REVENUE FROM CONTRACTS WITH CUSTOMERS

3 Months Ended

Mar. 31, 2021

Revenue Recognition [Abstract]

REVENUE FROM CONTRACTS WITH CUSTOMERS

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. In 2020, the Company eliminated ticket change fees indefinitely from its main cabin and first class fares. Mileage Plan other revenue includes brand and marketing revenue from our 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 level of detail within the Company’s condensed consolidated 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 March 31,
	2021		2020
Passenger ticket revenue, including ticket breakage and net of taxes and fees	$	525	$	1,213
Passenger ancillary revenue	50		116
Mileage Plan passenger revenue	84		152
Total Passenger revenue	$	659	$	1,481

Mileage Plan™ Loyalty Program

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

	Three Months Ended March 31,
	2021		2020
Passenger revenue	$	84	$	152
Mileage Plan other revenue	94		109
Total Mileage Plan revenue	$	178	$	261

Cargo and Other

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

	Three Months Ended March 31,
	2021		2020
Cargo revenue	$	27	$	24
Other revenue	17		22
Total Cargo and other revenue	$	44	$	46

Air Traffic Liability and Deferred Revenue

Passenger ticket and ancillary services liabilities

The Company recognized Passenger revenue of $136 million and $489 million from the prior year-end air traffic liability balance for the three months ended March 31, 2021 and 2020.

Given the reduction in demand for air travel stemming from the COVID-19 pandemic, advance bookings and associated cash receipts have been significantly depressed. The Company also experienced elevated cancellations beginning in March 2020 which led to cash refunds or the issuance of credits for future travel. At March 31, 2021, such credits, which are included in the air traffic liability balance, totaled $484 million, net of breakage. In April 2021, the Company announced updated expiration terms for these credits, extending to December 31, 2021 for possible travel through November 30, 2022. Given the ongoing uncertainty in the return of demand for air travel, assumptions about breakage of these credits could change in future periods.

Mileage PlanTM 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 $52 million of such receivables as of March 31, 2021 and $48 million as of December 31, 2020. Given the ongoing uncertainty around the return in demand for air travel, the timing of recognition of mileage credits may differ from current assumptions.

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

	Three Months Ended March 31,
	2021		2020
Total Deferred Revenue balance at January 1	$	2,277	$	1,990
Travel miles and companion certificate redemption - Passenger revenue	(84)		(152)
Miles redeemed on partner airlines - Other revenue	(4)		(22)
Increase in liability for mileage credits issued	136		207
Total Deferred Revenue balance at March 31	$	2,325	$	2,023