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FAIR VALUE MEASUREMENTS
 6 Months Ended
Jun. 30, 2020
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
Accounting standards pertaining to fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

As of June 30, 2020, the Company held certain items that are required to be measured at fair value on a recurring basis. These included cash equivalents, short-term investments (primarily treasury bills and certificates of deposit), interest rate derivative contracts, fuel derivative contracts, and available-for-sale securities. The majority of the Company’s short-term investments consist of instruments classified as Level 1. However, the Company has certificates of deposit, commercial paper, and time deposits that are classified as Level 2, due to the fact that the fair value for these instruments is determined utilizing observable inputs in non-active markets. Other available-for-sale securities primarily consist of investments associated with the Company’s excess benefit plan.

The Company’s fuel and interest rate derivative instruments consist of over-the-counter contracts, which are not traded on a public exchange. Fuel derivative instruments currently consist solely of option contracts, whereas interest rate derivatives consist solely of swap agreements. See Note 4 for further information on the Company’s derivative instruments and hedging activities. The fair values of swap contracts 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 swap contracts as Level 2. The Company’s Treasury Department, which reports to the Chief Financial Officer, determines the value of option contracts utilizing an option pricing model based on inputs that are either readily available in public markets, can be derived from information available in publicly quoted markets, or are provided by financial institutions that trade these contracts. The option pricing model used by the Company is an industry standard model for valuing options and is the same model used by the broker/dealer community (i.e., the Company’s counterparties). The inputs to this option pricing model are the option strike price, underlying price, risk free rate of interest, time to expiration, and volatility. Because certain inputs used to determine the fair value of option contracts are unobservable (principally implied volatility), the Company has categorized these option contracts as Level 3. Volatility information is obtained from external sources, but is analyzed by the Company for reasonableness and compared to similar information received from other external sources. The fair value of option contracts considers both the intrinsic value and any remaining time value associated with those derivatives that have not yet settled. The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values. To validate the reasonableness of the Company’s option pricing model, on a monthly basis, the Company compares its option valuations to third party valuations. If any significant differences were to be noted, they would be researched in order to determine the reason. However, historically, no significant differences have been noted. The Company has consistently applied these valuation techniques in all periods presented and believes it has obtained the most accurate information available for the types of derivative contracts it holds.

Included in Other available-for-sale securities are the Company’s investments associated with its deferred compensation plans, which consist of mutual funds that are publicly traded and for which market prices are readily available. These plans are non-qualified deferred compensation plans designed to hold contributions in excess of limits established by the Internal Revenue Code of 1986, as amended. The distribution timing and payment amounts under these plans are made based on the participant’s distribution election and plan balance. Assets related to the funded portions of the deferred compensation plans are held in a rabbi trust, and the Company remains liable to these participants for the unfunded portion of the plans. The Company records changes in the fair value of the assets in the Company’s earnings.

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2020, and December 31, 2019:
  Fair value measurements at reporting date using:
Quoted prices in
active markets
for identical assets		Significant
other observable
inputs		Significant
unobservable
inputs
DescriptionJune 30, 2020(Level 1)(Level 2)(Level 3)
Assets(in millions)
Cash equivalents    
Cash equivalents (a)$11,961  $11,961  $—  $—  
Commercial paper90  —  90  —  
Certificates of deposit19  —  19  —  
Time deposits281  —  281  —  
Short-term investments: 
Treasury bills1,649  1,649  —  —  
Certificates of deposit132  —  132  —  
Time deposits325  —  325  —  
Interest rate derivatives (see Note 4)2  2  
Fuel derivatives: 
Option contracts (b)107  —  —  107  
Other available-for-sale securities219  219  —  —  
Total assets$14,785  $13,829  $849  $107  
Liabilities    
Interest rate derivatives (see Note 4)$(74) $—  $(74) $—  
(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 4.

  Fair value measurements at reporting date using:
Quoted prices in
active markets
for identical assets		Significant
other observable
inputs		Significant
unobservable
inputs
DescriptionDecember 31, 2019(Level 1)(Level 2)(Level 3)
Assets(in millions)
Cash equivalents   
Cash equivalents (a)$1,999  $1,999  $—  $—  
Commercial paper535  —  535  —  
Certificates of deposit14  —  14  —  
Short-term investments:    
Treasury bills1,196  1,196  —  —  
Certificates of deposit268  —  268  —  
Time deposits60  —  60  —  
Interest rate derivatives (see Note 4)2  —  2  —  
Fuel derivatives:    
Option contracts (b)110  —  —  110  
Other available-for-sale securities197  197  —  —  
Total assets$4,381  $3,392  $879  $110  
Liabilities    
Interest rate derivatives (see Note 4)$(6) $—  $(6) $—  
(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 4.

The Company did not have any assets or liabilities measured at fair value on a nonrecurring basis during the six months ended June 30, 2020, or the year ended December 31, 2019. 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 six months ended June 30, 2020:
Fair value measurements using significant unobservable inputs (Level 3)
(in millions)Fuel derivatives
Balance at March 31, 2020$85  
Total gains (losses) for the period
Included in earnings(15) (a)
Included in other comprehensive income26  
Purchases11  (b)
Balance at June 30, 2020$107  
The amount of total losses for the period
included in earnings attributable to the
change in unrealized gains or losses relating
to assets still held at June 30, 2020		$(8) (a)
The amount of total gains for the period
included in other comprehensive loss attributable to the
change in unrealized gains or losses relating
to assets still held at June 30, 2020		$19  
(a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss).
(b) 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, 2019$110  
Total losses for the period
Included in earnings(17) (a)
Included in other comprehensive income(80) 
Purchases94  (b)
Balance at June 30, 2020$107  
The amount of total losses for the period
included in earnings attributable to the
change in unrealized gains or losses relating
to assets still held at June 30, 2020		$(8) (a)
The amount of total losses for the period
included in other comprehensive loss attributable to the
change in unrealized gains or losses relating
to assets still held at June 30, 2020		$(72) 
(a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss).
(b) 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.

The significant unobservable input used in the fair value measurement of the Company’s derivative option contracts is implied volatility. Holding other inputs constant, an increase (decrease) in implied volatility would have resulted in a higher (lower) fair value measurement, respectively, for the Company’s derivative option contracts.
The following table presents a range and weighted average of the unobservable inputs utilized in the fair value measurements of the Company’s fuel derivatives classified as Level 3 at June 30, 2020:
Quantitative information about Level 3 fair value measurements
 Valuation techniqueUnobservable inputPeriod (by year)RangeWeighted Average (a)
Fuel derivativesOption modelImplied volatilityThird quarter 202037-64%54 %
Fourth quarter 202037-63%47 %
202130-47%35 %
202227-31%29 %
Beyond 202225-28%27 %
(a) Implied volatility weighted by the notional amount (barrels of fuel) that will settle in respective period.

The carrying amounts and estimated fair values of the Company’s short-term and long-term debt (including current maturities), as well as the applicable fair value hierarchy tier, at June 30, 2020, 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 valueEstimated fair valueFair value level hierarchy
2.65% Notes due 2020$502  $503  Level 2
2.75% Notes due 2022300  304  Level 2
Pass Through Certificates due 2022 - 6.24%168  172  Level 2
4.75% Notes due 20231,250  1,289  Level 2
1.25% Convertible Notes due 20251,909  2,762  Level 2
5.25% Notes due 20251,250  1,317  Level 2
3.00% Notes due 2026300  296  Level 2
Term Loan Agreement payable through 2026 - 1.99%169  159  Level 3
3.45% Notes due 2027300  294  Level 2
5.125% Notes due 20271,300  1,352  Level 2
7.375% Debentures due 2027121  134  Level 2
Term Loan Agreement payable through 2028 - 1.71%196  176  Level 3
2.625% Notes due 2030500  455  Level 2
1.000% Payroll Support Program Loan due 2030850  629  Level 3