Segments

12 Months Ended

Dec. 31, 2019

SEGMENTS

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker and is used in resource allocation and performance assessments. Our chief operating decision maker is considered to be our executive leadership team. Our executive leadership team regularly reviews discrete information for our two operating segments, which are determined by the products and services provided: our airline segment and our refinery segment.

Airline Segment

Our airline segment is managed as a single business unit that provides scheduled air transportation for passengers and cargo throughout the U.S. and around the world and includes our loyalty program, as well as other ancillary airline services. This allows us to benefit from an integrated revenue pricing and route network. Our flight equipment forms one fleet, which is deployed through a single route scheduling system. When making resource allocation decisions, our chief operating decision maker evaluates flight profitability data, which considers aircraft type and route economics, but gives no weight to the financial impact of the resource allocation decision on an individual carrier basis. Our objective in making resource allocation decisions is to optimize our consolidated financial results.

Refinery Segment

In 2012, our wholly owned subsidiaries, Monroe Energy, LLC, and MIPC, LLC (collectively, "Monroe"), acquired the Trainer oil refinery and related assets located near Philadelphia, Pennsylvania, as part of our strategy to mitigate the cost of the refining margin reflected in the price of jet fuel. The acquisition included pipelines and terminal assets that allow the refinery to supply jet fuel to our airline operations throughout the Northeastern U.S., including our New York hubs at LaGuardia and JFK.

Our refinery segment operates for the benefit of the airline segment by providing jet fuel to the airline segment from its own production and through jet fuel obtained through agreements with third parties. The refinery's production consists of jet fuel as well as non-jet fuel products. We use several counterparties to exchange the non-jet fuel products produced by the refinery for jet fuel consumed in our airline operations. The gross fair value of the products exchanged under these agreements during the years ended December 31, 2019, 2018 and 2017 was $4.0 billion, $3.6 billion and $3.2 billion, respectively.

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
Year Ended December 31, 2019
Operating revenue:	$	46,910	$	5,558				$	47,007
Sales to airline segment					$	(1,103)	⁽¹⁾
Exchanged products					(3,963)		⁽²⁾
Sales of refined products					(395)		⁽³⁾
Operating income	6,542		76					6,618
Interest expense (income), net	327		(26)					301
Depreciation and amortization	2,581		99		(99)		⁽⁴⁾	2,581
Total assets, end of period	62,793		1,739					64,532
Capital expenditures	4,880		56					4,936
Year Ended December 31, 2018
Operating revenue:	$	43,890	$	5,458				$	44,438
Sales to airline segment					$	(962)	⁽¹⁾
Exchanged products					(3,596)		⁽²⁾
Sales of refined products					(352)		⁽³⁾
Operating income	5,206		58					5,264
Interest expense (income), net	334		(23)					311
Depreciation and amortization	2,329		67		(67)		⁽⁴⁾	2,329
Total assets, end of period	58,561		1,705					60,266
Capital expenditures	5,005		163					5,168
Year Ended December 31, 2017
Operating revenue:	$	40,636	$	5,039				$	41,138
Sales to airline segment					$	(886)	⁽¹⁾
Exchanged products					(3,240)		⁽²⁾
Sales of refined products					(411)		⁽³⁾
Operating income	5,856		110					5,966
Interest expense (income), net	403		(7)					396
Depreciation and amortization	2,222		47		(47)		⁽⁴⁾	2,222
Total assets, end of period	51,544		2,127					53,671
Capital expenditures	3,743		148					3,891

⁽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 exchange agreements, as discussed above, determined on a market price basis.

⁽³⁾These sales were at or near cost; accordingly, the margin on these sales is de minimis.

⁽⁴⁾Refinery segment operating results, including depreciation and amortization, are included within aircraft fuel and related taxes in our income statement.