Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 23, 2020 | |
Entity Information [Line Items] | ||
Document Transition Report | false | |
Entity Incorporation, State or Country Code | TX | |
Document Quarterly Report | true | |
Entity Registrant Name | SOUTHWEST AIRLINES CO. | |
City Area Code | 214 | |
Local Phone Number | 792-4000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Central Index Key | 0000092380 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Entity File Number | 1-7259 | |
Document Period End Date | Jun. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 589,872,108 | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Tax Identification Number | 74-1563240 | |
Entity Address, Address Line One | P.O. Box 36611 | |
Entity Address, City or Town | Dallas, | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75235-1611 | |
NEW YORK STOCK EXCHANGE, INC. [Member] | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Common Stock ($1.00 par value) | |
Trading Symbol | LUV | |
Security Exchange Name | NYSE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheet - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 12,351 | $ 2,548 |
Short-term investments | 2,106 | 1,524 |
Accounts and other receivables | 770 | 1,086 |
Inventories of parts and supplies, at cost | 422 | 529 |
Prepaid expenses and other current assets | 223 | 287 |
Total current assets | 15,872 | 5,974 |
Property and equipment, at cost: | ||
Flight equipment | 20,943 | 21,629 |
Ground property and equipment | 5,923 | 5,672 |
Deposits on flight equipment purchase contracts | 306 | 248 |
Assets constructed for others | 239 | 164 |
Property and equipment, at cost | 27,411 | 27,713 |
Less allowance for depreciation and amortization | 11,164 | 10,688 |
Property and equipment, net | 16,247 | 17,025 |
Goodwill | 970 | 970 |
Operating lease right-of-use assets | 1,845 | 1,349 |
Other assets | 662 | 577 |
Total assets | 35,596 | 25,895 |
Current liabilities: | ||
Accounts payable | 970 | 1,574 |
Accrued liabilities | 2,372 | 1,749 |
Current operating lease liabilities | 336 | 353 |
Air traffic liability | 4,988 | 4,457 |
Current maturities of long-term debt | 695 | 819 |
Total current liabilities | 9,361 | 8,952 |
Long-term debt less current maturities | 8,905 | 1,846 |
Air traffic liability - noncurrent | 1,891 | 1,053 |
Deferred income taxes | 2,114 | 2,364 |
Construction obligation | 239 | 164 |
Noncurrent operating lease liabilities | 1,486 | 978 |
Other noncurrent liabilities | 722 | 706 |
Stockholders' equity: | ||
Common stock | 888 | 808 |
Capital in excess of par value | 4,159 | 1,581 |
Retained earnings | 16,842 | 17,945 |
Accumulated other comprehensive loss | (130) | (61) |
Treasury stock, at cost | (10,881) | (10,441) |
Total stockholders' equity | 10,878 | 9,832 |
Total liabilities and stockholders' equity | $ 35,596 | $ 25,895 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Comprehensive Income (Loss) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
OPERATING REVENUE: | ||||
Operating Revenue | $ 1,008 | $ 5,909 | $ 5,242 | $ 11,059 |
OPERATING EXPENSES: | ||||
Salaries, wages, and benefits | 1,714 | 2,068 | 3,568 | 4,043 |
Payroll support, voluntary separation, net | (784) | 0 | (784) | 0 |
Fuel and oil | 257 | 1,136 | 1,128 | 2,152 |
Landing fees and airport rentals | 275 | 357 | 614 | 691 |
Maintenance materials and repairs | 140 | 310 | 412 | 603 |
Depreciation and amortization | 313 | 302 | 624 | 598 |
Other operating expenses | 220 | 768 | 917 | 1,499 |
Operating Costs and Expenses | 2,135 | 4,941 | 6,479 | 9,586 |
OPERATING INCOME (LOSS) | (1,127) | 968 | (1,237) | 1,473 |
OTHER EXPENSES (INCOME): | ||||
Interest expense | 96 | 31 | 124 | 61 |
Capitalized interest | (7) | (9) | (12) | (17) |
Interest income | (9) | (24) | (26) | (47) |
Other (gains) losses, net | 32 | 2 | 60 | 4 |
Total other expenses (income) | 112 | 0 | 146 | 1 |
INCOME (LOSS) BEFORE INCOME TAXES | (1,239) | 968 | (1,383) | 1,472 |
PROVISION FOR INCOME TAXES | (324) | 227 | (374) | 344 |
NET INCOME (LOSS) | $ (915) | $ 741 | $ (1,009) | $ 1,128 |
Earnings (Loss) Per Share, Basic and Diluted | $ (1.63) | $ 1.37 | $ (1.87) | $ 2.06 |
COMPREHENSIVE INCOME (LOSS) | $ (859) | $ 675 | $ (1,078) | $ 1,138 |
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING | ||||
Weighted Average Number of Shares Outstanding, Basic and Diluted | 563 | 542 | 539 | 547 |
Passenger | ||||
OPERATING REVENUE: | ||||
Operating Revenue | $ 704 | $ 5,487 | $ 4,549 | $ 10,231 |
Freight | ||||
OPERATING REVENUE: | ||||
Operating Revenue | 38 | 44 | 77 | 87 |
Other | ||||
OPERATING REVENUE: | ||||
Operating Revenue | $ 266 | $ 378 | $ 616 | $ 741 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Stockholders' Equity Statement - USD ($) $ in Millions | Total | Treasury stock | Accumulated other comprehensive income (loss) | Retained earnings | Capital in excess of par value | Common Stock |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Cumulative effect of new accounting standards | $ 55 | $ 0 | $ 0 | $ 55 | $ 0 | $ 0 |
Balance at beginning of period at Dec. 31, 2018 | 9,853 | (8,452) | 20 | 15,967 | 1,510 | 808 |
Balance at beginning of period (Accounting Standards Update 2016-02) at Dec. 31, 2018 | 9,908 | (8,452) | 20 | 16,022 | 1,510 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Repurchase of common stock | (500) | (500) | 0 | 0 | 0 | 0 |
Issuance of common and treasury stock pursuant to Employee stock plans | 4 | 6 | 0 | 0 | 10 | 0 |
Share-based compensation | (13) | 0 | 0 | 0 | (13) | 0 |
Cash dividends | (89) | 0 | 0 | 89 | 0 | 0 |
Comprehensive income (loss) | 463 | 0 | 76 | 387 | 0 | 0 |
Balance at end of period at Mar. 31, 2019 | $ 9,791 | (8,946) | 96 | 16,320 | 1,513 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Cash dividends, per share (in dollars per share) | $ 0.160 | |||||
Balance at beginning of period at Dec. 31, 2018 | $ 9,853 | (8,452) | 20 | 15,967 | 1,510 | 808 |
Balance at beginning of period (Accounting Standards Update 2016-02) at Dec. 31, 2018 | 9,908 | (8,452) | 20 | 16,022 | 1,510 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Comprehensive income (loss) | 1,138 | |||||
Balance at end of period at Jun. 30, 2019 | 9,940 | (9,394) | 30 | 16,962 | 1,534 | 808 |
Balance at beginning of period at Mar. 31, 2019 | 9,791 | (8,946) | 96 | 16,320 | 1,513 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Repurchase of common stock | (450) | (450) | 0 | 0 | 0 | 0 |
Issuance of common and treasury stock pursuant to Employee stock plans | 10 | 2 | 0 | 0 | (8) | 0 |
Share-based compensation | (13) | 0 | 0 | 0 | (13) | 0 |
Cash dividends | (99) | 0 | 0 | 99 | 0 | 0 |
Comprehensive income (loss) | 675 | 0 | (66) | 741 | 0 | 0 |
Balance at end of period at Jun. 30, 2019 | $ 9,940 | (9,394) | 30 | 16,962 | 1,534 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Cash dividends, per share (in dollars per share) | $ 0.180 | |||||
Balance at beginning of period at Dec. 31, 2019 | $ 9,832 | (10,441) | (61) | 17,945 | 1,581 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Repurchase of common stock | (451) | (451) | 0 | 0 | 0 | 0 |
Issuance of common and treasury stock pursuant to Employee stock plans | 2 | 6 | 0 | 0 | 8 | 0 |
Share-based compensation | (9) | 0 | 0 | 0 | (9) | 0 |
Cash dividends | (94) | 0 | 0 | (94) | 0 | 0 |
Comprehensive income (loss) | (219) | 0 | (125) | (94) | 0 | 0 |
Balance at end of period at Mar. 31, 2020 | $ 9,075 | (10,886) | (186) | 17,757 | 1,582 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Cash dividends, per share (in dollars per share) | $ 0.180 | |||||
Balance at beginning of period at Dec. 31, 2019 | $ 9,832 | (10,441) | (61) | 17,945 | 1,581 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Comprehensive income (loss) | (1,078) | |||||
Balance at end of period at Jun. 30, 2020 | 10,878 | (10,881) | (130) | 16,842 | 4,159 | 888 |
Balance at beginning of period at Mar. 31, 2020 | 9,075 | (10,886) | (186) | 17,757 | 1,582 | 808 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 13 | 5 | 0 | 0 | 8 | 0 |
Share-based compensation | 2 | 0 | 0 | 0 | 2 | 0 |
Stock warrants | 35 | 0 | 0 | 0 | 35 | 0 |
Equity feature of convertible notes, net of issuance costs | 392 | 0 | 0 | 0 | 392 | 0 |
Comprehensive income (loss) | (859) | 0 | 56 | (915) | 0 | 0 |
Balance at end of period at Jun. 30, 2020 | 10,878 | (10,881) | (130) | 16,842 | 4,159 | 888 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock Issued During Period, Value, New Issues | $ 2,224 | $ 0 | $ 0 | $ 0 | $ 2,144 | $ 80 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity (Parentheticals) - $ / shares | 3 Months Ended | ||
Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | |
Cash dividends, per share (in dollars per share) | $ 0.180 | $ 0.180 | $ 0.160 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Cash Flows - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net income (loss) | $ (915) | $ 741 | $ (1,009) | $ 1,128 |
Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||||
Depreciation and amortization | 313 | 302 | 624 | 598 |
Unrealized/realized (gain) loss on fuel derivative instruments | 6 | 0 | 8 | 0 |
Deferred income taxes | (181) | 36 | (230) | 50 |
Gain on sale-leaseback transactions | (222) | 0 | (222) | 0 |
Changes in certain assets and liabilities: | ||||
Accounts and other receivables | (119) | 18 | 64 | (204) |
Other assets | 224 | 86 | 282 | 115 |
Accounts payable and accrued liabilities | 1,200 | (89) | (90) | (346) |
Air traffic liability | 667 | (30) | 1,368 | 914 |
Other liabilities | (74) | (54) | (206) | (123) |
Cash collateral received from (provided to) derivative counterparties | 12 | (15) | 7 | 0 |
Other, net | (14) | (29) | (76) | (61) |
Net cash provided by operating activities | 897 | 966 | 520 | 2,071 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Capital expenditures | (113) | (230) | (336) | (390) |
Supplier Proceeds | 128 | 0 | 428 | 0 |
Purchases of short-term investments | (1,316) | (550) | (2,345) | (800) |
Proceeds from sales of short-term and other investments | 818 | 528 | 1,765 | 1,103 |
Net cash provided by (used in) investing activities | 332 | (252) | 327 | (87) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Issuance of common stock | 2,294 | 0 | 2,294 | 0 |
Proceeds from issuance of long-term debt | 3,997 | 0 | 4,497 | 0 |
Proceeds from term loan credit facility | 2,683 | 0 | 3,683 | 0 |
Proceeds from revolving credit facility | 0 | 0 | 1,000 | 0 |
Proceeds from convertible notes | 2,300 | 0 | 2,300 | 0 |
Proceeds from Payroll Support Program loan and warrants | 885 | 0 | 885 | 0 |
Proceeds from Employee stock plans | 13 | 10 | 24 | 20 |
Repurchase of common stock | 0 | (450) | (451) | (950) |
Payments of long-term debt and finance lease obligations | (159) | (75) | (237) | (175) |
Payments of cash dividends | 0 | (98) | (188) | (276) |
Capitalized financing costs | 171 | 0 | 176 | 0 |
Other, net | 23 | 1 | 8 | (11) |
Net cash provided by (used in) financing activities | 7,182 | (612) | 8,956 | (1,392) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 8,411 | 102 | 9,803 | 592 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 3,940 | 2,344 | 2,548 | 1,854 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 12,351 | 2,446 | 12,351 | 2,446 |
CASH PAYMENTS FOR: | ||||
Interest, net of amount capitalized | 40 | 33 | 54 | 48 |
Income taxes | 5 | 314 | 10 | 318 |
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract] | ||||
Right-of-use assets acquired under operating leases | 661 | 0 | 686 | 0 |
Assets Constructed for Others | 41 | 24 | 75 | 45 |
Sale Leaseback Cash Proceeds Investing | 815 | 0 | 815 | 0 |
364-Day Term Loan Credit Facility | ||||
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract] | ||||
Repayment of Short-term Debt | (3,683) | 0 | (3,683) | 0 |
Revolving Credit Facility | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Payments of revolving credit facility | $ (1,000) | $ 0 | $ (1,000) | $ 0 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Southwest Airlines Co. (the "Company" or "Southwest") operates Southwest Airlines, a major passenger airline that provides scheduled air transportation in the United States and near-international markets. The unaudited Condensed Consolidated Financial Statements include accounts of the Company and its wholly owned subsidiaries. The accompanying unaudited Condensed Consolidated Financial Statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles in the United States ("GAAP") for complete financial statements. The unaudited Condensed Consolidated Financial Statements for the interim periods ended June 30, 2020 and 2019 include all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods. This includes all normal and recurring adjustments and elimination of significant intercompany transactions. Financial results for the Company and airlines in general can be seasonal in nature. In many years, the Company's revenues, as well as its Operating income and Net income, have been better in its second and third fiscal quarters than in its first and fourth fiscal quarters. However, in 2020, as a result of the COVID-19 pandemic, the Company's results were not in line with such historical trends. See Note 2 for further information. Air travel is also significantly impacted by general economic conditions, the amount of disposable income available to consumers, unemployment levels, corporate travel budgets, extreme or severe weather and natural disasters, fears of terrorism or war, and other factors beyond the Company's control. These and other factors, such as the price of jet fuel in some periods, the nature of the Company's fuel hedging program, and the periodic volatility of commodities used by the Company for hedging jet fuel, have created, and may continue to create, significant volatility in the Company's financial results. See Note 4 for further information on fuel and the Company's hedging program. Operating results for the three and six months ended June 30, 2020, are not necessarily indicative of the results that may be expected for future quarters or for the year ended December 31, 2020. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. |
WORLDWIDE PANDEMIC
WORLDWIDE PANDEMIC | 6 Months Ended |
Jun. 30, 2020 | |
Worldwide Pandemic [Abstract] | |
Worldwide Pandemic | WORLDWIDE PANDEMIC As a result of the rapid spread of the novel coronavirus, COVID-19, throughout the world, including into the United States, on March 11, 2020, the World Health Organization classified the virus as a pandemic. The speed with which the effects of the COVID-19 pandemic have changed the U.S. economic landscape, outlook, and in particular the travel industry, has been swift and unexpected. The Company began to see a negative impact on bookings for future travel in late February 2020, which quickly accelerated during the remainder of first quarter and into second quarter, when trip cancellations outpaced new passenger bookings during the majority of March and April 2020. The Company began proactively canceling a significant portion of its scheduled flights in March, and continued making cancellations throughout second quarter, as the Company grounded a significant portion of its fleet and operated a fraction of its previously scheduled capacity. The Company continued to experience significant negative impacts to passenger demand and bookings in second quarter 2020 due to the pandemic. Based on these events and the uncertainty they created, the Company immediately began to focus on its liquidity, including quickly and substantially enhancing its cash holdings. Since the beginning of 2020, the Company has raised a total of $17.3 billion, net of fees. On April 20, 2020, the Company entered into definitive documentation with the United States Department of Treasury (the "Treasury") with respect to funding support pursuant to the Payroll Support Program ("Payroll Support") under the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). Payroll Support funds must be used to pay employee wages and benefits through at least September 30, 2020. The Company's expected aggregate receipts under the Payroll Support total approximately $3.3 billion. As consideration for the Payroll Support, the Company issued a promissory note (the "Note") in favor of the Treasury and entered into a warrant agreement with the Treasury (the "Warrant Agreement"), pursuant to which the Company agreed to issue warrants (each, a "Warrant") to purchase common stock of the Company to the Treasury. The Note was issued in an initial amount of $459 million, and the Company issued an initial Warrant to purchase up to 1.3 million shares of the Company's common stock. In accordance with the terms of the Note and the Warrant Agreement, upon each subsequent disbursement of Payroll Support to the Company (i) the principal amount of the Note will automatically be increased in an amount equal to 30 percent of any such disbursement and (ii) the Company will issue an additional Warrant to the Treasury in an amount equal to 10 percent of the principal amount of the increase to the Note in connection with such disbursement of Payroll Support, divided by the strike price of $36.47 (which was the closing price of the Company's common stock on April 9, 2020). Through June 30, 2020, the Company has received three of four expected installments of Payroll Support, representing 90 percent of the expected Payroll Support from the Treasury. These cumulative amounts totaled $2.9 billion, including $1.6 billion received in April and $652 million received in both May and June 2020. As of June 30, 2020, the Company has provided a Note in the aggregate amount of $850 million and issued Warrants valued at a total of $35 million to purchase up to an aggregate of 2.3 million shares of the Company's common stock, subject to adjustment pursuant to the terms of the Warrants. Pursuant to the terms of the Payroll Support Program agreement and the CARES Act, the Payroll Support funds may only be utilized to pay qualifying salaries, wages, and benefits, as defined in the CARES Act. As of June 30, 2020, excluding the $850 million Note and the $1.1 billion in Payroll Support already allocated to reduce eligible costs in second quarter 2020, approximately $957 million in Payroll Support funds remain to be allocated during third quarter 2020 and were within Accrued liabilities in the accompanying unaudited Condensed Consolidated Balance Sheet. Such funds are included as part of Cash and cash equivalents in the accompanying unaudited Condensed Consolidated Balance Sheet as of June 30, 2020. The Company expects the final 10 percent, or $326 million, of Payroll Support to be received in late July 2020, for which the Company expects to provide consideration in the form of an increase of the Note in an amount of $98 million and issue a Warrant to purchase up to 268 thousand shares of the Company's common stock, subject to adjustment pursuant to the terms of the Warrant. The Note matures in full on April 19, 2030, and is subject to mandatory prepayment requirements in connection with certain change of control triggering events that may occur prior to its maturity. The Company has an option to prepay the Note at any time without premium or penalty. Amounts outstanding under the Note bear interest at a rate of 1.00 percent before April 20, 2025 and, afterwards, at a rate equal to the Secured Overnight Financing Rate or other benchmark replacement rate consistent with customary market conventions plus a margin of 2.00 percent. The Note contains customary representations and warranties and events of default. The Warrant Agreement sets out the Company’s obligations to issue Warrants in connection with disbursements of Payroll Support and to file a resale shelf registration statement for the Warrants and the underlying shares of common stock. The Company has also granted the Treasury certain demand underwritten offering and piggyback registration rights with respect to the Warrants and the underlying common stock. Each Warrant is exercisable at a strike price of $36.47 per share of common stock and will expire on the fifth anniversary of the issue date of such Warrant. The Warrants will be settled through net share settlement or net cash settlement, at the Company’s option. The Warrants include adjustments for below market issuances, payment of dividends, and other customary anti-dilution provisions. The Warrants do not have voting rights. Although the Company has not yet decided whether it will participate in the separate secured loan program established under the CARES Act, it did sign a non-binding letter of intent, effective in June, with the Treasury with respect to a potential loan with an estimated principal amount of approximately $2.8 billion. This was the next step in the loan application process, and the Company expects to receive further information about the secured loan program in third quarter 2020. In addition to obtaining financing under the CARES Act as well as accessing the capital markets, the Company believes it has made significant progress on bolstering its liquidity through cost reductions. These efforts include aggressively evaluating all capital spending, discretionary spending, and non-essential costs for near-term cost reductions or deferrals; reducing the Company's published flight schedule; placing a significant number of aircraft in storage; implementing voluntary time-off programs for Employees; suspending all hiring and non-contract salary increases; reducing named executive officer salaries and Board of Director cash retainer fees by 20 percent; and modifying vendor and supplier payment terms. The Company will continue evaluating the need for further flight schedule adjustments. To support physical-distancing, the Company is currently limiting the number of seats sold on each flight to allow for middle seats to remain open for Customers who are not traveling together through at least October 2020, and will evaluate the possibility of extending this policy beyond October. On June 1, 2020, the Company announced Voluntary Separation Program 2020, a voluntary separation program that allowed eligible Employees the opportunity to voluntarily separate from the Company in exchange for severance, medical/dental coverage for a specified period of time, and travel privileges based on years of service. Virtually all of the Company’s Employees hired before June 1, 2020 were eligible to participate in the Voluntary Separation Program 2020. Employees electing to participate in Voluntary Separation Program 2020 were required to notify the Company of their election no later than July 15, 2020--with the stipulation that all Employees electing to participate had a total of seven days from their date of initial election to rescind their election and remain employed by the Company. Following the deadline to rescind such election, a total of over 4,200 Employees have elected to participate in Voluntary Separation Program 2020, consisting of the following breakdown among workgroups: 390 from Customer Support and Services, 1,060 from Ground Operations and Provisioning, 725 Flight Attendants, 640 Pilots, 185 from Maintenance, 90 from other Contract groups, and 1,145 Managerial and Administrative Employees. Voluntary Separation Program 2020 participants’ last day of work will fall between August 15, 2020 and September 30, 2020, as assigned by the Company based on the operational needs of particular work locations and departments, determined on an individual-by-individual basis. In conjunction with Voluntary Separation Program 2020, the Company also offered certain contract Employees the option to take voluntary Extended Emergency Time Off ("Extended ETO"), for periods between six and 18 months, with the exception of Pilots, who could elect to take Extended ETO for periods up to five years. Employees taking Extended ETO do not perform any work for the Company, but do get paid a portion of their wages and continue to receive all associated benefits, as well as accrue service credit for all benefits. The purpose of the Voluntary Separation Program 2020 and Extended ETO is to maintain a suitable sized workforce to operate at reduced capacity relative to the Company's operations prior to the COVID-19 pandemic. In accordance with the accounting guidance in ASC Topic 712 (Compensation — Nonretirement Postemployment Benefits), the Company accrued a charge related to the special termination benefits described above associated with Employees who had accepted the Voluntary Separation Program 2020 offer at June 30, 2020 of $307 million during second quarter 2020, all of which will be paid out in subsequent periods to these Employees. Costs incurred for Voluntary Separation Program 2020 and Extended ETO are recorded as a component of Payroll support, voluntary separation, net. The Company will record the additional special termination benefits charge associated with the Employees whose voluntary separation and Extended ETO elections were finalized during July, and were subsequently accepted by the Company, during third quarter 2020, and expects this charge to be material to third quarter results. In response to flight schedule adjustments due to the effects of the COVID-19 pandemic, a number of aircraft were taken out of the Company’s schedule beginning in late March. As of June 30, 2020, a portion of the Company's fleet had been placed in temporary storage, as well as some in a longer term storage program. Given the current expectation that these aircraft have been grounded temporarily, the Company has continued to record depreciation expense associated with them. As a result of the events and impacts surrounding the COVID-19 pandemic, including the Company's net loss incurred during the six months ended June 30, 2020, and the significant number of aircraft that have been placed in storage, the Company considered whether these conditions indicated that it was more likely than not that the Company’s $970 million in Goodwill and its $295 million in indefinite-lived intangible assets were impaired. Upon review, the Company determined that, based on the facts and circumstances in existence as of June 30, 2020, the fair values more likely than not exceeded book values of both its reporting unit and its indefinite-lived intangible assets and therefore, no quantitative test was required. In addition, the Company has assessed whether any impairment of its amortizable assets existed, and has determined that no charges were deemed necessary under applicable accounting standards as of June 30, 2020. The Company’s assumptions about future conditions important to its assessment of potential impairment of its amortizable assets, indefinite-lived intangible assets, and goodwill, including the impacts of the COVID-19 pandemic and other ongoing impacts to its business, are subject to uncertainty, and the Company will continue to monitor these conditions in future periods as new information becomes available, and will update its analyses accordingly. The Company's income tax benefit recorded for the first six months of 2020 was at a rate of 27.0 percent, which is higher than the first six months of 2019 tax rate of 23.4 percent. The higher effective tax rate in 2020 reflects the anticipated benefit of carrying back full year 2020 projected net losses to claim tax refunds against previous cash taxes paid relating to tax years 2015 through 2019, some of which were at higher rates than the current year. |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jun. 30, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS On December 18, 2019, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This new standard eliminates certain exceptions in Accounting Standards Codification ("ASC") 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted in any interim period within that year. The Company elected to early adopt this standard as of January 1, 2020. The most significant impact to the Company is the removal of a limit on the tax benefit recognized on pre-tax losses in interim periods. However, the early adoption as of January 1, 2020, did not have an impact on the Company's financial statements or disclosures for the first six months of 2020. On August 29, 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software. This standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in 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 standard is effective for public business entities in fiscal years beginning after December 15, 2019, and the standard was adopted and applied prospectively by the Company as of January 1, 2020, but it did not have a significant impact on the Company's financial statements and disclosures. 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 fiscal years. This 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 adopted the standard as of January 1, 2020, but it did not have a significant impact on the Company's financial statements or disclosures. See Note 9 for further information on the Company's fair value measurements. On January 26, 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The new standard eliminates Step 2 from the goodwill impairment test. An entity should recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. This standard is effective for public business entities in fiscal years beginning after December 15, 2019, and the standard was adopted and applied prospectively by the Company as of January 1, 2020, but it did not have a significant impact on the Company's financial statements and disclosures. |
FINANCIAL DERIVATIVE INSTRUMENT
FINANCIAL DERIVATIVE INSTRUMENTS | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
FINANCIAL DERIVATIVE INSTRUMENTS | (550)(b) (125) to (150) or >(550)(c) (c) N/A If credit rating is investment Cash is provided to CP >(100) >(50) (75) to (150) or >(550)(d) (125) to (150) or >(550)(d) >(40) >(65)(d) Cash is received from CP >0(d) >150(d) >250(d) >125(d) >100(d) >70(d) Cash can be pledged to (200) to (600)(e) N/A (150) to (550)(b) (150) to (550)(b) N/A N/A If credit rating is non-investment Cash is provided to CP (0) to (200) or >(600) (f) (0) to (150) or >(550) (0) to (150) or >(550) (f) (f) Cash is received from CP (f) (f) (f) (f) (f) (f) Cash can be pledged to (200) to (600) N/A (150) to (550) (150) to (550) N/A N/A (a) Individual counterparties with fair value of fuel derivatives < $8 million. (b) The Company has the option of providing cash or letters of credit as collateral. (c) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (d) Thresholds may vary based on changes in credit ratings within investment grade. (e) The Company has the option of providing cash as collateral. (f) 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 the three and six months ended June 30, 2020, the Company had fuel derivative instruments in place for up to 95 percent an d 79 percent, respectively, of its fuel consumption. As of June 30, 2020, the Company also had fuel derivative instruments in place to provide coverage at varying price levels. The following table provides information about the Company’s volume of fuel hedging on an economic basis: Maximum fuel hedged as of June 30, 2020 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) June 30, 2020 Remainder of 2020 460 WTI crude oil, Brent crude oil, and Heating oil 2021 1,283 WTI crude oil and Brent crude oil 2022 1,056 WTI crude oil and Brent crude oil Beyond 2022 529 WTI crude oil and Brent 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 and the Company's flight schedule fluctuates. Upon proper qualification, the Company accounts for its fuel derivative instruments as cash flow hedges. All periodic changes in fair value of the derivatives designated as hedges are recorded in Accumulated other comprehensive income (loss) ("AOCI") until the underlying jet fuel is consumed. See Note 5. 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 unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) 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 will be required to be immediately reclassified into earnings. During first and second quarter 2020, as a result of the drastic drop in demand for air travel, the Company's forecast for 2020 fuel purchases and consumption was significantly reduced, causing the Company to be in an estimated "over–hedged" position for second, third, and fourth quarter 2020. Therefore, the Company de–designated a portion of its fuel hedges related to second, third, and fourth quarter 2020 and has reclassified approximately $14 million and $16 million in losses from AOCI into Other (gains) losses, net, during the three and six months ended June 30, 2020, respectively. The Company did not have any such situations occur during 2019. All cash flows associated with purchasing and selling fuel derivatives are classified as Other operating cash flows in the unaudited Condensed 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 unaudited Condensed Consolidated Balance Sheet: Asset derivatives Liability derivatives Balance Sheet Fair value at Fair value at Fair value at Fair value at (in millions) location 6/30/2020 12/31/2019 6/30/2020 12/31/2019 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 7 $ 48 $ — $ — Fuel derivative contracts (gross) Other assets 99 62 — — Interest rate derivative contracts Prepaid expenses and other current assets 2 — — — Interest rate derivative contracts Other assets — 2 — — Interest rate derivative contracts Accrued liabilities — — — 5 Interest rate derivative contracts Other noncurrent liabilities — — 14 1 Total derivatives designated as hedges $ 108 $ 112 $ 14 $ 6 Derivatives not designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 1 $ — $ — $ — Interest rate derivative contracts Accrued liabilities — — 60 — Total derivatives not designated as hedges $ 1 $ — $ 60 $ — Total derivatives $ 109 $ 112 $ 74 $ 6 (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 unaudited Condensed 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) June 30, June 30, (in millions) 2020 2019 2020 2019 Current maturities of long-term debt $ 502 $ 300 $ 2 $ 1 Long-term debt less current maturities — 500 18 18 $ 502 $ 800 $ 20 $ 19 (a) At June 30, 2020 and 2019, these amounts include the cumulative amount of fair value hedging adjustments remaining for which hedge accounting has been discontinued, of $18 million and $19 million, respectively. In addition, the Company had the following amounts associated with fuel derivative instruments and hedging activities in its unaudited Condensed Consolidated Balance Sheet: Balance Sheet June 30, December 31, (in millions) location 2020 2019 Cash collateral deposits held from counterparties for fuel contracts - current Offset against Prepaid expenses and other current assets $ 1 $ 10 Cash collateral deposits held from counterparties for fuel contracts - noncurrent Offset against Other assets 31 15 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 unaudited Condensed 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 unaudited Condensed Consolidated Balance Sheet. 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. As of June 30, 2020, no cash collateral deposits were provided by or held by the Company based on its outstanding interest rate swap agreements. 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) June 30, 2020 December 31, 2019 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 $ 8 $ (1) $ 7 $ 48 $ (10) $ 38 Fuel derivative contracts Other assets $ 99 $ (31) $ 68 (a) $ 62 $ (15) $ 47 (a) Interest rate derivative contracts Prepaid expenses and other current assets $ 2 $ — $ 2 $ — $ — $ — Interest rate derivative contracts Other assets $ — $ — $ — (a) $ 2 $ — $ 2 (a) (a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 10. Offsetting of derivative liabilities (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) June 30, 2020 December 31, 2019 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 $ 1 $ (1) $ — $ 10 $ (10) $ — Fuel derivative contracts Other assets $ 31 $ (31) $ — (a) $ 15 $ (15) $ — (a) Interest rate derivative contracts Accrued liabilities $ 60 $ — $ 60 (a) $ 5 $ — $ 5 (a) Interest rate derivative contracts Other noncurrent liabilities $ 14 $ — $ 14 $ 1 $ — $ 1 (a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 10. The following tables present the impact of derivative instruments and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) for the three and six months ended June 30, 2020 and 2019: Location and amount recognized in income on cash flow and fair value hedging relationships Three months ended Three months ended June 30, 2019 (in millions) Fuel and oil Other (gains)/losses, net Interest expense Fuel and oil Interest expense Total $ 14 $ 14 $ 3 $ (2) $ 7 (Gain) loss on cash flow hedging relationships: Commodity contracts: Amount of (gain) loss reclassified from AOCI into income 14 14 — (2) — Interest contracts: Amount of loss reclassified from AOCI into income — — 1 — 1 Impact of fair value hedging relationships: Interest contracts: Hedged items — — 4 — 6 Derivatives designated as hedging instruments — — (2) — — Location and amount recognized in income on cash flow and fair value hedging relationships Six months ended Six months ended June 30, 2019 (in millions) Fuel and oil Other (gains)/losses, net Interest expense Fuel and oil Interest expense Total $ 36 $ 16 $ 4 $ 9 $ 15 Loss on cash flow hedging relationships: Commodity contracts: Amount of loss reclassified from AOCI into income 36 16 — 9 — Interest contracts: Amount of loss reclassified from AOCI into income — — 1 — 2 Impact of fair value hedging relationships: Interest contracts: Hedged items — — 7 — 12 Derivatives designated as hedging instruments — — (4) — 1 Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Three months ended June 30, (in millions) 2020 2019 Fuel derivative contracts $ (9) $ 54 Interest rate derivatives — 16 Total $ (9) $ 70 Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Six months ended June 30, (in millions) 2020 2019 Fuel derivative contracts $ 75 $ (12) Interest rate derivatives 32 27 Total $ 107 $ 15 Derivatives not designated as hedges Loss recognized Three months ended Location of loss June 30, (in millions) 2020 2019 Fuel derivative contracts $ 1 $ — Other (gains) losses, net Interest rate derivatives 5 — Other (gains) losses, net Total $ 6 $ — Derivatives not designated as hedges Loss recognized Six months ended Location of loss June 30, (in millions) 2020 2019 Fuel derivative contracts $ 1 $ — Other (gains) losses, net Interest rate derivatives 29 — Other (gains) losses, net Total $ 30 $ — The Company also recorded expense associated with premiums paid for fuel derivative contracts that settled/expired during the three and six months ended June 30, 2020 and 2019. Fuel derivatives that qualify for hedge accounting are recorded to Fuel and oil expense. Fuel derivatives that do not qualify for hedge accounting are recorded to Other (gains) and losses, net. The following tables present the impact of premiums paid for fuel derivative contracts and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) during the period the contract settles: Premium expense recognized Three months ended Location of premium expense June 30, (in millions) 2020 2019 Fuel derivative contracts designated as hedges $ 13 $ 28 Fuel and oil Fuel derivative contracts not designated as hedges $ 11 $ — Other (gains) and losses, net Premium expense recognized Six months ended Location of premium expense June 30, (in millions) 2020 2019 Fuel derivative contracts designated as hedges $ 38 $ 55 Fuel and oil Fuel derivative contracts not designated as hedges $ 11 $ — Other (gains) and losses, net 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 June 30, 2020, recorded in AOCI, were approximately $63 million in unrealized losses, net of taxes, which are expected to be realized in earnings during the twelve months subsequent to June 30, 2020. 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. 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. During first quarter 2019, the Company entered into 12 separate forward-starting interest rate swap agreements related to a series of 12 Boeing 737 MAX 8 aircraft leases with deliveries originally scheduled between July 2019 and February 2020. These lease contracts expose the Company to interest rate risk as the rental payments are adjusted and become fixed based on the 9-year swap rate at the time of delivery. The primary objective for these interest rate derivatives, which qualified as cash flow hedges, was to hedge the forecasted monthly rental payments. These swap agreements provide for a single payment at maturity based upon the change in the 9-year swap rate between the execution date and the termination date. All 12 swap agreements were terminated during third quarter 2019, resulting in $32 million being "frozen" in AOCI. As a result of the extenuating circumstances involving the MAX aircraft, which are outside the control of the Company, these amounts will be recognized in earnings when the original forecasted transaction occurs, which remains probable. During third quarter 2019, the Company entered into 12 separate forward-starting interest rate swap agreements, with similar terms as the third quarter 2019 terminated swaps, except for the range of 737 MAX 8 deliveries scheduled were between June 2020 and September 2020. As of June 30, 2020, all 12 of the aircraft leases are no longer probable to be received within the scheduled delivery range. Therefore, the 12 associated swap agreements were de-designated and $14 million and $31 million were "frozen" in AOCI for the three and six months ended June 30, 2020, respectively. These amounts will be recognized in earnings when the original forecasted transaction occurs, which continues to be probable. The mark-to-market changes for these swap agreements are now being recorded in earnings, resulting in a $5 million and $29 million unrealized loss to Other (gains) and losses, net, in the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) for the three and six months ended June 30, 2020, respectively. In addition, 6 of the 12 swap agreements were terminated on June 30, 2020, resulting in $31 million owed to the counterparty, which was recorded as an Accrued liability within the unaudited Condensed Consolidated Balance Sheet as of June 30, 2020. For the Company’s interest rate swap agreements that do not qualify for the "shortcut" or "critical terms match" methods of accounting, ineffectiveness is assessed at each reporting period. If hedge accounting is achieved, all periodic changes in fair value of the interest rate swaps are recorded in AOCI. 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 June 30, 2020, 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 and letters of credit 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 June 30, 2020, at which such postings are triggered: Counterparty (CP) (in millions) A B C D E F Other (a) Total Fair value of fuel derivatives $ 28 $ 12 $ 28 $ 10 $ 11 $ 9 $ 9 $ 107 Cash collateral held from CP 32 — — — — — — 32 Letters of credit (LC) — — — — — — — — Option to substitute LC for cash N/A N/A (75) to (150) or >(550)(b) (125) to (150) or >(550)(c) (c) N/A If credit rating is investment Cash is provided to CP >(100) >(50) (75) to (150) or >(550)(d) (125) to (150) or >(550)(d) >(40) >(65)(d) Cash is received from CP >0(d) >150(d) >250(d) >125(d) >100(d) >70(d) Cash can be pledged to (200) to (600)(e) N/A (150) to (550)(b) (150) to (550)(b) N/A N/A If credit rating is non-investment Cash is provided to CP (0) to (200) or >(600) (f) (0) to (150) or >(550) (0) to (150) or >(550) (f) (f) Cash is received from CP (f) (f) (f) (f) (f) (f) Cash can be pledged to (200) to (600) N/A (150) to (550) (150) to (550) N/A N/A (a) Individual counterparties with fair value of fuel derivatives < $8 million. (b) The Company has the option of providing cash or letters of credit as collateral. (c) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (d) Thresholds may vary based on changes in credit ratings within investment grade. (e) The Company has the option of providing cash as collateral. (f) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. |
COMPREHENSIVE INCOME (LOSS)
COMPREHENSIVE INCOME (LOSS) | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
COMPREHENSIVE INCOME (LOSS) | COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss) 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. The differences between Net income (loss) and Comprehensive income (loss) for the three and six months ended June 30, 2020 and 2019 were as follows: Three months ended June 30, (in millions) 2020 2019 NET INCOME (LOSS) $ (915) $ 741 Unrealized gain (loss) on fuel derivative instruments, net of 30 (56) Unrealized gain (loss) on interest rate derivative instruments, net of 1 (15) Other, net of deferred taxes of $8 and $1 25 5 Total other comprehensive income (loss) $ 56 $ (66) COMPREHENSIVE INCOME (LOSS) $ (859) $ 675 Six months ended June 30, (in millions) 2020 2019 NET INCOME (LOSS) $ (1,009) $ 1,128 Unrealized gain (loss) on fuel derivative instruments, net of (35) 19 Unrealized loss on interest rate derivative instruments, net of (31) (25) Other, net of deferred taxes of ($1) and $4 (3) 16 Total other comprehensive income (loss) $ (69) $ 10 COMPREHENSIVE INCOME (LOSS) $ (1,078) $ 1,138 A rollforward of the amounts included in AOCI is shown below for the three and six months ended June 30, 2020: (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax Accumulated other Balance at March 31, 2020 $ (209) $ (75) $ 20 $ 22 $ 56 $ (186) Changes in fair value 11 — — 33 (10) 34 Reclassification to earnings 28 1 — — (7) 22 Balance at June 30, 2020 $ (170) $ (74) $ 20 $ 55 $ 39 $ (130) (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax Accumulated other Balance at December 31, 2019 $ (125) $ (33) $ 20 $ 59 $ 18 $ (61) Changes in fair value (97) (42) — (4) 33 (110) Reclassification to earnings 52 1 — — (12) 41 Balance at June 30, 2020 $ (170) $ (74) $ 20 $ 55 $ 39 $ (130) The following tables illustrate the significant amounts reclassified out of each component of AOCI for the three and six months ended June 30, 2020: Three months ended June 30, 2020 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of AOCI components Unrealized loss on fuel derivative instruments $ 14 Fuel and oil expense 14 Other (gains) losses, net 7 Less: Tax expense $ 21 Net of tax Unrealized loss on interest rate derivative instruments $ 1 Interest expense — Less: Tax expense $ 1 Net of tax Total reclassifications for the period $ 22 Net of tax Six months ended June 30, 2020 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of AOCI components Unrealized loss on fuel derivative instruments $ 36 Fuel and oil expense 16 Other (gains) losses, net 12 Less: Tax Expense $ 40 Net of tax Unrealized loss on interest rate derivative instruments $ 1 Interest expense — Less: Tax Expense $ 1 Net of tax Total reclassifications for the period $ 41 Net of tax |
REVENUE
REVENUE | 6 Months Ended |
Jun. 30, 2020 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
REVENUE | REVENUE Passenger Revenues 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 three and six months ended June 30, 2020 and 2019: Three months ended June 30, Six months ended June 30, (in millions) 2020 2019 2020 2019 Passenger non-loyalty $ 562 $ 4,683 $ 3,783 $ 8,726 Passenger loyalty - air transportation 81 622 542 1,158 Passenger ancillary sold separately 61 182 224 347 Total passenger revenues $ 704 $ 5,487 $ 4,549 $ 10,231 As of June 30, 2020, and December 31, 2019, the components of Air traffic liability and Air traffic liability - noncurrent, 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 unaudited Condensed Consolidated Balance Sheet were as follows: Balance as of (in millions) June 30, 2020 December 31, 2019 Air traffic liability - passenger travel and ancillary passenger services $ 3,023 $ 2,125 Air traffic liability - loyalty program 3,856 3,385 Total Air traffic liability $ 6,879 $ 5,510 Rollforwards of the Company's Air traffic liability - loyalty program for the three and six months ended June 30, 2020 and 2019 were as follows (in millions): Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Air traffic liability - loyalty program - beginning balance $ 3,561 $ 3,171 $ 3,385 $ 3,011 Amounts deferred associated with points awarded 385 757 1,041 1,468 Revenue recognized from points redeemed - Passenger (81) (622) (542) (1,158) Revenue recognized from points redeemed - Other (9) (17) (28) (32) Air traffic liability - loyalty program - ending balance $ 3,856 $ 3,289 $ 3,856 $ 3,289 Air traffic liability includes consideration received for ticket and loyalty related performance obligations which have not been satisfied as of a given date. Rollforwards of the amounts included in Air traffic liability as of June 30, 2020 and 2019 were as follows (in millions): Air traffic liability Balance at December 31, 2019 $ 5,510 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 5,946 Revenue from amounts included in contract liability opening balances (1,936) Revenue from current period sales (2,641) Balance at June 30, 2020 $ 6,879 Air traffic liability Balance at December 31, 2018 $ 5,070 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 11,178 Revenue from amounts included in contract liability opening balances (2,855) Revenue from current period sales (7,409) Balance at June 30, 2019 $ 5,984 During the first and second quarters 2020, the Company experienced a significantly higher number of Customer-driven flight cancellations as a result of the COVID-19 pandemic. See Note 2 for further information. As a result, the amount of Customer travel funds held by the Company, net of spoilage, that can be redeemed for future travel as of June 30, 2020, far exceeds previous periods and represents approximately 28 percent of the total Air traffic liability balance at June 30, 2020, as compared to approximately 1 percent of the total Air traffic liability balance at December 31, 2019. In order to provide additional flexibility to Customers who hold these funds, the Company has significantly relaxed its previous policies with regards to the time period within which these funds can be redeemed, which is typically twelve months from the original date of purchase. For all Customer travel funds created or expired between March 1 and September 7, 2020 associated with flight cancellations, the Company has extended the expiration date to September 7, 2022. Despite the possibility that some of these travel funds may be redeemed beyond the following twelve-month period, the Company has continued to classify them as "current" in the accompanying unaudited Condensed Consolidated Balance Sheet as they remain a demand liability and the Company does not have sufficient data to enable it to accurately estimate the portion that will not be redeemed for travel in the subsequent twelve months. 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. Given the unprecedented amount of first half 2020 Customer flight cancellations and the amount of travel funds provided, the Company expects additional variability in the amount of spoilage revenue recorded in future periods, as the estimates of the portion of sold tickets that will expire unused may differ from historical experience. The Company has a co-branded credit card agreement (the “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. In 2018, Chase and Southwest executed a multi-year extension of the Agreement, extending the decades-long relationship between the parties. 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 three months ended June 30, 2020 and 2019, the Company recognized $256 million and $336 million, respectively. For the six months ended June 30, 2020 and 2019, the Company recognized $577 million and $655 million, respectively. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
NET INCOME (LOSS) PER SHARE | NET INCOME (LOSS) PER SHARE The following table sets forth the computation of basic and diluted net income (loss) per share (in millions, except per share amounts). Antidilutive common stock equivalents, excluded from the diluted net income (loss) per share calculation, consisting primarily of restricted stock units and stock warrants, are not material. See Note 8 for further information. Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 NUMERATOR: Net income (loss) $ (915) $ 741 $ (1,009) $ 1,128 DENOMINATOR: Weighted-average shares outstanding, basic and diluted 563 542 539 547 NET INCOME (LOSS) PER SHARE: Basic and Diluted $ (1.63) $ 1.37 $ (1.87) $ 2.06 |
FINANCING ACTIVITIES
FINANCING ACTIVITIES | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | FINANCING ACTIVITIES Debt During February 2020, the Company issued $500 million senior unsecured notes due 2030. The notes bear interest at 2.625 percent. Interest is payable semi-annually in arrears on February 10 and August 10, beginning in 2020. On March 12, 2020, the Company entered into a new $1.0 billion 364-day term loan credit facility agreement (the “364-Day Credit Agreement”) with a syndicate of lenders identified in the 364-Day Credit Agreement. The 364-Day Credit Agreement was drawn in full on the closing date. On March 30, 2020, the Company amended and restated the 364-Day Credit Agreement (the “Amended and Restated 364-Day Credit Agreement”) with a syndicate of lenders identified in the Amended and Restated 364-Day Credit Agreement to add additional term loan commitments of approximately $2.3 billion, add an uncommitted accordion increase provision to permit additional term loans in an aggregate amount not to exceed approximately $417 million, amend the pricing, amend certain covenants, add certain covenants, and provide for the grant of a security interest in certain aircraft and related assets. The Company drew approximately $2.3 billion under the Amended and Restated 364-Day Credit Agreement on April 1, 2020. On April 24, 2020, the Company drew an additional $350 million under the $417 million accordion feature. The Amended and Restated 364-Day Credit Agreement was originally set to mature in full on March 29, 2021. The outstanding Amended and Restated 364-Day Credit Agreement balance was repaid in full in second quarter 2020, and the agreement has been terminated. Concurrently with entering into the Amended and Restated 364-Day Credit Agreement on March 30, 2020, the Company also amended its existing $1.0 billion revolving credit facility expiring in August 2022 (the “Amended and Restated Revolving Credit Agreement”) to (i) amend the pricing and fees, (ii) amend certain covenants and provisions, (iii) add certain covenants, and (iv) provide for the grant of a security interest in certain aircraft and related assets. In second quarter 2020, the Company repaid in full the $1.0 billion drawn on the Amended and Restated Revolving Credit Agreement and, as of June 30, 2020, there were no amounts outstanding under the Amended and Restated Revolving Credit Agreement. Generally, amounts outstanding under the Amended and Restated Revolving Credit Agreement bear interest at interest rates based on either the LIBOR rate (selected by the Company for designated interest periods) or the “alternate base rate” (being the highest of (1) the Wall Street Journal prime rate, (2) one-month adjusted LIBOR (one-month LIBOR plus a statutory reserve rate) plus 1%, and (3) the New York Fed Bank Rate, plus 0.5%). The underlying LIBOR rate is subject to a floor of 1% per annum and the “alternate base rate” is subject to a floor of 1% per annum. The Amended and Restated Revolving Credit Agreement contains customary representations and warranties, covenants, and events of default. The Amended and Restated Revolving Credit Agreement is secured by a pool of aircraft and related assets, each with a minimum appraised value ratio requirement. Under the Amended and Restated Revolving Credit Agreement, the Company is required to maintain, at all times after March 31, 2021, a specified ratio of (x) adjusted net income (before interest, taxes, depreciation, amortization, and aircraft rental expense) less cash dividends to (y) interest and aircraft rental expense; and to maintain a minimum level of liquidity of $2.5 billion (defined as the aggregate amount available to be borrowed under the Amended and Restated Revolving Credit Agreement plus the aggregate amount of unrestricted cash and cash equivalents of the Company). The Amended and Restated Revolving Credit Agreement is a series of short-term borrowings; at the end of each borrowing the Company must elect to roll the facility over into the next borrowing or pay down the facility. The Amended and Restated Revolving Credit Agreement also has an accordion feature that would allow the Company, subject to, among other things, the procurement of incremental commitments, to increase the size of the facility to $1.5 billion. On May 1, 2020, the Company completed the public offering of $2.3 billion aggregate principal amount of 1.250% Convertible Senior Notes due 2025 (the “Convertible Notes”), which included the full exercise of the underwriters' option to buy an additional $300 million aggregate principal amount of Convertible Notes. The Convertible Notes bear interest at the rate of 1.250% per year and will mature on May 1, 2025. Interest on the notes is payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2020. The Company expects to use the net proceeds received for general corporate purposes. Holders may convert their Convertible Notes at their option at any time prior to the close of business on the business day immediately preceding February 1, 2025, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2020 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. On or after February 1, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their notes at any time, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election. The Company intends, however, to settle conversions by paying cash up to the principal amount, with any excess conversion value settled in shares of common stock. The initial conversion rate is 25.9909 shares of common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $38.48 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, in the event of certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such a corporate event in certain circumstances. In the event of a “Fundamental Change,” as defined, the holders may require the Company to purchase for cash all or a portion of their notes at a purchase price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest, if any. The Company may not redeem the notes at its option prior to the maturity date. Upon issuance, the Company bifurcated the Convertible Notes for accounting purposes between a liability component and an equity component utilizing applicable guidance. The liability component was determined by estimating the fair value of a hypothetical issuance of an identical offering excluding the conversion feature of the Convertible Notes, which has been estimated at $1.9 billion, and is reflected as a component of Long-term debt in the unaudited Condensed Consolidated Balance Sheet. The effective interest rate of this liability was 5.2%. The equity component was calculated as the difference between the liability component and the face amount of the Convertible Notes, determined to be $403 million, and is classified within Additional paid in capital in the unaudited Condensed Consolidated Balance Sheet. The Convertible Notes proceeds are also shown within the financing activities section in the unaudited Condensed Consolidated Statement of Cash Flows. The amount of the equity component in the transaction also represents a discount on liability portion of the Convertible Notes, and as such will be amortized as a non-cash component of interest expense over the 5-year term of the notes. The costs incurred in the issuance, including underwriters' discount, totaling $62 million, are classified as a cash outflow within the financing activities section in the unaudited Condensed Consolidated Statement of Cash Flows, and will also be amortized to expense over the term of the notes. Issuance costs attributable to the equity component of $11 million were netted with the equity component in the unaudited Condensed Consolidated Statement of Stockholders' Equity. The Company intends to settle conversions by paying cash up to the principal amount of the Convertible Notes, with any excess conversion value settled in shares of common stock. Therefore, the Convertible Notes are being accounted for using the treasury stock method for the purposes of Net income (loss) per share. Using this method, the denominator will be affected when the average share price of the Company's common stock for a given period is greater than the conversion price of approximately $38.48 per share. The Convertible Notes stipulate that holders of the notes may not elect to convert their Convertible Notes to shares of common stock until after June 30, 2020, and therefore there was no dilutive impact related to the notes until July 1, 2020. As consideration for the Payroll Support funding, the Company agreed to issue Warrants to the Treasury to purchase the Company's common stock in connection with each disbursement of Payroll Support to the Company. The Company accounts for the Warrants using the treasury stock method. Using this method, the denominator will be affected when the average share price of the Company's common stock for a given period is greater than the warrant exercise price of $36.47 per share. While the Company is reporting a net loss, all potential shares are considered antidilutive and have no impact on Net income (loss) per share. On May 4, 2020, the Company issued $2.0 billion of unsecured notes, consisting of $750 million aggregate principal amount of the Company’s 4.750% Notes due 2023 (the “$750 million 2023 Notes”) and $1.25 billion aggregate principal amount of the Company’s 5.250% Notes due 2025 (the “2025 Notes”). Interest on both the $750 million 2023 Notes and 2025 Notes is payable semi-annually in arrears on May 4 and November 4, beginning November 4, 2020. The proceeds from the $750 million 2023 Notes and 2025 Notes were used to repay a portion of the outstanding Amended and Restated 364-Day Credit Agreement balance. On June 8, 2020, the Company issued $1.8 billion of unsecured notes, consisting of $500 million aggregate principal amount of the Company’s 4.750% Notes due 2023 (the “$500 million 2023 Notes”) and $1.3 billion aggregate principal amount of the Company’s 5.125% Notes due 2027 (the “2027 Notes”). Interest on both the $500 million 2023 Notes and 2027 Notes is payable semi-annually. Interest on the $500 million 2023 Notes is payable in arrears on May 4 and November 4, beginning November 4, 2020 and interest on the 2027 Notes is payable in arrears on June 15 and December 15, beginning December 15, 2020. Approximately $1.7 billion combined proceeds of the $500 million 2023 Notes and 2027 Notes were used to repay the remaining outstanding Amended and Restated 364-Day Credit Agreement balance. The Company expects to use the remaining proceeds for general corporate purposes. In June 2020, the Company, through special purpose entities, entered into agreements with a financing institution and trusts to borrow $192 million secured by six Boeing 737-800 aircraft. These borrowings, which were recorded as a financing transaction in the Company's unaudited Condensed Consolidated Statement of Cash Flows, and as debt in the accompanying unaudited Condensed Consolidated Balance Sheet, bear interest at a rate of the 3 month LIBOR plus 1.4%, payable in quarterly installments through June 30, 2028. The special purpose entities were determined to be variable interest entities for which the Company is the primary beneficiary, and therefore were consolidated in the accompanying unaudited Condensed Consolidated Financial Statements. Other Financings Common Stock Issuance On May 1, 2020, the Company completed the public offering of 80.5 million shares of $1.00 par value common stock of the Company, which included the full exercise of the underwriters’ option to purchase an additional 10.5 million shares of common stock, at a public offering price of $28.50 per share (the “Common Stock Offering”). The Company expects to use the net proceeds of $2.2 billion from the Common Stock Offering for general corporate purposes. Sale-Leaseback of Aircraft In second quarter 2020, the Company entered into transactions with third parties, involving ten of the Company’s Boeing 737-800 aircraft and ten of the Company's Boeing 737 MAX 8 aircraft that qualified as sale-leaseback arrangements under applicable accounting guidance. The Company sold the ten 737-800 aircraft to a third party for $405 million, then immediately leased the aircraft back for approximately ten years. The Company sold the ten 737 MAX 8 aircraft to a third party for $410 million, then immediately leased the aircraft back for approximately 13 years. As such, the aircraft were de-recognized from Property and equipment at their remaining net book values. All of the leases from the sale-leasebacks are accounted for as operating leases, and thus are now reflected as part of the Company’s Operating lease right-of-use assets and operating lease liabilities in the accompanying unaudited Condensed Consolidated Balance Sheet. The 737-800 and 737 MAX 8 sale-leaseback transactions resulted in a recognized gain of $153 million and $69 million, respectively, reflected within Other operating expenses, net in the accompanying unaudited Condensed Consolidated Statement of Comprehensive Income. The 737-800 and 737 MAX 8 sale-leaseback transactions have increased the Company's future operating lease obligations by $35 million remaining in 2020, $71 million in each of the years from 2021 through 2025, and approximately $440 million thereafter. As of June 30, 2020, aggregate principal maturities of debt and finance leases (not including amounts associated with interest rate swap agreements, interest on finance leases, and amortization of purchase accounting adjustments) were $596 million for the remainder of 2020, $195 million in 2021, $499 million in 2022, $1.4 billion in 2023, $127 million in 2024, $3.7 billion in 2025, and $3.7 billion thereafter. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, 2020, 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 4 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 June 30, 2020, and December 31, 2019: Fair value measurements at reporting date using: Quoted prices in Significant Significant Description June 30, 2020 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 11,961 $ 11,961 $ — $ — Commercial paper 90 — 90 — Certificates of deposit 19 — 19 — Time deposits 281 — 281 — Short-term investments: Treasury bills 1,649 1,649 — — Certificates of deposit 132 — 132 — Time deposits 325 — 325 — Interest rate derivatives (see Note 4) 2 2 Fuel derivatives: Option contracts (b) 107 — — 107 Other available-for-sale securities 219 219 — — Total assets $ 14,785 $ 13,829 $ 849 $ 107 Liabilities Interest rate derivatives (see Note 4) $ (74) $ — $ (74) $ — (a) Cash equivalents are primarily composed of money market investments. (b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as an asset. See Note 4 . Fair value measurements at reporting date using: Quoted prices in Significant Significant Description December 31, 2019 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 1,999 $ 1,999 $ — $ — Commercial paper 535 — 535 — Certificates of deposit 14 — 14 — Short-term investments: Treasury bills 1,196 1,196 — — Certificates of deposit 268 — 268 — Time deposits 60 — 60 — Interest rate derivatives (see Note 4) 2 — 2 — Fuel derivatives: Option contracts (b) 110 — — 110 Other available-for-sale securities 197 197 — — Total assets $ 4,381 $ 3,392 $ 879 $ 110 Liabilities Interest rate derivatives (see Note 4) $ (6) $ — $ (6) $ — (a) Cash equivalents are primarily composed of money market investments. (b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net asset. See Note 4 . The Company did not have any assets or liabilities measured at fair value on a nonrecurring basis during the six months ended June 30, 2020, or the year ended December 31, 2019. 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 the three and six months ended June 30, 2020: Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at March 31, 2020 $ 85 Total gains (losses) for the period Included in earnings (15) (a) Included in other comprehensive income 26 Purchases 11 (b) Balance at June 30, 2020 $ 107 The amount of total losses for the period $ (8) (a) The amount of total gains for the period $ 19 (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). (b) The purchase of fuel derivatives is recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives was purchased as a single instrument or separate instruments. Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at December 31, 2019 $ 110 Total losses for the period Included in earnings (17) (a) Included in other comprehensive income (80) Purchases 94 (b) Balance at June 30, 2020 $ 107 The amount of total losses for the period $ (8) (a) The amount of total losses for the period $ (72) (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). (b) The purchase of fuel derivatives is recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives was 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 have resulted in a higher (lower) fair value measurement, respectively, for the Company’s derivative option contracts. The following table presents a range and weighted average of the unobservable inputs utilized in the fair value measurements of the Company’s fuel derivatives classified as Level 3 at June 30, 2020: Quantitative information about Level 3 fair value measurements Valuation technique Unobservable input Period (by year) Range Weighted Average (a) Fuel derivatives Option model Implied volatility Third quarter 2020 37-64% 54 % Fourth quarter 2020 37-63% 47 % 2021 30-47% 35 % 2022 27-31% 29 % Beyond 2022 25-28% 27 % (a) Implied volatility weighted by the notional amount (barrels of fuel) that will settle in respective period. The carrying amounts and estimated fair values of the Company’s short-term and long-term debt (including current maturities), as well as the applicable fair value hierarchy tier, at June 30, 2020, 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 three 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 2.65% Notes due 2020 $ 502 $ 503 Level 2 2.75% Notes due 2022 300 304 Level 2 Pass Through Certificates due 2022 - 6.24% 168 172 Level 2 4.75% Notes due 2023 1,250 1,289 Level 2 1.25% Convertible Notes due 2025 1,909 2,762 Level 2 5.25% Notes due 2025 1,250 1,317 Level 2 3.00% Notes due 2026 300 296 Level 2 Term Loan Agreement payable through 2026 - 1.99% 169 159 Level 3 3.45% Notes due 2027 300 294 Level 2 5.125% Notes due 2027 1,300 1,352 Level 2 7.375% Debentures due 2027 121 134 Level 2 Term Loan Agreement payable through 2028 - 1.71% 196 176 Level 3 2.625% Notes due 2030 500 455 Level 2 1.000% Payroll Support Program Loan due 2030 850 629 Level 3 |
SUPPLEMENTAL FINANCIAL INFORMAT
SUPPLEMENTAL FINANCIAL INFORMATION | 6 Months Ended |
Jun. 30, 2020 | |
Disclosure Text Block [Abstract] | |
SUPPLEMENTAL FINANCIAL INFORMATION | SUPPLEMENTAL FINANCIAL INFORMATION (in millions) June 30, 2020 December 31, 2019 Trade receivables $ 46 $ 53 Credit card receivables 38 112 Business partners and other suppliers 434 779 Income tax receivable 231 87 Other 21 55 Accounts and other receivables $ 770 $ 1,086 (in millions) June 30, 2020 December 31, 2019 Derivative contracts $ 68 $ 49 Intangible assets, net 295 296 Other 299 232 Other assets $ 662 $ 577 (in millions) June 30, 2020 December 31, 2019 Accounts payable trade $ 139 $ 304 Salaries payable 207 231 Taxes payable excluding income taxes 38 227 Aircraft maintenance payable 129 162 Fuel payable 68 129 Dividends payable — 93 Other payable 389 428 Accounts payable $ 970 $ 1,574 (in millions) June 30, 2020 December 31, 2019 Deferred Payroll Support Program grant proceeds $ 957 $ — Voluntary Separation Program 2020 307 — Profitsharing and savings plans 26 695 Vacation pay 454 434 Health 104 120 Workers compensation 159 166 Property and income taxes 72 79 Derivative contracts 60 5 Other 233 250 Accrued liabilities $ 2,372 $ 1,749 (in millions) June 30, 2020 December 31, 2019 Postretirement obligation $ 299 $ 288 Other deferred compensation 315 313 Other 108 105 Other noncurrent liabilities $ 722 $ 706 For further information on supplier receivables, see Note 12. For further information on fuel derivative and interest rate derivative contracts, see Note 4. Other Operating Expenses Other operating expenses, net for the three months ended June 30, 2020, included a $222 million gain on the sale of assets as a result of sale-leaseback transactions. See Note 8 for further information. Also reported within Other |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Los Angeles International Airport In October 2017, the Company executed a lease agreement with Los Angeles World Airports ("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. Construction on the Terminal 1.5 Project began during third quarter 2017 and is estimated to be substantially completed in late 2020 or early 2021. The costs incurred to fund the Terminal 1.5 Project are included within Assets Constructed for Others ("ACFO") and all amounts that have been or will be reimbursed will be included within Construction obligation on the accompanying unaudited Condensed Consolidated Balance Sheet. Funding for this project is primarily through the Regional Airports Improvement Corporation (the "RAIC"), which is a quasi-governmental special purpose entity that is acting as a conduit borrower under a syndicated credit facility provided by a group of lenders. A loan made under the credit facility for the Terminal 1.5 Project is being used to reimburse the Company for the site improvements and non-proprietary improvements of the Terminal 1.5 Project, and the outstanding loan will be repaid with the proceeds of LAWA’s payments to purchase completed construction phases. The Company guaranteed the obligation of the RAIC under the credit facility associated with the Terminal 1.5 Project. As of June 30, 2020, the Company's outstanding remaining guaranteed obligation under the credit facility for the Terminal 1.5 Project was $253 million. Construction costs recorded in ACFO for the Terminal 1.5 Project were $239 million and $164 million, as of June 30, 2020, and December 31, 2019, respectively. Dallas Love Field During 2008, the City of Dallas approved the Love Field Modernization Project ("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. Major construction was effectively completed in 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. Although the City of Dallas received commitments from various sources that helped to fund portions of the LFMP project, including the Federal Aviation Administration ("FAA"), 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 bonds issued by the LFAMC. As of June 30, 2020, $407 million of principal remained outstanding. The net present value of the future principal and interest payments associated with the bonds was $443 million as of June 30, 2020, and was reflected as part of the Company's operating lease right–of–use assets and lease obligations in the unaudited Condensed Consolidated Balance Sheet. 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 (the "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. |
BOEING 737 MAX AIRCRAFT GROUNDI
BOEING 737 MAX AIRCRAFT GROUNDING | 6 Months Ended |
Jun. 30, 2020 | |
Unusual or Infrequent Items, or Both [Abstract] | |
Boeing 737 Max Aircraft Grounding | BOEING 737 MAX AIRCRAFT GROUNDING On March 13, 2019, the FAA issued an emergency order for all U.S. airlines to ground all Boeing MAX aircraft. The Company immediately complied with the order and grounded all 34 MAX aircraft in its fleet. The Company will continue to monitor the situation and any potential future accounting implications that arise. The most significant financial impacts of this grounding to the Company thus far have been lost revenues, operating income, and operating cash flows, and delayed capital expenditures, directly associated with its grounded MAX fleet and other new aircraft that have not been able to be delivered. In July 2019, the Boeing Company announced a $4.9 billion after-tax charge for "potential concessions and other considerations to customers for disruptions related to the 737 MAX grounding." In January 2020, the Boeing Company announced an additional pre-tax charge of $2.6 billion related to "estimated potential concessions and other considerations to customers related to the 737 MAX grounding." During fourth quarter 2019, the Company entered into a Memorandum of Understanding with Boeing to compensate Southwest for estimated financial damages incurred during 2019 related to the grounding of the MAX. The terms of the agreement are confidential, but are intended to provide for a substantial portion of the Company’s estimated financial damages associated with both the 34 MAX aircraft that were grounded as of March 13, 2019, as well as the 41 additional MAX aircraft the Company was scheduled to receive (28 owned MAX from Boeing and 13 leased MAX from third parties) from March 13, 2019 through December 31, 2019. In accordance with applicable accounting principles, the Company will account for substantially all of the proceeds received from Boeing as a reduction in cost basis spread across both the existing 31 owned MAX in the Company’s fleet, plus the Company’s future firm aircraft deliveries as of the date of the agreement. No material financial impacts of the agreement were realized in the Company’s earnings during the year ended December 31, 2019. A total of $428 million in proceeds received in cash from Boeing are reflected within Investing Activities in the Consolidated Statement of Cash Flows for the six months ended June 30, 2020. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The unaudited Condensed Consolidated Financial Statements for the interim periods ended June 30, 2020 and 2019 include all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods. This includes all normal and recurring adjustments and elimination of significant intercompany transactions. Financial results for the Company and airlines in general can be seasonal in nature. In many years, the Company's revenues, as well as its Operating income and Net income, have been better in its second and third fiscal quarters than in its first and fourth fiscal quarters. However, in 2020, as a result of the COVID-19 pandemic, the Company's results were not in line with such historical trends. See Note 2 for further information. Air travel is also significantly impacted by general economic conditions, the amount of disposable income available to consumers, unemployment levels, corporate travel budgets, extreme or severe weather and natural disasters, fears of terrorism or war, and other factors beyond the Company's control. These and other factors, such as the price of jet fuel in some periods, the nature of the Company's fuel hedging program, and the periodic volatility of commodities used by the Company for hedging jet fuel, have created, and may continue to create, significant volatility in the Company's financial results. See Note 4 for further information on fuel and the Company's hedging program. Operating results for the three and six months ended |
Derivatives | Upon proper qualification, the Company accounts for its fuel derivative instruments as cash flow hedges. All periodic changes in fair value of the derivatives designated as hedges are recorded in Accumulated other comprehensive income (loss) ("AOCI") until the underlying jet fuel is consumed. See Note 5.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 unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) 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 will be required to be immediately reclassified into earnings.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. 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. |
Fair Value of Financial Instruments | 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 June 30, 2020, 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 4 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. |
New Accounting Pronouncements | On December 18, 2019, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This new standard eliminates certain exceptions in Accounting Standards Codification ("ASC") 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted in any interim period within that year. The Company elected to early adopt this standard as of January 1, 2020. The most significant impact to the Company is the removal of a limit on the tax benefit recognized on pre-tax losses in interim periods. However, the early adoption as of January 1, 2020, did not have an impact on the Company's financial statements or disclosures for the first six months of 2020. On August 29, 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software. This standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in 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 standard is effective for public business entities in fiscal years beginning after December 15, 2019, and the standard was adopted and applied prospectively by the Company as of January 1, 2020, but it did not have a significant impact on the Company's financial statements and disclosures. 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 fiscal years. This 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 adopted the standard as of January 1, 2020, but it did not have a significant impact on the Company's financial statements or disclosures. See Note 9 for further information on the Company's fair value measurements. On January 26, 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The new standard eliminates Step 2 from the goodwill impairment test. An entity should recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. This standard is effective for public business entities in fiscal years beginning after December 15, 2019, and the standard was adopted and applied prospectively by the Company as of January 1, 2020, but it did not have a significant impact on the Company's financial statements and disclosures. |
Revenue Recognition | 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. Given the unprecedented amount of first half 2020 Customer flight cancellations and the amount of travel funds provided, the Company expects additional variability in the amount of spoilage revenue recorded in future periods, as the estimates of the portion of sold tickets that will expire unused may differ from historical experience.The Company has a co-branded credit card agreement (the “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. In 2018, Chase and Southwest executed a multi-year extension of the Agreement, extending the decades-long relationship between the parties. 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. |
Convertible Debt Settlement | The Company intends to settle conversions by paying cash up to the principal amount of the Convertible Notes, with any excess conversion value settled in shares of common stock. Therefore, the Convertible Notes are being accounted for using the treasury stock method for the purposes of Net income (loss) per share. Using this method, the denominator will be affected when the average share price of the Company's common stock for a given period is greater than the conversion price of approximately $38.48 per share. The Convertible Notes stipulate that holders of the notes may not elect to convert their Convertible Notes to shares of common stock until after June 30, 2020, and therefore there was no dilutive impact related to the notes until July 1, 2020. As consideration for the Payroll Support funding, the Company agreed to issue Warrants to the Treasury to purchase the Company's common stock in connection with each disbursement of Payroll Support to the Company. The Company accounts for the Warrants using the treasury stock method. Using this method, the denominator will be affected when the average share price of the Company's common stock for a given period is greater than the warrant exercise price of $36.47 per share. While the Company is reporting a net loss, all potential shares are considered antidilutive and have no impact on Net income (loss) per share. |
Financial Derivative Instrume_2
Financial Derivative Instruments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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: Maximum fuel hedged as of June 30, 2020 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) June 30, 2020 Remainder of 2020 460 WTI crude oil, Brent crude oil, and Heating oil 2021 1,283 WTI crude oil and Brent crude oil 2022 1,056 WTI crude oil and Brent crude oil Beyond 2022 529 WTI crude oil and Brent 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 and the Company's flight schedule fluctuates. |
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 unaudited Condensed Consolidated Balance Sheet: Asset derivatives Liability derivatives Balance Sheet Fair value at Fair value at Fair value at Fair value at (in millions) location 6/30/2020 12/31/2019 6/30/2020 12/31/2019 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 7 $ 48 $ — $ — Fuel derivative contracts (gross) Other assets 99 62 — — Interest rate derivative contracts Prepaid expenses and other current assets 2 — — — Interest rate derivative contracts Other assets — 2 — — Interest rate derivative contracts Accrued liabilities — — — 5 Interest rate derivative contracts Other noncurrent liabilities — — 14 1 Total derivatives designated as hedges $ 108 $ 112 $ 14 $ 6 Derivatives not designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 1 $ — $ — $ — Interest rate derivative contracts Accrued liabilities — — 60 — Total derivatives not designated as hedges $ 1 $ — $ 60 $ — Total derivatives $ 109 $ 112 $ 74 $ 6 (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 Derivative Instruments Statements of Financial Performance and Financial Position, Location | The following table presents the amounts recorded on the unaudited Condensed 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) June 30, June 30, (in millions) 2020 2019 2020 2019 Current maturities of long-term debt $ 502 $ 300 $ 2 $ 1 Long-term debt less current maturities — 500 18 18 $ 502 $ 800 $ 20 $ 19 (a) At June 30, 2020 and 2019, these amounts include the cumulative amount of fair value hedging adjustments remaining for which hedge accounting has been discontinued, of $18 million and $19 million, respectively. |
Cash Collateral Deposits Due To or From Third Parties | In addition, the Company had the following amounts associated with fuel derivative instruments and hedging activities in its unaudited Condensed Consolidated Balance Sheet: Balance Sheet June 30, December 31, (in millions) location 2020 2019 Cash collateral deposits held from counterparties for fuel contracts - current Offset against Prepaid expenses and other current assets $ 1 $ 10 Cash collateral deposits held from counterparties for fuel contracts - noncurrent Offset against Other assets 31 15 |
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) June 30, 2020 December 31, 2019 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 $ 8 $ (1) $ 7 $ 48 $ (10) $ 38 Fuel derivative contracts Other assets $ 99 $ (31) $ 68 (a) $ 62 $ (15) $ 47 (a) Interest rate derivative contracts Prepaid expenses and other current assets $ 2 $ — $ 2 $ — $ — $ — Interest rate derivative contracts Other assets $ — $ — $ — (a) $ 2 $ — $ 2 (a) (a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 10. |
Offsetting Liabilities | Offsetting of derivative liabilities (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) June 30, 2020 December 31, 2019 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 $ 1 $ (1) $ — $ 10 $ (10) $ — Fuel derivative contracts Other assets $ 31 $ (31) $ — (a) $ 15 $ (15) $ — (a) Interest rate derivative contracts Accrued liabilities $ 60 $ — $ 60 (a) $ 5 $ — $ 5 (a) Interest rate derivative contracts Other noncurrent liabilities $ 14 $ — $ 14 $ 1 $ — $ 1 (a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 10. |
Schedule Of Derivative Instruments In Hedging Relationships Gain Loss In Statement Of Financial Performance | The following tables present the impact of derivative instruments and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) for the three and six months ended June 30, 2020 and 2019: Location and amount recognized in income on cash flow and fair value hedging relationships Three months ended Three months ended June 30, 2019 (in millions) Fuel and oil Other (gains)/losses, net Interest expense Fuel and oil Interest expense Total $ 14 $ 14 $ 3 $ (2) $ 7 (Gain) loss on cash flow hedging relationships: Commodity contracts: Amount of (gain) loss reclassified from AOCI into income 14 14 — (2) — Interest contracts: Amount of loss reclassified from AOCI into income — — 1 — 1 Impact of fair value hedging relationships: Interest contracts: Hedged items — — 4 — 6 Derivatives designated as hedging instruments — — (2) — — Location and amount recognized in income on cash flow and fair value hedging relationships Six months ended Six months ended June 30, 2019 (in millions) Fuel and oil Other (gains)/losses, net Interest expense Fuel and oil Interest expense Total $ 36 $ 16 $ 4 $ 9 $ 15 Loss on cash flow hedging relationships: Commodity contracts: Amount of loss reclassified from AOCI into income 36 16 — 9 — Interest contracts: Amount of loss reclassified from AOCI into income — — 1 — 2 Impact of fair value hedging relationships: Interest contracts: Hedged items — — 7 — 12 Derivatives designated as hedging instruments — — (4) — 1 |
Derivatives in Cash Flow Hedging Relationships | Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Three months ended June 30, (in millions) 2020 2019 Fuel derivative contracts $ (9) $ 54 Interest rate derivatives — 16 Total $ (9) $ 70 Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Six months ended June 30, (in millions) 2020 2019 Fuel derivative contracts $ 75 $ (12) Interest rate derivatives 32 27 Total $ 107 $ 15 |
Derivatives Not in Cash Flow Hedging Relationships | Derivatives not designated as hedges Loss recognized Three months ended Location of loss June 30, (in millions) 2020 2019 Fuel derivative contracts $ 1 $ — Other (gains) losses, net Interest rate derivatives 5 — Other (gains) losses, net Total $ 6 $ — Derivatives not designated as hedges Loss recognized Six months ended Location of loss June 30, (in millions) 2020 2019 Fuel derivative contracts $ 1 $ — Other (gains) losses, net Interest rate derivatives 29 — Other (gains) losses, net Total $ 30 $ — |
Premiums Paid for Fuel Derivative Contracts | The following tables present the impact of premiums paid for fuel derivative contracts and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) during the period the contract settles: Premium expense recognized Three months ended Location of premium expense June 30, (in millions) 2020 2019 Fuel derivative contracts designated as hedges $ 13 $ 28 Fuel and oil Fuel derivative contracts not designated as hedges $ 11 $ — Other (gains) and losses, net Premium expense recognized Six months ended Location of premium expense June 30, (in millions) 2020 2019 Fuel derivative contracts designated as hedges $ 38 $ 55 Fuel and oil Fuel derivative contracts not designated as hedges $ 11 $ — Other (gains) and losses, net |
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 June 30, 2020, at which such postings are triggered: Counterparty (CP) (in millions) A B C D E F Other (a) Total Fair value of fuel derivatives $ 28 $ 12 $ 28 $ 10 $ 11 $ 9 $ 9 $ 107 Cash collateral held from CP 32 — — — — — — 32 Letters of credit (LC) — — — — — — — — Option to substitute LC for cash N/A N/A (75) to (150) or >(550)(b) (125) to (150) or >(550)(c) (c) N/A If credit rating is investment Cash is provided to CP >(100) >(50) (75) to (150) or >(550)(d) (125) to (150) or >(550)(d) >(40) >(65)(d) Cash is received from CP >0(d) >150(d) >250(d) >125(d) >100(d) >70(d) Cash can be pledged to (200) to (600)(e) N/A (150) to (550)(b) (150) to (550)(b) N/A N/A If credit rating is non-investment Cash is provided to CP (0) to (200) or >(600) (f) (0) to (150) or >(550) (0) to (150) or >(550) (f) (f) Cash is received from CP (f) (f) (f) (f) (f) (f) Cash can be pledged to (200) to (600) N/A (150) to (550) (150) to (550) N/A N/A (a) Individual counterparties with fair value of fuel derivatives < $8 million. (b) The Company has the option of providing cash or letters of credit as collateral. (c) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (d) Thresholds may vary based on changes in credit ratings within investment grade. (e) The Company has the option of providing cash as collateral. (f) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. |
Comprehensive Income (Loss) (Ta
Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Components of Comprehensive Income (Loss) | The differences between Net income (loss) and Comprehensive income (loss) for the three and six months ended June 30, 2020 and 2019 were as follows: Three months ended June 30, (in millions) 2020 2019 NET INCOME (LOSS) $ (915) $ 741 Unrealized gain (loss) on fuel derivative instruments, net of 30 (56) Unrealized gain (loss) on interest rate derivative instruments, net of 1 (15) Other, net of deferred taxes of $8 and $1 25 5 Total other comprehensive income (loss) $ 56 $ (66) COMPREHENSIVE INCOME (LOSS) $ (859) $ 675 Six months ended June 30, (in millions) 2020 2019 NET INCOME (LOSS) $ (1,009) $ 1,128 Unrealized gain (loss) on fuel derivative instruments, net of (35) 19 Unrealized loss on interest rate derivative instruments, net of (31) (25) Other, net of deferred taxes of ($1) and $4 (3) 16 Total other comprehensive income (loss) $ (69) $ 10 COMPREHENSIVE INCOME (LOSS) $ (1,078) $ 1,138 |
Rollforward of the Amounts Included in AOCI, Net of Taxes | A rollforward of the amounts included in AOCI is shown below for the three and six months ended June 30, 2020: (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax Accumulated other Balance at March 31, 2020 $ (209) $ (75) $ 20 $ 22 $ 56 $ (186) Changes in fair value 11 — — 33 (10) 34 Reclassification to earnings 28 1 — — (7) 22 Balance at June 30, 2020 $ (170) $ (74) $ 20 $ 55 $ 39 $ (130) (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax Accumulated other Balance at December 31, 2019 $ (125) $ (33) $ 20 $ 59 $ 18 $ (61) Changes in fair value (97) (42) — (4) 33 (110) Reclassification to earnings 52 1 — — (12) 41 Balance at June 30, 2020 $ (170) $ (74) $ 20 $ 55 $ 39 $ (130) |
Reclassification out of Accumulated Other Comprehensive Income (Loss) | The following tables illustrate the significant amounts reclassified out of each component of AOCI for the three and six months ended June 30, 2020: Three months ended June 30, 2020 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of AOCI components Unrealized loss on fuel derivative instruments $ 14 Fuel and oil expense 14 Other (gains) losses, net 7 Less: Tax expense $ 21 Net of tax Unrealized loss on interest rate derivative instruments $ 1 Interest expense — Less: Tax expense $ 1 Net of tax Total reclassifications for the period $ 22 Net of tax Six months ended June 30, 2020 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of AOCI components Unrealized loss on fuel derivative instruments $ 36 Fuel and oil expense 16 Other (gains) losses, net 12 Less: Tax Expense $ 40 Net of tax Unrealized loss on interest rate derivative instruments $ 1 Interest expense — Less: Tax Expense $ 1 Net of tax Total reclassifications for the period $ 41 Net of tax |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Passenger Revenue | The following table provides the components of Passenger revenue recognized for the three and six months ended June 30, 2020 and 2019: Three months ended June 30, Six months ended June 30, (in millions) 2020 2019 2020 2019 Passenger non-loyalty $ 562 $ 4,683 $ 3,783 $ 8,726 Passenger loyalty - air transportation 81 622 542 1,158 Passenger ancillary sold separately 61 182 224 347 Total passenger revenues $ 704 $ 5,487 $ 4,549 $ 10,231 |
Components of Air Traffic Liability | As of June 30, 2020, and December 31, 2019, the components of Air traffic liability and Air traffic liability - noncurrent, 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 unaudited Condensed Consolidated Balance Sheet were as follows: Balance as of (in millions) June 30, 2020 December 31, 2019 Air traffic liability - passenger travel and ancillary passenger services $ 3,023 $ 2,125 Air traffic liability - loyalty program 3,856 3,385 Total Air traffic liability $ 6,879 $ 5,510 Rollforwards of the Company's Air traffic liability - loyalty program for the three and six months ended June 30, 2020 and 2019 were as follows (in millions): Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Air traffic liability - loyalty program - beginning balance $ 3,561 $ 3,171 $ 3,385 $ 3,011 Amounts deferred associated with points awarded 385 757 1,041 1,468 Revenue recognized from points redeemed - Passenger (81) (622) (542) (1,158) Revenue recognized from points redeemed - Other (9) (17) (28) (32) Air traffic liability - loyalty program - ending balance $ 3,856 $ 3,289 $ 3,856 $ 3,289 |
