Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 24, 2020 | |
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 | Mar. 31, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 508,885,530 | |
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 | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 3,940 | $ 2,548 |
Short-term investments | 1,605 | 1,524 |
Accounts and other receivables | 709 | 1,086 |
Inventories of parts and supplies, at cost | 518 | 529 |
Prepaid expenses and other current assets | 256 | 287 |
Total current assets | 7,028 | 5,974 |
Property and equipment, at cost: | ||
Flight equipment | 21,580 | 21,629 |
Ground property and equipment | 5,818 | 5,672 |
Deposits on flight equipment purchase contracts | 305 | 248 |
Assets constructed for others | 198 | 164 |
Property and equipment, at cost | 27,901 | 27,713 |
Less allowance for depreciation and amortization | 10,912 | 10,688 |
Property and equipment, net | 16,989 | 17,025 |
Goodwill | 970 | 970 |
Operating lease right-of-use assets | 1,278 | 1,349 |
Other assets | 620 | 577 |
Total assets | 26,885 | 25,895 |
Current liabilities: | ||
Accounts payable | 1,043 | 1,574 |
Accrued liabilities | 1,037 | 1,749 |
Current operating lease liabilities | 330 | 353 |
Air traffic liability | 5,036 | 4,457 |
Current maturities of long-term debt | 2,795 | 819 |
Total current liabilities | 10,241 | 8,952 |
Long-term debt less current maturities | 2,288 | 1,846 |
Air traffic liability - noncurrent | 1,175 | 1,053 |
Deferred income taxes | 2,278 | 2,364 |
Construction obligation | 198 | 164 |
Noncurrent operating lease liabilities | 936 | 978 |
Other noncurrent liabilities | 694 | 706 |
Stockholders' equity: | ||
Common stock | 808 | 808 |
Capital in excess of par value | 1,582 | 1,581 |
Retained earnings | 17,757 | 17,945 |
Accumulated other comprehensive loss | (186) | (61) |
Treasury stock, at cost | (10,886) | (10,441) |
Total stockholders' equity | 9,075 | 9,832 |
Total liabilities and stockholders' equity | $ 26,885 | $ 25,895 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Comprehensive Income (Loss) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
OPERATING REVENUE: | ||
Operating Revenue | $ 4,234 | $ 5,149 |
OPERATING EXPENSES: | ||
Salaries, wages, and benefits | 1,854 | 1,976 |
Fuel and oil | 870 | 1,015 |
Landing fees and airport rentals | 339 | 333 |
Maintenance materials and repairs | 272 | 293 |
Depreciation and amortization | 311 | 297 |
Other operating expenses | 698 | 730 |
Operating Costs and Expenses | 4,344 | 4,644 |
OPERATING INCOME (LOSS) | (110) | 505 |
OTHER EXPENSES (INCOME): | ||
Interest expense | 28 | 31 |
Capitalized interest | (5) | (9) |
Interest income | (17) | (23) |
Other (gains) losses, net | 28 | 2 |
Total other expenses (income) | 34 | 1 |
INCOME (LOSS) BEFORE INCOME TAXES | (144) | 504 |
PROVISION FOR INCOME TAXES | (50) | 117 |
NET INCOME (LOSS) | $ (94) | $ 387 |
NET INCOME (LOSS) PER SHARE, BASIC | $ (0.18) | $ 0.70 |
NET INCOME (LOSS) PER SHARE, DILUTED | $ (0.18) | $ 0.70 |
COMPREHENSIVE INCOME (LOSS) | $ (219) | $ 463 |
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING | ||
Basic | 515 | 551 |
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING | ||
Diluted | 515 | 552 |
Passenger | ||
OPERATING REVENUE: | ||
Operating Revenue | $ 3,845 | $ 4,745 |
Freight | ||
OPERATING REVENUE: | ||
Operating Revenue | 39 | 42 |
Other | ||
OPERATING REVENUE: | ||
Operating Revenue | $ 350 | $ 362 |
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 |
Cumulative effect of new accounting standards | $ 55 | $ 0 | $ 0 | $ 55 | $ 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 (loss) | 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, 2019 | 9,832 | (10,441) | (61) | 17,945 | 1,581 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Repurchase of common stock | (451) | (451) | 0 | 0 | 0 | 0 |
Issuance of common and treasury stock pursuant to Employee stock plans | 2 | 6 | 0 | 0 | 8 | 0 |
Share-based compensation | (9) | 0 | 0 | 0 | (9) | 0 |
Cash dividends | (94) | 0 | 0 | (94) | 0 | 0 |
Comprehensive income (loss) | (219) | 0 | (125) | (94) | 0 | 0 |
Balance at end of period at Mar. 31, 2020 | $ 9,075 | $ (10,886) | $ (186) | $ 17,757 | $ 1,582 | $ 808 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity (Parentheticals) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash dividends, per share (in dollars per share) | $ 0.180 | $ 0.160 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ (94) | $ 387 |
Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||
Depreciation and amortization | 311 | 297 |
Unrealized/realized (gain) loss on fuel derivative instruments | 2 | 0 |
Deferred income taxes | (49) | 13 |
Changes in certain assets and liabilities: | ||
Accounts and other receivables | 183 | (222) |
Other assets | 58 | 29 |
Accounts payable and accrued liabilities | (1,291) | (257) |
Air traffic liability | 701 | 944 |
Other liabilities | (132) | (69) |
Cash collateral received from (provided to) derivative counterparties | (5) | 15 |
Other, net | (61) | (32) |
Net cash provided by (used in) operating activities | (377) | 1,105 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capital expenditures | (224) | (160) |
Supplier Proceeds | 300 | 0 |
Purchases of short-term investments | (1,029) | (251) |
Proceeds from sales of short-term and other investments | 948 | 575 |
Net cash provided by (used in) investing activities | (5) | 164 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of long-term debt | 500 | 0 |
Proceeds from revolving credit facility | 1,000 | 0 |
Proceeds from term loan credit facility | 1,000 | 0 |
Proceeds from Employee stock plans | 11 | 10 |
Payments of long-term debt and finance lease obligations | (78) | (99) |
Payments of cash dividends | (188) | (178) |
Repurchase of common stock | (451) | (500) |
Other, net | (20) | (12) |
Net cash provided by (used in) financing activities | 1,774 | (779) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 1,392 | 490 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 2,548 | 1,854 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 3,940 | 2,344 |
CASH PAYMENTS FOR: | ||
Interest, net of amount capitalized | 14 | 15 |
Income taxes | 5 | 4 |
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS | ||
Right-of-use assets acquired under operating leases | 25 | 119 |
Right-of-use assets acquired under finance leases | 0 | 1 |
Assets constructed for others | $ 34 | $ 21 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2020 | |
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 March 31, 2020 and 2019 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, impact of fears or actual outbreak of disease or pandemics, 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 4 for further information on fuel and the Company's hedging program. Operating results for the three months ended March 31, 2020 , are not necessarily indicative of the results that may be expected for future quarters or for the year ended December 31, 2020 . 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, 2019 |
WORLDWIDE PANDEMIC
WORLDWIDE PANDEMIC | 3 Months Ended |
Mar. 31, 2020 | |
Worldwide Pandemic [Abstract] | |
Worldwide Pandemic | WORLDWIDE PANDEMIC As a result of the rapid spread of the novel coronavirus, COVID-19, throughout the world, including into the United States, on March 11, 2020, the World Health Organization (“WHO”) classified the virus as a pandemic. The speed with which the effects of the COVID-19 pandemic have changed the U.S. economic landscape, outlook, and in particular the travel industry, has been swift and unexpected. The Company began to see a negative impact on bookings for future travel in late February 2020, which quickly accelerated into and throughout March. January and February operating revenues were generally in line with the Company’s expectations, but March results were significantly below expectations due to the sharp decline in Passenger demand and bookings, combined with an unprecedented level of close-in trip cancellations (Customers canceling close to scheduled flight times). On March 22, the Company began proactively canceling a significant portion of its scheduled flights, and increased those cancellations further beginning on March 27, 2020. In addition, the cancellation of flights, both in March 2020 and for future periods, has resulted in a significant amount of cash refunds and issuance of travel credits to Customers. Further, due to the fears and restrictions involved with travel in the near term, sales of tickets for future travel have been well below the Company’s expectations. These events have created a liquidity risk, and the Company reacted quickly by taking the following steps to better enable it to meet all financial obligations as they become due. In mid-March, the Company closed a transaction to obtain $1.0 billion under the 364-Day Credit Agreement (defined below) from the syndicate of lenders named therein, and also drew down an available $1.0 billion under the Revolving Credit Agreement (defined below). Subsequently, on March 30, 2020, the Company executed an agreement to increase the commitments under the 364-Day Credit Agreement to $3.3 billion , add an uncommitted accordion provision to permit additional term loans in an aggregate amount not to exceed $417 million , and secured the 364-Day Credit Agreement with aircraft. This transaction was funded on April 1, 2020. On March 30, 2020, the Company also executed an agreement to secure the Revolving Credit Agreement with aircraft. See Note 8 for further information on these transactions as well as Note 13 for actions taken subsequent to March 31, 2020. Given the current capital market environment, the Company has been pursuing opportunities for additional financing transactions. The Company has also taken swift actions to preserve cash, including reducing named executive officer salaries and Board of Director cash retainer fees by 20 percent; suspending all hiring and non-contract salary increases; implementing voluntary time-off programs; canceling or deferring hundreds of capital spending projects; modifying vendor and supplier payment terms; and cutting all non-essential spending. The Company has also significantly reduced its published flight schedule through June 2020, and will continue evaluating the need for further flight schedule adjustments. In response to flight schedule adjustments due to the effects of the COVID-19 pandemic, a number of aircraft were taken out of the Company’s schedule beginning in late March. As of March 31, a portion of the Company's fleet had been placed in temporary storage and the Company was actively canceling a significant portion of its previously scheduled flying. Given the current expectation that these aircraft have been grounded temporarily, the Company has continued to record depreciation expense associated with them. As a result of the events and impacts surrounding the COVID-19 pandemic, including the Company's net loss incurred in first quarter 2020, and the significant number of aircraft that have been placed in temporary storage, the Company considered whether these conditions indicated that it was more likely than not that the Company’s $970 million in Goodwill and its $295 million in indefinite-lived intangible assets were impaired. However, upon review, the Company determined that, based on the facts and circumstances in existence as of March 31, 2020, the fair values more likely than not exceeded book values of both its reporting unit and its indefinite-lived intangible assets and therefore, no quantitative test was required. In addition, the Company has assessed whether any impairment of its amortizable assets existed, and has determined that no charges were deemed necessary under applicable accounting standards as of March 31, 2020. The Company’s assumptions about future conditions important to its assessment of potential impairment of its amortizable assets, indefinite-lived intangible assets, and goodwill, including the impacts of the COVID–19 pandemic and other ongoing impacts to its business, are subject to uncertainty, and the Company will continue to monitor these conditions in future periods as new information becomes available, and will update its analyses accordingly. The Company's income tax benefit recorded for first quarter 2020 was at a rate of 34.3 percent , which is higher than its first quarter 2019 rate of 23.1 percent . The higher effective tax rate in 2020 reflects the anticipated benefit of carrying back full year 2020 projected net losses to claim tax refunds against previous cash taxes paid relating to tax years 2015 through 2019, some of which were at higher rates than the current year. On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act” or “the Act”), a stimulus bill designed to provide relief for the actual and anticipated devastating economic impacts of the COVID-19 pandemic on the U.S. economy, businesses, and citizens. The airline industry is one of the targeted areas of the CARES Act, which has provided the opportunity for U.S. passenger and cargo airlines to apply for various forms of assistance, including, among others, a payroll support program and loan opportunities. The CARES Act also provides a temporary tax “holiday” from collecting and remitting certain government–imposed ticket taxes, as well as a deferral on payment of certain 2020 Company funded federal employment taxes to future years. The assistance offered to airlines includes significant stipulations and restrictions, as determined by the United States Department of the Treasury (the "Treasury"). See Note 13 |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Mar. 31, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS On December 18, 2019, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This new standard eliminates certain exceptions in Accounting Standards Codification ("ASC") 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted in any interim period within that year. The Company elected to early adopt this standard as of January 1, 2020. The most significant impact to the Company is the removal of a limit on the tax benefit recognized on pre-tax losses in interim periods. However, the early adoption as of January 1, 2020, did not have an impact on the Company's financial statements or disclosures for first quarter 2020. On August 29, 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software. This 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 standard is effective for public business entities in fiscal years beginning after December 15, 2019, and the standard was adopted and applied prospectively by the Company as of January 1, 2020, but it did not have a significant impact on the Company's financial statements and disclosures. 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. This 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 adopted the standard as of January 1, 2020, but it did not have a significant impact on the Company's financial statements or disclosures. See Note 9 for further information on the Company's fair value measurements. On January 26, 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The new standard eliminates Step 2 from the goodwill impairment test. An entity should recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. This standard is effective for public business entities in fiscal years beginning after December 15, 2019, and the standard was adopted and applied prospectively by the Company as of January 1, 2020, but it did not have a significant impact on the Company's financial statements and disclosures. |
FINANCIAL DERIVATIVE INSTRUMENT
FINANCIAL DERIVATIVE INSTRUMENTS | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
FINANCIAL DERIVATIVE INSTRUMENTS | (550)(b) (125) to (150) or >(550)(c) (c) N/A If credit rating is investment grade, fair value of fuel derivative level at which: Cash is provided to CP >(100) >(50) (75) to (150) or >(550)(d) (125) to (150) or >(550)(d) >(40) >(65)(d) Cash is received from CP >0(d) >150(d) >250(d) >125(d) >100(d) >70(d) Cash can be pledged to CP as collateral (200) to (600)(e) N/A (150) to (550)(b) (150) to (550)(b) 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) (f) (0) to (150) or >(550) (0) to (150) or >(550) (f) (f) Cash is received from CP (f) (f) (f) (f) (f) (f) 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 < $8 million . (b) The Company has the option of providing cash or letters of credit as collateral. (c) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (d) Thresholds may vary based on changes in credit ratings within investment grade. (e) The Company has the option of providing cash as collateral. (f) 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 months ended March 31, 2020 , the Company had fuel derivative instruments in place for up to 70 percent of its fuel consumption. As of March 31, 2020 , the Company also had fuel derivative instruments in place to provide coverage at varying price levels. The following table provides information about the Company’s volume of fuel hedging on an economic basis: Maximum fuel hedged as of March 31, 2020 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) March 31, 2020 Remainder of 2020 976 WTI crude oil, Brent crude oil, and Heating oil 2021 1,283 WTI crude oil and Brent crude oil 2022 930 WTI crude oil and Brent crude oil Beyond 2022 529 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 and may vary significantly as market prices and the Company's flight schedule fluctuates. 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 5 . 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 (Loss) 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. During first quarter 2020, as a result of the drastic drop in demand for air travel, the Company's forecast for second quarter fuel purchases and consumption was significantly reduced, causing the Company to be in an estimated "over– hedged" position for second quarter 2020. Therefore, the Company de–designated a portion of its fuel hedges related to second quarter 2020 and has reclassified approximately $2 million in losses from AOCI into Other (gains) losses, net, in first quarter 2020. The Company did not have any such situations occur during 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 3/31/2020 12/31/2019 3/31/2020 12/31/2019 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 5 $ 48 $ — $ — Fuel derivative contracts (gross) Other assets 79 62 — — Interest rate derivative contracts Prepaid expenses and other current assets 4 — — — Interest rate derivative contracts Other assets — 2 — — Interest rate derivative contracts Accrued liabilities — — 14 5 Interest rate derivative contracts Other noncurrent liabilities — — 16 1 Total derivatives designated as hedges $ 88 $ 112 $ 30 $ 6 Derivatives not designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 1 $ — $ — $ — Interest rate derivative contracts Accrued liabilities — — 41 — Interest rate derivative contracts Other noncurrent liabilities — — — — Total derivatives not designated as hedges $ 1 $ — $ 41 $ — Total derivatives $ 89 $ 112 $ 71 $ 6 (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) March 31, March 31, (in millions) 2020 2019 2020 2019 Current maturities of long-term debt $ 504 $ 300 $ 4 $ 2 Long-term debt less current maturities — 495 18 13 $ 504 $ 795 $ 22 $ 15 (a) At March 31, 2020 and 2019 , these amounts include the cumulative amount of fair value hedging adjustments remaining for which hedge accounting has been discontinued of $18 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 March 31, December 31, (in millions) location 2020 2019 Cash collateral deposits held from counterparties for fuel contracts - current Offset against Prepaid expenses and other current assets $ 1 $ 10 Cash collateral deposits held from counterparties for fuel contracts - noncurrent Offset against Other assets 19 15 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. If its fuel derivative instruments are in a net asset position with a counterparty, cash collateral amounts held are first netted against current outstanding derivative asset amounts associated with that counterparty until that balance is zero, and then any remainder is applied against the fair value of noncurrent outstanding derivative instruments. As of March 31, 2020 , 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) March 31, 2020 December 31, 2019 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 $ 6 $ (1 ) $ 5 $ 48 $ (10 ) $ 38 Fuel derivative contracts Other assets $ 79 $ (19 ) $ 60 (a) $ 62 $ (15 ) $ 47 (a) Interest rate derivative contracts Prepaid expenses and other current assets $ 4 $ — $ 4 $ — $ — $ — Interest rate derivative contracts Other assets $ — $ — $ — (a) $ 2 $ — $ 2 (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 10 . Offsetting of derivative liabilities (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) March 31, 2020 December 31, 2019 Description Balance Sheet location Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet Fuel derivative contracts Prepaid expenses and other current assets $ 1 $ (1 ) $ — $ 10 $ (10 ) $ — Fuel derivative contracts Other assets $ 19 $ (19 ) $ — (a) $ 15 $ (15 ) $ — (a) Interest rate derivative contracts Accrued liabilities $ 55 $ — $ 55 (a) $ 5 $ — $ 5 (a) Interest rate derivative contracts Other noncurrent liabilities $ 16 $ — $ 16 $ 1 $ — $ 1 (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 10 . The following tables present the impact of derivative instruments and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) for the three months ended March 31, 2020 and 2019 : Location and amount recognized in income on cash flow and fair value hedging relationships Three months ended March 31, 2020 Three months ended March 31, 2019 (in millions) Fuel and oil Other (gains)/losses, net Interest expense Fuel and oil Interest expense Total $ 22 $ 2 $ 2 $ 11 $ 8 Loss on cash flow hedging relationships: Commodity contracts: Amount of loss reclassified from AOCI into income 22 2 — 11 — Interest contracts: Amount of loss reclassified from AOCI into income — — — — 1 Impact of fair value hedging relationships: Interest contracts: Hedged items — — 4 — 6 Derivatives designated as hedging instruments — — (2 ) — 1 Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Three months ended March 31, (in millions) 2020 2019 Fuel derivative contracts $ 84 $ (68 ) Interest rate derivatives 32 12 Total $ 116 $ (56 ) Derivatives not designated as hedges Loss recognized in income on derivatives Three months ended Location of loss recognized in income on derivatives March 31, (in millions) 2020 2019 Interest rate derivatives $ 24 $ — Other (gains) losses, net The Company also recorded expense associated with premiums paid for fuel derivative contracts that settled/expired during the three months ended March 31, 2020 and 2019 of $24 million and $28 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 (Loss) 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 March 31, 2020 , recorded in AOCI, were approximately $67 million in unrealized losses , net of taxes, which are expected to be realized in earnings during the twelve months subsequent to March 31, 2020 . 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. During first quarter 2019, the Company entered into 12 separate forward-starting interest rate swap agreements related to a series of 12 737 MAX 8 aircraft leases with deliveries originally scheduled between July 2019 and February 2020. These lease contracts expose the Company to interest rate risk as the rental payments are adjusted and become fixed based on the 9-year swap rate at the time of delivery. The primary objective for these interest rate derivatives, which qualified as cash flow hedges, was to hedge the forecasted monthly rental payments. These swap agreements provide for a single payment at maturity based upon the change in the 9-year swap rate between the execution date and the termination date. All 12 swap agreements were terminated during third quarter 2019, resulting in $32 million being "frozen" in AOCI. As a result of the extenuating circumstances involving the MAX aircraft, which are outside the control of the Company, these amounts will be recognized in earnings when the original forecasted transaction occurs, which remains probable. During third quarter 2019, the Company entered into 12 separate forward-starting interest rate swap agreements, with similar terms as the third quarter 2019 terminated swaps, except for the range of 737 MAX 8 deliveries scheduled were between June 2020 and September 2020. During first quarter 2020, nine of the aircraft leases became no longer probable to be received within the scheduled delivery range. Therefore, the nine associated swap agreements were de-designated and $17 million was "frozen" in AOCI. These amounts will be recognized in earnings when the original forecasted transaction occurs, which continues to be probable. The mark-to-market changes for these swap agreements are now being recorded in earnings, resulting in a $24 million unrealized loss to Other (gains) and losses, net, in the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) for the three months ended March 31, 2020 . The Company will continue to assess the likelihood of the forecasted transactions related to the hedges for the remaining 737 MAX 8 deliveries in future periods. 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 March 31, 2020 , 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 and letters of credit 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 March 31, 2020 , at which such postings are triggered: Counterparty (CP) (in millions) A B C D E F Other (a) Total Fair value of fuel derivatives $ 23 $ 10 $ 20 $ 8 $ 9 $ 8 $ 7 $ 85 Cash collateral held from CP 20 — — — — — — 20 Letters of credit (LC) — — — — — — — — Option to substitute LC for cash N/A N/A (75) to (150) or >(550)(b) (125) to (150) or >(550)(c) (c) N/A If credit rating is investment grade, fair value of fuel derivative level at which: Cash is provided to CP >(100) >(50) (75) to (150) or >(550)(d) (125) to (150) or >(550)(d) >(40) >(65)(d) Cash is received from CP >0(d) >150(d) >250(d) >125(d) >100(d) >70(d) Cash can be pledged to CP as collateral (200) to (600)(e) N/A (150) to (550)(b) (150) to (550)(b) 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) (f) (0) to (150) or >(550) (0) to (150) or >(550) (f) (f) Cash is received from CP (f) (f) (f) (f) (f) (f) 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 < $8 million . (b) The Company has the option of providing cash or letters of credit as collateral. (c) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (d) Thresholds may vary based on changes in credit ratings within investment grade. (e) The Company has the option of providing cash as collateral. (f) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. |
COMPREHENSIVE INCOME (LOSS)
COMPREHENSIVE INCOME (LOSS) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
COMPREHENSIVE INCOME (LOSS) | COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss) 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 (loss) and Comprehensive income (loss) for the three months ended March 31, 2020 and 2019 were as follows: Three months ended March 31, (in millions) 2020 2019 NET INCOME (LOSS) $ (94 ) $ 387 Unrealized gain (loss) on fuel derivative instruments, net of deferred taxes of ($19) and $22 (65 ) 76 Unrealized loss on interest rate derivative instruments, net of deferred taxes of ($10) and ($3) (32 ) (11 ) Other, net of deferred taxes of ($9) and $3 (28 ) 11 Total other comprehensive income (loss) $ (125 ) $ 76 COMPREHENSIVE INCOME (LOSS) $ (219 ) $ 463 A rollforward of the amounts included in AOCI is shown below for the three months ended March 31, 2020 : (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax Accumulated other comprehensive income (loss) Balance at December 31, 2019 $ (125 ) $ (33 ) $ 20 $ 59 $ 18 $ (61 ) Changes in fair value (108 ) (42 ) — (37 ) 43 (144 ) Reclassification to earnings 24 — — — (5 ) 19 Balance at March 31, 2020 $ (209 ) $ (75 ) $ 20 $ 22 $ 56 $ (186 ) The following table illustrates the significant amounts reclassified out of each component of AOCI for the three months ended March 31, 2020 : Three months ended March 31, 2020 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) AOCI components Unrealized loss on fuel derivative instruments $ 22 Fuel and oil expense 2 Other (gains) losses, net 5 Less: Tax expense $ 19 Net of tax |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2020 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
