Financial Derivative Instruments (Tables)

3 Months Ended

Mar. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Cash Collateral Deposits Due To or From Third Parties

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	2018		2017
Cash collateral deposits held from counterparties for fuel contracts - current	Offset against Prepaid expenses and other current assets	$	60	$	15
Cash collateral deposits held from counterparties for fuel contracts - noncurrent	Offset against Other assets	20		—
Due to third parties for fuel contracts	Accounts payable	—		29
Receivable from third parties for fuel contracts	Accounts and other receivables	9		—

Volume of Fuel Hedging

The following table provides information about the Company’s volume of fuel hedging on an economic basis considering current market prices:



	Maximum fuel hedged as of
	March 31, 2018	Derivative underlying commodity type as of
Period (by year)	(gallons in millions) (a)	March 31, 2018
Remainder of 2018	1,235	WTI crude and Brent crude oil
2019	1,377	WTI crude and Brent crude oil
2020	867	WTI crude and Brent crude oil
2021	340	WTI crude oil
2022	88	WTI 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	3/31/2018		12/31/2017		3/31/2018		12/31/2017
Derivatives designated as hedges (a)
Fuel derivative contracts (gross)	Prepaid expenses and other current assets	$	145	$	112	$	—	$	—
Fuel derivative contracts (gross)	Other assets	195		136		—		—
Interest rate derivative contracts	Other noncurrent liabilities	—		—		24		20
Total derivatives designated as hedges		$	340	$	248	$	24	$	20
Derivatives not designated as hedges (a)
Fuel derivative contracts (gross)	Prepaid expenses and other current assets	$	23	$	35	$	23	$	35
Interest rate derivative contracts	Accrued liabilities	—		—		1		1
Interest rate derivative contracts	Other noncurrent liabilities	—		—		—		1
Total derivatives not designated as hedges		$	23	$	35	$	24	$	37
Total derivatives		$	363	$	283	$	48	$	57

(a) 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.

Schedule of Derivative Instruments Statements of Financial Performance and Financial Position, Location

The following table presents the amounts recorded on the unaudited Condensed Consolidated Balance Sheet related to fair value hedges:



Balance Sheet location of hedged item	Carrying amount of the hedged liabilities				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities (a)
	March 31,				March 31,
(in millions)	2018		2017		2018		2017
Long-term debt less current maturities	$	784	$	793	$	5	$	15

(a) At March 31, 2018 and 2017, these amounts include the cumulative amount of fair value hedging adjustments remaining for which hedge accounting has been discontinued of $21 million and $22 million, respectively.

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, 2018								December 31, 2017
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	$	168	$	(83	)	$	85		$	147	$	(50	)	$	97
Fuel derivative contracts	Other assets	$	195	$	(20	)	$	175	(a)	$	136	$	—		$	136	(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 9.

Offsetting Liabilities



Offsetting of derivative liabilities
(in millions)
		(i)		(ii)			(iii) = (i) + (ii)			(i)		(ii)			(iii) = (i) + (ii)
		March 31, 2018								December 31, 2017
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	$	83	$	(83	)	$	—		$	50	$	(50	)	$	—
Fuel derivative contracts	Other assets	$	20	$	(20	)	$	—	(a)	$	—	$	—		$	—	(a)
Interest rate derivative contracts	Accrued liabilities	$	1	$	—		$	1		$	1	$	—		$	1
Interest rate derivative contracts	Other noncurrent liabilities	$	24	$	—		$	24	(a)	$	21	$	—		$	21	(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 9.

Schedule Of Derivative Instruments In Hedging Relationships Gain Loss In Statement Of Financial Performance

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, 2018 and 2017:



Location and amount of (gain) loss recognized in income on cash flow and fair value hedging relationships
	Three months ended March 31, 2018				Three months ended March 31, 2017
(in millions)	Fuel and oil		Interest expense		Fuel and oil		Interest expense
Total	$	4	$	10	$	139	$	8

Loss on cash flow hedging relationships:
Commodity contracts:
Amount of loss reclassified from AOCI into income	4		—		139		—
Interest contracts:
Amount of loss reclassified from AOCI into income	—		2		—		3

Impact of fair value hedging relationships:
Interest contracts:
Hedged items	—		6		—		6
Derivatives designated as hedging instruments	—		2		—		(1		)

Derivatives in Cash Flow Hedging Relationships



Derivatives designated and qualified in cash flow hedging relationships
	(Gain) loss recognized in AOCI on derivatives							(Gain) loss recognized in income on derivatives (ineffective portion) (a)
	Three months ended							Three months ended
	March 31,							March 31,
(in millions)	2018				2017			2018		2017
Fuel derivative contracts	$	(78	)	*	$	79	*	$	—	$	14
Interest rate derivatives	(1		)	*	—		*	—		—
Total	$	(79	)		$	79		$	—	$	14

*Net of tax

(a) Amounts are included in Other (gains) losses, net.

Derivatives Not in Cash Flow Hedging Relationships



Derivatives not designated as hedges

	(Gain) loss recognized in income on derivatives
	(Gain) loss recognized in income on derivatives
	Three months ended						Location of (gain) loss recognized in income on derivatives
	March 31,
(in millions)	2018			2017
Fuel derivative contracts	$	—		$	51		Other (gains) losses, net
Interest rate derivatives	(1		)	(1		)	Interest expense
	$	(1	)	$	50

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, 2018, at which such postings are triggered:

Counterparty (CP)

(in millions)

Other (a)

Total

Fair value of fuel derivatives

116

340

Cash collateral held from CP

—

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)(c)

(75) to (150) or >(550)(c)

(125) to (150) or >(550)(d)

(d)

N/A

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)(e)

(125) to (150) or >(550)(e)

>(125)

>(65)(e)

Cash is received from CP

>50(e)

>150(e)

>250(e)

>75(e)

>100(e)

>30(e)

Aircraft or cash can be pledged to

CP as collateral

(200) to (600)(f)

(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)

(g)

Cash is received from CP

(g)

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 <$9 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.

(d) The Company has the option to substitute letters of credit for 100 percent of cash collateral requirement.

(e) Thresholds may vary based on changes in credit ratings within investment grade.

(f) The Company has the option of providing cash or pledging aircraft as collateral.

(g) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts.