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Financial Derivative Instruments (Tables)

9 Months Ended

Sep. 30, 2019

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, 2019			Derivative underlying commodity type as of
Period (by year)		(gallons in millions) (a)			September 30, 2019
Remainder of 2019		344			WTI crude oil and Brent crude oil
2020		1,301			WTI crude oil, Brent crude oil, and Heating oil
2021		1,169			WTI crude oil and Brent crude oil
2022		552			WTI crude oil and 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.

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		9/30/2019				12/31/2018				9/30/2019				12/31/2018
Derivatives designated as hedges (a)
Fuel derivative contracts (gross)		Prepaid expenses and other current assets		$	35			$	43			$	—			$	—
Fuel derivative contracts (gross)		Other assets		79				95				—				—
Interest rate derivative contracts		Other assets		1				—				—				—
Interest rate derivative contracts		Accrued liabilities		—				—				20				2
Interest rate derivative contracts		Other noncurrent liabilities		—				—				4				12
Total derivatives designated as hedges				$	115			$	138			$	24			$	14

(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.

Schedule of Derivative Instruments Statements of Financial Performance and Financial Position, Location

The following table presents the amounts recorded on the unaudited Condensed Consolidated Balance Sheet related to fair value hedges:

Balance Sheet location of hedged item		Carrying amount of the hedged liabilities								Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities (a)
		September 30,								September 30,
(in millions)		2019				2018				2019				2018
Current maturities of long-term debt		$	300			$	—			$	2			$	—
Long-term debt less current maturities		501				783				18				3
		$	801			$	783			$	20			$	3

(a) At September 30, 2019 and 2018, these amounts include the cumulative amount of fair value hedging adjustments remaining for which hedge accounting has been discontinued of $19 million and $20 million, respectively.

Cash Collateral Deposits Due To or From Third Parties

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		2019				2018
Due to third parties for fuel contracts		Accounts payable		$	1			$	—
Receivable from third parties for fuel contracts		Accounts and other receivables		—				2

Offsetting Assets

The Company has 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, 2019												December 31, 2018
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		$	35			$	—			$	35			$	43			$	—			$	43
Fuel derivative contracts		Other assets		$	79			$	—			$	79		(a)	$	95			$	—			$	95		(a)
Interest rate derivative contracts		Other assets		$	1			$	—			$	1		(a)	$	—			$	—			$	—		(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 9.

Offsetting Liabilities

Offsetting of derivative liabilities
(in millions)
				(i)				(ii)				(iii) = (i) + (ii)				(i)				(ii)				(iii) = (i) + (ii)
				September 30, 2019												December 31, 2018
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
Interest rate derivative contracts		Accrued liabilities		$	20			$	—			$	20			$	2			$	—			$	2
Interest rate derivative contracts		Other noncurrent liabilities		$	4			$	—			$	4			$	12			$	—			$	12

Schedule Of Derivative Instruments In Hedging Relationships Gain Loss In Statement Of Financial Performance

The following tables present the impact of derivative instruments and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income for the three and nine months ended September 30, 2019 and 2018:

Location and amount recognized in income on cash flow and fair value hedging relationships
		Three months ended September 30, 2019								Three months ended September 30, 2018
(in millions)		Fuel and oil				Interest expense				Fuel and oil				Interest expense
Total		$	19			$	8			$	(20	)		$	9
(Gain) loss on cash flow hedging relationships:
Commodity contracts:
Amount of (gain) loss reclassified from AOCI into income		19				—				(20		)		—
Interest contracts:
Amount of loss reclassified from AOCI into income		—				2				—				1
Impact of fair value hedging relationships:
Interest contracts:
Hedged items		—				6				—				6
Derivatives designated as hedging instruments		—				—				—				2

Location and amount recognized in income on cash flow and fair value hedging relationships
		Nine months ended September 30, 2019								Nine months ended September 30, 2018
(in millions)		Fuel and oil				Interest expense				Fuel and oil				Interest expense
Total		$	28			$	21			$	(32	)		$	26
(Gain) loss on cash flow hedging relationships:
Commodity contracts:
Amount of (gain) loss reclassified from AOCI into income		28				—				(32		)		—
Interest contracts:
Amount of loss reclassified from AOCI into income		—				3				—				4
Impact of fair value hedging relationships:
Interest contracts:
Hedged items		—				17				—				17
Derivatives designated as hedging instruments		—				1				—				5

Derivatives in Cash Flow Hedging Relationships

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)	2019				2018
Fuel derivative contracts	$	95			$	(122	)
Interest rate derivatives	17				—
Total	$	112			$	(122	)

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)	2019				2018
Fuel derivative contracts	$	83			$	(428	)
Interest rate derivatives	43				(2		)
Total	$	126			$	(430	)

Derivatives Not in Cash Flow Hedging Relationships

Derivatives not designated as hedges
	Gain recognized in income on derivatives
								Nine months ended								Location of gain  recognized in income on derivatives
	September 30,
(in millions)	2019				2018
Interest rate derivatives	$	—			$	(2	)		Interest expense

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, 2019, at which such postings are triggered:

Counterparty (CP)

(in millions)

A

B

C

D

E

F

Other (a)

Total

Fair value of fuel derivatives

$

25

$

18

$

35

$

12

$

9

$

7

$

8

$

114

Cash collateral held from CP

—

—

—

—

—

—

—

—

Aircraft collateral pledged to CP

—

—

—

—

—

—

—

—

Letters of credit (LC)

—

—

—

—

—

—

—

—

Option to substitute LC for aircraft

(200) to (600)(b)

N/A

(150) to (550)(c)

(150) to (550)(c)

N/A

N/A

Option to substitute LC for cash

N/A

N/A

(75) to (150) or >(550)(c)

(125) to (150) or >(550)(d)

(d)

N/A

If credit rating is investment grade, fair value of fuel derivative level at which:

Cash is provided to CP

(50) to (200) or >(600)

>(50)

(75) to (150) or >(550)(e)

(125) to (150) or >(550)(e)

>(40)

>(70)(e)

Cash is received from CP

>50(e)

>150(e)

>250(e)

>125(e)

>100(e)

>70(e)

Aircraft or cash can be pledged to   CP as collateral

(200) to (600)(f)

N/A

(150) to (550)(c)

(150) to (550)(c)

N/A

N/A

If credit rating is non-investment grade, fair value of fuel derivative level at which:

Cash is provided to CP

(0) to (200) or >(600)

(g)

(0) to (150) or >(550)

(0) to (150) or >(550)

(g)

(g)

Cash is received from CP

(g)

(g)

(g)

(g)

(g)

(g)

Aircraft or cash can be pledged to   CP as collateral

(200) to (600)

N/A

(150) to (550)

(150) to (550)

N/A

N/A

(a) Individual counterparties with fair value of fuel derivatives < $7 million.

(b) The Company has the option of providing letters of credit in addition to aircraft collateral if the appraised value of the aircraft does not meet the collateral requirements.

(c) The Company has the option of providing cash, letters of credit, or pledging aircraft as collateral.

(d) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement.

(e) Thresholds may vary based on changes in credit ratings within investment grade.

(f) The Company has the option of providing cash or pledging aircraft as collateral.

(g) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts.

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Disclosure of the agreements the Company had with counterparties in which cash deposits/receipts and/or pledged aircraft are required to be posted whenever the net fair value of derivatives associated with those counterparties exceeds specific thresholds. Includes the fair values of fuel derivatives, amounts posted as collateral, and applicable collateral posting threshold amounts at which such postings are triggered.

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