REVENUE | REVENUE Passenger Revenues 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 months ended March 31, 2020 and 2019 : Three months ended March 31, (in millions) 2020 2019 Passenger non-loyalty $ 3,220 $ 4,043 Passenger loyalty - air transportation 461 535 Passenger ancillary sold separately 164 167 Total passenger revenues $ 3,845 $ 4,745 As of March 31, 2020 , and December 31, 2019 , the components of Air traffic liability and Air traffic liability - noncurrent, 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) March 31, 2020 December 31, 2019 Air traffic liability - passenger travel and ancillary passenger services $ 2,650 $ 2,125 Air traffic liability - loyalty program 3,561 3,385 Total Air traffic liability $ 6,211 $ 5,510 Rollforwards of the Company's Air traffic liability - loyalty program for the three months ended March 31, 2020 and 2019 were as follows (in millions): Three months ended March 31, 2020 2019 Air traffic liability - loyalty program - beginning balance $ 3,385 $ 3,011 Amounts deferred associated with points awarded 656 711 Revenue recognized from points redeemed - Passenger (461 ) (535 ) Revenue recognized from points redeemed - Other (19 ) (16 ) Air traffic liability - loyalty program - ending balance $ 3,561 $ 3,171 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 March 31, 2020 and 2019 were as follows (in millions): Air traffic liability Balance at December 31, 2019 $ 5,510 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 4,565 Revenue from amounts included in contract liability opening balances (1,949 ) Revenue from current period sales (1,915 ) Balance at March 31, 2020 $ 6,211 Air traffic liability Balance at December 31, 2018 $ 5,070 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 5,704 Revenue from amounts included in contract liability opening balances (2,008 ) Revenue from current period sales (2,752 ) Balance at March 31, 2019 $ 6,014 In first quarter 2020, the Company experienced a significantly higher number of Customer driven flight cancellations as a result of the COVID-19 pandemic. See Note 2 for further information. As a result, the amount of Customer travel funds held by the Company that can be redeemed for future travel as of March 31, 2020, far exceeds previous periods and represents approximately one third of the total Air traffic liability balance at March 31, 2020, as compared to approximately 13 percent of the total Air traffic liability balance at December 31, 2019. In order to provide additional flexibility to Customers who own these funds, the Company has significantly relaxed its previous policies with regards to the time period within which these funds can be redeemed, which is typically twelve months from the original date of purchase. For all Customer travel funds created or expired between March 1 and September 7, 2020 associated with flight cancellations, the Company has extended the expiration date to September 7, 2022. The more significant of these ticket policy changes occurred in April 2020, which may result in a portion of these funds shifting to non-current, based on changes in expectations of when they will be redeemed for travel. Spoilage estimates are based on the Company's Customers' historical travel behavior as well as assumptions about the Customers' future travel behavior. Assumptions used to generate spoilage estimates can be impacted by several factors including, but not limited to: fare increases, fare sales, changes to the Company's ticketing policies, changes to the Company’s refund, exchange, and unused funds policies, seat availability, and economic factors. Given the unprecedented amount of first quarter 2020 Customer flight cancellations and the amount of travel funds provided, the Company expects additional variability in the amount of spoilage revenue recorded in future periods, as the estimates of the portion of those funds that will expire unused may differ from historical experience. The Company has a co-branded credit card agreement (the “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 March 31, 2020 and 2019 , the Company recognized $321 million and $319 million , respectively. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
NET INCOME (LOSS) PER SHARE | NET INCOME (LOSS) PER SHARE The following table sets forth the computation of basic and diluted net income (loss) per share (in millions, except per share amounts). Antidilutive common stock equivalents, excluded from the diluted net income (loss) per share calculation, consisting primarily of restricted stock units, are not material. Three months ended March 31, 2020 2019 NUMERATOR: Net income (loss) $ (94 ) $ 387 DENOMINATOR: Weighted-average shares outstanding, basic 515 551 Dilutive effect of restricted stock units — 1 Adjusted weighted-average shares outstanding, diluted 515 552 NET INCOME (LOSS) PER SHARE: Basic $ (0.18 ) $ 0.70 Diluted $ (0.18 ) $ 0.70 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | DEBT On March 12, 2020, the Company entered into a new $1.0 billion 364-day term loan credit facility agreement (the “364-Day Credit Agreement”) with a syndicate of lenders identified in the 364-Day Credit Agreement that was drawn in full on the closing date. On March 30, 2020, the Company amended and restated the 364-Day Credit Agreement (the “Amended and Restated 364-Day Credit Agreement”) with a syndicate of lenders identified in the Amended and Restated 364-Day Credit Agreement to add additional term loan commitments of approximately $2.3 billion , add an uncommitted accordion increase provision to permit additional term loans in an aggregate amount not to exceed approximately $417 million , amend the pricing, amend certain covenants, add certain covenants, and provide for the grant of a security interest in certain aircraft and related assets. The Amended and Restated 364-Day Credit Agreement matures in full on March 29, 2021. On March 16, 2020, the Company drew down the full $1.0 billion on its existing $1.0 billion revolving credit facility expiring in August 2022 (the "Revolving Credit Agreement"). The Revolving Credit Agreement is a series of short-term borrowings; at the end of each borrowing the Company must elect to roll the facility over into the next borrowing or pay down the facility, therefore the Company has classified the obligation under Current maturities of long-term debt within the unaudited Condensed Consolidated Balance Sheet as of March 31, 2020. The Revolving Credit Agreement also has an accordion feature that would allow the Company, subject to, among other things, the procurement of incremental commitments, to increase the size of the facility to $1.5 billion . Concurrently with entering into the Amended and Restated 364-Day Credit Agreement on March 30, 2020, the Company also amended the Revolving Credit Agreement (the “Amended and Restated Revolving Credit Agreement”; together with the Amended and Restated 364-Day Credit Agreement, the “Amended and Restated Credit Agreements”) to (i) amend the pricing and fees, (ii) amend certain covenants and provisions, (iii) add certain covenants, and (iv) provide for the grant of a security interest in certain aircraft and related assets. Generally, amounts outstanding under the Amended and Restated Credit Agreements bear interest at interest rates based on either the LIBOR rate (selected by the Company for designated interest periods) or the “alternate base rate” (being the highest of (1) the Wall Street Journal prime rate, (2) one-month adjusted LIBOR (one-month LIBOR plus a statutory reserve rate) plus 1% , and (3) the New York Fed Bank Rate, plus 0.5% ). The underlying LIBOR rate is subject to a floor of 1% per annum and the “alternate base rate” is subject to a floor of 1% per annum. The Amended and Restated Credit Agreements contain customary representations and warranties, covenants, and events of default. The Amended and Restated Credit Agreements are secured by certain separate pools of aircraft and related assets, each with a minimum appraised value ratio requirement. Under the Amended and Restated Credit Agreements, the Company is required to maintain, at all times after March 31, 2021, a specified ratio of (x) adjusted net income (before interest, taxes, depreciation, amortization, and aircraft rental expense) less cash dividends to (y) interest and aircraft rental expense; and to maintain a minimum level of liquidity of $2.5 billion (defined as the aggregate amount available to be borrowed under the Amended and Restated Revolving Credit Agreement plus the aggregate amount of unrestricted cash and cash equivalents of the Company). During February 2020, the Company issued $500 million senior unsecured notes due 2030. The notes bear interest at 2.625 percent . Interest is payable semi-annually in arrears on February 10 and August 10, beginning in 2020. As of March 31, 2020 , aggregate principal maturities of debt and finance leases (not including amounts associated with interest rate swap agreements, interest on finance leases, and amortization of purchase accounting adjustments) were $741 million for the remainder of 2020, $2.2 billion in 2021, $475 million in 2022, $103 million in 2023, $103 million in 2024, $90 million in 2025, and $1.4 billion thereafter. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2020 | |
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 March 31, 2020 , 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 4 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 March 31, 2020 , and December 31, 2019 : Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description March 31, 2020 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 3,495 $ 3,495 $ — $ — Commercial paper 360 — 360 — Certificates of deposit 19 — 19 — Time deposits 66 — 66 — Short-term investments: Treasury bills 1,396 1,396 — — Certificates of deposit 184 — 184 — Time deposits 25 — 25 — Interest rate derivatives (see Note 4) 4 4 Fuel derivatives: Option contracts (b) 85 — — 85 Other available-for-sale securities 182 182 — — Total assets $ 5,816 $ 5,073 $ 658 $ 85 Liabilities Interest rate derivatives (see Note 4) $ (71 ) $ — $ (71 ) $ — (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 4 . 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, 2019 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 1,999 $ 1,999 $ — $ — Commercial paper 535 — 535 — Certificates of deposit 14 — 14 — Short-term investments: Treasury bills 1,196 1,196 — — Certificates of deposit 268 — 268 — Time deposits 60 — 60 — Interest rate derivatives (see Note 4) 2 — 2 — Fuel derivatives: Option contracts (b) 110 — — 110 Other available-for-sale securities 197 197 — — Total assets $ 4,381 $ 3,392 $ 879 $ 110 Liabilities Interest rate derivatives (see Note 4) $ (6 ) $ — $ (6 ) $ — (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 4 . The Company did not have any assets or liabilities measured at fair value on a nonrecurring basis during the three months ended March 31, 2020 , or the year ended December 31, 2019 . 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 months ended March 31, 2020 and the year ended December 31, 2019 : Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at December 31, 2019 $ 110 Total losses for the period Included in earnings (2 ) (a) Included in other comprehensive income (106 ) Purchases 83 (b) Balance at March 31, 2020 $ 85 The amount of total losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at March 31, 2020 $ (2 ) (a) The amount of total losses for the period included in other comprehensive loss attributable to the change in unrealized gains or losses relating to assets still held at March 31, 2020 $ (100 ) (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). (b) 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 Losses included in other comprehensive loss (112 ) Purchases 133 (a) Sales (2 ) (a) Settlements (47 ) Balance at December 31, 2019 $ 110 (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 have resulted in a higher (lower) fair value measurement, respectively, for the Company’s derivative option contracts. The following table presents a range and weighted average of the unobservable inputs utilized in the fair value measurements of the Company’s fuel derivatives classified as Level 3 at March 31, 2020 : Quantitative information about Level 3 fair value measurements Valuation technique Unobservable input Period (by year) Range Weighted Average (a) Fuel derivatives Option model Implied volatility Second quarter 2020 49-121% 93 % Third quarter 2020 50-73% 59 % Fourth quarter 2020 41-56% 47 % 2021 28-47% 36 % 2022 27-30% 28 % Beyond 2022 25-27% 26 % (a) Implied volatility weighted by the notional amount (barrels of fuel) that will settle in respective period. The carrying amounts and estimated fair values of the Company’s short-term and long-term debt (including current maturities), as well as the applicable fair value hierarchy tier, at March 31, 2020 , 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 five 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 2.65% Notes due 2020 $ 504 $ 495 Level 2 Term Loan Agreement payable through 2020 - 5.223% 120 120 Level 3 737 Aircraft Note payable through 2020 7 7 Level 3 Revolving Credit Facility 1,000 978 Level 3 Term Loan Agreement due 2021 - 3.000% 1,000 990 Level 3 2.75% Notes due 2022 300 283 Level 2 Pass Through Certificates due 2022 - 6.24% 168 167 Level 2 Term Loan Agreement payable through 2026 - 3.03% 178 164 Level 3 3.00% Notes due 2026 300 284 Level 2 3.45% Notes due 2027 300 264 Level 2 7.375% Debentures due 2027 121 139 Level 2 2.625% Notes due 2030 500 420 Level 2 |
SUPPLEMENTAL FINANCIAL INFORMAT
SUPPLEMENTAL FINANCIAL INFORMATION | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure Text Block [Abstract] | |
SUPPLEMENTAL FINANCIAL INFORMATION | SUPPLEMENTAL FINANCIAL INFORMATION (in millions) March 31, 2020 December 31, 2019 Trade receivables $ 44 $ 53 Credit card receivables 4 112 Business partners and other suppliers 535 779 Income tax receivable 88 87 Other 38 55 Accounts and other receivables $ 709 $ 1,086 (in millions) March 31, 2020 December 31, 2019 Derivative contracts $ 60 $ 49 Intangible assets, net 296 296 Other 264 232 Other assets $ 620 $ 577 (in millions) March 31, 2020 December 31, 2019 Accounts payable trade $ 218 $ 304 Salaries payable 226 231 Taxes payable excluding income taxes 66 227 Aircraft maintenance payable 156 162 Fuel payable 57 129 Dividends payable — 93 Other payable 320 428 Accounts payable $ 1,043 $ 1,574 (in millions) March 31, 2020 December 31, 2019 Profitsharing and savings plans $ 25 $ 695 Vacation pay 443 434 Health 99 120 Workers compensation 168 166 Property and income taxes 67 79 Derivative contracts 55 5 Other 180 250 Accrued liabilities $ 1,037 $ 1,749 (in millions) March 31, 2020 December 31, 2019 Postretirement obligation $ 294 $ 288 Other deferred compensation 286 313 Other 114 105 Other noncurrent liabilities $ 694 $ 706 For further information on supplier receivables, see Note 12 . For further information on fuel derivative and interest rate derivative contracts, see Note 4 . Other Operating Expenses Other operating expenses consist of aircraft rentals, 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 | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Los Angeles International Airport In October 2017, the Company executed a lease agreement with Los Angeles World Airports ("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 fourth quarter 2020. The costs incurred to fund the Terminal 1.5 Project are included within Assets Constructed for Others ("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. Funding for this project is primarily through the Regional Airports Improvement Corporation (the "RAIC"), which is a quasi-governmental special purpose entity that is acting as a conduit borrower under a syndicated credit facility provided by a group of lenders. A loan made under the credit facility for the Terminal 1.5 Project is being used to reimburse the Company for the site improvements and non-proprietary improvements of the Terminal 1.5 Project, and the outstanding loan will be repaid with the proceeds of LAWA’s payments to purchase completed construction phases. The Company guaranteed the obligation of the RAIC under the credit facility associated with the Terminal 1.5 Project. As of March 31, 2020 , the Company's outstanding remaining guaranteed obligation under the credit facility for the Terminal 1.5 Project was $212 million . Construction costs recorded in ACFO for the Terminal 1.5 Project were $198 million and $164 million , as of March 31, 2020, and December 31, 2019, respectively. Dallas Love Field During 2008, the City of Dallas approved the Love Field Modernization Project ("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. 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 March 31, 2020 , $407 million of principal remained outstanding. The net present value of the future principal and interest payments associated with the bonds was $449 million as of March 31, 2020 , 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. 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 (the "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 | 3 Months Ended |
