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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Components of Deferred Tax Assets and Liabilities

The components of deferred tax assets and liabilities at December 31, 2022 and 2021, are as follows:

(in millions)						2022						2021
DEFERRED TAX LIABILITIES:
Accelerated depreciation						$	3,279					$	2,883
Prepaid insurance						238						189
Operating lease right-of-use assets						311						356
Other						154						188
Total deferred tax liabilities						3,982						3,616
DEFERRED TAX ASSETS:
Accrued employee benefits						424						341
Rapid rewards loyalty liability						616						636
Operating lease liabilities						313						371
Customer flight credits						43						305
Net operating losses and tax credits (a)						310						36
Other						291						157
Total deferred tax assets						1,997						1,846
Net deferred tax liability						$	1,985					$	1,770

(a) At December 31, 2022 and 2021, the Company had approximately $43 million and $44 million, respectively, of state net operating loss carryforwards (tax effected) to reduce future state taxable income. These state net operating loss carryforwards will expire in years 2025 - 2041 if unused. At December 31, 2022, the Company had $275 million (tax effected) of federal net operating loss carryforwards that were generated in 2022. The federal net operating loss can be carried forward indefinitely.

Components of the Income Tax Provision

The provision (benefit) for income taxes is composed of the following:

(in millions)						2022						2021						2020
CURRENT:
Federal (a)						$	(36)					$	337					$	(273)
State						(3)						33						(5)
Change in federal statutory rate (b)						—						(2)						(188)
Total current						(39)						368						(466)
DEFERRED:
Federal (a)						208						(43)						(589)
State						20						23						(127)
Total deferred						228						(20)						(716)
Income tax provision (benefit)						$	189					$	348					$	(1,182)

(a) The CARES Act allows entities to carry back 2020 losses to prior periods of up to five years, and claim refunds of federal taxes paid. The Company filed the refund claim with the IRS, and received a refund of $472 million during second quarter 2022.

(b) The benefit is representative of the excess refund generated as the result of carrying the 2020 losses back to a period when the federal statutory tax rate was 35 percent as opposed to the current tax rate of 21 percent.

Income Tax Provision Reconciliation To Federal Income Tax Statutory Rate

The effective tax rate on Income (loss) before income taxes differed from the federal income tax statutory rate for the following reasons:

(in millions)						2022						2021						2020
Tax at statutory U.S. tax rates						$	153					$	278					$	(894)
State income taxes, net of federal benefit						12						45						(115)
Change in federal statutory tax rate						—						(2)			(a)			(188)			(a)
Convertible debt repurchases						31						21						10
Federal tax credits						(13)						(2)						(1)
Other, net						6						8						6
Total income tax provision (benefit)						$	189					$	348					$	(1,182)

(a) The benefit is representative of the excess refund generated as the result of carrying the 2020 losses back to a period when the federal statutory tax rate was 35 percent as opposed to the current tax rate of 21 percent.

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- Definition

Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

+ References

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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