Investments and Fair Value Measurements

12 Months Ended

Dec. 31, 2013

Schedule of Available-for-sale Securities [Line Items]

Short-term investments consisted of (in millions):



	December 31,
	2013		2012
Overnight Investments, Time Deposits and Repurchase Agreements	$	177	$	308
Corporate and Bank Notes	3,350		2,121
U.S. Government Agency and Treasury Obligations	1,513		545
Commingled Funds	3,069		435
Other	2		3
	$	8,111	$	3,412

Short-term investments at December 31, 2013, by contractual maturity included (in millions):



Due in one year or less	$	5,257
Due between one year and three years	2,443
Due after three years	411
	$	8,111

All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are reflected as a component of Accumulated other comprehensive income (loss).

The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The Company's short-term investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuation of these securities. The Company's fuel derivative contracts, which consist primarily of call options, collars (consisting of a purchased call option and a sold put option) and call spreads (consisting of a purchased call option and a sold call option), are valued using energy and commodity market data which is derived by combining raw inputs with quantitative models and processes to generate forward curves and volatilities. Heating oil, jet fuel and crude oil are the primary underlying commodities in the hedge portfolio. No changes in valuation techniques or inputs occurred during the year ended December 31, 2013.

Assets and liabilities measured at fair value on a recurring basis are summarized below (in millions):



	Fair Value Measurements as of December 31, 2013
Description	Total		Level 1		Level 2		Level 3
Short-term investments ^{1, 2}
Money market funds	$	3,071	$	3,071	$	—	$	—
Government agency investments	1,512		—		1,512		—
Repurchase agreements	170		—		170		—
Corporate obligations	2,750		—		2,750		—
Bank notes / Certificates of deposit / Time deposits	608		—		608		—
	8,111		3,071		5,040		—
Restricted cash and short-term investments ¹	1,035		979		56		—
Fuel derivative contracts, net ¹	109		—		109		—
Total	$	9,255	$	4,050	$	5,205	$	—


(1)	Unrealized gains or losses on short-term investments, restricted cash and short-term investments and derivatives qualifying for hedge accounting are recorded in Accumulated other comprehensive income (loss) at each measurement date.


(2)	The Company's short-term investments mature in one year or less except for $250 million of Bank notes/Certificates of deposit/Time deposits, $511 million of U.S. Government agency investments and $2.1 billion of Corporate obligations.

A $56 million Level 1 restricted money market security was liquidated in August 2013. The cash proceeds were subsequently reinvested in a Level 2 U.S. Treasury Obligation. The Company's policy regarding the recording of transfers between levels is to reflect any such transfers at the end of the reporting period.

As of December 31, 2013, the Company had no exposure to European sovereign debt.

AA [Member]

Schedule of Available-for-sale Securities [Line Items]

Investments and Fair Value Measurements

Short-term investments consisted of (in millions):



	December 31,
	2013		2012
Overnight Investments, Time Deposits and Repurchase Agreements	$	177	$	306
Corporate and Bank Notes	3,350		2,121
U.S. Government Agency and Treasury Obligations	1,312		545
Commingled Funds	323		435
Other	—		1
	$	5,162	$	3,408

Short-term investments at December 31, 2013, by contractual maturity included (in millions):



Due in one year or less	$	2,308
Due between one year and three years	2,443
Due after three years	411
	$	5,162

All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are reflected as a component of Accumulated other comprehensive income (loss).

American utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. American's short-term investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuation of these securities. American's fuel derivative contracts, which consist primarily of call options, collars (consisting of a purchased call option and a sold put option) and call spreads (consisting of a purchased call option and a sold call option), are valued using energy and commodity market data which is derived by combining raw inputs with quantitative models and processes to generate forward curves and volatilities. Heating oil, jet fuel and crude oil are the primary underlying commodities in the hedge portfolio. No changes in valuation techniques or inputs occurred during the year ended December 31, 2013.

Assets and liabilities measured at fair value on a recurring basis are summarized below (in millions):



	Fair Value Measurements as of December 31, 2013
Description	Total		Level 1		Level 2		Level 3
Short-term investments ^{1, 2}
Money market funds	$	323	$	323	$	—	$	—
Government agency investments	1,312		—		1,312		—
Repurchase agreements	170		—		170		—
Corporate obligations	2,750		—		2,750		—
Bank notes / Certificates of deposit / Time deposits	607		—		607		—
	5,162		323		4,839		—
Restricted cash and short-term investments ¹	702		646		56		—
Fuel derivative contracts, net ¹	109		—		109		—
Total	$	5,973	$	969	$	5,004	$	—


(1)	Unrealized gains or losses on short-term investments, restricted cash and short-term investments and derivatives qualifying for hedge accounting are recorded in Accumulated other comprehensive income (loss) at each measurement date.


(2)	American's short-term investments mature in one year or less except for $250 million of Bank notes/Certificates of deposit/Time deposits, $511 million of U.S. Government agency investments and $2.1 billion of Corporate obligations.

A $56 million Level 1 restricted money market security was liquidated in August 2013. The cash proceeds were subsequently reinvested in a Level 2 U.S. Treasury Obligation. American's policy regarding the recording of transfers between levels is to reflect any such transfers at the end of the reporting period.

As of December 31, 2013, American had no exposure to European sovereign debt.