Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2022 | Jul. 28, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 1-7259 | |
Entity Registrant Name | SOUTHWEST AIRLINES CO. | |
Entity Incorporation, State or Country Code | TX | |
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 | |
City Area Code | 214 | |
Local Phone Number | 792-4000 | |
Title of 12(b) Security | Common Stock ($1.00 par value) | |
Trading Symbol | LUV | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 593,350,161 | |
Entity Central Index Key | 0000092380 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheet - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 13,234 | $ 12,480 |
Short-term investments | 3,197 | 3,024 |
Accounts and other receivables | 1,389 | 1,357 |
Inventories of parts and supplies, at cost | 751 | 537 |
Prepaid expenses and other current assets | 825 | 638 |
Total current assets | 19,396 | 18,036 |
Property and equipment, at cost: | ||
Flight equipment | 21,598 | 21,226 |
Ground property and equipment | 6,563 | 6,342 |
Deposits on flight equipment purchase contracts | 637 | 0 |
Assets constructed for others | 12 | 6 |
Property and equipment, at cost | 28,810 | 27,574 |
Less allowance for depreciation and amortization | 13,216 | 12,732 |
Property and equipment, net | 15,594 | 14,842 |
Goodwill | 970 | 970 |
Operating lease right-of-use assets | 1,495 | 1,590 |
Other assets | 847 | 882 |
Total assets | 38,302 | 36,320 |
Current liabilities: | ||
Accounts payable | 1,908 | 1,282 |
Accrued liabilities | 1,587 | 1,624 |
Current operating lease liabilities | 242 | 239 |
Air traffic liability | 6,312 | 5,566 |
Current maturities of long-term debt | 1,662 | 453 |
Total current liabilities | 11,711 | 9,164 |
Long-term debt less current maturities | 8,877 | 10,274 |
Air traffic liability - noncurrent | 2,206 | 2,159 |
Deferred income taxes | 2,072 | 1,770 |
Noncurrent operating lease liabilities | 1,220 | 1,315 |
Other noncurrent liabilities | 1,096 | 1,224 |
Stockholders' equity: | ||
Common stock | 888 | 888 |
Capital in excess of par value | 3,966 | 4,224 |
Retained earnings | 16,311 | 15,774 |
Accumulated other comprehensive income | 805 | 388 |
Treasury stock, at cost | (10,850) | (10,860) |
Total stockholders' equity | 11,120 | 10,414 |
Total liabilities and stockholders' equity | $ 38,302 | $ 36,320 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Comprehensive Income (Loss) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
OPERATING REVENUES: | ||||
Total operating revenues | $ 6,728 | $ 4,008 | $ 11,422 | $ 6,060 |
OPERATING EXPENSES, NET: | ||||
Salaries, wages, and benefits | 2,220 | 1,825 | 4,450 | 3,395 |
Payroll support and voluntary Employee programs, net | 0 | (740) | 0 | (2,187) |
Fuel and oil | 1,636 | 803 | 2,640 | 1,272 |
Maintenance materials and repairs | 210 | 222 | 420 | 395 |
Landing fees and airport rentals | 388 | 403 | 733 | 716 |
Depreciation and amortization | 325 | 315 | 649 | 627 |
Other operating expenses | 791 | 586 | 1,523 | 1,049 |
Total operating expenses, net | 5,570 | 3,414 | 10,415 | 5,267 |
OPERATING INCOME | 1,158 | 594 | 1,007 | 793 |
OTHER EXPENSES (INCOME): | ||||
Interest expense | 93 | 116 | 186 | 229 |
Capitalized interest | (11) | (8) | (20) | (19) |
Interest income | (28) | (2) | (31) | (4) |
Other (gains) losses, net | 68 | (14) | 212 | (61) |
Total other expenses (income) | 122 | 92 | 347 | 145 |
INCOME BEFORE INCOME TAXES | 1,036 | 502 | 660 | 648 |
PROVISION FOR INCOME TAXES | 276 | 154 | 178 | 185 |
NET INCOME | $ 760 | $ 348 | $ 482 | $ 463 |
Net income per share, basic (in USD per share) | $ 1.29 | $ 0.59 | $ 0.83 | $ 0.78 |
Net income per share, diluted (in USD per share) | $ 1.20 | $ 0.57 | $ 0.77 | $ 0.76 |
COMPREHENSIVE INCOME | $ 674 | $ 544 | $ 899 | $ 723 |
WEIGHTED AVERAGE SHARES OUTSTANDING | ||||
Basic (in shares) | 593 | 591 | 593 | 591 |
Diluted (in shares) | 635 | 615 | 640 | 612 |
Passenger | ||||
OPERATING REVENUES: | ||||
Total operating revenues | $ 6,119 | $ 3,569 | $ 10,254 | $ 5,282 |
Freight | ||||
OPERATING REVENUES: | ||||
Total operating revenues | 47 | 50 | 89 | 92 |
Other | ||||
OPERATING REVENUES: | ||||
Total operating revenues | $ 562 | $ 389 | $ 1,079 | $ 686 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Stockholders' Equity - USD ($) $ in Millions | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Capital in excess of par value | Capital in excess of par value Cumulative Effect, Period of Adoption, Adjustment | Retained earnings | Retained earnings Cumulative Effect, Period of Adoption, Adjustment | Accumulated other comprehensive income | Accumulated other comprehensive income Cumulative Effect, Period of Adoption, Adjustment | Treasury stock |
Balance at beginning of period at Dec. 31, 2020 | $ 8,876 | $ 0 | $ 888 | $ 4,191 | $ 14,777 | $ 19 | $ (105) | $ (19) | $ (10,875) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 0 | (8) | 8 | |||||||
Share-based compensation | 14 | 14 | ||||||||
Stock warrants | 23 | 23 | ||||||||
Comprehensive income | 180 | 116 | 64 | |||||||
Balance at end of period at Mar. 31, 2021 | 9,093 | 888 | 4,220 | 14,912 | (60) | (10,867) | ||||
Balance at beginning of period at Dec. 31, 2020 | 8,876 | 0 | 888 | 4,191 | 14,777 | 19 | (105) | (19) | (10,875) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Comprehensive income | 723 | |||||||||
Balance at end of period at Jun. 30, 2021 | 9,688 | 888 | 4,269 | 15,260 | 136 | (10,865) | ||||
Balance at beginning of period at Dec. 31, 2020 | 8,876 | 0 | 888 | 4,191 | 14,777 | 19 | (105) | $ (19) | (10,875) | |
Balance at end of period at Dec. 31, 2021 | $ 10,414 | (245) | 888 | 4,224 | $ (300) | 15,774 | 55 | 388 | (10,860) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Accounting Standards Update [Extensible Enumeration] | Accounting Standards Update 2020-06 | |||||||||
Balance at beginning of period at Mar. 31, 2021 | $ 9,093 | 888 | 4,220 | 14,912 | (60) | (10,867) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 13 | 11 | 2 | |||||||
Share-based compensation | 16 | 16 | ||||||||
Stock warrants | 22 | 22 | ||||||||
Comprehensive income | 544 | 348 | 196 | |||||||
Balance at end of period at Jun. 30, 2021 | 9,688 | 888 | 4,269 | 15,260 | 136 | (10,865) | ||||
Balance at beginning of period at Dec. 31, 2021 | 10,414 | (245) | 888 | 4,224 | (300) | 15,774 | 55 | 388 | (10,860) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 7 | 0 | 7 | |||||||
Share-based compensation | 16 | 16 | ||||||||
Comprehensive income | 225 | (278) | 503 | |||||||
Balance at end of period at Mar. 31, 2022 | 10,417 | 888 | 3,940 | 15,551 | 891 | (10,853) | ||||
Balance at beginning of period at Dec. 31, 2021 | 10,414 | $ (245) | 888 | 4,224 | $ (300) | 15,774 | $ 55 | 388 | (10,860) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Comprehensive income | 899 | |||||||||
Balance at end of period at Jun. 30, 2022 | 11,120 | 888 | 3,966 | 16,311 | 805 | (10,850) | ||||
Balance at beginning of period at Mar. 31, 2022 | 10,417 | 888 | 3,940 | 15,551 | 891 | (10,853) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 13 | 10 | 3 | |||||||
Share-based compensation | 16 | 16 | ||||||||
Comprehensive income | 674 | 760 | (86) | |||||||
Balance at end of period at Jun. 30, 2022 | $ 11,120 | $ 888 | $ 3,966 | $ 16,311 | $ 805 | $ (10,850) |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Cash Flows - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net income | $ 760 | $ 348 | $ 482 | $ 463 |
Adjustments to reconcile net income to cash provided by operating activities: | ||||
Depreciation and amortization | 325 | 315 | 649 | 627 |
Impairment of long-lived assets | 15 | 0 | 31 | 0 |
Unrealized mark-to-market adjustment on available for sale securities | 4 | 0 | 7 | 0 |
Unrealized/realized (gain) loss on fuel derivative instruments | (20) | (17) | 15 | (23) |
Deferred income taxes | 272 | (30) | 174 | (26) |
Loss on partial extinguishment of convertible and unsecured notes | 43 | 0 | 116 | 0 |
Changes in certain assets and liabilities: | ||||
Accounts and other receivables | 439 | (563) | 105 | (797) |
Other assets | (1) | 16 | (45) | 5 |
Accounts payable and accrued liabilities | 328 | 989 | 506 | 923 |
Air traffic liability | (92) | 946 | 793 | 1,546 |
Other liabilities | (103) | (64) | (209) | (186) |
Cash collateral received from (provided to) derivative counterparties | (101) | 48 | 284 | 86 |
Other, net | 37 | 17 | 69 | 32 |
Net cash provided by operating activities | 1,906 | 2,005 | 2,977 | 2,650 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Capital expenditures | (987) | (95) | (1,497) | (190) |
Assets constructed for others | (3) | 0 | (6) | 0 |
Purchases of short-term investments | (1,545) | (1,651) | (2,470) | (2,975) |
Proceeds from sales of short-term and other investments | 980 | 1,277 | 2,280 | 2,495 |
Net cash used in investing activities | (1,555) | (469) | (1,693) | (670) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Proceeds from Payroll Support Program loan and warrants | 0 | 625 | 0 | 1,136 |
Proceeds from Employee stock plans | 13 | 13 | 19 | 26 |
Payments of long-term debt and finance lease obligations | (53) | (43) | (146) | (109) |
Payments for repurchases and conversions of convertible debt | (178) | 0 | (409) | 0 |
Other, net | 3 | 22 | 6 | 28 |
Net cash provided by (used in) financing activities | (215) | 617 | (530) | 1,081 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 136 | 2,153 | 754 | 3,061 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 13,098 | 11,971 | 12,480 | 11,063 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 13,234 | 14,124 | 13,234 | 14,124 |
CASH PAYMENTS FOR: | ||||
Interest, net of amount capitalized | 141 | 150 | 161 | 167 |
Income taxes | 7 | 176 | 11 | 177 |
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS: | ||||
Adoption of Accounting Standards Update 2020-06, Debt (See Note 3) | 0 | 0 | 245 | 0 |
Right-of-use assets acquired under operating leases | 3 | 12 | 27 | 230 |
Flight equipment acquired against supplier credit memo | 0 | 207 | 0 | 512 |
Assets constructed for others | $ 0 | $ (341) | $ 0 | $ (309) |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2022 | |
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 June 30, 2022 and 2021 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. However, beginning in early 2020, as a result of the COVID-19 pandemic, the Company's results have not always been in line with such historical trends. See Note 2 for further information. Air travel is also significantly impacted by general economic conditions, the amount of disposable income available to consumers and changes in consumer behavior, unemployment levels, corporate travel budgets, global pandemics such as COVID-19, extreme or severe weather and natural disasters, fears of terrorism or war, governmental actions, 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 and six months ended June 30, 2022, are not necessarily indicative of the results that may be expected for future quarters or for the year ended December 31, 2022. 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, 2021. |
Worldwide Pandemic
Worldwide Pandemic | 6 Months Ended |
Jun. 30, 2022 | |
Unusual or Infrequent Items, or Both [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 classified the virus as a pandemic. The speed with which the effects of the COVID-19 pandemic changed the U.S. economic landscape, outlook, and in particular the travel industry, was swift and unexpected. The Company experienced significant disruptions in travel and reduced bookings throughout the remainder of 2020 and for the entirety of 2021 as a result of the pandemic and subsequent variants of COVID-19. Following a significant negative impact to revenues and bookings in January and February 2022, which included increased trip cancellations and staffing challenges associated with the Omicron variant, the Company saw improvements in revenue trends in March 2022 and throughout second quarter 2022 as COVID-19 cases significantly trended downward and bookings for summer travel accelerated. The Company continues to monitor demand for air travel and proactively adjust its published flight schedules and capacity. Since the start of the pandemic, the Company entered into definitive documentation with the United States Department of the Treasury ("Treasury") with respect to payroll funding support ("Payroll Support") pursuant to three separate Payroll Support programs: the "PSP1 Payroll Support Program" in April 2020 under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"); the "PSP2 Payroll Support Program” in January 2021 under the Consolidated Appropriations Act, 2021; and the "PSP3 Payroll Support Program" in April 2021 under the American Rescue Plan Act of 2021. As consideration for its receipt of funding under each of these Payroll Support programs, the Company issued a promissory note in favor of Treasury (classified as a component of Long term debt less current maturities in the unaudited Condensed Consolidated Balance Sheet) and entered into a warrant agreement with Treasury (classified as a component of Stockholders' equity in the unaudited Condensed Consolidated Balance Sheet). The following table provides the details from the PSP1, PSP2 and PSP3 Payroll Support programs: (dollars in millions, shares in thousands) Grant Promissory Note Warrants Total Payroll Support Proceeds Warrants (shares) Warrant strike price Promissory Note Maturity Date PSP1 $ 2,337 $ 976 $ 40 $ 3,354 2,676 $36.47/share April 19, 2030 PSP2 $ 1,393 $ 566 $ 27 $ 1,987 1,223 $46.28/share January 15, 2031 PSP3 $ 1,310 $ 526 $ 18 $ 1,852 899 $58.51/share April 23, 2031 Total $ 5,040 $ 2,068 $ 85 $ 7,193 4,798 In connection with the receipt of Payroll Support, the Company is subject to certain restrictions, including the elimination of share repurchases and dividends through September 30, 2022; and limits on executive compensation until April 1, 2023. Under each of the three Payroll Support programs, funds received were used solely to pay qualifying employee salaries, wages, and benefits. All grant portions of the Payroll Support programs received had been allocated and classified as a contra-expense line item in the Company's financial statements by the end of 2021, including approximately $724 million and $1.9 billion for the three and six months ended June 30, 2021, in the accompanying unaudited Condensed Consolidated Statement of Comprehensive Income. On June 1, 2020, the Company announced Voluntary Separation Program 2020 ("Voluntary Separation Program"), a voluntary separation program that allowed eligible Employees the opportunity to voluntarily separate from the Company in exchange for severance, medical/dental coverage for a specified period of time, and travel privileges based on years of service. A total of over 4,200 Employees elected to participate in Voluntary Separation Program. In conjunction with Voluntary Separation Program, the Company also offered certain contract Employees the option to take voluntary Extended Emergency Time Off ("Extended ETO"), for periods between six The purpose of Voluntary Separation Program and Extended ETO was to maintain a reduced workforce to operate at reduced capacity relative to the Company's operations prior to the COVID-19 pandemic. In accordance with the accounting guidance in Accounting Standards Codification ("ASC") Topic 712 (Compensation — Nonretirement Postemployment Benefits), the Company accrued charges related to the special termination benefits described above upon Employees accepting Voluntary Separation Program or Extended ETO offers. The Company accrued expenses totaling $1.4 billion for its Voluntary Separation Program and Extended ETO program in 2020, which are being reduced as program benefits are paid. For both the Voluntary Separation Program and Extended ETO programs combined, approximately $60 million of the liability balances were relieved during the first six months of 2022 through payments to Employees, leaving a balance of $269 million as of June 30, 2022. The liability associated with the Extended ETO program was fully relieved at March 31, 2022. During the first six months of 2021, the Company determined that it was no longer probable that the remaining portion of the Employees on Extended ETO would remain on such leave for their entire elected term. Therefore, a portion of the accruals previously recorded were reversed, resulting in a net $130 million credit to expense during the first six months of 2021. Both the initial charge and the partial reversal were classified within Payroll support and voluntary Employee programs, net, in the accompanying unaudited Condensed Consolidated Statement of Comprehensive Income. 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 2020, and placed in short-term storage, as well as some in a longer term storage program. As of June 30, 2022, four Boeing 737-700 aircraft remained in storage, all of which were retired from the Company's fleet in July 2022. |
New Accounting Pronouncements
New Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS On May 3, 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, and the standard was adopted and applied prospectively by the Company as of January 1, 2022, but the adoption and application did not have a significant impact on the Company's financial statements and disclosures, including interim periods. On January 7, 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848). This new standard provides optional temporary guidance for entities transitioning away from London Interbank Offered Rate ("LIBOR") to new reference interest rates so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions with Topic 848. These amendments do not apply to any contract modifications made after December 31, 2022, any new hedging relationships entered into after December 31, 2022, or to existing hedging relationships evaluated for effectiveness existing as of December 31, 2022, that apply certain optional practical expedients. This standard was effective immediately and may be applied (i) on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or (ii) on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued. The Company had no material LIBOR-related contract modifications during the six months ended June 30, 2022. On August 5, 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This new standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock, made targeted improvements to the disclosures for convertible instruments and earnings-per-share ("EPS") guidance, and amended the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. This standard is effective for fiscal years beginning after December 15, 2021, and the Company adopted this standard as of January 1, 2022, utilizing the modified retrospective method. Under the modified approach, the Company applied guidance to all financial instruments that were outstanding as of the beginning of the year of adoption with the cumulative effect recognized as an adjustment to the opening balance of retained earnings. Upon adoption, the Company reclassified the remaining equity component of $300 million, from Additional paid-in capital to Long-term debt associated with its 1.25% Convertible Senior Notes due 2025 (the “Convertible Notes”), and no longer records amortization of the debt discount to Interest expense. The cumulative effect from prior period amortization of the debt discount that has been recorded to Interest expense, offset by reductions to Capital in excess of par value related to the requisition of the equity component through previous repurchases, resulted in a $55 million adjustment to the opening balance of Retained earnings upon adoption. The new standard requires the use of the if-converted method to calculate diluted EPS, which is generally more dilutive, rather than the treasury stock method as was the Company's policy pre-adoption. For the three and six months ended June 30, 2022, the impacts of adopting this new standard were decreases to the Company's Net income in the amounts of $21 million, or $0.20 per diluted share, and $57 million, or $0.21 per diluted share, respectively, as a result of higher losses recognized on the Company’s extinguishment transactions following the elimination of the equity component of the Convertible Notes, partially offset by the elimination of the non-cash interest expense associated with the prior debt discount amortization. See Note 7. |
Financial Derivative Instrument
Financial Derivative Instruments | 6 Months Ended |
Jun. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
FINANCIAL DERIVATIVE INSTRUMENTS | (100) >(50) >(75) >(125) >(40) >(65) >(100) Cash is received from CP >0(c) >150(c) >250(c) >125(c) >100(c) >70(c) >100(c) If credit rating is non-investment Cash is received from CP (d) (d) (d) (d) (d) (d) (d) (a) Individual counterparties with fair value of fuel derivatives < $12 million. (b) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (c) Thresholds may vary based on changes in credit ratings within investment grade. (d) 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. As of June 30, 2022, the Company 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 June 30, 2022 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) June 30, 2022 Remainder of 2022 610 WTI crude oil, Brent crude oil, and Heating oil 2023 769 WTI crude oil and Brent crude oil 2024 358 WTI crude oil (a) Due to the types of derivatives utilized by the Company and different price levels of those contracts, these volumes represent the maximum economic hedge in place and may vary significantly as market prices and the Company's flight schedule fluctuate. Upon proper qualification, the Company accounts for its fuel derivative instruments as cash flow hedges. Qualification is re-evaluated quarterly, and all periodic changes in fair value of the derivatives designated as hedges are recorded in Accumulated other comprehensive income ("AOCI") until the underlying jet fuel is consumed. See Note 5. If a derivative initially does not qualify or ceases to qualify for hedge accounting, any change in the fair value of the derivative instrument since the last reporting period would be recorded in Other (gains) losses, net, in the unaudited Condensed Consolidated Statement of Comprehensive Income in the period of the change; however, any amounts previously recorded to AOCI would remain there until such time as the original forecasted transaction occurs, at which time these amounts would be reclassified to Fuel and oil expense. Factors that have and may continue to lead to the loss of hedge accounting include: significant fluctuation in energy prices, significant weather events affecting refinery capacity and the production of refined products, and the volatility of the different types of products the Company uses in hedging. Certain types of derivative instruments do not qualify for hedge accounting, including those that result in a net sold position (sold gallons exceeding purchased gallons). Increased volatility in certain 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 2021, as a result of the drop in demand for air travel compared with 2019 due to the pandemic, the Company was in an estimated "over-hedged" position and was required to de-designate a portion of its fuel hedges for hedge accounting purposes. However, the impact of such de-designations was not material to 2021 financial results. 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 6/30/2022 12/31/2021 6/30/2022 12/31/2021 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 797 $ 409 $ — $ — Fuel derivative contracts (gross) Other assets 372 287 — — Interest rate derivative contracts Other assets 11 — — — Interest rate derivative contracts Other noncurrent liabilities — — — 4 Total derivatives designated as hedges $ 1,180 $ 696 $ — $ 4 Derivatives not designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 125 $ — $ 167 $ — Total derivatives $ 1,305 $ 696 $ 167 $ 4 (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 4. 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 June 30, December 31, (in millions) location 2022 2021 Cash collateral deposits held from counterparties for fuel contracts - current Offset against Prepaid expenses and other current assets $ 297 $ 80 Cash collateral deposits held from counterparties for fuel contracts - noncurrent Offset against Other assets 162 95 Receivable from third parties for fuel contracts Accounts and other receivables 125 8 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 June 30, 2022, 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) June 30, 2022 December 31, 2021 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 $ 922 $ (464) (b) $ 458 $ 409 $ (80) $ 329 Fuel derivative contracts Other assets $ 372 $ (162) $ 210 (a) $ 287 $ (95) $ 192 (a) Interest rate derivative contracts Other assets $ 11 $ — $ 11 (a) $ — $ — $ — (a) (a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 9. (b) Includes the current portion of cash collateral deposits held from counterparties and derivative liability associated with fuel contracts. Offsetting of derivative liabilities (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) June 30, 2022 December 31, 2021 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 $ 464 $ (464) (b) $ — $ 80 $ (80) $ — Fuel derivative contracts Other assets $ 162 $ (162) $ — (a) $ 95 $ (95) $ — (a) Interest rate derivative contracts Other noncurrent liabilities $ — $ — $ — $ 4 $ — $ 4 (a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 9. (b) Includes the current portion of cash collateral deposits held from counterparties and derivative liability associated with fuel contracts. The following tables present the impact of derivative instruments and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2022 and 2021: Location and amount recognized in income on cash flow and fair value hedging relationships Three months ended June 30, 2022 Three months ended June 30, 2021 (in millions) Fuel and oil Other operating expenses Fuel and oil Other operating expenses Total $ (306) $ 2 $ 12 $ 1 (Gain) loss on cash flow hedging relationships: Commodity contracts: Amount of (gain) loss reclassified from AOCI into income (306) — 12 — Interest contracts: Amount of loss reclassified from AOCI into income — 2 — 1 Location and amount recognized in income on cash flow and fair value hedging relationships Six months ended June 30, 2022 Six months ended June 30, 2021 (in millions) Fuel and oil Other (gains)/losses, net Other operating expenses Fuel and oil Other (gains)/losses, net Other operating expenses Total $ (508) $ — $ 3 $ 28 $ 6 $ 2 (Gain) loss on cash flow hedging relationships Commodity contracts: Amount of (gain) loss reclassified from AOCI into income (508) — — 28 6 — Interest contracts: Amount of loss reclassified from AOCI into income — — 3 — — 2 Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Three months ended June 30, (in millions) 2022 2021 Fuel derivative contracts $ (140) $ (192) Interest rate derivatives (7) 6 Total $ (147) $ (186) Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Six months ended June 30, (in millions) 2022 2021 Fuel derivative contracts $ (792) $ (275) Interest rate derivatives (12) (4) Total $ (804) $ (279) Derivatives not designated as hedges (Gain) loss recognized in income on derivatives Three months ended Location of gain recognized in income on derivatives June 30, (in millions) 2022 2021 Fuel derivative contracts $ (20) $ (12) Other (gains) losses, net Derivatives not designated as hedges (Gain) loss recognized in income on derivatives Six months ended Location of (gain) loss recognized in income on derivatives June 30, (in millions) 2022 2021 Fuel derivative contracts $ 15 $ (16) Other (gains) losses, net The Company also recorded expense associated with premiums paid for fuel derivative contracts that settled/expired during the three and six months ended June 30, 2022 and 2021. Gains and/or losses associated with fuel derivatives that qualify for hedge accounting are ultimately recorded to Fuel and oil expense. Gains and/or losses associated with fuel derivatives that do not qualify for hedge accounting are recorded to Other (gains) and losses, net. The following tables present the impact of premiums paid for fuel derivative contracts and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income during the period the contract settles: Premium expense recognized in income on derivatives Three months ended Location of premium expense recognized in income on derivatives June 30, (in millions) 2022 2021 Fuel derivative contracts designated as hedges $ 26 $ 14 Fuel and oil Fuel derivative contracts not designated as hedges — 10 Other (gains) losses, net Premium expense recognized in income on derivatives Six months ended Location of premium expense recognized in income on derivatives June 30, (in millions) 2022 2021 Fuel derivative contracts designated as hedges $ 53 $ 29 Fuel and oil Fuel derivative contracts not designated as hedges — 21 Other (gains) losses, net 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 unrealized gains from fuel hedges as of June 30, 2022, recorded in AOCI, were approximately $545 million in net unrealized gains, net of taxes, which are expected to be realized in earnings during the twelve months subsequent to June 30, 2022. Interest Rate Swaps The Company is party to certain interest rate swap agreements that are accounted for as cash flow hedges, and has in the past held interest rate swap agreements that have qualified as fair value 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" or "critical terms match" methods of accounting for hedges, which dictate that the hedges were assumed to be perfectly effective at origination, and, thus, there was no ineffectiveness to be recorded in earnings. For the Company’s interest rate swap agreements that do not qualify for the "shortcut" or "critical terms match" methods of accounting, ineffectiveness is assessed at each reporting period. If hedge accounting is achieved, all periodic changes in fair value of the interest rate swaps are recorded in AOCI. Credit Risk and Collateral Credit exposure related to fuel derivative instruments is represented by the fair value of contracts that are an asset to the Company at the reporting date. At such times, these outstanding instruments expose the Company to credit loss in the event of nonperformance by the counterparties to the agreements. However, the Company has not experienced any significant credit loss as a result of counterparty nonperformance in the past. To manage credit risk, the Company selects and periodically reviews counterparties based on credit ratings, limits its exposure with respect to each counterparty, and monitors the market position of the fuel hedging program and its relative market position with each counterparty. At June 30, 2022, 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's credit rating. The Company also had agreements with counterparties in which cash deposits and letters of credit were 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 June 30, 2022, at which such postings are triggered: Counterparty (CP) (in millions) A B C D E F G Other (a) Total Fair value of fuel derivatives $ 289 $ 148 $ 264 $ 95 $ 131 $ 85 $ 92 $ 23 $ 1,127 Cash collateral held from CP 356 7 37 — 40 19 — — 459 Option to substitute LC for cash N/A N/A (b) (b) (b) N/A (b) If credit rating is investment Cash is provided to CP >(100) >(50) >(75) >(125) >(40) >(65) >(100) Cash is received from CP >0(c) >150(c) >250(c) >125(c) >100(c) >70(c) >100(c) If credit rating is non-investment Cash is received from CP (d) (d) (d) (d) (d) (d) (d) (a) Individual counterparties with fair value of fuel derivatives < $12 million. (b) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (c) Thresholds may vary based on changes in credit ratings within investment grade. (d) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. |
Comprehensive Income
Comprehensive Income | 6 Months Ended |
Jun. 30, 2022 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
COMPREHENSIVE INCOME | COMPREHENSIVE INCOME Comprehensive income includes changes in the fair value of certain financial derivative instruments that qualify for hedge accounting, unrealized gains and losses on certain investments, and actuarial gains/losses arising from the Company’s postretirement benefit obligation. The differences between Net income and Comprehensive income for the three and six months ended June 30, 2022 and 2021 were as follows: Three months ended June 30, (in millions) 2022 2021 NET INCOME $ 760 $ 348 Unrealized gain (loss) on fuel derivative instruments, net of deferred taxes of ($29) and $61 (95) 201 Unrealized gain (loss) on interest rate derivative instruments, net of deferred taxes of $3 and ($1) 9 (5) Total other comprehensive income (loss) $ (86) $ 196 COMPREHENSIVE INCOME $ 674 $ 544 Six months ended June 30, (in millions) 2022 2021 NET INCOME $ 482 $ 463 Unrealized gain on fuel derivative instruments, net of deferred taxes of $122 and $92 403 301 Unrealized gain on interest rate derivative instruments, net of deferred taxes of $5 and $1 14 6 Other, net of deferred taxes of $— and ($13) — (47) Total other comprehensive income $ 417 $ 260 COMPREHENSIVE INCOME $ 899 $ 723 A rollforward of the amounts included in AOCI, net of taxes, is shown below for the three and six months ended June 30, 2022: (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Deferred tax Accumulated other comprehensive income Balance at March 31, 2022 $ 1,141 $ (50) $ 66 $ (266) $ 891 Changes in fair value 182 10 — (45) 147 Reclassification to earnings (306) 2 — (a) 71 (233) Balance at June 30, 2022 $ 1,017 $ (38) $ 66 $ (240) $ 805 (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Deferred tax Accumulated other comprehensive income Balance at December 31, 2021 $ 492 $ (57) $ 66 $ (113) $ 388 Changes in fair value 1,033 16 — (245) 804 Reclassification to earnings (508) 3 — (a) 118 (387) Balance at June 30, 2022 $ 1,017 $ (38) $ 66 $ (240) $ 805 The following table illustrates the significant amounts reclassified out of each component of AOCI for the three and six months ended June 30, 2022: Three months ended June 30, 2022 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income AOCI components Unrealized gain on fuel derivative instruments $ (306) Fuel and oil expense (71) Less: Tax expense $ (235) Net of tax Unrealized loss on interest rate derivative instruments $ 2 Other operating expenses — Less: Tax expense $ 2 Net of tax Total reclassifications for the period $ (233) Net of tax Six months ended June 30, 2022 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income AOCI components Unrealized gain on fuel derivative instruments $ (508) Fuel and oil expense (119) Less: Tax expense $ (389) Net of tax Unrealized loss on interest rate derivative instruments $ 3 Other operating expenses 1 Less: Tax expense $ 2 Net of tax Total reclassifications for the period $ (387) Net of tax |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Passenger Revenues The Company’s contracts with its Customers primarily consist of its tickets sold, which are initially deferred as Air traffic liability. Passenger revenue associated with tickets is recognized when the performance obligation to the Customer is satisfied, which is primarily when travel is provided. Revenue is categorized by revenue source as the Company believes it best depicts the