Mar. 31, 2020 | |
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 MAX aircraft. The Company immediately complied with the order and grounded all 34 MAX 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 MAX 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." In January 2020, the Boeing Company announced an additional pre-tax charge of $2.6 billion related to "estimated potential concessions and other considerations to customers related to the 737 MAX grounding." During fourth quarter 2019, the Company entered into a Memorandum of Understanding with Boeing to compensate Southwest for estimated financial damages incurred during 2019 related to the grounding of the MAX. The terms of the agreement are confidential, but are intended to provide for a substantial portion of the Company’s estimated financial damages associated with both the 34 MAX aircraft that were grounded as of March 13, 2019, as well as the 41 additional MAX aircraft the Company was scheduled to receive ( 28 owned MAX from Boeing and 13 leased MAX from third parties) from March 13, 2019 through December 31, 2019. In accordance with applicable accounting principles, the Company will account for substantially all of the proceeds received from Boeing as a reduction in cost basis spread across both the existing 31 owned MAX in the Company’s fleet, plus the Company’s future firm aircraft deliveries as of the date of the agreement. No material financial impacts of the agreement were realized in the Company’s earnings during year ended December 31, 2019. A total of $300 million in proceeds received in cash from Boeing are reflected within Investing Activities in the Consolidated Statement of Cash Flows for the three months ended March 31, 2020. Amounts agreed to but not yet received are recorded within Accounts and Other Receivables. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | SUBSEQUENT EVENTS In April 2020, the Company reached an agreement in principle with the Treasury with respect to funding support pursuant to the Payroll Support Program under the CARES Act. See Note 2 for further information on the CARES Act. Funds received under the Payroll Support Program are expected to be used to pay Employee wages and benefits through September 30, 2020. The Company's expected aggregate receipts under the Payroll Support Program total approximately $3.3 billion (the "Payroll Support"), for which the Company expects to provide the Treasury consideration in the form of a promissory note representing a $948 million unsecured term loan to the Company and of warrants to purchase up to an aggregate of 2.6 million shares of the Company’s common stock, subject to adjustment by the Treasury in each case. On April 21, 2020, the Company received the first installment of approximately $1.6 billion of expected proceeds, or 50 percent , for which the Company provided consideration in the form of a promissory note representing a $459 million unsecured term loan and of warrants to purchase up to an aggregate of 1.3 million shares of the Company’s common stock. The remainder of the funds are expected to be disbursed to the Company, and the additional warrants are expected to be issued, in three installments from May to July 2020. As consideration for Payroll Support, on April 20, 2020, the Company issued a promissory note (the “Note”) in favor of the Treasury and entered into a warrant agreement with the Treasury (the “Warrant Agreement”), pursuant to which the Company agreed to issue warrants (each, a “Warrant”) to purchase common stock of the Company to the Treasury. In connection with the initial disbursement on April 21, 2020, the Note was issued at an initial amount of $459 million . Upon each subsequent disbursement of Payroll Support to the Company after April 21, 2020, (i) the principal amount of the Note will be increased in an amount equal to 30 percent of any such disbursement and (ii) the Company will issue a Warrant to the Treasury in an amount equal to 10 percent of the principal amount of the increase to the Note in connection with such disbursement of Payroll Support, divided by the strike price of $36.47 (which was the closing price of the Company’s common stock on April 9, 2020). The Note matures in full on April 19, 2030, and is subject to mandatory prepayment requirements in connection with certain change of control triggering events that may occur prior to its maturity. The Company has an option to prepay the Note at any time without premium or penalty. Amounts outstanding under the Note bear interest at a rate of 1.00 percent before April 20, 2025 and, afterwards, at a rate equal to Secured Overnight Financing Rate or other benchmark replacement rate consistent with customary market conventions plus margin of 2.00 percent . The Note contains customary representations and warranties and events of default. The Warrant Agreement sets out the Company’s obligations to issue Warrants in connection with disbursements of Payroll Support and to file a resale shelf registration statement for the Warrants and the underlying shares of common stock. The Company has also granted the Treasury certain demand underwritten offering and piggyback registration rights with respect to the Warrants and the underlying common stock. Each Warrant is exercisable at a strike price of $36.47 per share of common stock and will expire on the fifth anniversary of the issue date of such Warrant. The Warrants will be settled through net share settlement or net cash settlement, at the Company’s option. The Warrants include adjustments for below market issuances, payment of dividends and other customary anti-dilution provisions. The Warrants do not have voting rights. By accepting financing under the CARES Act, the Company has agreed to certain restrictions on its business, including: • The Company is prohibited from repurchasing its common stock and from paying dividends or making capital contributions with respect to its common stock until September 30, 2021. • The Company must place certain restrictions on certain higher-paid employee and executive pay, including limiting pay increases and severance pay or other benefits upon terminations, until March 24, 2022. • The Company is prohibited from involuntary terminations or furloughs of its Employees (except for death, disability, cause, or certain disciplinary reasons) until September 30, 2020. • The Company may not reduce the salary, wages, or benefits of its Employees (other than its Executive Officers or independent contractors, or as otherwise permitted under the terms of the Payroll Support Program) until September 30, 2020. • Until March 1, 2022, the Company must comply with any requirement issued by the Department of Transportation (“DOT”) that the Company maintain certain scheduled air transportation service as DOT deems necessary to ensure services to any point served by the Company before March 1, 2020. • The Company must maintain certain internal controls and records relating to the CARES Act funds, and is subject to additional reporting requirements. The Payroll Support will be recorded upon initial receipt of the cash as a deferred expense in the unaudited Condensed Consolidated Balance Sheet, and subsequently reclassified as a contra-expense in the unaudited Condensed Consolidated Statement of Income in second and third quarters 2020-relative to the salaries and wages expected to be incurred by the Company in those periods. At the Company’s election, approximately 90 percent of the total $3.3 billion in assistance is expected to be received in second quarter 2020, with the remainder to be received in third quarter 2020. The Company will allocate the proceeds received from the Treasury in accordance with applicable accounting guidance, and based on the consideration provided in the transaction. The Company has also been notified of general terms associated with the Loan program available to U.S. carriers through the Treasury under the CARES Act. The Company has the opportunity to apply for a 5-year senior secured term loan (the “secured term loan”) up to $2.8 billion as of April 20, 2020, that would be collateralized by certain assets of the Company. Interest on the secured term loan would be at LIBOR plus 250 basis points, would be prepayable at any time, and would contain restrictions similar to those noted above associated with the Payroll Support Program. If it agrees to take the secured term loan, the Company would have to provide approximately 7.6 million warrants to the Treasury. The Company plans to apply for the secured term loan by the April 30, 2020 deadline, but is currently undecided as to whether it would agree to draw down on the loan. The deadline for the Company to decide whether to take the loan is currently September 30, 2020. In connection with the secured term loan, should the Company accept the loan, the Company will be required to comply with the relevant provisions of the CARES Act, including those prohibiting the repurchase of common stock and the payment of common stock dividends, as well as those restricting the payment of certain executive compensation. Under the CARES Act, these restrictions will apply until one year after the secured term loan is repaid in full. The terms of the CARES Act represent just one component of the Company’s actions to address the liquidity risks presented by the impacts of the COVID-19 pandemic to its business. Commercial air travel in the U.S. and Company Passenger revenues for most of April 2020 have been at levels of less than five percent of comparable amounts experienced in April of 2019. However, much of the Company’s operating expenses have not declined at a commensurate amount, leading to significant operating cash outflows. Although the Company has canceled a significant portion of its originally scheduled flights for April, May, June, and July 2020, only a portion of the Company’s operating cost structure is variable, and the savings from less fuel consumption, landing fees, and certain other expenses will likely only cover a portion of the lost revenue during this period of time. The Company believes it has taken appropriate measures to address the significant cash outflows experienced thus far, and continues to evaluate options, should the lack of demand for air travel continue beyond the near term. In addition to the significant reductions in the Company’s flight schedule, various voluntary leave options have been offered to the Company’s 60,000 plus Employees (including time off without pay and extended time off with partial pay), hundreds of capital spending projects have been canceled or deferred, all non-essential spending has been cut, and existing contracts and payment terms with the majority of its vendors have been evaluated for further savings opportunities. The Company believes its financial position and preparation prior to the impact of the COVID-19 pandemic have allowed it to react quickly and sensibly in the steps it has taken so far to raise cash and increase its liquidity. Given the Company’s continued current access to capital markets, investment grade credit rating, and unencumbered assets (including a significant number of aircraft), it believes it has opportunities and options to raise additional liquidity at reasonable terms. Thus, the Company believes it is probable that the plans it has in place, or that it has the ability to execute as of the date of this filing, when fully implemented, will sufficiently mitigate the present conditions and allow the Company to reasonably handle the liquidity risks presented by the current climate. The Company drew approximately $2.3 billion under the Amended and Restated 364-Day Credit Agreement on April 1, 2020. On April 24, 2020, the Company also drew an additional $350 million under the $417 million accordion feature that allows the total borrowing capacity under the Amended and Restated 364-Day Credit Agreement to increase to $3.75 billion . As of the date hereof, there is approximately $3.68 billion outstanding under the Amended and Restated 364–Day Credit Agreement. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The unaudited Condensed Consolidated Financial Statements for the interim periods ended March 31, 2020 and 2019 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, impact of fears or actual outbreak of disease or pandemics, 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 4 for further information on fuel and the Company's hedging program. Operating results for the three months ended March 31, 2020 , are not necessarily indicative of the results that may be expected for future quarters or for the year ended December 31, 2020 . 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, 2019 |
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 5 . 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 (Loss) 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. During first quarter 2020, as a result of the drastic drop in demand for air travel, the Company's forecast for second quarter fuel purchases and consumption was significantly reduced, causing the Company to be in an estimated "over– hedged" position for second quarter 2020. Therefore, the Company de–designated a portion of its fuel hedges related to second quarter 2020 and has reclassified approximately $2 million in losses from AOCI into Other (gains) losses, net, in first quarter 2020. The Company did not have any such situations occur during 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. |
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 March 31, 2020 , 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 4 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 December 18, 2019, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This new standard eliminates certain exceptions in Accounting Standards Codification ("ASC") 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted in any interim period within that year. The Company elected to early adopt this standard as of January 1, 2020. The most significant impact to the Company is the removal of a limit on the tax benefit recognized on pre-tax losses in interim periods. However, the early adoption as of January 1, 2020, did not have an impact on the Company's financial statements or disclosures for first quarter 2020. On August 29, 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software. This 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 standard is effective for public business entities in fiscal years beginning after December 15, 2019, and the standard was adopted and applied prospectively by the Company as of January 1, 2020, but it did not have a significant impact on the Company's financial statements and disclosures. 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. This 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 adopted the standard as of January 1, 2020, but it did not have a significant impact on the Company's financial statements or disclosures. See Note 9 for further information on the Company's fair value measurements. On January 26, 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The new standard eliminates Step 2 from the goodwill impairment test. An entity should recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. This standard is effective for public business entities in fiscal years beginning after December 15, 2019, and the standard was adopted and applied prospectively by the Company as of January 1, 2020, but it did not have a significant impact on the Company's financial statements and disclosures. |
Revenue Recognition | Spoilage estimates are based on the Company's Customers' historical travel behavior as well as assumptions about the Customers' future travel behavior. Assumptions used to generate spoilage estimates can be impacted by several factors including, but not limited to: fare increases, fare sales, changes to the Company's ticketing policies, changes to the Company’s refund, exchange, and unused funds policies, seat availability, and economic factors. Given the unprecedented amount of first quarter 2020 Customer flight cancellations and the amount of travel funds provided, the Company expects additional variability in the amount of spoilage revenue recorded in future periods, as the estimates of the portion of those funds that will expire unused may differ from historical experience. |
Financial Derivative Instrume_2
Financial Derivative Instruments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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 March 31, 2020 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) March 31, 2020 Remainder of 2020 976 WTI crude oil, Brent crude oil, and Heating oil 2021 1,283 WTI crude oil and Brent crude oil 2022 930 WTI crude oil and Brent crude oil Beyond 2022 529 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 and may vary significantly as market prices and the Company's flight schedule fluctuates. |
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 3/31/2020 12/31/2019 3/31/2020 12/31/2019 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 5 $ 48 $ — $ — Fuel derivative contracts (gross) Other assets 79 62 — — Interest rate derivative contracts Prepaid expenses and other current assets 4 — — — Interest rate derivative contracts Other assets — 2 — — Interest rate derivative contracts Accrued liabilities — — 14 5 Interest rate derivative contracts Other noncurrent liabilities — — 16 1 Total derivatives designated as hedges $ 88 $ 112 $ 30 $ 6 Derivatives not designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 1 $ — $ — $ — Interest rate derivative contracts Accrued liabilities — — 41 — Interest rate derivative contracts Other noncurrent liabilities — — — — Total derivatives not designated as hedges $ 1 $ — $ 41 $ — Total derivatives $ 89 $ 112 $ 71 $ 6 (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) March 31, March 31, (in millions) 2020 2019 2020 2019 Current maturities of long-term debt $ 504 $ 300 $ 4 $ 2 Long-term debt less current maturities — 495 18 13 $ 504 $ 795 $ 22 $ 15 (a) At March 31, 2020 and 2019 , these amounts include the cumulative amount of fair value hedging adjustments remaining for which hedge accounting has been discontinued of $18 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 March 31, December 31, (in millions) location 2020 2019 Cash collateral deposits held from counterparties for fuel contracts - current Offset against Prepaid expenses and other current assets $ 1 $ 10 Cash collateral deposits held from counterparties for fuel contracts - noncurrent Offset against Other assets 19 15 |
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) March 31, 2020 December 31, 2019 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 $ 6 $ (1 ) $ 5 $ 48 $ (10 ) $ 38 Fuel derivative contracts Other assets $ 79 $ (19 ) $ 60 (a) $ 62 $ (15 ) $ 47 (a) Interest rate derivative contracts Prepaid expenses and other current assets $ 4 $ — $ 4 $ — $ — $ — Interest rate derivative contracts Other assets $ — $ — $ — (a) $ 2 $ — $ 2 (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 10 . |
Offsetting Liabilities | Offsetting of derivative liabilities (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) March 31, 2020 December 31, 2019 Description Balance Sheet location Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet Fuel derivative contracts Prepaid expenses and other current assets $ 1 $ (1 ) $ — $ 10 $ (10 ) $ — Fuel derivative contracts Other assets $ 19 $ (19 ) $ — (a) $ 15 $ (15 ) $ — (a) Interest rate derivative contracts Accrued liabilities $ 55 $ — $ 55 (a) $ 5 $ — $ 5 (a) Interest rate derivative contracts Other noncurrent liabilities $ 16 $ — $ 16 $ 1 $ — $ 1 (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 10 . |
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 (Loss) for the three months ended March 31, 2020 and 2019 : Location and amount recognized in income on cash flow and fair value hedging relationships Three months ended March 31, 2020 Three months ended March 31, 2019 (in millions) Fuel and oil Other (gains)/losses, net Interest expense Fuel and oil Interest expense Total $ 22 $ 2 $ 2 $ 11 $ 8 Loss on cash flow hedging relationships: Commodity contracts: Amount of loss reclassified from AOCI into income 22 2 — 11 — Interest contracts: Amount of loss reclassified from AOCI into income — — — — 1 Impact of fair value hedging relationships: Interest contracts: Hedged items — — 4 — 6 Derivatives designated as hedging instruments — — (2 ) — 1 |
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 March 31, (in millions) 2020 2019 Fuel derivative contracts $ 84 $ (68 ) Interest rate derivatives 32 12 Total $ 116 $ (56 ) |
Derivatives Not in Cash Flow Hedging Relationships | Derivatives not designated as hedges Loss recognized in income on derivatives Three months ended Location of loss recognized in income on derivatives March 31, (in millions) 2020 2019 Interest rate derivatives $ 24 $ — Other (gains) losses, net |
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 March 31, 2020 , at which such postings are triggered: Counterparty (CP) (in millions) A B C D E F Other (a) Total Fair value of fuel derivatives $ 23 $ 10 $ 20 $ 8 $ 9 $ 8 $ 7 $ 85 Cash collateral held from CP 20 — — — — — — 20 Letters of credit (LC) — — — — — — — — Option to substitute LC for cash N/A N/A (75) to (150) or >(550)(b) (125) to (150) or >(550)(c) (c) N/A If credit rating is investment grade, fair value of fuel derivative level at which: Cash is provided to CP >(100) >(50) (75) to (150) or >(550)(d) (125) to (150) or >(550)(d) >(40) >(65)(d) Cash is received from CP >0(d) >150(d) >250(d) >125(d) >100(d) >70(d) Cash can be pledged to CP as collateral (200) to (600)(e) N/A (150) to (550)(b) (150) to (550)(b) 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) (f) (0) to (150) or >(550) (0) to (150) or >(550) (f) (f) Cash is received from CP (f) (f) (f) (f) (f) (f) 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 < $8 million . (b) The Company has the option of providing cash or letters of credit as collateral. (c) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (d) Thresholds may vary based on changes in credit ratings within investment grade. (e) The Company has the option of providing cash as collateral. (f) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. |
Comprehensive Income (Loss) (Ta
Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Components of Comprehensive Income (Loss) | The differences between Net income (loss) and Comprehensive income (loss) for the three months ended March 31, 2020 and 2019 were as follows: Three months ended March 31, (in millions) 2020 2019 NET INCOME (LOSS) $ (94 ) $ 387 Unrealized gain (loss) on fuel derivative instruments, net of deferred taxes of ($19) and $22 (65 ) 76 Unrealized loss on interest rate derivative instruments, net of deferred taxes of ($10) and ($3) (32 ) (11 ) Other, net of deferred taxes of ($9) and $3 (28 ) 11 Total other comprehensive income (loss) $ (125 ) $ 76 COMPREHENSIVE INCOME (LOSS) $ (219 ) $ 463 |
Rollforward of the Amounts Included in AOCI, Net of Taxes | A rollforward of the amounts included in AOCI is shown below for the three months ended March 31, 2020 : (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax Accumulated other comprehensive income (loss) Balance at December 31, 2019 $ (125 ) $ (33 ) $ 20 $ 59 $ 18 $ (61 ) Changes in fair value (108 ) (42 ) — (37 ) 43 (144 ) Reclassification to earnings 24 — — — (5 ) 19 Balance at March 31, 2020 $ (209 ) $ (75 ) $ 20 $ 22 $ 56 $ (186 ) |
Reclassification out of Accumulated Other Comprehensive Income (Loss) | The following table illustrates the significant amounts reclassified out of each component of AOCI for the three months ended March 31, 2020 : Three months ended March 31, 2020 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) AOCI components Unrealized loss on fuel derivative instruments $ 22 Fuel and oil expense 2 Other (gains) losses, net 5 Less: Tax expense $ 19 Net of tax |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Passenger Revenue | The following table provides the components of Passenger revenue recognized for the three months ended March 31, 2020 and 2019 : Three months ended March 31, (in millions) 2020 2019 Passenger non-loyalty $ 3,220 $ 4,043 Passenger loyalty - air transportation 461 535 Passenger ancillary sold separately 164 167 Total passenger revenues $ 3,845 $ 4,745 |
Components of Air Traffic Liability | Rollforwards of the Company's Air traffic liability - loyalty program for the three months ended March 31, 2020 and 2019 were as follows (in millions): Three months ended March 31, 2020 2019 Air traffic liability - loyalty program - beginning balance $ 3,385 $ 3,011 Amounts deferred associated with points awarded 656 711 Revenue recognized from points redeemed - Passenger (461 ) (535 ) Revenue recognized from points redeemed - Other (19 ) (16 ) Air traffic liability - loyalty program - ending balance $ 3,561 $ 3,171 As of March 31, 2020 , and December 31, 2019 , the components of Air traffic liability and Air traffic liability - noncurrent, 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) March 31, 2020 December 31, 2019 Air traffic liability - passenger travel and ancillary passenger services $ 2,650 $ 2,125 Air traffic liability - loyalty program 3,561 3,385 Total Air traffic liability $ 6,211 $ 5,510 |
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 March 31, 2020 and 2019 were as follows (in millions): Air traffic liability Balance at December 31, 2019 $ 5,510 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 4,565 Revenue from amounts included in contract liability opening balances (1,949 ) Revenue from current period sales (1,915 ) Balance at March 31, 2020 $ 6,211 Air traffic liability Balance at December 31, 2018 $ 5,070 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 5,704 Revenue from amounts included in contract liability opening balances (2,008 ) Revenue from current period sales (2,752 ) Balance at March 31, 2019 $ 6,014 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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 (loss) per share (in millions, except per share amounts). Antidilutive common stock equivalents, excluded from the diluted net income (loss) per share calculation, consisting primarily of restricted stock units, are not material. Three months ended March 31, 2020 2019 NUMERATOR: Net income (loss) $ (94 ) $ 387 DENOMINATOR: Weighted-average shares outstanding, basic 515 551 Dilutive effect of restricted stock units — 1 Adjusted weighted-average shares outstanding, diluted 515 552 NET INCOME (LOSS) PER SHARE: Basic $ (0.18 ) $ 0.70 Diluted $ (0.18 ) $ 0.70 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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 March 31, 2020 , and December 31, 2019 : Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description March 31, 2020 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 3,495 $ 3,495 $ — $ — Commercial paper 360 — 360 — Certificates of deposit 19 — 19 — Time deposits 66 — 66 — Short-term investments: Treasury bills 1,396 1,396 — — Certificates of deposit 184 — 184 — Time deposits 25 — 25 — Interest rate derivatives (see Note 4) 4 4 Fuel derivatives: Option contracts (b) 85 — — 85 Other available-for-sale securities 182 182 — — Total assets $ 5,816 $ 5,073 $ 658 $ 85 Liabilities Interest rate derivatives (see Note 4) $ (71 ) $ — $ (71 ) $ — (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 4 . 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, 2019 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 1,999 $ 1,999 $ — $ — Commercial paper 535 — 535 — Certificates of deposit 14 — 14 — Short-term investments: Treasury bills 1,196 1,196 — — Certificates of deposit 268 — 268 — Time deposits 60 — 60 — Interest rate derivatives (see Note 4) 2 — 2 — Fuel derivatives: Option contracts (b) 110 — — 110 Other available-for-sale securities 197 197 — — Total assets $ 4,381 $ 3,392 $ 879 $ 110 Liabilities Interest rate derivatives (see Note 4) $ (6 ) $ — $ (6 ) $ — (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 4 . |
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 months ended March 31, 2020 and the year ended December 31, 2019 : Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at December 31, 2019 $ 110 Total losses for the period Included in earnings (2 ) (a) Included in other comprehensive income (106 ) Purchases 83 (b) Balance at March 31, 2020 $ 85 The amount of total losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at March 31, 2020 $ (2 ) (a) The amount of total losses for the period included in other comprehensive loss attributable to the change in unrealized gains or losses relating to assets still held at March 31, 2020 $ (100 ) (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). (b) 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 Losses included in other comprehensive loss (112 ) Purchases 133 (a) Sales (2 ) (a) Settlements (47 ) Balance at December 31, 2019 $ 110 (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 and weighted average of the unobservable inputs utilized in the fair value measurements of the Company’s fuel derivatives classified as Level 3 at March 31, 2020 : Quantitative information about Level 3 fair value measurements Valuation technique Unobservable input Period (by year) Range Weighted Average (a) Fuel derivatives Option model Implied volatility Second quarter 2020 49-121% 93 % Third quarter 2020 50-73% 59 % Fourth quarter 2020 41-56% 47 % 2021 28-47% 36 % 2022 27-30% 28 % Beyond 2022 25-27% 26 % (a) Implied volatility weighted by the notional amount (barrels of fuel) that will settle in respective period. |
Fair value, by Balance Sheet Grouping | The carrying amounts and estimated fair values of the Company’s short-term and long-term debt (including current maturities), as well as the applicable fair value hierarchy tier, at March 31, 2020 , 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 five 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 2.65% Notes due 2020 $ 504 $ 495 Level 2 Term Loan Agreement payable through 2020 - 5.223% 120 120 Level 3 737 Aircraft Note payable through 2020 7 7 Level 3 Revolving Credit Facility 1,000 978 Level 3 Term Loan Agreement due 2021 - 3.000% 1,000 990 Level 3 2.75% Notes due 2022 300 283 Level 2 Pass Through Certificates due 2022 - 6.24% 168 167 Level 2 Term Loan Agreement payable through 2026 - 3.03% 178 164 Level 3 3.00% Notes due 2026 300 284 Level 2 3.45% Notes due 2027 300 264 Level 2 7.375% Debentures due 2027 121 139 Level 2 2.625% Notes due 2030 500 420 Level 2 |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Table Text Block [Abstract] | |
Accounts and Other Receivables | (in millions) March 31, 2020 December 31, 2019 Trade receivables $ 44 $ 53 Credit card receivables 4 112 Business partners and other suppliers 535 779 Income tax receivable 88 87 Other 38 55 Accounts and other receivables $ 709 $ 1,086 |
Other Assets | (in millions) March 31, 2020 December 31, 2019 Derivative contracts $ 60 $ 49 Intangible assets, net 296 296 Other 264 232 Other assets $ 620 $ 577 |
Schedule of Accounts Payable | (in millions) March 31, 2020 December 31, 2019 Accounts payable trade $ 218 $ 304 Salaries payable 226 231 Taxes payable excluding income taxes 66 227 Aircraft maintenance payable 156 162 Fuel payable 57 129 Dividends payable — 93 Other payable 320 428 Accounts payable $ 1,043 $ 1,574 |
Accrued Liabilities | (in millions) March 31, 2020 December 31, 2019 Profitsharing and savings plans $ 25 $ 695 Vacation pay 443 434 Health 99 120 Workers compensation 168 166 Property and income taxes 67 79 Derivative contracts 55 5 Other 180 250 Accrued liabilities $ 1,037 $ 1,749 |
Other Noncurrent Liabilities | (in millions) March 31, 2020 December 31, 2019 Postretirement obligation $ 294 $ 288 Other deferred compensation 286 313 Other 114 105 Other noncurrent liabilities $ 694 $ 706 |
Worldwide Pandemic (Details)
Worldwide Pandemic (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Proceeds from term loan credit facility | $ 1,000 | $ 0 | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 34.30% | 23.10% | |
Goodwill | $ 970 | $ 970 | |
Use Rights [Member] | |||
Indefinite-Lived Domestic Slots and Routes | 295 | ||
364-Day Term Loan Credit Facility | |||
364-Day Term Loan Credit Facility | 1,000 | ||
Total Funds Outstanding Amended 364-Day Term Loan Credit Facility [Member] | |||
364-Day Term Loan Credit Facility | 3,300 | ||
Notes Payable to Banks | Term Loan Agreement Due 2021 | |||
364-Day Term Loan Credit Facility | 1,000 | ||
Revolving Credit Facility | |||
Revolving Credit Facility, Maximum Amount Outstanding at Period End | $ 1,000 |
Financial Derivative Instrume_3
Financial Derivative Instruments Narrative (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Sep. 30, 2019USD ($)Agreements | |
Derivative [Line Items] | |||
Premiums paid for fuel derivative contracts | $ 24 | $ 28 | |
Percentage of actual consumption hedged | 70.00% | ||
Current Unrealized Net Losses in OCI | $ 67 | ||
Maximum sum of derivatives of counterparty to be included in other (less than $8 million) | $ 8 | ||
Cash Collateral Percent Of Fair Value Fuel Derivatives Contracts | 100.00% | ||
Letter of Credit Percent of Collateral | 100.00% | ||
Fuel derivatives | |||
Derivative [Line Items] | |||
Cash collateral held (from) by CP | $ 20 | ||
Interest rate swap | |||
Derivative [Line Items] | |||
Interest Rate Derivative | 12 | 12 | |
Interest rate derivatives | |||
Derivative [Line Items] | |||
Cash collateral held (from) by CP | 0 | ||
Discontinuation of Interest Rate Cash Flow Hedge Balance in AOCI | $ 32 | ||
Not Designated as Hedging Instrument | Fuel derivatives | |||
Derivative [Line Items] | |||
Loss on Discontinuation of Cash Flow Hedge Due to Forecasted Transaction Probable of Not Occurring | 2 | ||
Not Designated as Hedging Instrument | Interest rate derivatives | |||
Derivative [Line Items] | |||
Discontinuation of Interest Rate Cash Flow Hedge Balance in AOCI | 17 | ||
Gain (Loss) on Interest Rate Derivative Instruments Not Designated as Hedging Instruments | $ 24 | ||
No Longer Probable Within Scheduled Delivery Range | Interest rate swap | |||
Derivative [Line Items] | |||
Interest Rate Derivative | Agreements | 9 |
Financial Derivative Instrume_4
Financial Derivative Instruments - Fuel Hedging (Details) gal in Millions | Mar. 31, 2020gal | [1] |
Remainder of Current Year | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 976 | |
2021 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 1,283 | |
2022 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 930 | |
Beyond 2022 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 529 | |
[1] | Due to the types of derivatives utilized by the Company and different price levels of those contracts, these volumes represent the maximum economic hedge in place and may vary significantly as market prices and the Company's flight schedule fluctuates. |
Financial Derivative Instrume_5
Financial Derivative Instruments - Fair Values by Balance Sheet Location (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 | |
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | $ 89 | $ 112 |
Derivative Liability, Fair Value, Gross Liability | [1] | 71 | 6 |
Designated as Hedging Instrument | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 88 | 112 |
Derivative Liability, Fair Value, Gross Liability | [1] | 30 | 6 |
Not Designated as Hedging Instrument | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 1 | 0 |
Derivative Liability, Fair Value, Gross Liability | [1] | 41 | 0 |
Fuel derivatives | Designated as Hedging Instrument | Prepaid expenses and other current assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 5 | 48 |
Derivative Asset, Fair Value, Gross Liability | [1] | 0 | 0 |
Fuel derivatives | Designated as Hedging Instrument | Other Assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 79 | 62 |
Derivative Asset, Fair Value, Gross Liability | [1] | 0 | 0 |
Fuel derivatives | Not Designated as Hedging Instrument | Prepaid expenses and other current assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 1 | 0 |
Derivative Asset, Fair Value, Gross Liability | [1] | 0 | 0 |
Interest rate derivatives | Designated as Hedging Instrument | Prepaid expenses and other current assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 4 | 0 |
Derivative Asset, Fair Value, Gross Liability | [1] | 0 | 0 |
Interest rate derivatives | Designated as Hedging Instrument | Accrued Liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Liability, Fair Value, Gross Asset | [1] | 0 | 0 |
Derivative Liability, Fair Value, Gross Liability | [1] | 14 | 5 |
Interest rate derivatives | Designated as Hedging Instrument | Other Assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 0 | 2 |
Derivative Asset, Fair Value, Gross Liability | [1] | 0 | 0 |
Interest rate derivatives | Designated as Hedging Instrument | Other Noncurrent Liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Liability, Fair Value, Gross Asset | [1] | 0 | 0 |
Derivative Liability, Fair Value, Gross Liability | [1] | 16 | 1 |
Interest rate derivatives | Not Designated as Hedging Instrument | Other Noncurrent Liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Liability, Fair Value, Gross Asset | [1] | 0 | 0 |
Derivative Liability, Fair Value, Gross Liability | [1] | 0 | 0 |
Interest rate derivatives | Not Designated as Hedging Instrument | Accrued Liabilities [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Liability, Fair Value, Gross Asset | [1] | 0 | 0 |
Derivative Liability, Fair Value, Gross Liability | [1] | $ 41 | $ 0 |
[1] | Represents the position of each trade before consideration of offsetting positions with each counterparty and does not include the impact of cash collateral deposits provided to or received from counterparties. See discussion of credit risk and collateral following in this Note. |
Financial Derivative Instrume_6
Financial Derivative Instruments - Carrying Amount of Fair Value Hedges (Details) - USD ($) | Mar. 31, 2020 | Mar. 31, 2019 | |
Derivative [Line Items] | |||
Deferred Gain (Loss) on Discontinuation of Interest Rate Fair Value Hedge | $ 18,000,000 | $ 20,000,000 | |
Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | 504,000,000 | 795,000,000 | |
Short-term Debt | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | 504,000,000 | 300,000,000 | |
Long-term Debt | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | 0 | 495,000,000 | |
Cumulative fair value adjustment [Member] | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | [1] | 22,000,000 | 15,000,000 |
Cumulative fair value adjustment [Member] | Short-term Debt | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | [1] | 4,000,000 | 2,000,000 |
Cumulative fair value adjustment [Member] | Long-term Debt | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | [1] | $ 18,000,000 | $ 13,000,000 |
[1] | At March 31, 2020 and 2019 , these amounts include the cumulative amount of fair value hedging adjustments remaining for which hedge accounting has been discontinued of $18 million and $20 million , respectively. |
Financial Derivative Instrume_7
Financial Derivative Instruments - Collateral by Balance Sheet Location (Details) - Fuel derivatives - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Prepaid expenses and other current assets | ||
Derivative [Line Items] | ||
Cash collateral deposits held from CP for fuel contracts - current | $ 1 | $ 10 |
Other Assets | ||
Derivative [Line Items] | ||
Cash collateral deposits held from CP for fuel contracts - non-current | $ 19 | $ 15 |
Financial Derivative Instrume_8
Financial Derivative Instruments - Offsetting of Derivative Assets (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 | |
Offsetting Assets [Line Items] | |||
Asset derivative contracts, net | $ 60 | $ 49 | |
Fuel derivatives | Prepaid expenses and other current assets | |||
Offsetting Assets [Line Items] | |||
Gross amounts of recognized assets | 6 | 48 | |
Gross liability amounts offset in the Balance Sheet | (1) | (10) | |
Asset derivative contracts, net | 5 | 38 | |
Fuel derivatives | Other Assets | |||
Offsetting Assets [Line Items] | |||
Gross amounts of recognized assets | 79 | 62 | |
Gross liability amounts offset in the Balance Sheet | (19) | (15) | |
Asset derivative contracts, net | [1] | 60 | 47 |
Interest rate derivatives | Prepaid expenses and other current assets | |||
Offsetting Assets [Line Items] | |||
Gross amounts of recognized assets | 4 | 0 | |
Gross liability amounts offset in the Balance Sheet | 0 | 0 | |
Asset derivative contracts, net | 4 | 0 | |
Interest rate derivatives | Other Assets | |||
Offsetting Assets [Line Items] | |||
Gross amounts of recognized assets | 0 | 2 | |
Gross liability amounts offset in the Balance Sheet | 0 | 0 | |
Asset derivative contracts, net | [1] | $ 0 | $ 2 |
[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 10 . |
Financial Derivative Instrume_9
Financial Derivative Instruments - Offsetting of Derivative Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 | |
Fuel derivatives | Prepaid expenses and other current assets | |||
Offsetting Liabilities [Line Items] | |||
Gross amounts of recognized liabilities | $ 1 | $ 10 | |
Gross asset amounts offset in the Balance Sheet | (1) | (10) | |
Liability derivative contracts, net | 0 | 0 | |
Fuel derivatives | Other Assets | |||
Offsetting Liabilities [Line Items] | |||
Gross amounts of recognized liabilities | 19 | 15 | |
Gross asset amounts offset in the Balance Sheet | (19) | (15) | |
Derivative contracts | [1] | 0 | |
Liability derivative contracts, net | [1] | 0 | |
Interest rate derivatives | Accrued Liabilities [Member] | |||
Offsetting Liabilities [Line Items] | |||
Gross amounts of recognized liabilities | 55 | 5 | |
Gross asset amounts offset in the Balance Sheet | 0 | 0 | |
Liability derivative contracts, net | [1] | 55 | 5 |
Interest rate derivatives | Other Noncurrent Liabilities | |||
Offsetting Liabilities [Line Items] | |||
Gross amounts of recognized liabilities | 16 | 1 | |
Gross asset amounts offset in the Balance Sheet | 0 | 0 | |
Liability derivative contracts, net | $ 16 | $ 1 | |
[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 10 . |
Financial Derivative Instrum_10
Financial Derivative Instruments - Location and Amount Recognized in Income by Hedging Relationship (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Fuel | ||
Derivative [Line Items] | ||
(Gain) Loss on Derivative Instruments, Net, Pretax | $ 22 | $ 11 |
Other (gains)/losses, net | ||
Derivative [Line Items] | ||
(Gain) Loss on Derivative Instruments, Net, Pretax | 2 | |
Interest Expense | ||
Derivative [Line Items] | ||
(Gain) Loss on Derivative Instruments, Net, Pretax | 2 | 8 |
Cash Flow Hedging | Fuel | Fuel derivatives | ||
Derivative [Line Items] | ||
Derivative Instruments, (Gain) Loss Reclassified from Accumulated OCI into Income, Effective Portion, Net | (22) | (11) |
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 |
Cash Flow Hedging | Other (gains)/losses, net | Fuel derivatives | ||
Derivative [Line Items] | ||
Loss on Discontinuation of Cash Flow Hedge Due to Forecasted Transaction Probable of Not Occurring | 2 | |
Cash Flow Hedging | Other (gains)/losses, net | Interest rate derivatives | ||
Derivative [Line Items] | ||
Derivative Instruments, (Gain) Loss Reclassified from Accumulated OCI into Income, Effective Portion, Net | 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 |
Cash Flow Hedging | Interest Expense | Interest rate derivatives | ||
Derivative [Line Items] | ||
Derivative Instruments, (Gain) Loss Reclassified from Accumulated OCI into Income, Effective Portion, Net | 0 | (1) |
Designated as Hedging Instrument | Fair Value Hedging | Fuel | Interest rate derivatives | ||
Derivative [Line Items] | ||
Interest Expense, Debt | 0 | 0 |
Designated as Hedging Instrument | Fair Value Hedging | Other (gains)/losses, net | Interest rate derivatives | ||
Derivative [Line Items] | ||
Interest Expense, Debt | 0 | |
Designated as Hedging Instrument | Fair Value Hedging | Interest Expense | Interest rate derivatives | ||
Derivative [Line Items] | ||
Interest Expense, Debt | 4 | 6 |
Not Designated as Hedging Instrument | Fuel derivatives | ||
Derivative [Line Items] | ||
Loss on Discontinuation of Cash Flow Hedge Due to Forecasted Transaction Probable of Not Occurring | 2 | |
Not Designated as Hedging Instrument | Fair Value Hedging | Fuel | Interest rate derivatives | ||
Derivative [Line Items] | ||
(Gain) Loss on Derivative Instruments, Net, Pretax | 0 | 0 |
Not Designated as Hedging Instrument | Fair Value Hedging | Other (gains)/losses, net | Interest rate derivatives | ||
Derivative [Line Items] | ||
(Gain) Loss on Derivative Instruments, Net, Pretax | 0 | |
Not Designated as Hedging Instrument | Fair Value Hedging | Interest Expense | Interest rate derivatives | ||
Derivative [Line Items] | ||
(Gain) Loss on Derivative Instruments, Net, Pretax | $ (2) | $ 1 |
Financial Derivative Instrum_11
Financial Derivative Instruments - (Gain) Loss by Hedging Relationship (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash Flow Hedging | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Gain) loss recognized in AOCI on derivatives | $ 116 | $ (56) |
Fuel derivatives | Cash Flow Hedging | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Gain) loss recognized in AOCI on derivatives | 84 | (68) |
Interest rate derivatives | Cash Flow Hedging | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Gain) loss recognized in AOCI on derivatives | 32 | 12 |
Interest rate derivatives | Interest rate derivatives | Not Designated as Hedging Instrument | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Gain) Loss recognized in income on derivatives | $ 24 | $ 0 |
Financial Derivative Instrum_12
Financial Derivative Instruments - Fair Values of Fuel Derivatives Amounts Posted as Collateral (Details) $ in Millions | Mar. 31, 2020USD ($) | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Letter of Credit Percent of Collateral | 100.00% | |
Cash Collateral Percent Of Fair Value Fuel Derivatives Contracts | 100.00% | |
Fuel derivatives | ||
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 | $ 85 | |
Cash collateral held (from) by CP | (20) | |
Letters of credit (LC) | 0 | |
Counterparty A | Fuel derivatives | ||
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 | 23 | |
Cash collateral held (from) by CP | (20) | |
Letters of credit (LC) | 0 | |
Counterparty B | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 10 | |
Cash collateral held (from) by CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty C | Fuel derivatives | ||
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 | 20 | |
Cash collateral held (from) by CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty D | Fuel derivatives | ||
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 | |
Cash collateral held (from) by CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty E | Fuel derivatives | ||
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 | |
Letters of credit (LC) | 0 | |
Counterparty F | Fuel derivatives | ||
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 | |
Cash collateral held (from) by CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty Other | Fuel derivatives | ||
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 | [1] |
Cash collateral held (from) by CP | 0 | [1] |
Letters of credit (LC) | 0 | [1] |
Minimum | Counterparty A | Fuel derivatives | ||
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (100) | |
Fair value of fuel derivative level at which cash is received from CP | 0 | [2] |
Fair value of fuel derivative levels at which cash collateral is pledged to CP | (200) | [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 | 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 | [4] | |
Fair value of fuel derivative levels at which cash collateral is pledged to CP | (200) | |
Minimum | Counterparty B | Fuel derivatives | ||
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 | [2] |
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 | [4] | |
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 | [4] | |
Minimum | Counterparty C | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for cash Threshold 1 | (75) | [5] |
Option to substitute LC for cash Threshold 2 | (550) | [5] |
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) | [2] |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (550) | [2] |
Fair value of fuel derivative level at which cash is received from CP | 250 | [2] |
Fair value of fuel derivative levels at which cash collateral is pledged to CP | (150) | [5] |
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 | [4] | |
Fair value of fuel derivative levels at which cash collateral is pledged to CP | (150) | |
Minimum | Counterparty D | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for cash Threshold 1 | (125) | [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 | (125) | [2] |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (550) | [2] |
Fair value of fuel derivative level at which cash is received from CP | 125 | [2] |
Fair value of fuel derivative levels at which cash collateral is pledged to CP | (150) | [5] |
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 | [4] | |
Fair value of fuel derivative levels at which cash collateral is pledged to CP | (150) | |
Minimum | Counterparty E | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for cash Threshold 1 | [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 | (40) | |
Fair value of fuel derivative level at which cash is received from CP | 100 | [2] |
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 | [4] | |
Fair value of fuel derivative level at which cash is received from CP | [4] | |
Minimum | Counterparty F | Fuel derivatives | ||
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (65) | [2] |
Fair value of fuel derivative level at which cash is received from CP | 70 | [2] |
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 | [4] | |
Fair value of fuel derivative level at which cash is received from CP | [4] | |
Maximum | Counterparty A | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC 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 collateral is pledged to CP | (600) | [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 | (200) | |
Fair value of fuel derivative levels at which cash collateral is pledged to CP | (600) | |
Maximum | Counterparty C | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for cash Threshold 1 | (150) | [5] |
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) | [2] |
Fair value of fuel derivative levels at which cash collateral is pledged to CP | (550) | [5] |
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 cash collateral is pledged to CP | (550) | |
Maximum | Counterparty D | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC 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) | [2] |
Fair value of fuel derivative levels at which cash collateral is pledged to CP | (550) | [5] |
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 cash collateral is pledged to CP | $ (550) | |
[1] | Individual counterparties with fair value of fuel derivatives < $8 million . | |
[2] | Thresholds may vary based on changes in credit ratings within investment grade. | |
[3] | The Company has the option of providing cash as collateral. | |
[4] | Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. | |
[5] | The Company has the option of providing cash or letters of credit as collateral. | |
[6] | The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. |
AOCI - Differences between Net
AOCI - Differences between Net Income and Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Condensed Statement of Income Captions [Line Items] | ||
Net income (loss) | $ (94) | $ 387 |
Other, net of deferred taxes | (28) | 11 |
Total other comprehensive income (loss) | (125) | 76 |
Comprehensive income (loss) | (219) | 463 |
Other deferred taxes | (9) | 3 |
Fuel derivatives | ||
Condensed Statement of Income Captions [Line Items] | ||
Unrealized gain (loss) on derivative instruments, net of deferred taxes | (65) | 76 |
Derivative deferred taxes | (19) | 22 |
Interest rate derivatives | ||
Condensed Statement of Income Captions [Line Items] | ||
Unrealized gain (loss) on derivative instruments, net of deferred taxes | (32) | (11) |
Derivative deferred taxes | $ (10) | $ (3) |
AOCI - Schedule of AOCI Compone
AOCI - Schedule of AOCI Components (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Fuel derivatives | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Beginning Balance | $ (125) |
Changes in fair value | (108) |
Ending Balance | (209) |
Interest rate derivatives | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Beginning Balance | (33) |
Changes in fair value | (42) |
Reclassification to earnings | 0 |
Ending Balance | (75) |
Defined Benefit Plan Items | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Beginning Balance | 20 |
Changes in fair value | 0 |
Reclassification to earnings | 0 |
Ending Balance | 20 |
Other comprehensive income (loss) other changes net of tax | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Beginning Balance | 59 |
Changes in fair value | (37) |
Reclassification to earnings | 0 |
Ending Balance | 22 |
Deferred Tax | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Beginning Balance | 18 |
Changes in fair value | 43 |
Reclassification to earnings | (5) |
Ending Balance | 56 |
AOCI Including Portion Attributable to Noncontrolling Interest | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Beginning Balance | (61) |
Changes in fair value | (144) |
Reclassification to earnings | 19 |
Ending Balance | (186) |
Reclassification out of Accumulated Other Comprehensive Income (Loss) | Fuel derivatives | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Reclassification to earnings | $ 24 |
AOCI - Reclassification out of
AOCI - Reclassification out of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Fuel and oil | $ 870 | $ 1,015 |
Other (gains) losses, net | (28) | (2) |
Less: Tax Expense | 50 | $ (117) |
Interest rate derivatives | ||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Reclassification to earnings | 0 | |
Reclassification out of Accumulated Other Comprehensive Income (Loss) | Fuel derivatives | ||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Reclassification to earnings | (24) | |
Less: Tax Expense | 5 | |
Net of Tax | 19 | |
Fuel derivatives | Reclassification out of Accumulated Other Comprehensive Income (Loss) | ||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Fuel and oil | 22 | |
Other (gains) losses, net | $ 2 |
Revenue - Passenger Revenue Bre
Revenue - Passenger Revenue Breakout (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Operating Revenue | $ 4,234 | $ 5,149 |
Passenger Revenue Non Loyalty | ||
Disaggregation of Revenue [Line Items] | ||
Operating Revenue | 3,220 | 4,043 |
Passenger Loyalty Air Transportation | ||
Disaggregation of Revenue [Line Items] | ||
Operating Revenue | 461 | 535 |
Passenger Ancillary Sold Separately | ||
Disaggregation of Revenue [Line Items] | ||
Operating Revenue | 164 | 167 |
Passenger | ||
Disaggregation of Revenue [Line Items] | ||
Operating Revenue | $ 3,845 | $ 4,745 |
Revenue - Air Traffic Liability
Revenue - Air Traffic Liability Breakout (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Revenue Recognition and Deferred Revenue [Abstract] | ||||
ATL - PAX Revenue and Ancillary PAX Services | $ 2,650 | $ 2,125 | ||
AirTrafficLiabilityLoyaltyProgram | 3,561 | 3,385 | ||
AirTrafficLiabilityTotal | $ 6,211 | $ 5,510 | $ 6,014 | $ 5,070 |
Revenue - Air Traffic Liabili_2
Revenue - Air Traffic Liability - Loyalty Program Rollforward (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Movement in Deferred Revenue | ||
Air traffic liability - loyalty program - beginning balance | $ 3,385 | $ 3,011 |
Amounts deferred associated with points awarded | 656 | 711 |
Revenue recognized from points redeemed - Passenger | (461) | (535) |
Revenue recognized from points redeemed - Other | (19) | (16) |
Air traffic liability - loyalty program - ending balance | $ 3,561 | $ 3,171 |
Revenue - Air Traffic Liabili_3
Revenue - Air Traffic Liability Rollforward (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Air Traffic Liability Roll Forward | ||
ATL, beginning balance | $ 5,510 | $ 5,070 |
Current Period Sales | 4,565 | 5,704 |
Revenue amounts in beginning balance | (1,949) | (2,008) |
Revenue from Current Period Sales | (1,915) | (2,752) |
ATL, ending balance | $ 6,211 | $ 6,014 |
Revenue - Additional Informatio
Revenue - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Deferred Revenue Arrangement [Line Items] | |||
Residual Travel Funds | 33.00% | 13.00% | |
Operating Revenue | $ 4,234 | $ 5,149 | |
Chase And Other Partner Agreements | |||
Deferred Revenue Arrangement [Line Items] | |||
Operating Revenue | $ 321 | $ 319 |
Net Income (Loss) Per Share (De
Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
NUMERATOR: | ||
Net income (loss) | $ (94) | $ 387 |
DENOMINATOR: | ||
Weighted-average shares outstanding, basic | 515 | 551 |
Dilutive effect of restricted stock units | 0 | 1 |
Adjusted weighted-average shares outstanding, diluted | 515 | 552 |
NET INCOME (LOSS) PER SHARE: | ||
Basic | $ (0.18) | $ 0.70 |
Diluted | $ (0.18) | $ 0.70 |
DEBT (Details)
DEBT (Details) $ in Millions | Mar. 31, 2020USD ($) |
Debt Instrument [Line Items] | |
Required Minimum Liquidity Level at All Times After March 31, 2021 | $ 2,500 |
Unsecured Debt Due 2030 | 500 |
Remainder of 2020 | 741 |
2021 | 2,200 |
2022 | 475 |
2023 | 103 |
2024 | 103 |
2025 | 90 |
Beyond 2025 | 1,400 |
Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Revolving Credit Facility, Maximum Amount Outstanding at Period End | 1,000 |
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,500 |
Amended 364-Day Term Loan Credit Facility | London Interbank Offered Rate (LIBOR) [Member] | |
Debt Instrument [Line Items] | |
Stated interest rate | 1.00% |
Amended 364-Day Term Loan Credit Facility | London Interbank Offered Rate (LIBOR) [Member] | Floor | |
Debt Instrument [Line Items] | |
Stated interest rate | 1.00% |
Amended 364-Day Term Loan Credit Facility | New York Fed Bank Rate [Member] | |
Debt Instrument [Line Items] | |
Stated interest rate | 0.50% |
Amended 364-Day Term Loan Credit Facility | Base Rate [Member] | Floor | |
Debt Instrument [Line Items] | |
Stated interest rate | 1.00% |
Existing Revolving Credit Facility [Member] | Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Line of Credit Facility, Current Borrowing Capacity | $ 1,000 |
Fair Value Measurements - Measu
Fair Value Measurements - Measured on Recurring Basis (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | |
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | [1] | $ 89,000,000 | $ 112,000,000 |
Fuel derivatives: | |||
Derivative Liability, Fair Value, Gross Liability | [1] | (71,000,000) | (6,000,000) |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Treasury bills | 1,396,000,000 | 1,196,000,000 | |
Interest rate derivatives (see Note 4) | 0 | ||
Fuel derivatives: | |||
Other available for sale securities | 182,000,000 | 197,000,000 | |
Total assets | 5,073,000,000 | 3,392,000,000 | |
Liabilities | |||
Interest rate derivatives (see Note 4) | 0 | 0 | |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Treasury bills | 0 | 0 | |
Interest rate derivatives (see Note 4) | 4,000,000 | 2,000,000 | |
Fuel derivatives: | |||
Other available for sale securities | 0 | 0 | |
Total assets | 658,000,000 | 879,000,000 | |
Liabilities | |||
Interest rate derivatives (see Note 4) | (71,000,000) | (6,000,000) | |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Treasury bills | 0 | 0 | |
Interest rate derivatives (see Note 4) | 0 | ||
Fuel derivatives: | |||
Other available for sale securities | 0 | 0 | |
Total assets | 85,000,000 | 110,000,000 | |
Liabilities | |||
Interest rate derivatives (see Note 4) | 0 | 0 | |
Options Held | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | [2] | 0 | 0 |
Options Held | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | [2] | 0 | 0 |
Options Held | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | [2] | 85,000,000 | 110,000,000 |
Cash Equivalents | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Cash equivalents | [3] | 3,495,000,000 | 1,999,000,000 |
Cash Equivalents | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Cash equivalents | [3] | 0 | 0 |
