Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 26, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
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 ($1.00 par value) | |
Trading Symbol | LUV | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 596,115,380 | |
Entity Central Index Key | 0000092380 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheet - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 9,497 | $ 9,492 |
Short-term investments | 2,236 | 2,800 |
Accounts and other receivables | 1,467 | 1,040 |
Inventories of parts and supplies, at cost | 799 | 790 |
Prepaid expenses and other current assets | 632 | 686 |
Total current assets | 14,631 | 14,808 |
Property and equipment, at cost: | ||
Flight equipment | 25,724 | 23,725 |
Ground property and equipment | 7,344 | 6,855 |
Deposits on flight equipment purchase contracts | 345 | 376 |
Assets constructed for others | 51 | 28 |
Property and equipment, at cost | 33,464 | 30,984 |
Less allowance for depreciation and amortization | 14,389 | 13,642 |
Property and equipment, net | 19,075 | 17,342 |
Goodwill | 970 | 970 |
Operating lease right-of-use assets | 1,288 | 1,394 |
Other assets | 1,016 | 855 |
Total assets | 36,980 | 35,369 |
Current liabilities: | ||
Accounts payable | 1,736 | 2,004 |
Accrued liabilities | 2,880 | 2,043 |
Current operating lease liabilities | 220 | 225 |
Air traffic liability | 7,246 | 6,064 |
Current maturities of long-term debt | 30 | 42 |
Total current liabilities | 12,112 | 10,378 |
Long-term debt less current maturities | 7,984 | 8,046 |
Air traffic liability - noncurrent | 1,754 | 2,186 |
Deferred income taxes | 2,157 | 1,985 |
Noncurrent operating lease liabilities | 1,039 | 1,118 |
Other noncurrent liabilities | 880 | 969 |
Stockholders' equity: | ||
Common stock | 888 | 888 |
Capital in excess of par value | 4,135 | 4,037 |
Retained earnings | 16,657 | 16,261 |
Accumulated other comprehensive income | 201 | 344 |
Treasury stock, at cost | (10,827) | (10,843) |
Total stockholders' equity | 11,054 | 10,687 |
Total liabilities and stockholders' equity | $ 36,980 | $ 35,369 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Comprehensive Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
OPERATING REVENUES: | ||||
Total operating revenues | $ 6,525 | $ 6,220 | $ 19,268 | $ 17,642 |
OPERATING EXPENSES: | ||||
Salaries, wages, and benefits | 2,728 | 2,322 | 7,991 | 6,771 |
Fuel and oil | 1,564 | 1,750 | 4,514 | 4,390 |
Maintenance materials and repairs | 326 | 204 | 836 | 624 |
Landing fees and airport rentals | 457 | 395 | 1,324 | 1,128 |
Depreciation and amortization | 375 | 335 | 1,107 | 984 |
Other operating expenses | 958 | 819 | 2,868 | 2,343 |
Total operating expenses | 6,408 | 5,825 | 18,640 | 16,240 |
OPERATING INCOME | 117 | 395 | 628 | 1,402 |
OTHER EXPENSES (INCOME): | ||||
Interest expense | 63 | 86 | 193 | 272 |
Capitalized interest | (4) | (11) | (15) | (31) |
Interest income | (156) | (70) | (425) | (101) |
Loss on extinguishment of debt | 0 | 76 | 0 | 192 |
Other (gains) losses, net | (23) | (39) | (44) | 57 |
Total other expenses (income) | (120) | 42 | (291) | 389 |
INCOME BEFORE INCOME TAXES | 237 | 353 | 919 | 1,013 |
PROVISION FOR INCOME TAXES | 44 | 76 | 202 | 254 |
NET INCOME | $ 193 | $ 277 | $ 717 | $ 759 |
Net income per share, basic (in USD per share) | $ 0.32 | $ 0.47 | $ 1.20 | $ 1.28 |
Net income per share, diluted (in USD per share) | $ 0.31 | $ 0.44 | $ 1.15 | $ 1.21 |
COMPREHENSIVE INCOME (LOSS) | $ 336 | $ (223) | $ 574 | $ 676 |
WEIGHTED AVERAGE SHARES OUTSTANDING | ||||
Basic (in shares) | 596 | 593 | 595 | 593 |
Diluted (in shares) | 640 | 639 | 639 | 643 |
Passenger | ||||
OPERATING REVENUES: | ||||
Total operating revenues | $ 5,912 | $ 5,613 | $ 17,426 | $ 15,867 |
Freight | ||||
OPERATING REVENUES: | ||||
Total operating revenues | 44 | 44 | 131 | 133 |
Other | ||||
OPERATING REVENUES: | ||||
Total operating revenues | $ 569 | $ 563 | $ 1,711 | $ 1,642 |
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 (loss) | Treasury stock |
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 | 7 | |||||||
Share-based compensation | 16 | 16 | |||||||
Comprehensive income (loss) | 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 (loss) | 676 | ||||||||
Balance at end of period at Sep. 30, 2022 | 10,924 | 888 | 3,989 | 16,588 | 305 | (10,846) | |||
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 (loss) | 674 | 760 | (86) | ||||||
Balance at end of period at Jun. 30, 2022 | 11,120 | 888 | 3,966 | 16,311 | 805 | (10,850) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 13 | 9 | 4 | ||||||
Share-based compensation | 14 | 14 | |||||||
Comprehensive income (loss) | (223) | 277 | (500) | ||||||
Balance at end of period at Sep. 30, 2022 | 10,924 | 888 | 3,989 | 16,588 | 305 | (10,846) | |||
Balance at beginning of period at Dec. 31, 2022 | 10,687 | 888 | 4,037 | 16,261 | 344 | (10,843) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 8 | 1 | 7 | ||||||
Share-based compensation | 20 | 20 | |||||||
Cash dividends, $0.18 per share | (107) | (107) | |||||||
Comprehensive income (loss) | (306) | (159) | (147) | ||||||
Balance at end of period at Mar. 31, 2023 | 10,302 | 888 | 4,058 | 15,995 | 197 | (10,836) | |||
Balance at beginning of period at Dec. 31, 2022 | 10,687 | 888 | 4,037 | 16,261 | 344 | (10,843) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Comprehensive income (loss) | 574 | ||||||||
Balance at end of period at Sep. 30, 2023 | 11,054 | 888 | 4,135 | 16,657 | 201 | (10,827) | |||
Balance at beginning of period at Mar. 31, 2023 | 10,302 | 888 | 4,058 | 15,995 | 197 | (10,836) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 16 | 11 | 5 | ||||||
Share-based compensation | 34 | 34 | |||||||
Cash dividends, $0.18 per share | (107) | (107) | |||||||
Comprehensive income (loss) | 544 | 683 | (139) | ||||||
Balance at end of period at Jun. 30, 2023 | 10,789 | 888 | 4,103 | 16,571 | 58 | (10,831) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 13 | 9 | 4 | ||||||
Share-based compensation | 23 | 23 | |||||||
Cash dividends, $0.18 per share | (107) | (107) | |||||||
Comprehensive income (loss) | 336 | 193 | 143 | ||||||
Balance at end of period at Sep. 30, 2023 | $ 11,054 | $ 888 | $ 4,135 | $ 16,657 | $ 201 | $ (10,827) |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | ||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | |
Statement of Stockholders' Equity [Abstract] | |||
Cash dividends, per share (in dollars per share) | $ 0.18 | $ 0.18 | $ 0.18 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Cash Flows - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net income | $ 193 | $ 277 | $ 717 | $ 759 |
Adjustments to reconcile net income to cash provided by operating activities: | ||||
Depreciation and amortization | 375 | 335 | 1,107 | 984 |
Impairment of long-lived assets | 0 | 4 | 0 | 35 |
Unrealized mark-to-market adjustment on available for sale securities | 0 | 0 | (4) | 7 |
Unrealized/realized (gain) on fuel derivative instruments | (21) | (26) | (14) | (11) |
Deferred income taxes | 57 | 76 | 214 | 250 |
Loss on extinguishment of debt | 0 | 76 | 0 | 192 |
Changes in certain assets and liabilities: | ||||
Accounts and other receivables | (216) | 58 | (405) | 162 |
Other assets | (35) | 30 | 74 | (14) |
Accounts payable and accrued liabilities | 352 | (70) | 645 | 436 |
Air traffic liability | (59) | (93) | 750 | 700 |
Other liabilities | (89) | (83) | (180) | (292) |
Cash collateral received from (provided to) derivative counterparties | 40 | (325) | (6) | (41) |
Other, net | 19 | (25) | (159) | 44 |
Net cash provided by operating activities | 616 | 234 | 2,739 | 3,211 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Capital expenditures | (842) | (1,072) | (2,812) | (2,568) |
Assets constructed for others | (8) | (7) | (23) | (14) |
Purchases of short-term investments | (1,620) | (1,743) | (5,347) | (4,213) |
Proceeds from sales of short-term and other investments | 2,406 | 1,702 | 5,914 | 3,982 |
Net cash used in investing activities | (64) | (1,120) | (2,268) | (2,813) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Proceeds from Employee stock plans | 13 | 12 | 36 | 32 |
Payments of long-term debt and finance lease obligations | (11) | (1,679) | (78) | (1,825) |
Payments of cash dividends | (214) | 0 | (428) | 0 |
Payments for repurchases and conversions of convertible debt | 0 | (239) | 0 | (648) |
Other, net | (1) | 1 | 4 | 6 |
Net cash used in financing activities | (213) | (1,905) | (466) | (2,435) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 339 | (2,791) | 5 | (2,037) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 9,158 | 13,234 | 9,492 | 12,480 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 9,497 | 10,443 | 9,497 | 10,443 |
CASH PAYMENTS FOR: | ||||
Interest, net of amount capitalized | 19 | 42 | 134 | 203 |
Income taxes | 1 | 8 | 9 | 19 |
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS: | ||||
Adoption of Accounting Standards Update 2020-06, Debt | 0 | 0 | 0 | 245 |
Right-of-use assets acquired under operating leases | $ 9 | $ 14 | $ 78 | $ 42 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2023 | |
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. In late December 2022, the Company experienced a wide-scale operational disruption as historically extreme winter weather across a significant portion of the United States impacted its operational plan and flight schedules. Subsequent to Winter Storm Elliott, the Company was challenged to realign flight crews, flight schedules, and aircraft for a period of several days during this peak demand travel period. This disruption and subsequent recovery efforts resulted in the cancellation of more than 16,700 flights during the period from December 21 through December 31, 2022. These events also created a deceleration in bookings, primarily isolated to January and February 2023, as well as increased first quarter 2023 expenses by approximately $55 million, which are included in the accompanying unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) for the nine months ended September 30, 2023. These first quarter 2023 expenses included reimbursements to Customers impacted by the cancellations for costs they incurred in excess of the amounts accrued as of December 31, 2022, adjustments to the estimated value of Rapid Rewards points offered as a gesture of goodwill to Customers as a result of changes in the estimates of the points expected to be redeemed, and additional premium pay and additional compensation for Employees directly or indirectly impacted by the cancellations and recovery efforts. There were no material impacts to operating revenues or expenses beyond first quarter 2023 as a result of this disruption. The accompanying unaudited Condensed Consolidated Financial Statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles in the United States ("GAAP") for complete financial statements. The unaudited Condensed Consolidated Financial Statements for the interim periods ended September 30, 2023 and 2022 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 performed better in its second and third fiscal quarters than in its first and fourth fiscal quarters. Air travel is also significantly impacted by general economic conditions, the amount of disposable income available to consumers 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 3 for further information on fuel and the Company's hedging program. Operating results for the three and nine months ended September 30, 2023, are not necessarily indicative of the results that may be expected for future quarters or for the year ended December 31, 2023. 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, 2022. |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS On January 7, 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848). This 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, 2024, any new hedging relationships entered into after December 31, 2024, or to existing hedging relationships evaluated for effectiveness existing as of December 31, 2024, 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 nine months ended September 30, 2023. |
Financial Derivative Instrument
Financial Derivative Instruments | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
FINANCIAL DERIVATIVE INSTRUMENTS | (100) >(50) >(75) >(125) >(40) >(65) >(100) >(100) Cash is received from CP >0(b) >150(b) >250(b) >125(b) >100(b) >70(b) >100(b) >100(b) If credit rating is non-investment Cash is received from CP (c) (c) (c) (c) (c) (c) (c) (c) (a) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (b) Thresholds may vary based on changes in credit ratings within investment grade. (c) 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. 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. The Company does not purchase or hold any financial derivative instruments for trading or speculative purposes. 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 the Company defines as prices significantly higher than historical average levels), 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 September 30, 2023, 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 September 30, 2023 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) September 30, 2023 Remainder of 2023 271 West Texas Intermediate ("WTI") crude oil, Brent crude oil, and Heating oil 2024 1,265 WTI crude oil and Brent crude oil 2025 1,033 Brent crude oil 2026 176 Brent crude oil (a) Due to the types of derivatives utilized by the Company and different price levels of those contracts, these volumes represent the maximum economic hedge in place and may vary significantly as market prices and the Company's flight schedule 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 4. When the Company has sold derivative positions in order to effectively "close" or offset a derivative already held as part of its fuel derivative instrument portfolio, any subsequent changes in fair value of those positions are marked to market through earnings. Likewise, any changes in fair value of those positions that were offset by entering into the sold positions and were de-designated as hedges are concurrently marked to market through earnings. However, any changes in value related to hedges that were deferred as part of AOCI while designated as a hedge would remain until the originally forecasted transaction occurs. In a situation where it becomes probable that a fuel hedged forecasted transaction will not occur, any gains and/or losses that have been recorded to AOCI would be required to be immediately reclassified into earnings. The Company did not have any such situations where a derivative ceased to qualify for hedge accounting during 2022, or during the nine months ended September 30, 2023. All cash flows associated with purchasing and selling fuel derivatives are classified as Other operating cash flows in the unaudited Condensed Consolidated Statement of Cash Flows. The following table presents the location of all assets and liabilities associated with the Company’s derivative instruments within the unaudited Condensed Consolidated Balance Sheet: Asset derivatives Liability derivatives Balance Sheet Fair value at Fair value at Fair value at Fair value at (in millions) location 9/30/2023 12/31/2022 9/30/2023 12/31/2022 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 250 $ 352 $ — $ — Fuel derivative contracts (gross) Other assets 223 160 — — Interest rate derivative contracts Other assets 23 14 — — Total derivatives designated as hedges $ 496 $ 526 $ — $ — Derivatives not designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 42 $ — $ 28 $ — Total derivatives $ 538 $ 526 $ 28 $ — (a) Represents the position of each trade before consideration of offsetting positions with each counterparty and does not include the impact of cash collateral deposits provided to or received from counterparties. See discussion of credit risk and collateral following in this Note. In addition, the Company had the following amounts associated with fuel derivative instruments and hedging activities in its unaudited Condensed Consolidated Balance Sheet: Balance Sheet September 30, December 31, (in millions) location 2023 2022 Cash collateral deposits held from counterparties for fuel contracts - current Offset against Prepaid expenses and other current assets $ 70 $ 106 Cash collateral deposits held from counterparties for fuel contracts - noncurrent Offset against Other assets 30 — Receivable from third parties for fuel contracts Accounts and other receivables 45 34 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 September 30, 2023, no cash collateral deposits were provided by or held by the Company based on its outstanding interest rate swap agreements. The Company had the following recognized financial assets and financial liabilities resulting from those transactions that meet the scope of the disclosure requirements as necessitated by applicable accounting guidance for balance sheet offsetting: Offsetting of derivative assets (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) September 30, 2023 December 31, 2022 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 $ 292 $ (98) $ 194 $ 352 $ (106) $ 246 Fuel derivative contracts Other assets $ 223 $ (30) $ 193 (a) $ 160 $ — $ 160 (a) Interest rate derivative contracts Other assets $ 23 $ — $ 23 (a) $ 14 $ — $ 14 (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 8. Offsetting of derivative liabilities (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) September 30, 2023 December 31, 2022 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 $ 98 $ (98) $ — $ 106 $ (106) $ — Fuel derivative contracts Other assets $ 30 $ (30) $ — $ — $ — $ — The following tables present the impact of derivative instruments and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30, 2023 and 2022: Location and amount recognized in income on cash flow and fair value hedging relationships Three months ended September 30, 2023 Three months ended September 30, 2022 (in millions) Fuel and oil Other operating expenses Fuel and oil Other operating expenses Total $ (52) $ 2 $ (195) $ 2 (Gain) loss on cash flow hedging relationships Commodity contracts: Amount of (gain) reclassified from AOCI into income (52) — (195) — Interest contracts: Amount of loss reclassified from AOCI into income — 2 — 2 Location and amount recognized in income on cash flow and fair value hedging relationships Nine months ended September 30, 2023 Nine months ended September 30, 2022 (in millions) Fuel and oil Other operating expenses Fuel and oil Other operating expenses Total $ (93) $ 5 $ (703) $ 5 (Gain) loss on cash flow hedging relationships Commodity contracts: Amount of (gain) reclassified from AOCI into income (93) — (703) — Interest contracts: Amount of loss reclassified from AOCI into income — 5 — 5 Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Three months ended September 30, (in millions) 2023 2022 Fuel derivative contracts $ (175) $ 354 Interest rate derivatives (7) (2) Total $ (182) $ 352 Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Nine months ended September 30, (in millions) 2023 2022 Fuel derivative contracts $ 78 $ (438) Interest rate derivatives (7) (14) Total $ 71 $ (452) Derivatives not designated as hedges (Gain) loss recognized in income on derivatives Three months ended Location of (gain) loss recognized in income on derivatives September 30, (in millions) 2023 2022 Fuel derivative contracts $ (33) $ (38) Other (gains) losses, net Derivatives not designated as hedges (Gain) loss recognized in income on derivatives Nine months ended Location of (gain) loss recognized in income on derivatives September 30, (in millions) 2023 2022 Fuel derivative contracts $ (26) $ (23) Other (gains) losses, net The Company also recorded expense (benefit) associated with premiums paid for fuel derivative contracts that settled/expired during the three and nine months ended September 30, 2023 and 2022. 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 (Loss) during the period the contract settles: Premium expense (benefit) recognized in income on derivatives Three months ended Location of premium expense (benefit) recognized in income on derivatives September 30, (in millions) 2023 2022 Fuel derivative contracts designated as hedges $ 30 $ 26 Fuel and oil Fuel derivative contracts not designated as hedges — (14) Other (gains) losses, net Premium expense (benefit) recognized in income on derivatives Nine months ended Location of premium expense (benefit) recognized in income on derivatives September 30, (in millions) 2023 2022 Fuel derivative contracts designated as hedges $ 91 $ 79 Fuel and oil Fuel derivative contracts not designated as hedges $ — $ (14) 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 September 30, 2023, recorded in AOCI, were approximately $77 million in unrealized gains, net of taxes, which are expected to be realized in earnings during the twelve months subsequent to September 30, 2023. Interest Rate Swaps The Company is party to certain interest rate swap agreements that are accounted for as cash flow hedges. The Company did not have any interest rate swap agreements designated as fair value hedges, as defined, during the periods presented. All 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. 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. As of September 30, 2023, 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 September 30, 2023, at which such postings are triggered: Counterparty (CP) (in millions) A B C D E F G H Total Fair value of fuel derivatives $ 120 $ 57 $ 84 $ 28 $ 77 $ 35 $ 60 $ 26 $ 487 Cash collateral held from CP 100 — — — — — — — 100 Option to substitute LC for cash N/A N/A (a) (a) (a) N/A (a) N/A If credit rating is investment Cash is provided to CP >(100) >(50) >(75) >(125) >(40) >(65) >(100) >(100) Cash is received from CP >0(b) >150(b) >250(b) >125(b) >100(b) >70(b) >100(b) >100(b) If credit rating is non-investment Cash is received from CP (c) (c) (c) (c) (c) (c) (c) (c) (a) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (b) Thresholds may vary based on changes in credit ratings within investment grade. (c) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. |
Comprehensive Income (Loss)
Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2023 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
COMPREHENSIVE INCOME (LOSS) | COMPREHENSIVE INCOME (LOSS) Comprehensive income includes changes in the fair value of certain financial derivative instruments that qualify for hedge accounting and actuarial gains/losses arising from the Company’s postretirement benefit obligation. The differences between Net income and Comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022 were as follows: Three months ended September 30, (in millions) 2023 2022 NET INCOME $ 193 $ 277 Unrealized gain (loss) on fuel derivative instruments, net of deferred taxes of $41 and ($153) 135 (504) Unrealized gain on interest rate derivative instruments, net of deferred taxes of $2 and $— 8 4 Total other comprehensive income (loss) $ 143 $ (500) COMPREHENSIVE INCOME (LOSS) $ 336 $ (223) Nine months ended September 30, (in millions) 2023 2022 NET INCOME $ 717 $ 759 Unrealized loss on fuel derivative instruments, net of deferred taxes of ($45) and ($31) (150) (101) Unrealized gain on interest rate derivative instruments, net of deferred taxes of $2 and $5 11 18 Other, net of deferred taxes of $4 and $— (4) — Total other comprehensive loss $ (143) $ (83) COMPREHENSIVE INCOME $ 574 $ 676 A rollforward of the amounts included in AOCI, net of taxes, is shown below for the three and nine months ended September 30, 2023: (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Deferred tax impact Accumulated other comprehensive income (loss) Balance at June 30, 2023 $ (65) $ (29) $ 170 $ (18) $ 58 Changes in fair value 228 8 — (55) 181 Reclassification to earnings (52) 2 — 12 (38) Balance at September 30, 2023 $ 111 $ (19) $ 170 $ (61) $ 201 (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Deferred tax impact Accumulated other comprehensive income (loss) Balance at December 31, 2022 $ 305 $ (32) $ 170 $ (99) $ 344 Changes in fair value (101) 8 — 21 (72) Reclassification to earnings (93) 5 — 17 (71) Balance at September 30, 2023 $ 111 $ (19) $ 170 $ (61) $ 201 The following tables illustrate the significant amounts reclassified out of each component of AOCI for the three and nine months ended September 30, 2023: Three months ended September 30, 2023 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) AOCI components Unrealized (gain) on fuel derivative instruments $ (52) Fuel and oil expense (12) Less: Tax expense $ (40) 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 $ (38) Net of tax Nine months ended September 30, 2023 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) AOCI components Unrealized (gain) on fuel derivative instruments $ (93) Fuel and oil expense (22) Less: Tax expense $ (71) Net of tax Unrealized loss on interest rate derivative instruments $ 5 Other operating expenses 1 Less: Tax expense $ 4 Net of tax Other — Other 4 Less: Tax Expense $ (4) Net of tax Total reclassifications for the period $ (71) Net of tax |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2023 | |
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 nine months ended September 30, 2023 and 2022: Three months ended September 30, Nine months ended September 30, (in millions) 2023 2022 2023 2022 Passenger non-loyalty $ 4,758 $ 4,630 $ 14,023 $ 13,112 Passenger loyalty - air transportation 916 791 2,730 2,236 Passenger ancillary sold separately 238 192 673 519 Total passenger revenues $ 5,912 $ 5,613 $ 17,426 $ 15,867 As of September 30, 2023, and December 31, 2022, 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) September 30, 2023 December 31, 2022 Air traffic liability - passenger travel and ancillary passenger services $ 4,004 $ 3,061 Air traffic liability - loyalty program 4,996 5,189 Total Air traffic liability $ 9,000 $ 8,250 The balance in "Air traffic liability - passenger travel and ancillary passenger services" also includes flight credits not currently associated with a ticket that can be applied by Customers towards the purchase of future travel. These flight credits are typically created as a result of a prior ticket cancellation or exchange, and are reflected net of associated breakage. Rollforwards of the Company's "Air traffic liability - loyalty program" for the three and nine months ended September 30, 2023 and 2022 were as follows (in millions): Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Air traffic liability - loyalty program - beginning balance $ 5,079 $ 4,885 $ 5,189 $ 4,789 Amounts deferred associated with points awarded 859 815 2,609 2,395 Revenue recognized from points redeemed - Passenger (916) (791) (2,730) (2,236) Revenue recognized from points redeemed - Other (26) (24) (72) (63) Air traffic liability - loyalty program - ending balance $ 4,996 $ 4,885 $ 4,996 $ 4,885 Air traffic liability includes consideration received for ticket and loyalty related performance obligations which have not been satisfied as of a given date. Rollforwards of the amounts included in Air traffic liability as of September 30, 2023 and 2022 were as follows (in millions): Air traffic liability Balance at December 31, 2022 $ 8,250 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 18,249 Revenue from amounts included in contract liability opening balances (5,263) Revenue from current period sales (12,236) Balance at September 30, 2023 $ 9,000 Air traffic liability Balance at December 31, 2021 $ 7,725 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 16,630 Revenue from amounts included in contract liability opening balances (3,750) Revenue from current period sales (12,180) Balance at September 30, 2022 $ 8,425 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. 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. As the Company continues to believe that a portion of Customer flight credits issued after July 28, 2022, will not be redeemed, it continues to estimate and record breakage associated with such amounts. The amount of Customer flight credits represents approximately 7 percent and 9 percent of the total Air traffic liability balance as of September 30, 2023, and December 31, 2022, respectively. 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 Bank USA, N.A, within Other operating revenues. For the three months ended September 30, 2023 and 2022, the Company recognized $526 million and $521 million, respectively. For the nine months ended September 30, 2023 and 2022, the Company recognized $1.6 billion and $1.5 billion, respectively. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 30, 2023 | |
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). Basic net income per share is calculated by dividing net income by the weighted average of shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the three and nine months ended September 30, 2023 and 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. Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 NUMERATOR: Net income $ 193 $ 277 $ 717 $ 759 Add: Interest expense 5 5 15 17 Net income attributable to common stockholders 198 282 732 776 DENOMINATOR: Weighted-average shares outstanding, basic 596 593 595 593 Dilutive effects of Convertible Notes 42 45 42 (a) 49 Dilutive effect of restricted stock units 2 1 2 1 Adjusted weighted-average shares outstanding, diluted 640 639 639 643 NET INCOME PER SHARE: Basic $ 0.32 $ 0.47 $ 1.20 $ 1.28 Diluted $ 0.31 $ 0.44 $ 1.15 $ 1.21 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Accounting standards pertaining to fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. As of September 30, 2023, 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), interest rate derivative contracts, fuel derivative contracts, and available-for-sale securities. The majority of the Company’s cash equivalents and 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 3 for further information on the Company’s derivative instruments and hedging activities. The fair values of swap contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Therefore, the Company has categorized these swap contracts as Level 2. The Company’s Treasury Department, which reports to the Chief Financial Officer, determines the value of option contracts utilizing an option pricing model based on inputs that are either readily available in public markets, can be derived from information available in publicly quoted markets, or are provided by financial institutions that trade these contracts. The option pricing model used by the Company is an industry standard model for valuing options and is 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 (Loss). The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2023, and December 31, 2022: Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description September 30, 2023 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents: Cash equivalents (a) $ 9,166 $ 9,166 $ — $ — Commercial paper 314 — 314 — Certificates of deposit 17 — 17 — Short-term investments: Treasury bills 2,029 2,029 — — Certificates of deposit 207 — 207 — Fuel derivatives: Option contracts (b) 515 — — 515 Interest rate derivatives (see Note 3) 23 — 23 — Equity Securities 249 249 — — Total assets $ 12,520 $ 11,444 $ 561 $ 515 Liabilities Fuel derivatives: Option contracts (b) $ (28) $ — $ — $ (28) (a) Cash equivalents are primarily composed of money market investments and treasury bills. (b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net asset. See Note 3. Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description December 31, 2022 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents: Cash equivalents (a) $ 9,040 $ 9,040 $ — $ — Commercial paper 179 — 179 — Certificates of deposit 23 — 23 — Time deposits 250 — 250 — Short-term investments: Treasury bills 2,226 2,226 — — Certificates of deposit 124 — 124 — Time deposits 450 — 450 — Fuel derivatives: Option contracts (b) 512 — — 512 Interest rate derivatives (see Note 3) 14 — 14 — Equity Securities 235 235 — — Total assets $ 13,053 $ 11,501 $ 1,040 $ 512 (a) Cash equivalents are primarily composed of money market investments. (b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as an asset. See Note 3. The Company did not have any material assets or liabilities measured at fair value on a nonrecurring basis during the nine months ended September 30, 2023, or the year ended December 31, 2022. The following tables present the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2023: Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at June 30, 2023 $ 316 Total gains (losses) for the period Included in earnings 33 (a) Included in other comprehensive income 228 Purchases 4 (b) Settlements (94) Balance at September 30, 2023 $ 487 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 September 30, 2023 $ (16) (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 September 30, 2023 $ (182) (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income. (b) The purchase of fuel derivatives is recorded on a gross basis 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, 2022 $ 512 Total gains (losses) for the period Included in earnings 26 (a) Included in other comprehensive income (100) Purchases 245 (b) Settlements (196) Balance at September 30, 2023 $ 487 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 September 30, 2023 $ (14) (a) The amount of total losses for the period included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2023 $ 26 (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income. (b) The purchase of fuel derivatives is recorded on a gross basis 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 as of September 30, 2023: 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 Fourth quarter 2023 19-41% 31 % 2024 26-38% 28 % 2025 24-28% 25 % 2026 23-26% 25 % (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, as of September 30, 2023, 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 5.25% Notes due 2025 1,302 1,287 Level 2 1.25% Convertible Notes due 2025 1,611 1,616 Level 2 3.00% Notes due 2026 300 278 Level 2 7.375% Debentures due 2027 111 104 Level 2 3.45% Notes due 2027 300 275 Level 2 5.125% Notes due 2027 1,727 1,683 Level 2 2.625% due 2030 500 414 Level 2 1.000% Payroll Support Program Loan due 2030 (a) 976 893 Level 3 1.000% Payroll Support Program Loan due 2031 (a) 566 500 Level 3 1.000% Payroll Support Program Loan due 2031 (a) 526 457 Level 3 (a) The interest rate will change to Secured Overnight Financing Rate +2% on the fifth anniversary of the loans. |
Supplemental Financial Informat
Supplemental Financial Information | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUPPLEMENTAL FINANCIAL INFORMATION | SUPPLEMENTAL FINANCIAL INFORMATION (in millions) September 30, 2023 December 31, 2022 Trade receivables $ 142 $ 117 Credit card receivables 382 85 Business partners and other suppliers 606 478 Taxes receivable 53 133 Fuel hedging and receivables 45 34 Other 239 193 Accounts and other receivables $ 1,467 $ 1,040 (in millions) September 30, 2023 December 31, 2022 Derivative contracts $ 216 $ 174 Intangible assets, net 296 296 Equity securities 249 235 Other 255 150 Other assets $ 1,016 $ 855 (in millions) September 30, 2023 December 31, 2022 Accounts payable trade $ 329 $ 277 Salaries, withholdings and payroll taxes 338 456 Ticket taxes and fees 357 242 Aircraft maintenance payable 121 65 Fuel payable 153 188 Dividends payable — 107 Customer reimbursements and refunds (a) 6 311 Accrued third party services 225 196 Other payable 207 162 Accounts payable $ 1,736 $ 2,004 (in millions) September 30, 2023 December 31, 2022 Voluntary Separation Program $ 65 $ 72 Profitsharing and savings plans 184 167 Vacation pay 513 484 Health 315 261 Workers compensation 128 164 Property and income taxes 64 37 Interest 72 45 Bonus and incentive pay (b) 1,250 563 Other 289 250 Accrued liabilities $ 2,880 $ 2,043 (in millions) September 30, 2023 December 31, 2022 Voluntary Separation Program $ 83 $ 147 Postretirement obligation 246 241 Other deferred compensation 327 331 Other 224 250 Other noncurrent liabilities $ 880 $ 969 (a) As of December 31, 2022, included customer reimbursement expenses due to the Company's December 2022 operational disruption and refund submissions that had yet to be processed. As of September 30, 2023, amounts primarily consist of normal current activity. (b) Primarily consists of anticipated contract labor ratification bonuses and/or accruals. Also includes non-contract incentive pay. Included in Salaries, wages and benefits expense for the three and nine months ended September 30, 2023, is incremental expense of $96 million and $180 million, respectively, for changes in estimate related to the contract ratification bonus for the Company’s Flight Attendants as part of the tentative agreement reached in October 2023 with the Transport Workers Union 556 ("TWU 556"). The cumulative $180 million is included in the balance as of September 30, 2023. The Company began accruing for all of its open labor contracts on April 1, 2022, and this incremental $180 million expense extends the timeframe covered by the ratification bonus to the date the Flight Attendant contract became amendable on November 1, 2018, to compensate for missed wage increases over that time period. For further information on fuel derivative and interest rate derivative contracts, see Note 3. 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 Total operating expenses. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Commitments On October 25, 2023, the Company entered into a supplemental agreement with The Boeing Company ("Boeing") relating to its contractual order book for Boeing 737-7 and Boeing 737-8 aircraft. Based on the Company's agreement with Boeing, capital commitments associated with firm orders as of October 26, 2023, were: $133 million remaining in 2023, $2.1 billion in 2024, $1.7 billion in 2025, $1.8 billion in 2026, $2.6 billion in 2027, $2.9 billion in 2028, and $5.3 billion thereafter. 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. Based on the wide-scale operational disruption for the Company, which led to the cancelation of a significant number of flights between December 21 and December 29, 2022, the Company could be subject to fines and/or penalties resulting from investigations by the Department of Transportation or other government agencies. See Note 1. On October 27, 2023, the Department of Transportation notified the Company that it has determined the Company had failed to provide adequate customer service assistance, prompt flight status notifications, and proper and prompt refunds and that the assessment of a civil penalty is warranted. The Company could also face monetary damages or other costs resulting from litigation initiated by Customers and/or Shareholders. The Company is currently not able to estimate a range of possible loss for such items. The Company is a defendant in class action litigation asserting it has not provided paid short-term military leave to certain employees, in violation of the federal Uniformed Services Employment and Reemployment Rights Act (“USERRA”). The United States District Court for the Northern District of California previously issued an order to effectively stay the action, pending an appeal from an order by the United States District Court for the Eastern District of Washington granting summary judgment in favor of an airline in a separate case involving substantially the same claims at issue in this action. On February 1, 2023, the Ninth Circuit reversed the district court’s grant of summary judgment and remanded the separate airline case to the District Court. The Ninth Circuit’s decision may adversely affect the Company’s defenses in the USERRA proceeding and may give rise to additional litigation in this or other areas. The Company is currently not able to estimate a range of possible loss with regards to the litigation to which it is a defendant. |
Financing Activities
Financing Activities | 9 Months Ended |
Sep. 30, 2023 | |
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 Senior Notes (the "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. 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. The Convertible Notes did not meet the criteria to be converted as of the date of the financial statements, and thus are classified as Long-term debt in the accompanying unaudited Condensed Consolidated Balance Sheet as of September 30, 2023. 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 was 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). However, based on the Company's most recent cash dividends declared in August 2023, the bond conversion rate changed to 26.5559 on September 5, 2023. The net carrying amount and principal amount of the Convertible Notes was $1.6 billion as of September 30, 2023 and December 31, 2022. The Company recognized interest expense associated with the Convertible Notes as follows: Three months ended September 30, Nine months ended September 30, (in millions) 2023 2022 2023 2022 Non-cash amortization of debt issuance costs $ 3 $ 3 $ 8 $ 9 Contractual coupon interest 5 5 15 18 Total interest expense $ 8 $ 8 $ 23 $ 27 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 contingencies during the nine months ended September 30, 2023. The effective interest rate associated with the Convertible Notes was approximately 1.9 percent for the three and nine months ended September 30, 2023. The following tables present the impact of the partial extinguishment of the Company's Convertible Notes and early prepayment of debt (excluding payments on finance leases) for the three and nine months ended September 30, 2022. No such instances of partial extinguishment or early prepayment of debt occurred for the three and nine months ended September 30, 2023. Three months ended September 30, 2022 (in millions) Cash paid for debt and interest Principal repayment Loss on extinguishment Non-cash amortization of debt discount and (issuance) costs Accrued Interest 1.25% Convertible Notes due 2025 $ 240 $ 184 $ 59 $ (3) $ — 5.125% Notes due 2027 149 143 3 1 2 4.75% Notes due 2023 1,274 1,247 8 — 19 5.25% Notes due 2025 227 217 6 — 4 Total $ 1,890 $ 1,791 $ 76 $ (2) $ 25 Nine months ended September 30, 2022 (in millions) Cash paid for debt and interest Principal repayment Loss on extinguishment Non-cash amortization of debt discount and (issuance) costs Accrued Interest 1.25% Convertible Notes due 2025 $ 649 $ 486 $ 171 $ (9) $ 1 5.125% Notes due 2027 209 199 6 2 2 4.75% Notes due 2023 1,278 1,250 9 — 19 5.25% Notes due 2025 228 218 6 — 4 Total $ 2,364 $ 2,153 $ 192 $ (7) $ 26 |
New Accounting Pronouncements (
New Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
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 September 30, 2023 and 2022 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 performed better in its second and third fiscal quarters than in its first and fourth fiscal quarters. Air travel is also significantly impacted by general economic conditions, the amount of disposable income available to consumers 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 3 for further information on fuel and the Company's hedging program. Operating results for the three and nine months ended September 30, 2023, are not necessarily indicative of the results that may be expected for future quarters or for the year ended December 31, 2023. 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, 2022. |
New Accounting Pronouncements | On January 7, 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848). This 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, 2024, any new hedging relationships entered into after December 31, 2024, or to existing hedging relationships evaluated for effectiveness existing as of December 31, 2024, 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 nine months ended September 30, 2023. |
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. The Company does not purchase or hold any financial derivative instruments for trading or speculative purposes. 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 the Company defines as prices significantly higher than historical average levels), 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 September 30, 2023, 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), interest rate derivative contracts, fuel derivative contracts, and available-for-sale securities. The majority of the Company’s cash equivalents and 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 3 for further information on the Company’s derivative instruments and hedging activities. The fair values of swap contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Therefore, the Company has categorized these swap contracts as Level 2. The Company’s Treasury Department, which reports to the Chief Financial Officer, determines the value of option contracts utilizing an option pricing model based on inputs that are either readily available in public markets, can be derived from information available in publicly quoted markets, or are provided by financial institutions that trade these contracts. The option pricing model used by the Company is an industry standard model for valuing options and is 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 (Loss). |
Revenue Recognition | 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 Bank USA, N.A, within Other operating revenues. |
Financial Derivative Instrume_2
Financial Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Volume of Fuel Hedging | The following table provides information about the Company’s volume of fuel hedging on an economic basis: Maximum fuel hedged as of September 30, 2023 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) September 30, 2023 Remainder of 2023 271 West Texas Intermediate ("WTI") crude oil, Brent crude oil, and Heating oil 2024 1,265 WTI crude oil and Brent crude oil 2025 1,033 Brent crude oil 2026 176 Brent crude oil (a) Due to the types of derivatives utilized by the Company and different price levels of those contracts, these volumes represent the maximum economic hedge in place and may vary significantly as market prices and the Company's flight schedule fluctuate. |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table presents the location of all assets and liabilities associated with the Company’s derivative instruments within the unaudited Condensed Consolidated Balance Sheet: Asset derivatives Liability derivatives Balance Sheet Fair value at Fair value at Fair value at Fair value at (in millions) location 9/30/2023 12/31/2022 9/30/2023 12/31/2022 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 250 $ 352 $ — $ — Fuel derivative contracts (gross) Other assets 223 160 — — Interest rate derivative contracts Other assets 23 14 — — Total derivatives designated as hedges $ 496 $ 526 $ — $ — Derivatives not designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 42 $ — $ 28 $ — Total derivatives $ 538 $ 526 $ 28 $ — (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. |
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 September 30, December 31, (in millions) location 2023 2022 Cash collateral deposits held from counterparties for fuel contracts - current Offset against Prepaid expenses and other current assets $ 70 $ 106 Cash collateral deposits held from counterparties for fuel contracts - noncurrent Offset against Other assets 30 — Receivable from third parties for fuel contracts Accounts and other receivables 45 34 The Company had the following recognized financial assets and financial liabilities resulting from those transactions that meet the scope of the disclosure requirements as necessitated by applicable accounting guidance for balance sheet offsetting: Offsetting of derivative assets (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) September 30, 2023 December 31, 2022 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 $ 292 $ (98) $ 194 $ 352 $ (106) $ 246 Fuel derivative contracts Other assets $ 223 $ (30) $ 193 (a) $ 160 $ — $ 160 (a) Interest rate derivative contracts Other assets $ 23 $ — $ 23 (a) $ 14 $ — $ 14 (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 8. |
