COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements [Abstract]

COMMITMENTS AND CONTINGENCIES

4. COMMITMENTS AND CONTINGENCIES

The Company's contractual purchase commitments primarily consist of scheduled aircraft acquisitions from Boeing. As of December 31,2011, the Company had the following contractual purchase commitments with Boeing for aircraft deliveries:

		The Boeing Company				The Boeing Company
		737NG				737MAX
		-700	-800
		Firm	Firm		Additional	Firm			(in millions)
		Orders	Orders	Options	-800s	Orders	Options	Total	Commitment
2012			28		5			33	$	952
2013			41					41		1,188
2014		35	4	15				54		1,151
2015		36		12				48		1,186
2016		31		12				43		1,157
2017		15		25		4		44		905
2018		10		28		15		53		1,126
2019						33		33		1,461
2020						34		34		1,184
2021						34	18	52		1,214
2022						30	19	49		1,097
2023							23	23		-
2024							23	23		-
Through 2027							67	67		-
	Total	127(a)	73	92	5(b)	150(c)	150	597	$	12,621(d)
(a) The Company has flexibility to substitute 737-800s or 737-600s in lieu of 737-700 firm orders.
(b) New delivery leased aircraft.
(c) The Company has flexibility to accept MAX 7 or MAX 8 deliveries.
(d) Firm orders from Boeing. The Company has flexibility as to the timing for certain of the firm orders in 2013 through 2017,
	but has classified the amounts in the earliest year they could be considered a commitment.

During 2008, the City of Dallas approved the Love Field Modernization Program (“LFMP”), a project to reconstruct Dallas Love Field (“Airport”) with modern, convenient air travel facilities. Pursuant to a Program Development Agreement (“PDA”) with the City of Dallas, and the Love Field Airport Modernization Corporation (or “LFAMC,” a Texas non-profit “local government corporation” established by the City to act on the City's behalf to facilitate the development of the LFMP), the Company is managing this project. Major construction commenced during 2010, with completion of the project scheduled for the second half of 2014. Although subject to change, at the current time the project is expected to include the renovation of the Airport airline terminals and complete replacement of gate facilities with a new 20-gate facility, including infrastructure, systems and equipment, aircraft parking apron, fueling system, roadways and terminal curbside, baggage handling systems, passenger loading bridges and support systems, and other supporting infrastructure.

It is currently expected that the total amount spent on the LFMP project will be approximately $519 million. Although the City of Dallas has received commitments from various sources that are expected to fund portions of the LFMP project, including the Federal Aviation Administration, the Transportation Security Administration, and the City's Aviation Fund, the majority of the funds used are expected to be from the issuance of bonds. During fourth quarter 2010, $310 million of such bonds were issued by the LFAMC, and the Company has guaranteed principal and interest payments on the bonds. Depending on funding needs and the timing of these funds from other sources, an additional tranche of bonds is expected to be issued during 2012.

The Company has agreed to manage the majority of the LFMP project, and as a result, has evaluated its ongoing accounting requirements in consideration of accounting guidance provided for lessees involved in asset construction. The Company has recorded and will continue to record an asset and corresponding obligation for the cost of the LFMP project as the construction of the facility occurs. As of December 31,2011, the Company had incurred construction costs of $202 million, classified as both an asset as a component of Ground property and equipment and a corresponding liability as a component of Other non-current liabilities, respectively, in its Consolidated Balance Sheet. Upon completion of the LFMP project, the Company expects to begin depreciating the assets over their estimated useful lives, and reduce the corresponding liabilities primarily through the Company's airport rental payments to the City of Dallas.

Contingencies

The Company is from time to time subject to various legal proceedings and claims arising in the ordinary course of business, including, but not limited to, examinations by the IRS. The Company's management does not expect that the outcome in any of its currently ongoing legal proceedings or the outcome of any adjustments presented by the IRS, individually or collectively, will have a material adverse effect on the Company's financial condition, results of operations, or cash flow.