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Financial Derivative Instruments (Tables)
 3 Months Ended
Mar. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Volume of Fuel Hedging
The following table provides information about the Company’s volume of fuel hedging for the years 2017 through 2019 on an “economic” basis considering current market prices:

 
 
Maximum fuel hedged as of
 
 
 
 
March 31, 2017
 
Derivative underlying commodity type as of
Period (by year)
 
(gallons in millions) (a)
 
March 31, 2017
Remainder of 2017
 
961

 
WTI crude and Brent crude oil
2018
 
1,647

 
WTI crude and Brent crude oil
2019
 
649

 
WTI crude and Brent crude oil

(a) Due to the types of derivatives utilized by the Company and different price levels of those contracts, these volumes represent the maximum economic hedge in place and may vary significantly as market prices fluctuate.
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value
The following table presents the location of all assets and liabilities associated with the Company’s derivative instruments within the unaudited Condensed Consolidated Balance Sheet:

 
 
 
 
Asset derivatives
 
Liability derivatives
 
 
Balance Sheet
 
Fair value at
 
Fair value at
 
Fair value at
 
Fair value at
(in millions)
 
location
 
3/31/2017
 
12/31/2016
 
3/31/2017
 
12/31/2016
Derivatives designated as hedges*
 
 
 
 
 
 
 
 
 
 
Fuel derivative contracts (gross)
 
Prepaid expenses and other current assets
 
$
2

 
$
7

 
$
—

 
$
44

Fuel derivative contracts (gross)
 
Other assets
 
82

 
126

 
—

 
—

Fuel derivative contracts (gross)
 
Accrued liabilities
 
20

 
4

 
402

 
412

Interest rate derivative contracts
 
Other noncurrent liabilities
 
—

 
—

 
25

 
35

Total derivatives designated as hedges
 
$
104

 
$
137

 
$
427

 
$
491

Derivatives not designated as hedges*
 
 
 
 
 
 
 
 
 
 
Fuel derivative contracts (gross)
 
Prepaid expenses and other current assets
 
$
2

 
$
54

 
$
—

 
$
—

Fuel derivative contracts (gross)
 
Other assets
 
46

 
52

 
46

 
52

Fuel derivative contracts (gross)
 
Accrued liabilities
 
193

 
201

 
234

 
262

Interest rate derivative contracts
 
Other noncurrent liabilities
 
—

 
—

 
5

 
—

Total derivatives not designated as hedges
 
 
 
$
241

 
$
307

 
$
285

 
$
314

Total derivatives
 
 
 
$
345

 
$
444

 
$
712

 
$
805

* Represents the position of each trade before consideration of offsetting positions with each counterparty and does not include the impact of cash collateral deposits provided to or received from counterparties. See discussion of credit risk and collateral following in this Note.
Cash Collateral Deposits Due To Or From Third Parties and Net Unrealized Losses
In addition, the Company had the following amounts associated with fuel derivative instruments and hedging activities in its unaudited Condensed Consolidated Balance Sheet:

 
 
Balance Sheet
 
March 31,
 
December 31,
(in millions)
 
location
 
2017
 
2016
Cash collateral deposits held from counterparties for fuel
  contracts - current
 
Offset against Prepaid expenses and other current assets
 
$
2

 
$
4

Cash collateral deposits held from counterparties for fuel
  contracts - noncurrent
 
Offset against Other assets
 
5

 
6

Cash collateral deposits provided to counterparties for fuel
  contracts - current
 
Offset against Accrued liabilities
 
270

 
311

Due to third parties for fuel contracts
 
Accounts payable
 
55

 
75
Offsetting Assets
The Company has the following recognized financial assets and financial liabilities resulting from those transactions that meet the scope of the disclosure requirements as necessitated by applicable accounting guidance for balance sheet offsetting:

Offsetting of derivative assets
 
(in millions)
 
 
 
 
 
(i)
 
(ii)
 
(iii) = (i) + (ii)
 
(i)
 
(ii)
 
(iii) = (i) + (ii)
 
 
 
 
 
March 31, 2017
 
December 31, 2016
 
Description
 
Balance Sheet location
 
Gross amounts of recognized assets
 
Gross amounts offset in the Balance Sheet
 
Net amounts of assets presented in the Balance Sheet
 
Gross amounts of recognized assets
 
Gross amounts offset in the Balance Sheet
 
Net amounts of assets presented in the Balance Sheet
 
Fuel derivative contracts
 
Prepaid expenses and other current assets
 
$
4

 
$
(2
)
 
$
2

 
$
61

 
$
(48
)
 
$
13

 
Fuel derivative contracts
 
Other assets
 
$
128

 
$
(51
)
 
$
77

(a)
$
178

 
$
(58
)
 
$
120

(a)
Fuel derivative contracts
 
Accrued liabilities
 
$
483

 
$
(483
)
 
$
—

(a)
$
516

 
$
(516
)
 
$
—

(a)

(a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 5.
Offsetting Liabilities
Offsetting of derivative liabilities
 
(in millions)
 
 
 
 
 
(i)
 
(ii)
 
(iii) = (i) + (ii)
 
(i)
 
(ii)
 
(iii) = (i) + (ii)
 
 
 
 
 
March 31, 2017
 
December 31, 2016
 
Description
 
Balance Sheet location
 
Gross amounts of recognized liabilities
 
Gross amounts offset in the Balance Sheet
 
Net amounts of liabilities presented in the Balance Sheet
 
Gross amounts of recognized liabilities
 
Gross amounts offset in the Balance Sheet
 
Net amounts of liabilities presented in the Balance Sheet
 
Fuel derivative contracts
 
Prepaid expenses and other current assets
 
$
2

 
$
(2
)
 
$
—

 
$
48

 
$
(48
)
 
$
—

 
Fuel derivative contracts
 
Other assets
 
$
51

 
$
(51
)
 
$
—

(a)
$
58

 
$
(58
)
 
$
—

(a)
Fuel derivative contracts
 
Accrued liabilities
 
$
636

 
$
(483
)
 
$
153

(a)
$
674

 
$
(516
)
 
$
158

(a)
Interest rate derivative contracts
 
Other noncurrent liabilities
 
$
30

 
$
—

 
$
30

(a)
$
35

 
$
—

 
$
35

(a)

(a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 5.
Derivatives in Cash Flow Hedging Relationships
The following tables present the impact of derivative instruments and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income for the three months ended March 31, 2017 and 2016:

Derivatives in cash flow hedging relationships
 
(Gain) loss recognized in AOCI on derivatives (effective
 portion)
 
(Gain) loss reclassified from AOCI into income (effective
portion) (a)
 
(Gain) loss recognized in income on derivatives
(ineffective portion) (b)
 
Three months ended
 
Three months ended
 
Three months ended
 
March 31,
 
March 31,
 
March 31,
(in millions)
2017
 
2016
 
2017
 
2016
 
2017
 
2016
Fuel derivative contracts
$
79

*
$
36

*
$
88

*
$
195

*
$
14

 
$
4

Interest rate derivatives
—

*
5

*
2

*
2

*
—

 
—

Total
$
79

 
$
41

 
$
90

 
$
197

 
$
14

 
$
4

*Net of tax
(a) Amounts related to fuel derivative contracts and interest rate derivatives, which are included in Fuel and oil and Interest expense, respectively.
(b) Amounts are included in Other (gains) losses, net.
Derivatives Not in Cash Flow Hedging Relationships
Derivatives not in cash flow hedging relationships
 
 
 
 
 
(Gain) loss
recognized in income on
derivatives
 
 
 
 
 
 
Three months ended
 
Location of (gain) loss
 recognized in income
on derivatives
 
March 31,
 
(in millions)
2017
 
2016
 
Fuel derivative contracts
$
51

 
$
76

 
Other (gains) losses, net
Interest rate derivatives
(1
)
 
—

 
Interest Expense
 
$
50

 
$
76

 
 
Fair Values of Fuel Derivatives, Amounts Posted as Collateral, and Collateral Posting Threshold Amounts
The following table provides the fair values of fuel derivatives, amounts posted as collateral, and applicable collateral posting threshold amounts as of March 31, 2017, at which such postings are triggered:

 
Counterparty (CP)
 
 
(in millions)
A
 
B
 
C
 
D
 
Other (a)
 
Total
Fair value of fuel derivatives
$
(232
)
 
$
(78
)
 
$
(40
)
 
$
6

 
$
7

 
$
(337
)
Cash collateral held from (by) CP
(223
)
 
(46
)
 
—

 
6

 
—

 
(263
)
Aircraft collateral pledged to CP
—

 
—

 
—

 
—

 
—

 
—

Letters of credit (LC)
—

 
—

 
—

 
—

 
—

 
—

Option to substitute LC for aircraft
(200) to (600)(b)
 
(100) to (500)(c)
 
(150) to (550)(c)
 
N/A
 
 
 
 
Option to substitute LC for cash
N/A
 
>(500)(d)
 
(75) to (150) or >(550)(d)
 
(e)
 
 
 
 
If credit rating is investment
grade, fair value of fuel
derivative level at which:
 
 
 
 
 
 
 
 
 
 
 
Cash is provided to CP
(50) to (200) or >(600)
 
(50) to (100) or >(500)
 
(75) to (150) or >(550)
 
>(100)
 
 
 
 
Cash is received from CP
>50(f)
 
>150(f)
 
>250(f)
 
>0(f)
 
 
 
 
Aircraft or cash can be pledged to
  CP as collateral
(200) to (600)(g)
 
(100) to (500)(c)
 
(150) to (550)(c)
 
N/A
 
 
 
 
If credit rating is non-investment
grade, fair value of fuel derivative level at which:
 
 
 
 
 
 
 
 
 
 
 
Cash is provided to CP
(0) to (200) or >(600)
 
(0) to (100) or >(500)
 
(0) to (150) or >(550)
 
(h)
 
 
 
 
Cash is received from CP
(h)
 
(h)
 
(h)
 
(h)
 
 
 
 
Aircraft or cash can be pledged to
  CP as collateral
(200) to (600)
 
(100) to (500)
 
(150) to (550)
 
N/A
 
 
 
 
(a) Individual counterparties with fair value of fuel derivatives <$5 million.
(b) The Company has the option of providing letters of credit in addition to aircraft collateral if the appraised value of the aircraft does not meet the collateral requirements.
(c) The Company has the option of providing cash, letters of credit, or pledging aircraft as collateral.
(d) The Company has the option of providing cash or letters of credit as collateral.
(e) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement.
(f) Thresholds may vary based on changes in credit ratings within investment grade.
(g) The Company has the option of providing cash or pledging aircraft as collateral.
(h) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts.