Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 06, 2019 | |
Entity Information [Line Items] | ||
Document Transition Report | false | |
Entity Incorporation, State or Country Code | TX | |
Document Quarterly Report | true | |
Entity Registrant Name | SOUTHWEST AIRLINES CO. | |
City Area Code | 214 | |
Local Phone Number | 792-4000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Central Index Key | 0000092380 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Entity File Number | 1-7259 | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 526,276,126 | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Tax Identification Number | 74-1563240 | |
Entity Address, Address Line One | P.O. Box 36611 | |
Entity Address, City or Town | Dallas, | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75235-1611 | |
NEW YORK STOCK EXCHANGE, INC. [Member] | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Common Stock ($1.00 par value) | |
Trading Symbol | LUV | |
Security Exchange Name | NYSE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheet - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 2,488 | $ 1,854 |
Short-term investments | 1,528 | 1,835 |
Accounts and other receivables | 867 | 568 |
Inventories of parts and supplies, at cost | 528 | 461 |
Prepaid expenses and other current assets | 239 | 310 |
Total current assets | 5,650 | 5,028 |
Property and equipment, at cost: | ||
Flight equipment | 21,736 | 21,753 |
Ground property and equipment | 5,446 | 4,960 |
Deposits on flight equipment purchase contracts | 933 | 775 |
Assets constructed for others | 172 | 1,768 |
Property and equipment, at cost | 28,287 | 29,256 |
Less allowance for depreciation and amortization | 10,445 | 9,731 |
Property and equipment, net | 17,842 | 19,525 |
Goodwill | 970 | 970 |
Operating lease right-of-use assets | 1,352 | 0 |
Other assets | 653 | 720 |
Total assets | 26,467 | 26,243 |
Current liabilities: | ||
Accounts payable | 1,274 | 1,416 |
Accrued liabilities | 1,456 | 1,749 |
Current operating lease liabilities | 332 | 0 |
Air traffic liability | 4,930 | 4,134 |
Current maturities of long-term debt | 637 | 606 |
Total current liabilities | 8,629 | 7,905 |
Long-term debt less current maturities | 2,398 | 2,771 |
Air traffic liability - noncurrent | 1,036 | 936 |
Deferred income taxes | 2,643 | 2,427 |
Construction obligation | 172 | 1,701 |
Noncurrent operating lease liabilities | 1,014 | 0 |
Other noncurrent liabilities | 644 | 650 |
Stockholders' equity: | ||
Common stock | 808 | 808 |
Capital in excess of par value | 1,554 | 1,510 |
Retained earnings | 17,525 | 15,967 |
Accumulated other comprehensive income (loss) | (63) | 20 |
Treasury stock, at cost | (9,893) | (8,452) |
Total stockholders' equity | 9,931 | 9,853 |
Total liabilities and stockholders' equity | $ 26,467 | $ 26,243 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Comprehensive Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
OPERATING REVENUE: | ||||
Operating Revenue | $ 5,639 | $ 5,575 | $ 16,698 | $ 16,261 |
OPERATING EXPENSES: | ||||
Salaries, wages, and benefits | 2,002 | 1,912 | 6,046 | 5,659 |
Fuel and oil | 1,090 | 1,205 | 3,242 | 3,425 |
Maintenance materials and repairs | 313 | 283 | 916 | 814 |
Landing fees and airport rentals | 345 | 337 | 1,036 | 1,011 |
Depreciation and amortization | 308 | 301 | 906 | 870 |
Other operating expenses | 762 | 739 | 2,260 | 2,096 |
Total operating expenses | 4,820 | 4,777 | 14,406 | 13,875 |
OPERATING INCOME | 819 | 798 | 2,292 | 2,386 |
OTHER EXPENSES (INCOME): | ||||
Interest Expense | 30 | 33 | 90 | 99 |
Capitalized interest | (10) | (9) | (27) | (29) |
Interest income | (23) | (20) | (70) | (47) |
Other (gains) losses, net | 3 | 8 | 8 | 16 |
Total other expenses (income) | 0 | 12 | 1 | 39 |
INCOME BEFORE INCOME TAXES | 819 | 786 | 2,291 | 2,347 |
PROVISION FOR INCOME TAXES | 160 | 171 | 504 | 536 |
NET INCOME | $ 659 | $ 615 | $ 1,787 | $ 1,811 |
NET INCOME PER SHARE, BASIC | $ 1.24 | $ 1.08 | $ 3.30 | $ 3.13 |
NET INCOME PER SHARE, DILUTED | $ 1.23 | $ 1.08 | $ 3.29 | $ 3.13 |
COMPREHENSIVE INCOME | $ 566 | $ 729 | $ 1,704 | $ 2,229 |
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING | ||||
Basic | 533 | 569 | 542 | 578 |
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING | ||||
Diluted | 534 | 569 | 543 | 579 |
Passenger | ||||
OPERATING REVENUE: | ||||
Operating Revenue | $ 5,230 | $ 5,194 | $ 15,462 | $ 15,137 |
Freight | ||||
OPERATING REVENUE: | ||||
Operating Revenue | 42 | 43 | 129 | 130 |
Other | ||||
OPERATING REVENUE: | ||||
Operating Revenue | $ 367 | $ 338 | $ 1,107 | $ 994 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Stockholders' Equity Statement - USD ($) $ in Millions | Total | Treasury stock | Accumulated other comprehensive income (loss) | Retained earnings | Capital in excess of par value | Common Stock |
Balance at beginning of period at Dec. 31, 2017 | $ 9,641 | $ (6,462) | $ 12 | $ 13,832 | $ 1,451 | $ 808 |
Balance at beginning of period (Accounting Standards Update 2017-12) at Dec. 31, 2017 | 9,641 | (6,462) | (6) | 13,850 | 1,451 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Repurchase of common stock | (500) | 500 | 0 | 0 | 0 | 0 |
Issuance of common and treasury stock pursuant to Employee stock plans | 4 | 5 | 0 | 0 | (9) | 0 |
Share-based compensation | 10 | 0 | 0 | 0 | 10 | 0 |
Cash dividends | (75) | 0 | 0 | 75 | 0 | 0 |
Comprehensive income | 547 | 0 | 84 | 463 | 0 | 0 |
Balance at end of period at Mar. 31, 2018 | 9,619 | (6,957) | 78 | 14,238 | 1,452 | 808 |
Balance at beginning of period at Dec. 31, 2017 | 9,641 | (6,462) | 12 | 13,832 | 1,451 | 808 |
Balance at beginning of period (Accounting Standards Update 2017-12) at Dec. 31, 2017 | 9,641 | (6,462) | (6) | 13,850 | 1,451 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Comprehensive income | 2,229 | |||||
Balance at end of period at Sep. 30, 2018 | 10,153 | (7,954) | 412 | 15,402 | 1,485 | 808 |
Balance at beginning of period at Mar. 31, 2018 | 9,619 | (6,957) | 78 | 14,238 | 1,452 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Repurchase of common stock | (500) | 500 | 0 | 0 | 0 | 0 |
Issuance of common and treasury stock pursuant to Employee stock plans | 9 | 1 | 0 | 0 | 8 | 0 |
Share-based compensation | 9 | 0 | 0 | 0 | 9 | 0 |
Cash dividends | (93) | 0 | 0 | 93 | 0 | 0 |
Comprehensive income | 953 | 0 | 220 | 733 | 0 | 0 |
Balance at end of period at Jun. 30, 2018 | 9,997 | (7,456) | 298 | 14,878 | 1,469 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Repurchase of common stock | (500) | 500 | 0 | 0 | 0 | 0 |
Issuance of common and treasury stock pursuant to Employee stock plans | 9 | 2 | 0 | 0 | 7 | 0 |
Share-based compensation | 9 | 0 | 0 | 0 | 9 | 0 |
Cash dividends | (91) | 0 | 0 | 91 | 0 | 0 |
Comprehensive income | 729 | 0 | 114 | 615 | 0 | 0 |
Balance at end of period at Sep. 30, 2018 | 10,153 | (7,954) | 412 | 15,402 | 1,485 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Cumulative effect of new accounting standards | 0 | 0 | (18) | 18 | 0 | 0 |
Balance at beginning of period at Dec. 31, 2018 | 9,853 | (8,452) | 20 | 15,967 | 1,510 | 808 |
Balance at beginning of period (Accounting Standards Update 2016-02) at Dec. 31, 2018 | 9,908 | (8,452) | 20 | 16,022 | 1,510 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Repurchase of common stock | (500) | 500 | 0 | 0 | 0 | 0 |
Issuance of common and treasury stock pursuant to Employee stock plans | 4 | 6 | 0 | 0 | 10 | 0 |
Share-based compensation | 13 | 0 | 0 | 0 | 13 | 0 |
Cash dividends | (89) | 0 | 0 | 89 | 0 | 0 |
Comprehensive income | 463 | 0 | 76 | 387 | 0 | 0 |
Balance at end of period at Mar. 31, 2019 | 9,791 | (8,946) | 96 | 16,320 | 1,513 | 808 |
Balance at beginning of period at Dec. 31, 2018 | 9,853 | (8,452) | 20 | 15,967 | 1,510 | 808 |
Balance at beginning of period (Accounting Standards Update 2016-02) at Dec. 31, 2018 | 9,908 | (8,452) | 20 | 16,022 | 1,510 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Comprehensive income | 1,704 | |||||
Balance at end of period at Sep. 30, 2019 | 9,931 | (9,893) | (63) | 17,525 | 1,554 | 808 |
Balance at beginning of period at Mar. 31, 2019 | 9,791 | (8,946) | 96 | 16,320 | 1,513 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Repurchase of common stock | (450) | (450) | 0 | 0 | 0 | 0 |
Issuance of common and treasury stock pursuant to Employee stock plans | 10 | 2 | 0 | 0 | 8 | 0 |
Share-based compensation | 13 | 0 | 0 | 0 | 13 | 0 |
Cash dividends | (99) | 0 | 0 | (99) | 0 | 0 |
Comprehensive income | 675 | 0 | (66) | 741 | 0 | 0 |
Balance at end of period at Jun. 30, 2019 | 9,940 | (9,394) | 30 | 16,962 | 1,534 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Repurchase of common stock | (500) | (500) | 0 | 0 | 0 | 0 |
Issuance of common and treasury stock pursuant to Employee stock plans | 9 | 1 | 0 | 0 | 8 | 0 |
Share-based compensation | 12 | 0 | 0 | 0 | 12 | 0 |
Cash dividends | (96) | 0 | 0 | (96) | 0 | 0 |
Comprehensive income | 566 | 0 | (93) | 659 | 0 | 0 |
Balance at end of period at Sep. 30, 2019 | 9,931 | (9,893) | (63) | 17,525 | 1,554 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Cumulative effect of new accounting standards | $ 55 | $ 0 | $ 0 | $ 55 | $ 0 | $ 0 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity (Parentheticals) - $ / shares | 3 Months Ended | |||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | |
Cash dividends, per share (in dollars per share) | $ 0.180 | $ 0.180 | $ 0.160 | $ 0.160 | $ 0.160 | $ 0.1250 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Cash Flows - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net income | $ 659 | $ 615 | $ 1,787 | $ 1,811 |
Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||||
Depreciation and amortization | 308 | 301 | 906 | 870 |
Unrealized/realized gains on fuel derivative instruments | 0 | (2) | 0 | (13) |
Deferred income taxes | 174 | 104 | 224 | 308 |
Changes in certain assets and liabilities: | ||||
Accounts and other receivables | (88) | (13) | (292) | (109) |
Other assets | 79 | (30) | 195 | (243) |
Accounts payable and accrued liabilities | 106 | 161 | (240) | 80 |
Air traffic liability | (17) | 52 | 897 | 1,018 |
Other liabilities | (87) | 0 | (210) | 0 |
Cash collateral received from derivative counterparties | 0 | 10 | 0 | 150 |
Other, net | (43) | 73 | (104) | 32 |
Net cash provided by operating activities | 1,091 | 1,271 | 3,163 | 3,904 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Capital expenditures | (375) | (454) | (766) | (1,384) |
Assets constructed for others | 0 | (8) | 0 | (49) |
Purchases of short-term investments | (529) | (678) | (1,329) | (1,607) |
Proceeds from sales of short-term and other investments | 545 | 531 | 1,648 | 1,665 |
Other, net | 0 | 5 | 0 | 5 |
Net cash used in investing activities | (359) | (604) | (447) | (1,370) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Proceeds from Employee stock plans | 9 | 9 | 29 | 26 |
Reimbursement for assets constructed for others | 0 | 8 | 0 | 165 |
Payments of long-term debt and finance lease obligations | (70) | (98) | (245) | (255) |
Payments of cash dividends | (96) | (91) | (372) | (332) |
Repayment of construction obligation | 0 | (8) | 0 | (22) |
Repurchase of common stock | (500) | (500) | (1,450) | (1,500) |
Other, net | (33) | 3 | (44) | (7) |
Net cash used in financing activities | (690) | (677) | (2,082) | (1,925) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 42 | (10) | 634 | 609 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 2,446 | 2,114 | 1,854 | 1,495 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 2,488 | 2,104 | 2,488 | 2,104 |
CASH PAYMENTS FOR: | ||||
Interest, net of amount capitalized | 11 | 18 | 59 | 70 |
Income taxes | 169 | 38 | 487 | 212 |
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS | ||||
Flight equipment under finance leases | 0 | 18 | 0 | 32 |
Assets constructed for others | $ 28 | $ 46 | $ 73 | $ 126 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Southwest Airlines Co. (the "Company" or "Southwest") 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, 2019 and 2018 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, extreme or severe weather and natural disasters, fears of terrorism or war, 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, and the periodic volatility of commodities used by the Company for hedging jet fuel, 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, 2019 , are not necessarily indicative of the results that may be expected for future quarters or for the year ended December 31, 2019 . For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 . Effective as of January 1, 2019, the Company adopted Accounting Standards Update ("ASU") No. 2016-02, Leases, codified in Accounting Standards Codification ("ASC") 842 (the "New Lease Standard"). All amounts and disclosures set forth in this Form 10-Q for the three and nine months ended September 30, 2019 reflect the adoption of this ASU, while all periods prior to 2019 remain in accordance with prior accounting requirements. See Note 2 |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS On August 29, 2018, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software. This new standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40, Accounting for Internal-Use Software, to determine which implementation costs to (i) capitalize as assets and amortize over the term of the hosting arrangement or (ii) expense as incurred. This new standard is effective for public business entities in fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years. Early adoption is permitted, including during an interim period. Entities have the option to apply this standard prospectively to all implementation costs incurred after the date of adoption or retrospectively. The Company is evaluating this new standard, but does not expect it to have a significant impact on its financial statement presentation or results. On August 28, 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement. This standard is effective for public business entities in fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years. Early adoption is permitted, including during an interim period. This new standard requires changes to the disclosure requirements for fair value measurements for certain Level 3 items, and specifies that some of the changes must be applied prospectively, while others should be applied retrospectively. The Company is evaluating this new standard, but does not expect it to have a significant impact on its financial statement disclosures. See Note 8 for further information on the Company's fair value measurements. On February 25, 2016, the FASB issued the New Lease Standard. The New Lease Standard 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, as defined in the New Lease Standard) at the lease commencement date and recognize expenses on the income statement in a similar manner to the legacy guidance in ASC 840, Leases ("ASC 840"). The lease liability is measured as 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 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 do not include (i) variable lease payments other than those that depend on an index or rate, (ii) any guarantee by the lessee of the lessor’s debt, or (iii) any amount allocated to non-lease components, if such election is made upon adoption, per the provisions of the New Lease Standard. The Company adopted the provisions of the New Lease Standard effective January 1, 2019, using the modified retrospective adoption method, utilizing the simplified transition option available in the New Lease Standard, which allows entities to continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented in the year of adoption. The Company elected the package of practical expedients available under the transition provisions of the New Lease Standard, including (i) not reassessing whether expired or existing contracts contain leases, (ii) not reassessing lease classification, and (iii) not revaluing initial direct costs for existing leases. In addition, the New Lease Standard eliminated the previous build-to-suit lease accounting guidance and resulted in derecognition of build-to-suit assets and liabilities that remained on the balance sheet after the end of the construction period, including the related deferred taxes. However, given the Company's guarantee associated with the bonds issued to fund the Dallas Love Field Modernization Program (the "LFMP"), the remaining debt service amount as of the adoption date was considered a minimum rental payment under the New Lease Standard, and therefore was recorded as a lease liability on the unaudited Condensed Consolidated Balance Sheet that will be reduced through future debt service payments made in 2019 and beyond. See Note 7 for disclosures related to the New Lease Standard, and Note 10 for further information on the Company’s build-to-suit projects. The following table provides the unaudited Condensed Consolidated Balance Sheet impact of applying the New Lease Standard effective as of January 1, 2019. The impact to the Company's results of operations and cash flows was not significant: Balance as of January 1, 2019 ( in millions ) Balances removed under prior accounting Balances added under New Lease Standard Net impact of New Lease Standard Prepaid expenses and other current assets $ 1 $ — $ (1 ) Flight equipment — (110 ) (110 ) Assets constructed for others 1,669 — (1,669 ) Less allowance for depreciation and amortization (166 ) (2 ) 164 Operating lease right-of-use assets — 1,466 1,466 Other assets 121 — (121 ) Total assets $ 1,625 $ 1,354 $ (271 ) Accounts payable $ 8 $ — $ (8 ) Accrued liabilities 37 — (37 ) Current operating lease liabilities — 355 355 Current maturities of long-term debt — (14 ) (14 ) Long-term debt less current maturities — (96 ) (96 ) Deferred income taxes (17 ) — 17 Construction obligation 1,602 — (1,602 ) Noncurrent operating lease liabilities — 1,119 1,119 Other noncurrent liabilities 60 — (60 ) Retained earnings (65 ) (10 ) 55 Total liabilities and stockholders' equity $ 1,625 $ 1,354 $ (271 ) |
FINANCIAL DERIVATIVE INSTRUMENT
FINANCIAL DERIVATIVE INSTRUMENTS | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
FINANCIAL DERIVATIVE INSTRUMENTS | (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) (75) to (150) or >(550)(e) (125) to (150) or >(550)(e) >(40) >(70)(e) Cash is received from CP >50(e) >150(e) >250(e) >125(e) >100(e) >70(e) Aircraft or cash can be pledged to CP as collateral (200) to (600)(f) N/A (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) (g) (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) N/A (150) to (550) (150) to (550) N/A N/A (a) Individual counterparties with fair value of fuel derivatives < $7 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, 2019 , the Company had fuel derivative instruments in place for up to 66 percent and 76 percent , respectively, of its fuel consumption. As of September 30, 2019 , the Company also had fuel derivative instruments in place to provide coverage at varying price levels, but up to a maximum of approximately 65 percent of its remaining 2019 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: Maximum fuel hedged as of September 30, 2019 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) September 30, 2019 Remainder of 2019 344 WTI crude oil and Brent crude oil 2020 1,301 WTI crude oil, Brent crude oil, and Heating oil 2021 1,169 WTI crude oil and Brent crude oil 2022 552 WTI crude oil and Brent 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. Upon proper qualification, the Company accounts for its fuel derivative instruments as cash flow hedges. All periodic changes in fair value of the derivatives designated as hedges 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 the derivatives will no longer qualify for hedge accounting, in which case any change in the fair value of derivative instruments since the last reporting period would be recorded in 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. Factors that have and may continue to lead to the loss of hedge accounting include: significant fluctuation in energy prices, significant weather events affecting refinery capacity and the production of refined products, and the volatility of the different types of products the Company uses in hedging. Increased volatility in these commodity markets for an extended period of time, especially if such volatility were to worsen, could cause the Company to lose hedge accounting altogether for the commodities used in its fuel hedging program, which would create further volatility in the Company’s GAAP financial results. However, even though derivatives may not qualify for hedge accounting, the Company continues to hold the instruments as management believes derivative instruments continue to afford the Company the opportunity to stabilize jet fuel costs. 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 2018 , or during the nine months ended September 30, 2019 . 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 9/30/2019 12/31/2018 9/30/2019 12/31/2018 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 35 $ 43 $ — $ — Fuel derivative contracts (gross) Other assets 79 95 — — Interest rate derivative contracts Other assets 1 — — — Interest rate derivative contracts Accrued liabilities — — 20 2 Interest rate derivative contracts Other noncurrent liabilities — — 4 12 Total derivatives designated as hedges $ 115 $ 138 $ 24 $ 14 (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. The following table presents the amounts recorded on the unaudited Condensed Consolidated Balance Sheet related to fair value hedges: Balance Sheet location of hedged item Carrying amount of the hedged liabilities Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities (a) September 30, September 30, (in millions) 2019 2018 2019 2018 Current maturities of long-term debt $ 300 $ — $ 2 $ — Long-term debt less current maturities 501 783 18 3 $ 801 $ 783 $ 20 $ 3 (a) At September 30, 2019 and 2018 , these amounts include the cumulative amount of fair value hedging adjustments remaining for which hedge accounting has been discontinued of $19 million and $20 million , respectively. 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 2019 2018 Due to third parties for fuel contracts Accounts payable $ 1 $ — Receivable from third parties for fuel contracts Accounts and other receivables — 2 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. As of September 30, 2019 , no cash collateral deposits were provided by or held by the Company from counterparties based on its outstanding fuel derivative portfolio, and no cash collateral deposits were provided by or held by the Company based on its outstanding interest rate swap agreements. 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, 2019 December 31, 2018 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 $ 35 $ — $ 35 $ 43 $ — $ 43 Fuel derivative contracts Other assets $ 79 $ — $ 79 (a) $ 95 $ — $ 95 (a) Interest rate derivative contracts Other assets $ 1 $ — $ 1 (a) $ — $ — $ — (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 9 . Offsetting of derivative liabilities (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) September 30, 2019 December 31, 2018 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 Interest rate derivative contracts Accrued liabilities $ 20 $ — $ 20 $ 2 $ — $ 2 Interest rate derivative contracts Other noncurrent liabilities $ 4 $ — $ 4 $ 12 $ — $ 12 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, 2019 and 2018 : Location and amount recognized in income on cash flow and fair value hedging relationships Three months ended September 30, 2019 Three months ended September 30, 2018 (in millions) Fuel and oil Interest expense Fuel and oil Interest expense Total $ 19 $ 8 $ (20 ) $ 9 (Gain) loss on cash flow hedging relationships: Commodity contracts: Amount of (gain) loss reclassified from AOCI into income 19 — (20 ) — Interest contracts: Amount of loss reclassified from AOCI into income — 2 — 1 Impact of fair value hedging relationships: Interest contracts: Hedged items — 6 — 6 Derivatives designated as hedging instruments — — — 2 Location and amount recognized in income on cash flow and fair value hedging relationships Nine months ended September 30, 2019 Nine months ended September 30, 2018 (in millions) Fuel and oil Interest expense Fuel and oil Interest expense Total $ 28 $ 21 $ (32 ) $ 26 (Gain) loss on cash flow hedging relationships: Commodity contracts: Amount of (gain) loss reclassified from AOCI into income 28 — (32 ) — Interest contracts: Amount of loss reclassified from AOCI into income — 3 — 4 Impact of fair value hedging relationships: Interest contracts: Hedged items — 17 — 17 Derivatives designated as hedging instruments — 1 — 5 Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Three months ended September 30, (in millions) 2019 2018 Fuel derivative contracts $ 95 $ (122 ) Interest rate derivatives 17 — Total $ 112 $ (122 ) Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Nine months ended September 30, (in millions) 2019 2018 Fuel derivative contracts $ 83 $ (428 ) Interest rate derivatives 43 (2 ) Total $ 126 $ (430 ) Derivatives not designated as hedges Gain recognized in income on derivatives Nine months ended Location of gain recognized in income on derivatives September 30, (in millions) 2019 2018 Interest rate derivatives $ — $ (2 ) Interest expense The Company also recorded expense associated with premiums paid for fuel derivative contracts that settled/expired during the three months ended September 30, 2019 and 2018 of $20 million and $34 million , respectively, and the nine months ended September 30, 2019 and 2018 of $75 million and $101 million , respectively. These amounts are recognized through changes in fair value within AOCI for designated hedges, and are ultimately recorded as a component of Fuel and oil in the unaudited Condensed Consolidated Statement of Comprehensive Income during the period the contracts settle. 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, 2019 , recorded in AOCI, were approximately $43 million in unrealized losses , net of taxes, which are expected to be realized in earnings during the twelve months subsequent to September 30, 2019 . 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" or "critical terms match" methods of accounting, ineffectiveness is assessed at each reporting period. If hedge accounting is achieved, all periodic changes in fair value of the interest rate swaps are recorded in AOCI. 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, 2019 , 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, 2019 , at which such postings are triggered: Counterparty (CP) (in millions) A B C D E F Other (a) Total Fair value of fuel derivatives $ 25 $ 18 $ 35 $ 12 $ 9 $ 7 $ 8 $ 114 Cash collateral held from CP — — — — — — — — Aircraft collateral pledged to CP — — — — — — — — Letters of credit (LC) — — — — — — — — Option to substitute LC for aircraft (200) to (600)(b) N/A (150) to (550)(c) (150) to (550)(c) N/A N/A Option to substitute LC for cash N/A N/A (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) (75) to (150) or >(550)(e) (125) to (150) or >(550)(e) >(40) >(70)(e) Cash is received from CP >50(e) >150(e) >250(e) >125(e) >100(e) >70(e) Aircraft or cash can be pledged to CP as collateral (200) to (600)(f) N/A (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) (g) (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) N/A (150) to (550) (150) to (550) N/A N/A (a) Individual counterparties with fair value of fuel derivatives < $7 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, 2019 | |
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, 2019 and 2018 were as follows: Three months ended September 30, (in millions) 2019 2018 NET INCOME $ 659 $ 615 Unrealized gain (loss) on fuel derivative instruments, net of deferred taxes of ($24) and $32 (80 ) 107 Unrealized gain (loss) on interest rate derivative instruments, net of deferred taxes of ($5) and $- (15 ) 1 Other, net of deferred taxes of $- and $1 2 6 Total other comprehensive income (loss) $ (93 ) $ 114 COMPREHENSIVE INCOME $ 566 $ 729 Nine months ended September 30, (in millions) 2019 2018 NET INCOME $ 1,787 $ 1,811 Unrealized gain (loss) on fuel derivative instruments, net of deferred taxes of ($18) and $123 (61 ) 404 Unrealized gain (loss) on interest rate derivative instruments, net of deferred taxes of ($13) and $1 (40 ) 5 Other, net of deferred taxes of $4 and $1 18 9 Total other comprehensive income (loss) $ (83 ) $ 418 COMPREHENSIVE INCOME $ 1,704 $ 2,229 A rollforward of the amounts included in AOCI is shown below for the three and nine months ended September 30, 2019 : (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax Accumulated other comprehensive income (loss) Balance at June 30, 2019 $ (31 ) $ (33 ) $ 58 $ 45 $ (9 ) $ 30 Changes in fair value (123 ) (22 ) — 2 33 (110 ) Reclassification to earnings 19 2 — — (4 ) 17 Balance at September 30, 2019 $ (135 ) $ (53 ) $ 58 $ 47 $ 20 $ (63 ) (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax Accumulated other comprehensive income (loss) Balance at December 31, 2018 $ (56 ) $ — $ 58 $ 25 $ (7 ) $ 20 Changes in fair value (107 ) (56 ) — 22 33 (108 ) Reclassification to earnings 28 3 — — (6 ) 25 Balance at September 30, 2019 $ (135 ) $ (53 ) $ 58 $ 47 $ 20 $ (63 ) The following tables illustrate the significant amounts reclassified out of each component of AOCI for the three and nine months ended September 30, 2019 : Three months ended September 30, 2019 (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 $ 19 Fuel and oil expense 4 Less: Tax expense $ 15 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 $ 17 Net of tax Nine months ended September 30, 2019 (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 $ 28 Fuel and oil expense 6 Less: Tax Expense $ 22 Net of tax Unrealized loss on interest rate derivative instruments $ 3 Interest expense — Less: Tax Expense $ 3 Net of tax Total reclassifications for the period $ 25 Net of tax |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2019 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
REVENUE | REVENUE Passenger Revenues The Company’s contracts with its Customers primarily consist of its tickets sold, which are initially deferred as Air traffic liability. Passenger revenue associated with tickets is recognized when the performance obligation to the Customer is satisfied, which is primarily when travel is provided. Revenue is categorized by revenue source as the Company believes it best depicts the nature, amount, timing, and uncertainty of revenue and cash flow. The following table provides the components of Passenger revenue recognized for the three and nine months ended September 30, 2019 and 2018 : Three months ended September 30, Nine months ended September 30, (in millions) 2019 2018 2019 2018 Passenger non-loyalty $ 4,400 $ 4,417 $ 13,126 $ 12,969 Passenger loyalty - air transportation 657 623 1,814 1,702 Passenger ancillary sold separately 173 154 522 466 Total passenger revenues $ 5,230 $ 5,194 $ 15,462 $ 15,137 As of September 30, 2019 , and December 31, 2018 , the components of Air traffic liability, including contract liabilities based on tickets sold, unused funds available to the Customer, and loyalty points available for redemption, net of expected spoilage, within the unaudited Condensed Consolidated Balance Sheet were as follows: Balance as of (in millions) September 30, 2019 December 31, 2018 Air traffic liability - passenger travel and ancillary passenger services $ 2,627 $ 2,059 Air traffic liability - loyalty program 3,339 3,011 Total Air traffic liability $ 5,966 $ 5,070 The balance in Air traffic liability – passenger travel and ancillary passenger services also includes unused funds that are available for use by Customers and are not currently associated with a ticket, but represent funds effectively refunded and made available for use to purchase a ticket for a flight that occurs prior to their expiration. These funds are typically created as a result of a prior ticket cancellation or exchange. These performance obligations are expected to have a duration of twelve months or less; therefore, the Company has elected to not disclose the amount of the remaining transaction price and its expected timing of recognition for passenger tickets. Recognition of revenue associated with the Company’s loyalty liability can be difficult to predict, as the number of award seats available to members is not currently restricted and they could choose to redeem their points at any time that a seat is available. The performance obligations classified as a current liability related to the Company’s loyalty program were estimated based on expected redemptions utilizing historical redemption patterns, and forecasted flight availability, fares, and coefficients. The entire balance classified as Air traffic liability – noncurrent relates to loyalty points that were estimated to be redeemed in periods beyond 12 months following the representative balance sheet date. Based on historical trends, the Company expects the majority of loyalty points to be redeemed within two years. Rollforwards of the Company's Air traffic liability - loyalty program for the three and nine months ended September 30, 2019 and 2018 were as follows (in millions): Three months ended September 30, Nine months ended September 30, 2019 2018 2019 2018 Air traffic liability - loyalty program - beginning balance $ 3,289 $ 2,919 $ 3,011 $ 2,667 Amounts deferred associated with points awarded 727 669 2,195 2,027 Revenue recognized from points redeemed - Passenger (657 ) (623 ) (1,814 ) (1,702 ) Revenue recognized from points redeemed - Other (20 ) (17 ) (53 ) (44 ) Air traffic liability - loyalty program - ending balance $ 3,339 $ 2,948 $ 3,339 $ 2,948 Air traffic liability includes consideration received for ticket and loyalty related performance obligations which have not been satisfied as of a given date. Rollforwards of the amounts included in Air traffic liability as of September 30, 2019 and 2018 were as follows (in millions): Air traffic liability Balance at December 31, 2018 $ 5,070 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 16,410 Revenue from amounts included in contract liability opening balances (3,160 ) Revenue from current period sales (12,354 ) Balance at September 30, 2019 $ 5,966 Air traffic liability Balance at December 31, 2017 $ 4,565 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 16,200 Revenue from amounts included in contract liability opening balances (3,098 ) Revenue from current period sales (12,084 ) Balance at September 30, 2018 $ 5,583 The Company has a co-branded credit card agreement (“Agreement”) with Chase Bank USA, N.A. (“Chase”), through which the Company sells loyalty points and certain marketing components, which consist of the use of Southwest Airlines’ brand and access to Rapid Rewards Member lists, licensing and advertising elements, and the use of the Company’s resource team. The Company recognized revenue related to the marketing, advertising, and other travel-related benefits of the revenue associated with various loyalty partner agreements including, but not limited to, the Agreement with Chase, within Other operating revenues. For the three months ended September 30, 2019 and 2018 , the Company recognized $329 million and $290 million , respectively. For the nine months ended September 30, 2019 and 2018 , the Company recognized $984 million and $856 million |
NET INCOME PER SHARE
NET INCOME PER SHARE | 9 Months Ended |
Sep. 30, 2019 | |
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, 2019 2018 2019 2018 NUMERATOR: Net income $ 659 $ 615 $ 1,787 $ 1,811 DENOMINATOR: Weighted-average shares outstanding, basic 533 569 542 578 Dilutive effect of restricted stock units 1 — 1 1 Adjusted weighted-average shares outstanding, diluted 534 569 543 579 NET INCOME PER SHARE: Basic $ 1.24 $ 1.08 $ 3.30 $ 3.13 Diluted $ 1.23 $ 1.08 $ 3.29 $ 3.13 |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
LEASES | LEASES The Company enters into leases for aircraft, property, and other types of equipment in the normal course of business. The accounting for these leases follows the requirements of the New Lease Standard, which the Company adopted as of January 1, 2019. See Note 2 . For leases with terms greater than 12 months, an asset and lease liability are initially recorded at an amount equal to the present value of the unpaid lease payments. The Company's lease term includes any option to extend the lease when it is reasonably certain that it will exercise that option. The Company uses its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments, since the Company does not know the actual implicit rates in its leases. The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating its incremental borrowing rate. The Company does not separate lease and nonlease components within any of its agreements. As of September 30, 2019 , the Company held aircraft leases with remaining terms ranging from one month to 12 years . The aircraft leases generally can be renewed for one to five years at rates based on fair market value at the end of the lease term. Residual value guarantees included in the Company's lease agreements are not material. On July 9, 2012, the Company signed an agreement with Delta Air Lines, Inc. and Boeing Capital Corp. to lease or sublease 88 AirTran Airways, Inc. Boeing 717-200 aircraft ("B717s") to Delta at agreed-upon lease rates. Excluding aircraft for which the leases had expired as of September 30, 2019 , the following remained: 68 on operating leases, ten owned, and two on finance leases. The sublease terms for the 68 B717s on operating lease and the two B717s on finance lease coincide with the Company's remaining lease terms for these aircraft from the original lessor, which have remaining lease terms ranging from approximately one month to five years . The Company's future sublease income associated with the 68 B717s on operating lease as of September 30, 2019 was as follows: $23 million remaining in 2019 , $78 million in 2020 , $41 million in 2021 , $17 million in 2022 , $7 million in 2023 , and $1 million in 2024. The leasing of the ten B717s that are owned by the Company is subject to certain conditions, and the remaining lease terms are up to four years , after which Delta will have the option to purchase the aircraft at the then-prevailing fair market value. The ten owned B717s are accounted for as sales type leases, the two B717s classified by the Company as finance leases are accounted for as direct financing leases, and the remaining 68 subleases are accounted for as operating leases. There are no contingent payments and no significant residual value conditions associated with the transaction. At each airport where the Company conducts flight operations, the Company has lease agreements, generally with a governmental unit or authority, for the use of airport terminals, airfields, office space, cargo warehouses, and/or maintenance facilities. These leases are classified as operating lease agreements and have lease terms remaining ranging from one month to 27 years . The majority of the airport terminal leases contain certain provisions for periodic adjustments to rates that depend upon airport operating costs or use of the facilities, and are reset at least annually. Due to the nature and variability of the rates, the majority of these leases are not recorded on the unaudited Condensed Consolidated Balance Sheet. The Company also leases certain technology assets, fuel storage tanks, and various other equipment that qualify as leases under the New Lease Standard. The remaining lease terms range from three months to eight years . Certain leases can be renewed from one to five years . Lease-related assets and liabilities recorded on the unaudited Condensed Consolidated Balance Sheet were as follows: ( in millions) Balance Sheet location September 30, 2019 Assets Operating Operating lease right-of-use assets (net) $ 1,352 Finance Property and equipment (net of allowance for depreciation and amortization of $430) 835 Total lease assets $ 2,187 Liabilities Current Operating Current operating lease liabilities $ 332 Finance Current maturities of long-term debt 86 Noncurrent Operating Noncurrent operating lease liabilities 1,014 Finance Long-term debt less current maturities 586 Total lease liabilities $ 2,018 The components of lease costs, included in the unaudited Condensed Consolidated Statement of Comprehensive Income, were as follows: ( in millions ) Statement of Comprehensive Income location Three months ended September 30, 2019 Nine months ended September 30, 2019 Operating lease cost - aircraft (a) Other operating expenses $ 44 $ 132 Operating lease cost - other Landing fees and airport rentals, and Other operating expenses 22 66 Short-term lease cost Other operating expenses 1 3 Variable lease cost Landing fees and airport rentals, and Other operating expenses 337 1,016 Finance lease cost: Amortization of lease liabilities Depreciation and amortization 29 87 Interest on lease liabilities Interest expense 6 20 Total net lease cost $ 439 $ 1,324 (a) Net of sublease income of $25 million and $75 million for the three and nine months ended September 30, 2019 , respectively. Supplemental cash flow information related to leases, included in the unaudited Condensed Consolidated Statement of Cash Flows, was as follows: ( in millions ) Three months ended September 30, 2019 Nine months ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 95 $ 298 Operating cash flows for finance leases 6 20 Financing cash flows for finance leases 21 64 Right-of-use assets obtained in exchange for lease obligations: Operating leases 6 130 Finance leases — 1 As of September 30, 2019 , maturities of lease liabilities were as follows: ( in millions ) Operating leases Finance leases Remainder of 2019 $ 115 $ 28 2020 347 109 2021 213 104 2022 141 101 2023 111 97 Thereafter 753 338 Total lease payments $ 1,680 $ 777 Less imputed interest (334 ) (105 ) Total lease obligations 1,346 672 Less current obligations (332 ) (86 ) Long-term lease obligations $ 1,014 $ 586 The table below presents additional information related to the Company's leases as of September 30, 2019 : Weighted average remaining lease term Operating leases 9 years Finance leases 8 years Weighted average discount rate Operating leases (a) 3.8 % Finance leases 3.8 % (a) Upon adoption of the New Lease Standard, the incremental borrowing rate used for existing leases was established as of January 1, 2019. As of September 30, 2019 , the Company had additional operating lease commitments that had not yet commenced of approximately $533 million for 16 Boeing 737 MAX 8 aircraft expected to be delivered in 2019 and 2020, each with lease terms that range from eight to nine years . Disclosures related to periods prior to the adoption of the New Lease Standard Future minimum lease payments under capital leases and noncancelable operating leases and rentals to be received under subleases with initial or remaining terms in excess of one year at December 31, 2018, were as follows: (in millions) Capital leases Operating leases Subleases Operating leases, net 2019 $ 111 $ 348 $ (92 ) $ 256 2020 109 357 (78 ) 279 2021 105 244 (41 ) 203 2022 100 172 (17 ) 155 2023 97 146 (7 ) 139 Thereafter 335 474 (1 ) 473 Total minimum lease payments $ 857 $ 1,741 $ (236 ) $ 1,505 Less amount representing interest 126 Present value of minimum lease payments (a) 731 Less current portion 85 Long-term portion $ 646 (a) Excludes lease incentive obligation of $114 million |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2019 | |
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, 2019 , 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 time 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 currently consist solely 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, 2019 , and December 31, 2018 : 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, 2019 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 2,078 $ 2,078 $ — $ — Commercial paper 405 — 405 — Certificates of deposit 5 — 5 — Short-term investments: Treasury bills 1,195 1,195 — — Certificates of deposit 274 — 274 — Time deposits 59 — 59 — Interest rate derivatives (see Note 3) 1 — 1 — Fuel derivatives: Option contracts (b) 114 — — 114 Other available-for-sale securities 178 178 — — Total assets $ 4,309 $ 3,451 $ 744 $ 114 Liabilities Interest rate derivatives (see Note 3) $ (24 ) $ — $ (24 ) $ — (a) Cash equivalents are primarily composed of money market investments. (b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as an asset. 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, 2018 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 1,392 $ 1,392 $ — $ — Commercial paper 454 — 454 — Certificates of deposit 8 — 8 — Short-term investments: Treasury bills 1,582 1,582 — — Certificates of deposit 228 — 228 — Time deposits 25 — 25 — Fuel derivatives: Option contracts (b) 138 — — 138 Other available-for-sale securities 127 127 — — Total assets $ 3,954 $ 3,101 $ 715 $ 138 Liabilities Interest rate derivatives (see Note 3) $ (14 ) $ — $ (14 ) $ — (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. The Company had no transfers of assets or liabilities between any of the above levels during the nine months ended September 30, 2019 , or the year ended December 31, 2018 . The Company did not have any assets or liabilities measured at fair value on a nonrecurring basis during the nine months ended September 30, 2019 , or the year ended December 31, 2018 . 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, 2019 : Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at June 30, 2019 $ 187 Total losses (realized or unrealized) included in other comprehensive income (123 ) Purchases 50 (a) Balance at September 30, 2019 $ 114 (a) The purchase of fuel derivatives is recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives was 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, 2018 $ 138 Total losses (realized or unrealized) included in other comprehensive income (101 ) Purchases 126 (a) Sales (2 ) (a) Settlements (47 ) Balance at September 30, 2019 $ 114 (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 was 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, an increase (decrease) in implied volatility would result in a 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, 2019 : Quantitative information about Level 3 fair value measurements Valuation technique Unobservable input Period (by year) Range Fuel derivatives Option model Implied volatility Fourth quarter 2019 22-38% 2020 24-42% 2021 20-29% 2022 19-21% 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, 2019 , 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 three 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 2.75% Notes due November 2019 $ 300 $ 300 Level 2 2.65% Notes due 2020 501 504 Level 2 Term Loan Agreement payable through 2020 - 5.223% 147 147 Level 3 737 Aircraft Notes payable through 2020 21 21 Level 3 2.75% Notes due 2022 300 304 Level 2 Pass Through Certificates due 2022 - 6.24% 197 208 Level 2 Term Loan Agreement payable through 2026 - 3.71% 188 188 Level 3 3.00% Notes due 2026 300 307 Level 2 3.45% Notes due 2027 300 315 Level 2 7.375% Debentures due 2027 123 152 Level 2 |
SUPPLEMENTAL FINANCIAL INFORMAT
SUPPLEMENTAL FINANCIAL INFORMATION | 9 Months Ended |
Sep. 30, 2019 | |
Disclosure Text Block [Abstract] | |
