Segments

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Segments

SEGMENTS

Refinery Operations

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. Due to the decrease in demand for jet fuel caused by the COVID-19 pandemic, the refinery has shifted production to more 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 three months ended March 31, 2021 and 2020 was $503 million and $831 million, 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.

Financial information by segment
(in millions)	Airline		Refinery		Intersegment Sales/Other			Consolidated
Three Months Ended March 31, 2021
Operating revenue:	$	3,610	$	1,047				$	4,150
Sales to airline segment					$	—	(1)
Exchanged products					(503)		(2)
Sales of refined products					(4)		(3)
Operating loss	(1,273)		(125)		—			(1,398)
Interest expense, net	360		1		—			361
Depreciation and amortization	492		24		(24)		(4)	492
Total assets, end of period	71,505		1,578		—			73,083
Fair value obligations, end of period(5)	—		(346)		—			(346)
Capital expenditures	425		13		—			438
Three Months Ended March 31, 2020
Operating revenue:	$	8,592	$	1,184				$	8,592
Sales to airline segment					$	(210)	(1)
Exchanged products					(831)		(2)
Sales of refined products					(143)		(3)
Operating (loss)/income	(439)		29		—			(410)
Interest expense (income), net	80		(1)		—			79
Depreciation and amortization	678		25		(25)		(4)	678
Total assets, end of period	66,864		1,874		—			68,738
Fair value obligations, end of period(5)	—		(33)		—			(33)
Capital expenditures	926		11		—			937

(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.

(5)The fair values of these obligations, which are related to renewable fuel compliance costs, are based on quoted market prices and other observable information and are classified as Level 2 in the fair value hierarchy.