Long-term Debt, Short-term Borrowings and Finance Lease Obligations (Tables)

9 Months Ended

Sep. 30, 2020

The carrying amounts and estimated fair values of our long-term debt, net of debt acquisition costs, at September 30, 2020 and December 31, 2019 were as follows (in millions):



	September 30, 2020				December 31, 2019
	Carrying Value		Estimated Fair Value⁽²⁾		Carrying Value		Estimated Fair Value⁽²⁾
Public Debt
Fixed rate special facility bonds, due through 2036	$	42	$	43	$	42	$	46
Fixed rate enhanced equipment notes:
2019-1 Series AA, due through 2032	574		414		581		586
2019-1 Series A, due through 2028	179		146		181		186
2019-1 Series B, due through 2027	114		142		—		—
2020-1 Series A, due through 2032	628		611		—		—
2020-1 Series B, due through 2028	170		213		—		—
Non-Public Debt
Fixed rate enhanced equipment notes, due through 2023	114		115		133		141
Floating rate equipment notes, due through 2028	164		150		201		207
Fixed rate equipment notes, due through 2028	935		920		1,107		1,201
Floating rate term loan credit facility, due through 2024	709		750		—		—
Unsecured CARES Act Payroll Support Program loan, due through 2030	259		192		—		—
Secured CARES Act Loan, due through 2025	105		100		—		—
2020 sale-leaseback transactions, due through 2024	235		262		—		—
Citibank line of credit, due through 2023	546		520		—		—
Total⁽¹⁾	$	4,774	$	4,578	$	2,245	$	2,367

(1) Total excludes finance lease obligations of $65 million and $89 million at September 30, 2020 and December 31, 2019, respectively.

(2) The estimated fair values of our publicly held long-term debt are classified as Level 2 in the fair value hierarchy. The fair values of our enhanced equipment notes and our special facility bonds were based on quoted market prices in markets with low trading volumes. The fair value of our non-public debt was estimated using a discounted cash flow analysis based on our borrowing rates for instruments with similar terms and therefore classified as Level 3 in the fair value hierarchy. The fair values of our other financial instruments approximate their carrying values. Refer to Note 9 to our condensed consolidated financial statements for an explanation of the fair value hierarchy structure.

We have financed certain aircraft with Enhanced Equipment Trust Certificates, or EETCs. One of the benefits of this structure is being able to finance several aircraft at one time, rather than individually. The structure of EETC financing is that we create pass-through trusts in order to issue pass-through certificates. The proceeds from the issuance of these certificates are then used to purchase equipment notes, which are issued by us and are secured by our aircraft. These trusts meet the definition of a variable interest entity, or VIE, as defined in the Consolidations topic of the Codification, and must be considered for consolidation in our financial statements. Our assessment of our EETCs considers both quantitative and qualitative factors including the purpose for which these trusts were established and the nature of the risks in each. The main purpose of the trust structure is to enhance the credit worthiness of our debt obligation through certain bankruptcy protection provisions and liquidity facilities, and also to lower our total borrowing cost. We concluded that we are not the primary beneficiary in these trusts because our involvement in them is limited to principal and interest payments on the related notes, the trusts were not set up to pass along variability created by credit risk to us, and the likelihood of our defaulting on the notes. Therefore, we have not consolidated these trusts in our financial statements.