Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 01, 2019 | Jun. 30, 2018 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | SOUTHWEST AIRLINES CO | ||
Entity Central Index Key | 92,380 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 552,688,849 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 29,086,256,077 | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false |
Consolidated Balance Sheet
Consolidated Balance Sheet - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Current assets: | |||
Cash and cash equivalents | $ 1,854 | $ 1,495 | |
Short-term investments | 1,835 | 1,778 | |
Accounts and other receivables | 568 | 662 | |
Inventories of parts and supplies, at cost | 461 | 420 | |
Prepaid expenses and other current assets | 310 | 460 | |
Total current assets | 5,028 | 4,815 | |
Property and equipment, at cost: | |||
Flight equipment | 21,753 | 21,368 | |
Ground property and equipment | 4,960 | 4,399 | |
Deposits on flight equipment purchase contracts | 775 | 919 | |
Assets constructed for others | 1,768 | 1,543 | |
Property and equipment, at cost | 29,256 | 28,229 | |
Less allowance for depreciation and amortization | 9,731 | 9,690 | |
Property and equipment, net | 19,525 | 18,539 | |
Goodwill | 970 | 970 | |
Other assets | 720 | 786 | |
Total assets | 26,243 | 25,110 | |
Current liabilities: | |||
Accounts payable | 1,416 | 1,320 | |
Accrued liabilities | 1,749 | 1,700 | |
Air traffic liability | 4,134 | 3,495 | |
Current maturities of long-term debt | 606 | 348 | |
Total current liabilities | 7,905 | 6,863 | |
Long-term debt less current maturities | 2,771 | 3,320 | |
Air traffic liablity - noncurrent | 936 | 1,070 | |
Deferred income taxes | 2,427 | 2,119 | |
Construction obligation | [1] | 1,701 | 1,390 |
Other noncurrent liabilities | 650 | 707 | |
Stockholders' equity: | |||
Common stock, $1.00 par value: 2,000,000,000 shares authorized; 807,611,634 shares issued in 2018 and 2017 | 808 | 808 | |
Capital in excess of par value | 1,510 | 1,451 | |
Retained earnings | 15,967 | 13,832 | |
Accumulated Other Comprehensive Income, Net of Tax | 20 | 12 | |
Treasury stock, at cost: 255,008,275 and 219,060,856 shares in 2018 and 2017 respectively | (8,452) | (6,462) | |
Total stockholders' equity | 9,853 | 9,641 | |
Total liabilities and stockholders' equity | $ 26,243 | $ 25,110 | |
[1] | Construction obligation will be reduced through future facility rent payments. These future payments are not fixed per the lease agreement, but are variable and fluctuate based on various market and other factors outside the control of the Company. |
Consolidated Balance Sheet (Par
Consolidated Balance Sheet (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Stockholders' equity: | ||
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 2,000,000,000 | 2,000,000,000 |
Common stock, shares issued (in shares) | 807,611,634 | 807,611,634 |
Treasury stock, at cost: shares (in shares) | 255,008,275 | 219,060,856 |
Consolidated Statement of Incom
Consolidated Statement of Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
OPERATING REVENUES: | |||
Operating Revenue | $ 21,965 | $ 21,146 | $ 20,289 |
OPERATING EXPENSES: | |||
Salaries, wages, and benefits | 7,649 | 7,305 | 6,786 |
Fuel and oil | 4,616 | 4,076 | 3,801 |
Maintenance materials and repairs | 1,107 | 1,001 | 1,045 |
Landing fees and airport rentals | 1,334 | 1,292 | 1,211 |
Depreciation and amortization | 1,201 | 1,218 | 1,221 |
Other operating expenses | 2,852 | 2,847 | 2,703 |
Total operating expenses | 18,759 | 17,739 | 16,767 |
OPERATING INCOME | 3,206 | 3,407 | 3,522 |
OTHER EXPENSES (INCOME): | |||
Interest Expense | 131 | 114 | 122 |
Capitalized interest | (38) | (49) | (47) |
Interest income | (69) | (35) | (24) |
Other (gains) losses, net | (18) | (112) | (21) |
Total other expenses (income) | 42 | 142 | 72 |
INCOME BEFORE INCOME TAXES | 3,164 | 3,265 | 3,450 |
PROVISION (BENEFIT) FOR INCOME TAXES | 699 | (92) | 1,267 |
NET INCOME | 2,465 | 3,357 | 2,183 |
Passenger | |||
OPERATING REVENUES: | |||
Operating Revenue | 20,455 | 19,763 | 19,068 |
Freight | |||
OPERATING REVENUES: | |||
Operating Revenue | 175 | 173 | 171 |
Other | |||
OPERATING REVENUES: | |||
Operating Revenue | $ 1,335 | $ 1,210 | $ 1,050 |
Consolidated Statement of Compr
Consolidated Statement of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating Revenue | $ 21,965 | $ 21,146 | $ 20,289 |
Net income | 2,465 | 3,357 | 2,183 |
Unrealized gain (loss) on defined benefit plan items, net of deferred taxes of $15, $2, and ($13) | 52 | 3 | (23) |
Other, net of deferred taxes of ($2), $5, and $5 | (6) | 8 | 9 |
OTHER COMPREHENSIVE INCOME | 26 | 335 | 728 |
COMPREHENSIVE INCOME | 2,491 | 3,692 | 2,911 |
Fuel derivatives | |||
Unrealized gain on derivatives, net of tax | (26) | 317 | 735 |
Interest rate derivatives | |||
Unrealized gain on derivatives, net of tax | 6 | 7 | 7 |
Passenger | |||
Operating Revenue | 20,455 | 19,763 | 19,068 |
Freight | |||
Operating Revenue | 175 | 173 | 171 |
Other | |||
Operating Revenue | $ 1,335 | $ 1,210 | $ 1,050 |
Consolidated Statement of Com_2
Consolidated Statement of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Deferred taxes on unrealized gain (loss), other, tax effect | $ (2) | $ 5 | $ 5 |
Deferred taxes on postretirement | 15 | 2 | (13) |
Fuel derivatives | |||
Deferred taxes on unrealized gain (loss) on derivatives, tax effect | (7) | 185 | 432 |
Interest rate derivatives | |||
Deferred taxes on unrealized gain (loss) on derivatives, tax effect | $ 1 | $ 4 | $ 5 |
Consolidated Statement of Stock
Consolidated Statement of Stockholder's Equity - USD ($) $ in Millions | Total | Common Stock | Capital in excess of par value | Retained earnings | Accumulated other comprehensive income (loss) | Treasury stock | Scenario, Previously Reported | Scenario, Previously ReportedCommon Stock | Scenario, Previously ReportedCapital in excess of par value | Scenario, Previously ReportedRetained earnings | Scenario, Previously ReportedAccumulated other comprehensive income (loss) | Scenario, Previously ReportedTreasury stock |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Cumulative effect of new accounting standards | $ (596) | $ 0 | $ 0 | $ (596) | $ 0 | $ 0 | ||||||
Balance at beginning of period at Dec. 31, 2015 | 6,762 | 808 | 1,374 | 8,813 | (1,051) | (3,182) | $ 7,358 | $ 808 | $ 1,374 | $ 9,409 | $ (1,051) | $ (3,182) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Repurchase of common stock | (1,750) | 0 | 0 | 0 | 0 | (1,750) | ||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 20 | 0 | 8 | 0 | 0 | 12 | ||||||
Issuance of stock for conversion of debt | 43 | (5) | ||||||||||
Conversion of 5.25% senior notes to common stock | 0 | 0 | 0 | 48 | ||||||||
Share-based compensation | 33 | 0 | 33 | 0 | 0 | 0 | ||||||
Cash dividends | (235) | 0 | 0 | (235) | 0 | 0 | ||||||
Comprehensive income | 2,911 | 0 | 0 | 2,183 | 728 | 0 | ||||||
Balance at end of period at Dec. 31, 2016 | 7,784 | 808 | 1,410 | 10,761 | (323) | (4,872) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Repurchase of common stock | (1,600) | 0 | 0 | 0 | 0 | (1,600) | ||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 14 | 0 | 4 | 0 | 0 | 10 | ||||||
Share-based compensation | 37 | 0 | 37 | 0 | 0 | 0 | ||||||
Cash dividends | (286) | 0 | 0 | (286) | 0 | 0 | ||||||
Comprehensive income | 3,692 | 0 | 0 | 3,357 | 335 | 0 | ||||||
Balance at end of period at Dec. 31, 2017 | 9,641 | 808 | 1,451 | 13,832 | 12 | (6,462) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Repurchase of common stock | (2,000) | 0 | 0 | 0 | 0 | (2,000) | ||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 23 | 0 | 13 | 0 | 0 | 10 | ||||||
Share-based compensation | 46 | 0 | 46 | 0 | 0 | 0 | ||||||
Cash dividends | (348) | 0 | 0 | (348) | 0 | 0 | ||||||
Comprehensive income | 2,491 | 0 | 0 | 2,465 | 26 | 0 | ||||||
Balance at end of period at Dec. 31, 2018 | 9,853 | 808 | 1,510 | 15,967 | 20 | (8,452) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Cumulative effect of new accounting standards | $ 0 | $ 0 | $ 0 | $ 18 | $ (18) | $ 0 |
Consolidated Statement of Sto_2
Consolidated Statement of Stockholder's Equity (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Stockholders' Equity [Abstract] | |||
Cash dividends, per share (in dollars per share) | $ 0.6050 | $ 0.4750 | $ 0.3750 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 2,465 | $ 3,357 | $ 2,183 |
Adjustments to reconcile net income to cash provided by (used in) operating activities: | |||
Depreciation and amortization | 1,201 | 1,218 | 1,221 |
Loss on asset impairment | 0 | 0 | 21 |
Aircraft grounding charge | 0 | 63 | 0 |
Unrealized/realized gains on fuel derivative instruments | (14) | (50) | (200) |
Deferred income taxes | (301) | 1,066 | (419) |
Changes in certain assets and liabilities: | |||
Accounts and other receivables | 117 | (102) | (50) |
Other assets | (227) | (262) | (119) |
Accounts payable and accrued liabilities | 545 | 233 | 221 |
Air traffic liability | 506 | 343 | 227 |
Cash collateral received from (provided to) derivative counterparties | (15) | 316 | 535 |
Other, net | 14 | (121) | (165) |
Net cash provided by operating activities | 4,893 | 3,929 | 4,293 |
Net cash used in investing activities | |||
Capital expenditures | (1,922) | (2,123) | (2,038) |
Assets constructed for others | (54) | (126) | (109) |
Purchases of short-term investments | (2,409) | (2,380) | (2,388) |
Proceeds from sale of short-term and other investments | 2,342 | 2,221 | 2,263 |
Other, net | 5 | 0 | 0 |
Net cash used in investing activities | (2,038) | (2,408) | (2,272) |
Net cash used in financing activities | |||
Proceeds from issuance of long-term debt | 0 | 600 | 515 |
Proceeds from Employee stock plans | 35 | 29 | 29 |
Reimbursement for assets constructed for others | 170 | 126 | 107 |
Payments of long-term debt and capital lease obligations | (342) | (592) | (523) |
Payments of convertible debt | 0 | 0 | (68) |
Payments of cash dividends | 332 | 274 | 222 |
Repayment of construction obligation | (30) | (10) | (9) |
Repurchase of common stock | (2,000) | (1,600) | (1,750) |
Other, net | 3 | 15 | (3) |
Net cash used in financing activities | (2,496) | (1,706) | (1,924) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 359 | (185) | 97 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 1,495 | 1,680 | 1,583 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 1,854 | 1,495 | 1,680 |
CASH PAYMENTS FOR: | |||
Interest, net of amount capitalized | 107 | 81 | 100 |
Income taxes | 327 | 992 | 902 |
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS: | |||
Flight equipment acquired through the assumption of debt | 0 | 0 | 20 |
Flight equipment under capital leases | 32 | 233 | 307 |
Assets constructed for others | $ 171 | $ 197 | $ 196 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation Southwest Airlines Co. (the "Company") operates Southwest Airlines, a major domestic airline. The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries, which include AirTran Holdings, LLC, the successor to AirTran Holdings, Inc. ("AirTran Holdings"), the former parent company of AirTran Airways, Inc. ("AirTran Airways"). The accompanying Consolidated Financial Statements include the results of operations and cash flows for all periods presented and all significant inter-entity balances and transactions have been eliminated. The preparation of financial statements in conformity with generally accepted accounting principles in the United States ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. Effective as of January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (the "New Revenue Standard"), ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (the "New Retirement Standard"), and ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities (the "New Hedging Standard"). All amounts and disclosures set forth in this Form 10-K reflect the adoption of these ASUs. See Note 2 for further information. The Company reclassified $198 million and $229 million from Aircraft rentals to Other operating expenses in the Consolidated Statement of Income for the years ended December 31, 2017 and 2016 , respectively, to be comparative with the current period's presentation. Aircraft rentals expense included in Other operating expenses for the year ended December 31, 2018 , was $161 million . This reclassification had no impact on Operating income, Net income, the Consolidated Balance Sheet, or the Consolidated Statement of Cash Flows. Cash and Cash Equivalents Cash in excess of that necessary for operating requirements is invested in short-term, highly liquid, income-producing investments. Investments with original maturities of three months or less when purchased are classified as cash and cash equivalents, which primarily consist of certificates of deposit, money market funds, and investment grade commercial paper issued by major corporations and financial institutions. Cash and cash equivalents are stated at cost, which approximates fair value. As of December 31, 2018 , no cash collateral deposits were provided by or held by the Company from its fuel hedge counterparties, and no cash collateral deposits were held by or provided by the Company to its interest rate hedge counterparties. As of December 31, 2017 , $15 million in cash collateral deposits were held by the Company from its fuel hedge counterparties, and no cash collateral deposits were held by or provided by the Company to its interest rate hedge counterparties. Cash collateral amounts provided or held associated with fuel and interest rate derivative instruments are not restricted in any way and earn interest income at an agreed upon rate that approximates the rates earned on short-term securities issued by the U.S. Government. Depending on the fair value of the Company’s fuel and interest rate derivative instruments, the amounts of collateral deposits held or provided at any point in time can fluctuate significantly. See Note 10 for further information on these collateral deposits and fuel derivative instruments. Short-term and Noncurrent Investments Short-term investments consist of investments with original maturities of greater than three months but less than twelve months when purchased. These are primarily short-term securities issued by the U.S. Government and certificates of deposit issued by domestic banks. All of these investments are classified as available-for-sale securities and are stated at fair value, which approximates cost. For all short-term investments, at each reset period or upon reinvestment, the Company accounts for the transaction as Proceeds from sales of short-term investments for the security relinquished, and Purchases of short-investments for the security purchased, in the accompanying Consolidated Statement of Cash Flows. Unrealized gains and losses, net of tax, if any, are recognized in Accumulated other comprehensive income (loss) ("AOCI") in the accompanying Consolidated Balance Sheet. Realized net gains and losses on specific investments, if any, are reflected in Interest income in the accompanying Consolidated Statement of Income. Both unrealized and realized gains and/or losses associated with investments were immaterial for all years presented. Noncurrent investments consist of investments with maturities of greater than twelve months. Noncurrent investments are included as a component of Other assets in the Consolidated Balance Sheet. Accounts and Other Receivables Accounts and other receivables are carried at cost. They primarily consist of amounts due from credit card companies associated with sales of tickets for future travel, and amounts due from business partners in the Company’s loyalty program. The allowance for doubtful accounts was immaterial at December 31, 2018 and 2017 . In addition, the provision for doubtful accounts and write-offs for 2018 , 2017 , and 2016 were each immaterial. Inventories Inventories primarily consist of aircraft fuel, flight equipment expendable parts, materials, and supplies. All of these items are carried at average cost, less an allowance for obsolescence. These items are generally charged to expense when issued for use. The reserve for obsolescence was $2 million and $45 million at December 31, 2018 , and 2017 , respectively. In addition, the Company’s provision for obsolescence and write-offs for 2018 , 2017 , and 2016 were each immaterial. Property and Equipment Property and equipment is stated at cost. Capital expenditures include payments made for aircraft, other flight equipment, purchase deposits related to future aircraft deliveries, airport and other facility construction projects, and ground and other property and equipment. Depreciation is provided by the straight-line method to estimated residual values over periods of approximately 25 years for flight equipment, 5 to 30 years for ground property and equipment, and 5 to 30 years, or the expected term of the Company's lease if shorter, for Assets constructed for others, once the asset is placed in service. Residual values estimated for aircraft are approximately 15 percent , for ground property and equipment generally range from 0 to 10 percent , and for Assets constructed for others range from 17 to 75 percent . Property under capital leases and related obligations are initially recorded at an amount equal to the present value of future minimum lease payments computed on the basis of the Company’s incremental borrowing rate or, when known, the interest rate implicit in the lease. Amortization of property under capital leases is on a straight-line basis over the lease term and is included in Depreciation and amortization expense. Leasehold improvements generally are amortized on a straight-line basis over the shorter of the estimated useful life of the improvement or the remaining term of the lease. Assets constructed for others consists of airport improvement projects in which the Company is considered the accounting owner of the facilities. See Note 4 for further information. During first quarter 2016, the Company made the decision to further simplify its operations and accelerate the retirement of its less-efficient Boeing 737-300 ("Classic") fleet. In September 2017, the Company retired the remaining 61 Classic aircraft as part of this accelerated retirement schedule. This change in retirement dates was considered a change in estimate and was accounted for on a prospective basis as of the dates the decisions were finalized. Therefore, the Company recorded accelerated depreciation expense over the remainder of the useful lives for each Classic aircraft and related parts. See Note 7 for further information regarding the Company's aircraft fleet. The impacts on expense and earnings from the accelerated depreciation were as follows: (in millions, except per share amounts) Year ended December 31, 2017 Year ended December 31, 2016 Depreciation and amortization expense $ 21 $ 123 Net income * $ (19 ) $ (66 ) Net income per basic share $ (0.03 ) $ (0.11 ) Net income per diluted share $ (0.03 ) $ (0.10 ) * net of profitsharing benefit and income taxes The Company evaluates its long-lived assets used in operations for impairment when events and circumstances indicate that the undiscounted cash flows to be generated by that asset are less than the carrying amounts of the asset and may not be recoverable. Factors that would indicate potential impairment include, but are not limited to, significant decreases in the market value of the long-lived asset(s), a significant change in the long-lived asset’s physical condition, and operating or cash flow losses associated with the use of the long-lived asset. If an asset is deemed to be impaired, an impairment loss is recorded for the excess of the asset book value in relation to its estimated fair value. Aircraft and Engine Maintenance The cost of scheduled inspections and repairs and routine maintenance costs for all aircraft and engines are charged to Maintenance materials and repairs expense within the accompanying Consolidated Statement of Income as incurred. The Company has maintenance agreements related to certain of its aircraft engines with external service providers, including a "power-by-the-hour" agreement associated with its Boeing 737-700 fleet. Under these agreements, which the Company has determined effectively transfer the risk and create an obligation associated with the maintenance on such engines to the counterparty, expense is recorded commensurate with each hour flown on an engine. In situations where the payments to the counterparty do not sufficiently match the level of services received during the period, expense is recorded on a straight-line basis over the term of the agreement based on the Company's best estimate of expected future aircraft utilization. For its engine maintenance contracts that do not transfer risk to the service provider, the Company records expense on a time and materials basis when an engine repair event takes place. Modifications that significantly enhance the operating performance or extend the useful lives of aircraft or engines are capitalized and amortized over the remaining life of the asset. Goodwill and Intangible Assets The Company applies a fair value based impairment test to the carrying value of goodwill and indefinite-lived intangible assets annually on October 1st, or more frequently if certain events or circumstances indicate that an impairment loss may have been incurred. The Company assesses the value of goodwill and indefinite-lived assets under either a qualitative or quantitative approach. Under a qualitative approach, the Company considers various market factors, including applicable key assumptions listed below. These factors are analyzed to determine if events and circumstances could reasonably have affected the fair value of goodwill and indefinite-lived intangible assets. If the Company determines that it is more likely than not that an indefinite-lived intangible asset is impaired, the quantitative approach is used to assess the asset’s implied fair value and the amount of the impairment. Under a quantitative approach, the implied fair value of the Company's identifiable assets and liabilities is calculated based on key assumptions. If the Company assets' carrying value exceeds the fair value calculated using the quantitative approach, an impairment charge is recorded for the difference in fair value and carrying value. During 2016, the Company recorded a $21 million impairment charge associated with leased slots at Newark Liberty International Airport as a result of the FAA announcement, in April 2016, that this airport was being changed to a Level 2 schedule-facilitated airport from its previous designation as Level 3. This impairment loss was reflected in Other operating expenses within the accompanying Consolidated Statement of Income. The Company does not believe this FAA decision is indicative of a similar decision being made at the Company's other slot-controlled airports, Washington Reagan and New York LaGuardia. The following table is a summary of the Company’s intangible assets, which are included as a component of Other assets in the Company's Consolidated Balance Sheet, as of December 31, 2018 and 2017 : Year ended December 31, 2018 Year ended December 31, 2017 (in millions) Weighted-average useful life (in years) Gross carrying amount Accumulated amortization Gross carrying amount Accumulated Amortization Customer relationships/marketing agreements 10 $ 27 $ 25 $ 27 $ 23 Owned domestic slots (a) Indefinite 295 n/a 295 n/a Gate leasehold rights (a) 15 180 78 180 66 Total 14 $ 502 $ 103 $ 502 $ 89 (a) Intangible assets primarily consist of acquired leasehold rights to certain airport owned gates, takeoff and landing slots (a "slot" is the right of an air carrier, pursuant to regulations of the FAA, to operate a takeoff or landing at a specific time at certain airports) at certain domestic slot-controlled airports, and certain intangible assets acquired. The Company's definite lived assets are amortized on a straight-line basis over the useful life of the asset. The aggregate amortization expense for 2018 , 2017 , and 2016 was $16 million , $13 million , and $17 million , respectively. Estimated aggregate amortization expense for the five succeeding years and thereafter is as follows: 2019 – $13 million , 2020 – $12 million , 2021 – $12 million , 2022 – $12 million , 2023 – $12 million , and thereafter – $45 million . Revenue Recognition Tickets sold are initially deferred as Air traffic liability. Passenger revenue is recognized and Air traffic liability is reduced when transportation is provided. Air traffic liability primarily represents tickets sold for future travel dates and funds that are past flight date and remain unused as well as a portion of the Company's liability associated with its loyalty program. The majority of the Company’s tickets sold are nonrefundable. Refundable tickets that are sold but not flown on the travel date can be reused for another flight, up to a year from the date of sale, or refunded, subject to certain conditions. Based on the Company's revenue recognition policy, revenue is recorded at the flight date for a Customer who does not change his/her itinerary and loses his/her funds as the Company has then fulfilled its performance obligation. Amounts collected from passengers for ancillary service fees are also recognized when the service is provided, which is typically the flight date. Revenue from the estimated spoilage of tickets (including partial tickets) is recorded once the flight date has passed in proportion to the pattern of flights taken by the Customer, which approximates the average period over which the population of Rapid Reward Members redeem their points. Initial spoilage estimates are routinely adjusted and ultimately finalized once the tickets expire, which is typically twelve months after the original purchase date. See Note 5 for further information. Approximately $566 million , approximately $489 million , and approximately $383 million of the Company's Operating revenues in 2018 , 2017 , and 2016 , respectively, were attributable to foreign operations. The remainder of the Company's Operating revenues, approximately $21.4 billion , approximately $20.7 billion , and approximately $20.0 billion in 2018 , 2017 , and 2016 , respectively, were attributable to domestic operations. Loyalty Program The Company records a liability for the relative fair value of providing free travel under its loyalty program for all points earned from flight activity or sold to companies participating in the Company’s Rapid Rewards loyalty program as business partners that are expected to be redeemed for future travel. The loyalty liability represents performance obligations that will be satisfied when a Rapid Rewards loyalty member redeems points for travel or other goods and services, or upon spoilage of the points. Points earned from flight activity are valued at their relative standalone selling price by applying fair value based on historical redemption patterns. Points earned from business partner activity, which primarily consist of points sold, along with related services, to companies participating in the Rapid Rewards loyalty program, are valued using a relative fair value methodology based on the contractual rate which partners pay to Southwest to award Rapid Rewards points to the business partner’s customers. For points that are expected to expire unused, the Company recognizes spoilage in proportion to the pattern of points used by the Customer, which approximates the average period over which the population of Rapid Reward Members redeem their points. The Company records passenger revenue related to air transportation when the transportation is delivered. The marketing elements are recognized as Other - net revenue when earned. See Note 5 for further information. Advertising Advertising costs are charged to expense as incurred. Advertising and promotions expense for the years ended December 31, 2018 , 2017 , and 2016 was $215 million , $224 million , and $232 million , respectively, and is included as a component of Other operating expense in the accompanying Consolidated Statement of Income. Share-based Employee Compensation The Company has share-based compensation plans covering certain Employees, including a plan that also covers the Company’s Board of Directors. The Company accounts for share-based compensation based on its grant date fair value. See Note 9 for further information. Financial Derivative Instruments The Company accounts for financial derivative instruments at fair value and applies hedge accounting rules where appropriate. The Company utilizes various derivative instruments, including jet fuel, crude oil, unleaded gasoline, and heating oil-based derivatives, to attempt to reduce the risk of its exposure to jet fuel price increases. These instruments are accounted for as cash flow hedges upon proper qualification. The Company also has interest rate swap agreements to convert a portion of its fixed-rate debt to floating rates and has swap agreements that convert certain floating-rate debt to a fixed-rate. The majority of these interest rate hedges are appropriately designated as either fair value hedges or as cash flow hedges. Since the majority of the Company’s financial derivative instruments are not traded on a market exchange, the Company estimates their fair values. Depending on the type of instrument, the values are determined by the use of present value methods or option value models with assumptions about commodity prices based on those observed in underlying markets. The Company adopted the New Hedging Standard as of January 1, 2018. See Note 2 for further information on this adoption. All cash flows associated with purchasing and selling derivatives are classified as operating cash flows in the Consolidated Statement of Cash Flows, within Changes in certain assets and liabilities. The Company classifies its cash collateral provided to or held from counterparties in a "net" presentation on the Consolidated Balance Sheet against the fair value of the derivative positions with those counterparties. See Note 10 for further information. Software Capitalization The Company capitalizes certain internal and external costs related to the acquisition and development of internal use software during the application development stages of projects. The Company amortizes these costs using the straight-line method over the estimated useful life of the software, which is typically five to fifteen years. Costs incurred during the preliminary project or the post-implementation/operation stages of the project are expensed as incurred. Capitalized computer software, included as a component of Ground property and equipment in the accompanying Consolidated Balance Sheet, net of accumulated depreciation, was $674 million and $654 million at December 31, 2018 , and 2017 , respectively. Computer software depreciation expense was $155 million , $168 million , and $111 million for the years ended December 31, 2018 , 2017 , and 2016 , respectively, and is included as a component of Depreciation and amortization expense in the accompanying Consolidated Statement of Income. The Company evaluates internal use software for impairment on a quarterly basis; if it is determined the value of an asset was not recoverable or it qualifies for impairment, a charge will be recorded to write down the software to the lower of its carrying value or fair value. The Company had no significant impairments during 2018 , 2017 , or 2016 . Income Taxes The Company accounts for deferred income taxes utilizing an asset and liability method, whereby deferred tax assets and liabilities are recognized based on the tax effect of temporary differences between the financial statements and the tax basis of assets and liabilities, as measured by current enacted tax rates. The Company also evaluates the need for a valuation allowance to reduce deferred tax assets to estimated recoverable amounts. The Company’s policy for recording interest and penalties associated with uncertain tax positions is to record such items as a component of income before income taxes. Penalties are recorded in Other (gains) losses, net, and interest paid or received is recorded in Interest expense or Interest income, respectively, in the accompanying Consolidated Statement of Income. There were no material amounts recorded for penalties and interest related to uncertain tax positions for all years presented. See Note 14 for further information. Concentration Risk Approximately 83 percent of the Company’s full-time equivalent Employees are unionized and are covered by collective-bargaining agreements. A percentage of the Company's unionized Employees, including its Flight Attendants, Customer Service Agents, Mechanics, Flight Simulator Technicians, and Material Specialists, are in discussions on labor agreements. Those unionized Employee groups in discussions represent approximately 43 percent of the Company’s full-time equivalent Employees as of December 31, 2018 . The Company attempts to minimize its concentration risk with regards to its cash, cash equivalents, and its investment portfolio. This is accomplished by diversifying and limiting amounts among different counterparties, the type of investment, and the amount invested in any individual security or money market fund. To manage risk associated with financial derivative instruments held, the Company selects and will periodically review counterparties based on credit ratings, limits its exposure to a single counterparty, and monitors the market position of the program and its relative market position with each counterparty. The Company also has agreements with counterparties containing early termination rights and/or bilateral collateral provisions whereby security is required if market risk exposure exceeds a specified threshold amount or credit ratings fall below certain levels. Collateral deposits provided to or held from counterparties serve to decrease, but not totally eliminate, the credit risk associated with the Company’s hedging program. See Note 10 for further information. As of December 31, 2018 , the Company operated an all-Boeing fleet, all of which are variations of the Boeing 737. If the Company were unable to acquire additional aircraft or associated aircraft parts from Boeing, or Boeing were unable or unwilling to make timely deliveries of aircraft or associated parts, or to provide adequate support for its products, the Company’s operations would be materially adversely impacted. In addition, the Company would be materially adversely impacted in the event of a mechanical or regulatory issue associated with the Boeing 737 aircraft type, whether as a result of downtime for part or all of the Company’s fleet, increased maintenance costs, or because of a negative perception by the flying public. The Company is also dependent on sole or limited suppliers for aircraft engines and certain other aircraft parts and services and would, therefore, also be materially adversely impacted in the event of the unavailability of, inadequate support for, or a mechanical or regulatory issue associated with, engines and other parts. The Company has historically entered into agreements with some of its co-brand, payment, and loyalty partners that contain exclusivity aspects which place certain confidential restrictions on the Company from entering into certain arrangements with other payment and loyalty partners. These arrangements generally extend for the terms of the agreements, which typically are for five to seven years, but none of which are more than 10 years in length. Some of these agreements automatically renew on an annual basis, unless either party objects to such extension. The Company believes the financial benefits generated by the exclusivity aspects of these arrangements outweigh the risks involved with such agreements. |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS AND ACCOUNTING CHANGES On August 29, 2018, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software. This new standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Accounting Standards Codification ("ASC") 350-40, Accounting for Internal-Use Software, to determine which implementation costs to (i) capitalize as assets and amortize over the term of the hosting arrangement or (ii) expense as incurred. This new standard is effective for public business entities in fiscal years beginning after December 15, 2019. Early adoption is permitted, including during an interim period. Entities have the option to apply this standard prospectively to all implementation costs incurred after the date of adoption or retrospectively. The Company is evaluating this new standard, but does not expect it to have a significant impact on its financial statement presentation or results. On August 28, 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement. This standard is effective for public business entities in fiscal years beginning after December 15, 2019, and for interim periods within those years. Early adoption is permitted, including during an interim period. This new standard requires changes to the disclosure requirements for fair value measurements for certain Level 3 items, and specifies that some of the changes must be applied prospectively, while others should be applied retrospectively. The Company is evaluating this new standard, but does not expect it to have a significant impact on its financial statement disclosures. See Note 11 for further information on the Company's fair value measurements. On August 28, 2018, the FASB issued ASU No. 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General. This new standard makes changes to the disclosure requirements for sponsors of defined benefit pension and/or other postretirement benefit plans to improve effectiveness of notes to the financial statements. This standard is effective for public business entities in fiscal years ending after December 15, 2020. Early adoption is permitted. Entities will apply this standard using a retrospective approach. The Company elected to early adopt this standard as of December 31, 2018, on a retrospective basis as required. Therefore disclosures within Note 13 have been reduced to reflect the elimination of certain previously required disclosures. The adoption had no impact on the Company's Net income, earnings per share, or cash flows. On August 28, 2017, the FASB issued the New Hedging Standard. The New Hedging Standard amends the hedge accounting model to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. The New Hedging Standard also simplifies the application of hedge accounting in certain situations. The New Hedging Standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted in any interim or annual period. The Company elected to early adopt the New Hedging Standard as of January 1, 2018, utilizing a modified retrospective approach, as required. The most significant impacts of the New Hedging Standard on the Company's accounting are the elimination of the requirement to separately measure and record ineffectiveness for all cash flow hedges in a hedging relationship, as well as a change in classification of premium expense associated with option contracts. Such premium expense for the Company's fuel hedges was previously reflected as a component of Other (gains) losses, net, in the Consolidated Statement of Income, but under the New Hedging Standard is reflected as a component of the line item to which the hedge relates, which is Fuel and oil expense. As such, premium expense for the years ended December 31, 2017 and 2016 , has been reclassified in order to be comparative with current period results in the accompanying Consolidated Statement of Income. The impact of the cumulative effect of the adjustment to move the reporting of ineffectiveness as of January 1, 2018, to AOCI from Retained earnings, was a $20 million loss, net of taxes. The adoption and resulting reclassification had no impact on the Company's Net income, earnings per share, or cash flows. As a result of the adoption of the New Hedging Standard, however, the Company incurred no gains or losses due to ineffectiveness in Other (gains) losses, net, in the Consolidated Statement of Income, during 2018. See Note 10 for further information and for further details on gains or losses recorded due to ineffectiveness during 2017. On March 10, 2017, the FASB issued the New Retirement Standard. The New Retirement Standard requires employers to present the service cost component of the net periodic benefit cost in the same income statement line item as other Employee compensation costs arising from services rendered during the period. The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in nonoperating expenses. As required by the New Retirement Standard, the Company adopted this guidance retrospectively as of January 1, 2018, using a practical expedient which permitted the Company to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. As such, the Company reclassified $14 million and $ 12 million of Salaries, wages, and benefits expense to Other (gains) and losses under the New Retirement Standard in the accompanying Consolidated Statement of Income for the years ended December 31, 2017 and 2016 , respectively. The adoption and resulting reclassification had no impact on the Company's Net income, earnings per share, or cash flows. On February 25, 2016, the FASB issued ASU No. 2016-02, Leases (the "New Lease Standard"). The New Lease Standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The New Lease Standard requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases (with the exception of short-term leases) at the lease commencement date and recognize expenses on the income statement in a similar manner to the current guidance in ASC 840, Leases ("ASC 840"). The lease liability will be measured as the present value of the unpaid lease payments and the right-of-use asset will be derived from the calculation of the lease liability. Lease payments will include fixed and in-substance fixed payments, variable payments based on an index or rate, reasonably certain purchase options, termination penalties, fees paid by the lessee to the owners of a special-purpose entity for restructuring the transaction, and probable amounts the lessee will owe under a residual value guarantee. Lease payments will not include variable lease payments other than those that depend on an index or rate, any guarantee by the lessee of the lessor’s debt, or any amount allocated to non-lease components. The Company established a project team to evaluate and implement the New Lease Standard. The Company currently believes the most significant impact of the New Lease Standard on its accounting will be the balance sheet impact of its aircraft operating leases, which will significantly increase assets and liabilities. As of December 31, 2018 , the Company had 51 leased aircraft under operating leases in its active fleet and also had another 73 aircraft under operating leases that are being subleased to another airline. The Company also has operating leases related to terminal operations space and other real estate leases. Although the real estate leases will also have a substantial impact to the balance sheet, the Company does not expect the leases related to terminal operations space to have a significant impact since variable lease payments, other than those based on an index or rate, are excluded from the measurement of the lease liability. The Company also does not expect the adoption of the New Lease Standard to impact any of its existing debt covenants. In addition, the New Lease Standard eliminates the current build-to-suit lease accounting guidance and is expected to result in derecognition of build-to-suit assets and liabilities that remained on the balance sheet after the end of the construction period, including the related deferred taxes. See Note 4 for further information on the Company’s build-to-suit projects. However, given the Company's guarantee associated with the bonds issued to fund the Dallas Love Field Modernization Program (the "LFMP"), the Company believes that the remaining debt service amounts as of the adoption date would be considered a minimum rental payment under the New Lease Standard, and therefore will be recorded as a lease liability on the balance sheet and will be reduced through future debt service payments made in 2019 and beyond. The underlying leases for all of these facilities will be subject to evaluation under the New Lease Standard. The Company plans to elect the package of practical expedients available under the transition provisions of the New Lease Standard, including (i) not reassessing whether expired or existing contracts contain leases, (ii) lease classification, and (iii) not revaluing initial direct costs for existing leases. Also, the Company plans to elect the practical expedient which will allow aggregation of non-lease components with the related lease components when evaluating accounting treatment. Lastly, the Company currently plans to apply the modified retrospective adoption method, utilizing the simplified transition option available in the New Lease Standard, which allows entities to continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented in the year of adoption. The Company will adopt the New Lease Standard on January 1, 2019. The expected impact of applying the New Lease Standard effective as of January 1, 2019, to the Company’s results of operations and cash flows is not expected to be significant. The expected major impacts to the balance sheet will be 1) the removal of approximately $1.5 billion in Assets constructed for others, net, and related Construction obligations, and 2) the addition of approximately $1.4 billion in Operating lease right of use assets and lease liabilities, which includes approximately $700 million from operating lease aircraft, approximately $450 million from the Company’s remaining obligations associated with the LFMP bonds, and approximately $220 million from other operating leases. On May 28, 2014, the FASB issued the New Revenue Standard, also referred to as ASC 606, Revenue From Contracts With Customers ("ASC 606"), which replaces numerous revenue recognition requirements in GAAP, including industry-specific requirements, and provides companies with a single revenue recognition model for recognizing revenue from contracts with Customers. The New Revenue Standard establishes a five-step model whereby revenue is recognized as performance obligations within a contract are satisfied in an amount that reflects the consideration the Company expects to receive in exchange for satisfaction of those performance obligations, or standalone selling price. The New Revenue Standard also requires new, expanded disclosures regarding revenue recognition. See Note 5 for further information. The Company adopted the provisions of the New Revenue Standard effective January 1, 2018, using the full retrospective method. As such, results for the years ended December 31, 2017 and 2016 , have been recast under the New Revenue Standard in order to be comparative with current period results in the accompanying Consolidated Statements of Income and Cash Flows. The amounts in the accompanying Consolidated Balance Sheet as of December 31, 2017, have also been recast. The most significant impact of the New Revenue Standard relates to the accounting for the Company’s loyalty program. The New Revenue Standard eliminated the incremental cost method for flight points awarded, which was previously allowed in prior accounting guidance. The Company now accounts for the revenue and liability for loyalty points earned through flight activity using a relative fair value approach. The New Revenue Standard also resulted in different income statement classification for certain types of revenues (primarily ancillary revenues) which were previously classified as Other revenues, but under the New Revenue Standard are included in Passenger revenues, and certain expenses, which were previously classified as Other operating expenses, but under the New Revenue Standard are offset against Passenger revenues. The following table provides the impact of applying the New Revenue Standard to the Company’s previously reported balances as of December 31, 2017: Balance as of December 31, 2017 (in millions) As Reported New Revenue Standard As Recast Accrued liabilities $ 1,777 $ (77 ) $ 1,700 Air traffic liability 3,460 35 3,495 Air traffic liability - noncurrent — 1,070 1,070 Deferred income taxes 2,358 (239 ) 2,119 Retained earnings 14,621 (789 ) 13,832 The impacts of applying the New Revenue Standard, the New Retirement Standard, and the New Hedging Standard to the Company’s Consolidated Statement of Income for the years ended December 31, 2017 and 2016 , are as follows (amounts may not recalculate due to rounding): Year ended December 31, 2017 (in millions), except per share amounts As Reported New Revenue Standard New Retirement Standard New Hedging Standard As Recast Passenger revenue $ 19,141 $ 622 $ — $ — $ 19,763 Other revenue 1,857 (647 ) — — 1,210 Salaries, wages, and benefits 7,319 — (14 ) — 7,305 Fuel and oil expense 3,940 — — 136 4,076 Other operating expenses 2,886 (39 ) — — 2,847 Other (gains) losses, net 234 — 14 (136 ) 112 Provision for income taxes (237 ) 145 — — (92 ) Net income 3,488 (131 ) — — 3,357 Net income per share, basic 5.80 (0.22 ) — — 5.58 Net income per share, diluted 5.79 (0.22 ) — — 5.57 Year ended December 31, 2016 (in millions), except per share amounts As Reported New Revenue Standard New Retirement Standard New Hedging Standard As Recast Passenger revenue $ 18,594 $ 474 $ — $ — $ 19,068 Other revenue 1,660 (610 ) — — 1,050 Salaries, wages, and benefits 6,798 — (12 ) — 6,786 Fuel and oil expense 3,647 — — 154 3,801 Other operating expenses 2,743 (40 ) — — 2,703 Other (gains) losses, net 162 — 12 (154 ) 21 Provision for income taxes 1,303 (36 ) — — 1,267 Net income 2,244 (60 ) — — 2,183 Net income per share, basic 3.58 (0.10 ) — — 3.48 Net income per share, diluted 3.55 (0.10 ) — — 3.45 The impacts of applying the New Revenue Standard to the Company’s Consolidated Statement of Cash Flows for the years ended December 31, 2017 and 2016 , are as follows (amounts may not recalculate due to rounding): Year ended December 31, 2017 (in millions) As Reported New Revenue Standard As Recast Net income $ 3,488 $ (131 ) $ 3,357 Deferred income taxes (1,212 ) 145 (1,066 ) Changes in certain assets and liabilities 227 (14 ) 212 Net cash provided by operating activities 3,929 — 3,929 Year ended December 31, 2016 (in millions) As Reported New Revenue Standard As Recast Net income $ 2,244 $ (60 ) $ 2,183 Deferred income taxes 455 (36 ) 419 Changes in certain assets and liabilities 182 96 279 Net cash provided by operating activities 4,293 — 4,293 |
NET INCOME PER SHARE
NET INCOME PER SHARE | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
NET INCOME PER SHARE | NET INCOME PER SHARE The following table sets forth the computation of basic and diluted net income per share (in millions except per share amounts): Year ended December 31, 2018 2017 2016 As Recast As Recast NUMERATOR: Net income $ 2,465 $ 3,357 $ 2,183 Incremental income effect of interest on 5.25% convertible notes — — 2 Net income after assumed conversion $ 2,465 $ 3,357 $ 2,185 DENOMINATOR: Weighted-average shares outstanding, basic 573 601 627 Dilutive effect of Employee stock options and restricted stock units 1 2 1 Dilutive effect of 5.25% convertible notes — — 5 Adjusted weighted-average shares outstanding, diluted 574 603 633 NET INCOME PER SHARE: Basic $ 4.30 $ 5.58 $ 3.48 Diluted $ 4.29 $ 5.57 $ 3.45 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Commitments The Company has contractual obligations and commitments primarily with regard to future purchases of aircraft, repayment of debt (see Note 6 ), and lease arrangements (see Note 7 ). During the year ended December 31, 2018 , the Company purchased 18 new 737 MAX 8 aircraft and 26 new 737-800 aircraft from Boeing and acquired one used 737-700 aircraft from a third party under a capital lease. The Company has firm orders in place with Boeing for 219 737 MAX 8 aircraft and 30 737 MAX 7 aircraft, as well as options for 115 737 MAX 8 aircraft as of December 31, 2018 . The Company's capital commitments associated with these firm orders and additional aircraft are as follows: $924 million in 2019 , $1.4 billion in 2020 , $1.7 billion in 2021 , $1.2 billion in 2022 , $1.6 billion in 2023 , and $3.4 billion thereafter. Fort Lauderdale-Hollywood International Airport In December 2013 , the Company entered into an agreement with Broward County, Florida, which owns and operates Fort Lauderdale-Hollywood International Airport ("FLL"), to oversee and manage the design and construction of the airport's Terminal 1 Modernization Project. Pursuant to an addendum entered into during 2016, the cost of the project could not exceed $333 million . In addition to significant improvements to the existing Terminal 1, the project included the design and construction of a new five-gate Concourse A with an international processing facility. Funding for the project has come directly from Broward County aviation sources, but flows through the Company in its capacity as manager of the project. Major construction on the project began during third quarter 2015. Construction of Concourse A was completed during second quarter 2017, and construction on Terminal 1 was substantially complete and operational as of the end of third quarter 2018. The Company has determined that due to its agreed upon role in overseeing and managing the project, it is considered the owner of the project for accounting purposes. As such, during construction the Company records expenditures as Assets constructed for others ("ACFO") in the Consolidated Balance Sheet, along with a corresponding outflow within Assets constructed for others in the Consolidated Statement of Cash Flows, and an increase to Construction obligation (with a corresponding cash inflow from Financing activities in the Consolidated Statement of Cash Flows) as reimbursements are received from Broward County. Upon completion of different phases of the project, the Company has placed the associated assets in service and has begun depreciating the assets over their estimated useful lives. Los Angeles International Airport In March 2013, the Company executed a lease agreement (the "T1 Lease") with Los Angeles World Airports ("LAWA"), which owns and operates Los Angeles International Airport ("LAX"). Under the T1 Lease, which was amended in June 2014 and September 2017, the Company oversaw and managed the design, development, financing, construction, and commissioning of the airport's Terminal 1 Modernization Project at a cost that did not exceed $526 million (including proprietary renovations, or $510 million excluding proprietary renovations). In October 2017, the Company executed a separate lease agreement with LAWA (the "T1.5 Lease"). Under the T1.5 Lease, the Company is overseeing and managing the design, development, financing, construction, and commissioning of a passenger processing facility between Terminal 1 and 2 (the "Terminal 1.5 Project"). The Terminal 1.5 Project is expected to include ticketing, baggage claim, passenger screening, and a bus gate at a cost not to exceed $479 million for site improvements and non-proprietary improvements. These projects are being funded primarily using the Regional Airports Improvement Corporation (the "RAIC"), which is a quasi-governmental special purpose entity that acts as a conduit borrower under syndicated credit facilities provided by groups of lenders. Loans made under the separate credit facilities for the Terminal 1 Modernization Project and the Terminal 1.5 Project are being used to fund the development of each of these projects, and the outstanding loans will be repaid with the proceeds of LAWA’s payments to purchase completed construction phases. The Company has guaranteed the obligations of the RAIC under each of the credit facilities associated with the respective lease agreements. At December 31, 2018 , the Company's outstanding remaining guaranteed obligations under the credit facilities for the Terminal 1 Modernization Project and the Terminal 1.5 Project were $111 million and $106 million , respectively. Construction on the Terminal 1 Modernization Project began during 2014 and was substantially complete and operational during fourth quarter 2018. Construction on the Terminal 1.5 Project began during third quarter 2017 and is estimated to be completed during 2020. The Company has determined that due to its agreed upon role in overseeing and managing these projects, it is considered the owner of these projects for accounting purposes. LAWA is reimbursing the Company (through the RAIC credit facilities) for the site improvements and non-proprietary improvements, while proprietary improvements will not be reimbursed. As a result, the costs incurred to fund these projects are included within ACFO and all amounts that have been or will be reimbursed will be included within Construction obligation on the accompanying Consolidated Balance Sheet. This transaction has no impact on the Company's Consolidated Statement of Cash Flows. Dallas Love Field During 2008 , the City of Dallas approved the Love Field Modernization Program (the "LFMP"), a project to reconstruct Dallas Love Field with modern, convenient air travel facilities. Pursuant to a Program Development Agreement with the City of Dallas and the Love Field Airport Modernization Corporation (or the "LFAMC," a Texas non-profit "local government corporation" established by the City of Dallas to act on the City of Dallas' behalf to facilitate the development of the LFMP), the Company managed this project. Although the City of Dallas received commitments from various sources that helped to fund portions of the LFMP project, including the Federal Aviation Administration, the Transportation Security Administration, and the City of Dallas' Aviation Fund, the majority of the funds used were from the issuance of bonds. The Company guaranteed principal and interest payments on $456 million of such bonds issued by the LFAMC. As of December 31, 2018 , $416 million of principal remained outstanding. The Company utilized the accounting guidance provided for lessees involved in asset construction. Upon completion of different phases of the LFMP project, the Company has placed the associated assets in service and has begun depreciating the assets over their estimated useful lives. The corresponding LFMP liabilities are being reduced primarily through the Company's airport rental payments to the City of Dallas, as the construction costs of this project are passed through to the Company via recurring airport rates and charges. Major construction was effectively completed by December 31, 2014. During second quarter 2017, the City of Dallas approved using the remaining bond funds for additional terminal construction projects which were effectively completed in 2018. During 2015, the City of Dallas issued additional bonds for the construction of a new parking garage at Dallas Love Field, which was completed and operational in fourth quarter 2018 . The Company has not guaranteed the principal or interest payments on these bonds, but remains the accounting owner of this project. Construction costs recorded in ACFO for the Company's various projects as of December 31, 2018 , and December 31, 2017 , were as follows: December 31, 2018 December 31, 2017 (in millions) ACFO ACFO, Net (a) Construction Obligation (b) ACFO ACFO, Net (a) Construction Obligation (b) FLL Terminal $ 313 $ 304 $ 308 $ 258 $ 256 $ 258 LAX Terminal 1 485 459 476 433 417 433 LAX Terminal 1.5 (c) 99 99 99 31 31 31 LFMP - Terminal 545 460 502 543 474 516 LFMP - Parking Garage 200 200 200 152 152 152 HOU International Terminal (d) 126 115 116 126 118 — $ 1,768 $ 1,637 $ 1,701 $ 1,543 $ 1,448 $ 1,390 (a) Net of accumulated depreciation. (b) Construction obligation will be reduced through future facility rent payments. These future payments are not fixed per the lease agreement, but are variable and fluctuate based on various market and other factors outside the control of the Company. (c) Project still in progress. (d) Project completed in 2015 at Houston William P. Hobby Airport ("HOU"). Contingencies The Company is from time to time subject to various legal proceedings and claims arising in the ordinary course of business, including, but not limited to, examinations by the Internal Revenue Service ("IRS"). The Company's management does not expect that the outcome of any of its currently ongoing legal proceedings or the outcome of any adjustments presented by the IRS, individually or collectively, will have a material adverse effect on the Company's financial condition, results of operations, or cash flow. |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2018 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Deferred Revenue Disclosure | REVENUE Passenger Revenues The Company’s contracts with its Customers primarily consist of its tickets sold, which are initially deferred as Air traffic liability. Passenger revenue associated with tickets is recognized when the performance obligation to the Customer is satisfied, which is primarily when travel is provided. Revenue is categorized by revenue source as the Company believes it best depicts the nature, amount, timing, and uncertainty of revenue and cash flow. The following table provides the components of Passenger revenue recognized for the years ended December 31, 2018 , 2017 , and 2016 : Year ended December 31, (in millions) 2018 2017 2016 As Recast As Recast Passenger non-loyalty $ 17,506 $ 16,934 $ 16,534 Passenger loyalty - air transportation 2,307 2,263 1,997 Passenger ancillary sold separately 642 566 537 Total passenger revenues $ 20,455 $ 19,763 $ 19,068 Passenger non-loyalty includes all revenues recognized from Passengers related to flights paid for primarily with cash or credit card. All Customers purchasing a ticket on Southwest Airlines are generally able to check up to two bags at no extra charge (with certain exceptions as stated in the Company's published Contract of Carriage), and the Company also does not charge a fee for a Customer to make a change to their flight after initial purchase, although fare differences may apply. Passenger loyalty - air transportation primarily consists of the revenue recognized associated with award flights taken by loyalty program members upon redemption of loyalty points. Passenger ancillary sold separately includes any revenue recognized associated with ancillary fees charged separately, such as in-flight purchases, EarlyBird Check-In ® , and Upgraded Boarding. Air traffic liability primarily represents tickets sold for future travel dates, funds that are past flight date and remain unused, but are expected to be used in the future, and the Company’s liability for loyalty benefits that are expected to be redeemed in the future. The majority of the Company’s tickets sold are nonrefundable. Southwest has a No Show policy that applies to fares that are not canceled or changed by a Customer at least ten minutes prior to a flight's scheduled departure. Refundable tickets that are sold but not flown on the travel date and canceled in accordance with the No Show policy can also be reused for another flight, up to a year from the date of sale. A small percentage of tickets (or partial tickets) expire unused. The Company estimates the amount of tickets that expire unused and recognizes such amounts in Passenger revenue once the scheduled flight date has lapsed in proportion to the pattern of flights taken by the Customer. Based on the Company's revenue recognition policy, revenue is recorded at the flight date for a Customer who does not change his/her itinerary and loses his/her funds as the Company has then fulfilled its performance obligation. Amounts collected from passengers for ancillary services are also recognized when the service is provided, which is typically the flight date. Initial spoilage estimates for both tickets and funds available for future use are routinely adjusted and ultimately finalized once the tickets expire, which is typically twelve months after the original purchase date. Spoilage estimates are based on the Company's Customers' historical travel behavior as well as assumptions about the Customers' future travel behavior. Assumptions used to generate spoilage estimates can be impacted by several factors including, but not limited to: fare increases, fare sales, changes to the Company's ticketing policies, changes to the Company’s refund, exchange and unused funds policies, seat availability, and economic factors. Loyalty Program The Company records a liability for the relative fair value of providing free travel under its loyalty program for all points earned from flight activity or sold to companies participating in the Company’s loyalty program as business partners. The loyalty liability represents the outstanding performance obligations that will be satisfied when a member redeems points for travel or other goods and services, or upon spoilage of the points. Points earned from flight activity are valued at their relative standalone selling price based on coefficients in place that determine the worth of loyalty points in relation to their redemption value to the Customer. Points purchased by business partners are subjected to an allocation methodology in which the relative fair value of the transportation and marketing elements, if any, identified in the contract are first determined, then applied to the contractual rate paid by the business partner. The terms for these agreements are no more than 10 years in length. The Company’s liability for loyalty benefits include a portion that are expected to be redeemed during the following twelve months (classified as a component of Air traffic liability), and a portion that are not expected to be redeemed during the following twelve months (classified as Air traffic liability - noncurrent). The Company continually updates this analysis and adjusts the split between current and non-current liabilities as appropriate. In order to determine the value of each loyalty point, certain assumptions must be made at the time of measurement, which include the following: • Allocation of Passenger Revenue - Revenues from Passengers, related to travel, who also earn Rapid Rewards Points have been allocated between flight (recognized as revenue when transportation is provided) and Rapid Rewards Points (deferred until points are redeemed or spoil) based on each obligation’s relative standalone selling price. The Company utilizes historical earning patterns to assist in this allocation. • Fair Value of Rapid Rewards Points - Determined from the base fare value of tickets which were purchased using prior point redemptions for travel and other products and services, which the Company believes to be indicative of the fair value of points as perceived by Customers and representative of the value of each point at the time of redemption. The Company’s booking site allows a Customer to toggle between fares utilizing either cash or point redemptions, which provides the Customer with an approximation of the equivalent value of their points. The value can differ, however, based on demand, the amount of time prior to the flight, and other factors. The fare mix during the period measured represents a constraint, which could result in the assumptions above changing at the measurement date, as fare classes can have different coefficients used to determine the total loyalty points needed to purchase an award ticket. The mixture of these fare classes and changes in the coefficients used by the Company could cause the fair value per point to increase or decrease. For points that are expected to expire unused, the Company recognizes spoilage in proportion to the pattern of points used by the Customer, which approximates the average period over which the population of Rapid Reward Members redeem their points. The Company utilizes historical behavioral data to develop a predictive statistical model to analyze the amount of spoilage expected for points sold to business partners and earned through flight. The Company continues to evaluate expected spoilage annually and applies appropriate adjustments in the fourth quarter of each year, or other times, if changes in Customer behavior are detected. Changes to spoilage estimates impact revenue recognition prospectively. In most historical periods, the impact of changes in the estimated spoilage rate has not resulted in material changes to revenue recognition. However, due to the size of the Company’s liability for loyalty benefits as a result of the elimination of the incremental cost method of accounting for flight points, changes in Customer behavior and/or expected future redemption patterns could result in more significant variations in Passenger revenue under the New Revenue Standard. These analyses have not resulted in material adjustments in 2018 , 2017 , or 2016 . ASC 606 requires the Company to allocate consideration received to performance obligations based on the relative fair value of those obligations. The Company has a co-branded credit card agreement (“Agreement”) with Chase Bank USA, N.A. (“Chase”), through which the Company sells loyalty points and certain marketing components, which consist of the use of Southwest Airlines’ brand and access to Rapid Rewards Member lists, licensing and advertising elements, and the use of the Company’s resource team. The Company estimated the selling prices and volumes over the term of the Agreement in order to determine the allocation of proceeds to each of the two performance obligations identified in the Agreement, which have been characterized as a transportation component and a marketing component. The allocations utilized are reviewed to determine if adjustment is necessary any time there is a modification to the Agreement. The Company records Passenger revenue related to loyalty point redemptions for air travel when the travel is delivered, and the marketing elements are recognized as Other revenue when the performance obligations related to those services are satisfied, which is generally the same period consideration is received from Chase. The Company has elected the transition provision within ASC 606 to reflect the aggregate effect of historical modifications to the Agreement on January 1, 2018, when (i) identifying the satisfied and unsatisfied performance obligations, (ii) determining the transaction price, and (iii) allocating the transaction price to the satisfied and unsatisfied performance obligations. When applying the full retrospective adoption provisions of ASC 606, the Company determined the transaction price for all satisfied and unsatisfied performance obligations in the Agreement and performed a single allocation of the transaction price to those performance obligations, based on the relative selling prices on January 1, 2016. In applying this transition provision, the Company evaluated the historical modifications of the Agreement and did not identify any new performance obligations throughout the periods prior to adoption of the new standard. The Company did not believe it was reasonably possible to quantitatively estimate the impact of applying this transition provision to contract modifications prior to January 1, 2016. As performance obligations to Customers are satisfied, the related revenue is recognized. The events that result in revenue recognition that are associated with performance obligations identified as a part of the Rapid Rewards Program are as follows: • Tickets and Rapid Rewards Points - When a flight occurs, the related performance obligation is satisfied and the related value provided by the Customer, whether from purchased tickets or Rapid Rewards Points, is recognized as revenue. • Loyalty points redeemed for goods and/or services other than travel - Rapid Rewards Members have the option to redeem points for goods and services offered through a third party vendor, who acts as principal. The performance obligation related to the purchase of these goods and services is satisfied when the good and/or service is delivered to the Customer. • Marketing Royalties - As part of its Agreement with Chase, Southwest provides certain deliverables, including use of the Southwest Airlines’ brand, access to Rapid Rewards Member lists, advertising elements, and the Company’s resource team. These performance obligations are satisfied each month that the Agreement is active. As of the years ended December 31, 2018 and 2017 , the components of Air traffic liability, including contract liabilities based on tickets sold, unused funds available to the Customer, and loyalty points available for redemption, net of expected spoilage, within the Consolidated Balance Sheet were as follows: Balance as of (in millions) December 31, 2018 December 31, 2017 Air traffic liability - passenger travel and ancillary passenger services $ 2,059 $ 1,898 Air traffic liability - loyalty program 3,011 2,667 Total Air traffic liability $ 5,070 $ 4,565 The balance in Air traffic liability – passenger travel and ancillary passenger services also includes unused funds that are available for use by Customers that are not currently associated with a ticket, but represent funds effectively refunded and made available for use to purchase a ticket for a flight that occurs prior to their expiration. These funds are typically created as a result of a prior ticket cancellation or exchange. These performance obligations are expected to have a duration of twelve months or less; therefore, the Company has elected the provision within ASC 606 to not disclose the amount of the remaining transaction price and its expected timing of recognition for passenger tickets. Recognition of revenue associated with the Company’s loyalty liability can be difficult to predict, as the number of award seats available to members is not currently restricted and they could choose to redeem their points at any time that a seat is available. The performance obligations classified as a current liability related to the Company’s loyalty program were estimated based on expected redemptions utilizing historical redemption patterns, and forecasted flight availability, fares, and coefficients. The entire balance classified as Air traffic liability – noncurrent relates to loyalty points that were estimated to be redeemed in periods beyond 12 months following the representative balance sheet date. The Company expects the majority of loyalty points to be redeemed within two years. A rollforward of the Company's Air traffic liability - loyalty program for the years ended December 31, 2018 and 2017 is as follows (in millions): Year ended December 31, 2018 2017 Air traffic liability - loyalty program - beginning balance $ 2,667 $ 2,485 Amounts deferred associated with points awarded 2,717 2,485 Revenue recognized from points redeemed - Passenger (2,307 ) (2,263 ) Revenue recognized from points redeemed - Other (66 ) (40 ) Air traffic liability - loyalty program - ending balance $ 3,011 $ 2,667 Air traffic liability includes consideration received for ticket and loyalty related performance obligations which have not been satisfied as of a given date. A rollforward of the amounts included in Air traffic liability as of December 31, 2018 and 2017 are as follows (in millions): Air traffic liability Balance at December 31, 2017 $ 4,565 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 21,026 Revenue from amounts included in contract liability opening balances (3,479 ) Revenue from current period sales (17,042 ) Balance at December 31, 2018 $ 5,070 Air traffic liability Balance at December 31, 2016 $ 4,221 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 20,146 Revenue from amounts included in contract liability opening balances (3,099 ) Revenue from current period sales (16,703 ) Balance at December 31, 2017 $ 4,565 All performance obligations related to freight services sold are completed within twelve months or less; therefore, the Company has elected the provision within ASC 606 to not disclose the amount of the remaining transaction price and its expected timing of recognition for freight shipments. Other revenues primarily consist of marketing royalties associated with the Company’s co-branded Chase ® Visa credit card, but also include commissions and advertising associated with Southwest.com ® . All amounts classified as Other revenues are paid monthly, coinciding with the Company fulfilling its deliverables; therefore, the Company has elected the provision within ASC 606 to not disclose the amount of the remaining transaction price and its expected timing of recognition for such services provided. The Company recognized revenue related to the marketing, advertising, and other travel-related benefits of the revenue associated with various loyalty partner agreements including, but not limited to, the Agreement with Chase, within Other operating revenues. For the years ended December 31, 2018, 2017, and 2016 the Company recognized $1.1 billion , $1.0 billion , and $919 million , respectively. The Company is also required to collect certain taxes and fees from Customers on behalf of government agencies and remit these back to the applicable governmental entity on a periodic basis. These taxes and fees include foreign and U.S. federal transportation taxes, federal security charges, and airport passenger facility charges. These items are collected from Customers at the time they purchase their tickets, are excluded from the contract transaction price, and are therefore not included in Passenger revenue. The Company records a liability upon collection from the Customer and relieves the liability when payments are remitted to the applicable governmental agency. |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT (in millions) December 31, 2018 December 31, 2017 French Credit Agreements due June 2018 - 2.54% $ — $ 1 Fixed-rate 737 Aircraft Notes payable through January 2018 - 7.03% — 3 2.75% Notes due November 2019 300 300 Term Loan Agreement payable through May 2019 - 6.315% 23 66 Term Loan Agreement payable through July 2019 - 4.84% 10 19 2.65% Notes due 2020 492 491 Term Loan Agreement payable through 2020 - 5.223% 187 237 737 Aircraft Notes payable through 2020 67 155 2.75% Notes due 2022 300 300 Pass Through Certificates due 2022 - 6.24% 250 294 Term Loan Agreement payable through 2026 - 3.88% 197 215 3.00% Notes due 2026 300 300 3.45% Notes due 2027 300 300 7.375% Debentures due 2027 125 127 Capital leases 845 885 $ 3,396 $ 3,693 Less current maturities 606 348 Less debt discount and issuance costs 19 25 $ 2,771 $ 3,320 AirTran Holdings is party to aircraft purchase financing facilities, and as of December 31, 2018 , nine Boeing 737 aircraft remained that were financed under floating-rate facilities. Each note is secured by a first mortgage on the aircraft to which it relates. The notes bear interest at a floating rate per annum equal to a margin plus the three or six-month LIBOR in effect at the commencement of each semi-annual or three-month period, as applicable. As of December 31, 2018 , the weighted average interest rate was 4.06 percent . Principal and interest under the notes are payable semi-annually or every three months as applicable. As of December 31, 2018 , the remaining debt outstanding may be prepaid without penalty under all aircraft loans provided under such facilities. The remaining notes mature in years 2019 and 2020 . As discussed further in Note 10 , a portion of the above floating-rate debt has been effectively converted to a fixed rate via interest rate swap agreements which expire as the underlying notes mature. AirTran Holdings was previously a party to an additional aircraft purchase financing facility, and one Boeing 737 aircraft was financed under the fixed-rate facility. The note was secured by a first mortgage on the aircraft to which it related. The remaining note matured on January 11, 2018. During November 2017, the Company issued $300 million senior unsecured notes due 2022 . The notes bear interest at 2.75 percent . Interest is payable semi-annually in arrears on May 16 and November 16. Also 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 on May 16 and November 16. 