Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2016shares | |
Document and Entity Information [Abstract] | |
Document type | 10-Q |
Amendment flag | false |
Document period end date | Mar. 31, 2016 |
Document fiscal year focus | 2,016 |
Document fiscal period focus | Q1 |
Entity registrant name | DELTA AIR LINES INC /DE/ |
Entity central index key | 27,904 |
Current fiscal year end date | --12-31 |
Entity filer category | Large Accelerated Filer |
Entity common stock, shares outstanding | 771,581,440 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Cash and cash equivalents | $ 1,708 | $ 1,972 |
Short-term investments | 1,206 | 1,465 |
Accounts receivable, net of an allowance for uncollectible accounts of $11 and $9 at March 31, 2016 and December 31, 2015, respectively | 2,179 | 2,020 |
Hedge margin receivable | 454 | 119 |
Fuel inventory | 367 | 379 |
Expendable parts and supplies inventories, net of an allowance for obsolescence of $114 at March 31, 2016 and December 31, 2015 | 326 | 318 |
Hedge derivatives asset | 2,179 | 1,987 |
Prepaid expenses and other | 887 | 796 |
Total current assets | 9,306 | 9,056 |
Property and Equipment, Net: | ||
Property and equipment, net of accumulated depreciation and amortization of $11,314 and $10,871 at March 31, 2016 and December 31, 2015, respectively | 23,422 | 23,039 |
Other Assets: | ||
Goodwill | 9,794 | 9,794 |
Identifiable intangibles, net of accumulated amortization of $815 and $811 at March 31, 2016 and December 31, 2015, respectively | 4,856 | 4,861 |
Deferred income taxes, net | 4,489 | 4,956 |
Other noncurrent assets | 1,475 | 1,428 |
Total other assets | 20,614 | 21,039 |
Total assets | 53,342 | 53,134 |
Current Liabilities: | ||
Current maturities of long-term debt and capital leases | 1,531 | 1,563 |
Air traffic liability | 5,988 | 4,503 |
Accounts payable | 2,732 | 2,743 |
Accrued salaries and related benefits | 1,903 | 3,195 |
Hedge derivatives liability | 2,630 | 2,581 |
Frequent flyer deferred revenue | 1,605 | 1,635 |
Other accrued liabilities | 1,719 | 1,306 |
Total current liabilities | 18,108 | 17,526 |
Noncurrent Liabilities: | ||
Long-term debt and capital leases | 6,920 | 6,766 |
Pension, postretirement and related benefits | 12,695 | 13,855 |
Frequent flyer deferred revenue | 2,276 | 2,246 |
Other noncurrent liabilities | 2,091 | 1,891 |
Total noncurrent liabilities | $ 23,982 | $ 24,758 |
Commitments and Contingencies | ||
Stockholders' Equity: | ||
Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 785,605,157 and 799,850,675 shares issued at March 31, 2016 and December 31, 2015, respectively | $ 0 | $ 0 |
Additional paid-in capital | 10,339 | 10,875 |
Retained earnings | 8,462 | 7,623 |
Accumulated other comprehensive loss | (7,279) | (7,275) |
Treasury stock, at cost, 14,023,717 and 21,066,684 shares at March 31, 2016 and December 31, 2015, respectively | (270) | (373) |
Total stockholders' equity | 11,252 | 10,850 |
Total liabilities and stockholders' equity | $ 53,342 | $ 53,134 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Allowance for uncollectible accounts | $ 11 | $ 9 |
Allowance for obsolescence | 114 | 114 |
Property and equipment additions: | ||
Accumulated depreciation and amortization | 11,314 | 10,871 |
Other Assets: | ||
Accumulated amortization of identifiable intangible assets | $ 815 | $ 811 |
Stockholders' Equity: | ||
Common stock, par value per share (in usd per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 1,500,000,000 | 1,500,000,000 |
Common stock, shares issued | 785,605,157 | 799,850,675 |
Treasury stock, at cost, shares | 14,023,717 | 21,066,684 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Operating Revenue: | ||
Mainline | $ 6,444 | $ 6,549 |
Regional carriers | 1,318 | 1,374 |
Total passenger revenue | 7,762 | 7,923 |
Cargo | 162 | 217 |
Other | 1,327 | 1,248 |
Total operating revenue | 9,251 | 9,388 |
Operating Expense: | ||
Salaries and related costs | 2,311 | 2,092 |
Aircraft fuel and related taxes | 1,227 | 1,835 |
Regional carriers expense | 1,006 | 1,053 |
Depreciation and amortization | 486 | 470 |
Contracted services | 476 | 441 |
Aircraft maintenance materials and outside repairs | 449 | 452 |
Passenger commissions and other selling expenses | 388 | 386 |
Landing fees and other rents | 348 | 373 |
Profit sharing | 272 | 136 |
Passenger service | 189 | 190 |
Aircraft rent | 66 | 60 |
Other | 493 | 502 |
Total operating expense | 7,711 | 7,990 |
Operating Income | 1,540 | 1,398 |
Non-Operating Expense: | ||
Interest expense, net | (107) | (131) |
Miscellaneous, net | 1 | (81) |
Total non-operating expense, net | (106) | (212) |
Income Before Income Taxes | 1,434 | 1,186 |
Income Tax Provision | (488) | (440) |
Net Income | $ 946 | $ 746 |
Basic earnings per share (in USD per share) | $ 1.22 | $ 0.91 |
Diluted earnings per share (in USD per share) | 1.21 | 0.90 |
Cash dividends declared per share (in USD per share) | $ 0.135 | $ 0.09 |
Comprehensive Income | $ 942 | $ 763 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Net Cash Provided by Operating Activities | ||
Net Cash Provided by Operating Activities | $ 1,011 | $ 1,636 |
Property and equipment additions: | ||
Flight equipment, including advance payments | (764) | (451) |
Ground property and equipment, including technology | (107) | (135) |
Purchase of short-term investments | (488) | (344) |
Redemption of short-term investments | 753 | 115 |
Other, net | 5 | 3 |
Net cash used in investing activities | (601) | (812) |
Cash Flows From Financing Activities: | ||
Payments on long-term debt and capital lease obligations | (459) | (301) |
Repurchase of common stock | (775) | (425) |
Cash dividends | (107) | (75) |
Fuel card obligation | 141 | (32) |
Proceeds from short-term obligations | 68 | 0 |
Proceeds from long-term obligations | 450 | 41 |
Other, net | 8 | 2 |
Net cash used in financing activities | (674) | (790) |
Net (Decrease) Increase in Cash and Cash Equivalents | (264) | 34 |
Cash and cash equivalents at beginning of period | 1,972 | 2,088 |
Cash and cash equivalents at end of period | 1,708 | 2,122 |
Non-Cash Transactions: | ||
Treasury stock contributed to our qualified defined benefit pension plans | 350 | 0 |
Flight equipment acquired under capital leases | $ 27 | $ 39 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Delta Air Lines, Inc. and our wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Consistent with these requirements, this Form 10-Q does not include all the information required by GAAP for complete financial statements. As a result, this Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying Notes in our Form 10-K for the year ended December 31, 2015 . Management believes the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, including normal recurring items and restructuring and other items, considered necessary for a fair statement of results for the interim periods presented. Due to seasonal variations in the demand for air travel, the volatility of aircraft fuel prices and other factors, operating results for the three months ended March 31, 2016 are not necessarily indicative of operating results for the entire year. We reclassified certain prior period amounts to conform to the current period presentation. Unless otherwise noted, all amounts disclosed are stated before consideration of income taxes. Recent Accounting Standards Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." Under this ASU and subsequently issued amendments, revenue is recognized at the time a good or service is transferred to a customer for the amount of consideration received. Entities may use a full retrospective approach or report the cumulative effect as of the date of adoption. The standard is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption of the standard is permitted, but not before December 15, 2016. We are currently evaluating how the adoption of the revenue recognition standard will impact our Consolidated Financial Statements. Leases In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)." This standard will require all leases with durations greater than twelve months to be recognized on the balance sheet and is effective for interim and annual reporting periods beginning after December 15, 2018, although early adoption is permitted. We believe adoption of this standard will have a significant impact on our Consolidated Balance Sheets. Although we have not completed our assessment, we do not expect the adoption to change the recognition, measurement or presentation of lease expenses within the Consolidated Statements of Operations and Cash Flows. Information about our undiscounted future lease payments and the timing of those payments is in Note 7, "Lease Obligations," in our Form 10-K for the year ended December 31, 2015. Equity Method Investments In March 2016, the FASB issued ASU No. 2016-07, "Investments—Equity Method and Joint Ventures (Topic 323)." This standard eliminates the requirement that when an existing cost method investment qualifies for use of the equity method, an investor must restate its historical financial statements, as if the equity method had been used during all previous periods. Under the new guidance, at the point an investment qualifies for the equity method, any unrealized gain or loss in accumulated other comprehensive income/(loss) ("AOCI") will be recognized through earnings. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. We early adopted this standard during the three months ended March 31, 2016. Although none of our available-for-sale or cost investments qualified for use of the equity method during the quarter, we expect the tender offer for additional capital stock of Grupo Aeroméxico to be completed during 2016, at which point our investment will qualify for the equity method of accounting. As of March 31, 2016, the unrealized gain recorded in AOCI related to our investment in Grupo Aeroméxico was $21 million . Share-Based Compensation In March 2016, the FASB issued ASU No. 2016-09, "Compensation—Stock Compensation (Topic 718)." This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. We are currently assessing how the adoption of this standard will impact our Consolidated Financial Statements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS Assets (Liabilities) Measured at Fair Value on a Recurring Basis (in millions) March 31, Level 1 Level 2 Cash equivalents $ 1,137 $ 1,137 $ — Short-term investments U.S. government and agency securities 160 127 33 Asset- and mortgage-backed securities 238 — 238 Corporate obligations 755 — 755 Other fixed income securities 53 — 53 Restricted cash equivalents and investments 49 49 — Long-term investments 167 141 26 Hedge derivatives, net Fuel hedge contracts (664 ) (101 ) (563 ) Interest rate contract 7 — 7 Foreign currency exchange contracts (33 ) — (33 ) (in millions) December 31, Level 1 Level 2 Cash equivalents $ 1,543 $ 1,543 $ — Short-term investments U.S. government and agency securities 151 74 77 Asset- and mortgage-backed securities 380 — 380 Corporate obligations 896 — 896 Other fixed income securities 38 — 38 Restricted cash equivalents and investments 49 49 — Long-term investments 155 130 25 Hedge derivatives, net Fuel hedge contracts (672 ) 65 (737 ) Interest rate contract (3 ) — (3 ) Foreign currency exchange contracts 94 — 94 Cash Equivalents and Restricted Cash Equivalents and Investments. Cash equivalents generally consist of money market funds. Restricted cash equivalents and investments generally consist of money market funds and time deposits, which relate to certain self-insurance obligations and airport commitments. The fair value of these investments is based on a market approach using prices and other relevant information generated by market transactions involving identical or comparable assets. Short-Term Investments. The fair values of short-term investments are based on a market approach using industry standard valuation techniques that incorporate observable inputs such as quoted market prices, interest rates, benchmark curves, credit ratings of the security and other observable information. Long-Term Investments. Our long-term investments that are measured at fair value primarily consist of equity investments in Grupo Aeroméxico, the parent company of Aeroméxico, and GOL Linhas Aéreas Inteligentes, the parent company of VRG Linhas Aéreas (operating as GOL). Shares of the parent companies of Aeroméxico and GOL are traded on public exchanges and we have valued our investments based on quoted market prices. The investments are classified in other noncurrent assets. Hedge Derivatives. A portion of our derivative contracts are negotiated over-the-counter with counterparties without going through a public exchange. Accordingly, our fair value assessments give consideration to the risk of counterparty default (as well as our own credit risk). Such contracts are classified as Level 2 within the fair value hierarchy. The remainder of our hedge contracts are comprised of futures contracts, which are traded on a public exchange. These contracts are classified within Level 1 of the fair value hierarchy. • Fuel Contracts. Our fuel hedge portfolio consists of options, swaps and futures. The hedge contracts include crude oil, diesel fuel and jet fuel, as these commodities are highly correlated with the price of jet fuel that we consume. Option contracts are valued under an income approach using option pricing models based on data either readily observable in public markets, derived from public markets or provided by counterparties who regularly trade in public markets. Volatilities used in these valuations ranged from 23% to 58% depending on the maturity dates, underlying commodities and strike prices of the option contracts. Swap contracts are valued under an income approach using a discounted cash flow model based on data either readily observable or provided by counterparties who regularly trade in public markets. Discount rates used in these valuations vary with the maturity dates of the respective contracts and are based on the London interbank offered rate ("LIBOR"). Futures contracts and options on futures contracts are traded on a public exchange and valued based on quoted market prices. • Interest Rate Contract. Our interest rate derivative is a swap contract, which is valued based on data readily observable in public markets. • Foreign Currency Exchange Contracts. Our foreign currency derivatives consist of Japanese yen and Canadian dollar forward contracts and are valued based on data readily observable in public markets. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2016 | |
Short-term Investments [Abstract] | |
Investments | INVESTMENTS Short-Term Investments The estimated fair values of short-term investments, which approximate cost at March 31, 2016 , are shown below by contractual maturity. Actual maturities may differ from contractual maturities because issuers of the securities may have the right to retire our investments without prepayment penalties. (in millions) Available-For-Sale Due in one year or less $ 221 Due after one year through three years 829 Due after three years through five years 102 Due after five years 54 Total $ 1,206 Long-Term Investments We have developed strategic relationships with certain international airlines through equity investments or other forms of cooperation and support. Strategic relationships improve our coordination with these airlines and enable our customers to seamlessly connect to more places while enjoying a consistent, high-quality travel experience. • Aeroméxico . We own 4.1% of the outstanding shares of Grupo Aeroméxico. Additionally, we have a derivative contract that may be settled for the underlying shares representing another 8.1% of Grupo Aeroméxico outstanding shares. During 2015, we announced our intention to acquire additional shares of the capital stock of Grupo Aeroméxico through a cash tender offer, subject to regulatory approvals. If approved, the tender offer is expected to occur during 2016. As a result of this tender offer, we would own up to 49% of the outstanding capital stock of Grupo Aeroméxico. Based on current exchange rates, the total amount to be paid for the additional shares and the shares underlying the derivative would be up to $750 million. • GOL. During 2015, we acquired preferred shares of GOL's parent company , increasing our ownership to 9.5% of GOL's outstanding capital stock. Additionally, GOL entered into a $300 million five -year term loan facility with third parties, which we have guaranteed. Our entire guaranty is secured by GOL's ownership interest in Smiles, GOL's publicly traded loyalty program. Because GOL remains in compliance with the terms of its loan facility, we have not recorded a liability on our Consolidated Balance Sheet as of March 31, 2016 . Challenges in the Brazilian economy and GOL’s recent financial performance have caused the fair value of our equity investment in GOL’s parent company to decline to $25 million with an $81 million loss recorded in AOCI at March 31, 2016 . As GOL’s shares have traded below our cost basis for longer than a year, we evaluated whether the investment was other-than-temporarily impaired. We determined the investment was not impaired as GOL’s management is executing measures to maximize operational and network efficiency and control costs, which we anticipate will improve GOL’s financial performance and the fair value of our investment. In addition, we have the intent and ability to maintain our investment in GOL to allow for the recovery of its market value as GOL, which operates as an extension of our global network, is a strategic investment for Delta. • China Eastern. During 2015, we acquired shares of China Eastern , which provided us with a 3.5% stake in the airline . In conjunction with this transaction, we and China Eastern entered into a new commercial agreement to expand our relationship and better connect the networks of the two airlines. As the investment agreement restricts our sale or transfer of these shares for a period of three years, we will account for the investment at cost during this period. Although China Eastern shares are actively traded on a public exchange, it is not practicable to estimate the fair value of the investment due to the restriction on our ability to sell or transfer the shares. We have, however, evaluated whether the recent decline in the value of China Eastern's shares would impair our investment. We considered the recent conditions and outlook for both China Eastern and the broader Chinese economy, as well as the nature of our investment in China Eastern. We determined that the investment was not impaired as the share price decline primarily results from declines in the broader Chinese equity markets and is not specific to China Eastern's financial performance. In addition, we have the intent and ability to maintain our investment in China Eastern to allow for the recovery of its market value as China Eastern, which operates as an extension of our global network, is a strategic investment for Delta. |
