 5100CH3026
STATUS: ACCEPT
5220MP3012 NC NC
OVERWING HATCH ASSIST HANDLE REVISION -
INSTALL RECESSED HANDLE IN LIEU OF
PROTRUDING HANDLE
STATUS: ACCEPT
7200CG3244 IB IB
AIRPLANE PERFORMANCE: CFM56-7 ENGINES WITH
OPERATIONAL THRUST OF 22,000 LBS. FOR
737-600,-700
STATUS: ACCEPT
7900CG3026 NC NC
LUBRICATING OIL - ESSO/EXXON TURBO OIL 2380
STATUS: ACCEPT
CR'S 138 TOTAL *** ***
</TABLE>
<PAGE>
<PAGE> 129
6-1162-RLL-2037
Southwest Airlines Co.
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: Letter Agreement No. 6-1162-RLL-2037 to
Purchase Agreement No. 1810 - Reconciliation of the
Aircraft Basic Price
Gentlemen:
This Letter Agreement amends Purchase Agreement No. 1810 (the
Agreement) between The Boeing Company (Boeing) and Southwest Airlines
Co. (Buyer) relating to the sale by Boeing and the purchase by Buyer
of Model 737-7H4 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein,
will have the same meaning as in the Agreement.
1. Reconciliation of the Aircraft Basic Price
During the course of recent negotiations, Boeing and Buyer
reviewed and mutually agreed to the pricing for the Aircraft. The
price elements for the prices set forth in Article 3.2 of the
Agreement are documented in the Attachment to this Letter Agreement.
<PAGE>
<PAGE> 130
2. Confidential Treatment
Buyer understands that certain commercial and financial
information contained in this Letter Agreement are considered by
Boeing as confidential. Buyer agrees that it will treat this Letter
Agreement and the information contained herein as confidential and
will not, without the prior written consent of Boeing, disclose this
Letter Agreement or any information contained herein to any other
person or entity, except as provided in Letter Agreement 6-1162-RLL-934R1.
Very truly yours,
THE BOEING COMPANY
By /s/ R. Leo Lyons
---------------------
Its Attorney-in-Fact
---------------------
ACCEPTED AND AGREED TO as of this
date: February 26, 1997
SOUTHWEST AIRLINES CO.
By /s/ Gary A. Barron
----------------------
Its EVP-COO
----------------------
Attachment ***
<PAGE>
<PAGE> 131
6-1162-RLL-2073
Southwest Airlines Co.
P.O. Box 36611
Dallas, Texas 75235-1611
Subject: Letter Agreement No. 6-1162-RLL-2073 to
Purchase Agreement No. 1810 -Maintenance Training Matters
Gentlemen:
This Letter Agreement amends Purchase Agreement No. 1810 (the
Agreement) between The Boeing Company (Boeing) and Southwest Airlines
Co. (Buyer) relating to the sale by Boeing and the purchase by Buyer
of Model 737-7H4 aircraft (the Aircraft).
All terms used herein and in the Agreement, and not defined herein,
will have the same meaning as in the Agreement.
1. Customized Maintenance Training for Buyer
Buyer and Boeing agree that the maintenance training, as
described below, will be provided to Buyer in lieu of the maintenance
training as described in Exhibit C, Part A, Paragraphs 3.1, 3.2, 3.3
and 3.4 of the Agreement.
2. Description of, and Schedule for, the Customized Maintenance
Training Program for Buyer
A. Line and Base Course Boeing will provide *** in August
1997, *** students.
B. Major Model Differences Course Boeing will provide ***,
beginning in September 1997, lasting *** students in each round.
C. Engine Run Course Boeing will provide ***, beginning in
October 1997, lasting *** students in each round.
D. Rigging Course Boeing will provide ***, beginning in
August 1998, lasting *** students in each round.
3. Scheduling of Courses The specific schedule for each of the
courses listed above will be coordinated between Buyer and Boeing's
scheduling people.
<PAGE>
<PAGE> 132
Southwest Airlines Co.
6-1162-RLL-2073 Page 2
4. *** CBT Lesson Modules Boeing will provide *** CBT lesson
modules to Buyer on or about June 30, 1997.
5. Confidential Treatment
Buyer understands that certain commercial and financial
information contained in this Letter Agreement are considered by
Boeing as confidential. Buyer agrees that it will treat this Letter
Agreement and the information contained herein as confidential and
will not, without the prior written consent of Boeing, disclose this
Letter Agreement or any information contained herein to any other
person or entity, except as provided in Letter Agreement 6-1162-RLL-934R1.
Very truly yours,
THE BOEING COMPANY
By /s/ R. Leo Lyons
-----------------------
Its Attorney-in-Fact
----------------------
ACCEPTED AND AGREED TO as of this
date: February 26, 1997
SOUTHWEST AIRLINES CO.
By /s/ Gary A. Barron
-----------------------
Its EVP-COO
----------------------
