Revenue Recognition (Notes)

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

Revenue Recognition

The Company categorizes the revenues received from contracts with its customers by revenue source as we believe it best depicts the nature, amount, timing, and uncertainty of our revenue and cash flow. The following table provides the revenues recognized by revenue source for the three months ended March 31, 2020 and 2019 (in millions):



	Three Months Ended March 31,
	2020		2019
Passenger revenue
Passenger travel	$	1,408	$	1,712
Loyalty revenue - air transportation	103		90
Other revenue
Loyalty revenue	51		43
Other revenue	26		26
Total revenue	$	1,588	$	1,871

For the three months ended March 31, 2020, TrueBlue^® points earned from ticket purchases are presented as a reduction to Passenger travel within passenger revenue. Amounts presented in Loyalty revenue - air transportation represent the revenue recognized when TrueBlue^® points have been redeemed and the travel has occurred. The corresponding amounts within the three months ended March 31, 2019 have been reclassified to be comparable with the current period presentation. These reclassifications do not impact total passenger revenue.

Contract Liabilities

Our contract liabilities primarily consist of ticket sales for which transportation has not yet been provided, unused credits available to customers, and outstanding loyalty points available for redemption (in millions):



	March 31, 2020		December 31, 2019
Air traffic liability - passenger travel	$	1,020	$	929
Air traffic liability - loyalty program (air transportation)	656		661
Deferred revenue	33		10
Total	$	1,709	$	1,600

During the three months ended March 31, 2020 and 2019, we recognized passenger revenue of $636 million and $668 million respectively, that was included in passenger travel liability at the beginning of the respective periods.

The Company elected the practical expedient that allows entities to not disclose the amount of the remaining transaction price and its expected timing of recognition for passenger tickets if the contract has an original expected duration of one year or less or if certain other conditions are met. We elected to apply this practical expedient to our contract liabilities relating to passenger travel and ancillary services as our tickets or any related passenger credits expire one year from the date of issuance.

In April in response to COVID-19, we announced for certain travel credits that are recorded in our air traffic liability, principally those travel credits issued from February 27, 2020 through May 31, 2020, will be given an extended expiration life of 24 months. Accordingly, any revenue associated with these travel credits will be recognized within 24 months. Given the change in contract duration, our estimates of revenue from unused tickets may be subject to variability and differ from historical experience.

TrueBlue^® points are combined in one homogeneous pool and are not separately identifiable. As such, the revenue is comprised of the points that were part of the air traffic liability balance at the beginning of the period as well as points that were issued during the period.

The table below presents the activity of the current and non-current air traffic liability for our loyalty program, and includes points earned and sold to participating companies for the three months ended March 31, 2020 and 2019 (in millions):



Balance at December 31, 2019	$	661
TrueBlue^® points redeemed	(103		)
TrueBlue^® points earned and sold	98
Balance at March 31, 2020	$	656

Balance at December 31, 2018	$	580
TrueBlue^® points redeemed	(90		)
TrueBlue^® points earned and sold	104
Balance at March 31, 2019	$	594

The timing of our TrueBlue^® point redemptions can vary; however, the majority of our points are redeemed within approximately three years of the date of issuance.