Southwest Airlines Announces Sale, Leaseback Of Boeing Aircraft: Retail Sentiment Remains Positive

Southwest Airlines Co. (LUV), on Tuesday, announced the sale and leaseback of 36 Boeing 737-800 aircraft which will be owned and leased to the firm by Incline Aviation III, the third in BBAM's flagship aviation investment fund series.

BBAM is an aircraft lessor that provides fleet and financing solutions to over 100 airline customers in more than 50 countries.

Southwest Airlines CFO Tammy Romo said the transaction is part of the firm’s 'Southwest. Even Better.' transformational plan, which was introduced in September.

“By opportunistically monetizing surplus value from a portion of our existing all-Boeing 737 fleet, Southwest is generating significant cash to drive fleet modernization and offset capital expenditures in support of our capital allocation strategy,” Romo said.

Southwest indicated in an SEC filing that it completed the sale-leaseback of 35 aircraft in late December 2024. The company received gross proceeds of $871 million and expects to record realized gains of $92 million in the fourth quarter of 2024 for the sale-leaseback of these 35 aircraft, it said.

“Transaction proceeds generated from the fleet strategy initiative, as well as excess cash from the balance sheet, are expected to be used in support of the company's capital allocation strategy, which includes funding future fleet modernization and providing shareholder returns,” it said.

Meanwhile, UBS analyst Thomas Wadewitz raised the firm's price target on Southwest to $29 from $27 while keeping a ‘Sell’ rating, according to TheFly. The brokerage said it is likely that airlines will report a strong fourth quarter.

At the same time, Bernstein analyst David Vernon raised the firm's price target on the stock to $34 from $33 while keeping a ‘Market Perform’ rating.

Despite the development, Southwest shares traded over 3% lower on Tuesday afternoon. However, retail investors chose to ignore the decline in stock price, with the sentiment meter continuing to trend in the ‘bullish’ territory (55/100), albeit with a lower score.

LUV’s Sentiment Meter and Message Volume as of 1:29 p.m. ET on Jan. 7, 2025 | Source: Stocktwits

Notably, Southwest Airlines shares have gained over 12% over the past year.

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