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. Rollforwards of the amounts included in Air traffic liability as of June 30, 2020 and 2019 were as follows (in millions): Air traffic liability Balance at December 31, 2019 $ 5,510 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 5,946 Revenue from amounts included in contract liability opening balances (1,936) Revenue from current period sales (2,641) Balance at June 30, 2020 $ 6,879 Air traffic liability Balance at December 31, 2018 $ 5,070 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 11,178 Revenue from amounts included in contract liability opening balances (2,855) Revenue from current period sales (7,409) Balance at June 30, 2019 $ 5,984 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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 (loss) per share (in millions, except per share amounts). Antidilutive common stock equivalents, excluded from the diluted net income (loss) per share calculation, consisting primarily of restricted stock units and stock warrants, are not material. See Note 8 for further information. Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 NUMERATOR: Net income (loss) $ (915) $ 741 $ (1,009) $ 1,128 DENOMINATOR: Weighted-average shares outstanding, basic and diluted 563 542 539 547 NET INCOME (LOSS) PER SHARE: Basic and Diluted $ (1.63) $ 1.37 $ (1.87) $ 2.06 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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 June 30, 2020, and December 31, 2019: Fair value measurements at reporting date using: Quoted prices in Significant Significant Description June 30, 2020 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 11,961 $ 11,961 $ — $ — Commercial paper 90 — 90 — Certificates of deposit 19 — 19 — Time deposits 281 — 281 — Short-term investments: Treasury bills 1,649 1,649 — — Certificates of deposit 132 — 132 — Time deposits 325 — 325 — Interest rate derivatives (see Note 4) 2 2 Fuel derivatives: Option contracts (b) 107 — — 107 Other available-for-sale securities 219 219 — — Total assets $ 14,785 $ 13,829 $ 849 $ 107 Liabilities Interest rate derivatives (see Note 4) $ (74) $ — $ (74) $ — (a) Cash equivalents are primarily composed of money market investments. (b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as an asset. See Note 4 . Fair value measurements at reporting date using: Quoted prices in Significant Significant Description December 31, 2019 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents Cash equivalents (a) $ 1,999 $ 1,999 $ — $ — Commercial paper 535 — 535 — Certificates of deposit 14 — 14 — Short-term investments: Treasury bills 1,196 1,196 — — Certificates of deposit 268 — 268 — Time deposits 60 — 60 — Interest rate derivatives (see Note 4) 2 — 2 — Fuel derivatives: Option contracts (b) 110 — — 110 Other available-for-sale securities 197 197 — — Total assets $ 4,381 $ 3,392 $ 879 $ 110 Liabilities Interest rate derivatives (see Note 4) $ (6) $ — $ (6) $ — (a) Cash equivalents are primarily composed of money market investments. (b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net asset. See Note 4 . |
Fair Value, Assets 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 the three and six months ended June 30, 2020: Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at March 31, 2020 $ 85 Total gains (losses) for the period Included in earnings (15) (a) Included in other comprehensive income 26 Purchases 11 (b) Balance at June 30, 2020 $ 107 The amount of total losses for the period $ (8) (a) The amount of total gains for the period $ 19 (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). (b) The purchase of fuel derivatives is recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives was purchased as a single instrument or separate instruments. Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at December 31, 2019 $ 110 Total losses for the period Included in earnings (17) (a) Included in other comprehensive income (80) Purchases 94 (b) Balance at June 30, 2020 $ 107 The amount of total losses for the period $ (8) (a) The amount of total losses for the period $ (72) (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). (b) The purchase of fuel derivatives is recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives was purchased as a single instrument or separate instruments. |
Fair Value Valuation Techniques | The following table presents a range and weighted average of the unobservable inputs utilized in the fair value measurements of the Company’s fuel derivatives classified as Level 3 at June 30, 2020: Quantitative information about Level 3 fair value measurements Valuation technique Unobservable input Period (by year) Range Weighted Average (a) Fuel derivatives Option model Implied volatility Third quarter 2020 37-64% 54 % Fourth quarter 2020 37-63% 47 % 2021 30-47% 35 % 2022 27-31% 29 % Beyond 2022 25-28% 27 % (a) Implied volatility weighted by the notional amount (barrels of fuel) that will settle in respective period. |
Fair value, by Balance Sheet Grouping | The carrying amounts and estimated fair values of the Company’s short-term and long-term debt (including current maturities), as well as the applicable fair value hierarchy tier, at June 30, 2020, 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 three 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 2.65% Notes due 2020 $ 502 $ 503 Level 2 2.75% Notes due 2022 300 304 Level 2 Pass Through Certificates due 2022 - 6.24% 168 172 Level 2 4.75% Notes due 2023 1,250 1,289 Level 2 1.25% Convertible Notes due 2025 1,909 2,762 Level 2 5.25% Notes due 2025 1,250 1,317 Level 2 3.00% Notes due 2026 300 296 Level 2 Term Loan Agreement payable through 2026 - 1.99% 169 159 Level 3 3.45% Notes due 2027 300 294 Level 2 5.125% Notes due 2027 1,300 1,352 Level 2 7.375% Debentures due 2027 121 134 Level 2 Term Loan Agreement payable through 2028 - 1.71% 196 176 Level 3 2.625% Notes due 2030 500 455 Level 2 1.000% Payroll Support Program Loan due 2030 850 629 Level 3 |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Table Text Block [Abstract] | |
Accounts and Other Receivables | (in millions) June 30, 2020 December 31, 2019 Trade receivables $ 46 $ 53 Credit card receivables 38 112 Business partners and other suppliers 434 779 Income tax receivable 231 87 Other 21 55 Accounts and other receivables $ 770 $ 1,086 |
Other Assets | (in millions) June 30, 2020 December 31, 2019 Derivative contracts $ 68 $ 49 Intangible assets, net 295 296 Other 299 232 Other assets $ 662 $ 577 |
Schedule of Accounts Payable | (in millions) June 30, 2020 December 31, 2019 Accounts payable trade $ 139 $ 304 Salaries payable 207 231 Taxes payable excluding income taxes 38 227 Aircraft maintenance payable 129 162 Fuel payable 68 129 Dividends payable — 93 Other payable 389 428 Accounts payable $ 970 $ 1,574 |
Accrued Liabilities | (in millions) June 30, 2020 December 31, 2019 Deferred Payroll Support Program grant proceeds $ 957 $ — Voluntary Separation Program 2020 307 — Profitsharing and savings plans 26 695 Vacation pay 454 434 Health 104 120 Workers compensation 159 166 Property and income taxes 72 79 Derivative contracts 60 5 Other 233 250 Accrued liabilities $ 2,372 $ 1,749 |
Other Noncurrent Liabilities | (in millions) June 30, 2020 December 31, 2019 Postretirement obligation $ 299 $ 288 Other deferred compensation 315 313 Other 108 105 Other noncurrent liabilities $ 722 $ 706 |
Basis of Presentation (Details)
Basis of Presentation (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($) | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Debt Issuance Costs | $ 5 |
Worldwide Pandemic (Details)
Worldwide Pandemic (Details) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | 60 Months Ended | 120 Months Ended | ||||||||
Jun. 30, 2020USD ($)employeesshares | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)employeesshares | Jun. 30, 2019USD ($) | Apr. 19, 2030 | Apr. 19, 2030 | May 29, 2020USD ($) | Apr. 21, 2020USD ($) | Apr. 20, 2020USD ($)shares | Apr. 09, 2020$ / shares | Mar. 30, 2020USD ($) | Dec. 31, 2019USD ($) | |
Proceeds from term loan credit facility | $ 2,683 | $ 0 | $ 3,683 | $ 0 | ||||||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 27.00% | 23.40% | ||||||||||
Total Expected Receipts of Relief Through Payroll Support Program of CARES Act | $ 3,300 | |||||||||||
Proceeds from Payroll Support Program Grant | 2,900 | $ 2,900 | ||||||||||
Cash Raised, Net of Fees | 17,300 | |||||||||||
Unsecured Term Loan Through Payroll Support Program of CARES Act | $ 459 | |||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares | $ 36.47 | |||||||||||
Proceeds from Payroll Support Program Grant Received in April | $ 1,600 | |||||||||||
Proceeds from Payroll Support Program Grant Received in May | $ 652 | |||||||||||
Proceeds from Payroll Support Program Grant Received in June 2020 | $ 652 | $ 652 | ||||||||||
Percent of Proceeds from Payroll Support Program Grant Received | 90.00% | 90.00% | ||||||||||
Proceeds from Payroll Support Program Grant Remaining to be Allocated to Payroll Support, Voluntary Separation, net | $ 957 | $ 957 | $ 0 | |||||||||
Percent of Proceeds from Payroll Support Program Grant To be Received in July 2020 | 10.00% | 10.00% | ||||||||||
Proceeds from Payroll Support Program Grant To Be Received in July 2020 | $ 326 | $ 326 | ||||||||||
Unsecured Term Loan to be Issued Through Payroll Support Program of CARES Act | 98 | 98 | ||||||||||
Expected Eligibility Amount for Secured Loans Through CARES Act | $ 2,800 | $ 2,800 | ||||||||||
Voluntary Separation Program 2020 Participants | employees | 4,200 | 4,200 | ||||||||||
Voluntary Separation Program 2020 Accrual for Employees who Accepted through June 30, 2020 | $ 307 | |||||||||||
Proceeds from Payroll Support Program Grant Allocated to Payroll Support, Voluntary Separation, net | 1,100 | |||||||||||
Goodwill | $ 970 | $ 970 | $ 970 | |||||||||
Subsequent Event | ||||||||||||
Principal Amount Increase on Unsecured Term Loan Through Payroll Support Program of CARES Act | 30.00% | |||||||||||
Principal Amount Increase on Warrants Issued to Treasury Through Payroll Support Program of CARES Act | 10.00% | |||||||||||
Minimum | ||||||||||||
Extended Emergency Time Off Period | 6 months | |||||||||||
Maximum | ||||||||||||
Extended Emergency Time Off Period | 18 months | |||||||||||
Customer Support and Service [Member] | ||||||||||||
Voluntary Separation Program 2020 Participants | employees | 390 | 390 | ||||||||||
Ground Operations and Provisioning [Member] | ||||||||||||
Voluntary Separation Program 2020 Participants | employees | 1,060 | 1,060 | ||||||||||
Flight Attendants [Member] | ||||||||||||
Voluntary Separation Program 2020 Participants | employees | 725 | 725 | ||||||||||
Pilots [Member] | ||||||||||||
Voluntary Separation Program 2020 Participants | employees | 640 | 640 | ||||||||||
Pilots [Member] | Maximum | ||||||||||||
Extended Emergency Time Off Period | 5 years | |||||||||||
Contract groups [Member] | ||||||||||||
Voluntary Separation Program 2020 Participants | employees | 90 | 90 | ||||||||||
Managerial and Administrative [Member] | ||||||||||||
Voluntary Separation Program 2020 Participants | employees | 1,145 | 1,145 | ||||||||||
Maintenance [Member] | ||||||||||||
Voluntary Separation Program 2020 Participants | employees | 185 | 185 | ||||||||||
LUV Common Stock Warrants | ||||||||||||
Class of Warrant or Right, Outstanding | shares | 2,300,000 | 2,300,000 | 1,300,000 | |||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares | $ 36.47 | |||||||||||
Warrants and Rights Outstanding | $ 35 | $ 35 | ||||||||||
Class of Warrant or Right, Unissued | shares | 268,000 | 268,000 | ||||||||||
Use Rights [Member] | ||||||||||||
Indefinite-Lived Domestic Slots and Routes | $ 295 | $ 295 | ||||||||||
CARES Act Unsecured Loan | Unsecured Debt | ||||||||||||
Stated interest rate | 1.00% | 1.00% | ||||||||||
Unsecured Debt | Forecast | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | ||||||||||||
Basis spread on variable rate (percent) April 21, 2025 and beyond | 2.00% | |||||||||||
1.0 Payroll Support Program Loan due 2030 | Unsecured Debt | ||||||||||||
Stated interest rate | 1.00% | 1.00% | ||||||||||
Carrying amount of debt | $ 850 | $ 850 | ||||||||||
Accordian Feature to Amended 364-Day Term Loan Credit Facility [Member] | Amended 364-Day Term Loan Credit Facility | ||||||||||||
Accordian Feature on Short-term Debt | $ 417 |
Financial Derivative Instrume_3
Financial Derivative Instruments Narrative (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Jun. 08, 2020USD ($) | May 04, 2020USD ($) | Dec. 31, 2019Agreements | Jun. 30, 2019 | |
Derivative [Line Items] | |||||||
Percentage of actual consumption hedged | 95.00% | 79.00% | |||||
Debt Instrument, Face Amount | $ 1,800 | $ 2,000 | |||||
Current Unrealized Net Losses in OCI | $ 63 | $ 63 | |||||
Maximum sum of derivatives of counterparty to be included in other (less than $8 million) | $ 8 | $ 8 | |||||
Cash Collateral Percent Of Fair Value Fuel Derivatives Contracts | 100.00% | 100.00% | |||||
Letter of Credit Percent of Collateral | 100.00% | 100.00% | |||||
Terminated Interest Rate Swap Liability | $ 31 | $ 31 | |||||
Fuel derivatives | |||||||
Derivative [Line Items] | |||||||
Cash collateral held (from) by CP | 32 | 32 | |||||
Interest rate swap | |||||||
Derivative [Line Items] | |||||||
Interest Rate Derivative | 12 | 12 | |||||
Interest rate derivatives | |||||||
Derivative [Line Items] | |||||||
Cash collateral held (from) by CP | 0 | 0 | |||||
Discontinuation of Interest Rate Cash Flow Hedge Balance in AOCI | $ 32 | ||||||
Not Designated as Hedging Instrument | Fuel derivatives | |||||||
Derivative [Line Items] | |||||||
Loss on Discontinuation of Cash Flow Hedge Due to Forecasted Transaction Probable of Not Occurring | 14 | 16 | |||||
Not Designated as Hedging Instrument | Interest rate derivatives | |||||||
Derivative [Line Items] | |||||||
Discontinuation of Interest Rate Cash Flow Hedge Balance in AOCI | 14 | 31 | |||||
Gain (Loss) on Interest Rate Derivative Instruments Not Designated as Hedging Instruments | $ 5 | $ 29 |
Financial Derivative Instrume_4
Financial Derivative Instruments - Fuel Hedging (Details) gal in Millions | Jun. 30, 2020gal | [1] |
Remainder of Current Year | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 460 | |
2021 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 1,283 | |
2022 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 1,056 | |
Beyond 2022 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 529 | |
[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 and the Company's flight schedule fluctuates. |
Financial Derivative Instrume_5
Financial Derivative Instruments - Fair Values by Balance Sheet Location (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | |
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | $ 109 | $ 112 |
Derivative Liability, Fair Value, Gross Liability | [1] | 74 | 6 |
Designated as Hedging Instrument | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 108 | 112 |
Derivative Liability, Fair Value, Gross Liability | [1] | 14 | 6 |
Not Designated as Hedging Instrument | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 1 | 0 |
Derivative Liability, Fair Value, Gross Liability | [1] | 60 | 0 |
Fuel derivatives | Designated as Hedging Instrument | Prepaid expenses and other current assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 7 | 48 |
Derivative Asset, Fair Value, Gross Liability | [1] | 0 | 0 |
Fuel derivatives | Designated as Hedging Instrument | Other Assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 99 | 62 |
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 [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 1 | 0 |
Derivative Asset, Fair Value, Gross Liability | [1] | 0 | 0 |
Interest rate derivatives | Designated as Hedging Instrument | Prepaid expenses and other current assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 2 | 0 |
Derivative Asset, Fair Value, Gross Liability | [1] | 0 | 0 |
Interest rate derivatives | Designated as Hedging Instrument | Accrued Liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Liability, Fair Value, Gross Asset | [1] | 0 | 0 |
Derivative Liability, Fair Value, Gross Liability | [1] | 0 | 5 |
Interest rate derivatives | Designated as Hedging Instrument | Other Assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 0 | 2 |
Derivative Asset, Fair Value, Gross Liability | [1] | 0 | 0 |
Interest rate derivatives | Designated as Hedging Instrument | Other Noncurrent Liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Liability, Fair Value, Gross Asset | [1] | 0 | 0 |
Derivative Liability, Fair Value, Gross Liability | [1] | 14 | 1 |
Interest rate derivatives | Not Designated as Hedging Instrument | Accrued Liabilities [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Liability, Fair Value, Gross Asset | [1] | 0 | 0 |
Derivative Liability, Fair Value, Gross Liability | [1] | $ 60 | $ 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 ($) | Jun. 30, 2020 | Jun. 30, 2019 | |
Derivative [Line Items] | |||
Deferred Gain (Loss) on Discontinuation of Interest Rate Fair Value Hedge | $ 18,000,000 | $ 19,000,000 | |
Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | 502,000,000 | 800,000,000 | |
Short-term Debt | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | 502,000,000 | 300,000,000 | |
Long-term Debt | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | 0 | 500,000,000 | |
Cumulative fair value adjustment [Member] | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | [1] | 20,000,000 | 19,000,000 |
Cumulative fair value adjustment [Member] | Short-term Debt | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | [1] | 2,000,000 | 1,000,000 |
Cumulative fair value adjustment [Member] | Long-term Debt | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Derivative, Amount of Hedged Item | [1] | $ 18,000,000 | $ 18,000,000 |
[1] | At June 30, 2020 and 2019, these amounts include the cumulative amount of fair value hedging adjustments remaining for which hedge accounting has been discontinued, of $18 million and $19 million, respectively. |
Financial Derivative Instrume_7
Financial Derivative Instruments - Collateral by Balance Sheet Location (Details) - Fuel derivatives - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Prepaid expenses and other current assets | ||
Derivative [Line Items] | ||
Cash collateral deposits held from CP for fuel contracts - current | $ 1 | $ 10 |
Other Assets | ||
Derivative [Line Items] | ||
Cash collateral deposits held from CP for fuel contracts - non-current | $ 31 | $ 15 |
Financial Derivative Instrume_8
Financial Derivative Instruments - Offsetting of Derivative Assets (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | |
Offsetting Assets [Line Items] | |||
Asset derivative contracts, net | $ 68 | $ 49 | |
Fuel derivatives | Prepaid expenses and other current assets | |||
Offsetting Assets [Line Items] | |||
Gross amounts of recognized assets | 8 | 48 | |
Gross liability amounts offset in the Balance Sheet | (1) | (10) | |
Asset derivative contracts, net | 7 | 38 | |
Fuel derivatives | Other Assets | |||
Offsetting Assets [Line Items] | |||
Gross amounts of recognized assets | 99 | 62 | |
Gross liability amounts offset in the Balance Sheet | (31) | (15) | |
Asset derivative contracts, net | [1] | 68 | 47 |
Interest rate derivatives | Prepaid expenses and other current assets | |||
Offsetting Assets [Line Items] | |||
Gross amounts of recognized assets | 2 | 0 | |
Gross liability amounts offset in the Balance Sheet | 0 | 0 | |
Asset derivative contracts, net | 2 | 0 | |
Interest rate derivatives | Other Assets | |||
Offsetting Assets [Line Items] | |||
Gross amounts of recognized assets | 0 | 2 | |
Gross liability amounts offset in the Balance Sheet | 0 | 0 | |
Asset derivative contracts, net | [1] | $ 0 | $ 2 |
[1] | The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 10. |
Financial Derivative Instrume_9
Financial Derivative Instruments - Offsetting of Derivative Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | |
Fuel derivatives | Prepaid expenses and other current assets | |||
Offsetting Liabilities [Line Items] | |||
Gross amounts of recognized liabilities | $ 1 | $ 10 | |
Gross asset amounts offset in the Balance Sheet | (1) | (10) | |
Liability derivative contracts, net | 0 | 0 | |
Fuel derivatives | Other Assets | |||
Offsetting Liabilities [Line Items] | |||
Gross amounts of recognized liabilities | 31 | 15 | |
Gross asset amounts offset in the Balance Sheet | (31) | (15) | |
Liability derivative contracts, net | [1] | 0 | 0 |
Interest rate derivatives | Accrued Liabilities [Member] | |||
Offsetting Liabilities [Line Items] | |||
Gross amounts of recognized liabilities | 60 | 5 | |
Gross asset amounts offset in the Balance Sheet | 0 | 0 | |
Liability derivative contracts, net | [1] | 60 | 5 |
Interest rate derivatives | Other Noncurrent Liabilities | |||
Offsetting Liabilities [Line Items] | |||
