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RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS | 3 Months Ended
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Mar. 31, 2018
Accounting Changes and Error Corrections [Abstract] |
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS | RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS Revenue Recognition and Retirement Benefits Accounting Standards In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)." The Company adopted the new standard as of January 1, 2018, utilizing a full retrospective transition method. Adoption of the new standard resulted in changes to accounting policies for revenue recognition related to frequent flyer activity, certain ancillary revenues such as change fees, air traffic liabilities, and sales and marketing expenses. As a result of adoption, the Company also changed certain financial statement line item disclosure captions. See Note 3 for a discussion of the impact of this standard. Although less significant, in March 2017 the FASB issued ASU 2017-07, "Compensation - Retirement Benefits (Topic 715)," which requires the Company to present the service cost component of net periodic benefit cost as Wages and benefits in the statement of operations. The Company adopted the new standard as of January 1, 2018, utilizing a full retrospective transition method. Under this new standard, all components of net periodic benefit cost are presented in Nonoperating income (expense), except service cost, which remains in Wages and benefits. Certain line item captions on the balance sheet and statement of operations changed as a result of the newly implemented standards. Accordingly, historical financial information presented below as reported has been presented using the new captions. The cumulative impact to retained earnings at January 1, 2016 as a result of the new revenue recognition standard was $171 million. Below are the impacts of these newly adopted accounting standards to the financial statements. Consolidated balance sheet as of December 31, 2017 (in millions):
| December 31, 2017
| As Reported |  | Adjustments - Revenue Recognition |  | As Adjusted
Current Assets: |  |  |  |  |
Prepaid expenses and other current assets | $ | 127 |  |  | $ | 6 |  |  | $ | 133 |
Current Liabilities: |  |  |  |  |
Air traffic liability | 937 |  |  | (131 | ) |  | 806 |
Deferred revenue | 518 |  |  | 117 |  |  | 635 |
Other liabilities and credits: |  |  |  |  |
Deferred income taxes | 454 |  |  | (84 | ) |  | 370 |
Deferred revenue | 699 |  |  | 391 |  |  | 1,090 |
Other liabilities | 451 |  |  | (26 | ) |  | 425 |
Shareholders' Equity: |  |  |  |  |
Retained earnings | 4,454 |  |  | (261 | ) |  | 4,193 |
Condensed consolidated statement of operations for the three months ended March 31, 2017 (in millions):
| Three Months Ended March 31, 2017
| As Reported |  | Adjustments - Revenue Recognition |  | Adjustments - Retirement Benefits |  | As Adjusted
Operating Revenues |  |  |  |  |  |  |
Passenger Revenue | $ | 1,484 |  |  | $ | 118 |  |  | $ | — |  |  | $ | 1,602 |
Mileage plan other revenue | 119 |  |  | (19 | ) |  | — |  |  | 100 |
Cargo and other revenue | 146 |  |  | (108 | ) |  | — |  |  | 38 |
Total Operating Revenue | 1,749 |  |  | (9 | ) |  | — |  |  | 1,740 |
Operating Expenses |  |  |  |  |  |  |
Wages and benefits | 448 |  |  | — |  |  | 2 |  |  | 450 |
Selling expenses | 81 |  |  | 2 |  |  | — |  |  | 83 |
Special items—merger-related costs | 40 |  |  | (1 | ) |  | — |  |  | 39 |
All other operating expenses | 1,011 |  |  | — |  |  | — |  |  | 1,011 |
Total Operating Expenses | 1,580 |  |  | 1 |  |  | 2 |  |  | 1,583 |
Operating Income | 169 |  |  | (10 | ) |  | (2 | ) |  | 157 |
Nonoperating Income (Expense) |  |  |  |  |  |  |
Other—net | (3 | ) |  | — |  |  | 2 |  |  | (1 | )
All other nonoperating income (expense) | (14 | ) |  | — |  |  | — |  |  | (14 | )
| (17 | ) |  | — |  |  | 2 |  |  | (15 | )
Income (loss) before income tax | 152 |  |  | (10 | ) |  | — |  |  | 142 |
Income tax expense (benefit) | 53 |  |  | (4 | ) |  | — |  |  | 49 |
Net Income (Loss) | $ | 99 |  |  | $ | (6 | ) |  | $ | — |  |  | $ | 93 |
Condensed consolidated statement of cash flows for the three months ended March 31, 2017 (in millions):
| Three Months Ended March 31, 2017
| As Reported |  | Adjustments - Revenue Recognition |  | As Adjusted
Cash flows from operating activities: |  |  |  |  |
Net income | $ | 99 |  |  | (6 | ) |  | $ | 93 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |
Depreciation and amortization | 90 |  |  | — |  |  | 90 |
Stock-based compensation and other | 13 |  |  | — |  |  | 13 |
Changes in certain assets and liabilities: |  |  |  |  |
Changes in deferred tax provision | 48 |  |  | (4 | ) |  | 44 |
Increase in air traffic liability | 369 |  |  | (5 | ) |  | 364 |
Increase in deferred revenue | 1 |  |  | 30 |  |  | 31 |
Other—net | (150 | ) |  | (15 | ) |  | (165 | )
Net cash provided by operating activities | 470 |  |  | — |  |  | 470 |
Net cash used in investing activities | (488 | ) |  | — |  |  | (488 | )
Net cash used in financing activities | (127 | ) |  | — |  |  | (127 | )
Net increase (decrease) in cash and cash equivalents | (145 | ) |  | — |  |  | (145 | )
Cash and cash equivalents at beginning of year | 328 |  |  | — |  |  | 328 |
Cash and cash equivalents at end of the period | $ | 183 |  |  | — |  |  | $ | 183 |

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