SUPPLEMENTAL FINANCIAL INFORMATION | SUPPLEMENTAL FINANCIAL INFORMATION (in millions) September 30, 2019 December 31, 2018 Derivative contracts $ 80 $ 95 Intangible assets, net 311 400 Finance lease receivable 50 61 Other 212 164 Other assets $ 653 $ 720 (in millions) September 30, 2019 December 31, 2018 Accounts payable trade $ 270 $ 263 Salaries payable 199 216 Taxes payable excluding income taxes 188 220 Aircraft maintenance payable 109 69 Fuel payable 120 122 Other payable 388 526 Accounts payable $ 1,274 $ 1,416 (in millions) September 30, 2019 December 31, 2018 Profitsharing and savings plans $ 423 $ 580 Vacation pay 427 403 Health 118 107 Workers compensation 169 166 Property and income taxes 70 68 Other 249 425 Accrued liabilities $ 1,456 $ 1,749 (in millions) September 30, 2019 December 31, 2018 Postretirement obligation $ 245 $ 232 Other deferred compensation 288 247 Other 111 171 Other noncurrent liabilities $ 644 $ 650 For further information 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. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES The Company adopted the provisions of the New Lease Standard effective January 1, 2019, using the modified retrospective adoption method. The New Lease Standard eliminated the previous build-to-suit lease accounting guidance and resulted in the derecognition of build-to-suit assets and liabilities that remained on the balance sheet after the end of the construction period. See Note 2 for further information. Descriptions of the Company's recently completed and current build-to-suit projects follows. 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. In addition to significant improvements to the existing Terminal 1, the project included the design and construction of a new five-gate Concourse A with an international processing facility. Funding for the project came directly from Broward County aviation sources, but flowed through the Company in its capacity as manager of the project. Construction of Concourse A was completed during second quarter 2017, and construction on Terminal 1 was substantially complete and operational as of the end of third quarter 2018. As construction was completed prior to adoption of the New Lease Standard, the Company derecognized the FLL related Assets constructed for others ("ACFO") and Construction obligation within the unaudited Condensed Consolidated Balance Sheet as of January 1, 2019. 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 oversaw and managed the design, development, financing, construction, and commissioning of the airport's Terminal 1 Modernization Project. Construction on the Terminal 1 Modernization Project began during 2014 and was substantially complete and operational during fourth quarter 2018. As construction was completed prior to adoption of the New Lease Standard, the Company derecognized the LAX T1 Lease related ACFO and Construction obligation within the unaudited Condensed Consolidated Balance Sheet as of January 1, 2019. In October 2017, the Company executed a separate lease agreement with LAWA (the "T1.5 Lease"). Under the T1.5 Lease, the Company is overseeing and managing the design, development, financing, construction, and commissioning of a passenger processing facility between Terminal 1 and 2 (the "Terminal 1.5 Project"). The Terminal 1.5 Project is expected to include ticketing, baggage claim, passenger screening, and a bus gate at a cost not to exceed $479 million for site improvements and non-proprietary improvements. Construction on the Terminal 1.5 Project began during third quarter 2017 and is estimated to be substantially completed during 2020. The Company has determined that due to its role in the project, it is considered the owner of the Terminal 1.5 Project for accounting purposes under the New Lease Standard. As a result, the costs incurred to fund the Terminal 1.5 Project 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. Upon completion of the Terminal 1.5 Project, the Company will perform an evaluation to determine the treatment of these associated assets and liabilities. Funding for these projects is primarily through 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. The Company guaranteed the obligations of the RAIC under separate credit facilities associated with the respective lease agreements. As of September 30, 2019 , the Company's outstanding remaining guaranteed obligation under the credit facility for the Terminal 1.5 Project was $183 million . Loans made under the separate credit facility for the Terminal 1.5 Project are being used to reimburse the Company for the site improvements and non-proprietary improvements of the Terminal 1.5 Project, and the outstanding loans will be repaid with the proceeds of LAWA’s payments to purchase completed construction phases. Dallas Love Field During 2008, the City of Dallas approved the 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 the "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. Major construction was effectively completed in 2014. During second quarter 2017, the City of Dallas approved using the remaining bond funds for additional terminal construction projects, which were effectively completed in 2018. As construction was completed prior to adoption of the New Lease Standard, the Company derecognized the LFMP Terminal related ACFO and Construction obligation within the unaudited Condensed Consolidated Balance Sheet as of January 1, 2019. Although the City of Dallas received commitments from various sources that helped to fund portions of the 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 bonds issued by the LFAMC. As of September 30, 2019 , $416 million of principal remained outstanding. The net present value of the future principal and interest payments associated with the bonds was $458 million as of September 30, 2019 , and was reflected as part of the Company's operating lease right–of–use assets and lease obligations in the unaudited Condensed Consolidated Balance Sheet. See Notes 2 and 7 for further information. During 2015, the City of Dallas issued additional bonds for the construction of a new parking garage at Dallas Love Field, which was completed and operational in fourth quarter 2018. As construction was completed prior to adoption of the New Lease Standard, the Company derecognized the LFMP Parking Garage related ACFO and Construction obligation within the unaudited Condensed Consolidated Balance Sheet as of January 1, 2019. The Company has not guaranteed the principal or interest payments on these bonds. Construction costs recorded in ACFO for the Company's various projects as of September 30, 2019 , and December 31, 2018 , were as follows: September 30, 2019 December 31, 2018 (in millions) ACFO ACFO, Net (a) Construction Obligation ACFO ACFO, Net (a) Construction Obligation FLL Terminal $ — $ — $ — $ 313 $ 304 $ 308 LAX Terminal 1 — — — 485 459 476 LAX Terminal 1.5 (b) 172 172 172 99 99 99 LFMP Terminal — — — 545 460 502 LFMP Parking Garage — — — 200 200 200 HOU International Terminal (c) — — — 126 115 116 $ 172 $ 172 $ 172 $ 1,768 $ 1,637 $ 1,701 (a) Net of accumulated depreciation. (b) Project still in progress. (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. |
BOEING 737 MAX AIRCRAFT GROUNDI
BOEING 737 MAX AIRCRAFT GROUNDING | 9 Months Ended |
Sep. 30, 2019 | |
Unusual or Infrequent Items, or Both [Abstract] | |
Boeing 737 Max Aircraft Grounding | BOEING 737 MAX AIRCRAFT GROUNDING On March 13, 2019, the FAA issued an emergency order for all U.S. airlines to ground all Boeing 737 MAX aircraft. The Company immediately complied with the order and grounded all 34 737 MAX 8 aircraft in its fleet. The Company will continue to monitor the situation and any potential future accounting implications that arise. The most significant financial impacts of this grounding to the Company thus far have been lost revenues, operating income, and operating cash flows, and delayed capital expenditures, directly associated with its grounded 737 MAX 8 fleet and other new aircraft that have not been able to be delivered. In July 2019, the Boeing Company announced a $4.9 billion after-tax charge for "potential concessions and other considerations to customers for disruptions related to the 737 MAX grounding." The Company has had discussions with Boeing regarding compensation for damages due to the MAX groundings, but has not reached any conclusions regarding these matters, and no amounts expected from Boeing have been included in 2019 results. As of September 30, 2019 , there had been no change to the Company's contractual obligations and commitments with regard to future purchases of aircraft. However, Boeing is not delivering new MAX aircraft and, therefore, not meeting its contractual delivery schedule. Based on the Company's current contractual obligations and Boeing's targeted regulatory approval of MAX return to service in fourth quarter 2019, the Company is still targeting receipt of seven MAX aircraft deliveries during fourth quarter 2019, with the remaining 34 MAX aircraft originally scheduled for delivery in 2019 shifting into 2020; however, the FAA will ultimately determine the timing of MAX return to service, and the Company therefore offers no assurances that current estimations and timelines are correct. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The unaudited Condensed Consolidated Financial Statements for the interim periods ended September 30, 2019 and 2018 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, extreme or severe weather and natural disasters, fears of terrorism or war, 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, and the periodic volatility of commodities used by the Company for hedging jet fuel, 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, 2019 , are not necessarily indicative of the results that may be expected for future quarters or for the year ended December 31, 2019 . For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 . |
Derivatives | Upon proper qualification, the Company accounts for its fuel derivative instruments as cash flow hedges. All periodic changes in fair value of the derivatives designated as hedges 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 the derivatives will no longer qualify for hedge accounting, in which case any change in the fair value of derivative instruments since the last reporting period would be recorded in 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. Factors that have and may continue to lead to the loss of hedge accounting include: significant fluctuation in energy prices, significant weather events affecting refinery capacity and the production of refined products, and the volatility of the different types of products the Company uses in hedging. Increased volatility in these commodity markets for an extended period of time, especially if such volatility were to worsen, could cause the Company to lose hedge accounting altogether for the commodities used in its fuel hedging program, which would create further volatility in the Company’s GAAP financial results. However, even though derivatives may not qualify for hedge accounting, the Company continues to hold the instruments as management believes derivative instruments continue to afford the Company the opportunity to stabilize jet fuel costs. 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 2018 , or during the nine months ended September 30, 2019 . 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" or "critical terms match" methods of accounting, ineffectiveness is assessed at each reporting period. If hedge accounting is achieved, all periodic changes in fair value of the interest rate swaps are recorded in AOCI. |
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, 2019 , 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 time 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 currently consist solely 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 February 25, 2016, the FASB issued the New Lease Standard. The New Lease Standard 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, as defined in the New Lease Standard) at the lease commencement date and recognize expenses on the income statement in a similar manner to the legacy guidance in ASC 840, Leases ("ASC 840"). The lease liability is measured as 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 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 do not include (i) variable lease payments other than those that depend on an index or rate, (ii) any guarantee by the lessee of the lessor’s debt, or (iii) any amount allocated to non-lease components, if such election is made upon adoption, per the provisions of the New Lease Standard. The Company adopted the provisions of the New Lease Standard effective January 1, 2019, using the modified retrospective adoption method, utilizing the simplified transition option available in the New Lease Standard, which allows entities to continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented in the year of adoption. The Company elected the package of practical expedients available under the transition provisions of the New Lease Standard, including (i) not reassessing whether expired or existing contracts contain leases, (ii) not reassessing lease classification, and (iii) not revaluing initial direct costs for existing leases. In addition, the New Lease Standard eliminated the previous build-to-suit lease accounting guidance and resulted in derecognition of build-to-suit assets and liabilities that remained on the balance sheet after the end of the construction period, including the related deferred taxes. However, given the Company's guarantee associated with the bonds issued to fund the Dallas Love Field Modernization Program (the "LFMP"), the remaining debt service amount as of the adoption date was considered a minimum rental payment under the New Lease Standard, and therefore was recorded as a lease liability on the unaudited Condensed Consolidated Balance Sheet that will be reduced through future debt service payments made in 2019 and beyond. See Note 7 for disclosures related to the New Lease Standard, and Note 10 for further information on the Company’s build-to-suit projects. The following table provides the unaudited Condensed Consolidated Balance Sheet impact of applying the New Lease Standard effective as of January 1, 2019. The impact to the Company's results of operations and cash flows was not significant: Balance as of January 1, 2019 ( in millions ) Balances removed under prior accounting Balances added under New Lease Standard Net impact of New Lease Standard Prepaid expenses and other current assets $ 1 $ — $ (1 ) Flight equipment — (110 ) (110 ) Assets constructed for others 1,669 — (1,669 ) Less allowance for depreciation and amortization (166 ) (2 ) 164 Operating lease right-of-use assets — 1,466 1,466 Other assets 121 — (121 ) Total assets $ 1,625 $ 1,354 $ (271 ) Accounts payable $ 8 $ — $ (8 ) Accrued liabilities 37 — (37 ) Current operating lease liabilities — 355 355 Current maturities of long-term debt — (14 ) (14 ) Long-term debt less current maturities — (96 ) (96 ) Deferred income taxes (17 ) — 17 Construction obligation 1,602 — (1,602 ) Noncurrent operating lease liabilities — 1,119 1,119 Other noncurrent liabilities 60 — (60 ) Retained earnings (65 ) (10 ) 55 Total liabilities and stockholders' equity $ 1,625 $ 1,354 $ (271 ) |
Revenue Recognition | The balance in Air traffic liability – passenger travel and ancillary passenger services also includes unused funds that are available for use by Customers and are not currently associated with a ticket, but represent funds effectively refunded and made available for use to purchase a ticket for a flight that occurs prior to their expiration. These funds are typically created as a result of a prior ticket cancellation or exchange. These performance obligations are expected to have a duration of twelve months or less; therefore, the Company has elected to not disclose the amount of the remaining transaction price and its expected timing of recognition for passenger tickets. Recognition of revenue associated with the Company’s loyalty liability can be difficult to predict, as the number of award seats available to members is not currently restricted and they could choose to redeem their points at any time that a seat is available. The performance obligations classified as a current liability related to the Company’s loyalty program were estimated based on expected redemptions utilizing historical redemption patterns, and forecasted flight availability, fares, and coefficients. The entire balance classified as Air traffic liability – noncurrent relates to loyalty points that were estimated to be redeemed in periods beyond 12 months following the representative balance sheet date. Based on historical trends, the Company expects the majority of loyalty points to be redeemed within two years. |
Lessee, Leases | The Company enters into leases for aircraft, property, and other types of equipment in the normal course of business. The accounting for these leases follows the requirements of the New Lease Standard, which the Company adopted as of January 1, 2019. See Note 2 . For leases with terms greater than 12 months, an asset and lease liability are initially recorded at an amount equal to the present value of the unpaid lease payments. The Company's lease term includes any option to extend the lease when it is reasonably certain that it will exercise that option. The Company uses its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments, since the Company does not know the actual implicit rates in its leases. The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating its incremental borrowing rate. The Company does not separate lease and nonlease components within any of its agreements. |
New Accounting Pronouncements (
New Accounting Pronouncements (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following table provides the unaudited Condensed Consolidated Balance Sheet impact of applying the New Lease Standard effective as of January 1, 2019. The impact to the Company's results of operations and cash flows was not significant: Balance as of January 1, 2019 ( in millions ) Balances removed under prior accounting Balances added under New Lease Standard Net impact of New Lease Standard Prepaid expenses and other current assets $ 1 $ — $ (1 ) Flight equipment — (110 ) (110 ) Assets constructed for others 1,669 — (1,669 ) Less allowance for depreciation and amortization (166 ) (2 ) 164 Operating lease right-of-use assets — 1,466 1,466 Other assets 121 — (121 ) Total assets $ 1,625 $ 1,354 $ (271 ) Accounts payable $ 8 $ — $ (8 ) Accrued liabilities 37 — (37 ) Current operating lease liabilities — 355 355 Current maturities of long-term debt — (14 ) (14 ) Long-term debt less current maturities — (96 ) (96 ) Deferred income taxes (17 ) — 17 Construction obligation 1,602 — (1,602 ) Noncurrent operating lease liabilities — 1,119 1,119 Other noncurrent liabilities 60 — (60 ) Retained earnings (65 ) (10 ) 55 Total liabilities and stockholders' equity $ 1,625 $ 1,354 $ (271 ) |
Financial Derivative Instrume_2
Financial Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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: Maximum fuel hedged as of September 30, 2019 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) September 30, 2019 Remainder of 2019 344 WTI crude oil and Brent crude oil 2020 1,301 WTI crude oil, Brent crude oil, and Heating oil 2021 1,169 WTI crude oil and Brent crude oil 2022 552 WTI crude oil and Brent 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. |
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 9/30/2019 12/31/2018 9/30/2019 12/31/2018 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 35 $ 43 $ — $ — Fuel derivative contracts (gross) Other assets 79 95 — — Interest rate derivative contracts Other assets 1 — — — Interest rate derivative contracts Accrued liabilities — — 20 2 Interest rate derivative contracts Other noncurrent liabilities — — 4 12 Total derivatives designated as hedges $ 115 $ 138 $ 24 $ 14 (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. |
Schedule of Derivative Instruments Statements of Financial Performance and Financial Position, Location | The following table presents the amounts recorded on the unaudited Condensed Consolidated Balance Sheet related to fair value hedges: Balance Sheet location of hedged item Carrying amount of the hedged liabilities Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities (a) September 30, September 30, (in millions) 2019 2018 2019 2018 Current maturities of long-term debt $ 300 $ — $ 2 $ — Long-term debt less current maturities 501 783 18 3 $ 801 $ 783 $ 20 $ 3 (a) At September 30, 2019 and 2018 , these amounts include the cumulative amount of fair value hedging adjustments remaining for which hedge accounting has been discontinued of $19 million and $20 million , respectively. |
Cash Collateral Deposits Due To or From Third Parties | 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 2019 2018 Due to third parties for fuel contracts Accounts payable $ 1 $ — Receivable from third parties for fuel contracts Accounts and other receivables — 2 |
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, 2019 December 31, 2018 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 $ 35 $ — $ 35 $ 43 $ — $ 43 Fuel derivative contracts Other assets $ 79 $ — $ 79 (a) $ 95 $ — $ 95 (a) Interest rate derivative contracts Other assets $ 1 $ — $ 1 (a) $ — $ — $ — (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 9 . |
Offsetting Liabilities | Offsetting of derivative liabilities (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) September 30, 2019 December 31, 2018 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 Interest rate derivative contracts Accrued liabilities $ 20 $ — $ 20 $ 2 $ — $ 2 Interest rate derivative contracts Other noncurrent liabilities $ 4 $ — $ 4 $ 12 $ — $ 12 |
Schedule Of Derivative Instruments In Hedging Relationships Gain Loss In Statement Of Financial Performance | 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, 2019 and 2018 : Location and amount recognized in income on cash flow and fair value hedging relationships Three months ended September 30, 2019 Three months ended September 30, 2018 (in millions) Fuel and oil Interest expense Fuel and oil Interest expense Total $ 19 $ 8 $ (20 ) $ 9 (Gain) loss on cash flow hedging relationships: Commodity contracts: Amount of (gain) loss reclassified from AOCI into income 19 — (20 ) — Interest contracts: Amount of loss reclassified from AOCI into income — 2 — 1 Impact of fair value hedging relationships: Interest contracts: Hedged items — 6 — 6 Derivatives designated as hedging instruments — — — 2 Location and amount recognized in income on cash flow and fair value hedging relationships Nine months ended September 30, 2019 Nine months ended September 30, 2018 (in millions) Fuel and oil Interest expense Fuel and oil Interest expense Total $ 28 $ 21 $ (32 ) $ 26 (Gain) loss on cash flow hedging relationships: Commodity contracts: Amount of (gain) loss reclassified from AOCI into income 28 — (32 ) — Interest contracts: Amount of loss reclassified from AOCI into income — 3 — 4 Impact of fair value hedging relationships: Interest contracts: Hedged items — 17 — 17 Derivatives designated as hedging instruments — 1 — 5 |
Derivatives in Cash Flow Hedging Relationships | Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Three months ended September 30, (in millions) 2019 2018 Fuel derivative contracts $ 95 $ (122 ) Interest rate derivatives 17 — Total $ 112 $ (122 ) Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Nine months ended September 30, (in millions) 2019 2018 Fuel derivative contracts $ 83 $ (428 ) Interest rate derivatives 43 (2 ) Total $ 126 $ (430 ) |
Derivatives Not in Cash Flow Hedging Relationships | Derivatives not designated as hedges Gain recognized in income on derivatives Nine months ended Location of gain recognized in income on derivatives September 30, (in millions) 2019 2018 Interest rate derivatives $ — $ (2 ) Interest expense |
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, 2019 , at which such postings are triggered: Counterparty (CP) (in millions) A B C D E F Other (a) Total Fair value of fuel derivatives $ 25 $ 18 $ 35 $ 12 $ 9 $ 7 $ 8 $ 114 Cash collateral held from CP — — — — — — — — Aircraft collateral pledged to CP — — — — — — — — Letters of credit (LC) — — — — — — — — Option to substitute LC for aircraft (200) to (600)(b) N/A (150) to (550)(c) (150) to (550)(c) N/A N/A Option to substitute LC for cash N/A N/A (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) (75) to (150) or >(550)(e) (125) to (150) or >(550)(e) >(40) >(70)(e) Cash is received from CP >50(e) >150(e) >250(e) >125(e) >100(e) >70(e) Aircraft or cash can be pledged to CP as collateral (200) to (600)(f) N/A (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) (g) (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) N/A (150) to (550) (150) to (550) N/A N/A (a) Individual counterparties with fair value of fuel derivatives < $7 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, 2019 | |
Equity [Abstract] | |
Components of Comprehensive Income | The differences between Net income and Comprehensive income for the three and nine months ended September 30, 2019 and 2018 were as follows: Three months ended September 30, (in millions) 2019 2018 NET INCOME $ 659 $ 615 Unrealized gain (loss) on fuel derivative instruments, net of deferred taxes of ($24) and $32 (80 ) 107 Unrealized gain (loss) on interest rate derivative instruments, net of deferred taxes of ($5) and $- (15 ) 1 Other, net of deferred taxes of $- and $1 2 6 Total other comprehensive income (loss) $ (93 ) $ 114 COMPREHENSIVE INCOME $ 566 $ 729 Nine months ended September 30, (in millions) 2019 2018 NET INCOME $ 1,787 $ 1,811 Unrealized gain (loss) on fuel derivative instruments, net of deferred taxes of ($18) and $123 (61 ) 404 Unrealized gain (loss) on interest rate derivative instruments, net of deferred taxes of ($13) and $1 (40 ) 5 Other, net of deferred taxes of $4 and $1 18 9 Total other comprehensive income (loss) $ (83 ) $ 418 COMPREHENSIVE INCOME $ 1,704 $ 2,229 |
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, 2019 : (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax Accumulated other comprehensive income (loss) Balance at June 30, 2019 $ (31 ) $ (33 ) $ 58 $ 45 $ (9 ) $ 30 Changes in fair value (123 ) (22 ) — 2 33 (110 ) Reclassification to earnings 19 2 — — (4 ) 17 Balance at September 30, 2019 $ (135 ) $ (53 ) $ 58 $ 47 $ 20 $ (63 ) (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax Accumulated other comprehensive income (loss) Balance at December 31, 2018 $ (56 ) $ — $ 58 $ 25 $ (7 ) $ 20 Changes in fair value (107 ) (56 ) — 22 33 (108 ) Reclassification to earnings 28 3 — — (6 ) 25 Balance at September 30, 2019 $ (135 ) $ (53 ) $ 58 $ 47 $ 20 $ (63 ) |
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, 2019 : Three months ended September 30, 2019 (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 $ 19 Fuel and oil expense 4 Less: Tax expense $ 15 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 $ 17 Net of tax Nine months ended September 30, 2019 (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 $ 28 Fuel and oil expense 6 Less: Tax Expense $ 22 Net of tax Unrealized loss on interest rate derivative instruments $ 3 Interest expense — Less: Tax Expense $ 3 Net of tax Total reclassifications for the period $ 25 Net of tax |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Passenger Revenue | The following table provides the components of Passenger revenue recognized for the three and nine months ended September 30, 2019 and 2018 : Three months ended September 30, Nine months ended September 30, (in millions) 2019 2018 2019 2018 Passenger non-loyalty $ 4,400 $ 4,417 $ 13,126 $ 12,969 Passenger loyalty - air transportation 657 623 1,814 1,702 Passenger ancillary sold separately 173 154 522 466 Total passenger revenues $ 5,230 $ 5,194 $ 15,462 $ 15,137 |
Components of Air Traffic Liability | As of September 30, 2019 , and December 31, 2018 , the components of Air traffic liability, including contract liabilities based on tickets sold, unused funds available to the Customer, and loyalty points available for redemption, net of expected spoilage, within the unaudited Condensed Consolidated Balance Sheet were as follows: Balance as of (in millions) September 30, 2019 December 31, 2018 Air traffic liability - passenger travel and ancillary passenger services $ 2,627 $ 2,059 Air traffic liability - loyalty program 3,339 3,011 Total Air traffic liability $ 5,966 $ 5,070 three and nine months ended September 30, 2019 and 2018 were as follows (in millions): Three months ended September 30, Nine months ended September 30, 2019 2018 2019 2018 Air traffic liability - loyalty program - beginning balance $ 3,289 $ 2,919 $ 3,011 $ 2,667 Amounts deferred associated with points awarded 727 669 2,195 2,027 Revenue recognized from points redeemed - Passenger (657 ) (623 ) (1,814 ) (1,702 ) Revenue recognized from points redeemed - Other (20 ) (17 ) (53 ) (44 ) Air traffic liability - loyalty program - ending balance $ 3,339 $ 2,948 $ 3,339 $ 2,948 |
Rollforward of Air Traffic Liability | Air traffic liability includes consideration received for ticket and loyalty related performance obligations which have not been satisfied as of a given date. Rollforwards of the amounts included in Air traffic liability as of September 30, 2019 and 2018 were as follows (in millions): Air traffic liability Balance at December 31, 2018 $ 5,070 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 16,410 Revenue from amounts included in contract liability opening balances (3,160 ) Revenue from current period sales (12,354 ) Balance at September 30, 2019 $ 5,966 Air traffic liability Balance at December 31, 2017 $ 4,565 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 16,200 Revenue from amounts included in contract liability opening balances (3,098 ) Revenue from current period sales (12,084 ) Balance at September 30, 2018 $ 5,583 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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, 2019 2018 2019 2018 NUMERATOR: Net income $ 659 $ 615 $ 1,787 $ 1,811 DENOMINATOR: Weighted-average shares outstanding, basic 533 569 542 578 Dilutive effect of restricted stock units 1 — 1 1 Adjusted weighted-average shares outstanding, diluted 534 569 543 579 NET INCOME PER SHARE: Basic $ 1.24 $ 1.08 $ 3.30 $ 3.13 Diluted $ 1.23 $ 1.08 $ 3.29 $ 3.13 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Lease-Related Assets and Liabilities | Lease-related assets and liabilities recorded on the unaudited Condensed Consolidated Balance Sheet were as follows: ( in millions) Balance Sheet location September 30, 2019 Assets Operating Operating lease right-of-use assets (net) $ 1,352 Finance Property and equipment (net of allowance for depreciation and amortization of $430) 835 Total lease assets $ 2,187 Liabilities Current Operating Current operating lease liabilities $ 332 Finance Current maturities of long-term debt 86 Noncurrent Operating Noncurrent operating lease liabilities 1,014 Finance Long-term debt less current maturities 586 Total lease liabilities $ 2,018 |
Components of Lease Cost | The components of lease costs, included in the unaudited Condensed Consolidated Statement of Comprehensive Income, were as follows: ( in millions ) Statement of Comprehensive Income location Three months ended September 30, 2019 Nine months ended September 30, 2019 Operating lease cost - aircraft (a) Other operating expenses $ 44 $ 132 Operating lease cost - other Landing fees and airport rentals, and Other operating expenses 22 66 Short-term lease cost Other operating expenses 1 3 Variable lease cost Landing fees and airport rentals, and Other operating expenses 337 1,016 Finance lease cost: Amortization of lease liabilities Depreciation and amortization 29 87 Interest on lease liabilities Interest expense 6 20 Total net lease cost $ 439 $ 1,324 (a) Net of sublease income of $25 million and $75 million for the three and nine months ended September 30, 2019 , respectively. |
Schedule of Cash Flow, Supplemental Disclosures | Supplemental cash flow information related to leases, included in the unaudited Condensed Consolidated Statement of Cash Flows, was as follows: ( in millions ) Three months ended September 30, 2019 Nine months ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 95 $ 298 Operating cash flows for finance leases 6 20 Financing cash flows for finance leases 21 64 Right-of-use assets obtained in exchange for lease obligations: Operating leases 6 130 Finance leases — 1 |
