Sale and leaseback: Southwest sells 36 Boeing 737s, United buys 18 Embraer E175s

Southwest Airlines is selling 36 Boeing 737-800s and United Airlines is buying 18 Embraer E175s, as both carriers enter new sale and leaseback agreements.  

in a statement and SEC filing on January 7, 2025, low-cost US carrier Southwest Airlines confirmed that it had entered a sale-leaseback transaction with Babcock & Brown Aircraft Management (BBAM). 

Under the agreement, Southwest sold 36 Boeing 737-800s to BBAM, with the aircraft leased back to the carrier through management firm’s Incline Aviation III for between 26 and 37 months.  

Tammy Romo, Executive Vice President and CFO of Southwest Airlines, said: “This transaction is part of our ‘Southwest. Even Better.’ transformational plan introduced in September at Investor Day. 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.” 

The agreement for 35 Boeings was completed towards the end of December 2024, and sale and leaseback for the final aircraft is expected to be completed in January 2025. 

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 Southwest’s capital allocation strategy, which includes funding future fleet modernization and providing shareholder returns. 

Steve Zissis, President and CEO of BBAM, said: “We are excited to partner with Southwest Airlines, one of the world’s most admired and awarded airlines, on this landmark sale-leaseback transaction. The transaction underscores BBAM’s commitment to delivering tailored fleet financing solutions and certainty of execution to our airline partners. We look forward to a long and successful relationship with Southwest Airlines.” 

United Airlines purchases Embraer E175s 

United Airlines has also recently entered into a sale and leaseback agreement, through a transaction with regional airline operator Mesa Airlines.  

Mesa Airlines submitted a SEC Filing on January 7, 2025, confirming it had entered into an Aircraft Purchase Agreement with United Airlines after agreeing to sell 18 Embraer ERJ 175 aircraft. 

The sale of eight aircraft closed on December 31, 2024, while the ten remaining are expected to be sold by February 1, 2025.  

Proceeds from the sale of the aircraft are expected to raise $229.1 million, with Mesa Airline set to use $142.4 million to pay off associated debt. 

The SEC Filing said: “Mesa Airlines and United have entered into, and will enter into with respect to the remaining ten aircraft, lease agreements pursuant to which Mesa Airlines will lease each such Aircraft from United on the terms set forth in the applicable lease agreements.”  

Mesa Airlines operates flights on behalf of United Airlines, flying planes branded as United Express. 

On December 24, 2024, Mesa Airlines also sold 15 used Bombardier CRJ-900s to an undisclosed buyer for $19 million. 

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