Investments

12 Months Ended

Dec. 31, 2017

Investments, Debt and Equity Securities [Abstract]

Investments

INVESTMENTS

Short-Term Investments

The estimated fair values of short-term investments, which approximate cost at December 31, 2017, are shown below by contractual maturity. Actual maturities may differ from contractual maturities because issuers of the securities may have the right to retire our investments without prepayment penalties.

(in millions)	Available- For-Sale
Due in one year or less	$	323
Due after one year through three years	465
Due after three years through five years	19
Due after five years	18
Total	$	825

Long-Term Investments

We have developed strategic relationships with certain airlines through equity investments and other forms of cooperation and support. Strategic relationships improve our coordination with these airlines and enable our customers to seamlessly connect to more places while enjoying a consistent, high-quality travel experience.

Equity Method Investments

• Aeroméxico. During 2017, we completed a $622 million tender offer and executed derivative contracts for $173 million to obtain additional capital stock of Grupo Aeroméxico, increasing our ownership percentage to a non-controlling 49% equity stake in Grupo Aeroméxico.

• Virgin Atlantic. We have a non-controlling 49% equity stake in Virgin Atlantic Limited, the parent company of Virgin Atlantic Airways.

We account for these investments under the equity method of accounting and recognize our portion of their financial results in miscellaneous, net in our Consolidated Statements of Operations.

Available-for-Sale Investments

• GOL. We own 9% of the outstanding capital stock of GOL's parent company through ownership of its preferred shares. Driven by an improved outlook for the Brazilian economy and the financial performance of the company, the stock price of GOL's parent company has more than doubled since December 31, 2016 and exceeds the original cost of our investment. This unrealized gain of $56 million is recorded in AOCI.

Additionally, GOL has a $300 million five-year term loan facility with third parties, which we have guaranteed. Our entire guaranty is secured by GOL's ownership interest in Smiles, GOL's publicly-traded loyalty program. Because GOL remains in compliance with the terms of its loan facility, we have not recorded a liability on our Consolidated Balance Sheets as of December 31, 2017.

• China Eastern. We have a 3% equity interest in China Eastern. Because the investment agreement with China Eastern restricts our sale or transfer of these shares through the September 2018 quarter, we had previously recorded this investment at cost. As we are now within one year of the lapse of these restrictions, we began accounting for the investment during the September 2017 quarter as available-for-sale with changes in fair value recorded in AOCI. As of December 31, 2017, the unrealized gain recorded in AOCI was $106 million.

Cost Method Investments

• Air France-KLM. During 2017, we acquired 10% of the outstanding shares of our joint venture partner, Air France-KLM, for $450 million. Because our investment agreement restricts the sale or transfer of these shares for five years, we account for this investment at cost. We are working to develop a combined long-term joint venture with Air France-KLM and Virgin Atlantic as part of our investment strategy.

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Republic Airways. During 2017, we acquired a 17% ownership interest in Republic Airways Holdings Inc. ("Republic"), in consideration for our unsecured claim in Republic’s bankruptcy case. This ownership interest is accounted for at cost as Republic's shares are not actively traded on a public exchange and we do not have the ability to exercise significant influence over Republic.