Finance lease maturity | As of September 30, 2019 , maturities of lease liabilities were as follows: ( in millions ) Operating leases Finance leases Remainder of 2019 $ 115 $ 28 2020 347 109 2021 213 104 2022 141 101 2023 111 97 Thereafter 753 338 Total lease payments $ 1,680 $ 777 Less imputed interest (334 ) (105 ) Total lease obligations 1,346 672 Less current obligations (332 ) (86 ) Long-term lease obligations $ 1,014 $ 586 |
Lessee Operating and Finance Leases Weighted Average Assumptions | The table below presents additional information related to the Company's leases as of September 30, 2019 : Weighted average remaining lease term Operating leases 9 years Finance leases 8 years Weighted average discount rate Operating leases (a) 3.8 % Finance leases 3.8 % (a) Upon adoption of the New Lease Standard, the incremental borrowing rate used for existing leases was established as of January 1, 2019. |
Operating lease maturity | As of September 30, 2019 , maturities of lease liabilities were as follows: ( in millions ) Operating leases Finance leases Remainder of 2019 $ 115 $ 28 2020 347 109 2021 213 104 2022 141 101 2023 111 97 Thereafter 753 338 Total lease payments $ 1,680 $ 777 Less imputed interest (334 ) (105 ) Total lease obligations 1,346 672 Less current obligations (332 ) (86 ) Long-term lease obligations $ 1,014 $ 586 |
Future Minimum Lease Payments Under Capital Leases And Noncancelable Operating Leases | Future minimum lease payments under capital leases and noncancelable operating leases and rentals to be received under subleases with initial or remaining terms in excess of one year at December 31, 2018, were as follows: (in millions) Capital leases Operating leases Subleases Operating leases, net 2019 $ 111 $ 348 $ (92 ) $ 256 2020 109 357 (78 ) 279 2021 105 244 (41 ) 203 2022 100 172 (17 ) 155 2023 97 146 (7 ) 139 Thereafter 335 474 (1 ) 473 Total minimum lease payments $ 857 $ 1,741 $ (236 ) $ 1,505 Less amount representing interest 126 Present value of minimum lease payments (a) 731 Less current portion 85 Long-term portion $ 646 (a) Excludes lease incentive obligation of $114 million |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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, 2019 , and December 31, 2018 : 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, 2019 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 2,078 $ 2,078 $ — $ — Commercial paper 405 — 405 — Certificates of deposit 5 — 5 — Short-term investments: Treasury bills 1,195 1,195 — — Certificates of deposit 274 — 274 — Time deposits 59 — 59 — Interest rate derivatives (see Note 3) 1 — 1 — Fuel derivatives: Option contracts (b) 114 — — 114 Other available-for-sale securities 178 178 — — Total assets $ 4,309 $ 3,451 $ 744 $ 114 Liabilities Interest rate derivatives (see Note 3) $ (24 ) $ — $ (24 ) $ — (a) Cash equivalents are primarily composed of money market investments. (b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as an asset. 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, 2018 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 1,392 $ 1,392 $ — $ — Commercial paper 454 — 454 — Certificates of deposit 8 — 8 — Short-term investments: Treasury bills 1,582 1,582 — — Certificates of deposit 228 — 228 — Time deposits 25 — 25 — Fuel derivatives: Option contracts (b) 138 — — 138 Other available-for-sale securities 127 127 — — Total assets $ 3,954 $ 3,101 $ 715 $ 138 Liabilities Interest rate derivatives (see Note 3) $ (14 ) $ — $ (14 ) $ — (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. |
Fair Value, Assets 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, 2019 : Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at June 30, 2019 $ 187 Total losses (realized or unrealized) included in other comprehensive income (123 ) Purchases 50 (a) Balance at September 30, 2019 $ 114 (a) The purchase of fuel derivatives is recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives was 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, 2018 $ 138 Total losses (realized or unrealized) included in other comprehensive income (101 ) Purchases 126 (a) Sales (2 ) (a) Settlements (47 ) Balance at September 30, 2019 $ 114 (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 was 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, 2019 : Quantitative information about Level 3 fair value measurements Valuation technique Unobservable input Period (by year) Range Fuel derivatives Option model Implied volatility Fourth quarter 2019 22-38% 2020 24-42% 2021 20-29% 2022 19-21% |
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, 2019 , 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 three 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 2.75% Notes due November 2019 $ 300 $ 300 Level 2 2.65% Notes due 2020 501 504 Level 2 Term Loan Agreement payable through 2020 - 5.223% 147 147 Level 3 737 Aircraft Notes payable through 2020 21 21 Level 3 2.75% Notes due 2022 300 304 Level 2 Pass Through Certificates due 2022 - 6.24% 197 208 Level 2 Term Loan Agreement payable through 2026 - 3.71% 188 188 Level 3 3.00% Notes due 2026 300 307 Level 2 3.45% Notes due 2027 300 315 Level 2 7.375% Debentures due 2027 123 152 Level 2 |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Table Text Block [Abstract] | |
Other Assets | (in millions) September 30, 2019 December 31, 2018 Derivative contracts $ 80 $ 95 Intangible assets, net 311 400 Finance lease receivable 50 61 Other 212 164 Other assets $ 653 $ 720 |
Schedule of Accounts Payable | (in millions) September 30, 2019 December 31, 2018 Accounts payable trade $ 270 $ 263 Salaries payable 199 216 Taxes payable excluding income taxes 188 220 Aircraft maintenance payable 109 69 Fuel payable 120 122 Other payable 388 526 Accounts payable $ 1,274 $ 1,416 |
Accrued Liabilities | (in millions) September 30, 2019 December 31, 2018 Profitsharing and savings plans $ 423 $ 580 Vacation pay 427 403 Health 118 107 Workers compensation 169 166 Property and income taxes 70 68 Other 249 425 Accrued liabilities $ 1,456 $ 1,749 |
Other Noncurrent Liabilities | (in millions) September 30, 2019 December 31, 2018 Postretirement obligation $ 245 $ 232 Other deferred compensation 288 247 Other 111 171 Other noncurrent liabilities $ 644 $ 650 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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, 2019 , and December 31, 2018 , were as follows: September 30, 2019 December 31, 2018 (in millions) ACFO ACFO, Net (a) Construction Obligation ACFO ACFO, Net (a) Construction Obligation FLL Terminal $ — $ — $ — $ 313 $ 304 $ 308 LAX Terminal 1 — — — 485 459 476 LAX Terminal 1.5 (b) 172 172 172 99 99 99 LFMP Terminal — — — 545 460 502 LFMP Parking Garage — — — 200 200 200 HOU International Terminal (c) — — — 126 115 116 $ 172 $ 172 $ 172 $ 1,768 $ 1,637 $ 1,701 (a) Net of accumulated depreciation. (b) Project still in progress. (c) Project completed in 2015 at Houston William P. Hobby Airport ("HOU"). |
New Accounting Pronouncements -
New Accounting Pronouncements - Adjustments (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle | |||
Prepaid expenses and other current assets | $ 239 | $ 310 | |
Flight equipment | 21,736 | 21,753 | |
Assets constructed for others | 172 | 1,768 | |
Less allowance for depreciation and amortization | (10,445) | (9,731) | |
Operating lease right-of-use assets | 1,352 | 0 | |
Other assets | 653 | 720 | |
Total assets | 26,467 | 26,243 | |
Accounts payable | 1,274 | 1,416 | |
Accrued liabilities | 1,456 | 1,749 | |
Current operating lease liabilities | 332 | 0 | |
Current maturities of long-term debt | 637 | 606 | |
Long-term debt less current maturities | 2,398 | 2,771 | |
Deferred income taxes | 2,643 | 2,427 | |
Construction obligation | 172 | 1,701 | |
Noncurrent operating lease liabilities | 1,014 | 0 | |
Other noncurrent liabilities | 644 | 650 | |
Retained earnings | 17,525 | 15,967 | |
Total liabilities and stockholders' equity | $ 26,467 | $ 26,243 | |
ASU 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle | |||
Prepaid expenses and other current assets | $ (1) | ||
Flight equipment | (110) | ||
Assets constructed for others | (1,669) | ||
Less allowance for depreciation and amortization | 164 | ||
Operating lease right-of-use assets | 1,466 | ||
Other assets | (121) | ||
Total assets | (271) | ||
Accounts payable | (8) | ||
Accrued liabilities | (37) | ||
Current operating lease liabilities | 355 | ||
Current maturities of long-term debt | (14) | ||
Long-term debt less current maturities | (96) | ||
Deferred income taxes | 17 | ||
Construction obligation | (1,602) | ||
Noncurrent operating lease liabilities | 1,119 | ||
Other noncurrent liabilities | (60) | ||
Retained earnings | 55 | ||
Total liabilities and stockholders' equity | (271) | ||
Balances Removed Under Prior Accounting | ASU 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle | |||
Prepaid expenses and other current assets | 1 | ||
Flight equipment | 0 | ||
Assets constructed for others | 1,669 | ||
Less allowance for depreciation and amortization | (166) | ||
Operating lease right-of-use assets | 0 | ||
Other assets | 121 | ||
Total assets | 1,625 | ||
Accounts payable | 8 | ||
Accrued liabilities | 37 | ||
Current operating lease liabilities | 0 | ||
Current maturities of long-term debt | 0 | ||
Long-term debt less current maturities | 0 | ||
Deferred income taxes | (17) | ||
Construction obligation | 1,602 | ||
Noncurrent operating lease liabilities | 0 | ||
Other noncurrent liabilities | 60 | ||
Retained earnings | (65) | ||
Total liabilities and stockholders' equity | 1,625 | ||
Balances Added Under New Lease Standard | ASU 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle | |||
Prepaid expenses and other current assets | 0 | ||
Flight equipment | (110) | ||
Assets constructed for others | 0 | ||
Less allowance for depreciation and amortization | (2) | ||
Operating lease right-of-use assets | 1,466 | ||
Other assets | 0 | ||
Total assets | 1,354 | ||
Accounts payable | 0 | ||
Accrued liabilities | 0 | ||
Current operating lease liabilities | 355 | ||
Current maturities of long-term debt | (14) | ||
Long-term debt less current maturities | (96) | ||
Deferred income taxes | 0 | ||
Construction obligation | 0 | ||
Noncurrent operating lease liabilities | 1,119 | ||
Other noncurrent liabilities | 0 | ||
Retained earnings | (10) | ||
Total liabilities and stockholders' equity | $ 1,354 |
Financial Derivative Instrume_3
Financial Derivative Instruments Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Derivative [Line Items] | ||||
Premiums paid for fuel derivative contracts | $ 20 | $ 34 | $ 75 | $ 101 |
Percentage of actual consumption hedged | 66.00% | 76.00% | ||
Current Unrealized Net Losses in OCI | $ 43 | $ 43 | ||
Maximum sum of derivatives of counterparty to be included in other (less than $7 million) | $ 7 | $ 7 | ||
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% | ||
Fuel derivatives | ||||
Derivative [Line Items] | ||||
Cash collateral provided by or held from CP | $ 0 | $ 0 | ||
Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Cash collateral provided by or held from CP | $ 0 | $ 0 | ||
Remainder of Current Year | ||||
Derivative [Line Items] | ||||
Percent of fuel consumption hedged | 65.00% | 65.00% |
Financial Derivative Instrume_4
Financial Derivative Instruments - Fuel Hedging (Details) gal in Millions | Sep. 30, 2019gal | [1] |
Remainder of Current Year | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 344 | |
2020 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 1,301 | |
2021 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 1,169 | |
2022 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 552 | |
[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. |
Financial Derivative Instrume_5
Financial Derivative Instruments - Fair Values by Balance Sheet Location (Details) - Designated as Hedging Instrument - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 | |
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | $ 115 | $ 138 |
Derivative Liability, Fair Value, Gross Liability | [1] | 24 | 14 |
Fuel derivatives | Prepaid expenses and other current assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 35 | 43 |
Derivative Asset, Fair Value, Gross Liability | [1] | 0 | 0 |
Fuel derivatives | Other Assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 79 | 95 |
Derivative Asset, Fair Value, Gross Liability | [1] | 0 | 0 |
Interest rate derivatives | Accrued Liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Liability, Fair Value, Gross Asset | [1] | 0 | 0 |
Derivative Liability, Fair Value, Gross Liability | [1] | 20 | 2 |
Interest rate derivatives | Other Assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 1 | 0 |
Derivative Asset, Fair Value, Gross Liability | [1] | 0 | 0 |
Interest rate derivatives | Other Noncurrent Liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Liability, Fair Value, Gross Asset | [1] | 0 | 0 |
Derivative Liability, Fair Value, Gross Liability | [1] | $ 4 | $ 12 |
[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 Instrume_6
Financial Derivative Instruments - Carrying Amount of Fair Value Hedges (Details) - USD ($) | Sep. 30, 2019 | Sep. 30, 2018 | |
Derivative [Line Items] | |||
Deferred Gain (Loss) on Discontinuation of Interest Rate Fair Value Hedge | $ 19,000,000 | $ 20,000,000 | |
Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | 801,000,000 | 783,000,000 | |
Short-term Debt | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | 300,000,000 | 0 | |
Long-term Debt | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | 501,000,000 | 783,000,000 | |
Cumulative fair value adjustment [Member] | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | [1] | 20,000,000 | 3,000,000 |
Cumulative fair value adjustment [Member] | Short-term Debt | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | [1] | 2,000,000 | 0 |
Cumulative fair value adjustment [Member] | Long-term Debt | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | [1] | $ 18,000,000 | $ 3,000,000 |
[1] | At September 30, 2019 and 2018 , these amounts include the cumulative amount of fair value hedging adjustments remaining for which hedge accounting has been discontinued of $19 million and $20 million , respectively. |
Financial Derivative Instrume_7
Financial Derivative Instruments - Collateral by Balance Sheet Location (Details) - Fuel derivatives - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Accounts Payable | ||
Derivative [Line Items] | ||
Due to third parties for fuel contracts | $ 1 | $ 0 |
Accounts And Other Receivables | ||
Derivative [Line Items] | ||
Receivable from third parties for settled fuel contracts - current | $ 0 | $ 2 |
Financial Derivative Instrume_8
Financial Derivative Instruments - Offsetting of Derivative Assets (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 | |
Offsetting Assets [Line Items] | |||
Asset derivative contracts, net | $ 80 | $ 95 | |
Fuel derivatives | Prepaid expenses and other current assets | |||
Offsetting Assets [Line Items] | |||
Gross amounts of recognized assets | 35 | 43 | |
Gross liability amounts offset in the Balance Sheet | 0 | 0 | |
Asset derivative contracts, net | 35 | 43 | |
Fuel derivatives | Other Assets | |||
Offsetting Assets [Line Items] | |||
Gross amounts of recognized assets | 79 | 95 | |
Gross liability amounts offset in the Balance Sheet | 0 | 0 | |
Asset derivative contracts, net | [1] | 79 | 95 |
Interest rate derivatives | Other Assets | |||
Offsetting Assets [Line Items] | |||
Gross amounts of recognized assets | 1 | 0 | |
Gross liability amounts offset in the Balance Sheet | 0 | 0 | |
Asset derivative contracts, net | [1] | $ 1 | $ 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 9 . |
Financial Derivative Instrume_9
Financial Derivative Instruments - Offsetting of Derivative Liabilities (Details) - Interest rate derivatives - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Accrued Liabilities [Member] | ||
Offsetting Liabilities [Line Items] | ||
Gross amounts of recognized liabilities | $ 20 | $ 2 |
Gross asset amounts offset in the Balance Sheet | 0 | 0 |
Liability derivative contracts, net | 20 | 2 |
Other Noncurrent Liabilities | ||
Offsetting Liabilities [Line Items] | ||
Gross amounts of recognized liabilities | 4 | 12 |
Gross asset amounts offset in the Balance Sheet | 0 | 0 |
Liability derivative contracts, net | $ 4 | $ 12 |
Financial Derivative Instrum_10
Financial Derivative Instruments - Location and Amount Recognized in Income by Hedging Relationship (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Fuel | ||||
Derivative [Line Items] | ||||
(Gain) Loss on Derivative Instruments, Net, Pretax | $ 19 | $ (20) | $ 28 | $ (32) |
Interest Expense | ||||
Derivative [Line Items] | ||||
(Gain) Loss on Derivative Instruments, Net, Pretax | 8 | 9 | 21 | 26 |
Cash Flow Hedging | Fuel | Fuel derivatives | ||||
Derivative [Line Items] | ||||
Derivative Instruments, (Gain) Loss Reclassified from Accumulated OCI into Income, Effective Portion, Net | 19 | (20) | 28 | (32) |
Cash Flow Hedging | Fuel | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Derivative Instruments, (Gain) Loss Reclassified from Accumulated OCI into Income, Effective Portion, Net | 0 | 0 | 0 | 0 |
Cash Flow Hedging | Interest Expense | Fuel derivatives | ||||
Derivative [Line Items] | ||||
Derivative Instruments, (Gain) Loss Reclassified from Accumulated OCI into Income, Effective Portion, Net | 0 | 0 | 0 | 0 |
Cash Flow Hedging | Interest Expense | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Derivative Instruments, (Gain) Loss Reclassified from Accumulated OCI into Income, Effective Portion, Net | 2 | 1 | 3 | 4 |
Designated as Hedging Instrument | Fair Value Hedging | Fuel | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Interest Expense, Debt | 0 | 0 | 0 | 0 |
Designated as Hedging Instrument | Fair Value Hedging | Interest Expense | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Interest Expense, Debt | 6 | 6 | 17 | 17 |
Not Designated as Hedging Instrument | Fair Value Hedging | Fuel | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
(Gain) Loss on Derivative Instruments, Net, Pretax | 0 | 0 | 0 | 0 |
Not Designated as Hedging Instrument | Fair Value Hedging | Interest Expense | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
(Gain) Loss on Derivative Instruments, Net, Pretax | $ 0 | $ 2 | $ 1 | $ 5 |
Financial Derivative Instrum_11
Financial Derivative Instruments - (Gain) Loss by Hedging Relationship (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in AOCI on derivatives | $ 112 | $ (122) | $ 126 | $ (430) |
Fuel derivatives | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in AOCI on derivatives | 95 | (122) | 83 | (428) |
Interest rate derivatives | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in AOCI on derivatives | $ 17 | $ 0 | 43 | (2) |
Interest rate derivatives | Interest rate derivatives | Not Designated as Hedging Instrument | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain recognized in income on derivatives | $ 0 | $ (2) |
Financial Derivative Instrum_12
Financial Derivative Instruments - Fair Values of Fuel Derivatives Amounts Posted as Collateral (Details) - Fuel derivatives $ in Millions | Sep. 30, 2019USD ($) | |
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 | $ 114 | |
Cash collateral held from (by) CP | 0 | |
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 Asset, Fair Value, Amount Not Offset Against Collateral | 25 | |
Cash collateral held from (by) CP | 0 | |
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 Asset, Fair Value, Amount Not Offset Against Collateral | 18 | |
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 | 35 | |
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 | 12 | |
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 | 9 | |
Cash collateral held from (by) CP | 0 | |
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 | 7 | |
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 | 8 | [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 | ||
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 | ||
Fair value of fuel derivative level at which cash is received from CP | 150 | [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 levels at which cash is provided to CP Threshold 2 | ||
Fair value of fuel derivative level at which cash is received from CP | [5] | |
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) | [3] |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (550) | [3] |
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) | [3] |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (550) | [3] |
Fair value of fuel derivative level at which cash is received from CP | 125 | [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 | (40) | |
Fair value of fuel derivative level at which cash is received from CP | 100 | [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 | (70) | [3] |
Fair value of fuel derivative level at which cash is received from CP | 70 | [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 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) | [3] |
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) | [3] |
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 < $7 million . | |
[2] | The Company has the option of providing letters of credit in addition to aircraft collateral if the appraised value of the aircraft does not meet the collateral requirements. | |
[3] | Thresholds may vary based on changes in credit ratings within investment grade. | |
[4] | The Company has the option of providing cash or pledging aircraft as collateral. | |
[5] | Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. | |
[6] | The Company has the option of providing cash, letters of credit, or pledging aircraft as collateral. | |
[7] | The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. |
AOCI - Differences between Net
AOCI - Differences between Net Income and Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Condensed Statement of Income Captions [Line Items] | ||||||||
NET INCOME | $ 659 | $ 615 | $ 1,787 | $ 1,811 | ||||
Other, net of deferred taxes | 2 | 6 | 18 | 9 | ||||
Total other comprehensive income (loss) | (93) | 114 | (83) | 418 | ||||
Comprehensive income | 566 | $ 675 | $ 463 | 729 | $ 953 | $ 547 | 1,704 | 2,229 |
Other deferred taxes | 0 | 1 | 5 | 1 | ||||
Fuel derivatives | ||||||||
Condensed Statement of Income Captions [Line Items] | ||||||||
Unrealized gain (loss) on derivative instruments, net of deferred taxes | (80) | 107 | (61) | 404 | ||||
Derivative deferred taxes | (24) | 32 | (18) | 123 | ||||
Interest rate derivatives | ||||||||
Condensed Statement of Income Captions [Line Items] | ||||||||
Unrealized gain (loss) on derivative instruments, net of deferred taxes | (15) | 1 | (40) | 5 | ||||
Derivative deferred taxes | $ (5) | $ 0 | $ (13) | $ 1 |
AOCI - Schedule of AOCI Compone
AOCI - Schedule of AOCI Components (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Fuel derivatives | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | $ (31) | $ (56) |
Changes in fair value | (123) | (107) |
Ending Balance | (135) | (135) |
Interest rate derivatives | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | (33) | 0 |
Changes in fair value | (22) | (56) |
Reclassification to earnings | 2 | 3 |
Ending Balance | (53) | (53) |
Defined Benefit Plan Items | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | 58 | 58 |
Changes in fair value | 0 | 0 |
Reclassification to earnings | 0 | 0 |
Ending Balance | 58 | 58 |
Other comprehensive income other changes net of tax | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | 45 | 25 |
Changes in fair value | 2 | 22 |
Reclassification to earnings | 0 | 0 |
Ending Balance | 47 | 47 |
Deferred Tax | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | (9) | (7) |
Changes in fair value | 33 | 33 |
Reclassification to earnings | (4) | (6) |
Ending Balance | 20 | 20 |
AOCI Including Portion Attributable to Noncontrolling Interest | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | 30 | 20 |
Changes in fair value | (110) | (108) |
Reclassification to earnings | 17 | 25 |
Ending Balance | (63) | (63) |
Reclassification out of Accumulated Other Comprehensive Income | Fuel derivatives | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Reclassification to earnings | $ (19) | $ (28) |
AOCI - Reclassification out of
AOCI - Reclassification out of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Fuel and oil | $ 1,090 | $ 1,205 | $ 3,242 | $ 3,425 |
Interest Expense | (30) | (33) | (90) | (99) |
Less: Tax Expense | (160) | $ (171) | (504) | $ (536) |
Interest rate derivatives | ||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Reclassification to earnings | (2) | (3) | ||
Reclassification out of Accumulated Other Comprehensive Income | ||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Net of Tax | 17 | 25 | ||
Reclassification out of Accumulated Other Comprehensive Income | Fuel derivatives | ||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Reclassification to earnings | 19 | 28 | ||
Less: Tax Expense | 4 | 6 | ||
Net of Tax | 15 | 22 | ||
Reclassification out of Accumulated Other Comprehensive Income | Interest rate derivatives | ||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | ||||
Less: Tax Expense | 0 | 0 | ||
Net of Tax | $ 2 | $ 3 |
Revenue - Passenger Revenue Bre
Revenue - Passenger Revenue Breakout (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Operating Revenue | $ 5,639 | $ 5,575 | $ 16,698 | $ 16,261 |
Passenger Revenue Non Loyalty | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating Revenue | 4,400 | 4,417 | 13,126 | 12,969 |
Passenger Loyalty Air Transportation | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating Revenue | 657 | 623 | 1,814 | 1,702 |
Passenger Ancillary Sold Separately | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating Revenue | 173 | 154 | 522 | 466 |
Passenger | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating Revenue | $ 5,230 | $ 5,194 | $ 15,462 | $ 15,137 |
Revenue - Air Traffic Liability
Revenue - Air Traffic Liability Breakout (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Revenue Recognition and Deferred Revenue [Abstract] | ||||
ATL - PAX Revenue and Ancillary PAX Services | $ 2,627 | $ 2,059 | ||
ATL - Loyalty Program | 3,339 | 3,011 | ||
Air Traffic Liability Total | $ 5,966 | $ 5,070 | $ 5,583 | $ 4,565 |
Revenue - Air Traffic Liabili_2
Revenue - Air Traffic Liability - Loyalty Program Rollforward (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Movement in Deferred Revenue | ||||
Air traffic liability - loyalty program - beginning balance | $ 3,289 | $ 2,919 | $ 3,011 | $ 2,667 |
Amounts deferred associated with points awarded | 727 | 669 | 2,195 | 2,027 |
Revenue recognized from points redeemed - Passenger | (657) | (623) | (1,814) | (1,702) |
Revenue recognized from points redeemed - Other | (20) | (17) | (53) | (44) |
Air traffic liability - loyalty program - ending balance | $ 3,339 | $ 2,948 | $ 3,339 | $ 2,948 |
Revenue - Air Traffic Liabili_3
Revenue - Air Traffic Liability Rollforward (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Air Traffic Liability Roll Forward | ||
ATL, beginning balance | $ 5,070 | $ 4,565 |
Current Period Sales | 16,410 | 16,200 |
Revenue amounts in beginning balance | (3,160) | (3,098) |
Revenue from Current Period Sales | (12,354) | (12,084) |
ATL, ending balance | $ 5,966 | $ 5,583 |
Revenue - Additional Informatio
Revenue - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Deferred Revenue Arrangement [Line Items] | ||||
Operating Revenue | $ 5,639 | $ 5,575 | $ 16,698 | $ 16,261 |
Chase And Other Partner Agreements | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Operating Revenue | $ 329 | $ 290 | $ 984 | $ 856 |
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, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
NUMERATOR: | ||||
Net income | $ 659 | $ 615 | $ 1,787 | $ 1,811 |
DENOMINATOR: | ||||
Weighted-average shares outstanding, basic | 533 | 569 | 542 | 578 |
Dilutive effect of restricted stock units | 1 | 0 | 1 | 1 |
Adjusted weighted-average shares outstanding, diluted | 534 | 569 | 543 | 579 |
NET INCOME PER SHARE: | ||||
Basic | $ 1.24 | $ 1.08 | $ 3.30 | $ 3.13 |
Diluted | $ 1.23 | $ 1.08 | $ 3.29 | $ 3.13 |
Leases (Details)
Leases (Details) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019USD ($)aircraft | Sep. 30, 2019USD ($)aircraft | Dec. 31, 2018USD ($) | |
Sublease Income | $ 25,000,000 | $ 75,000,000 | |
Sublease income - Remainder of 2019 | 23,000,000 | 23,000,000 | $ 348,000,000 |
Sublease income - 2020 | 78,000,000 | 78,000,000 | 357,000,000 |
Sublease income - 2021 | 41,000,000 | 41,000,000 | 244,000,000 |
Sublease income - 2022 | 17,000,000 | 17,000,000 | 172,000,000 |
Sublease income - 2023 | 7,000,000 | 7,000,000 | $ 146,000,000 |
Sublease income - 2024 | 1,000,000 | 1,000,000 | |
Unrecorded Unconditional Purchase Obligation | $ 533,000,000 | $ 533,000,000 | |
Lessee, Operating Lease, Lease Not yet Commenced, Description | aircraft | 16 | 16 | |
B-717-200 | |||
Property Subject to or Available for Operating Lease, Number of Units | aircraft | 68 | 68 | |
Finance Leases, Net Investment in Sales Type Leases, Contingent Payments on Leased Property | $ 0 | $ 0 | |
Finance Leases, Net Investment in Sales Type Leases, Unguaranteed Residual Values of Leased Property | $ 0 | $ 0 | |
Finance Leased Assets, Number of Units | aircraft | 2 | 2 | |
Property Subject To Or Available For Lease, Number Of Units, Total | aircraft | 88 | 88 | |
Owned Assets, Number of Units | aircraft | 10 | 10 | |
Lease Terms For Owned Aircraft | 4 years | ||
Minimum | B-717-200 | |||
Sublease Terms | 1 month | ||
Minimum | 737 MAX 8 | |||
Lessee, Renewal Term | 8 years | ||
Minimum | Aircraft | |||
Lessee, Renewal Term | 1 year | ||
Lessee Operating and Finance Lease Term of Contract | 1 month | ||
Minimum | Airport-Related | |||
Lessee Operating Lease Terms of Contract | 1 month | ||
Minimum | Other Property | |||
Lessee, Renewal Term | 1 year | ||
Lessee Operating and Finance Lease Term of Contract | 3 months | ||
Maximum | B-717-200 | |||
Sublease Terms | 5 years | ||
Maximum | 737 MAX 8 | |||
Lessee, Operating Lease, Lease Not yet Commenced, Term of Contract | 9 years | 9 years | |
Maximum | Aircraft | |||
Lessee, Renewal Term | 5 years | ||
Lessee Operating and Finance Lease Term of Contract | 12 years | ||
Maximum | Airport-Related | |||
Lessee Operating Lease Terms of Contract | 27 years | ||
Maximum | Other Property | |||
Lessee, Renewal Term | 5 years | ||
Lessee Operating and Finance Lease Term of Contract | 8 years |
Leases Lease-Related Assets and
Leases Lease-Related Assets and Liabilities (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Operating lease right-of-use assets | $ 1,352,000,000 | $ 0 |
Finance lease right-of-use asset | 835,000,000 | |
Finance Lease, Right of Use Asset, Accumulated Depreciation | 430,000,000 | |
Total lease assets | 2,187,000,000 | |
Current operating lease liabilities | 332,000,000 | 0 |
Finance lease, current maturities of long-term debt | 86,000,000 | |
Noncurrent operating lease liabilities | 1,014,000,000 | 0 |
Finance lease, long-term debt less current maturities | 586,000,000 | |
Total lease liabilities | 2,018,000,000 | |
Less allowance for depreciation and amortization | 10,445,000,000 | $ 9,731,000,000 |
Finance Lease | ||
Finance lease, current maturities of long-term debt | 86,000,000 | |
Finance lease, long-term debt less current maturities | $ 586,000,000 |
Leases Components of Lease Cost
Leases Components of Lease Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | ||
Short-term Lease, Cost | $ 1 | $ 3 | |
Variable Lease, Cost | 337 | 1,016 | |
Sublease Income | (25) | (75) | |
Finance Lease, Right-of-Use Asset, Amortization | 29 | 87 | |
Finance Lease, Interest Expense | 6 | 20 | |
Lease, Cost | 439 | 1,324 | |
Aircraft | |||
Operating Lease, Cost | [1] | 44 | 132 |
Other Property | |||
Operating Lease, Cost | $ 22 | $ 66 | |
[1] | Net of sublease income of $25 million and $75 million for the three and nine months ended September 30, 2019 , respectively. |
Leases Supplemental Cash Flow I