Derivatives
Derivatives | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | DERIVATIVES Changes in aircraft fuel prices, interest rates and foreign currency exchange rates impact our results of operations. In an effort to manage our exposure to these risks, we enter into derivative contracts and adjust our derivative portfolio as market conditions change. Aircraft Fuel Price Risk Changes in aircraft fuel prices materially impact our results of operations. We have historically managed our fuel price risk through a hedging program intended to reduce the financial impact from changes in the price of jet fuel. Since 2014, however, jet fuel prices have consistently decreased and remain at low levels. During the March 2015 quarter, we effectively deferred settlement of a portion of our hedge portfolio until 2016 by entering into fuel derivative transactions that, excluding market movements from the date of inception, would settle and provide approximately $300 million in cash receipts during the second half of 2015 and require approximately $300 million in cash payments in 2016. By effectively deferring settlement of a portion of the original derivative transactions, the restructured hedge portfolio provided additional time for the fuel market to stabilize. We early terminated certain of these deferral transactions in the second half of 2015. Due to the continued volatility in the fuel market, early in the March 2016 quarter , we entered into transactions to further defer settlement of a portion of our hedge portfolio until 2017. These deferral transactions, excluding market movements from the date of inception, will settle and provide approximately $300 million in cash receipts during the second half of 2016 and require approximately $300 million in cash payments in 2017. Subsequent to these deferral transactions, i n order to better participate in the low fuel price environment, we reduced our hedging activity and entered into derivatives designed to offset and effectively terminate our existing airline segment hedge positions. As a result, we have both neutralized our hedge portfolio and locked in net settlements of approximately $725 million in 2016 and $300 million in 2017, which include the deferral transactions discussed above. During the three months ended March 31, 2016 and 2015 , we recorded fuel hedge losses of $274 million and $411 million , respectively. Cash flows associated with these deferral transactions are reported as cash flows from financing activities within our Condensed Consolidated Statements of Cash Flows in the settlement period. During the three months ended March 31, 2016, we reported $11 million in net cash receipts associated with these transactions as cash flows from financing activities within other, net. Hedge Position as of March 31, 2016 (in millions) Volume Final Maturity Date Hedge Derivatives Asset Other Noncurrent Assets Hedge Derivatives Liability Other Noncurrent Liabilities Hedge Derivatives, net Designated as hedges Interest rate contract (fair value hedge) 367 U.S. dollars August 2022 $ 3 $ 4 $ — $ — $ 7 Foreign currency exchange contracts 70,789 Japanese yen February 2019 5 8 (24 ) (22 ) (33 ) 555 Canadian dollars Not designated as hedges Fuel hedge contracts 244 (1) gallons - crude oil, diesel and jet fuel December 2017 2,171 16 (2,606 ) (245 ) (664 ) Total derivative contracts $ 2,179 $ 28 $ (2,630 ) $ (267 ) $ (690 ) (1) As discussed above, we have entered into hedges designed to offset and effectively terminate our existing hedge positions for 2016 and 2017. This volume represents short-term hedge protection designed to mitigate the risk of fuel price and refining margin declines. Hedge Position as of December 31, 2015 (in millions) Volume Final Maturity Date Hedge Derivatives Asset Other Noncurrent Assets Hedge Derivatives Liability Other Noncurrent Liabilities Hedge Derivatives, net Designated as hedges Interest rate contract (fair value hedge) 384 U.S. dollars August 2022 $ 4 $ — $ — $ (7 ) $ (3 ) Foreign currency exchange contracts 46,920 Japanese yen July 2018 76 20 (1 ) (1 ) 94 395 Canadian dollars Not designated as hedges Fuel hedge contracts 887 gallons - crude oil, diesel and jet fuel November 2017 1,907 4 (2,580 ) (3 ) (672 ) Total derivative contracts $ 1,987 $ 24 $ (2,581 ) $ (11 ) $ (581 ) Offsetting Assets and Liabilities We have master netting arrangements with our counterparties giving us the right of setoff. We have elected not to offset the fair value positions recorded on our Consolidated Balance Sheets. The following table shows the net fair value positions had we elected to offset. (in millions) Hedge Derivatives Asset Other Noncurrent Assets Hedge Derivatives Liability Other Noncurrent Liabilities Hedge Derivatives, net March 31, 2016 Net derivative contracts $ 6 $ 6 $ (457 ) $ (245 ) $ (690 ) December 31, 2015 Net derivative contracts $ 143 $ 21 $ (737 ) $ (8 ) $ (581 ) Designated Hedge Gains (Losses) Gains (losses) related to our designated hedge contracts are as follows: Effective Portion Reclassified from AOCI to Earnings Effective Portion Recognized in Other Comprehensive Income (in millions) 2016 2015 2016 2015 Three Months Ended March 31, Foreign currency exchange contracts $ 24 $ 51 $ (82 ) $ (16 ) As of March 31, 2016 , we have recorded $26 million of gains on cash flow hedge contracts in AOCI, which are scheduled to settle and be reclassified into earnings within the next 12 months. Credit Risk To manage credit risk associated with our aircraft fuel price, interest rate and foreign currency hedging programs, we evaluate counterparties based on several criteria including their credit ratings and limit our exposure to any one counterparty. Our hedge contracts contain margin funding requirements. The margin funding requirements may cause us to post margin to counterparties or may cause counterparties to post margin to us as market prices in the underlying hedged items change. Due to the fair value position of our hedge contracts, we posted margin of $454 million and $119 million as of March 31, 2016 and December 31, 2015 , respectively. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | LONG-TERM DEBT Fair Value of Debt Market risk associated with our fixed- and variable-rate long-term debt relates to the potential reduction in fair value and negative impact to future earnings, respectively, from an increase in interest rates. The fair value of debt, shown below, is principally based on reported market values, recently completed market transactions and estimates based on interest rates, maturities, credit risk and underlying collateral. Long-term debt is primarily classified as Level 2 within the fair value hierarchy. (in millions) March 31, 2016 December 31, 2015 Total debt at par value $ 8,243 $ 8,098 Unamortized discount and debt issue cost, net (133 ) (152 ) Net carrying amount $ 8,110 $ 7,946 Fair value $ 8,500 $ 8,400 Aircraft Financings During the three months ended March 31, 2016 , we entered into financing arrangements to borrow $450 million , which are secured by 26 aircraft. These loans bear interest at a variable rate equal to LIBOR plus a specified margin and mature between 2019 and 2021. Covenants We were in compliance with the covenants in our financing agreements at March 31, 2016 . |
Employee Benefit Plans
Employee Benefit Plans | 3 Months Ended |
Mar. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Employee Benefit Plans | EMPLOYEE BENEFIT PLANS The following table shows the components of net periodic cost: Pension Benefits Other Postretirement and Postemployment Benefits (in millions) 2016 2015 2016 2015 Three Months Ended March 31, Service cost $ — $ — $ 17 $ 16 Interest cost 229 221 37 35 Expected return on plan assets (226 ) (220 ) (18 ) (20 ) Amortization of prior service credit — — (7 ) (7 ) Recognized net actuarial loss 59 58 6 6 Net periodic cost $ 62 $ 59 $ 35 $ 30 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Aircraft Purchase and Lease Commitments Our future aircraft purchase commitments totaled approximately $13.1 billion at March 31, 2016 : (in millions) Total Nine months ending December 31, 2016 $ 1,660 2017 2,500 2018 2,510 2019 1,500 2020 1,900 Thereafter 3,010 Total $ 13,080 Our future aircraft purchase commitments included the following aircraft at March 31, 2016 : Aircraft Type Purchase Commitments B-737-900ER 64 B-787-8 18 A321-200 44 A330-300 5 A330-900neo 25 A350-900 25 E190-100 19 Total 200 We have obtained, but are under no obligation to use, long-term financing commitments for a substantial portion of the purchase price of these aircraft, except for the 18 B-787-8 and 19 E190-100 aircraft. Our purchase commitment for the 18 B-787-8 aircraft provides for certain aircraft substitution rights, including for our current orders of B-737-900ER aircraft. Legal Contingencies We are involved in various legal proceedings related to employment practices, environmental issues, antitrust matters and other matters concerning our business. We record liabilities for losses from legal proceedings when we determine that it is probable that the outcome in a legal proceeding will be unfavorable and the amount of loss can be reasonably estimated. Although the outcome of the legal proceedings in which we are involved cannot be predicted with certainty, management believes that the resolution of these matters will not have a material effect on our Condensed Consolidated Financial Statements. Shuttle America Shuttle America and its parent, Republic Airways Holdings (collectively, Republic Airways), filed for bankruptcy in February 2016. In connection with agreements to settle litigation currently pending between Republic Airways and Delta, wind-down 50 -seat aircraft operations, return to full capacity of contracted operations for Embraer 170/175 aircraft and lease certain takeoff and landing slots at New York-LaGuardia, we have agreed to enter into a debtor-in-possession credit agreement that will provide up to $75 million in liquidity to Republic Airways, all subject to the approval of the bankruptcy court. We do not believe that Republic Airways' bankruptcy filing will have a material effect on our operations or financial statements. Other Contingencies General Indemnifications We are the lessee under many commercial real estate leases. It is common in these transactions for us, as the lessee, to agree to indemnify the lessor and the lessor's related parties for tort, environmental and other liabilities that arise out of or relate to our use or occupancy of the leased premises. This type of indemnity would typically make us responsible to indemnified parties for liabilities arising out of the conduct of, among others, contractors, licensees and invitees at, or in connection with, the use or occupancy of the leased premises. This indemnity often extends to related liabilities arising from the negligence of the indemnified parties, but usually excludes any liabilities caused by either their sole or gross negligence or their willful misconduct. Our aircraft and other equipment lease and financing agreements typically contain provisions requiring us, as the lessee or obligor, to indemnify the other parties to those agreements, including certain of those parties' related persons, against virtually any liabilities that might arise from the use or operation of the aircraft or other equipment. We believe that our insurance would cover most of our exposure to liabilities and related indemnities associated with the commercial real estate leases and aircraft and other equipment lease and financing agreements described above. While our insurance does not typically cover environmental liabilities, we have certain insurance policies in place as required by applicable environmental laws. Certain of our aircraft and other financing transactions include provisions that require us to make payments to preserve an expected economic return to the lenders if that economic return is diminished due to certain changes in laws or regulations. In certain of these financing transactions, we also bear the risk of certain changes in tax laws that would subject payments to non-U.S. lenders to withholding taxes. We cannot reasonably estimate our potential future payments under the indemnities and related provisions described above because we cannot predict (1) when and under what circumstances these provisions may be triggered and (2) the amount that would be payable if the provisions were triggered because the amounts would be based on facts and circumstances existing at such time. Employees Under Collective Bargaining Agreements At March 31, 2016 , we had approximately 84,000 full-time equivalent employees. Approximately 18% of these employees were represented by unions. Other We have certain contracts for goods and services that require us to pay a penalty, acquire inventory specific to us or purchase contract-specific equipment, as defined by each respective contract, if we terminate the contract without cause prior to its expiration date. Because these obligations are contingent on our termination of the contract without cause prior to its expiration date, no obligation would exist unless such a termination occurs. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | ACCUMULATED OTHER COMPREHENSIVE LOSS The following tables show the components of accumulated other comprehensive loss: (in millions) Pension and Other Benefits Liabilities (2) Derivative Contracts Investments Total Balance at January 1, 2016 (net of tax effect of $1,222) $ (7,354 ) $ 140 $ (61 ) $ (7,275 ) Changes in value (net of tax effect of $20) — (36 ) 11 (25 ) Reclassifications into earnings (net of tax effect of $12) (1) 36 (15 ) — 21 Balance at March 31, 2016 (net of tax effect of $1,230) $ (7,318 ) $ 89 $ (50 ) $ (7,279 ) (in millions) Pension and Other Benefits Liabilities (2) Derivative Contracts Investments Total Balance at January 1, 2015 (net of tax effect of $1,279) $ (7,517 ) $ 222 $ (16 ) $ (7,311 ) Changes in value (net of tax effect of $13) — 22 (12 ) 10 Reclassifications into earnings (net of tax effect of $5) (1) 39 (32 ) — 7 Balance at March 31, 2015 (net of tax effect of $1,261) $ (7,478 ) $ 212 $ (28 ) $ (7,294 ) (1) Amounts reclassified from AOCI for pension and other benefits liabilities are recorded in salaries and related costs in the Condensed Consolidated Statements of Operations and Comprehensive Income. Amounts reclassified from AOCI for derivative contracts designated as foreign currency cash flow hedges are recorded in passenger revenue in the Condensed Consolidated Statements of Operations and Comprehensive Income. (2) Includes $ 1.9 billion of deferred income tax expense primarily related to pension obligations that will not be recognized in net income until the pension obligations are fully extinguished. |
Segments
Segments | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Segments | SEGMENTS Refinery Operations Our refinery segment operates for the benefit of the airline segment by providing jet fuel to the airline segment from its own production and through jet fuel obtained through agreements with third parties. The refinery's production consists of jet fuel, as well as gasoline, diesel and other refined products ("non-jet fuel products"). We use several counterparties to exchange the non-jet fuel products produced by the refinery for jet fuel consumed in our airline operations. The gross fair value of the products exchanged under these agreements during the three months ended March 31, 2016 and 2015 was $526 million and $782 million , respectively. Segment Reporting Segment results are prepared based on our internal accounting methods described below, with reconciliations to consolidated amounts in accordance with GAAP. Our segments are not designed to measure operating income or loss directly related to the products and services included in each segment on a stand-alone basis. (in millions) Airline Refinery Intersegment Sales/Other Consolidated Three Months Ended March 31, 2016 Operating revenue: $ 9,172 $ 765 $ 9,251 Sales to airline segment $ (144 ) (1) Exchanged products (526 ) (2) Sales of refined products to third parties (16 ) (3) Operating income (4) 1,568 (28 ) — 1,540 Interest expense, net 107 — — 107 Depreciation and amortization 477 9 — 486 Total assets, end of period 52,093 1,249 — 53,342 Capital expenditures 858 13 — 871 Three Months Ended March 31, 2015 Operating revenue: $ 9,314 $ 1,140 $ 9,388 Sales to airline segment $ (233 ) (1) Exchanged products (782 ) (2) Sales of refined products to third parties (51 ) (3) Operating income (4) 1,312 86 — 1,398 Interest expense, net 131 — — 131 Depreciation and amortization 463 7 — 470 Total assets, end of period 52,587 1,056 — 53,643 Capital expenditures 579 7 — 586 (1) Represents transfers, valued on a market price basis, from the refinery to the airline segment for use in airline operations. We determine market price by reference to the market index for the primary delivery location, which is New York Harbor, for jet fuel from the refinery. (2) Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis. (3) Represents sales of refined products to third parties. These sales were at or near cost; accordingly, the margin on these sales is de minimis. (4) Includes the impact of pricing arrangements between the airline and refinery segments with respect to the refinery's inventory price risk. |
