Financial Instruments and Fair Value Measurements

3 Months Ended

Mar. 31, 2017

Financial Instruments and Fair Value Measurements

NOTE 6 - FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The table below presents disclosures about the financial assets and liabilities measured at fair value on a recurring basis in the Company’s financial statements (in millions):

	March 31, 2017								December 31, 2016
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	2,164	$	2,164	$	—	$	—	$	2,179	$	2,179	$	—	$	—
Short-term investments:
Corporate debt		804		—		804		—		835		—		835		—
Asset-backed securities		757		—		757		—		792		—		792		—
Certificates of deposit placed through an account registry service (“CDARS”)		224		—		224		—		246		—		246		—
U.S. government and agency notes		101		—		101		—		140		—		140		—
Other fixed-income securities		146		—		146		—		54		—		54		—
Other investments measured at NAV		183		—		—		—		182		—		—		—
Restricted cash		129		129		—		—		124		124		—		—
Enhanced equipment trust certificates (“EETC”)		22		—		—		22		23		—		—		23

Available-for-sale investment maturities - The short-term investments shown in the table above are classified as available-for-sale. As of March 31, 2017, asset-backed securities have remaining maturities of less than one year to approximately 19 years, corporate debt securities have remaining maturities of less than one year to approximately five years and CDARS have maturities of less than one year. U.S. government and other securities have maturities of less than one year to approximately three years. The EETC securities mature in 2019.

Restricted Cash - Restricted cash primarily includes cash collateral associated with workers’ compensation obligations and collateral for letters of credit.

Investments presented in the table above have the same fair value as their carrying value. The table below presents the carrying values and estimated fair values of financial instruments not presented in the tables above (in millions):

	Fair Value of Debt by Fair Value Hierarchy Level
	March 31, 2017										December 31, 2016
	Carrying Amount		Fair Value								Carrying Amount		Fair Value
			Total		Level 1		Level 2		Level 3				Total		Level 1		Level 2		Level 3
Long-term debt	$	11,894	$	12,321	$	—	$	9,040	$	3,281	$	10,767	$	11,055	$	—	$	8,184	$	2,871

Fair value of the financial instruments included in the tables above was determined as follows:

Description	Fair Value Methodology
Cash and cash equivalents	The carrying amounts approximate fair value because of the short-term maturity of these assets.
Short-term investments and Restricted cash	Fair value is based on (a) the trading prices of the investment or similar instruments, (b) an income approach, which uses valuation techniques to convert future amounts into a single present amount based on current market expectations about those future amounts when observable trading prices are not available, or (c) broker quotes obtained by third-party valuation services.
Debt	Fair values were based on either market prices or the discounted amount of future cash flows using our current incremental rate of borrowing for similar liabilities.
Other investments measured at NAV	In accordance with the relevant accounting standards, certain investments that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position. The investments measured using NAV are shares of mutual funds that invest in fixed-income instruments including bonds, debt securities, and other similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. The Company can redeem its shares at any time at NAV subject to a three-day settlement period.