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Fair Value Measurements (Tables)
 3 Months Ended
Mar. 31, 2015
Fair Value Disclosures [Abstract]  
Assets and liabilities measured at fair value on a recurring basis
The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2015, and December 31, 2014:

 
 
 
 
Fair value measurements at reporting date using:
 
 
 
 
Quoted prices in
active markets
for identical assets
 
Significant
other observable
inputs
 
Significant
unobservable
inputs
Description
 
March 31, 2015
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
(in millions)
Cash equivalents
 
 
 
 
 
 
 
 
Cash equivalents (a)
 
$
1,891

 
$
1,891

 
$
—

 
$
—

Certificates of deposit
 
18

 
—

 
18

 
—

Eurodollar time deposits
 
116

 
—

 
116

 
—

Short-term investments:
 
 
 
 
 
 
 
 
Treasury bills
 
1,150

 
1,150

 
—

 
—

Certificates of deposit
 
263

 
—

 
263

 
—

Noncurrent investments (b)
 
 
 
 
 
 
 
 
Auction rate securities
 
27

 
—

 
—

 
27

Interest rate derivatives
 
4

 
—

 
4

 
—

Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
515

 
—

 
515

 
—

Option contracts (c)
 
725

 
—

 
—

 
725

Other available-for-sale securities
 
61

 
61

 
—

 
—

Total assets
 
$
4,770

 
$
3,102

 
$
916

 
$
752

Liabilities
 
 
 
 
 
 
 
 
Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
$
(336
)
 
$
—

 
$
(336
)
 
$
—

Option contracts (c)
 
(1,970
)
 
—

 
—

 
(1,970
)
Interest rate derivatives
 
(61
)
 
—

 
(61
)
 
—

Total liabilities
 
$
(2,367
)
 
$
—

 
$
(397
)
 
$
(1,970
)

(a) Cash equivalents are primarily composed of money market investments.
(b) Noncurrent investments are included in Other assets in the unaudited Condensed Consolidated Balance Sheet.
(c) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net liability.

 
 
 
 
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, 2014
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
(in millions)
Cash equivalents
 
 
 
 
 
 
 
 
Cash equivalents (a)
 
$
1,110

 
$
1,110

 
$
—

 
$
—

Commercial paper
 
70

 
—

 
70

 
—

Certificates of deposit
 
4

 
—

 
4

 
—

Eurodollar time deposits
 
98

 
—

 
98

 
—

Short-term investments:
 
 
 
 
 
 
 
 
Treasury bills
 
1,450

 
1,450

 
—

 
—

Certificates of deposit
 
256

 
—

 
256

 
—

Noncurrent investments (b)
 
 
 
 
 
 
 
 
Auction rate securities
 
27

 
—

 
—

 
27

Interest rate derivatives
 
13

 
—

 
13

 
—

Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
455

 
—

 
455

 
—

Option contracts (c)
 
892

 
—

 
—

 
892

Other available-for-sale securities
 
68

 
63

 
—

 
5

Total assets
 
$
4,443

 
$
2,623

 
$
896

 
$
924

Liabilities
 
 
 
 
 
 
 
 
Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
$
(365
)
 
$
—

 
$
(365
)
 
$
—

Option contracts (c)
 
(1,983
)
 
—

 
—

 
(1,983
)
Interest rate derivatives
 
(61
)
 
—

 
(61
)
 
—

Total liabilities
 
$
(2,409
)
 
$
—

 
$
(426
)
 
$
(1,983
)

(a) Cash equivalents are primarily composed of money market investments.
(b) Noncurrent investments are included in Other assets in the unaudited Condensed Consolidated Balance Sheet.
(c) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net liability.
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation
The following table presents the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2015:

 
Fair value measurements using significant
unobservable inputs (Level 3)
 
Fuel
 
Auction rate
 
Other
 
 
(in millions)
derivatives
 
securities
 
securities
 
Total
Balance at December 31, 2014
$
(1,091
)
 
$
27

 
$
5

 
$
(1,059
)
Total losses (realized or unrealized)
 
 
 

 
 

 
 

Included in earnings
(93
)
 
—

 
(1
)
 
(94
)
Included in other comprehensive income
(79
)
 
—

 
—

 
(79
)
Purchases
62

(a)
—

 
—

 
62

Sales
(44
)
(a)
—

 
(4
)
 
(48
)
Balance at March 31, 2015
$
(1,245
)
 
$
27

(b)
$
—

 
$
(1,218
)
The amount of total losses for the period
  included in earnings attributable to the
  change in unrealized gains or losses relating
  to assets still held at March 31, 2015
$
(93
)
 
$
—

 
$
—

 
$
(93
)
(a) The purchase and sale of fuel derivatives are recorded gross based on the structure of the derivative instrument and
whether a contract with multiple derivatives is purchased as a single instrument or separate instruments.
(b) Included in Other assets in the unaudited Condensed Consolidated Balance Sheet.
Fair Value Valuation Techniques
The following table presents a range of the unobservable inputs utilized in the fair value measurements of the Company’s assets and liabilities classified as Level 3 at March 31, 2015:

Quantitative information about Level 3 fair value measurements
 
Valuation technique
Unobservable input
Period (by year)
Range
Fuel derivatives
Option model
Implied volatility
Second quarter 2015
25-47%
 
 
 
Third quarter 2015
31-43%
 
 
 
Fourth quarter 2015
28-40%
 
 
 
2016
22-35%
 
 
 
2017
19-25%
 
 
 
2018
20-24%
Auction rate securities
Discounted cash flow
Time to principal recovery
 
8 years
 
 
Illiquidity premium
 
3%
 
 
Counterparty credit spread
 
1-2%
Fair value, by Balance Sheet Grouping
The carrying amounts and estimated fair values of the Company’s long-term debt (including current maturities), as well as the applicable fair value hierarchy tier, at March 31, 2015, 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. Six of the Company’s debt agreements are not publicly held. The Company has determined the estimated fair value of this debt to be Level 3, as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes indicative pricing from counterparties and a discounted cash flow method to estimate the fair value of the Level 3 items.

(in millions)
 Carrying value
 
Estimated fair value
 
Fair value level hierarchy
5.75% Notes due 2016
$
311

 
$
334

 
Level 2
5.25% Convertible Senior Notes due 2016
113

 
330

 
Level 2
5.125% Notes due 2017
314

 
336

 
Level 2
French Credit Agreements due 2018 - 1.06%
36

 
36

 
Level 3
Fixed-rate 737 Aircraft Notes payable through 2018 - 7.02%
22

 
22

 
Level 3
2.75% Notes due 2019
305

 
313

 
Level 2
Term Loan Agreement due 2019 - 6.315%
169

 
169

 
Level 3
Term Loan Agreement due 2019 - 6.84%
67

 
73

 
Level 3
Term Loan Agreement due 2020 - 5.223%
362

 
356

 
Level 3
Floating-rate 737 Aircraft Notes payable through 2020
288

 
282

 
Level 3
Pass Through Certificates due 2022 - 6.24%
347

 
400

 
Level 2
7.375% Debentures due 2027
134

 
162

 
Level 2