Offsetting Liabilities | Offsetting of derivative liabilities (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) September 30, 2023 December 31, 2022 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 $ 98 $ (98) $ — $ 106 $ (106) $ — Fuel derivative contracts Other assets $ 30 $ (30) $ — $ — $ — $ — |
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 (Loss) for the three and nine months ended September 30, 2023 and 2022: Location and amount recognized in income on cash flow and fair value hedging relationships Three months ended September 30, 2023 Three months ended September 30, 2022 (in millions) Fuel and oil Other operating expenses Fuel and oil Other operating expenses Total $ (52) $ 2 $ (195) $ 2 (Gain) loss on cash flow hedging relationships Commodity contracts: Amount of (gain) reclassified from AOCI into income (52) — (195) — Interest contracts: Amount of loss reclassified from AOCI into income — 2 — 2 Location and amount recognized in income on cash flow and fair value hedging relationships Nine months ended September 30, 2023 Nine months ended September 30, 2022 (in millions) Fuel and oil Other operating expenses Fuel and oil Other operating expenses Total $ (93) $ 5 $ (703) $ 5 (Gain) loss on cash flow hedging relationships Commodity contracts: Amount of (gain) reclassified from AOCI into income (93) — (703) — Interest contracts: Amount of loss reclassified from AOCI into income — 5 — 5 Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Three months ended September 30, (in millions) 2023 2022 Fuel derivative contracts $ (175) $ 354 Interest rate derivatives (7) (2) Total $ (182) $ 352 Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Nine months ended September 30, (in millions) 2023 2022 Fuel derivative contracts $ 78 $ (438) Interest rate derivatives (7) (14) Total $ 71 $ (452) |
Derivative Instruments, Gain (Loss) | Derivatives not designated as hedges (Gain) loss recognized in income on derivatives Three months ended Location of (gain) loss recognized in income on derivatives September 30, (in millions) 2023 2022 Fuel derivative contracts $ (33) $ (38) Other (gains) losses, net Derivatives not designated as hedges (Gain) loss recognized in income on derivatives Nine months ended Location of (gain) loss recognized in income on derivatives September 30, (in millions) 2023 2022 Fuel derivative contracts $ (26) $ (23) 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 (Loss) during the period the contract settles: Premium expense (benefit) recognized in income on derivatives Three months ended Location of premium expense (benefit) recognized in income on derivatives September 30, (in millions) 2023 2022 Fuel derivative contracts designated as hedges $ 30 $ 26 Fuel and oil Fuel derivative contracts not designated as hedges — (14) Other (gains) losses, net Premium expense (benefit) recognized in income on derivatives Nine months ended Location of premium expense (benefit) recognized in income on derivatives September 30, (in millions) 2023 2022 Fuel derivative contracts designated as hedges $ 91 $ 79 Fuel and oil Fuel derivative contracts not designated as hedges $ — $ (14) 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 September 30, 2023, at which such postings are triggered: Counterparty (CP) (in millions) A B C D E F G H Total Fair value of fuel derivatives $ 120 $ 57 $ 84 $ 28 $ 77 $ 35 $ 60 $ 26 $ 487 Cash collateral held from CP 100 — — — — — — — 100 Option to substitute LC for cash N/A N/A (a) (a) (a) N/A (a) N/A If credit rating is investment Cash is provided to CP >(100) >(50) >(75) >(125) >(40) >(65) >(100) >(100) Cash is received from CP >0(b) >150(b) >250(b) >125(b) >100(b) >70(b) >100(b) >100(b) If credit rating is non-investment Cash is received from CP (c) (c) (c) (c) (c) (c) (c) (c) (a) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (b) Thresholds may vary based on changes in credit ratings within investment grade. (c) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. |
Comprehensive Income (Loss) (Ta
Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Components of Comprehensive Income (Loss) | The differences between Net income and Comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022 were as follows: Three months ended September 30, (in millions) 2023 2022 NET INCOME $ 193 $ 277 Unrealized gain (loss) on fuel derivative instruments, net of deferred taxes of $41 and ($153) 135 (504) Unrealized gain on interest rate derivative instruments, net of deferred taxes of $2 and $— 8 4 Total other comprehensive income (loss) $ 143 $ (500) COMPREHENSIVE INCOME (LOSS) $ 336 $ (223) Nine months ended September 30, (in millions) 2023 2022 NET INCOME $ 717 $ 759 Unrealized loss on fuel derivative instruments, net of deferred taxes of ($45) and ($31) (150) (101) Unrealized gain on interest rate derivative instruments, net of deferred taxes of $2 and $5 11 18 Other, net of deferred taxes of $4 and $— (4) — Total other comprehensive loss $ (143) $ (83) COMPREHENSIVE INCOME $ 574 $ 676 |
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 nine months ended September 30, 2023: (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Deferred tax impact Accumulated other comprehensive income (loss) Balance at June 30, 2023 $ (65) $ (29) $ 170 $ (18) $ 58 Changes in fair value 228 8 — (55) 181 Reclassification to earnings (52) 2 — 12 (38) Balance at September 30, 2023 $ 111 $ (19) $ 170 $ (61) $ 201 (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Deferred tax impact Accumulated other comprehensive income (loss) Balance at December 31, 2022 $ 305 $ (32) $ 170 $ (99) $ 344 Changes in fair value (101) 8 — 21 (72) Reclassification to earnings (93) 5 — 17 (71) Balance at September 30, 2023 $ 111 $ (19) $ 170 $ (61) $ 201 |
Reclassification out of Accumulated Other Comprehensive Income (Loss) | The following tables illustrate the significant amounts reclassified out of each component of AOCI for the three and nine months ended September 30, 2023: Three months ended September 30, 2023 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) AOCI components Unrealized (gain) on fuel derivative instruments $ (52) Fuel and oil expense (12) Less: Tax expense $ (40) 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 $ (38) Net of tax Nine months ended September 30, 2023 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) AOCI components Unrealized (gain) on fuel derivative instruments $ (93) Fuel and oil expense (22) Less: Tax expense $ (71) Net of tax Unrealized loss on interest rate derivative instruments $ 5 Other operating expenses 1 Less: Tax expense $ 4 Net of tax Other — Other 4 Less: Tax Expense $ (4) Net of tax Total reclassifications for the period $ (71) Net of tax |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Passenger Revenue | The following table provides the components of Passenger revenue recognized for the three and nine months ended September 30, 2023 and 2022: Three months ended September 30, Nine months ended September 30, (in millions) 2023 2022 2023 2022 Passenger non-loyalty $ 4,758 $ 4,630 $ 14,023 $ 13,112 Passenger loyalty - air transportation 916 791 2,730 2,236 Passenger ancillary sold separately 238 192 673 519 Total passenger revenues $ 5,912 $ 5,613 $ 17,426 $ 15,867 |
Rollforward of Air Traffic Liability | As of September 30, 2023, and December 31, 2022, 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) September 30, 2023 December 31, 2022 Air traffic liability - passenger travel and ancillary passenger services $ 4,004 $ 3,061 Air traffic liability - loyalty program 4,996 5,189 Total Air traffic liability $ 9,000 $ 8,250 Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Air traffic liability - loyalty program - beginning balance $ 5,079 $ 4,885 $ 5,189 $ 4,789 Amounts deferred associated with points awarded 859 815 2,609 2,395 Revenue recognized from points redeemed - Passenger (916) (791) (2,730) (2,236) Revenue recognized from points redeemed - Other (26) (24) (72) (63) Air traffic liability - loyalty program - ending balance $ 4,996 $ 4,885 $ 4,996 $ 4,885 Air traffic liability Balance at December 31, 2022 $ 8,250 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 18,249 Revenue from amounts included in contract liability opening balances (5,263) Revenue from current period sales (12,236) Balance at September 30, 2023 $ 9,000 Air traffic liability Balance at December 31, 2021 $ 7,725 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 16,630 Revenue from amounts included in contract liability opening balances (3,750) Revenue from current period sales (12,180) Balance at September 30, 2022 $ 8,425 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings per Share Basic and Diluted | Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 NUMERATOR: Net income $ 193 $ 277 $ 717 $ 759 Add: Interest expense 5 5 15 17 Net income attributable to common stockholders 198 282 732 776 DENOMINATOR: Weighted-average shares outstanding, basic 596 593 595 593 Dilutive effects of Convertible Notes 42 45 42 (a) 49 Dilutive effect of restricted stock units 2 1 2 1 Adjusted weighted-average shares outstanding, diluted 640 639 639 643 NET INCOME PER SHARE: Basic $ 0.32 $ 0.47 $ 1.20 $ 1.28 Diluted $ 0.31 $ 0.44 $ 1.15 $ 1.21 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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 as of September 30, 2023, and December 31, 2022: Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description September 30, 2023 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents: Cash equivalents (a) $ 9,166 $ 9,166 $ — $ — Commercial paper 314 — 314 — Certificates of deposit 17 — 17 — Short-term investments: Treasury bills 2,029 2,029 — — Certificates of deposit 207 — 207 — Fuel derivatives: Option contracts (b) 515 — — 515 Interest rate derivatives (see Note 3) 23 — 23 — Equity Securities 249 249 — — Total assets $ 12,520 $ 11,444 $ 561 $ 515 Liabilities Fuel derivatives: Option contracts (b) $ (28) $ — $ — $ (28) (a) Cash equivalents are primarily composed of money market investments and treasury bills. (b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net asset. See Note 3. Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description December 31, 2022 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents: Cash equivalents (a) $ 9,040 $ 9,040 $ — $ — Commercial paper 179 — 179 — Certificates of deposit 23 — 23 — Time deposits 250 — 250 — Short-term investments: Treasury bills 2,226 2,226 — — Certificates of deposit 124 — 124 — Time deposits 450 — 450 — Fuel derivatives: Option contracts (b) 512 — — 512 Interest rate derivatives (see Note 3) 14 — 14 — Equity Securities 235 235 — — Total assets $ 13,053 $ 11,501 $ 1,040 $ 512 (a) Cash equivalents are primarily composed of money market investments. (b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as an asset. See Note 3. |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The following tables present the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2023: Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at June 30, 2023 $ 316 Total gains (losses) for the period Included in earnings 33 (a) Included in other comprehensive income 228 Purchases 4 (b) Settlements (94) Balance at September 30, 2023 $ 487 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 September 30, 2023 $ (16) (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 September 30, 2023 $ (182) (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income. (b) The purchase of fuel derivatives is recorded on a gross basis 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, 2022 $ 512 Total gains (losses) for the period Included in earnings 26 (a) Included in other comprehensive income (100) Purchases 245 (b) Settlements (196) Balance at September 30, 2023 $ 487 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 September 30, 2023 $ (14) (a) The amount of total losses for the period included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2023 $ 26 (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income. (b) The purchase of fuel derivatives is recorded on a gross basis based on the structure of the derivative instrument and whether a contract with multiple derivatives was purchased as a single instrument or separate instruments. |
Fair Value Valuation Techniques | The following table presents a range and weighted average of the unobservable inputs utilized in the fair value measurements of the Company’s fuel derivatives classified as Level 3 as of September 30, 2023: 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 Fourth quarter 2023 19-41% 31 % 2024 26-38% 28 % 2025 24-28% 25 % 2026 23-26% 25 % (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, as of September 30, 2023, 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 5.25% Notes due 2025 1,302 1,287 Level 2 1.25% Convertible Notes due 2025 1,611 1,616 Level 2 3.00% Notes due 2026 300 278 Level 2 7.375% Debentures due 2027 111 104 Level 2 3.45% Notes due 2027 300 275 Level 2 5.125% Notes due 2027 1,727 1,683 Level 2 2.625% due 2030 500 414 Level 2 1.000% Payroll Support Program Loan due 2030 (a) 976 893 Level 3 1.000% Payroll Support Program Loan due 2031 (a) 566 500 Level 3 1.000% Payroll Support Program Loan due 2031 (a) 526 457 Level 3 (a) The interest rate will change to Secured Overnight Financing Rate +2% on the fifth anniversary of the loans. |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Accounts and Other Receivables | (in millions) September 30, 2023 December 31, 2022 Trade receivables $ 142 $ 117 Credit card receivables 382 85 Business partners and other suppliers 606 478 Taxes receivable 53 133 Fuel hedging and receivables 45 34 Other 239 193 Accounts and other receivables $ 1,467 $ 1,040 |
Other Assets | (in millions) September 30, 2023 December 31, 2022 Derivative contracts $ 216 $ 174 Intangible assets, net 296 296 Equity securities 249 235 Other 255 150 Other assets $ 1,016 $ 855 |
Schedule of Accounts Payable | (in millions) September 30, 2023 December 31, 2022 Accounts payable trade $ 329 $ 277 Salaries, withholdings and payroll taxes 338 456 Ticket taxes and fees 357 242 Aircraft maintenance payable 121 65 Fuel payable 153 188 Dividends payable — 107 Customer reimbursements and refunds (a) 6 311 Accrued third party services 225 196 Other payable 207 162 Accounts payable $ 1,736 $ 2,004 |
Accrued Liabilities | (in millions) September 30, 2023 December 31, 2022 Voluntary Separation Program $ 65 $ 72 Profitsharing and savings plans 184 167 Vacation pay 513 484 Health 315 261 Workers compensation 128 164 Property and income taxes 64 37 Interest 72 45 Bonus and incentive pay (b) 1,250 563 Other 289 250 Accrued liabilities $ 2,880 $ 2,043 |
Other Noncurrent Liabilities | (in millions) September 30, 2023 December 31, 2022 Voluntary Separation Program $ 83 $ 147 Postretirement obligation 246 241 Other deferred compensation 327 331 Other 224 250 Other noncurrent liabilities $ 880 $ 969 (a) As of December 31, 2022, included customer reimbursement expenses due to the Company's December 2022 operational disruption and refund submissions that had yet to be processed. As of September 30, 2023, amounts primarily consist of normal current activity. |
Financing Activities (Tables)
Financing Activities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Interest Income and Interest Expense Disclosure | The Company recognized interest expense associated with the Convertible Notes as follows: Three months ended September 30, Nine months ended September 30, (in millions) 2023 2022 2023 2022 Non-cash amortization of debt issuance costs $ 3 $ 3 $ 8 $ 9 Contractual coupon interest 5 5 15 18 Total interest expense $ 8 $ 8 $ 23 $ 27 |
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 (excluding payments on finance leases) for the three and nine months ended September 30, 2022. No such instances of partial extinguishment or early prepayment of debt occurred for the three and nine months ended September 30, 2023. Three months ended September 30, 2022 (in millions) Cash paid for debt and interest Principal repayment Loss on extinguishment Non-cash amortization of debt discount and (issuance) costs Accrued Interest 1.25% Convertible Notes due 2025 $ 240 $ 184 $ 59 $ (3) $ — 5.125% Notes due 2027 149 143 3 1 2 4.75% Notes due 2023 1,274 1,247 8 — 19 5.25% Notes due 2025 227 217 6 — 4 Total $ 1,890 $ 1,791 $ 76 $ (2) $ 25 Nine months ended September 30, 2022 (in millions) Cash paid for debt and interest Principal repayment Loss on extinguishment Non-cash amortization of debt discount and (issuance) costs Accrued Interest 1.25% Convertible Notes due 2025 $ 649 $ 486 $ 171 $ (9) $ 1 5.125% Notes due 2027 209 199 6 2 2 4.75% Notes due 2023 1,278 1,250 9 — 19 5.25% Notes due 2025 228 218 6 — 4 Total $ 2,364 $ 2,153 $ 192 $ (7) $ 26 |
Basis of Presentation (Details)
Basis of Presentation (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Dec. 31, 2022 flight | Sep. 30, 2023 USD ($) | Mar. 31, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | |
Accounting Policies [Abstract] | ||||||
Customer reimbursements other expenses | $ 55 | |||||
Net income | $ 193 | $ 277 | $ 717 | $ 759 | ||
Loss on extinguishment of debt | 0 | 76 | 0 | 192 | ||
Other (gains) losses, net | $ (23) | $ (39) | $ (44) | $ 57 | ||
Number of Cancelled Flights | flight | 16,700 |
Financial Derivative Instrume_3
Financial Derivative Instruments - Fuel Hedging (Details) gal in Millions | 9 Months Ended |
Sep. 30, 2023 gal | |
Remainder of 2023 | |
Volume of Fuel Hedging | |
Fuel Hedged (in gallons) | 271 |
2024 | |
Volume of Fuel Hedging | |
Fuel Hedged (in gallons) | 1,265 |
2025 | |
Volume of Fuel Hedging | |
Fuel Hedged (in gallons) | 1,033 |
2026 | |
Volume of Fuel Hedging | |
Fuel Hedged (in gallons) | 176 |
Financial Derivative Instrume_4
Financial Derivative Instruments - Fair Values by Balance Sheet Location (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | $ 538 | $ 526 |
Gross amounts of recognized liabilities | 28 | 0 |
Fuel derivative contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 292 | 352 |
Gross amounts of recognized liabilities | 98 | 106 |
Fuel derivative contracts | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 223 | 160 |
Gross amounts of recognized liabilities | 30 | 0 |
Cash collateral deposits held from counterparties for fuel contracts - current | 30 | 0 |
Fuel derivative contracts | Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Cash collateral deposits held from counterparties for fuel contracts - current | 70 | 106 |
Fuel derivative contracts | Accounts and other receivables | ||
Derivatives, Fair Value [Line Items] | ||
Receivable from third parties for fuel contracts | 45 | 34 |
Interest rate derivative contracts | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 23 | 14 |
Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 496 | 526 |
Gross amounts of recognized liabilities | 0 | 0 |
Designated as Hedging Instrument | Fuel derivative contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 250 | 352 |
Gross amounts of recognized liabilities | 0 | 0 |
Designated as Hedging Instrument | Fuel derivative contracts | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 223 | 160 |
Gross amounts of recognized liabilities | 0 | 0 |
Designated as Hedging Instrument | Interest rate derivative contracts | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 23 | 14 |
Gross amounts of recognized liabilities | 0 | 0 |
Not Designated as Hedging Instrument | Fuel derivative contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 42 | 0 |
Gross amounts of recognized liabilities | $ 28 | $ 0 |
Financial Derivative Instrume_5
Financial Derivative Instruments - Narrative (Details) $ in Millions | Sep. 30, 2023 USD ($) |
Derivative [Line Items] | |
Net unrealized losses, net of taxes | $ 77 |
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 | Sep. 30, 2023 | Dec. 31, 2022 |
Offsetting Assets [Line Items] | ||
Gross amounts of recognized assets | $ 538 | $ 526 |
Fuel derivative contracts | Prepaid expenses and other current assets | ||
Offsetting Assets [Line Items] | ||
Gross amounts of recognized assets | 292 | 352 |
Gross amounts offset in the Balance Sheet | (98) | (106) |
Net amounts of assets presented in the Balance Sheet | $ 194 | $ 246 |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Prepaid expenses and other current assets | Prepaid expenses and other current assets |
Fuel derivative contracts | Other assets | ||
Offsetting Assets [Line Items] | ||
Gross amounts of recognized assets | $ 223 | $ 160 |
Gross amounts offset in the Balance Sheet | (30) | 0 |
Net amounts of assets presented in the Balance Sheet | $ 193 | $ 160 |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Other assets | Other assets |
Interest rate derivative contracts | ||
Offsetting Assets [Line Items] | ||
Net amounts of assets presented in the Balance Sheet | $ 23 | $ 14 |
Interest rate derivative contracts | Other assets | ||
Offsetting Assets [Line Items] | ||
Gross amounts of recognized assets | 23 | 14 |
Gross amounts offset in the Balance Sheet | $ 0 | $ 0 |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Other assets | Other assets |
Financial Derivative Instrume_7
Financial Derivative Instruments - Offsetting Derivative Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Offsetting Liabilities [Line Items] | ||
Gross amounts of recognized liabilities | $ 28 | $ 0 |
Fuel derivative contracts | Prepaid expenses and other current assets | ||
Offsetting Liabilities [Line Items] | ||
Gross amounts of recognized liabilities | 98 | 106 |
Gross amounts offset in the Balance Sheet | (98) | (106) |
Net amounts of liabilities presented in the Balance Sheet | $ 0 | $ 0 |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Prepaid expenses and other current assets | Prepaid expenses and other current assets |
Fuel derivative contracts | Other assets | ||
Offsetting Liabilities [Line Items] | ||
Gross amounts of recognized liabilities | $ 30 | $ 0 |
Gross amounts offset in the Balance Sheet | (30) | 0 |
Net amounts of liabilities presented in the Balance Sheet | $ 0 | $ 0 |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Other assets | Other assets |
Financial Derivative Instrume_8
Financial Derivative Instruments - Location and Amount Recognized in Income by Hedging Relationship (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Cash Flow Hedging | ||||
Derivative [Line Items] | ||||
Amount of (gain) reclassified from AOCI into income | $ (182) | $ 352 | $ 71 | $ (452) |
Cash Flow Hedging | Fuel derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of (gain) reclassified from AOCI into income | (175) | 354 | 78 | (438) |
Cash Flow Hedging | Interest rate derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of (gain) reclassified from AOCI into income | (7) | (2) | (7) | (14) |
Fuel and oil | ||||
Derivative [Line Items] | ||||
Derivatives designated as hedging instruments | (52) | (195) | (93) | (703) |
Fuel and oil | Cash Flow Hedging | Fuel derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of (gain) reclassified from AOCI into income | (52) | (195) | (93) | (703) |
Fuel and oil | Cash Flow Hedging | Interest rate derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of (gain) reclassified from AOCI into income | 0 | 0 | 0 | 0 |
Other operating expenses | ||||
Derivative [Line Items] | ||||
Derivatives designated as hedging instruments | 2 | 2 | 5 | 5 |
Other operating expenses | Cash Flow Hedging | Fuel derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of (gain) 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) reclassified from AOCI into income | $ 2 | $ 2 | $ 5 | $ 5 |
Financial Derivative Instrume_9
Financial Derivative Instruments - (Gain) Loss by Hedging Relationship (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Fuel derivative contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) | Other Nonoperating Income (Expense) |
Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in AOCI on derivatives, net of tax | $ (182) | $ 352 | $ 71 | $ (452) |
Cash Flow Hedging | Fuel derivative contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in AOCI on derivatives, net of tax | (175) | 354 | 78 | (438) |
Cash Flow Hedging | Interest rate derivative contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in AOCI on derivatives, net of tax | (7) | (2) | (7) | (14) |
Not Designated as Hedging Instrument | Fuel derivative contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in income on derivatives | $ (33) | $ (38) | $ (26) | $ (23) |
Financial Derivative Instrum_10
Financial Derivative Instruments - Premiums for Fuel Derivative Contracts (Details) - Fuel derivative contracts - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Designated as Hedging Instrument | Fuel and oil | ||||
Derivative [Line Items] | ||||
Premium expense (benefit) recognized in income on derivatives | $ 30 | $ 26 | $ 91 | $ 79 |
Not Designated as Hedging Instrument | Other (gains)/losses, net | ||||
Derivative [Line Items] | ||||
Fuel derivative contracts not designated as hedges | $ 0 | $ (14) | $ 0 | $ (14) |
Financial Derivative Instrum_11
Financial Derivative Instruments - Fair Values of Fuel Derivatives Amounts Posted as Collateral (Details) $ in Millions | Sep. 30, 2023 USD ($) |
If credit rating is investment grade, fair value of fuel derivative level at which: | |
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 | $ 487 |
Cash collateral held from CP | 100 |
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 | 120 |
Cash collateral held from CP | 100 |
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 | 57 |
Cash collateral held from CP | 0 |
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 | 84 |
Cash collateral held from CP | 0 |
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 | 28 |
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 | 77 |
Cash collateral held from CP | 0 |
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 | 35 |
Cash collateral held from CP | 0 |
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 | 60 |
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 H | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | 26 |
Cash collateral held from CP | 0 |
Fuel derivative contracts | Counterparty H | 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 |
Comprehensive Income (Loss) - D
Comprehensive Income (Loss) - Differences between Net Income and Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Condensed Statement of Income Captions [Line Items] | ||||||||
NET INCOME | $ 193 | $ 277 | $ 717 | $ 759 | ||||
Other, net of deferred taxes of $0 and $— | (4) | 0 | ||||||
Total other comprehensive income (loss) | 143 | (500) | (143) | (83) | ||||
COMPREHENSIVE INCOME (LOSS) | 336 | $ 544 | $ (306) | (223) | $ 674 | $ 225 | 574 | 676 |
Other deferred taxes | 4 | 0 | ||||||
Fuel derivative contracts | ||||||||
Condensed Statement of Income Captions [Line Items] | ||||||||
Unrealized gain (loss) on derivative instruments, net of deferred taxes | 135 | (504) | (150) | (101) | ||||
Derivative deferred taxes | 41 | (153) | (45) | (31) | ||||
Interest rate derivatives | ||||||||
Condensed Statement of Income Captions [Line Items] | ||||||||
Unrealized gain (loss) on derivative instruments, net of deferred taxes | 8 | 4 | 11 | 18 | ||||
Derivative deferred taxes | $ 2 | $ 0 | $ 2 | $ 5 |
Comprehensive Income (Loss) - S
Comprehensive Income (Loss) - Schedule of AOCI Components (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | $ 10,789 | $ 10,687 |
Changes in fair value | 181 | (72) |
Reclassification to earnings | (38) | (71) |
Balance at end of period | 11,054 | 11,054 |
Accumulated other comprehensive income (loss) | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | 58 | 344 |
Balance at end of period | 201 | 201 |
Fuel and Interest Rate Derivatives | Fuel derivative contracts | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | (65) | 305 |
Changes in fair value | 228 | (101) |
Reclassification to earnings | (52) | (93) |
Balance at end of period | 111 | 111 |
Fuel and Interest Rate Derivatives | Interest rate derivatives | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | (29) | (32) |
Changes in fair value | 8 | 8 |
Reclassification to earnings | 2 | 5 |
Balance at end of period | (19) | (19) |
Defined benefit plan items | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | 170 | 170 |
Balance at end of period | 170 | 170 |
Deferred tax impact | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at beginning of period | (18) | (99) |
Changes in fair value | (55) | 21 |
Reclassification to earnings | 12 | 17 |
Balance at end of period | $ (61) | $ (61) |
Comprehensive Income (Loss) - R
Comprehensive Income (Loss) - Reclassifications (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Fuel and oil | $ 1,564 | $ 1,750 | $ 4,514 | $ 4,390 |
Less: Tax expense | 44 | 76 | 202 | 254 |
Interest expense | 63 | 86 | 193 | 272 |
Net income | 193 | $ 277 | 717 | $ 759 |
Reclassification to earnings | ||||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Net income | (38) | (71) | ||
Fuel derivative contracts | Fuel and Interest Rate Derivatives | Reclassification to earnings | ||||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Fuel and oil | (52) | (93) | ||
Less: Tax expense | (12) | (22) | ||
Net income | (40) | (71) | ||
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 | 5 | ||
Net income | $ 2 | 4 | ||
Other Contract | Fuel and Interest Rate Derivatives | Reclassification to earnings | ||||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Less: Tax expense | 4 | |||
Net income | (4) | |||
Other Income | $ 0 |
Revenue - Passenger Revenue Bre
Revenue - Passenger Revenue Breakout (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Operating revenue | $ 6,525 | $ 6,220 | $ 19,268 | $ 17,642 |
Passenger | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating revenue | 5,912 | 5,613 | 17,426 | 15,867 |
Passenger non-loyalty | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating revenue | 4,758 | 4,630 | 14,023 | 13,112 |
Passenger loyalty - air transportation | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating revenue | 916 | 791 | 2,730 | 2,236 |
Passenger ancillary sold separately | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating revenue | $ 238 | $ 192 | $ 673 | $ 519 |
Revenue - Air Traffic Liability
Revenue - Air Traffic Liability Breakout (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 |
Revenue from Contract with Customer [Abstract] | ||||||
Air traffic liability - passenger travel and ancillary passenger services | $ 4,004 | $ 3,061 | ||||
Air traffic liability - loyalty program | 4,996 | $ 5,079 | 5,189 | $ 4,885 | $ 4,885 | $ 4,789 |
Total Air traffic liability | $ 9,000 | $ 8,250 | $ 8,425 | $ 7,725 |
Revenue - Air Traffic Liabili_2
Revenue - Air Traffic Liability - Loyalty Program Rollforward (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Change in Contract With Customer, Liability [Roll Forward] | ||||
Beginning balance | $ 5,079 | $ 4,885 | $ 5,189 | $ 4,789 |
Amounts deferred associated with points awarded | 859 | 815 | 2,609 | 2,395 |
Ending balance | 4,996 | 4,885 | 4,996 | 4,885 |
Passenger Customer | ||||
Change in Contract With Customer, Liability [Roll Forward] | ||||
Revenue recognized from points redeemed | (916) | (791) | (2,730) | (2,236) |
Other | ||||
Change in Contract With Customer, Liability [Roll Forward] | ||||
Revenue recognized from points redeemed | $ (26) | $ (24) | $ (72) | $ (63) |
Revenue - Air Traffic Liabili_3
Revenue - Air Traffic Liability Rollforward (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Change in Contract With Customer, Liability [Roll Forward] | ||
Beginning balance | $ 8,250 | $ 7,725 |
Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) | 18,249 | 16,630 |
Revenue from amounts included in contract liability opening balances | (5,263) | (3,750) |
Revenue from current period sales | (12,236) | (12,180) |
Ending balance | $ 9,000 | $ 8,425 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Residual travel funds (as a percent) | 7% | 7% | 9% | ||
Total operating revenues | $ 6,525 | $ 6,220 | $ 19,268 | $ 17,642 | |
Chase Bank USA Agreement | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Total operating revenues | $ 526 | $ 521 | $ 1,600 | $ 1,500 |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
NUMERATOR: | ||||
Net income | $ 193 | $ 277 | $ 717 | $ 759 |
Add: Interest expense | 5 | 5 | 15 | 17 |
Net income attributable to common stockholders | $ 198 | $ 282 | $ 732 | $ 776 |
DENOMINATOR: | ||||
Weighted-average shares outstanding, Basic (in shares) | 596 | 593 | 595 | 593 |
Dilutive effects of convertible notes (in shares) | 42 | 45 | 42 | 49 |
Dilutive effect of restricted stock units (in shares) | 2 | 1 | 2 | 1 |
Diluted (in shares) | 640 | 639 | 639 | 643 |
NET INCOME PER SHARE: | ||||
BASIC (in USD per share) | $ 0.32 | $ 0.47 | $ 1.20 | $ 1.28 |
Diluted (in USD per share) | $ 0.31 | $ 0.44 | $ 1.15 | $ 1.21 |
Fair Value Measurements - Measu
Fair Value Measurements - Measured on Recurring Basis (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Fuel derivatives: | ||
Option contracts | $ 538 | $ 526 |
Fair Value, Measurements, Recurring | ||
Assets | ||
Treasury bills | 2,029 | 2,226 |
Fuel derivatives: | ||
Interest rate derivatives (see Note 3) | 23 | 14 |
Equity Securities | 249 | 235 |
Total assets | 12,520 | 13,053 |
Fair Value, Measurements, Recurring | Options Contracts | ||
Fuel derivatives: | ||
Option contracts | 515 | 512 |
Fair Value, Measurements, Recurring | Commodity Option | ||
Liabilities | ||
Liabilities | (28) | |
Fair Value, Measurements, Recurring | Certificates of deposit | ||
Assets | ||
Investments | 207 | 124 |
Fair Value, Measurements, Recurring | Time deposits | ||
Assets | ||
Investments | 450 | |
Fair Value, Measurements, Recurring | Cash Equivalents | ||
Assets | ||
Cash equivalents | 9,166 | 9,040 |
Fair Value, Measurements, Recurring | Commercial paper | ||
Assets | ||
Cash equivalents | 314 | 179 |
Fair Value, Measurements, Recurring | Certificates of deposit | ||
Assets | ||
Cash equivalents | 17 | 23 |
Fair Value, Measurements, Recurring | Time deposits | ||
Assets | ||
Cash equivalents | 250 | |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | ||
Assets | ||
Treasury bills | 2,029 | 2,226 |
Fuel derivatives: | ||
Interest rate derivatives (see Note 3) | 0 | 0 |
Equity Securities | 249 | 235 |
Total assets | 11,444 | 11,501 |
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) | Certificates of deposit | ||
Assets | ||
Investments | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | Time deposits | ||
Assets | ||
Investments | 0 | |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | Cash Equivalents | ||
Assets | ||
Cash equivalents | 9,166 | 9,040 |
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) | Certificates of deposit | ||
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 3) | 23 | 14 |
Equity Securities | 0 | 0 |
Total assets | 561 | 1,040 |
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) | Certificates of deposit | ||
Assets | ||
Investments | 207 | 124 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Time deposits | ||
Assets | ||
Investments | 450 | |
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 | 314 | 179 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Certificates of deposit | ||
Assets | ||
Cash equivalents | 17 | 23 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Time deposits | ||
Assets | ||
Cash equivalents | 250 | |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | ||
Assets | ||
Treasury bills | 0 | 0 |
Fuel derivatives: | ||
Interest rate derivatives (see Note 3) | 0 | 0 |
Equity Securities | 0 | 0 |
Total assets | 515 | 512 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Options Contracts | ||
Fuel derivatives: | ||
Option contracts | 515 | 512 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Commodity Option | ||
Liabilities | ||
Liabilities | (28) | |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Certificates of deposit | ||
Assets | ||
Investments | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Time deposits | ||
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) | Certificates of deposit | ||
Assets | ||
Cash equivalents | $ 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Time deposits | ||
Assets | ||
Cash equivalents | $ 0 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Assets and Liabilities Measured on Recurring Basis with Unobservable Inputs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
Fuel derivative contracts | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Purchases | $ 4 | $ 245 |
Fuel derivative contracts | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning Balance | 316 | 512 |
Included in earnings | 33 | 26 |
Included in other comprehensive income | 228 | (100) |
Settlements | (94) | (196) |
Ending Balance | 487 | 487 |
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 September 30, 2023 | (16) | (14) |
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 September 30, 2023 | $ (182) | $ 26 |
Fair Value Measurements - Quant
Fair Value Measurements - Quantitative Information about Level 3 Fair Value (Details) - Significant unobservable inputs (Level 3) - Measurement Input, Option Volatility | Sep. 30, 2023 |
Fourth quarter 2023 | Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.19 |
Fourth quarter 2023 | Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.41 |
Fourth quarter 2023 | Weighted Average | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.31 |
2024 | Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.26 |
2024 | Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.38 |
2024 | Weighted Average | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.28 |
2025 | Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.24 |
2025 | Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.28 |
2025 | Weighted Average | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.25 |
2026 | Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.23 |
2026 | Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.26 |
2026 | Weighted Average | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.25 |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying and Estimated Fair Value of Debt (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Sep. 30, 2022 |
Convertible Debt | 1.25% Convertible Notes due 2025 | ||
Debt Instrument [Line Items] | ||
Carrying value | $ 1,611 | |
Unsecured Debt | 5.25% Notes due 2025 | ||
Debt Instrument [Line Items] | ||
Carrying value | 1,302 | |
Unsecured Debt | 3.00% Notes due 2026 | ||
Debt Instrument [Line Items] | ||
Carrying value | 300 | |
Unsecured Debt | 7.375% Debentures due 2027 | ||
Debt Instrument [Line Items] | ||
Carrying value | 111 | |
Unsecured Debt | 3.45% Notes due 2027 | ||
Debt Instrument [Line Items] | ||
Carrying value | 300 | |
Unsecured Debt | 5.125% Notes due 2027 | ||
Debt Instrument [Line Items] | ||
Carrying value | 1,727 | |
Unsecured Debt | 2.625% due 2030 | ||
Debt Instrument [Line Items] | ||
Carrying value | 500 | |
Unsecured Debt | 1.000% Payroll Support Program Loan due 2030 (a) | ||
Debt Instrument [Line Items] | ||
Carrying value | 976 | |
Unsecured Debt | 1.000% Payroll Support Program Loan due 2031 (a) | ||
Debt Instrument [Line Items] | ||
Carrying value | 566 | |
Unsecured Debt | 1.000% Payroll Support Program Loan due 2031 (a) | ||
Debt Instrument [Line Items] | ||
Carrying value | $ 526 | |
Level 2 | Convertible Debt | 1.25% Convertible Notes due 2025 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 1.25% | 1.25% |
Notes payable, Estimated Fair Value | $ 1,616 | |
Level 2 | Unsecured Debt | 5.25% Notes due 2025 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 5.25% | 5.25% |
Notes payable, Estimated Fair Value | $ 1,287 | |
Level 2 | Unsecured Debt | 3.00% Notes due 2026 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 3% | |
Notes payable, Estimated Fair Value | $ 278 | |
Level 2 | Unsecured Debt | 7.375% Debentures due 2027 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 7.375% | |
Loans payable, Estimated Fair Value | $ 104 | |
Level 2 | Unsecured Debt | 3.45% Notes due 2027 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 3.45% | |
Notes payable, Estimated Fair Value | $ 275 | |
Level 2 | Unsecured Debt | 5.125% Notes due 2027 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 5.125% | 5.125% |
Notes payable, Estimated Fair Value | $ 1,683 | |
Level 2 | Unsecured Debt | 2.625% due 2030 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 2.625% | |
Notes payable, Estimated Fair Value | $ 414 | |
Level 3 | Unsecured Debt | 1.000% Payroll Support Program Loan due 2030 (a) | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 1% | |
Notes payable, Estimated Fair Value | $ 893 | |
Level 3 | Unsecured Debt | 1.000% Payroll Support Program Loan due 2031 (a) | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 1% | |
Notes payable, Estimated Fair Value | $ 500 | |
Level 3 | Unsecured Debt | 1.000% Payroll Support Program Loan due 2031 (a) | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 1% | |
Notes payable, Estimated Fair Value | $ 457 |
Supplemental Financial Inform_3
Supplemental Financial Information - Accounts and Other Receivables (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Trade receivables | $ 142 | $ 117 |
Credit card receivables | 382 | 85 |
Business partners and other suppliers | 606 | 478 |
Taxes receivable | 53 | 133 |
Fuel hedging and receivables | 45 | 34 |
Other | 239 | 193 |
Accounts and other receivables | $ 1,467 | $ 1,040 |
Supplemental Financial Inform_4
Supplemental Financial Information - Other Assets (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Derivative contracts | $ 216 | $ 174 |
Intangible assets, net | 296 | 296 |
Equity securities | 249 | 235 |
Other | 255 | 150 |
Other assets | $ 1,016 | $ 855 |
Supplemental Financial Inform_5
Supplemental Financial Information - Accounts Payable (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts payable trade | $ 329 | $ 277 |
Salaries, withholdings and payroll taxes | 338 | 456 |
Ticket taxes and fees | 357 | 242 |
Aircraft maintenance payable | 121 | 65 |
Fuel payable | 153 | 188 |
Dividends payable | 0 | 107 |
Customer reimbursements and refunds | 6 | 311 |
Accrued third party services | 225 | 196 |
Other payable | 207 | 162 |
Accounts payable | $ 1,736 | $ 2,004 |
Supplemental Financial Inform_6
Supplemental Financial Information - Accrued Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Accrued Liabilities, Current [Abstract] | |||||
Voluntary Separation Program | $ 65 | $ 65 | $ 72 | ||
Profitsharing and savings plans | 184 | 184 | 167 | ||
Vacation pay | 513 | 513 | 484 | ||
Health | 315 | 315 | 261 | ||
Workers compensation | 128 | 128 | 164 | ||
Property and income taxes | 64 | 64 | 37 | ||
Interest | 72 | 72 | 45 | ||
Bonus and incentive pay | 1,250 | 1,250 | 563 | ||
Other | 289 | 289 | 250 | ||
Accrued liabilities | 2,880 | 2,880 | $ 2,043 | ||
Salaries, wages, and benefits | 2,728 | $ 2,322 | 7,991 | $ 6,771 | |
Change in accrued bonus and incentive pay | $ 96 | $ 180 |
Supplemental Financial Inform_7
Supplemental Financial Information - Other Non-Current Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Voluntary Separation Program | $ 83 | $ 147 |
Postretirement obligation | 246 | 241 |
Other deferred compensation | 327 | 331 |
Other | 224 | 250 |
Other noncurrent liabilities | $ 880 | $ 969 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - Boeing Agreement - Subsequent Event $ in Millions | Oct. 26, 2023 USD ($) |
Other Commitments [Line Items] | |
Remainder of 2023 | $ 133 |
2024 | 2,100 |
2025 | 1,700 |
2026 | 1,800 |
2027 | 2,600 |
2028 | 2,900 |
Thereafter | $ 5,300 |
Financing Activities - Narrativ
Financing Activities - Narrative (Details) | 3 Months Ended | 9 Months Ended | |||||
Sep. 05, 2023 | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | May 01, 2020 USD ($) $ / shares | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Capital expenditures | $ 842,000,000 | $ 1,072,000,000 | $ 2,812,000,000 | $ 2,568,000,000 | |||
Payments of long-term debt and finance lease obligations | 11,000,000 | $ 1,679,000,000 | 78,000,000 | $ 1,825,000,000 | |||
Convertible Debt | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Principal amount | $ 1,600,000,000 | $ 1,600,000,000 | $ 1,600,000,000 | $ 2,300,000,000 | |||
Initial conversion ratio | 0.0265590 | 0.0259909 | |||||
Initial conversion price (in USD per share) | $ / shares | $ 38.48 | ||||||
Term (in years) | 5 years | ||||||
Convertible Debt | 1.25% Convertible Notes due 2025 | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Amounts outstanding | $ 1,611,000,000 | $ 1,611,000,000 | |||||
Line of Credit | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Borrowing capacity | 1,000,000,000 | 1,000,000,000 | |||||
Amounts outstanding | $ 0 | $ 0 | |||||
Notes Due 2027 | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Effective interest rate | 1.90% | 1.90% |
Financing Activities - Interest
Financing Activities - Interest Expense (Details) - Convertible Debt - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Debt Instrument [Line Items] | ||||
Non-cash amortization of debt issuance costs | $ 3 | $ 3 | $ 8 | $ 9 |
Contractual coupon interest | 5 | 5 | 15 | 18 |
Total interest expense | $ 8 | $ 8 | $ 23 | $ 27 |
Financing Activities - Schedule
Financing Activities - Schedule of Debt Extinguishment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Debt Instrument [Line Items] | ||||
Loss on extinguishment of debt | $ 0 | $ 76 | $ 0 | $ 192 |
Convertible Debt And Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Cash paid for debt and interest | 1,890 | 2,364 | ||
Principal repayment | 1,791 | 2,153 | ||
Loss on extinguishment of debt | 76 | 192 | ||
Non-cash amortization of debt discount and (issuance) costs | (2) | (7) | ||
Accrued Interest | 25 | 26 | ||
1.25% Convertible Notes due 2025 | Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Cash paid for debt and interest | 240 | 649 | ||
Principal repayment | 184 | 486 | ||
Loss on extinguishment of debt | 59 | 171 | ||
Non-cash amortization of debt discount and (issuance) costs | (3) | (9) | ||
Accrued Interest | $ 0 | $ 1 | ||
1.25% Convertible Notes due 2025 | Convertible Debt | Level 2 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 1.25% | 1.25% | 1.25% | 1.25% |
5.125% Notes due 2027 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Cash paid for debt and interest | $ 149 | $ 209 | ||
Principal repayment | 143 | 199 | ||
Loss on extinguishment of debt | 3 | 6 | ||
Non-cash amortization of debt discount and (issuance) costs | 1 | 2 | ||
Accrued Interest | $ 2 | $ 2 | ||
5.125% Notes due 2027 | Unsecured Debt | Level 2 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 5.125% | 5.125% | 5.125% | 5.125% |
4.75% Notes due 2023 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 4.75% | 4.75% | ||
Cash paid for debt and interest | $ 1,274 | $ 1,278 | ||
Principal repayment | 1,247 | 1,250 | ||
Loss on extinguishment of debt | 8 | 9 | ||
Non-cash amortization of debt discount and (issuance) costs | 0 | 0 | ||
Accrued Interest | 19 | 19 | ||
5.25% Notes due 2025 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Cash paid for debt and interest | 227 | 228 | ||
Principal repayment | 217 | 218 | ||
Loss on extinguishment of debt | 6 | 6 | ||
Non-cash amortization of debt discount and (issuance) costs | 0 | 0 | ||
Accrued Interest | $ 4 | $ 4 | ||
5.25% Notes due 2025 | Unsecured Debt | Level 2 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 5.25% | 5.25% | 5.25% | 5.25% |
Uncategorized Items - luv-20230
Label | Element | Value |
Accounting Standards Update [Extensible Enumeration] | us-gaap_AccountingStandardsUpdateExtensibleList | Accounting Standards Update 2020-06 [Member] |