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 May 15 and November 15. During October 2016, the Company entered into a term loan agreement providing for loans to the Company aggregating up to $215 million , to be secured by mortgages on seven of the Company's 737-800 aircraft. The Company borrowed the full $215 million and secured this loan with the requisite seven aircraft mortgages. The loan matures on October 31, 2026, and is repayable via semi-annual installments of principal that began on April 30, 2018. The loan bears interest at the LIBO Rate (as defined in the term loan agreement) plus 1.10 percent , which equates to a current rate of 3.88 percent , and interest is payable semi-annually in installments. During November 2015, the Company issued $500 million senior unsecured notes due 2020 . The notes bear interest at 2.65 percent , payable semi-annually in arrears on May 5 and November 5. Concurrently, the Company entered into a fixed-to-floating interest rate swap to convert the interest on these unsecured notes to a floating rate until their maturity. See Note 10 for further information on the interest-rate swap agreement. During November 2014 , the Company issued $300 million senior unsecured notes due November 2019 . The notes bear interest at 2.75 percent , payable semi-annually in arrears on May 6 and November 6 . Concurrently, the Company entered into a fixed-to-floating interest rate swap to convert the interest on these unsecured notes to a floating rate until their maturity. See Note 10 for further information on the interest-rate swap agreement. On July 1, 2009 , the Company entered into a term loan agreement providing for loans to the Company aggregating up to $124 million , to be secured by mortgages on five of the Company’s 737-700 aircraft. The Company borrowed the full $124 million and secured this loan with the requisite five aircraft mortgages. The loan matures on July 1, 2019 , and is repayable semi-annually in installments of principal and interest that began on January 1, 2010 . The loan bears interest at a fixed rate of 4.84 percent . In September 2015 , the Company prepaid $24 million on the loan agreement, which in turn released one of the encumbered aircraft. As such, the remaining four aircraft related to this transaction were still encumbered as of December 31, 2018 . On April 29, 2009 , the Company entered into a term loan agreement providing for loans to the Company aggregating up to $332 million , to be secured by mortgages on 14 of the Company’s 737-700 aircraft. The Company borrowed the full $332 million and secured the loan with the requisite 14 aircraft mortgages. The loan matures on May 6, 2019 , and is being repaid via quarterly installments of principal and interest that began on August 6, 2009 . The loan bears interest at the LIBO Rate (as defined in the term loan agreement) plus 3.30 percent . Pursuant to the terms of the term loan agreement, the Company entered into an interest rate swap agreement to convert the variable rate on the term loan to a fixed 6.315 percent until maturity. On May 6, 2008 , the Company entered into a term loan agreement providing for loans to the Company aggregating up to $600 million , to be secured by first-lien mortgages on 21 of the Company’s 737-700 aircraft. On May 9, 2008, the Company borrowed the full $600 million and secured these loans with the requisite 21 aircraft mortgages. The loans mature on May 9, 2020 , and are being repaid via quarterly installments of principal and interest that began on August 9, 2008. The loans bear interest at the LIBO Rate (as defined in the term loan agreement) plus 0.95 percent . Pursuant to the terms of the term loan agreement, the Company entered into an interest rate swap agreement to convert the variable rate on the term loan to a fixed 5.223 percent until maturity. On October 3, 2007 , grantor trusts established by the Company issued $500 million Pass Through Certificates consisting of $412 million 6.15 percent Series A certificates and $88 million 6.65 percent Series B certificates. A separate trust was established for each class of certificates. The trusts used the proceeds from the sale of certificates to acquire equipment notes in the same amounts, which were issued by the Company on a full recourse basis. Payments on the equipment notes held in each trust are passed through to the holders of certificates of such trust. The equipment notes were issued for each of 16 Boeing 737-700 aircraft owned by the Company and are secured by a mortgage on each aircraft. Beginning February 1, 2008, principal and interest payments on the equipment notes held for both series of certificates became due semi-annually until the balance of the certificates mature on August 1, 2022 . Prior to their issuance, the Company also entered into swap agreements to hedge the variability in interest rates on the Pass Through Certificates. The swap agreements were accounted for as cash flow hedges, and resulted in a payment by the Company of $20 million upon issuance of the Pass Through Certificates. The effective portion of the hedge is being amortized to interest expense concurrent with the amortization of the debt and is reflected in the above table as a reduction in the debt balance. The ineffectiveness of the hedge transaction was immaterial. In fourth quarter 2004 , the Company entered into four identical 13 -year floating-rate financing arrangements, whereby it borrowed a total of $112 million from French banking partnerships. The borrowings matured and were redeemed in full on June 30, 2018, utilizing available cash on hand. 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 on March 1 and September 1 . 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. 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 $170 million at December 31, 2018 . The net book value of the assets pledged as collateral for the Company’s secured borrowings, primarily aircraft, was $1.5 billion at December 31, 2018 . In addition, the Company has pledged a total of up to 74 of its Boeing 737-700 and 24 of its Boeing 737-800 aircraft at a net book value of $2.1 billion , in the case that it has obligations related to its fuel derivative instruments with counterparties that exceed certain thresholds. See Note 10 for further information on these collateral arrangements. As of December 31, 2018 , aggregate annual principal maturities of debt and capital leases (not including amounts associated with interest rate swap agreements, interest on capital leases, amortization of capital lease incentives, and amortization of purchase accounting adjustments) for the five-year period ending December 31, 2023, and thereafter, were $590 million in 2019, $821 million in 2020, $172 million in 2021, $477 million in 2022, $105 million in 2023, and $1.1 billion thereafter. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
LEASES | LEASES The Company's fleet included 51 aircraft on operating lease and 72 aircraft on capital lease as of December 31, 2018 , compared with 53 aircraft on operating lease and 69 aircraft on capital lease, as of December 31, 2017 . Amounts applicable to these aircraft on capital lease that are included in property and equipment were: (in millions) 2018 2017 Flight equipment $ 1,329 $ 1,207 Less: accumulated amortization 304 172 $ 1,025 $ 1,035 Total rental expense for operating leases, both aircraft and other, charged to operations in 2018 , 2017 , and 2016 was $935 million , $939 million , and $932 million , respectively. The majority of the Company’s terminal operations space, as well as 124 aircraft, including 73 B717s subleased to Delta, were under operating leases at December 31, 2018 . For aircraft operating leases and for terminal operating leases and other real estate leases, expense is recorded on a straight–line basis and included in Other operating expenses and in Landing fees and airport rentals, respectively, in the Consolidated Statement of Income. The majority of the Company’s terminal operations space payments are considered variable, and thus excluded from the Company’s disclosures of future minimum lease payments. Future minimum lease payments under capital leases and noncancelable operating leases and rentals to be received under subleases with initial or remaining terms in excess of one year at December 31, 2018 , were: (in millions) Capital leases Operating leases Subleases Operating leases, net 2019 $ 111 $ 348 $ (92 ) $ 256 2020 109 357 (78 ) 279 2021 105 244 (41 ) 203 2022 100 172 (17 ) 155 2023 97 146 (7 ) 139 Thereafter 335 474 (1 ) 473 Total minimum lease payments $ 857 $ 1,741 $ (236 ) $ 1,505 Less amount representing interest 126 Present value of minimum lease payments (a) 731 Less current portion 85 Long-term portion $ 646 (a) Excludes lease incentive obligation of $114 million . The aircraft leases generally can be renewed for one to five years at rates based on fair market value at the end of the lease term. Most aircraft leases have purchase options at or near the end of the lease term at fair market value, generally limited to a stated percentage of the lessor’s defined cost of the aircraft. On July 9, 2012, the Company signed an agreement with Delta Air Lines, Inc. and Boeing Capital Corp. to lease or sublease all 88 of AirTran Airways' B717s to Delta at agreed-upon lease rates. Three operating leases expired during 2018, and, as of December 31, 2018 , the following remained: 73 operating leases, ten owned, and two capital leases. The sublease terms for the 73 B717s on operating lease and the two B717s on capital lease coincide with the Company's remaining lease terms for these aircraft from the original lessor, which range from approximately one to six years. The leasing of the ten B717s that are owned by the Company is subject to certain conditions, and the remaining lease terms are up to four years, after which Delta will have the option to purchase the aircraft at the then-prevailing market value. The ten owned B717s are accounted for as sales type leases, the two B717s classified by the Company as capital leases are accounted for as direct financing leases, and the remaining 73 subleases are accounted for as operating leases with Delta. There are no contingent payments and no significant residual value conditions associated with the transaction. During 2017, the Company retired its remaining 87 Classic aircraft, which included 61 Classic aircraft grounded in September 2017 as part of an accelerated retirement schedule. The Company recorded a charge of $63 million , within Other operating expenses in the accompanying Consolidated Statement of Income, related to the leased portion of the Classic fleet, representing the remaining net lease payments due and certain lease return requirements that could have to be performed on these leased aircraft prior to their return to the lessors, as of the cease-use date. As of December 31, 2018 , the remaining amounts associated with the cease-use liability have been paid in full. |
COMMON STOCK
COMMON STOCK | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
COMMON STOCK | COMMON STOCK The Company has one class of capital stock, its common stock. Holders of shares of common stock are entitled to receive dividends when and if declared by the Board of Directors and are entitled to one vote per share on all matters submitted to a vote of the Shareholders. At December 31, 2018 , the Company had 60 million shares of common stock reserved for issuance pursuant to Employee equity plans (of which 29 million shares had not been granted) through various share-based compensation arrangements. See Note 9 to the Consolidated Financial Statements for information regarding the Company's equity plans. |
STOCK PLANS
STOCK PLANS | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK PLANS | STOCK PLANS Share-based Compensation The Company accounts for share-based compensation utilizing fair value, which is determined on the date of grant for all instruments. The Consolidated Statement of Income for the years ended December 31, 2018 , 2017 , and 2016 , reflects share-based compensation expense of $46 million , $37 million , and $33 million , respectively. The total tax benefit recognized in earnings from share-based compensation arrangements for the years ended December 31, 2018 , 2017 , and 2016 , was not material . As of December 31, 2018 , there was $51 million of total unrecognized compensation cost related to share-based compensation arrangements, which is expected to be recognized over a weighted-average period of 1.9 years. The Company expects substantially all unvested awards to vest. Restricted Stock Units and Stock Grants Under the Company’s Amended and Restated 2007 Equity Incentive Plan ("2007 Equity Plan"), which has been approved by Shareholders, the Company granted restricted stock units ("RSUs") and performance-based restricted stock units ("PBRSUs") to certain Employees during 2018 , 2017 , and 2016 . Outstanding RSUs vest over three years , subject generally to the individual’s continued employment or service. The PBRSUs granted in January 2016 and February 2017 are subject to the Company’s performance with respect to a three-year simple average of Return on Invested Capital, before taxes and excluding special items, for the defined performance period and the individual’s continued employment or service. The PBRSUs granted in January 2018 are subject to the Company’s performance with respect to a three-year simple average of Return on Invested Capital, after taxes and excluding special items, for the defined performance period and the individual’s continued employment or service. The number of PBRSUs vesting on the vesting date will be interpolated based on the Company's Return on Invested Capital performance and ranges from zero PBRSUs to 200 percent of granted PBRSUs. Forfeiture rates are estimated at the time of grant based on historical actuals for similar grants, and are trued-up to actuals over the vesting period. The Company recognizes all expense on a straight-line basis over the vesting period, with any changes in expense due to the number of PBRSUs expected to vest being modified on a prospective basis. Aggregated information regarding the Company’s RSUs and PBRSUs is summarized below: All Restricted Stock Units Units (000) Wtd. Average Fair Value (per share) Outstanding December 31, 2015 1,485 $ 30.17 Granted 675 (a) 37.29 Vested (665 ) 23.29 Surrendered (56 ) 36.29 Outstanding December 31, 2016 1,439 36.52 Granted 717 (b) 52.73 Vested (806 ) 30.23 Surrendered (56 ) 43.86 Outstanding December 31, 2017, Unvested 1,294 45.32 Granted 782 (c) 60.80 Vested (670 ) 45.11 Surrendered (64 ) 47.05 Outstanding December 31, 2018, Unvested 1,342 52.56 (a) Includes 247 thousand PBRSUs (b) Includes 235 thousand PBRSUs (c) Includes 308 thousand PBRSUs In addition, the Company granted approximately 28 thousand shares of unrestricted stock at a weighted average grant price of $53.01 in 2018 , approximately 26 thousand shares at a weighted average grant price of $57.04 in 2017 , and approximately 27 thousand shares at a weighted average grant price of $42.90 in 2016 , to members of its Board of Directors. A remaining balance of up to 21 million shares of the Company’s common stock may be issued pursuant to grants under the 2007 Equity Plan. Employee Stock Purchase Plan Under the Amended and Restated 1991 Employee Stock Purchase Plan ("ESPP"), which has been approved by Shareholders, the Company is authorized to issue up to a remaining balance of 8 million shares of the Company’s common stock to Employees of the Company. These shares may be issued at a price equal to 90 percent of the market value at the end of each monthly purchase period. Common stock purchases are paid for through periodic payroll deductions. The following table provides information about the Company’s ESPP activity during 2018 , 2017 , and 2016 : Employee Stock Purchase Plan (a) Total number Weighted-average of shares Average fair value of each purchased price paid purchase right Period (in thousands) per share under the ESPP As of December 31, 2016 622 $ 36.57 $ 4.06 As of December 31, 2017 544 $ 50.13 $ 5.57 As of December 31, 2018 661 $ 50.73 $ 5.64 (a) The weighted-average fair value of each purchase right under the ESPP granted is equal to ten percent discount from the market value of the Common Stock at the end of each monthly purchase period. Taxes Grants of RSUs result in the creation of a deferred tax asset, which is a temporary difference, until the time the RSU vests. All excess tax benefits and tax deficiencies are recorded through the income statement. Due to the treatment of RSUs for tax purposes, the Company’s effective tax rate from year to year is subject to variability. |
FINANCIAL DERIVATIVE INSTRUMENT
FINANCIAL DERIVATIVE INSTRUMENTS | 12 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
FINANCIAL DERIVATIVE INSTRUMENTS | (550)(c) (125) to (150) or >(550)(d) (d) N/A If credit rating is investment grade, fair value of fuel derivative level at which: Cash is provided to CP (50) to (200) or >(600) >(50) (75) to (150) or >(550)(e) (125) to (150) or >(550)(e) >(125) >(70)(e) Cash is received from CP >50(e) >150(e) >250(e) >125(e) >100(e) >70(e) Aircraft or cash can be pledged to CP as collateral (200) to (600)(f) N/A (150) to (550)(c) (150) to (550)(c) N/A N/A If credit rating is non-investment grade, fair value of fuel derivative level at which: Cash is provided to CP (0) to (200) or >(600) (g) (0) to (150) or >(550) (0) to (150) or >(550) (g) (g) Cash is received from CP (g) (g) (g) (g) (g) (g) Aircraft or cash can be pledged to CP as collateral (200) to (600) N/A (150) to (550) (150) to (550) N/A N/A (a) Individual counterparties with fair value of fuel derivatives < $5 million . (b) The Company has the option of providing letters of credit in addition to aircraft collateral if the appraised value of the aircraft does not meet the collateral requirements. (c) The Company has the option of providing cash, letters of credit, or pledging aircraft as collateral. (d) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (e) Thresholds may vary based on changes in credit ratings within investment grade. (f) The Company has the option of providing cash or pledging aircraft as collateral. (g) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts." id="sjs-B4">FINANCIAL DERIVATIVE INSTRUMENTS Fuel Contracts Airline operators are inherently dependent upon energy to operate and, therefore, are impacted by changes in jet fuel prices. Furthermore, jet fuel and oil typically represents one of the largest operating expenses for airlines. The Company endeavors to acquire jet fuel at the lowest possible cost and to reduce volatility in operating expenses through its fuel hedging program. Although the Company may periodically enter into jet fuel derivatives for short-term timeframes, because jet fuel is not widely traded on an organized futures exchange, there are limited opportunities to hedge directly in jet fuel for time horizons longer than approximately 24 months into the future. However, the Company has found that financial derivative instruments in other commodities, such as West Texas Intermediate ("WTI") crude oil, Brent crude oil, and refined products, such as heating oil and unleaded gasoline, can be useful in decreasing its exposure to jet fuel price volatility. The Company does not purchase or hold any financial derivative instruments for trading or speculative purposes. The Company has used financial derivative instruments for both short-term and long-term timeframes, and primarily uses a mixture of purchased call options, collar structures (which include both a purchased call option and a sold put option), call spreads (which include a purchased call option and a sold call option), put spreads (which include a purchased put option and a sold put option), and fixed price swap agreements in its portfolio. Although the use of collar structures and swap agreements can reduce the overall cost of hedging, these instruments carry more risk than purchased call options in that the Company could end up in a liability position when the collar structure or swap agreement settles. With the use of purchased call options and call spreads, the Company cannot be in a liability position at settlement, but does not have coverage once market prices fall below the strike price of the purchased call option. For the purpose of evaluating its net cash spend for jet fuel and for forecasting its future estimated jet fuel expense, the Company evaluates its hedge volumes strictly from an "economic" standpoint and thus does not consider whether the hedges have qualified or will qualify for hedge accounting. The Company defines its "economic" hedge as the net volume of fuel derivative contracts held, including the impact of positions that have been offset through sold positions, regardless of whether those contracts qualify for hedge accounting. The level at which the Company is economically hedged for a particular period is also dependent on current market prices for that period, as well as the types of derivative instruments held and the strike prices of those instruments. For example, the Company may enter into "out-of-the-money" option contracts (including catastrophic protection), which may not generate intrinsic gains at settlement if market prices do not rise above the option strike price. Therefore, even though the Company may have an economic hedge in place for a particular period, that hedge may not produce any hedging gains at settlement and may even produce hedging losses depending on market prices, the types of instruments held, and the strike prices of those instruments. For 2018 , the Company had fuel derivative instruments in place for up to 79 percent of its fuel consumption. As of December 31, 2018 , the Company also had fuel derivative instruments in place to provide coverage at varying price levels, but up to a maximum of approximately 70 percent of its 2019 estimated fuel consumption, depending on where market prices settle. The following table provides information about the Company’s volume of fuel hedging on an economic basis considering current market prices: Maximum fuel hedged as of December 31, 2018 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) December 31, 2018 2019 1,519 WTI crude and Brent crude oil 2020 1,207 WTI crude and Brent crude oil 2021 466 WTI crude and Brent crude oil 2022 88 WTI crude oil (a) Due to the types of derivatives utilized by the Company and different price levels of those contracts, these volumes represent the maximum economic hedge in place and may vary significantly as market prices fluctuate. Upon proper qualification, the Company accounts for its fuel derivative instruments as cash flow hedges. The Company adopted the New Hedging Standard as of January 1, 2018. See Note 2 for further information on this adoption. Under the New Hedging Standard, all periodic changes in fair value of the derivatives designated as hedges are recorded in AOCI until the underlying jet fuel is consumed. See Note 12 . Prior to the adoption of the New Hedging Standard, ineffectiveness resulted when the change in the fair value of the derivative instrument exceeded the change in the value of the Company’s expected future cash outlay to purchase and consume jet fuel. Prior to 2018, those expected future cash outlays represented forecasted forward jet fuel prices, which were estimated through utilization of a statistical–based regression equation with data from market forward prices of like commodities. This equation was then adjusted for certain items, such as transportation costs, that are stated in the Company’s fuel purchasing contracts with its vendors. To the extent that the periodic changes in the fair value of the derivatives were ineffective, the ineffective portion was recorded to Other (gains) losses, net, in the Consolidated Statement of Income in the period of the change. The Company's results are subject to the possibility that the derivatives will no longer qualify for hedge accounting, in which case any change in the fair value of derivative instruments since the last reporting period would be recorded in Other (gains) losses, net, in the Consolidated Statement of Income in the period of the change; however, any amounts previously recorded to AOCI would remain there until such time as the original forecasted transaction occurs, at which time these amounts would be reclassified to Fuel and oil expense. Factors that have and may continue to lead to the loss of hedge accounting include: significant fluctuation in energy prices, significant weather events affecting refinery capacity and the production of refined products, and the volatility of the different types of products the Company uses in hedging. Increased volatility in these commodity markets for an extended period of time, especially if such volatility were to worsen, could cause the Company to lose hedge accounting altogether for the commodities used in its fuel hedging program, which would create further volatility in the Company’s GAAP financial results. However, even though derivatives may not qualify for hedge accounting, the Company continues to hold the instruments as management believes derivative instruments continue to afford the Company the opportunity to stabilize jet fuel costs. When the Company has sold derivative positions in order to effectively "close" or offset a derivative already held as part of its fuel derivative instrument portfolio, any subsequent changes in fair value of those positions are marked to market through earnings. Likewise, any changes in fair value of those positions that were offset by entering into the sold positions and were de-designated as hedges are concurrently marked to market through earnings. However, any changes in value related to hedges that were deferred as part of AOCI while designated as a hedge would remain until the originally forecasted transaction occurs. In a situation where it becomes probable that a fuel hedged forecasted transaction will not occur, any gains and/or losses that have been recorded to AOCI would be required to be immediately reclassified into earnings. The Company did not have any such situations occur during 2018 , 2017 , or 2016 . Accounting pronouncements pertaining to derivative instruments and hedging are complex with stringent requirements, including the documentation of a Company hedging strategy, statistical analysis to qualify a commodity for hedge accounting both on a historical and a prospective basis, and strict contemporaneous documentation that is required at the time each hedge is designated by the Company. This statistical analysis involves utilizing regression analyses that compare changes in the price of jet fuel to changes in the prices of the commodities used for hedging purposes. All cash flows associated with purchasing and selling fuel derivatives are classified as Other operating cash flows in the Consolidated Statement of Cash Flows. The following table presents the location of all assets and liabilities associated with the Company’s derivative instruments within the Consolidated Balance Sheet: Asset derivatives Liability derivatives Balance Sheet Fair value at Fair value at Fair value at Fair value at (in millions) location 12/31/2018 12/31/2017 12/31/2018 12/31/2017 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 43 $ 112 $ — $ — Fuel derivative contracts (gross) Other assets 95 136 — — Interest rate derivative contracts Accrued liabilities — — 2 — Interest rate derivative contracts Other noncurrent liabilities — — 12 20 Total derivatives designated as hedges $ 138 $ 248 $ 14 $ 20 Derivatives not designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ — $ 35 $ — $ 35 Interest rate derivative contracts Accrued liabilities — — — 1 Interest rate derivative contracts Other noncurrent liabilities — — — 1 Total derivatives not designated as hedges $ — $ 35 $ — $ 37 Total derivatives $ 138 $ 283 $ 14 $ 57 (a) Represents the position of each trade before consideration of offsetting positions with each counterparty and does not include the impact of cash collateral deposits provided to or received from counterparties. See discussion of credit risk and collateral following in this Note. The following table presents the amounts recorded on the Consolidated Balance Sheet related to fair value hedges: Balance Sheet location of hedged item Carrying amount of the hedged liabilities Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities (a) December 31, December 31, (in millions) 2018 2017 2018 2017 Long-term debt less current maturities $ 791 $ 791 $ 11 $ 12 (a) At December 31, 2018 and 2017 , these amounts include the cumulative amount of fair value hedging adjustments remaining for which hedge accounting has been discontinued of $ 20 million and $ 21 million, respectively. In addition, the Company also had the following amounts associated with fuel derivative instruments and hedging activities in its Consolidated Balance Sheet: Balance Sheet December 31, December 31, (in millions) location 2018 2017 Cash collateral deposits held from counterparties for fuel contracts - current Offset against Prepaid expenses and other current assets $ — $ 15 Due to third parties for fuel contracts Accounts payable — 29 Receivable from third parties for fuel contracts Accounts and other receivables 2 — All of the Company's fuel derivative instruments and interest rate swaps are subject to agreements that follow the netting guidance in the applicable accounting standards for derivatives and hedging. The types of derivative instruments the Company has determined are subject to netting requirements in the accompanying Consolidated Balance Sheet are those in which the Company pays or receives cash for transactions with the same counterparty and in the same currency via one net payment or receipt. For cash collateral held by the Company or provided to counterparties, the Company nets such amounts against the fair value of the Company's derivative portfolio by each counterparty. The Company has elected to utilize netting for both its fuel derivative instruments and interest rate swap agreements and also classifies such amounts as either current or noncurrent, based on the net fair value position with each of the Company's counterparties in the Consolidated Balance Sheet. The Company's application of its netting policy associated with cash collateral differs depending on whether its derivative instruments are in a net asset position or a net liability position. If its fuel derivative instruments are in a net asset position with a counterparty, cash collateral amounts held are first netted against current outstanding derivative asset amounts associated with that counterparty until that balance is zero, and then any remainder is applied against the fair value of noncurrent outstanding derivative instruments. If the Company's fuel derivative instruments are in a net liability position with the counterparty, cash collateral amounts provided are first netted against noncurrent outstanding derivative amounts associated with that counterparty until that balance is zero, and then any remainder is applied against the fair value of current outstanding derivative instruments. The Company has the following recognized financial assets and financial liabilities resulting from those transactions that meet the scope of the disclosure requirements as necessitated by applicable accounting guidance for balance sheet offsetting: Offsetting of derivative assets (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) December 31, 2018 December 31, 2017 Description Balance Sheet location Gross amounts of recognized assets Gross amounts offset in the Balance Sheet Net amounts of assets presented in the Balance Sheet Gross amounts of recognized assets Gross amounts offset in the Balance Sheet Net amounts of assets presented in the Balance Sheet Fuel derivative contracts Prepaid expenses and other current assets $ 43 $ — $ 43 $ 147 $ (50 ) $ 97 Fuel derivative contracts Other assets $ 95 $ — $ 95 (a) $ 136 $ — $ 136 (a) (a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the Consolidated Balance Sheet in Note 15 . Offsetting of derivative liabilities (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) December 31, 2018 December 31, 2017 Description Balance Sheet location Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet Fuel derivative contracts Prepaid expenses and other current assets $ — $ — $ — $ 50 $ (50 ) $ — Interest rate derivative contracts Accrued liabilities $ 2 $ — $ 2 $ 1 $ — $ 1 Interest rate derivative contracts Other noncurrent liabilities $ 12 $ — $ 12 (a) $ 21 $ — $ 21 (a) (a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the Consolidated Balance Sheet in Note 15 . The following tables present the impact of derivative instruments and their location within the Consolidated Statement of Income for the year ended December 31, 2018 and 2017: Location and amount of (gain) loss recognized in income on cash flow and fair value hedging relationships Year ended December 31, 2018 Year ended December 31, 2017 (in millions) Fuel and oil Interest expense Fuel and oil Interest expense Total $ (33 ) $ 37 $ 552 $ 33 (Gain) loss on cash flow hedging relationships: Commodity contracts: Amount of (gain) loss reclassified from AOCI into income (33 ) — 552 — Interest contracts: Amount of loss reclassified from AOCI into income — 6 — 11 Impact of fair value hedging relationships: Interest contracts: Hedged items — 23 — 23 Derivatives designated as hedging instruments — 8 — (1 ) Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives (Gain) loss recognized in income on derivatives (ineffective portion)(a) Year ended Year ended December 31, December 31, (in millions) 2018 2017 2018 2017 Fuel derivative contracts $ 1 * $ 32 * $ — $ 31 Interest rate derivatives (1 ) * — * — 1 Total $ — $ 32 $ — $ 32 *Net of tax (a) Amounts are included in Other (gains) losses, net. Derivatives not designated as hedges (Gain) loss recognized in income on derivatives Year ended Location of (gain) loss December 31, recognized in income (in millions) 2018 2017 on derivatives Fuel derivative contracts $ — $ 75 Other (gains) losses, net Interest rate derivatives (2 ) (4 ) Interest Expense Total $ (2 ) $ 71 The Company also recorded expense associated with premiums paid for fuel derivative contracts that settled/expired during 2018 , 2017 , and 2016 of $ 135 million , $ 136 million , and $ 154 million , respectively. These amounts are recognized through changes in fair value within AOCI for designated hedges, and are ultimately recorded as a component of Fuel and oil in the Consolidated Statement of Income during the period the contracts settle. The fair values of the derivative instruments, depending on the type of instrument, were determined by the use of present value methods or option value models with assumptions about commodity prices based on those observed in underlying markets or provided by third parties. Included in the Company’s cumulative net unrealized losses from fuel hedges as of December 31, 2018 , recorded in AOCI, were approximately $36 million in unrealized losses , net of taxes, which are expected to be realized in earnings during the twelve months subsequent to December 31, 2018 . Interest Rate Swaps The Company is party to certain interest rate swap agreements that are accounted for as either fair value hedges or cash flow hedges, as defined in the applicable accounting guidance for derivative instruments and hedging. The New Hedging Standard also addresses targeted improvements to special hedge accounting for interest rate hedges. Though the Company did not make any changes to the accounting for its current interest rate hedges as of the January 2018 adoption date, the New Hedging Standard provides the Company with more opportunities to achieve special hedge accounting for potential interest rate hedges in the future. Several of the Company's interest rate swap agreements qualify for the "shortcut" method of accounting for hedges, which dictates that the hedges are assumed to be perfectly effective, and, thus, there is no ineffectiveness to be recorded in earnings. For the Company’s interest rate swap agreements that do not qualify for the "shortcut" method of accounting, ineffectiveness is required to be measured at each reporting period. The ineffectiveness associated with all of the Company’s interest rate swap agreements for all periods presented was not material. The fair values of the interest rate swap agreements, which are adjusted regularly, have been aggregated by counterparty for classification in the Consolidated Balance Sheet. Agreements totaling a net liability of $14 million are fair value hedges, cash flow hedges, and interest rate derivatives not utilizing hedge accounting, and are classified as components of Accrued liabilities and Other noncurrent liabilities. The corresponding adjustment related to the net liability associated with the Company’s cash flow hedges is to AOCI, fair value hedges is to the carrying value of the long-term debt, and interest rate derivatives not utilizing hedge accounting is to Interest expense. See Note 12 . The Company has fixed-to-floating interest rate swap agreements in place associated with its $500 million 2.65 percent Notes due 2020 and its $300 million 2.75 percent Notes due 2019 that are accounted for as fair value hedges. As a result of the fixed-to-floating interest rate swap agreements in place, the average floating rate recognized during 2018 was approximately 3.58 percent on the $500 million Notes, and approximately 3.40 percent on the $300 million Notes, based on actual and forward rates as of December 31, 2018 . The Company has floating-to-fixed interest rate swap agreements associated with its $600 million floating-rate term loan agreement due 2020 and its $332 million term loan agreement due 2019 that are accounted for as cash flow hedges. These interest rate hedges have fixed the interest rate on the $600 million floating-rate term loan agreement at 5.223 percent until maturity, and for the $332 million term loan agreement at 6.315 percent until maturity. There are also a number of interest rate swap agreements, which convert a portion of AirTran Holdings' floating-rate debt to a fixed-rate basis for the remaining life of the debt, thus reducing the impact of interest rate changes on future interest expense and cash flows. Under these agreements, which expire between 2019 and 2020 , AirTran Holdings pays fixed rates between 4.35 percent and 5.91 percent and receives either three-month or six-month LIBOR on the notional values. The notional amount of outstanding debt related to interest rate swaps as of December 31, 2018 , was $57 million . The mark-to-market impact associated with these hedges for all periods presented was not material. Credit Risk and Collateral Credit exposure related to fuel derivative instruments is represented by the fair value of contracts that are an asset to the Company at the reporting date. At such times, these outstanding instruments expose the Company to credit loss in the event of nonperformance by the counterparties to the agreements. However, the Company has not experienced any significant credit loss as a result of counterparty nonperformance in the past. To manage credit risk, the Company selects and periodically reviews counterparties based on credit ratings, limits its exposure with respect to each counterparty, and monitors the market position of the fuel hedging program and its relative market position with each counterparty. At December 31, 2018 , the Company had agreements with all of its active counterparties containing early termination rights and/or bilateral collateral provisions whereby security is required if market risk exposure exceeds a specified threshold amount based on the counterparty credit rating. The Company also had agreements with counterparties in which cash deposits, letters of credit, and/or pledged aircraft are required to be posted as collateral whenever the net fair value of derivatives associated with those counterparties exceeds specific thresholds. In certain cases, the Company has the ability to substitute among these different forms of collateral at its discretion. The following table provides the fair values of fuel derivatives, amounts posted as collateral, and applicable collateral posting threshold amounts as of December 31, 2018 , at which such postings are triggered: Counterparty (CP) (in millions) A B C D E F Other (a) Total Fair value of fuel derivatives $ 38 $ 23 $ 43 $ 12 $ 5 $ 10 $ 7 $ 138 Cash collateral held from CP — — — — — — — — Aircraft collateral pledged to CP — — — — — — — — Letters of credit (LC) — — — — — — — — Option to substitute LC for aircraft (200) to (600)(b) N/A (150) to (550)(c) (150) to (550)(c) N/A N/A Option to substitute LC for cash N/A N/A (75) to (150) or >(550)(c) (125) to (150) or >(550)(d) (d) N/A If credit rating is investment grade, fair value of fuel derivative level at which: Cash is provided to CP (50) to (200) or >(600) >(50) (75) to (150) or >(550)(e) (125) to (150) or >(550)(e) >(125) >(70)(e) Cash is received from CP >50(e) >150(e) >250(e) >125(e) >100(e) >70(e) Aircraft or cash can be pledged to CP as collateral (200) to (600)(f) N/A (150) to (550)(c) (150) to (550)(c) N/A N/A If credit rating is non-investment grade, fair value of fuel derivative level at which: Cash is provided to CP (0) to (200) or >(600) (g) (0) to (150) or >(550) (0) to (150) or >(550) (g) (g) Cash is received from CP (g) (g) (g) (g) (g) (g) Aircraft or cash can be pledged to CP as collateral (200) to (600) N/A (150) to (550) (150) to (550) N/A N/A (a) Individual counterparties with fair value of fuel derivatives < $5 million . (b) The Company has the option of providing letters of credit in addition to aircraft collateral if the appraised value of the aircraft does not meet the collateral requirements. (c) The Company has the option of providing cash, letters of credit, or pledging aircraft as collateral. (d) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (e) Thresholds may vary based on changes in credit ratings within investment grade. (f) The Company has the option of providing cash or pledging aircraft as collateral. (g) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2018 | |
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 December 31, 2018 , 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 (primarily treasury bills and certificates of deposit), interest rate derivative contracts, fuel derivative contracts, and available-for-sale securities. The majority of the Company’s 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. Other available-for-sale securities primarily consist of investments associated with the Company’s excess benefit plan. The Company’s fuel and interest rate 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 consist solely of swap agreements. See Note 10 for further information on the Company’s derivative instruments and hedging activities. The fair values of swap contracts 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 swap contracts as Level 2. The Company’s Treasury Department, which reports to the Chief Financial Officer, 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 the same 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 Other available-for-sale securities are the Company's investments 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 the assets in the Company's earnings. The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2018 , and December 31, 2017 : Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description December 31, 2018 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 1,392 $ 1,392 $ — $ — Commercial paper 454 — 454 — Certificates of deposit 8 — 8 — Short-term investments: Treasury bills 1,582 1,582 — — Certificates of deposit 228 — 228 — Time deposits 25 — 25 — Fuel derivatives: Option contracts (b) 138 — — 138 Other available-for-sale securities 127 127 — — Total assets $ 3,954 $ 3,101 $ 715 $ 138 Liabilities Interest rate derivatives (see Note 10) (14 ) — (14 ) — (a) Cash equivalents are primarily composed of money market investments. (b) In the Consolidated Balance Sheet amounts are presented as an asset. See Note 10 . Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description December 31, 2017 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 1,133 $ 1,133 $ — $ — Commercial paper 350 — 350 — Certificates of deposit 12 — 12 — Short-term investments: Treasury bills 1,491 1,491 — — Certificates of deposit 287 — 287 — Fuel derivatives: Option contracts (b) 283 — — 283 Other available-for-sale securities 107 107 — — Total assets $ 3,663 $ 2,731 $ 649 $ 283 Liabilities Fuel derivatives: Option contracts (b) (35 ) — — (35 ) Interest rate derivatives (see Note 10) (22 ) — (22 ) — Total liabilities $ (57 ) $ — $ (22 ) $ (35 ) (a) Cash equivalents are primarily composed of money market investments. (b) In the Consolidated Balance Sheet amounts are presented as a net asset. See Note 10 . The Company had no transfers of assets or liabilities between any of the above levels during the years ended December 31, 2018 or 2017 . The Company did not have any assets or liabilities measured at fair value on a nonrecurring basis as of December 31, 2018 or 2017 . The following tables present the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for 2018 and 2017 : Fair value measurements using significant unobservable inputs (Level 3) Fuel (in millions) derivatives Balance at December 31, 2017 $ 248 Total losses (realized or unrealized) included in other comprehensive income (1 ) Purchases 66 (a) Sales (4 ) (a) Settlements (171 ) Balance at December 31, 2018 $ 138 (a) The purchase and sale of fuel derivatives are recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives is purchased as a single instrument or separate instruments. Fair value measurements using significant unobservable inputs (Level 3) Fuel (in millions) derivatives Balance at December 31, 2016 $ (258 ) Total losses (realized or unrealized) Included in earnings (125 ) Included in other comprehensive income (50 ) Purchases 142 (a) Sales — (a) Settlements 539 Balance at December 31, 2017 $ 248 The amount of total losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at December 31, 2016 $ (42 ) (a) The purchase and sale of fuel derivatives are recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives is purchased as a single instrument or separate instruments. 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 result in a higher (lower) fair value measurement, respectively, for the Company’s derivative option contracts. The following table presents a range of the unobservable inputs utilized in the fair value measurements of the Company’s fuel derivatives classified as Level 3 at December 31, 2018 : Quantitative information about Level 3 fair value measurements Valuation technique Unobservable input Period (by year) Range Fuel derivatives Option model Implied volatility 2019 29-49% 2020 22-31% 2021 19-24% 2022 20-21% The carrying amounts and estimated fair values of the Company’s long-term debt (including current maturities), as well as the applicable fair value hierarchy tier, at December 31, 2018 , are presented in the table below. The fair values of the Company’s publicly held long-term 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. Debt under five of the Company’s debt agreements is not publicly held. 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) Carrying value Estimated fair value Fair value level hierarchy 2.75% Notes due November 2019 $ 300 $ 299 Level 2 Term Loan Agreement payable through May 2019 - 6.315% 23 23 Level 3 Term Loan Agreement payable through July 2019 - 4.84% 10 10 Level 3 2.65% Notes due 2020 492 486 Level 2 Term Loan Agreement payable through 2020 - 5.223% 187 187 Level 3 737 Aircraft Notes payable through 2020 67 67 Level 3 2.75% Notes due 2022 300 293 Level 2 Pass Through Certificates due 2022 - 6.24% 250 263 Level 2 Term Loan Agreement payable through 2026 - 3.88% 197 197 Level 3 3.00% Notes due 2026 300 279 Level 2 3.45% Notes due 2027 300 286 Level 2 7.375% Debentures due 2027 125 146 Level 2 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Comprehensive income includes changes in the fair value of certain financial derivative instruments that qualify for hedge accounting, unrealized gains and losses on certain investments, and actuarial gains/losses arising from the Company’s postretirement benefit obligation. A rollforward of the amounts included in AOCI, net of taxes, is shown below for 2018 and 2017 : (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax impact Accumulated other Balance at December 31, 2016 $ (499 ) $ (18 ) $ (14 ) $ 20 $ 188 $ (323 ) Changes in fair value (50 ) — 5 13 11 (21 ) Reclassification to earnings 552 11 — — (207 ) 356 Balance at December 31, 2017 $ 3 $ (7 ) $ (9 ) $ 33 $ (8 ) $ 12 ASU 2017-12 adoption adjustment (a) (26 ) — — — 6 (20 ) ASU 2018-02 stranded AOCI adoption adjustment (b) — — — — 2 2 Changes in fair value — 1 67 (8 ) (14 ) 46 Reclassification to earnings (33 ) 6 — — 7 (20 ) Balance at December 31, 2018 $ (56 ) $ — $ 58 $ 25 $ (7 ) $ 20 (a) The Company adopted the New Hedging Standard as of January 1, 2018. See Note 2 for further information on this adoption. (b) The Company adopted the Reclassification of Certain Tax Effects from AOCI as of January 1, 2018, which allowed the Company to reclassify to Retained earnings any tax effects stranded in AOCI as a result of the Tax Cuts and Jobs Act enacted in December 2017. The following table illustrates the significant amounts reclassified out of each component of AOCI for the year ended December 31, 2018 : Year ended December 31, 2018 (in millions) Amounts reclassified from AOCI Affected line item in the Consolidated Statement of Comprehensive Income AOCI components Unrealized gain on fuel derivative instruments $ (33 ) Fuel and oil expense (8 ) Less: Tax expense $ (25 ) Net of tax Unrealized loss on interest rate derivative instruments $ 6 Interest expense 1 Less: Tax expense $ 5 Net of tax Total reclassifications for the period $ (20 ) Net of tax |
EMPLOYEE RETIREMENT PLANS
EMPLOYEE RETIREMENT PLANS | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
EMPLOYEE RETIREMENT PLANS | EMPLOYEE RETIREMENT PLANS Defined Contribution Plans Southwest has defined contribution plans covering substantially all of its Employees. Contributions under all defined contribution plans are primarily based on Employee compensation and performance of the Company. The Company sponsors Employee savings plans under section 401(k) of the Internal Revenue Code of 1986, as amended. The Southwest Airlines Co. 401(k) Plan includes Company matching contributions and the Southwest Airlines Pilots Retirement Saving Plan has non-elective Company contributions. In addition, the Southwest Airlines Co. ProfitSharing Plan (ProfitSharing Plan) is a defined contribution plan to which the Company may contribute a percentage of its eligible pre-tax profits, as defined, on an annual basis. No Employee contributions to the ProfitSharing Plan are allowed. Amounts associated with the Company's defined contribution plans expensed in 2018 , 2017 , and 2016 , reflected as a component of Salaries, wages, and benefits, were $1.0 billion , $1.0 billion , and $937 million , respectively. Postretirement Benefit Plans The Company provides postretirement benefits to qualified retirees in the form of medical and dental coverage. Employees must meet minimum levels of service and age requirements as set forth by the Company, or as specified in collective-bargaining agreements with specific workgroups. Employees meeting these requirements, as defined, may use accrued unused sick time to pay for medical and dental premiums from the age of retirement until age 65 . The following table shows the change in the accumulated postretirement benefit obligation ("APBO") for the years ended December 31, 2018 and 2017 : (in millions) 2018 2017 APBO at beginning of period $ 275 $ 256 Service cost 18 18 Interest cost 9 11 Benefits paid (5 ) (8 ) Actuarial gain (69 ) (2 ) Plan amendments 4 — APBO at end of period $ 232 $ 275 During 2018, the Company recorded a $69 million actuarial gain as a decrease to the APBO with an offset to AOCI. This actuarial gain is reflected above and resulted from changes in certain key assumptions used to determine the Company’s year-end obligation. The assumption change that resulted in the largest portion of the actuarial gain was the expected per capita costs for future qualifying retirees, which reflects lower expectations based on recent history. All plans are unfunded, and benefits are paid as they become due. Estimated future benefit payments expected to be paid are $8 million in 2019 , $9 million in 2020 , $10 million in 2021 , $11 million in 2022 , $13 million in 2023 , and $93 million for the next five years thereafter. The funded status (the difference between the fair value of plan assets and the projected benefit obligations) of the Company’s consolidated benefit plans are recognized in the Consolidated Balance Sheet, with a corresponding adjustment to AOCI. The following table reconciles the funded status of the plans to the accrued postretirement benefit cost recognized in Other non-current liabilities on the Company’s Consolidated Balance Sheet at December 31, 2018 and 2017 . (in millions) 2018 2017 Funded status $ (232 ) $ (275 ) Unrecognized net actuarial (gain) loss (64 ) 5 Unrecognized prior service cost 5 4 Accumulated other comprehensive income (loss) 59 (9 ) Cost recognized on Consolidated Balance Sheet $ (232 ) $ (275 ) The consolidated periodic postretirement benefit cost for the years ended December 31, 2018 , 2017 , and 2016 , included the following: (in millions) 2018 2017 2016 Service cost $ 18 $ 18 $ 13 Interest cost 9 11 9 Amortization of prior service cost 3 3 3 Net periodic postretirement benefit cost $ 30 $ 32 $ 25 Service cost is recognized within Salaries, wages, and benefits expense, and all other costs are recognized in Other (gains) losses, net in the Consolidated Statement of Income. Unrecognized prior service cost is expensed using a straight-line amortization of the cost over the average future service of Employees expected to receive benefits under the plans. Actuarial gains are amortized utilizing the minimum amortization method. The following actuarial assumptions were used to account for the Company’s postretirement benefit plans at December 31, 2018 , 2017 , and 2016 : 2018 2017 2016 Weighted-average discount rate 4.35 % 3.65 % 4.25 % Assumed healthcare cost trend rate (a) 7.13 % 7.08 % 7.08 % (a) The assumed healthcare cost trend rate is assumed to be 7.13% for 2019 , then decline gradually to 5.19% by 2027 and remain level thereafter. The selection of a discount rate is made annually and is selected by the Company based upon comparison of the expected future cash flows associated with the Company’s future payments under its consolidated postretirement obligations to a yield curve created using high quality bonds that closely match those expected future cash flows. This rate increased during 2018 due to market conditions. The assumed healthcare trend rate is also reviewed at least annually and is determined based upon both historical experience with the Company’s healthcare benefits paid and expectations of how those trends may or may not change in future years. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017. The Act reduces the U.S. federal corporate tax rate from the previous rate of 35 percent to 21 percent , required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and created new taxes on certain foreign sourced earnings. At December 31, 2017, the Company calculated the accounting for the tax effects of enactment of the Act as written, and recorded the effects on the existing deferred tax balances. The components of deferred tax assets and liabilities at December 31, 2018 and 2017 , are as follows: 2018 2017 (in millions) As Recast DEFERRED TAX LIABILITIES: Accelerated depreciation $ 3,395 $ 3,123 Other 92 83 Total deferred tax liabilities 3,487 3,206 DEFERRED TAX ASSETS: Construction obligation 355 318 Accrued employee benefits 329 301 Rapid rewards loyalty liability 267 338 Other 109 130 Total deferred tax assets 1,060 1,087 Net deferred tax liability $ 2,427 $ 2,119 The provision (benefit) for income taxes is composed of the following: 2018 2017 2016 (in millions) As Recast As Recast CURRENT: Federal $ 338 $ 904 $ 778 State 60 72 69 Total current 398 976 847 DEFERRED: Federal 299 200 393 State 2 2 27 Change in federal statutory tax rate — (1,270 ) — Total deferred 301 (1,068 ) 420 $ 699 $ (92 ) $ 1,267 The effective tax rate on income before income taxes differed from the federal income tax statutory rate for the following reasons: 2018 2017 2016 (in millions) As Recast As Recast Tax at statutory U.S. tax rates $ 664 $ 1,143 $ 1,208 State income taxes, net of federal benefit 49 50 62 Change in federal statutory tax rate — (1,270 ) — Other, net (14 ) (15 ) (3 ) Total income tax provision (benefit) $ 699 $ (92 ) $ 1,267 The only period subject to examination for the Company’s federal tax return is the 2018 tax year. The Company is also subject to various examinations from state and local income tax jurisdictions in the ordinary course of business. These examinations are not expected to have a material effect on the financial results of the Company. |
SUPPLEMENTAL FINANCIAL INFORMAT
SUPPLEMENTAL FINANCIAL INFORMATION | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure Text Block [Abstract] | |
SUPPLEMENTAL FINANCIAL INFORMATION | SUPPLEMENTAL FINANCIAL INFORMATION (in millions) December 31, 2018 December 31, 2017 Derivative contracts $ 95 $ 136 Intangible assets, net 400 413 Capital lease receivable 61 76 Other 164 161 Other assets $ 720 $ 786 (in millions) December 31, 2018 December 31, 2017 Accounts payable trade $ 263 $ 186 Salaries payable 216 201 Taxes payable 220 203 Aircraft maintenance payable 69 38 Fuel payable 122 123 Other payable 526 569 Accounts payable $ 1,416 $ 1,320 (in millions) December 31, 2018 December 31, 2017 Profitsharing and savings plans $ 580 $ 579 Aircraft and other lease related obligations 37 40 Permanently grounded aircraft liability — 34 Vacation pay 403 365 Health 107 100 Workers compensation 166 172 Property and income taxes 68 57 Other 388 353 Accrued liabilities $ 1,749 $ 1,700 (in millions) December 31, 2018 December 31, 2017 Postretirement obligation $ 232 $ 275 Non-current lease-related obligations 48 85 Permanently grounded aircraft liability — 13 Other deferred compensation 247 237 Derivative contracts 12 21 Other 111 76 Other noncurrent liabilities $ 650 $ 707 For further information on fuel derivative and interest rate derivative contracts, see Note 10 . Other Operating Expenses Other operating expenses consist of distribution costs, advertising expenses, personnel expenses, professional fees, and other operating costs, none of which individually exceed 10 percent of Operating expenses. |
QUARTERLY FINANCIAL DATA
QUARTERLY FINANCIAL DATA | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Data [Abstract] | |
QUARTERLY FINANCIAL DATA | QUARTERLY FINANCIAL DATA (unaudited) Three months ended (in millions except per share amounts) March 31 June 30 Sept. 30 Dec. 31 2018 Operating revenues $ 4,944 $ 5,742 $ 5,575 $ 5,704 Operating income 616 972 798 820 Income before income taxes 602 960 786 817 Net income 463 733 615 654 Net income per share, basic 0.79 1.27 1.08 1.17 Net income per share, diluted 0.79 1.27 1.08 1.17 March 31 June 30 Sept. 30 Dec. 31 As Recast As Recast As Recast As Recast 2017 Operating revenues $ 4,854 $ 5,731 $ 5,303 $ 5,258 Operating income 606 1,215 845 741 Income before income taxes 532 1,165 832 736 Net income 339 743 528 1,747 (a) Net income per share, basic 0.55 1.23 0.88 2.95 (a) Net income per share, diluted 0.55 1.23 0.88 2.94 (a) (a) Includes a $1.3 billion reduction in Provision for income taxes related to the Tax Cuts and Jobs Act legislation enacted in December 2017, which resulted in a re-measurement of the Company's deferred tax assets and liabilities at the new federal corporate tax rate of 21 percent . See Note 14 to the Consolidated Financial Statements for further information. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
New Accounting Pronouncements, Policy | On August 28, 2017, the FASB issued the New Hedging Standard. The New Hedging Standard amends the hedge accounting model to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. The New Hedging Standard also simplifies the application of hedge accounting in certain situations. The New Hedging Standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted in any interim or annual period. The Company elected to early adopt the New Hedging Standard as of January 1, 2018, utilizing a modified retrospective approach, as required. The most significant impacts of the New Hedging Standard on the Company's accounting are the elimination of the requirement to separately measure and record ineffectiveness for all cash flow hedges in a hedging relationship, as well as a change in classification of premium expense associated with option contracts. Such premium expense for the Company's fuel hedges was previously reflected as a component of Other (gains) losses, net, in the Consolidated Statement of Income, but under the New Hedging Standard is reflected as a component of the line item to which the hedge relates, which is Fuel and oil expense. As such, premium expense for the years ended December 31, 2017 and 2016 , has been reclassified in order to be comparative with current period results in the accompanying Consolidated Statement of Income. The impact of the cumulative effect of the adjustment to move the reporting of ineffectiveness as of January 1, 2018, to AOCI from Retained earnings, was a $20 million loss, net of taxes. The adoption and resulting reclassification had no impact on the Company's Net income, earnings per share, or cash flows. As a result of the adoption of the New Hedging Standard, however, the Company incurred no gains or losses due to ineffectiveness in Other (gains) losses, net, in the Consolidated Statement of Income, during 2018. See Note 10 for further information and for further details on gains or losses recorded due to ineffectiveness during 2017. On March 10, 2017, the FASB issued the New Retirement Standard. The New Retirement Standard requires employers to present the service cost component of the net periodic benefit cost in the same income statement line item as other Employee compensation costs arising from services rendered during the period. The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in nonoperating expenses. As required by the New Retirement Standard, the Company adopted this guidance retrospectively as of January 1, 2018, using a practical expedient which permitted the Company to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. As such, the Company reclassified $14 million and $ 12 million of Salaries, wages, and benefits expense to Other (gains) and losses under the New Retirement Standard in the accompanying Consolidated Statement of Income for the years ended December 31, 2017 and 2016 , respectively. The adoption and resulting reclassification had no impact on the Company's Net income, earnings per share, or cash flows. On February 25, 2016, the FASB issued ASU No. 2016-02, Leases (the "New Lease Standard"). The New Lease Standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The New Lease Standard requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases (with the exception of short-term leases) at the lease commencement date and recognize expenses on the income statement in a similar manner to the current guidance in ASC 840, Leases ("ASC 840"). The lease liability will be measured as the present value of the unpaid lease payments and the right-of-use asset will be derived from the calculation of the lease liability. Lease payments will include fixed and in-substance fixed payments, variable payments based on an index or rate, reasonably certain purchase options, termination penalties, fees paid by the lessee to the owners of a special-purpose entity for restructuring the transaction, and probable amounts the lessee will owe under a residual value guarantee. Lease payments will not include variable lease payments other than those that depend on an index or rate, any guarantee by the lessee of the lessor’s debt, or any amount allocated to non-lease components. The Company established a project team to evaluate and implement the New Lease Standard. The Company currently believes the most significant impact of the New Lease Standard on its accounting will be the balance sheet impact of its aircraft operating leases, which will significantly increase assets and liabilities. As of December 31, 2018 , the Company had 51 leased aircraft under operating leases in its active fleet and also had another 73 aircraft under operating leases that are being subleased to another airline. The Company also has operating leases related to terminal operations space and other real estate leases. Although the real estate leases will also have a substantial impact to the balance sheet, the Company does not expect the leases related to terminal operations space to have a significant impact since variable lease payments, other than those based on an index or rate, are excluded from the measurement of the lease liability. The Company also does not expect the adoption of the New Lease Standard to impact any of its existing debt covenants. In addition, the New Lease Standard eliminates the current build-to-suit lease accounting guidance and is expected to result in derecognition of build-to-suit assets and liabilities that remained on the balance sheet after the end of the construction period, including the related deferred taxes. See Note 4 for further information on the Company’s build-to-suit projects. However, given the Company's guarantee associated with the bonds issued to fund the Dallas Love Field Modernization Program (the "LFMP"), the Company believes that the remaining debt service amounts as of the adoption date would be considered a minimum rental payment under the New Lease Standard, and therefore will be recorded as a lease liability on the balance sheet and will be reduced through future debt service payments made in 2019 and beyond. The underlying leases for all of these facilities will be subject to evaluation under the New Lease Standard. The Company plans to elect the package of practical expedients available under the transition provisions of the New Lease Standard, including (i) not reassessing whether expired or existing contracts contain leases, (ii) lease classification, and (iii) not revaluing initial direct costs for existing leases. Also, the Company plans to elect the practical expedient which will allow aggregation of non-lease components with the related lease components when evaluating accounting treatment. Lastly, the Company currently plans to apply the modified retrospective adoption method, utilizing the simplified transition option available in the New Lease Standard, which allows entities to continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented in the year of adoption. The Company will adopt the New Lease Standard on January 1, 2019. The expected impact of applying the New Lease Standard effective as of January 1, 2019, to the Company’s results of operations and cash flows is not expected to be significant. The expected major impacts to the balance sheet will be 1) the removal of approximately $1.5 billion in Assets constructed for others, net, and related Construction obligations, and 2) the addition of approximately $1.4 billion in Operating lease right of use assets and lease liabilities, which includes approximately $700 million from operating lease aircraft, approximately $450 million from the Company’s remaining obligations associated with the LFMP bonds, and approximately $220 million from other operating leases. On May 28, 2014, the FASB issued the New Revenue Standard, also referred to as ASC 606, Revenue From Contracts With Customers ("ASC 606"), which replaces numerous revenue recognition requirements in GAAP, including industry-specific requirements, and provides companies with a single revenue recognition model for recognizing revenue from contracts with Customers. The New Revenue Standard establishes a five-step model whereby revenue is recognized as performance obligations within a contract are satisfied in an amount that reflects the consideration the Company expects to receive in exchange for satisfaction of those performance obligations, or standalone selling price. The New Revenue Standard also requires new, expanded disclosures regarding revenue recognition. See Note 5 for further information. The Company adopted the provisions of the New Revenue Standard effective January 1, 2018, using the full retrospective method. As such, results for the years ended December 31, 2017 and 2016 , have been recast under the New Revenue Standard in order to be comparative with current period results in the accompanying Consolidated Statements of Income and Cash Flows. The amounts in the accompanying Consolidated Balance Sheet as of December 31, 2017, have also been recast. The most significant impact of the New Revenue Standard relates to the accounting for the Company’s loyalty program. The New Revenue Standard eliminated the incremental cost method for flight points awarded, which was previously allowed in prior accounting guidance. The Company now accounts for the revenue and liability for loyalty points earned through flight activity using a relative fair value approach. The New Revenue Standard also resulted in different income statement classification for certain types of revenues (primarily ancillary revenues) which were previously classified as Other revenues, but under the New Revenue Standard are included in Passenger revenues, and certain expenses, which were previously classified as Other operating expenses, but under the New Revenue Standard are offset against Passenger revenues. The following table provides the impact of applying the New Revenue Standard to the Company’s previously reported balances as of December 31, 2017: Balance as of December 31, 2017 (in millions) As Reported New Revenue Standard As Recast Accrued liabilities $ 1,777 $ (77 ) $ 1,700 Air traffic liability 3,460 35 3,495 Air traffic liability - noncurrent — 1,070 1,070 Deferred income taxes 2,358 (239 ) 2,119 Retained earnings 14,621 (789 ) 13,832 The impacts of applying the New Revenue Standard, the New Retirement Standard, and the New Hedging Standard to the Company’s Consolidated Statement of Income for the years ended December 31, 2017 and 2016 , are as follows (amounts may not recalculate due to rounding): Year ended December 31, 2017 (in millions), except per share amounts As Reported New Revenue Standard New Retirement Standard New Hedging Standard As Recast Passenger revenue $ 19,141 $ 622 $ — $ — $ 19,763 Other revenue 1,857 (647 ) — — 1,210 Salaries, wages, and benefits 7,319 — (14 ) — 7,305 Fuel and oil expense 3,940 — — 136 4,076 Other operating expenses 2,886 (39 ) — — 2,847 Other (gains) losses, net 234 — 14 (136 ) 112 Provision for income taxes (237 ) 145 — — (92 ) Net income 3,488 (131 ) — — 3,357 Net income per share, basic 5.80 (0.22 ) — — 5.58 Net income per share, diluted 5.79 (0.22 ) — — 5.57 Year ended December 31, 2016 (in millions), except per share amounts As Reported New Revenue Standard New Retirement Standard New Hedging Standard As Recast Passenger revenue $ 18,594 $ 474 $ — $ — $ 19,068 Other revenue 1,660 (610 ) — — 1,050 Salaries, wages, and benefits 6,798 — (12 ) — 6,786 Fuel and oil expense 3,647 — — 154 3,801 Other operating expenses 2,743 (40 ) — — 2,703 Other (gains) losses, net 162 — 12 (154 ) 21 Provision for income taxes 1,303 (36 ) — — 1,267 Net income 2,244 (60 ) — — 2,183 Net income per share, basic 3.58 (0.10 ) — — 3.48 Net income per share, diluted 3.55 (0.10 ) — — 3.45 The impacts of applying the New Revenue Standard to the Company’s Consolidated Statement of Cash Flows for the years ended December 31, 2017 and 2016 , are as follows (amounts may not recalculate due to rounding): Year ended December 31, 2017 (in millions) As Reported New Revenue Standard As Recast Net income $ 3,488 $ (131 ) $ 3,357 Deferred income taxes (1,212 ) 145 (1,066 ) Changes in certain assets and liabilities 227 (14 ) 212 Net cash provided by operating activities 3,929 — 3,929 Year ended December 31, 2016 (in millions) As Reported New Revenue Standard As Recast Net income $ 2,244 $ (60 ) $ 2,183 Deferred income taxes 455 (36 ) 419 Changes in certain assets and liabilities 182 96 279 Net cash provided by operating activities 4,293 — 4,293 |
Basis of Presentation | Basis of Presentation Southwest Airlines Co. (the "Company") operates Southwest Airlines, a major domestic airline. The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries, which include AirTran Holdings, LLC, the successor to AirTran Holdings, Inc. ("AirTran Holdings"), the former parent company of AirTran Airways, Inc. ("AirTran Airways"). The accompanying Consolidated Financial Statements include the results of operations and cash flows for all periods presented and all significant inter-entity balances and transactions have been eliminated. The preparation of financial statements in conformity with generally accepted accounting principles in the United States ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. Effective as of January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (the "New Revenue Standard"), ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (the "New Retirement Standard"), and ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities (the "New Hedging Standard"). All amounts and disclosures set forth in this Form 10-K reflect the adoption of these ASUs. See Note 2 for further information. The Company reclassified $198 million and $229 million from Aircraft rentals to Other operating expenses in the Consolidated Statement of Income for the years ended December 31, 2017 and 2016 , respectively, to be comparative with the current period's presentation. Aircraft rentals expense included in Other operating expenses for the year ended December 31, 2018 , was $161 million . This reclassification had no impact on Operating income, Net income, the Consolidated Balance Sheet, or the Consolidated Statement of Cash Flows. |
Cash and cash equivalents | Cash and Cash Equivalents Cash in excess of that necessary for operating requirements is invested in short-term, highly liquid, income-producing investments. Investments with original maturities of three months or less when purchased are classified as cash and cash equivalents, which primarily consist of certificates of deposit, money market funds, and investment grade commercial paper issued by major corporations and financial institutions. Cash and cash equivalents are stated at cost, which approximates fair value. As of December 31, 2018 , no cash collateral deposits were provided by or held by the Company from its fuel hedge counterparties, and no cash collateral deposits were held by or provided by the Company to its interest rate hedge counterparties. As of December 31, 2017 , $15 million in cash collateral deposits were held by the Company from its fuel hedge counterparties, and no cash collateral deposits were held by or provided by the Company to its interest rate hedge counterparties. Cash collateral amounts provided or held associated with fuel and interest rate derivative instruments are not restricted in any way and earn interest income at an agreed upon rate that approximates the rates earned on short-term securities issued by the U.S. Government. Depending on the fair value of the Company’s fuel and interest rate derivative instruments, the amounts of collateral deposits held or provided at any point in time can fluctuate significantly. See Note 10 for further information on these collateral deposits and fuel derivative instruments. |
Short-term and noncurrent investments | Short-term and Noncurrent Investments Short-term investments consist of investments with original maturities of greater than three months but less than twelve months when purchased. These are primarily short-term securities issued by the U.S. Government and certificates of deposit issued by domestic banks. All of these investments are classified as available-for-sale securities and are stated at fair value, which approximates cost. For all short-term investments, at each reset period or upon reinvestment, the Company accounts for the transaction as Proceeds from sales of short-term investments for the security relinquished, and Purchases of short-investments for the security purchased, in the accompanying Consolidated Statement of Cash Flows. Unrealized gains and losses, net of tax, if any, are recognized in Accumulated other comprehensive income (loss) ("AOCI") in the accompanying Consolidated Balance Sheet. Realized net gains and losses on specific investments, if any, are reflected in Interest income in the accompanying Consolidated Statement of Income. Both unrealized and realized gains and/or losses associated with investments were immaterial for all years presented. Noncurrent investments consist of investments with maturities of greater than twelve months. Noncurrent investments are included as a component of Other assets in the Consolidated Balance Sheet. |
Accounts and other receivables | Accounts and Other Receivables Accounts and other receivables are carried at cost. They primarily consist of amounts due from credit card companies associated with sales of tickets for future travel, and amounts due from business partners in the Company’s loyalty program. The allowance for doubtful accounts was immaterial at December 31, 2018 and 2017 . In addition, the provision for doubtful accounts and write-offs for 2018 , 2017 , and 2016 were each immaterial. |
Inventories | Inventories Inventories primarily consist of aircraft fuel, flight equipment expendable parts, materials, and supplies. All of these items are carried at average cost, less an allowance for obsolescence. These items are generally charged to expense when issued for use. The reserve for obsolescence was $2 million and $45 million at December 31, 2018 , and 2017 , respectively. In addition, the Company’s provision for obsolescence and write-offs for 2018 , 2017 , and 2016 were each immaterial. |
Property and equipment | Property and Equipment Property and equipment is stated at cost. Capital expenditures include payments made for aircraft, other flight equipment, purchase deposits related to future aircraft deliveries, airport and other facility construction projects, and ground and other property and equipment. Depreciation is provided by the straight-line method to estimated residual values over periods of approximately 25 years for flight equipment, 5 to 30 years for ground property and equipment, and 5 to 30 years, or the expected term of the Company's lease if shorter, for Assets constructed for others, once the asset is placed in service. Residual values estimated for aircraft are approximately 15 percent , for ground property and equipment generally range from 0 to 10 percent , and for Assets constructed for others range from 17 to 75 percent . Property under capital leases and related obligations are initially recorded at an amount equal to the present value of future minimum lease payments computed on the basis of the Company’s incremental borrowing rate or, when known, the interest rate implicit in the lease. Amortization of property under capital leases is on a straight-line basis over the lease term and is included in Depreciation and amortization expense. Leasehold improvements generally are amortized on a straight-line basis over the shorter of the estimated useful life of the improvement or the remaining term of the lease. Assets constructed for others consists of airport improvement projects in which the Company is considered the accounting owner of the facilities. See Note 4 for further information. During first quarter 2016, the Company made the decision to further simplify its operations and accelerate the retirement of its less-efficient Boeing 737-300 ("Classic") fleet. In September 2017, the Company retired the remaining 61 Classic aircraft as part of this accelerated retirement schedule. This change in retirement dates was considered a change in estimate and was accounted for on a prospective basis as of the dates the decisions were finalized. Therefore, the Company recorded accelerated depreciation expense over the remainder of the useful lives for each Classic aircraft and related parts. See Note 7 for further information regarding the Company's aircraft fleet. The impacts on expense and earnings from the accelerated depreciation were as follows: (in millions, except per share amounts) Year ended December 31, 2017 Year ended December 31, 2016 Depreciation and amortization expense $ 21 $ 123 Net income * $ (19 ) $ (66 ) Net income per basic share $ (0.03 ) $ (0.11 ) Net income per diluted share $ (0.03 ) $ (0.10 ) * net of profitsharing benefit and income taxes The Company evaluates its long-lived assets used in operations for impairment when events and circumstances indicate that the undiscounted cash flows to be generated by that asset are less than the carrying amounts of the asset and may not be recoverable. Factors that would indicate potential impairment include, but are not limited to, significant decreases in the market value of the long-lived asset(s), a significant change in the long-lived asset’s physical condition, and operating or cash flow losses associated with the use of the long-lived asset. If an asset is deemed to be impaired, an impairment loss is recorded for the excess of the asset book value in relation to its estimated fair value. |
Aircraft and engine maintenance | Aircraft and Engine Maintenance The cost of scheduled inspections and repairs and routine maintenance costs for all aircraft and engines are charged to Maintenance materials and repairs expense within the accompanying Consolidated Statement of Income as incurred. The Company has maintenance agreements related to certain of its aircraft engines with external service providers, including a "power-by-the-hour" agreement associated with its Boeing 737-700 fleet. Under these agreements, which the Company has determined effectively transfer the risk and create an obligation associated with the maintenance on such engines to the counterparty, expense is recorded commensurate with each hour flown on an engine. In situations where the payments to the counterparty do not sufficiently match the level of services received during the period, expense is recorded on a straight-line basis over the term of the agreement based on the Company's best estimate of expected future aircraft utilization. For its engine maintenance contracts that do not transfer risk to the service provider, the Company records expense on a time and materials basis when an engine repair event takes place. Modifications that significantly enhance the operating performance or extend the useful lives of aircraft or engines are capitalized and amortized over the remaining life of the asset. |
Goodwill and intangible assets | Goodwill and Intangible Assets The Company applies a fair value based impairment test to the carrying value of goodwill and indefinite-lived intangible assets annually on October 1st, or more frequently if certain events or circumstances indicate that an impairment loss may have been incurred. The Company assesses the value of goodwill and indefinite-lived assets under either a qualitative or quantitative approach. Under a qualitative approach, the Company considers various market factors, including applicable key assumptions listed below. These factors are analyzed to determine if events and circumstances could reasonably have affected the fair value of goodwill and indefinite-lived intangible assets. If the Company determines that it is more likely than not that an indefinite-lived intangible asset is impaired, the quantitative approach is used to assess the asset’s implied fair value and the amount of the impairment. Under a quantitative approach, the implied fair value of the Company's identifiable assets and liabilities is calculated based on key assumptions. If the Company assets' carrying value exceeds the fair value calculated using the quantitative approach, an impairment charge is recorded for the difference in fair value and carrying value. During 2016, the Company recorded a $21 million impairment charge associated with leased slots at Newark Liberty International Airport as a result of the FAA announcement, in April 2016, that this airport was being changed to a Level 2 schedule-facilitated airport from its previous designation as Level 3. This impairment loss was reflected in Other operating expenses within the accompanying Consolidated Statement of Income. The Company does not believe this FAA decision is indicative of a similar decision being made at the Company's other slot-controlled airports, Washington Reagan and New York LaGuardia. The following table is a summary of the Company’s intangible assets, which are included as a component of Other assets in the Company's Consolidated Balance Sheet, as of December 31, 2018 and 2017 : Year ended December 31, 2018 Year ended December 31, 2017 (in millions) Weighted-average useful life (in years) Gross carrying amount Accumulated amortization Gross carrying amount Accumulated Amortization Customer relationships/marketing agreements 10 $ 27 $ 25 $ 27 $ 23 Owned domestic slots (a) Indefinite 295 n/a 295 n/a Gate leasehold rights (a) 15 180 78 180 66 Total 14 $ 502 $ 103 $ 502 $ 89 (a) Intangible assets primarily consist of acquired leasehold rights to certain airport owned gates, takeoff and landing slots (a "slot" is the right of an air carrier, pursuant to regulations of the FAA, to operate a takeoff or landing at a specific time at certain airports) at certain domestic slot-controlled airports, and certain intangible assets acquired. The Company's definite lived assets are amortized on a straight-line basis over the useful life of the asset. The aggregate amortization expense for 2018 , 2017 , and 2016 was $16 million , $13 million , and $17 million , respectively. Estimated aggregate amortization expense for the five succeeding years and thereafter is as follows: 2019 – $13 million , 2020 – $12 million , 2021 – $12 million , 2022 – $12 million , 2023 – $12 million , and thereafter – $45 million . |
Revenue recognition | Revenue Recognition Tickets sold are initially deferred as Air traffic liability. Passenger revenue is recognized and Air traffic liability is reduced when transportation is provided. Air traffic liability primarily represents tickets sold for future travel dates and funds that are past flight date and remain unused as well as a portion of the Company's liability associated with its loyalty program. The majority of the Company’s tickets sold are nonrefundable. Refundable tickets that are sold but not flown on the travel date can be reused for another flight, up to a year from the date of sale, or refunded, subject to certain conditions. Based on the Company's revenue recognition policy, revenue is recorded at the flight date for a Customer who does not change his/her itinerary and loses his/her funds as the Company has then fulfilled its performance obligation. Amounts collected from passengers for ancillary service fees are also recognized when the service is provided, which is typically the flight date. Revenue from the estimated spoilage of tickets (including partial tickets) is recorded once the flight date has passed in proportion to the pattern of flights taken by the Customer, which approximates the average period over which the population of Rapid Reward Members redeem their points. Initial spoilage estimates are routinely adjusted and ultimately finalized once the tickets expire, which is typically twelve months after the original purchase date. See Note 5 for further information. Approximately $566 million , approximately $489 million , and approximately $383 million of the Company's Operating revenues in 2018 , 2017 , and 2016 , respectively, were attributable to foreign operations. The remainder of the Company's Operating revenues, approximately $21.4 billion , approximately $20.7 billion , and approximately $20.0 billion in 2018 , 2017 , and 2016 , respectively, were attributable to domestic operations. The balance in Air traffic liability – passenger travel and ancillary passenger services also includes unused funds that are available for use by Customers that are not currently associated with a ticket, but represent funds effectively refunded and made available for use to purchase a ticket for a flight that occurs prior to their expiration. These funds are typically created as a result of a prior ticket cancellation or exchange. These performance obligations are expected to have a duration of twelve months or less; therefore, the Company has elected the provision within ASC 606 to not disclose the amount of the remaining transaction price and its expected timing of recognition for passenger tickets. Recognition of revenue associated with the Company’s loyalty liability can be difficult to predict, as the number of award seats available to members is not currently restricted and they could choose to redeem their points at any time that a seat is available. The performance obligations classified as a current liability related to the Company’s loyalty program were estimated based on expected redemptions utilizing historical redemption patterns, and forecasted flight availability, fares, and coefficients. The entire balance classified as Air traffic liability – noncurrent relates to loyalty points that were estimated to be redeemed in periods beyond 12 months following the representative balance sheet date. The Company expects the majority of loyalty points to be redeemed within two years. The Company is also required to collect certain taxes and fees from Customers on behalf of government agencies and remit these back to the applicable governmental entity on a periodic basis. These taxes and fees include foreign and U.S. federal transportation taxes, federal security charges, and airport passenger facility charges. These items are collected from Customers at the time they purchase their tickets, are excluded from the contract transaction price, and are therefore not included in Passenger revenue. The Company records a liability upon collection from the Customer and relieves the liability when payments are remitted to the applicable governmental agency. All performance obligations related to freight services sold are completed within twelve months or less; therefore, the Company has elected the provision within ASC 606 to not disclose the amount of the remaining transaction price and its expected timing of recognition for freight shipments. Other revenues primarily consist of marketing royalties associated with the Company’s co-branded Chase ® Visa credit card, but also include commissions and advertising associated with Southwest.com ® . All amounts classified as Other revenues are paid monthly, coinciding with the Company fulfilling its deliverables; therefore, the Company has elected the provision within ASC 606 to not disclose the amount of the remaining transaction price and its expected timing of recognition for such services provided. In order to determine the value of each loyalty point, certain assumptions must be made at the time of measurement, which include the following: • Allocation of Passenger Revenue - Revenues from Passengers, related to travel, who also earn Rapid Rewards Points have been allocated between flight (recognized as revenue when transportation is provided) and Rapid Rewards Points (deferred until points are redeemed or spoil) based on each obligation’s relative standalone selling price. The Company utilizes historical earning patterns to assist in this allocation. • Fair Value of Rapid Rewards Points - Determined from the base fare value of tickets which were purchased using prior point redemptions for travel and other products and services, which the Company believes to be indicative of the fair value of points as perceived by Customers and representative of the value of each point at the time of redemption. The Company’s booking site allows a Customer to toggle between fares utilizing either cash or point redemptions, which provides the Customer with an approximation of the equivalent value of their points. The value can differ, however, based on demand, the amount of time prior to the flight, and other factors. The fare mix during the period measured represents a constraint, which could result in the assumptions above changing at the measurement date, as fare classes can have different coefficients used to determine the total loyalty points needed to purchase an award ticket. The mixture of these fare classes and changes in the coefficients used by the Company could cause the fair value per point to increase or decrease. For points that are expected to expire unused, the Company recognizes spoilage in proportion to the pattern of points used by the Customer, which approximates the average period over which the population of Rapid Reward Members redeem their points. The Company utilizes historical behavioral data to develop a predictive statistical model to analyze the amount of spoilage expected for points sold to business partners and earned through flight. The Company continues to evaluate expected spoilage annually and applies appropriate adjustments in the fourth quarter of each year, or other times, if changes in Customer behavior are detected. Changes to spoilage estimates impact revenue recognition prospectively. In most historical periods, the impact of changes in the estimated spoilage rate has not resulted in material changes to revenue recognition. However, due to the size of the Company’s liability for loyalty benefits as a result of the elimination of the incremental cost method of accounting for flight points, changes in Customer behavior and/or expected future redemption patterns could result in more significant variations in Passenger revenue under the New Revenue Standard. These analyses have not resulted in material adjustments in 2018 , 2017 , or 2016 . |
Loyalty program | Loyalty Program The Company records a liability for the relative fair value of providing free travel under its loyalty program for all points earned from flight activity or sold to companies participating in the Company’s Rapid Rewards loyalty program as business partners that are expected to be redeemed for future travel. The loyalty liability represents performance obligations that will be satisfied when a Rapid Rewards loyalty member redeems points for travel or other goods and services, or upon spoilage of the points. Points earned from flight activity are valued at their relative standalone selling price by applying fair value based on historical redemption patterns. Points earned from business partner activity, which primarily consist of points sold, along with related services, to companies participating in the Rapid Rewards loyalty program, are valued using a relative fair value methodology based on the contractual rate which partners pay to Southwest to award Rapid Rewards points to the business partner’s customers. For points that are expected to expire unused, the Company recognizes spoilage in proportion to the pattern of points used by the Customer, which approximates the average period over which the population of Rapid Reward Members redeem their points. The Company records passenger revenue related to air transportation when the transportation is delivered. The marketing elements are recognized as Other - net revenue when earned. See Note 5 for further information. |
Advertising | Advertising Advertising costs are charged to expense as incurred. Advertising and promotions expense for the years ended December 31, 2018 , 2017 , and 2016 was $215 million , $224 million , and $232 million , respectively, and is included as a component of Other operating expense in the accompanying Consolidated Statement of Income. |
Share-based Employee compensation | Share-based Employee Compensation The Company has share-based compensation plans covering certain Employees, including a plan that also covers the Company’s Board of Directors. The Company accounts for share-based compensation based on its grant date fair value. See Note 9 for further information. Outstanding RSUs vest over three years , subject generally to the individual’s continued employment or service. The PBRSUs granted in January 2016 and February 2017 are subject to the Company’s performance with respect to a three-year simple average of Return on Invested Capital, before taxes and excluding special items, for the defined performance period and the individual’s continued employment or service. The PBRSUs granted in January 2018 are subject to the Company’s performance with respect to a three-year simple average of Return on Invested Capital, after taxes and excluding special items, for the defined performance period and the individual’s continued employment or service. The number of PBRSUs vesting on the vesting date will be interpolated based on the Company's Return on Invested Capital performance and ranges from zero PBRSUs to 200 percent of granted PBRSUs. Grants of RSUs result in the creation of a deferred tax asset, which is a temporary difference, until the time the RSU vests. All excess tax benefits and tax deficiencies are recorded through the income statement. Due to the treatment of RSUs for tax purposes, the Company’s effective tax rate from year to year is subject to variability. The Company accounts for share-based compensation utilizing fair value, which is determined on the date of grant for all instruments. |
Fair Value of Financial Instruments | Financial Derivative Instruments The Company accounts for financial derivative instruments at fair value and applies hedge accounting rules where appropriate. The Company utilizes various derivative instruments, including jet fuel, crude oil, unleaded gasoline, and heating oil-based derivatives, to attempt to reduce the risk of its exposure to jet fuel price increases. These instruments are accounted for as cash flow hedges upon proper qualification. The Company also has interest rate swap agreements to convert a portion of its fixed-rate debt to floating rates and has swap agreements that convert certain floating-rate debt to a fixed-rate. The majority of these interest rate hedges are appropriately designated as either fair value hedges or as cash flow hedges. Since the majority of the Company’s financial derivative instruments are not traded on a market exchange, the Company estimates their fair values. Depending on the type of instrument, the values are determined by the use of present value methods or option value models with assumptions about commodity prices based on those observed in underlying markets. The Company adopted the New Hedging Standard as of January 1, 2018. See Note 2 for further information on this adoption. All cash flows associated with purchasing and selling derivatives are classified as operating cash flows in the Consolidated Statement of Cash Flows, within Changes in certain assets and liabilities. The Company classifies its cash collateral provided to or held from counterparties in a "net" presentation on the Consolidated Balance Sheet against the fair value of the derivative positions with those counterparties. See Note 10 for further information. 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 result in a higher (lower) fair value measurement, respectively, for the Company’s derivative option contracts. 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 December 31, 2018 , 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 (primarily treasury bills and certificates of deposit), interest rate derivative contracts, fuel derivative contracts, and available-for-sale securities. The majority of the Company’s 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. Other available-for-sale securities primarily consist of investments associated with the Company’s excess benefit plan. The Company’s fuel and interest rate 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 consist solely of swap agreements. See Note 10 for further information on the Company’s derivative instruments and hedging activities. The fair values of swap contracts 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 swap contracts as Level 2. The Company’s Treasury Department, which reports to the Chief Financial Officer, 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 the same 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. |
Software capitalization | Software Capitalization The Company capitalizes certain internal and external costs related to the acquisition and development of internal use software during the application development stages of projects. The Company amortizes these costs using the straight-line method over the estimated useful life of the software, which is typically five to fifteen years. Costs incurred during the preliminary project or the post-implementation/operation stages of the project are expensed as incurred. Capitalized computer software, included as a component of Ground property and equipment in the accompanying Consolidated Balance Sheet, net of accumulated depreciation, was $674 million and $654 million at December 31, 2018 , and 2017 , respectively. Computer software depreciation expense was $155 million , $168 million , and $111 million for the years ended December 31, 2018 , 2017 , and 2016 , respectively, and is included as a component of Depreciation and amortization expense in the accompanying Consolidated Statement of Income. The Company evaluates internal use software for impairment on a quarterly basis; if it is determined the value of an asset was not recoverable or it qualifies for impairment, a charge will be recorded to write down the software to the lower of its carrying value or fair value. The Company had no significant impairments during 2018 , 2017 , or 2016 . |
Income taxes | Income Taxes The Company accounts for deferred income taxes utilizing an asset and liability method, whereby deferred tax assets and liabilities are recognized based on the tax effect of temporary differences between the financial statements and the tax basis of assets and liabilities, as measured by current enacted tax rates. The Company also evaluates the need for a valuation allowance to reduce deferred tax assets to estimated recoverable amounts. The Company’s policy for recording interest and penalties associated with uncertain tax positions is to record such items as a component of income before income taxes. Penalties are recorded in Other (gains) losses, net, and interest paid or received is recorded in Interest expense or Interest income, respectively, in the accompanying Consolidated Statement of Income. There were no material amounts recorded for penalties and interest related to uncertain tax positions for all years presented. |
Concentration risk | Concentration Risk Approximately 83 percent of the Company’s full-time equivalent Employees are unionized and are covered by collective-bargaining agreements. A percentage of the Company's unionized Employees, including its Flight Attendants, Customer Service Agents, Mechanics, Flight Simulator Technicians, and Material Specialists, are in discussions on labor agreements. Those unionized Employee groups in discussions represent approximately 43 percent of the Company’s full-time equivalent Employees as of December 31, 2018 . The Company attempts to minimize its concentration risk with regards to its cash, cash equivalents, and its investment portfolio. This is accomplished by diversifying and limiting amounts among different counterparties, the type of investment, and the amount invested in any individual security or money market fund. To manage risk associated with financial derivative instruments held, the Company selects and will periodically review counterparties based on credit ratings, limits its exposure to a single counterparty, and monitors the market position of the program and its relative market position with each counterparty. The Company also has agreements with counterparties containing early termination rights and/or bilateral collateral provisions whereby security is required if market risk exposure exceeds a specified threshold amount or credit ratings fall below certain levels. Collateral deposits provided to or held from counterparties serve to decrease, but not totally eliminate, the credit risk associated with the Company’s hedging program. See Note 10 for further information. As of December 31, 2018 , the Company operated an all-Boeing fleet, all of which are variations of the Boeing 737. If the Company were unable to acquire additional aircraft or associated aircraft parts from Boeing, or Boeing were unable or unwilling to make timely deliveries of aircraft or associated parts, or to provide adequate support for its products, the Company’s operations would be materially adversely impacted. In addition, the Company would be materially adversely impacted in the event of a mechanical or regulatory issue associated with the Boeing 737 aircraft type, whether as a result of downtime for part or all of the Company’s fleet, increased maintenance costs, or because of a negative perception by the flying public. The Company is also dependent on sole or limited suppliers for aircraft engines and certain other aircraft parts and services and would, therefore, also be materially adversely impacted in the event of the unavailability of, inadequate support for, or a mechanical or regulatory issue associated with, engines and other parts. The Company has historically entered into agreements with some of its co-brand, payment, and loyalty partners that contain exclusivity aspects which place certain confidential restrictions on the Company from entering into certain arrangements with other payment and loyalty partners. These arrangements generally extend for the terms of the agreements, which typically are for five to seven years, but none of which are more than 10 years in length. Some of these agreements automatically renew on an annual basis, unless either party objects to such extension. The Company believes the financial benefits generated by the exclusivity aspects of these arrangements outweigh the risks involved with such agreements. |
Derivatives | All of the Company's fuel derivative instruments and interest rate swaps are subject to agreements that follow the netting guidance in the applicable accounting standards for derivatives and hedging. The types of derivative instruments the Company has determined are subject to netting requirements in the accompanying Consolidated Balance Sheet are those in which the Company pays or receives cash for transactions with the same counterparty and in the same currency via one net payment or receipt. For cash collateral held by the Company or provided to counterparties, the Company nets such amounts against the fair value of the Company's derivative portfolio by each counterparty. The Company has elected to utilize netting for both its fuel derivative instruments and interest rate swap agreements and also classifies such amounts as either current or noncurrent, based on the net fair value position with each of the Company's counterparties in the Consolidated Balance Sheet. The Company's application of its netting policy associated with cash collateral differs depending on whether its derivative instruments are in a net asset position or a net liability position. If its fuel derivative instruments are in a net asset position with a counterparty, cash collateral amounts held are first netted against current outstanding derivative asset amounts associated with that counterparty until that balance is zero, and then any remainder is applied against the fair value of noncurrent outstanding derivative instruments. If the Company's fuel derivative instruments are in a net liability position with the counterparty, cash collateral amounts provided are first netted against noncurrent outstanding derivative amounts associated with that counterparty until that balance is zero, and then any remainder is applied against the fair value of current outstanding derivative instruments Upon proper qualification, the Company accounts for its fuel derivative instruments as cash flow hedges. The Company adopted the New Hedging Standard as of January 1, 2018. See Note 2 for further information on this adoption. Under the New Hedging Standard, all periodic changes in fair value of the derivatives designated as hedges are recorded in AOCI until the underlying jet fuel is consumed. See Note 12 . Prior to the adoption of the New Hedging Standard, ineffectiveness resulted when the change in the fair value of the derivative instrument exceeded the change in the value of the Company’s expected future cash outlay to purchase and consume jet fuel. Prior to 2018, those expected future cash outlays represented forecasted forward jet fuel prices, which were estimated through utilization of a statistical–based regression equation with data from market forward prices of like commodities. This equation was then adjusted for certain items, such as transportation costs, that are stated in the Company’s fuel purchasing contracts with its vendors. To the extent that the periodic changes in the fair value of the derivatives were ineffective, the ineffective portion was recorded to Other (gains) losses, net, in the Consolidated Statement of Income in the period of the change. The Company's results are subject to the possibility that the derivatives will no longer qualify for hedge accounting, in which case any change in the fair value of derivative instruments since the last reporting period would be recorded in Other (gains) losses, net, in the Consolidated Statement of Income in the period of the change; however, any amounts previously recorded to AOCI would remain there until such time as the original forecasted transaction occurs, at which time these amounts would be reclassified to Fuel and oil expense. Factors that have and may continue to lead to the loss of hedge accounting include: significant fluctuation in energy prices, significant weather events affecting refinery capacity and the production of refined products, and the volatility of the different types of products the Company uses in hedging. Increased volatility in these commodity markets for an extended period of time, especially if such volatility were to worsen, could cause the Company to lose hedge accounting altogether for the commodities used in its fuel hedging program, which would create further volatility in the Company’s GAAP financial results. However, even though derivatives may not qualify for hedge accounting, the Company continues to hold the instruments as management believes derivative instruments continue to afford the Company the opportunity to stabilize jet fuel costs. When the Company has sold derivative positions in order to effectively "close" or offset a derivative already held as part of its fuel derivative instrument portfolio, any subsequent changes in fair value of those positions are marked to market through earnings. Likewise, any changes in fair value of those positions that were offset by entering into the sold positions and were de-designated as hedges are concurrently marked to market through earnings. However, any changes in value related to hedges that were deferred as part of AOCI while designated as a hedge would remain until the originally forecasted transaction occurs. In a situation where it becomes probable that a fuel hedged forecasted transaction will not occur, any gains and/or losses that have been recorded to AOCI would be required to be immediately reclassified into earnings. The Company did not have any such situations occur during 2018 , 2017 , or 2016 . The Company is party to certain interest rate swap agreements that are accounted for as either fair value hedges or cash flow hedges, as defined in the applicable accounting guidance for derivative instruments and hedging. The New Hedging Standard also addresses targeted improvements to special hedge accounting for interest rate hedges. Though the Company did not make any changes to the accounting for its current interest rate hedges as of the January 2018 adoption date, the New Hedging Standard provides the Company with more opportunities to achieve special hedge accounting for potential interest rate hedges in the future. Several of the Company's interest rate swap agreements qualify for the "shortcut" method of accounting for hedges, which dictates that the hedges are assumed to be perfectly effective, and, thus, there is no ineffectiveness to be recorded in earnings. For the Company’s interest rate swap agreements that do not qualify for the "shortcut" method of accounting, ineffectiveness is required to be measured at each reporting period Accounting pronouncements pertaining to derivative instruments and hedging are complex with stringent requirements, including the documentation of a Company hedging strategy, statistical analysis to qualify a commodity for hedge accounting both on a historical and a prospective basis, and strict contemporaneous documentation that is required at the time each hedge is designated by the Company. This statistical analysis involves utilizing regression analyses that compare changes in the price of jet fuel to changes in the prices of the commodities used for hedging purposes |
Compensation Related Costs | Grants of RSUs result in the creation of a deferred tax asset, which is a temporary difference, until the time the RSU vests. All excess tax benefits and tax deficiencies are recorded through the income statement. Due to the treatment of RSUs for tax purposes, the Company’s effective tax rate from year to year is subject to variability. |
Employee Retirement Plans | Unrecognized prior service cost is expensed using a straight-line amortization of the cost over the average future service of Employees expected to receive benefits under the plans. Actuarial gains are amortized utilizing the minimum amortization method. The following actuarial assumptions were used to account for the Company’s postretirement benefit plans at December 31, 2018 , 2017 , and 2016 : 2018 2017 2016 Weighted-average discount rate 4.35 % 3.65 % 4.25 % Assumed healthcare cost trend rate (a) 7.13 % 7.08 % 7.08 % (a) The assumed healthcare cost trend rate is assumed to be 7.13% for 2019 , then decline gradually to 5.19% by 2027 and remain level thereafter. The selection of a discount rate is made annually and is selected by the Company based upon comparison of the expected future cash flows associated with the Company’s future payments under its consolidated postretirement obligations to a yield curve created using high quality bonds that closely match those expected future cash flows. This rate increased during 2018 due to market conditions. The assumed healthcare trend rate is also reviewed at least annually and is determined based upon both historical experience with the Company’s healthcare benefits paid and expectations of how those trends may or may not change in future years. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Finite Lived Intangible Assets | The following table is a summary of the Company’s intangible assets, which are included as a component of Other assets in the Company's Consolidated Balance Sheet, as of December 31, 2018 and 2017 : Year ended December 31, 2018 Year ended December 31, 2017 (in millions) Weighted-average useful life (in years) Gross carrying amount Accumulated amortization Gross carrying amount Accumulated Amortization Customer relationships/marketing agreements 10 $ 27 $ 25 $ 27 $ 23 Owned domestic slots (a) Indefinite 295 n/a 295 n/a Gate leasehold rights (a) 15 180 78 180 66 Total 14 $ 502 $ 103 $ 502 $ 89 (a) Intangible assets primarily consist of acquired leasehold rights to certain airport owned gates, takeoff and landing slots (a "slot" is the right of an air carrier, pursuant to regulations of the FAA, to operate a takeoff or landing at a specific time at certain airports) at certain domestic slot-controlled airports, and certain intangible assets acquired. |
Schedule of Change in Accounting Estimate | The impacts on expense and earnings from the accelerated depreciation were as follows: (in millions, except per share amounts) Year ended December 31, 2017 Year ended December 31, 2016 Depreciation and amortization expense $ 21 $ 123 Net income * $ (19 ) $ (66 ) Net income per basic share $ (0.03 ) $ (0.11 ) Net income per diluted share $ (0.03 ) $ (0.10 ) * net of profitsharing benefit and income taxes |
New Accounting Pronouncements (
New Accounting Pronouncements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following table provides the impact of applying the New Revenue Standard to the Company’s previously reported balances as of December 31, 2017: Balance as of December 31, 2017 (in millions) As Reported New Revenue Standard As Recast Accrued liabilities $ 1,777 $ (77 ) $ 1,700 Air traffic liability 3,460 35 3,495 Air traffic liability - noncurrent — 1,070 1,070 Deferred income taxes 2,358 (239 ) 2,119 Retained earnings 14,621 (789 ) 13,832 The impacts of applying the New Revenue Standard, the New Retirement Standard, and the New Hedging Standard to the Company’s Consolidated Statement of Income for the years ended December 31, 2017 and 2016 , are as follows (amounts may not recalculate due to rounding): Year ended December 31, 2017 (in millions), except per share amounts As Reported New Revenue Standard New Retirement Standard New Hedging Standard As Recast Passenger revenue $ 19,141 $ 622 $ — $ — $ 19,763 Other revenue 1,857 (647 ) — — 1,210 Salaries, wages, and benefits 7,319 — (14 ) — 7,305 Fuel and oil expense 3,940 — — 136 4,076 Other operating expenses 2,886 (39 ) — — 2,847 Other (gains) losses, net 234 — 14 (136 ) 112 Provision for income taxes (237 ) 145 — — (92 ) Net income 3,488 (131 ) — — 3,357 Net income per share, basic 5.80 (0.22 ) — — 5.58 Net income per share, diluted 5.79 (0.22 ) — — 5.57 Year ended December 31, 2016 (in millions), except per share amounts As Reported New Revenue Standard New Retirement Standard New Hedging Standard As Recast Passenger revenue $ 18,594 $ 474 $ — $ — $ 19,068 Other revenue 1,660 (610 ) — — 1,050 Salaries, wages, and benefits 6,798 — (12 ) — 6,786 Fuel and oil expense 3,647 — — 154 3,801 Other operating expenses 2,743 (40 ) — — 2,703 Other (gains) losses, net 162 — 12 (154 ) 21 Provision for income taxes 1,303 (36 ) — — 1,267 Net income 2,244 (60 ) — — 2,183 Net income per share, basic 3.58 (0.10 ) — — 3.48 Net income per share, diluted 3.55 (0.10 ) — — 3.45 The impacts of applying the New Revenue Standard to the Company’s Consolidated Statement of Cash Flows for the years ended December 31, 2017 and 2016 , are as follows (amounts may not recalculate due to rounding): Year ended December 31, 2017 (in millions) As Reported New Revenue Standard As Recast Net income $ 3,488 $ (131 ) $ 3,357 Deferred income taxes (1,212 ) 145 (1,066 ) Changes in certain assets and liabilities 227 (14 ) 212 Net cash provided by operating activities 3,929 — 3,929 Year ended December 31, 2016 (in millions) As Reported New Revenue Standard As Recast Net income $ 2,244 $ (60 ) $ 2,183 Deferred income taxes 455 (36 ) 419 Changes in certain assets and liabilities 182 96 279 Net cash provided by operating activities 4,293 — 4,293 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule Of Earnings Per Share Basic And Diluted | The following table sets forth the computation of basic and diluted net income per share (in millions except per share amounts): Year ended December 31, 2018 2017 2016 As Recast As Recast NUMERATOR: Net income $ 2,465 $ 3,357 $ 2,183 Incremental income effect of interest on 5.25% convertible notes — — 2 Net income after assumed conversion $ 2,465 $ 3,357 $ 2,185 DENOMINATOR: Weighted-average shares outstanding, basic 573 601 627 Dilutive effect of Employee stock options and restricted stock units 1 2 1 Dilutive effect of 5.25% convertible notes — — 5 Adjusted weighted-average shares outstanding, diluted 574 603 633 NET INCOME PER SHARE: Basic $ 4.30 $ 5.58 $ 3.48 Diluted $ 4.29 $ 5.57 $ 3.45 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Other Commitments | Construction costs recorded in ACFO for the Company's various projects as of December 31, 2018 , and December 31, 2017 , were as follows: December 31, 2018 December 31, 2017 (in millions) ACFO ACFO, Net (a) Construction Obligation (b) ACFO ACFO, Net (a) Construction Obligation (b) FLL Terminal $ 313 $ 304 $ 308 $ 258 $ 256 $ 258 LAX Terminal 1 485 459 476 433 417 433 LAX Terminal 1.5 (c) 99 99 99 31 31 31 LFMP - Terminal 545 460 502 543 474 516 LFMP - Parking Garage 200 200 200 152 152 152 HOU International Terminal (d) 126 115 116 126 118 — $ 1,768 $ 1,637 $ 1,701 $ 1,543 $ 1,448 $ 1,390 (a) Net of accumulated depreciation. (b) Construction obligation will be reduced through future facility rent payments. These future payments are not fixed per the lease agreement, but are variable and fluctuate based on various market and other factors outside the control of the Company. (c) Project still in progress. (d) Project completed in 2015 at Houston William P. Hobby Airport ("HOU"). |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Passenger Revenue | The following table provides the components of Passenger revenue recognized for the years ended December 31, 2018 , 2017 , and 2016 : Year ended December 31, (in millions) 2018 2017 2016 As Recast As Recast Passenger non-loyalty $ 17,506 $ 16,934 $ 16,534 Passenger loyalty - air transportation 2,307 2,263 1,997 Passenger ancillary sold separately 642 566 537 Total passenger revenues $ 20,455 $ 19,763 $ 19,068 |
Components of Air Traffic Liability | As of the years ended December 31, 2018 and 2017 , the components of Air traffic liability, including contract liabilities based on tickets sold, unused funds available to the Customer, and loyalty points available for redemption, net of expected spoilage, within the Consolidated Balance Sheet were as follows: Balance as of (in millions) December 31, 2018 December 31, 2017 Air traffic liability - passenger travel and ancillary passenger services $ 2,059 $ 1,898 Air traffic liability - loyalty program 3,011 2,667 Total Air traffic liability $ 5,070 $ 4,565 A rollforward of the Company's Air traffic liability - loyalty program for the years ended December 31, 2018 and 2017 is as follows (in millions): Year ended December 31, 2018 2017 Air traffic liability - loyalty program - beginning balance $ 2,667 $ 2,485 Amounts deferred associated with points awarded 2,717 2,485 Revenue recognized from points redeemed - Passenger (2,307 ) (2,263 ) Revenue recognized from points redeemed - Other (66 ) (40 ) Air traffic liability - loyalty program - ending balance $ 3,011 $ 2,667 |
Rollforward of Air Traffic Liability | Air traffic liability includes consideration received for ticket and loyalty related performance obligations which have not been satisfied as of a given date. A rollforward of the amounts included in Air traffic liability as of December 31, 2018 and 2017 are as follows (in millions): Air traffic liability Balance at December 31, 2017 $ 4,565 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 21,026 Revenue from amounts included in contract liability opening balances (3,479 ) Revenue from current period sales (17,042 ) Balance at December 31, 2018 $ 5,070 Air traffic liability Balance at December 31, 2016 $ 4,221 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 20,146 Revenue from amounts included in contract liability opening balances (3,099 ) Revenue from current period sales (16,703 ) Balance at December 31, 2017 $ 4,565 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | (in millions) December 31, 2018 December 31, 2017 French Credit Agreements due June 2018 - 2.54% $ — $ 1 Fixed-rate 737 Aircraft Notes payable through January 2018 - 7.03% — 3 2.75% Notes due November 2019 300 300 Term Loan Agreement payable through May 2019 - 6.315% 23 66 Term Loan Agreement payable through July 2019 - 4.84% 10 19 2.65% Notes due 2020 492 491 Term Loan Agreement payable through 2020 - 5.223% 187 237 737 Aircraft Notes payable through 2020 67 155 2.75% Notes due 2022 300 300 Pass Through Certificates due 2022 - 6.24% 250 294 Term Loan Agreement payable through 2026 - 3.88% 197 215 3.00% Notes due 2026 300 300 3.45% Notes due 2027 300 300 7.375% Debentures due 2027 125 127 Capital leases 845 885 $ 3,396 $ 3,693 Less current maturities 606 348 Less debt discount and issuance costs 19 25 $ 2,771 $ 3,320 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Capital Leases Aircraft Included In Property And Equipment | Amounts applicable to these aircraft on capital lease that are included in property and equipment were: (in millions) 2018 2017 Flight equipment $ 1,329 $ 1,207 Less: accumulated amortization 304 172 $ 1,025 $ 1,035 |
Future Minimum Lease Payments Under Capital Leases And Noncancelable Operating Leases | Future minimum lease payments under capital leases and noncancelable operating leases and rentals to be received under subleases with initial or remaining terms in excess of one year at December 31, 2018 , were: (in millions) Capital leases Operating leases Subleases Operating leases, net 2019 $ 111 $ 348 $ (92 ) $ 256 2020 109 357 (78 ) 279 2021 105 244 (41 ) 203 2022 100 172 (17 ) 155 2023 97 146 (7 ) 139 Thereafter 335 474 (1 ) 473 Total minimum lease payments $ 857 $ 1,741 $ (236 ) $ 1,505 Less amount representing interest 126 Present value of minimum lease payments (a) 731 Less current portion 85 Long-term portion $ 646 (a) Excludes lease incentive obligation of $114 million . |
Stock Plans (Tables)
Stock Plans (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Compensation, Employee Stock Purchase Plan, Activity | The following table provides information about the Company’s ESPP activity during 2018 , 2017 , and 2016 : Employee Stock Purchase Plan (a) Total number Weighted-average of shares Average fair value of each purchased price paid purchase right Period (in thousands) per share under the ESPP As of December 31, 2016 622 $ 36.57 $ 4.06 As of December 31, 2017 544 $ 50.13 $ 5.57 As of December 31, 2018 661 $ 50.73 $ 5.64 (a) The weighted-average fair value of each purchase right under the ESPP granted is equal to ten percent discount from the market value of the Common Stock at the end of each monthly purchase period. |
Schedule of Share-based Compensation, Restricted Stock Units Award Activity | Aggregated information regarding the Company’s RSUs and PBRSUs is summarized below: All Restricted Stock Units Units (000) Wtd. Average Fair Value (per share) Outstanding December 31, 2015 1,485 $ 30.17 Granted 675 (a) 37.29 Vested (665 ) 23.29 Surrendered (56 ) 36.29 Outstanding December 31, 2016 1,439 36.52 Granted 717 (b) 52.73 Vested (806 ) 30.23 Surrendered (56 ) 43.86 Outstanding December 31, 2017, Unvested 1,294 45.32 Granted 782 (c) 60.80 Vested (670 ) 45.11 Surrendered (64 ) 47.05 Outstanding December 31, 2018, Unvested 1,342 52.56 (a) Includes 247 thousand PBRSUs (b) Includes 235 thousand PBRSUs (c) Includes 308 thousand PBRSUs |
Financial Derivative Instrume_2
Financial Derivative Instruments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Volume of Fuel Hedging | The following table provides information about the Company’s volume of fuel hedging on an economic basis considering current market prices: Maximum fuel hedged as of December 31, 2018 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) December 31, 2018 2019 1,519 WTI crude and Brent crude oil 2020 1,207 WTI crude and Brent crude oil 2021 466 WTI crude and Brent crude oil 2022 88 WTI crude oil (a) Due to the types of derivatives utilized by the Company and different price levels of those contracts, these volumes represent the maximum economic hedge in place and may vary significantly as market prices fluctuate. |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table presents the location of all assets and liabilities associated with the Company’s derivative instruments within the Consolidated Balance Sheet: Asset derivatives Liability derivatives Balance Sheet Fair value at Fair value at Fair value at Fair value at (in millions) location 12/31/2018 12/31/2017 12/31/2018 12/31/2017 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 43 $ 112 $ — $ — Fuel derivative contracts (gross) Other assets 95 136 — — Interest rate derivative contracts Accrued liabilities — — 2 — Interest rate derivative contracts Other noncurrent liabilities — — 12 20 Total derivatives designated as hedges $ 138 $ 248 $ 14 $ 20 Derivatives not designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ — $ 35 $ — $ 35 Interest rate derivative contracts Accrued liabilities — — — 1 Interest rate derivative contracts Other noncurrent liabilities — — — 1 Total derivatives not designated as hedges $ — $ 35 $ — $ 37 Total derivatives $ 138 $ 283 $ 14 $ 57 (a) Represents the position of each trade before consideration of offsetting positions with each counterparty and does not include the impact of cash collateral deposits provided to or received from counterparties. See discussion of credit risk and collateral following in this Note. |
Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location [Table Text Block] | The following table presents the amounts recorded on the Consolidated Balance Sheet related to fair value hedges: Balance Sheet location of hedged item Carrying amount of the hedged liabilities Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities (a) December 31, December 31, (in millions) 2018 2017 2018 2017 Long-term debt less current maturities $ 791 $ 791 $ 11 $ 12 (a) At December 31, 2018 and 2017 , these amounts include the cumulative amount of fair value hedging adjustments remaining for which hedge accounting has been discontinued of $ 20 million and $ 21 million, respectively. |
Cash Collateral Deposits Due To Or From Third Parties and Net Unrealized Losses | In addition, the Company also had the following amounts associated with fuel derivative instruments and hedging activities in its Consolidated Balance Sheet: Balance Sheet December 31, December 31, (in millions) location 2018 2017 Cash collateral deposits held from counterparties for fuel contracts - current Offset against Prepaid expenses and other current assets $ — $ 15 Due to third parties for fuel contracts Accounts payable — 29 Receivable from third parties for fuel contracts Accounts and other receivables 2 — |
Offsetting Assets | The Company has the following recognized financial assets and financial liabilities resulting from those transactions that meet the scope of the disclosure requirements as necessitated by applicable accounting guidance for balance sheet offsetting: Offsetting of derivative assets (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) December 31, 2018 December 31, 2017 Description Balance Sheet location Gross amounts of recognized assets Gross amounts offset in the Balance Sheet Net amounts of assets presented in the Balance Sheet Gross amounts of recognized assets Gross amounts offset in the Balance Sheet Net amounts of assets presented in the Balance Sheet Fuel derivative contracts Prepaid expenses and other current assets $ 43 $ — $ 43 $ 147 $ (50 ) $ 97 Fuel derivative contracts Other assets $ 95 $ — $ 95 (a) $ 136 $ — $ 136 (a) (a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the Consolidated Balance Sheet in Note 15 . |
Offsetting Liabilities | Offsetting of derivative liabilities (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) December 31, 2018 December 31, 2017 Description Balance Sheet location Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet Gross amounts of recognized liabilities Gross amounts offset in the Balance Sheet Net amounts of liabilities presented in the Balance Sheet Fuel derivative contracts Prepaid expenses and other current assets $ — $ — $ — $ 50 $ (50 ) $ — Interest rate derivative contracts Accrued liabilities $ 2 $ — $ 2 $ 1 $ — $ 1 Interest rate derivative contracts Other noncurrent liabilities $ 12 $ — $ 12 (a) $ 21 $ — $ 21 (a) (a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the Consolidated Balance Sheet in Note 15 . |
Derivatives in Cash Flow Hedging Relationships | The following tables present the impact of derivative instruments and their location within the Consolidated Statement of Income for the year ended December 31, 2018 and 2017: Location and amount of (gain) loss recognized in income on cash flow and fair value hedging relationships Year ended December 31, 2018 Year ended December 31, 2017 (in millions) Fuel and oil Interest expense Fuel and oil Interest expense Total $ (33 ) $ 37 $ 552 $ 33 (Gain) loss on cash flow hedging relationships: Commodity contracts: Amount of (gain) loss reclassified from AOCI into income (33 ) — 552 — Interest contracts: Amount of loss reclassified from AOCI into income — 6 — 11 Impact of fair value hedging relationships: Interest contracts: Hedged items — 23 — 23 Derivatives designated as hedging instruments — 8 — (1 ) Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives (Gain) loss recognized in income on derivatives (ineffective portion)(a) Year ended Year ended December 31, December 31, (in millions) 2018 2017 2018 2017 Fuel derivative contracts $ 1 * $ 32 * $ — $ 31 Interest rate derivatives (1 ) * — * — 1 Total $ — $ 32 $ — $ 32 *Net of tax (a) Amounts are included in Other (gains) losses, net. |
Derivatives Not in Cash Flow Hedging Relationships | Derivatives not designated as hedges (Gain) loss recognized in income on derivatives Year ended Location of (gain) loss December 31, recognized in income (in millions) 2018 2017 on derivatives Fuel derivative contracts $ — $ 75 Other (gains) losses, net Interest rate derivatives (2 ) (4 ) Interest Expense Total $ (2 ) $ 71 |
Fair Values of Fuel Derivatives, Amounts Posted as Collateral, and Collateral Posting Threshold Amounts | The following table provides the fair values of fuel derivatives, amounts posted as collateral, and applicable collateral posting threshold amounts as of December 31, 2018 , at which such postings are triggered: Counterparty (CP) (in millions) A B C D E F Other (a) Total Fair value of fuel derivatives $ 38 $ 23 $ 43 $ 12 $ 5 $ 10 $ 7 $ 138 Cash collateral held from CP — — — — — — — — Aircraft collateral pledged to CP — — — — — — — — Letters of credit (LC) — — — — — — — — Option to substitute LC for aircraft (200) to (600)(b) N/A (150) to (550)(c) (150) to (550)(c) N/A N/A Option to substitute LC for cash N/A N/A (75) to (150) or >(550)(c) (125) to (150) or >(550)(d) (d) N/A If credit rating is investment grade, fair value of fuel derivative level at which: Cash is provided to CP (50) to (200) or >(600) >(50) (75) to (150) or >(550)(e) (125) to (150) or >(550)(e) >(125) >(70)(e) Cash is received from CP >50(e) >150(e) >250(e) >125(e) >100(e) >70(e) Aircraft or cash can be pledged to CP as collateral (200) to (600)(f) N/A (150) to (550)(c) (150) to (550)(c) N/A N/A If credit rating is non-investment grade, fair value of fuel derivative level at which: Cash is provided to CP (0) to (200) or >(600) (g) (0) to (150) or >(550) (0) to (150) or >(550) (g) (g) Cash is received from CP (g) (g) (g) (g) (g) (g) Aircraft or cash can be pledged to CP as collateral (200) to (600) N/A (150) to (550) (150) to (550) N/A N/A (a) Individual counterparties with fair value of fuel derivatives < $5 million . (b) The Company has the option of providing letters of credit in addition to aircraft collateral if the appraised value of the aircraft does not meet the collateral requirements. (c) The Company has the option of providing cash, letters of credit, or pledging aircraft as collateral. (d) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (e) Thresholds may vary based on changes in credit ratings within investment grade. (f) The Company has the option of providing cash or pledging aircraft as collateral. (g) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2018 , and December 31, 2017 : Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description December 31, 2018 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 1,392 $ 1,392 $ — $ — Commercial paper 454 — 454 — Certificates of deposit 8 — 8 — Short-term investments: Treasury bills 1,582 1,582 — — Certificates of deposit 228 — 228 — Time deposits 25 — 25 — Fuel derivatives: Option contracts (b) 138 — — 138 Other available-for-sale securities 127 127 — — Total assets $ 3,954 $ 3,101 $ 715 $ 138 Liabilities Interest rate derivatives (see Note 10) (14 ) — (14 ) — (a) Cash equivalents are primarily composed of money market investments. (b) In the Consolidated Balance Sheet amounts are presented as an asset. See Note 10 . Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description December 31, 2017 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 1,133 $ 1,133 $ — $ — Commercial paper 350 — 350 — Certificates of deposit 12 — 12 — Short-term investments: Treasury bills 1,491 1,491 — — Certificates of deposit 287 — 287 — Fuel derivatives: Option contracts (b) 283 — — 283 Other available-for-sale securities 107 107 — — Total assets $ 3,663 $ 2,731 $ 649 $ 283 Liabilities Fuel derivatives: Option contracts (b) (35 ) — — (35 ) Interest rate derivatives (see Note 10) (22 ) — (22 ) — Total liabilities $ (57 ) $ — $ (22 ) $ (35 ) (a) Cash equivalents are primarily composed of money market investments. (b) In the Consolidated Balance Sheet amounts are presented as a net asset. See Note 10 . |
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation | The following tables present the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for 2018 and 2017 : Fair value measurements using significant unobservable inputs (Level 3) Fuel (in millions) derivatives Balance at December 31, 2017 $ 248 Total losses (realized or unrealized) included in other comprehensive income (1 ) Purchases 66 (a) Sales (4 ) (a) Settlements (171 ) Balance at December 31, 2018 $ 138 (a) The purchase and sale of fuel derivatives are recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives is purchased as a single instrument or separate instruments. Fair value measurements using significant unobservable inputs (Level 3) Fuel (in millions) derivatives Balance at December 31, 2016 $ (258 ) Total losses (realized or unrealized) Included in earnings (125 ) Included in other comprehensive income (50 ) Purchases 142 (a) Sales — (a) Settlements 539 Balance at December 31, 2017 $ 248 The amount of total losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at December 31, 2016 $ (42 ) (a) The purchase and sale of fuel derivatives are recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives is purchased as a single instrument or separate instruments. |
Fair Value Valuation Techniques | The following table presents a range of the unobservable inputs utilized in the fair value measurements of the Company’s fuel derivatives classified as Level 3 at December 31, 2018 : Quantitative information about Level 3 fair value measurements Valuation technique Unobservable input Period (by year) Range Fuel derivatives Option model Implied volatility 2019 29-49% 2020 22-31% 2021 19-24% 2022 20-21% |
Fair value, by Balance Sheet Grouping | (in millions) Carrying value Estimated fair value Fair value level hierarchy 2.75% Notes due November 2019 $ 300 $ 299 Level 2 Term Loan Agreement payable through May 2019 - 6.315% 23 23 Level 3 Term Loan Agreement payable through July 2019 - 4.84% 10 10 Level 3 2.65% Notes due 2020 492 486 Level 2 Term Loan Agreement payable through 2020 - 5.223% 187 187 Level 3 737 Aircraft Notes payable through 2020 67 67 Level 3 2.75% Notes due 2022 300 293 Level 2 Pass Through Certificates due 2022 - 6.24% 250 263 Level 2 Term Loan Agreement payable through 2026 - 3.88% 197 197 Level 3 3.00% Notes due 2026 300 279 Level 2 3.45% Notes due 2027 300 286 Level 2 7.375% Debentures due 2027 125 146 Level 2 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Rollforward of the Amounts Included in AOCI, Net of Taxes | A rollforward of the amounts included in AOCI, net of taxes, is shown below for 2018 and 2017 : (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax impact Accumulated other Balance at December 31, 2016 $ (499 ) $ (18 ) $ (14 ) $ 20 $ 188 $ (323 ) Changes in fair value (50 ) — 5 13 11 (21 ) Reclassification to earnings 552 11 — — (207 ) 356 Balance at December 31, 2017 $ 3 $ (7 ) $ (9 ) $ 33 $ (8 ) $ 12 ASU 2017-12 adoption adjustment (a) (26 ) — — — 6 (20 ) ASU 2018-02 stranded AOCI adoption adjustment (b) — — — — 2 2 Changes in fair value — 1 67 (8 ) (14 ) 46 Reclassification to earnings (33 ) 6 — — 7 (20 ) Balance at December 31, 2018 $ (56 ) $ — $ 58 $ 25 $ (7 ) $ 20 (a) The Company adopted the New Hedging Standard as of January 1, 2018. See Note 2 for further information on this adoption. (b) The Company adopted the Reclassification of Certain Tax Effects from AOCI as of January 1, 2018, which allowed the Company to reclassify to Retained earnings any tax effects stranded in AOCI as a result of the Tax Cuts and Jobs Act enacted in December 2017. |
Reclassification out of Accumulated Other Comprehensive Income | The following table illustrates the significant amounts reclassified out of each component of AOCI for the year ended December 31, 2018 : Year ended December 31, 2018 (in millions) Amounts reclassified from AOCI Affected line item in the Consolidated Statement of Comprehensive Income AOCI components Unrealized gain on fuel derivative instruments $ (33 ) Fuel and oil expense (8 ) Less: Tax expense $ (25 ) Net of tax Unrealized loss on interest rate derivative instruments $ 6 Interest expense 1 Less: Tax expense $ 5 Net of tax Total reclassifications for the period $ (20 ) Net of tax |
Employee Retirement Plans (Tabl
Employee Retirement Plans (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Schedule of Changes in Accumulated Postemployment Benefit Obligations | The following table shows the change in the accumulated postretirement benefit obligation ("APBO") for the years ended December 31, 2018 and 2017 : (in millions) 2018 2017 APBO at beginning of period $ 275 $ 256 Service cost 18 18 Interest cost 9 11 Benefits paid (5 ) (8 ) Actuarial gain (69 ) (2 ) Plan amendments 4 — APBO at end of period $ 232 $ 275 |
Schedule of Amounts Recognized in Balance Sheet | The following table reconciles the funded status of the plans to the accrued postretirement benefit cost recognized in Other non-current liabilities on the Company’s Consolidated Balance Sheet at December 31, 2018 and 2017 . (in millions) 2018 2017 Funded status $ (232 ) $ (275 ) Unrecognized net actuarial (gain) loss (64 ) 5 Unrecognized prior service cost 5 4 Accumulated other comprehensive income (loss) 59 (9 ) Cost recognized on Consolidated Balance Sheet $ (232 ) $ (275 ) |
Schedule of Net Benefit Costs | The consolidated periodic postretirement benefit cost for the years ended December 31, 2018 , 2017 , and 2016 , included the following: (in millions) 2018 2017 2016 Service cost $ 18 $ 18 $ 13 Interest cost 9 11 9 Amortization of prior service cost 3 3 3 Net periodic postretirement benefit cost $ 30 $ 32 $ 25 |
Schedule of Assumptions Used | The following actuarial assumptions were used to account for the Company’s postretirement benefit plans at December 31, 2018 , 2017 , and 2016 : 2018 2017 2016 Weighted-average discount rate 4.35 % 3.65 % 4.25 % Assumed healthcare cost trend rate (a) 7.13 % 7.08 % 7.08 % (a) The assumed healthcare cost trend rate is assumed to be 7.13% for 2019 , then decline gradually to 5.19% by 2027 and remain level thereafter. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Components of Deferred Tax Assets and Liabilities | The components of deferred tax assets and liabilities at December 31, 2018 and 2017 , are as follows: 2018 2017 (in millions) As Recast DEFERRED TAX LIABILITIES: Accelerated depreciation $ 3,395 $ 3,123 Other 92 83 Total deferred tax liabilities 3,487 3,206 DEFERRED TAX ASSETS: Construction obligation 355 318 Accrued employee benefits 329 301 Rapid rewards loyalty liability 267 338 Other 109 130 Total deferred tax assets 1,060 1,087 Net deferred tax liability $ 2,427 $ 2,119 |
Components of the Income Tax Provision | The provision (benefit) for income taxes is composed of the following: 2018 2017 2016 (in millions) As Recast As Recast CURRENT: Federal $ 338 $ 904 $ 778 State 60 72 69 Total current 398 976 847 DEFERRED: Federal 299 200 393 State 2 2 27 Change in federal statutory tax rate — (1,270 ) — Total deferred 301 (1,068 ) 420 $ 699 $ (92 ) $ 1,267 |
Income Tax Provision Reconciliation To Federal Income Tax Statutory Rate | The effective tax rate on income before income taxes differed from the federal income tax statutory rate for the following reasons: 2018 2017 2016 (in millions) As Recast As Recast Tax at statutory U.S. tax rates $ 664 $ 1,143 $ 1,208 State income taxes, net of federal benefit 49 50 62 Change in federal statutory tax rate — (1,270 ) — Other, net (14 ) (15 ) (3 ) Total income tax provision (benefit) $ 699 $ (92 ) $ 1,267 |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Table Text Block [Abstract] | |
Other Assets | (in millions) December 31, 2018 December 31, 2017 Derivative contracts $ 95 $ 136 Intangible assets, net 400 413 Capital lease receivable 61 76 Other 164 161 Other assets $ 720 $ 786 |
Accounts Payable | (in millions) December 31, 2018 December 31, 2017 Accounts payable trade $ 263 $ 186 Salaries payable 216 201 Taxes payable 220 203 Aircraft maintenance payable 69 38 Fuel payable 122 123 Other payable 526 569 Accounts payable $ 1,416 $ 1,320 |
Accrued Liabilities | (in millions) December 31, 2018 December 31, 2017 Profitsharing and savings plans $ 580 $ 579 Aircraft and other lease related obligations 37 40 Permanently grounded aircraft liability — 34 Vacation pay 403 365 Health 107 100 Workers compensation 166 172 Property and income taxes 68 57 Other 388 353 Accrued liabilities $ 1,749 $ 1,700 |
Other Noncurrent Liabilities | (in millions) December 31, 2018 December 31, 2017 Postretirement obligation $ 232 $ 275 Non-current lease-related obligations 48 85 Permanently grounded aircraft liability — 13 Other deferred compensation 247 237 Derivative contracts 12 21 Other 111 76 Other noncurrent liabilities $ 650 $ 707 |
Quarterly Financial Data (Table
Quarterly Financial Data (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Data [Abstract] | |
Schedule of Quarterly Financial Information | Three months ended (in millions except per share amounts) March 31 June 30 Sept. 30 Dec. 31 2018 Operating revenues $ 4,944 $ 5,742 $ 5,575 $ 5,704 Operating income 616 972 798 820 Income before income taxes 602 960 786 817 Net income 463 733 615 654 Net income per share, basic 0.79 1.27 1.08 1.17 Net income per share, diluted 0.79 1.27 1.08 1.17 March 31 June 30 Sept. 30 Dec. 31 As Recast As Recast As Recast As Recast 2017 Operating revenues $ 4,854 $ 5,731 $ 5,303 $ 5,258 Operating income 606 1,215 845 741 Income before income taxes 532 1,165 832 736 Net income 339 743 528 1,747 (a) Net income per share, basic 0.55 1.23 0.88 2.95 (a) Net income per share, diluted 0.55 1.23 0.88 2.94 (a) (a) Includes a $1.3 billion reduction in Provision for income taxes related to the Tax Cuts and Jobs Act legislation enacted in December 2017, which resulted in a re-measurement of the Company's deferred tax assets and liabilities at the new federal corporate tax rate of 21 percent . See Note 14 to the Consolidated Financial Statements for further information. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 12 Months Ended | |||
Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($)aircraft$ / shares | Dec. 31, 2016USD ($)$ / shares | ||
Accounting Policies [Abstract] | ||||
Inventory reserve for obsolescence | $ 2,000,000 | $ 45,000,000 | ||
Capitalized computer software, net | 674,000,000 | 654,000,000 | ||
Computer software depreciation expense | 155,000,000 | 168,000,000 | $ 111,000,000 | |
Capitalized computer software, Impairments | 0 | 0 | 0 | |
Advertising costs | $ 215,000,000 | 224,000,000 | 232,000,000 | |
Concentration Risk [Line Items] | ||||
Percentage Of Employees Represented By Unions Under Collective Bargaining Agreements | 43.00% | |||
Change in Accounting Estimate [Line Items] | ||||
Change in Accounting Estimate Financial Effect on Depreciation Expense, Depreciation Estimate | 21,000,000 | 123,000,000 | ||
Change in Accounting Estimate, Financial Effect on Net Income, Depreciation Adjustment | [1] | $ (19,000,000) | $ (66,000,000) | |
Change in Accounting Estimate, Financial Effect on Net Income Per Share, Depreciation Estimate | $ / shares | $ (0.03) | $ (0.11) | ||
ChangeinAccountingEstimateFinancialEffectonNetIncomePerShareDilutedDepreciationEstimate | $ / shares | $ (0.03) | $ (0.10) | ||
Remaining -300 aircraft grounded in September 2017 | aircraft | 61 | |||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Gross carrying amount | $ 502,000,000 | $ 502,000,000 | ||
Weighted-average useful life (in years) | 14 years | |||
Accumulated amortization | $ 103,000,000 | 89,000,000 | ||
Amortization of intangible assets | 16,000,000 | 13,000,000 | $ 17,000,000 | |
Loss on asset impairment | 0 | 0 | $ 21,000,000 | |
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract] | ||||
2,019 | 13,000,000 | |||
2,020 | 12,000,000 | |||
2,021 | 12,000,000 | |||
2,022 | 12,000,000 | |||
2,023 | 12,000,000 | |||
Thereafter | 45,000,000 | |||
Fuel derivatives | ||||
Accounting Policies [Abstract] | ||||
Total collateral already posted aggregate fair value | 0 | (15,000,000) | ||
Change in Accounting Estimate [Line Items] | ||||
Collateral Already Posted, Aggregate Fair Value | 0 | |||
Other Noncurrent Liabilities | Interest rate derivatives | ||||
Change in Accounting Estimate [Line Items] | ||||
Collateral Already Posted, Aggregate Fair Value | $ 0 | 0 | ||
Flight equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Maximum percentage of cost estimated as residual value (in hundredths) | 15.00% | |||
Flight equipment | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, Plant, and Equipment Useful Life | 25 years | |||
Property, Plant and Equipment [Member] | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, Plant, and Equipment Useful Life | 5 years | |||
Property, Plant and Equipment [Member] | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, Plant, and Equipment Useful Life | 30 years | |||
Ground property and equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Minimum percentage of cost estimated residual value (in hundredths) | 0.00% | |||
Maximum percentage of cost estimated as residual value (in hundredths) | 10.00% | |||
AssetsConstructedForOthers | ||||
Property, Plant and Equipment [Line Items] | ||||
Minimum percentage of cost estimated residual value (in hundredths) | 17.00% | |||
Maximum percentage of cost estimated as residual value (in hundredths) | 75.00% | |||
AssetsConstructedForOthers | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, Plant, and Equipment Useful Life | 5 years | |||
AssetsConstructedForOthers | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, Plant, and Equipment Useful Life | 30 years | |||
Software | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, Plant, and Equipment Useful Life | 5 years | |||
Software | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, Plant, and Equipment Useful Life | 15 years | |||
Customer relationships/marketing agreements | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Gross carrying amount of finite-lived intangible assets | $ 27,000,000 | 27,000,000 | ||
Weighted-average useful life (in years) | 10 years | |||
Accumulated amortization | $ 25,000,000 | 23,000,000 | ||
Owned domestic slots (a) | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Gross carrying amount of indefinite-lived intangible assets | [2] | $ 295,000,000 | 295,000,000 | |
Leased domestic slots (a) | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Weighted-average useful life (in years) | [2] | 0 years | ||
Gate leasehold rights (a) | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Gross carrying amount of finite-lived intangible assets | [2] | $ 180,000,000 | 180,000,000 | |
Weighted-average useful life (in years) | [2] | 15 years | ||
Accumulated amortization | [2] | $ 78,000,000 | $ 66,000,000 | |
Unionized Employees concentration risk | ||||
Concentration Risk [Line Items] | ||||
The percentage of Company's employees that are unionized and covered by collective bargaining agreements (in hundredths) | 83.00% | |||
[1] | net of profitsharing benefit and income taxes | |||
[2] | Intangible assets primarily consist of acquired leasehold rights to certain airport owned gates, takeoff and landing slots (a "slot" is the right of an air carrier, pursuant to regulations of the FAA, to operate a takeoff or landing at a specific time at certain airports) at certain domestic slot-controlled airports, and certain intangible assets acquired. |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Operating Revenue (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating Revenue | $ 21,965 | $ 21,146 | $ 20,289 |
Latin America | |||
Operating Revenue | 566 | 489 | 383 |
North America | |||
Operating Revenue | $ 21,400 | $ 20,700 | $ 20,000 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Changes in Accounting Principles (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Changes in Accounting Principles [Abstract] | |||
Aircraft rentals | $ 161 | $ 198 | $ 229 |
Change in Accounting Estimate (
Change in Accounting Estimate (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2019 | Dec. 31, 2018 | Jan. 01, 2018 | |
Retained Earnings (Accumulated Deficit) | $ 13,832 | $ 15,967 | |||
Assets constructed for others | 1,543 | 1,768 | |||
Accounting Standards Update 2017-07 | |||||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption | 14 | $ 12 | |||
Reclassification from Other operating expenses to be offset against Passenger revenues | Adjustments for New Accounting Standards Update 2014-09 | |||||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption | 40 | ||||
Restatement Adjustment | |||||
Assets constructed for others | $ 1,500 | ||||
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | 1,400 | ||||
Restatement Adjustment | Adjustments for New Accounting Standards Update 2014-09 | |||||
Retained Earnings (Accumulated Deficit) | (789) | ||||
Restatement Adjustment | Accumulated other comprehensive income (loss) | Adjustments for New Accounting Standards Update 2014-09 | |||||
Retained Earnings (Accumulated Deficit) | $ 20 | ||||
DAL | |||||
Assets constructed for others | $ 543 | 545 | |||
Municipal Bonds Principal Remaining | $ 416 | ||||
DAL | Restatement Adjustment | |||||
Municipal Bonds Principal Remaining | 450 | ||||
Aircraft | Restatement Adjustment | |||||
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | 700 | ||||
Aircraft | Other Assets | |||||
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | $ 200 |
New Accounting Pronouncements -
New Accounting Pronouncements - Adjustments (Details) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2018USD ($)aircraft$ / shares | Sep. 30, 2018USD ($)$ / shares | Jun. 30, 2018USD ($)$ / shares | Mar. 31, 2018USD ($)$ / shares | Dec. 31, 2017USD ($)aircraft$ / shares | Sep. 30, 2017USD ($)$ / shares | Jun. 30, 2017USD ($)$ / shares | Mar. 31, 2017USD ($)$ / shares | Dec. 31, 2018USD ($)aircraft$ / shares | Dec. 31, 2017USD ($)aircraft$ / shares | Dec. 31, 2016USD ($)$ / shares | Jan. 01, 2019USD ($) | Jan. 01, 2018USD ($) | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Prepaid expenses and other current assets | $ 310 | $ 460 | $ 310 | $ 460 | |||||||||||
Operating Revenue | 21,965 | 21,146 | $ 20,289 | ||||||||||||
Accrued Liabilities, Recast | 1,749 | 1,700 | 1,749 | 1,700 | |||||||||||
Air traffic liability | 4,134 | 3,495 | 4,134 | 3,495 | |||||||||||
Air traffic liablity - noncurrent | 936 | 1,070 | 936 | 1,070 | |||||||||||
Deferred income taxes | 2,427 | 2,119 | 2,427 | 2,119 | |||||||||||
Retained earnings | $ 15,967 | $ 13,832 | $ 15,967 | $ 13,832 | |||||||||||
Aircraft under operating lease | aircraft | 51 | 53 | 51 | 53 | |||||||||||
Salaries, wages, and benefits | $ 7,649 | $ 7,305 | 6,786 | ||||||||||||
Fuel and oil | 4,616 | 4,076 | 3,801 | ||||||||||||
Other operating expenses | 2,852 | 2,847 | 2,703 | ||||||||||||
Other (gains) losses, net | 18 | 112 | 21 | ||||||||||||
PROVISION (BENEFIT) FOR INCOME TAXES | 699 | (92) | 1,267 | ||||||||||||
Net income | $ 654 | $ 615 | $ 733 | $ 463 | $ 1,747 | [1] | $ 528 | $ 743 | $ 339 | $ 2,465 | $ 3,357 | $ 2,183 | |||
NET INCOME PER SHARE, BASIC (in dollars per share) | $ / shares | $ 1.17 | $ 1.08 | $ 1.27 | $ 0.79 | $ 2.95 | [1] | $ 0.88 | $ 1.23 | $ 0.55 | $ 4.30 | $ 5.58 | $ 3.48 | |||
NET INCOME PER SHARE, DILUTED (in dollars per share) | $ / shares | $ 1.17 | $ 1.08 | $ 1.27 | $ 0.79 | $ 2.94 | [1] | $ 0.88 | $ 1.23 | $ 0.55 | $ 4.29 | $ 5.57 | $ 3.45 | |||
Deferred income taxes | $ 301 | $ (1,066) | $ 419 | ||||||||||||
Changes in certain assets and liabilities | 212 | 279 | |||||||||||||
Net Cash Provided by operating activities | 4,893 | 3,929 | 4,293 | ||||||||||||
Flight equipment | $ 21,753 | $ 21,368 | 21,753 | 21,368 | |||||||||||
Assets constructed for others | 1,768 | 1,543 | 1,768 | 1,543 | |||||||||||
Less allowance for depreciation and amortization | 9,731 | 9,690 | 9,731 | 9,690 | |||||||||||
Other assets | 720 | 786 | 720 | 786 | |||||||||||
Assets | 26,243 | 25,110 | 26,243 | 25,110 | |||||||||||
Accounts payable | 1,416 | 1,320 | 1,416 | 1,320 | |||||||||||
Current maturities of long-term debt | 606 | 348 | 606 | 348 | |||||||||||
Construction obligation | [2] | 1,701 | 1,390 | 1,701 | 1,390 | ||||||||||
Other noncurrent liabilities | 650 | 707 | 650 | 707 | |||||||||||
Liabilities and Equity | $ 26,243 | 25,110 | $ 26,243 | 25,110 | |||||||||||
Scenario, Previously Reported | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Accrued Liabilities | 1,777 | 1,777 | |||||||||||||
Air traffic liability | 3,460 | 3,460 | |||||||||||||
Air traffic liablity - noncurrent | 0 | 0 | |||||||||||||
Deferred income taxes | 2,358 | 2,358 | |||||||||||||
Retained earnings | 14,621 | 14,621 | |||||||||||||
Salaries, wages, and benefits | 7,319 | 6,798 | |||||||||||||
Fuel and oil | 3,940 | 3,647 | |||||||||||||
Other operating expenses | 2,886 | 2,743 | |||||||||||||
Other (gains) losses, net | (234) | (162) | |||||||||||||
PROVISION (BENEFIT) FOR INCOME TAXES | (237) | 1,303 | |||||||||||||
Net income | $ 3,488 | $ 2,244 | |||||||||||||
NET INCOME PER SHARE, BASIC (in dollars per share) | $ / shares | $ 5.80 | $ 3.58 | |||||||||||||
NET INCOME PER SHARE, DILUTED (in dollars per share) | $ / shares | $ 5.79 | $ 3.55 | |||||||||||||
Deferred income taxes | $ 1,212 | $ (455) | |||||||||||||
Changes in certain assets and liabilities | 227 | 182 | |||||||||||||
Net Cash Provided by operating activities | 3,929 | 4,293 | |||||||||||||
Restatement Adjustment | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Assets constructed for others | $ 1,500 | ||||||||||||||
Accounting Standards Update 2017-07 | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption | 14 | 12 | |||||||||||||
Adjustments for New Accounting Standards Update 2014-09 | Restatement Adjustment | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Accrued Liabilities | (77) | (77) | |||||||||||||
Air traffic liability | 35 | 35 | |||||||||||||
Air traffic liablity - noncurrent | 1,070 | 1,070 | |||||||||||||
Deferred income taxes | (239) | (239) | |||||||||||||
Retained earnings | $ (789) | (789) | |||||||||||||
Salaries, wages, and benefits | 0 | 0 | |||||||||||||
Fuel and oil | 0 | 0 | |||||||||||||
Other operating expenses | (39) | (40) | |||||||||||||
Other (gains) losses, net | 0 | 0 | |||||||||||||
PROVISION (BENEFIT) FOR INCOME TAXES | 145 | (36) | |||||||||||||
Net income | $ (131) | $ (60) | |||||||||||||
NET INCOME PER SHARE, BASIC (in dollars per share) | $ / shares | $ (0.22) | $ (0.1) | |||||||||||||
NET INCOME PER SHARE, DILUTED (in dollars per share) | $ / shares | $ (0.22) | $ (0.1) | |||||||||||||
Deferred income taxes | $ (145) | $ 36 | |||||||||||||
Changes in certain assets and liabilities | (14) | 96 | |||||||||||||
Net Cash Provided by operating activities | 0 | 0 | |||||||||||||
Adjustments for New Accounting Standards Update 2017-07 | Restatement Adjustment | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Salaries, wages, and benefits | (14) | (12) | |||||||||||||
Fuel and oil | 0 | 0 | |||||||||||||
Other operating expenses | 0 | 0 | |||||||||||||
Other (gains) losses, net | (14) | (12) | |||||||||||||
PROVISION (BENEFIT) FOR INCOME TAXES | 0 | 0 | |||||||||||||
Net income | $ 0 | $ 0 | |||||||||||||
NET INCOME PER SHARE, BASIC (in dollars per share) | $ / shares | $ 0 | $ 0 | |||||||||||||
NET INCOME PER SHARE, DILUTED (in dollars per share) | $ / shares | $ 0 | $ 0 | |||||||||||||
Adjustments for New Accounting Standards Update 2017-12 | Restatement Adjustment | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Salaries, wages, and benefits | $ 0 | $ 0 | |||||||||||||
Fuel and oil | 136 | 154 | |||||||||||||
Other operating expenses | 0 | 0 | |||||||||||||
Other (gains) losses, net | 136 | 154 | |||||||||||||
PROVISION (BENEFIT) FOR INCOME TAXES | 0 | 0 | |||||||||||||
Net income | $ 0 | $ 0 | |||||||||||||
NET INCOME PER SHARE, BASIC (in dollars per share) | $ / shares | $ 0 | $ 0 | |||||||||||||
NET INCOME PER SHARE, DILUTED (in dollars per share) | $ / shares | $ 0 | $ 0 | |||||||||||||
Accumulated other comprehensive income (loss) | Adjustments for New Accounting Standards Update 2014-09 | Restatement Adjustment | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Retained earnings | $ 20 | ||||||||||||||
B-717-200 | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Aircraft under operating lease | aircraft | 73 | 73 | |||||||||||||
Passenger | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Operating Revenue | $ 20,455 | $ 19,763 | $ 19,068 | ||||||||||||
Passenger | Scenario, Previously Reported | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Operating Revenue | 19,141 | 18,594 | |||||||||||||
Passenger | Adjustments for New Accounting Standards Update 2014-09 | Restatement Adjustment | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Operating Revenue | 622 | 474 | |||||||||||||
Passenger | Adjustments for New Accounting Standards Update 2017-07 | Restatement Adjustment | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Operating Revenue | 0 | 0 | |||||||||||||
Passenger | Adjustments for New Accounting Standards Update 2017-12 | Restatement Adjustment | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Operating Revenue | 0 | 0 | |||||||||||||
Other | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Operating Revenue | $ 1,335 | 1,210 | 1,050 | ||||||||||||
Other | Scenario, Previously Reported | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Operating Revenue | 1,857 | 1,660 | |||||||||||||
Other | Adjustments for New Accounting Standards Update 2014-09 | Restatement Adjustment | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Operating Revenue | (647) | (610) | |||||||||||||
Other | Adjustments for New Accounting Standards Update 2017-07 | Restatement Adjustment | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Operating Revenue | 0 | 0 | |||||||||||||
Other | Adjustments for New Accounting Standards Update 2017-12 | Restatement Adjustment | |||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||
Operating Revenue | $ 0 | $ 0 | |||||||||||||
[1] | Includes a $1.3 billion reduction in Provision for income taxes related to the Tax Cuts and Jobs Act legislation enacted in December 2017, which resulted in a re-measurement of the Company's deferred tax assets and liabilities at the new federal corporate tax rate of 21 percent. See Note 14 to the Consolidated Financial Statements for further information. | ||||||||||||||
[2] | Construction obligation will be reduced through future facility rent payments. These future payments are not fixed per the lease agreement, but are variable and fluctuate based on various market and other factors outside the control of the Company. |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
NUMERATOR: | ||||||||||||
Net income | $ 654 | $ 615 | $ 733 | $ 463 | $ 1,747 | [1] | $ 528 | $ 743 | $ 339 | $ 2,465 | $ 3,357 | $ 2,183 |
Incremental income effect of interest on 5.25% convertible notes | 0 | 0 | 2 | |||||||||
Net income after assumed conversion | $ 2,465 | $ 3,357 | $ 2,185 | |||||||||
DENOMINATOR: | ||||||||||||
Weighted-average shares outstanding, basic | 573 | 601 | 627 | |||||||||
Dilutive effect of Employee stock options and restricted stock units | 1 | 2 | 1 | |||||||||
Dilutive effect of 5.25% convertible notes | 0 | 0 | 5 | |||||||||
Adjusted weighted-average shares outstanding, diluted | 574 | 603 | 633 | |||||||||
NET INCOME PER SHARE: | ||||||||||||
Basic (in dollars per share) | $ 1.17 | $ 1.08 | $ 1.27 | $ 0.79 | $ 2.95 | [1] | $ 0.88 | $ 1.23 | $ 0.55 | $ 4.30 | $ 5.58 | $ 3.48 |
Diluted (in dollars per share) | $ 1.17 | $ 1.08 | $ 1.27 | $ 0.79 | $ 2.94 | [1] | $ 0.88 | $ 1.23 | $ 0.55 | $ 4.29 | $ 5.57 | $ 3.45 |
Convertible Debt | 5.25% Convertible Senior Notes due 2016 | ||||||||||||
Potentially dilutive amounts excluded from calculations: | ||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.25% | 5.25% | 5.25% | 5.25% | 5.25% | |||||||
[1] | Includes a $1.3 billion reduction in Provision for income taxes related to the Tax Cuts and Jobs Act legislation enacted in December 2017, which resulted in a re-measurement of the Company's deferred tax assets and liabilities at the new federal corporate tax rate of 21 percent. See Note 14 to the Consolidated Financial Statements for further information. |
Commitments and Contingengies -
Commitments and Contingengies - Long-term Purchase Commitments (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($)aircraft | |
Aircraft | |
Long-term Purchase Commitment [Line Items] | |
Committed expenditures, 2019 | $ | $ 924 |
Committed expenditures, 2020 | $ | 1,379 |
Committed expenditures, 2021 | $ | 1,663 |
Committed expenditures, 2022 | $ | 1,202 |
Committed expenditures, 2023 | $ | 1,596 |
Committed expenditures, 2024 and beyond | $ | $ 3,444 |
B-737-8 Max | |
Long-term Purchase Commitment [Line Items] | |
Property, Plant and Equipment, Number of Aircraft Purchased | aircraft | 18 |
B-737-800 | |
Long-term Purchase Commitment [Line Items] | |
Property, Plant and Equipment, Number of Aircraft Purchased | aircraft | 26 |
B-737-700 | |
Long-term Purchase Commitment [Line Items] | |
Property, Plant and Equipment, Number of Aircraft Purchased | aircraft | 1 |
B-737-8 Max | |
Long-term Purchase Commitment [Line Items] | |
Long-term Purchase Commitment, Minimum Quantity Required | aircraft | 219 |
Options - 737MAX (in units) | aircraft | 115 |
B-737-7 Max | |
Long-term Purchase Commitment [Line Items] | |
Options - 737MAX (in units) | aircraft | 30 |
Commitments and Contingencies -
Commitments and Contingencies - Airport Projects (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2010 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Airport Project [Line Items] | |||||
Assets constructed for others | $ 1,768 | $ 1,543 | |||
Assets constructed for others, net | [1] | 1,637 | 1,448 | ||
Depreciation and amortization | 1,201 | 1,218 | $ 1,221 | ||
Construction obligation | [2] | 1,701 | 1,390 | ||
Los Angeles World Airport Terminal 1 | |||||
Airport Project [Line Items] | |||||
Expected total airport modernization project cost | 526 | ||||
Contractual Obligation | 111 | ||||
Expected Total Cost Of Airport Project Nonproprietary | 510 | ||||
Assets constructed for others | 485 | 433 | |||
Assets constructed for others, net | [1] | 459 | 417 | ||
Construction obligation | [2] | 476 | 433 | ||
Los Angeles World Airport Terminal 1.5 | |||||
Airport Project [Line Items] | |||||
Expected total airport modernization project cost | 479 | ||||
Contractual Obligation | 106 | ||||
Assets constructed for others | [3] | 99 | 31 | ||
Assets constructed for others, net | [1],[3] | 99 | 31 | ||
Construction obligation | [2],[3] | 99 | 31 | ||
FLL | |||||
Airport Project [Line Items] | |||||
Expected total airport modernization project cost | 333 | ||||
Assets constructed for others | 313 | 258 | |||
Assets constructed for others, net | [1] | 304 | 256 | ||
Construction obligation | [2] | 308 | 258 | ||
DAL | |||||
Airport Project [Line Items] | |||||
Municipal bonds issued | $ 456 | ||||
Municipal Bonds Principal Remaining | 416 | ||||
Assets constructed for others | 545 | 543 | |||
Assets constructed for others, net | [1] | 460 | 474 | ||
Construction obligation | [2] | 502 | 516 | ||
HOU | |||||
Airport Project [Line Items] | |||||
Assets constructed for others | [4] | 126 | 126 | ||
Assets constructed for others, net | [1],[4] | 115 | 118 | ||
Construction obligation | [2],[4] | 116 | 0 | ||
DALGarage | |||||
Airport Project [Line Items] | |||||
Assets constructed for others | 200 | 152 | |||
Assets constructed for others, net | [1] | 200 | 152 | ||
Construction obligation | [2] | $ 200 | $ 152 | ||
[1] | Net of accumulated depreciation. | ||||
[2] | Construction obligation will be reduced through future facility rent payments. These future payments are not fixed per the lease agreement, but are variable and fluctuate based on various market and other factors outside the control of the Company. | ||||
[3] | Project still in progress. | ||||
[4] | Project completed in 2015 at Houston William P. Hobby Airport ("HOU"). |
Revenue - Passenger Revenue Bre
Revenue - Passenger Revenue Breakout (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Disaggregation of Revenue [Line Items] | |||
Operating Revenue | $ 21,965 | $ 21,146 | $ 20,289 |
Passenger Revenue Non Loyalty | |||
Disaggregation of Revenue [Line Items] | |||
Operating Revenue | 17,506 | 16,934 | 16,534 |
Passenger Loyalty Air Transportation | |||
Disaggregation of Revenue [Line Items] | |||
Operating Revenue | 2,307 | 2,263 | 1,997 |
Passenger Ancillary Sold Separately | |||
Disaggregation of Revenue [Line Items] | |||
Operating Revenue | 642 | 566 | 537 |
Passenger | |||
Disaggregation of Revenue [Line Items] | |||
Operating Revenue | $ 20,455 | $ 19,763 | $ 19,068 |
Revenue - Air Traffic Liability
Revenue - Air Traffic Liability Breakout (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
ATL - PAX Revenue and Ancillary PAX Services | $ 2,059 | $ 1,898 | |
ATL - Loyalty Program | 3,011 | 2,667 | |
Air Traffic Liability Total | $ 5,070 | $ 4,565 | $ 4,221 |
Revenue - Air Traffic Liabili_2
Revenue - Air Traffic Liability - Loyalty Program Rollforward (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Movement in Deferred Revenue | ||
Air traffic liability - loyalty program - beginning balance | $ 2,667 | $ 2,485 |
Amounts deferred associated with points awarded | 2,717 | 2,485 |
Revenue recognized from points redeemed - Passenger | (2,307) | (2,263) |
Revenue recognized from points redeemed - Other | (66) | (40) |
Air traffic liability - loyalty program - ending balance | $ 3,011 | $ 2,667 |
Revenue - Air Traffic Liabili_3
Revenue - Air Traffic Liability Rollforward (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Air Traffic Liability Rollforward [Abstract] | ||
ATL, beginning balance | $ 4,565 | $ 4,221 |
Current Period Sales | 21,026 | 20,146 |
Revenue amounts in beginning balance | (3,479) | (3,099) |
Revenue from Current Period Sales | (17,042) | (16,703) |
ATL, ending balance | $ 5,070 | $ 4,565 |
Revenue - Additional Informatio
Revenue - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Deferred Revenue Arrangement [Line Items] | |||
Operating Revenue | $ 21,965 | $ 21,146 | $ 20,289 |
Chase And Other Partner Agreements | |||
Deferred Revenue Arrangement [Line Items] | |||
Operating Revenue | $ 1,100 | $ 1,000 | $ 919 |
Schedule of Long-term Debt (Det
Schedule of Long-term Debt (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | ||
Capital Lease Obligations | $ 845 | $ 885 |
Total | 3,396 | 3,693 |
Less current maturities | 606 | 348 |
Less debt discount and issuance costs | 19 | 25 |
Long-term debt less current maturities | 2,771 | 3,320 |
French Credit Agreements due June 2018 - 2.54% | ||
Debt Instrument [Line Items] | ||
Secured Debt | $ 0 | $ 1 |
Interest rate stated in the debt agreement (in hundredths) | 2.54% | |
Debt Instrument, Maturity Date Range, Start | Nov. 2, 2004 | |
Debt Instrument, Maturity Date Range, End | Jun. 30, 2018 | |
Fixed-rate 737 Aircraft Notes payable through January 2018 - 7.03% | ||
Debt Instrument [Line Items] | ||
Interest rate stated in the debt agreement (in hundredths) | 7.03% | |
Debt Instrument, Maturity Date Range, Start | Jan. 11, 2006 | |
Debt Instrument, Maturity Date Range, End | Jan. 11, 2018 | |
Fixed-rate 737 Aircraft Notes payable through January 2018 - 7.03% | AirTran Airways | ||
Debt Instrument [Line Items] | ||
Secured Debt | $ 0 | $ 3 |
2.75% Unsecured Senior Notes Due November 2019 | ||
Debt Instrument [Line Items] | ||
Unsecured Debt | $ 300 | 300 |
Interest rate stated in the debt agreement (in hundredths) | 2.75% | |
Debt Instrument, Maturity Date Range, Start | Nov. 6, 2014 | |
Debt Instrument, Maturity Date Range, End | Nov. 6, 2019 | |
2.75% Unsecured Senior Notes Due November 2019 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Interest rate stated in the debt agreement (in hundredths) | 2.75% | |
Term Loan Agreement payable through May 2019 - 6.315% | ||
Debt Instrument [Line Items] | ||
Secured Debt | $ 23 | 66 |
Interest rate stated in the debt agreement (in hundredths) | 6.315% | |
Debt Instrument, Maturity Date Range, Start | Apr. 29, 2009 | |
Debt Instrument, Maturity Date Range, End | May 6, 2019 | |
Term Loan Agreement payable through May 2019 - 6.315% | Notes Payable to Banks | ||
Debt Instrument [Line Items] | ||
Interest rate stated in the debt agreement (in hundredths) | 6.315% | |
Term Loan Agreement payable through July 2019 - 4.84% | ||
Debt Instrument [Line Items] | ||
Secured Debt | $ 10 | 19 |
Interest rate stated in the debt agreement (in hundredths) | 4.84% | |
Debt Instrument, Maturity Date Range, Start | Jul. 1, 2009 | |
Debt Instrument, Maturity Date Range, End | Jul. 1, 2019 | |
2.65% Notes due 2020 | ||
Debt Instrument [Line Items] | ||
Unsecured Debt | $ 492 | 491 |
Interest rate stated in the debt agreement (in hundredths) | 2.65% | |
Debt Instrument, Maturity Date Range, Start | Nov. 5, 2015 | |
Debt Instrument, Maturity Date Range, End | Nov. 5, 2020 | |
2.65% Notes due 2020 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Interest rate stated in the debt agreement (in hundredths) | 2.65% | |
Term Loan Agreement payable through 2020 - 5.223% | ||
Debt Instrument [Line Items] | ||
Secured Debt | $ 187 | 237 |
Interest rate stated in the debt agreement (in hundredths) | 5.223% | |
Debt Instrument, Maturity Date Range, Start | May 9, 2008 | |
Debt Instrument, Maturity Date Range, End | May 9, 2020 | |
Term Loan Agreement payable through 2020 - 5.223% | Notes Payable to Banks | ||
Debt Instrument [Line Items] | ||
Interest rate stated in the debt agreement (in hundredths) | 5.223% | |
737 Aircraft Notes payable through 2020 | AirTran Airways | ||
Debt Instrument [Line Items] | ||
Secured Debt | $ 67 | 155 |
Debt Instrument, Maturity Date Range, Start | May 8, 2006 | |
Debt Instrument, Maturity Date Range, End | Apr. 3, 2020 | |
Unsecured Senior Notes Due 2022 - 2.75% | ||
Debt Instrument [Line Items] | ||
Unsecured Debt | $ 300 | 300 |
Interest rate stated in the debt agreement (in hundredths) | 2.75% | |
Debt Instrument, Maturity Date Range, Start | Nov. 16, 2017 | |
Debt Instrument, Maturity Date Range, End | Nov. 16, 2022 | |
Pass Through Certificates due 2022 - 6.24% | Enhanced Equipment Trust Certificate | ||
Debt Instrument [Line Items] | ||
Secured Debt | $ 250 | 294 |
Interest rate stated in the debt agreement (in hundredths) | 6.24% | |
Debt Instrument, Maturity Date Range, Start | Oct. 3, 2017 | |
Debt Instrument, Maturity Date Range, End | Aug. 1, 2022 | |
Term Loan Agreement Due 2026 - 3.88% | ||
Debt Instrument [Line Items] | ||
Secured Debt | $ 197 | 215 |
Interest rate stated in the debt agreement (in hundredths) | 3.88% | |
Debt Instrument, Maturity Date Range, Start | Oct. 31, 2016 | |
Debt Instrument, Maturity Date Range, End | Oct. 31, 2026 | |
Unsecured Senior Notes Due 2026 - 3.00% | ||
Debt Instrument [Line Items] | ||
Unsecured Debt | $ 300 | 300 |
Interest rate stated in the debt agreement (in hundredths) | 3.00% | |
Debt Instrument, Maturity Date Range, Start | Nov. 4, 2016 | |
Debt Instrument, Maturity Date Range, End | Nov. 15, 2026 | |
Unsecured Senior Notes Due 2027 - 3.45% | ||
Debt Instrument [Line Items] | ||
Unsecured Debt | $ 300 | 300 |
Interest rate stated in the debt agreement (in hundredths) | 3.45% | |
Debt Instrument, Maturity Date Range, Start | Nov. 16, 2017 | |
Debt Instrument, Maturity Date Range, End | Nov. 16, 2027 | |
7.375% Debentures due 2027 | ||
Debt Instrument [Line Items] | ||
Unsecured Debt | $ 125 | $ 127 |
Interest rate stated in the debt agreement (in hundredths) | 7.375% | |
Debt Instrument, Maturity Date Range, Start | Feb. 28, 1997 | |
Debt Instrument, Maturity Date Range, End | Mar. 1, 2027 |
Long-term Debt (Details)
Long-term Debt (Details) | 12 Months Ended | ||
Dec. 31, 2018USD ($)aircraftMortgagesAgreements | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Debt Instrument [Line Items] | |||
Encumbered Aircraft Released | aircraft | 1 | ||
Encumbered Aircraft Remaining | aircraft | 4 | ||
Repayments of Convertible Debt | $ 0 | $ 0 | $ 68,000,000 |
Letters of Credit Outstanding Amount | 170,000,000 | ||
Net book value of assets pledged as collateral for the Company's secured borrowings, primarily aircraft and engines | 1,500,000,000 | ||
Net book value of additional assets pledged as collateral in case obligations related to fuel derivatives exceed certain thresholds | 2,100,000,000 | ||
Long-term Debt, by Maturity [Abstract] | |||
2,019 | 590,000,000 | ||
2,020 | 821,000,000 | ||
2,021 | 172,000,000 | ||
2,022 | 477,000,000 | ||
2,023 | 105,000,000 | ||
Thereafter | 1,100,000,000 | ||
AirTran Airways | Interest rate derivatives | |||
Debt Instrument [Line Items] | |||
Notional amount | $ 57,000,000 | ||
AirTran Airways | Maximum | Interest rate derivatives | |||
Debt Instrument [Line Items] | |||
Interest rate stated in the debt agreement (in hundredths) | 5.91% | ||
French Credit Agreements due June 2018 - 2.54% | |||
Debt Instrument [Line Items] | |||
Face amount of debt | $ 112,000,000 | ||
Interest rate stated in the debt agreement (in hundredths) | 2.54% | ||
Number of identical floating rate financing agreements entered into concurrently with French banking partnerships | Agreements | 4 | ||
Term | 13 years | ||
Fixed-rate 737 Aircraft Notes payable through January 2018 - 7.03% | |||
Debt Instrument [Line Items] | |||
Interest rate stated in the debt agreement (in hundredths) | 7.03% | ||
2.75% Unsecured Senior Notes Due November 2019 | |||
Debt Instrument [Line Items] | |||
Face amount of debt | $ 300,000,000 | ||
Interest rate stated in the debt agreement (in hundredths) | 2.75% | ||
Term Loan Agreement payable through May 2019 - 6.315% | |||
Debt Instrument [Line Items] | |||
Number of mortgages on secured aircraft | Mortgages | 14 | ||
Interest rate stated in the debt agreement (in hundredths) | 6.315% | ||
Term Loan Agreement payable through May 2019 - 6.315% | LIBOR | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 3.30% | ||
Term Loan Agreement payable through May 2019 - 6.315% | Maximum | |||
Debt Instrument [Line Items] | |||
Face amount of debt | $ 332,000,000 | ||
Term Loan Agreement payable through July 2019 - 4.84% | |||
Debt Instrument [Line Items] | |||
Number of mortgages on secured aircraft | Mortgages | 5 | ||
Interest rate stated in the debt agreement (in hundredths) | 4.84% | ||
Debt Instrument, Prepayment Amount | $ 24,000,000 | ||
Term Loan Agreement payable through July 2019 - 4.84% | Maximum | |||
Debt Instrument [Line Items] | |||
Face amount of debt | 124,000,000 | ||
2.65% Notes due 2020 | |||
Debt Instrument [Line Items] | |||
Face amount of debt | $ 500,000,000 | ||
Interest rate stated in the debt agreement (in hundredths) | 2.65% | ||
Term Loan Agreement payable through 2020 - 5.223% | |||
Debt Instrument [Line Items] | |||
Number of mortgages on secured aircraft | Mortgages | 21 | ||
Face amount of debt | $ 600,000,000 | ||
Interest rate stated in the debt agreement (in hundredths) | 5.223% | ||
Term Loan Agreement payable through 2020 - 5.223% | LIBOR | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 0.95% | ||
737 Aircraft Notes payable through 2020 | AirTran Airways | |||
Debt Instrument [Line Items] | |||
Number of mortgages on secured aircraft | Mortgages | 9 | ||
Weighted average interest rate | 4.06% | ||
Notes Payable Aircraft Fixed Rate Through 2019 [Member] | AirTran Airways | |||
Debt Instrument [Line Items] | |||
Number of mortgages on secured aircraft | Mortgages | 1 | ||
Unsecured Senior Notes Due 2022 - 2.75% | |||
Debt Instrument [Line Items] | |||
Face amount of debt | $ 300,000,000 | ||
Interest rate stated in the debt agreement (in hundredths) | 2.75% | ||
Pass Through Certificates due 2022 - 6.24% | |||
Debt Instrument [Line Items] | |||
Number of mortgages on secured aircraft | Mortgages | 16 | ||
Face amount of debt | $ 500,000,000 | ||
Pass Through Certificates due 2022 - 6.24% | Interest rate derivatives | Cash Flow Hedging | |||
Debt Instrument [Line Items] | |||
Notional amount | 20,000,000 | ||
Pass Through Certificates Series A | |||
Debt Instrument [Line Items] | |||
Face amount of debt | $ 412,000,000 | ||
Interest rate stated in the debt agreement (in hundredths) | 6.15% | ||
Pass Through Certificates Series B | |||
Debt Instrument [Line Items] | |||
Face amount of debt | $ 88,000,000 | ||
Interest rate stated in the debt agreement (in hundredths) | 6.65% | ||
Term Loan Agreement Due 2026 - 3.88% | |||
Debt Instrument [Line Items] | |||
Number of mortgages on secured aircraft | Mortgages | 7 | ||
Interest rate stated in the debt agreement (in hundredths) | 3.88% | ||
Term Loan Agreement Due 2026 - 3.88% | LIBOR | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 1.10% | ||
Term Loan Agreement Due 2026 - 3.88% | Maximum | |||
Debt Instrument [Line Items] | |||
Face amount of debt | $ 215,000,000 | ||
Unsecured Senior Notes Due 2026 - 3.00% | |||
Debt Instrument [Line Items] | |||
Face amount of debt | $ 300,000,000 | ||
Interest rate stated in the debt agreement (in hundredths) | 3.00% | ||
Unsecured Senior Notes Due 2027 - 3.45% | |||
Debt Instrument [Line Items] | |||
Face amount of debt | $ 300,000,000 | ||
Interest rate stated in the debt agreement (in hundredths) | 3.45% | ||
Unsecured Senior Notes Due 2027 - 3.45% | Treasury Rate | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 20.00% | ||
7.375% Debentures due 2027 | |||
Debt Instrument [Line Items] | |||
Face amount of debt | $ 100,000,000 | ||
Interest rate stated in the debt agreement (in hundredths) | 7.375% | ||
Enhanced Equipment Trust Certificate | Pass Through Certificates due 2022 - 6.24% | |||
Debt Instrument [Line Items] | |||
Interest rate stated in the debt agreement (in hundredths) | 6.24% | ||
B-737-700 | |||
Debt Instrument [Line Items] | |||
Maximum additional number of assets pledged as collateral in case obligations related to fuel derivatives exceed certain thresholds | aircraft | 74 | ||
B-737-800 | |||
Debt Instrument [Line Items] | |||
Maximum additional number of assets pledged as collateral in case obligations related to fuel derivatives exceed certain thresholds | aircraft | 24 |
Leases (Details)
Leases (Details) | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2018USD ($)aircraft | Sep. 30, 2017USD ($) | Dec. 31, 2018USD ($)aircraft | Dec. 31, 2017USD ($)aircraftCapitalLeases | Dec. 31, 2016USD ($) | Jul. 09, 2012aircraft | ||
Capital Leases, Balance Sheet, Assets by Major Class, Net [Abstract] | |||||||
Flight equipment | $ 1,329,000,000 | $ 1,329,000,000 | $ 1,207,000,000 | ||||
Less: accumulated amortization | 304,000,000 | 304,000,000 | 172,000,000 | ||||
Total | 1,025,000,000 | 1,025,000,000 | $ 1,035,000,000 | ||||
Capital Leased Assets [Line Items] | |||||||
2,019 | 111,000,000 | 111,000,000 | |||||
2,020 | 109,000,000 | 109,000,000 | |||||
2,021 | 105,000,000 | 105,000,000 | |||||
2,022 | 100,000,000 | 100,000,000 | |||||
2,023 | 97,000,000 | 97,000,000 | |||||
Thereafter | 335,000,000 | 335,000,000 | |||||
Total minimum lease payments | 857,000,000 | 857,000,000 | |||||
Less amount representing interest | 126,000,000 | 126,000,000 | |||||
Present value of minimum lease payments (a) | [1] | 731,000,000 | 731,000,000 | ||||
Less current portion | 85,000,000 | 85,000,000 | |||||
Long-term portion | $ 646,000,000 | $ 646,000,000 | |||||
Number of capital leased assets | 72 | 72 | 69 | ||||
Rental expense for operating leases | $ 935,000,000 | $ 939,000,000 | $ 932,000,000 | ||||
Total Classic aircraft retired in 2017 | aircraft | 87 | ||||||
Remaining -300 aircraft grounded in September 2017 | aircraft | 61 | ||||||
Subleases | |||||||
2,018 | $ (92,000,000) | (92,000,000) | |||||
2,019 | (78,000,000) | (78,000,000) | |||||
2,020 | (41,000,000) | (41,000,000) | |||||
2,021 | (17,000,000) | (17,000,000) | |||||
2,022 | (7,000,000) | (7,000,000) | |||||
Thereafter | (1,000,000) | (1,000,000) | |||||
Total minimum lease payments | (236,000,000) | (236,000,000) | |||||
Operating Leased Assets [Line Items] | |||||||
Lease Incentive Obligation Excluded | $ 114,000,000 | $ 114,000,000 | |||||
Number of operating leased assets | aircraft | 51 | 51 | 53 | ||||
Operating leases | |||||||
2,019 | $ 256,000,000 | $ 256,000,000 | |||||
2,020 | 279,000,000 | 279,000,000 | |||||
2,021 | 203,000,000 | 203,000,000 | |||||
2,022 | 155,000,000 | 155,000,000 | |||||
2,023 | 139,000,000 | 139,000,000 | |||||
Thereafter | 473,000,000 | 473,000,000 | |||||
Total minimum lease payments | 1,505,000,000 | 1,505,000,000 | |||||
2,019 | 348,000,000 | 348,000,000 | |||||
2,020 | 357,000,000 | 357,000,000 | |||||
2,021 | 244,000,000 | 244,000,000 | |||||
2,022 | 172,000,000 | 172,000,000 | |||||
2,023 | 146,000,000 | 146,000,000 | |||||
Thereafter | 474,000,000 | 474,000,000 | |||||
Total minimum lease payments | $ 1,741,000,000 | 1,741,000,000 | |||||
Aircraft grounding charge | $ 63,000,000 | $ 0 | $ 63,000,000 | $ 0 | |||
Minimum | |||||||
Capital Leased Assets [Line Items] | |||||||
Renewal term | 1 year | 1 year | |||||
Maximum | |||||||
Capital Leased Assets [Line Items] | |||||||
Renewal term | 5 years | 5 years | |||||
Property Subject to Operating Lease [Member] | |||||||
Operating Leased Assets [Line Items] | |||||||
Number of operating leased assets | aircraft | 51 | 51 | |||||
Property Available for Operating Lease [Member] | |||||||
Operating Leased Assets [Line Items] | |||||||
Number of operating leased assets | aircraft | 124 | 124 | |||||
B-717-200 | |||||||
Capital Leased Assets [Line Items] | |||||||
Number of capital leased assets | aircraft | 2 | 2 | |||||
Number of owned assets | aircraft | 10 | 10 | |||||
Lease terms for owned aircraft | 4 years | ||||||
Contingent rental payment due | $ 0 | $ 0 | |||||
Residual value of leased properties | $ 0 | $ 0 | |||||
Operating Leased Assets [Line Items] | |||||||
Property Subject To Or Available For Lease, Number Of Units, Total | aircraft | 88 | ||||||
Number of operating leased assets | aircraft | 73 | 73 | |||||
B-717-200 | Minimum | |||||||
Capital Leased Assets [Line Items] | |||||||
Sublease terms | 1 year | ||||||
B-717-200 | Maximum | |||||||
Capital Leased Assets [Line Items] | |||||||
Sublease terms | 6 years | ||||||
Expired | B-717-200 | |||||||
Operating Leased Assets [Line Items] | |||||||
Property Subject To Or Available For Lease, Number Of Units, Total | aircraft | 3 | ||||||
[1] | Excludes lease incentive obligation of $114 million. |
Common Stock (Details)
Common Stock (Details) shares in Millions | Dec. 31, 2018shares |
Equity [Abstract] | |
Common stock reserved for issuance pursuant to Employee stock benefit plans (in shares) | 60 |
Common stock reserved for issuance and not granted pursuant to Employee stock benefit plans (in shares) | 29 |
Stock Plans (Details)
Stock Plans (Details) - USD ($) | 12 Months Ended | ||||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |||||
Employee service share based compensation aggregate disclosures [Abstract] | |||||||
Share based compensation cost | $ 46,000,000 | $ 37,000,000 | $ 33,000,000 | ||||
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense | 0 | ||||||
Total unrecognized compensation cost related to share-based compensation arrangements | $ 51,000,000 | ||||||
Weighted average period of time over which unrecognized compensation cost is to be recognized | 1 year 10 months 8 days | ||||||
The remaining number of RSU's or stock options that may be issued (in shares) | 29,000,000 | ||||||
Employee stock purchase plan [Abstract] | |||||||
The remaining balance of shares originally authorized for issue under the employee stock purchase plan (in shares) | 8,000,000 | ||||||
The percentage of market value at which shares may be issued to participating employees (in hundredths) | 90.00% | ||||||
The number of shares issued to participants under the plan during the period | 661,000 | 544,000 | 622,000 | ||||
The weighted average fair value of each purchase right under the employee stock purchase plan (in dollars per share) | $ 50.73 | $ 50.13 | $ 36.57 | ||||
The discount percentage off the market value for the employee stock purchase plan (in hundredths) | 10.00% | ||||||
The aggregate cost of the discount from the market value on shares issued to employees at the end of each monthly purchase period | [1] | $ 5.64 | $ 5.57 | $ 4.06 | |||
Stock Compensation Plan - Board of Directors | |||||||
Employee service share based compensation aggregate disclosures [Abstract] | |||||||
Non-option equity instruments granted (in shares) | 28,000 | 26,000 | 27,000 | ||||
Weighted average price of non-option equity instruments granted | $ 53.01 | $ 57.04 | $ 42.90 | ||||
RSUs | |||||||
Employee service share based compensation aggregate disclosures [Abstract] | |||||||
Vesting periods for plans | 3 years | ||||||
The remaining number of RSU's or stock options that may be issued (in shares) | 21,000,000 | ||||||
Units 0 | |||||||
Outstanding RSU's - beginning balance (in shares) | 1,294,000 | 1,439,000 | 1,485,000 | ||||
Granted (in shares) | 782,000 | [2] | 717,000 | [3] | 675,000 | [4] | |
Vested (in shares) | (670,000) | (806,000) | (665,000) | ||||
Surrendered (in shares) | (64,000) | (56,000) | (56,000) | ||||
Outstanding RSU's - ending balance (in shares) | 1,342,000 | 1,294,000 | 1,439,000 | ||||
Wtd. Average Fair Value (per share) | |||||||
Weighted average grant date fair value RSU's - beginning balance (in dollars per share) | $ 45.32 | $ 36.52 | $ 30.17 | ||||
Weighted average grant date fair value RSU's - granted (in dollars per share) | 60.80 | 52.73 | 37.29 | ||||
Weighted average grant date fair value RSU's - vested (in dollars per share) | 45.11 | 30.23 | 23.29 | ||||
Weighted average grant date fair value RSU's - surrendered (in dollars per share) | 47.05 | 43.86 | 36.29 | ||||
Weighted average grant date fair value RSU's - period end (in dollars per share) | $ 52.56 | $ 45.32 | $ 36.52 | ||||
Performance Shares | |||||||
Units 0 | |||||||
Granted (in shares) | 308,000 | 235,000 | 247,000 | ||||
Minimum | Performance Shares | |||||||
Employee service share based compensation aggregate disclosures [Abstract] | |||||||
Percentage of PBRSUs to be granted | 0.00% | ||||||
Maximum | Performance Shares | |||||||
Employee service share based compensation aggregate disclosures [Abstract] | |||||||
Percentage of PBRSUs to be granted | 200.00% | ||||||
[1] | The weighted-average fair value of each purchase right under the ESPP granted is equal to ten percent discount from the market value of the Common Stock at the end of each monthly purchase period. | ||||||
[2] | Includes 308 thousand PBRSUs | ||||||
[3] | Includes 235 thousand PBRSUs | ||||||
[4] | Includes 247 thousand PBRSUs |
Financial Derivative Instrume_3
Financial Derivative Instruments Narrative (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Derivative [Line Items] | ||||
Percentage of actual consumption hedged | 79.00% | |||
Premiums paid for fuel derivative contracts | $ 135,000,000 | $ 136,000,000 | $ 154,000,000 | |
Current Unrealized Net Loss in OCI | 36,000,000 | |||
Maximum sum of derivatives of counterparty to be included in other (less than $10 million) | $ 5,000,000 | |||
Cash collateral provided as a percentage of derivative contract value (in hundredths) | 100.00% | |||
Derivative Asset, Fair Value, Gross Asset | [1] | $ 138,000,000 | 283,000,000 | |
Derivative Liability, Fair Value, Gross Liability | [1] | 14,000,000 | 57,000,000 | |
Term Loan Agreement payable through 2020 - 5.223% | ||||
Derivative [Line Items] | ||||
Face amount of debt | $ 600,000,000 | |||
Interest rate stated in the debt agreement (in hundredths) | 5.223% | |||
Term Loan Agreement payable through May 2019 - 6.315% | ||||
Derivative [Line Items] | ||||
Interest rate stated in the debt agreement (in hundredths) | 6.315% | |||
Term Loan Agreement payable through May 2019 - 6.315% | Maximum | ||||
Derivative [Line Items] | ||||
Face amount of debt | $ 332,000,000 | |||
Unsecured Senior Notes Due 2027 | ||||
Derivative [Line Items] | ||||
Face amount of debt | $ 300,000,000 | |||
Interest rate stated in the debt agreement (in hundredths) | 3.45% | |||
2.75% Unsecured Senior Notes Due November 2019 | ||||
Derivative [Line Items] | ||||
Face amount of debt | $ 300,000,000 | |||
Interest rate stated in the debt agreement (in hundredths) | 2.75% | |||
2.65% Notes due 2020 | ||||
Derivative [Line Items] | ||||
Face amount of debt | $ 500,000,000 | |||
Interest rate stated in the debt agreement (in hundredths) | 2.65% | |||
Notes Payable to Banks | Term Loan Agreement payable through 2020 - 5.223% | ||||
Derivative [Line Items] | ||||
Face amount of debt | $ 600,000,000 | |||
Interest rate stated in the debt agreement (in hundredths) | 5.223% | |||
Notes Payable to Banks | Term Loan Agreement payable through May 2019 - 6.315% | ||||
Derivative [Line Items] | ||||
Face amount of debt | $ 332,000,000 | |||
Interest rate stated in the debt agreement (in hundredths) | 6.315% | |||
Unsecured Debt | 2.75% Unsecured Senior Notes Due November 2019 | ||||
Derivative [Line Items] | ||||
Face amount of debt | $ 300,000,000 | |||
Interest rate stated in the debt agreement (in hundredths) | 2.75% | |||
Average Floating Rate | 3.40% | |||
Unsecured Debt | 2.65% Notes due 2020 | ||||
Derivative [Line Items] | ||||
Face amount of debt | $ 500,000,000 | |||
Interest rate stated in the debt agreement (in hundredths) | 2.65% | |||
Average Floating Rate | 3.58% | |||
Fuel derivatives | ||||
Derivative [Line Items] | ||||
Total collateral already posted aggregate fair value | $ 0 | 15,000,000 | ||
Interest rate derivatives | AirTran Airways | ||||
Derivative [Line Items] | ||||
Notional amount | $ 57,000,000 | |||
Interest rate derivatives | AirTran Airways | Minimum | ||||
Derivative [Line Items] | ||||
Interest rate stated in the debt agreement (in hundredths) | 4.35% | |||
Interest rate derivatives | AirTran Airways | Maximum | ||||
Derivative [Line Items] | ||||
Interest rate stated in the debt agreement (in hundredths) | 5.91% | |||
Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Derivative Asset, Fair Value, Gross Asset | [1] | $ 138,000,000 | 248,000,000 | |
Derivative Liability, Fair Value, Gross Liability | [1] | 14,000,000 | 20,000,000 | |
Other Noncurrent Liabilities | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Derivative Liability, Fair Value, Gross Liability | 14,000,000 | |||
Other Noncurrent Liabilities | Designated as Hedging Instrument | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Derivative Liability, Fair Value, Gross Liability | [1] | 12,000,000 | 20,000,000 | |
Other Assets | Designated as Hedging Instrument | Fuel derivatives | ||||
Derivative [Line Items] | ||||
Derivative Asset, Fair Value, Gross Asset | [1] | $ 95,000,000 | $ 136,000,000 | |
2,019 | ||||
Derivative [Line Items] | ||||
Percent of fuel consumption hedged | 70.00% | |||
[1] | Represents the position of each trade before consideration of offsetting positions with each counterparty and does not include the impact of cash collateral deposits provided to or received from counterparties. See discussion of credit risk and collateral following in this Note. |
Financial Derivative Instrume_4
Financial Derivative Instruments - Fuel Hedging (Details) gal in Millions | Dec. 31, 2018gal | [1] |
2,019 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 1,519 | |
2,020 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 1,207 | |
2,021 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 466 | |
2,022 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 88 | |
[1] | Due to the types of derivatives utilized by the Company and different price levels of those contracts, these volumes represent the maximum economic hedge in place and may vary significantly as market prices fluctuate. |
Financial Derivative Instrume_5
Financial Derivative Instruments - Fair Values by Balance Sheet Location (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Derivatives, Fair Value | |||
Derivative Asset, Fair Value, Gross Asset | [1] | $ 138 | $ 283 |
Derivative Liability, Fair Value, Gross Liability | [1] | 14 | 57 |
Designated as Hedging Instrument | |||
Derivatives, Fair Value | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 138 | 248 |
Derivative Liability, Fair Value, Gross Liability | [1] | 14 | 20 |
Not Designated as Hedging Instrument | |||
Derivatives, Fair Value | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 0 | 35 |
Derivative Liability, Fair Value, Gross Liability | [1] | 0 | 37 |
Fuel derivatives | Designated as Hedging Instrument | Prepaid expenses and other current assets | |||
Derivatives, Fair Value | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 43 | 112 |
Derivative Asset, Fair Value, Gross Liability | [1] | 0 | 0 |
Fuel derivatives | Designated as Hedging Instrument | Other Assets | |||
Derivatives, Fair Value | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 95 | 136 |
Derivative Asset, Fair Value, Gross Liability | [1] | 0 | 0 |
Fuel derivatives | Not Designated as Hedging Instrument | Prepaid expenses and other current assets | |||
Derivatives, Fair Value | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 0 | 35 |
Derivative Asset, Fair Value, Gross Liability | [1] | 0 | 35 |
Interest rate derivatives | Other Noncurrent Liabilities | |||
Derivatives, Fair Value | |||
Derivative Liability, Fair Value, Gross Liability | 14 | ||
Interest rate derivatives | Designated as Hedging Instrument | Accrued Liabilities | |||
Derivatives, Fair Value | |||
Derivative Liability, Fair Value, Gross Liability | [1] | 2 | 0 |
Derivative Liability, Fair Value, Gross Asset | [1] | 0 | 0 |
Interest rate derivatives | Designated as Hedging Instrument | Other Noncurrent Liabilities | |||
Derivatives, Fair Value | |||
Derivative Liability, Fair Value, Gross Liability | [1] | 12 | 20 |
Derivative Liability, Fair Value, Gross Asset | [1] | 0 | 0 |
Interest rate derivatives | Not Designated as Hedging Instrument | Accrued Liabilities | |||
Derivatives, Fair Value | |||
Derivative Liability, Fair Value, Gross Liability | [1] | 0 | 1 |
Derivative Liability, Fair Value, Gross Asset | [1] | 0 | 0 |
