Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | Apr. 23, 2021 | |
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 | Mar. 31, 2021 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 591,376,576 | |
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 | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 11,971 | $ 11,063 |
Short-term investments | 2,377 | 2,271 |
Accounts and other receivables | 937 | 1,130 |
Inventories of parts and supplies, at cost | 448 | 414 |
Prepaid expenses and other current assets | 367 | 295 |
Total current assets | 16,100 | 15,173 |
Property and equipment, at cost: | ||
Flight equipment | 20,876 | 20,877 |
Ground property and equipment | 6,111 | 6,083 |
Deposits on flight equipment purchase contracts | 53 | 305 |
Assets constructed for others | 341 | 309 |
Property and equipment, at cost | 27,381 | 27,574 |
Less allowance for depreciation and amortization | 11,733 | 11,743 |
Property and equipment, net | 15,648 | 15,831 |
Goodwill | 970 | 970 |
Operating lease right-of-use assets | 2,032 | 1,892 |
Other assets | 743 | 722 |
Total assets | 35,493 | 34,588 |
Current liabilities: | ||
Accounts payable | 1,094 | 931 |
Accrued liabilities | 1,665 | 2,259 |
Current operating lease liabilities | 292 | 306 |
Air traffic liability | 4,906 | 3,790 |
Current maturities of long-term debt | 225 | 220 |
Total current liabilities | 8,182 | 7,506 |
Long-term debt less current maturities | 10,546 | 10,111 |
Air traffic liability - noncurrent | 2,826 | 3,343 |
Deferred income taxes | 1,660 | 1,634 |
Construction obligation | 341 | 309 |
Noncurrent operating lease liabilities | 1,722 | 1,562 |
Other noncurrent liabilities | 1,123 | 1,247 |
Stockholders' equity: | ||
Common stock | 888 | 888 |
Capital in excess of par value | 4,220 | 4,191 |
Retained earnings | 14,912 | 14,777 |
Accumulated other comprehensive loss | (60) | (105) |
Treasury stock, at cost | (10,867) | (10,875) |
Total stockholders' equity | 9,093 | 8,876 |
Total liabilities and stockholders' equity | $ 35,493 | $ 34,588 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Comprehensive Income (Loss) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
OPERATING REVENUE: | ||
Operating Revenue | $ 2,052 | $ 4,234 |
OPERATING EXPENSES, NET: | ||
Salaries, wages, and benefits | 1,571 | 1,854 |
Payroll support and voluntary Employee programs, net | (1,448) | 0 |
Fuel and oil | 469 | 870 |
Maintenance materials and repairs | 173 | 272 |
Landing fees and airport rentals | 313 | 339 |
Depreciation and amortization | 312 | 311 |
Other operating expenses | 463 | 698 |
Operating Costs and Expenses | 1,853 | 4,344 |
OPERATING INCOME (LOSS) | 199 | (110) |
OTHER EXPENSES (INCOME): | ||
Interest expense | 114 | 28 |
Capitalized interest | (11) | (5) |
Interest income | (2) | (17) |
Other (gains) losses, net | (48) | 28 |
Total other expenses (income) | 53 | 34 |
INCOME (LOSS) BEFORE INCOME TAXES | 146 | (144) |
PROVISION (BENEFIT) FOR INCOME TAXES | 30 | (50) |
NET INCOME (LOSS) | $ 116 | $ (94) |
Basic | $ 0.20 | $ (0.18) |
Diluted | $ 0.19 | $ (0.18) |
COMPREHENSIVE INCOME (LOSS) | $ 180 | $ (219) |
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING | ||
Weighted-average shares outstanding, basic | 591 | 515 |
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING | ||
Adjusted weighted-average shares outstanding, diluted | 609 | 515 |
Passenger | ||
OPERATING REVENUE: | ||
Operating Revenue | $ 1,712 | $ 3,845 |
Freight | ||
OPERATING REVENUE: | ||
Operating Revenue | 43 | 39 |
Other | ||
OPERATING REVENUE: | ||
Operating Revenue | $ 297 | $ 350 |
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 |
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, per share (in dollars per share) | $ 0.180 | |||||
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 |
Balance at beginning of period at Dec. 31, 2020 | 8,876 | (10,875) | (105) | 14,777 | 4,191 | 888 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 0 | (8) | 0 | 0 | 8 | 0 |
Share-based compensation | 14 | 0 | 0 | 0 | 14 | 0 |
Stock warrants | 23 | 0 | 0 | 0 | 23 | 0 |
Comprehensive income (loss) | 180 | 0 | 64 | 116 | 0 | 0 |
Balance at end of period at Mar. 31, 2021 | 9,093 | (10,867) | (60) | 14,912 | 4,220 | 888 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Cumulative effect of new accounting standards | $ 0 | $ 0 | $ (19) | $ 19 | $ 0 | $ 0 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 116 | $ (94) |
Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||
Depreciation and amortization | 312 | 311 |
Unrealized/realized (gain) loss on fuel derivative instruments | (7) | 2 |
Deferred income taxes | 5 | (49) |
Changes in certain assets and liabilities: | ||
Accounts and other receivables | (234) | 183 |
Other assets | (11) | 58 |
Accounts payable and accrued liabilities | (66) | (1,291) |
Air traffic liability | 599 | 701 |
Other liabilities | (122) | (132) |
Cash collateral received from (provided to) derivative counterparties | 38 | (5) |
Other, net | 15 | (61) |
Net cash provided by (used in) operating activities | 645 | (377) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capital expenditures | (95) | (224) |
Supplier Proceeds | 0 | 300 |
Purchases of short-term investments | (1,324) | (1,029) |
Proceeds from sales of short-term and other investments | 1,218 | 948 |
Net cash used in investing activities | (201) | (5) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of long-term debt | 0 | 500 |
Proceeds from term loan credit facility | 0 | 1,000 |
Proceeds from revolving credit facility | 0 | 1,000 |
Proceeds from Payroll Support Program loan and warrants | 511 | 0 |
Proceeds from Employee stock plans | 13 | 11 |
Repurchase of common stock | 0 | (451) |
Payments of long-term debt and finance lease obligations | (67) | (78) |
Payments of cash dividends | 0 | (188) |
Other, net | 7 | (20) |
Net cash provided by financing activities | 464 | 1,774 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 908 | 1,392 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 11,063 | 2,548 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 11,971 | 3,940 |
CASH PAYMENTS FOR: | ||
Interest, net of amount capitalized | 17 | 14 |
Income taxes | 1 | 5 |
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract] | ||
Right-of-use assets acquired under operating leases | 218 | 25 |
Assets Constructed for Others | $ 32 | $ 34 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021 and 2020 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, beginning in early 2020, as a result of the COVID-19 pandemic, the Company's results have not been 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 and changes in consumer behavior, unemployment levels, corporate travel budgets, global pandemics such as COVID-19, extreme or severe weather and natural disasters, fears of terrorism or war, governmental actions, 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 months ended March 31, 2021, are not necessarily indicative of the results that may be expected for future quarters or for the year ended December 31, 2021. 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, 2020. In the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss), for the three months ended March 31, 2021, Payroll support and voluntary Employee programs, net, includes the correction of previously underaccrued payroll tax credits, related to fourth quarter 2020, of $88 million, pre-tax. Other gains and losses, net, includes gains of $60 million, pre-tax, to correct investment gains related to prior periods previously recorded in Accumulated other comprehensive income (loss) ("AOCI"). In the unaudited Condensed Consolidated Statement of Stockholders' Equity, for the three months ended March 31, 2021, the Company recorded a decrease of $19 million, net of tax, in AOCI and a corresponding increase in Retained earnings to correct the amount of the impact of the cumulative effect of adopting Accounting Standard Update ("ASU") 2016-01, Financial Instruments in 2018. These corrections are not considered material to prior period financial statements and are not expected to be material to the full year 2021 financial statements. |
WORLDWIDE PANDEMIC
WORLDWIDE PANDEMIC | 3 Months Ended |
Mar. 31, 2021 | |
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 changed the U.S. economic landscape, outlook, and in particular the travel industry, was swift and unexpected. The Company saw a negative impact on bookings for future travel throughout 2020. The Company proactively canceled a significant portion of its scheduled flights in March 2020 and continued adjusting capacity throughout 2020, as the Company grounded a significant portion of its fleet and operated a significantly reduced portion of its previously scheduled capacity. The Company continued to experience significant negative impacts to passenger demand and bookings through first quarter 2021 due to the pandemic. In April 2020, the Company entered into definitive documentation with the United States Department of Treasury ("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"). During 2020, the Company received a total of $3.4 billion of relief funds under the CARES Act. As consideration for the Payroll Support, the Company issued a promissory note in favor of Treasury and entered into a warrant agreement with Treasury, pursuant to which the Company agreed to issue warrants to purchase common stock of the Company to Treasury. During 2020, the Company provided the promissory note in the aggregate amount of $976 million and issued warrants valued at a total of $40 million to purchase up to an aggregate of 2.7 million shares of the Company's common stock, subject to adjustment pursuant to the terms of the warrants. Payroll Support funds were used solely to pay qualifying employee salaries, wages, and benefits. On January 15, 2021, the Company entered into definitive documentation with Treasury with respect to funding support under the Consolidated Appropriations Act, 2021 (the "Payroll Support Program Extension"). Payroll Support Program Extension funds were used solely to pay qualifying employee wages and benefits. As of March 31, 2021, the Company had received $1.7 billion associated with the Payroll Support Program Extension. As consideration for the Payroll Support Program Extension, the Company issued a promissory note (the "PSP2 Note") in favor of Treasury and entered into a warrant agreement (the "PSP2 Warrant Agreement") with Treasury pursuant to which the Company agreed to issue warrants (each, a "PSP2 Warrant") to purchase common stock of the Company to Treasury. As of March 31, 2021, the Company had provided a PSP2 Note in the aggregate amount of $488 million and issued PSP2 Warrants valued at a total of $23 million to purchase up to an aggregate of 1.1 million shares of the Company's common stock, subject to adjustment pursuant to the terms of the PSP2 Warrants. Pursuant to the terms of the Payroll Support Program Extension, the payroll support funds could only be utilized to pay qualifying salaries, wages, and benefits, as defined. As of March 31, 2021, excluding the $488 million PSP2 Note and value allocated to the PSP2 Warrants, all Payroll Support Program Extension funds received had been allocated to reduce eligible costs in the accompanying unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) for the three months ended March 31, 2021. On April 23, 2021, the Company received an additional $259 million related to the Payroll Support Program Extension, for which the Company provided Treasury consideration in the form of an increase of the PSP2 Note in an amount of $78 million and a PSP2 Warrant to purchase up to 168 thousand shares of the Company's common stock under the PSP2 Warrant Agreement. The grant portion of the payroll support funds will be allocated to reduce qualifying employee salaries, wages, and benefits during second quarter 2021. After taking into account the additional support under the Payroll Support Program Extension, the Company has received $2.0 billion of payroll support under the Payroll Support Program Extension, for which the Company has provided Treasury with a PSP2 Note in the aggregate amount of $566 million and PSP2 Warrants to purchase up to 1.2 million shares of the Company's common stock. The PSP2 Note matures in full on January 15, 2031, 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 PSP2 Note at any time without premium or penalty. Amounts outstanding under the PSP2 Note bear interest at a rate of 1.00 percent before January 15, 2026, 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 PSP2 Note contains customary representations and warranties and events of default. Also under the terms of the Payroll Support (discussed above) and Payroll Support Program Extension, the Company is prohibited from repurchasing its common stock and from paying dividends with respect to its common stock through March 31, 2022. The PSP2 Warrant Agreement sets out the Company’s obligations to issue PSP2 Warrants in connection with disbursements of funding support pursuant to the Payroll Support Program Extension and to file or designate a resale shelf registration statement for the PSP2 Warrants and the underlying shares of common stock. The Company has also granted Treasury certain demand underwritten offering and piggyback registration rights with respect to the PSP2 Warrants and the underlying common stock. Each PSP2 Warrant is exercisable at a strike price of $46.28 per share of common stock and will expire on the fifth anniversary of the issue date of such PSP2 Warrant. The PSP2 Warrants will be settled through net share settlement or net cash settlement, at the Company’s option. The PSP2 Warrants include adjustments for below market issuances, payment of dividends, and other customary anti-dilution provisions. The PSP2 Warrants do not have voting rights. On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021, which includes provisions for an expected $14 billion of further payroll support ("PSP3 Payroll Support") for eligible U.S. airlines (the "PSP3 Payroll Support Program"). On April 23, 2021, the Company finalized an agreement with Treasury in which the Company is expected to receive an aggregate of approximately $1.9 billion in PSP3 Payroll Support funds that will be used to pay qualifying employee salaries, wages, and benefits through at least September 30, 2021. The Company received an initial installment of $926 million on April 23, 2021, and expects to receive the remainder of PSP3 Payroll Support funds during second quarter 2021. As consideration for the PSP3 Payroll Support, on April 23, 2021, the Company issued a promissory note (the "PSP3 Note") in favor of Treasury and entered into a warrant agreement with Treasury (the "PSP3 Warrant Agreement"), pursuant to which the Company agreed to issue warrants (each, a "PSP3 Warrant") to purchase common stock of the Company to Treasury. The PSP3 Note was issued for $248 million and the Company issued a PSP3 Warrant valued at a total of $9 million to purchase up to an aggregate of 424 thousand shares of the Company's common stock, subject to adjustment pursuant to the terms of the PSP3 Warrant. Upon each subsequent disbursement of PSP3 Payroll Support to the Company after April 23, 2021, (i) the principal amount of the PSP3 Note will automatically be increased in an amount equal to 30 percent of any such disbursement and (ii) the Company will issue an additional PSP3 Warrant to Treasury in an amount equal to 10 percent of the principal amount of the increase to the PSP3 Note in connection with such disbursement of PSP3 Payroll Support, divided by the strike price of $58.51 (which was the closing price of the Company's common stock on March 10, 2021). The PSP3 Payroll Support funds received can only be utilized to pay qualifying salaries, wages, and benefits, as defined. Excluding the amounts allocated to the PSP3 Note and value allocated to the PSP3 Warrants, all PSP3 Payroll Support funds received are expected to be allocated to reduce eligible costs in the year ended December 31, 2021. The Company currently expects the grant portion of the direct payroll support of $1.3 billion will be classified as a contra-expense line item in the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). 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 Voluntary Separation Program 2020. 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. Approximately 11,000 Employees participated in the Extended ETO program, and 8,164 Employees remained on Extended ETO leave as of March 31, 2021. Employees taking Extended ETO do not perform any work for the Company and are considered inactive while on leave, 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. Contract employees who elected to take Extended ETO for periods between 12 and 18 months and had 10 or more years of service were given the opportunity to convert to the Voluntary Separation Program 2020 beginning on September 1, 2020, until up to 90 days before the end of their respective Extended ETO term. The purpose of Voluntary Separation Program 2020 and Extended ETO is to maintain a reduced 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 charges related to the special termination benefits described above upon Employees accepting Voluntary Separation Program 2020 or Extended ETO offers, which have been reduced as program benefits are paid. During first quarter 2021, the Company determined that it was no longer probable that a portion of the Employees remaining on Extended ETO would remain on such leave for their entire elected term. Therefore, a portion of the accruals previously recorded were reversed, resulting in a $141 million credit to expense. In addition, the Company continues to be subject to overstaffing levels in certain workgroups and locations, and offered some of the Employees on Extended ETO the opportunity to extend their leave periods by one, two, or three months. Based on the acceptances received, the Company accrued an additional $26 million in expense associated with the program. Both of these items are classified within Payroll support and voluntary Employee programs, net, in the accompanying unaudited Condensed Consolidated Statement of Comprehensive Income (Loss), and are in addition to the allocation of the Payroll Support Program Extension funds utilized to fund salaries, wages, and benefits, which totaled $1.2 billion during first quarter 2021. The Company accrued expense totaling $620 million for its Extended ETO program in 2020, and considering the adjustments described above, as well as payments subsequently made, $190 million remains accrued as of March 31, 2021. The balance consists of future wages and benefits for the Employees that will not be working during their leave. The Company accrued amounts for up to the first 18 months from inception for all Employees that elected Extended ETO, but did not include amounts related to Pilots for periods beyond February 2022, based on the uncertainty of the Company's future capacity levels, and because it is not currently probable that such Employees will not be recalled to work beyond that timeframe. Therefore, future adjustments to the amounts accrued may become necessary at a later date. For both the Voluntary Support Program 2020 and Extended ETO programs combined, approximately $188 million of the liability balances were relieved during first quarter 2021 through payments to Employees, leaving a balance of $611 million as of March 31, 2021. 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 2020, and placed in short-term storage, as well as some in a longer term storage program. As of March 31, 2021, 66 aircraft remained in temporary or long-term storage. Given the current expectation that these aircraft have been placed in storage temporarily, the Company has continued to record depreciation expense associated with them. |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS On January 7, 2021, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2021-01, Reference Rate Reform (Topic 848). This new standard provides optional temporary guidance for entities transitioning away from LIBOR to new reference rates so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions with Topic 848. These amendments do not apply to any contract modifications made after December 31, 2022, any new hedging relationships entered into after December 31, 2022, or to existing hedging relationships evaluated for effectiveness existing as of December 31, 2022, that apply certain optional practical expedients. This standard is effective immediately and may be applied (i) on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or (ii) on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued. The Company is currently evaluating its contracts that reference LIBOR and the potential impacts of applying the optional temporary guidance under this standard. There were no LIBOR-related contract modifications during first quarter 2021, and the Company will provide additional information about the transition to new reference rates for affected contracts and adoption of this standard at a future date, if material.On August 5, 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This new standard reduces the number of accounting models for convertible debt instruments and convertible preferred stock, enhances information transparency by making targeted improvements to the disclosures for convertible instruments and earnings-per-share (EPS) guidance, and amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. This standard is effective for fiscal years beginning after December 15, 2021. Companies may elect early adoption for periods beginning no earlier than December 15, 2020, including interim periods within those fiscal years. The FASB specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company plans to adopt this standard as of January 1, 2022. Upon adoption, the Company will reclassify the remaining equity component from Additional paid-in capital to Long-term debt associated with its convertible notes, and no longer record amortization of the debt discount to Interest expense. The computation of diluted net income (loss) per share will be affected in the numerator as the Company will no longer record the debt discount amortization in Interest expense and may have to add back Interest expense to the numerator. The denominator could also be affected as the Company will be required to use the if-converted method to calculate diluted shares. |
FINANCIAL DERIVATIVE INSTRUMENT
FINANCIAL DERIVATIVE INSTRUMENTS | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
FINANCIAL DERIVATIVE INSTRUMENTS | (100) >(50) >(75) >(125) >(40) >(65) >(100) Cash is received from CP >0(c) >150(c) >250(c) >125(c) >100(c) >70(c) >100(c) If credit rating is non-investment Cash is received from CP (d) (d) (d) (d) (d) (d) (d) (a) Individual counterparties with fair value of fuel derivatives < $4 million. (b) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (c) Thresholds may vary based on changes in credit ratings within investment grade. (d) 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. As of March 31, 2021, the Company had fuel derivative instruments in place to provide coverage in future periods 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 March 31, 2021 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) March 31, 2021 Remainder of 2021 962 WTI crude oil and Brent crude oil 2022 1,220 WTI crude oil and Brent crude oil 2023 643 WTI crude oil and Brent crude oil Beyond 2023 106 WTI crude oil (a) Due to the types of derivatives utilized by the Company and different price levels of those contracts, these volumes represent the maximum economic hedge in place and may vary significantly as market prices and the Company's flight schedule fluctuate. Upon proper qualification, the Company accounts for its fuel derivative instruments as cash flow hedges. Qualification is re-evaluated quarterly, and all periodic changes in fair value of the derivatives designated as hedges are recorded in AOCI until the underlying jet fuel is consumed. See Note 5. If a derivative ceases to qualify for hedge accounting, 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 would be required to be immediately reclassified into earnings. 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 3/31/2021 12/31/2020 3/31/2021 12/31/2020 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 58 $ 9 $ — $ — Fuel derivative contracts (gross) Other assets 182 121 — — Interest rate derivative contracts Other assets 6 — — — Interest rate derivative contracts Other noncurrent liabilities — — — 6 Total derivatives designated as hedges $ 246 $ 130 $ — $ 6 Derivatives not designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 9 $ 4 $ — $ — Total derivatives $ 255 $ 134 $ — $ 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 4. 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 March 31, December 31, (in millions) location 2021 2020 Cash collateral deposits held from counterparties for fuel contracts - current Offset against Prepaid expenses and other current assets $ 15 $ 3 Cash collateral deposits held from counterparties for fuel contracts - noncurrent Offset against Other assets 57 31 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 March 31, 2021, 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) March 31, 2021 December 31, 2020 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 $ 67 $ (15) $ 52 $ 13 $ (3) $ 10 Fuel derivative contracts Other assets $ 182 $ (57) $ 125 (a) $ 121 $ (31) $ 90 (a) Interest rate derivative contracts Other assets $ 6 $ — $ 6 (a) $ — $ — $ — (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 9. Offsetting of derivative liabilities (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) March 31, 2021 December 31, 2020 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 $ 15 $ (15) $ — $ 3 $ (3) $ — Fuel derivative contracts Other assets $ 57 $ (57) $ — (a) $ 31 $ (31) $ — (a) Interest rate derivative contracts Other noncurrent liabilities $ — $ — $ — $ 6 $ — $ 6 (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 9. 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 months ended March 31, 2021 and 2020: Location and amount recognized in income on cash flow and fair value hedging relationships Three months ended March 31, 2021 Three months ended March 31, 2020 (in millions) Fuel and oil Other (gains)/losses, net Other operating expenses Fuel and oil Other (gains)/losses, net Interest expense Total $ 16 $ 6 $ 1 $ 22 $ 2 $ 2 Loss on cash flow hedging relationships: Commodity contracts: Amount of loss reclassified from AOCI into income 16 6 — 22 2 — Interest contracts: Amount of loss reclassified from AOCI into income — — 1 — — — Impact of fair value hedging relationships: Interest contracts: Hedged items — — — — — 4 Derivatives designated as hedging instruments — — — — — (2) Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Three months ended March 31, (in millions) 2021 2020 Fuel derivative contracts $ (84) $ 84 Interest rate derivatives (9) 32 Total $ (93) $ 116 Derivatives not designated as hedges (Gain) loss recognized in income on derivatives Three months ended Location of (gain) loss recognized in income on derivatives March 31, (in millions) 2021 2020 Fuel derivative contracts $ (5) $ — Other (gains) losses, net Interest rate derivatives — 24 Other (gains) losses, net Total $ (5) $ 24 The Company also recorded expense associated with premiums paid for fuel derivative contracts that settled/expired during the three months ended March 31, 2021 and 2020. Gains and/or losses associated with fuel derivatives that qualify for hedge accounting are ultimately recorded to Fuel and oil expense. Gains and/or losses associated with fuel derivatives that do not qualify for hedge accounting are recorded to Other (gains) and losses, net. The following table presents 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 in income on derivatives Three months ended Location of premium expense recognized in income on derivatives March 31, (in millions) 2021 2020 Fuel derivative contracts designated as hedges $ 14 $ 24 Fuel and oil Fuel derivative contracts not designated as hedges 11 — Other (gains) 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 March 31, 2021, recorded in AOCI, were approximately $19 million in net unrealized losses, net of taxes, which are expected to be realized in earnings during the twelve months subsequent to March 31, 2021. Interest Rate Swaps The Company is party to certain interest rate swap agreements that are accounted for as cash flow hedges, and has in the past held interest rate swap agreements that have qualified as fair value 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 dictated that the hedges were assumed to be perfectly effective, and, thus, there was no ineffectiveness to be recorded in earnings. During 2019, the Company had entered into forward-starting interest rate swap agreements related to a series of 12 Boeing 737 MAX 8 aircraft leases originally scheduled to be received between July 2019 and February 2020. These lease contracts exposed the Company to interest rate risk as the rental payments were subject to adjustment and would become fixed based on the 9-year swap rate at the time of delivery. As a result of the grounding of the MAX aircraft, those deliveries were significantly delayed. These original agreements were subsequently terminated in third quarter 2019, and the Company entered into new interest rate swap agreements based on revised expected aircraft delivery dates. As the revised delivery dates were also not met, these subsequent agreements were subsequently de-designated as hedges and the agreements terminated. The Company received three of the twelve aircraft in December 2020, and an additional eight aircraft in first quarter 2021. The remaining delivery is expected during third quarter 2021. As a result of the discontinued hedges, the Company had cumulative losses "frozen" in AOCI, which are being recognized in earnings over the 9-year lease terms of each aircraft upon delivery. Therefore, the Company has reclassified approximately $1 million in losses from AOCI into Other operating expenses, in the unaudited Condensed Consolidated Statement of Income (Loss) for the three months ended March 31, 2021. No such reclassifications occurred in 2020. The cumulative amounts remaining in AOCI as of March 31, 2021, associated with future aircraft deliveries, was $62 million. 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 March 31, 2021, 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's credit rating. The Company also had agreements with counterparties in which cash deposits and letters of credit were 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 March 31, 2021, at which such postings are triggered: Counterparty (CP) (in millions) A B C D E F G Other (a) Total Fair value of fuel derivatives $ 60 $ 28 $ 60 $ 28 $ 30 $ 21 $ 18 $ 4 $ 249 Cash collateral held from CP 72 — — — — — — — 72 Option to substitute LC for cash N/A N/A (b) (b) (b) N/A (b) If credit rating is investment Cash is provided to CP >(100) >(50) >(75) >(125) >(40) >(65) >(100) Cash is received from CP >0(c) >150(c) >250(c) >125(c) >100(c) >70(c) >100(c) If credit rating is non-investment Cash is received from CP (d) (d) (d) (d) (d) (d) (d) (a) Individual counterparties with fair value of fuel derivatives < $4 million. (b) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (c) Thresholds may vary based on changes in credit ratings within investment grade. (d) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. |
COMPREHENSIVE INCOME (LOSS)
COMPREHENSIVE INCOME (LOSS) | 3 Months Ended |
Mar. 31, 2021 | |
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 months ended March 31, 2021 and 2020 were as follows: Three months ended March 31, (in millions) 2021 2020 NET INCOME (LOSS) $ 116 $ (94) Unrealized gain (loss) on fuel derivative instruments, net of deferred taxes of $30 and ($19) 101 (65) Unrealized gain (loss) on interest rate derivative instruments, net of deferred taxes of $3 and ($10) 10 (32) Other, net of deferred taxes of ($13) and ($9) (47) (28) Total other comprehensive income (loss) $ 64 $ (125) COMPREHENSIVE INCOME (LOSS) $ 180 $ (219) A rollforward of the amounts included in AOCI, net of taxes, is shown below for the three months ended March 31, 2021: (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax Accumulated other comprehensive income (loss) Balance at December 31, 2020 $ (119) $ (66) $ (43) $ 91 $ 32 $ (105) Cumulative effect of adopting ASU 2016-01 as of January 1, 2018 — See Note 1 — — — (31) 12 (19) Changes in fair value 109 12 — — (28) 93 Reclassification to earnings 22 1 — (60) (a) 8 (29) Balance at March 31, 2021 $ 12 $ (53) $ (43) $ — $ 24 $ (60) (a) Investment gains related to prior periods that were reclassified from AOCI into Other (gains) losses, net. See Note 1. The following tables illustrate the significant amounts reclassified out of each component of AOCI for the three months ended March 31, 2021: Three months ended March 31, 2021 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) AOCI components Unrealized loss on fuel derivative instruments $ 16 Fuel and oil expense 6 Other (gains) losses, net 5 Less: Tax expense $ 17 Net of tax Unrealized loss on interest rate derivative instruments $ 1 Other operating expenses — Less: Tax expense $ 1 Net of tax Unrealized gain on deferred compensation plan investment (See Note 1) $ (60) Other (gains) losses, net (13) Less: Tax expense $ (47) Net of tax Total reclassifications for the period $ (29) Net of tax |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2021 | |
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 months ended March 31, 2021 and March 31, 2020: Three months ended March 31, (in millions) 2021 2020 Passenger non-loyalty $ 1,354 $ 3,220 Passenger loyalty - air transportation 278 461 Passenger ancillary sold separately 80 164 Total passenger revenues $ 1,712 $ 3,845 As of March 31, 2021, and December 31, 2020, 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) March 31, 2021 December 31, 2020 Air traffic liability - passenger travel and ancillary passenger services $ 3,109 $ 2,686 Air traffic liability - loyalty program 4,623 4,447 Total Air traffic liability $ 7,732 $ 7,133 The balance in Air traffic liability - passenger travel and ancillary passenger services also includes unused funds that are available for use by Customers and are not currently associated with a ticket, but represent funds effectively refunded and made available for use to purchase a ticket for a flight that occurs prior to their expiration. These funds are typically created as a result of a prior ticket cancellation or exchange. Rollforwards of the Company's Air traffic liability - loyalty program for the three months ended March 31, 2021 and March 31, 2020 were as follows (in millions): Three months ended March 31, 2021 2020 Air traffic liability - loyalty program - beginning balance $ 4,447 $ 3,385 Amounts deferred associated with points awarded 466 656 Revenue recognized from points redeemed - Passenger (278) (461) Revenue recognized from points redeemed - Other (12) (19) Air traffic liability - loyalty program - ending balance $ 4,623 $ 3,561 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 March 31, 2021 and March 31, 2020 were as follows (in millions): Air traffic liability Balance at December 31, 2020 $ 7,133 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 2,324 Revenue from amounts included in contract liability opening balances (743) Revenue from current period sales (982) Balance at March 31, 2021 $ 7,732 Air traffic liability Balance at December 31, 2019 $ 5,510 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 4,565 Revenue from amounts included in contract liability opening balances (1,949) Revenue from current period sales (1,915) Balance at March 31, 2020 $ 6,211 During 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 March 31, 2021, represents approximately 22 percent of the total Air traffic liability balance at March 31, 2021, as compared to approximately 28 percent of the total Air traffic liability balance at December 31, 2020. Both of these recent periods represent a significantly higher portion than the approximate 2 percent of the Air traffic liability balance that Customer funds made up as of 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 that would have otherwise expired between March 1 and September 7, 2020 associated with flight cancellations, the Company has extended the expiration date to September 7, 2022. At March 31, 2021, $1.8 billion of Customer travel funds remain in Air traffic liability with a September 7, 2022 expiration date. The Company has limited data available to predict the occurrence or timing of performance obligation satisfaction on these funds due to certain constraints including, but not limited to, consumer confidence, economic health, vaccines, and uncertainty regarding customer travel fund redemption patterns for funds that live longer than 12 months as this is unprecedented in Company history. As a result, recognition of these travel funds as flown revenue, refunds, or spoilage revenue will likely be more volatile from period to period compared to what previous Customer behavior may indicate, as cumulative revenue recognized is constrained to amounts that are not probable of being reversed. 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 has limited data to enable it to accurately estimate the portion that will not be redeemed for travel in the subsequent twelve months. Recognition of revenue associated with the Company’s loyalty liability can be difficult to predict, as the number of award seats available to members is not currently restricted and they could choose to redeem their points at any time that a seat is available. The performance obligations classified as a current liability related to the Company’s loyalty program were estimated based on expected redemptions utilizing historical redemption patterns, and forecasted flight availability, fares, and coefficients. The entire balance classified as Air traffic liability—noncurrent relates to loyalty points that were estimated to be redeemed in periods beyond 12 months following the representative balance sheet date. The Company expects the majority of loyalty points to be redeemed within two years. 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 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 the 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 March 31, 2021 and March 31, 2020, the Company recognized $280 million and $321 million, respectively. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 3 Months Ended |
Mar. 31, 2021 | |
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). An immaterial number of shares related to the Company's restricted stock units were excluded from the denominator for both periods presented, because inclusion of such shares would be antidilutive. Three months ended March 31, 2021 2020 NUMERATOR: Net income (loss) $ 116 $ (94) DENOMINATOR: Weighted-average shares outstanding, basic 591 515 Dilutive effects of convertible notes (a) 16 — Dilutive effect of stock warrants 1 — Dilutive effect of restricted stock units 1 — Adjusted weighted-average shares outstanding, diluted 609 515 NET INCOME (LOSS) PER SHARE: Basic $ 0.20 $ (0.18) Diluted $ 0.19 $ (0.18) (a) Because 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, 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, and the Company reports Net income for the given period. For the three months ended March 31, 2021, the average market price of the Company's common stock exceeded this conversion price per share and as such, the common shares underlying the convertible notes were included in the diluted calculation. See Note 8 for further information on the convertible notes. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021, 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 in equity securities with readily determinable market values 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 a similar 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 plan obligations and plan assets, which net to zero, within the Salaries, wages, and benefits line and Other (gains) losses line, respectively, of the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2021, and December 31, 2020: Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description March 31, 2021 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents: Cash equivalents (a) $ 11,600 $ 11,600 $ — $ — Commercial paper 90 — 90 — Certificates of deposit 6 — 6 — Time deposits 275 — 275 — Short-term investments: Treasury bills 1,800 1,800 — — Certificates of deposit 27 — 27 — Time deposits 550 — 550 — Fuel derivatives: Option contracts (b) 249 — — 249 Interest rate derivatives (see Note 4) 6 — 6 — Other available-for-sale securities 240 240 — — Total assets $ 14,843 $ 13,640 $ 954 $ 249 (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 active markets for identical assets Significant other observable inputs Significant unobservable inputs Description December 31, 2020 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents: Cash equivalents (a) $ 10,663 $ 10,663 $ — $ — Commercial paper 90 — 90 — Certificates of deposit 10 — 10 — Time deposits 300 — 300 — Short-term investments: Treasury bills 1,800 1,800 — — Certificates of deposit 46 — 46 — Time deposits 425 — 425 — Fuel derivatives: Option contracts (b) 134 — — 134 Other available-for-sale securities 259 259 — — Total assets $ 13,727 $ 12,722 $ 871 $ 134 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 an asset. See Note 4. The Company did not have any material assets or liabilities measured at fair value on a nonrecurring basis during the three months ended March 31, 2021, or the year ended December 31, 2020. The following table presents the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2021: Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at December 31, 2020 $ 134 Total gains (losses) for the period Included in earnings (1) (a) Included in other comprehensive income 117 Settlements (1) Balance at March 31, 2021 $ 249 The amount of total losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at March 31, 2021 $ (2) (a) The amount of total gains for the period included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at March 31, 2021 $ 116 (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). 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 March 31, 2021: 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 Second quarter 2021 22-46% 32 % Third quarter 2021 30-40% 33 % Fourth quarter 2021 29-36% 31 % 2022 25-34% 29 % 2023 23-26% 25 % Beyond 2023 23-25% 24 % (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 March 31, 2021, are presented in the table below. The fair values of the Company’s publicly held long-term debt are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets; therefore, the Company has categorized these agreements as Level 2. Debt under five of the Company’s debt agreements is not publicly held. The Company has determined the estimated fair value of this debt to be Level 3, as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes indicative pricing from counterparties and a discounted cash flow method to estimate the fair value of the Level 3 items. (in millions) Carrying value Estimated fair value Fair value level hierarchy 2.75% Notes due 2022 $ 300 $ 309 Level 2 Pass Through Certificates due 2022 - 6.24% 105 107 Level 2 4.75% Notes due 2023 1,250 1,350 Level 2 1.25% Convertible Notes due 2025 1,963 3,968 Level 2 5.25% Notes due 2025 1,550 1,765 Level 2 Term Loan Agreement payable through 2025 - 1.59% 112 112 Level 3 3.00% Notes due 2026 300 317 Level 2 Term Loan Agreement payable through 2026 - 1.34% 159 157 Level 3 3.45% Notes due 2027 300 318 Level 2 5.125% Notes due 2027 2,000 2,301 Level 2 7.375% Debentures due 2027 119 145 Level 2 Term Loan Agreement payable through 2028 - 1.60% 178 177 Level 3 2.625% Notes due 2030 500 492 Level 2 1.000% Payroll Support Program Loan due 2030 976 941 Level 3 1.000% Payroll Support Program Loan due 2031 488 460 Level 3 Convertible Notes 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”). 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). 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. The carrying amount of the equity component was calculated as the difference between the liability component and the face amount of the Convertible Notes, which was determined to be $403 million. The equity component is not remeasured as long as it continues to meet the conditions for equity classification, which it had as of March 31, 2021, and December 31, 2020. The following table details the liability component recognized related to the Convertible Notes as of March 31, 2021, and December 31, 2020: (in millions) March 31, 2021 December 31, 2020 Liability component: Principal amount $ 2,300 $ 2,300 Unamortized debt discount (337) (355) Net carrying amount $ 1,963 $ 1,945 The effective interest rate on the liability component approximates 5.2 percent for the three months ended March 31, 2021. The Company recognized $28 million of interest expense associated with the Convertible Notes during the three months ended March 31, 2021, including $19 million of non-cash amortization of the debt discount, $2 million of non-cash amortization of debt issuance costs, and $7 million of contractual coupon interest. The unamortized debt discount and issuance costs will be recognized as non-cash interest expense over the 5-year term of the notes, through May 1, 2025. As of March 31, 2021, the if-converted value of the Convertible Notes exceeded the principal amount by $881 million, using the average stock price for the three months ended March 31, 2021. The Convertible Notes did not meet the criteria to be converted throughout first quarter 2021. However, the conversion criteria were subsequently met, and holders of the Convertible Notes are able to convert during the calendar quarter beginning April 1, 2021. |
SUPPLEMENTAL FINANCIAL INFORMAT
SUPPLEMENTAL FINANCIAL INFORMATION | 3 Months Ended |
Mar. 31, 2021 | |
Disclosure Text Block [Abstract] | |
SUPPLEMENTAL FINANCIAL INFORMATION | SUPPLEMENTAL FINANCIAL INFORMATION (in millions) March 31, 2021 December 31, 2020 Trade receivables $ 59 $ 46 Credit card receivables 92 35 Business partners and other suppliers (a) 73 274 Taxes receivable (b) 705 740 Other 8 35 Accounts and other receivables $ 937 $ 1,130 (in millions) March 31, 2021 December 31, 2020 Derivative contracts $ 131 $ 90 Intangible assets, net 295 295 Other 317 337 Other assets $ 743 $ 722 (in millions) March 31, 2021 December 31, 2020 Accounts payable trade $ 169 $ 111 Salaries payable 197 201 Taxes payable excluding income taxes 190 49 Aircraft maintenance payable 83 95 Fuel payable 98 66 Other payable 357 409 Accounts payable $ 1,094 $ 931 (in millions) March 31, 2021 December 31, 2020 Extended Emergency Time Off $ 190 $ 393 Voluntary Separation Program 2020 124 143 Profitsharing and savings plans 46 25 Vendor prepayment (a) 277 600 Vacation pay 443 436 Health 109 111 Workers compensation 163 161 Property and income taxes 80 84 Interest 111 49 Other 122 257 Accrued liabilities $ 1,665 $ 2,259 (in millions) March 31, 2021 December 31, 2020 Extended Emergency Time Off $ — $ 57 Voluntary Separation Program 2020 297 321 Postretirement obligation 430 428 Other deferred compensation 319 353 Other 77 88 Other noncurrent liabilities $ 1,123 $ 1,247 (a) In fourth quarter 2020, the Company received a $600 million prepayment from Chase for Rapid Rewards points expected to be purchased during 2021, based on cardholder activity on the Visa credit card associated with its loyalty program. During first quarter 2021, $323 million was reclassified to deferred revenue in Air Traffic liability--loyalty (including $106 million that would have been a receivable from business partners as of March 31, 2021), and the remainder is expected to be reclassified during second quarter 2021. (b) Both periods include approximately $470 million associated with a significant cash tax refund expected as a result of the CARES Act allowing entities to carry back 2020 losses to prior periods of up to five years, and claim refunds of federal taxes paid. This amount also includes excise taxes remitted to taxing authorities for which the subsequent flights were canceled by Customers, resulting in amounts due back to the Company. For further information on fuel derivative and interest rate derivative contracts, see Note 4. Other Operating Expenses |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2021 | |
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 oversaw and managed 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 includes ticketing, baggage claim, passenger screening, and a bus gate at a cost not to exceed $464 million for site improvements and non-proprietary improvements. Construction on the Terminal 1.5 Project began during third quarter 2017 and was substantially completed at December 31, 2020; however, the Terminal 1.5 Project will not be placed into service until second quarter 2021, at which time LAWA is expected to repay the outstanding loan and purchase the remaining completed assets for accounting purposes. 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. Upon completion of any individual asset as part of the overall project, the asset and associated liability on the balance sheet are de-recognized in accordance with applicable accounting guidance. 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 March 31, 2021, the Company's outstanding guaranteed obligation under the credit facility for the Terminal 1.5 Project was $364 million. Construction costs recorded in ACFO for the Terminal 1.5 Project, which exclude costs associated with assets that were previously completed and placed into service, were $341 million and $309 million, as of March 31, 2021, and December 31, 2020, 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 March 31, 2021, $399 million of principal remained outstanding. The net present value of the future principal and interest payments associated with the bonds was $438 million as of March 31, 2021, 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. Contractual Obligations and Contingent Liabilities and Commitments On March 24, 2021, the Company entered into Supplemental Agreement No. 12 (the "Supplement") to its aircraft purchase agreement with The Boeing Company ("Boeing") relating to the Company's purchase of Boeing 737 MAX 7 and 737 MAX 8 aircraft. Pursuant to the Supplement (i) the Company added 100 firm orders for the MAX 7, with the first 30 to be delivered in 2022; (ii) the Company added 155 MAX aircraft options; (iii) the order book was extended to include deliveries through 2031; and (iv) the Company converted 70 MAX 8 firm orders to MAX 7 firm orders. The Supplement also includes certain confidential credits, discounts, and other concessions provided to the Company by Boeing. As of March 31, 2021, based on the Supplement to its aircraft purchase agreement with Boeing, the Company had firm deliveries and options for Boeing 737 MAX 7 and 737 MAX 8 aircraft as follows: The Boeing Company MAX 7 MAX 8 MAX 7 or 8 Options Additional MAX 8s Total 2021 — 19 — 9 28 (a) 2022 30 — 42 — 72 2023 30 — 38 — 68 2024 30 — 40 — 70 2025 30 — 40 — 70 2026 15 15 40 — 70 2027 15 15 30 — 60 2028 15 15 30 — 60 2029 20 30 10 — 60 2030 15 45 — — 60 2031 — 10 — — 10 200 149 (b) 270 9 (c) 628 (a) Includes 20 737 MAX 8s delivered as of March 31, 2021, consisting of 12 owned and 8 leased aircraft. (b) The Company has flexibility to designate firm orders or options as MAX 7 or MAX 8, upon written advance notification as stated in the contract. (c) These 9 additional MAX 8 aircraft are leases to be acquired from various third parties, including 8 leased MAX 8 aircraft delivered in first quarter 2021. The Company also received 7 leased MAX 8 aircraft in fourth quarter 2020, for a total of 16 MAX 8 operating leased aircraft from third parties in 2020 and 2021, combined. Based on the Company's existing agreement with Boeing as reflected in the delivery schedule above, the Company's cash capital commitments associated with its firm orders are as follows: none for 2021 (due to previously agreed upon delivery credits provided by The Boeing Company to the Company due to the settlement of 2020 estimated damages relating to the FAA grounding of the 737 MAX aircraft and progress payments made to date on undelivered aircraft), $700 million in 2022, $1.1 billion in 2023, $1.0 billion in 2024, $1.1 billion in 2025, $1.2 billion in 2026, and $7.2 billion thereafter. Contingencies The Company is from time to time subject to various legal proceedings and claims arising in the ordinary course of business, including, but not limited to, examinations by the Internal Revenue Service ("IRS"). The Company's management does not expect that the outcome of any of its currently ongoing legal proceedings or the outcome of any adjustments presented by the IRS, individually or collectively, will have a material adverse effect on the Company's financial condition, results of operations, or cash flow. |
BOEING 737 MAX AIRCRAFT GROUNDI
BOEING 737 MAX AIRCRAFT GROUNDING | 3 Months Ended |
Mar. 31, 2021 | |
Unusual or Infrequent Items, or Both [Abstract] | |
Boeing 737 Max Aircraft Grounding | BOEING 737 MAX AIRCRAFT GROUNDING AND RETURN TO SERVICE 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. On November 18, 2020, the FAA rescinded the emergency order and issued official requirements to enable U.S. airlines to return the Boeing 737 MAX to service. The Company returned the MAX to revenue service on March 11, 2021, after the Company met all FAA requirements and Pilots received updated, MAX-related training. The most significant financial impacts of the grounding to the Company were the lost revenues, operating income, and operating cash flows, and delayed capital expenditures, directly associated with its grounded MAX fleet and other new aircraft that were not able to be delivered. In July 2019, The Boeing Company ("Boeing") 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, Boeing 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 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 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 at the time, and 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 years ended December 31, 2019 and 2020. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The unaudited Condensed Consolidated Financial Statements for the interim periods ended March 31, 2021 and 2020 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, beginning in early 2020, as a result of the COVID-19 pandemic, the Company's results have not been 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 and changes in consumer behavior, unemployment levels, corporate travel budgets, global pandemics such as COVID-19, extreme or severe weather and natural disasters, fears of terrorism or war, governmental actions, 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 months ended March 31, 2021, are not necessarily indicative of the results that may be expected for future quarters or for the year ended December 31, 2021. 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, 2020. |
Derivatives | Upon proper qualification, the Company accounts for its fuel derivative instruments as cash flow hedges. Qualification is re-evaluated quarterly, and all periodic changes in fair value of the derivatives designated as hedges are recorded in AOCI until the underlying jet fuel is consumed. See Note 5.If a derivative ceases to qualify for hedge accounting, 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 would be required to be immediately reclassified into earnings.The Company is party to certain interest rate swap agreements that are accounted for as cash flow hedges, and has in the past held interest rate swap agreements that have qualified as fair value 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 dictated that the hedges were assumed to be perfectly effective, and, thus, there was 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 March 31, 2021, 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 in equity securities with readily determinable market values 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 |
New Accounting Pronouncements | On January 7, 2021, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2021-01, Reference Rate Reform (Topic 848). This new standard provides optional temporary guidance for entities transitioning away from LIBOR to new reference rates so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions with Topic 848. These amendments do not apply to any contract modifications made after December 31, 2022, any new hedging relationships entered into after December 31, 2022, or to existing hedging relationships evaluated for effectiveness existing as of December 31, 2022, that apply certain optional practical expedients. This standard is effective immediately and may be applied (i) on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or (ii) on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued. The Company is currently evaluating its contracts that reference LIBOR and the potential impacts of applying the optional temporary guidance under this standard. There were no LIBOR-related contract modifications during first quarter 2021, and the Company will provide additional information about the transition to new reference rates for affected contracts and adoption of this standard at a future date, if material.On August 5, 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This new standard reduces the number of accounting models for convertible debt instruments and convertible preferred stock, enhances information transparency by making targeted improvements to the disclosures for convertible instruments and earnings-per-share (EPS) guidance, and amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. This standard is effective for fiscal years beginning after December 15, 2021. Companies may elect early adoption for periods beginning no earlier than December 15, 2020, including interim periods within those fiscal years. The FASB specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company plans to adopt this standard as of January 1, 2022. Upon adoption, the Company will reclassify the remaining equity component from Additional paid-in capital to Long-term debt associated with its convertible notes, and no longer record amortization of the debt discount to Interest expense. The computation of diluted net income (loss) per share will be affected in the numerator as the Company will no longer record the debt discount amortization in Interest expense and may have to add back Interest expense to the numerator. The denominator could also be affected as the Company will be required to use the if-converted method to calculate diluted shares. |
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 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 the 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. |
Financial Derivative Instrume_2
Financial Derivative Instruments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) March 31, 2021 Remainder of 2021 962 WTI crude oil and Brent crude oil 2022 1,220 WTI crude oil and Brent crude oil 2023 643 WTI crude oil and Brent crude oil Beyond 2023 106 WTI crude oil (a) Due to the types of derivatives utilized by the Company and different price levels of those contracts, these volumes represent the maximum economic hedge in place and may vary significantly as market prices and the Company's flight schedule fluctuate. |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table presents the location of all assets and liabilities associated with the Company’s derivative instruments within the 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 3/31/2021 12/31/2020 3/31/2021 12/31/2020 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 58 $ 9 $ — $ — Fuel derivative contracts (gross) Other assets 182 121 — — Interest rate derivative contracts Other assets 6 — — — Interest rate derivative contracts Other noncurrent liabilities — — — 6 Total derivatives designated as hedges $ 246 $ 130 $ — $ 6 Derivatives not designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 9 $ 4 $ — $ — Total derivatives $ 255 $ 134 $ — $ 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 4. |
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 March 31, December 31, (in millions) location 2021 2020 Cash collateral deposits held from counterparties for fuel contracts - current Offset against Prepaid expenses and other current assets $ 15 $ 3 Cash collateral deposits held from counterparties for fuel contracts - noncurrent Offset against Other assets 57 31 |
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) March 31, 2021 December 31, 2020 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 $ 67 $ (15) $ 52 $ 13 $ (3) $ 10 Fuel derivative contracts Other assets $ 182 $ (57) $ 125 (a) $ 121 $ (31) $ 90 (a) Interest rate derivative contracts Other assets $ 6 $ — $ 6 (a) $ — $ — $ — (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 9. |
Offsetting Liabilities | Offsetting of derivative liabilities (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) March 31, 2021 December 31, 2020 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 $ 15 $ (15) $ — $ 3 $ (3) $ — Fuel derivative contracts Other assets $ 57 $ (57) $ — (a) $ 31 $ (31) $ — (a) Interest rate derivative contracts Other noncurrent liabilities $ — $ — $ — $ 6 $ — $ 6 (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 9. |
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 months ended March 31, 2021 and 2020: Location and amount recognized in income on cash flow and fair value hedging relationships Three months ended March 31, 2021 Three months ended March 31, 2020 (in millions) Fuel and oil Other (gains)/losses, net Other operating expenses Fuel and oil Other (gains)/losses, net Interest expense Total $ 16 $ 6 $ 1 $ 22 $ 2 $ 2 Loss on cash flow hedging relationships: Commodity contracts: Amount of loss reclassified from AOCI into income 16 6 — 22 2 — Interest contracts: Amount of loss reclassified from AOCI into income — — 1 — — — Impact of fair value hedging relationships: Interest contracts: Hedged items — — — — — 4 Derivatives designated as hedging instruments — — — — — (2) |
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 March 31, (in millions) 2021 2020 Fuel derivative contracts $ (84) $ 84 Interest rate derivatives (9) 32 Total $ (93) $ 116 |
Derivatives Not in Cash Flow Hedging Relationships | Derivatives not designated as hedges (Gain) loss recognized in income on derivatives Three months ended Location of (gain) loss recognized in income on derivatives March 31, (in millions) 2021 2020 Fuel derivative contracts $ (5) $ — Other (gains) losses, net Interest rate derivatives — 24 Other (gains) losses, net Total $ (5) $ 24 |
Premiums Paid for Fuel Derivative Contracts | The following table presents 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 in income on derivatives Three months ended Location of premium expense recognized in income on derivatives March 31, (in millions) 2021 2020 Fuel derivative contracts designated as hedges $ 14 $ 24 Fuel and oil Fuel derivative contracts not designated as hedges 11 — Other (gains) 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 March 31, 2021, at which such postings are triggered: Counterparty (CP) (in millions) A B C D E F G Other (a) Total Fair value of fuel derivatives $ 60 $ 28 $ 60 $ 28 $ 30 $ 21 $ 18 $ 4 $ 249 Cash collateral held from CP 72 — — — — — — — 72 Option to substitute LC for cash N/A N/A (b) (b) (b) N/A (b) If credit rating is investment Cash is provided to CP >(100) >(50) >(75) >(125) >(40) >(65) >(100) Cash is received from CP >0(c) >150(c) >250(c) >125(c) >100(c) >70(c) >100(c) If credit rating is non-investment Cash is received from CP (d) (d) (d) (d) (d) (d) (d) (a) Individual counterparties with fair value of fuel derivatives < $4 million. (b) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. (c) Thresholds may vary based on changes in credit ratings within investment grade. (d) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts. |
