Oil Refinery (Notes)

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

OIL REFINERY

Fuel expense is our single largest expense.In recent years, global demand for jet fuel and related products has increased while jet fuel refining capacity has decreased in the United States (particularly in the Northeast), resulting in increases in the refining margin reflected in the prices we paid for jet fuel. In June 2012, we purchased an oil refinery as part of our strategy to mitigate the increasing cost of the refining margin we pay.

Refinery Operations and Strategic Agreements

The refinery's production consists of jet fuel, as well as gasoline, diesel and other refined products ("non-jet fuel products"). We use several counterparties to exchange gas and diesel the refinery produces for jet fuel consumed in our airline operations. The gross fair value of the products exchanged under these agreements during the three and nine months endedSeptember 30, 2014 was $1.4 billion and $3.9 billion, respectively, compared to $1.5 billion and $4.2 billion during the three and nine months endedSeptember 30, 2013, respectively. A multi-year product exchange agreement with a significant counterparty, BP Products North America, Inc., was terminated early effective July 1, 2014, and replaced with another counterparty.

Segment Reporting

Segment results are prepared based on our internal accounting methods described below, with reconciliations to consolidated amounts in accordance with GAAP. Our segments are not designed to measure operating income or loss directly related to the products and services included in each segment on a stand-alone basis.

(in millions)	Airline		Refinery		Intersegment Sales/Other				Consolidated
Three Months Ended September 30, 2014
Operating revenue:	$	11,114	$	1,836					$	11,178
Sales to airline segment					$	(345	)	(1)
Exchanged products					(1,393		)	(2)
Sales of refined products to third parties					(34		)	(3)
Operating income(4)	816		19		—				835
Interest expense, net	140		—		—				140
Depreciation and amortization	433		7		—				440
Total assets, end of period	50,648		1,292		—				51,940
Capital expenditures	449		8		—				457
Three Months Ended September 30, 2013
Operating revenue:	$	10,490	$	1,892					$	10,490
Sales to airline segment					$	(320	)	(1)
Exchanged products					(1,504		)	(2)
Sales of refined products to third parties					(68		)	(3)
Operating income(4)	1,560		3		—				1,563
Interest expense, net	176		—		—				176
Depreciation and amortization	413		5		—				418
Total assets, end of period	44,823		1,174		—				45,997
Capital expenditures	618		13		—				631

⁽¹⁾  Represents transfers, valued on a market price basis, from the refinery to the airline segment for use in airline operations. We determine market price by reference to the market index for the primary delivery location, which is New York Harbor, for jet fuel from the refinery.

⁽²⁾  Represents value of products delivered under our strategic agreements, as discussed above, determined on a market price basis.

⁽³⁾  Represents sales of refined products to third parties. These sales were at or near cost; accordingly, the margin on these sales is de minimis.

⁽⁴⁾  Includes the impact of pricing arrangements between the airline segment and refinery segment with respect to the refinery's inventory price risk.

(in millions)	Airline		Refinery			Intersegment Sales/Other				Consolidated
Nine Months Ended September 30, 2014
Operating revenue:	$	30,651	$	5,317						$	30,715
Sales to airline segment						$	(981	)	(1)
Exchanged products						(3,920		)	(2)
Sales of refined products to third parties						(352		)	(3)
Operating income (loss)(4)	3,043		(9		)	—				3,034
Interest expense, net	460		—			—				460
Depreciation and amortization	1,315		18			—				1,333
Capital expenditures	1,552		37			—				1,589
Nine Months Ended September 30, 2013
Operating revenue:	$	28,697	$	5,487						$	28,697
Sales to airline segment						$	(927	)	(1)
Exchanged products						(4,172		)	(2)
Sales of refined products to third parties						(388		)	(3)
Operating income (loss)(4)	2,769		(70		)	—				2,699
Interest expense, net	526		—			—				526
Depreciation and amortization	1,225		13			—				1,238
Capital expenditures	1,591		25			—				1,616

⁽¹⁾  Represents transfers, valued on a market price basis, from the refinery to the airline segment for use in airline operations. We determine market price by reference to the market index for the primary delivery location, which is New York Harbor, for jet fuel from the refinery.

⁽²⁾  Represents value of products delivered under our strategic agreements, as discussed above, determined on a market price basis.

⁽³⁾  Represents sales of refined products to third parties. These sales were at or near cost; accordingly, the margin on these sales is de minimis.

⁽⁴⁾  Includes the impact of pricing arrangements between the airline segment and refinery segment with respect to the refinery's inventory price risk.