Interest rate derivatives | Not Designated as Hedging Instrument | Other Noncurrent Liabilities | |||
Derivatives, Fair Value | |||
Derivative Liability, Fair Value, Gross Liability | [1] | 0 | 1 |
Derivative Liability, Fair Value, Gross Asset | [1] | $ 0 | $ 0 |
[1] | Represents the position of each trade before consideration of offsetting positions with each counterparty and does not include the impact of cash collateral deposits provided to or received from counterparties. See discussion of credit risk and collateral following in this Note. |
Financial Derivative Instrume_6
Financial Derivative Instruments - Carrying Amount of Fair Value Hedges (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | |
Derivative [Line Items] | |||
Deferred Gain (Loss) on Discontinuation of Interest Rate Fair Value Hedge | $ 20,000,000 | $ 21,000,000 | |
Designated as Hedging Instrument | Long-term Debt [Member] | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | 791,000,000 | 791,000,000 | |
cumulative fair value adjustment [Member] | Designated as Hedging Instrument | Long-term Debt [Member] | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | [1] | $ 11,000,000 | $ 12,000,000 |
[1] | At December 31, 2018 and 2017, these amounts include the cumulative amount of fair value hedging adjustments remaining for which hedge accounting has been discontinued of $20 million and $21 million, respectively. |
Financial Derivative Instrume_7
Financial Derivative Instruments - Collateral by Balance Sheet Location (Details) - Fuel derivatives - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Derivative [Line Items] | ||
Collateral Already Posted, Aggregate Fair Value | $ 0 | |
Prepaid expenses and other current assets | ||
Derivative [Line Items] | ||
Total Collateral Already Received Aggregate Fair Value | 0 | $ 15 |
Accounts Payable | ||
Derivative [Line Items] | ||
Due To Third Parties For Settled Fuel Contracts | 0 | $ 29 |
Accounts And Other Receivables [Member] | ||
Derivative [Line Items] | ||
Receivable from third parties for settled fuel contracts - current | $ 2 |
Financial Derivative Instrume_8
Financial Derivative Instruments - Offsetting of Derivative Assets (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Offsetting Assets | |||
Asset derivative contracts, net | $ 95 | $ 136 | |
Fuel derivatives | Prepaid expenses and other current assets | |||
Offsetting Assets | |||
Gross amounts of recognized assets | 43 | 147 | |
Gross amounts offset in the Balance Sheet | 0 | (50) | |
Asset derivative contracts, net | 43 | 97 | |
Fuel derivatives | Other Assets | |||
Offsetting Assets | |||
Gross amounts of recognized assets | 95 | 136 | |
Gross amounts offset in the Balance Sheet | 0 | 0 | |
Asset derivative contracts, net | [1] | $ 95 | $ 136 |
[1] | The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the Consolidated Balance Sheet in Note 15. |
Financial Derivative Instrume_9
Financial Derivative Instruments - Offsetting of Derivative Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Other Noncurrent Liabilities | |||
Offsetting Liabilities | |||
Liabilities derivative contracts, net | $ 12 | $ 21 | |
Fuel derivatives | Prepaid expenses and other current assets | |||
Offsetting Liabilities | |||
Gross amounts of recognized liabilities | 0 | 50 | |
Gross amounts offset in the Balance Sheet | 0 | (50) | |
Liabilities derivative contracts, net | 0 | 0 | |
Interest rate derivatives | Accrued Liabilities | |||
Offsetting Liabilities | |||
Gross amounts of recognized liabilities | 2 | 1 | |
Gross amounts offset in the Balance Sheet | 0 | 0 | |
Liabilities derivative contracts, net | 2 | 1 | |
Interest rate derivatives | Other Noncurrent Liabilities | |||
Offsetting Liabilities | |||
Gross amounts of recognized liabilities | 12 | 21 | |
Gross amounts offset in the Balance Sheet | 0 | 0 | |
Liabilities derivative contracts, net | [1] | $ 12 | $ 21 |
[1] | The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the Consolidated Balance Sheet in Note 15. |
Financial Derivative Instrum_10
Financial Derivative Instruments - (Gain) Loss in Income by Hedging Relationship (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Interest Expense | ||
Derivative [Line Items] | ||
Gain (Loss) on Derivative Instruments, Net, Pretax | $ 37 | $ 33 |
Fuel | ||
Derivative [Line Items] | ||
Gain (Loss) on Derivative Instruments, Net, Pretax | (33) | 552 |
Cash Flow Hedging | Interest Expense | Fuel derivatives | ||
Derivative [Line Items] | ||
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | 0 | 0 |
Cash Flow Hedging | Interest Expense | Interest rate derivatives | ||
Derivative [Line Items] | ||
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | 6 | 11 |
Cash Flow Hedging | Fuel | Fuel derivatives | ||
Derivative [Line Items] | ||
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | (33) | 552 |
Cash Flow Hedging | Fuel | Interest rate derivatives | ||
Derivative [Line Items] | ||
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | 0 | 0 |
Not Designated as Hedging Instrument | Fair Value Hedging | Interest Expense | Interest rate derivatives | ||
Derivative [Line Items] | ||
Gain (Loss) on Derivative Instruments, Net, Pretax | 8 | (1) |
Not Designated as Hedging Instrument | Fair Value Hedging | Fuel | Interest rate derivatives | ||
Derivative [Line Items] | ||
Gain (Loss) on Derivative Instruments, Net, Pretax | 0 | 0 |
Designated as Hedging Instrument | Fair Value Hedging | Interest Expense | Interest rate derivatives | ||
Derivative [Line Items] | ||
Interest Expense, Debt | 23 | 23 |
Designated as Hedging Instrument | Fair Value Hedging | Fuel | Interest rate derivatives | ||
Derivative [Line Items] | ||
Interest Expense, Debt | $ 0 | $ 0 |
Financial Derivative Instrum_11
Financial Derivative Instruments - (Gain) Loss by Hedging Relationship (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Cash Flow Hedging | |||
Derivative Instruments, Gain (Loss) | |||
(Gain) loss recognized in AOCI on derivatives (effective portion) | $ 0 | $ 32 | |
(Gain) loss recognized in income on derivatives (ineffective portion) | [1] | 0 | 32 |
Not Designated as Hedging Instrument | Other Nonoperating Income (Expense) | |||
Derivative Instruments, Gain (Loss) | |||
(Gain) loss recognized in income on derivatives | (2) | 71 | |
Fuel derivatives | Cash Flow Hedging | |||
Derivative Instruments, Gain (Loss) | |||
(Gain) loss recognized in AOCI on derivatives (effective portion) | [2] | 1 | 32 |
(Gain) loss recognized in income on derivatives (ineffective portion) | [1] | 0 | 31 |
Fuel derivatives | Not Designated as Hedging Instrument | Other Nonoperating Income (Expense) | |||
Derivative Instruments, Gain (Loss) | |||
(Gain) loss recognized in income on derivatives | 0 | 75 | |
Interest rate derivatives | Cash Flow Hedging | |||
Derivative Instruments, Gain (Loss) | |||
(Gain) loss recognized in AOCI on derivatives (effective portion) | [2] | (1) | 0 |
(Gain) loss recognized in income on derivatives (ineffective portion) | [1] | 0 | 1 |
Interest rate derivatives | Not Designated as Hedging Instrument | Other Nonoperating Income (Expense) | |||
Derivative Instruments, Gain (Loss) | |||
(Gain) loss recognized in income on derivatives | $ (2) | $ (4) | |
[1] | Amounts are included in Other (gains) losses, net. | ||
[2] | Net of tax |
Financial Derivative Instrum_12
Financial Derivative Instruments - Fair Values of Fuel Derivatives Amounts Posted as Collateral (Details) $ in Millions | Dec. 31, 2018USD ($) | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Maximum Sum Of Derivatives Of Counterparty To Be Included In Other | $ 5 | |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Cash Collateral Percent Of Fair Value Fuel Derivatives Contracts | 100.00% | |
Letter of Credit Percent of Collateral | 100.00% | |
Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Fair value of fuel derivatives - asset | $ 138 | |
Collateral Already Posted, Aggregate Fair Value | 0 | |
Aircraft collateral pledged to CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty A | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Fair value of fuel derivatives - asset | 38 | |
Collateral Already Posted, Aggregate Fair Value | 0 | |
Aircraft collateral pledged to CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty A | Minimum | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for aircraft | (200) | [1] |
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (50) | |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (600) | |
Fair value of fuel derivative level at which cash is received from CP | 50 | [2] |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (200) | [3] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | 0 | |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (600) | |
Fair value of fuel derivative level at which cash is received from CP | [4] | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (200) | |
Counterparty A | Maximum | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for aircraft | (600) | [1] |
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (200) | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (600) | [3] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (200) | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (600) | |
Counterparty B | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Fair value of fuel derivatives - asset | 23 | |
Collateral Already Posted, Aggregate Fair Value | 0 | |
Aircraft collateral pledged to CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty B | Minimum | Fuel derivatives | ||
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (50) | |
Fair value of fuel derivative level at which cash is received from CP | 150 | [2] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | [4] | |
Fair value of fuel derivative level at which cash is received from CP | [4] | |
Counterparty B | Maximum | Fuel derivatives | ||
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | ||
Counterparty C | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Fair value of fuel derivatives - asset | 43 | |
Collateral Already Posted, Aggregate Fair Value | 0 | |
Aircraft collateral pledged to CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty C | Minimum | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for aircraft | (150) | [5] |
Option to substitute LC for cash Threshold 1 | (75) | [5] |
Option to substitute LC for cash Threshold 2 | (550) | [5] |
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (75) | [2] |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (550) | [2] |
Fair value of fuel derivative level at which cash is received from CP | 250 | [2] |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (150) | [5] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | 0 | |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (550) | |
Fair value of fuel derivative level at which cash is received from CP | [4] | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (150) | |
Counterparty C | Maximum | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for aircraft | (550) | [5] |
Option to substitute LC for cash Threshold 1 | (150) | [5] |
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (150) | [2] |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (550) | [5] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (150) | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (550) | |
Counterparty D | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Fair value of fuel derivatives - asset | 12 | |
Collateral Already Posted, Aggregate Fair Value | 0 | |
Aircraft collateral pledged to CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty D | Minimum | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for aircraft | (150) | [5] |
Option to substitute LC for cash Threshold 1 | (125) | [6] |
Option to substitute LC for cash Threshold 2 | (550) | [6] |
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (125) | [2] |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (550) | [2] |
Fair value of fuel derivative level at which cash is received from CP | 125 | [2] |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (150) | [5] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | 0 | |
Fair value of fuel derivative levels at which cash is provided to CP Threshold 2 | (550) | |
Fair value of fuel derivative level at which cash is received from CP | [4] | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (150) | |
Counterparty D | Maximum | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for aircraft | (550) | [5] |
Option to substitute LC for cash Threshold 1 | (150) | [6] |
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (150) | [2] |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (550) | [5] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (150) | |
Fair value of fuel derivative levels at which aircraft or cash collateral is pledged to CP | (550) | |
Counterparty E | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Fair value of fuel derivatives - asset | 5 | |
Collateral Already Posted, Aggregate Fair Value | 0 | |
Aircraft collateral pledged to CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty E | Minimum | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Option to substitute LC for cash Threshold 1 | [6] | |
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (125) | |
Fair value of fuel derivative level at which cash is received from CP | 100 | [2] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | [4] | |
Fair value of fuel derivative level at which cash is received from CP | [4] | |
Counterparty F | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Fair value of fuel derivatives - asset | 10 | |
Collateral Already Posted, Aggregate Fair Value | 0 | |
Aircraft collateral pledged to CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty F | Minimum | Fuel derivatives | ||
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (70) | [2] |
Fair value of fuel derivative level at which cash is received from CP | 70 | [2] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | [4] | |
Fair value of fuel derivative level at which cash is received from CP | [4] | |
Counterparty Other | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Fair value of fuel derivatives - asset | 7 | [7] |
Collateral Already Posted, Aggregate Fair Value | 0 | [7] |
Aircraft collateral pledged to CP | 0 | [7] |
Letters of credit (LC) | $ 0 | [7] |
[1] | The Company has the option of providing letters of credit in addition to aircraft collateral if the appraised value of the aircraft does not meet the collateral requirements. | |
[2] | Thresholds may vary based on changes in credit ratings within investment grade. | |
[3] | The Company has the option of providing cash or pledging aircraft as collateral. | |
[4] | Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. | |
[5] | The Company has the option of providing cash, letters of credit, or pledging aircraft as collateral. | |
[6] | The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. | |
[7] | Individual counterparties with fair value of fuel derivatives <$5 million. |
Fair Value Measurements Narrati
Fair Value Measurements Narrative (Details) | 12 Months Ended |
Dec. 31, 2018Agreements | |
Fair Value Disclosures [Abstract] | |
Debt agreements not publicly held | 5 |
Fair Value Measurements - Measu
Fair Value Measurements - Measured on Recurring Basis (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Assets | |||
Time Deposits | $ 25 | ||
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 138 | $ 283 |
Fuel derivatives: | |||
Derivative Liability, Fair Value, Gross Liability | [1] | (14) | (57) |
Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Time Deposits | 0 | ||
Significant other observable inputs (Level 2) | |||
Assets | |||
Time Deposits | 25 | ||
Significant unobservable inputs (Level 3) | |||
Assets | |||
Time Deposits | 0 | ||
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Treasury bills | 1,582 | 1,491 | |
Fuel derivatives: | |||
Other available for sale securities | 127 | 107 | |
Assets, Fair Value Disclosure | 3,101 | 2,731 | |
Fuel derivatives: | |||
Interest rate derivatives (see Note 10) | 0 | 0 | |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Treasury bills | 0 | 0 | |
Fuel derivatives: | |||
Other available for sale securities | 0 | 0 | |
Assets, Fair Value Disclosure | 715 | 649 | |
Fuel derivatives: | |||
Interest rate derivatives (see Note 10) | (14) | (22) | |
Total Liabilities | (22) | ||
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Treasury bills | 0 | 0 | |
Fuel derivatives: | |||
Assets, Fair Value Disclosure | 138 | 283 | |
Fuel derivatives: | |||
Interest rate derivatives (see Note 10) | 0 | 0 | |
Total Liabilities | (35) | ||
Cash Equivalents | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Cash equivalents | [2] | 1,392 | 1,133 |
Cash Equivalents | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Cash equivalents | [2] | 0 | 0 |
Cash Equivalents | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Cash equivalents | [2] | 0 | 0 |
Commercial paper | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Cash equivalents | 0 | 0 | |
Commercial paper | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Cash equivalents | 454 | 350 | |
Commercial paper | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Cash equivalents | 0 | 0 | |
Certificates of deposit | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Cash equivalents | 0 | 0 | |
Certificates of deposit | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Cash equivalents | 8 | 12 | |
Certificates of deposit | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Cash equivalents | 0 | 0 | |
Certificates of deposit | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Investments | 0 | 0 | |
Certificates of deposit | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Investments | 228 | 287 | |
Certificates of deposit | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Investments | 0 | 0 | |
Options Held | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | [3] | 0 | 0 |
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Liability | [3] | 0 | |
Options Held | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | [3] | 0 | 0 |
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Liability | [3] | 0 | |
Options Held | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | [3] | 138 | 283 |
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Liability | [3] | (35) | |
Period end date | Fair Value, Measurements, Recurring | |||
Assets | |||
Treasury bills | 1,582 | 1,491 | |
Fuel derivatives: | |||
Other available for sale securities | 127 | 107 | |
Assets, Fair Value Disclosure | 3,954 | 3,663 | |
Fuel derivatives: | |||
Interest rate derivatives (see Note 10) | (14) | (22) | |
Total Liabilities | (57) | ||
Period end date | Cash Equivalents | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash equivalents | [2] | 1,392 | 1,133 |
Period end date | Commercial paper | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash equivalents | 454 | 350 | |
Period end date | Certificates of deposit | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash equivalents | 8 | 12 | |
Period end date | Certificates of deposit | Fair Value, Measurements, Recurring | |||
Assets | |||
Investments | 228 | 287 | |
Period end date | Options Held | Fair Value, Measurements, Recurring | |||
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | [3] | $ 138 | 283 |
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Liability | [3] | $ (35) | |
[1] | Represents the position of each trade before consideration of offsetting positions with each counterparty and does not include the impact of cash collateral deposits provided to or received from counterparties. See discussion of credit risk and collateral following in this Note. | ||
[2] | Cash equivalents are primarily composed of money market investments. | ||
[3] | In the Consolidated Balance Sheet amounts are presented as an asset. See Note 10. |
Fair Value Measurement - Fair V
Fair Value Measurement - Fair Value Assets and Liabilities Measured on Recurring Basis with Unobservable Inputs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Total losses (realized or unrealized) | |||
Included in other comprehensive income | $ (1) | ||
Fuel derivatives | |||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||
Beginning Balance | (248) | $ 258 | |
Total losses (realized or unrealized) | |||
Included in earnings | (125) | ||
Included in other comprehensive income | (50) | ||
Purchases | [1] | 66 | 142 |
Sales | [1] | (4) | |
Settlements | (171) | (539) | |
Ending Balance | (138) | (248) | |
The amount of total losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at December 31, 2017 | (42) | ||
Quoted prices in active markets for identical assets (Level 1) | Fair Value, Measurements, Recurring | |||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||
Assets, Fair Value Disclosure | 3,101 | 2,731 | |
Significant other observable inputs (Level 2) | Fair Value, Measurements, Recurring | |||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||
Assets, Fair Value Disclosure | 715 | 649 | |
Significant unobservable inputs (Level 3) | Fair Value, Measurements, Recurring | |||
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |||
Assets, Fair Value Disclosure | $ 138 | $ 283 | |
[1] | The purchase and sale of fuel derivatives are recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives is purchased as a single instrument or separate instruments. |
Fair Value Measurements - Quant
Fair Value Measurements - Quantitative Information about Level 3 Fair Value (Details) - Option Model - Implied Volatility - Fuel derivatives | Dec. 31, 2018 |
2,019 | |
Quantitative Information About Level 3 [Line Items] | |
Fair Value Measurement Range, Minimum | 29.00% |
Fair Value Measurement Range, Maximum | 49.00% |
2,020 | |
Quantitative Information About Level 3 [Line Items] | |
Fair Value Measurement Range, Minimum | 22.00% |
Fair Value Measurement Range, Maximum | 31.00% |
2,021 | |
Quantitative Information About Level 3 [Line Items] | |
Fair Value Measurement Range, Minimum | 19.00% |
Fair Value Measurement Range, Maximum | 24.00% |
2,022 | |
Quantitative Information About Level 3 [Line Items] | |
Fair Value Measurement Range, Minimum | 20.00% |
Fair Value Measurement Range, Maximum | 21.00% |
Fair Value Instruments - Carryi
Fair Value Instruments - Carrying and Estimated Fair Value of Debt (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Debt and Capital Lease Obligations | $ 3,396 | $ 3,693 |
French Credit Agreements due 2018 - 2.54% | ||
Debt Instrument [Line Items] | ||
Secured Debt - Carrying Value | 0 | $ 1 |
Interest rate stated in the debt agreement (in hundredths) | 2.54% | |
Fixed-rate 737 Aircraft Notes payable through 2018 - 7.03% | ||
Debt Instrument [Line Items] | ||
Interest rate stated in the debt agreement (in hundredths) | 7.03% | |
2.75% Unsecured Senior Notes Due November 2019 | ||
Debt Instrument [Line Items] | ||
Unsecured Debt - Carrying Value | $ 300 | $ 300 |
Interest rate stated in the debt agreement (in hundredths) | 2.75% | |
2.75% Unsecured Senior Notes Due November 2019 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Interest rate stated in the debt agreement (in hundredths) | 2.75% | |
Term Loan Agreement payable through May 2019 - 6.315% | ||
Debt Instrument [Line Items] | ||
Secured Debt - Carrying Value | $ 23 | 66 |
Interest rate stated in the debt agreement (in hundredths) | 6.315% | |
Term Loan Agreement payable through May 2019 - 6.315% | Notes Payable to Banks | ||
Debt Instrument [Line Items] | ||
Interest rate stated in the debt agreement (in hundredths) | 6.315% | |
Term Loan Agreement payable through July 2019 - 4.84% | ||
Debt Instrument [Line Items] | ||
Secured Debt - Carrying Value | $ 10 | 19 |
Interest rate stated in the debt agreement (in hundredths) | 4.84% | |
2.65% Notes due 2020 | ||
Debt Instrument [Line Items] | ||
Unsecured Debt - Carrying Value | $ 492 | 491 |
Interest rate stated in the debt agreement (in hundredths) | 2.65% | |
2.65% Notes due 2020 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Interest rate stated in the debt agreement (in hundredths) | 2.65% | |
Term Loan Agreement payable through 2020 - 5.223% | ||
Debt Instrument [Line Items] | ||
Secured Debt - Carrying Value | $ 187 | 237 |
Interest rate stated in the debt agreement (in hundredths) | 5.223% | |
Term Loan Agreement payable through 2020 - 5.223% | Notes Payable to Banks | ||
Debt Instrument [Line Items] | ||
Interest rate stated in the debt agreement (in hundredths) | 5.223% | |
Unsecured Senior Notes Due 2022 - 2.75% | ||
Debt Instrument [Line Items] | ||
Unsecured Debt - Carrying Value | $ 300 | 300 |
Interest rate stated in the debt agreement (in hundredths) | 2.75% | |
Pass Through Certificates due 2022 - 6.24% | Enhanced Equipment Trust Certificate | ||
Debt Instrument [Line Items] | ||
Secured Debt - Carrying Value | $ 250 | 294 |
Interest rate stated in the debt agreement (in hundredths) | 6.24% | |
Term Loan Agreement Due 2026 - 3.88% | ||
Debt Instrument [Line Items] | ||
Secured Debt - Carrying Value | $ 197 | 215 |
Interest rate stated in the debt agreement (in hundredths) | 3.88% | |
Unsecured Senior Notes Due 2026 - 3.00% | ||
Debt Instrument [Line Items] | ||
Unsecured Debt - Carrying Value | $ 300 | 300 |
Interest rate stated in the debt agreement (in hundredths) | 3.00% | |
Unsecured Senior Notes Due 2027 - 3.45% | ||
Debt Instrument [Line Items] | ||
Unsecured Debt - Carrying Value | $ 300 | 300 |
Interest rate stated in the debt agreement (in hundredths) | 3.45% | |
7.375% Debentures due 2027 | ||
Debt Instrument [Line Items] | ||
Unsecured Debt - Carrying Value | $ 125 | 127 |
Interest rate stated in the debt agreement (in hundredths) | 7.375% | |
Level 2 | 2.75% Unsecured Senior Notes Due November 2019 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | $ 299 | |
Level 2 | 2.65% Notes due 2020 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | 486 | |
Level 2 | Unsecured Senior Notes Due 2022 - 2.75% | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | 293 | |
Level 2 | Pass Through Certificates due 2022 - 6.24% | Enhanced Equipment Trust Certificate | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | 263 | |
Level 2 | Unsecured Senior Notes Due 2026 - 3.00% | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | 279 | |
Level 2 | Unsecured Senior Notes Due 2027 - 3.45% | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | 286 | |
Level 2 | 7.375% Debentures due 2027 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Loans Payable, Fair Value | 146 | |
Level 3 | Term Loan Agreement payable through May 2019 - 6.315% | Notes Payable to Banks | ||
Debt Instrument [Line Items] | ||
Loans Payable, Fair Value | 23 | |
Level 3 | Term Loan Agreement payable through July 2019 - 4.84% | Notes Payable to Banks | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | 10 | |
Level 3 | Term Loan Agreement payable through 2020 - 5.223% | Notes Payable to Banks | ||
Debt Instrument [Line Items] | ||
Loans Payable, Fair Value | 187 | |
Level 3 | 737 Aircraft Notes payable through 2020 | Notes Payable to Banks | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | 67 | |
Level 3 | Term Loan Agreement Due 2026 - 3.88% | Notes Payable to Banks | ||
Debt Instrument [Line Items] | ||
Loans Payable, Fair Value | 197 | |
AirTran Airways | Fixed-rate 737 Aircraft Notes payable through 2018 - 7.03% | ||
Debt Instrument [Line Items] | ||
Secured Debt - Carrying Value | 0 | 3 |
AirTran Airways | 737 Aircraft Notes payable through 2020 | ||
Debt Instrument [Line Items] | ||
Secured Debt - Carrying Value | $ 67 | $ 155 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Fuel and oil | $ 4,616 | $ 4,076 | $ 3,801 | |
Interest Expense | 131 | 114 | 122 | |
Fuel derivatives | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 3 | (499) | ||
Changes in fair value | 0 | (50) | ||
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 552 | |||
Beginning balance | (3) | 499 | ||
Changes in fair value | 0 | (50) | ||
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 552 | |||
Ending balance | (56) | 3 | (499) | |
Interest rate derivatives | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (7) | (18) | ||
Changes in fair value | 1 | 0 | ||
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 11 | |||
Beginning balance | 7 | 18 | ||
Changes in fair value | 1 | 0 | ||
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 11 | |||
Ending balance | 0 | (7) | (18) | |
Defined benefit plan items | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (9) | (14) | ||
Changes in fair value | 67 | 5 | ||
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 0 | 0 | ||
Beginning balance | 9 | 14 | ||
Changes in fair value | 67 | 5 | ||
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 0 | 0 | ||
Ending balance | 58 | (9) | (14) | |
Other | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 33 | 20 | ||
Changes in fair value | (8) | 13 | ||
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 0 | 0 | ||
Beginning balance | (33) | (20) | ||
Changes in fair value | (8) | 13 | ||
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 0 | 0 | ||
Ending balance | 25 | 33 | 20 | |
Deferred tax | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (8) | 188 | ||
Changes in fair value | (14) | 11 | ||
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 7 | (207) | ||
Beginning balance | 8 | (188) | ||
Changes in fair value | (14) | 11 | ||
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 7 | (207) | ||
Ending balance | (7) | (8) | 188 | |
Accumulated other comprehensive income (loss) | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 12 | (323) | ||
Changes in fair value | 46 | (21) | ||
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | (20) | 356 | ||
Beginning balance | (12) | 323 | ||
Changes in fair value | 46 | (21) | ||
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | (20) | 356 | ||
Ending balance | 20 | $ 12 | $ (323) | |
Fuel derivatives | Reclassification out of Accumulated Other Comprehensive Income | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Fuel and oil | (33) | |||
Interest rate derivatives | Reclassification out of Accumulated Other Comprehensive Income | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Interest Expense | 6 | |||
Accounting Standards Update 2017-12 [Member] | Fuel derivatives | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | [1] | (26) | ||
Accounting Standards Update 2017-12 [Member] | Interest rate derivatives | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | [1] | 0 | ||
Accounting Standards Update 2017-12 [Member] | Defined benefit plan items | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | [1] | 0 | ||
Accounting Standards Update 2017-12 [Member] | Other | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | [1] | 0 | ||
Accounting Standards Update 2017-12 [Member] | Deferred tax | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | [1] | 6 | ||
Accounting Standards Update 2017-12 [Member] | Accumulated other comprehensive income (loss) | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | [1] | (20) | ||
Accounting Standards Update 2018-02 [Domain] | Fuel derivatives | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | [2] | 0 | ||
Accounting Standards Update 2018-02 [Domain] | Interest rate derivatives | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | [2] | 0 | ||
Accounting Standards Update 2018-02 [Domain] | Defined benefit plan items | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | [2] | 0 | ||
Accounting Standards Update 2018-02 [Domain] | Other | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | [2] | 0 | ||
Accounting Standards Update 2018-02 [Domain] | Deferred tax | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | [2] | 2 | ||
Accounting Standards Update 2018-02 [Domain] | Accumulated other comprehensive income (loss) | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Cumulative Effect of New Accounting Principle in Period of Adoption | [2] | $ 2 | ||
[1] | The Company adopted the New Hedging Standard as of January 1, 2018. See Note 2 for further information on this adoption. | |||
[2] | The Company adopted the Reclassification of Certain Tax Effects from AOCI as of January 1, 2018, which allowed the Company to reclassify to Retained earnings any tax effects stranded in AOCI as a result of the Tax Cuts and Jobs Act enacted in December 2017. |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (Loss) - Reclassification out of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Interest Expense | $ 131 | $ 114 | $ 122 |
Fuel and oil | 4,616 | 4,076 | 3,801 |
Less: Tax Expense | 699 | $ (92) | $ 1,267 |
Reclassification out of Accumulated Other Comprehensive Income | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Net of tax | (20) | ||
Fuel derivatives | Reclassification out of Accumulated Other Comprehensive Income | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Fuel and oil | (33) | ||
Less: Tax Expense | (8) | ||
Net of tax | (25) | ||
Interest rate derivatives | Reclassification out of Accumulated Other Comprehensive Income | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Interest Expense | 6 | ||
Less: Tax Expense | 1 | ||
Net of tax | $ 5 |
Employee Retirement Plans (Deta
Employee Retirement Plans (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Defined contribution plans [Abstract] | ||||
Company contributions to all defined contribution plans expensed | $ 1,000 | $ 1,000 | $ 937 | |
Maximum age after retirement that employees may use accrued unused sick time to pay for medical and dental premiums | 65 years | |||
Change in benefit obligation [Roll Forward] | ||||
APBO at beginning of period | $ 275 | 256 | ||
Service cost | 18 | 18 | 13 | |
Interest cost | 9 | 11 | 9 | |
Benefits paid | (5) | (8) | ||
Actuarial gain | (69) | (2) | ||
Plan amendments | 4 | 0 | ||
APBO at end of period | 232 | 275 | 256 | |
Estimated future benefit payments time period [Abstract] | ||||
2,019 | 8 | |||
2,020 | 9 | |||
2,021 | 10 | |||
2,022 | 11 | |||
2,023 | 13 | |||
Next five years thereafter | 93 | |||
Reconciliation of funded status to accrued postretirement benefit cost recognized on the balance sheet [Abstract] | ||||
Funded status | (232) | (275) | ||
Unrecognized net actuarial (gain) loss | (64) | 5 | ||
Unrecognized prior service cost | 5 | 4 | ||
Accumulated other comprehensive income (loss) | 59 | (9) | ||
Cost recognized on Consolidated Balance Sheet | (232) | (275) | ||
Components of periodic postretirement benefit cost [Abstract] | ||||
Service cost | 18 | 18 | 13 | |
Interest cost | 9 | 11 | 9 | |
Amortization of prior service cost | 3 | 3 | 3 | |
Net periodic postretirement benefit cost | $ 30 | $ 32 | $ 25 | |
Actuarial assumptions used to account for postretirement benefit plans [Abstract] | ||||
Weighted-average discount rate (in hundredths) | 4.35% | 3.65% | 4.25% | |
Assumed healthcare cost trend rates [Abstract] | ||||
Assumed healthcare cost trend rate decline (in hundredths) | 5.19% | |||
Assumed healthcare cost trend rate | [1] | 7.13% | 7.08% | 7.08% |
Year the health care cost trend reaches ultimate rate (year) | 2,027 | |||
[1] | The assumed healthcare cost trend rate is assumed to be 7.13% for 2019, then decline gradually to 5.19% by 2027 and remain level thereafter. |
Income Taxes (Detail)
Income Taxes (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 35.00% | |
DEFERRED TAX LIABILITIES: | |||
Accelerated depreciation | $ 3,395 | $ 3,123 | |
Other | 92 | 83 | |
Deferred Tax Liabilities, Gross | 3,487 | 3,206 | |
DEFERRED TAX ASSETS: | |||
Deferred tax assets construction obligation | 355 | 318 | |
Accrued employee benefits | 329 | 301 | |
Rapid rewards loyalty liability | 267 | 338 | |
Other | 109 | 130 | |
Total deferred tax assets | 1,060 | 1,087 | |
Total deferred tax liabilities | 2,427 | 2,119 | |
CURRENT: | |||
Federal | 338 | 904 | $ 778 |
State | 60 | 72 | 69 |
Total current | 398 | 976 | 847 |
DEFERRED: | |||
Federal | 299 | 200 | 393 |
State | 2 | 2 | 27 |
Change in federal statutory rate | 0 | (1,270) | 0 |
Total deferred | 301 | (1,068) | 420 |
Total | 699 | (92) | 1,267 |
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation [Abstract] | |||
Tax at statutory U.S. tax rates | 664 | 1,143 | 1,208 |
State income taxes, net of federal benefit | 49 | 50 | 62 |
Change in federal statutory rate | 0 | (1,270) | 0 |
Other, net | $ (14) | $ (15) | $ (3) |
Supplemental Financial Inform_3
Supplemental Financial Information - Other Assets (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Other Assets [Abstract] | ||
Derivative contracts | $ 95 | $ 136 |
Intangible assets, net | 400 | 413 |
Capital lease receivable | 61 | 76 |
Other | 164 | 161 |
Other assets | $ 720 | $ 786 |
Supplemental Financial Inform_4
Supplemental Financial Information - Accounts Payable (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts Payable [Abstract] | ||
Accounts payable trade | $ 263 | $ 186 |
Salaries payable | 216 | 201 |
Taxes payable | 220 | 203 |
Aircraft maintenance payable | 69 | 38 |
Fuel payable | 122 | 123 |
Other payable | 526 | 569 |
Accounts Payable, Current | $ 1,416 | $ 1,320 |
Supplemental Financial Inform_5
Supplemental Financial Information - Accrued Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Supplemental Financial Data [Line Items] | ||
Profitsharing and savings plans | $ 580 | $ 579 |
Aircraft and other lease related obligations | 37 | 40 |
Permanently grounded aircraft liability current | 0 | 34 |
Vacation pay | 403 | 365 |
Health | 107 | 100 |
Workers compensation | 166 | 172 |
Property and income taxes | 68 | 57 |
Other | 388 | 353 |
Accrued liabilities | 1,749 | 1,700 |
Interest rate derivatives | Accrued Liabilities | ||
Supplemental Financial Data [Line Items] | ||
Derivative contracts | $ 2 | $ 1 |
Supplemental Financial Inform_6
Supplemental Financial Information - Other Non-Current Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Other Liabilities, Noncurrent [Abstract] | |||||
Postretirement obligation | $ 232 | $ 275 | |||
Non-current lease-related obligations | 48 | 85 | |||
Permanently grounded aircraft liability noncurrent | 0 | 13 | |||
Other deferred compensation | 247 | 237 | |||
Other | 111 | 76 | |||
Other non-current liabilities | 650 | 707 | |||
Aircraft grounding charge | $ 63 | 0 | 63 | $ 0 | |
Other Noncurrent Liabilities | |||||
Other Liabilities, Noncurrent [Abstract] | |||||
Derivative contracts | 12 | 21 | |||
Other Noncurrent Liabilities | Interest Rate Swap | |||||
Other Liabilities, Noncurrent [Abstract] | |||||
Derivative contracts | [1] | $ 12 | $ 21 | ||
[1] | The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the Consolidated Balance Sheet in Note 15. |
Quarterly Financial Data (Detai
Quarterly Financial Data (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Quarterly Financial Data [Abstract] | ||||||||||||
Operating revenues | $ 5,704 | $ 5,575 | $ 5,742 | $ 4,944 | $ 5,258 | $ 5,303 | $ 5,731 | $ 4,854 | ||||
Operating income | 820 | 798 | 972 | 616 | 741 | 845 | 1,215 | 606 | $ 3,206 | $ 3,407 | $ 3,522 | |
Income before income taxes | 817 | 786 | 960 | 602 | 736 | 832 | 1,165 | 532 | 3,164 | 3,265 | 3,450 | |
Net income | $ 654 | $ 615 | $ 733 | $ 463 | $ 1,747 | [1] | $ 528 | $ 743 | $ 339 | $ 2,465 | $ 3,357 | $ 2,183 |
Basic (in dollars per share) | $ 1.17 | $ 1.08 | $ 1.27 | $ 0.79 | $ 2.95 | [1] | $ 0.88 | $ 1.23 | $ 0.55 | $ 4.30 | $ 5.58 | $ 3.48 |
Diluted (in dollars per share) | $ 1.17 | $ 1.08 | $ 1.27 | $ 0.79 | $ 2.94 | [1] | $ 0.88 | $ 1.23 | $ 0.55 | $ 4.29 | $ 5.57 | $ 3.45 |
Change in federal statutory rate | $ 0 | $ 1,270 | $ 0 | |||||||||
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Percent | 21.00% | |||||||||||
[1] | Includes a $1.3 billion reduction in Provision for income taxes related to the Tax Cuts and Jobs Act legislation enacted in December 2017, which resulted in a re-measurement of the Company's deferred tax assets and liabilities at the new federal corporate tax rate of 21 percent. See Note 14 to the Consolidated Financial Statements for further information. |