XML 24 R13.htm IDEA: XBRL DOCUMENT
v3.19.2

LEASES | 6 Months Ended
--- | ---
Jun. 30, 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 any option to extend the lease when it is reasonably certain that it will exercise that option. The Company uses its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments, since the Company does not know the actual implicit rates in its leases. 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 June 30, 2019, the Company held aircraft leases with remaining terms ranging from three 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. 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 aircraft for which the leases had expired as of June 30, 2019, the following remained: 73 on operating leases, ten owned, and two on 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 three months to five years. The Company's future sublease income associated with the 73 B717s on operating lease as of June 30, 2019 was as follows: $48 million remaining in 2019, $78 million in 2020, $41 million in 2021, $17 million in 2022, $7 million in 2023, and $1 million in 2024. 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 fair 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 lease agreements, generally with a governmental unit or authority, for the use of airport terminals, airfields, office space, cargo warehouses, and/or maintenance facilities. These leases are classified as operating lease agreements and have lease terms remaining ranging from one month 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 three months 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 | June 30, 2019
Assets |  |
Operating | Operating lease right-of-use assets (net) | $ | 1,424 |
Finance | Property and equipment (net of allowance for depreciation and amortization of $401) | 862 |
Total lease assets |  | $ | 2,286 |
Liabilities |  |
Current |  |
Operating | Current operating lease liabilities | $ | 350 |
Finance | Current maturities of long-term debt | 86 |
Noncurrent |  |
Operating | Noncurrent operating lease liabilities | 1,072 |
Finance | Long-term debt less current maturities | 608 |
Total lease liabilities |  | $ | 2,116 |
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 June 30, 2019 |  | Six months ended June 30, 2019
Operating lease cost - aircraft (a) | Other operating expenses | $ | 44 |  |  | $ | 88 |
Operating lease cost - other | Landing fees and airport rentals, and Other operating expenses | 22 |  |  | 44 |
Short-term lease cost | Other operating expenses | 1 |  |  | 2 |
Variable lease cost | Landing fees and airport rentals, and Other operating expenses | 349 |  |  | 679 |
Finance lease cost: |  |  |  |
Amortization of lease liabilities | Depreciation and amortization | 29 |  |  | 58 |
Interest on lease liabilities | Interest expense | 7 |  |  | 14 |
Total net lease cost |  | $ | 452 |  |  | $ | 885 |
(a) Net of sublease income of $25 million and $50 million for the three and six months ended June 30, 2019, respectively. 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 June 30, 2019 |  | Six months ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows for operating leases | $ | 107 |  |  | $ | 203 |
Operating cash flows for finance leases | 7 |  |  | 14 |
Financing cash flows for finance leases | 21 |  |  | 43 |
Right-of-use assets obtained in exchange for lease obligations: |  |  |
Operating leases | 5 |  |  | 124 |
Finance leases | — |  |  | 1 |
As of June 30, 2019, maturities of lease liabilities were as follows:
(in millions) | Operating leases |  | Finance leases
Remainder of 2019 | $ | 210 |  |  | $ | 55 |
2020 | 344 |  |  | 109 |
2021 | 213 |  |  | 104 |
2022 | 140 |  |  | 101 |
2023 | 110 |  |  | 97 |
Thereafter | 752 |  |  | 339 |
Total lease payments | $ | 1,769 |  |  | $ | 805 |
Less imputed interest | (347 | ) |  | (111 | )
Total lease obligations | 1,422 |  |  | 694 |
Less current obligations | (350 | ) |  | (86 | )
Long-term lease obligations | $ | 1,072 |  |  | $ | 608 |
The table below presents additional information related to the Company's leases as of June 30, 2019:
| As of June 30, 2019
Weighted average remaining lease term |
Operating leases | 9 years |
Finance leases | 8 years |
Weighted average discount rate |
Operating leases (a) | 3.8 | %
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 June 30, 2019, the Company had additional operating lease commitments that had not yet commenced of approximately $600 million for 16 Boeing 737 MAX 8 aircraft expected to be delivered in 2019 and 2020, each with lease terms that range from eight to nine years. Disclosures related to periods prior to the adoption of the New Lease Standard Future minimum lease payments under capital leases and noncancelable operating leases and rentals to be received under subleases with initial or remaining terms in excess of one year at December 31, 2018, were as follows:
(in millions) |  | Capital leases |  | Operating leases |  | Subleases |  | Operating leases, net
2019 |  | $ | 111 |  |  | $ | 348 |  |  | $ | (92 | ) |  | $ | 256 |
2020 |  | 109 |  |  | 357 |  |  | (78 | ) |  | 279 |
2021 |  | 105 |  |  | 244 |  |  | (41 | ) |  | 203 |
2022 |  | 100 |  |  | 172 |  |  | (17 | ) |  | 155 |
2023 |  | 97 |  |  | 146 |  |  | (7 | ) |  | 139 |
Thereafter |  | 335 |  |  | 474 |  |  | (1 | ) |  | 473 |
Total minimum lease payments |  | $ | 857 |  |  | $ | 1,741 |  |  | $ | (236 | ) |  | $ | 1,505 |
Less amount representing interest |  | 126 |  |  |  |  |  |  |
Present value of minimum lease payments (a) |  | 731 |  |  |  |  |  |  |
Less current portion |  | 85 |  |  |  |  |  |  |
Long-term portion |  | $ | 646 |  |  |  |  |  |  |
(a) Excludes lease incentive obligation of $114 million.

X
- References No definition available. + Details
Name: | us-gaap_LeasesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_LeasesOfLesseeDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration