Changes in fuel prices, interest rates and foreign currency exchange rates impact our results of operations. In an effort to manage our exposure to these risks, we may enter into derivative contracts and adjust our derivative portfolio as market conditions change. We recognize derivative contracts at fair value on our balance sheets. Cash flows associated with purchasing and settling hedge contracts generally are classified as operating cash flows.

Our derivative contracts to hedge the financial risk from changing fuel prices are primarily related to Monroe’s inventory. During the years ended December 31, 2020, 2019 and 2018, fuel hedges did not have a significant impact in our income statement.

Our exposure to market risk from adverse changes in interest rates is primarily associated with our debt obligations. Market risk associated with our fixed and variable rate debt relates to the potential reduction in fair value and negative impact to future earnings, respectively, from an increase in interest rates.

In an effort to manage our exposure to the risk associated with our variable rate debt, we periodically enter into interest rate swaps. We designate interest rate contracts used to convert the interest rate exposure on a portion of our debt portfolio from a floating rate to a fixed rate as cash flow hedges, while those contracts converting our interest rate exposure from a fixed rate to a floating rate are designated as fair value hedges.

We also have exposure to market risk from adverse changes in interest rates associated with our cash and cash equivalents and benefit plan obligations. Market risk associated with our cash and cash equivalents relates to the potential decline in interest income from a decrease in interest rates. Pension, postretirement, postemployment and worker's compensation obligation risk relates to the potential increase in our future obligations and expenses from a decrease in interest rates used to discount these obligations.

In the March 2020 quarter, we unwound a majority of our interest rate swap contracts. The unwind of these contracts generated approximately $100 million of cash in the March 2020 quarter. Additionally, in January 2021 we unwound our remaining interest rate swap contract. The unwind of this contract generated approximately $20 million of cash in January 2021. These gains are being reflected in our income statement over the remaining term of the related debt agreements.

We are subject to foreign currency exchange rate risk because we have revenue, expense and equity investments denominated in foreign currencies. To manage exchange rate risk, we execute both our international revenue and expense transactions in the same foreign currency to the extent practicable. From time to time, we may also enter into foreign currency option and forward contracts.

In November 2019, we entered into a three and a half-year U.S. dollar-South Korean won ("KRW") cross currency swap with a notional value of 177 billion KRW. This swap is intended to mitigate foreign currency volatility resulting from our KRW-denominated investment in Hanjin-KAL. During the year ended December 31, 2020, we recorded an unrealized loss on this swap of $10 million, which is reflected in gain/(loss) on investments, net within non-operating expense.


Hedge Position as of December 31, 2020
(in millions)	Volume		Final Maturity Date	Prepaid Expenses and Other		Other Noncurrent Assets		Other Accrued Liabilities		Other Noncurrent Liabilities		Hedge Derivatives, net
Designated as hedges
Interest rate contract (fair value hedges)	150	U.S. dollars	April 2028	$	3	$	20	$	—	$	—	$	23
Not designated as hedges
Foreign currency exchange contract	177,045	South Korean won	April 2023	—		—		—		(13)		(13)
Fuel hedge contracts	157	gallons - crude oil and refined products	April 2021	—		—		(9)		—		(9)
Total derivative contracts				$	3	$	20	$	(9)	$	(13)	$	1


Hedge Position as of December 31, 2019
(in millions)	Volume		Final Maturity Date	Prepaid Expenses and Other		Other Noncurrent Assets		Other Accrued Liabilities		Other Noncurrent Liabilities		Hedge Derivatives, net
Designated as hedges
Interest rate contracts (fair value hedges)	1,872	U.S. dollars	April 2028	$	12	$	53	$	(4)	$	—	$	61

Not designated as hedges
Foreign currency exchange contract	397	Euros	December 2020	9		—		—		—		9
Foreign currency exchange contract	177,045	South Korean won	April 2023	1		—		—		(4)		(3)
Fuel hedge contracts	243	gallons - crude oil and refined products	July 2020	16		—		(15)		—		1
Total derivative contracts				$	38	$	53	$	(19)	$	(4)	$	68


Balance sheet location of hedged item in fair value hedges
	Carrying Amount of Hedge Instruments				Cumulative Amount of Fair Value Hedge Adjustments (1)
(in millions)	December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2019
Current maturities of debt and finance leases	$	21	$	(19)	$	21	$	8
Debt and finance leases	(72)		(1,783)		77		53

(1)As of December 31, 2020, these amounts include the cumulative amount of fair value hedging adjustments remaining for which hedge accounting has been discontinued of approximately $76 million.

We have master netting arrangements with our counterparties giving us the right to offset hedge assets and liabilities. However, we have elected not to offset the fair value positions recorded on our balance sheets. The following table shows the net fair value of our counterparty positions had we elected to offset.


Derivative contracts offsetting assets and liabilities
(in millions)	Prepaid Expenses and Other		Other Noncurrent Assets		Other Accrued Liabilities		Other Noncurrent Liabilities		Hedge Derivatives, Net
December 31, 2020
Net derivative contracts	$	3	$	20	$	(9)	$	(13)	$	1
December 31, 2019
Net derivative contracts	$	24	$	53	$	(5)	$	(4)	$	68


Not designated hedge gains/(losses) by category
	Location of Gain (Loss) Recognized in Income	Gain (Loss) Recognized in Income
		Year Ended December 31,
(in millions)		2020		2019		2018
Foreign currency exchange contracts	Gain/(loss) on investments, net	$	(31)	$	10	$	(4)
Fuel hedge contracts	Aircraft fuel and related taxes	85		(41)		52
Total		$	54	$	(31)	$	48

To manage credit risk associated with our fuel price, interest rate and foreign currency hedging programs, we evaluate counterparties based on several criteria including their credit ratings and limit our exposure to any one counterparty.

Our hedge contracts often contain margin funding requirements. The margin funding requirements may cause us to post margin to counterparties or may cause counterparties to post margin to us as market prices in the underlying hedged items change. Due to the fair value position of our hedge contracts, we held or posted no margin as of December 31, 2020 and posted margin of $34 million as of December 31, 2019.

Accounts receivable primarily consist of amounts due from credit card companies from the sale of passenger tickets, ancillary businesses and refinery sales and other companies for the purchase of miles under the loyalty program. The credit risk associated with these receivables is minimal. See Note 5, "Investments," for further information on our receivables from our investees and other airlines.

We self-insure a portion of our losses from claims related to workers' compensation, environmental issues, property damage, medical insurance for employees, healthcare for retirees, disability and general liability. Losses are accrued based on an estimate of the aggregate liability for claims incurred, using independent actuarial reviews based on standard industry practices and our historical experience.