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Fair Value Measurements
 3 Months Ended
Mar. 31, 2025
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 March 31, 2025, 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, fuel derivative contracts, and available-for-sale securities. The majority of the Company’s cash equivalents and 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. Equity securities primarily consist of investments with readily determinable market values associated with the Company’s excess benefit plan.

The Company’s 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 have historically consisted solely of swap agreements. See Note 3 for further information on the Company’s derivative instruments and hedging activities. The Company 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 a similar 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 Equity securities are the Company’s investments primarily 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 plan obligations and plan assets, which net to zero, within the Salaries, wages, and benefits line and Other (gains) losses, net line, respectively, of the unaudited Condensed Consolidated Statement of Comprehensive Loss.

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2025, and December 31, 2024:
  Fair value measurements at reporting date using:
Quoted prices in active markets for identical assetsSignificant other observable inputsSignificant unobservable inputs
DescriptionMarch 31, 2025(Level 1)(Level 2)(Level 3)
Assets(in millions)
Cash equivalents:    
Cash equivalents (a)$7,789 $7,789 $— $— 
Commercial paper45 — 45 — 
Time deposits300 — 300 — 
Short-term investments: 
Certificates of deposit118 — 118 — 
Fuel derivatives: 
Option contracts (b)92 — — 92 
Equity Securities352 352 — — 
Total assets$8,696 $8,141 $463 $92 
(a) Cash equivalents are primarily composed of money market investments and treasury bills.
(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 assetsSignificant other observable inputsSignificant unobservable inputs
DescriptionDecember 31, 2024(Level 1)(Level 2)(Level 3)
Assets(in millions)
Cash equivalents:   
Cash equivalents (a)$7,209 $7,209 $— $— 
Time deposits300 — 300 — 
Short-term investments:    
Treasury bills1,094 1,094 — — 
Certificates of deposit122 — 122 — 
Fuel derivatives:    
Option contracts (b)130 — — 130 
Equity Securities367 367 — — 
Total assets$9,222 $8,670 $422 $130 
(a) Cash equivalents are primarily composed of money market investments and treasury bills.
(b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as an asset. See Note 3.

The Company did not have any material assets or liabilities measured at fair value on a nonrecurring basis during the three months ended March 31, 2025, or the year ended December 31, 2024. The following table presents the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2025:

Fair value measurements using significant unobservable inputs (Level 3)
(in millions)Fuel derivatives
Balance as of December 31, 2024$130 
Total loss for the period
Included in other comprehensive loss(38)
Balance as of March 31, 2025$92 
  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 as of March 31, 2025
$36 

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 as of March 31, 2025:
Quantitative information about Level 3 fair value measurements
 Valuation techniqueUnobservable inputPeriod (by year)RangeWeighted Average (a)
Fuel derivativesOption modelImplied volatilitySecond quarter 2025
17-32%
28 %
Third quarter 2025
24-30%
28 %
Fourth quarter 2025
24-27%
26 %
2026
22-31%
24 %
2027
21-25%
23 %
(a) Implied volatility weighted by the notional amount (barrels of underlying commodity) that will settle in each 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, as of March 31, 2025, are presented in the table below. The fair values of the Company’s publicly held 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. All privately held debt agreements are categorized as Level 3. 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)Maturity DateCarrying valueEstimated fair valueFair value level hierarchy
1.25% Convertible Notes (a)
20251,611 1,606 Level 2
3.00% Notes
2026300 292 Level 2
7.375% Debentures
2027106 111 Level 2
3.45% Notes
2027300 291 Level 2
5.125% Notes
20271,727 1,741 Level 2
2.625% Notes
2030500 449 Level 2
1.000% Payroll Support Program Loan (b)
2030976 994 Level 3
1.000% Payroll Support Program Loan (b)
2031566 554 Level 3
1.000% Payroll Support Program Loan (b)
2031526 509 Level 3
(a) The maturity date for the convertible notes occurs in May 2025.
(b) 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 would have occurred on April 20, 2025; however, the Company prepaid this tranche in full on April 17, 2025. See Note 10 for further information.