Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 30, 2017 | |
Entity Information [Line Items] | ||
Entity Registrant Name | SOUTHWEST AIRLINES CO | |
Entity Central Index Key | 92,380 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 593,387,660 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheet - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 1,460 | $ 1,680 |
Short-term investments | 1,580 | 1,625 |
Accounts and other receivables | 579 | 546 |
Inventories of parts and supplies, at cost | 438 | 337 |
Prepaid expenses and other current assets | 223 | 310 |
Total current assets | 4,280 | 4,498 |
Property and equipment, at cost: | ||
Flight equipment | 21,004 | 20,275 |
Ground property and equipment | 4,219 | 3,779 |
Deposits on flight equipment purchase contracts | 1,118 | 1,190 |
Assets constructed for others | 1,460 | 1,220 |
Property and equipment, at cost | 27,801 | 26,464 |
Less allowance for depreciation and amortization | 9,645 | 9,420 |
Property and equipment, net | 18,156 | 17,044 |
Goodwill | 970 | 970 |
Other assets | 843 | 774 |
Total assets | 24,249 | 23,286 |
Current liabilities: | ||
Accounts payable | 1,124 | 1,178 |
Accrued liabilities | 1,593 | 1,985 |
Air traffic liability | 3,932 | 3,115 |
Current maturities of long-term debt | 316 | 566 |
Total current liabilities | 6,965 | 6,844 |
Long-term debt less current maturities | 2,763 | 2,821 |
Deferred income taxes | 3,697 | 3,374 |
Construction obligation | 1,311 | 1,078 |
Other noncurrent liabilities | 713 | 728 |
Stockholders' equity: | ||
Common stock | 808 | 808 |
Capital in excess of par value | 1,436 | 1,410 |
Retained earnings | 12,806 | 11,418 |
Accumulated other comprehensive loss | (136) | (323) |
Treasury stock, at cost | (6,114) | (4,872) |
Total stockholders' equity | 8,800 | 8,441 |
Total liabilities and stockholders' equity | $ 24,249 | $ 23,286 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Comprehensive Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
OPERATING REVENUES: | ||||
Passenger | $ 4,745 | $ 4,669 | $ 14,403 | $ 13,971 |
Freight | 42 | 42 | 128 | 129 |
Other | 484 | 428 | 1,366 | 1,250 |
Total operating revenues | 5,271 | 5,139 | 15,897 | 15,350 |
OPERATING EXPENSES: | ||||
Salaries, wages, and benefits | 1,795 | 1,909 | 5,395 | 5,089 |
Fuel and oil | 1,003 | 941 | 2,915 | 2,696 |
Maintenance materials and repairs | 263 | 258 | 758 | 801 |
Aircraft rentals | 51 | 56 | 158 | 174 |
Landing fees and other rentals | 324 | 307 | 969 | 918 |
Depreciation and amortization | 302 | 315 | 939 | 903 |
Other operating expenses | 699 | 658 | 2,021 | 1,854 |
Total operating expenses | 4,437 | 4,444 | 13,155 | 12,435 |
OPERATING INCOME | 834 | 695 | 2,742 | 2,915 |
OTHER EXPENSES (INCOME): | ||||
Interest Expense | 28 | 31 | 84 | 93 |
Capitalized interest | (15) | (12) | (38) | (34) |
Interest income | (9) | (6) | (24) | (17) |
Other (gains) losses, net | 39 | 64 | 207 | 135 |
Total other expenses (income) | 43 | 77 | 229 | 177 |
INCOME BEFORE INCOME TAXES | 791 | 618 | 2,513 | 2,738 |
PROVISION FOR INCOME TAXES | 288 | 230 | 913 | 1,016 |
NET INCOME | $ 503 | $ 388 | $ 1,600 | $ 1,722 |
NET INCOME PER SHARE, BASIC | $ 0.84 | $ 0.63 | $ 2.65 | $ 2.73 |
NET INCOME PER SHARE, DILUTED | $ 0.84 | $ 0.62 | $ 2.64 | $ 2.70 |
COMPREHENSIVE INCOME | $ 630 | $ 517 | $ 1,787 | $ 2,274 |
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING | ||||
Basic | 597 | 618 | 605 | 630 |
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING | ||||
Diluted | 598 | 625 | 606 | 638 |
Cash dividends declared per common share | $ 0.125 | $ 0.100 | $ 0.350 | $ 0.275 |
Condensed Consolidated Stateme4
Condensed Consolidated Statement of Cash Flows - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net income | $ 503 | $ 388 | $ 1,600 | $ 1,722 |
Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||||
Depreciation and amortization | 302 | 315 | 939 | 903 |
Loss on asset impairment | 0 | 0 | 0 | 21 |
Aircraft grounding charge | 63 | 0 | 63 | 0 |
Unrealized/realized (gain) loss on fuel derivative instruments | (42) | (67) | (20) | (101) |
Deferred income taxes | 82 | 315 | 213 | 395 |
Changes in certain assets and liabilities: | ||||
Accounts and other receivables | 0 | (320) | (23) | (355) |
Other assets | (64) | (16) | (264) | (61) |
Accounts payable and accrued liabilities | 89 | 247 | (156) | 272 |
Air traffic liability | (80) | (77) | 817 | 686 |
Cash collateral received from derivative counterparties | 151 | 114 | 286 | 230 |
Other, net | (8) | (43) | (89) | (128) |
Net cash provided by operating activities | 996 | 856 | 3,366 | 3,584 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Capital expenditures | (638) | (464) | (1,603) | (1,364) |
Assets constructed for others | (17) | (33) | (113) | (70) |
Purchases of short-term investments | (531) | (641) | (1,653) | (1,670) |
Proceeds from sales of short-term and other investments | 566 | 549 | 1,696 | 1,671 |
Payments for (Proceeds from) Other Investing Activities | 0 | 5 | 0 | 0 |
Net cash used in investing activities | (620) | (584) | (1,673) | (1,433) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Proceeds from Employee stock plans | 7 | 6 | 22 | 23 |
Reimbursement for assets constructed for others | 17 | 33 | 113 | 68 |
Payments of long-term debt and capital lease obligations | (106) | (68) | (534) | (171) |
Payments of cash dividends | (75) | (62) | (274) | (222) |
Repayment of construction obligation | (2) | (2) | (7) | (6) |
Repurchase of common stock | (300) | (250) | (1,250) | (1,450) |
Other, net | 6 | (3) | 17 | (10) |
Net cash used in financing activities | (453) | (346) | (1,913) | (1,768) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (77) | (74) | (220) | 383 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 1,537 | 2,040 | 1,680 | 1,583 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 1,460 | 1,966 | 1,460 | 1,966 |
CASH PAYMENTS FOR: | ||||
Interest, net of amount capitalized | 16 | 27 | 61 | 77 |
Income taxes | 229 | 264 | 611 | 902 |
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS | ||||
Flight equipment acquired through the assumption of debt | 0 | 20 | 0 | 20 |
Flight equipment under capital leases | 77 | 0 | 180 | 251 |
Assets constructed for others | $ 39 | $ 50 | $ 127 | $ 165 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Southwest Airlines Co. (the "Company") operates Southwest Airlines, a major passenger airline that provides scheduled air transportation in the United States and near-international markets. The unaudited Condensed Consolidated Financial Statements include accounts of the Company and its wholly owned subsidiaries. The accompanying unaudited Condensed Consolidated Financial Statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles in the United States ("GAAP") for complete financial statements. The unaudited Condensed Consolidated Financial Statements for the interim periods ended September 30, 2017 and 2016 include all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods. This includes all normal and recurring adjustments and elimination of significant intercompany transactions. Financial results for the Company and airlines in general can be seasonal in nature. In many years, the Company's revenues, as well as its Operating income and Net income, have been better in its second and third fiscal quarters than in its first and fourth fiscal quarters. Air travel is also significantly impacted by general economic conditions, the amount of disposable income available to consumers, unemployment levels, corporate travel budgets, natural disasters, and other factors beyond the Company's control. These and other factors, such as the price of jet fuel in some periods, the nature of the Company's fuel hedging program, the periodic volatility of commodities used by the Company for hedging jet fuel, and the requirements related to hedge accounting, have created, and may continue to create, significant volatility in the Company's financial results. See Note 3 for further information on fuel and the Company's hedging program. Operating results for the three and nine months ended September 30, 2017 , are not necessarily indicative of the results that may be expected for future quarters or for the year ended December 31, 2017 . For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Southwest Airlines Co. Annual Report on Form 10-K for the year ended December 31, 2016 . |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS On August 28, 2017, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2017-12, Targeted Improvements to Accounting for Hedging Activities. The standard amends the hedge accounting model to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. The amendments also simplify the application of hedge accounting in certain situations. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted in any interim or annual period. The most significant impacts of this ASU on the Company's accounting will be the elimination of ineffectiveness for all cash flow hedges in a hedging relationship, as well as a change in classification of premium expense associated with option contracts. Currently, such premium expense for the Company's fuel hedges is reflected as a component of Other (gains) losses, net, in the Condensed Consolidated Statement of Income, but under the new ASU will be reflected as a component of the line item to which the hedge relates, which is Fuel and oil expense. The Company is currently considering early adoption of the ASU as of January 1, 2018. On March 10, 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The standard requires employers to present the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in nonoperating expenses. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company does not expect this to have a material impact on Operating income and expects this to have no impact on Net income. The Company will adopt this guidance as of January 1, 2018. On January 26, 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The standard simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test (as defined by the FASB), which requires a hypothetical purchase price allocation (implied fair value of goodwill) to measure impairment loss. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted. The Company does not expect this ASU to have a significant impact on its financial statement presentation or results. On February 25, 2016, the FASB issued ASU No. 2016-02, Leases. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The guidance requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases (with the exception of short-term leases) at the lease commencement date and recognize expenses on the income statement in a similar manner to the current guidance in Accounting Standards Codification 840, Leases. The lease liability will be measured at the present value of the unpaid lease payments and the right-of-use asset will be derived from the calculation of the lease liability. Lease payments will include fixed and in-substance fixed payments, variable payments based on an index or rate, reasonably certain purchase options, termination penalties, fees paid by the lessee to the owners of a special-purpose entity for restructuring the transaction, and probable amounts the lessee will owe under a residual value guarantee. Lease payments will not include variable lease payments other than those that depend on an index or rate, any guarantee by the lessee of the lessor’s debt, or any amount allocated to non-lease components. The Company has formed a project team to evaluate and implement the standard, and currently believes the most significant impact of this ASU on its accounting will be the balance sheet impact of its aircraft operating leases, which will significantly increase assets and liabilities. As of September 30, 2017 , the Company had 53 leased aircraft under operating leases and also had another 76 aircraft under operating leases that are being subleased to another airline. As of September 30, 2017 , the net present value of future rents for those aircraft was approximately $1.0 billion . This amount only includes contractual payments due to lessors, and does not consider certain items that the standard requires to be assessed in determining the final asset and liability to be reflected on the Company's balance sheet, such as lease renewal options and potential impairments, nor does it consider the sublease income that is due from third parties. The Company also has operating leases related to terminal operations space and other real estate leases. Although the real estate leases will also have a substantial impact to the balance sheet, the Company does not expect the leases related to terminal operations space to have a significant impact since variable lease payments, other than those based on an index or rate, are excluded from the measurement of the lease liability. The Company also does not expect the adoption of this ASU to impact any of its existing debt covenants. In addition, the standard eliminates the current build-to-suit lease accounting guidance and could result in derecognition of build-to-suit assets and liabilities that remained on the balance sheet after the end of the construction period. The underlying leases for these facilities will be subject to evaluation under the new standard. See Note 7 for further information on the Company’s build-to-suit projects. The Company anticipates utilizing the modified retrospective transition approach to adopt the standard, which requires application of the new guidance for all periods presented with an option to use certain practical expedients. The Company currently plans to adopt the standard as of January 1, 2018, pending successful implementation of a third-party lease accounting software and completion of remaining administrative tasks. The Company is continuing to evaluate the new guidance and plans to provide additional information in its 2017 10-K. On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. Following the FASB's finalization of a one year deferral of this standard, the ASU is now effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company has formed a project team to evaluate and work to implement the standard, and currently believes the most significant impact of this ASU on its accounting will be the elimination of the incremental cost method for frequent flyer accounting, which will require the Company to re-value its liabilities associated with Customer flight points with a relative fair value approach, resulting in a significant increase in the liabilities. The Company's liabilities associated with these flight points were $64 million at September 30, 2017 , and the Company currently estimates that applying a relative fair value approach would increase the liabilities by approximately 20 to 25 times that value, depending on various assumptions made at the time of measurement. The adoption of the new standard is also expected to result in different income statement classification for certain types of revenues which are currently classified as Other revenues, but under the new ASU would be included in Passenger revenues. Based on the Company's full year 2016 results, the amount to be reclassified would have been approximately $600 million . However, the estimated impact of this ASU would not have had a material impact on Operating revenues and would not have impacted any of its existing debt covenants. The Company currently anticipates utilizing the full retrospective method of adoption allowed by the standard, in order to provide for comparative results in all periods presented, and will adopt the standard as of January 1, 2018. The Company is continuing to evaluate the new guidance both internally and through its participation in an industry working group, and plans to continue to provide relevant and material information prior to adoption. The Company is in the process of completing its analysis of information necessary to recast prior period results, however it does not believe there are any remaining significant implementation topics associated with the adoption of this ASU that have not yet been addressed. |
FINANCIAL DERIVATIVE INSTRUMENT
FINANCIAL DERIVATIVE INSTRUMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
FINANCIAL DERIVATIVE INSTRUMENTS | (500)(c) (75) to (150) or >(550)(c) (125) to (150) or >(550)(d) (d) N/A If credit rating is investment grade, fair value of fuel derivative level at which: Cash is provided to CP (50) to (200) or >(600) (50) to (100) or >(500) (75) to (150) or >(550) (125) to (150) or >(550) >(100) >(65) Cash is received from CP >50(e) >150(e) >250(e) >75(e) >0(e) >30(e) Aircraft or cash can be pledged to CP as collateral (200) to (600)(f) (100) to (500)(c) (150) to (550)(c) (150) to (550)(c) N/A N/A If credit rating is non-investment grade, fair value of fuel derivative level at which: Cash is provided to CP (0) to (200) or >(600) (0) to (100) or >(500) (0) to (150) or >(550) (0) to (150) or >(550) (g) (g) Cash is received from CP (g) (g) (g) (g) (g) (g) Aircraft or cash can be pledged to CP as collateral (200) to (600) (100) to (500) (150) to (550) (150) to (550) N/A N/A (a) Individual counterparties with fair value of fuel derivatives < $2 million . (b) The Company has the option of providing letters of credit in addition to aircraft collateral if the appraised value of the aircraft does not meet the collateral requirements. (c) The Company has the option of providing cash, letters of credit, or pledging aircraft as collateral. (d) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (e) Thresholds may vary based on changes in credit ratings within investment grade. (f) The Company has the option of providing cash or pledging aircraft as collateral. (g) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts." id="sjs-B4">FINANCIAL DERIVATIVE INSTRUMENTS Fuel contracts Airline operators are inherently dependent upon energy to operate and, therefore, are impacted by changes in jet fuel prices. Furthermore, jet fuel and oil typically represents one of the largest operating expenses for airlines. The Company endeavors to acquire jet fuel at the lowest possible cost and to reduce volatility in operating expenses through its fuel hedging program. Although the Company may periodically enter into jet fuel derivatives for short-term timeframes, because jet fuel is not widely traded on an organized futures exchange, there are limited opportunities to hedge directly in jet fuel for time horizons longer than approximately 24 months into the future. However, the Company has found that financial derivative instruments in other commodities, such as West Texas Intermediate ("WTI") crude oil, Brent crude oil, and refined products, such as heating oil and unleaded gasoline, can be useful in decreasing its exposure to jet fuel price volatility. The Company does not purchase or hold any financial derivative instruments for trading or speculative purposes. The Company has used financial derivative instruments for both short-term and long-term timeframes, and primarily uses a mixture of purchased call options, collar structures (which include both a purchased call option and a sold put option), call spreads (which include a purchased call option and a sold call option), put spreads (which include a purchased put option and a sold put option), and fixed price swap agreements in its portfolio. Although the use of collar structures and swap agreements can reduce the overall cost of hedging, these instruments carry more risk than purchased call options in that the Company could end up in a liability position when the collar structure or swap agreement settles. With the use of purchased call options and call spreads, the Company cannot be in a liability position at settlement, but does not have coverage once market prices fall below the strike price of the purchased call option. For the purpose of evaluating its net cash spend for jet fuel and for forecasting its future estimated jet fuel expense, the Company evaluates its hedge volumes strictly from an "economic" standpoint and thus does not consider whether the hedges have qualified or will qualify for hedge accounting. The Company defines its "economic" hedge as the net volume of fuel derivative contracts held, including the impact of positions that have been offset through sold positions, regardless of whether those contracts qualify for hedge accounting. The level at which the Company is economically hedged for a particular period is also dependent on current market prices for that period, as well as the types of derivative instruments held and the strike prices of those instruments. For example, the Company may enter into "out-of-the-money" option contracts (including "catastrophic" protection), which may not generate intrinsic gains at settlement if market prices do not rise above the option strike price. Therefore, even though the Company may have an economic hedge in place for a particular period, that hedge may not produce any hedging gains at settlement and may even produce hedging losses depending on market prices, the types of instruments held, and the strike prices of those instruments. For the three and nine months ended September 30, 2017 , the Company had fuel derivative instruments in place for up to 61 percent and 62 percent , respectively, of its fuel consumption. As of September 30, 2017 , the Company also had fuel derivative instruments in place to provide coverage at varying price levels, but up to a maximum of approximately 64 percent of its remaining 2017 estimated fuel consumption, depending on where market prices settle. The following table provides information about the Company’s volume of fuel hedging on an economic basis considering current market prices: Maximum fuel hedged as of September 30, 2017 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) September 30, 2017 Remainder of 2017 320 WTI crude and Brent crude oil 2018 1,647 WTI crude and Brent crude oil 2019 1,377 WTI crude and Brent crude oil Beyond 2019 358 WTI crude oil (a) Due to the types of derivatives utilized by the Company and different price levels of those contracts, these volumes represent the maximum economic hedge in place and may vary significantly as market prices fluctuate. Upon proper qualification, the Company accounts for its fuel derivative instruments as cash flow hedges. Generally, utilizing hedge accounting, all periodic changes in fair value of the derivatives designated as hedges that are considered to be effective are recorded in Accumulated other comprehensive income (loss) ("AOCI") until the underlying jet fuel is consumed. See Note 4 . The Company’s results are subject to the possibility that periodic changes will not be effective, as defined, or that the derivatives will no longer qualify for hedge accounting. Ineffectiveness results when the change in the fair value of the derivative instrument exceeds the change in the value of the Company’s expected future cash outlay to purchase and consume jet fuel. To the extent that the periodic changes in the fair value of the derivatives are ineffective, the ineffective portion is recorded to Other (gains) losses, net, in the unaudited Condensed Consolidated Statement of Comprehensive Income in the period of the change. Likewise, if a hedge ceases to qualify for hedge accounting, any change in the fair value of derivative instruments since the last reporting period is recorded to Other (gains) losses, net, in the unaudited Condensed Consolidated Statement of Comprehensive Income in the period of the change; however, any amounts previously recorded to AOCI would remain there until such time as the original forecasted transaction occurs, at which time these amounts would be reclassified to Fuel and oil expense. When the Company has sold derivative positions in order to effectively "close" or offset a derivative already held as part of its fuel derivative instrument portfolio, any subsequent changes in fair value of those positions are marked to market through earnings. Likewise, any changes in fair value of those positions that were offset by entering into the sold positions and were de-designated as hedges are concurrently marked to market through earnings. However, any changes in value related to hedges that were deferred as part of AOCI while designated as a hedge would remain until the originally forecasted transaction occurs. In a situation where it becomes probable that a fuel hedged forecasted transaction will not occur, any gains and/or losses that have been recorded to AOCI would be required to be immediately reclassified into earnings. The Company did not have any such situations occur during 2016 , or during the nine months ended September 30, 2017 . All cash flows associated with purchasing and selling fuel derivatives are classified as Other operating cash flows in the unaudited Condensed Consolidated Statement of Cash Flows. The following table presents the location of all assets and liabilities associated with the Company’s derivative instruments within the unaudited Condensed Consolidated Balance Sheet: Asset derivatives Liability derivatives Balance Sheet Fair value at Fair value at Fair value at Fair value at (in millions) location 9/30/2017 12/31/2016 9/30/2017 12/31/2016 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 23 $ 7 $ 36 $ 44 Fuel derivative contracts (gross) Other assets 85 126 — — Fuel derivative contracts (gross) Accrued liabilities 16 4 84 412 Interest rate derivative contracts Other noncurrent liabilities — — 18 35 Total derivatives designated as hedges $ 124 $ 137 $ 138 $ 491 Derivatives not designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 41 $ 54 $ 25 $ — Fuel derivative contracts (gross) Other assets 14 52 14 52 Fuel derivative contracts (gross) Accrued liabilities 55 201 85 262 Interest rate derivative contracts Other noncurrent liabilities — — 3 — Total derivatives not designated as hedges $ 110 $ 307 $ 127 $ 314 Total derivatives $ 234 $ 444 $ 265 $ 805 (a) Represents the position of each trade before consideration of offsetting positions with each counterparty and does not include the impact of cash collateral deposits provided to or received from counterparties. See discussion of credit risk and collateral following in this Note. In addition, the Company had the following amounts associated with fuel derivative instruments and hedging activities in its unaudited Condensed Consolidated Balance Sheet: Balance Sheet September 30, December 31, (in millions) location 2017 2016 Cash collateral deposits held from counterparties for fuel contracts - current Offset against Prepaid expenses and other current assets $ 3 $ 4 Cash collateral deposits held from counterparties for fuel contracts - noncurrent Offset against Other assets 1 6 Cash collateral deposits provided to counterparties for fuel contracts - current Offset against Accrued liabilities 18 311 Due to third parties for fuel contracts Accounts payable 50 75 All of the Company's fuel derivative instruments and interest rate swaps are subject to agreements that follow the netting guidance in the applicable accounting standards for derivatives and hedging. The types of derivative instruments the Company has determined are subject to netting requirements in the accompanying unaudited Condensed Consolidated Balance Sheet are those in which the Company pays or receives cash for transactions with the same counterparty and in the same currency via one net payment or receipt. For cash collateral held by the Company or provided to counterparties, the Company nets such amounts against the fair value of the Company's derivative portfolio by each counterparty. The Company has elected to utilize netting for both its fuel derivative instruments and interest rate swap agreements and also classifies such amounts as either current or noncurrent, based on the net fair value position with each of the Company's counterparties in the unaudited Condensed Consolidated Balance Sheet. The Company's application of its netting policy associated with cash collateral differs depending on whether its derivative instruments are in a net asset position or a net liability position. If its fuel derivative instruments are in a net asset position with a counterparty, cash collateral amounts held are first netted against current outstanding derivative asset amounts associated with that counterparty until that balance is zero, and then any remainder is applied against the fair value of noncurrent outstanding derivative instruments. If the Company's fuel derivative instruments are in a net liability position with the counterparty, cash collateral amounts provided are first netted against noncurrent outstanding derivative liability amounts associated with that counterparty until that balance is zero, and then any remainder is applied against the fair value of current outstanding derivative instruments. The Company has the following recognized financial assets and financial liabilities resulting from those transactions that meet the scope of the disclosure requirements as necessitated by applicable accounting guidance for balance sheet offsetting: Offsetting of derivative assets (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) September 30, 2017 December 31, 2016 Description Balance Sheet location Gross amounts of recognized assets Gross amounts offset in the Balance Sheet Net amounts of assets presented in the Balance Sheet Gross amounts of recognized assets Gross amounts offset in the Balance Sheet Net amounts of assets presented in the Balance Sheet Fuel derivative contracts Prepaid expenses and other current assets $ 64 $ (64 ) $ — $ 61 $ (48 ) $ 13 Fuel derivative contracts Other assets $ 99 $ (15 ) $ 84 (a) $ 178 $ (58 ) $ 120 (a) Fuel derivative contracts Accrued liabilities $ 89 $ (89 ) $ — (a) $ 516 $ (516 ) $ — (a) (a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 5 . Offsetting of derivative liabilities (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) September 30, 2017 December 31, 2016 Description Balance Sheet location Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet Fuel derivative contracts Prepaid expenses and other current assets $ 64 $ (64 ) $ — $ 48 $ (48 ) $ — Fuel derivative contracts Other assets $ 15 $ (15 ) $ — (a) $ 58 $ (58 ) $ — (a) Fuel derivative contracts Accrued liabilities $ 169 $ (89 ) $ 80 (a) $ 674 $ (516 ) $ 158 (a) Interest rate derivative contracts Other noncurrent liabilities $ 21 $ — $ 21 (a) $ 35 $ — $ 35 (a) (a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 5 . The following tables present the impact of derivative instruments and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016 : Derivatives in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives (effective portion) (Gain) loss reclassified from AOCI into income (effective portion) (a) (Gain) loss recognized in income on derivatives (ineffective portion) (b) Three months ended Three months ended Three months ended September 30, September 30, September 30, (in millions) 2017 2016 2017 2016 2017 2016 Fuel derivative contracts $ (29 ) * $ 19 * $ 94 * $ 141 * $ 8 $ (4 ) Interest rate derivatives — * (2 ) * 2 * 2 * — (2 ) Total $ (29 ) $ 17 $ 96 $ 143 $ 8 $ (6 ) *Net of tax (a) Amounts related to fuel derivative contracts and interest rate derivatives, which are included in Fuel and oil and Interest expense, respectively. (b) Amounts are included in Other (gains) losses, net. Derivatives in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives (effective portion) (Gain) loss reclassified from AOCI into income (effective portion)(a) (Gain) loss recognized in income on derivatives (ineffective portion)(b) Nine months ended Nine months ended Nine months ended September 30, September 30, September 30, (in millions) 2017 2016 2017 2016 2017 2016 Fuel derivative contracts $ 104 * $ (62 ) * $ 282 * $ 484 * $ 29 $ (3 ) Interest rate derivatives 1 * 4 * 6 * 7 * — (3 ) Total $ 105 $ (58 ) $ 288 $ 491 $ 29 $ (6 ) *Net of tax (a) Amounts related to fuel derivative contracts and interest rate derivatives, which are included in Fuel and oil and Interest expense, respectively. (b) Amounts are included in Other (gains) losses, net. Derivatives not in cash flow hedging relationships (Gain) loss recognized in income on derivatives Three months ended Location of (gain) loss recognized in income on derivatives September 30, (in millions) 2017 2016 Fuel derivative contracts $ (4 ) $ 35 Other (gains) losses, net Interest rate derivatives (1 ) — Interest expense $ (5 ) $ 35 Derivatives not in cash flow hedging relationships (Gain) loss recognized in income on derivatives Nine months ended Location of (gain) loss September 30, recognized in income (in millions) 2017 2016 on derivatives Fuel derivative contracts $ 80 $ 23 Other (gains) losses, net Interest rate derivatives (3 ) — Interest expense $ 77 $ 23 The Company also recorded expense associated with premiums paid for fuel derivative contracts that settled/expired during the three months ended September 30, 2017 and 2016 of $34 million and $34 million , respectively, and the nine months ended September 30, 2017 and 2016 of $102 million and $117 million , respectively. These amounts are excluded from the Company’s measurement of effectiveness for related hedges and are included as a component of Other (gains) losses, net, in the unaudited Condensed Consolidated Statement of Comprehensive Income. The fair values of the derivative instruments, depending on the type of instrument, were determined by the use of present value methods or option value models with assumptions about commodity prices based on those observed in underlying markets or provided by third parties. Included in the Company’s cumulative net unrealized losses from fuel hedges as of September 30, 2017 , recorded in AOCI, were approximately $118 million in unrealized losses , net of taxes, which are expected to be realized in earnings during the twelve months subsequent to September 30, 2017 . Interest rate swaps The Company is party to certain interest rate swap agreements that are accounted for as either fair value hedges or cash flow hedges, as defined in the applicable accounting guidance for derivative instruments and hedging. Several of the Company's interest rate swap agreements qualify for the "shortcut" method of accounting for hedges, which dictates that the hedges are assumed to be perfectly effective, and, thus, there is no ineffectiveness to be recorded in earnings. For the Company’s interest rate swap agreements that do not qualify for the "shortcut" method of accounting, ineffectiveness is required to be measured at each reporting period. The ineffectiveness associated with all of the Company’s interest rate swap agreements for all periods presented was not material. Credit risk and collateral Credit exposure related to fuel derivative instruments is represented by the fair value of contracts that are an asset to the Company at the reporting date. At such times, these outstanding instruments expose the Company to credit loss in the event of nonperformance by the counterparties to the agreements. However, the Company has not experienced any significant credit loss as a result of counterparty nonperformance in the past. To manage credit risk, the Company selects and periodically reviews counterparties based on credit ratings, limits its exposure with respect to each counterparty, and monitors the market position of the fuel hedging program and its relative market position with each counterparty. At September 30, 2017 , the Company had agreements with all of its active counterparties containing early termination rights and/or bilateral collateral provisions whereby security is required if market risk exposure exceeds a specified threshold amount based on the counterparty credit rating. The Company also had agreements with counterparties in which cash deposits, letters of credit, and/or pledged aircraft are required to be posted as collateral whenever the net fair value of derivatives associated with those counterparties exceeds specific thresholds. In certain cases, the Company has the ability to substitute among these different forms of collateral at its discretion. The following table provides the fair values of fuel derivatives, amounts posted as collateral, and applicable collateral posting threshold amounts as of September 30, 2017 , at which such postings are triggered: Counterparty (CP) (in millions) A B C D E F Other (a) Total Fair value of fuel derivatives $ (42 ) $ (3 ) $ 16 $ 10 $ 4 $ 3 $ 2 $ (10 ) Cash collateral held from (by) CP (18 ) — — — 4 — — (14 ) Aircraft collateral pledged to CP — — — — — — — — Letters of credit (LC) — — — — — — — — Option to substitute LC for aircraft (200) to (600)(b) (100) to (500)(c) (150) to (550)(c) (150) to (550)(c) N/A N/A Option to substitute LC for cash N/A >(500)(c) (75) to (150) or >(550)(c) (125) to (150) or >(550)(d) (d) N/A If credit rating is investment grade, fair value of fuel derivative level at which: Cash is provided to CP (50) to (200) or >(600) (50) to (100) or >(500) (75) to (150) or >(550) (125) to (150) or >(550) >(100) >(65) Cash is received from CP >50(e) >150(e) >250(e) >75(e) >0(e) >30(e) Aircraft or cash can be pledged to CP as collateral (200) to (600)(f) (100) to (500)(c) (150) to (550)(c) (150) to (550)(c) N/A N/A If credit rating is non-investment grade, fair value of fuel derivative level at which: Cash is provided to CP (0) to (200) or >(600) (0) to (100) or >(500) (0) to (150) or >(550) (0) to (150) or >(550) (g) (g) Cash is received from CP (g) (g) (g) (g) (g) (g) Aircraft or cash can be pledged to CP as collateral (200) to (600) (100) to (500) (150) to (550) (150) to (550) N/A N/A (a) Individual counterparties with fair value of fuel derivatives < $2 million . (b) The Company has the option of providing letters of credit in addition to aircraft collateral if the appraised value of the aircraft does not meet the collateral requirements. (c) The Company has the option of providing cash, letters of credit, or pledging aircraft as collateral. (d) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (e) Thresholds may vary based on changes in credit ratings within investment grade. (f) The Company has the option of providing cash or pledging aircraft as collateral. (g) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. |
COMPREHENSIVE INCOME
COMPREHENSIVE INCOME | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
COMPREHENSIVE INCOME | COMPREHENSIVE INCOME Comprehensive income includes changes in the fair value of certain financial derivative instruments that qualify for hedge accounting, unrealized gains and losses on certain investments, and actuarial gains/losses arising from the Company’s postretirement benefit obligation. The differences between Net income and Comprehensive income for the three and nine months ended September 30, 2017 and 2016 were as follows: Three months ended September 30, (in millions) 2017 2016 NET INCOME $ 503 $ 388 Unrealized gain on fuel derivative instruments, net of deferred taxes of $73 and $72 123 122 Unrealized gain on interest rate derivative instruments, net of deferred taxes of $- and $2 2 4 Other, net of deferred taxes of $2 and $2 2 3 Total other comprehensive income $ 127 $ 129 COMPREHENSIVE INCOME $ 630 $ 517 Nine months ended September 30, (in millions) 2017 2016 NET INCOME $ 1,600 $ 1,722 Unrealized gain on fuel derivative instruments, net of deferred taxes of $105 and $321 178 546 Unrealized gain on interest rate derivative instruments, net of deferred taxes of $2 and $1 5 3 Other, net of deferred taxes of $2 and $2 4 3 Total other comprehensive income $ 187 $ 552 COMPREHENSIVE INCOME $ 1,787 $ 2,274 A rollforward of the amounts included in AOCI is shown below for the three and nine months ended September 30, 2017 : (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax Accumulated other comprehensive income (loss) Balance at June 30, 2017 $ (412 ) $ (13 ) $ (14 ) $ 22 $ 154 $ (263 ) Changes in fair value 45 — — 4 (18 ) 31 Reclassification to earnings 151 2 — — (57 ) 96 Balance at September 30, 2017 $ (216 ) $ (11 ) $ (14 ) $ 26 $ 79 $ (136 ) (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax Accumulated other comprehensive income (loss) Balance at December 31, 2016 $ (499 ) $ (18 ) $ (14 ) $ 20 $ 188 $ (323 ) Changes in fair value (165 ) (1 ) — 6 59 (101 ) Reclassification to earnings 448 8 — — (168 ) 288 Balance at September 30, 2017 $ (216 ) $ (11 ) $ (14 ) $ 26 $ 79 $ (136 ) The following tables illustrate the significant amounts reclassified out of each component of AOCI for the three and nine months ended September 30, 2017 : Three months ended September 30, 2017 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income AOCI components Unrealized loss on fuel derivative instruments $ 151 Fuel and oil expense 57 Less: Tax expense $ 94 Net of tax Unrealized loss on interest rate derivative instruments $ 2 Interest expense — Less: Tax expense $ 2 Net of tax Total reclassifications for the period $ 96 Net of tax Nine months ended September 30, 2017 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income AOCI components Unrealized loss on fuel derivative instruments $ 448 Fuel and oil expense 166 Less: Tax Expense $ 282 Net of tax Unrealized loss on interest rate derivative instruments $ 8 Interest expense 2 Less: Tax Expense $ 6 Net of tax Total reclassifications for the period $ 288 Net of tax |
SUPPLEMENTAL FINANCIAL INFORMAT
SUPPLEMENTAL FINANCIAL INFORMATION | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure Text Block [Abstract] | |
SUPPLEMENTAL FINANCIAL INFORMATION | SUPPLEMENTAL FINANCIAL INFORMATION (in millions) September 30, 2017 December 31, 2016 Derivative contracts $ 84 $ 120 Intangible assets, net 416 426 Capital lease receivable 79 90 Non-current prepaid maintenance 113 6 Other 151 132 Other assets $ 843 $ 774 (in millions) September 30, 2017 December 31, 2016 Accounts payable trade $ 165 $ 138 Salaries payable 175 200 Taxes payable 180 184 Aircraft maintenance payable 33 26 Fuel payable 139 95 Other payables 432 535 Accounts payable $ 1,124 $ 1,178 (in millions) September 30, 2017 December 31, 2016 ProfitSharing and savings plans $ 450 $ 645 Aircraft and other lease related obligations 41 55 Permanently grounded aircraft liability 31 (a) — Vacation pay 348 355 Contract ratification bonuses 69 188 Health 93 96 Derivative contracts 80 158 Workers compensation 174 183 Property and income taxes 79 68 Other 228 237 Accrued liabilities $ 1,593 $ 1,985 (in millions) September 30, 2017 December 31, 2016 Postretirement obligation $ 274 $ 256 Non-current lease-related obligations 94 125 Permanently grounded aircraft liability 18 (a) — Other deferred compensation 225 204 Derivative contracts 21 35 Other 81 108 Other noncurrent liabilities $ 713 $ 728 (a) These amounts represent the current and noncurrent portion of the Company's cease-use liability recorded during third quarter 2017 , as a result of the Company grounding its remaining leased Boeing 737-300 aircraft on September 29, 2017. The liability reflects the remaining net lease payments due and certain lease return requirements that may have to be performed on these leased aircraft prior to their return to the lessors as of the cease-use date, but does not include the write–off of approximately $15 million in net prepaid rents associated with the aircraft at the grounding date, which were included in the $63 million charge recorded. This loss related to the grounding of the Classic fleet was recorded to Other operating expenses in the unaudited Condensed Consolidated Statement of Comprehensive Income during third quarter 2017. For further details on fuel derivative and interest rate derivative contracts, see Note 3 . Other Operating Expenses Other operating expenses consist of distribution costs, advertising expenses, personnel expenses, professional fees, and other operating costs, none of which individually exceeded 10 percent of Operating expenses. |
NET INCOME PER SHARE
NET INCOME PER SHARE | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
NET INCOME PER SHARE | NET INCOME PER SHARE The following table sets forth the computation of basic and diluted net income per share (in millions, except per share amounts): Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 NUMERATOR: Net income $ 503 $ 388 $ 1,600 $ 1,722 Incremental income effect of interest on 5.25% convertible notes — 1 — 2 Net income after assumed conversion $ 503 $ 389 $ 1,600 $ 1,724 DENOMINATOR: Weighted-average shares outstanding, basic 597 618 605 630 Dilutive effect of Employee stock options and restricted stock units 1 1 1 2 Dilutive effect of 5.25% convertible notes — 6 — 6 Adjusted weighted-average shares outstanding, diluted 598 625 606 638 NET INCOME PER SHARE: Basic $ 0.84 $ 0.63 $ 2.65 $ 2.73 Diluted $ 0.84 $ 0.62 $ 2.64 $ 2.70 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Fort Lauderdale-Hollywood International Airport In December 2013 , the Company entered into an agreement with Broward County, Florida, which owns and operates Fort Lauderdale-Hollywood International Airport ("FLL"), to oversee and manage the design and construction of the airport's Terminal 1 Modernization Project. Pursuant to an addendum entered into during 2016, the cost of the project is not to exceed $333 million . In addition to significant improvements to the existing Terminal 1, the project includes the design and construction of a new five-gate Concourse A with an international processing facility. Funding for the project comes directly from Broward County aviation sources, but flows through the Company in its capacity as manager of the project. Major construction on the project began during third quarter 2015 . Construction of Concourse A was completed during second quarter 2017, and construction on Terminal 1 is expected to be completed later this year. The Company has determined that due to its agreed upon role in overseeing and managing the project, it is considered the owner of the project for accounting purposes. As such, during construction the Company records expenditures as Assets constructed for others ("ACFO") in the unaudited Condensed Consolidated Balance Sheet, along with a corresponding outflow within Assets constructed for others in the unaudited Condensed Consolidated Statement of Cash Flows, and an increase to Construction obligation (with a corresponding cash inflow from Financing activities in the unaudited Condensed Consolidated Statement of Cash Flows) as reimbursements are received from Broward County. Los Angeles International Airport In March 2013, the Company executed a lease agreement (the "T1 Lease") with Los Angeles World Airports ("LAWA"), which owns and operates Los Angeles International Airport ("LAX"). Under the T1 Lease, which was amended in June 2014 and September 2017, the Company is overseeing and managing the design, development, financing, construction, and commissioning of the airport's Terminal 1 Modernization Project at a cost not to exceed $526 million (including proprietary renovations, or $510 million excluding proprietary renovations). In October 2017, the Company executed a separate lease agreement with LAWA (the "T1.5 Lease"). The Company intends to oversee and manage the design, development, financing, construction, and commissioning of a passenger processing facility between Terminal 1 and 2 ("Terminal 1.5"), but there is a scenario under the T1.5 Lease where the Company could be responsible for constructing just the site improvements for Terminal 1.5. Terminal 1.5 will house ticketing, baggage claim, passenger screening and a bus gate at a cost not to exceed $479 million for site improvements and non-proprietary improvements. These projects are being funded primarily using the Regional Airports Improvement Corporation (the "RAIC"), which is a quasi-governmental special purpose entity that acts as a conduit borrower under syndicated credit facilities provided by groups of lenders. Loans made under the separate credit facilities for the Terminal 1 project and the Terminal 1.5 project are being used to fund the development of each of these projects, and the outstanding loans will be repaid with the proceeds of LAWA’s payments to purchase completed construction phases. The Company has guaranteed the obligations of the RAIC under each of the credit facilities of the respective lease agreements. As of September 30, 2017, there was no guarantee outstanding for the Terminal 1.5 project, and the Company's outstanding remaining guaranteed obligation under the credit facility for the Terminal 1 project was $299 million . Construction on the Terminal 1 project began during 2014 and is estimated to be completed during 2018. Construction on the Terminal 1.5 project began during third quarter 2017 and is estimated to be completed during 2020. The Company has determined that due to its agreed upon role in overseeing and managing these projects, it is considered the owner of these projects for accounting purposes. LAWA is reimbursing the Company (through the RAIC credit facilities) for the site improvements and non-proprietary improvements, while proprietary improvements will not be reimbursed. As a result, the costs incurred to fund these projects are included within ACFO and all amounts that have been or will be reimbursed will be included within Construction obligation on the accompanying unaudited Condensed Consolidated Balance Sheet. Dallas Love Field During 2008, the City of Dallas approved the Love Field Modernization Program ("LFMP"), a project to reconstruct Dallas Love Field with modern, convenient air travel facilities. Pursuant to a Program Development Agreement with the City of Dallas and the Love Field Airport Modernization Corporation (or "LFAMC," a Texas non-profit "local government corporation" established by the City of Dallas to act on the City of Dallas' behalf to facilitate the development of the LFMP), the Company managed this project. Although the City of Dallas received commitments from various sources that helped to fund portions of this LFMP project, including the Federal Aviation Administration ("FAA"), the Transportation Security Administration, and the City of Dallas' Aviation Fund, the majority of the funds used were from the issuance of bonds. The Company guaranteed principal and interest payments on $456 million of such bonds issued by the LFAMC. As of September 30, 2017 , $432 million of principal remained outstanding. The Company utilized the accounting guidance provided for lessees involved in asset construction. Upon completion of different phases of the LFMP project, the Company has placed the associated assets in service and has begun depreciating the assets over their estimated useful lives. The corresponding LFMP liabilities are being reduced primarily through the Company's airport rental payments to the City of Dallas as the construction costs of this project are passed through to the Company via recurring airport rates and charges. Major construction was effectively completed by December 31, 2014. During second quarter 2017, the City of Dallas approved using the remaining bond funds for additional terminal construction projects which began during second quarter and are expected to be completed in 2018. During 2015, the City of Dallas issued additional bonds for the construction of a new parking garage at Dallas Love Field. The Company has not guaranteed the principal or interest payments on these bonds, but remains the accounting owner of this project due to its incorporation into the LFMP agreements. Construction costs recorded in ACFO for the Company's various projects as of September 30, 2017 , and December 31, 2016 , were as follows: September 30, 2017 December 31, 2016 (in millions) ACFO ACFO, Net (b) Construction Obligation ACFO ACFO, Net (b) Construction Obligation FLL Terminal (a) $ 245 $ 244 $ 245 $ 132 $ 132 $ 132 LAX Terminal 1 (a) 417 404 417 344 336 344 LFMP - Terminal 540 474 517 538 486 522 LFMP - Parking Garage (a) 132 132 132 80 80 80 HOU International Terminal (c) 126 119 — 126 122 — $ 1,460 $ 1,373 $ 1,311 $ 1,220 $ 1,156 $ 1,078 (a) Projects still in progress. (b) Net of accumulated depreciation. (c) Project completed in 2015 at Houston William P. Hobby Airport ("HOU"). Contingencies The Company is from time to time subject to various legal proceedings and claims arising in the ordinary course of business, including, but not limited to, examinations by the Internal Revenue Service ("IRS"). The Company's management does not expect that the outcome of any of its currently ongoing legal proceedings or the outcome of any adjustments presented by the IRS, individually or collectively, will have a material adverse effect on the Company's financial condition, results of operations, or cash flow. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Accounting standards pertaining to fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. As of September 30, 2017 , the Company held certain items that are required to be measured at fair value on a recurring basis. These included cash equivalents, short-term investments (primarily treasury bills and certificates of deposit), interest rate derivative contracts, fuel derivative contracts, and available-for-sale securities. The majority of the Company’s short-term investments consist of instruments classified as Level 1. However, the Company has certificates of deposit, commercial paper, and Eurodollar deposits that are classified as Level 2, due to the fact that the fair value for these instruments is determined utilizing observable inputs in non-active markets. Other available-for-sale securities primarily consist of investments associated with the Company’s excess benefit plan. The Company’s fuel and interest rate derivative instruments consist of over-the-counter contracts, which are not traded on a public exchange. Fuel derivative instruments include swaps, as well as different types of option contracts, whereas interest rate derivatives consist solely of swap agreements. See Note 3 for further information on the Company’s derivative instruments and hedging activities. The fair values of swap contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Therefore, the Company has categorized these swap contracts as Level 2. The Company’s Treasury Department, which reports to the Chief Financial Officer, determines the value of option contracts utilizing an option pricing model based on inputs that are either readily available in public markets, can be derived from information available in publicly quoted markets, or are provided by financial institutions that trade these contracts. The option pricing model used by the Company is an industry standard model for valuing options and is the same model used by the broker/dealer community (i.e., the Company’s counterparties). The inputs to this option pricing model are the option strike price, underlying price, risk free rate of interest, time to expiration, and volatility. Because certain inputs used to determine the fair value of option contracts are unobservable (principally implied volatility), the Company has categorized these option contracts as Level 3. Volatility information is obtained from external sources, but is analyzed by the Company for reasonableness and compared to similar information received from other external sources. The fair value of option contracts considers both the intrinsic value and any remaining time value associated with those derivatives that have not yet settled. The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values. To validate the reasonableness of the Company’s option pricing model, on a monthly basis, the Company compares its option valuations to third party valuations. If any significant differences were to be noted, they would be researched in order to determine the reason. However, historically, no significant differences have been noted. The Company has consistently applied these valuation techniques in all periods presented and believes it has obtained the most accurate information available for the types of derivative contracts it holds. Included in Other available-for-sale securities are the Company’s investments associated with its deferred compensation plans, which consist of mutual funds that are publicly traded and for which market prices are readily available. These plans are non-qualified deferred compensation plans designed to hold contributions in excess of limits established by the Internal Revenue Code of 1986, as amended. The distribution timing and payment amounts under these plans are made based on the participant’s distribution election and plan balance. Assets related to the funded portions of the deferred compensation plans are held in a rabbi trust, and the Company remains liable to these participants for the unfunded portion of the plans. The Company records changes in the fair value of the assets in the Company’s earnings. The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2017 , and December 31, 2016 : Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description September 30, 2017 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 1,025 $ 1,025 $ — $ — Commercial paper 420 — 420 — Certificates of deposit 15 — 15 — Short-term investments: Treasury bills 1,344 1,344 — — Certificates of deposit 236 — 236 — Fuel derivatives: Swap contracts (c) 12 — 12 — Option contracts (b) 164 — — 164 Option contracts (c) 58 — — 58 Other available-for-sale securities 101 101 — — Total assets $ 3,375 $ 2,470 $ 683 $ 222 Liabilities Fuel derivatives: Swap contracts (c) $ (27 ) $ — $ (27 ) $ — Option contracts (b) (76 ) — — (76 ) Option contracts (c) (141 ) — — (141 ) Interest rate derivatives (see Note 3) (21 ) — (21 ) — Total liabilities $ (265 ) $ — $ (48 ) $ (217 ) (a) Cash equivalents are primarily composed of money market investments. (b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net asset. See Note 3. (c) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net liability. See Note 3. Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description December 31, 2016 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 1,344 $ 1,344 $ — $ — Commercial paper 325 — 325 — Certificates of deposit 11 — 11 — Short-term investments: Treasury bills 1,345 1,345 — — Certificates of deposit 280 — 280 — Fuel derivatives: Swap contracts (c) 42 — 42 — Option contracts (b) 239 — — 239 Option contracts (c) 163 — — 163 Other available-for-sale securities 83 83 — — Total assets $ 3,832 $ 2,772 $ 658 $ 402 Liabilities Fuel derivatives: Swap contracts (c) $ (110 ) $ — $ (110 ) $ — Option contracts (b) (96 ) — — (96 ) Option contracts (c) (564 ) — — (564 ) Interest rate derivatives (see Note 3) (35 ) — (35 ) — Total liabilities $ (805 ) $ — $ (145 ) $ (660 ) (a) Cash equivalents are primarily composed of money market investments. (b) In the unaudited Consolidated Balance Sheet amounts are presented as a net asset. See Note 3. (c) In the unaudited Consolidated Balance Sheet amounts are presented as a net liability. See Note 3. The Company had no transfers of assets or liabilities between any of the above levels during the nine months ended September 30, 2017 , or the year ended December 31, 2016 . The Company did not have any assets or liabilities measured at fair value on a nonrecurring basis as of the nine months ended September 30, 2017 , or the year ended December 31, 2016 . The following tables present the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2017 : Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at June 30, 2017 $ (233 ) Total gains (realized or unrealized) Included in earnings 10 Included in other comprehensive income 45 Purchases 25 (a) Sales — (a) Settlements 158 Balance at September 30, 2017 $ 5 The amount of total gains for the period included in earnings attributable to the change in unrealized gains or losses relating to option contracts still held at September 30, 2017 $ 4 (a) The purchase and sale of fuel derivatives are recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives is purchased as a single instrument or separate instruments. Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at December 31, 2016 $ (258 ) Total losses (realized or unrealized) Included in earnings (136 ) Included in other comprehensive income (164 ) Purchases 104 (a) Sales — (a) Settlements 459 Balance at September 30, 2017 $ 5 The amount of total losses for the period included in earnings attributable to the change in unrealized gains or losses relating to option contracts still held at September 30, 2017 $ (57 ) (a) The purchase and sale of fuel derivatives are recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives is purchased as a single instrument or separate instruments. The significant unobservable input used in the fair value measurement of the Company’s derivative option contracts is implied volatility. Holding other inputs constant, a significant increase (decrease) in implied volatility would result in a significantly higher (lower) fair value measurement, respectively, for the Company’s derivative option contracts. The following table presents a range of the unobservable inputs utilized in the fair value measurements of the Company’s fuel derivatives classified as Level 3 at September 30, 2017 : Quantitative information about Level 3 fair value measurements Valuation technique Unobservable input Period (by year) Range Fuel derivatives Option model Implied volatility Fourth quarter 2017 14-30% 2018 19-28% 2019 18-23% Beyond 2019 17-21% The carrying amounts and estimated fair values of the Company’s long-term debt (including current maturities), as well as the applicable fair value hierarchy tier, at September 30, 2017 , are presented in the table below. The fair values of the Company’s publicly held long-term debt are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets; therefore, the Company has categorized these agreements as Level 2. Debt under seven of the Company’s debt agreements is not publicly held. The Company has determined the estimated fair value of this debt to be Level 3, as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes indicative pricing from counterparties and a discounted cash flow method to estimate the fair value of the Level 3 items. (in millions) Carrying value Estimated fair value Fair value level hierarchy French Credit Agreements due 2018 - 2.15% $ 7 $ 7 Level 3 Fixed-rate 737 Aircraft Notes payable through 2018 - 7.03% 3 3 Level 3 2.75% Notes due 2019 301 305 Level 2 Term Loan Agreement payable through 2019 - 6.315% 76 77 Level 3 Term Loan Agreement payable through 2019 - 4.84% 19 20 Level 3 2.65% Notes due 2020 495 503 Level 2 Term Loan Agreement payable through 2020 - 5.223% 249 252 Level 3 737 Aircraft Notes payable through 2020 166 165 Level 3 Pass Through Certificates due 2022 - 6.24% 294 322 Level 2 Term Loan Agreement payable through 2026 - 2.53% 215 215 Level 3 3.00% Notes due 2026 300 296 Level 2 7.375% Debentures due 2027 128 157 Level 2 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The unaudited Condensed Consolidated Financial Statements for the interim periods ended September 30, 2017 and 2016 include all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods. This includes all normal and recurring adjustments and elimination of significant intercompany transactions. Financial results for the Company and airlines in general can be seasonal in nature. In many years, the Company's revenues, as well as its Operating income and Net income, have been better in its second and third fiscal quarters than in its first and fourth fiscal quarters. Air travel is also significantly impacted by general economic conditions, the amount of disposable income available to consumers, unemployment levels, corporate travel budgets, natural disasters, and other factors beyond the Company's control. These and other factors, such as the price of jet fuel in some periods, the nature of the Company's fuel hedging program, the periodic volatility of commodities used by the Company for hedging jet fuel, and the requirements related to hedge accounting, have created, and may continue to create, significant volatility in the Company's financial results. See Note 3 for further information on fuel and the Company's hedging program. Operating results for the three and nine months ended September 30, 2017 , are not necessarily indicative of the results that may be expected for future quarters or for the year ended December 31, 2017 . For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Southwest Airlines Co. Annual Report on Form 10-K for the year ended December 31, 2016 . |
Derivatives | The Company is party to certain interest rate swap agreements that are accounted for as either fair value hedges or cash flow hedges, as defined in the applicable accounting guidance for derivative instruments and hedging. Several of the Company's interest rate swap agreements qualify for the "shortcut" method of accounting for hedges, which dictates that the hedges are assumed to be perfectly effective, and, thus, there is no ineffectiveness to be recorded in earnings. For the Company’s interest rate swap agreements that do not qualify for the "shortcut" method of accounting, ineffectiveness is required to be measured at each reporting period. The ineffectiveness associated with all of the Company’s interest rate swap agreements for all periods presented was not material. Upon proper qualification, the Company accounts for its fuel derivative instruments as cash flow hedges. Generally, utilizing hedge accounting, all periodic changes in fair value of the derivatives designated as hedges that are considered to be effective are recorded in Accumulated other comprehensive income (loss) ("AOCI") until the underlying jet fuel is consumed. See Note 4 . The Company’s results are subject to the possibility that periodic changes will not be effective, as defined, or that the derivatives will no longer qualify for hedge accounting. Ineffectiveness results when the change in the fair value of the derivative instrument exceeds the change in the value of the Company’s expected future cash outlay to purchase and consume jet fuel. To the extent that the periodic changes in the fair value of the derivatives are ineffective, the ineffective portion is recorded to Other (gains) losses, net, in the unaudited Condensed Consolidated Statement of Comprehensive Income in the period of the change. Likewise, if a hedge ceases to qualify for hedge accounting, any change in the fair value of derivative instruments since the last reporting period is recorded to Other (gains) losses, net, in the unaudited Condensed Consolidated Statement of Comprehensive Income in the period of the change; however, any amounts previously recorded to AOCI would remain there until such time as the original forecasted transaction occurs, at which time these amounts would be reclassified to Fuel and oil expense. When the Company has sold derivative positions in order to effectively "close" or offset a derivative already held as part of its fuel derivative instrument portfolio, any subsequent changes in fair value of those positions are marked to market through earnings. Likewise, any changes in fair value of those positions that were offset by entering into the sold positions and were de-designated as hedges are concurrently marked to market through earnings. However, any changes in value related to hedges that were deferred as part of AOCI while designated as a hedge would remain until the originally forecasted transaction occurs. In a situation where it becomes probable that a fuel hedged forecasted transaction will not occur, any gains and/or losses that have been recorded to AOCI would be required to be immediately reclassified into earnings. The Company did not have any such situations occur during 2016 , or during the nine months ended September 30, 2017 . |
Fair Value of Financial Instruments | Accounting standards pertaining to fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. As of September 30, 2017 , the Company held certain items that are required to be measured at fair value on a recurring basis. These included cash equivalents, short-term investments (primarily treasury bills and certificates of deposit), interest rate derivative contracts, fuel derivative contracts, and available-for-sale securities. The majority of the Company’s short-term investments consist of instruments classified as Level 1. However, the Company has certificates of deposit, commercial paper, and Eurodollar deposits that are classified as Level 2, due to the fact that the fair value for these instruments is determined utilizing observable inputs in non-active markets. Other available-for-sale securities primarily consist of investments associated with the Company’s excess benefit plan. The Company’s fuel and interest rate derivative instruments consist of over-the-counter contracts, which are not traded on a public exchange. Fuel derivative instruments include swaps, as well as different types of option contracts, whereas interest rate derivatives consist solely of swap agreements. See Note 3 for further information on the Company’s derivative instruments and hedging activities. The fair values of swap contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Therefore, the Company has categorized these swap contracts as Level 2. The Company’s Treasury Department, which reports to the Chief Financial Officer, determines the value of option contracts utilizing an option pricing model based on inputs that are either readily available in public markets, can be derived from information available in publicly quoted markets, or are provided by financial institutions that trade these contracts. The option pricing model used by the Company is an industry standard model for valuing options and is the same model used by the broker/dealer community (i.e., the Company’s counterparties). The inputs to this option pricing model are the option strike price, underlying price, risk free rate of interest, time to expiration, and volatility. Because certain inputs used to determine the fair value of option contracts are unobservable (principally implied volatility), the Company has categorized these option contracts as Level 3. Volatility information is obtained from external sources, but is analyzed by the Company for reasonableness and compared to similar information received from other external sources. The fair value of option contracts considers both the intrinsic value and any remaining time value associated with those derivatives that have not yet settled. The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values. To validate the reasonableness of the Company’s option pricing model, on a monthly basis, the Company compares its option valuations to third party valuations. If any significant differences were to be noted, they would be researched in order to determine the reason. However, historically, no significant differences have been noted. The Company has consistently applied these valuation techniques in all periods presented and believes it has obtained the most accurate information available for the types of derivative contracts it holds. |
New Accounting Pronouncements | On August 28, 2017, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2017-12, Targeted Improvements to Accounting for Hedging Activities. The standard amends the hedge accounting model to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. The amendments also simplify the application of hedge accounting in certain situations. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted in any interim or annual period. The most significant impacts of this ASU on the Company's accounting will be the elimination of ineffectiveness for all cash flow hedges in a hedging relationship, as well as a change in classification of premium expense associated with option contracts. Currently, such premium expense for the Company's fuel hedges is reflected as a component of Other (gains) losses, net, in the Condensed Consolidated Statement of Income, but under the new ASU will be reflected as a component of the line item to which the hedge relates, which is Fuel and oil expense. The Company is currently considering early adoption of the ASU as of January 1, 2018. On March 10, 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The standard requires employers to present the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in nonoperating expenses. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company does not expect this to have a material impact on Operating income and expects this to have no impact on Net income. The Company will adopt this guidance as of January 1, 2018. On January 26, 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The standard simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test (as defined by the FASB), which requires a hypothetical purchase price allocation (implied fair value of goodwill) to measure impairment loss. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted. The Company does not expect this ASU to have a significant impact on its financial statement presentation or results. On February 25, 2016, the FASB issued ASU No. 2016-02, Leases. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The guidance requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases (with the exception of short-term leases) at the lease commencement date and recognize expenses on the income statement in a similar manner to the current guidance in Accounting Standards Codification 840, Leases. The lease liability will be measured at the present value of the unpaid lease payments and the right-of-use asset will be derived from the calculation of the lease liability. Lease payments will include fixed and in-substance fixed payments, variable payments based on an index or rate, reasonably certain purchase options, termination penalties, fees paid by the lessee to the owners of a special-purpose entity for restructuring the transaction, and probable amounts the lessee will owe under a residual value guarantee. Lease payments will not include variable lease payments other than those that depend on an index or rate, any guarantee by the lessee of the lessor’s debt, or any amount allocated to non-lease components. The Company has formed a project team to evaluate and implement the standard, and currently believes the most significant impact of this ASU on its accounting will be the balance sheet impact of its aircraft operating leases, which will significantly increase assets and liabilities. As of September 30, 2017 , the Company had 53 leased aircraft under operating leases and also had another 76 aircraft under operating leases that are being subleased to another airline. As of September 30, 2017 , the net present value of future rents for those aircraft was approximately $1.0 billion . This amount only includes contractual payments due to lessors, and does not consider certain items that the standard requires to be assessed in determining the final asset and liability to be reflected on the Company's balance sheet, such as lease renewal options and potential impairments, nor does it consider the sublease income that is due from third parties. The Company also has operating leases related to terminal operations space and other real estate leases. Although the real estate leases will also have a substantial impact to the balance sheet, the Company does not expect the leases related to terminal operations space to have a significant impact since variable lease payments, other than those based on an index or rate, are excluded from the measurement of the lease liability. The Company also does not expect the adoption of this ASU to impact any of its existing debt covenants. In addition, the standard eliminates the current build-to-suit lease accounting guidance and could result in derecognition of build-to-suit assets and liabilities that remained on the balance sheet after the end of the construction period. The underlying leases for these facilities will be subject to evaluation under the new standard. See Note 7 for further information on the Company’s build-to-suit projects. The Company anticipates utilizing the modified retrospective transition approach to adopt the standard, which requires application of the new guidance for all periods presented with an option to use certain practical expedients. The Company currently plans to adopt the standard as of January 1, 2018, pending successful implementation of a third-party lease accounting software and completion of remaining administrative tasks. The Company is continuing to evaluate the new guidance and plans to provide additional information in its 2017 10-K. On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. Following the FASB's finalization of a one year deferral of this standard, the ASU is now effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company has formed a project team to evaluate and work to implement the standard, and currently believes the most significant impact of this ASU on its accounting will be the elimination of the incremental cost method for frequent flyer accounting, which will require the Company to re-value its liabilities associated with Customer flight points with a relative fair value approach, resulting in a significant increase in the liabilities. The Company's liabilities associated with these flight points were $64 million at September 30, 2017 , and the Company currently estimates that applying a relative fair value approach would increase the liabilities by approximately 20 to 25 times that value, depending on various assumptions made at the time of measurement. The adoption of the new standard is also expected to result in different income statement classification for certain types of revenues which are currently classified as Other revenues, but under the new ASU would be included in Passenger revenues. Based on the Company's full year 2016 results, the amount to be reclassified would have been approximately $600 million . However, the estimated impact of this ASU would not have had a material impact on Operating revenues and would not have impacted any of its existing debt covenants. The Company currently anticipates utilizing the full retrospective method of adoption allowed by the standard, in order to provide for comparative results in all periods presented, and will adopt the standard as of January 1, 2018. The Company is continuing to evaluate the new guidance both internally and through its participation in an industry working group, and plans to continue to provide relevant and material information prior to adoption. The Company is in the process of completing its analysis of information necessary to recast prior period results, however it does not believe there are any remaining significant implementation topics associated with the adoption of this ASU that have not yet been addressed. |
Financial Derivative Instrume14
Financial Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Volume of Fuel Hedging | The following table provides information about the Company’s volume of fuel hedging on an economic basis considering current market prices: Maximum fuel hedged as of September 30, 2017 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) September 30, 2017 Remainder of 2017 320 WTI crude and Brent crude oil 2018 1,647 WTI crude and Brent crude oil 2019 1,377 WTI crude and Brent crude oil Beyond 2019 358 WTI crude oil (a) Due to the types of derivatives utilized by the Company and different price levels of those contracts, these volumes represent the maximum economic hedge in place and may vary significantly as market prices fluctuate. |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table presents the location of all assets and liabilities associated with the Company’s derivative instruments within the unaudited Condensed Consolidated Balance Sheet: Asset derivatives Liability derivatives Balance Sheet Fair value at Fair value at Fair value at Fair value at (in millions) location 9/30/2017 12/31/2016 9/30/2017 12/31/2016 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 23 $ 7 $ 36 $ 44 Fuel derivative contracts (gross) Other assets 85 126 — — Fuel derivative contracts (gross) Accrued liabilities 16 4 84 412 Interest rate derivative contracts Other noncurrent liabilities — — 18 35 Total derivatives designated as hedges $ 124 $ 137 $ 138 $ 491 Derivatives not designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 41 $ 54 $ 25 $ — Fuel derivative contracts (gross) Other assets 14 52 14 52 Fuel derivative contracts (gross) Accrued liabilities 55 201 85 262 Interest rate derivative contracts Other noncurrent liabilities — — 3 — Total derivatives not designated as hedges $ 110 $ 307 $ 127 $ 314 Total derivatives $ 234 $ 444 $ 265 $ 805 (a) Represents the position of each trade before consideration of offsetting positions with each counterparty and does not include the impact of cash collateral deposits provided to or received from counterparties. See discussion of credit risk and collateral following in this Note. |
Cash Collateral Deposits Due To Or From Third Parties and Net Unrealized Losses | In addition, the Company had the following amounts associated with fuel derivative instruments and hedging activities in its unaudited Condensed Consolidated Balance Sheet: Balance Sheet September 30, December 31, (in millions) location 2017 2016 Cash collateral deposits held from counterparties for fuel contracts - current Offset against Prepaid expenses and other current assets $ 3 $ 4 Cash collateral deposits held from counterparties for fuel contracts - noncurrent Offset against Other assets 1 6 Cash collateral deposits provided to counterparties for fuel contracts - current Offset against Accrued liabilities 18 311 Due to third parties for fuel contracts Accounts payable 50 75 |
Offsetting Assets | The Company has the following recognized financial assets and financial liabilities resulting from those transactions that meet the scope of the disclosure requirements as necessitated by applicable accounting guidance for balance sheet offsetting: Offsetting of derivative assets (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) September 30, 2017 December 31, 2016 Description Balance Sheet location Gross amounts of recognized assets Gross amounts offset in the Balance Sheet Net amounts of assets presented in the Balance Sheet Gross amounts of recognized assets Gross amounts offset in the Balance Sheet Net amounts of assets presented in the Balance Sheet Fuel derivative contracts Prepaid expenses and other current assets $ 64 $ (64 ) $ — $ 61 $ (48 ) $ 13 Fuel derivative contracts Other assets $ 99 $ (15 ) $ 84 (a) $ 178 $ (58 ) $ 120 (a) Fuel derivative contracts Accrued liabilities $ 89 $ (89 ) $ — (a) $ 516 $ (516 ) $ — (a) (a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 5 . |
Offsetting Liabilities | Offsetting of derivative liabilities (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) September 30, 2017 December 31, 2016 Description Balance Sheet location Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet Fuel derivative contracts Prepaid expenses and other current assets $ 64 $ (64 ) $ — $ 48 $ (48 ) $ — Fuel derivative contracts Other assets $ 15 $ (15 ) $ — (a) $ 58 $ (58 ) $ — (a) Fuel derivative contracts Accrued liabilities $ 169 $ (89 ) $ 80 (a) $ 674 $ (516 ) $ 158 (a) Interest rate derivative contracts Other noncurrent liabilities $ 21 $ — $ 21 (a) $ 35 $ — $ 35 (a) (a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 5 . |
Derivatives in Cash Flow Hedging Relationships | The following tables present the impact of derivative instruments and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016 : Derivatives in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives (effective portion) (Gain) loss reclassified from AOCI into income (effective portion) (a) (Gain) loss recognized in income on derivatives (ineffective portion) (b) Three months ended Three months ended Three months ended September 30, September 30, September 30, (in millions) 2017 2016 2017 2016 2017 2016 Fuel derivative contracts $ (29 ) * $ 19 * $ 94 * $ 141 * $ 8 $ (4 ) Interest rate derivatives — * (2 ) * 2 * 2 * — (2 ) Total $ (29 ) $ 17 $ 96 $ 143 $ 8 $ (6 ) *Net of tax (a) Amounts related to fuel derivative contracts and interest rate derivatives, which are included in Fuel and oil and Interest expense, respectively. (b) Amounts are included in Other (gains) losses, net. Derivatives in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives (effective portion) (Gain) loss reclassified from AOCI into income (effective portion)(a) (Gain) loss recognized in income on derivatives (ineffective portion)(b) Nine months ended Nine months ended Nine months ended September 30, September 30, September 30, (in millions) 2017 2016 2017 2016 2017 2016 Fuel derivative contracts $ 104 * $ (62 ) * $ 282 * $ 484 * $ 29 $ (3 ) Interest rate derivatives 1 * 4 * 6 * 7 * — (3 ) Total $ 105 $ (58 ) $ 288 $ 491 $ 29 $ (6 ) *Net of tax (a) Amounts related to fuel derivative contracts and interest rate derivatives, which are included in Fuel and oil and Interest expense, respectively. (b) Amounts are included in Other (gains) losses, net. |
Derivatives Not in Cash Flow Hedging Relationships | Derivatives not in cash flow hedging relationships (Gain) loss recognized in income on derivatives Three months ended Location of (gain) loss recognized in income on derivatives September 30, (in millions) 2017 2016 Fuel derivative contracts $ (4 ) $ 35 Other (gains) losses, net Interest rate derivatives (1 ) — Interest expense $ (5 ) $ 35 Derivatives not in cash flow hedging relationships (Gain) loss recognized in income on derivatives Nine months ended Location of (gain) loss September 30, recognized in income (in millions) 2017 2016 on derivatives Fuel derivative contracts $ 80 $ 23 Other (gains) losses, net Interest rate derivatives (3 ) — Interest expense $ 77 $ 23 |
Fair Values of Fuel Derivatives, Amounts Posted as Collateral, and Collateral Posting Threshold Amounts | The following table provides the fair values of fuel derivatives, amounts posted as collateral, and applicable collateral posting threshold amounts as of September 30, 2017 , at which such postings are triggered: Counterparty (CP) (in millions) A B C D E F Other (a) Total Fair value of fuel derivatives $ (42 ) $ (3 ) $ 16 $ 10 $ 4 $ 3 $ 2 $ (10 ) Cash collateral held from (by) CP (18 ) — — — 4 — — (14 ) Aircraft collateral pledged to CP — — — — — — — — Letters of credit (LC) — — — — — — — — Option to substitute LC for aircraft (200) to (600)(b) (100) to (500)(c) (150) to (550)(c) (150) to (550)(c) N/A N/A Option to substitute LC for cash N/A >(500)(c) (75) to (150) or >(550)(c) (125) to (150) or >(550)(d) (d) N/A If credit rating is investment grade, fair value of fuel derivative level at which: Cash is provided to CP (50) to (200) or >(600) (50) to (100) or >(500) (75) to (150) or >(550) (125) to (150) or >(550) >(100) >(65) Cash is received from CP >50(e) >150(e) >250(e) >75(e) >0(e) >30(e) Aircraft or cash can be pledged to CP as collateral (200) to (600)(f) (100) to (500)(c) (150) to (550)(c) (150) to (550)(c) N/A N/A If credit rating is non-investment grade, fair value of fuel derivative level at which: Cash is provided to CP (0) to (200) or >(600) (0) to (100) or >(500) (0) to (150) or >(550) (0) to (150) or >(550) (g) (g) Cash is received from CP (g) (g) (g) (g) (g) (g) Aircraft or cash can be pledged to CP as collateral (200) to (600) (100) to (500) (150) to (550) (150) to (550) N/A N/A (a) Individual counterparties with fair value of fuel derivatives < $2 million . (b) The Company has the option of providing letters of credit in addition to aircraft collateral if the appraised value of the aircraft does not meet the collateral requirements. (c) The Company has the option of providing cash, letters of credit, or pledging aircraft as collateral. (d) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (e) Thresholds may vary based on changes in credit ratings within investment grade. (f) The Company has the option of providing cash or pledging aircraft as collateral. (g) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. |
Comprehensive Income (Tables)
Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Components of Comprehensive Income | The differences between Net income and Comprehensive income for the three and nine months ended September 30, 2017 and 2016 were as follows: Three months ended September 30, (in millions) 2017 2016 NET INCOME $ 503 $ 388 Unrealized gain on fuel derivative instruments, net of deferred taxes of $73 and $72 123 122 Unrealized gain on interest rate derivative instruments, net of deferred taxes of $- and $2 2 4 Other, net of deferred taxes of $2 and $2 2 3 Total other comprehensive income $ 127 $ 129 COMPREHENSIVE INCOME $ 630 $ 517 Nine months ended September 30, (in millions) 2017 2016 NET INCOME $ 1,600 $ 1,722 Unrealized gain on fuel derivative instruments, net of deferred taxes of $105 and $321 178 546 Unrealized gain on interest rate derivative instruments, net of deferred taxes of $2 and $1 5 3 Other, net of deferred taxes of $2 and $2 4 3 Total other comprehensive income $ 187 $ 552 COMPREHENSIVE INCOME $ 1,787 $ 2,274 |
Rollforward of the Amounts Included in AOCI, Net of Taxes | A rollforward of the amounts included in AOCI is shown below for the three and nine months ended September 30, 2017 : (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax Accumulated other comprehensive income (loss) Balance at June 30, 2017 $ (412 ) $ (13 ) $ (14 ) $ 22 $ 154 $ (263 ) Changes in fair value 45 — — 4 (18 ) 31 Reclassification to earnings 151 2 — — (57 ) 96 Balance at September 30, 2017 $ (216 ) $ (11 ) $ (14 ) $ 26 $ 79 $ (136 ) (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax Accumulated other comprehensive income (loss) Balance at December 31, 2016 $ (499 ) $ (18 ) $ (14 ) $ 20 $ 188 $ (323 ) Changes in fair value (165 ) (1 ) — 6 59 (101 ) Reclassification to earnings 448 8 — — (168 ) 288 Balance at September 30, 2017 $ (216 ) $ (11 ) $ (14 ) $ 26 $ 79 $ (136 ) |
Reclassification out of Accumulated Other Comprehensive Income | The following tables illustrate the significant amounts reclassified out of each component of AOCI for the three and nine months ended September 30, 2017 : Three months ended September 30, 2017 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income AOCI components Unrealized loss on fuel derivative instruments $ 151 Fuel and oil expense 57 Less: Tax expense $ 94 Net of tax Unrealized loss on interest rate derivative instruments $ 2 Interest expense — Less: Tax expense $ 2 Net of tax Total reclassifications for the period $ 96 Net of tax Nine months ended September 30, 2017 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income AOCI components Unrealized loss on fuel derivative instruments $ 448 Fuel and oil expense 166 Less: Tax Expense $ 282 Net of tax Unrealized loss on interest rate derivative instruments $ 8 Interest expense 2 Less: Tax Expense $ 6 Net of tax Total reclassifications for the period $ 288 Net of tax |
Supplemental Financial Inform16
Supplemental Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Table Text Block [Abstract] | |
Other Assets | (in millions) September 30, 2017 December 31, 2016 Derivative contracts $ 84 $ 120 Intangible assets, net 416 426 Capital lease receivable 79 90 Non-current prepaid maintenance 113 6 Other 151 132 Other assets $ 843 $ 774 |
Schedule of Accounts Payable | (in millions) September 30, 2017 December 31, 2016 Accounts payable trade $ 165 $ 138 Salaries payable 175 200 Taxes payable 180 184 Aircraft maintenance payable 33 26 Fuel payable 139 95 Other payables 432 535 Accounts payable $ 1,124 $ 1,178 |
Accrued Liabilities | (in millions) September 30, 2017 December 31, 2016 ProfitSharing and savings plans $ 450 $ 645 Aircraft and other lease related obligations 41 55 Permanently grounded aircraft liability 31 (a) — Vacation pay 348 355 Contract ratification bonuses 69 188 Health 93 96 Derivative contracts 80 158 Workers compensation 174 183 Property and income taxes 79 68 Other 228 237 Accrued liabilities $ 1,593 $ 1,985 |
Other Noncurrent Liabilities | (in millions) September 30, 2017 December 31, 2016 Postretirement obligation $ 274 $ 256 Non-current lease-related obligations 94 125 Permanently grounded aircraft liability 18 (a) — Other deferred compensation 225 204 Derivative contracts 21 35 Other 81 108 Other noncurrent liabilities $ 713 $ 728 (a) These amounts represent the current and noncurrent portion of the Company's cease-use liability recorded during third quarter 2017 , as a result of the Company grounding its remaining leased Boeing 737-300 aircraft on September 29, 2017. The liability reflects the remaining net lease payments due and certain lease return requirements that may have to be performed on these leased aircraft prior to their return to the lessors as of the cease-use date, but does not include the write–off of approximately $15 million in net prepaid rents associated with the aircraft at the grounding date, which were included in the $63 million charge recorded. This loss related to the grounding of the Classic fleet was recorded to Other operating expenses in the unaudited Condensed Consolidated Statement of Comprehensive Income during third quarter 2017. |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule Of Earnings Per Share Basic And Diluted | The following table sets forth the computation of basic and diluted net income per share (in millions, except per share amounts): Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 NUMERATOR: Net income $ 503 $ 388 $ 1,600 $ 1,722 Incremental income effect of interest on 5.25% convertible notes — 1 — 2 Net income after assumed conversion $ 503 $ 389 $ 1,600 $ 1,724 DENOMINATOR: Weighted-average shares outstanding, basic 597 618 605 630 Dilutive effect of Employee stock options and restricted stock units 1 1 1 2 Dilutive effect of 5.25% convertible notes — 6 — 6 Adjusted weighted-average shares outstanding, diluted 598 625 606 638 NET INCOME PER SHARE: Basic $ 0.84 $ 0.63 $ 2.65 $ 2.73 Diluted $ 0.84 $ 0.62 $ 2.64 $ 2.70 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Construction costs recorded in ACFO | Construction costs recorded in ACFO for the Company's various projects as of September 30, 2017 , and December 31, 2016 , were as follows: September 30, 2017 December 31, 2016 (in millions) ACFO ACFO, Net (b) Construction Obligation ACFO ACFO, Net (b) Construction Obligation FLL Terminal (a) $ 245 $ 244 $ 245 $ 132 $ 132 $ 132 LAX Terminal 1 (a) 417 404 417 344 336 344 LFMP - Terminal 540 474 517 538 486 522 LFMP - Parking Garage (a) 132 132 132 80 80 80 HOU International Terminal (c) 126 119 — 126 122 — $ 1,460 $ 1,373 $ 1,311 $ 1,220 $ 1,156 $ 1,078 (a) Projects still in progress. (b) Net of accumulated depreciation. (c) Project completed in 2015 at Houston William P. Hobby Airport ("HOU"). |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Assets and liabilities measured at fair value on a recurring basis | The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2017 , and December 31, 2016 : Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description September 30, 2017 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 1,025 $ 1,025 $ — $ — Commercial paper 420 — 420 — Certificates of deposit 15 — 15 — Short-term investments: Treasury bills 1,344 1,344 — — Certificates of deposit 236 — 236 — Fuel derivatives: Swap contracts (c) 12 — 12 — Option contracts (b) 164 — — 164 Option contracts (c) 58 — — 58 Other available-for-sale securities 101 101 — — Total assets $ 3,375 $ 2,470 $ 683 $ 222 Liabilities Fuel derivatives: Swap contracts (c) $ (27 ) $ — $ (27 ) $ — Option contracts (b) (76 ) — — (76 ) Option contracts (c) (141 ) — — (141 ) Interest rate derivatives (see Note 3) (21 ) — (21 ) — Total liabilities $ (265 ) $ — $ (48 ) $ (217 ) (a) Cash equivalents are primarily composed of money market investments. (b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net asset. See Note 3. (c) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net liability. See Note 3. Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description December 31, 2016 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 1,344 $ 1,344 $ — $ — Commercial paper 325 — 325 — Certificates of deposit 11 — 11 — Short-term investments: Treasury bills 1,345 1,345 — — Certificates of deposit 280 — 280 — Fuel derivatives: Swap contracts (c) 42 — 42 — Option contracts (b) 239 — — 239 Option contracts (c) 163 — — 163 Other available-for-sale securities 83 83 — — Total assets $ 3,832 $ 2,772 $ 658 $ 402 Liabilities Fuel derivatives: Swap contracts (c) $ (110 ) $ — $ (110 ) $ — Option contracts (b) (96 ) — — (96 ) Option contracts (c) (564 ) — — (564 ) Interest rate derivatives (see Note 3) (35 ) — (35 ) — Total liabilities $ (805 ) $ — $ (145 ) $ (660 ) (a) Cash equivalents are primarily composed of money market investments. (b) In the unaudited Consolidated Balance Sheet amounts are presented as a net asset. See Note 3. (c) In the unaudited Consolidated Balance Sheet amounts are presented as a net liability. See Note 3. |
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation | The following tables present the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2017 : Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at June 30, 2017 $ (233 ) Total gains (realized or unrealized) Included in earnings 10 Included in other comprehensive income 45 Purchases 25 (a) Sales — (a) Settlements 158 Balance at September 30, 2017 $ 5 The amount of total gains for the period included in earnings attributable to the change in unrealized gains or losses relating to option contracts still held at September 30, 2017 $ 4 (a) The purchase and sale of fuel derivatives are recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives is purchased as a single instrument or separate instruments. Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at December 31, 2016 $ (258 ) Total losses (realized or unrealized) Included in earnings (136 ) Included in other comprehensive income (164 ) Purchases 104 (a) Sales — (a) Settlements 459 Balance at September 30, 2017 $ 5 The amount of total losses for the period included in earnings attributable to the change in unrealized gains or losses relating to option contracts still held at September 30, 2017 $ (57 ) (a) The purchase and sale of fuel derivatives are recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives is purchased as a single instrument or separate instruments. |
Fair Value Valuation Techniques | The following table presents a range of the unobservable inputs utilized in the fair value measurements of the Company’s fuel derivatives classified as Level 3 at September 30, 2017 : Quantitative information about Level 3 fair value measurements Valuation technique Unobservable input Period (by year) Range Fuel derivatives Option model Implied volatility Fourth quarter 2017 14-30% 2018 19-28% 2019 18-23% Beyond 2019 17-21% |
Fair value, by Balance Sheet Grouping | The carrying amounts and estimated fair values of the Company’s long-term debt (including current maturities), as well as the applicable fair value hierarchy tier, at September 30, 2017 , are presented in the table below. The fair values of the Company’s publicly held long-term debt are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets; therefore, the Company has categorized these agreements as Level 2. Debt under seven of the Company’s debt agreements is not publicly held. The Company has determined the estimated fair value of this debt to be Level 3, as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes indicative pricing from counterparties and a discounted cash flow method to estimate the fair value of the Level 3 items. (in millions) Carrying value Estimated fair value Fair value level hierarchy French Credit Agreements due 2018 - 2.15% $ 7 $ 7 Level 3 Fixed-rate 737 Aircraft Notes payable through 2018 - 7.03% 3 3 Level 3 2.75% Notes due 2019 301 305 Level 2 Term Loan Agreement payable through 2019 - 6.315% 76 77 Level 3 Term Loan Agreement payable through 2019 - 4.84% 19 20 Level 3 2.65% Notes due 2020 495 503 Level 2 Term Loan Agreement payable through 2020 - 5.223% 249 252 Level 3 737 Aircraft Notes payable through 2020 166 165 Level 3 Pass Through Certificates due 2022 - 6.24% 294 322 Level 2 Term Loan Agreement payable through 2026 - 2.53% 215 215 Level 3 3.00% Notes due 2026 300 296 Level 2 7.375% Debentures due 2027 128 157 Level 2 |
New Accounting Pronouncements (
New Accounting Pronouncements (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2016USD ($) | Sep. 30, 2017USD ($)aircraft | |
New Accounting Pronouncements or Change in Accounting Principle | ||
Aircraft under operating lease | aircraft | 53 | |
Net Present Value Aircraft Operating Leases | $ 1,000 | |
Rapid Rewards Frequent Flier Liability | $ 64 | |
Reclassification From Other Revenue Into Passenger Revenue Related to the Adoption of Topic 606 of the New Revenue Recognition Standard | $ 600 | |
Minimum | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
Estimated Impact | 20 | |
Maximum | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
Estimated Impact | 25 | |
B-717-200 | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
Aircraft under operating lease | aircraft | 76 |
Financial Derivative Instrume21
Financial Derivative Instruments Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Derivative [Line Items] | ||||
Perecentage of actual consumption hedged | 61.00% | 62.00% | ||
Premiums paid for fuel derivative contracts | $ 34 | $ 34 | $ 102 | $ 117 |
Current Unrealized Net Gains (Losses) in OCI | (118) | (118) | ||
Maximum sum of derivatives of counterparty to be included in other (less than $2 million) | $ 2 | $ 2 | ||
Maximum cash collateral provided as a percentage of derivative contract value (in hundredths) | 100.00% | 100.00% | ||
Maximum letter of credit percent of collateral | 100.00% | 100.00% | ||
Remainder of Current Year | ||||
Derivative [Line Items] | ||||
Derivative, Nonmonetary Notional Amount, Percent of Required Need, Coverage | 64.00% | 64.00% |
Financial Derivative Instrume22
Financial Derivative Instruments - Fuel Hedging (Details) gal in Millions | Sep. 30, 2017gal | [1] |
Remainder of Current Year | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 320 | |
2,018 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 1,647 | |
2,019 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 1,377 | |
Beyond 2,019 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 358 | |
[1] | Due to the types of derivatives utilized by the Company and different price levels of those contracts, these volumes represent the maximum economic hedge in place and may vary significantly as market prices fluctuate. |
Financial Derivative Instrume23
Financial Derivative Instruments - Fair Values by Balance Sheet Location (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | |
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | $ 234 | $ 444 |
Derivative Liability, Fair Value, Gross Liability | [1] | 265 | 805 |
Designated as Hedging Instrument | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 124 | 137 |
Derivative Liability, Fair Value, Gross Liability | [1] | 138 | 491 |
Not Designated as Hedging Instrument | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 110 | 307 |
Derivative Liability, Fair Value, Gross Liability | [1] | 127 | 314 |
Fuel derivatives | |||
Derivatives, Fair Value [Line Items] | |||
Collateral Already Posted, Aggregate Fair Value | 14 | ||
Fuel derivatives | Prepaid expenses and other current assets | |||
Derivatives, Fair Value [Line Items] | |||
Total Collateral Already Received Aggregate Fair Value | 3 | 4 | |
Fuel derivatives | Accrued Liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Collateral Already Posted, Aggregate Fair Value | 18 | 311 | |
Fuel derivatives | Accounts Payable | |||
Derivatives, Fair Value [Line Items] | |||
Due To Third Parties For Settled Fuel Contracts | 50 | 75 | |
Fuel derivatives | Other Assets | |||
Derivatives, Fair Value [Line Items] | |||
Total Collateral Already Received Aggregate Fair Value | 1 | 6 | |
Fuel derivatives | Designated as Hedging Instrument | Prepaid expenses and other current assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 23 | 7 |
Derivative Asset, Fair Value, Gross Liability | [1] | 36 | 44 |
Fuel derivatives | Designated as Hedging Instrument | Accrued Liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Liability, Fair Value, Gross Asset | [1] | 16 | 4 |
Derivative Liability, Fair Value, Gross Liability | [1] | 84 | 412 |
Fuel derivatives | Designated as Hedging Instrument | Other Assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 85 | 126 |
Derivative Asset, Fair Value, Gross Liability | [1] | 0 | 0 |
Fuel derivatives | Not Designated as Hedging Instrument | Prepaid expenses and other current assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 41 | 54 |
Derivative Asset, Fair Value, Gross Liability | [1] | 25 | 0 |
Fuel derivatives | Not Designated as Hedging Instrument | Accrued Liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Liability, Fair Value, Gross Asset | [1] | 55 | 201 |
Derivative Liability, Fair Value, Gross Liability | [1] | 85 | 262 |
Fuel derivatives | Not Designated as Hedging Instrument | Other Assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 14 | 52 |
Derivative Asset, Fair Value, Gross Liability | [1] | 14 | 52 |
Interest rate derivatives | Designated as Hedging Instrument | Other Noncurrent Liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Liability, Fair Value, Gross Asset | [1] | 0 | 0 |
Derivative Liability, Fair Value, Gross Liability | [1] | 18 | 35 |
Interest rate derivatives | Not Designated as Hedging Instrument | Other Noncurrent Liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Liability, Fair Value, Gross Asset | [1] | 0 | 0 |
Derivative Liability, Fair Value, Gross Liability | [1] | $ 3 | $ 0 |
[1] | Represents the position of each trade before consideration of offsetting positions with each counterparty and does not include the impact of cash collateral deposits provided to or received from counterparties. See discussion of credit risk and collateral following in this Note. |
Financial Derivative Instrume24
Financial Derivative Instruments - Offsetting of Derivative Assets (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | |
Offsetting Assets [Line Items] | |||
Asset derivative contracts, net | $ 84 | $ 120 | |
Fuel derivatives | Prepaid expenses and other current assets | |||
Offsetting Assets [Line Items] | |||
Gross amounts of recognized assets | 64 | 61 | |
Gross liability amounts offset in the Balance Sheet | (64) | (48) | |
Asset derivative contracts, net | 0 | 13 | |
Fuel derivatives | Other Assets | |||
Offsetting Assets [Line Items] | |||
Gross amounts of recognized assets | 99 | 178 | |
Gross liability amounts offset in the Balance Sheet | (15) | (58) | |
Asset derivative contracts, net | [1] | 84 | 120 |
Fuel derivatives | Accrued Liabilities | |||
Offsetting Assets [Line Items] | |||
Gross amounts of recognized assets | 89 | 516 | |
Gross liability amounts offset in the Balance Sheet | (89) | (516) | |
Asset derivative contracts, net | [1] | $ 0 | $ 0 |
[1] | The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 5. |
Financial Derivative Instrume25
Financial Derivative Instruments - Offsetting of Derivative Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | |
Fuel derivatives | Prepaid expenses and other current assets | |||
Offsetting Liabilities [Line Items] | |||
Gross amounts of recognized liabilities | $ 64 | $ 48 | |
Gross asset amounts offset in the Balance Sheet | (64) | (48) | |
Liability derivative contracts, net | 0 | 0 | |
Fuel derivatives | Other Assets | |||
Offsetting Liabilities [Line Items] | |||
Gross amounts of recognized liabilities | 15 | 58 | |
Gross asset amounts offset in the Balance Sheet | (15) | (58) | |
Liability derivative contracts, net | [1] | 0 | 0 |
Fuel derivatives | Accrued Liabilities | |||
Offsetting Liabilities [Line Items] | |||
Gross amounts of recognized liabilities | 169 | 674 | |
Gross asset amounts offset in the Balance Sheet | (89) | (516) | |
Liability derivative contracts, net | [1] | 80 | 158 |
Interest rate derivatives | Other Noncurrent Liabilities | |||
Offsetting Liabilities [Line Items] | |||
Gross amounts of recognized liabilities | 21 | 35 | |
Gross asset amounts offset in the Balance Sheet | 0 | 0 | |
Liability derivative contracts, net | [1] | $ 21 | $ 35 |
[1] | The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 5. |
Financial Derivative Instrume26
Financial Derivative Instruments - (Gain) Loss by Hedging Relationship (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | ||
Cash Flow Hedging | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
(Gain) Loss recognized in AOCI on derivatives (effective portion) | $ (29) | $ 17 | $ 105 | $ (58) | |
(Gain) Loss reclassified from AOCI into income (effective portion) | [1] | 96 | 143 | 288 | 491 |
(Gain) Loss recognized in income on derivatives (ineffective portion) | [2] | 8 | (6) | 29 | (6) |
Fuel derivatives | Cash Flow Hedging | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
(Gain) Loss recognized in AOCI on derivatives (effective portion) | [3] | (29) | 19 | 104 | (62) |
(Gain) Loss reclassified from AOCI into income (effective portion) | [1],[3] | 94 | 141 | 282 | 484 |
(Gain) Loss recognized in income on derivatives (ineffective portion) | [2] | 8 | (4) | 29 | (3) |
Interest rate derivatives | Cash Flow Hedging | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
(Gain) Loss recognized in AOCI on derivatives (effective portion) | [3] | 0 | (2) | 1 | 4 |
(Gain) Loss reclassified from AOCI into income (effective portion) | [1],[3] | 2 | 2 | 6 | 7 |
(Gain) Loss recognized in income on derivatives (ineffective portion) | [2] | 0 | (2) | 0 | (3) |
Other Nonoperating Income Expense | Not Designated as Hedging Instrument | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
(Gain) loss recognized in income on derivatives | (5) | 35 | 77 | 23 | |
Other Nonoperating Income Expense | Fuel derivatives | Not Designated as Hedging Instrument | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
(Gain) loss recognized in income on derivatives | (4) | 35 | 80 | 23 | |
Other Nonoperating Income Expense | Interest rate derivatives | Not Designated as Hedging Instrument | |||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||
(Gain) loss recognized in income on derivatives | $ (1) | $ 0 | $ (3) | $ 0 | |
[1] | Amounts related to fuel derivative contracts and interest rate derivatives, which are included in Fuel and oil and Interest expense, respectively. | ||||
[2] | Amounts are included in Other (gains) losses, net. | ||||
[3] | Net of tax |
Financial Derivative Instrume27
Financial Derivative Instruments - Fair Values of Fuel Derivatives Amounts Posted as Collateral (Details) - Fuel derivatives $ in Millions | Sep. 30, 2017USD ($) | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Derivative Liability, Fair Value, Amount Not Offset Against Collateral | $ (10) | |
Cash collateral held from (by) CP | (14) | |
Aircraft collateral pledged to CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty A | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Derivative Liability, Fair Value, Amount Not Offset Against Collateral | (42) | |
Cash collateral held from (by) CP | (18) | |
Aircraft collateral pledged to CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty B | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Derivative Liability, Fair Value, Amount Not Offset Against Collateral | (3) | |
Cash collateral held from (by) CP | 0 | |
Aircraft collateral pledged to CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty C | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 16 | |
Cash collateral held from (by) CP | 0 | |
Aircraft collateral pledged to CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty D | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 10 | |
Cash collateral held from (by) CP | 0 | |
Aircraft collateral pledged to CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty E | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 4 | |
Cash collateral held from (by) CP | 4 | |
Aircraft collateral pledged to CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty F | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 3 | |
Cash collateral held from (by) CP | 0 | |
Aircraft collateral pledged to CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty Other | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 2 | [1] |
Cash collateral held from (by) CP | 0 | [1] |
Aircraft collateral pledged to CP | 0 | [1] |
Letters of credit (LC) | 0 | [1] |
Minimum | Counterparty A | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for aircraft | (200) | [2] |
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (50) | |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (600) | |
Fair value of fuel derivative level at which cash is received from CP | 50 | [3] |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (200) | [4] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | 0 | |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (600) | |
Fair value of fuel derivative level at which cash is received from CP | [5] | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (200) | |
Minimum | Counterparty B | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for aircraft | (100) | [6] |
Fair Value Of Fuel Derivative Levels In Which Letters Of Credit May Be Substituted For Cash Threshold 1 | (500) | [6] |
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (50) | |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (500) | |
Fair value of fuel derivative level at which cash is received from CP | 150 | [3] |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (100) | [6] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | 0 | |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (500) | |
Fair value of fuel derivative level at which cash is received from CP | [5] | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (100) | |
Minimum | Counterparty C | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for aircraft | (150) | [6] |
Fair Value Of Fuel Derivative Levels In Which Letters Of Credit May Be Substituted For Cash Threshold 1 | (75) | [6] |
Option to substitute LC for cash Threshold 2 | (550) | [6] |
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (75) | |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (550) | |
Fair value of fuel derivative level at which cash is received from CP | 250 | [3] |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (150) | [6] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | 0 | |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (550) | |
Fair value of fuel derivative level at which cash is received from CP | [5] | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (150) | |
Minimum | Counterparty D | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for aircraft | (150) | [6] |
Fair Value Of Fuel Derivative Levels In Which Letters Of Credit May Be Substituted For Cash Threshold 1 | (125) | [7] |
Option to substitute LC for cash Threshold 2 | (550) | [7] |
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (125) | |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (500) | |
Fair value of fuel derivative level at which cash is received from CP | 75 | [3] |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (150) | [6] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | 0 | |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (550) | |
Fair value of fuel derivative level at which cash is received from CP | [5] | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (150) | |
Minimum | Counterparty E | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Fair Value Of Fuel Derivative Levels In Which Letters Of Credit May Be Substituted For Cash Threshold 1 | [7] | |
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (100) | |
Fair value of fuel derivative level at which cash is received from CP | 0 | [3] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | [5] | |
Fair value of fuel derivative level at which cash is received from CP | [5] | |
Minimum | Counterparty F | ||
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (65) | |
Fair value of fuel derivative level at which cash is received from CP | (30) | [3] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | [5] | |
Fair value of fuel derivative level at which cash is received from CP | [5] | |
Maximum | Counterparty A | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for aircraft | (600) | [2] |
Fair Value Of Fuel Derivative Levels In Which Letters Of Credit May Be Substituted For Cash Threshold 1 | ||
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (200) | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (600) | [4] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (200) | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (600) | |
Maximum | Counterparty B | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for aircraft | (500) | [6] |
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (100) | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (500) | [6] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (100) | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (500) | |
Maximum | Counterparty C | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for aircraft | (550) | [6] |
Fair Value Of Fuel Derivative Levels In Which Letters Of Credit May Be Substituted For Cash Threshold 1 | (150) | [6] |
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (150) | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (550) | [6] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (150) | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (550) | |
Maximum | Counterparty D | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for aircraft | (550) | [6] |
Fair Value Of Fuel Derivative Levels In Which Letters Of Credit May Be Substituted For Cash Threshold 1 | (150) | [7] |
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (150) | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (550) | [6] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (150) | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | $ (550) | |
[1] | Individual counterparties with fair value of fuel derivatives <$2 million. | |
[2] | The Company has the option of providing letters of credit in addition to aircraft collateral if the appraised value of the aircraft does not meet the collateral requirements. | |
[3] | Thresholds may vary based on changes in credit ratings within investment grade. | |
[4] | The Company has the option of providing cash or pledging aircraft as collateral. | |
[5] | Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. | |
[6] | The Company has the option of providing cash, letters of credit, or pledging aircraft as collateral. | |
[7] | The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. |
Comprehensive Income (Details)
Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Net income | $ 503 | $ 388 | $ 1,600 | $ 1,722 |
Other, net of deferred taxes | 2 | 3 | 4 | 3 |
Total other comprehensive income (loss) | 127 | 129 | 187 | 552 |
Total comprehensive income | 630 | 517 | 1,787 | 2,274 |
Deferred taxes on unrealized gain (loss) on other | 2 | 2 | 2 | 2 |
Less: Tax Expense | 288 | 230 | 913 | 1,016 |
Interest Expense | (28) | (31) | (84) | (93) |
Fuel derivatives | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning Balance | (412) | (499) | ||
Changes in fair value | 45 | (165) | ||
Reclassification to earnings | 151 | 448 | ||
Ending Balance | (216) | (216) | ||
Interest rate derivatives | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning Balance | (13) | (18) | ||
Changes in fair value | 0 | (1) | ||
Reclassification to earnings | 2 | 8 | ||
Ending Balance | (11) | (11) | ||
Defined benefit plan items | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning Balance | (14) | (14) | ||
Changes in fair value | 0 | 0 | ||
Reclassification to earnings | 0 | 0 | ||
Ending Balance | (14) | (14) | ||
Other | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning Balance | 22 | 20 | ||
Changes in fair value | 4 | 6 | ||
Reclassification to earnings | 0 | 0 | ||
Ending Balance | 26 | 26 | ||
Deferred Tax | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning Balance | 154 | 188 | ||
Changes in fair value | (18) | 59 | ||
Reclassification to earnings | (57) | (168) | ||
Ending Balance | 79 | 79 | ||
AOCI Including Portion Attributable to Noncontrolling Interest | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Beginning Balance | (263) | (323) | ||
Changes in fair value | 31 | (101) | ||
Reclassification to earnings | 96 | 288 | ||
Ending Balance | (136) | (136) | ||
Interest rate derivatives | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Unrealized gain (loss) on derivatives, net of tax | 2 | 4 | 5 | 3 |
Deferred taxes on unrealized gain (loss) on derivatives | 0 | 2 | 2 | 1 |
Fuel derivatives | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Unrealized gain (loss) on derivatives, net of tax | 123 | 122 | 178 | 546 |
Deferred taxes on unrealized gain (loss) on derivatives | $ 73 | $ 72 | $ 105 | $ 321 |
Comprehensive Income - Reclassi
Comprehensive Income - Reclassification out of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Fuel and oil | $ 1,003 | $ 941 | $ 2,915 | $ 2,696 |
Interest Expense | (28) | (31) | (84) | (93) |
Less: Tax Expense | (288) | $ (230) | (913) | $ (1,016) |
Reclassification out of Accumulated Other Comprehensive Income | ||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Net of Tax | 96 | 288 | ||
Fuel derivatives | Reclassification out of Accumulated Other Comprehensive Income | ||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Less: Tax Expense | 57 | 166 | ||
Net of Tax | 94 | 282 | ||
Interest rate derivatives | Reclassification out of Accumulated Other Comprehensive Income | ||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Less: Tax Expense | 0 | 2 | ||
Net of Tax | 2 | 6 | ||
Fuel derivatives | ||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Reclassification to earnings | 151 | 448 | ||
Interest rate derivatives | ||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Reclassification to earnings | $ 2 | $ 8 |
Supplemental Financial Inform30
Supplemental Financial Information - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Supplemental Financial Information Narrative [Abstract] | ||||
Aircraft Grounding Charge Prepaid Rent | $ 15 | $ 15 | ||
Aircraft grounding charge | $ 63 | $ 0 | $ 63 | $ 0 |
Supplemental Financial Inform31
Supplemental Financial Information - Other Assets (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Other Assets [Abstract] | ||
Asset derivative contracts, net | $ 84 | $ 120 |
