Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2021 | Oct. 22, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 1-7259 | |
Entity Registrant Name | SOUTHWEST AIRLINES CO. | |
Entity Incorporation, State or Country Code | TX | |
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 | |
City Area Code | 214 | |
Local Phone Number | 792-4000 | |
Title of 12(b) Security | Common Stock ($1.00 par value) | |
Trading Symbol | LUV | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 591,919,907 | |
Entity Central Index Key | 0000092380 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheet - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 12,980 | $ 11,063 |
Short-term investments | 3,024 | 2,271 |
Accounts and other receivables | 1,479 | 1,130 |
Inventories of parts and supplies, at cost | 511 | 414 |
Prepaid expenses and other current assets | 560 | 295 |
Total current assets | 18,554 | 15,173 |
Property and equipment, at cost: | ||
Flight equipment | 21,262 | 20,877 |
Ground property and equipment | 6,287 | 6,083 |
Deposits on flight equipment purchase contracts | 0 | 305 |
Assets constructed for others | 3 | 309 |
Property and equipment, at cost | 27,552 | 27,574 |
Less allowance for depreciation and amortization | 12,496 | 11,743 |
Property and equipment, net | 15,056 | 15,831 |
Goodwill | 970 | 970 |
Operating lease right-of-use assets | 1,611 | 1,892 |
Other assets | 919 | 722 |
Total assets | 37,110 | 34,588 |
Current liabilities: | ||
Accounts payable | 1,229 | 931 |
Accrued liabilities | 1,687 | 2,259 |
Current operating lease liabilities | 243 | 306 |
Air traffic liability | 5,751 | 3,790 |
Current maturities of long-term debt | 225 | 220 |
Total current liabilities | 9,135 | 7,506 |
Long-term debt less current maturities | 11,013 | 10,111 |
Air traffic liability - noncurrent | 2,485 | 3,343 |
Deferred income taxes | 1,795 | 1,634 |
Construction obligation | 0 | 309 |
Noncurrent operating lease liabilities | 1,334 | 1,562 |
Other noncurrent liabilities | 1,098 | 1,247 |
Stockholders' equity: | ||
Common stock | 888 | 888 |
Capital in excess of par value | 4,251 | 4,191 |
Retained earnings | 15,706 | 14,777 |
Accumulated other comprehensive income (loss) | 267 | (105) |
Treasury stock, at cost | (10,862) | (10,875) |
Total stockholders' equity | 10,250 | 8,876 |
Total liabilities and stockholders' equity | $ 37,110 | $ 34,588 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Comprehensive Income (Loss) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
OPERATING REVENUE: | ||||
Total operating revenues | $ 4,679 | $ 1,793 | $ 10,739 | $ 7,035 |
OPERATING EXPENSES, NET: | ||||
Salaries, wages, and benefits | 2,122 | 1,678 | 5,518 | 5,245 |
Payroll support and voluntary Employee programs, net | (776) | (149) | (2,963) | (933) |
Fuel and oil | 990 | 379 | 2,261 | 1,507 |
Maintenance materials and repairs | 250 | 185 | 646 | 597 |
Landing fees and airport rentals | 376 | 308 | 1,092 | 922 |
Depreciation and amortization | 322 | 315 | 949 | 940 |
Other operating expenses | 662 | 488 | 1,710 | 1,405 |
Total operating expenses, net | 3,946 | 3,204 | 9,213 | 9,683 |
OPERATING INCOME (LOSS) | 733 | (1,411) | 1,526 | (2,648) |
OTHER EXPENSES (INCOME): | ||||
Interest expense | 115 | 111 | 343 | 235 |
Capitalized interest | (9) | (11) | (27) | (23) |
Interest income | (2) | (4) | (6) | (30) |
Other (gains) losses, net | 29 | 35 | (32) | 95 |
Total other expenses (income) | 133 | 131 | 278 | 277 |
INCOME (LOSS) BEFORE INCOME TAXES | 600 | (1,542) | 1,248 | (2,925) |
PROVISION (BENEFIT) FOR INCOME TAXES | 154 | (385) | 339 | (759) |
NET INCOME (LOSS) | $ 446 | $ (1,157) | $ 909 | $ (2,166) |
NET INCOME (LOSS) PER SHARE, BASIC (in USD per share) | $ 0.75 | $ (1.96) | $ 1.54 | $ (3.89) |
NET INCOME (LOSS) PER SHARE, DILUTED (in USD per share) | $ 0.73 | $ (1.96) | $ 1.49 | $ (3.89) |
COMPREHENSIVE INCOME (LOSS) | $ 577 | $ (1,129) | $ 1,300 | $ (2,207) |
WEIGHTED AVERAGE SHARES OUTSTANDING | ||||
Basic (in shares) | 592 | 590 | 591 | 556 |
Diluted (in shares) | 607 | 590 | 610 | 556 |
Passenger | ||||
OPERATING REVENUE: | ||||
Total operating revenues | $ 4,227 | $ 1,454 | $ 9,508 | $ 6,003 |
Freight | ||||
OPERATING REVENUE: | ||||
Total operating revenues | 47 | 41 | 140 | 118 |
Other | ||||
OPERATING REVENUE: | ||||
Total operating revenues | $ 405 | $ 298 | $ 1,091 | $ 914 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Stockholders' Equity - USD ($) $ in Millions | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Capital in excess of par value | Retained earnings | Retained earningsCumulative Effect, Period of Adoption, Adjustment | Accumulated other comprehensive income (loss) | Accumulated other comprehensive income (loss)Cumulative Effect, Period of Adoption, Adjustment | Treasury stock |
Balance at beginning of period at Dec. 31, 2019 | $ 9,832 | $ 808 | $ 1,581 | $ 17,945 | $ (61) | $ (10,441) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Repurchase of common stock | (451) | (451) | |||||||
Issuance of common and treasury stock pursuant to Employee stock plans | (2) | (8) | 6 | ||||||
Share-based compensation | 9 | 9 | |||||||
Cash dividends | (94) | (94) | |||||||
Comprehensive income (loss) | (219) | (94) | (125) | ||||||
Balance at end of period at Mar. 31, 2020 | 9,075 | 808 | 1,582 | 17,757 | (186) | (10,886) | |||
Balance at beginning of period at Dec. 31, 2019 | 9,832 | 808 | 1,581 | 17,945 | (61) | (10,441) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Comprehensive income (loss) | (2,207) | ||||||||
Balance at end of period at Sep. 30, 2020 | 9,769 | 888 | 4,175 | 15,685 | (102) | (10,877) | |||
Balance at beginning of period at Mar. 31, 2020 | 9,075 | 808 | 1,582 | 17,757 | (186) | (10,886) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock, net of issuance costs | 2,224 | 80 | 2,144 | ||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 13 | 8 | 5 | ||||||
Share-based compensation | (2) | (2) | |||||||
Stock warrants | 35 | 35 | |||||||
Equity feature of convertible notes, net of issuance costs | 392 | 392 | |||||||
Comprehensive income (loss) | (859) | (915) | 56 | ||||||
Balance at end of period at Jun. 30, 2020 | 10,878 | 888 | 4,159 | 16,842 | (130) | (10,881) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 13 | 9 | 4 | ||||||
Share-based compensation | 2 | 2 | |||||||
Stock warrants | 5 | 5 | |||||||
Comprehensive income (loss) | (1,129) | (1,157) | 28 | ||||||
Balance at end of period at Sep. 30, 2020 | 9,769 | 888 | 4,175 | 15,685 | (102) | (10,877) | |||
Balance at beginning of period at Dec. 31, 2020 | 8,876 | $ 0 | 888 | 4,191 | 14,777 | $ 19 | (105) | $ (19) | (10,875) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 0 | (8) | 8 | ||||||
Share-based compensation | 14 | 14 | |||||||
Stock warrants | 23 | 23 | |||||||
Comprehensive income (loss) | 180 | 116 | 64 | ||||||
Balance at end of period at Mar. 31, 2021 | 9,093 | 888 | 4,220 | 14,912 | (60) | (10,867) | |||
Balance at beginning of period at Dec. 31, 2020 | 8,876 | $ 0 | 888 | 4,191 | 14,777 | $ 19 | (105) | $ (19) | (10,875) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Comprehensive income (loss) | 1,300 | ||||||||
Balance at end of period at Sep. 30, 2021 | 10,250 | 888 | 4,251 | 15,706 | 267 | (10,862) | |||
Balance at beginning of period at Mar. 31, 2021 | 9,093 | 888 | 4,220 | 14,912 | (60) | (10,867) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 13 | 11 | 2 | ||||||
Share-based compensation | 16 | 16 | |||||||
Stock warrants | 22 | 22 | |||||||
Comprehensive income (loss) | 544 | 348 | 196 | ||||||
Balance at end of period at Jun. 30, 2021 | 9,688 | 888 | 4,269 | 15,260 | 136 | (10,865) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common and treasury stock pursuant to Employee stock plans | 13 | 10 | 3 | ||||||
Share-based compensation | 14 | 14 | |||||||
Equity feature of partial extinguishment of convertible notes | (42) | (42) | |||||||
Comprehensive income (loss) | 577 | 446 | 131 | ||||||
Balance at end of period at Sep. 30, 2021 | $ 10,250 | $ 888 | $ 4,251 | $ 15,706 | $ 267 | $ (10,862) |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity (Parenthetical) $ in Millions | 3 Months Ended |
Jun. 30, 2020USD ($)$ / shares | |
Statement of Stockholders' Equity [Abstract] | |
Cash dividends, per share (in dollars per share) | $ / shares | $ 0.180 |
Stock warrants | $ 35 |
Issuance of common and treasury stock pursuant to Employee stock plans | 13 |
Share-based compensation | $ (2) |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Cash Flows - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net income (loss) | $ 446 | $ (1,157) | $ 909 | $ (2,166) |
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | ||||
Depreciation and amortization | 322 | 315 | 949 | 940 |
Unrealized/realized (gain) loss on fuel derivative instruments | (2) | 17 | (25) | 25 |
Deferred income taxes | 67 | (298) | 42 | (528) |
Gain on sale-leaseback transactions | 0 | 0 | 0 | (222) |
Loss on partial extinguishment of convertible notes | 12 | 0 | 12 | 0 |
Changes in certain assets and liabilities: | ||||
Accounts and other receivables | (23) | (123) | (819) | (60) |
Other assets | 59 | 84 | 64 | 366 |
Accounts payable and accrued liabilities | (948) | 26 | (25) | (65) |
Air traffic liability | (442) | 216 | 1,103 | 1,584 |
Other liabilities | (88) | (106) | (275) | (312) |
Cash collateral received from (provided to) derivative counterparties | 42 | (5) | 128 | 2 |
Other, net | (20) | (19) | 12 | (95) |
Net cash provided by (used in) operating activities | (575) | (1,050) | 2,075 | (531) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Capital expenditures | (135) | (89) | (325) | (425) |
Supplier proceeds | 0 | 0 | 0 | 428 |
Assets constructed for others | (3) | 0 | (3) | 0 |
Proceeds from sale-leaseback transactions | 0 | 0 | 0 | 815 |
Purchases of short-term investments | (1,525) | (1,536) | (4,500) | (3,881) |
Proceeds from sales of short-term and other investments | 1,251 | 1,191 | 3,747 | 2,956 |
Net cash used in investing activities | (412) | (434) | (1,081) | (107) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Issuance of common stock | 0 | 0 | 0 | 2,294 |
Proceeds from issuance of long-term debt | 0 | 1,125 | 0 | 5,622 |
Proceeds from term loan credit facility | 0 | 0 | 0 | 3,683 |
Proceeds from revolving credit facility | 0 | 0 | 0 | 1,000 |
Proceeds from convertible notes | 0 | 0 | 0 | 2,300 |
Proceeds from Payroll Support Program loan and warrants | 0 | 130 | 1,136 | 1,016 |
Proceeds from Employee stock plans | 13 | 13 | 39 | 36 |
Repurchase of common stock | 0 | 0 | 0 | (451) |
Payments of long-term debt and finance lease obligations | (67) | (59) | (177) | (295) |
Payments of term loan credit facility | 0 | 0 | 0 | (3,683) |
Payments of revolving credit facility | 0 | 0 | 0 | (1,000) |
Payments of cash dividends | 0 | 0 | 0 | (188) |
Payments of terminated interest rate derivative instruments | 0 | (31) | 0 | (31) |
Payments for repurchases and conversions of convertible debt | (121) | 0 | (121) | 0 |
Capitalized financing items | 0 | 44 | 0 | (133) |
Other, net | 18 | 20 | 46 | 29 |
Net cash provided by (used in) financing activities | (157) | 1,242 | 923 | 10,199 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (1,144) | (242) | 1,917 | 9,561 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 14,124 | 12,351 | 11,063 | 2,548 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 12,980 | 12,109 | 12,980 | 12,109 |
CASH PAYMENTS FOR: | ||||
Interest, net of amount capitalized | 22 | 7 | 188 | 61 |
Income taxes | 114 | 7 | 291 | 17 |
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS: | ||||
Right-of-use assets acquired under operating leases | 53 | 6 | 283 | 692 |
Flight equipment acquired against supplier credit memo | 0 | 0 | 512 | 0 |
Assets constructed for others | 0 | 35 | 309 | 110 |
Remeasurement of right-of-use asset and lease liability | $ 343 | $ 0 | $ 343 | $ 0 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 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 September 30, 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 always 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 and nine months ended September 30, 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 nine months ended September 30, 2021, Payroll support and voluntary Employee programs, net, includes the correction of previously under accrued 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 nine months ended September 30, 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 Standards 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 | 9 Months Ended |
Sep. 30, 2021 | |
Unusual or Infrequent Items, or Both [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 negative impacts to passenger demand and bookings early in 2021 due to the pandemic, in particular with respect to business travel, although as a result of declining reported COVID-19 cases throughout the United States, easing travel restrictions, lifting of business restrictions, and an increase in the number of individuals vaccinated, domestic leisure travel demand and bookings improved during second quarter 2021. In third quarter 2021, the Company experienced softness in bookings and elevated trip cancellations, especially close-in, as a result of the rise in COVID-19 cases associated with the Delta variant. The Company continues to monitor demand for air travel and proactively adjust its published flight schedules and capacity in response. Since the start of the pandemic, the Company entered into definitive documentation with the United States Department of Treasury ("Treasury") with respect to payroll funding support ("Payroll Support") pursuant to three separate Payroll Support programs: the "PSP1 Payroll Support Program" in April 2020 under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"); the "PSP2 Payroll Support Program” in January 2021 under the Consolidated Appropriations Act, 2021; and the "PSP3 Payroll Support Program" in April 2021 under the American Rescue Plan Act of 2021. As consideration for each of these Payroll Support programs, 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, subject to adjustment pursuant to the terms of the warrants. Under each of the three Payroll Support programs, funds were received in multiple disbursements. Upon each initial disbursement of Payroll Support under each of the three Payroll Support programs, the Company provided a promissory note and issued warrants to Treasury. Upon each subsequent disbursement of Payroll Support under each of the three Payroll Support programs, (i) the principal amount of the applicable promissory note was increased and (ii) the Company issued additional warrants to Treasury. The following table provides the details from each of these programs: (in millions, except shares in thousands) Grant Promissory Note Warrants Total Payroll Support Proceeds Warrants (shares) PSP1 Payroll Support Program April 21, 2020 $ 1,152 $ 459 $ 18 $ 1,630 1,258 May 29, 2020 448 196 8 652 536 June 30, 2020 448 196 9 652 536 July 30, 2020 225 97 3 326 268 September 30, 2020 64 28 2 94 78 $ 2,337 $ 976 $ 40 $ 3,354 2,676 PSP2 Payroll Support Program January 15, 2021 $ 625 $ 229 $ 9 $ 864 495 March 5, 2021 591 259 14 864 560 April 23, 2021 177 78 4 259 168 $ 1,393 $ 566 $ 27 $ 1,987 1,223 PSP3 Payroll Support Program April 23, 2021 $ 670 $ 248 $ 9 $ 926 424 June 3, 2021 640 278 9 926 475 $ 1,310 $ 526 $ 18 $ 1,852 899 Total $ 5,040 $ 2,068 $ 85 $ 7,193 4,798 The promissory note under the PSP1 Payroll Support Program ("PSP1 Note") matures in full on April 19, 2030, and is subject to mandatory prepayment requirements in connection with certain change of control triggering events that may occur prior to its maturity. Amounts outstanding under the PSP1 Note bear interest at a rate of 1.00 percent before April 20, 2025, and afterwards, at a rate equal to the Secured Overnight Financing Rate ("SOFR") or other benchmark replacement rate consistent with customary market conventions plus a margin of 2.00 percent. The PSP1 Note contains customary representations and warranties and events of default. Each warrant issued pursuant to the PSP1 Payroll Support Program is exercisable at a strike price of $36.47 per share of common stock and will expire on the fifth anniversary of the issue date of such warrant. The promissory note under the PSP2 Payroll Support Program ("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. 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 SOFR 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. Each warrant issued pursuant to the PSP2 Payroll Support Program 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 warrant. The promissory note under the PSP3 Payroll Support Program ("PSP3 Note") matures in full on April 23, 2031, and is subject to mandatory prepayment requirements in connection with certain change of control triggering events that may occur prior to its maturity. Amounts outstanding under the PSP3 Note bear interest at a rate of 1.00 percent before April 23, 2026, and afterwards, at a rate equal to the SOFR or other benchmark replacement rate consistent with customary market conventions plus a margin of 2.00 percent. The PSP3 Note contains customary representations and warranties and events of default. Each warrant issued pursuant to the PSP3 Payroll Support Program is exercisable at a strike price of $58.51 per share of common stock and will expire on the fifth anniversary of the issue date of such warrant. In connection with the receipt of Payroll Support, the Company is subject to certain restrictions, including the elimination of share repurchases and dividends through September 30, 2022; and limits on executive compensation until April 1, 2023. Under each of the three Payroll Support programs, funds received were used solely to pay qualifying employee salaries, wages, and benefits. As of September 30, 2021, all grant portions of the Payroll Support programs received had been allocated and classified as a contra-expense line item in the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). The Company has an option to prepay the promissory notes at any time without premium or penalty. Warrants will be settled through net share settlement or net cash settlement, at the Company’s option. The Company has also granted Treasury certain demand underwritten offering and piggyback registration rights with respect to the warrants and the underlying common stock. The warrants do not have voting rights and include adjustments for below market issuances, payment of dividends, and other customary anti-dilution provisions. On June 1, 2020, the Company announced Voluntary Separation Program 2020 ("Voluntary Separation Program"), 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. A total of over 4,200 Employees initially elected to participate in Voluntary Separation Program. In conjunction with Voluntary Separation Program, the Company also offered certain contract Employees the option to take voluntary Extended Emergency Time Off ("Extended ETO"), for periods between six The purpose of Voluntary Separation Program and Extended ETO was 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 Accounting Standards Codification ("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 or Extended ETO offers. The Company accrued expenses totaling $1.4 billion for its Voluntary Separation Program and Extended ETO program in 2020, which are being reduced as program benefits are paid. For both the Voluntary Separation Program and Extended ETO programs combined, approximately $405 million of the liability balances were relieved during the first nine months of 2021 through payments to Employees, leaving a balance of $369 million as of September 30, 2021. During the first nine months of 2021, the Company determined that it was no longer probable that a portion of the Employees 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 net $140 million credit to expense during the first nine months of 2021. Both the initial charge and the partial reversal were 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 PSP2 Payroll Support Program and PSP3 Payroll Support Program funds utilized to fund salaries, wages, and benefits, which totaled $763 million and $2.7 billion for the three and nine months ended September 30, 2021, respectively. 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 September 30, 2021, 24 aircraft remained in storage, and given the |
NEW ACCOUNTING PRONOUNCEMENTS
NEW ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
NEW ACCOUNTING PRONOUNCEMENTS | NEW ACCOUNTING PRONOUNCEMENTS On May 3, 2021, the Financial Accounting Standards Board (the "FASB") issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Under this standard, issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. Early adoption is permitted, including adoption in an interim period. If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The Company is evaluating this new standard, but does not expect it to have a material impact on the Company's financial statements or disclosures. On January 7, 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848). This new standard provides optional temporary guidance for entities transitioning away from London Interbank Offered Rate ("LIBOR") to new reference interest 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 material LIBOR-related contract modifications during the nine months ended September 30, 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. 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 | 9 Months Ended |
Sep. 30, 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 < $11 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 September 30, 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 September 30, 2021 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) September 30, 2021 Remainder of 2021 321 WTI crude oil and Brent crude oil 2022 1,220 WTI crude oil and Brent crude oil 2023 769 WTI crude oil and Brent crude oil 2024 358 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 9/30/2021 12/31/2020 9/30/2021 12/31/2020 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 322 $ 9 $ — $ — Fuel derivative contracts (gross) Other assets 343 121 — — Interest rate derivative contracts Other assets 1 — — — Interest rate derivative contracts Other noncurrent liabilities — — 2 6 Total derivatives designated as hedges $ 666 $ 130 $ 2 $ 6 Derivatives not designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 16 $ 4 $ — $ — Total derivatives $ 682 $ 134 $ 2 $ 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 September 30, 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 $ 69 $ 3 Cash collateral deposits held from counterparties for fuel contracts - noncurrent Offset against Other assets 93 31 Receivable from third parties for fuel contracts Accounts and other receivables 8 — 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 September 30, 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) September 30, 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 $ 338 $ (69) $ 269 $ 13 $ (3) $ 10 Fuel derivative contracts Other assets $ 343 $ (93) $ 250 (a) $ 121 $ (31) $ 90 (a) Interest rate derivative contracts Other assets $ 1 $ — $ 1 (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) September 30, 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 $ 69 $ (69) $ — $ 3 $ (3) $ — Fuel derivative contracts Other assets $ 93 $ (93) $ — (a) $ 31 $ (31) $ — (a) Interest rate derivative contracts Other noncurrent liabilities $ 2 $ — $ 2 $ 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 and nine months ended September 30, 2021 and 2020: Location and amount recognized in income on cash flow and fair value hedging relationships Three months ended September 30, 2021 Three months ended September 30, 2020 (in millions) Fuel and oil Other (gains)/losses, net Other operating expenses Fuel and oil Other (gains)/losses, net Interest expense Total $ 2 $ — $ 1 $ 18 $ 22 $ 2 Loss on cash flow hedging relationships: Commodity contracts: Amount of loss reclassified from AOCI into income 2 — — 18 22 — 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) Location and amount recognized in income on cash flow and fair value hedging relationships Nine months ended September 30, 2021 Nine months ended September 30, 2020 (in millions) Fuel and oil Other (gains)/losses, net Other operating expenses Fuel and oil Other (gains)/losses, net Interest expense Total $ 30 $ 6 $ 4 $ 54 $ 38 $ 6 Loss on cash flow hedging relationships: Commodity contracts: Amount of loss reclassified from AOCI into income 30 6 — 54 38 — Interest contracts: Amount of loss reclassified from AOCI into income — — 4 — — 1 Impact of fair value hedging relationships: Interest contracts: Hedged items — — — — — 11 Derivatives designated as hedging instruments — — — — — (6) Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Three months ended September 30, (in millions) 2021 2020 Fuel derivative contracts $ (128) $ 17 Interest rate derivatives (1) (3) Total $ (129) $ 14 Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Nine months ended September 30, (in millions) 2021 2020 Fuel derivative contracts $ (402) $ 91 Interest rate derivatives (5) 30 Total $ (407) $ 121 Derivatives not designated as hedges (Gain) loss recognized in income on derivatives Three months ended Location of (gain) loss recognized in income on derivatives September 30, (in millions) 2021 2020 Fuel derivative contracts $ 3 $ 1 Other (gains) losses, net Interest rate derivatives — (1) Other (gains) losses, net Total $ 3 $ — Derivatives not designated as hedges (Gain) loss recognized in income on derivatives Nine months ended Location of (gain) loss recognized in income on derivatives September 30, (in millions) 2021 2020 Fuel derivative contracts $ (13) $ 2 Other (gains) losses, net Interest rate derivatives — 28 Other (gains) losses, net Total $ (13) $ 30 The Company also recorded expense associated with premiums paid for fuel derivative contracts that settled/expired during the three and nine months ended September 30, 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 tables present the impact of premiums paid for fuel derivative contracts and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) during the period the contract settles: Premium expense recognized in income on derivatives Three months ended Location of premium expense recognized in income on derivatives September 30, (in millions) 2021 2020 Fuel derivative contracts designated as hedges $ 14 $ 13 Fuel and oil Fuel derivative contracts not designated as hedges 11 11 Other (gains) losses, net Premium expense recognized in income on derivatives Nine months ended Location of premium expense recognized in income on derivatives September 30, (in millions) 2021 2020 Fuel derivative contracts designated as hedges $ 43 $ 51 Fuel and oil Fuel derivative contracts not designated as hedges 32 22 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 unrealized gains from fuel hedges as of September 30, 2021, recorded in AOCI, were approximately $173 million in net unrealized gains, net of taxes, which are expected to be realized in earnings during the twelve months subsequent to September 30, 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" or "critical terms match methods" of accounting for hedges, which dictates that the hedges were assumed to be perfectly effective at origination, 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 ("-8") aircraft leases for aircraft 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 Boeing 737 MAX ("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. All of the associated aircraft had been delivered to the Company as of September 30, 2021. As a result of the discontinued hedges, the Company had cumulative losses "frozen" in AOCI as of September 30, 2021, of $59 million, which will be recognized in earnings over the 9-year lease terms of each aircraft. 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 September 30, 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 September 30, 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 $ 158 $ 84 $ 160 $ 77 $ 78 $ 55 $ 54 $ 15 $ 681 Cash collateral held from CP 162 — — — — — — — 162 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 < $11 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) | 9 Months Ended |
Sep. 30, 2021 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
COMPREHENSIVE INCOME (LOSS) | COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss) includes changes in the fair value of certain financial derivative instruments that qualify for hedge accounting, unrealized gains and losses on certain investments, and actuarial gains/losses arising from the Company’s postretirement benefit obligation. The differences between Net income (loss) and Comprehensive income (loss) for the three and nine months ended September 30, 2021 and 2020 were as follows: Three months ended September 30, (in millions) 2021 2020 NET INCOME (LOSS) $ 446 $ (1,157) Unrealized gain on fuel derivative instruments, net of deferred taxes of $39 and $5 129 14 Unrealized gain on interest rate derivative instruments, net of deferred taxes of $1 and $— 2 3 Other, net of deferred taxes of $— and $3 — 11 Total other comprehensive income $ 131 $ 28 COMPREHENSIVE INCOME (LOSS) $ 577 $ (1,129) Nine months ended September 30, (in millions) 2021 2020 NET INCOME (LOSS) $ 909 $ (2,166) Unrealized gain (loss) on fuel derivative instruments, net of deferred taxes of $131 and ($6) 430 (20) Unrealized gain (loss) on interest rate derivative instruments, net of deferred taxes of $2 and ($9) 8 (29) Other, net of deferred taxes of ($13) and $2 (47) 8 Total other comprehensive income (loss) $ 391 $ (41) COMPREHENSIVE INCOME (LOSS) $ 1,300 $ (2,207) A rollforward of the amounts included in AOCI, net of taxes, is shown below for the three and nine months ended September 30, 2021: (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Deferred tax Accumulated other comprehensive income Balance at June 30, 2021 $ 274 $ (59) $ (43) $ (36) $ 136 Changes in fair value 166 2 — (39) 129 Reclassification to earnings 2 1 — (1) 2 Balance at September 30, 2021 $ 442 $ (56) $ (43) $ (76) $ 267 (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 525 6 — — (124) 407 Reclassification to earnings 36 4 — (60) (a) 4 (16) Balance at September 30, 2021 $ 442 $ (56) $ (43) $ — $ (76) $ 267 (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 and nine months ended September 30, 2021: Three months ended September 30, 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 $ 2 Fuel and oil expense 1 Less: Tax expense $ 1 Net of tax Unrealized loss on interest rate derivative instruments $ 1 Other operating expenses — Less: Tax expense $ 1 Net of tax Total reclassifications for the period $ 2 Net of tax Nine months ended September 30, 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 $ 30 Fuel and oil expense 6 Other (gains) losses, net 8 Less: Tax expense $ 28 Net of tax Unrealized loss on interest rate derivative instruments $ 4 Interest expense 1 Less: Tax expense $ 3 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 $ (16) Net of tax |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2021 | |
Revenue from Contract with Customer [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 within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30, 2021 and 2020: Three months ended September 30, Nine months ended September 30, (in millions) 2021 2020 2021 2020 Passenger non-loyalty $ 3,443 $ 1,183 $ 7,672 $ 4,966 Passenger loyalty - air transportation 621 205 1,448 747 Passenger ancillary sold separately 163 66 388 290 Total passenger revenues $ 4,227 $ 1,454 $ 9,508 $ 6,003 As of September 30, 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 breakage, within the unaudited Condensed Consolidated Balance Sheet were as follows: Balance as of (in millions) September 30, 2021 December 31, 2020 Air traffic liability - passenger travel and ancillary passenger services $ 3,464 $ 2,686 Air traffic liability - loyalty program 4,772 4,447 Total Air traffic liability $ 8,236 $ 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 and nine months ended September 30, 2021 and 2020 were as follows (in millions): Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Air traffic liability - loyalty program - beginning balance $ 4,719 $ 3,856 $ 4,447 $ 3,385 Amounts deferred associated with points awarded 688 447 1,810 1,488 Revenue recognized from points redeemed - Passenger (621) (205) (1,448) (747) Revenue recognized from points redeemed - Other (14) (16) (37) (44) Unused funds converted to loyalty points — 105 — 105 Air traffic liability - loyalty program - ending balance $ 4,772 $ 4,187 $ 4,772 $ 4,187 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 September 30, 2021 and 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) 10,648 Revenue from amounts included in contract liability opening balances (2,346) Revenue from current period sales (7,199) Balance at September 30, 2021 $ 8,236 Air traffic liability Balance at December 31, 2019 $ 5,510 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 7,631 Revenue from amounts included in contract liability opening balances (2,126) Revenue from current period sales (3,921) Balance at September 30, 2020 $ 7,094 During 2020 and in parts of 2021, the Company has experienced a significantly higher number of Customer-driven flight cancellations as a result of the COVID-19 pandemic, including those associated with the Delta variant of the virus. See Note 2 for further information. As a result, the amount of Customer travel funds held in Air traffic liability that are estimated to be redeemed for future travel as of September 30, 2021, remains much higher than historical levels. The amount of such Customer funds represents approximately 17 percent and 28 percent of the total Air traffic liability balance at September 30, 2021, and December 31, 2020, respectively, compared to approximately two percent of the Air traffic liability balance as of December 31, 2019. In order to provide additional flexibility to Customers who hold these funds, the Company 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 extended the expiration date to September 7, 2022. At September 30, 2021, $1.4 billion of Customer travel funds remain in Air traffic liability with a September 7, 2022 expiration date, although the Company has estimated that a portion of those will not be redeemed. 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 breakage 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. Breakage estimates are based on the Company's Customers' historical travel behavior, as well as assumptions about Customers' future travel behavior. Assumptions used to generate breakage 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. 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 and fares. The entire balance classified as Air traffic liability—noncurrent relates to loyalty points that were estimated to be redeemed in periods beyond the twelve-months following the representative balance sheet date. Based on historical experience as well as current forecasted redemptions, the Company expects the majority of loyalty points to be redeemed within approximately two years of the date the points are issued. 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 September 30, 2021 and 2020, the Company recognized $355 million and $282 million, respectively. For the nine months ended September 30, 2021 and 2020, the Company recognized $987 million and $859 million, respectively. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 9 Months Ended |
Sep. 30, 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). Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 NUMERATOR: Net income (loss) $ 446 $ (1,157) $ 909 $ (2,166) DENOMINATOR: Weighted-average shares outstanding, basic 592 590 591 556 Dilutive effects of convertible notes (a) 14 — 17 — Dilutive effect of stock warrants 1 — 1 — Dilutive effect of restricted stock units — — 1 — Adjusted weighted-average shares outstanding, diluted 607 590 610 556 NET INCOME (LOSS) PER SHARE: Basic $ 0.75 $ (1.96) $ 1.54 $ (3.89) Diluted $ 0.73 $ (1.96) $ 1.49 $ (3.89) Antidilutive amounts excluded from calculations: Convertible debt (a) — 5 — 2 Restricted stock units — 1 — 1 (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 cash or 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 and nine months ended September 30, 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 | 9 Months Ended |
Sep. 30, 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 September 30, 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 September 30, 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 September 30, 2021 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents: Cash equivalents (a) $ 12,790 $ 12,790 $ — $ — Commercial paper 90 — 90 — Time deposits 100 — 100 — Short-term investments: Treasury bills 2,249 2,249 — — Time deposits 775 — 775 — Fuel derivatives: Option contracts (b) 681 — — 681 Interest rate derivatives (see Note 4) 1 — 1 — Other available-for-sale securities 260 260 — — Total assets $ 16,946 $ 15,299 $ 966 $ 681 Liabilities Interest rate derivatives (see Note 4) $ (2) $ — $ (2) $ — (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 nine months ended September 30, 2021, or the year ended December 31, 2020. The following tables present the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2021: Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at June 30, 2021 $ 502 Total gains (losses) for the period Included in earnings (3) (a) Included in other comprehensive income 166 Purchases 41 (b) Sales (7) (b) Settlements (18) Balance at September 30, 2021 $ 681 The amount of total gains for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2021 $ 4 (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 September 30, 2021 $ 177 (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). (b) The purchase and sale of fuel derivatives are recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives was purchased as a single instrument or separate instruments. Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at December 31, 2020 $ 134 Total gains for the period Included in earnings 6 (a) Included in other comprehensive income 533 Purchases 41 (b) Sales (7) (b) Settlements (26) Balance at September 30, 2021 $ 681 The amount of total gains for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2021 $ 10 (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 September 30, 2021 $ 510 (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). (b) The purchase and sale of fuel derivatives are recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives was purchased as a single instrument or separate instruments. The significant unobservable input used in the fair value measurement of the Company’s derivative option contracts is implied volatility. Holding other inputs constant, an increase (decrease) in implied volatility would have resulted in a higher (lower) fair value measurement, respectively, for the Company’s derivative option contracts. The following table presents a range and weighted average of the unobservable inputs utilized in the fair value measurements of the Company’s fuel derivatives classified as Level 3 at September 30, 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 Fourth quarter 2021 22-37% 30 % 2022 30-43% 35 % 2023 28-34% 31 % 2024 26-31% 28 % (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 September 30, 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. All privately held debt agreements are categorized as Level 3. 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 $ 307 Level 2 Pass Through Certificates due 2022 - 6.24% 71 73 Level 2 4.75% Notes due 2023 1,250 1,331 Level 2 1.25% Convertible Notes due 2025 1,932 3,326 Level 2 5.25% Notes due 2025 1,550 1,755 Level 2 Term Loan Agreement payable through 2025 - 1.53% 100 100 Level 3 3.00% Notes due 2026 300 320 Level 2 Term Loan Agreement payable through 2026 - 1.31% 149 147 Level 3 3.45% Notes due 2027 300 324 Level 2 5.125% Notes due 2027 2,000 2,341 Level 2 7.375% Debentures due 2027 117 143 Level 2 Term Loan Agreement payable through 2028 - 1.53% 165 165 Level 3 2.625% Notes due 2030 500 508 Level 2 1.000% Payroll Support Program Loan due April 2030 976 941 Level 3 1.000% Payroll Support Program Loan due January 2031 566 537 Level 3 1.000% Payroll Support Program Loan due April 2031 526 492 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 to settle conversions by paying cash up to the principal amount of the convertible notes, with any excess conversion value settled in cash or 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 initial carrying amount of the equity component was calculated as the difference between the liability component and the face amount of the Convertible Notes. During the three months ended September 30, 2021, the Company repurchased $80 million in principal of the Convertible Notes for $121 million in cash. The Company accounted for the repurchase as a partial debt extinguishment, which resulted in (i) a loss of $12 million reflected in Other (gains) and losses, net, in the accompanying unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) for the three months ended September 30, 2021, (ii) a $12 million reduction in debt discount and issuance costs, and (iii) a $42 million reduction to Capital in excess of par value related to the reacquisition of the equity component in the accompanying unaudited Condensed Consolidated Balance Sheet as of September 30, 2021. Additionally, an immaterial number of conversions were exercised and settled during the first nine months of 2021. The following table details the equity and liability component recognized related to the Convertible Notes as of September 30, 2021, and December 31, 2020: (in millions) September 30, 2021 December 31, 2020 Carrying amount of equity component $ 361 $ 403 Liability component: Principal amount $ 2,221 $ 2,300 Unamortized debt discount (289) (355) Net carrying amount $ 1,932 $ 1,945 The effective interest rate on the liability component was approximately 5.2 percent for the three and nine months ended September 30, 2021. The Company recognized $40 million of interest expense associated with the Convertible Notes during the three months ended September 30, 2021, including $29 million of non-cash amortization of the debt discount, $4 million of non-cash amortization of debt issuance costs, and $7 million of contractual coupon interest. The Company recognized $96 million of interest expense associated with the Convertible Notes during the nine months ended September 30, 2021, including $66 million of non-cash amortization of the debt discount, $8 million of non-cash amortization of debt issuance costs, and $22 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, less amounts that were or will be required to be accelerated to expense immediately upon conversion. As of September 30, 2021, the if-converted value of the Convertible Notes exceeded the principal amount by $748 million, using the closing stock price on September 30, 2021. The Convertible Notes did not meet the criteria to be converted as of the date of the financial statements, and thus are classified as Long-term debt in the accompanying unaudited Condensed Consolidated Balance Sheet as of September 30, 2021. |
SUPPLEMENTAL FINANCIAL INFORMAT
SUPPLEMENTAL FINANCIAL INFORMATION | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUPPLEMENTAL FINANCIAL INFORMATION | SUPPLEMENTAL FINANCIAL INFORMATION (in millions) September 30, 2021 December 31, 2020 Trade receivables $ 67 $ 46 Credit card receivables 122 35 Business partners and other suppliers 426 274 Taxes receivable (a) 710 740 Other 154 35 Accounts and other receivables $ 1,479 $ 1,130 (in millions) September 30, 2021 December 31, 2020 Derivative contracts $ 251 $ 90 Intangible assets, net 295 295 Other 373 337 Other assets $ 919 $ 722 (in millions) September 30, 2021 December 31, 2020 Accounts payable trade $ 234 $ 111 Salaries payable 247 201 Taxes payable excluding income taxes 163 49 Aircraft maintenance payable 72 95 Fuel payable 114 66 Other payable 399 409 Accounts payable $ 1,229 $ 931 (in millions) September 30, 2021 December 31, 2020 Extended Emergency Time Off $ 17 $ 393 Voluntary Separation Program 98 143 Profitsharing and savings plans 210 25 Vendor prepayment (b) — 600 Vacation pay 450 436 Health 137 111 Workers compensation 141 161 Property and income taxes 78 84 Interest 110 49 Deferred supplier payments (c) 142 — Other 304 257 Accrued liabilities $ 1,687 $ 2,259 (in millions) September 30, 2021 December 31, 2020 Extended Emergency Time Off $ — $ 57 Voluntary Separation Program 254 321 Postretirement obligation 436 428 Other deferred compensation 341 353 Other 67 88 Other noncurrent liabilities $ 1,098 $ 1,247 (a) Includes approximately $472 million and $470 million, as of September 30, 2021 and December 31, 2020, respectively, 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. These amounts also include excise taxes remitted to taxing authorities for which the subsequent flights were canceled by Customers, resulting in amounts due back to the Company. (b) In fourth quarter 2020, the Company received a $600 million prepayment from Chase for Rapid Rewards points that were subsequently issued to Members during the first half of 2021, based on cardholder activity on the Visa credit card associated with its loyalty program. (c) Represents amounts owed for aircraft deliveries received that will be relieved via future payments to supplier. See Note 11 for further information. For further information on fuel derivative and interest rate derivative contracts, see Note 4. Other Operating Expenses Other operating expenses consist of aircraft rentals, distribution costs, advertising expenses, personnel expenses, professional fees, and other operating costs, none of which individually exceeded 10 percent of Operating expenses. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 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 Terminals 1 and 2 (the "Terminal 1.5 Project"). The Terminal 1.5 Project included ticketing, baggage claim, passenger screening, and a bus gate. Construction on the Terminal 1.5 Project began during third quarter 2017 and was substantially completed at December 31, 2020. The project final cost was approximately $410 million. During second quarter 2021, LAWA repaid the outstanding loan and purchased the remaining completed assets for accounting purposes, at which time the Terminal 1.5 Project right-of-use asset and lease liability of $365 million on the balance sheet were de-recognized in accordance with applicable accounting guidance. This repayment was also reported as a supplemental noncash transaction on the unaudited Condensed Consolidated Statement of Cash Flows, net of Assets constructed for others additions during the period. 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 for Series 2010 and 2012 bonds issued by the LFAMC. Given the Company’s guarantee associated with the bonds issued to fund LFMP, the remaining debt service amount was considered a minimum lease payment under the adoption of ASC Topic 842, Leases, and therefore was recorded as a lease liability with a corresponding right-of-use asset within the Company’s unaudited Condensed Consolidated Balance Sheet. All of the outstanding Series 2010 bonds, in the principal amount of $310 million were redeemed on September 28, 2021 (Redemption Date) at the redemption price plus accrued interest of $7 million. The source of the funds used to pay the principal and interest on the Series 2010 bonds was proceeds from the sale of LFAMC General Airport Revenue Bonds, Series 2021, which also occurred on the Redemption Date. As the Series 2010 bonds have been fully repaid following the Redemption Date, the Company’s guarantee associated with the Series 2010 bonds no longer exists. This refinancing transaction was considered a lease modification in accordance with applicable guidance, and the Company's obligation was remeasured as of the transaction date. This remeasurement resulted in a reduction of the Company's right-of-use asset and lease liability in the amount of $343 million, which has been reflected in the unaudited Condensed Consolidated Balance Sheet as of September 30, 2021. This refinancing transaction results in a reduction of the Company’s future maturities of lease liabilities, which includes both principal and interest, by $8 million during the remainder of 2021, by $16 million each in 2022, 2023, 2024, 2025, and by $474 million beyond 2025 . As of September 30, 2021, $89 million of principal remained outstanding associated with the Series 2012 bonds. The net present value of the future principal and interest payments associated with the bonds was $100 million as of September 30, 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 Based on growth opportunities and ongoing fleet modernization plans for more fuel efficient aircraft, the Company has entered into supplemental agreements with The Boeing Company ("Boeing") during 2021 to increase its 2022 firm orders of 737 MAX 7 ("-7") aircraft. Additionally, the Company accelerated options into 2022, 2023, 2024, and 2025, and added new options into 2026 and 2027. During third quarter 2021, the Company exercised eight of its 2022 options for -7 aircraft. Fleet and capacity plans will continue to evolve as the Company manages through this recovery period, and it will continue to evaluate its remaining MAX options for 2022. However, with its cost-effective order book, the Company retains significant flexibility to manage its fleet size, including opportunities to accelerate fleet modernization efforts if growth opportunities do not materialize. Additional information regarding the Company's delivery schedule is included in the following table as of September 30, 2021. The delivery schedule for the -7 is dependent on the FAA issuing required certifications and approvals to Boeing and the Company. The FAA will ultimately determine the timing of the -7 certification and entry into service, and the Company therefore offers no assurances that current estimations and timelines are correct. The Boeing Company -7 Firm Orders -8 Firm Orders -7 or -8 Options Additional -8s Total 2021 — 19 — 9 28 (a) 2022 72 — 42 — 114 (b) 2023 30 — 60 — 90 (c) 2024 30 — 56 — 86 2025 30 — 56 — 86 2026 15 15 40 — 70 2027 15 15 6 — 36 2028 15 15 — — 30 2029 20 30 — — 50 2030 15 45 — — 60 2031 — 10 — — 10 242 149 (d) 260 9 (e) 660 (a) All 28 -8s were delivered as of September 30, 2021, consisting of 19 owned and 9 leased aircraft. (b) During third quarter 2021, the Company exercised eight -7 options for delivery in 2022. (c) The Company exercised eight -7 options for delivery in 2023 on October 1, 2021. (d) The Company has flexibility to designate firm orders or options as -7s or -8s, upon written advance notification as stated in the contract. (e) These 9 additional -8 aircraft were leased from various third parties and delivered as of September 30, 2021. 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 as of September 30, 2021, were as follows: $33 million for 2021, $1.7 billion in 2022, $1.2 billion in 2023, $1.1 billion in 2024, $837 million in 2025, $961 million in 2026, and $7.0 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. |
NEW ACCOUNTING PRONOUNCEMENTS (
NEW ACCOUNTING PRONOUNCEMENTS (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Basis of Presentation | The unaudited Condensed Consolidated Financial Statements for the interim periods ended September 30, 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 always 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 and nine months ended September 30, 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. |
New Accounting Pronouncements | On May 3, 2021, the Financial Accounting Standards Board (the "FASB") issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Under this standard, issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. Early adoption is permitted, including adoption in an interim period. If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The Company is evaluating this new standard, but does not expect it to have a material impact on the Company's financial statements or disclosures. On January 7, 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848). This new standard provides optional temporary guidance for entities transitioning away from London Interbank Offered Rate ("LIBOR") to new reference interest 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 material LIBOR-related contract modifications during the nine months ended September 30, 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. 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. |
Derivatives | 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. |
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 September 30, 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). |
Revenue Recognition | 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 and fares. The entire balance classified as Air traffic liability—noncurrent relates to loyalty points that were estimated to be redeemed in periods beyond the twelve-months following the representative balance sheet date. Based on historical experience as well as current forecasted redemptions, the Company expects the majority of loyalty points to be redeemed within approximately two years of the date the points are issued. 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 |
WORLDWIDE PANDEMIC (Tables)
WORLDWIDE PANDEMIC (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Unusual or Infrequent Items, or Both [Abstract] | |
Schedule of Payroll Support Program | (in millions, except shares in thousands) Grant Promissory Note Warrants Total Payroll Support Proceeds Warrants (shares) PSP1 Payroll Support Program April 21, 2020 $ 1,152 $ 459 $ 18 $ 1,630 1,258 May 29, 2020 448 196 8 652 536 June 30, 2020 448 196 9 652 536 July 30, 2020 225 97 3 326 268 September 30, 2020 64 28 2 94 78 $ 2,337 $ 976 $ 40 $ 3,354 2,676 PSP2 Payroll Support Program January 15, 2021 $ 625 $ 229 $ 9 $ 864 495 March 5, 2021 591 259 14 864 560 April 23, 2021 177 78 4 259 168 $ 1,393 $ 566 $ 27 $ 1,987 1,223 PSP3 Payroll Support Program April 23, 2021 $ 670 $ 248 $ 9 $ 926 424 June 3, 2021 640 278 9 926 475 $ 1,310 $ 526 $ 18 $ 1,852 899 Total $ 5,040 $ 2,068 $ 85 $ 7,193 4,798 |
Financial Derivative Instrume_2
Financial Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 2021 Derivative underlying commodity type as of Period (by year) (gallons in millions) (a) September 30, 2021 Remainder of 2021 321 WTI crude oil and Brent crude oil 2022 1,220 WTI crude oil and Brent crude oil 2023 769 WTI crude oil and Brent crude oil 2024 358 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 9/30/2021 12/31/2020 9/30/2021 12/31/2020 Derivatives designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 322 $ 9 $ — $ — Fuel derivative contracts (gross) Other assets 343 121 — — Interest rate derivative contracts Other assets 1 — — — Interest rate derivative contracts Other noncurrent liabilities — — 2 6 Total derivatives designated as hedges $ 666 $ 130 $ 2 $ 6 Derivatives not designated as hedges (a) Fuel derivative contracts (gross) Prepaid expenses and other current assets $ 16 $ 4 $ — $ — Total derivatives $ 682 $ 134 $ 2 $ 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. |
Offsetting Assets | 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 September 30, 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 $ 69 $ 3 Cash collateral deposits held from counterparties for fuel contracts - noncurrent Offset against Other assets 93 31 Receivable from third parties for fuel contracts Accounts and other receivables 8 — Offsetting of derivative assets (in millions) (i) (ii) (iii) = (i) + (ii) (i) (ii) (iii) = (i) + (ii) September 30, 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 $ 338 $ (69) $ 269 $ 13 $ (3) $ 10 Fuel derivative contracts Other assets $ 343 $ (93) $ 250 (a) $ 121 $ (31) $ 90 (a) Interest rate derivative contracts Other assets $ 1 $ — $ 1 (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) September 30, 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 $ 69 $ (69) $ — $ 3 $ (3) $ — Fuel derivative contracts Other assets $ 93 $ (93) $ — (a) $ 31 $ (31) $ — (a) Interest rate derivative contracts Other noncurrent liabilities $ 2 $ — $ 2 $ 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 Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) | The following tables present the impact of derivative instruments and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30, 2021 and 2020: Location and amount recognized in income on cash flow and fair value hedging relationships Three months ended September 30, 2021 Three months ended September 30, 2020 (in millions) Fuel and oil Other (gains)/losses, net Other operating expenses Fuel and oil Other (gains)/losses, net Interest expense Total $ 2 $ — $ 1 $ 18 $ 22 $ 2 Loss on cash flow hedging relationships: Commodity contracts: Amount of loss reclassified from AOCI into income 2 — — 18 22 — 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) Location and amount recognized in income on cash flow and fair value hedging relationships Nine months ended September 30, 2021 Nine months ended September 30, 2020 (in millions) Fuel and oil Other (gains)/losses, net Other operating expenses Fuel and oil Other (gains)/losses, net Interest expense Total $ 30 $ 6 $ 4 $ 54 $ 38 $ 6 Loss on cash flow hedging relationships: Commodity contracts: Amount of loss reclassified from AOCI into income 30 6 — 54 38 — Interest contracts: Amount of loss reclassified from AOCI into income — — 4 — — 1 Impact of fair value hedging relationships: Interest contracts: Hedged items — — — — — 11 Derivatives designated as hedging instruments — — — — — (6) Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Three months ended September 30, (in millions) 2021 2020 Fuel derivative contracts $ (128) $ 17 Interest rate derivatives (1) (3) Total $ (129) $ 14 Derivatives designated and qualified in cash flow hedging relationships (Gain) loss recognized in AOCI on derivatives, net of tax Nine months ended September 30, (in millions) 2021 2020 Fuel derivative contracts $ (402) $ 91 Interest rate derivatives (5) 30 Total $ (407) $ 121 |
Derivative Instruments, Gain (Loss) | Derivatives not designated as hedges (Gain) loss recognized in income on derivatives Three months ended Location of (gain) loss recognized in income on derivatives September 30, (in millions) 2021 2020 Fuel derivative contracts $ 3 $ 1 Other (gains) losses, net Interest rate derivatives — (1) Other (gains) losses, net Total $ 3 $ — Derivatives not designated as hedges (Gain) loss recognized in income on derivatives Nine months ended Location of (gain) loss recognized in income on derivatives September 30, (in millions) 2021 2020 Fuel derivative contracts $ (13) $ 2 Other (gains) losses, net Interest rate derivatives — 28 Other (gains) losses, net Total $ (13) $ 30 |
Premiums Paid for Fuel Derivative Contracts | The following tables present the impact of premiums paid for fuel derivative contracts and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) during the period the contract settles: Premium expense recognized in income on derivatives Three months ended Location of premium expense recognized in income on derivatives September 30, (in millions) 2021 2020 Fuel derivative contracts designated as hedges $ 14 $ 13 Fuel and oil Fuel derivative contracts not designated as hedges 11 11 Other (gains) losses, net Premium expense recognized in income on derivatives Nine months ended Location of premium expense recognized in income on derivatives September 30, (in millions) 2021 2020 Fuel derivative contracts designated as hedges $ 43 $ 51 Fuel and oil Fuel derivative contracts not designated as hedges 32 22 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 September 30, 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 $ 158 $ 84 $ 160 $ 77 $ 78 $ 55 $ 54 $ 15 $ 681 Cash collateral held from CP 162 — — — — — — — 162 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 < $11 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) | 9 Months Ended |
Sep. 30, 2021 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Components of Comprehensive Income (Loss) | The differences between Net income (loss) and Comprehensive income (loss) for the three and nine months ended September 30, 2021 and 2020 were as follows: Three months ended September 30, (in millions) 2021 2020 NET INCOME (LOSS) $ 446 $ (1,157) Unrealized gain on fuel derivative instruments, net of deferred taxes of $39 and $5 129 14 Unrealized gain on interest rate derivative instruments, net of deferred taxes of $1 and $— 2 3 Other, net of deferred taxes of $— and $3 — 11 Total other comprehensive income $ 131 $ 28 COMPREHENSIVE INCOME (LOSS) $ 577 $ (1,129) Nine months ended September 30, (in millions) 2021 2020 NET INCOME (LOSS) $ 909 $ (2,166) Unrealized gain (loss) on fuel derivative instruments, net of deferred taxes of $131 and ($6) 430 (20) Unrealized gain (loss) on interest rate derivative instruments, net of deferred taxes of $2 and ($9) 8 (29) Other, net of deferred taxes of ($13) and $2 (47) 8 Total other comprehensive income (loss) $ 391 $ (41) COMPREHENSIVE INCOME (LOSS) $ 1,300 $ (2,207) |
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 and nine months ended September 30, 2021: (in millions) Fuel derivatives Interest rate derivatives Defined benefit plan items Deferred tax Accumulated other comprehensive income Balance at June 30, 2021 $ 274 $ (59) $ (43) $ (36) $ 136 Changes in fair value 166 2 — (39) 129 Reclassification to earnings 2 1 — (1) 2 Balance at September 30, 2021 $ 442 $ (56) $ (43) $ (76) $ 267 (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 525 6 — — (124) 407 Reclassification to earnings 36 4 — (60) (a) 4 (16) Balance at September 30, 2021 $ 442 $ (56) $ (43) $ — $ (76) $ 267 (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 and nine months ended September 30, 2021: Three months ended September 30, 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 $ 2 Fuel and oil expense 1 Less: Tax expense $ 1 Net of tax Unrealized loss on interest rate derivative instruments $ 1 Other operating expenses — Less: Tax expense $ 1 Net of tax Total reclassifications for the period $ 2 Net of tax Nine months ended September 30, 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 $ 30 Fuel and oil expense 6 Other (gains) losses, net 8 Less: Tax expense $ 28 Net of tax Unrealized loss on interest rate derivative instruments $ 4 Interest expense 1 Less: Tax expense $ 3 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 $ (16) Net of tax |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Passenger Revenue | The following table provides the components of Passenger revenue recognized within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30, 2021 and 2020: Three months ended September 30, Nine months ended September 30, (in millions) 2021 2020 2021 2020 Passenger non-loyalty $ 3,443 $ 1,183 $ 7,672 $ 4,966 Passenger loyalty - air transportation 621 205 1,448 747 Passenger ancillary sold separately 163 66 388 290 Total passenger revenues $ 4,227 $ 1,454 $ 9,508 $ 6,003 |
Rollforward of Air Traffic Liability | As of September 30, 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 breakage, within the unaudited Condensed Consolidated Balance Sheet were as follows: Balance as of (in millions) September 30, 2021 December 31, 2020 Air traffic liability - passenger travel and ancillary passenger services $ 3,464 $ 2,686 Air traffic liability - loyalty program 4,772 4,447 Total Air traffic liability $ 8,236 $ 7,133 Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Air traffic liability - loyalty program - beginning balance $ 4,719 $ 3,856 $ 4,447 $ 3,385 Amounts deferred associated with points awarded 688 447 1,810 1,488 Revenue recognized from points redeemed - Passenger (621) (205) (1,448) (747) Revenue recognized from points redeemed - Other (14) (16) (37) (44) Unused funds converted to loyalty points — 105 — 105 Air traffic liability - loyalty program - ending balance $ 4,772 $ 4,187 $ 4,772 $ 4,187 Air traffic liability Balance at December 31, 2020 $ 7,133 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 10,648 Revenue from amounts included in contract liability opening balances (2,346) Revenue from current period sales (7,199) Balance at September 30, 2021 $ 8,236 Air traffic liability Balance at December 31, 2019 $ 5,510 Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) 7,631 Revenue from amounts included in contract liability opening balances (2,126) Revenue from current period sales (3,921) Balance at September 30, 2020 $ 7,094 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 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). Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 NUMERATOR: Net income (loss) $ 446 $ (1,157) $ 909 $ (2,166) DENOMINATOR: Weighted-average shares outstanding, basic 592 590 591 556 Dilutive effects of convertible notes (a) 14 — 17 — Dilutive effect of stock warrants 1 — 1 — Dilutive effect of restricted stock units — — 1 — Adjusted weighted-average shares outstanding, diluted 607 590 610 556 NET INCOME (LOSS) PER SHARE: Basic $ 0.75 $ (1.96) $ 1.54 $ (3.89) Diluted $ 0.73 $ (1.96) $ 1.49 $ (3.89) Antidilutive amounts excluded from calculations: Convertible debt (a) — 5 — 2 Restricted stock units — 1 — 1 (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 cash or 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 and nine months ended September 30, 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) | 9 Months Ended |
Sep. 30, 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 September 30, 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 September 30, 2021 (Level 1) (Level 2) (Level 3) Assets (in millions) Cash equivalents: Cash equivalents (a) $ 12,790 $ 12,790 $ — $ — Commercial paper 90 — 90 — Time deposits 100 — 100 — Short-term investments: Treasury bills 2,249 2,249 — — Time deposits 775 — 775 — Fuel derivatives: Option contracts (b) 681 — — 681 Interest rate derivatives (see Note 4) 1 — 1 — Other available-for-sale securities 260 260 — — Total assets $ 16,946 $ 15,299 $ 966 $ 681 Liabilities Interest rate derivatives (see Note 4) $ (2) $ — $ (2) $ — (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 tables present the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2021: Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at June 30, 2021 $ 502 Total gains (losses) for the period Included in earnings (3) (a) Included in other comprehensive income 166 Purchases 41 (b) Sales (7) (b) Settlements (18) Balance at September 30, 2021 $ 681 The amount of total gains for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2021 $ 4 (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 September 30, 2021 $ 177 (a) Included in Other (gains) losses, net, within the unaudited Condensed Consolidated Statement of Comprehensive Income (Loss). (b) The purchase and sale of fuel derivatives are recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives was purchased as a single instrument or separate instruments. Fair value measurements using significant unobservable inputs (Level 3) (in millions) Fuel derivatives Balance at December 31, 2020 $ 134 Total gains for the period Included in earnings 6 (a) Included in other comprehensive income 533 Purchases 41 (b) Sales (7) (b) Settlements (26) Balance at September 30, 2021 $ 681 The amount of total gains for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2021 $ 10 (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 September 30, 2021 $ 510 (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 September 30, 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 Fourth quarter 2021 22-37% 30 % 2022 30-43% 35 % 2023 28-34% 31 % 2024 26-31% 28 % (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 September 30, 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. All privately held debt agreements are categorized as Level 3. 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 $ 307 Level 2 Pass Through Certificates due 2022 - 6.24% 71 73 Level 2 4.75% Notes due 2023 1,250 1,331 Level 2 1.25% Convertible Notes due 2025 1,932 3,326 Level 2 5.25% Notes due 2025 1,550 1,755 Level 2 Term Loan Agreement payable through 2025 - 1.53% 100 100 Level 3 3.00% Notes due 2026 300 320 Level 2 Term Loan Agreement payable through 2026 - 1.31% 149 147 Level 3 3.45% Notes due 2027 300 324 Level 2 5.125% Notes due 2027 2,000 2,341 Level 2 7.375% Debentures due 2027 117 143 Level 2 Term Loan Agreement payable through 2028 - 1.53% 165 165 Level 3 2.625% Notes due 2030 500 508 Level 2 1.000% Payroll Support Program Loan due April 2030 976 941 Level 3 1.000% Payroll Support Program Loan due January 2031 566 537 Level 3 1.000% Payroll Support Program Loan due April 2031 526 492 Level 3 |
Schedule of Debt | The following table details the equity and liability component recognized related to the Convertible Notes as of September 30, 2021, and December 31, 2020: (in millions) September 30, 2021 December 31, 2020 Carrying amount of equity component $ 361 $ 403 Liability component: Principal amount $ 2,221 $ 2,300 Unamortized debt discount (289) (355) Net carrying amount $ 1,932 $ 1,945 |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Accounts and Other Receivables | (in millions) September 30, 2021 December 31, 2020 Trade receivables $ 67 $ 46 Credit card receivables 122 35 Business partners and other suppliers 426 274 Taxes receivable (a) 710 740 Other 154 35 Accounts and other receivables $ 1,479 $ 1,130 |
Other Assets | (in millions) September 30, 2021 December 31, 2020 Derivative contracts $ 251 $ 90 Intangible assets, net 295 295 Other 373 337 Other assets $ 919 $ 722 |
Schedule of Accounts Payable | (in millions) September 30, 2021 December 31, 2020 Accounts payable trade $ 234 $ 111 Salaries payable 247 201 Taxes payable excluding income taxes 163 49 Aircraft maintenance payable 72 95 Fuel payable 114 66 Other payable 399 409 Accounts payable $ 1,229 $ 931 |
Accrued Liabilities | (in millions) September 30, 2021 December 31, 2020 Extended Emergency Time Off $ 17 $ 393 Voluntary Separation Program 98 143 Profitsharing and savings plans 210 25 Vendor prepayment (b) — 600 Vacation pay 450 436 Health 137 111 Workers compensation 141 161 Property and income taxes 78 84 Interest 110 49 Deferred supplier payments (c) 142 — Other 304 257 Accrued liabilities $ 1,687 $ 2,259 |
Other Noncurrent Liabilities | (in millions) September 30, 2021 December 31, 2020 Extended Emergency Time Off $ — $ 57 Voluntary Separation Program 254 321 Postretirement obligation 436 428 Other deferred compensation 341 353 Other 67 88 Other noncurrent liabilities $ 1,098 $ 1,247 (a) Includes approximately $472 million and $470 million, as of September 30, 2021 and December 31, 2020, respectively, 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. These amounts also include excise taxes remitted to taxing authorities for which the subsequent flights were canceled by Customers, resulting in amounts due back to the Company. (b) In fourth quarter 2020, the Company received a $600 million prepayment from Chase for Rapid Rewards points that were subsequently issued to Members during the first half of 2021, based on cardholder activity on the Visa credit card associated with its loyalty program. (c) Represents amounts owed for aircraft deliveries received that will be relieved via future payments to supplier. See Note 11 for further information. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Other Commitments | The Boeing Company -7 Firm Orders -8 Firm Orders -7 or -8 Options Additional -8s Total 2021 — 19 — 9 28 (a) 2022 72 — 42 — 114 (b) 2023 30 — 60 — 90 (c) 2024 30 — 56 — 86 2025 30 — 56 — 86 2026 15 15 40 — 70 2027 15 15 6 — 36 2028 15 15 — — 30 2029 20 30 — — 50 2030 15 45 — — 60 2031 — 10 — — 10 242 149 (d) 260 9 (e) 660 (a) All 28 -8s were delivered as of September 30, 2021, consisting of 19 owned and 9 leased aircraft. (b) During third quarter 2021, the Company exercised eight -7 options for delivery in 2022. (c) The Company exercised eight -7 options for delivery in 2023 on October 1, 2021. (d) The Company has flexibility to designate firm orders or options as -7s or -8s, upon written advance notification as stated in the contract. |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||||
Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Payroll support and voluntary Employee programs, net | $ 776 | $ 149 | $ 2,963 | $ 933 | ||||||
Other (gains) losses, net | (29) | (35) | 32 | (95) | ||||||
Decrease in AOCI | 10,250 | $ 8,876 | 9,769 | 10,250 | 9,769 | $ 9,688 | $ 9,093 | $ 10,878 | $ 9,075 | $ 9,832 |
Accumulated other comprehensive income (loss) | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Decrease in AOCI | 267 | (105) | (102) | 267 | (102) | 136 | (60) | (130) | (186) | (61) |
Retained earnings | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Decrease in AOCI | 15,706 | 14,777 | $ 15,685 | 15,706 | $ 15,685 | $ 15,260 | $ 14,912 | $ 16,842 | $ 17,757 | $ 17,945 |
Cumulative Effect, Period of Adoption, Adjustment | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Decrease in AOCI | 0 | |||||||||
Cumulative Effect, Period of Adoption, Adjustment | Accumulated other comprehensive income (loss) | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Decrease in AOCI | (19) | |||||||||
Cumulative Effect, Period of Adoption, Adjustment | Accumulated other comprehensive income (loss) | Accounting Standards Update 2016-01 | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Decrease in AOCI | $ 19 | $ 19 | ||||||||
Cumulative Effect, Period of Adoption, Adjustment | Retained earnings | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Decrease in AOCI | 19 | |||||||||
Cumulative Effect, Period of Adoption, Adjustment | Retained earnings | Accounting Standards Update 2016-01 | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Decrease in AOCI | 19 | |||||||||
Revision of Prior Period, Error Correction, Adjustment | Underaccrued Payroll Tax Credits | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Payroll support and voluntary Employee programs, net | 88 | |||||||||
Revision of Prior Period, Error Correction, Adjustment | Investment Gains | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Other (gains) losses, net | $ 60 |
WORLDWIDE PANDEMIC - Payroll Su
WORLDWIDE PANDEMIC - Payroll Support Program (Details) - USD ($) shares in Thousands, $ in Millions | Jun. 03, 2021 | Apr. 23, 2021 | Mar. 05, 2021 | Jan. 15, 2021 | Sep. 30, 2020 | Jul. 30, 2020 | Jun. 30, 2020 | May 29, 2020 | Apr. 21, 2020 | Jun. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2020 | Jun. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Jun. 30, 2021 | Dec. 31, 2020 |
Unusual or Infrequent Item, or Both [Line Items] | ||||||||||||||||||
Promissory Note | $ 0 | $ 0 | $ 0 | $ 3,683 | ||||||||||||||
COVID - 19 | United States Department of Treasury | ||||||||||||||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||||||||||||||
Grant | $ 5,040 | |||||||||||||||||
Promissory Note | 2,068 | |||||||||||||||||
Warrants | 85 | |||||||||||||||||
Total Payroll Support Proceeds | $ 7,193 | |||||||||||||||||
Warrants (shares) | 4,798 | 4,798 | ||||||||||||||||
PSP1 Payroll Support Program | United States Department of Treasury | ||||||||||||||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||||||||||||||
Grant | $ 64 | $ 225 | $ 448 | $ 448 | $ 1,152 | $ 2,337 | ||||||||||||
Promissory Note | 28 | 97 | 196 | 196 | 459 | 976 | ||||||||||||
Warrants | 2 | 3 | 9 | 8 | 18 | 40 | ||||||||||||
Total Payroll Support Proceeds | $ 94 | $ 326 | $ 652 | $ 652 | $ 1,630 | $ 3,354 | ||||||||||||
Warrants (shares) | 78 | 268 | 536 | 536 | 1,258 | 78 | 78 | 78 | 2,676 | |||||||||
PSP2 Payroll Support Program | United States Department of Treasury | ||||||||||||||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||||||||||||||
Grant | $ 177 | $ 591 | $ 625 | $ 1,393 | ||||||||||||||
Promissory Note | 78 | 259 | 229 | 566 | ||||||||||||||
Warrants | 4 | 14 | 9 | 27 | ||||||||||||||
Total Payroll Support Proceeds | $ 259 | $ 864 | $ 864 | $ 1,987 | ||||||||||||||
Warrants (shares) | 168 | 560 | 495 | 1,223 | 1,223 | |||||||||||||
PSP3 Payroll Support Program | United States Department of Treasury | ||||||||||||||||||
Unusual or Infrequent Item, or Both [Line Items] | ||||||||||||||||||
Grant | $ 640 | $ 670 | $ 1,310 | |||||||||||||||
Promissory Note | 278 | 248 | 526 | |||||||||||||||
Warrants | 9 | 9 | 18 | |||||||||||||||
Total Payroll Support Proceeds | $ 926 | $ 926 | $ 1,852 | |||||||||||||||
Warrants (shares) | 475 | 424 | 899 | 899 |
WORLDWIDE PANDEMIC - Narrative
WORLDWIDE PANDEMIC - Narrative (Details) $ / shares in Units, $ in Millions | Apr. 23, 2026 | Jan. 15, 2026 | Apr. 20, 2025 | Jun. 01, 2020employee | Sep. 30, 2021USD ($)aircraftemployee$ / shares | Sep. 30, 2021USD ($)aircraftemployee$ / shares | Dec. 31, 2020USD ($) |
COVID - 19 | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Voluntary separation program 2020 participants | 4,200 | 4,200 | |||||
Number of employees who participated in extended emergency time off during 2020 | 11,000 | 1,000 | 1,000 | ||||
Total employees who participated in extended emergency time off During 2020, who were still on emergency time off at December 31, 2020 | 500 | ||||||
Number of days before the end of their term | 90 days | ||||||
Employees who elected conversion in extended emergency time off | 300 | ||||||
Extended emergency time off accrual for employees who accepted through 2020 | $ | $ 369 | $ 405 | $ 1,400 | ||||
Extended emergency time off reversal for employees who accepted through March 31, 2021 | $ | 140 | ||||||
Proceeds from PSP2 payroll support program | $ | $ 763 | $ 2,700 | |||||
Aircrafts in long-term storage | aircraft | 24 | 24 | |||||
COVID - 19 | Minimum | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Extended emergency time off, period | 6 months | ||||||
COVID - 19 | Minimum | Option to Convert to Voluntary Separation Program 2020 | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Extended emergency time off, period | 12 months | ||||||
Years of service | 10 years | ||||||
COVID - 19 | Maximum | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Extended emergency time off, period | 18 months | ||||||
COVID - 19 | Maximum | Option to Convert to Voluntary Separation Program 2020 | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Extended emergency time off, period | 18 months | ||||||
COVID - 19 | Maximum | Pilots | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Extended emergency time off, period | 5 years | ||||||
United States Department of Treasury | PSP1 Payroll Support Program | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Strike price (in USD per share) | $ / shares | $ 36.47 | $ 36.47 | |||||
United States Department of Treasury | PSP1 Payroll Support Program | Notes Payable, Other Payables | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Stated interest rate | 1.00% | 1.00% | |||||
United States Department of Treasury | PSP1 Payroll Support Program | Notes Payable, Other Payables | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Forecast | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Variable rate (as a percent) | 2.00% | ||||||
United States Department of Treasury | PSP2 Payroll Support Program | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Strike price (in USD per share) | $ / shares | $ 46.28 | $ 46.28 | |||||
Expiration period (in years) | 5 years | ||||||
United States Department of Treasury | PSP2 Payroll Support Program | Notes Payable, Other Payables | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Stated interest rate | 1.00% | 1.00% | |||||
United States Department of Treasury | PSP2 Payroll Support Program | Notes Payable, Other Payables | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Forecast | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Variable rate (as a percent) | 2.00% | ||||||
United States Department of Treasury | PSP3 Payroll Support Program | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Strike price (in USD per share) | $ / shares | $ 58.51 | $ 58.51 | |||||
Expiration period (in years) | 5 years | ||||||
United States Department of Treasury | PSP3 Payroll Support Program | Notes Payable, Other Payables | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Stated interest rate | 1.00% | 1.00% | |||||
United States Department of Treasury | PSP3 Payroll Support Program | Notes Payable, Other Payables | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Forecast | |||||||
Unusual or Infrequent Item, or Both [Line Items] | |||||||
Variable rate (as a percent) | 2.00% |
Financial Derivative Instrume_3
Financial Derivative Instruments - Fuel Hedging (Details) gal in Millions | 9 Months Ended |
Sep. 30, 2021gal | |
Remainder of 2021 | |
Volume of Fuel Hedging | |
Fuel Hedged (in gallons) | 321 |
2022 | |
Volume of Fuel Hedging | |
Fuel Hedged (in gallons) | 1,220 |
2023 | |
Volume of Fuel Hedging | |
Fuel Hedged (in gallons) | 769 |
2024 | |
Volume of Fuel Hedging | |
Fuel Hedged (in gallons) | 358 |
Financial Derivative Instrume_4
Financial Derivative Instruments - Fair Values by Balance Sheet Location (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | $ 682 | $ 134 |
Gross amounts of recognized liabilities | 2 | 6 |
Fuel derivative contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 338 | 13 |
Gross amounts of recognized liabilities | 69 | 3 |
Fuel derivative contracts | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 343 | 121 |
Gross amounts of recognized liabilities | 93 | 31 |
Cash collateral deposits held from counterparties for fuel contracts - current | 93 | 31 |
Fuel derivative contracts | Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Cash collateral deposits held from counterparties for fuel contracts - current | 69 | 3 |
Fuel derivative contracts | Accounts and other receivables | ||
Derivatives, Fair Value [Line Items] | ||
Receivable from third parties for fuel contracts | 8 | 0 |
Interest rate derivatives | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 1 | 0 |
Interest rate derivatives | Other noncurrent liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized liabilities | 2 | 6 |
Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 666 | 130 |
Gross amounts of recognized liabilities | 2 | 6 |
Designated as Hedging Instrument | Fuel derivative contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 322 | 9 |
Designated as Hedging Instrument | Fuel derivative contracts | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 343 | 121 |
Designated as Hedging Instrument | Interest rate derivatives | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | 1 | |
Designated as Hedging Instrument | Interest rate derivatives | Other noncurrent liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized liabilities | 2 | 6 |
Not Designated as Hedging Instrument | Fuel derivative contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Gross amounts of recognized assets | $ 16 | $ 4 |
Financial Derivative Instrume_5
Financial Derivative Instruments - Narrative (Details) $ in Millions | 9 Months Ended | |
Sep. 30, 2021USD ($) | Dec. 31, 2019aircraft | |
Derivative [Line Items] | ||
Net unrealized losses, net of taxes | $ 173 | |
Aircraft lease term | 9 years | |
Remaining AOCI associated with future aircraft deliveries | $ 59 | |
Aircraft lease term | 9 years | |
Interest rate derivatives | ||
Derivative [Line Items] | ||
Cash collateral held (from) by CP | $ 0 | |
Interest rate swap | ||
Derivative [Line Items] | ||
Number of aircraft leases | aircraft | 12 |
Financial Derivative Instrume_6
Financial Derivative Instruments - Offsetting of Derivative Assets (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Offsetting Assets [Line Items] | ||
Gross amounts of recognized assets | $ 682 | $ 134 |
Fuel derivative contracts | Prepaid expenses and other current assets | ||
Offsetting Assets [Line Items] | ||
Gross amounts of recognized assets | 338 | 13 |
Gross amounts offset in the Balance Sheet | 69 | 3 |
Net amounts of assets presented in the Balance Sheet | 269 | 10 |
Fuel derivative contracts | Other assets | ||
Offsetting Assets [Line Items] | ||
Gross amounts of recognized assets | 343 | 121 |
Gross amounts offset in the Balance Sheet | 93 | 31 |
Net amounts of assets presented in the Balance Sheet | 250 | 90 |
Interest rate derivatives | Other assets | ||
Offsetting Assets [Line Items] | ||
Gross amounts of recognized assets | 1 | 0 |
Gross amounts offset in the Balance Sheet | 0 | 0 |
Net amounts of assets presented in the Balance Sheet | $ 1 | $ 0 |
Financial Derivative Instrume_7
Financial Derivative Instruments - Offsetting Derivative Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Offsetting Liabilities [Line Items] | ||
Gross amounts of recognized liabilities | $ 2 | $ 6 |
Fuel derivative contracts | Prepaid expenses and other current assets | ||
Offsetting Liabilities [Line Items] | ||
Gross amounts of recognized liabilities | 69 | 3 |
Gross amounts offset in the Balance Sheet | 69 | 3 |
Net amounts of liabilities presented in the Balance Sheet | 0 | 0 |
Fuel derivative contracts | Other assets | ||
Offsetting Liabilities [Line Items] | ||
Gross amounts of recognized liabilities | 93 | 31 |
Gross amounts offset in the Balance Sheet | 93 | 31 |
Net amounts of liabilities presented in the Balance Sheet | 0 | 0 |
Interest rate derivatives | Other noncurrent liabilities | ||
Offsetting Liabilities [Line Items] | ||
Gross amounts of recognized liabilities | 2 | 6 |
Gross amounts offset in the Balance Sheet | 0 | 0 |
Net amounts of liabilities presented in the Balance Sheet | $ 2 | $ 6 |
Financial Derivative Instrume_8
Financial Derivative Instruments - Location and Amount Recognized in Income by Hedging Relationship (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Cash Flow Hedging | ||||
Derivative [Line Items] | ||||
Amount of loss reclassified from AOCI into income | $ 129 | $ (14) | $ 407 | $ (121) |
Cash Flow Hedging | Fuel derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of loss reclassified from AOCI into income | 128 | (17) | 402 | (91) |
Cash Flow Hedging | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Amount of loss reclassified from AOCI into income | 1 | 3 | 5 | (30) |
Fuel and oil | ||||
Derivative [Line Items] | ||||
Derivatives designated as hedging instruments | 2 | 18 | 30 | 54 |
Fuel and oil | Cash Flow Hedging | Fuel derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of loss reclassified from AOCI into income | 2 | 18 | 30 | 54 |
Fuel and oil | Cash Flow Hedging | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Amount of loss reclassified from AOCI into income | 0 | 0 | 0 | 0 |
Fuel and oil | Fair Value Hedging | Not Designated as Hedging Instrument | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Hedged items | 0 | 0 | 0 | 0 |
Fuel and oil | Fair Value Hedging | Designated as Hedging Instrument | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Derivatives designated as hedging instruments | 0 | 0 | 0 | 0 |
Other (gains)/losses, net | ||||
Derivative [Line Items] | ||||
Derivatives designated as hedging instruments | 0 | 22 | 6 | 38 |
Other (gains)/losses, net | Cash Flow Hedging | Fuel derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of loss reclassified from AOCI into income | 0 | 22 | 6 | 38 |
Other (gains)/losses, net | Cash Flow Hedging | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Amount of loss reclassified from AOCI into income | 0 | 0 | 0 | 0 |
Other (gains)/losses, net | Fair Value Hedging | Not Designated as Hedging Instrument | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Hedged items | 0 | 0 | 0 | 0 |
Other (gains)/losses, net | Fair Value Hedging | Designated as Hedging Instrument | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Derivatives designated as hedging instruments | 0 | 0 | 0 | 0 |
Other operating expenses | ||||
Derivative [Line Items] | ||||
Derivatives designated as hedging instruments | 1 | |||
Other operating expenses | Cash Flow Hedging | Fuel derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of loss reclassified from AOCI into income | 0 | |||
Other operating expenses | Cash Flow Hedging | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Amount of loss reclassified from AOCI into income | 1 | |||
Other operating expenses | Fair Value Hedging | Not Designated as Hedging Instrument | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Hedged items | 0 | |||
Other operating expenses | Fair Value Hedging | Designated as Hedging Instrument | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Derivatives designated as hedging instruments | $ 0 | |||
Interest expense | ||||
Derivative [Line Items] | ||||
Derivatives designated as hedging instruments | 2 | 4 | 6 | |
Interest expense | Cash Flow Hedging | Fuel derivative contracts | ||||
Derivative [Line Items] | ||||
Amount of loss reclassified from AOCI into income | 0 | 0 | 0 | |
Interest expense | Cash Flow Hedging | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Amount of loss reclassified from AOCI into income | 0 | 4 | 1 | |
Interest expense | Fair Value Hedging | Not Designated as Hedging Instrument | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Hedged items | 4 | 0 | 11 | |
Interest expense | Fair Value Hedging | Designated as Hedging Instrument | Interest rate derivatives | ||||
Derivative [Line Items] | ||||
Derivatives designated as hedging instruments | $ (2) | $ 0 | $ (6) |
Financial Derivative Instrume_9
Financial Derivative Instruments - (Gain) Loss by Hedging Relationship (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in AOCI on derivatives, net of tax | $ (129) | $ 14 | $ (407) | $ 121 |
Cash Flow Hedging | Fuel derivative contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in AOCI on derivatives, net of tax | (128) | 17 | (402) | 91 |
Cash Flow Hedging | Interest rate derivatives | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in AOCI on derivatives, net of tax | (1) | (3) | (5) | 30 |
Not Designated as Hedging Instrument | Other Nonoperating Income (Expense) | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in income on derivatives | 3 | 0 | (13) | 30 |
Not Designated as Hedging Instrument | Fuel derivative contracts | Other Nonoperating Income (Expense) | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in income on derivatives | 3 | 1 | (13) | 2 |
Not Designated as Hedging Instrument | Interest rate derivatives | Other Nonoperating Income (Expense) | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Gain) loss recognized in income on derivatives | $ 0 | $ (1) | $ 0 | $ 28 |
Financial Derivative Instrum_10
Financial Derivative Instruments - Premiums for Fuel Derivative Contracts (Details) - Fuel derivative contracts - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Designated as Hedging Instrument | Fuel and oil | ||||
Derivative [Line Items] | ||||
Premium expense recognized in income on derivatives | $ 14 | $ 13 | $ 43 | $ 51 |
Not Designated as Hedging Instrument | Other (gains)/losses, net | ||||
Derivative [Line Items] | ||||
Premium expense recognized in income on derivatives | $ 11 | $ 11 | $ 32 | $ 22 |
Financial Derivative Instrum_11
Financial Derivative Instruments - Fair Values of Fuel Derivatives Amounts Posted as Collateral (Details) $ in Millions | Sep. 30, 2021USD ($) |
If credit rating is non-investment grade, fair value of fuel derivative level at which: | |
Maximum sum of derivatives of counterparty to be included in other | $ 11 |
Letter of credit substitution percentage | 100.00% |
Cash collateral percentage | 100.00% |
Fuel derivative contracts | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | $ 681 |
Cash collateral held from CP | 162 |
Fuel derivative contracts | Counterparty A | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | 158 |
Cash collateral held from CP | 162 |
Fuel derivative contracts | Counterparty A | Minimum | |
If credit rating is investment grade, fair value of fuel derivative level at which: | |
Cash is provided to CP | (100) |
Cash is received from CP | 0 |
Fuel derivative contracts | Counterparty B | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | 84 |
Cash collateral held from CP | 0 |