Restructuring
Restructuring | 3 Months Ended |
Mar. 31, 2016 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | RESTRUCTURING The following table shows the balances and activity for restructuring charges: (in millions) Severance and Related Costs Lease Restructuring Liability as of January 1, 2016 $ 52 $ 415 Additional costs and expenses 1 — Payments (31 ) (22 ) Liability as of March 31, 2016 $ 22 $ 393 Lease restructuring charges include remaining lease payments for permanently grounded aircraft related to the domestic and Pacific fleet restructurings. Certain 50 -seat regional aircraft and older B-757-200 aircraft were retired as a part of our domestic fleet restructuring over the past several years. Our domestic fleet restructuring replaced these aircraft with more efficient and customer preferred CRJ-900, B-717-200 and B-737-900 aircraft. We are restructuring our Pacific fleet by removing less efficient B-747-400 aircraft and replacing them with smaller-gauge, widebody aircraft to better match capacity with demand. These liabilities also include lease restructuring charges related to B-747-400 aircraft under operating leases that were retired during 2014. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | EARNINGS PER SHARE We calculate basic earnings per share by dividing net income by the weighted average number of common shares outstanding, excluding restricted shares. We calculate diluted earnings per share by dividing net income by the weighted average number of common shares outstanding plus the dilutive effect of outstanding share-based awards, including stock options and restricted stock awards. Antidilutive common stock equivalents excluded from the diluted earnings per share calculation are not material. The following table shows the computation of basic and diluted earnings per share: Three Months Ended March 31, (in millions, except per share data) 2016 2015 Net income $ 946 $ 746 Basic weighted average shares outstanding 774 818 Dilutive effect of share-based awards 6 8 Diluted weighted average shares outstanding 780 826 Basic earnings per share $ 1.22 $ 0.91 Diluted earnings per share $ 1.21 $ 0.90 |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Delta Air Lines, Inc. and our wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Consistent with these requirements, this Form 10-Q does not include all the information required by GAAP for complete financial statements. As a result, this Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying Notes in our Form 10-K for the year ended December 31, 2015 . Management believes the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, including normal recurring items and restructuring and other items, considered necessary for a fair statement of results for the interim periods presented. Due to seasonal variations in the demand for air travel, the volatility of aircraft fuel prices and other factors, operating results for the three months ended March 31, 2016 are not necessarily indicative of operating results for the entire year. |
Recent accounting standards | Recent Accounting Standards Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." Under this ASU and subsequently issued amendments, revenue is recognized at the time a good or service is transferred to a customer for the amount of consideration received. Entities may use a full retrospective approach or report the cumulative effect as of the date of adoption. The standard is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption of the standard is permitted, but not before December 15, 2016. We are currently evaluating how the adoption of the revenue recognition standard will impact our Consolidated Financial Statements. Leases In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)." This standard will require all leases with durations greater than twelve months to be recognized on the balance sheet and is effective for interim and annual reporting periods beginning after December 15, 2018, although early adoption is permitted. We believe adoption of this standard will have a significant impact on our Consolidated Balance Sheets. Although we have not completed our assessment, we do not expect the adoption to change the recognition, measurement or presentation of lease expenses within the Consolidated Statements of Operations and Cash Flows. Information about our undiscounted future lease payments and the timing of those payments is in Note 7, "Lease Obligations," in our Form 10-K for the year ended December 31, 2015. Equity Method Investments In March 2016, the FASB issued ASU No. 2016-07, "Investments—Equity Method and Joint Ventures (Topic 323)." This standard eliminates the requirement that when an existing cost method investment qualifies for use of the equity method, an investor must restate its historical financial statements, as if the equity method had been used during all previous periods. Under the new guidance, at the point an investment qualifies for the equity method, any unrealized gain or loss in accumulated other comprehensive income/(loss) ("AOCI") will be recognized through earnings. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. We early adopted this standard during the three months ended March 31, 2016. Although none of our available-for-sale or cost investments qualified for use of the equity method during the quarter, we expect the tender offer for additional capital stock of Grupo Aeroméxico to be completed during 2016, at which point our investment will qualify for the equity method of accounting. As of March 31, 2016, the unrealized gain recorded in AOCI related to our investment in Grupo Aeroméxico was $21 million . Share-Based Compensation In March 2016, the FASB issued ASU No. 2016-09, "Compensation—Stock Compensation (Topic 718)." This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. We are currently assessing how the adoption of this standard will impact our Consolidated Financial Statements. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Assets (liabilities) measured at fair value on a recurring basis | Assets (Liabilities) Measured at Fair Value on a Recurring Basis (in millions) March 31, Level 1 Level 2 Cash equivalents $ 1,137 $ 1,137 $ — Short-term investments U.S. government and agency securities 160 127 33 Asset- and mortgage-backed securities 238 — 238 Corporate obligations 755 — 755 Other fixed income securities 53 — 53 Restricted cash equivalents and investments 49 49 — Long-term investments 167 141 26 Hedge derivatives, net Fuel hedge contracts (664 ) (101 ) (563 ) Interest rate contract 7 — 7 Foreign currency exchange contracts (33 ) — (33 ) (in millions) December 31, Level 1 Level 2 Cash equivalents $ 1,543 $ 1,543 $ — Short-term investments U.S. government and agency securities 151 74 77 Asset- and mortgage-backed securities 380 — 380 Corporate obligations 896 — 896 Other fixed income securities 38 — 38 Restricted cash equivalents and investments 49 49 — Long-term investments 155 130 25 Hedge derivatives, net Fuel hedge contracts (672 ) 65 (737 ) Interest rate contract (3 ) — (3 ) Foreign currency exchange contracts 94 — 94 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Short-term Investments [Abstract] | |
Maturities for short-term investments | The estimated fair values of short-term investments, which approximate cost at March 31, 2016 , are shown below by contractual maturity. Actual maturities may differ from contractual maturities because issuers of the securities may have the right to retire our investments without prepayment penalties. (in millions) Available-For-Sale Due in one year or less $ 221 Due after one year through three years 829 Due after three years through five years 102 Due after five years 54 Total $ 1,206 |
Derivatives (Tables)