Leases Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Operating Lease, Payments | $ 95 | $ 298 |
Finance Lease, Interest Payment on Liability | 6 | 20 |
Finance Lease, Principal Payments | 21 | 64 |
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | 6 | 130 |
Right-of-Use Asset Obtained in Exchange for Finance Lease Liability | $ 0 | $ 1 |
Leases Maturity of Lease Liabil
Leases Maturity of Lease Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Current operating lease liabilities | $ 332 | $ 0 |
Finance lease, current maturities of long-term debt | 86 | |
Noncurrent operating lease liabilities | 1,014 | $ 0 |
Finance lease, long-term debt less current maturities | 586 | |
Operating Lease | ||
Remainder of 2019 | 115 | |
2020 | 347 | |
2021 | 213 | |
2022 | 141 | |
2023 | 111 | |
Thereafter | 753 | |
Total lease payments | 1,680 | |
Less imputed interest | (334) | |
Total lease obligations | 1,346 | |
Current operating lease liabilities | 332 | |
Noncurrent operating lease liabilities | 1,014 | |
Finance Lease | ||
Remainder of 2019 | 28 | |
2020 | 109 | |
2021 | 104 | |
2022 | 101 | |
2023 | 97 | |
Thereafter | 338 | |
Total lease payments | 777 | |
Less imputed interest | (105) | |
Total lease obligations | 672 | |
Finance lease, current maturities of long-term debt | 86 | |
Finance lease, long-term debt less current maturities | $ 586 |
Leases Other Information (Detai
Leases Other Information (Details) | Sep. 30, 2019 | |
Leases - Other Information [Abstract] | ||
Operating Lease, Weighted Average Remaining Lease Term | 9 years | |
Finance Lease, Weighted Average Remaining Lease Term | 8 years | |
Operating Lease, Weighted Average Discount Rate, Percent | 3.80% | [1] |
Finance Lease, Weighted Average Discount Rate, Percent | 3.80% | |
[1] | Upon adoption of the New Lease Standard, the incremental borrowing rate used for existing leases was established as of January 1, 2019. |
Leases Capital Leases, Balance
Leases Capital Leases, Balance Sheet, Assets by Major Class, Net (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 | |
Capital Leased Assets [Line Items] | |||
2019 | $ 111 | ||
2020 | 109 | ||
2021 | 105 | ||
2022 | 100 | ||
2023 | 97 | ||
Thereafter | 335 | ||
Total minimum lease payments | 857 | ||
Less amount representing interest | 126 | ||
Present value of minimum lease payments (a) | [1] | 731 | |
Less current portion | (85) | ||
Long-term portion | 646 | ||
Lease Incentive Obligation Excluded | 114 | ||
Subleases | |||
2019 | (92) | ||
2020 | (78) | ||
2021 | (41) | ||
2022 | (17) | ||
2023 | (7) | ||
Thereafter | (1) | ||
Total minimum lease payments | (236) | ||
Operating Leased Assets [Line Items] | |||
2019 | $ 23 | 348 | |
2020 | 78 | 357 | |
2021 | 41 | 244 | |
2022 | 17 | 172 | |
2023 | $ 7 | 146 | |
Thereafter | 474 | ||
Total minimum lease payments | 1,741 | ||
2019 | 256 | ||
2020 | 279 | ||
2021 | 203 | ||
2022 | 155 | ||
2023 | 139 | ||
Thereafter | 473 | ||
Total minimum lease payments | $ 1,505 | ||
[1] | Excludes lease incentive obligation of $114 million |
Fair Value Measurements - Measu
Fair Value Measurements - Measured on Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | ||
Quoted prices in active markets for identical assets (Level 1) | ||||
Assets | ||||
Treasury bills | $ 1,195,000,000 | $ 1,582,000,000 | ||
Interest rate derivatives (see Note 3) | 0 | |||
Fuel derivatives: | ||||
Other available for sale securities | 178,000,000 | 127,000,000 | ||
Total assets | 3,451,000,000 | 3,101,000,000 | ||
Liabilities | ||||
Interest rate derivatives (see Note 3) | 0 | 0 | ||
Significant other observable inputs (Level 2) | ||||
Assets | ||||
Treasury bills | 0 | 0 | ||
Interest rate derivatives (see Note 3) | 1,000,000 | |||
Fuel derivatives: | ||||
Other available for sale securities | 0 | 0 | ||
Total assets | 744,000,000 | 715,000,000 | ||
Liabilities | ||||
Interest rate derivatives (see Note 3) | (24,000,000) | (14,000,000) | ||
Significant unobservable inputs (Level 3) | ||||
Assets | ||||
Treasury bills | 0 | 0 | ||
Interest rate derivatives (see Note 3) | 0 | |||
Fuel derivatives: | ||||
Other available for sale securities | 0 | 0 | ||
Total assets | 114,000,000 | 138,000,000 | ||
Liabilities | ||||
Interest rate derivatives (see Note 3) | 0 | 0 | ||
Options Held | Quoted prices in active markets for identical assets (Level 1) | ||||
Fuel derivatives: | ||||
Derivative Asset, Fair Value, Gross Asset | 0 | [1] | 0 | [2] |
Options Held | Significant other observable inputs (Level 2) | ||||
Fuel derivatives: | ||||
Derivative Asset, Fair Value, Gross Asset | 0 | [1] | 0 | [2] |
Options Held | Significant unobservable inputs (Level 3) | ||||
Fuel derivatives: | ||||
Derivative Asset, Fair Value, Gross Asset | 114,000,000 | [1] | 138,000,000 | [2] |
Cash Equivalents | Quoted prices in active markets for identical assets (Level 1) | ||||
Assets | ||||
Cash equivalents | 2,078,000,000 | [3] | 1,392,000,000 | [4] |
Cash Equivalents | Significant other observable inputs (Level 2) | ||||
Assets | ||||
Cash equivalents | 0 | [3] | 0 | [4] |
Cash Equivalents | Significant unobservable inputs (Level 3) | ||||
Assets | ||||
Cash equivalents | 0 | [3] | 0 | [4] |
Commercial Paper | Quoted prices in active markets for identical assets (Level 1) | ||||
Assets | ||||
Cash equivalents | 0 | 0 | ||
Commercial Paper | Significant other observable inputs (Level 2) | ||||
Assets | ||||
Cash equivalents | 405,000,000 | 454,000,000 | ||
Commercial Paper | Significant unobservable inputs (Level 3) | ||||
Assets | ||||
Cash equivalents | 0 | 0 | ||
Certificates of Deposit | Quoted prices in active markets for identical assets (Level 1) | ||||
Assets | ||||
Cash equivalents | 0 | 0 | ||
Investments | 0 | 0 | ||
Certificates of Deposit | Significant other observable inputs (Level 2) | ||||
Assets | ||||
Cash equivalents | 5,000,000 | 8,000,000 | ||
Investments | 274,000,000 | 228,000,000 | ||
Certificates of Deposit | Significant unobservable inputs (Level 3) | ||||
Assets | ||||
Cash equivalents | 0 | 0 | ||
Investments | 0 | 0 | ||
Time Deposits | Quoted prices in active markets for identical assets (Level 1) | ||||
Assets | ||||
Investments | 0 | 0 | ||
Time Deposits | Significant other observable inputs (Level 2) | ||||
Assets | ||||
Investments | 59,000,000 | 25,000,000 | ||
Time Deposits | Significant unobservable inputs (Level 3) | ||||
Assets | ||||
Investments | 0 | 0 | ||
Estimate of Fair Value Measurement | ||||
Assets | ||||
Treasury bills | 1,195,000,000 | 1,582,000,000 | ||
Interest rate derivatives (see Note 3) | 1,000,000 | |||
Fuel derivatives: | ||||
Other available for sale securities | 178,000,000 | 127,000,000 | ||
Total assets | 4,309,000,000 | 3,954,000,000 | ||
Liabilities | ||||
Interest rate derivatives (see Note 3) | (24,000,000) | (14,000,000) | ||
Estimate of Fair Value Measurement | Options Held | ||||
Fuel derivatives: | ||||
Derivative Asset, Fair Value, Gross Asset | 114,000,000 | [1] | 138,000,000 | [2] |
Estimate of Fair Value Measurement | Cash Equivalents | ||||
Assets | ||||
Cash equivalents | 2,078,000,000 | [3] | 1,392,000,000 | [4] |
Estimate of Fair Value Measurement | Commercial Paper | ||||
Assets | ||||
Cash equivalents | 405,000,000 | 454,000,000 | ||
Estimate of Fair Value Measurement | Certificates of Deposit | ||||
Assets | ||||
Cash equivalents | 5,000,000 | 8,000,000 | ||
Investments | 274,000,000 | 228,000,000 | ||
Estimate of Fair Value Measurement | Time Deposits | ||||
Assets | ||||
Investments | $ 59,000,000 | $ 25,000,000 | ||
[1] | In the unaudited Condensed Consolidated Balance Sheet amounts are presented as an asset. See Note 3 . | |||
[2] | In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net asset. See Note 3. | |||
[3] | Cash equivalents are primarily composed of money market investments. | |||
[4] | Cash equivalents are primarily composed of money market investments. |
Fair Value Measurement - Fair V
Fair Value Measurement - Fair Value Assets and Liabilities Measured on Recurring Basis with Unobservable Inputs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2019 | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Gains (Losses) Included in Other Comprehensive Income (Loss) | $ (123) | $ (101) | |||
Fuel derivatives | |||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Beginning Balance | 187 | 138 | |||
Purchases | 50 | [1] | 126 | [2] | |
Sales | [2] | (2) | |||
Settlements | (47) | ||||
Ending Balance | $ 114 | $ 114 | |||
[1] | The purchase of fuel derivatives is recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives was purchased as a single instrument or separate instruments. | ||||
[2] | 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 was purchased as a single instrument or separate instruments. |
Fair Value Measurements - Quant
Fair Value Measurements - Quantitative Information about Level 3 Fair Value (Details) - Significant unobservable inputs (Level 3) - Fuel derivatives - Measurement Input, Option Volatility | Sep. 30, 2019 |
Minimum | Fourth quarter 2019 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative Asset, Measurement Input | 0.22 |
Minimum | 2020 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative Asset, Measurement Input | 0.24 |
Minimum | 2021 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative Asset, Measurement Input | 0.20 |
Minimum | 2022 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative Asset, Measurement Input | 0.19 |
Maximum | Fourth quarter 2019 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative Asset, Measurement Input | 0.38 |
Maximum | 2020 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative Asset, Measurement Input | 0.42 |
Maximum | 2021 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative Asset, Measurement Input | 0.29 |
Maximum | 2022 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative Asset, Measurement Input | 0.21 |
Fair Value Instruments - Carryi
Fair Value Instruments - Carrying and Estimated Fair Value of Debt (Details) $ in Millions | Sep. 30, 2019USD ($) |
2.75% Notes Due November 2019 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 300 |
Stated interest rate | 2.75% |
2.65% Notes due 2020 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 501 |
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 | $ 147 |
Stated interest rate | 5.223% |
737 Aircraft Notes payable through 2020 | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 21 |
2.75% Notes due 2022 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 300 |
Stated interest rate | 2.75% |
Pass Through Certificates due 2022 - 6.24% | Enhanced Equipment Trust Certificate | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 197 |
Stated interest rate | 6.24% |
Term Loan Agreement due 2026 - 3.71% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 188 |
Stated interest rate | 3.71% |
3.00% Notes due 2026 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 300 |
Stated interest rate | 3.00% |
3.45% Notes due 2027 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 300 |
Stated interest rate | 3.45% |
7.375% Debentures due 2027 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 123 |
Stated interest rate | 7.375% |
Level 2 | 2.75% Notes Due November 2019 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | $ 300 |
Level 2 | 2.65% Notes due 2020 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 504 |
Level 2 | 2.75% Notes due 2022 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 304 |
Level 2 | Pass Through Certificates due 2022 - 6.24% | Enhanced Equipment Trust Certificate | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 208 |
Level 2 | 3.00% Notes due 2026 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 307 |
Level 2 | 3.45% Notes due 2027 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 315 |
Level 2 | 7.375% Debentures due 2027 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Loans Payable, Fair Value | 152 |
Level 3 | Term Loan Agreement payable through 2020 - 5.223% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Loans Payable, Fair Value | 147 |
Level 3 | 737 Aircraft Notes payable through 2020 | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 21 |
Level 3 | Term Loan Agreement due 2026 - 3.71% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Loans Payable, Fair Value | $ 188 |
Supplemental Financial Inform_3
Supplemental Financial Information - Other Assets (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 | |
Other Assets [Abstract] | |||
Derivative contracts | $ 80 | $ 95 | |
Intangible assets | 311 | 400 | |
Finance lease receivable | 50 | 61 | |
Other | 212 | 164 | |
Other assets | 653 | 720 | |
Other Assets | Interest rate derivatives | |||
Other Assets [Abstract] | |||
Derivative contracts | [1] | $ 1 | $ 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 9 . |
Supplemental Financial Inform_4
Supplemental Financial Information - Accounts Payable (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Supplemental Financial Information - Accounts Payable [Abstract] | ||
Accounts payable trade | $ 270 | $ 263 |
Salaries payable | 199 | 216 |
Taxes payable | 188 | 220 |
Aircraft maintenance payable | 109 | 69 |
Fuel payable | 120 | 122 |
Other payable | 388 | 526 |
Accounts Payable, Current | $ 1,274 | $ 1,416 |
Supplemental Financial Inform_5
Supplemental Financial Information - Accrued Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Accrued Liabilities, Current [Abstract] | ||
Profitsharing and savings plans | $ 423 | $ 580 |
Vacation pay | 427 | 403 |
Health | 118 | 107 |
Workers compensation | 169 | 166 |
Accrual for Property and Income Taxes | 70 | 68 |
Other | 249 | 425 |
Accrued liabilities | $ 1,456 | $ 1,749 |
Supplemental Financial Inform_6
Supplemental Financial Information - Other Non-Current Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Other Liabilities, Noncurrent [Abstract] | ||
Postretirement obligation | $ 245 | $ 232 |
Other deferred compensation | 288 | 247 |
Other | 111 | 171 |
Other noncurrent liabilities | $ 644 | $ 650 |
Commitments and Contingencies -
Commitments and Contingencies - Airport Projects (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 | |
Other Commitments [Line Items] | |||
ACFO | $ 172 | $ 1,768 | |
Assets constructed for others, net | 172 | 1,637 | |
Construction Obligation | 172 | 1,701 | |
FLL Terminal | |||
Other Commitments [Line Items] | |||
ACFO | 0 | 313 | |
Assets constructed for others, net | [1] | 0 | 304 |
Construction Obligation | 0 | 308 | |
LAX Terminal 1 | |||
Other Commitments [Line Items] | |||
ACFO | 0 | 485 | |
Assets constructed for others, net | [1] | 0 | 459 |
Construction Obligation | 0 | 476 | |
LAX Terminal 1.5 | |||
Other Commitments [Line Items] | |||
Total Expected Cost Of Airport Project | 479 | ||
Outstanding remaining guaranteed obligation | 183 | ||
ACFO | [2] | 172 | 99 |
Assets constructed for others, net | [1],[2] | 172 | 99 |
Construction Obligation | [2] | 172 | 99 |
LFMP Terminal | |||
Other Commitments [Line Items] | |||
ACFO | 0 | 545 | |
Assets constructed for others, net | [1] | 0 | 460 |
Construction Obligation | 0 | 502 | |
Municipal bonds principal remaining | 416 | ||
Net present value of principal remaining | 458 | ||
LFMP Parking Garage | |||
Other Commitments [Line Items] | |||
ACFO | 0 | 200 | |
Assets constructed for others, net | [1] | 0 | 200 |
Construction Obligation | 0 | 200 | |
HOU International Terminal | |||
Other Commitments [Line Items] | |||
ACFO | [3] | 0 | 126 |
Assets constructed for others, net | [1],[3] | 0 | 115 |
Construction Obligation | [3] | $ 0 | $ 116 |
[1] | Net of accumulated depreciation. | ||
[2] | Project still in progress. | ||
[3] | Project completed in 2015 at Houston William P. Hobby Airport ("HOU"). |
Boeing 737 MAX Aircraft Groun_2
Boeing 737 MAX Aircraft Grounding (Details) $ in Billions | Sep. 30, 2019USD ($)aircraft |
Number of Aircraft Grounded Under Emergency Order | 34 |
Potential Concessions to All Airlines Related to MAX Grounding | $ | $ 4.9 |
Number of MAX Aircraft Expected To Be Delivered in Fourth Quarter 2019 | 7 |
Number of MAX Aircraft Expected To Be Delivered in 2020 | 34 |