Intangible assets | 416 | 426 |
Capital lease receivable | 79 | 90 |
Non-current prepaid maintenance | 113 | 6 |
Other | 151 | 132 |
Other assets | $ 843 | $ 774 |
Supplemental Financial Inform32
Supplemental Financial Information - Accounts Payable (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Supplemental Financial Information - Accounts Payable [Abstract] | ||
Accounts payable trade | $ 165 | $ 138 |
Salaries payable | 175 | 200 |
Taxes payable | 180 | 184 |
Aircraft maintenance payable | 33 | 26 |
Fuel payable | 139 | 95 |
Other payables | 432 | 535 |
Accounts Payable, Current | $ 1,124 | $ 1,178 |
Supplemental Financial Inform33
Supplemental Financial Information - Accrued Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | |
Accrued Liabilities, Current [Abstract] | |||
ProfitSharing and savings plans | $ 450 | $ 645 | |
Aircraft and other lease related obligations | 41 | 55 | |
Permanently grounded aircraft liability current | 31 | [1] | 0 |
Vacation pay | 348 | 355 | |
Contract ratification bonuses | 69 | 188 | |
Health | 93 | 96 | |
Workers compensation | 174 | 183 | |
Property and income taxes | 79 | 68 | |
Other | 228 | 237 | |
Accrued liabilities | 1,593 | 1,985 | |
Fuel derivatives | Accrued Liabilities | |||
Accrued Liabilities, Current [Abstract] | |||
Derivative contracts | $ 80 | $ 158 | |
[1] | These amounts represent the current and noncurrent portion of the Company's cease-use liability recorded during third quarter 2017, as a result of the Company grounding its remaining leased Boeing 737-300 aircraft on September 29, 2017. |
Supplemental Financial Inform34
Supplemental Financial Information - Other Non-Current Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | |
Other Liabilities, Noncurrent [Abstract] | |||
Postretirement obligation | $ 274 | $ 256 | |
Non-current lease-related obligations | 94 | 125 | |
Permanently grounded aircraft liability noncurrent | 18 | [1] | 0 |
Other deferred compensation | 225 | 204 | |
Other | 81 | 108 | |
Other noncurrent liabilities | 713 | 728 | |
Other Noncurrent Liabilities | |||
Other Liabilities, Noncurrent [Abstract] | |||
Derivative contracts | $ 21 | $ 35 | |
[1] | These amounts represent the current and noncurrent portion of the Company's cease-use liability recorded during third quarter 2017, as a result of the Company grounding its remaining leased Boeing 737-300 aircraft on September 29, 2017. |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
NUMERATOR: | ||||
Net income | $ 503 | $ 388 | $ 1,600 | $ 1,722 |
Incremental income effect of interest on 5.25% convertible notes | 0 | 1 | 0 | 2 |
Net income after assumed conversion | $ 503 | $ 389 | $ 1,600 | $ 1,724 |
DENOMINATOR: | ||||
Weighted-average shares outstanding, basic | 597 | 618 | 605 | 630 |
Dilutive effect of Employee stock options and restricted stock units | 1 | 1 | 1 | 2 |
Dilutive effect of 5.25% convertible notes | 0 | 6 | 0 | 6 |
Adjusted weighted-average shares outstanding, diluted | 598 | 625 | 606 | 638 |
NET INCOME PER SHARE: | ||||
Basic | $ 0.84 | $ 0.63 | $ 2.65 | $ 2.73 |
Diluted | $ 0.84 | $ 0.62 | $ 2.64 | $ 2.70 |
Commitments and Contingencies36
Commitments and Contingencies (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Sep. 30, 2017 | Dec. 31, 2010 | Dec. 31, 2016 | ||
Airport Project [Line Items] | ||||
Assets constructed for others | $ 1,460 | $ 1,220 | ||
Assets constructed for others, net | 1,373 | 1,156 | ||
Construction obligation | 1,311 | 1,078 | ||
Fort Lauderdale-Hollywood International Airport | ||||
Airport Project [Line Items] | ||||
Total Expected Cost Of Airport Project | 333 | |||
Assets constructed for others | [1] | 245 | 132 | |
Assets constructed for others, net | [1],[2] | 244 | 132 | |
Construction obligation | [1] | 245 | 132 | |
Los Angeles World Airport Terminal 1 | ||||
Airport Project [Line Items] | ||||
Total Expected Cost Of Airport Project | 526 | |||
Total Expected Cost Of Airport Project Nonproprietary | 510 | |||
Remaining guaranteed obligation | 299 | |||
Assets constructed for others | [1] | 417 | 344 | |
Assets constructed for others, net | [1],[2] | 404 | 336 | |
Construction obligation | [1] | 417 | 344 | |
Los Angeles World Airport Terminal 1.5 | ||||
Airport Project [Line Items] | ||||
Total Expected Cost Of Airport Project | 479 | |||
Remaining guaranteed obligation | 0 | |||
Dallas Love Field Terminal | ||||
Airport Project [Line Items] | ||||
Assets constructed for others | 540 | 538 | ||
Assets constructed for others, net | [2] | 474 | 486 | |
Construction obligation | 517 | 522 | ||
Municipal bonds issued | $ 456 | |||
Municipal bonds principal remaining | 432 | |||
Dallas Love Field Parking Garage | ||||
Airport Project [Line Items] | ||||
Assets constructed for others | [1] | 132 | 80 | |
Assets constructed for others, net | [1],[2] | 132 | 80 | |
Construction obligation | [1] | 132 | 80 | |
Houston Hobby Airport | ||||
Airport Project [Line Items] | ||||
Assets constructed for others | [3] | 126 | 126 | |
Assets constructed for others, net | [2],[3] | 119 | 122 | |
Construction obligation | [3] | $ 0 | $ 0 | |
[1] | Projects still in progress. | |||
[2] | Net of accumulated depreciation. | |||
[3] | Project completed in 2015 at Houston William P. Hobby Airport ("HOU"). |
Fair Value Measurements - Measu
Fair Value Measurements - Measured on Recurring Basis (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | |||
Fuel derivatives: | |||||
Derivative Asset, Fair Value, Gross Asset | [1] | $ 234 | $ 444 | ||
Fuel derivatives: | |||||
Derivative Liability, Fair Value, Gross Liability | [1] | (265) | (805) | ||
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||||
Assets | |||||
Treasury bills | 1,344 | 1,345 | |||
Fuel derivatives: | |||||
Other available for sale securities | 101 | 83 | |||
Total assets | 2,470 | 2,772 | |||
Liabilities | |||||
Interest rate derivatives (see Note 3) | 0 | 0 | |||
Total Liabilities | 0 | 0 | |||
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||||
Assets | |||||
Treasury bills | 0 | 0 | |||
Fuel derivatives: | |||||
Other available for sale securities | 0 | 0 | |||
Total assets | 683 | 658 | |||
Liabilities | |||||
Interest rate derivatives (see Note 3) | (21) | (35) | |||
Total Liabilities | (48) | (145) | |||
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||||
Assets | |||||
Treasury bills | 0 | 0 | |||
Fuel derivatives: | |||||
Other available for sale securities | 0 | 0 | |||
Total assets | 222 | 402 | |||
Liabilities | |||||
Interest rate derivatives (see Note 3) | 0 | 0 | |||
Total Liabilities | (217) | (660) | |||
Cash Equivalents | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||||
Assets | |||||
Cash equivalents | 1,025 | [2] | 1,344 | [3] | |
Cash Equivalents | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||||
Assets | |||||
Cash equivalents | 0 | [2] | 0 | [3] | |
Cash Equivalents | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||||
Assets | |||||
Cash equivalents | 0 | [2] | 0 | [3] | |
Commercial paper | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||||
Assets | |||||
Cash equivalents | 0 | 0 | |||
Commercial paper | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||||
Assets | |||||
Cash equivalents | 420 | 325 | |||
Commercial paper | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||||
Assets | |||||
Cash equivalents | 0 | 0 | |||
Certificates of deposit | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||||
Assets | |||||
Cash equivalents | 0 | 0 | |||
Certificates of deposit | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||||
Assets | |||||
Cash equivalents | 15 | 11 | |||
Certificates of deposit | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||||
Assets | |||||
Cash equivalents | 0 | 0 | |||
Certificates of deposit | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||||
Assets | |||||
Investments | 0 | 0 | |||
Certificates of deposit | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||||
Assets | |||||
Investments | 236 | 280 | |||
Certificates of deposit | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||||
Assets | |||||
Investments | 0 | 0 | |||
Swap | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||||
Fuel derivatives: | |||||
Derivative Liability, Fair Value, Gross Asset | 0 | [4] | 0 | [5] | |
Fuel derivatives: | |||||
Derivative Liability, Fair Value, Gross Liability | 0 | [4] | 0 | [5] | |
Swap | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||||
Fuel derivatives: | |||||
Derivative Liability, Fair Value, Gross Asset | 12 | [4] | 42 | [5] | |
Fuel derivatives: | |||||
Derivative Liability, Fair Value, Gross Liability | (27) | [4] | (110) | [5] | |
Swap | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||||
Fuel derivatives: | |||||
Derivative Liability, Fair Value, Gross Asset | 0 | [4] | 0 | [5] | |
Fuel derivatives: | |||||
Derivative Liability, Fair Value, Gross Liability | 0 | [4] | 0 | [5] | |
Options Held | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||||
Fuel derivatives: | |||||
Derivative Asset, Fair Value, Gross Asset | 0 | [6] | 0 | [7] | |
Derivative Liability, Fair Value, Gross Asset | 0 | [4] | 0 | [5] | |
Fuel derivatives: | |||||
Derivative Asset, Fair Value, Gross Liability | 0 | [6] | 0 | [7] | |
Derivative Liability, Fair Value, Gross Liability | 0 | [4] | 0 | [5] | |
Options Held | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||||
Fuel derivatives: | |||||
Derivative Asset, Fair Value, Gross Asset | 0 | [6] | 0 | [7] | |
Derivative Liability, Fair Value, Gross Asset | 0 | [4] | 0 | [5] | |
Fuel derivatives: | |||||
Derivative Asset, Fair Value, Gross Liability | 0 | [6] | 0 | [7] | |
Derivative Liability, Fair Value, Gross Liability | 0 | [4] | 0 | [5] | |
Options Held | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||||
Fuel derivatives: | |||||
Derivative Asset, Fair Value, Gross Asset | 164 | [6] | 239 | [7] | |
Derivative Liability, Fair Value, Gross Asset | 58 | [4] | 163 | [5] | |
Fuel derivatives: | |||||
Derivative Asset, Fair Value, Gross Liability | (76) | [6] | (96) | [7] | |
Derivative Liability, Fair Value, Gross Liability | (141) | [4] | (564) | [5] | |
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring | |||||
Assets | |||||
Treasury bills | 1,344 | 1,345 | |||
Fuel derivatives: | |||||
Other available for sale securities | 101 | 83 | |||
Total assets | 3,375 | 3,832 | |||
Liabilities | |||||
Interest rate derivatives (see Note 3) | (21) | (35) | |||
Total Liabilities | (265) | (805) | |||
Estimate of Fair Value Measurement [Member] | Cash Equivalents | Fair Value, Measurements, Recurring | |||||
Assets | |||||
Cash equivalents | 1,025 | [2] | 1,344 | [3] | |
Estimate of Fair Value Measurement [Member] | Commercial paper | Fair Value, Measurements, Recurring | |||||
Assets | |||||
Cash equivalents | 420 | 325 | |||
Estimate of Fair Value Measurement [Member] | Certificates of deposit | Fair Value, Measurements, Recurring | |||||
Assets | |||||
Cash equivalents | 15 | 11 | |||
Estimate of Fair Value Measurement [Member] | Certificates of deposit | Fair Value, Measurements, Recurring | |||||
Assets | |||||
Investments | 236 | 280 | |||
Estimate of Fair Value Measurement [Member] | Swap | Fair Value, Measurements, Recurring | |||||
Fuel derivatives: | |||||
Derivative Liability, Fair Value, Gross Asset | 12 | [4] | 42 | [5] | |
Fuel derivatives: | |||||
Derivative Liability, Fair Value, Gross Liability | (27) | [4] | (110) | [5] | |
Estimate of Fair Value Measurement [Member] | Options Held | Fair Value, Measurements, Recurring | |||||
Fuel derivatives: | |||||
Derivative Asset, Fair Value, Gross Asset | 164 | [6] | 239 | [7] | |
Derivative Liability, Fair Value, Gross Asset | 58 | [4] | 163 | [5] | |
Fuel derivatives: | |||||
Derivative Asset, Fair Value, Gross Liability | (76) | [6] | (96) | [7] | |
Derivative Liability, Fair Value, Gross Liability | $ (141) | [4] | $ (564) | [5] | |
[1] | Represents the position of each trade before consideration of offsetting positions with each counterparty and does not include the impact of cash collateral deposits provided to or received from counterparties. See discussion of credit risk and collateral following in this Note. | ||||
[2] | Cash equivalents are primarily composed of money market investments. | ||||
[3] | Cash equivalents are primarily composed of money market investments. | ||||
[4] | In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net liability. See Note 3. | ||||
[5] | In the unaudited Consolidated Balance Sheet amounts are presented as a net liability. See Note 3. | ||||
[6] | In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net asset. See Note 3. | ||||
[7] | In the unaudited Consolidated Balance Sheet amounts are presented as a net asset. See Note 3. |
Fair Value Measurement - Fair V
Fair Value Measurement - Fair Value Assets and Liabilities Measured on Recurring Basis with Unobservable Inputs (Details) - Fuel derivatives - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2017 | ||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||
Beginning Balance | $ (233) | $ (258) | |
Total gains or (losses) (realized or unrealized) | |||
Included in earnings | 10 | (136) | |
Included in other comprehensive income | 45 | (164) | |
Purchases | [1] | 25 | 104 |
Sales | [1] | 0 | 0 |
Settlements | (158) | (459) | |
September 30, 2017 | (5) | (5) | |
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to option contracts still held at September 30, 2017 | $ 4 | $ (57) | |
[1] | The purchase and sale of fuel derivatives are recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives is purchased as a single instrument or separate instruments. |
Fair Value Measurements - Quant
Fair Value Measurements - Quantative Information about Level 3 Fair Value (Details) - Option Model - Implied Volatility - Fuel derivatives | Sep. 30, 2017 |
Fourth quarter 2017 | |
Quantitative Information About Level 3 | |
Fair Value Measurement Range, Minimum | 14.00% |
Fair Value Measurement Range, Maximum | 30.00% |
2,018 | |
Quantitative Information About Level 3 | |
Fair Value Measurement Range, Minimum | 19.00% |
Fair Value Measurement Range, Maximum | 28.00% |
2,019 | |
Quantitative Information About Level 3 | |
Fair Value Measurement Range, Minimum | 18.00% |
Fair Value Measurement Range, Maximum | 23.00% |
Beyond 2,019 | |
Quantitative Information About Level 3 | |
Fair Value Measurement Range, Minimum | 17.00% |
Fair Value Measurement Range, Maximum | 21.00% |
Fair Value Instruments - Carryi
Fair Value Instruments - Carrying and Estimated Fair Value of Debt (Details) $ in Millions | Sep. 30, 2017USD ($) |
French Credit Agreements Due 2018 - 2.15% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 7 |
Stated interest rate | 2.15% |
Fixed-rate 737 Aircraft Notes payable through 2018 - 7.03% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 3 |
Stated interest rate | 7.03% |
2.75% Notes Due 2019 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 301 |
Stated interest rate | 2.75% |
Term Loan Agreement payable through 2019 - 6.315% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 76 |
Stated interest rate | 6.315% |
Term Loan Agreement payable through 2019 - 4.84% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 19 |
Stated interest rate | 4.84% |
2.65% Notes due 2020 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 495 |
Stated interest rate | 2.65% |
Term Loan Agreement payable through 2020 - 5.223% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 249 |
Stated interest rate | 5.223% |
737 Aircraft Notes payable through 2020 | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 166 |
Pass Through Certificates due 2022 - 6.24% | Enhanced Equipment Trust Certificate | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 294 |
Stated interest rate | 6.24% |
Term Loan Agreement due 2026 - 2.53% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 215 |
Stated interest rate | 2.53% |
3.00% Notes due 2026 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 300 |
Stated interest rate | 3.00% |
7.375% Debentures due 2027 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 128 |
Stated interest rate | 7.375% |
Level 2 | 2.75% Notes Due 2019 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | $ 305 |
Level 2 | 2.65% Notes due 2020 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 503 |
Level 2 | Pass Through Certificates due 2022 - 6.24% | Enhanced Equipment Trust Certificate | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 322 |
Level 2 | 3.00% Notes due 2026 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 296 |
Level 2 | 7.375% Debentures due 2027 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Loans Payable, Fair Value | 157 |
Level 3 | French Credit Agreements Due 2018 - 2.15% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 7 |
Level 3 | Fixed-rate 737 Aircraft Notes payable through 2018 - 7.03% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 3 |
Level 3 | Term Loan Agreement payable through 2019 - 6.315% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Loans Payable, Fair Value | 77 |
Level 3 | Term Loan Agreement payable through 2019 - 4.84% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Loans Payable, Fair Value | 20 |
Level 3 | Term Loan Agreement payable through 2020 - 5.223% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Loans Payable, Fair Value | 252 |
Level 3 | 737 Aircraft Notes payable through 2020 | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 165 |
Level 3 | Term Loan Agreement due 2026 - 2.53% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Loans Payable, Fair Value | $ 215 |