Southwest Airlines Reaches Agreement on Payroll Support Program Under The CARES Act
Vinson & Elkins advised Southwest Airlines Co. in its application to and negotiation of agreements with the United States Department of the Treasury for payroll support funding under the Payroll Support Program of the CARES Act.
On April 20, 2020, Southwest entered into definitive documentation with Treasury with respect to the initial disbursement of more than $3.2 billion in expected funding. Southwest received 50% of the total expected funding on April 21, 2020 with the remainder expected to be disbursed between April and July 2020. In connection with the initial disbursement, Southwest entered into a promissory note in favor of the Treasury for approximately $458.9 million and issued to Treasury a warrant to purchase up to 1,258,232 shares of Southwest’s common stock. The promissory note is expected to be increased to approximately $947.8 million and Southwest is expected to issue warrants for an additional 1,258, 232 shares, in connection with the subsequent disbursements.
The V&E corporate team was led by partners Robert Kimball and Brenda Lenahan, with assistance from partners Bailey Pham, Caroline Phillips and Tzvi Werzberger, senior associates Joanna Enns, Katherine Frank and Michael Makhotin, and associates Cole Renicker and Sydney Verner. Also advising were partners Daniel Graham, David Peck and Shane Tucker.
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