nature, amount, timing, and uncertainty of revenue and cash flow. The following table provides the components of Passenger revenue recognized for the three and six months ended June 30, 2022 and 2021: Three months ended June 30, Six months ended June 30, (in millions) 2022 2021 2022 2021 Passenger non-loyalty $ 5,118 $ 2,875 $ 8,482 $ 4,230 Passenger loyalty - air transportation 821 549 1,445 826 Passenger ancillary sold separately 180 145 327 226 Total passenger revenues $ 6,119 $ 3,569 $ 10,254 $ 5,282 As of June 30, 2022, and December 31, 2021, the components of Air traffic liability, including contract liabilities based on tickets sold and unused flight credits available to the Customer, both of which are net of recorded breakage, and loyalty points available for redemption, within the unaudited Condensed Consolidated Balance Sheet were as follows: Balance as of (in millions) June 30, 2022 December 31, 2021 Air traffic liability - passenger travel and ancillary passenger services $ 3,634 $ 2,936 Air traffic liability - loyalty program 4,884 4,789 Total Air traffic liability $ 8,518 $ 7,725 The balance in Air traffic liability - passenger travel and ancillary passenger services also includes unused funds that are available for use by Customers and are not currently associated with a ticket, although they remain reusable, for a period of time, in the form of a flight credit that can be applied towards the purchase of future travel. These flight credits are typically created as a result of a prior ticket cancellation or exchange. Rollforwards of the Company's Air traffic liability - loyalty program for the three and six months ended June 30, 2022 and 2021 were as follows (in millions): Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 Air traffic liability - loyalty program - beginning balance $ 4,884 $ 4,623 $ 4,789 $ 4,447 Amounts deferred associated with points awarded 842 656 1,579 1,121 Revenue recognized from points redeemed - Passenger (821) (549) (1,445) (826) Revenue recognized from points redeemed - Other (21) (11) (39) (23) Air traffic liability - loyalty program - ending balance $ 4,884 $ 4,719 $ 4,884 $ 4,719 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 June 30, 2022 and 2021 were as follows (in millions): Air traffic liability Balance at December 31, 2021 $ 7,725 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 11,086 Revenue from amounts included in contract liability opening balances (3,029) Revenue from current period sales (7,264) Balance at June 30, 2022 $ 8,518 Air traffic liability Balance at December 31, 2020 $ 7,133 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 6,851 Revenue from amounts included in contract liability opening balances (1,600) Revenue from current period sales (3,705) Balance at June 30, 2021 $ 8,679 During 2020 and in parts of 2021, 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 flight credits held in Air traffic liability that are estimated to be redeemed for future travel as of June 30, 2022, remains much higher than historical levels. The amount of such Customer funds represents approximately 5 percent and 16 percent of the total Air traffic liability balance at June 30, 2022, and December 31, 2021, respectively, compared to approximately 2 percent of the Air traffic liability balance as of December 31, 2019. In order to provide additional flexibility to Customers who hold these funds, the Company 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 flight credits created or that would have otherwise expired between March 1 and September 7, 2020 associated with flight cancellations, the Company previously extended the expiration date to September 7, 2022. At June 30, 2022, $1.1 billion of extended Customer flight credits with a September 7, 2022 expiration date remained in Air traffic liability, although the Company has estimated that a portion of those will not be redeemed. As a result, recognition of these flight credits as flown revenue, refunds, or breakage revenue has created more volatility over the life of these funds compared to periods in which these extended funds did not exist. On July 28, 2022, the Company announced that all existing Customer flight credits as of that date, as well as any future flight credits issued, will no longer expire and will thus remain redeemable by Customers. This announcement is considered a contract modification under applicable accounting guidance and the Company will account for such change prospectively beginning in third quarter 2022. The Company’s balance of existing Customer flight credits as of the modification date was approximately $1.9 billion, including the extended funds that had been set to expire on September 7, 2022. As the Company continues to believe that a portion of Customer flight credits will not be redeemed, it expects to continue to estimate and record breakage associated with such amounts, although the amount of breakage realized on a prospective basis is expected be lower and more stable than it has been during the pandemic. Flight credits result from canceling reservations and previously were valid for no longer than one year from the date of original purchase. Flight credits for non-refundable fares will be issued as long as the flight is cancelled more than 10 minutes prior to the scheduled departure. Recognition of revenue associated with the Company’s loyalty liability can be difficult to predict, as the number of award seats available to Members is not currently restricted and they could choose to redeem their points at any time that a seat is available. The performance obligations classified as a current liability related to the Company’s loyalty program were estimated based on expected redemptions utilizing historical redemption patterns, and forecasted flight availability and fares. The entire balance classified as Air traffic liability—noncurrent relates to loyalty points that were estimated to be redeemed in periods beyond the twelve months following the representative balance sheet date. Based on historical experience as well as current forecasted redemptions, the Company expects the majority of loyalty points to be redeemed within approximately two years of the date the points are issued. All performance obligations related to freight services sold are completed within twelve months or less; therefore, the Company has elected to not disclose the amount of the remaining transaction price and its expected timing of recognition for freight shipments. Other revenues primarily consist of marketing royalties associated with the Company’s co-brand Chase ® Visa credit card, but also include commissions and advertising associated with Southwest.com ® . All amounts classified as Other revenues are paid monthly, coinciding with the Company fulfilling its deliverables; therefore, the Company has elected to not disclose the amount of the remaining transaction price and its expected timing of recognition for such services provided. 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 June 30, 2022 and 2021, the Company recognized $522 million and $352 million, respectively. For the six months ended June 30, 2022 and 2021, the Company recognized $1.0 billion and $632 million, respectively. |
Net Income Per Share
Net Income Per Share | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
NET INCOME PER SHARE | NET INCOME PER SHARE The following table sets forth the computation of basic and diluted net income per share (in millions, except per share amounts). For the three and six months ended June 30, 2022, an immaterial number of shares related to the Company's restricted stock units and stock warrants were excluded from the denominator because inclusion of such shares would be antidilutive. For the three and six months ended June 30, 2021, an immaterial number of shares related to the Company's restricted stock units were excluded from the denominator because inclusion of such shares would be antidilutive. Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 NUMERATOR: Net income $ 760 $ 348 $ 482 $ 463 Add: Interest expense 4 (a) — 8 (a) — Net income attributable to common stockholders 764 348 490 463 DENOMINATOR: Weighted-average shares outstanding, basic 593 591 593 591 Dilutive effects of Convertible Notes 41 (a) 22 (b) 46 (a) 19 (b) Dilutive effect of stock warrants — 1 — 1 Dilutive effect of restricted stock units 1 1 1 1 Adjusted weighted-average shares outstanding, diluted 635 615 640 612 NET INCOME PER SHARE: Basic $ 1.29 $ 0.59 $ 0.83 $ 0.78 Diluted $ 1.20 $ 0.57 $ 0.77 $ 0.76 (a) As of January 1, 2022, the Company adopted ASU 2020-06 using the modified retrospective method. The standard requires the Company to apply the if-converted method for purposes of Net income per share. Using this method, the numerator is affected by adding back interest expense and the denominator is affected by including the effect of potential share settlement, if the effect is more dilutive, regardless of the type of settlement. For the three and six months ended June 30, 2022, all shares issuable on conversion were included in the denominator. See Notes 3 and 11 for further information regarding the new standard and the Convertible Notes. (b) Prior to the adoption of ASU 2020-06, the Convertible Notes were accounted for using the treasury stock method for the purposes of Net income per share. For the three and six months ended June 30, 2021, the average market price of the Company's common stock exceeded the conversion price per share of $38.48 and as such, the common shares underlying the Convertible Notes were included in the diluted calculation. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2022 | |
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 June 30, 2022, 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 time deposits), 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. Equity securities primarily consist of investments with readily determinable market values 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 a similar 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 plan obligations and plan assets, which net to zero, within the Salaries, wages, and benefits line and Other (gains) losses line, respectively, of the unaudited Condensed Consolidated Statement of Comprehensive Income. The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2022, and December 31, 2021: Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description June 30, 2022 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents: Cash equivalents (a) $ 12,964 $ 12,964 $ — $ — Commercial paper 270 — 270 — Short-term investments: Treasury bills 2,432 2,432 — — Certificates of deposit 90 — 90 — Time deposits 675 — 675 — Fuel derivatives: Option contracts (b) 1,294 — — 1,294 Interest rate derivatives (see Note 4) 11 — 11 — Equity Securities 225 225 — — Total assets $ 17,961 $ 15,621 $ 1,046 $ 1,294 Liabilities Fuel derivatives: Option contracts (b) $ (167) $ — $ — $ (167) (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 measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description December 31, 2021 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents: Cash equivalents (a) $ 12,340 $ 12,340 $ — $ — Commercial paper 90 — 90 — Time deposits 50 — 50 — Short-term investments: Treasury bills 2,399 2,399 — — Time deposits 625 — 625 — Fuel derivatives: Option contracts (b) 696 — — 696 Equity Securities 288 288 — — Total assets $ 16,488 $ 15,027 $ 765 $ 696 Liabilities Interest rate derivatives (see Note 4) $ (4) $ — $ (4) $ — (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. The Company did not have any material assets or liabilities measured at fair value on a nonrecurring basis during the six months ended June 30, 2022, or the year ended December 31, 2021. The following tables present the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2022: Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at March 31, 2022 $ 1,273 Total gains for the period Included in earnings 20 (a) Included in other comprehensive income 182 Sales (16) (b) Settlements (332) Balance at June 30, 2022 $ 1,127 The amount of total gains for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2022 $ 20 (a) The amount of total gains for the period included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2022 $ 115 (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income. (b) The sale 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, 2021 $ 696 Total gains (losses) for the period Included in earnings (15) (a) Included in other comprehensive income 1,033 Sales (26) (b) Settlements (561) Balance at June 30, 2022 $ 1,127 The amount of total losses for the period $ (15) (a) The amount of total gains for the period $ 672 (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income. (b) The sale 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. 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 June 30, 2022: 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 Third quarter 2022 28-68% 48 % Fourth quarter 2022 44-65% 53 % 2023 38-58% 50 % 2024 34-48% 39 % (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 June 30, 2022, 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. All privately held debt agreements are categorized as Level 3. The Company has determined the estimated fair value of this debt to be Level 3, as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes indicative pricing from counterparties and a discounted cash flow method to estimate the fair value of the Level 3 items. (in millions) Carrying value Estimated fair value Fair value level hierarchy 2.75% Notes due November 2022 $ 300 $ 300 Level 2 Pass Through Certificates due August 2022 - 6.19% 33 33 Level 2 4.75% Notes due 2023 1,247 1,259 Level 2 1.25% Convertible Notes due 2025 1,795 2,121 Level 2 5.25% Notes due 2025 1,549 1,582 Level 2 3.00% Notes due 2026 300 281 Level 2 3.45% Notes due 2027 300 282 Level 2 5.125% Notes due 2027 1,944 1,963 Level 2 7.375% Debentures due 2027 115 126 Level 2 2.625% Notes due 2030 500 423 Level 2 1.000% PSP1 due 2030 976 900 Level 3 1.000% PSP2 due 2031 566 510 Level 3 1.000% PSP3 due 2031 526 470 Level 3 |
Supplemental Financial Informat
Supplemental Financial Information | 6 Months Ended |
Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUPPLEMENTAL FINANCIAL INFORMATION | SUPPLEMENTAL FINANCIAL INFORMATION (in millions) June 30, 2022 December 31, 2021 Trade receivables $ 59 $ 58 Credit card receivables 166 83 Business partners and other suppliers 541 432 Taxes receivable (a) 219 699 Fuel hedging and receivables 125 8 Other 279 77 Accounts and other receivables $ 1,389 $ 1,357 (in millions) June 30, 2022 December 31, 2021 Derivative contracts $ 221 $ 192 Intangible assets, net 295 295 Other 331 395 Other assets $ 847 $ 882 (in millions) June 30, 2022 December 31, 2021 Accounts payable trade $ 395 $ 156 Salaries payable 340 287 Taxes payable excluding income taxes 318 200 Aircraft maintenance payable 69 42 Fuel payable 260 170 Other payable 526 427 Accounts payable $ 1,908 $ 1,282 (in millions) June 30, 2022 December 31, 2021 Voluntary Separation Program $ 79 $ 92 Profitsharing and savings plans 154 262 Vacation pay 463 451 Health 231 152 Workers compensation 155 141 Property and income taxes 58 65 Interest 96 46 Deferred supplier payments (b) — 80 Other 351 335 Accrued liabilities $ 1,587 $ 1,624 (in millions) June 30, 2022 December 31, 2021 Voluntary Separation Program $ 190 $ 233 Postretirement obligation 334 330 Other deferred compensation 302 369 Other 270 292 Other noncurrent liabilities $ 1,096 $ 1,224 (a) This amount includes approximately $472 million as of December 31, 2021 associated with a significant cash tax refund expected as a result of the CARES Act allowing entities to carry back 2020 losses to prior periods of up to five years, and claim refunds of federal taxes paid. The refund was received by the Company during second quarter 2022. These amounts as of June 30, 2022 and December 31, 2021 also include excise taxes remitted to taxing authorities for which the subsequent flights were canceled by Customers, resulting in amounts due back to the Company. (b) Represents amounts owed at December 31, 2021 for aircraft deliveries received that will be relieved via future payments to supplier. 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. |
Commitment and Contingencies
Commitment and Contingencies | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES 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 (the "Series 2010" bonds and the "Series 2012" bonds). Given the Company’s guarantee associated with the bonds issued to fund LFMP, the remaining debt service amount was considered a minimum lease payment under the adoption of ASC Topic 842, Leases, and therefore was recorded as a lease liability with a corresponding right-of-use asset within the Company’s unaudited Condensed Consolidated Balance Sheet. All of the outstanding Series 2010 bonds, in the principal amount of $310 million, were redeemed by LFAMC on September 28, 2021 (Redemption Date). As the Series 2010 bonds have been fully repaid following the Redemption Date, the Company's guarantee associated with the Series 2010 bonds no longer exists. As of June 30, 2022, $79 million of principal remained outstanding associated with the Series 2012 bonds. The net present value of the future principal and interest payments associated with the Series 2012 bonds was $88 million as of June 30, 2022, 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. Contractual Obligations and Contingent Liabilities and Commitments During second quarter 2022, the Company entered into supplemental agreements with The Boeing Company ("Boeing") to replace the majority of its 2022 Boeing 737-7 ("-7") firm orders with Boeing 737-8 ("-8") firm orders, among other adjustments to its near-term contractual order book. The Company also exercised 20 -8 options for delivery in 2022, exercised four -7 options for delivery in 2023, exercised three -8 options for delivery in 2023, and accelerated and exercised 17 2023 -8 options for delivery in 2022. While the Company is contractually scheduled to receive 114 MAX deliveries, including options, this year, a portion of its deliveries are expected to shift into 2023 due to Boeing's supply chain challenges and the current status of the -7 certification. Based on recent discussions with Boeing regarding the pace of expected deliveries for the remainder of this year, the Company is currently estimating it will receive a total of 66 -8 aircraft deliveries and no -7 deliveries in 2022. The Company retains significant flexibility to manage its fleet size, including opportunities to accelerate fleet modernization efforts if growth opportunities do not materialize. Given the current supply chain and aircraft delivery delays, the Company will continue working with Boeing on the Company's contractual order book with focus on 2022 and 2023. Additional information regarding the Company's contractual order book is included in the following table as of June 30, 2022: The Boeing Company -7 Firm Orders -8 Firm Orders -7 or -8 Options Total 2022 14 95 5 114 (c) 2023 86 — 4 90 2024 30 — 56 86 2025 30 — 56 86 2026 15 15 40 70 2027 15 15 6 36 2028 15 15 — 30 2029 20 30 — 50 2030 15 45 — 60 2031 — 10 — 10 240 (a) 225 (b) 167 632 (a) The delivery schedule for the -7 is dependent on the FAA issuing required certifications and approvals to Boeing and the Company. The FAA will ultimately determine the timing of the -7 certification and entry into service, and the Company therefore offers no assurance that current estimations and timelines are correct. (b) The Company has flexibility to designate firm orders or options as -7s or -8s, upon written advance notification as stated in the contract. (c) Includes 12 -8 deliveries received through June 30, 2022, 23 expected -8 deliveries in third quarter 2022, and 31 expected -8 deliveries in fourth quarter 2022, for a total of 66 -8 deliveries in 2022. While the Company is contractually scheduled to receive 114 MAX deliveries, including options, this year, a portion of its deliveries are expected to shift into 2023 due to Boeing's supply chain challenges and the current status of the -7 certification. Furthermore, given the current ongoing status of the -7 certification and pace of expected deliveries for the remainder of this year, it is the Company's assumption that it will receive no -7 aircraft deliveries in 2022, and has the ability to convert -7s to -8s as noted in footnote (b). Based on the Company's existing agreement with Boeing, capital commitments associated with its firm orders as of June 30, 2022, were: $2.4 billion remaining in 2022, $2.2 billion in 2023, $910 million in 2024, $845 million in 2025, $984 million in 2026, $1.0 billion in 2027, and $6.3 billion thereafter. In addition, subsequent to June 30, 2022, and through August 1, 2022, due to the current status of the -7 certification, the Company converted 48 2023 -7 firm orders to -8 firm orders in 2023. These conversions did not result in a significant change to the Company's commitments as of June 30, 2022. Contingencies The Company is from time to time subject to various legal proceedings and claims arising in the ordinary course of business and records a liability for such claims when it is probable that a loss will be incurred and the amount is reasonably estimable. In recent years, the airline industry has experienced an increase in litigation asserting the application of state and local employment laws, particularly in California. On June 30, 2022, the U.S. Supreme Court denied review of the Ninth Circuit’s ruling in Bernstein v. Virgin America, Inc. , which held that federal law did not preempt the California state meal-and-rest-break regulations for flight attendants at issue. The Company is a defendant in multiple proceedings asserting wage and hour claims with respect to certain employees who work in, or are based in, California. The Bernstein decision may adversely affect the Company’s defenses in some or all of those proceedings and may give rise to additional litigation in these or other areas previously believed to be preempted by federal law. The Company is currently not able to estimate a range of possible loss. |
Financing Activities
Financing Activities | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
FINANCING ACTIVITIES | FINANCING ACTIVITIES On May 1, 2020, the Company completed the public offering of $2.3 billion aggregate principal amount of Convertible Notes. The Convertible Notes bear interest at a rate of 1.25% and will mature on May 1, 2025. Interest on the notes is payable semi-annually in arrears on May 1 and November 1, beginning November 1, 2020. Holders may convert their Convertible Notes at their option at any time prior to the close of business on the business day immediately preceding February 1, 2025, in the event certain conditions are met, as stated in the offering documents. As of June 30, 2022, the conditions were not met that would allow holders to exercise their conversion option. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election. The Company intends to settle conversions by paying cash up to the principal amount of the Convertible Notes, with any excess conversion value settled in cash or shares of common stock. The initial conversion rate is 25.9909 shares of common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $38.48 per share of common stock). Upon issuance, the Company bifurcated the Convertible Notes for accounting purposes between a liability component and an equity component utilizing applicable guidance. The liability component was determined by estimating the fair value of a hypothetical issuance of an identical offering excluding the conversion feature of the Convertible Notes. The initial carrying amount of the equity component was calculated as the difference between the liability component and the face amount of the Convertible Notes. The Company adopted ASU 2020-06, as of January 1, 2022, utilizing the modified retrospective method approach. See Note 3 for further information. Upon adoption, the Company reclassified the remaining equity component, of $300 million, from Additional paid-in capital to Long-term debt associated with its Convertible Notes, and no longer records amortization of the debt discount to Interest expense. The following table details the equity and liability component recognized related to the Convertible Notes, prior to and following the adoption of ASU 2020-06: (in millions) June 30, 2022 December 31, 2021 Equity component: Carrying amount of Convertible Notes $ — $ 311 Carrying amount of issuance costs — (11) Net carrying amount $ — $ 300 Liability component: Principal amount $ 1,795 $ 2,097 Unamortized debt discount — (255) Net carrying amount $ 1,795 $ 1,842 The Company recognized interest expense associated with the Convertible Notes as follows: Three months ended June 30, Six months ended June 30, (in millions) 2022 2021 2022 2021 Non-cash amortization of the debt discount $ — $ 19 $ — $ 37 Non-cash amortization of debt issuance costs 3 2 7 4 Contractual coupon interest 6 7 12 15 Total interest expense $ 9 $ 28 $ 19 $ 56 The unamortized debt issuance costs are being recognized as non-cash interest expense based on the 5-year term of the notes, through May 1, 2025, less amounts that were or will be required to be accelerated immediately upon conversion or repurchases. The Company had no changes to conversion terms, contingencies, or exercise prices during the six months ended June 30, 2022. The effective interest rate associated with the Convertible Notes was approximately 1.9 percent for the three and six months ended June 30, 2022. During the three and six months ended June 30, 2022, the Company paid $231 million and $555 million, respectively, in debt and finance lease obligations, which included scheduled debt and lease payments, extinguishment of Convertible Notes, and the early prepayment of debt. The following tables present the impact of the partial extinguishment of the Company's Convertible Notes and early prepayment of debt within the unaudited Condensed Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2022: Three months ended June 30, 2022 (in millions) Cash payment Principal repayment Loss on extinguishment (a) Non-cash amortization of debt discount and (issuance) costs 1.25% Convertible Notes due 2025 $ 178 $ 138 $ 42 $ (2) 5.125% Notes due 2027 $ 27 $ 26 $ 1 $ — 4.75% Notes due 2023 3 3 — — 5.25% Notes due 2025 1 1 — — Total $ 209 $ 168 $ 43 $ (2) Six months ended June 30, 2022 (in millions) Cash payment Principal repayment Loss on extinguishment (a) Non-cash amortization of debt discount and (issuance) costs 1.25% Convertible Notes due 2025 $ 409 $ 302 $ 112 $ (5) 5.125% Notes due 2027 $ 61 $ 56 $ 4 $ 1 4.75% Notes due 2023 3 3 — — 5.25% Notes due 2025 1 1 — — Total $ 474 $ 362 $ 116 $ (4) (a) Reflected in Other (gains) losses, net. The Company has access to $1.0 billion under its amended and restated revolving credit facility (the "Amended A&R Credit Agreement"). In July 2022, this facility was amended to extend the expiration date to August 2025, and to change the benchmark rate from the London Interbank Offered Rate to the Secured Overnight Financing Rate ("SOFR"). There were no amounts outstanding under the Amended A&R Credit Agreement as of June 30, 2022. |
New Accounting Pronouncements (
New Accounting Pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Basis of Presentation | 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 June 30, 2022 and 2021 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. However, beginning in early 2020, as a result of the COVID-19 pandemic, the Company's results have not always been in line with such historical trends. See Note 2 for further information. Air travel is also significantly impacted by general economic conditions, the amount of disposable income available to consumers and changes in consumer behavior, unemployment levels, corporate travel budgets, global pandemics such as COVID-19, extreme or severe weather and natural disasters, fears of terrorism or war, governmental actions, 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 and six months ended June 30, 2022, are not necessarily indicative of the results that may be expected for future quarters or for the year ended December 31, 2022. 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, 2021. |
New Accounting Pronouncements | On May 3, 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, and the standard was adopted and applied prospectively by the Company as of January 1, 2022, but the adoption and application did not have a significant impact on the Company's financial statements and disclosures, including interim periods. On January 7, 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848). This new standard provides optional temporary guidance for entities transitioning away from London Interbank Offered Rate ("LIBOR") to new reference interest rates so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions with Topic 848. These amendments do not apply to any contract modifications made after December 31, 2022, any new hedging relationships entered into after December 31, 2022, or to existing hedging relationships evaluated for effectiveness existing as of December 31, 2022, that apply certain optional practical expedients. This standard was effective immediately and may be applied (i) on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or (ii) on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued. The Company had no material LIBOR-related contract modifications during the six months ended June 30, 2022. On August 5, 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This new standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock, made targeted improvements to the disclosures for convertible instruments and earnings-per-share ("EPS") guidance, and amended the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. This standard is effective for fiscal years beginning after December 15, 2021, and the Company adopted this standard as of January 1, 2022, utilizing the modified retrospective method. Under the modified approach, the Company applied guidance to all financial instruments that were outstanding as of the beginning of the year of adoption with the cumulative effect recognized as an adjustment to the opening balance of retained earnings. Upon adoption, the Company reclassified the remaining equity component of $300 million, from Additional paid-in capital to Long-term debt associated with its 1.25% Convertible Senior Notes due 2025 (the “Convertible Notes”), and no longer records amortization of the debt discount to Interest expense. The cumulative effect from prior period amortization of the debt discount that has been recorded to Interest expense, offset by reductions to Capital in excess of par value related to the requisition of the equity component through previous repurchases, resulted in a $55 million adjustment to the opening balance of Retained earnings upon adoption. The new standard requires the use of the if-converted method to calculate diluted EPS, which is generally more dilutive, rather than the treasury stock method as was the Company's policy pre-adoption. For the three and six months ended June 30, 2022, the impacts of adopting this new standard were decreases to the Company's Net income in the amounts of $21 million, or $0.20 per diluted share, and $57 million, or $0.21 per diluted share, respectively, as a result of higher losses recognized on the Company’s extinguishment transactions following the elimination of the equity component of the Convertible Notes, partially offset by the elimination of the non-cash interest expense associated with the prior debt discount amortization. See Note 7. |
Derivatives | 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. |
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 June 30, 2022, 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 time deposits), 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. Equity securities primarily consist of investments with readily determinable market values 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 a similar 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 plan obligations and plan assets, which net to zero, within the Salaries, wages, and benefits line and Other (gains) losses line, respectively, of the unaudited Condensed Consolidated Statement of Comprehensive Income. |
Revenue Recognition | Recognition of revenue associated with the Company’s loyalty liability can be difficult to predict, as the number of award seats available to Members is not currently restricted and they could choose to redeem their points at any time that a seat is available. The performance obligations classified as a current liability related to the Company’s loyalty program were estimated based on expected redemptions utilizing historical redemption patterns, and forecasted flight availability and fares. The entire balance classified as Air traffic liability—noncurrent relates to loyalty points that were estimated to be redeemed in periods beyond the twelve months following the representative balance sheet date. Based on historical experience as well as current forecasted redemptions, the Company expects the majority of loyalty points to be redeemed within approximately two years of the date the points are issued. All performance obligations related to freight services sold are completed within twelve months or less; therefore, the Company has elected to not disclose the amount of the remaining transaction price and its expected timing of recognition for freight shipments. Other revenues primarily consist of marketing royalties associated with the Company’s co-brand Chase ® Visa credit card, but also include commissions and advertising associated with Southwest.com ® . All amounts classified as Other revenues are paid monthly, coinciding with the Company fulfilling its deliverables; therefore, the Company has elected to not disclose the amount of the remaining transaction price and its expected timing of recognition for such services provided. |
Worldwide Pandemic (Tables)
Worldwide Pandemic (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Unusual or Infrequent Items, or Both [Abstract] | |
Schedule of Payroll Support Program | The following table provides the details from the PSP1, PSP2 and PSP3 Payroll Support programs: (dollars in millions, shares in thousands) Grant Promissory Note Warrants Total Payroll Support Proceeds Warrants (shares) Warrant strike price Promissory Note Maturity Date PSP1 $ 2,337 $ 976 $ 40 $ 3,354 2,676 $36.47/share April 19, 2030 PSP2 $ 1,393 $ 566 $ 27 $ 1,987 1,223 $46.28/share January 15, 2031 PSP3 $ 1,310 $ 526 $ 18 $ 1,852 899 $58.51/share April 23, 2031 Total $ 5,040 $ 2,068 $ 85 $ 7,193 4,798 |
Financial Derivative Instrume_2
Financial Derivative Instruments (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
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 June 30, 2022 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) June 30, 2022 Remainder of 2022 610 WTI crude oil, Brent crude oil, and Heating oil 2023 769 WTI crude oil and Brent crude oil 2024 358 WTI crude oil (a) Due to the types of derivatives utilized by the Company and different price levels of those contracts, these volumes represent the maximum economic hedge in place and may vary significantly as market prices and the Company's flight schedule fluctuate. |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table presents the location of all assets and liabilities associated with the Company’s derivative instruments within the unaudited Condensed Consolidated Balance Sheet: Asset derivatives Liability derivatives Balance Sheet Fair value at Fair value at Fair value at Fair value at (in millions) location 6/30/2022 12/31/2021 6/30/2022 12/31/2021 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 797 $ 409 $ — $ — Fuel derivative contracts (gross) Other assets 372 287 — — Interest rate derivative contracts Other assets 11 — — — Interest rate derivative contracts Other noncurrent liabilities — — — 4 Total derivatives designated as hedges $ 1,180 $ 696 $ — $ 4 Derivatives not designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 125 $ — $ 167 $ — Total derivatives $ 1,305 $ 696 $ 167 $ 4 (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 4. |
Offsetting Assets | 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 June 30, December 31, (in millions) location 2022 2021 Cash collateral deposits held from counterparties for fuel contracts - current Offset against Prepaid expenses and other current assets $ 297 $ 80 Cash collateral deposits held from counterparties for fuel contracts - noncurrent Offset against Other assets 162 95 Receivable from third parties for fuel contracts Accounts and other receivables 125 8 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) June 30, 2022 December 31, 2021 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 $ 922 $ (464) (b) $ 458 $ 409 $ (80) $ 329 Fuel derivative contracts Other assets $ 372 $ (162) $ 210 (a) $ 287 $ (95) $ 192 (a) Interest rate derivative contracts Other assets $ 11 $ — $ 11 (a) $ — $ — $ — (a) (a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 9. (b) Includes the current portion of cash collateral deposits held from counterparties and derivative liability associated with fuel contracts. |
Offsetting Liabilities | Offsetting of derivative liabilities (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) June 30, 2022 December 31, 2021 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 $ 464 $ (464) (b) $ — $ 80 $ (80) $ — Fuel derivative contracts Other assets $ 162 $ (162) $ — (a) $ 95 $ (95) $ — (a) Interest rate derivative contracts Other noncurrent liabilities $ — $ — $ — $ 4 $ — $ 4 (a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 9. (b) Includes the current portion of cash collateral deposits held from counterparties and derivative liability associated with fuel contracts. |
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) | The following tables present the impact of derivative instruments and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2022 and 2021: Location and amount recognized in income on cash flow and fair value hedging relationships Three months ended June 30, 2022 Three months ended June 30, 2021 (in millions) Fuel and oil Other operating expenses Fuel and oil Other operating expenses Total $ (306) $ 2 $ 12 $ 1 (Gain) loss on cash flow hedging relationships: Commodity contracts: Amount of (gain) loss reclassified from AOCI into income (306) — 12 — Interest contracts: Amount of loss reclassified from AOCI into income — 2 — 1 Location and amount recognized in income on cash flow and fair value hedging relationships Six months ended June 30, 2022 Six months ended June 30, 2021 (in millions) Fuel and oil Other (gains)/losses, net Other operating expenses Fuel and oil Other (gains)/losses, net Other operating expenses Total $ (508) $ — $ 3 $ 28 $ 6 $ 2 (Gain) loss on cash flow hedging relationships Commodity contracts: Amount of (gain) loss reclassified from AOCI into income (508) — — 28 6 — Interest contracts: Amount of loss reclassified from AOCI into income — — 3 — — 2 Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Three months ended June 30, (in millions) 2022 2021 Fuel derivative contracts $ (140) $ (192) Interest rate derivatives (7) 6 Total $ (147) $ (186) Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Six months ended June 30, (in millions) 2022 2021 Fuel derivative contracts $ (792) $ (275) Interest rate derivatives (12) (4) Total $ (804) $ (279) |
Derivative Instruments, Gain (Loss) | Derivatives not designated as hedges (Gain) loss recognized in income on derivatives Three months ended Location of gain recognized in income on derivatives June 30, (in millions) 2022 2021 Fuel derivative contracts $ (20) $ (12) Other (gains) losses, net Derivatives not designated as hedges (Gain) loss recognized in income on derivatives Six months ended Location of (gain) loss recognized in income on derivatives June 30, (in millions) 2022 2021 Fuel derivative contracts $ 15 $ (16) Other (gains) losses, net |
Premiums Paid for Fuel Derivative Contracts | The following tables present the impact of premiums paid for fuel derivative contracts and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income during the period the contract settles: Premium expense recognized in income on derivatives Three months ended Location of premium expense recognized in income on derivatives June 30, (in millions) 2022 2021 Fuel derivative contracts designated as hedges $ 26 $ 14 Fuel and oil Fuel derivative contracts not designated as hedges — 10 Other (gains) losses, net Premium expense recognized in income on derivatives Six months ended Location of premium expense recognized in income on derivatives June 30, (in millions) 2022 2021 Fuel derivative contracts designated as hedges $ 53 $ 29 Fuel and oil Fuel derivative contracts not designated as hedges — 21 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 June 30, 2022, at which such postings are triggered: Counterparty (CP) (in millions) A B C D E F G Other (a) Total Fair value of fuel derivatives $ 289 $ 148 $ 264 $ 95 $ 131 $ 85 $ 92 $ 23 $ 1,127 Cash collateral held from CP 356 7 37 — 40 19 — — 459 Option to substitute LC for cash N/A N/A (b) (b) (b) N/A (b) If credit rating is investment Cash is provided to CP >(100) >(50) >(75) >(125) >(40) >(65) >(100) Cash is received from CP >0(c) >150(c) >250(c) >125(c) >100(c) >70(c) >100(c) If credit rating is non-investment Cash is received from CP (d) (d) (d) (d) (d) (d) (d) (a) Individual counterparties with fair value of fuel derivatives < $12 million. (b) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (c) Thresholds may vary based on changes in credit ratings within investment grade. (d) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. |
Comprehensive Income (Tables)
Comprehensive Income (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Components of Comprehensive Income (Loss) | The differences between Net income and Comprehensive income for the three and six months ended June 30, 2022 and 2021 were as follows: Three months ended June 30, (in millions) 2022 2021 NET INCOME $ 760 $ 348 Unrealized gain (loss) on fuel derivative instruments, net of deferred taxes of ($29) and $61 (95) 201 Unrealized gain (loss) on interest rate derivative instruments, net of deferred taxes of $3 and ($1) 9 (5) Total other comprehensive income (loss) $ (86) $ 196 COMPREHENSIVE INCOME $ 674 $ 544 Six months ended June 30, (in millions) 2022 2021 NET INCOME $ 482 $ 463 Unrealized gain on fuel derivative instruments, net of deferred taxes of $122 and $92 403 301 Unrealized gain on interest rate derivative instruments, net of deferred taxes of $5 and $1 14 6 Other, net of deferred taxes of $— and ($13) — (47) Total other comprehensive income $ 417 $ 260 COMPREHENSIVE INCOME $ 899 $ 723 |
Rollforward of the Amounts Included in AOCI, Net of Taxes | A rollforward of the amounts included in AOCI, net of taxes, is shown below for the three and six months ended June 30, 2022: (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Deferred tax Accumulated other comprehensive income Balance at March 31, 2022 $ 1,141 $ (50) $ 66 $ (266) $ 891 Changes in fair value 182 10 — (45) 147 Reclassification to earnings (306) 2 — (a) 71 (233) Balance at June 30, 2022 $ 1,017 $ (38) $ 66 $ (240) $ 805 (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Deferred tax Accumulated other comprehensive income Balance at December 31, 2021 $ 492 $ (57) $ 66 $ (113) $ 388 Changes in fair value 1,033 16 — (245) 804 Reclassification to earnings (508) 3 — (a) 118 (387) Balance at June 30, 2022 $ 1,017 $ (38) $ 66 $ (240) $ 805 |
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 and six months ended June 30, 2022: Three months ended June 30, 2022 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income AOCI components Unrealized gain on fuel derivative instruments $ (306) Fuel and oil expense (71) Less: Tax expense $ (235) Net of tax Unrealized loss on interest rate derivative instruments $ 2 Other operating expenses — Less: Tax expense $ 2 Net of tax Total reclassifications for the period $ (233) Net of tax Six months ended June 30, 2022 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income AOCI components Unrealized gain on fuel derivative instruments $ (508) Fuel and oil expense (119) Less: Tax expense $ (389) Net of tax Unrealized loss on interest rate derivative instruments $ 3 Other operating expenses 1 Less: Tax expense $ 2 Net of tax Total reclassifications for the period $ (387) Net of tax |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Passenger Revenue | The following table provides the components of Passenger revenue recognized for the three and six months ended June 30, 2022 and 2021: Three months ended June 30, Six months ended June 30, (in millions) 2022 2021 2022 2021 Passenger non-loyalty $ 5,118 $ 2,875 $ 8,482 $ 4,230 Passenger loyalty - air transportation 821 549 1,445 826 Passenger ancillary sold separately 180 145 327 226 Total passenger revenues $ 6,119 $ 3,569 $ 10,254 $ 5,282 |
Rollforward of Air Traffic Liability | As of June 30, 2022, and December 31, 2021, the components of Air traffic liability, including contract liabilities based on tickets sold and unused flight credits available to the Customer, both of which are net of recorded breakage, and loyalty points available for redemption, within the unaudited Condensed Consolidated Balance Sheet were as follows: Balance as of (in millions) June 30, 2022 December 31, 2021 Air traffic liability - passenger travel and ancillary passenger services $ 3,634 $ 2,936 Air traffic liability - loyalty program 4,884 4,789 Total Air traffic liability $ 8,518 $ 7,725 Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 Air traffic liability - loyalty program - beginning balance $ 4,884 $ 4,623 $ 4,789 $ 4,447 Amounts deferred associated with points awarded 842 656 1,579 1,121 Revenue recognized from points redeemed - Passenger (821) (549) (1,445) (826) Revenue recognized from points redeemed - Other (21) (11) (39) (23) Air traffic liability - loyalty program - ending balance $ 4,884 $ 4,719 $ 4,884 $ 4,719 Air traffic liability Balance at December 31, 2021 $ 7,725 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 11,086 Revenue from amounts included in contract liability opening balances (3,029) Revenue from current period sales (7,264) Balance at June 30, 2022 $ 8,518 Air traffic liability Balance at December 31, 2020 $ 7,133 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 6,851 Revenue from amounts included in contract liability opening balances (1,600) Revenue from current period sales (3,705) Balance at June 30, 2021 $ 8,679 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings per Share Basic and Diluted | The following table sets forth the computation of basic and diluted net income per share (in millions, except per share amounts). For the three and six months ended June 30, 2022, an immaterial number of shares related to the Company's restricted stock units and stock warrants were excluded from the denominator because inclusion of such shares would be antidilutive. For the three and six months ended June 30, 2021, an immaterial number of shares related to the Company's restricted stock units were excluded from the denominator because inclusion of such shares would be antidilutive. Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 NUMERATOR: Net income $ 760 $ 348 $ 482 $ 463 Add: Interest expense 4 (a) — 8 (a) — Net income attributable to common stockholders 764 348 490 463 DENOMINATOR: Weighted-average shares outstanding, basic 593 591 593 591 Dilutive effects of Convertible Notes 41 (a) 22 (b) 46 (a) 19 (b) Dilutive effect of stock warrants — 1 — 1 Dilutive effect of restricted stock units 1 1 1 1 Adjusted weighted-average shares outstanding, diluted 635 615 640 612 NET INCOME PER SHARE: Basic $ 1.29 $ 0.59 $ 0.83 $ 0.78 Diluted $ 1.20 $ 0.57 $ 0.77 $ 0.76 (a) As of January 1, 2022, the Company adopted ASU 2020-06 using the modified retrospective method. The standard requires the Company to apply the if-converted method for purposes of Net income per share. Using this method, the numerator is affected by adding back interest expense and the denominator is affected by including the effect of potential share settlement, if the effect is more dilutive, regardless of the type of settlement. For the three and six months ended June 30, 2022, all shares issuable on conversion were included in the denominator. See Notes 3 and 11 for further information regarding the new standard and the Convertible Notes. (b) Prior to the adoption of ASU 2020-06, the Convertible Notes were accounted for using the treasury stock method for the purposes of Net income per share. For the three and six months ended June 30, 2021, the average market price of the Company's common stock exceeded the conversion price per share of $38.48 and as such, the common shares underlying the Convertible Notes were included in the diluted calculation. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
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 June 30, 2022, and December 31, 2021: Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description June 30, 2022 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents: Cash equivalents (a) $ 12,964 $ 12,964 $ — $ — Commercial paper 270 — 270 — Short-term investments: Treasury bills 2,432 2,432 — — Certificates of deposit 90 — 90 — Time deposits 675 — 675 — Fuel derivatives: Option contracts (b) 1,294 — — 1,294 Interest rate derivatives (see Note 4) 11 — 11 — Equity Securities 225 225 — — Total assets $ 17,961 $ 15,621 $ 1,046 $ 1,294 Liabilities Fuel derivatives: Option contracts (b) $ (167) $ — $ — $ (167) (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 measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description December 31, 2021 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents: Cash equivalents (a) $ 12,340 $ 12,340 $ — $ — Commercial paper 90 — 90 — Time deposits 50 — 50 — Short-term investments: Treasury bills 2,399 2,399 — — Time deposits 625 — 625 — Fuel derivatives: Option contracts (b) 696 — — 696 Equity Securities 288 288 — — Total assets $ 16,488 $ 15,027 $ 765 $ 696 Liabilities Interest rate derivatives (see Note 4) $ (4) $ — $ (4) $ — (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, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The following tables present the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2022: Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at March 31, 2022 $ 1,273 Total gains for the period Included in earnings 20 (a) Included in other comprehensive income 182 Sales (16) (b) Settlements (332) Balance at June 30, 2022 $ 1,127 The amount of total gains for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2022 $ 20 (a) The amount of total gains for the period included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2022 $ 115 (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income. (b) The sale 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, 2021 $ 696 Total gains (losses) for the period Included in earnings (15) (a) Included in other comprehensive income 1,033 Sales (26) (b) Settlements (561) Balance at June 30, 2022 $ 1,127 The amount of total losses for the period $ (15) (a) The amount of total gains for the period $ 672 (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income. |
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 June 30, 2022: 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 Third quarter 2022 28-68% 48 % Fourth quarter 2022 44-65% 53 % 2023 38-58% 50 % 2024 34-48% 39 % (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 June 30, 2022, 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. All privately held debt agreements are categorized as Level 3. The Company has determined the estimated fair value of this debt to be Level 3, as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes indicative pricing from counterparties and a discounted cash flow method to estimate the fair value of the Level 3 items. (in millions) Carrying value Estimated fair value Fair value level hierarchy 2.75% Notes due November 2022 $ 300 $ 300 Level 2 Pass Through Certificates due August 2022 - 6.19% 33 33 Level 2 4.75% Notes due 2023 1,247 1,259 Level 2 1.25% Convertible Notes due 2025 1,795 2,121 Level 2 5.25% Notes due 2025 1,549 1,582 Level 2 3.00% Notes due 2026 300 281 Level 2 3.45% Notes due 2027 300 282 Level 2 5.125% Notes due 2027 1,944 1,963 Level 2 7.375% Debentures due 2027 115 126 Level 2 2.625% Notes due 2030 500 423 Level 2 1.000% PSP1 due 2030 976 900 Level 3 1.000% PSP2 due 2031 566 510 Level 3 1.000% PSP3 due 2031 526 470 Level 3 |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Accounts and Other Receivables | (in millions) June 30, 2022 December 31, 2021 Trade receivables $ 59 $ 58 Credit card receivables 166 83 Business partners and other suppliers 541 432 Taxes receivable (a) 219 699 Fuel hedging and receivables 125 8 Other 279 77 Accounts and other receivables $ 1,389 $ 1,357 |