Comprehensive Income (Loss) (Ta
Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Components of Comprehensive Income (Loss) | The differences between Net income (loss) and Comprehensive income (loss) for the three months ended March 31, 2021 and 2020 were as follows: Three months ended March 31, (in millions) 2021 2020 NET INCOME (LOSS) $ 116 $ (94) Unrealized gain (loss) on fuel derivative instruments, net of deferred taxes of $30 and ($19) 101 (65) Unrealized gain (loss) on interest rate derivative instruments, net of deferred taxes of $3 and ($10) 10 (32) Other, net of deferred taxes of ($13) and ($9) (47) (28) Total other comprehensive income (loss) $ 64 $ (125) COMPREHENSIVE INCOME (LOSS) $ 180 $ (219) |
Rollforward of the Amounts Included in AOCI, Net of Taxes | A rollforward of the amounts included in AOCI, net of taxes, is shown below for the three months ended March 31, 2021: (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Other Deferred tax Accumulated other comprehensive income (loss) Balance at December 31, 2020 $ (119) $ (66) $ (43) $ 91 $ 32 $ (105) Cumulative effect of adopting ASU 2016-01 as of January 1, 2018 — See Note 1 — — — (31) 12 (19) Changes in fair value 109 12 — — (28) 93 Reclassification to earnings 22 1 — (60) (a) 8 (29) Balance at March 31, 2021 $ 12 $ (53) $ (43) $ — $ 24 $ (60) (a) Investment gains related to prior periods that were reclassified from AOCI into Other (gains) losses, net. See Note 1. |
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 months ended March 31, 2021: Three months ended March 31, 2021 (in millions) Amounts reclassified from AOCI Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) AOCI components Unrealized loss on fuel derivative instruments $ 16 Fuel and oil expense 6 Other (gains) losses, net 5 Less: Tax expense $ 17 Net of tax Unrealized loss on interest rate derivative instruments $ 1 Other operating expenses — Less: Tax expense $ 1 Net of tax Unrealized gain on deferred compensation plan investment (See Note 1) $ (60) Other (gains) losses, net (13) Less: Tax expense $ (47) Net of tax Total reclassifications for the period $ (29) Net of tax |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Passenger Revenue | The following table provides the components of Passenger revenue recognized for the three months ended March 31, 2021 and March 31, 2020: Three months ended March 31, (in millions) 2021 2020 Passenger non-loyalty $ 1,354 $ 3,220 Passenger loyalty - air transportation 278 461 Passenger ancillary sold separately 80 164 Total passenger revenues $ 1,712 $ 3,845 |
Components of Air Traffic Liability | As of March 31, 2021, and December 31, 2020, 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) March 31, 2021 December 31, 2020 Air traffic liability - passenger travel and ancillary passenger services $ 3,109 $ 2,686 Air traffic liability - loyalty program 4,623 4,447 Total Air traffic liability $ 7,732 $ 7,133 Three months ended March 31, 2021 2020 Air traffic liability - loyalty program - beginning balance $ 4,447 $ 3,385 Amounts deferred associated with points awarded 466 656 Revenue recognized from points redeemed - Passenger (278) (461) Revenue recognized from points redeemed - Other (12) (19) Air traffic liability - loyalty program - ending balance $ 4,623 $ 3,561 |
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 March 31, 2021 and March 31, 2020 were as follows (in millions): Air traffic liability Balance at December 31, 2020 $ 7,133 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 2,324 Revenue from amounts included in contract liability opening balances (743) Revenue from current period sales (982) Balance at March 31, 2021 $ 7,732 Air traffic liability Balance at December 31, 2019 $ 5,510 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 4,565 Revenue from amounts included in contract liability opening balances (1,949) Revenue from current period sales (1,915) Balance at March 31, 2020 $ 6,211 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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). An immaterial number of shares related to the Company's restricted stock units were excluded from the denominator for both periods presented, because inclusion of such shares would be antidilutive. Three months ended March 31, 2021 2020 NUMERATOR: Net income (loss) $ 116 $ (94) DENOMINATOR: Weighted-average shares outstanding, basic 591 515 Dilutive effects of convertible notes (a) 16 — Dilutive effect of stock warrants 1 — Dilutive effect of restricted stock units 1 — Adjusted weighted-average shares outstanding, diluted 609 515 NET INCOME (LOSS) PER SHARE: Basic $ 0.20 $ (0.18) Diluted $ 0.19 $ (0.18) (a) Because 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, 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, and the Company reports Net income for the given period. For the three months ended March 31, 2021, the average market price of the Company's common stock exceeded this conversion price per share and as such, the common shares underlying the convertible notes were included in the diluted calculation. See Note 8 for further information on the convertible notes. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021, and December 31, 2020: Fair value measurements at reporting date using: Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs Description March 31, 2021 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents: Cash equivalents (a) $ 11,600 $ 11,600 $ — $ — Commercial paper 90 — 90 — Certificates of deposit 6 — 6 — Time deposits 275 — 275 — Short-term investments: Treasury bills 1,800 1,800 — — Certificates of deposit 27 — 27 — Time deposits 550 — 550 — Fuel derivatives: Option contracts (b) 249 — — 249 Interest rate derivatives (see Note 4) 6 — 6 — Other available-for-sale securities 240 240 — — Total assets $ 14,843 $ 13,640 $ 954 $ 249 (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 active markets for identical assets Significant other observable inputs Significant unobservable inputs Description December 31, 2020 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents: Cash equivalents (a) $ 10,663 $ 10,663 $ — $ — Commercial paper 90 — 90 — Certificates of deposit 10 — 10 — Time deposits 300 — 300 — Short-term investments: Treasury bills 1,800 1,800 — — Certificates of deposit 46 — 46 — Time deposits 425 — 425 — Fuel derivatives: Option contracts (b) 134 — — 134 Other available-for-sale securities 259 259 — — Total assets $ 13,727 $ 12,722 $ 871 $ 134 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 an asset. See Note 4. |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The following table presents the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2021: Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at December 31, 2020 $ 134 Total gains (losses) for the period Included in earnings (1) (a) Included in other comprehensive income 117 Settlements (1) Balance at March 31, 2021 $ 249 The amount of total losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at March 31, 2021 $ (2) (a) The amount of total gains for the period included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at March 31, 2021 $ 116 (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). |
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 March 31, 2021: 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 Second quarter 2021 22-46% 32 % Third quarter 2021 30-40% 33 % Fourth quarter 2021 29-36% 31 % 2022 25-34% 29 % 2023 23-26% 25 % Beyond 2023 23-25% 24 % (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 March 31, 2021, are presented in the table below. The fair values of the Company’s publicly held long-term debt are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets; therefore, the Company has categorized these agreements as Level 2. Debt under five of the Company’s debt agreements is not publicly held. The Company has determined the estimated fair value of this debt to be Level 3, as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes indicative pricing from counterparties and a discounted cash flow method to estimate the fair value of the Level 3 items. (in millions) Carrying value Estimated fair value Fair value level hierarchy 2.75% Notes due 2022 $ 300 $ 309 Level 2 Pass Through Certificates due 2022 - 6.24% 105 107 Level 2 4.75% Notes due 2023 1,250 1,350 Level 2 1.25% Convertible Notes due 2025 1,963 3,968 Level 2 5.25% Notes due 2025 1,550 1,765 Level 2 Term Loan Agreement payable through 2025 - 1.59% 112 112 Level 3 3.00% Notes due 2026 300 317 Level 2 Term Loan Agreement payable through 2026 - 1.34% 159 157 Level 3 3.45% Notes due 2027 300 318 Level 2 5.125% Notes due 2027 2,000 2,301 Level 2 7.375% Debentures due 2027 119 145 Level 2 Term Loan Agreement payable through 2028 - 1.60% 178 177 Level 3 2.625% Notes due 2030 500 492 Level 2 1.000% Payroll Support Program Loan due 2030 976 941 Level 3 1.000% Payroll Support Program Loan due 2031 488 460 Level 3 |
Schedule of Debt | The following table details the liability component recognized related to the Convertible Notes as of March 31, 2021, and December 31, 2020: (in millions) March 31, 2021 December 31, 2020 Liability component: Principal amount $ 2,300 $ 2,300 Unamortized debt discount (337) (355) Net carrying amount $ 1,963 $ 1,945 |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Table Text Block [Abstract] | |
Accounts and Other Receivables | (in millions) March 31, 2021 December 31, 2020 Trade receivables $ 59 $ 46 Credit card receivables 92 35 Business partners and other suppliers (a) 73 274 Taxes receivable (b) 705 740 Other 8 35 Accounts and other receivables $ 937 $ 1,130 |
Other Assets | (in millions) March 31, 2021 December 31, 2020 Derivative contracts $ 131 $ 90 Intangible assets, net 295 295 Other 317 337 Other assets $ 743 $ 722 |
Schedule of Accounts Payable | (in millions) March 31, 2021 December 31, 2020 Accounts payable trade $ 169 $ 111 Salaries payable 197 201 Taxes payable excluding income taxes 190 49 Aircraft maintenance payable 83 95 Fuel payable 98 66 Other payable 357 409 Accounts payable $ 1,094 $ 931 |
Accrued Liabilities | (in millions) March 31, 2021 December 31, 2020 Extended Emergency Time Off $ 190 $ 393 Voluntary Separation Program 2020 124 143 Profitsharing and savings plans 46 25 Vendor prepayment (a) 277 600 Vacation pay 443 436 Health 109 111 Workers compensation 163 161 Property and income taxes 80 84 Interest 111 49 Other 122 257 Accrued liabilities $ 1,665 $ 2,259 |
Other Noncurrent Liabilities | (in millions) March 31, 2021 December 31, 2020 Extended Emergency Time Off $ — $ 57 Voluntary Separation Program 2020 297 321 Postretirement obligation 430 428 Other deferred compensation 319 353 Other 77 88 Other noncurrent liabilities $ 1,123 $ 1,247 (a) In fourth quarter 2020, the Company received a $600 million prepayment from Chase for Rapid Rewards points expected to be purchased during 2021, based on cardholder activity on the Visa credit card associated with its loyalty program. During first quarter 2021, $323 million was reclassified to deferred revenue in Air Traffic liability--loyalty (including $106 million that would have been a receivable from business partners as of March 31, 2021), and the remainder is expected to be reclassified during second quarter 2021. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contractual Purchase Commitments | As of March 31, 2021, based on the Supplement to its aircraft purchase agreement with Boeing, the Company had firm deliveries and options for Boeing 737 MAX 7 and 737 MAX 8 aircraft as follows: The Boeing Company MAX 7 MAX 8 MAX 7 or 8 Options Additional MAX 8s Total 2021 — 19 — 9 28 (a) 2022 30 — 42 — 72 2023 30 — 38 — 68 2024 30 — 40 — 70 2025 30 — 40 — 70 2026 15 15 40 — 70 2027 15 15 30 — 60 2028 15 15 30 — 60 2029 20 30 10 — 60 2030 15 45 — — 60 2031 — 10 — — 10 200 149 (b) 270 9 (c) 628 (a) Includes 20 737 MAX 8s delivered as of March 31, 2021, consisting of 12 owned and 8 leased aircraft. (b) The Company has flexibility to designate firm orders or options as MAX 7 or MAX 8, upon written advance notification as stated in the contract. |
Basis of Presentation (Details)
Basis of Presentation (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2021USD ($) | ||
Accounting Standards Update and Change in Accounting Principle [Abstract] | ||
Cumulative effect of new accounting standards | $ 0 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect of new accounting standards | 0 | |
Adjustment Related to Underaccrued Payroll Tax Credits Included in Payroll support and other voluntary Employee programs, net | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Prior Period Reclassification Adjustment | 88 | |
Other comprehensive income (loss) other changes net of tax | ||
Accounting Standards Update and Change in Accounting Principle [Abstract] | ||
Cumulative effect of new accounting standards | (31) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect of new accounting standards | (31) | |
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax | (60) | [1] |
Accumulated other comprehensive income (loss) | ||
Accounting Standards Update and Change in Accounting Principle [Abstract] | ||
Cumulative effect of new accounting standards | (19) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect of new accounting standards | $ (19) | |
[1] | Investment gains related to prior periods that were reclassified from AOCI into Other (gains) losses, net. See Note 1. |
Worldwide Pandemic (Details)
Worldwide Pandemic (Details) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 12 Months Ended | 60 Months Ended | ||||
Mar. 31, 2021USD ($)employees$ / sharesshares | Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($) | Jan. 15, 2031 | Dec. 31, 2021employees | Apr. 23, 2021USD ($)$ / sharesshares | Mar. 11, 2021USD ($) | |
Proceeds from term loan credit facility | $ 0 | $ 1,000 | |||||
Proceeds from Payroll Support Program | 3,400 | ||||||
Proceeds from Payroll Support Program Grant Received in June 2020 | $ 652 | ||||||
Voluntary Separation Program 2020 and Extended Emergency Time Off Total Accrued | $ 611 | ||||||
Number of Aircraft in Long-Term Storage | 66 | ||||||
Proceeds from PSP2 Payroll Support Program Extension Grant Allocated to Fund Salaries, Wages, and Benefits | $ 1,200 | ||||||
Proceeds from Payroll Support Program Extension | $ 1,700 | ||||||
Total Employees who participated in Extended Emergency Time Off During 2020 | employees | 11,000 | ||||||
Total Proceeds to be provided to U.S. Airlines from PSP3 Payroll Support per American Rescue Plan Act of 2021 | $ 14,000 | ||||||
Total Employees who Participated in Extended Emergency Time Off During 2020, Who Were Still on Emergency Time Off at December 31, 2020 | employees | 8,164 | ||||||
Extended Emergency Time Off Accrual for Employees who Accepted through 2020 | 620 | ||||||
Extended Emergency Time Off | $ 190 | 393 | |||||
Voluntary Separation Program 2020 and Extended Emergency Time Off Relieved from Accrual for Employees Who Accepted Through December 31, 2020 | 188 | ||||||
Extended Emergency Time Off Reversal for Employees who Accepted through March 31, 2021 | 141 | ||||||
Extended Emergency Time Off Accrual for Employees who Accepted through March 31, 2021 | 26 | ||||||
PSP3 Payroll Support Program Amount of Grant Expected to be Allocated in Third Quarter 2021 | 1,300 | ||||||
Goodwill | $ 970 | $ 970 | |||||
Option to Convert to Voluntary Separation Program 2020 [Member] | |||||||
Extended Emergency Time Off Period | 12 months | ||||||
Subsequent Event | |||||||
Proceeds from PSP3 Payroll Support Program per American Rescue Plan Act of 2021 | $ 1,900 | ||||||
Proceeds from PSP3 Payroll Support Program Grant per American Rescue Plan Act of 2021, Received in April 2021 | 926 | ||||||
Subsequent Event | PSP2 Payroll Support Program Extension Topoff Received April 23, 2021 | |||||||
Proceeds from Payroll Support Program Extension Received in April 2021 | 259 | ||||||
Subsequent Event | Total Amount of PSP2 Payroll Support Program Extension Agreement | |||||||
Total Proceeds from Payroll Support Program Extension (PSP2) | $ 2,000 | ||||||
Minimum | |||||||
Extended Emergency Time Off Period | 6 months | ||||||
Minimum | Option to Convert to Voluntary Separation Program 2020 [Member] | |||||||
Extended Emergency Time Off Period | 12 months | ||||||
Maximum | |||||||
Extended Emergency Time Off Period | 18 months | ||||||
Pilots [Member] | Maximum | |||||||
Extended Emergency Time Off Period | 5 years | ||||||
LUV Common Stock Warrants | Total Amount of PSP2 Payroll Support Program Extension Agreement | |||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares | $ 46.28 | ||||||
LUV Common Stock Warrants | PSP2 Payroll Support Program Extension As of March 31, 2021 | |||||||
Warrants and Rights Outstanding | $ 23 | ||||||
LUV Common Stock Warrants | Payroll Support Program | |||||||
Class of Warrant or Right, Outstanding | shares | 2,700 | ||||||
Warrants and Rights Outstanding | $ 40 | ||||||
LUV Common Stock Warrants | Payroll Support Program Extension issued during first quarter 2021 | |||||||
Class of Warrant or Right, Outstanding | shares | 1,100 | ||||||
LUV Common Stock Warrants | Subsequent Event | PSP2 Payroll Support Program Extension Topoff Received April 23, 2021 | |||||||
Class of Warrant or Right, Outstanding | shares | 168 | ||||||
LUV Common Stock Warrants | Subsequent Event | Total Amount of PSP2 Payroll Support Program Extension Agreement | |||||||
Class of Warrant or Right, Outstanding | shares | 1,200 | ||||||
LUV Common Stock Warrants | Subsequent Event | PSP3 Payroll Support Program Extension Agreement [Member] | |||||||
Class of Warrant or Right, Outstanding | shares | 424 | ||||||
Warrants and Rights Outstanding | $ 9 | ||||||
Common Stock | Subsequent Event | PSP3 Payroll Support Program Extension Agreement [Member] | |||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares | $ 58.51 | ||||||
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% | ||||||
Carrying amount of debt | $ 976 | ||||||
1.0 Payroll Support Program Loan due 2031 | Unsecured Debt | |||||||
Stated interest rate | 1.00% | ||||||
Carrying amount of debt | $ 488 | ||||||
1.0 Payroll Support Program Loan due 2031 | Unsecured Debt | Subsequent Event | PSP2 Payroll Support Program Extension Topoff Received April 23, 2021 | |||||||
Carrying amount of debt | $ 78 | ||||||
1.0 Payroll Support Program Loan due 2031 | Unsecured Debt | Subsequent Event | Total Amount of PSP2 Payroll Support Program Extension Agreement | |||||||
Carrying amount of debt | 566 | ||||||
Payroll Support Program Extension Unsecured Loan | Unsecured Debt | |||||||
Stated interest rate | 1.00% | ||||||
1.0 Payroll Support Program Loan due 2031 issued during first quarter 2021 | Unsecured Debt | |||||||
Carrying amount of debt | $ 488 | ||||||
1.0 PSP3 Payroll Support Program Loan due 2031 | Unsecured Debt | Subsequent Event | |||||||
Carrying amount of debt | $ 248 |
Financial Derivative Instrume_3
Financial Derivative Instruments Narrative (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2021USD ($)aircraft | Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($) | |
Derivative [Line Items] | |||
Discontinuation of Interest Rate Cash Flow Hedge Balance in AOCI | $ 62 | ||
Current Unrealized Net Losses in OCI | 19 | ||
Maximum sum of derivatives of counterparty to be included in other | $ 4 | ||
Cash Collateral Percent Of Fair Value Fuel Derivatives Contracts | 100.00% | ||
Letter of Credit Percent of Collateral | 100.00% | ||
Interest Rate Swap Derivative, Aircraft Leases Received in December 2020 | aircraft | 3 | ||
Interest Rate Swap Derivative, Aircraft Leases Received in First Quarter 2021 | 8 | ||
Fuel derivatives | |||
Derivative [Line Items] | |||
Cash collateral held (from) by CP | $ 72 | ||
Fuel derivatives | Cash Flow Hedging | Operating Expense [Member] | |||
Derivative [Line Items] | |||
Derivative Instruments, (Gain) Loss Reclassified from Accumulated OCI into Income, Effective Portion, Net | $ 0 | ||
Interest rate swap | |||
Derivative [Line Items] | |||
Interest Rate Derivative | 12 | ||
Interest rate derivatives | |||
Derivative [Line Items] | |||
Cash collateral held (from) by CP | $ 0 | ||
Interest rate derivatives | Cash Flow Hedging | Operating Expense [Member] | |||
Derivative [Line Items] | |||
Derivative Instruments, (Gain) Loss Reclassified from Accumulated OCI into Income, Effective Portion, Net | 1 | $ 0 | |
Other Noncurrent Liabilities | Interest rate derivatives | |||
Derivative [Line Items] | |||
Derivative contracts | $ 0 | $ 6 |
Financial Derivative Instrume_4
Financial Derivative Instruments - Fuel Hedging (Details) gal in Millions | Mar. 31, 2021gal | [1] |
Remainder of Current Year | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 962 | |
2022 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 1,220 | |
2023 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 643 | |
Beyond 2023 | ||
Volume of Fuel Hedging | ||
Fuel Hedged (in gallons) | 106 | |
[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 fluctuate. |
Financial Derivative Instrume_5
Financial Derivative Instruments - Fair Values by Balance Sheet Location (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | |
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | $ 255 | $ 134 | |
Derivative Liability, Fair Value, Gross Liability | 0 | 6 | |
Designated as Hedging Instrument | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 246 | 130 |
Derivative Liability, Fair Value, Gross Liability | 0 | 6 | |
Fuel derivatives | Designated as Hedging Instrument | Prepaid expenses and other current assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 58 | 9 |
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] | 182 | 121 |
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] | 9 | 4 |
Derivative Asset, Fair Value, Gross Liability | [1] | 0 | 0 |
Interest rate derivatives | Designated as Hedging Instrument | Other Assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 6 | 0 |
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] | $ 0 | $ 6 |
[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 4. |
Financial Derivative Instrume_6
Financial Derivative Instruments - Collateral by Balance Sheet Location (Details) - Fuel derivatives - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Prepaid expenses and other current assets | ||
Derivative [Line Items] | ||
Cash collateral deposits held from CP for fuel contracts - current | $ 15 | $ 3 |
Other Assets | ||
Derivative [Line Items] | ||
Cash collateral deposits held from CP for fuel contracts - non-current | $ 57 | $ 31 |
Financial Derivative Instrume_7
Financial Derivative Instruments - Offsetting of Derivative Assets (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | |
Offsetting Assets [Line Items] | |||
Asset derivative contracts, net | $ 131 | $ 90 | |
Fuel derivatives | Prepaid expenses and other current assets | |||
Offsetting Assets [Line Items] | |||
Gross amounts of recognized assets | 67 | 13 | |
Gross liability amounts offset in the Balance Sheet | (15) | (3) | |
Asset derivative contracts, net | 52 | 10 | |
Fuel derivatives | Other Assets | |||
Offsetting Assets [Line Items] | |||
Gross amounts of recognized assets | 182 | 121 | |
Gross liability amounts offset in the Balance Sheet | (57) | (31) | |
Asset derivative contracts, net | [1] | 125 | 90 |
Interest rate derivatives | Other Assets | |||
Offsetting Assets [Line Items] | |||
Gross amounts of recognized assets | 6 | 0 | |
Gross liability amounts offset in the Balance Sheet | 0 | 0 | |
Asset derivative contracts, net | [1] | $ 6 | $ 0 |
[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 9. |
Financial Derivative Instrume_8
Financial Derivative Instruments - Offsetting of Derivative Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | |
Fuel derivatives | Prepaid expenses and other current assets | |||
Offsetting Liabilities [Line Items] | |||
Gross amounts of recognized liabilities | $ 15 | $ 3 | |
Gross asset amounts offset in the Balance Sheet | (15) | (3) | |
Liability derivative contracts, net | 0 | 0 | |
Fuel derivatives | Other Assets | |||
Offsetting Liabilities [Line Items] | |||
Gross amounts of recognized liabilities | 57 | 31 | |
Gross asset amounts offset in the Balance Sheet | (57) | (31) | |
Liability derivative contracts, net | [1] | 0 | 0 |
Interest rate derivatives | Other Noncurrent Liabilities | |||
Offsetting Liabilities [Line Items] | |||
Gross amounts of recognized liabilities | 0 | 6 | |
Gross asset amounts offset in the Balance Sheet | 0 | 0 | |
Liability derivative contracts, net | $ 0 | $ 6 | |
[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 9. |
Financial Derivative Instrume_9
Financial Derivative Instruments - Location and Amount Recognized in Income by Hedging Relationship (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Fuel | ||
Derivative [Line Items] | ||
(Gain) Loss on Derivative Instruments, Net, Pretax | $ 16 | $ 22 |
Other (gains)/losses, net | ||
Derivative [Line Items] | ||
(Gain) Loss on Derivative Instruments, Net, Pretax | 6 | 2 |
Interest Expense | ||
Derivative [Line Items] | ||
(Gain) Loss on Derivative Instruments, Net, Pretax | 2 | |
Other Operating Expense | ||
Derivative [Line Items] | ||
(Gain) Loss on Derivative Instruments, Net, Pretax | 1 | |
Cash Flow Hedging | Fuel | Fuel derivatives | ||
Derivative [Line Items] | ||
Derivative Instruments, (Gain) Loss Reclassified from Accumulated OCI into Income, Effective Portion, Net | 16 | 22 |
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 |
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 | 6 | 2 |
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 | |
Cash Flow Hedging | Interest Expense | Interest rate derivatives | ||
Derivative [Line Items] | ||
Derivative Instruments, (Gain) Loss Reclassified from Accumulated OCI into Income, Effective Portion, Net | 0 | |
Cash Flow Hedging | Other Operating Expense | Fuel derivatives | ||
Derivative [Line Items] | ||
Derivative Instruments, (Gain) Loss Reclassified from Accumulated OCI into Income, Effective Portion, Net | 0 | |
Cash Flow Hedging | Other Operating Expense | Interest rate derivatives | ||
Derivative [Line Items] | ||
Derivative Instruments, (Gain) Loss Reclassified from Accumulated OCI into Income, Effective Portion, Net | 1 | 0 |
Designated as Hedging Instrument | Fair Value Hedging | Fuel | Interest rate derivatives | ||
Derivative [Line Items] | ||
(Gain) Loss on Derivative Instruments, Net, Pretax | 0 | 0 |
Designated as Hedging Instrument | Fair Value Hedging | 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) | |
Designated as Hedging Instrument | Fair Value Hedging | Other Operating Expense | Interest rate derivatives | ||
Derivative [Line Items] | ||
(Gain) Loss on Derivative Instruments, Net, Pretax | 0 | |
Not Designated as Hedging Instrument | Fair Value Hedging | Fuel | Interest rate derivatives | ||
Derivative [Line Items] | ||
Interest Expense, Debt | 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 | |
Not Designated as Hedging Instrument | Fair Value Hedging | Other Operating Expense | Interest rate derivatives | ||
Derivative [Line Items] | ||
Interest Expense, Debt | $ 0 |
Financial Derivative Instrum_10
Financial Derivative Instruments - (Gain) Loss by Hedging Relationship (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash Flow Hedging | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Gain) loss recognized in AOCI on derivatives | $ (93) | $ 116 |
Fuel derivatives | Cash Flow Hedging | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Gain) loss recognized in AOCI on derivatives | (84) | 84 |
Interest rate derivatives | Cash Flow Hedging | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Gain) loss recognized in AOCI on derivatives | (9) | 32 |
Interest rate derivatives | Not Designated as Hedging Instrument | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Gain) Loss recognized in income on derivatives | (5) | 24 |
Interest rate derivatives | Fuel derivatives | Not Designated as Hedging Instrument | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Gain) Loss recognized in income on derivatives | (5) | 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 | $ 0 | $ 24 |
Financial Derivative Instrum_11
Financial Derivative Instruments - Premiums for Fuel Derivative Contracts (Details) - Fuel derivatives - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Designated as Hedging Instrument | Operating Expense [Member] | ||
Derivative [Line Items] | ||
Premiums paid for fuel derivative contracts | $ 14 | $ 24 |
Not Designated as Hedging Instrument | Other (gains)/losses, net | ||
Derivative [Line Items] | ||
Premiums paid for fuel derivative contracts | $ 11 | $ 0 |
Financial Derivative Instrum_12
Financial Derivative Instruments - Fair Values of Fuel Derivatives Amounts Posted as Collateral (Details) $ in Millions | Mar. 31, 2021USD ($) | |
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 | $ 249 | |
Cash collateral held (from) by CP | 72 | |
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 | 60 | |
Cash collateral held (from) by CP | 72 | |
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 | 28 | |
Cash collateral held (from) by CP | 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 | 60 | |
Cash collateral held (from) by CP | 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 | 28 | |
Cash collateral held (from) by CP | 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 | 30 | |
Cash collateral held (from) by CP | 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 | 21 | |
Cash collateral held (from) by CP | 0 | |
Counterparty G | 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 | 18 | |
Cash collateral held (from) by CP | 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 | 4 | [1] |
Cash collateral held (from) by CP | 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] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative level at which cash is received from CP | [3] | |
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 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 level at which cash is received from CP | [3] | |
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 | [4] | |
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) | |
Fair value of fuel derivative level at which cash is received from CP | 250 | [2] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative level at which cash is received from CP | [3] | |
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 | [4] | |
If credit rating is investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative levels at which cash is provided to CP Threshold 1 | (125) | |
Fair value of fuel derivative level at which cash is received from CP | 125 | [2] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative level at which cash is received from CP | [3] | |
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 | [4] | |
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 level at which cash is received from CP | [3] | |
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) | |
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 level at which cash is received from CP | [3] | |
Minimum | Counterparty G | 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 | [4] | |
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 | 100 | [2] |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | ||
Fair value of fuel derivative level at which cash is received from CP | [3] | |
[1] | Individual counterparties with fair value of fuel derivatives < $4 million. | |
[2] | Thresholds may vary based on changes in credit ratings within investment grade. | |
[3] | Cash collateral is provided at 100 percent of fair value of fuel derivative contracts | |
[4] | The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement. |
AOCI - Differences between Net
AOCI - Differences between Net Income and Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Condensed Statement of Income Captions [Line Items] | ||
Net income (loss) | $ 116 | $ (94) |
Other, net of deferred taxes | (47) | (28) |
Total other comprehensive income (loss) | 64 | (125) |
Comprehensive income (loss) | 180 | (219) |
Other deferred taxes | (13) | (9) |
Fuel derivatives | ||
Condensed Statement of Income Captions [Line Items] | ||
Unrealized gain (loss) on derivative instruments, net of deferred taxes | 101 | (65) |
Derivative deferred taxes | 30 | (19) |
Interest rate derivatives | ||
Condensed Statement of Income Captions [Line Items] | ||
Unrealized gain (loss) on derivative instruments, net of deferred taxes | 10 | (32) |
Derivative deferred taxes | $ 3 | $ (10) |
AOCI - Schedule of AOCI Compone
AOCI - Schedule of AOCI Components (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2021USD ($) | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Cumulative effect of new accounting standards | $ 0 |
Fuel derivatives | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Beginning Balance | (119) |
Cumulative effect of new accounting standards | 0 |
Changes in fair value | 109 |
Ending Balance | 12 |
Interest rate derivatives | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Beginning Balance | (66) |
Cumulative effect of new accounting standards | 0 |
Changes in fair value | 12 |
Reclassification to earnings | 1 |
Ending Balance | (53) |
Defined Benefit Plan Items | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Beginning Balance | (43) |
Cumulative effect of new accounting standards | 0 |
Changes in fair value | 0 |
Reclassification to earnings | 0 |
Ending Balance | (43) |
Other comprehensive income (loss) other changes net of tax | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Beginning Balance | 91 |
Cumulative effect of new accounting standards | (31) |
Changes in fair value | 0 |
Ending Balance | 0 |
Deferred Tax | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Beginning Balance | 32 |
Cumulative effect of new accounting standards | 12 |
Changes in fair value | (28) |
Reclassification to earnings | 8 |
Ending Balance | 24 |
AOCI Including Portion Attributable to Noncontrolling Interest | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Beginning Balance | (105) |
Cumulative effect of new accounting standards | (19) |
Changes in fair value | 93 |
Reclassification to earnings | (29) |
Ending Balance | (60) |
Reclassification out of Accumulated Other Comprehensive Income (Loss) | Fuel derivatives | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |
Reclassification to earnings | $ 22 |
AOCI - Reclassification out of
AOCI - Reclassification out of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Other operating expenses | $ (463) | $ (698) |
Fuel and oil | 469 | 870 |
Other (gains) losses, net | 48 | (28) |
Less: Tax Expense | (30) | $ 50 |
Reclassification out of Accumulated Other Comprehensive Income (Loss) | ||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Net of Tax | (29) | |
Reclassification out of Accumulated Other Comprehensive Income (Loss) | Fuel derivatives | ||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Less: Tax Expense | 5 | |
Net of Tax | 17 | |
Fuel derivatives | Reclassification out of Accumulated Other Comprehensive Income (Loss) | ||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Fuel and oil | 16 | |
Other (gains) losses, net | 6 | |
Interest rate derivatives | Reclassification out of Accumulated Other Comprehensive Income (Loss) | ||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Other operating expenses | 1 | |
Less: Tax Expense | 0 | |
Net of Tax | 1 | |
Unrealized gain on deferred compensation plan investment | Reclassification out of Accumulated Other Comprehensive Income (Loss) | ||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Less: Tax Expense | (13) | |
Net of Tax | (47) | |
Other (gains) losses, net | $ (60) |
Revenue - Passenger Revenue Bre
Revenue - Passenger Revenue Breakout (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Operating Revenue | $ 2,052 | $ 4,234 |
Passenger Revenue Non Loyalty | ||
Disaggregation of Revenue [Line Items] | ||
Operating Revenue | 1,354 | 3,220 |
Passenger Loyalty Air Transportation | ||
Disaggregation of Revenue [Line Items] | ||
Operating Revenue | 278 | 461 |
Passenger Ancillary Sold Separately | ||
Disaggregation of Revenue [Line Items] | ||
Operating Revenue | 80 | 164 |
Passenger | ||
Disaggregation of Revenue [Line Items] | ||
Operating Revenue | $ 1,712 | $ 3,845 |
Revenue - Air Traffic Liability
Revenue - Air Traffic Liability Breakout (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Revenue Recognition and Deferred Revenue [Abstract] | ||||
ATL - PAX Revenue and Ancillary PAX Services | $ 3,109 | $ 2,686 | ||
AirTrafficLiabilityLoyaltyProgram | 4,623 | 4,447 | ||
AirTrafficLiabilityTotal | $ 7,732 | $ 7,133 | $ 6,211 | $ 5,510 |
Revenue - Air Traffic Liabili_2
Revenue - Air Traffic Liability - Loyalty Program Rollforward (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Movement in Deferred Revenue | ||
Air traffic liability - loyalty program - beginning balance | $ 4,447 | $ 3,385 |
Amounts deferred associated with points awarded | 466 | 656 |
Revenue recognized from points redeemed - Passenger | (278) | (461) |
Revenue recognized from points redeemed - Other | (12) | (19) |
Air traffic liability - loyalty program - ending balance | $ 4,623 | $ 3,561 |
Revenue - Air Traffic Liabili_3
Revenue - Air Traffic Liability Rollforward (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Air Traffic Liability Roll Forward | ||
ATL, beginning balance | $ 7,133 | $ 5,510 |
Current Period Sales | 2,324 | 4,565 |
Revenue amounts in beginning balance | (743) | (1,949) |
Revenue from Current Period Sales | (982) | (1,915) |
ATL, ending balance | $ 7,732 | $ 6,211 |
Revenue - Additional Informatio
Revenue - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Deferred Revenue Arrangement [Line Items] | |||
Residual Travel Funds | 22.00% | 28.00% | |
Operating Revenue | $ 2,052 | $ 4,234 | |
Chase And Other Partner Agreements | |||
Deferred Revenue Arrangement [Line Items] | |||
Operating Revenue | $ 280 | $ 321 |
Net Income (Loss) Per Share (De
Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | ||
NUMERATOR: | |||
Net income (loss) | $ 116 | $ (94) | |
DENOMINATOR: | |||
Weighted-average shares outstanding, basic | 591 | 515 | |
Dilutive effects of convertible notes | 16 | 0 | [1] |
Dilutive effect of stock warrants | 1 | 0 | |
Dilutive effect of restricted stock units | 1 | 0 | |
Adjusted weighted-average shares outstanding, diluted | 609 | 515 | |
NET INCOME (LOSS) PER SHARE: | |||
Basic | $ 0.20 | $ (0.18) | |
Diluted | 0.19 | $ (0.18) | |
Debt Instrument, Convertible, Conversion Price | $ 38.48 | ||
[1] | Because 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, 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, and the Company reports Net income for the given period. For the three months ended March 31, 2021, the average market price of the Company's common stock exceeded this conversion price per share and as such, the common shares underlying the convertible notes were included in the diluted calculation. See Note 8 for further information on the convertible notes. |
Fair Value Measurements Narrati
Fair Value Measurements Narrative (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2021USD ($)Loans | Dec. 31, 2020USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt Agreements Not Publicly Held | Loans | 5 | |
1.250 Convertible Senior Notes due 2025 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt Instrument, Convertible, Conversion Ratio | 25.9909 | |
1.250 Convertible Senior Notes due 2025 | Unsecured Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stated interest rate | 1.25% | |
1.250 Convertible Senior Notes due 2025 | Convertible Debt [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt Instrument, Convertible, Carrying Amount of Equity Component | $ | $ 403 | $ 403 |
Fair Value Measurements - Measu
Fair Value Measurements - Measured on Recurring Basis (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 | |
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | $ 255,000,000 | $ 134,000,000 | |
Fuel derivatives: | |||
Derivative Liability, Fair Value, Gross Liability | 0 | (6,000,000) | |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Treasury bills | 1,800,000,000 | 1,800,000,000 | |
Interest rate derivatives (see Note 4) | 0 | ||
Fuel derivatives: | |||
Other available for sale securities | 240,000,000 | 259,000,000 | |
Total assets | 13,640,000,000 | 12,722,000,000 | |
Liabilities | |||
Interest rate derivatives (see Note 4) | 0 | ||
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Treasury bills | 0 | 0 | |
Interest rate derivatives (see Note 4) | 6,000,000 | ||
Fuel derivatives: | |||
Other available for sale securities | 0 | 0 | |
Total assets | 954,000,000 | 871,000,000 | |
Liabilities | |||
Interest rate derivatives (see Note 4) | (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 | 249,000,000 | 134,000,000 | |
Liabilities | |||
Interest rate derivatives (see Note 4) | 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 | [1] | 0 | 0 |
Options Held | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 0 | 0 |
Options Held | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 249,000,000 | 134,000,000 |
Cash Equivalents | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Cash equivalents | [2] | 11,600,000,000 | 10,663,000,000 |
Cash Equivalents | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Cash equivalents | [2] | 0 | 0 |
Cash Equivalents | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Cash equivalents | [2] | 0 | 0 |
Commercial Paper | Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | |||
Assets | |||
Cash equivalents | 0 | 0 | |
Commercial Paper | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Cash equivalents | 90,000,000 | 90,000,000 | |
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 | 6,000,000 | 10,000,000 | |
Investments | 27,000,000 | 46,000,000 | |
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 | 0 | |
Investments | 0 | 0 | |
Time Deposits | Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | |||
Assets | |||
Cash equivalents | 275,000,000 | 300,000,000 | |
Investments | 550,000,000 | 425,000,000 | |
Time Deposits | Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | |||
Assets | |||
Cash equivalents | 0 | 0 | |
Investments | 0 | 0 | |
Estimate of Fair Value Measurement | Fair Value, Measurements, Recurring | |||
Assets | |||
Treasury bills | 1,800,000,000 | 1,800,000,000 | |
Interest rate derivatives (see Note 4) | 6,000,000 | ||
Fuel derivatives: | |||
Other available for sale securities | 240,000,000 | 259,000,000 | |
Total assets | 14,843,000,000 | 13,727,000,000 | |
Liabilities | |||
Interest rate derivatives (see Note 4) | (6,000,000) | ||
Estimate of Fair Value Measurement | Options Held | Fair Value, Measurements, Recurring | |||
Fuel derivatives: | |||
Derivative Asset, Fair Value, Gross Asset | [1] | 249,000,000 | 134,000,000 |
Estimate of Fair Value Measurement | Cash Equivalents | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash equivalents | [2] | 11,600,000,000 | 10,663,000,000 |
Estimate of Fair Value Measurement | Commercial Paper | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash equivalents | 90,000,000 | 90,000,000 | |
Estimate of Fair Value Measurement | Certificates of Deposit | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash equivalents | 6,000,000 | 10,000,000 | |
Investments | 27,000,000 | 46,000,000 | |
Estimate of Fair Value Measurement | Time Deposits | Fair Value, Measurements, Recurring | |||
Assets | |||
Cash equivalents | 275,000,000 | 300,000,000 | |
Investments | $ 550,000,000 | $ 425,000,000 | |
[1] | In the unaudited Condensed Consolidated Balance Sheet amounts are presented as an asset. See Note 4. | ||
[2] | 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 | ||
Mar. 31, 2021 | Dec. 31, 2020 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Losses for the period included in earnings | [1] | $ (1) | |
Fair Value, Recurring Basis, Unobservable Input Reconciliation, Asset (Liability), Gain (Loss), OCI | 117 | ||
Settlements | 1 | ||
Ending Balance | 249 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value | $ 134 | ||
Commodity Option | |||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | |||
Fair Value, Asset, Recurring Basis, Still Held, Unrealized Gain (Loss) | [1] | (2) | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Fair Value, Asset, Recurring Basis, Still Held, Unrealized Gain (Loss), OCI | $ 116 | ||
[1] | Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). |
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 | Mar. 31, 2021 | |
Minimum | Second quarter 2021 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.22 | |
Minimum | Third quarter 2021 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.30 | |
Minimum | Fourth quarter 2021 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.29 | |
Minimum | 2022 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.25 | |
Minimum | 2023 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.23 | |
Minimum | Beyond 2023 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.23 | |
Weighted Average | Second quarter 2021 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.32 | |
Weighted Average | Third quarter 2021 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.33 | [1] |
Weighted Average | Fourth quarter 2021 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.31 | [1] |
Weighted Average | 2022 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.29 | [1] |
Weighted Average | 2023 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.25 | [1] |
Weighted Average | Beyond 2023 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.24 | [1] |
Maximum | Second quarter 2021 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.46 | |
Maximum | Third quarter 2021 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.40 | |
Maximum | Fourth quarter 2021 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.36 | |
Maximum | 2022 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.34 | |
Maximum | 2023 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.26 | |
Maximum | Beyond 2023 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Asset, Measurement Input | 0.25 | |
[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 | Mar. 31, 2021 | Dec. 31, 2020 |
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 | $ 105 | |
Stated interest rate | 6.24% | |
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 | 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] | ||
Net carrying amount | $ 1,963 | $ 1,945 |
5.250 Unsecured Notes due 2025 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Carrying amount of debt | $ 1,550 | |
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 | $ 159 | |
Stated interest rate | 1.34% | |
5.125 Notes due 2027 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Carrying amount of debt | $ 2,000 | |
Stated interest rate | 5.125% | |
7.375% Debentures due 2027 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Carrying amount of debt | $ 119 | |
Stated interest rate | 7.375% | |
1.60 Term Loan Agreement Payable through 2028 | Notes Payable to Banks | ||
Debt Instrument [Line Items] | ||
Carrying amount of debt | $ 178 | |
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 | $ 976 | |
Stated interest rate | 1.00% | |
3.45% Notes due 2027 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Carrying amount of debt | $ 300 | |
Stated interest rate | 3.45% | |
Term Loan Agreement Due 2025 | Notes Payable to Banks | ||
Debt Instrument [Line Items] | ||
Carrying amount of debt | $ 112 | |
Stated interest rate | 1.59% | |
Term Loan Agreement Due 2028 | Notes Payable to Banks | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 1.60% | |
1.0 Payroll Support Program Loan due 2031 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Carrying amount of debt | $ 488 | |
Stated interest rate | 1.00% | |
Level 2 | 2.75% Notes due 2022 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | $ 309 | |
Level 2 | Pass Through Certificates due 2022 - 6.24% | Enhanced Equipment Trust Certificate | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | 107 | |
Level 2 | 4.750 Unsecured Notes due 2023 | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | 1,350 | |
Level 2 | 1.250 Convertible Senior Notes due 2025 | Convertible Debt [Member] | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | 3,968 | |
Level 2 | 5.250 Unsecured Notes due 2025 | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | 1,765 | |
Level 2 | 3.00% Notes due 2026 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | 317 | |
Level 2 | 5.125 Notes due 2027 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | 2,301 | |
Level 2 | 7.375% Debentures due 2027 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Loans Payable, Fair Value | 145 | |
Level 2 | 2.625% Notes due 2030 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | 492 | |
Level 2 | 3.45% Notes due 2027 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | 318 | |
Level 3 | Term Loan Agreement due 2026 - 1.99% | Notes Payable to Banks | ||
Debt Instrument [Line Items] | ||
Loans Payable, Fair Value | 157 | |
Level 3 | 1.60 Term Loan Agreement Payable through 2028 | Notes Payable to Banks | ||
Debt Instrument [Line Items] | ||
Loans Payable, Fair Value | 177 | |
Level 3 | 1.0 Payroll Support Program Loan due 2030 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | 941 | |
Level 3 | Term Loan Agreement Due 2025 | Notes Payable to Banks | ||
Debt Instrument [Line Items] | ||
Loans Payable, Fair Value | 112 | |
Level 3 | 1.0 Payroll Support Program Loan due 2031 | Unsecured Debt | ||
Debt Instrument [Line Items] | ||
Notes Payable, Fair Value | $ 460 |
Fair Value Instruments - Conver
Fair Value Instruments - Convertible Debt (Details) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Mar. 31, 2021USD ($)$ / shares | Dec. 31, 2020USD ($) | May 01, 2020USD ($) | |
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 38.48 | ||
Debt Instrument, Convertible, Remaining Discount Amortization Period | 5 years | ||
1.250 Convertible Senior Notes due 2025 | |||
Debt Instrument, Convertible, Conversion Ratio | 25.9909 | ||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 38.48 | ||
1.250 Convertible Senior Notes due 2025 | Convertible Debt [Member] | |||
Unamortized debt discount | $ (337) | $ (355) | |
Net carrying amount | 1,963 | 1,945 | |
Debt Instrument, Convertible, Carrying Amount of Equity Component | $ 403 | 403 | |
Debt Instrument, Interest Rate, Effective Percentage | 5.20% | ||
Interest Expense, Debt | $ 28 | ||
Debt Instrument, Convertible, If-converted Value in Excess of Principal | 881 | ||
1.250 Convertible Senior Notes due 2025 | Convertible Debt [Member] | Principal Amount | |||
Principal amount | 2,300 | $ 2,300 | |
1.250 Convertible Senior Notes due 2025 | Convertible Debt [Member] | Date of Issuance | |||
Debt Instrument, Face Amount | $ 2,300 | ||
1.250 Convertible Senior Notes due 2025 | Convertible Debt [Member] | Contractual Coupon Interest Expense | |||
Interest Expense, Debt | 7 | ||
1.250 Convertible Senior Notes due 2025 | Convertible Debt [Member] | Non-Cash Amortization of Debt Discount | |||
Interest Expense, Debt | 19 | ||
1.250 Convertible Senior Notes due 2025 | Convertible Debt [Member] | Non-Cash Amortization of Debt Issuance Costs | |||
Interest Expense, Debt | $ 2 | ||
1.250 Convertible Senior Notes due 2025 | Unsecured Debt | |||
Stated interest rate | 1.25% |
Supplemental Financial Inform_3
Supplemental Financial Information - Accounts and Other Receivables (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2021 | Dec. 31, 2020 | ||
Accounts and Other Receivables [Abstract] | |||
Trade receivables | $ 59 | $ 46 | |
Credit card receivables | 92 | 35 | |
Business partners and other suppliers (a) | [1] | 73 | 274 |
Taxes receivable (b) | [2] | 705 | 740 |
Other | 8 | 35 | |
Accounts and other receivables | 937 | 1,130 | |
Cash Tax Refund Expected From CARES Act Loss Carry Back Provision | $ 470 | $ 470 | |
CARES Act Loss Carryback Period | 5 years | ||
Deferred revenue related to vendor prepayment | $ 323 | ||
Amount of Deferred Revenue from Vendor Prepayment that Would Have Been Receivable at Period End | $ 106 | ||
[1] | In fourth quarter 2020, the Company received a $600 million prepayment from Chase for Rapid Rewards points expected to be purchased during 2021, based on cardholder activity on the Visa credit card associated with its loyalty program. During first quarter 2021, $323 million was reclassified to deferred revenue in Air Traffic liability--loyalty (including $106 million that would have been a receivable from business partners as of March 31, 2021), and the remainder is expected to be reclassified during second quarter 2021. | ||
[2] | Both periods include approximately $470 million associated with a significant cash tax refund expected as a result of the CARES Act allowing entities to carry back 2020 losses to prior periods of up to five years, and claim refunds of federal taxes paid. This amount also includes excise taxes remitted to taxing authorities for which the subsequent flights were canceled by Customers, resulting in amounts due back to the Company. |
Supplemental Financial Inform_4
Supplemental Financial Information - Other Assets (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | |
Other Assets [Abstract] | |||
Derivative contracts | $ 131 | $ 90 | |
Intangible assets | 295 | 295 | |
Other | 317 | 337 | |
Other assets | 743 | 722 | |
Other Assets | Interest rate derivatives | |||
Other Assets [Abstract] | |||
Derivative contracts | [1] | $ 6 | $ 0 |
[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 9. |
Supplemental Financial Inform_5
Supplemental Financial Information - Accounts Payable (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Supplemental Financial Information - Accounts Payable [Abstract] | ||
Accounts payable trade | $ 169 | $ 111 |
Salaries payable | 197 | 201 |
Taxes payable | 190 | 49 |
Aircraft maintenance payable | 83 | 95 |
Fuel payable | 98 | 66 |
Other payable | 357 | 409 |
Accounts Payable, Current | $ 1,094 | $ 931 |
Supplemental Financial Inform_6
Supplemental Financial Information - Accrued Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2021 | Dec. 31, 2020 | ||
Accrued Liabilities, Current [Abstract] | |||
Extended Emergency Time Off | $ 190 | $ 393 | |
Voluntary Separation Program 2020 | 124 | 143 | |
Profitsharing and savings plans | 46 | 25 | |
Vendor Prepayment | [1] | 277 | 600 |
Vacation pay | 443 | 436 | |
Health | 109 | 111 | |
Workers compensation | 163 | 161 | |
Property and income taxes | 80 | 84 | |
Other | 122 | 257 | |
Accrued liabilities | 1,665 | 2,259 | |
Deferred revenue related to vendor prepayment | 323 | ||
Accrued Liabilities [Member] | |||
Accrued Liabilities, Current [Abstract] | |||
Interest | $ 111 | $ 49 | |
[1] | In fourth quarter 2020, the Company received a $600 million prepayment from Chase for Rapid Rewards points expected to be purchased during 2021, based on cardholder activity on the Visa credit card associated with its loyalty program. During first quarter 2021, $323 million was reclassified to deferred revenue in Air Traffic liability--loyalty (including $106 million that would have been a receivable from business partners as of March 31, 2021), and the remainder is expected to be reclassified during second quarter 2021. |
Supplemental Financial Inform_7
Supplemental Financial Information - Other Non-Current Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Other Liabilities, Noncurrent [Abstract] | ||
Extended Emergency Time Off | $ 0 | $ 57 |
Voluntary Separation Program 2020 | 297 | 321 |
Postretirement obligation | 430 | 428 |
Other deferred compensation | 319 | 353 |
Other | 77 | 88 |
Other noncurrent liabilities | $ 1,123 | $ 1,247 |
Commitments and Contingencies -
Commitments and Contingencies - Airport Projects (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Other Commitments [Line Items] | ||
Assets constructed for others | $ 341 | $ 309 |
LAX Terminal 1.5 | ||
Other Commitments [Line Items] | ||
Construction Obligation | 364 | |
LAX Terminal 1.5 | ||
Other Commitments [Line Items] | ||
Total Not to Exceed Cost Of Airport Project | 464 | |
LFMP Terminal | ||
Other Commitments [Line Items] | ||
Municipal bonds principal remaining | 399 | |
Net present value of principal remaining | $ 438 |
Commitment and Contingencies -
Commitment and Contingencies - Long Term Purchase Commitments (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2021USD ($)aircraft | Dec. 31, 2020aircraft | ||
Long-term Purchase Commitment [Line Items] | |||
2021 | $ | $ 0 | ||
2022 | $ | 700 | ||
2023 | $ | 1,100 | ||
2024 | $ | 1,000 | ||
2025 | $ | 1,100 | ||
2026 | $ | 1,200 | ||
Thereafter | $ | $ 7,200 | ||
Total Number of Boeing 737 MAX 7 Firm Orders Added to Purchase Agreement per Supplemental Agreement No. 12 | 100 | ||
Number of Boeing 737 MAX 7 Firm Orders Added to Purchase Agreement per Supplemental Agreement No. 12 to be Delivered in 2022 | 30 | ||
Total Number of Boeing 737 MAX Options Added to Purchase Agreement per Supplemental Agreement No. 12 | 155 | ||
Total Number of Boeing 737 MAX 8 Firm Orders Converted to 737 MAX 7 Firm Orders per Supplemental Agreement No. 12 | 70 | ||
B-737-MAX 7 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 200 | ||
B-737-MAX 7 | Current Year - 2021 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | [1] | 0 | |
B-737-MAX 7 | Year Two - 2022 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 30 | ||
B-737-MAX 7 | Year Two - 2023 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 30 | ||
B-737-MAX 7 | Year Four - 2024 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 30 | ||
B-737-MAX 7 | Year Five - 2025 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 30 | ||
B-737-MAX 7 | Year Six - 2026 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 15 | ||
B-737-MAX 7 | Year Seven - 2027 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 15 | ||
B-737-MAX 7 | Year Eight - 2028 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 15 | ||
B-737-MAX 7 | Year Nine - 2029 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 20 | ||
B-737-MAX 7 | Year Ten - 2030 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 15 | ||
B-737-MAX 7 | Year Eleven - 2031 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 0 | ||
B-737-MAX 8 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | [2] | 149 | |
Long Term Purchase Commitments Additional MAX 8s | [3] | 9 | |
Total Aircraft Delivered During the Three Months Ended March 31, 2021 | 20 | ||
Owned Aircraft Delivered During the Three Months Ended March 31, 2021 | 12 | ||
Leased Aircraft Delivered During the Three Months Ended March 31, 2021 | 8 | ||
Leased Aircraft Delivered During the Three Months Ended December 31, 2020 | 7 | ||
Total Operating Leased Aircraft to be Delivered in 2020 and 2021 from Third Parties | 16 | ||
B-737-MAX 8 | Current Year - 2021 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | [1] | 19 | |
Long Term Purchase Commitments Additional MAX 8s | 9 | ||
B-737-MAX 8 | Year Two - 2022 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 0 | ||
Long Term Purchase Commitments Additional MAX 8s | 0 | ||
B-737-MAX 8 | Year Two - 2023 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 0 | ||
Long Term Purchase Commitments Additional MAX 8s | 0 | ||
B-737-MAX 8 | Year Four - 2024 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 0 | ||
Long Term Purchase Commitments Additional MAX 8s | 0 | ||
B-737-MAX 8 | Year Five - 2025 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 0 | ||
Long Term Purchase Commitments Additional MAX 8s | 0 | ||
B-737-MAX 8 | Year Six - 2026 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 15 | ||
Long Term Purchase Commitments Additional MAX 8s | 0 | ||
B-737-MAX 8 | Year Seven - 2027 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 15 | ||
Long Term Purchase Commitments Additional MAX 8s | 0 | ||
B-737-MAX 8 | Year Eight - 2028 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 15 | ||
Long Term Purchase Commitments Additional MAX 8s | 0 | ||
B-737-MAX 8 | Year Nine - 2029 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 30 | ||
Long Term Purchase Commitments Additional MAX 8s | 0 | ||
B-737-MAX 8 | Year Ten - 2030 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 45 | ||
Long Term Purchase Commitments Additional MAX 8s | 0 | ||
B-737-MAX 8 | Year Eleven - 2031 | |||
Long-term Purchase Commitment [Line Items] | |||
Long-term Purchase Commitment | 10 | ||
Long Term Purchase Commitments Additional MAX 8s | 0 | ||
B-737 MAX | |||
Long-term Purchase Commitment [Line Items] | |||
Long Term Purchase Options | 270 | ||
Long Term Purchase Commitments and Options, Total | 628 | ||
B-737 MAX | Current Year - 2021 | |||
Long-term Purchase Commitment [Line Items] | |||
Long Term Purchase Options | [1] | 0 | |
Long Term Purchase Commitments and Options, Total | [1] | 28 | |
B-737 MAX | Year Two - 2022 | |||
Long-term Purchase Commitment [Line Items] | |||
Long Term Purchase Options | 42 | ||
Long Term Purchase Commitments and Options, Total | 72 | ||
B-737 MAX | Year Two - 2023 | |||
Long-term Purchase Commitment [Line Items] | |||
Long Term Purchase Options | 38 | ||
Long Term Purchase Commitments and Options, Total | 68 | ||
B-737 MAX | Year Four - 2024 | |||
Long-term Purchase Commitment [Line Items] | |||
Long Term Purchase Options | 40 | ||
Long Term Purchase Commitments and Options, Total | 70 | ||
B-737 MAX | Year Five - 2025 | |||
Long-term Purchase Commitment [Line Items] | |||
Long Term Purchase Options | 40 | ||
Long Term Purchase Commitments and Options, Total | 70 | ||
B-737 MAX | Year Six - 2026 | |||
Long-term Purchase Commitment [Line Items] | |||
Long Term Purchase Options | 40 | ||
Long Term Purchase Commitments and Options, Total | 70 | ||
B-737 MAX | Year Seven - 2027 | |||
Long-term Purchase Commitment [Line Items] | |||
Long Term Purchase Options | 30 | ||
Long Term Purchase Commitments and Options, Total | 60 | ||
B-737 MAX | Year Eight - 2028 | |||
Long-term Purchase Commitment [Line Items] | |||
Long Term Purchase Options | 30 | ||
Long Term Purchase Commitments and Options, Total | 60 | ||
B-737 MAX | Year Nine - 2029 | |||
Long-term Purchase Commitment [Line Items] | |||
Long Term Purchase Options | 10 | ||
Long Term Purchase Commitments and Options, Total | 60 | ||
B-737 MAX | Year Ten - 2030 | |||
Long-term Purchase Commitment [Line Items] | |||
Long Term Purchase Options | 0 | ||
Long Term Purchase Commitments and Options, Total | 60 | ||
B-737 MAX | Year Eleven - 2031 | |||
Long-term Purchase Commitment [Line Items] | |||
Long Term Purchase Options | 0 | ||
Long Term Purchase Commitments and Options, Total | 10 | ||
[1] | Includes 20 737 MAX 8s delivered as of March 31, 2021, consisting of 12 owned and 8 leased aircraft. | ||
[2] | The Company has flexibility to designate firm orders or options as MAX 7 or MAX 8, upon written advance notification as stated in the contract. | ||
[3] | These 9 additional MAX 8 aircraft are leases to be acquired from various third parties, including 8 leased MAX 8 aircraft delivered in first quarter 2021. The Company also received 7 leased MAX 8 aircraft in fourth quarter 2020, for a total of 16 MAX 8 operating leased aircraft from third parties in 2020 and 2021, combined. |
BOEING 737 MAX AIRCRAFT GROUN_2
BOEING 737 MAX AIRCRAFT GROUNDING (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2021USD ($)aircraft | Mar. 31, 2020USD ($) | |
Number of Aircraft Grounded Under Emergency Order | 34 | |
After-Tax Potential Concessions and Other Considerations Announced July 2019 | $ | $ 4,900 | |
Pre-Tax Potential Concessions and Other Considerations Announced January 2020 | $ | $ 2,600 | |
Number of Aircraft Not Delivered Due to Grounding Under Emergency Order | 41 | |
Supplier Proceeds | $ | $ 0 | $ (300) |
Contract to Own Aircraft | ||
Number of Aircraft Not Delivered Due to Grounding Under Emergency Order | 28 | |
Contract to Lease Aircraft | ||
Number of Aircraft Not Delivered Due to Grounding Under Emergency Order | 13 | |
B-737-Max | ||
Owned Assets, Number of Units | 31 |