Fuel derivative contracts | Counterparty B | Minimum | |
If credit rating is investment grade, fair value of fuel derivative level at which: | |
Cash is provided to CP | (50) |
Cash is received from CP | 150 |
Fuel derivative contracts | Counterparty C | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | 160 |
Cash collateral held from CP | 0 |
Fuel derivative contracts | Counterparty C | Minimum | |
If credit rating is investment grade, fair value of fuel derivative level at which: | |
Cash is provided to CP | (75) |
Cash is received from CP | 250 |
Fuel derivative contracts | Counterparty D | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | 77 |
Cash collateral held from CP | 0 |
Fuel derivative contracts | Counterparty D | Minimum | |
If credit rating is investment grade, fair value of fuel derivative level at which: | |
Cash is provided to CP | (125) |
Cash is received from CP | 125 |
Fuel derivative contracts | Counterparty E | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | 78 |
Cash collateral held from CP | 0 |
Fuel derivative contracts | Counterparty E | Minimum | |
If credit rating is investment grade, fair value of fuel derivative level at which: | |
Cash is provided to CP | (40) |
Cash is received from CP | 100 |
Fuel derivative contracts | Counterparty F | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | 55 |
Cash collateral held from CP | 0 |
Fuel derivative contracts | Counterparty F | Minimum | |
If credit rating is investment grade, fair value of fuel derivative level at which: | |
Cash is provided to CP | (65) |
Cash is received from CP | 70 |
Fuel derivative contracts | Counterparty G | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | 54 |
Cash collateral held from CP | 0 |
Fuel derivative contracts | Counterparty G | Minimum | |
If credit rating is investment grade, fair value of fuel derivative level at which: | |
Cash is provided to CP | (100) |
Cash is received from CP | 100 |
Fuel derivative contracts | Counterparty Other | |
Schedule Of Fair Values Of Fuel Derivatives Amounts Posted As Collateral And Collateral Posting Thresholds [Line Items] | |
Fair value of fuel derivatives | 15 |
Cash collateral held from CP | $ 0 |
Comprehensive Income (Loss) - D
Comprehensive Income (Loss) - Differences between Net Income and Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Condensed Statement of Income Captions [Line Items] | ||||||||
NET INCOME (LOSS) | $ 446 | $ (1,157) | $ 909 | $ (2,166) | ||||
Other, net of deferred taxes of $— and $3 | 0 | 11 | (47) | 8 | ||||
Total other comprehensive income (loss) | 131 | 28 | 391 | (41) | ||||
COMPREHENSIVE INCOME (LOSS) | 577 | $ 544 | $ 180 | (1,129) | $ (859) | $ (219) | 1,300 | (2,207) |
Other deferred taxes | 0 | 3 | (13) | 2 | ||||
Fuel derivative contracts | ||||||||
Condensed Statement of Income Captions [Line Items] | ||||||||
Unrealized gain (loss) on derivative instruments, net of deferred taxes | 129 | 14 | 430 | (20) | ||||
Derivative deferred taxes | 39 | 5 | 131 | (6) | ||||
Interest rate derivatives | ||||||||
Condensed Statement of Income Captions [Line Items] | ||||||||
Unrealized gain (loss) on derivative instruments, net of deferred taxes | 2 | 3 | 8 | (29) | ||||
Derivative deferred taxes | $ 1 | $ 0 | $ 2 | $ (9) |
Comprehensive Income (Loss) - S
Comprehensive Income (Loss) - Schedule of AOCI Components (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2021 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | $ 9,688 | $ 8,876 | $ 8,876 |
Changes in fair value | 129 | 407 | |
Reclassification to earnings | 2 | (16) | |
Balance at end of period | 10,250 | $ 9,093 | $ 10,250 |
Accounting Standards Update [Extensible Enumeration] | Accounting Standards Update 2016-01 | Accounting Standards Update 2016-01 | |
Cumulative Effect, Period of Adoption, Adjustment | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | $ 0 | $ 0 | |
Accumulated other comprehensive income (loss) | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | 136 | (105) | (105) |
Balance at end of period | 267 | (60) | 267 |
Accumulated other comprehensive income (loss) | Cumulative Effect, Period of Adoption, Adjustment | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | (19) | (19) | |
Fuel and Interest Rate Derivatives | Fuel derivative contracts | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | 274 | (119) | (119) |
Changes in fair value | 166 | 525 | |
Reclassification to earnings | 2 | 36 | |
Balance at end of period | 442 | 442 | |
Fuel and Interest Rate Derivatives | Interest rate derivatives | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | (59) | (66) | (66) |
Changes in fair value | 2 | 6 | |
Reclassification to earnings | 1 | 4 | |
Balance at end of period | (56) | (56) | |
Defined benefit plan items | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | (43) | (43) | (43) |
Balance at end of period | (43) | (43) | |
Other | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | 91 | 91 | |
Reclassification to earnings | (60) | ||
Balance at end of period | 0 | 0 | |
Other | Cumulative Effect, Period of Adoption, Adjustment | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | (31) | (31) | |
Deferred tax | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | (36) | 32 | 32 |
Changes in fair value | (39) | (124) | |
Reclassification to earnings | (1) | 4 | |
Balance at end of period | $ (76) | (76) | |
Deferred tax | Cumulative Effect, Period of Adoption, Adjustment | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at beginning of period | $ 12 | $ 12 |
Comprehensive Income (Loss) - R
Comprehensive Income (Loss) - Reclassifications (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Fuel and oil | $ 990 | $ 379 | $ 2,261 | $ 1,507 |
Other (gains) losses, net | 29 | 35 | (32) | 95 |
Less: Tax expense | 154 | (385) | 339 | (759) |
Other operating expenses | 662 | 488 | 1,710 | 1,405 |
Interest expense | 115 | 111 | 343 | 235 |
Net income (loss) | 446 | $ (1,157) | 909 | $ (2,166) |
Reclassification to earnings | ||||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Net income (loss) | 2 | (16) | ||
Defined benefit plan items | Reclassification to earnings | ||||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other (gains) losses, net | (60) | |||
Less: Tax expense | (13) | |||
Net income (loss) | (47) | |||
Fuel derivative contracts | Fuel and Interest Rate Derivatives | Reclassification to earnings | ||||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Fuel and oil | 2 | 30 | ||
Other (gains) losses, net | 6 | |||
Less: Tax expense | 1 | 8 | ||
Net income (loss) | 1 | 28 | ||
Interest rate derivatives | Fuel and Interest Rate Derivatives | Reclassification to earnings | ||||
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Less: Tax expense | 0 | 1 | ||
Other operating expenses | 1 | |||
Interest expense | 4 | |||
Net income (loss) | $ 1 | $ 3 |
Revenue - Passenger Revenue Bre
Revenue - Passenger Revenue Breakout (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Operating revenue | $ 4,679 | $ 1,793 | $ 10,739 | $ 7,035 |
Passenger | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating revenue | 4,227 | 1,454 | 9,508 | 6,003 |
Passenger non-loyalty | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating revenue | 3,443 | 1,183 | 7,672 | 4,966 |
Passenger loyalty - air transportation | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating revenue | 621 | 205 | 1,448 | 747 |
Passenger ancillary sold separately | ||||
Disaggregation of Revenue [Line Items] | ||||
Operating revenue | $ 163 | $ 66 | $ 388 | $ 290 |
Revenue - Air Traffic Liability
Revenue - Air Traffic Liability Breakout (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Revenue from Contract with Customer [Abstract] | ||||||
Air traffic liability - passenger travel and ancillary passenger services | $ 3,464 | $ 2,686 | ||||
Air traffic liability - loyalty program | 4,772 | $ 4,719 | 4,447 | $ 4,187 | $ 3,856 | $ 3,385 |
Total Air traffic liability | $ 8,236 | $ 7,133 | $ 7,094 | $ 5,510 |
Revenue - Air Traffic Liabili_2
Revenue - Air Traffic Liability - Loyalty Program Rollforward (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Change in Contract With Customer, Liability [Roll Forward] | ||||
Beginning balance | $ 4,719 | $ 3,856 | $ 4,447 | $ 3,385 |
Amounts deferred associated with points awarded | 688 | 447 | 1,810 | 1,488 |
Unused funds converted to loyalty points | 0 | 105 | 0 | 105 |
Ending balance | 4,772 | 4,187 | 4,772 | 4,187 |
Passenger Customer | ||||
Change in Contract With Customer, Liability [Roll Forward] | ||||
Revenue recognized from points redeemed | (621) | (205) | (1,448) | (747) |
Other | ||||
Change in Contract With Customer, Liability [Roll Forward] | ||||
Revenue recognized from points redeemed | $ (14) | $ (16) | $ (37) | $ (44) |
Revenue - Air Traffic Liabili_3
Revenue - Air Traffic Liability Rollforward (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Change in Contract With Customer, Liability [Roll Forward] | ||
Beginning balance | $ 7,133 | $ 5,510 |
Current period sales (passenger travel, ancillary services, flight loyalty, and partner loyalty) | 10,648 | 7,631 |
Revenue from amounts included in contract liability opening balances | (2,346) | (2,126) |
Revenue from current period sales | (7,199) | 3,921 |
Ending balance | $ 8,236 | $ 7,094 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
Residual travel funds | 17.00% | 17.00% | 28.00% | 2.00% | ||
Remaining customer travel funds | $ 1,400 | $ 1,400 | ||||
Loyalty points, redemption period (in years) | 2 years | |||||
Total operating revenues | 4,679 | $ 1,793 | $ 10,739 | $ 7,035 | ||
Chase Bank USA Agreement | ||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
Total operating revenues | $ 355 | $ 282 | $ 987 | $ 859 |
Net Income (Loss) Per Share (De
Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
NUMERATOR: | ||||
Net income (loss) | $ 446 | $ (1,157) | $ 909 | $ (2,166) |
DENOMINATOR: | ||||
Weighted-average shares outstanding, Basic (in shares) | 592 | 590 | 591 | 556 |
Dilutive effects of convertible notes (in shares) | 14 | 0 | 17 | 0 |
Dilutive effect of stock warrants (in shares) | 1 | 0 | 1 | 0 |
Dilutive effect of restricted stock units (in shares) | 0 | 0 | 1 | 0 |
Diluted (in shares) | 607 | 590 | 610 | 556 |
NET INCOME (LOSS) PER SHARE: | ||||
BASIC (in USD per share) | $ 0.75 | $ (1.96) | $ 1.54 | $ (3.89) |
DILUTED (in USD per share) | 0.73 | $ (1.96) | 1.49 | $ (3.89) |
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Initial conversion price (in USD per share) | $ 38.48 | $ 38.48 | ||
Convertible Debt Securities | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Potentially dilutive amounts excluded from calculations (in shares) | 0 | 5 | 0 | 2 |
Restricted Stock Units (RSUs) | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Potentially dilutive amounts excluded from calculations (in shares) | 0 | 1 | 0 | 1 |
Fair Value Measurements - Measu
Fair Value Measurements - Measured on Recurring Basis (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Fuel derivatives: | ||
Option contracts | $ 682 | $ 134 |
Fair Value, Measurements, Recurring | ||
Assets | ||
Treasury bills | 2,249 | 1,800 |
Fuel derivatives: | ||
Interest rate derivatives (see Note 4) | 1 | |
Other available-for-sale securities | 260 | 259 |
Total assets | 16,946 | 13,727 |
Liabilities | ||
Interest rate derivatives (see Note 4) | (2) | (6) |
Fair Value, Measurements, Recurring | Options Held | ||
Fuel derivatives: | ||
Option contracts | 681 | 134 |
Fair Value, Measurements, Recurring | Certificates of deposit | ||
Assets | ||
Investments | 46 | |
Fair Value, Measurements, Recurring | Time deposits | ||
Assets | ||
Investments | 775 | 425 |
Fair Value, Measurements, Recurring | Cash Equivalents | ||
Assets | ||
Cash equivalents | 12,790 | 10,663 |
Fair Value, Measurements, Recurring | Commercial paper | ||
Assets | ||
Cash equivalents | 90 | 90 |
Fair Value, Measurements, Recurring | Certificates of deposit | ||
Assets | ||
Cash equivalents | 10 | |
Fair Value, Measurements, Recurring | Time deposits | ||
Assets | ||
Cash equivalents | 100 | 300 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | ||
Assets | ||
Treasury bills | 2,249 | 1,800 |
Fuel derivatives: | ||
Interest rate derivatives (see Note 4) | 0 | |
Other available-for-sale securities | 260 | 259 |
Total assets | 15,299 | 12,722 |
Liabilities | ||
Interest rate derivatives (see Note 4) | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | Options Held | ||
Fuel derivatives: | ||
Option contracts | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | Certificates of deposit | ||
Assets | ||
Investments | 0 | |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | Time deposits | ||
Assets | ||
Investments | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | Cash Equivalents | ||
Assets | ||
Cash equivalents | 12,790 | 10,663 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | Commercial paper | ||
Assets | ||
Cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | Certificates of deposit | ||
Assets | ||
Cash equivalents | 0 | |
Fair Value, Measurements, Recurring | Quoted prices in active markets for identical assets (Level 1) | Time deposits | ||
Assets | ||
Cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | ||
Assets | ||
Treasury bills | 0 | 0 |
Fuel derivatives: | ||
Interest rate derivatives (see Note 4) | 1 | |
Other available-for-sale securities | 0 | 0 |
Total assets | 966 | 871 |
Liabilities | ||
Interest rate derivatives (see Note 4) | (2) | (6) |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Options Held | ||
Fuel derivatives: | ||
Option contracts | 0 | 0 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Certificates of deposit | ||
Assets | ||
Investments | 46 | |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Time deposits | ||
Assets | ||
Investments | 775 | 425 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Cash Equivalents | ||
Assets | ||
Cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Commercial paper | ||
Assets | ||
Cash equivalents | 90 | 90 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Certificates of deposit | ||
Assets | ||
Cash equivalents | 10 | |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | Time deposits | ||
Assets | ||
Cash equivalents | 100 | 300 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | ||
Assets | ||
Treasury bills | 0 | 0 |
Fuel derivatives: | ||
Interest rate derivatives (see Note 4) | 0 | |
Other available-for-sale securities | 0 | 0 |
Total assets | 681 | 134 |
Liabilities | ||
Interest rate derivatives (see Note 4) | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Options Held | ||
Fuel derivatives: | ||
Option contracts | 681 | 134 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Certificates of deposit | ||
Assets | ||
Investments | 0 | |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Time deposits | ||
Assets | ||
Investments | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Cash Equivalents | ||
Assets | ||
Cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Commercial paper | ||
Assets | ||
Cash equivalents | 0 | 0 |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Certificates of deposit | ||
Assets | ||
Cash equivalents | 0 | |
Fair Value, Measurements, Recurring | Significant unobservable inputs (Level 3) | Time deposits | ||
Assets | ||
Cash equivalents | $ 0 | $ 0 |
Fair Value Measurement - Fair V
Fair Value Measurement - Fair Value Assets and Liabilities Measured on Recurring Basis with Unobservable Inputs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2021 | Sep. 30, 2021 | |
Fuel derivative contracts | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Included in earnings | $ (6) | |
Included in other comprehensive income | 533 | |
Sales | $ (7) | (7) |
Purchases | 41 | 41 |
Fuel derivative contracts | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning Balance | 502 | 134 |
Included in earnings | (3) | 6 |
Included in other comprehensive income | 166 | 533 |
Settlements | 18 | 26 |
Ending Balance | 681 | 681 |
The amount of total gains for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at September 30, 2021 | 4 | 10 |
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 September 30, 2021 | $ 177 | $ 510 |
Fair Value Measurements - Quant
Fair Value Measurements - Quantitative Information about Level 3 Fair Value (Details) - Significant unobservable inputs (Level 3) - Measurement Input, Option Volatility | Sep. 30, 2021 |
Fourth quarter 2021 | Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.22 |
Fourth quarter 2021 | Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.37 |
Fourth quarter 2021 | Weighted Average | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.30 |
2022 | Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.30 |
2022 | Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.43 |
2022 | Weighted Average | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.35 |
2023 | Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.28 |
2023 | Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.34 |
2023 | Weighted Average | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.31 |
2024 | Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.26 |
2024 | Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.31 |
2024 | Weighted Average | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Derivative asset, measurement input (in years) | 0.28 |
Fair Value Instruments - Carryi
Fair Value Instruments - Carrying and Estimated Fair Value of Debt (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 | May 01, 2020 |
Unsecured Debt | 2.75% Notes due 2022 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 2.75% | ||
Carrying value | $ 300 | ||
Unsecured Debt | 4.75% Notes due 2023 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 4.75% | ||
Carrying value | $ 1,250 | ||
Unsecured Debt | 5.25% Notes due 2025 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 5.25% | ||
Carrying value | $ 1,550 | ||
Unsecured Debt | 3.00% Notes due 2026 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 3.00% | ||
Carrying value | $ 300 | ||
Unsecured Debt | 3.45% Notes due 2027 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 3.45% | ||
Carrying value | $ 300 | ||
Unsecured Debt | 5.125% Notes due 2027 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 5.125% | ||
Carrying value | $ 2,000 | ||
Unsecured Debt | 7.375% Debentures due 2027 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 7.375% | ||
Carrying value | $ 117 | ||
Unsecured Debt | 2.625% Notes due 2030 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 2.625% | ||
Carrying value | $ 500 | ||
Unsecured Debt | 1.000% Payroll Support Program Loan due April 2030 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 1.00% | ||
Carrying value | $ 976 | ||
Unsecured Debt | 1.000% Payroll Support Program Loan due January 2031 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 1.00% | ||
Carrying value | $ 566 | ||
Unsecured Debt | 1.000% Payroll Support Program Loan due April 2031 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 1.00% | ||
Carrying value | $ 526 | ||
Enhanced Equipment Trust Certificate | Pass Through Certificates due 2022 - 6.24% | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 6.24% | ||
Carrying value | $ 71 | ||
Convertible Debt | 1.25% Convertible Notes due 2025 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 1.25% | 1.25% | |
Carrying value | $ 1,932 | $ 1,945 | |
Notes Payable to Banks | Term Loan Agreement payable through 2025 - 1.53% | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 1.53% | ||
Carrying value | $ 100 | ||
Notes Payable to Banks | Term Loan Agreement payable through 2026 - 1.31% | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 1.31% | ||
Carrying value | $ 149 | ||
Notes Payable to Banks | Term Loan Agreement payable through 2028 - 1.53% | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 1.53% | ||
Carrying value | $ 165 | ||
Level 2 | Unsecured Debt | 2.75% Notes due 2022 | |||
Debt Instrument [Line Items] | |||
Notes payable, Estimated Fair Value | 307 | ||
Level 2 | Unsecured Debt | 4.75% Notes due 2023 | |||
Debt Instrument [Line Items] | |||
Notes payable, Estimated Fair Value | 1,331 | ||
Level 2 | Unsecured Debt | 5.25% Notes due 2025 | |||
Debt Instrument [Line Items] | |||
Notes payable, Estimated Fair Value | 1,755 | ||
Level 2 | Unsecured Debt | 3.00% Notes due 2026 | |||
Debt Instrument [Line Items] | |||
Notes payable, Estimated Fair Value | 320 | ||
Level 2 | Unsecured Debt | 3.45% Notes due 2027 | |||
Debt Instrument [Line Items] | |||
Notes payable, Estimated Fair Value | 324 | ||
Level 2 | Unsecured Debt | 5.125% Notes due 2027 | |||
Debt Instrument [Line Items] | |||
Notes payable, Estimated Fair Value | 2,341 | ||
Level 2 | Unsecured Debt | 7.375% Debentures due 2027 | |||
Debt Instrument [Line Items] | |||
Loans payable, Estimated Fair Value | 143 | ||
Level 2 | Unsecured Debt | 2.625% Notes due 2030 | |||
Debt Instrument [Line Items] | |||
Notes payable, Estimated Fair Value | 508 | ||
Level 2 | Enhanced Equipment Trust Certificate | Pass Through Certificates due 2022 - 6.24% | |||
Debt Instrument [Line Items] | |||
Notes payable, Estimated Fair Value | 73 | ||
Level 2 | Convertible Debt | 1.25% Convertible Notes due 2025 | |||
Debt Instrument [Line Items] | |||
Notes payable, Estimated Fair Value | 3,326 | ||
Level 3 | Unsecured Debt | 1.000% Payroll Support Program Loan due April 2030 | |||
Debt Instrument [Line Items] | |||
Notes payable, Estimated Fair Value | 941 | ||
Level 3 | Unsecured Debt | 1.000% Payroll Support Program Loan due January 2031 | |||
Debt Instrument [Line Items] | |||
Notes payable, Estimated Fair Value | 537 | ||
Level 3 | Unsecured Debt | 1.000% Payroll Support Program Loan due April 2031 | |||
Debt Instrument [Line Items] | |||
Notes payable, Estimated Fair Value | 492 | ||
Level 3 | Notes Payable to Banks | Term Loan Agreement payable through 2025 - 1.53% | |||
Debt Instrument [Line Items] | |||
Loans payable, Estimated Fair Value | 100 | ||
Level 3 | Notes Payable to Banks | Term Loan Agreement payable through 2026 - 1.31% | |||
Debt Instrument [Line Items] | |||
Loans payable, Estimated Fair Value | 147 | ||
Level 3 | Notes Payable to Banks | Term Loan Agreement payable through 2028 - 1.53% | |||
Debt Instrument [Line Items] | |||
Loans payable, Estimated Fair Value | $ 165 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2021USD ($)$ / shares | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)$ / shares | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | May 01, 2020USD ($)$ / shares | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Initial conversion price (in USD per share) | $ / shares | $ 38.48 | $ 38.48 | ||||
Other (gains) losses, net | $ (29,000,000) | $ (35,000,000) | $ 32,000,000 | $ (95,000,000) | ||
Capital in excess of par value | 4,251,000,000 | 4,251,000,000 | $ 4,191,000,000 | |||
Loss on repurchase of debt instrument | (12,000,000) | $ 0 | $ (12,000,000) | $ 0 | ||
Equity feature of partial extinguishment of convertible notes | $ (42,000,000) | |||||
Amortization period (in years) | 5 years | |||||
1.250 Convertible Senior Notes due 2025 | Convertible Debt | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Principal amount | $ 2,300,000,000 | |||||
Stated interest rate | 1.25% | 1.25% | 1.25% | |||
Initial conversion ratio | 0.0259909 | |||||
Initial conversion price (in USD per share) | $ / shares | $ 38.48 | |||||
Effective interest rate | 5.20% | 5.20% | ||||
Interest expense | $ 40,000,000 | $ 96,000,000 | ||||
Unamortized debt discount | (289,000,000) | (289,000,000) | $ (355,000,000) | |||
If-converted value in excess of principal amount | 748,000,000 | |||||
1.250 Convertible Senior Notes due 2025 | Convertible Debt | September 2021 | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Principal amount of debt repurchased | 80,000,000 | 80,000,000 | ||||
Cash paid for repurchased debt | 121,000,000 | 121,000,000 | ||||
Loss on repurchase of debt instrument | 12,000,000 | |||||
Unamortized debt discount | (12,000,000) | (12,000,000) | ||||
Equity feature of partial extinguishment of convertible notes | 42,000,000 | |||||
1.250 Convertible Senior Notes due 2025 | Convertible Debt | Non-Cash Amortization of Debt Discount | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Interest expense | 29,000,000 | 66,000,000 | ||||
1.250 Convertible Senior Notes due 2025 | Convertible Debt | Non-Cash Amortization of Debt Issuance Costs | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Interest expense | 4,000,000 | 8,000,000 | ||||
1.250 Convertible Senior Notes due 2025 | Convertible Debt | Contractual Coupon Interest Expense | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Interest expense | $ 7,000,000 | $ 22,000,000 |
Fair Value Instruments - Conver
Fair Value Instruments - Convertible Debt (Details) - 1.250 Convertible Senior Notes due 2025 - Convertible Debt - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Equity component | $ 361 | $ 403 |
Principal amount | 2,221 | 2,300 |
Unamortized debt discount | (289) | (355) |
Net carrying amount | $ 1,932 | $ 1,945 |
Supplemental Financial Inform_3
Supplemental Financial Information - Accounts and Other Receivables (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Trade receivables | $ 67 | $ 46 |
Credit card receivables | 122 | 35 |
Business partners and other suppliers | 426 | 274 |
Taxes receivable | 710 | 740 |
Other | 154 | 35 |
Accounts and other receivables | $ 1,479 | $ 1,130 |
Supplemental Financial Inform_4
Supplemental Financial Information - Other Assets (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Derivative contracts | $ 251 | $ 90 |
Intangible assets, net | 295 | 295 |
Other | 373 | 337 |
Other assets | $ 919 | $ 722 |
Supplemental Financial Inform_5
Supplemental Financial Information - Accounts Payable (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts payable trade | $ 234 | $ 111 |
Salaries payable | 247 | 201 |
Taxes payable excluding income taxes | 163 | 49 |
Aircraft maintenance payable | 72 | 95 |
Fuel payable | 114 | 66 |
Other payable | 399 | 409 |
Accounts payable | $ 1,229 | $ 931 |
Supplemental Financial Inform_6
Supplemental Financial Information - Accrued Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Accrued Liabilities, Current [Abstract] | ||
Extended Emergency Time Off | $ 17 | $ 393 |
Voluntary Separation Program | 98 | 143 |
Profitsharing and savings plans | 210 | 25 |
Vendor prepayment | 0 | 600 |
Vacation pay | 450 | 436 |
Health | 137 | 111 |
Workers compensation | 141 | 161 |
Property and income taxes | 78 | 84 |
Interest | 110 | 49 |
Deferred supplier payments | 142 | 0 |
Other | 304 | 257 |
Accrued liabilities | $ 1,687 | $ 2,259 |
Supplemental Financial Inform_7
Supplemental Financial Information - Other Non-Current Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Extended Emergency Time Off | $ 0 | $ 57 |
Voluntary Separation Program | 254 | 321 |
Postretirement obligation | 436 | 428 |
Other deferred compensation | 341 | 353 |
Other | 67 | 88 |
Other noncurrent liabilities | 1,098 | 1,247 |
Unusual or Infrequent Item, or Both [Line Items] | ||
Taxes receivable | 710 | 740 |
Vendor prepayment | 0 | 600 |
CARES Act | ||
Unusual or Infrequent Item, or Both [Line Items] | ||
Taxes receivable | $ 472 | $ 470 |
Commitments and contingencies -
Commitments and contingencies - Narrative (Details) $ in Millions | Sep. 28, 2021USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2021USD ($) | Dec. 31, 2020USD ($) | Sep. 30, 2021USD ($)aircraft |
Other Commitments [Line Items] | |||||
Decrease in operating lease liability | $ 343 | ||||
Remainder of 2021 | $ (8) | ||||
2022 | (16) | ||||
2023 | (16) | ||||
2024 | (16) | ||||
2025 | (16) | ||||
Beyond 2025 | $ (474) | ||||
Aircrafts to be purchased | aircraft | 660 | ||||
Remainder of 2021 | $ 33 | ||||
Payment Guarantee, Dallas Love Field Series 2010 Bonds | |||||
Other Commitments [Line Items] | |||||
Principal amount of guarantee | 89 | ||||
Net present value of future principal and interest payments | $ 100 | ||||
-7 Firm Orders | |||||
Other Commitments [Line Items] | |||||
Aircrafts to be purchased | aircraft | 242 | ||||
-7 or -8 Options | |||||
Other Commitments [Line Items] | |||||
Aircrafts to be purchased | aircraft | 260 | ||||
Cash Capital Commitments, Boeing Orders | |||||
Other Commitments [Line Items] | |||||
2022 | $ 1,700 | ||||
2023 | 1,200 | ||||
2024 | 1,100 | ||||
2025 | 837 | ||||
2026 | 961 | ||||
Thereafter | $ 7,000 | ||||
Leaseholds and Leasehold Improvements | |||||
Other Commitments [Line Items] | |||||
Construction payments | $ 343 | ||||
Los Angeles World Airports | |||||
Other Commitments [Line Items] | |||||
Payments for airport projects | $ 410 | ||||
Decrease in operating lease liability | $ 365 | ||||
Los Angeles World Airports | Leaseholds and Leasehold Improvements | |||||
Other Commitments [Line Items] | |||||
Construction payments | $ 365 | ||||
Love Field Airport Modernization Corporation | Series 2010 Bonds | |||||
Other Commitments [Line Items] | |||||
Debt redeemed | $ 310 | ||||
Interest expense | $ 7 |
Commitment and Contingencies -
Commitment and Contingencies - Long Term Purchase Commitments (Details) | Oct. 01, 2021optionExercised | Sep. 30, 2021aircraftoptionExercised |
Long-term Purchase Commitment [Line Items] | ||
2021 | 28 | |
2022 | 114 | |
2023 | 90 | |
2024 | 86 | |
2025 | 86 | |
2026 | 70 | |
2027 | 36 | |
2028 | 30 | |
2029 | 50 | |
2030 | 60 | |
2031 | 10 | |
Total | 660 | |
-7 Firm Orders | ||
Long-term Purchase Commitment [Line Items] | ||
2021 | 0 | |
2022 | 72 | |
2023 | 30 | |
2024 | 30 | |
2025 | 30 | |
2026 | 15 | |
2027 | 15 | |
2028 | 15 | |
2029 | 20 | |
2030 | 15 | |
2031 | 0 | |
Total | 242 | |
Number of options exercised | optionExercised | 8 | |
-7 Firm Orders | Subsequent Event | ||
Long-term Purchase Commitment [Line Items] | ||
Number of options exercised | optionExercised | 8 | |
-8 Firm Orders | ||
Long-term Purchase Commitment [Line Items] | ||
2021 | 19 | |
2022 | 0 | |
2023 | 0 | |
2024 | 0 | |
2025 | 0 | |
2026 | 15 | |
2027 | 15 | |
2028 | 15 | |
2029 | 30 | |
2030 | 45 | |
2031 | 10 | |
Total | 149 | |
Owned aircrafts delivered | 19 | |
Leased aircrafts delivered | 9 | |
-8 Firm Orders | Other Commitment, Aircraft Deliveries In 2020 | ||
Long-term Purchase Commitment [Line Items] | ||
Aircrafts delivered | 28 | |
-7 or -8 Options | ||
Long-term Purchase Commitment [Line Items] | ||
2021 | 0 | |
2022 | 42 | |
2023 | 60 | |
2024 | 56 | |
2025 | 56 | |
2026 | 40 | |
2027 | 6 | |
2028 | 0 | |
2029 | 0 | |
2030 | 0 | |
2031 | 0 | |
Total | 260 | |
Additional -8s | ||
Long-term Purchase Commitment [Line Items] | ||
2021 | 9 | |
2022 | 0 | |
2023 | 0 | |
2024 | 0 | |
2025 | 0 | |
2026 | 0 | |
2027 | 0 | |
2028 | 0 | |
2029 | 0 | |
2030 | 0 | |
2031 | 0 | |
Total | 9 |