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FINANCING ACTIVITIES | 12 Months Ended
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Dec. 31, 2024
Debt Disclosure [Abstract] |
FINANCING ACTIVITIES | FINANCING ACTIVITIES
(in millions) | Maturity Dates |  | December 31, 2024 |  | December 31, 2023
Unsecured |  |  |  |  |
5.25% Notes | 2025 |  | $ | — |  |  | $ | 1,302 |
1.25% Convertible Notes | 2025 |  | 1,611 |  |  | 1,611 |
3.00% Notes | 2026 |  | 300 |  |  | 300 |
7.375% Debentures | 2027 |  | 107 |  |  | 111 |
3.45% Notes | 2027 |  | 300 |  |  | 300 |
5.125% Notes | 2027 |  | 1,727 |  |  | 1,727 |
2.625% Notes | 2030 |  | 500 |  |  | 500 |
1.000% Payroll Support Program Loan (a) | 2030 |  | 976 |  |  | 976 |
1.000% Payroll Support Program Loan (a) | 2031 |  | 566 |  |  | 566 |
1.000% Payroll Support Program Loan (a) | 2031 |  | 526 |  |  | 526 |
Finance leases |  |  | 91 |  |  | 104
|  |  | $ | 6,704 |  |  | $ | 8,023 |
Less current maturities |  |  | 1,630 |  |  | 29 |
Less debt discount and issuance costs |  |  | 5 |  |  | 16 |
|  |  | $ | 5,069 |  |  | $ | 7,978 |
(a) The interest rate will change to Secured Overnight Financing Rate plus two percent on the fifth anniversary of the loans. The fifth anniversary for the first tranche occurs in April 2025. Senior Unsecured Notes due through 2030 During 2020, the Company issued $2.0 billion of unsecured notes due 2027, of which $1.3 billion was issued June 8, 2020 (the “$1.3 billion 2027 Notes”) and $700 million was issued July 31, 2020 (the “$700 million 2027 Notes”). The notes bear interest at 5.125%. Interest is payable semi-annually in arrears. The $700 million 2027 Notes were offered as an additional issuance of the Company’s $1.3 billion 2027 Notes issued on June 8, 2020. The $700 million 2027 Notes were issued at a premium. The Company made early prepayments on the notes of $272 million throughout 2022, utilizing available cash on hand. During 2020, the Company issued $1.55 billion of unsecured notes due 2025, of which $1.25 billion was issued May 4, 2020 (the “$1.25 billion 2025 Notes”) and $300 million was issued July 31, 2020 (the “$300 million 2025 Notes”), bearing interest at 5.250% with interest payable semi-annually in arrears. The $300 million 2025 Notes were offered as an additional issuance of the Company’s $1.25 billion 2025 Notes issued on May 4, 2020. The $300 million 2025 Notes were issued at a premium. The Company made early prepayments on the notes of $248 million throughout 2022, and prepaid the remaining notes in full in December 2024, utilizing available cash on hand. During February 2020, the Company issued $500 million senior unsecured notes due 2030. The notes bear interest at 2.625 percent. Interest is payable semi-annually in arrears. During November 2017, the Company issued $300 million senior unsecured notes due 2027. The notes bear interest at 3.45 percent. Interest is payable semi-annually in arrears. During November 2016, the Company issued $300 million senior unsecured notes due 2026. The notes bear interest at 3.00 percent. Interest is payable semi-annually in arrears. On February 28, 1997, the Company issued $100 million of senior unsecured 7.375 percent debentures due March 1, 2027. Interest is payable semi-annually. The debentures may be redeemed, at the option of the Company, in whole at any time or in part from time to time, at a redemption price equal to the greater of the principal amount of the debentures plus accrued interest at the date of redemption or the sum of the present values of the remaining scheduled payments of principal and interest thereon, discounted to the date of redemption at the comparable treasury rate plus 20 basis points, plus accrued interest at the date of redemption. Convertible Notes due 2025 On May 1, 2020, the Company completed the public offering of $2.3 billion aggregate principal amount of Convertible Senior Notes (the “Convertible Notes”). The Convertible Notes bear interest at a rate of 1.25% and will mature on May 1, 2025. Interest on the notes is payable semi-annually in arrears. Holders may convert their Convertible Notes at their option at any time prior to the close of business on the business day immediately preceding February 1, 2025, in the event certain conditions are met, as stated in the offering documents. The Convertible Notes did not meet the criteria to be converted as of December 31, 2024, but are classified within Current maturities of long-term debt in the accompanying Consolidated Balance Sheet due to their maturity on May 1, 2025. Upon conversion, the Company will settle conversions by paying cash up to the principal amount of the Convertible Notes, with any excess conversion value also settled in cash. The initial conversion rate was 25.9909 shares of common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $38.48 per share of common stock). However, based on the Company's most recent cash dividends declared in November 2024, the bond conversion rate changed, and was 27.3384 as of December 31, 2024. As of December 31, 2024, the if-converted value of the Convertible Notes was less than the principal amount by $130 million, using the Company's closing stock price. Upon issuance, the Company bifurcated the Convertible Notes for accounting purposes between a liability component and an equity component utilizing applicable guidance. The liability component was determined by estimating the fair value of a hypothetical issuance of an identical offering excluding the conversion feature of the Convertible Notes. The initial carrying amount of the equity component was calculated as the difference between the liability component and the face amount of the Convertible Notes. The Company adopted ASU 2020-06, as of January 1, 2022, utilizing the modified retrospective method approach. Upon adoption, the Company reclassified the remaining equity component, of $300 million, from Additional paid-in capital to Long-term debt associated with its Convertible Notes, and no longer records amortization of the debt discount to Interest expense. The Company recognized interest expense associated with the Convertible Notes as follows:
(in millions) | December 31, 2024 |  | December 31, 2023
Non-cash amortization of debt issuance costs | $ | 10 |  |  | $ | 10 |
Contractual coupon interest | 20 |  |  | 20 |
Total interest expense | $ | 30 |  |  | $ | 30 |
The unamortized debt issuance costs are being recognized as non-cash interest expense based on the 5-year term of the notes, through May 1, 2025, less amounts that were or will be required to be accelerated immediately upon conversion or repurchases. The Company had no changes to contingencies related to the Convertible Notes for the year ended December 31, 2024. The effective interest rate associated with the Convertible Notes was approximately 1.9 percent for the year ended December 31, 2024. There were no Convertible Note prepayments or conversions exercised or settled during 2023 or 2024. Payroll Support Program Loans due through 2031 As a result of the rapid spread of the novel coronavirus, COVID-19, throughout the world, including into the United States, on March 11, 2020, the World Health Organization classified the virus as a pandemic. The speed with which the effects of the COVID-19 pandemic changed the U.S. economic landscape, outlook, and in particular the travel industry, was swift and unexpected. The Company experienced significant disruptions in travel and reduced bookings throughout the remainder of 2020 and for the entirety of 2021 as a result of the pandemic and subsequent variants of COVID-19. The Company entered into definitive documentation with Treasury with respect to payroll funding support ("Payroll Support") pursuant to three separate Payroll Support programs: the "PSP1 Payroll Support Program" in April 2020 under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"); the "PSP2 Payroll Support Program” in January 2021 under the Consolidated Appropriations Act, 2021; and the "PSP3 Payroll Support Program" in April 2021 under the American Rescue Plan Act of 2021. As consideration for its receipt of funding under each of these Payroll Support programs, the Company issued a promissory note in favor of Treasury (classified as a component of Long term debt less current maturities in the Consolidated Balance Sheet) and entered into a warrant agreement with Treasury (classified as a component of Stockholders' equity in the Consolidated Balance Sheet). The Company paid approximately $6 million during second quarter 2024 to repurchase and terminate its outstanding stock warrants, previously issued in connection with the Payroll Support programs entered into with Treasury in 2020 and 2021. Revolving Credit Facility The Company has access to $1.0 billion under the Amended Credit Agreement, which expires in August 2028. For the twelve months ended December 31, 2024 and 2023 there were no amounts outstanding under the Amended Credit Agreement. Generally, amounts outstanding under the Amended Credit Agreement bear interest at rates based on either the SOFR rate (selected by the Company for designated interest periods) or the “alternate base rate” (being the highest of (1) the Wall Street Journal prime rate, (2) one-month adjusted SOFR (one-month SOFR plus 0.1 percent) plus 1 percent, and (3) the Federal Reserve Bank of New York Rate, plus 0.5 percent). The underlying SOFR rate is subject to a floor of 1 percent per annum and the “alternate base rate” is subject to a floor of 1 percent per annum. The Amended Credit Agreement has an accordion feature that would allow the Company, subject to, among other things, the procurement of incremental commitments, to increase the size of the facility to $1.5 billion. The facility contains a financial covenant requiring a minimum coverage ratio of adjusted pre-tax income to fixed obligations, as defined. As of December 31, 2024, the Company was in compliance with this covenant and all other covenants in the Amended Credit Agreement. The Company is required to provide standby letters of credit to support certain obligations that arise in the ordinary course of business. Although the letters of credit are an off-balance sheet item, the majority of the obligations to which they relate are reflected as liabilities in the Consolidated Balance Sheet. Outstanding letters of credit totaled $377 million as of December 31, 2024. The Company had no assets pledged as collateral for its borrowings as of December 31, 2024. Maturities As of December 31, 2024, aggregate annual principal maturities of debt and finance leases (not including amounts associated with interest on finance leases) are as follows:
(in millions) |
2025 | $ | 1,633 |
2026 | 320 |
2027 | 2,149 |
2028 | 15 |
2029 | 9 |
Thereafter | 2,571 |
Total | $ | 6,697 |

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