Gross amounts of recognized liabilities | 14 | 1 | |
Gross asset amounts offset in the Balance Sheet | 0 | 0 | |
Liability derivative contracts, net | $ 14 | $ 1 | |
[1] | The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 10. |
Financial Derivative Instrum_10
Financial Derivative Instruments - Location and Amount Recognized in Income by Hedging Relationship (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Fuel | ||||
Derivative [Line Items] | ||||
(Gain) Loss on Derivative Instruments, Net, Pretax | $ 14 | $ (2) | $ 36 | $ 9 |
Other (gains)/losses, net | ||||
Derivative [Line Items] | ||||
(Gain) Loss on Derivative Instruments, Net, Pretax | 14 | 16 | ||
Interest Expense | ||||
Derivative [Line Items] | ||||
(Gain) Loss on Derivative Instruments, Net, Pretax | 3 | 7 | 4 | 15 |
Cash Flow Hedging | Fuel | Fuel derivatives | ||||
Derivative [Line Items] | ||||
Derivative Instruments, (Gain) Loss Reclassified from Accumulated OCI into Income, Effective Portion, Net | 14 | (2) | 36 | 9 |
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 | 0 | 0 |
Cash Flow Hedging | Other (gains)/losses, net | Fuel derivatives | ||||
Derivative [Line Items] | ||||
Loss on Discontinuation of Cash Flow Hedge Due to Forecasted Transaction Probable of Not Occurring | 14 | 16 | ||
Cash Flow Hedging | Other (gains)/losses, net | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Derivative Instruments, (Gain) Loss Reclassified from Accumulated OCI into Income, Effective Portion, Net | 0 | 0 | ||
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 | 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 | 1 | 1 | 1 | 2 |
Designated as Hedging Instrument | Fair Value Hedging | Fuel | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
(Gain) Loss on Derivative Instruments, Net, Pretax | 0 | 0 | 0 | 0 |
Designated as Hedging Instrument | Fair Value Hedging | Other (gains)/losses, net | 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] | ||||
(Gain) Loss on Derivative Instruments, Net, Pretax | (2) | 0 | (4) | 1 |
Not Designated as Hedging Instrument | Fuel derivatives | ||||
Derivative [Line Items] | ||||
Loss on Discontinuation of Cash Flow Hedge Due to Forecasted Transaction Probable of Not Occurring | 14 | 16 | ||
Not Designated as Hedging Instrument | Fair Value Hedging | Fuel | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Interest Expense, Debt | 0 | 0 | 0 | 0 |
Not Designated as Hedging Instrument | Fair Value Hedging | Other (gains)/losses, net | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Interest Expense, Debt | 0 | 0 | ||
Not Designated as Hedging Instrument | Fair Value Hedging | Interest Expense | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Interest Expense, Debt | $ 4 | $ 6 | $ 7 | $ 12 |
Financial Derivative Instrum_11
Financial Derivative Instruments - (Gain) Loss by Hedging Relationship (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in AOCI on derivatives | $ (9) | $ (70) | $ (107) | $ (15) |
Fuel derivatives | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in AOCI on derivatives | (9) | (54) | (75) | (12) |
Interest rate derivatives | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in AOCI on derivatives | 0 | (16) | (32) | (27) |
Interest rate derivatives | Not Designated as Hedging Instrument | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) Loss recognized in income on derivatives | (6) | 0 | (30) | 0 |
Interest rate derivatives | Fuel derivatives | Not Designated as Hedging Instrument | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) Loss recognized in income on derivatives | 1 | 0 | 1 | 0 |
Interest rate derivatives | Interest rate derivatives | Not Designated as Hedging Instrument | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) Loss recognized in income on derivatives | $ 5 | $ 0 | $ 29 | $ 0 |
Financial Derivative Instrum_12
Financial Derivative Instruments - Premiums for Fuel Derivative Contracts (Details) - Fuel derivatives - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Designated as Hedging Instrument | Operating Expense [Member] | ||||
Derivative [Line Items] | ||||
Premiums paid for fuel derivative contracts | $ 13 | $ 28 | $ 38 | $ 55 |
Not Designated as Hedging Instrument | Other (gains)/losses, net | ||||
Derivative [Line Items] | ||||
Premiums paid for fuel derivative contracts | $ 11 | $ 0 | $ 11 | $ 0 |
Financial Derivative Instrum_13
Financial Derivative Instruments - Fair Values of Fuel Derivatives Amounts Posted as Collateral (Details) $ in Millions | Jun. 30, 2020USD ($) | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Letter of Credit Percent of Collateral | 100.00% | |
Cash Collateral Percent Of Fair Value Fuel Derivatives Contracts | 100.00% | |
Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | $ 107 | |
Cash collateral held (from) by CP | (32) | |
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] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 28 | |
Cash collateral held (from) by CP | (32) | |
Letters of credit (LC) | 0 | |
Counterparty B | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 12 | |
Cash collateral held (from) by CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty C | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 28 | |
Cash collateral held (from) by CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty D | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 10 | |
Cash collateral held (from) by CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty E | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 11 | |
Cash collateral held (from) by CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty F | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 9 | |
Cash collateral held (from) by CP | 0 | |
Letters of credit (LC) | 0 | |
Counterparty Other | Fuel derivatives | ||
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 9 | [1] |
Cash collateral held (from) by CP | 0 | [1] |
Letters of credit (LC) | 0 | [1] |
Minimum | Counterparty A | 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 | (100) | |
Fair value of fuel derivative level at which cash is received from CP | 0 | [2] |
Fair value of fuel derivative levels at which 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 cash collateral is pledged to CP | (200) | |
Minimum | Counterparty B | 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 levels at which cash is provided to CP Threshold 2 | ||
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 levels at which cash is provided to CP Threshold 2 | ||
Fair value of fuel derivative level at which cash is received from CP | [4] | |
Minimum | Counterparty C | 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 | (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 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 cash collateral is pledged to CP | (150) | |
Minimum | Counterparty D | 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 | (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 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 cash collateral is pledged to CP | (150) | |
Minimum | Counterparty E | 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 | (40) | |
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] | |
Minimum | Counterparty F | 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 | (65) | [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] | |
Maximum | Counterparty A | 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 | ||
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which 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 cash collateral is pledged to CP | (600) | |
Maximum | Counterparty C | 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 | (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 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 cash collateral is pledged to CP | (550) | |
Maximum | Counterparty D | 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 | (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 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 cash collateral is pledged to CP | $ (550) | |
[1] | Individual counterparties with fair value of fuel derivatives < $8 million. | |
[2] | Thresholds may vary based on changes in credit ratings within investment grade. | |
[3] | The Company has the option of providing cash as collateral. | |
[4] | Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. | |
[5] | The Company has the option of providing cash or letters of credit as collateral. | |
[6] | The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. |
AOCI - Differences between Net
AOCI - Differences between Net Income and Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Condensed Statement of Income Captions [Line Items] | ||||||
Net income (loss) | $ (915) | $ 741 | $ (1,009) | $ 1,128 | ||
Other, net of deferred taxes | 25 | 5 | (3) | 16 | ||
Total other comprehensive income (loss) | 56 | (66) | (69) | 10 | ||
Comprehensive income (loss) | (859) | $ (219) | 675 | $ 463 | (1,078) | 1,138 |
Other deferred taxes | 8 | 1 | (1) | 4 | ||
Fuel derivatives | ||||||
Condensed Statement of Income Captions [Line Items] | ||||||
Unrealized gain (loss) on derivative instruments, net of deferred taxes | 30 | (56) | (35) | 19 | ||
Derivative deferred taxes | 9 | (17) | (10) | 6 | ||
Interest rate derivatives | ||||||
Condensed Statement of Income Captions [Line Items] | ||||||
Unrealized gain (loss) on derivative instruments, net of deferred taxes | 1 | (15) | (31) | (25) | ||
Derivative deferred taxes | $ 0 | $ (4) | $ (10) | $ (8) |
AOCI - Schedule of AOCI Compone
AOCI - Schedule of AOCI Components (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | |
Fuel derivatives | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | $ (209) | $ (125) |
Changes in fair value | 11 | (97) |
Ending Balance | (170) | (170) |
Interest rate derivatives | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | (75) | (33) |
Changes in fair value | 0 | (42) |
Reclassification to earnings | 1 | 1 |
Ending Balance | (74) | (74) |
Defined Benefit Plan Items | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | 20 | 20 |
Changes in fair value | 0 | 0 |
Reclassification to earnings | 0 | 0 |
Ending Balance | 20 | 20 |
Other comprehensive income (loss) other changes net of tax | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | 22 | 59 |
Changes in fair value | 33 | (4) |
Reclassification to earnings | 0 | 0 |
Ending Balance | 55 | 55 |
Deferred Tax | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | 56 | 18 |
Changes in fair value | (10) | 33 |
Reclassification to earnings | (7) | (12) |
Ending Balance | 39 | 39 |
AOCI Including Portion Attributable to Noncontrolling Interest | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning Balance | (186) | (61) |
Changes in fair value | 34 | (110) |
Reclassification to earnings | 22 | 41 |
Ending Balance | (130) | (130) |
Reclassification out of Accumulated Other Comprehensive Income (Loss) | Fuel derivatives | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Reclassification to earnings | $ 28 | $ 52 |
AOCI - Reclassification out of
AOCI - Reclassification out of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Fuel and oil | $ 257 | $ 1,136 | $ 1,128 | $ 2,152 |
Other (gains) losses, net | (32) | (2) | (60) | (4) |
Less: Tax Expense | 324 | $ (227) | 374 | $ (344) |
Interest rate derivatives | ||||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Reclassification to earnings | (1) | (1) | ||
Reclassification out of Accumulated Other Comprehensive Income (Loss) | ||||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Net of Tax | 22 | 41 | ||
Reclassification out of Accumulated Other Comprehensive Income (Loss) | Fuel derivatives | ||||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Reclassification to earnings | (28) | (52) | ||
Less: Tax Expense | (7) | (12) | ||
Net of Tax | 21 | 40 | ||
Fuel derivatives | Reclassification out of Accumulated Other Comprehensive Income (Loss) | ||||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Fuel and oil | 14 | 36 | ||
Other (gains) losses, net | 14 | 16 | ||
Interest rate derivatives | Reclassification out of Accumulated Other Comprehensive Income (Loss) | ||||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Less: Tax Expense | 0 | 0 | ||
Net of Tax | $ 1 | $ 1 |
Revenue - Passenger Revenue Bre
Revenue - Passenger Revenue Breakout (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Operating Revenue | $ 1,008 | $ 5,909 | $ 5,242 | $ 11,059 |
Passenger Revenue Non Loyalty | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating Revenue | 562 | 4,683 | 3,783 | 8,726 |
Passenger Loyalty Air Transportation | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating Revenue | 81 | 622 | 542 | 1,158 |
Passenger Ancillary Sold Separately | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating Revenue | 61 | 182 | 224 | 347 |
Passenger | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating Revenue | $ 704 | $ 5,487 | $ 4,549 | $ 10,231 |
Revenue - Air Traffic Liability
Revenue - Air Traffic Liability Breakout (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Revenue Recognition and Deferred Revenue [Abstract] | ||||
ATL - PAX Revenue and Ancillary PAX Services | $ 3,023 | $ 2,125 | ||
AirTrafficLiabilityLoyaltyProgram | 3,856 | 3,385 | ||
AirTrafficLiabilityTotal | $ 6,879 | $ 5,510 | $ 5,984 | $ 5,070 |
Revenue - Air Traffic Liabili_2
Revenue - Air Traffic Liability - Loyalty Program Rollforward (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Movement in Deferred Revenue | ||||
Air traffic liability - loyalty program - beginning balance | $ 3,561 | $ 3,171 | $ 3,385 | $ 3,011 |
Amounts deferred associated with points awarded | 385 | 757 | 1,041 | 1,468 |
Revenue recognized from points redeemed - Passenger | (81) | (622) | (542) | (1,158) |
Revenue recognized from points redeemed - Other | (9) | (17) | (28) | (32) |
Air traffic liability - loyalty program - ending balance | $ 3,856 | $ 3,289 | $ 3,856 | $ 3,289 |
Revenue - Air Traffic Liabili_3
Revenue - Air Traffic Liability Rollforward (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Air Traffic Liability Roll Forward | ||
ATL, beginning balance | $ 5,510 | $ 5,070 |
Current Period Sales | 5,946 | 11,178 |
Revenue amounts in beginning balance | (1,936) | (2,855) |
Revenue from Current Period Sales | (2,641) | (7,409) |
ATL, ending balance | $ 6,879 | $ 5,984 |
Revenue - Additional Informatio
Revenue - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Deferred Revenue Arrangement [Line Items] | |||||
Residual Travel Funds | 28.00% | 28.00% | 1.00% | ||
Operating Revenue | $ 1,008 | $ 5,909 | $ 5,242 | $ 11,059 | |
Chase And Other Partner Agreements | |||||
Deferred Revenue Arrangement [Line Items] | |||||
Operating Revenue | $ 256 | $ 336 | $ 577 | $ 655 |
Net Income (Loss) Per Share (De
Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
NUMERATOR: | ||||
Net income (loss) | $ (915) | $ 741 | $ (1,009) | $ 1,128 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Weighted Average Number of Shares Outstanding, Basic and Diluted | 563 | 542 | 539 | 547 |
Earnings (Loss) Per Share, Basic and Diluted | $ (1.63) | $ 1.37 | $ (1.87) | $ 2.06 |
FINANCING ACTIVITIES (Details)
FINANCING ACTIVITIES (Details) $ / shares in Units, shares in Millions | May 01, 2020USD ($)$ / sharesshares | Jun. 30, 2020USD ($)aircraft$ / shares | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)aircraft$ / shares | Jun. 30, 2019USD ($) | Jun. 08, 2020USD ($) | May 04, 2020USD ($) | Apr. 24, 2020USD ($) | Apr. 09, 2020$ / shares | Apr. 01, 2020USD ($) | Mar. 30, 2020USD ($) | Dec. 31, 2019USD ($) |
Debt Instrument [Line Items] | ||||||||||||
Required Minimum Liquidity Level at All Times After March 31, 2021 | $ 2,500,000,000 | $ 2,500,000,000 | ||||||||||
Remainder of 2020 | 596,000,000 | 596,000,000 | ||||||||||
2021 | 195,000,000 | 195,000,000 | ||||||||||
2022 | 499,000,000 | 499,000,000 | ||||||||||
2023 | 1,400,000,000 | 1,400,000,000 | ||||||||||
2024 | 127,000,000 | 127,000,000 | ||||||||||
2025 | 3,700,000,000 | 3,700,000,000 | ||||||||||
Beyond 2025 | 3,700,000,000 | 3,700,000,000 | ||||||||||
Proceeds from Payroll Support Program Grant Remaining to be Allocated to Payroll Support, Voluntary Separation, net | 957,000,000 | 957,000,000 | $ 0 | |||||||||
Shares Issued, Price Per Share | $ / shares | $ 28.50 | |||||||||||
Stock Issued During Period, Shares, New Issues | shares | 80.5 | |||||||||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 1 | |||||||||||
Gain on sale-leaseback transactions | (222,000,000) | $ 0 | (222,000,000) | $ 0 | ||||||||
Adjustments to Additional Paid in Capital, Equity Component of Convertible Debt | (392,000,000) | |||||||||||
Proceeds from issuance of long-term debt | 3,997,000,000 | 0 | 4,497,000,000 | 0 | ||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares | $ 36.47 | |||||||||||
Debt Instrument, Face Amount | $ 1,800,000,000 | $ 2,000,000,000 | ||||||||||
Issuance of common stock | $ 2,200,000,000 | 2,294,000,000 | 0 | 2,294,000,000 | 0 | |||||||
Sale Leaseback Cash Proceeds Investing | 815,000,000 | $ 0 | 815,000,000 | $ 0 | ||||||||
Underwriters' Option [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stock Issued During Period, Shares, New Issues | shares | 10.5 | |||||||||||
2Q20 Saleleaseback of 10 737-800 and 10 737 MAX 8 aircraft [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Sale Leaseback Operating Lease Obligations - 2021 | 71,000,000 | 71,000,000 | ||||||||||
Sale Leaseback Operating Lease Obligations - 2022 | 71,000,000 | 71,000,000 | ||||||||||
Sale Leaseback Operating Lease Obligations - 2023 | 71,000,000 | 71,000,000 | ||||||||||
Sale Leaseback Operating Lease Obligations - 2024 | 71,000,000 | 71,000,000 | ||||||||||
Sale Leaseback Operating Lease Obligations - 2025 | 71,000,000 | 71,000,000 | ||||||||||
Operating Leases, Future Minimum Payments, Remainder of Fiscal Year | 35,000,000 | 35,000,000 | ||||||||||
Operating Leases, Future Minimum Payments, Due Thereafter | $ 440,000,000 | $ 440,000,000 | ||||||||||
B-737-800 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Sale Leaseback Transaction, Description of Asset(s) | ten | |||||||||||
Gain on sale-leaseback transactions | $ 153,000,000 | |||||||||||
Sale Leaseback Transaction, Lease Terms | ten years | |||||||||||
Sale Leaseback Cash Proceeds Investing | $ 405,000,000 | |||||||||||
B-737-7 MAX | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Sale Leaseback Transaction, Description of Asset(s) | ten | |||||||||||
Gain on sale-leaseback transactions | $ 69,000,000 | |||||||||||
Sale Leaseback Transaction, Lease Terms | 13 years | |||||||||||
Sale Leaseback Cash Proceeds Investing | $ 410,000,000 | |||||||||||
2.625% Notes due 2030 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stated interest rate | 2.625% | 2.625% | ||||||||||
Unsecured Debt | $ 500,000,000 | $ 500,000,000 | ||||||||||
Amended 364-Day Term Loan Credit Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt Instrument, Face Amount | $ 2,300,000,000 | |||||||||||
1.250 Convertible Senior Notes due 2025 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stated interest rate | 1.25% | |||||||||||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 38.48 | $ 38.48 | ||||||||||
Debt Instrument, Convertible, Conversion Ratio | 25.9909 | |||||||||||
Debt Instrument, Redemption Price, Percentage | 100.00% | |||||||||||
Convertible Debt Conversion Terms Percentage of Sales Price Exceeding Conversion Price | 130.00% | |||||||||||
Convertible Debt Conversion Terms Measurement Period Trading Price Threshold Percentage | 98.00% | |||||||||||
4.750 Unsecured Notes due 2023 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stated interest rate | 4.75% | 4.75% | ||||||||||
Debt Instrument, Face Amount | $ 500,000,000 | $ 750,000,000 | ||||||||||
5.250 Unsecured Notes due 2025 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stated interest rate | 5.25% | |||||||||||
Debt Instrument, Face Amount | $ 1,250,000,000 | |||||||||||
5.125 Unsecured Notes due 2027 [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stated interest rate | 5.125% | |||||||||||
Debt Instrument, Face Amount | $ 1,300,000,000 | |||||||||||
4.750 Unsecured Notes due 2023 and 5.125 Unsecured Notes due 2027 [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Proceeds from issuance of long-term debt | $ 1,700,000,000 | |||||||||||
Secured Debt by Six Aircraft [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Aircraft Subject to Secure Debt Transactions | aircraft | 6 | 6 | ||||||||||
Debt Instrument, Face Amount | $ 192,000,000 | $ 192,000,000 | ||||||||||
364-Day Term Loan Credit Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt Instrument, Face Amount | 1,000,000,000 | $ 1,000,000,000 | ||||||||||
Convertible Debt [Member] | 1.250 Convertible Senior Notes due 2025 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stated interest rate | 1.25% | |||||||||||
Debt Instrument Underwriters Option to Purchase | $ 300,000,000 | |||||||||||
Adjustments to Additional Paid in Capital, Equity Component of Convertible Debt | $ (11,000,000) | |||||||||||
Debt Instrument, Interest Rate, Effective Percentage | 5.20% | 5.20% | ||||||||||
Debt Instrument, Face Amount | $ 2,300,000,000 | $ 1,900,000,000 | $ 1,900,000,000 | |||||||||
Debt Instrument, Convertible, Carrying Amount of Equity Component | (403,000,000) | (403,000,000) | ||||||||||
Unamortized Debt Issuance Expense | 62,000,000 | 62,000,000 | ||||||||||
Revolving Credit Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,500,000,000 | $ 1,500,000,000 | ||||||||||
Amended 364-Day Term Loan Credit Facility | London Interbank Offered Rate (LIBOR) [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stated interest rate | 1.00% | 1.00% | ||||||||||
Amended 364-Day Term Loan Credit Facility | London Interbank Offered Rate (LIBOR) [Member] | Minimum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stated interest rate | 1.00% | 1.00% | ||||||||||
Amended 364-Day Term Loan Credit Facility | New York Fed Bank Rate [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stated interest rate | 0.50% | 0.50% | ||||||||||
Amended 364-Day Term Loan Credit Facility | Base Rate [Member] | Minimum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stated interest rate | 1.00% | 1.00% | ||||||||||
Accordian Feature to Amended 364-Day Term Loan Credit Facility [Member] | Amended 364-Day Term Loan Credit Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Accordian Feature on Short-term Debt | $ 417,000,000 | |||||||||||
Debt Instrument, Face Amount | $ 350,000,000 | |||||||||||
Secured Debt by Six Aircraft [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Stated interest rate | 1.40% | 1.40% | ||||||||||
Existing Revolving Credit Facility [Member] | Revolving Credit Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Line of Credit Facility, Current Borrowing Capacity | $ 1,000,000,000 | $ 1,000,000,000 | ||||||||||
Revolving Credit Facility, Fair Value Amount Outstanding | 0 | 0 | ||||||||||
Existing Revolving Credit Facility [Member] | 364-Day Term Loan Credit Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt Instrument, Face Amount | $ 1,000,000,000 | $ 1,000,000,000 |
Fair Value Measurements - Measu
Fair Value Measurements - Measured on Recurring Basis (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 | |
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | [1] | $ 109,000,000 | $ 112,000,000 |
Fuel derivatives: | |||
Derivative Liability, Fair Value, Gross Liability | [1] | (74,000,000) | (6,000,000) |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Treasury bills | 1,649,000,000 | 1,196,000,000 | |
Interest rate derivatives (see Note 4) | 0 | ||
Fuel derivatives: | |||
Other available for sale securities | 219,000,000 | 197,000,000 | |
Total assets | 13,829,000,000 | 3,392,000,000 | |
Liabilities | |||
Interest rate derivatives (see Note 4) | 0 | 0 | |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Treasury bills | 0 | 0 | |
Interest rate derivatives (see Note 4) | 2,000,000 | 2,000,000 | |
Fuel derivatives: | |||
Other available for sale securities | 0 | 0 | |
Total assets | 849,000,000 | 879,000,000 | |
Liabilities | |||
Interest rate derivatives (see Note 4) | (74,000,000) | (6,000,000) | |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Treasury bills | 0 | 0 | |
Interest rate derivatives (see Note 4) | 0 | ||
Fuel derivatives: | |||
Other available for sale securities | 0 | 0 | |
Total assets | 107,000,000 | 110,000,000 | |
Liabilities | |||
Interest rate derivatives (see Note 4) | 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 | [2] | 0 | 0 |
Options Held | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | [2] | 0 | 0 |
Options Held | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | [2] | 107,000,000 | 110,000,000 |
Cash Equivalents | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Cash equivalents | [3] | 11,961,000,000 | 1,999,000,000 |
Cash Equivalents | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Cash equivalents | [3] | 0 | 0 |
Cash Equivalents | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Cash equivalents | [3] | 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 | 90,000,000 | 535,000,000 | |
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 | |
Investments | 0 | 0 | |
Certificates of Deposit | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Cash equivalents | 19,000,000 | 14,000,000 | |
Investments | 132,000,000 | 268,000,000 | |
Certificates of Deposit | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Cash equivalents | 0 | 0 | |
Investments | 0 | 0 | |
Time Deposits | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Cash equivalents | 0 | ||
Investments | 0 | 0 | |
Time Deposits | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Cash equivalents | 281,000,000 | ||
Investments | 325,000,000 | 60,000,000 | |
Time Deposits | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Cash equivalents | 0 | ||
Investments | 0 | 0 | |
Estimate of Fair Value Measurement | Fair Value, Measurements, Recurring | |||
Assets | |||
Treasury bills | 1,649,000,000 | 1,196,000,000 | |
Interest rate derivatives (see Note 4) | 2,000,000 | 2,000,000 | |
Fuel derivatives: | |||
Other available for sale securities | 219,000,000 | 197,000,000 | |
Total assets | 14,785,000,000 | 4,381,000,000 | |
Liabilities | |||
Interest rate derivatives (see Note 4) | (74,000,000) | (6,000,000) | |
Estimate of Fair Value Measurement | Options Held | Fair Value, Measurements, Recurring | |||
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | [2] | 107,000,000 | 110,000,000 |
Estimate of Fair Value Measurement | Cash Equivalents | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash equivalents | [3] | 11,961,000,000 | 1,999,000,000 |
Estimate of Fair Value Measurement | Commercial Paper | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash equivalents | 90,000,000 | 535,000,000 | |
Estimate of Fair Value Measurement | Certificates of Deposit | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash equivalents | 19,000,000 | 14,000,000 | |
Investments | 132,000,000 | 268,000,000 | |
Estimate of Fair Value Measurement | Time Deposits | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash equivalents | 281,000,000 | ||
Investments | $ 325,000,000 | $ 60,000,000 | |
[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] | In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net asset. See Note 4 . | ||
[3] | Cash equivalents are primarily composed of money market investments. |
Fair Value Measurement - Fair V
Fair Value Measurement - Fair Value Assets and Liabilities Measured on Recurring Basis with Unobservable Inputs (Details) - Fuel derivatives - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Losses for the period included in earnings | [1] | $ (15) | $ (17) | ||
Fair Value, Recurring Basis, Unobservable Input Reconciliation, Asset (Liability), Gain (Loss), OCI | 26 | (80) | |||
Purchases | [2] | 11 | 94 | ||
Ending Balance | 107 | 107 | |||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value | $ 85 | $ 110 | |||
Commodity Option | |||||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | |||||
Fair Value, Asset, Recurring Basis, Still Held, Unrealized Gain (Loss) | [1] | (8) | (8) | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Fair Value, Asset, Recurring Basis, Still Held, Unrealized Gain (Loss), OCI | $ 19 | $ (72) | |||
[1] | Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). | ||||
[2] | The purchase of fuel derivatives is recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives was purchased as a single instrument or separate instruments. |
Fair Value Measurements - Quant
Fair Value Measurements - Quantitative Information about Level 3 Fair Value (Details) - Significant unobservable inputs (Level 3) - Fuel derivatives - Measurement Input, Option Volatility | Jun. 30, 2020 | |
Minimum | Third quarter 2020 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.3700 | |
Minimum | Fourth quarter 2020 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.3700 | |
Minimum | 2021 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.3000 | |
Minimum | 2022 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.2700 | |
Minimum | Beyond 2022 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.2500 | |
Weighted Average | Third quarter 2020 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.54 | [1] |
Weighted Average | Fourth quarter 2020 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.47 | [1] |
Weighted Average | 2021 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.35 | [1] |
Weighted Average | 2022 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.29 | [1] |
Weighted Average | Beyond 2022 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.27 | [1] |
Maximum | Third quarter 2020 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.6400 | |
Maximum | Fourth quarter 2020 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.6300 | |
Maximum | 2021 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.4700 | |
Maximum | 2022 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.3100 | |
Maximum | Beyond 2022 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.2800 | |
[1] | Implied volatility weighted by the notional amount (barrels of fuel) that will settle in respective period. |
Fair Value Instruments - Carryi
Fair Value Instruments - Carrying and Estimated Fair Value of Debt (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Jun. 08, 2020 | May 04, 2020 | May 01, 2020 |
2.65% Notes due 2020 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Carrying amount of debt | $ 502 | |||
Stated interest rate | 2.65% | |||
2.75% Notes due 2022 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Carrying amount of debt | $ 300 | |||
Stated interest rate | 2.75% | |||
Pass Through Certificates due 2022 - 6.24% | Enhanced Equipment Trust Certificate | ||||
Debt Instrument [Line Items] | ||||
Carrying amount of debt | $ 168 | |||
Stated interest rate | 6.24% | |||
4.750 Unsecured Notes due 2023 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 4.75% | 4.75% | ||
4.750 Unsecured Notes due 2023 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Carrying amount of debt | $ 1,250 | |||
Stated interest rate | 4.75% | |||
1.250 Convertible Senior Notes due 2025 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 1.25% | |||
1.250 Convertible Senior Notes due 2025 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 1.25% | |||
1.250 Convertible Senior Notes due 2025 | Convertible Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Carrying amount of debt | $ 1,909 | |||
Stated interest rate | 1.25% | |||
5.250 Unsecured Notes due 2025 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 5.25% | |||
5.250 Unsecured Notes due 2025 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Carrying amount of debt | $ 1,250 | |||
Stated interest rate | 5.25% | |||
3.00% Notes due 2026 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Carrying amount of debt | $ 300 | |||
Stated interest rate | 3.00% | |||
Term Loan Agreement due 2026 - 1.99% | Notes Payable to Banks | ||||
Debt Instrument [Line Items] | ||||
Carrying amount of debt | $ 169 | |||
Stated interest rate | 1.99% | |||
3.45% Notes due 2027 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 3.45% | |||
5.125 Notes due 2027 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Carrying amount of debt | $ 1,300 | |||
Stated interest rate | 5.125% | |||
7.375% Debentures due 2027 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Carrying amount of debt | $ 121 | |||
Stated interest rate | 7.375% | |||
1.71 Term Loan Agreement Payable through 2028 | Notes Payable to Banks | ||||
Debt Instrument [Line Items] | ||||
Carrying amount of debt | $ 196 | |||
2.625% Notes due 2030 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 2.625% | |||
2.625% Notes due 2030 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Carrying amount of debt | $ 500 | |||
Stated interest rate | 2.625% | |||
1.0 Payroll Support Program Loan due 2030 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Carrying amount of debt | $ 850 | |||
Stated interest rate | 1.00% | |||
3.45 Unsecured Senior Notes due 2027 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Carrying amount of debt | $ 300 | |||
Level 2 | 2.65% Notes due 2020 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Notes Payable, Fair Value | 503 | |||
Level 2 | 2.75% Notes due 2022 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Notes Payable, Fair Value | 304 | |||
Level 2 | Pass Through Certificates due 2022 - 6.24% | Enhanced Equipment Trust Certificate | ||||
Debt Instrument [Line Items] | ||||
Notes Payable, Fair Value | 172 | |||
Level 2 | 4.750 Unsecured Notes due 2023 | ||||
Debt Instrument [Line Items] | ||||
Notes Payable, Fair Value | 1,289 | |||
Level 2 | 1.250 Convertible Senior Notes due 2025 | Convertible Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Notes Payable, Fair Value | 2,762 | |||
Level 2 | 5.250 Unsecured Notes due 2025 | ||||
Debt Instrument [Line Items] | ||||
Notes Payable, Fair Value | 1,317 | |||
Level 2 | 3.00% Notes due 2026 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Notes Payable, Fair Value | 296 | |||
Level 2 | 5.125 Notes due 2027 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Notes Payable, Fair Value | 1,352 | |||
Level 2 | 7.375% Debentures due 2027 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Loans Payable, Fair Value | 134 | |||
Level 2 | 2.625% Notes due 2030 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Notes Payable, Fair Value | 455 | |||
Level 2 | 3.45 Unsecured Senior Notes due 2027 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Notes Payable, Fair Value | 294 | |||
Level 3 | Term Loan Agreement due 2026 - 1.99% | Notes Payable to Banks | ||||
Debt Instrument [Line Items] | ||||
Loans Payable, Fair Value | 159 | |||
Level 3 | 1.71 Term Loan Agreement Payable through 2028 | Notes Payable to Banks | ||||
Debt Instrument [Line Items] | ||||
Loans Payable, Fair Value | 176 | |||
Level 3 | 1.0 Payroll Support Program Loan due 2030 | Unsecured Debt | ||||
Debt Instrument [Line Items] | ||||
Notes Payable, Fair Value | $ 629 | |||
Notes Payable to Banks | 1.71 Term Loan Agreement Payable through 2028 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 1.71% |
Supplemental Financial Inform_3
Supplemental Financial Information - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Supplemental Financial Information - Narrative [Abstract] | ||||
Gain on sale-leaseback transactions | $ (222) | $ 0 | $ (222) | $ 0 |
Supplemental Financial Inform_4
Supplemental Financial Information - Accounts and Other Receivables (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Accounts and Other Receivables [Abstract] | ||
Trade receivables | $ 46 | $ 53 |
Credit card receivables | 38 | 112 |
Business partners and other suppliers | 434 | 779 |
Income tax receivable | 231 | 87 |
Other | 21 | 55 |
Accounts and other receivables | $ 770 | $ 1,086 |
Supplemental Financial Inform_5
Supplemental Financial Information - Other Assets (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | |
Other Assets [Abstract] | |||
Derivative contracts | $ 68 | $ 49 | |
Intangible assets | 295 | 296 | |
Other | 299 | 232 | |
Other assets | 662 | 577 | |
Other Assets | Interest rate derivatives | |||
Other Assets [Abstract] | |||
Derivative contracts | [1] | $ 0 | $ 2 |
[1] | The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 10. |
Supplemental Financial Inform_6
Supplemental Financial Information - Accounts Payable (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Supplemental Financial Information - Accounts Payable [Abstract] | ||
Accounts payable trade | $ 139 | $ 304 |
Salaries payable | 207 | 231 |
Taxes payable | 38 | 227 |
Aircraft maintenance payable | 129 | 162 |
Fuel payable | 68 | 129 |
Dividends Payable | 0 | 93 |
Other payable | 389 | 428 |
Accounts Payable, Current | $ 970 | $ 1,574 |
Supplemental Financial Inform_7
Supplemental Financial Information - Accrued Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 | |
Accrued Liabilities, Current [Abstract] | |||
Deferred Payroll Support Program grant proceeds | $ 957 | $ 0 | |
Voluntary Separation 2020 | 307 | 0 | |
Profitsharing and savings plans | 26 | 695 | |
Vacation pay | 454 | 434 | |
Health | 104 | 120 | |
Workers compensation | 159 | 166 | |
Property and income taxes | 72 | 79 | |
Other | 233 | 250 | |
Accrued liabilities | 2,372 | 1,749 | |
Interest rate derivatives | Accrued Liabilities [Member] | |||
Accrued Liabilities, Current [Abstract] | |||
Derivative contracts | [1] | $ 60 | $ 5 |
[1] | The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 10. |
Supplemental Financial Inform_8
Supplemental Financial Information - Other Non-Current Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Other Liabilities, Noncurrent [Abstract] | ||
Postretirement obligation | $ 299 | $ 288 |
Other deferred compensation | 315 | 313 |
Other | 108 | 105 |
Other noncurrent liabilities | $ 722 | $ 706 |
Commitments and Contingencies -
Commitments and Contingencies - Airport Projects (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Other Commitments [Line Items] | ||
Assets constructed for others | $ 239 | $ 164 |
LAX Terminal 1.5 | ||
Other Commitments [Line Items] | ||
Total Expected Cost Of Airport Project | 479 | |
Outstanding remaining guaranteed obligation | 253 | |
LFMP Terminal | ||
Other Commitments [Line Items] | ||
Municipal bonds principal remaining | 407 | |
Net present value of principal remaining | $ 443 |
Boeing 737 MAX Aircraft Groun_2
Boeing 737 MAX Aircraft Grounding (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020USD ($)aircraft | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)aircraft | Jun. 30, 2019USD ($) | |
Number of Aircraft Grounded Under Emergency Order | 34 | 34 | ||
After-Tax Potential Concessions and Other Considerations Announced July 2019 | $ | $ 4,900 | $ 4,900 | ||
Pre-Tax Potential Concessions and Other Considerations Announced January 2020 | $ | $ 2,600 | $ 2,600 | ||
Number of Aircraft Not Delivered Due to Grounding Under Emergency Order | 41 | 41 | ||
Supplier Proceeds | $ | $ (128) | $ 0 | $ (428) | $ 0 |
Contract to Own Aircraft | ||||
Number of Aircraft Not Delivered Due to Grounding Under Emergency Order | 28 | 28 | ||
Contract to Lease Aircraft | ||||
Number of Aircraft Not Delivered Due to Grounding Under Emergency Order | 13 | 13 | ||
B-737-Max | ||||
Owned Assets, Number of Units | 31 | 31 |