REVENUE FROM CONTRACTS WITH CUSTOMERS

9 Months Ended

Sep. 30, 2022

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 is passenger ancillary revenue such as bag fees, on-board food and beverage, and certain revenue from the frequent flyer program. Mileage Plan other revenue includes brand and marketing revenue from the 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.

In the first quarter of 2022, the Company amended its Mileage Plan co-branded credit card agreement with Bank of America. The amendment extended the term of the agreement into 2030 and resulted in modifications to the separately identifiable performance obligations.

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 September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Passenger ticket revenue, including ticket breakage, net of taxes and fees	$	2,252	$	1,483	$	5,536	$	3,122
Passenger ancillary revenue	127		101		337		235
Mileage Plan passenger revenue	236		190		671		428
Total Passenger revenue	$	2,615	$	1,774	$	6,544	$	3,785

Mileage Plan Loyalty Program

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Passenger revenue	$	236	$	190	$	671	$	428
Mileage Plan other revenue	146		120		433		332
Total Mileage Plan revenue	$	382	$	310	$	1,104	$	760

Cargo and Other

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Cargo revenue	$	37	$	34	$	102	$	95
Other revenue	30		25		88		65
Total Cargo and other revenue	$	67	$	59	$	190	$	160

Air Traffic Liability and Deferred Revenue

Passenger ticket and ancillary services liabilities

The Company recognized Passenger revenue of $65 million and $101 million from the prior year-end air traffic liability balance for the three months ended September 30, 2022 and 2021, and $587 million and $276 million for the nine months ended September 30, 2022 and 2021.

Mileage Plan assets and liabilities

The Company records a receivable for amounts due from the affinity card partner and from other partners as mileage credits are sold until the payments are collected. The Company had $80 million of such receivables as of September 30, 2022 and $64 million as of December 31, 2021.

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

	Nine Months Ended September 30,
	2022		2021
Total Deferred revenue balance at January 1	$	2,358	$	2,277
Travel miles and companion certificate redemption - Passenger revenue	(632)		(428)
Miles redeemed on partner airlines - Other revenue	(45)		(30)
Increase in liability for mileage credits issued	800		531
Total Deferred revenue balance at September 30	$	2,481	$	2,350