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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Assets and liabilities measured at fair value on a recurring basis

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2018, and December 31, 2017:

						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, 2018				(Level 1)				(Level 2)				(Level 3)
Assets		(in millions)
Cash equivalents
Cash equivalents (a)		$	1,696			$	1,696			$	—			$	—
Commercial paper		369				—				369				—
Certificates of deposit		14				—				14				—
Time deposits		25				—				25				—
Short-term investments:
Treasury bills		1,488				1,488				—				—
Certificates of deposit		228				—				228				—
Fuel derivatives:
Option contracts (b)		698				—				—				698
Other available-for-sale securities		141				141				—				—
Total assets		$	4,659			$	3,325			$	636			$	698
Liabilities
Interest rate derivatives (see Note 3)		$	(22	)		$	—			$	(22	)		$	—

(a) Cash equivalents are primarily composed of money market investments.

(b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as an asset. See Note 3.

						Fair value measurements at reporting date using:
						Quoted prices in active markets for identical assets				Significant other observable inputs				Significant unobservable inputs
Description		December 31, 2017				(Level 1)				(Level 2)				(Level 3)
Assets		(in millions)
Cash equivalents
Cash equivalents (a)		$	1,133			$	1,133			$	—			$	—
Commercial paper		350				—				350				—
Certificates of deposit		12				—				12				—
Short-term investments:
Treasury bills		1,491				1,491				—				—
Certificates of deposit		287				—				287				—
Fuel derivatives:
Option contracts (b)		283				—				—				283
Other available-for-sale securities		107				107				—				—
Total assets		$	3,663			$	2,731			$	649			$	283
Liabilities
Fuel derivatives:
Option contracts (b)		$	(35	)		$	—			$	—			$	(35	)
Interest rate derivatives (see Note 3)		(22		)		—				(22		)		—
Total liabilities		$	(57	)		$	—			$	(22	)		$	(35	)

(a) Cash equivalents are primarily composed of money market investments.

(b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net asset. See Note 3.

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The following tables present the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2018:

Fair value measurements using significant unobservable inputs (Level 3)
(in millions)	Fuel derivatives
Balance at June 30, 2018	$	596
Total gains (realized or unrealized) included in other comprehensive income	158
Purchases	1			(a)
Settlements	(57		)
Balance at September 30, 2018	$	698

(a) The purchase of fuel derivatives is 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.

Fair value measurements using significant unobservable inputs (Level 3)
(in millions)	Fuel derivatives
Balance at December 31, 2017	$	248
Total gains (realized or unrealized) included in other comprehensive income	558
Purchases	28			(a)
Sales	(2		)	(a)
Settlements	(134		)
Balance at September 30, 2018	$	698

(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.

Fair Value Valuation Techniques

The following table presents a range of the unobservable inputs utilized in the fair value measurements of the Company’s fuel derivatives classified as Level 3 at September 30, 2018:

Quantitative information about Level 3 fair value measurements
		Valuation technique		Unobservable input		Period (by year)		Range
Fuel derivatives		Option model		Implied volatility		Fourth quarter 2018		16-29%
						2019		22-29%
						2020		21-26%
						2021		19-22%
						2022		19%

Fair value, by Balance Sheet Grouping

The carrying amounts and estimated fair values of the Company’s long-term debt (including current maturities), as well as the applicable fair value hierarchy tier, at September 30, 2018, are presented in the table below. The fair values of the Company’s publicly held long-term debt are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets; therefore, the Company has categorized these agreements as Level 2. Debt under five of the Company’s debt agreements is not publicly held. The Company has determined the estimated fair value of this debt to be Level 3, as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes indicative pricing from counterparties and a discounted cash flow method to estimate the fair value of the Level 3 items.

(in millions)	Carrying value				Estimated fair value				Fair value level hierarchy
2.75% Notes due 2019	$	298			$	297			Level 2
Term Loan Agreement payable through 2019 - 6.315%	34				34				Level 3
Term Loan Agreement payable through 2019 - 4.84%	10				10				Level 3
2.65% Notes due 2020	485				480				Level 2
Term Loan Agreement payable through 2020 - 5.223%	199				200				Level 3
737 Aircraft Notes payable through 2020	100				99				Level 3
2.75% Notes due 2022	300				290				Level 2
Pass Through Certificates due 2022 - 6.24%	250				264				Level 2
Term Loan Agreement payable through 2026 - 3.62%	206				206				Level 3
3.00% Notes due 2026	300				276				Level 2
3.45% Notes due 2027	300				283				Level 2
7.375% Debentures due 2027	125				145				Level 2

X

- Definition

Tabular disclosure of input and valuation technique used to measure fair value and change in valuation approach and technique for each separate class of asset and liability measured on recurring and nonrecurring basis.

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Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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Tabular disclosure of financial instrument classified as a derivative asset (liability) after deduction of derivative liability (asset) using recurring unobservable inputs that reflect the entity's own assumption about the assumptions market participants would use in pricing.

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Tabular disclosure of assets and liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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