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LEASES | 3 Months Ended
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Mar. 31, 2019
Leases [Abstract] |
LEASES | LEASES The Company enters into leases for aircraft, property, and other types of equipment in the normal course of business. The accounting for these leases follows the requirements of the New Lease Standard, which the Company adopted as of January 1, 2019. See Note 2. For leases with terms greater than 12 months, an asset and lease liability are initially recorded at an amount equal to the present value of the unpaid lease payments. The Company's lease term includes options to extend the lease when it is reasonably certain that it will exercise that option. The Company uses the interest rate implicit in the lease, when known, or its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating its incremental borrowing rate. The Company does not separate lease and nonlease components within any of its agreements. As of March 31, 2019, the Company held aircraft leases with remaining terms ranging from six months to 13 years. The aircraft leases generally can be renewed for one to five years at rates based on fair market value at the end of the lease term. Most aircraft leases have purchase options at or near the end of the lease term at fair market value, generally limited to a stated percentage of the lessor's defined cost of the aircraft. Residual value guarantees included in the Company's lease agreements are not material. On July 9, 2012, the Company signed an agreement with Delta Air Lines, Inc. and Boeing Capital Corp. to lease or sublease 88 AirTran Airways, Inc. Boeing 717-200 aircraft ("B717s") to Delta at agreed-upon lease rates. Excluding the leases that had expired as of March 31, 2019, the following remained: 73 operating leases, ten owned, and two finance leases. The sublease terms for the 73 B717s on operating lease and the two B717s on finance lease coincide with the Company's remaining lease terms for these aircraft from the original lessor, which have remaining lease terms ranging from approximately six months to five years. The Company's future sublease income associated with the 73 B717s on operating lease as of March 31, 2019 was as follows: $73 million remaining in 2019, $78 million in 2020, $41 million in 2021, $17 million in 2022, and $7 million in 2023. The leasing of the ten B717s that are owned by the Company is subject to certain conditions, and the remaining lease terms are up to four years, after which Delta will have the option to purchase the aircraft at the then-prevailing market value. The ten owned B717s are accounted for as sales type leases, the two B717s classified by the Company as finance leases are accounted for as direct financing leases, and the remaining 73 subleases are accounted for as operating leases with Delta. There are no contingent payments and no significant residual value conditions associated with the transaction. At each airport where the Company conducts flight operations, the Company has agreements, generally with a governmental unit or authority, for the use of airport terminals, airfields, office space, cargo warehouses, and maintenance facilities. These leases are classified as operating leases agreements and have lease terms remaining ranging from two months to 27 years. The majority of the airport terminal leases contain certain provisions for periodic adjustments to rates that depend upon airport operating costs or use of the facilities, and are reset at least annually. Due to the nature and variability of the rates, the majority of these leases are not recorded on the unaudited Condensed Consolidated Balance Sheet. The Company also leases certain technology assets, fuel storage tanks, and various other equipment that qualify as leases under the New Lease Standard. The remaining lease terms range from one month to eight years. Certain leases can be renewed from one to five years. Lease-related assets and liabilities recorded on the unaudited Condensed Consolidated Balance Sheet were as follows:
(in millions) | Balance Sheet location | March 31, 2019
Assets |  |
Operating | Operating lease right-of-use assets (net) | $ | 1,508 |
Finance | Property and equipment (net of allowance for depreciation and amortization of $372) | 890 |
Total lease assets |  | $ | 2,398 |
Liabilities |  |
Current |  |
Operating | Current operating lease liabilities | $ | 361 |
Finance | Current maturities of long-term debt | 85 |
Noncurrent |  |
Operating | Noncurrent operating lease liabilities | 1,150 |
Finance | Long-term debt less current maturities | 630 |
Total lease liabilities |  | $ | 2,226 |
The components of lease costs, included in the unaudited Condensed Consolidated Statement of Comprehensive Income, were as follows:
(in millions) | Statement of Comprehensive Income location | Three months ended March 31, 2019
Operating lease cost - aircraft (a) | Landing fees and airport rentals, and Other operating expenses | $ | 43 |
Operating lease cost - other | Landing fees and airport rentals, and Other operating expenses | 22 |
Short-term lease cost | Other operating expenses | 1 |
Variable lease cost | Landing fees and airport rentals, and Other operating expenses | 330 |
Finance lease cost: |  |
Amortization of lease liabilities | Depreciation and amortization | 29 |
Interest on lease liabilities | Interest expense | 7 |
Total net lease cost |  | $ | 432 |
(a) Net of sublease income of $25 million Supplemental cash flow information related to leases, included in the unaudited Condensed Consolidated Statement of Cash Flows, was as follows:
(in millions) | Three months ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities: |
Operating cash flows for operating leases | $ | 96 |
Operating cash flows for finance leases | 7 |
Financing cash flows for finance leases | 22 |
Right-of-use assets obtained in exchange for lease obligations: |
Operating leases | 119 |
Finance leases | 1 |
As of March 31, 2019, maturities of lease liabilities were as follows:
(in millions) | Operating leases |  | Finance leases
Remainder of 2019 | $ | 316 |  |  | $ | 83 |
2020 | 344 |  |  | 109 |
2021 | 212 |  |  | 104 |
2022 | 140 |  |  | 101 |
2023 | 109 |  |  | 97 |
Thereafter | 750 |  |  | 339 |
Total lease payments | $ | 1,871 |  |  | $ | 833 |
Less imputed interest | (360 | ) |  | (118 | )
Total lease obligations | 1,511 |  |  | 715 |
Less current obligations | (361 | ) |  | (85 | )
Long-term lease obligations | $ | 1,150 |  |  | $ | 630 |
The table below presents additional information related to the Company's leases for the three months ended March 31, 2019:
| Three months ended March 31, 2019
Weighted average remaining lease term |
Operating leases | 9 years |
Finance leases | 9 years |
Weighted average discount rate |
Operating leases (a) | 3.7 | %
Finance leases | 3.8 | %
(a) Upon adoption of the New Lease Standard, the incremental borrowing rate used for existing leases was established as of January 1, 2019. As of March 31, 2019, the Company has additional operating lease commitments that had not yet commenced of approximately $600 million for 16 Boeing 737 MAX 8 aircraft to be delivered in 2019 and 2020, each with lease terms that range from eight to nine years.

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- Definition The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 + Details
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