Other Assets | (in millions) June 30, 2022 December 31, 2021 Derivative contracts $ 221 $ 192 Intangible assets, net 295 295 Other 331 395 Other assets $ 847 $ 882 |
Schedule of Accounts Payable | (in millions) June 30, 2022 December 31, 2021 Accounts payable trade $ 395 $ 156 Salaries payable 340 287 Taxes payable excluding income taxes 318 200 Aircraft maintenance payable 69 42 Fuel payable 260 170 Other payable 526 427 Accounts payable $ 1,908 $ 1,282 |
Accrued Liabilities | (in millions) June 30, 2022 December 31, 2021 Voluntary Separation Program $ 79 $ 92 Profitsharing and savings plans 154 262 Vacation pay 463 451 Health 231 152 Workers compensation 155 141 Property and income taxes 58 65 Interest 96 46 Deferred supplier payments (b) — 80 Other 351 335 Accrued liabilities $ 1,587 $ 1,624 |
Other Noncurrent Liabilities | (in millions) June 30, 2022 December 31, 2021 Voluntary Separation Program $ 190 $ 233 Postretirement obligation 334 330 Other deferred compensation 302 369 Other 270 292 Other noncurrent liabilities $ 1,096 $ 1,224 (a) This amount includes approximately $472 million as of December 31, 2021 associated with a significant cash tax refund expected as a result of the CARES Act allowing entities to carry back 2020 losses to prior periods of up to five years, and claim refunds of federal taxes paid. The refund was received by the Company during second quarter 2022. These amounts as of June 30, 2022 and December 31, 2021 also include excise taxes remitted to taxing authorities for which the subsequent flights were canceled by Customers, resulting in amounts due back to the Company. (b) Represents amounts owed at December 31, 2021 for aircraft deliveries received that will be relieved via future payments to supplier. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Other Commitments | Additional information regarding the Company's contractual order book is included in the following table as of June 30, 2022: The Boeing Company -7 Firm Orders -8 Firm Orders -7 or -8 Options Total 2022 14 95 5 114 (c) 2023 86 — 4 90 2024 30 — 56 86 2025 30 — 56 86 2026 15 15 40 70 2027 15 15 6 36 2028 15 15 — 30 2029 20 30 — 50 2030 15 45 — 60 2031 — 10 — 10 240 (a) 225 (b) 167 632 (a) The delivery schedule for the -7 is dependent on the FAA issuing required certifications and approvals to Boeing and the Company. The FAA will ultimately determine the timing of the -7 certification and entry into service, and the Company therefore offers no assurance that current estimations and timelines are correct. (b) The Company has flexibility to designate firm orders or options as -7s or -8s, upon written advance notification as stated in the contract. (c) Includes 12 -8 deliveries received through June 30, 2022, 23 expected -8 deliveries in third quarter 2022, and 31 expected -8 deliveries in fourth quarter 2022, for a total of 66 -8 deliveries in 2022. While the Company is contractually scheduled to receive 114 MAX deliveries, including options, this year, a portion of its deliveries are expected to shift into 2023 due to Boeing's supply chain challenges and the current status of the -7 certification. Furthermore, given the current ongoing status of the -7 certification and pace of expected deliveries for the remainder of this year, it is the Company's assumption that it will receive no -7 aircraft deliveries in 2022, and has the ability to convert -7s to -8s as noted in footnote (b). |
Financing Activities (Tables)
Financing Activities (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Debt | The following table details the equity and liability component recognized related to the Convertible Notes, prior to and following the adoption of ASU 2020-06: (in millions) June 30, 2022 December 31, 2021 Equity component: Carrying amount of Convertible Notes $ — $ 311 Carrying amount of issuance costs — (11) Net carrying amount $ — $ 300 Liability component: Principal amount $ 1,795 $ 2,097 Unamortized debt discount — (255) Net carrying amount $ 1,795 $ 1,842 |
Interest Income and Interest Expense Disclosure | The Company recognized interest expense associated with the Convertible Notes as follows: Three months ended June 30, Six months ended June 30, (in millions) 2022 2021 2022 2021 Non-cash amortization of the debt discount $ — $ 19 $ — $ 37 Non-cash amortization of debt issuance costs 3 2 7 4 Contractual coupon interest 6 7 12 15 Total interest expense $ 9 $ 28 $ 19 $ 56 |
Schedule of Extinguishment of Debt | The following tables present the impact of the partial extinguishment of the Company's Convertible Notes and early prepayment of debt within the unaudited Condensed Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2022: Three months ended June 30, 2022 (in millions) Cash payment Principal repayment Loss on extinguishment (a) Non-cash amortization of debt discount and (issuance) costs 1.25% Convertible Notes due 2025 $ 178 $ 138 $ 42 $ (2) 5.125% Notes due 2027 $ 27 $ 26 $ 1 $ — 4.75% Notes due 2023 3 3 — — 5.25% Notes due 2025 1 1 — — Total $ 209 $ 168 $ 43 $ (2) Six months ended June 30, 2022 (in millions) Cash payment Principal repayment Loss on extinguishment (a) Non-cash amortization of debt discount and (issuance) costs 1.25% Convertible Notes due 2025 $ 409 $ 302 $ 112 $ (5) 5.125% Notes due 2027 $ 61 $ 56 $ 4 $ 1 4.75% Notes due 2023 3 3 — — 5.25% Notes due 2025 1 1 — — Total $ 474 $ 362 $ 116 $ (4) |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Payroll support and voluntary Employee programs, net | $ 0 | $ 740 | $ 0 | $ 2,187 | ||||
Other (gains) losses, net | (68) | 14 | (212) | 61 | ||||
Decrease in AOCI | 11,120 | 9,688 | 11,120 | 9,688 | $ 10,417 | $ 10,414 | $ 9,093 | $ 8,876 |
Accumulated other comprehensive income | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Decrease in AOCI | 805 | 136 | 805 | 136 | 891 | 388 | (60) | (105) |
Retained earnings | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Decrease in AOCI | $ 16,311 | $ 15,260 | $ 16,311 | $ 15,260 | $ 15,551 | 15,774 | $ 14,912 | 14,777 |
Cumulative Effect, Period of Adoption, Adjustment | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Decrease in AOCI | (245) | 0 | ||||||
Cumulative Effect, Period of Adoption, Adjustment | Accumulated other comprehensive income | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Decrease in AOCI | (19) | |||||||
Cumulative Effect, Period of Adoption, Adjustment | Retained earnings | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Decrease in AOCI | $ 55 | $ 19 |
Worldwide Pandemic - Payroll Su
Worldwide Pandemic - Payroll Support Program (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | 14 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2022 | |
COVID - 19 | ||||
Unusual or Infrequent Item, or Both [Line Items] | ||||
Grant | $ 724 | $ 1,900 | ||
United States Department of Treasury | COVID - 19 | ||||
Unusual or Infrequent Item, or Both [Line Items] | ||||
Grant | $ 5,040 | |||
Promissory Note | 2,068 | |||
Warrants | 85 | |||
Total Payroll Support Proceeds | 7,193 | |||
Warrants (shares) | 4,798 | |||
United States Department of Treasury | PSP1 | ||||
Unusual or Infrequent Item, or Both [Line Items] | ||||
Grant | 2,337 | |||
Promissory Note | 976 | |||
Warrants | 40 | |||
Total Payroll Support Proceeds | 3,354 | |||
Warrants (shares) | 2,676 | |||
Strike price (in USD per share) | $ 36.47 | |||
United States Department of Treasury | PSP2 | ||||
Unusual or Infrequent Item, or Both [Line Items] | ||||
Grant | 1,393 | |||
Promissory Note | 566 | |||
Warrants | 27 | |||
Total Payroll Support Proceeds | 1,987 | |||
Warrants (shares) | 1,223 | |||
Strike price (in USD per share) | $ 46.28 | |||
United States Department of Treasury | PSP3 | ||||
Unusual or Infrequent Item, or Both [Line Items] | ||||
Grant | 1,310 | |||
Promissory Note | 526 | |||
Warrants | 18 | |||
Total Payroll Support Proceeds | $ 1,852 | |||
Warrants (shares) | 899 | |||
Strike price (in USD per share) | $ 58.51 |
Worldwide Pandemic - Narrative
Worldwide Pandemic - Narrative (Details) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | 14 Months Ended | ||||
Jun. 30, 2022 USD ($) employee $ / shares | Jun. 01, 2020 employee | Mar. 31, 2022 employee | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) employee $ / shares | Jun. 30, 2021 USD ($) | Dec. 31, 2020 USD ($) | Jun. 30, 2021 USD ($) | |
Unusual or Infrequent Item, or Both [Line Items] | ||||||||
Employees who elected conversion in extended emergency time off | employee | 0 | |||||||
COVID - 19 | ||||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||||
Voluntary separation program 2020 participants | employee | 4,200 | 4,200 | ||||||
Number of employees who participated in extended emergency time off during 2020 | employee | 12,000 | |||||||
Extended emergency time off accrual for employees who accepted through 2020 | $ 269 | $ 60 | $ 1,400 | |||||
Extended emergency time off reversal for employees who accepted through March 31, 2021 | $ 130 | |||||||
Grant | $ 724 | $ 1,900 | ||||||
COVID - 19 | Minimum | ||||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||||
Extended emergency time off, period | 6 months | |||||||
COVID - 19 | Maximum | ||||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||||
Extended emergency time off, period | 18 months | |||||||
COVID - 19 | Maximum | Pilots | ||||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||||
Extended emergency time off, period | 5 years | |||||||
United States Department of Treasury | COVID - 19 | ||||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||||
Grant | $ 5,040 | |||||||
United States Department of Treasury | PSP1 | ||||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||||
Strike price (in USD per share) | $ / shares | $ 36.47 | $ 36.47 | ||||||
Grant | 2,337 | |||||||
United States Department of Treasury | PSP2 | ||||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||||
Strike price (in USD per share) | $ / shares | 46.28 | $ 46.28 | ||||||
Expiration period (in years) | 5 years | |||||||
Grant | 1,393 | |||||||
United States Department of Treasury | PSP3 | ||||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||||
Strike price (in USD per share) | $ / shares | $ 58.51 | $ 58.51 | ||||||
Expiration period (in years) | 5 years | |||||||
Grant | $ 1,310 |
New Accounting Pronouncements_2
New Accounting Pronouncements (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||||||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Mar. 31, 2022 | Jan. 01, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | May 01, 2020 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Decrease in AOCI | $ 11,120 | $ 9,688 | $ 11,120 | $ 9,688 | $ 10,417 | $ 10,414 | $ 9,093 | $ 8,876 | ||
Net income | $ (760) | $ (348) | $ (482) | $ (463) | ||||||
Diluted (in USD per share) | $ 1.20 | $ 0.57 | $ 0.77 | $ 0.76 | ||||||
Convertible Debt | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Stated interest rate | 1.25% | |||||||||
Accounting Standards Update 2020-06 | Convertible Debt | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Net carrying amount | $ 300 | |||||||||
Capital in excess of par value | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Decrease in AOCI | $ 3,966 | $ 4,269 | $ 3,966 | $ 4,269 | 3,940 | 4,224 | 4,220 | 4,191 | ||
Retained earnings | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Decrease in AOCI | 16,311 | $ 15,260 | 16,311 | $ 15,260 | $ 15,551 | 15,774 | $ 14,912 | 14,777 | ||
Cumulative Effect, Period of Adoption, Adjustment | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Decrease in AOCI | (245) | 0 | ||||||||
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Net income | $ 21 | $ 57 | ||||||||
Diluted (in USD per share) | $ (0.20) | $ (0.21) | ||||||||
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | Convertible Debt | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Stated interest rate | 1.25% | |||||||||
Cumulative Effect, Period of Adoption, Adjustment | Capital in excess of par value | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Decrease in AOCI | (300) | |||||||||
Cumulative Effect, Period of Adoption, Adjustment | Capital in excess of par value | Accounting Standards Update 2020-06 | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Decrease in AOCI | $ (300) | |||||||||
Cumulative Effect, Period of Adoption, Adjustment | Capital in excess of par value | Accounting Standards Update 2020-06 | Convertible Debt | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Decrease in AOCI | (300) | |||||||||
Cumulative Effect, Period of Adoption, Adjustment | Retained earnings | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Decrease in AOCI | $ 55 | $ 19 | ||||||||
Cumulative Effect, Period of Adoption, Adjustment | Retained earnings | Accounting Standards Update 2020-06 | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Decrease in AOCI | $ 55 |
Financial Derivative Instrume_3
Financial Derivative Instruments - Fuel Hedging (Details) gal in Millions | 6 Months Ended |
Jun. 30, 2022 gal | |
Remainder of 2022 | |
Volume of Fuel Hedging | |
Fuel Hedged (in gallons) | 610 |
2023 | |
Volume of Fuel Hedging | |
Fuel Hedged (in gallons) | 769 |
2024 | |
Volume of Fuel Hedging | |
Fuel Hedged (in gallons) | 358 |
Financial Derivative Instrume_4
Financial Derivative Instruments - Fair Values by Balance Sheet Location (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | $ 1,305 | $ 696 |
Gross amounts of recognized liabilities | 167 | 4 |
Fuel derivative contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 922 | 409 |
Gross amounts of recognized liabilities | 464 | 80 |
Fuel derivative contracts | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 372 | 287 |
Gross amounts of recognized liabilities | 162 | 95 |
Cash collateral deposits held from counterparties for fuel contracts - current | 162 | 95 |
Fuel derivative contracts | Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Cash collateral deposits held from counterparties for fuel contracts - current | 297 | 80 |
Fuel derivative contracts | Accounts and other receivables | ||
Derivatives, Fair Value [Line Items] | ||
Receivable from third parties for fuel contracts | 125 | 8 |
Interest rate derivative contracts | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 11 | 0 |
Interest rate derivative contracts | Other noncurrent liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized liabilities | 0 | 4 |
Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 1,180 | 696 |
Gross amounts of recognized liabilities | 0 | 4 |
Designated as Hedging Instrument | Fuel derivative contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 797 | 409 |
Designated as Hedging Instrument | Fuel derivative contracts | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 372 | 287 |
Designated as Hedging Instrument | Interest rate derivative contracts | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 11 | |
Designated as Hedging Instrument | Interest rate derivative contracts | Other noncurrent liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized liabilities | 0 | $ 4 |
Not Designated as Hedging Instrument | Fuel derivative contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 125 | |
Gross amounts of recognized liabilities | $ 167 |
Financial Derivative Instrume_5
Financial Derivative Instruments - Narrative (Details) $ in Millions | Jun. 30, 2022 USD ($) |
Derivative [Line Items] | |
Net unrealized losses, net of taxes | $ 545 |
Interest rate derivative contracts | |
Derivative [Line Items] | |
Cash collateral held (from) by CP | $ 0 |
Financial Derivative Instrume_6
Financial Derivative Instruments - Offsetting of Derivative Assets (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Offsetting Assets [Line Items] | ||
Gross amounts of recognized assets | $ 1,305 | $ 696 |
Fuel derivative contracts | Prepaid expenses and other current assets | ||
Offsetting Assets [Line Items] | ||
Gross amounts of recognized assets | 922 | 409 |
Gross amounts offset in the Balance Sheet | (464) | (80) |
Net amounts of assets presented in the Balance Sheet | 458 | 329 |
Fuel derivative contracts | Other assets | ||
Offsetting Assets [Line Items] | ||
Gross amounts of recognized assets | 372 | 287 |
Gross amounts offset in the Balance Sheet | (162) | (95) |
Net amounts of assets presented in the Balance Sheet | 210 | 192 |
Interest rate derivative contracts | Other assets | ||
Offsetting Assets [Line Items] | ||
Gross amounts of recognized assets | 11 | 0 |
Gross amounts offset in the Balance Sheet | 0 | 0 |
Net amounts of assets presented in the Balance Sheet | $ 11 | $ 0 |
Financial Derivative Instrume_7
Financial Derivative Instruments - Offsetting Derivative Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Offsetting Liabilities [Line Items] | ||
Gross amounts of recognized liabilities | $ 167 | $ 4 |
Fuel derivative contracts | Prepaid expenses and other current assets | ||
Offsetting Liabilities [Line Items] | ||
Gross amounts of recognized liabilities | 464 | 80 |
Gross amounts offset in the Balance Sheet | (464) | (80) |
Net amounts of liabilities presented in the Balance Sheet | 0 | 0 |
Fuel derivative contracts | Other assets | ||
Offsetting Liabilities [Line Items] | ||
Gross amounts of recognized liabilities | 162 | 95 |
Gross amounts offset in the Balance Sheet | (162) | (95) |
Net amounts of liabilities presented in the Balance Sheet | 0 | 0 |
Interest rate derivative contracts | Other noncurrent liabilities | ||
Offsetting Liabilities [Line Items] | ||
Gross amounts of recognized liabilities | 0 | 4 |
Gross amounts offset in the Balance Sheet | 0 | 0 |
Net amounts of liabilities presented in the Balance Sheet | $ 0 | $ 4 |
Financial Derivative Instrume_8
Financial Derivative Instruments - Location and Amount Recognized in Income by Hedging Relationship (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Cash Flow Hedging | ||||
Derivative [Line Items] | ||||
Amount of (gain) loss reclassified from AOCI into income | $ 147 | $ 186 | $ 804 | $ 279 |
Cash Flow Hedging | Fuel derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of (gain) loss reclassified from AOCI into income | 140 | 192 | 792 | 275 |
Cash Flow Hedging | Interest rate derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of (gain) loss reclassified from AOCI into income | 7 | (6) | 12 | 4 |
Fuel and oil | ||||
Derivative [Line Items] | ||||
Derivatives designated as hedging instruments | (306) | 12 | (508) | 28 |
Fuel and oil | Cash Flow Hedging | Fuel derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of (gain) loss reclassified from AOCI into income | (306) | 12 | (508) | 28 |
Fuel and oil | Cash Flow Hedging | Interest rate derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of (gain) loss reclassified from AOCI into income | 0 | 0 | 0 | 0 |
Other (gains)/losses, net | ||||
Derivative [Line Items] | ||||
Derivatives designated as hedging instruments | 0 | 6 | ||
Other (gains)/losses, net | Cash Flow Hedging | Fuel derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of (gain) loss reclassified from AOCI into income | 0 | 6 | ||
Other (gains)/losses, net | Cash Flow Hedging | Interest rate derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of (gain) loss reclassified from AOCI into income | 0 | 0 | ||
Other operating expenses | ||||
Derivative [Line Items] | ||||
Derivatives designated as hedging instruments | 2 | 1 | 3 | 2 |
Other operating expenses | Cash Flow Hedging | Fuel derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of (gain) loss reclassified from AOCI into income | 0 | 0 | 0 | 0 |
Other operating expenses | Cash Flow Hedging | Interest rate derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of (gain) loss reclassified from AOCI into income | $ 2 | $ 1 | $ 3 | $ 2 |
Financial Derivative Instrume_9
Financial Derivative Instruments - (Gain) Loss by Hedging Relationship (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in AOCI on derivatives, net of tax | $ (147) | $ (186) | $ (804) | $ (279) |
Cash Flow Hedging | Fuel derivative contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in AOCI on derivatives, net of tax | (140) | (192) | (792) | (275) |
Cash Flow Hedging | Interest rate derivative contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in AOCI on derivatives, net of tax | (7) | 6 | (12) | (4) |
Not Designated as Hedging Instrument | Fuel derivative contracts | Other Nonoperating Income (Expense) | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in income on derivatives | $ (20) | $ (12) | $ 15 | $ (16) |
Financial Derivative Instrum_10
Financial Derivative Instruments - Premiums for Fuel Derivative Contracts (Details) - Fuel derivative contracts - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Designated as Hedging Instrument | Fuel and oil | ||||
Derivative [Line Items] | ||||
Premium expense recognized in income on derivatives | $ 26 | $ 14 | $ 53 | $ 29 |
Not Designated as Hedging Instrument | Other (gains)/losses, net | ||||
Derivative [Line Items] | ||||
Premium expense recognized in income on derivatives | $ 0 | $ 10 | $ 0 | $ 21 |
Financial Derivative Instrum_11
Financial Derivative Instruments - Fair Values of Fuel Derivatives Amounts Posted as Collateral (Details) $ in Millions | Jun. 30, 2022 USD ($) |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | |
Maximum sum of derivatives of counterparty to be included in other | $ 12 |
Letter of credit substitution percentage | 100% |
Cash collateral percentage | 100% |
Fuel derivative contracts | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | $ 1,127 |
Cash collateral held from CP | 459 |
Fuel derivative contracts | Counterparty A | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | 289 |
Cash collateral held from CP | 356 |
Fuel derivative contracts | Counterparty A | Minimum | |
If credit rating is investment grade, fair value of fuel derivative level at which: | |
Cash is provided to CP | (100) |
Cash is received from CP | 0 |
Fuel derivative contracts | Counterparty B | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | 148 |
Cash collateral held from CP | 7 |
Fuel derivative contracts | Counterparty B | Minimum | |
If credit rating is investment grade, fair value of fuel derivative level at which: | |
Cash is provided to CP | (50) |
Cash is received from CP | 150 |
Fuel derivative contracts | Counterparty C | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | 264 |
Cash collateral held from CP | 37 |
Fuel derivative contracts | Counterparty C | Minimum | |
If credit rating is investment grade, fair value of fuel derivative level at which: | |
Cash is provided to CP | (75) |
Cash is received from CP | 250 |
Fuel derivative contracts | Counterparty D | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | 95 |
Cash collateral held from CP | 0 |
Fuel derivative contracts | Counterparty D | Minimum | |
If credit rating is investment grade, fair value of fuel derivative level at which: | |
Cash is provided to CP | (125) |
Cash is received from CP | 125 |
Fuel derivative contracts | Counterparty E | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | 131 |
Cash collateral held from CP | 40 |
Fuel derivative contracts | Counterparty E | Minimum | |
If credit rating is investment grade, fair value of fuel derivative level at which: | |
Cash is provided to CP | (40) |
Cash is received from CP | 100 |
Fuel derivative contracts | Counterparty F | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | 85 |
Cash collateral held from CP | 19 |
Fuel derivative contracts | Counterparty F | Minimum | |
If credit rating is investment grade, fair value of fuel derivative level at which: | |
Cash is provided to CP | (65) |
Cash is received from CP | 70 |
Fuel derivative contracts | Counterparty G | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | 92 |
Cash collateral held from CP | 0 |
Fuel derivative contracts | Counterparty G | Minimum | |
If credit rating is investment grade, fair value of fuel derivative level at which: | |
Cash is provided to CP | (100) |
Cash is received from CP | 100 |
Fuel derivative contracts | Counterparty Other | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | 23 |
Cash collateral held from CP | $ 0 |
Comprehensive Income - Differen
Comprehensive Income - Differences between Net Income and Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Condensed Statement of Income Captions [Line Items] | ||||||
NET INCOME | $ 760 | $ 348 | $ 482 | $ 463 | ||
Other, net of deferred taxes of $— and $— | 0 | (47) | ||||
Total other comprehensive income (loss) | (86) | 196 | 417 | 260 | ||
COMPREHENSIVE INCOME | 674 | $ 225 | 544 | $ 180 | 899 | 723 |
Other deferred taxes | 0 | (13) | ||||
Fuel derivative contracts | ||||||
Condensed Statement of Income Captions [Line Items] | ||||||
Unrealized gain (loss) on derivative instruments, net of deferred taxes | (95) | 201 | 403 | 301 | ||
Derivative deferred taxes | (29) | 61 | 122 | 92 | ||
Interest rate derivatives | ||||||
Condensed Statement of Income Captions [Line Items] | ||||||
Unrealized gain (loss) on derivative instruments, net of deferred taxes | 9 | (5) | 14 | 6 | ||
Derivative deferred taxes | $ 3 | $ (1) | $ 5 | $ 1 |
Comprehensive Income - Schedule
Comprehensive Income - Schedule of AOCI Components (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2022 | Jun. 30, 2022 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | $ 10,417 | $ 10,414 |
Balance at end of period | 11,120 | 11,120 |
Accumulated other comprehensive income | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | 891 | 388 |
Changes in fair value | 147 | 804 |
Reclassification to earnings | (233) | (387) |
Balance at end of period | 805 | 805 |
Fuel and Interest Rate Derivatives | Fuel derivative contracts | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | 1,141 | 492 |
Changes in fair value | 182 | 1,033 |
Reclassification to earnings | (306) | (508) |
Balance at end of period | 1,017 | 1,017 |
Fuel and Interest Rate Derivatives | Interest rate derivatives | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | (50) | (57) |
Changes in fair value | 10 | 16 |
Reclassification to earnings | 2 | 3 |
Balance at end of period | (38) | (38) |
Defined benefit plan items | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | 66 | 66 |
Balance at end of period | 66 | 66 |
Deferred tax | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | (266) | (113) |
Changes in fair value | (45) | (245) |
Reclassification to earnings | 71 | 118 |
Balance at end of period | $ (240) | $ (240) |
Comprehensive Income - Reclassi
Comprehensive Income - Reclassifications (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Fuel and oil | $ 1,636 | $ 803 | $ 2,640 | $ 1,272 |
Less: Tax expense | 276 | 154 | 178 | 185 |
Interest expense | 93 | 116 | 186 | 229 |
Net income | 760 | $ 348 | 482 | $ 463 |
Reclassification to earnings | ||||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Net income | (233) | (387) | ||
Fuel derivative contracts | Fuel and Interest Rate Derivatives | Reclassification to earnings | ||||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Fuel and oil | (306) | (508) | ||
Less: Tax expense | (71) | (119) | ||
Net income | (235) | (389) | ||
Interest rate derivatives | Fuel and Interest Rate Derivatives | Reclassification to earnings | ||||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Less: Tax expense | 0 | 1 | ||
Interest expense | 2 | 3 | ||
Net income | $ 2 | $ 2 |
Revenue - Passenger Revenue Bre
Revenue - Passenger Revenue Breakout (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Operating revenue | $ 6,728 | $ 4,008 | $ 11,422 | $ 6,060 |
Passenger | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating revenue | 6,119 | 3,569 | 10,254 | 5,282 |
Passenger non-loyalty | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating revenue | 5,118 | 2,875 | 8,482 | 4,230 |
Passenger loyalty - air transportation | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating revenue | 821 | 549 | 1,445 | 826 |
Passenger ancillary sold separately | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating revenue | $ 180 | $ 145 | $ 327 | $ 226 |
Revenue - Air Traffic Liability
Revenue - Air Traffic Liability Breakout (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Revenue from Contract with Customer [Abstract] | ||||||
Air traffic liability - passenger travel and ancillary passenger services | $ 3,634 | $ 2,936 | ||||
Air traffic liability - loyalty program | 4,884 | $ 4,884 | 4,789 | $ 4,719 | $ 4,623 | $ 4,447 |
Total Air traffic liability | $ 8,518 | $ 7,725 | $ 8,679 | $ 7,133 |
Revenue - Air Traffic Liabili_2
Revenue - Air Traffic Liability - Loyalty Program Rollforward (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Change in Contract With Customer, Liability [Roll Forward] | ||||
Beginning balance | $ 4,884 | $ 4,623 | $ 4,789 | $ 4,447 |
Amounts deferred associated with points awarded | 842 | 656 | 1,579 | 1,121 |
Ending balance | 4,884 | 4,719 | 4,884 | 4,719 |
Passenger Customer | ||||
Change in Contract With Customer, Liability [Roll Forward] | ||||
Revenue recognized from points redeemed | (821) | (549) | (1,445) | (826) |
Other | ||||
Change in Contract With Customer, Liability [Roll Forward] | ||||
Revenue recognized from points redeemed | $ (21) | $ (11) | $ (39) | $ (23) |
Revenue - Air Traffic Liabili_3
Revenue - Air Traffic Liability Rollforward (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Change in Contract With Customer, Liability [Roll Forward] | ||
Beginning balance | $ 7,725 | $ 7,133 |
Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) | 11,086 | 6,851 |
Revenue from amounts included in contract liability opening balances | (3,029) | (1,600) |
Revenue from current period sales | (7,264) | 3,705 |
Ending balance | $ 8,518 | $ 8,679 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jul. 28, 2022 | Dec. 31, 2021 | Dec. 31, 2019 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Residual travel funds | 5% | 5% | 16% | 2% | |||
Remaining customer travel funds | $ 1,100 | $ 1,100 | |||||
Loyalty points, redemption period (in years) | 2 years | ||||||
Total operating revenues | 6,728 | $ 4,008 | $ 11,422 | $ 6,060 | |||
Subsequent Event | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Remaining customer travel funds | $ 1,900 | ||||||
Chase Bank USA Agreement | |||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||||
Total operating revenues | $ 522 | $ 352 | $ 1,000 | $ 632 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | |
NUMERATOR: | |||||
Net income | $ 760 | $ 348 | $ 482 | $ 463 | |
Add: Interest expense | 4 | 0 | 8 | 0 | |
Net income attributable to common stockholders | $ 764 | $ 348 | $ 490 | $ 463 | |
DENOMINATOR: | |||||
Weighted-average shares outstanding, Basic (in shares) | 593 | 591 | 593 | 591 | |
Dilutive effects of convertible notes (in shares) | 41 | 22 | 46 | 19 | |
Dilutive effect of stock warrants (in shares) | 0 | 1 | 0 | 1 | |
Dilutive effect of restricted stock units (in shares) | 1 | 1 | 1 | 1 | |
Diluted (in shares) | 635 | 615 | 640 | 612 | |
NET INCOME PER SHARE: | |||||
BASIC (in USD per share) | $ 1.29 | $ 0.59 | $ 0.83 | $ 0.78 | |
Diluted (in USD per share) | $ 1.20 | $ 0.57 | $ 0.77 | $ 0.76 | |
Initial conversion price (in USD per share) | $ 38.48 |
Fair Value Measurements - Measu
Fair Value Measurements - Measured on Recurring Basis (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Fuel derivatives: | ||
Option contracts | $ 1,305 | $ 696 |
Fair Value, Measurements, Recurring | ||
Assets | ||
Treasury bills | 2,432 | 2,399 |
Fuel derivatives: | ||
Interest rate derivatives (see Note 4) | 11 | |
Equity Securities | 225 | 288 |
Total assets | 17,961 | 16,488 |
Liabilities | ||
Total liabilities | 4 | |
Fair Value, Measurements, Recurring | Options Contracts | ||
Fuel derivatives: | ||
Option contracts | 1,294 | 696 |
Fair Value, Measurements, Recurring | Commodity Option | ||
Liabilities | ||
Liabilities | 167 | |
Fair Value, Measurements, Recurring | Interest rate derivatives | ||
Liabilities | ||
Liabilities | 4 | |
Fair Value, Measurements, Recurring | Time deposits | ||
Assets | ||
Investments | 675 | 625 |
Fair Value, Measurements, Recurring | Certificates of deposit | ||
Assets | ||
Investments | 90 | |
Fair Value, Measurements, Recurring | Cash Equivalents | ||
Assets | ||
Cash equivalents | 12,964 | 12,340 |
Fair Value, Measurements, Recurring | Commercial paper | ||
Assets | ||
Cash equivalents | 270 | 90 |
Fair Value, Measurements, Recurring | Time deposits | ||
Assets | ||
Cash equivalents | 50 | |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | ||
Assets | ||
Treasury bills | 2,432 | 2,399 |
Fuel derivatives: | ||
Interest rate derivatives (see Note 4) | 0 | |
Equity Securities | 225 | 288 |
Total assets | 15,621 | 15,027 |
Liabilities | ||
Total liabilities | 0 | |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | Options Contracts | ||
Fuel derivatives: | ||
Option contracts | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | Commodity Option | ||
Liabilities | ||
Liabilities | 0 | |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | Interest rate derivatives | ||
Liabilities | ||
Liabilities | 0 | |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | Time deposits | ||
Assets | ||
Investments | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | Certificates of deposit | ||
Assets | ||
Investments | 0 | |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | Cash Equivalents | ||
Assets | ||
Cash equivalents | 12,964 | 12,340 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | Commercial paper | ||
Assets | ||
Cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | Time deposits | ||
Assets | ||
Cash equivalents | 0 | |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | ||
Assets | ||
Treasury bills | 0 | 0 |
Fuel derivatives: | ||
Interest rate derivatives (see Note 4) | 11 | |
Equity Securities | 0 | 0 |
Total assets | 1,046 | 765 |
Liabilities | ||
Total liabilities | 4 | |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Options Contracts | ||
Fuel derivatives: | ||
Option contracts | 0 | 0 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Commodity Option | ||
Liabilities | ||
Liabilities | 0 | |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Interest rate derivatives | ||
Liabilities | ||
Liabilities | 4 | |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Time deposits | ||
Assets | ||
Investments | 675 | 625 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Certificates of deposit | ||
Assets | ||
Investments | 90 | |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Cash Equivalents | ||
Assets | ||
Cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Commercial paper | ||
Assets | ||
Cash equivalents | 270 | 90 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Time deposits | ||
Assets | ||
Cash equivalents | 50 | |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | ||
Assets | ||
Treasury bills | 0 | 0 |
Fuel derivatives: | ||
Interest rate derivatives (see Note 4) | 0 | |
Equity Securities | 0 | 0 |
Total assets | 1,294 | 696 |
Liabilities | ||
Total liabilities | 0 | |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Options Contracts | ||
Fuel derivatives: | ||
Option contracts | 1,294 | 696 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Commodity Option | ||
Liabilities | ||
Liabilities | 167 | |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Interest rate derivatives | ||
Liabilities | ||
Liabilities | 0 | |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Time deposits | ||
Assets | ||
Investments | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Certificates of deposit | ||
Assets | ||
Investments | 0 | |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Cash Equivalents | ||
Assets | ||
Cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Commercial paper | ||
Assets | ||
Cash equivalents | $ 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Time deposits | ||
Assets | ||
Cash equivalents | $ 0 |
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 | 6 Months Ended |
Jun. 30, 2022 | Jun. 30, 2022 | |
Fuel derivative contracts | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Sales | $ (16) | $ (26) |
Fuel derivative contracts | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning Balance | 1,273 | 696 |
Included in earnings | 20 | (15) |
Included in other comprehensive income | 182 | 1,033 |
Settlements | (332) | (561) |
Ending Balance | 1,127 | 1,127 |
The amount of total gains for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2022 | 20 | (15) |
The amount of total gains for the period included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2022 | $ 115 | $ 672 |
Fair Value Measurements - Quant
Fair Value Measurements - Quantitative Information about Level 3 Fair Value (Details) - Significant unobservable inputs (Level 3) - Measurement Input, Option Volatility | Jun. 30, 2022 |
Third quarter 2022 | Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.28 |
Third quarter 2022 | Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.68 |
Third quarter 2022 | Weighted Average | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.48 |
Fourth quarter 2022 | Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.44 |
Fourth quarter 2022 | Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.65 |
Fourth quarter 2022 | Weighted Average | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.53 |
2023 | Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.38 |
2023 | Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.58 |
2023 | Weighted Average | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.50 |
2024 | Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.34 |
2024 | Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.48 |
2024 | Weighted Average | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.39 |
Fair Value Instruments - Carryi
Fair Value Instruments - Carrying and Estimated Fair Value of Debt (Details) - USD ($) $ in Millions | Jun. 30, 2022 | May 01, 2020 |
Unsecured Debt | 2.75% Notes due November 2022 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 2.75% | |
Carrying value | $ 300 | |
Unsecured Debt | 4.75% Notes due 2023 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 4.75% | |
Carrying value | $ 1,247 | |
Unsecured Debt | 5.25% Notes due 2025 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 5.25% | |
Carrying value | $ 1,549 | |
Unsecured Debt | 3.00% Notes due 2026 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 3% | |
Carrying value | $ 300 | |
Unsecured Debt | 3.45% Notes due 2027 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 3.45% | |
Carrying value | $ 300 | |
Unsecured Debt | 5.125% Notes due 2027 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 5.125% | |
Carrying value | $ 1,944 | |
Unsecured Debt | 7.375% Debentures due 2027 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 7.375% | |
Carrying value | $ 115 | |
Unsecured Debt | 2.625% Notes due 2030 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 2.625% | |
Carrying value | $ 500 | |
Unsecured Debt | 1.000% PSP1 due 2030 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 1% | |
Carrying value | $ 976 | |
Unsecured Debt | 1.000% PSP2 due 2031 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 1% | |
Carrying value | $ 566 | |
Unsecured Debt | 1.000% PSP3 due 2031 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 1% | |
Carrying value | $ 526 | |
Enhanced Equipment Trust Certificate | Pass Through Certificates due August 2022 - 6.19% | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 6.19% | |
Carrying value | $ 33 | |
Convertible Debt | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 1.25% | |
Convertible Debt | 1.25% Convertible Notes due 2025 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 1.25% | |
Carrying value | $ 1,795 | |
Level 2 | Unsecured Debt | 2.75% Notes due November 2022 | ||
Debt Instrument [Line Items] | ||
Notes payable, Estimated Fair Value | 300 | |
Level 2 | Unsecured Debt | 4.75% Notes due 2023 | ||
Debt Instrument [Line Items] | ||
Notes payable, Estimated Fair Value | 1,259 | |
Level 2 | Unsecured Debt | 5.25% Notes due 2025 | ||
Debt Instrument [Line Items] | ||
Notes payable, Estimated Fair Value | 1,582 | |
Level 2 | Unsecured Debt | 3.00% Notes due 2026 | ||
Debt Instrument [Line Items] | ||
Notes payable, Estimated Fair Value | 281 | |
Level 2 | Unsecured Debt | 3.45% Notes due 2027 | ||
Debt Instrument [Line Items] | ||
Notes payable, Estimated Fair Value | 282 | |
Level 2 | Unsecured Debt | 5.125% Notes due 2027 | ||
Debt Instrument [Line Items] | ||
Notes payable, Estimated Fair Value | 1,963 | |
Level 2 | Unsecured Debt | 7.375% Debentures due 2027 | ||
Debt Instrument [Line Items] | ||
Loans payable, Estimated Fair Value | 126 | |
Level 2 | Unsecured Debt | 2.625% Notes due 2030 | ||
Debt Instrument [Line Items] | ||
Notes payable, Estimated Fair Value | 423 | |
Level 2 | Enhanced Equipment Trust Certificate | Pass Through Certificates due August 2022 - 6.19% | ||
Debt Instrument [Line Items] | ||
Notes payable, Estimated Fair Value | 33 | |
Level 2 | Convertible Debt | 1.25% Convertible Notes due 2025 | ||
Debt Instrument [Line Items] | ||
Notes payable, Estimated Fair Value | 2,121 | |
Level 3 | Unsecured Debt | 1.000% PSP1 due 2030 | ||
Debt Instrument [Line Items] | ||
Notes payable, Estimated Fair Value | 900 | |
Level 3 | Unsecured Debt | 1.000% PSP2 due 2031 | ||
Debt Instrument [Line Items] | ||
Notes payable, Estimated Fair Value | 510 | |
Level 3 | Unsecured Debt | 1.000% PSP3 due 2031 | ||
Debt Instrument [Line Items] | ||
Notes payable, Estimated Fair Value | $ 470 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - Convertible Debt | Jun. 30, 2022 | May 01, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stated interest rate | 1.25% | |
1.25% Convertible Notes due 2025 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stated interest rate | 1.25% |
Fair Value Instruments - Conver
Fair Value Instruments - Convertible Debt (Details) $ in Millions | Jun. 30, 2022 USD ($) |
1.25% Convertible Notes due 2025 | Convertible Debt | |
Debt Instrument [Line Items] | |
Net carrying amount | $ 1,795 |
Supplemental Financial Inform_3
Supplemental Financial Information - Accounts and Other Receivables (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Trade receivables | $ 59 | $ 58 |
Credit card receivables | 166 | 83 |
Business partners and other suppliers | 541 | 432 |
Taxes receivable | 219 | 699 |
Fuel hedging and receivables | 125 | 8 |
Other | 279 | 77 |
Accounts and other receivables | $ 1,389 | $ 1,357 |
Supplemental Financial Inform_4
Supplemental Financial Information - Other Assets (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Derivative contracts | $ 221 | $ 192 |
Intangible assets, net | 295 | 295 |
Other | 331 | 395 |
Other assets | $ 847 | $ 882 |
Supplemental Financial Inform_5
Supplemental Financial Information - Accounts Payable (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts payable trade | $ 395 | $ 156 |
Salaries payable | 340 | 287 |
Taxes payable excluding income taxes | 318 | 200 |
Aircraft maintenance payable | 69 | 42 |
Fuel payable | 260 | 170 |
Other payable | 526 | 427 |
Accounts payable | $ 1,908 | $ 1,282 |
Supplemental Financial Inform_6
Supplemental Financial Information - Accrued Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Accrued Liabilities, Current [Abstract] | ||
Voluntary Separation Program | $ 79 | $ 92 |
Profitsharing and savings plans | 154 | 262 |
Vacation pay | 463 | 451 |
Health | 231 | 152 |
Workers compensation | 155 | 141 |
Property and income taxes | 58 | 65 |
Interest | 96 | 46 |
Deferred supplier payments | 0 | 80 |
Other | 351 | 335 |
Accrued liabilities | $ 1,587 | $ 1,624 |
Supplemental Financial Inform_7
Supplemental Financial Information - Other Non-Current Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Voluntary Separation Program | $ 190 | $ 233 |
Postretirement obligation | 334 | 330 |
Other deferred compensation | 302 | 369 |
Other | 270 | 292 |
Other noncurrent liabilities | 1,096 | 1,224 |
Unusual or Infrequent Item, or Both [Line Items] | ||
Taxes receivable | $ 219 | 699 |
CARES Act | ||
Unusual or Infrequent Item, or Both [Line Items] | ||
Taxes receivable | $ 472 |
Commitments and contingencies -
Commitments and contingencies - Narrative (Details) $ in Millions | 1 Months Ended | 3 Months Ended | |
Sep. 28, 2021 USD ($) | Aug. 01, 2022 aircraft | Jun. 30, 2022 USD ($) aircraft | |
Other Commitments [Line Items] | |||
Aircrafts to be purchased | 632 | ||
MAX aircrafts to be delivered this year | 114 | ||
Cash Capital Commitments, Boeing Orders | |||
Other Commitments [Line Items] | |||
Remainder of 2022 | $ | $ 2,400 | ||
2023 | $ | 2,200 | ||
2024 | $ | 910 | ||
2025 | $ | 845 | ||
2026 | $ | 984 | ||
2027 | $ | 1,000 | ||
Thereafter | $ | 6,300 | ||
Payment Guarantee, Dallas Love Field Series 2010 Bonds | |||
Other Commitments [Line Items] | |||
Principal amount of guarantee | $ | 79 | ||
Net present value of future principal and interest payments | $ | $ 88 | ||
-8 Firm Orders | |||
Other Commitments [Line Items] | |||
Exercised, 2022 | 20 | ||
Exercised, 2023 | 3 | ||
Shifted, 2023 | 17 | ||
Aircrafts to be purchased | 225 | ||
Estimated MAX aircrafts to be delivered this year | 66 | ||
-7 Firm Orders | |||
Other Commitments [Line Items] | |||
Exercised, 2023 | 4 | ||
Aircrafts to be purchased | 240 | ||
Estimated MAX aircrafts to be delivered this year | 0 | ||
-7 Firm Orders | Subsequent Event | |||
Other Commitments [Line Items] | |||
Converted, 2022 | 48 | ||
Love Field Airport Modernization Corporation | Series 2010 Bonds | |||
Other Commitments [Line Items] | |||
Cash payment | $ | $ 310 |
Commitment and Contingencies -
Commitment and Contingencies - Long Term Purchase Commitments (Details) - aircraft | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 |
Long-term Purchase Commitment [Line Items] | |||
2022 | 114 | ||
2023 | 90 | ||
2024 | 86 | ||
2025 | 86 | ||
2026 | 70 | ||
2027 | 36 | ||
2028 | 30 | ||
2029 | 50 | ||
2030 | 60 | ||
2031 | 10 | ||
Total | 632 | ||
-7 Firm Orders | |||
Long-term Purchase Commitment [Line Items] | |||
2022 | 14 | ||
2023 | 86 | ||
2024 | 30 | ||
2025 | 30 | ||
2026 | 15 | ||
2027 | 15 | ||
2028 | 15 | ||
2029 | 20 | ||
2030 | 15 | ||
2031 | 0 | ||
Total | 240 | ||
-8 Firm Orders | |||
Long-term Purchase Commitment [Line Items] | |||
2022 | 95 | ||
2023 | 0 | ||
2024 | 0 | ||
2025 | 0 | ||
2026 | 15 | ||
2027 | 15 | ||
2028 | 15 | ||
2029 | 30 | ||
2030 | 45 | ||
2031 | 10 | ||
Total | 225 | ||
Other Commitment, Number Of Aircrafts To Be Delivered | 12 | ||
-8 Firm Orders | Forecast | |||
Long-term Purchase Commitment [Line Items] | |||
Other Commitment, Number Of Aircrafts To Be Delivered | 31 | 23 | |
-7 or -8 Options | |||
Long-term Purchase Commitment [Line Items] | |||
2022 | 5 | ||
2023 | 4 | ||
2024 | 56 | ||
2025 | 56 | ||
2026 | 40 | ||
2027 | 6 | ||
2028 | 0 | ||
2029 | 0 | ||
2030 | 0 | ||
2031 | 0 | ||
Total | 167 |
Financing Activities - Narrativ
Financing Activities - Narrative (Details) | 3 Months Ended | 6 Months Ended | ||||||||
Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Mar. 31, 2022 USD ($) | Jan. 01, 2022 USD ($) | Dec. 31, 2021 USD ($) | Mar. 31, 2021 USD ($) $ / shares | Dec. 31, 2020 USD ($) | May 01, 2020 USD ($) $ / shares | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||
Initial conversion price (in USD per share) | $ / shares | $ 38.48 | |||||||||
Decrease in AOCI | $ (11,120,000,000) | $ (9,688,000,000) | $ (11,120,000,000) | $ (9,688,000,000) | $ (10,417,000,000) | $ (10,414,000,000) | $ (9,093,000,000) | $ (8,876,000,000) | ||
Payments of long-term debt and finance lease obligations | 53,000,000 | 43,000,000 | 146,000,000 | 109,000,000 | ||||||
Interest expense | 93,000,000 | 116,000,000 | 186,000,000 | 229,000,000 | ||||||
Capital in excess of par value | ||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||
Decrease in AOCI | (3,966,000,000) | (4,269,000,000) | $ (3,966,000,000) | (4,269,000,000) | $ (3,940,000,000) | (4,224,000,000) | $ (4,220,000,000) | (4,191,000,000) | ||
Cumulative Effect, Period of Adoption, Adjustment | ||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||
Decrease in AOCI | 245,000,000 | $ 0 | ||||||||
Cumulative Effect, Period of Adoption, Adjustment | Capital in excess of par value | ||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||
Decrease in AOCI | $ 300,000,000 | |||||||||
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | Capital in excess of par value | ||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||
Decrease in AOCI | $ 300,000,000 | |||||||||
Convertible Debt | ||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||
Principal amount | $ 2,300,000,000 | |||||||||
Stated interest rate | 1.25% | |||||||||
Initial conversion price (in USD per share) | $ / shares | $ 38.48 | |||||||||
Amortization period (in years) | 5 years | |||||||||
Hedged items | $ 9,000,000 | $ 28,000,000 | $ 19,000,000 | $ 56,000,000 | ||||||
Initial conversion ratio | 0.0259909 | |||||||||
Convertible Debt | Accounting Standards Update 2020-06 | ||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||
Net carrying amount | $ 300,000,000 | |||||||||
Convertible Debt | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | ||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||
Stated interest rate | 1.25% | |||||||||
Convertible Debt | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | Capital in excess of par value | ||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||
Decrease in AOCI | $ 300,000,000 | |||||||||
Notes Due 2027 | ||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||
Effective interest rate | 1.90% | 1.90% | ||||||||
Convertible Debt And Unsecured Debt | ||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||
Payments of long-term debt and finance lease obligations | $ 231,000,000 | $ 555,000,000 | ||||||||
Line of Credit | ||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||
Net carrying amount | 0 | 0 | ||||||||
Borrowing capacity | $ 1,000,000,000 | $ 1,000,000,000 |
Financing Activities - Converti
Financing Activities - Convertible Debt (Details) - Convertible Debt - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Equity component: | ||
Equity component: | ||
Carrying amount of Convertible Notes | $ 0 | $ 311 |
Carrying amount of issuance costs | 0 | (11) |
Net carrying amount | 0 | 300 |
Liability component: | ||
Equity component: | ||
Principal amount | 1,795 | 2,097 |
Unamortized debt discount | 0 | (255) |
Net carrying amount | $ 1,795 | $ 1,842 |
Financing Activities - Interest
Financing Activities - Interest Expense (Details) - Convertible Debt - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Debt Instrument [Line Items] | ||||
Non-cash amortization of the debt discount | $ 0 | $ 19 | $ 0 | $ 37 |
Non-cash amortization of debt issuance costs | 3 | 2 | 7 | 4 |
Contractual coupon interest | 6 | 7 | 12 | 15 |
Total interest expense | $ 9 | $ 28 | $ 19 | $ 56 |
Financing Activities - Schedule
Financing Activities - Schedule of Extinguishment of Debt (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2022 | May 01, 2020 | |
Debt Instrument [Line Items] | |||
Cash payment | $ 209 | $ 474 | |
Principal repayment | 168 | 362 | |
Loss on partial extinguishment of convertible and unsecured notes | 43 | 116 | |
Non-cash amortization of debt discount and (issuance) costs | $ (2) | $ (4) | |
Convertible Debt | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 1.25% | ||
1.25% Convertible Notes due 2025 | Convertible Debt | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 1.25% | 1.25% | |
Cash payment | $ 178 | $ 409 | |
Principal repayment | 138 | 302 | |
Loss on partial extinguishment of convertible and unsecured notes | 42 | 112 | |
Non-cash amortization of debt discount and (issuance) costs | $ (2) | $ (5) | |
5.125% Notes due 2027 | Unsecured Debt | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 5.125% | 5.125% | |
Cash payment | $ 27 | $ 61 | |
Principal repayment | 26 | 56 | |
Loss on partial extinguishment of convertible and unsecured notes | 1 | 4 | |
Non-cash amortization of debt discount and (issuance) costs | $ 0 | $ 1 | |
4.75% Notes due 2023 | Unsecured Debt | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 4.75% | 4.75% | |
Cash payment | $ 3 | $ 3 | |
Principal repayment | 3 | 3 | |
Loss on partial extinguishment of convertible and unsecured notes | 0 | 0 | |
Non-cash amortization of debt discount and (issuance) costs | $ 0 | $ 0 | |
5.25% Notes due 2025 | Unsecured Debt | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 5.25% | 5.25% | |
Cash payment | $ 1 | $ 1 | |
Principal repayment | 1 | 1 | |
Loss on partial extinguishment of convertible and unsecured notes | 0 | 0 | |
Non-cash amortization of debt discount and (issuance) costs | $ 0 | $ 0 |
Uncategorized Items - luv-20220
Label | Element | Value |
Accounting Standards Update [Extensible Enumeration] | us-gaap_AccountingStandardsUpdateExtensibleList | Accounting Standards Update 2016-01 [Member] |