XML 73 R36.htm IDEA: XBRL DOCUMENT

Financial Derivative Instruments (Tables)

12 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

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



	Maximum fuel hedged as of
	December 31, 2019	Derivative underlying commodity type as of
Period (by year)	(gallons in millions) (a)	December 31, 2019
2020	1,301	WTI crude oil, Brent crude oil, and Heating oil
2021	1,169	WTI crude and Brent crude oil
2022	603	WTI crude and Brent crude oil
Beyond 2022	32	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 Consolidated Balance Sheet:



		Asset derivatives				Liability derivatives
	Balance Sheet	Fair value at		Fair value at		Fair value at		Fair value at
(in millions)	location	12/31/2019		12/31/2018		12/31/2019		12/31/2018
Derivatives designated as hedges (a)
Fuel derivative contracts (gross)	Prepaid expenses and other current assets	$	48	$	43	$	—	$	—
Fuel derivative contracts (gross)	Other assets	62		95		—		—
Interest rate derivative contracts	Other assets	2		—		—		—
Interest rate derivative contracts	Accrued liabilities	—		—		5		2
Interest rate derivative contracts	Other noncurrent liabilities	—		—		1		12
Total derivatives designated as hedges		$	112	$	138	$	6	$	14

(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 Derivatives Instruments Statements of Financial Performance and Financial Position, Location [Table Text Block]

The following table presents the amounts recorded on the 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)
	December 31,				December 31,
(in millions)	2019		2018		2019		2018
Current maturities of long-term debt	$	500	$	—	$	—	$	—
Long-term debt less current maturities	—		791		19		11
	$	500	$	791	$	19	$	11

(a) At December 31, 2019 and 2018, these amounts include the cumulative amount of fair value hedging adjustments remaining for which hedge accounting has been discontinued of $19 million and $20 million, respectively.

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 Consolidated Balance Sheet:



	Balance Sheet	December 31,		December 31,
(in millions)	location	2019		2018
Cash collateral deposits held from counterparties for fuel contracts - current	Offset against Prepaid expenses and other current assets	$	10	$	—
Cash collateral deposits held from counterparties for fuel contracts - noncurrent	Offset against Other assets	15		—

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)
		December 31, 2019								December 31, 2018
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	$	48	$	(10	)	$	38		$	43	$	—	$	43
Fuel derivative contracts	Other assets	$	62	$	(15	)	$	47	(a)	$	95	$	—	$	95	(a)
Interest rate derivative contracts	Other assets	$	2	$	—		$	2	(a)	$	—	$	—	$	—	(a)

(a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the Consolidated Balance Sheet in Note 15.

Offsetting Liabilities



Offsetting of derivative liabilities
(in millions)
		(i)		(ii)			(iii) = (i) + (ii)			(i)		(ii)		(iii) = (i) + (ii)
		December 31, 2019								December 31, 2018
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	$	10	$	(10	)	$	—		$	—	$	—	$	—
Fuel derivative contracts	Other assets	$	15	$	(15	)	$	—	(a)	$	—	$	—	$	—	(a)
Interest rate derivative contracts	Accrued liabilities	$	5	$	—		$	5		$	2	$	—	$	2
Interest rate derivative contracts	Other noncurrent liabilities	$	1	$	—		$	1		$	12	$	—	$	12

(a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the Consolidated Balance Sheet in Note 15.

Derivatives in Cash Flow Hedging Relationships

The following tables present the impact of derivative instruments and their location within the Consolidated Statement of Income for the year ended December 31, 2019 and 2018:



Location and amount recognized in income on cash flow and fair value hedging relationships
	Year ended December 31, 2019				Year ended December 31, 2018
(in millions)	Fuel and oil		Interest expense		Fuel and oil			Interest expense
Total	$	48	$	29	$	(33	)	$	37

(Gain) loss on cash flow hedging relationships:
Commodity contracts:
Amount of (gain) loss reclassified from AOCI into income	48		—		(33		)	—
Interest contracts:
Amount of loss reclassified from AOCI into income	—		5		—			6

Impact of fair value hedging relationships:
Interest contracts:
Hedged items	—		22		—			23
Derivatives designated as hedging instruments	—		2		—			8



Derivatives designated and qualified in cash flow hedging relationships
	(Gain) loss recognized in AOCI on derivatives, net of tax
	Year ended
	December 31,
(in millions)	2019		2018
Fuel derivative contracts	$	90	$	1
Interest rate derivatives	29		(1		)
Total	$	119	$	—

Derivatives Not in Cash Flow Hedging Relationships



Derivatives not designated as hedges
	(Gain) loss
	recognized in income on
	derivatives
	Year ended					Location of (gain) loss
	December 31,					recognized in income
(in millions)	2019		2018			on derivatives
Interest rate derivatives	$	—	$	(2	)	Interest Expense

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 December 31, 2019, at which such postings are triggered:

Counterparty (CP)

(in millions)

Other(a)

Total

Fair value of fuel derivatives

110

Cash collateral held from CP

—

Aircraft collateral pledged to CP

—

Letters of credit (LC)

—

Option to substitute LC for aircraft

(200) to (600)(b)

N/A

(150) to (550)(c)

N/A

Option to substitute LC for cash

N/A

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

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

(d)

If credit rating is investment

grade, fair value of fuel

derivative level at which:

Cash is provided to CP

>(100)

>(50)

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

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

>(40)

Cash is received from CP

>0(e)

>150(e)

>250(e)

>125(e)

>100(e)

Aircraft or cash can be pledged to

CP as collateral

(200) to (600)(f)

N/A

(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)

(g)

(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)

N/A

(150) to (550)

N/A

(a) Individual counterparties with fair value of fuel derivatives <$7 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.