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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2019

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, 2019, and December 31, 2018:

						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, 2019				(Level 1)				(Level 2)				(Level 3)
Assets		(in millions)
Cash equivalents
Cash equivalents (a)		$	2,078			$	2,078			$	—			$	—
Commercial paper		405				—				405				—
Certificates of deposit		5				—				5				—
Short-term investments:
Treasury bills		1,195				1,195				—				—
Certificates of deposit		274				—				274				—
Time deposits		59				—				59				—
Interest rate derivatives (see Note 3)		1				—				1				—
Fuel derivatives:
Option contracts (b)		114				—				—				114
Other available-for-sale securities		178				178				—				—
Total assets		$	4,309			$	3,451			$	744			$	114
Liabilities
Interest rate derivatives (see Note 3)		$	(24	)		$	—			$	(24	)		$	—

(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, 2018				(Level 1)				(Level 2)				(Level 3)
Assets		(in millions)
Cash equivalents
Cash equivalents (a)		$	1,392			$	1,392			$	—			$	—
Commercial paper		454				—				454				—
Certificates of deposit		8				—				8				—
Short-term investments:
Treasury bills		1,582				1,582				—				—
Certificates of deposit		228				—				228				—
Time deposits		25				—				25				—
Fuel derivatives:
Option contracts (b)		138				—				—				138
Other available-for-sale securities		127				127				—				—
Total assets		$	3,954			$	3,101			$	715			$	138
Liabilities
Interest rate derivatives (see Note 3)		$	(14	)		$	—			$	(14	)		$	—

(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, 2019:

Fair value measurements using significant unobservable inputs (Level 3)
(in millions)	Fuel derivatives
Balance at June 30, 2019	$	187
Total losses (realized or unrealized) included in other comprehensive income	(123		)
Purchases	50			(a)
Balance at September 30, 2019	$	114

(a) The purchase of fuel derivatives is recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives was 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, 2018	$	138
Total losses (realized or unrealized) included in other comprehensive income	(101		)
Purchases	126			(a)
Sales	(2		)	(a)
Settlements	(47		)
Balance at September 30, 2019	$	114

(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 was 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, 2019:

Quantitative information about Level 3 fair value measurements
		Valuation technique		Unobservable input		Period (by year)		Range
Fuel derivatives		Option model		Implied volatility		Fourth quarter 2019		22-38%
						2020		24-42%
						2021		20-29%
						2022		19-21%

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, 2019, 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 three 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 November 2019	$	300			$	300			Level 2
2.65% Notes due 2020	501				504				Level 2
Term Loan Agreement payable through 2020 - 5.223%	147				147				Level 3
737 Aircraft Notes payable through 2020	21				21				Level 3
2.75% Notes due 2022	300				304				Level 2
Pass Through Certificates due 2022 - 6.24%	197				208				Level 2
Term Loan Agreement payable through 2026 - 3.71%	188				188				Level 3
3.00% Notes due 2026	300				307				Level 2
3.45% Notes due 2027	300				315				Level 2
7.375% Debentures due 2027	123				152				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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- Definition

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.

+ References

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- Definition

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).

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
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