Derivatives (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Hedge Position | Hedge Position as of March 31, 2016 (in millions) Volume Final Maturity Date Hedge Derivatives Asset Other Noncurrent Assets Hedge Derivatives Liability Other Noncurrent Liabilities Hedge Derivatives, net Designated as hedges Interest rate contract (fair value hedge) 367 U.S. dollars August 2022 $ 3 $ 4 $ — $ — $ 7 Foreign currency exchange contracts 70,789 Japanese yen February 2019 5 8 (24 ) (22 ) (33 ) 555 Canadian dollars Not designated as hedges Fuel hedge contracts 244 (1) gallons - crude oil, diesel and jet fuel December 2017 2,171 16 (2,606 ) (245 ) (664 ) Total derivative contracts $ 2,179 $ 28 $ (2,630 ) $ (267 ) $ (690 ) (1) As discussed above, we have entered into hedges designed to offset and effectively terminate our existing hedge positions for 2016 and 2017. This volume represents short-term hedge protection designed to mitigate the risk of fuel price and refining margin declines. Hedge Position as of December 31, 2015 (in millions) Volume Final Maturity Date Hedge Derivatives Asset Other Noncurrent Assets Hedge Derivatives Liability Other Noncurrent Liabilities Hedge Derivatives, net Designated as hedges Interest rate contract (fair value hedge) 384 U.S. dollars August 2022 $ 4 $ — $ — $ (7 ) $ (3 ) Foreign currency exchange contracts 46,920 Japanese yen July 2018 76 20 (1 ) (1 ) 94 395 Canadian dollars Not designated as hedges Fuel hedge contracts 887 gallons - crude oil, diesel and jet fuel November 2017 1,907 4 (2,580 ) (3 ) (672 ) Total derivative contracts $ 1,987 $ 24 $ (2,581 ) $ (11 ) $ (581 ) Offsetting Assets and Liabilities We have master netting arrangements with our counterparties giving us the right of setoff. We have elected not to offset the fair value positions recorded on our Consolidated Balance Sheets. The following table shows the net fair value positions had we elected to offset. (in millions) Hedge Derivatives Asset Other Noncurrent Assets Hedge Derivatives Liability Other Noncurrent Liabilities Hedge Derivatives, net March 31, 2016 Net derivative contracts $ 6 $ 6 $ (457 ) $ (245 ) $ (690 ) December 31, 2015 Net derivative contracts $ 143 $ 21 $ (737 ) $ (8 ) $ (581 ) |
Schedule of Designated Hedge Gains (Losses) | Designated Hedge Gains (Losses) Gains (losses) related to our designated hedge contracts are as follows: Effective Portion Reclassified from AOCI to Earnings Effective Portion Recognized in Other Comprehensive Income (in millions) 2016 2015 2016 2015 Three Months Ended March 31, Foreign currency exchange contracts $ 24 $ 51 $ (82 ) $ (16 ) |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of estimated fair value of debt instruments | The fair value of debt, shown below, is principally based on reported market values, recently completed market transactions and estimates based on interest rates, maturities, credit risk and underlying collateral. Long-term debt is primarily classified as Level 2 within the fair value hierarchy. (in millions) March 31, 2016 December 31, 2015 Total debt at par value $ 8,243 $ 8,098 Unamortized discount and debt issue cost, net (133 ) (152 ) Net carrying amount $ 8,110 $ 7,946 Fair value $ 8,500 $ 8,400 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Schedule of net benefit costs | The following table shows the components of net periodic cost: Pension Benefits Other Postretirement and Postemployment Benefits (in millions) 2016 2015 2016 2015 Three Months Ended March 31, Service cost $ — $ — $ 17 $ 16 Interest cost 229 221 37 35 Expected return on plan assets (226 ) (220 ) (18 ) (20 ) Amortization of prior service credit — — (7 ) (7 ) Recognized net actuarial loss 59 58 6 6 Net periodic cost $ 62 $ 59 $ 35 $ 30 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future aircraft purchase commitments | Our future aircraft purchase commitments totaled approximately $13.1 billion at March 31, 2016 : (in millions) Total Nine months ending December 31, 2016 $ 1,660 2017 2,500 2018 2,510 2019 1,500 2020 1,900 Thereafter 3,010 Total $ 13,080 |
Aircraft Purchase and Lease Commitments | Our future aircraft purchase commitments included the following aircraft at March 31, 2016 : Aircraft Type Purchase Commitments B-737-900ER 64 B-787-8 18 A321-200 44 A330-300 5 A330-900neo 25 A350-900 25 E190-100 19 Total 200 |
Accumulated Other Comprehensi24
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of accumulated other comprehensive income (loss) | The following tables show the components of accumulated other comprehensive loss: (in millions) Pension and Other Benefits Liabilities (2) Derivative Contracts Investments Total Balance at January 1, 2016 (net of tax effect of $1,222) $ (7,354 ) $ 140 $ (61 ) $ (7,275 ) Changes in value (net of tax effect of $20) — (36 ) 11 (25 ) Reclassifications into earnings (net of tax effect of $12) (1) 36 (15 ) — 21 Balance at March 31, 2016 (net of tax effect of $1,230) $ (7,318 ) $ 89 $ (50 ) $ (7,279 ) (in millions) Pension and Other Benefits Liabilities (2) Derivative Contracts Investments Total Balance at January 1, 2015 (net of tax effect of $1,279) $ (7,517 ) $ 222 $ (16 ) $ (7,311 ) Changes in value (net of tax effect of $13) — 22 (12 ) 10 Reclassifications into earnings (net of tax effect of $5) (1) 39 (32 ) — 7 Balance at March 31, 2015 (net of tax effect of $1,261) $ (7,478 ) $ 212 $ (28 ) $ (7,294 ) (1) Amounts reclassified from AOCI for pension and other benefits liabilities are recorded in salaries and related costs in the Condensed Consolidated Statements of Operations and Comprehensive Income. Amounts reclassified from AOCI for derivative contracts designated as foreign currency cash flow hedges are recorded in passenger revenue in the Condensed Consolidated Statements of Operations and Comprehensive Income. (2) Includes $ 1.9 billion of deferred income tax expense primarily related to pension obligations that will not be recognized in net income until the pension obligations are fully extinguished. |
Segments (Tables)
Segments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information, by segment | Segment results are prepared based on our internal accounting methods described below, with reconciliations to consolidated amounts in accordance with GAAP. Our segments are not designed to measure operating income or loss directly related to the products and services included in each segment on a stand-alone basis. (in millions) Airline Refinery Intersegment Sales/Other Consolidated Three Months Ended March 31, 2016 Operating revenue: $ 9,172 $ 765 $ 9,251 Sales to airline segment $ (144 ) (1) Exchanged products (526 ) (2) Sales of refined products to third parties (16 ) (3) Operating income (4) 1,568 (28 ) — 1,540 Interest expense, net 107 — — 107 Depreciation and amortization 477 9 — 486 Total assets, end of period 52,093 1,249 — 53,342 Capital expenditures 858 13 — 871 Three Months Ended March 31, 2015 Operating revenue: $ 9,314 $ 1,140 $ 9,388 Sales to airline segment $ (233 ) (1) Exchanged products (782 ) (2) Sales of refined products to third parties (51 ) (3) Operating income (4) 1,312 86 — 1,398 Interest expense, net 131 — — 131 Depreciation and amortization 463 7 — 470 Total assets, end of period 52,587 1,056 — 53,643 Capital expenditures 579 7 — 586 (1) Represents transfers, valued on a market price basis, from the refinery to the airline segment for use in airline operations. We determine market price by reference to the market index for the primary delivery location, which is New York Harbor, for jet fuel from the refinery. (2) Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis. (3) Represents sales of refined products to third parties. These sales were at or near cost; accordingly, the margin on these sales is de minimis. (4) Includes the impact of pricing arrangements between the airline and refinery segments with respect to the refinery's inventory price risk. |
Restructuring (Tables)
Restructuring (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Restructuring and Related Activities [Abstract] | |
Schedule of restructuring reserve by type of cost | The following table shows the balances and activity for restructuring charges: (in millions) Severance and Related Costs Lease Restructuring Liability as of January 1, 2016 $ 52 $ 415 Additional costs and expenses 1 — Payments (31 ) (22 ) Liability as of March 31, 2016 $ 22 $ 393 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share, basic and diluted | The following table shows the computation of basic and diluted earnings per share: Three Months Ended March 31, (in millions, except per share data) 2016 2015 Net income $ 946 $ 746 Basic weighted average shares outstanding 774 818 Dilutive effect of share-based awards 6 8 Diluted weighted average shares outstanding 780 826 Basic earnings per share $ 1.22 $ 0.91 Diluted earnings per share $ 1.21 $ 0.90 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Grupo Aeromexico | |
Schedule of Equity Method Investments | |
Unrealized gain | $ 21 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair Value Measurements on a Recurring Basis (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Assets, Fair Value Disclosure | ||
Cash equivalents | $ 1,137 | $ 1,543 |
Restricted cash equivalents and investments | 49 | 49 |
Fuel hedge contracts | (664) | (672) |
Interest rate contract | 7 | (3) |
Foreign currency exchange contracts | (33) | 94 |
Short-Term Investments | U.S. government and agency securities | ||
Assets, Fair Value Disclosure | ||
Investments | 160 | 151 |
Short-Term Investments | Asset- and mortgage-backed securities | ||
Assets, Fair Value Disclosure | ||
Investments | 238 | 380 |
Short-Term Investments | Corporate obligations | ||
Assets, Fair Value Disclosure | ||
Investments | 755 | 896 |
Short-Term Investments | Other fixed income securities | ||
Assets, Fair Value Disclosure | ||
Investments | 53 | 38 |
Long-Term Investments | ||
Assets, Fair Value Disclosure | ||
Investments | 167 | 155 |
Level 1 | ||
Assets, Fair Value Disclosure | ||
Cash equivalents | 1,137 | 1,543 |
Restricted cash equivalents and investments | 49 | 49 |
Fuel hedge contracts | (101) | 65 |
Level 1 | Short-Term Investments | U.S. government and agency securities | ||
Assets, Fair Value Disclosure | ||
Investments | 127 | 74 |
Level 1 | Long-Term Investments | ||
Assets, Fair Value Disclosure | ||
Investments | 141 | 130 |
Level 2 | ||
Assets, Fair Value Disclosure | ||
Restricted cash equivalents and investments | 0 | |
Fuel hedge contracts | (563) | (737) |
Interest rate contract | 7 | (3) |
Foreign currency exchange contracts | (33) | 94 |
Level 2 | Short-Term Investments | U.S. government and agency securities | ||
Assets, Fair Value Disclosure | ||
Investments | 33 | 77 |
Level 2 | Short-Term Investments | Asset- and mortgage-backed securities | ||
Assets, Fair Value Disclosure | ||
Investments | 238 | 380 |
Level 2 | Short-Term Investments | Corporate obligations | ||
Assets, Fair Value Disclosure | ||
Investments | 755 | 896 |
Level 2 | Short-Term Investments | Other fixed income securities | ||
Assets, Fair Value Disclosure | ||
Investments | 53 | 38 |
Level 2 | Long-Term Investments | ||
Assets, Fair Value Disclosure | ||
Investments | $ 26 | $ 25 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2016 | |
Minimum | |
Fair Value Assumptions and Methodology for Assets and Liabilities | |
Expected volatility rate (percent) | 23.00% |
Maximum | |
Fair Value Assumptions and Methodology for Assets and Liabilities | |
Expected volatility rate (percent) | 58.00% |
Investments - Schedule of matur
Investments - Schedule of maturities for short-term investments (Details) $ in Millions | Mar. 31, 2016USD ($) |
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity | |
Due in one year or less | $ 221 |
Due after one year through three years | 829 |
Due after three years through five years | 102 |
Due after five years | 54 |
Total | $ 1,206 |
Investments (Narrative) (Detail
Investments (Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Grupo Aeromexico | ||
Schedule of Available-for-sale Securities | ||
Ownership percentage | 4.10% | |
Potential change In ownership percentage due to the settlement of derivatives | 8.10% | |
Potential change ownership percentage | 49.00% | |
Maximum settlement value for additional shares | $ 750,000,000 | |
GOL | ||
Schedule of Available-for-sale Securities | ||
Ownership percentage | 9.50% | |
China Eastern | ||
Schedule of Available-for-sale Securities | ||
Ownership percentage in cost method investment | 3.50% | |
Restriction of sale or transfer of shares period | 3 years | |
Preferred stock | GOL | ||
Schedule of Available-for-sale Securities | ||
Fair value of investment | 25,000,000 | |
Loss on Investments | $ 81,000,000 | |
Term loan facility | GOL | ||
Schedule of Available-for-sale Securities | ||
Guarantee borrowings on third party debt | $ 300,000,000 | |
Guarantee borrowings on third party debt, term | 5 years |
Derivatives (Narrative) (Detail
Derivatives (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | |
Derivative | |||||
Expected payments for derivative instruments | $ 725 | ||||
Cash receipts associated withe the hedge deferral | 11 | ||||
Gains on cash flow hedge contracts in AOCI to be reclassified into earnings within 12 months | 26 | ||||
Margin posted due to fair value position of hedge contracts | 454 | $ 119 | |||
Fuel Derivative | |||||
Derivative | |||||
Expected proceeds from derivative instruments | $ 300 | ||||
Expected payments for derivative instruments | 300 | ||||
Scenario, Forecast | |||||
Derivative | |||||
Expected proceeds from derivative instruments | $ 300 | ||||
Expected payments for derivative instruments | $ 300 | ||||
Fuel hedge contracts | |||||
Derivative | |||||
Derivative loss | $ 274 | $ 411 |
Derivatives - Hedge Position (D
Derivatives - Hedge Position (Details) ¥ in Millions, gal in Millions, CAD in Millions, $ in Millions | Mar. 31, 2016JPY (¥)gal | Mar. 31, 2016CADgal | Mar. 31, 2016USD ($)gal | Dec. 31, 2015JPY (¥)gal | Dec. 31, 2015CADgal | Dec. 31, 2015USD ($)gal |
Derivatives, Fair Value | ||||||
Foreign currency exchange contracts, hedge derivatives, net | $ (33) | $ 94 | ||||
Fuel hedge contracts, derivatives, net | (664) | (672) | ||||
Net derivative contracts, hedge derivatives, net | (690) | (581) | ||||
Hedge Derivatives Asset | ||||||
Derivatives, Fair Value | ||||||
Total derivative contracts, assets | 2,179 | 1,987 | ||||
Other Noncurrent Assets | ||||||
Derivatives, Fair Value | ||||||
Total derivative contracts, assets | 28 | 24 | ||||
Hedge Derivatives Liability | ||||||
Derivatives, Fair Value | ||||||
Total derivative contracts, liabilities | (2,630) | (2,581) | ||||
Other Noncurrent Liabilities | ||||||
Derivatives, Fair Value | ||||||
Total derivative contracts, liabilities | (267) | (11) | ||||
Designated as hedging instrument | ||||||
Derivatives, Fair Value | ||||||
Interest rate contract (fair value hedge), hedge derivatives, net | 7 | (3) | ||||
Foreign currency exchange contracts, hedge derivatives, net | (33) | 94 | ||||
Not designated as hedging instrument | ||||||
Derivatives, Fair Value | ||||||
Fuel hedge contracts, derivatives, net | (664) | (672) | ||||
Interest rate contract (fair value hedge) | Designated as hedging instrument | Hedge Derivatives Asset | ||||||
Derivatives, Fair Value | ||||||
Interest rate contract (fair value hedge), assets | 3 | 4 | ||||
Interest rate contract (fair value hedge) | Designated as hedging instrument | Other Noncurrent Assets | ||||||
Derivatives, Fair Value | ||||||
Interest rate contract (fair value hedge), assets | 4 | 0 | ||||
Interest rate contract (fair value hedge) | Designated as hedging instrument | Hedge Derivatives Liability | ||||||
Derivatives, Fair Value | ||||||
Interest rate contract (fair value hedge), liabilities | 0 | 0 | ||||
Interest rate contract (fair value hedge) | Designated as hedging instrument | Other Noncurrent Liabilities | ||||||
Derivatives, Fair Value | ||||||
Interest rate contract (fair value hedge), liabilities | 0 | (7) | ||||
Foreign currency exchange contracts | Designated as hedging instrument | Hedge Derivatives Asset | ||||||
Derivatives, Fair Value | ||||||
Foreign currency exchange contracts, assets | 5 | 76 | ||||
Foreign currency exchange contracts | Designated as hedging instrument | Other Noncurrent Assets | ||||||
Derivatives, Fair Value | ||||||
Foreign currency exchange contracts, assets | 8 | 20 | ||||
Foreign currency exchange contracts | Designated as hedging instrument | Hedge Derivatives Liability | ||||||
Derivatives, Fair Value | ||||||
Foreign currency exchange contracts, liabilities | (24) | (1) | ||||
Foreign currency exchange contracts | Designated as hedging instrument | Other Noncurrent Liabilities | ||||||
Derivatives, Fair Value | ||||||
Foreign currency exchange contracts, liabilities | $ (22) | $ (1) | ||||
Fuel hedge contracts | Not designated as hedging instrument | ||||||
Derivatives, Fair Value | ||||||
Derivative, nonmonetary notional amount | gal | 244 | 244 | 244 | 887 | 887 | 887 |
Fuel hedge contracts | Not designated as hedging instrument | Hedge Derivatives Asset | ||||||
Derivatives, Fair Value | ||||||
Fuel hedge contracts, assets | $ 2,171 | $ 1,907 | ||||
Fuel hedge contracts | Not designated as hedging instrument | Other Noncurrent Assets | ||||||
Derivatives, Fair Value | ||||||
Fuel hedge contracts, assets | 16 | 4 | ||||
Fuel hedge contracts | Not designated as hedging instrument | Hedge Derivatives Liability | ||||||
Derivatives, Fair Value | ||||||
Fuel hedge contracts, liabilities | (2,606) | (2,580) | ||||
Fuel hedge contracts | Not designated as hedging instrument | Other Noncurrent Liabilities | ||||||
Derivatives, Fair Value | ||||||
Fuel hedge contracts, liabilities | (245) | (3) | ||||
Fair value hedging | Interest rate contract (fair value hedge) | Designated as hedging instrument | ||||||
Derivatives, Fair Value | ||||||
Derivative, notional amount | $ 367 | $ 384 | ||||
Cash flow hedging | Foreign currency exchange contracts | Designated as hedging instrument | ||||||
Derivatives, Fair Value | ||||||
Derivative, notional amount | ¥ 70,789 | CAD 555 | ¥ 46,920 | CAD 395 |
Derivatives Derivatives - Offse
Derivatives Derivatives - Offsetting Assets and Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Derivative | ||
Net derivative contracts, hedge derivatives, net | $ (690) | $ (581) |
Hedge Derivatives Asset | ||
Derivative | ||
Net derivative contracts, assets | 6 | 143 |
Other Noncurrent Assets | ||
Derivative | ||
Net derivative contracts, assets | 6 | 21 |
Hedge Derivatives Liability | ||
Derivative | ||
Net derivative contracts, liabilities | (457) | (737) |
Other Noncurrent Liabilities | ||
Derivative | ||
Net derivative contracts, liabilities | $ (245) | $ (8) |
Derivatives - Designated Hedge
Derivatives - Designated Hedge Gain (Loss) (Details) - Foreign currency exchange contracts - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | ||
Effective Portion Reclassified from AOCI to Earnings | $ 24 | $ 51 |
Effective Portion Recognized in Other Comprehensive Income | $ (82) | $ (16) |
Long-Term Debt - Schedule of Fa
Long-Term Debt - Schedule of Fair Values (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Debt | ||
Total debt at par value | $ 8,243 | $ 8,098 |
Unamortized discount and debt issue cost, net | (133) | (152) |
Net carrying amount | 8,110 | 7,946 |
Fair value | $ 8,500 | $ 8,400 |
Long-Term Debt Long-Term Debt (
Long-Term Debt Long-Term Debt (Narratives (Details) | Mar. 31, 2016USD ($) |
Debt Disclosure [Abstract] | |
Financing arrangement | $ 450,000,000 |
Employee Benefit Plans - Schedu
Employee Benefit Plans - Schedule of Benefit Plan Components (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Pension Benefits | ||
Defined Benefit Plan Disclosure | ||
Service cost | $ 0 | $ 0 |
Interest cost | 229 | 221 |
Expected return on plan assets | (226) | (220) |
Amortization of prior service credit | 0 | 0 |
Recognized net actuarial loss | 59 | 58 |
Net periodic cost | 62 | 59 |
Other Postretirement and Postemployment Benefits | ||
Defined Benefit Plan Disclosure | ||
Service cost | 17 | 16 |
Interest cost | 37 | 35 |
Expected return on plan assets | (18) | (20) |
Amortization of prior service credit | (7) | (7) |
Recognized net actuarial loss | 6 | 6 |
Net periodic cost | $ 35 | $ 30 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Purchase Obligations (Details) - Future aircraft purchase commitments $ in Millions | Mar. 31, 2016USD ($) |
Unrecorded Unconditional Purchase Obligation, Fiscal Year Maturity | |
Nine months ending December 31, 2016 | $ 1,660 |
2,017 | 2,500 |
2,018 | 2,510 |
2,019 | 1,500 |
2,020 | 1,900 |
Thereafter | 3,010 |
Total | $ 13,080 |
Commitments and Contingencies41
Commitments and Contingencies - Aircraft Purchase and Lease Commitments (Details) - Future aircraft purchase commitments | Mar. 31, 2016aircraft |
Unrecorded Unconditional Purchase Obligation | |
Aircraft purchase commitments, minimum quantity required | 200 |
B-737-900ER | |
Unrecorded Unconditional Purchase Obligation | |
Aircraft purchase commitments, minimum quantity required | 64 |
B-787-8 | |
Unrecorded Unconditional Purchase Obligation | |
Aircraft purchase commitments, minimum quantity required | 18 |
A321-200 | |
Unrecorded Unconditional Purchase Obligation | |
Aircraft purchase commitments, minimum quantity required | 44 |
A330-300 | |
Unrecorded Unconditional Purchase Obligation | |
Aircraft purchase commitments, minimum quantity required | 5 |
A330-900neo | |
Unrecorded Unconditional Purchase Obligation | |
Aircraft purchase commitments, minimum quantity required | 25 |
A350-900 | |
Unrecorded Unconditional Purchase Obligation | |
Aircraft purchase commitments, minimum quantity required | 25 |
E190-100 | |
Unrecorded Unconditional Purchase Obligation | |
Aircraft purchase commitments, minimum quantity required | 19 |
Commitments and Contingencies42
Commitments and Contingencies - Devaluation and Other Contingencies (Details) employee in Thousands | Feb. 28, 2016USD ($)seat | Mar. 31, 2016employee |
Other Commitments | ||
Entity number of employees | employee | 84 | |
Percentage of employees represented by unions under collective bargaining agreements | 18.00% | |
Shuttle America | ||
Other Commitments | ||
Line of credit loan commitment | $ | $ 75,000,000 | |
Embraer 170/175 | ||
Other Commitments | ||
Number of seats in plane | seat | 50 |
Accumulated Other Comprehensi43
Accumulated Other Comprehensive Loss - Schedule of AOCI Components (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
AOCI Attributable to Parent, Net of Tax | ||
Accumulated other comprehensive loss, beginning balance | $ (7,275) | $ (7,311) |
Changes in value (net of tax effect) | (25) | 10 |
Reclassifications into earnings (net of tax effect) | 21 | 7 |
Accumulated other comprehensive loss, ending balance | (7,279) | (7,294) |
Accumulated other comprehensive income tax portion, period start | 1,222 | 1,279 |
Other comprehensive income tax affect | 20 | 13 |
Reclassification into earnings tax effect | 12 | 5 |
Accumulated other comprehensive income tax portion, period end | 1,230 | 1,261 |
Deferred income taxes related to pension obligation | 1,900 | 1,900 |
Pension and Other Benefits Liabilities | ||
AOCI Attributable to Parent, Net of Tax | ||
Accumulated other comprehensive loss, beginning balance | (7,354) | (7,517) |
Reclassifications into earnings (net of tax effect) | 36 | 39 |
Accumulated other comprehensive loss, ending balance | (7,318) | (7,478) |
Derivative Contracts | ||
AOCI Attributable to Parent, Net of Tax | ||
Accumulated other comprehensive loss, beginning balance | 140 | 222 |
Changes in value (net of tax effect) | (36) | 22 |
Reclassifications into earnings (net of tax effect) | (15) | (32) |
Accumulated other comprehensive loss, ending balance | 89 | 212 |
Investments | ||
AOCI Attributable to Parent, Net of Tax | ||
Accumulated other comprehensive loss, beginning balance | (61) | (16) |
Changes in value (net of tax effect) | 11 | (12) |
Accumulated other comprehensive loss, ending balance | $ (50) | $ (28) |
Segments (Narrative) (Details)
Segments (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Segment Reporting Information, Profit (Loss) | ||
Operating revenue | $ 9,251 | $ 9,388 |
Intersegment Sales/Other | Exchanged products | ||
Segment Reporting Information, Profit (Loss) | ||
Operating revenue | $ (526) | $ (782) |
Segments - Schedule of Segment
Segments - Schedule of Segment Reporting (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Segment Reporting Information, Profit (Loss) | |||
Operating revenue | $ 9,251 | $ 9,388 | |
Operating income | 1,540 | 1,398 | |
Interest expense, net | 107 | 131 | |
Depreciation and amortization | 486 | 470 | |
Assets | 53,342 | 53,643 | $ 53,134 |
Capital expenditures | 871 | 586 | |
Operating Segments | Airline | |||
Segment Reporting Information, Profit (Loss) | |||
Operating revenue | 9,172 | 9,314 | |
Operating income | 1,568 | 1,312 | |
Interest expense, net | 107 | 131 | |
Depreciation and amortization | 477 | 463 | |
Assets | 52,093 | 52,587 | |
Capital expenditures | 858 | 579 | |
Operating Segments | Refinery | |||
Segment Reporting Information, Profit (Loss) | |||
Operating revenue | 765 | 1,140 | |
Operating income | (28) | 86 | |
Interest expense, net | 0 | 0 | |
Depreciation and amortization | 9 | 7 | |
Assets | 1,249 | 1,056 | |
Capital expenditures | 13 | 7 | |
Intersegment Sales/Other | Sales to airline segment | |||
Segment Reporting Information, Profit (Loss) | |||
Operating revenue | (144) | (233) | |
Intersegment Sales/Other | Exchanged products | |||
Segment Reporting Information, Profit (Loss) | |||
Operating revenue | (526) | (782) | |
Intersegment Sales/Other | Sales of refined products to third parties | |||
Segment Reporting Information, Profit (Loss) | |||
Operating revenue | $ (16) | $ (51) |
Restructuring - Narrative (Deta
Restructuring - Narrative (Details) | 3 Months Ended |
Mar. 31, 2016seat | |
Regional carrier | |
Restructuring Cost and Reserve | |
Number of seats in plane | 50 |
Restructuring - Schedule of Res
Restructuring - Schedule of Restructuring Charges (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Severance and Related Costs | |
Restructuring Reserve | |
Liability as of January 1, 2016 | $ 52 |
Additional costs and expenses | 1 |
Payments | (31) |
March 31, 2016 | 22 |
Lease Restructuring | |
Restructuring Reserve | |
Liability as of January 1, 2016 | 415 |
Additional costs and expenses | 0 |
Payments | (22) |
March 31, 2016 | $ 393 |
Earnings Per Share - Schedule
Earnings Per Share - Schedule of Computation for Earnings Per Share Types (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Earnings Per Share [Abstract] | ||
Net income | $ 946 | $ 746 |
Basic weighted average shares outstanding, shares | 774 | 818 |
Dilutive effect of share-based awards, shares | 6 | 8 |
Diluted weighted average shares outstanding, shares | 780 | 826 |
Basic earnings per share (in USD per share) | $ 1.22 | $ 0.91 |
Diluted earnings per share (in USD per share) | $ 1.21 | $ 0.90 |