REVENUE FROM CONTRACTS WITH CUSTOMERS

6 Months Ended

Jun. 30, 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 June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Passenger ticket revenue, including ticket breakage and net of taxes and fees	$	1,114	$	222	$	1,639	$	1,435
Passenger ancillary revenue	84		31		134		147
Mileage Plan passenger revenue	154		56		238		208
Total Passenger revenue	$	1,352	$	309	$	2,011	$	1,790

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,
	2021		2020		2021		2020
Passenger revenue	$	154	$	56	$	238	$	208
Mileage Plan other revenue	118		73		212		182
Total Mileage Plan revenue	$	272	$	129	$	450	$	390

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,
	2021		2020		2021		2020
Cargo revenue	$	34	$	28	$	61	$	52
Other revenue	23		11		40		33
Total Cargo and other revenue	$	57	$	39	$	101	$	85

Air Traffic Liability and Deferred Revenue

Passenger ticket and ancillary services liabilities

The Company recognized Passenger revenue of $36 million and net refunds from the prior year-end air traffic liability balance for the three months ended June 30, 2021 and 2020, and $175 million and $484 million for the six months ended June 30, 2021 and 2020.

Given the increase in demand for air travel from the recovery from the COVID-19 pandemic, advance bookings and associated cash receipts have significantly increased in relation to prior year. The Company also experienced increased revenue recognition from credits redeemed for travel, for which the remaining balance is included in the air traffic liability balance, and total $387 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.

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 $61 million of such receivables as of June 30, 2021 and $48 million as of December 31, 2020. As demand for air travel continues to increase unpredictably, 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):

	Six Months Ended June 30,
	2021		2020
Total Deferred Revenue balance at January 1	$	2,277	$	1,990
Travel miles and companion certificate redemption - Passenger revenue	(238)		(208)
Miles redeemed on partner airlines - Other revenue	(17)		(21)
Increase in liability for mileage credits issued	324		313
Total Deferred Revenue balance at June 30	$	2,346	$	2,074