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Fair Value Measurements (Tables)
 9 Months Ended
Sep. 30, 2017
Fair Value Disclosures [Abstract]  
Assets and liabilities measured at fair value on a recurring basis
The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2017, and December 31, 2016:

 
 
 
 
Fair value measurements at reporting date using:
 
 
 
 
Quoted prices in
active markets
for identical assets
 
Significant
other observable
inputs
 
Significant
unobservable
inputs
Description
 
September 30, 2017
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
(in millions)
Cash equivalents
 
 
 
 
 
 
 
 
Cash equivalents (a)
 
$
1,025

 
$
1,025

 
$
—

 
$
—

Commercial paper
 
420

 
—

 
420

 
—

Certificates of deposit
 
15

 
—

 
15

 
—

Short-term investments:
 
 
 
 
 
 
 
 
Treasury bills
 
1,344

 
1,344

 
—

 
—

Certificates of deposit
 
236

 
—

 
236

 
—

Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
12

 
—

 
12

 
—

Option contracts (b)
 
164

 
—

 
—

 
164

Option contracts (c)
 
58

 
—

 
—

 
58

Other available-for-sale securities
 
101

 
101

 
—

 
—

Total assets
 
$
3,375

 
$
2,470

 
$
683

 
$
222

Liabilities
 
 
 
 
 
 
 
 
Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
$
(27
)
 
$
—

 
$
(27
)
 
$
—

Option contracts (b)
 
(76
)
 
—

 
—

 
(76
)
     Option contracts (c)
 
(141
)
 
—

 
—

 
(141
)
Interest rate derivatives (see Note 3)
 
(21
)
 
—

 
(21
)
 
—

Total liabilities
 
$
(265
)
 
$
—

 
$
(48
)
 
$
(217
)
(a) Cash equivalents are primarily composed of money market investments.
(b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net asset. See Note 3.
(c) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net liability. See Note 3.

 
 
 
 
Fair value measurements at reporting date using:
 
 
 
 
Quoted prices in
active markets
for identical assets
 
Significant
other observable
inputs
 
Significant
unobservable
inputs
Description
 
December 31, 2016
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
(in millions)
Cash equivalents
 
 
 
 
 
 
 
 
Cash equivalents (a)
 
$
1,344

 
$
1,344

 
$
—

 
$
—

Commercial paper
 
325

 
—

 
325

 
—

Certificates of deposit
 
11

 
—

 
11

 
—

Short-term investments:
 
 
 
 
 
 
 
 
Treasury bills
 
1,345

 
1,345

 
—

 
—

Certificates of deposit
 
280

 
—

 
280

 
—

Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
42

 
—

 
42

 
—

Option contracts (b)
 
239

 
—

 
—

 
239

Option contracts (c)
 
163

 
—

 
—

 
163

Other available-for-sale securities
 
83

 
83

 
—

 
—

Total assets
 
$
3,832

 
$
2,772

 
$
658

 
$
402

Liabilities
 
 
 
 
 
 
 
 
Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
$
(110
)
 
$
—

 
$
(110
)
 
$
—

Option contracts (b)
 
(96
)
 
—

 
—

 
(96
)
Option contracts (c)
 
(564
)
 
—

 
—

 
(564
)
Interest rate derivatives (see Note 3)
 
(35
)
 
—

 
(35
)
 
—

Total liabilities
 
$
(805
)
 
$
—

 
$
(145
)
 
$
(660
)
(a) Cash equivalents are primarily composed of money market investments.
(b) In the unaudited Consolidated Balance Sheet amounts are presented as a net asset. See Note 3.
(c) In the unaudited Consolidated Balance Sheet amounts are presented as a net liability. See Note 3.
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation
The following tables present the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2017:

Fair value measurements using significant unobservable inputs (Level 3)
(in millions)
Fuel derivatives
 
Balance at June 30, 2017
$
(233
)
 
Total gains (realized or unrealized)
 

 
Included in earnings
10

 
Included in other comprehensive income
45

 
Purchases
25

(a)
Sales
—

(a)
Settlements
158

 
Balance at September 30, 2017
$
5

 
The amount of total gains for the period
  included in earnings attributable to the
  change in unrealized gains or losses relating
  to option contracts still held at September 30, 2017
$
4

 
(a) The purchase and sale of fuel derivatives are recorded gross based on the structure of the derivative instrument and whether a contract with multiple derivatives is purchased as a single instrument or separate instruments.
Fair value measurements using significant unobservable inputs (Level 3)
(in millions)
Fuel derivatives
 
Balance at December 31, 2016
$
(258
)
 
Total losses (realized or unrealized)
 

 
Included in earnings
(136
)
 
Included in other comprehensive income
(164
)
 
Purchases
104

(a)
Sales
—

(a)
Settlements
459

 
Balance at September 30, 2017
$
5

 
The amount of total losses for the period
  included in earnings attributable to the
  change in unrealized gains or losses relating
  to option contracts still held at September 30, 2017
$
(57
)
 

(a) The purchase and sale of fuel derivatives are recorded gross based on the structure of the derivative instrument and
whether a contract with multiple derivatives is purchased as a single instrument or separate instruments.
Fair Value Valuation Techniques
The following table presents a range of the unobservable inputs utilized in the fair value measurements of the Company’s fuel derivatives classified as Level 3 at September 30, 2017:

Quantitative information about Level 3 fair value measurements
 
 
Valuation technique
 
Unobservable input
 
Period (by year)
 
Range
Fuel derivatives
 
Option model
 
Implied volatility
 
Fourth quarter 2017

 
14-30%
 
 
 
 
 
 
2018
 
19-28%
 
 
 
 
 
 
2019
 
18-23%
 
 
 
 
 
 
Beyond 2019
 
17-21%
Fair value, by Balance Sheet Grouping
The carrying amounts and estimated fair values of the Company’s long-term debt (including current maturities), as well as the applicable fair value hierarchy tier, at September 30, 2017, are presented in the table below. The fair values of the Company’s publicly held long-term debt are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets; therefore, the Company has categorized these agreements as Level 2. Debt under seven of the Company’s debt agreements is not publicly held. The Company has determined the estimated fair value of this debt to be Level 3, as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes indicative pricing from counterparties and a discounted cash flow method to estimate the fair value of the Level 3 items.

(in millions)
 Carrying value
 
Estimated fair value
 
Fair value level hierarchy
French Credit Agreements due 2018 - 2.15%
$
7

 
$
7

 
Level 3
Fixed-rate 737 Aircraft Notes payable through 2018 - 7.03%
3

 
3

 
Level 3
2.75% Notes due 2019
301

 
305

 
Level 2
Term Loan Agreement payable through 2019 - 6.315%
76

 
77

 
Level 3
Term Loan Agreement payable through 2019 - 4.84%
19

 
20

 
Level 3
2.65% Notes due 2020
495

 
503

 
Level 2
Term Loan Agreement payable through 2020 - 5.223%
249

 
252

 
Level 3
737 Aircraft Notes payable through 2020
166

 
165

 
Level 3
Pass Through Certificates due 2022 - 6.24%
294

 
322

 
Level 2
Term Loan Agreement payable through 2026 - 2.53%
215

 
215

 
Level 3
3.00% Notes due 2026
300

 
296

 
Level 2
7.375% Debentures due 2027
128

 
157

 
Level 2