REVENUE FROM CONTRACTS WITH CUSTOMERS

6 Months Ended

Jun. 30, 2020

REVENUE

Ticket revenue is recorded as Passenger revenue, and represents the primary source of the Company's revenue. Also included in Passenger revenue are passenger ancillary revenues, such as bag fees, on-board food and beverage, ticket change fees, and certain revenue from the frequent flyer program. Mileage Plan other revenue includes brand and marketing revenue from the Company's co-branded credit card and other partners and certain interline frequent flyer revenue, net of commissions. Cargo and other revenue includes freight and mail revenue, and to a lesser extent, other ancillary revenue products such as lounge membership and certain commissions.

The Company disaggregates revenue by segment in Note 9. The details within the Company’s statements of operations, segment disclosures, and in this footnote depict the nature, amount, timing and uncertainty of revenue and how cash flows are affected by economic and other factors.

Passenger Ticket and Ancillary Services Revenue

Passenger revenue recognized in the condensed consolidated statements of operations (in millions):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Passenger ticket revenue, including ticket breakage and net of taxes and fees	$	222	$	1,792	$	1,435	$	3,231
Passenger ancillary revenue	31		147		147		271
Mileage Plan passenger revenue	56		172		208		325
Total Passenger revenue	$	309	$	2,111	$	1,790	$	3,827

Mileage Plan™ Loyalty Program

Mileage Plan™ revenue included in the condensed consolidated statements of operations (in millions):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Passenger revenue	$	56	$	172	$	208	$	325
Mileage Plan other revenue	73		118		182		228
Total Mileage Plan revenue	$	129	$	290	$	390	$	553

Cargo and Other

Cargo and other revenue included in the condensed consolidated statements of operations (in millions):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Cargo revenue	$	28	$	38	$	52	$	68
Other revenue	11		21		33		41
Total Cargo and other revenue	$	39	$	59	$	85	$	109

Air Traffic Liability and Deferred Revenue

Passenger ticket and ancillary services liabilities

The Company recognized Passenger revenue of $484 million and $563 million from the prior year-end air traffic liability balance for the six months ended June 30, 2020 and 2019.

Given the ongoing reduction in demand for air travel stemming from the COVID-19 pandemic, the Company has observed unprecedented declines in advance bookings and associated cash receipts. The Company also saw significant cancellations beginning in March 2020, which has led to cash refunds or the issuance of credits for future travel. Since the onset of the pandemic, the Company has issued cash refunds of $363 million and credits for future travel of $695 million. At June 30, 2020, such credits, which are included in the air traffic liability balance, totaled $568 million, net of breakage. In April 2020, the Company announced updated expiration terms for these credits, extending to July 2021. At this time, the Company is unable to estimate how and when the air traffic liability will be recognized in earnings given ongoing uncertainty around the return in demand for air travel.

Mileage Plan^TM assets and liabilities

The Company records a receivable for amounts due from the bank partner and from other partners as mileage credits are sold until the payments are collected. The Company had $42 million of such receivables as of June 30, 2020 and $105 million as of December 31, 2019. Consistent with the significant cancellation activity outlined above, the Company saw a substantial number of redeposits in the second quarter. Given the uncertainty around the return in demand for air travel, the Company is unable to determine how and when mileage credits will be recognized in earnings.

The table below presents a roll forward of the total frequent flyer liability (in millions):


	Six Months Ended June 30,
	2020		2019
Total Deferred Revenue balance at January 1	$	1,990	$	1,874
Travel miles and companion certificate redemption - Passenger revenue	(208)		(325)
Miles redeemed on partner airlines - Other revenue	(21)		(51)
Increase in liability for mileage credits issued	313		451
Total Deferred Revenue balance at June 30	$	2,074	$	1,949