According to Zhito Finance APP, Southwest Airlines (LUV.US) will generate $92 million in earnings by selling and leasing back 35 Boeing (BA.US) 737-800 aircraft, which is the first step in the airline's broader plan to partially monetize its large fleet and many aircraft Orders.

In a statement on Tuesday, Southwest Airlines reported that the total earnings from the Trade completed with Babcock & Brown Aircraft Management last December amounted to $0.871 billion. The $92 million in earnings will be recorded in the fourth quarter of 2024. The airline indicated that the sale and leaseback of another aircraft is expected to be completed in January.

Currently, Southwest Airlines is working to extract additional value from its over 800 Boeing 737 aircraft and nearly 700 aircraft on Order, as part of a comprehensive reform aimed at improving investor returns that have lagged behind peers in recent years. Other initiatives include moving away from the traditional model, offering designated seating, and premium fares with more legroom.

The fleet Trade aims to leverage the demand and price surge for aircraft, as both Boeing and Airbus (EADSY.US) are currently facing production challenges that restrict the supply of new passenger aircraft. The sale and leaseback agreement allows the airline to sell part of its 737-800 medium-haul aircraft to lessors and then lease them back for a fixed period, with lease terms ranging from 26 to 37 months. This deal will add an annual rent payment of $2.6 million for the airline.

The airline stated that it may also directly sell its fleet as well as some of the new 737 Max aircraft received from Boeing. The company currently does not need these aircraft, and if it does not accept the ordered aircraft, it will lose existing credit points due to past delivery delays. Southwest Airlines' Boeing Orders will extend until 2031.