Cash Equivalents | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Cash equivalents | [3] | 0 | 0 |
Commercial Paper | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Cash equivalents | 0 | 0 | |
Commercial Paper | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Cash equivalents | 360,000,000 | 535,000,000 | |
Commercial Paper | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Cash equivalents | 0 | 0 | |
Certificates of Deposit | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Cash equivalents | 0 | 0 | |
Investments | 0 | 0 | |
Certificates of Deposit | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Cash equivalents | 19,000,000 | 14,000,000 | |
Investments | 184,000,000 | 268,000,000 | |
Certificates of Deposit | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Cash equivalents | 0 | 0 | |
Investments | 0 | 0 | |
Time Deposits | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Cash equivalents | 0 | ||
Investments | 0 | 0 | |
Time Deposits | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Cash equivalents | 66,000,000 | ||
Investments | 25,000,000 | 60,000,000 | |
Time Deposits | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Cash equivalents | 0 | ||
Investments | 0 | 0 | |
Estimate of Fair Value Measurement | Fair Value, Measurements, Recurring | |||
Assets | |||
Treasury bills | 1,396,000,000 | 1,196,000,000 | |
Interest rate derivatives (see Note 4) | 4,000,000 | 2,000,000 | |
Fuel derivatives: | |||
Other available for sale securities | 182,000,000 | 197,000,000 | |
Total assets | 5,816,000,000 | 4,381,000,000 | |
Liabilities | |||
Interest rate derivatives (see Note 4) | (71,000,000) | (6,000,000) | |
Estimate of Fair Value Measurement | Options Held | Fair Value, Measurements, Recurring | |||
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | [2] | 85,000,000 | 110,000,000 |
Estimate of Fair Value Measurement | Cash Equivalents | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash equivalents | [3] | 3,495,000,000 | 1,999,000,000 |
Estimate of Fair Value Measurement | Commercial Paper | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash equivalents | 360,000,000 | 535,000,000 | |
Estimate of Fair Value Measurement | Certificates of Deposit | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash equivalents | 19,000,000 | 14,000,000 | |
Investments | 184,000,000 | 268,000,000 | |
Estimate of Fair Value Measurement | Time Deposits | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash equivalents | 66,000,000 | ||
Investments | $ 25,000,000 | $ 60,000,000 | |
[1] | Represents the position of each trade before consideration of offsetting positions with each counterparty and does not include the impact of cash collateral deposits provided to or received from counterparties. See discussion of credit risk and collateral following in this Note. | ||
[2] | In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net asset. See Note 4 . | ||
[3] | 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 | 12 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Fair Value, Recurring Basis, Unobservable Input Reconciliation, Asset (Liability), Gain (Loss), OCI | $ (112) | ||
Fuel derivatives | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning Balance | 138 | ||
Losses for the period included in earnings | [1] | $ (2) | |
Fair Value, Recurring Basis, Unobservable Input Reconciliation, Asset (Liability), Gain (Loss), OCI | (106) | ||
Purchases | [2] | 83 | 133 |
Sales | [2] | (2) | |
Settlements | (47) | ||
Ending Balance | 85 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value | $ 110 | ||
Commodity Option | Fuel derivatives | |||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | |||
Fair Value, Asset, Recurring Basis, Still Held, Unrealized Gain (Loss) | [1] | (2) | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Fair Value, Asset, Recurring Basis, Still Held, Unrealized Gain (Loss), OCI | $ (100) | ||
[1] | Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). | ||
[2] | 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 - Quant
Fair Value Measurements - Quantitative Information about Level 3 Fair Value (Details) - Significant unobservable inputs (Level 3) - Fuel derivatives - Measurement Input, Option Volatility | Mar. 31, 2020 | |
Minimum | Second quarter 2020 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.49 | |
Minimum | Third quarter 2020 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.50 | |
Minimum | Fourth quarter 2020 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.41 | |
Minimum | 2021 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.28 | |
Minimum | 2022 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.27 | |
Minimum | Beyond 2022 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.25 | |
Weighted Average | Second quarter 2020 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.93 | [1] |
Weighted Average | Third quarter 2020 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.59 | [1] |
Weighted Average | Fourth quarter 2020 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.47 | [1] |
Weighted Average | 2021 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.36 | [1] |
Weighted Average | 2022 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.28 | [1] |
Weighted Average | Beyond 2022 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.26 | [1] |
Maximum | Second quarter 2020 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 1.21 | |
Maximum | Third quarter 2020 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.73 | |
Maximum | Fourth quarter 2020 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.56 | |
Maximum | 2021 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.47 | |
Maximum | 2022 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.30 | |
Maximum | Beyond 2022 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.27 | |
[1] | Implied volatility weighted by the notional amount (barrels of fuel) that will settle in respective period. |
Fair Value Instruments - Carryi
Fair Value Instruments - Carrying and Estimated Fair Value of Debt (Details) $ in Millions | Mar. 31, 2020USD ($) |
2.65% Notes due 2020 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 504 |
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 | $ 120 |
Stated interest rate | 5.223% |
737 Aircraft Notes payable through 2020 | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 7 |
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 | $ 168 |
Stated interest rate | 6.24% |
Term Loan Agreement due 2026 - 3.71% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 178 |
Stated interest rate | 3.03% |
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 | $ 121 |
Stated interest rate | 7.375% |
2.625% Notes due 2030 | |
Debt Instrument [Line Items] | |
Stated interest rate | 2.625% |
2.625% Notes due 2030 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Carrying amount of debt | $ 500 |
Stated interest rate | 2.625% |
Level 2 | 2.65% Notes due 2020 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | $ 495 |
Level 2 | 2.75% Notes due 2022 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 283 |
Level 2 | Pass Through Certificates due 2022 - 6.24% | Enhanced Equipment Trust Certificate | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 167 |
Level 2 | 3.00% Notes due 2026 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 284 |
Level 2 | 3.45% Notes due 2027 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 264 |
Level 2 | 7.375% Debentures due 2027 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Loans Payable, Fair Value | 139 |
Level 2 | 2.625% Notes due 2030 | Unsecured Debt | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 420 |
Level 3 | Term Loan Agreement payable through 2020 - 5.223% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Loans Payable, Fair Value | 120 |
Level 3 | 737 Aircraft Notes payable through 2020 | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Notes Payable, Fair Value | 7 |
Level 3 | Term Loan Agreement Due 2021 | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Loans Payable, Fair Value | 990 |
Level 3 | Term Loan Agreement due 2026 - 3.71% | Notes Payable to Banks | |
Debt Instrument [Line Items] | |
Loans Payable, Fair Value | $ 164 |
Notes Payable to Banks | Term Loan Agreement Due 2021 | |
Debt Instrument [Line Items] | |
Stated interest rate | 3.00% |
Short-term Debt | $ 1,000 |
Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Revolving Credit Facility, Maximum Amount Outstanding at Period End | 1,000 |
Revolving Credit Facility | Level 3 | |
Debt Instrument [Line Items] | |
Line of Credit Facility, Fair Value | $ 978 |
Supplemental Financial Inform_3
Supplemental Financial Information - Accounts and Other Receivables (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Accounts and Other Receivables [Abstract] | ||
Trade receivables | $ 44 | $ 53 |
Credit card receivables | 4 | 112 |
Business partners and other suppliers | 535 | 779 |
Income tax receivable | 88 | 87 |
Other | 38 | 55 |
Accounts and other receivables | $ 709 | $ 1,086 |
Supplemental Financial Inform_4
Supplemental Financial Information - Other Assets (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 | |
Other Assets [Abstract] | |||
Derivative contracts | $ 60 | $ 49 | |
Intangible assets | 296 | 296 | |
Other | 264 | 232 | |
Other assets | 620 | 577 | |
Other Assets | Interest rate derivatives | |||
Other Assets [Abstract] | |||
Derivative contracts | [1] | $ 0 | $ 2 |
[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 10 . |
Supplemental Financial Inform_5
Supplemental Financial Information - Accounts Payable (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Supplemental Financial Information - Accounts Payable [Abstract] | ||
Accounts payable trade | $ 218 | $ 304 |
Salaries payable | 226 | 231 |
Taxes payable | 66 | 227 |
Aircraft maintenance payable | 156 | 162 |
Fuel payable | 57 | 129 |
Dividends Payable | 0 | 93 |
Other payable | 320 | 428 |
Accounts Payable, Current | $ 1,043 | $ 1,574 |
Supplemental Financial Inform_6
Supplemental Financial Information - Accrued Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 | |
Accrued Liabilities, Current [Abstract] | |||
Profitsharing and savings plans | $ 25 | $ 695 | |
Vacation pay | 443 | 434 | |
Health | 99 | 120 | |
Workers compensation | 168 | 166 | |
Property and income taxes | 67 | 79 | |
Other | 180 | 250 | |
Accrued liabilities | 1,037 | 1,749 | |
Interest rate derivatives | Accrued Liabilities [Member] | |||
Accrued Liabilities, Current [Abstract] | |||
Derivative contracts | [1] | $ 55 | $ 5 |
[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 10 . |
Supplemental Financial Inform_7
Supplemental Financial Information - Other Non-Current Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Other Liabilities, Noncurrent [Abstract] | ||
Postretirement obligation | $ 294 | $ 288 |
Other deferred compensation | 286 | 313 |
Other | 114 | 105 |
Other noncurrent liabilities | $ 694 | $ 706 |
Commitments and Contingencies -
Commitments and Contingencies - Airport Projects (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
LAX Terminal 1.5 | ||
Other Commitments [Line Items] | ||
Total Expected Cost Of Airport Project | $ 479 | |
Outstanding remaining guaranteed obligation | 212 | |
Assets constructed for others, net | 198 | $ 164 |
LFMP Terminal | ||
Other Commitments [Line Items] | ||
Municipal bonds principal remaining | 407 | |
Net present value of principal remaining | $ 449 |
Boeing 737 MAX Aircraft Groun_2
Boeing 737 MAX Aircraft Grounding (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2020USD ($)aircraft | Mar. 31, 2019USD ($) | |
Number of Aircraft Grounded Under Emergency Order | 34 | |
After-Tax Potential Concessions and Other Considerations Announced July 2019 | $ | $ 4,900 | |
Pre-Tax Potential Concessions and Other Considerations Announced January 2020 | $ | $ 2,600 | |
Number of Aircraft Not Delivered Due to Grounding Under Emergency Order | 41 | |
Supplier Proceeds | $ | $ (300) | $ 0 |
Contract to Own Aircraft | ||
Number of Aircraft Not Delivered Due to Grounding Under Emergency Order | 28 | |
Contract to Lease Aircraft | ||
Number of Aircraft Not Delivered Due to Grounding Under Emergency Order | 13 | |
B-737-Max | ||
Owned Assets, Number of Units | 31 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | 1 Months Ended | 3 Months Ended | 60 Months Ended | 120 Months Ended | ||||||
Apr. 28, 2020USD ($) | Jun. 30, 2020 | Apr. 19, 2030 | Apr. 19, 2030 | Apr. 24, 2020USD ($) | Apr. 21, 2020USD ($)shares | Apr. 20, 2020USD ($)BasisPointsshares | Apr. 09, 2020$ / shares | Apr. 01, 2020USD ($) | Mar. 31, 2020 | |
Subsequent Event [Line Items] | ||||||||||
Entity Number of Employees | 60,000 | |||||||||
Subsequent Event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Total Expected Receipts of Relief Through Payroll Support Program of CARES Act | $ 3,300,000,000 | |||||||||
Expected Unsecured Term Loan Through Payroll Support Program of CARES Act | 948,000,000 | |||||||||
Proceeds from Payroll Support Program Grant | $ 1,600,000,000 | |||||||||
Percent of Total Expected Proceeds Received from Payroll Support Program Grant | 50.00% | |||||||||
Unsecured Term Loan Through Payroll Support Program of CARES Act | $ 459,000,000 | |||||||||
Principal Amount Increase on Unsecured Term Loan Through Payroll Support Program of CARES Act | 30.00% | |||||||||
Principal Amount Increase on Warrants Issued to Treasury Through Payroll Support Program of CARES Act | 10.00% | |||||||||
Percent of Total Expected Proceeds Received in 2Q20 from Payroll Support Program of CARES Act | 90.00% | |||||||||
Expected Eligibility Amount for Secured Loans Through CARES Act | $ 2,800,000,000 | |||||||||
Expected Interest Rate for Secured Loans Through CARES Act | BasisPoints | 250 | |||||||||
Expected Warrant Issuance to Treasury for Secured Loans Through CARES Act | shares | 7,600,000 | |||||||||
LUV Common Stock Warrants | Subsequent Event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Class of Warrant or Right, Outstanding | shares | 1,300,000 | |||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | shares | 2,600,000 | |||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares | $ 36.47 | |||||||||
Amended 364-Day Term Loan Credit Facility | Subsequent Event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
364-Day Term Loan Credit Facility | $ 3,680,000,000 | $ 2,300,000,000 | ||||||||
Unsecured Debt | CARES Act Unsecured Loan | Subsequent Event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Stated interest rate | 1.00% | |||||||||
Accordian Feature to Amended 364-Day Term Loan Credit Facility [Member] | Amended 364-Day Term Loan Credit Facility | Subsequent Event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
364-Day Term Loan Credit Facility | $ 350,000,000 | |||||||||
Accordian Feature on Short-term Debt | $ 417,000,000 | |||||||||
Total Funds Available Amended 364-Day Term Loan Credit Facility | $ 3,750,000,000 | |||||||||
Forecast | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Unsecured Debt | CARES Act Unsecured Loan | Subsequent Event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Basis spread on variable rate (percent) April 21, 2025 and beyond | 2.00% |