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Fair Value Measurements (Tables)
 3 Months Ended
Mar. 31, 2018
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 March 31, 2018, and December 31, 2017:

 
 
 
 
Fair value measurements at reporting date using:
 
 
 
 
Quoted prices in
active markets
for identical assets
 
Significant
other observable
inputs
 
Significant
unobservable
inputs
Description
 
March 31, 2018
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
(in millions)
Cash equivalents
 
 
 
 
 
 
 
 
Cash equivalents (a)
 
$
1,500

 
$
1,500

 
$
—

 
$
—

Commercial paper
 
285

 
—

 
285

 
—

Certificates of deposit
 
12

 
—

 
12

 
—

Time deposits
 
25

 
—

 
25

 
—

Short-term investments:
 
 
 
 
 
 
 
 
Treasury bills
 
1,144

 
1,144

 
—

 
—

Certificates of deposit
 
277

 
—

 
277

 
—

Fuel derivatives:
 
 
 
 
 
 
 
 
Option contracts (b)
 
363

 
—

 
—

 
363

Other available-for-sale securities
 
122

 
122

 
—

 
—

Total assets
 
$
3,728

 
$
2,766

 
$
599

 
$
363

Liabilities
 
 
 
 
 
 
 
 
Fuel derivatives:
 
 
 
 
 
 
 
 
Option contracts (b)
 
(23
)
 
—

 
—

 
(23
)
Interest rate derivatives (see Note 3)
 
(25
)
 
—

 
(25
)
 
—

Total liabilities
 
$
(48
)
 
$
—

 
$
(25
)
 
$
(23
)
(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.


 
 
 
 
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, 2017
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
(in millions)
Cash equivalents
 
 
 
 
 
 
 
 
Cash equivalents (a)
 
$
1,133

 
$
1,133

 
$
—

 
$
—

Commercial paper
 
350

 
—

 
350

 
—

Certificates of deposit
 
12

 
—

 
12

 
—

Short-term investments:
 
 
 
 
 
 
 
 
Treasury bills
 
1,491

 
1,491

 
—

 
—

Certificates of deposit
 
287

 
—

 
287

 
—

Fuel derivatives:
 
 
 
 
 
 
 
 
Option contracts (b)
 
283

 
—

 
—

 
283

Other available-for-sale securities
 
107

 
107

 
—

 
—

Total assets
 
$
3,663

 
$
2,731

 
$
649

 
$
283

Liabilities
 
 
 
 
 
 
 
 
Fuel derivatives:
 
 
 
 
 
 
 
 
Option contracts (b)
 
(35
)
 
—

 
—

 
(35
)
Interest rate derivatives (see Note 3)
 
(22
)
 
—

 
(22
)
 
—

Total liabilities
 
$
(57
)
 
$
—

 
$
(22
)
 
$
(35
)
(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.
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation
The following table presents the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2018:

Fair value measurements using significant unobservable inputs (Level 3)
(in millions)
Fuel derivatives
 
Balance at December 31, 2017
$
248

 
Total gains (realized or unrealized) included in other comprehensive income
101

 
Purchases
18

(a)
Settlements
(27
)
 
Balance at March 31, 2018
$
340

 
(a) The purchase 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 March 31, 2018:

Quantitative information about Level 3 fair value measurements
 
 
Valuation technique
 
Unobservable input
 
Period (by year)
 
Range
Fuel derivatives
 
Option model
 
Implied volatility
 
Second quarter 2018
 
14-31%
 
 
 
 
 
 
Third quarter 2018
 
21-30%
 
 
 
 
 
 
Fourth quarter 2018
 
22-29%
 
 
 
 
 
 
2019
 
21-26%
 
 
 
 
 
 
2020
 
20-23%
 
 
 
 
 
 
2021
 
19-20%
 
 
 
 
 
 
2022
 
19%
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 March 31, 2018, 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 six 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 June 2018 - 2.54%
$
1

 
$
1

 
Level 3
2.75% Notes due 2019
298

 
298

 
Level 2
Term Loan Agreement payable through 2019 - 6.315%
55

 
55

 
Level 3
Term Loan Agreement payable through 2019 - 4.84%
15

 
15

 
Level 3
2.65% Notes due 2020
486

 
483

 
Level 2
Term Loan Agreement payable through 2020 - 5.223%
225

 
225

 
Level 3
737 Aircraft Notes payable through 2020
144

 
144

 
Level 3
2.75% Notes due 2022
300

 
295

 
Level 2
Pass Through Certificates due 2022 - 6.24%
273

 
293

 
Level 2
Term Loan Agreement payable through 2026 - 2.67%
215

 
215

 
Level 3
3.00% Notes due 2026
300

 
284

 
Level 2
3.45% Notes due 2027
300

 
292

 
Level 2
7.375% Debentures due 2027
126

 
151

 
Level 2