XML 27 R16.htm IDEA: XBRL DOCUMENT v3.23.3
SEGMENTS
 9 Months Ended
Sep. 30, 2023
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 from 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 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 and nine months ended September 30, 2023 was $519 million and $1.8 billion, respectively, compared to $834 million and $2.6 billion for the three and nine months ended September 30, 2022, 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)AirlineRefineryIntersegment Sales/OtherConsolidated
Three Months Ended September 30, 2023
Operating revenue:$14,553 $1,886 $15,488 
Sales to airline segment$(385)
(1)
Exchanged products(519)
(2)
Sales of refined products(47)
Depreciation and amortization594 23 (23)
(3)
594 
Operating income1,865 119 
(3)
— 1,984 
Interest expense, net196 6 (6)196 
Total assets, end of period69,851 3,397 (1)73,247 
Net fair value obligations, end of period— (9)— (9)
Capital expenditures1,201 68 — 1,269 
Three Months Ended September 30, 2022
Operating revenue:$12,841 $2,599 $13,975 
Sales to airline segment$(504)
(1)
Exchanged products(834)
(2)
Sales of refined products(127)
Depreciation and amortization538 23 (23)
(3)
538 
Operating income1,264 192 
(3)
— 1,456 
Interest expense, net248 3 (3)248 
Total assets, end of period69,680 2,977 (61)72,596 
Net fair value obligations, end of period— (291)— (291)
Capital expenditures1,393 49 — 1,442 
(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 for jet fuel from the refinery by reference to the market index for the primary delivery location, which is New York Harbor.
(2)Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis.
(3)Refinery segment operating results, including depreciation and amortization, are included within aircraft fuel and related taxes in our income statement.
Financial information by segment
(in millions)AirlineRefineryIntersegment Sales/OtherConsolidated
Nine Months Ended September 30, 2023
Operating revenue:$41,008 $6,274 $43,825 
Sales to airline segment$(1,346)
(1)
Exchanged products(1,848)
(2)
Sales of refined products(263)
Depreciation and amortization1,731 69 (69)
(3)
1,731 
Operating income3,814 385 
(3)
— 4,199 
Interest expense, net627 14 (14)627 
Capital expenditures3,594 127 — 3,721 
Nine Months Ended September 30, 2022
Operating revenue:$33,312 $8,265 $37,147 
Sales to airline segment$(1,557)
(1)
Exchanged products(2,623)
(2)
Sales of refined products(250)
Depreciation and amortization1,554 70 (70)
(3)
1,554 
Operating income1,676 515 
(3)
— 2,191 
Interest expense, net791 7 (7)791 
Capital expenditures4,069 97 — 4,166 
(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 for jet fuel from the refinery by reference to the market index for the primary delivery location, which is New York Harbor.
(2)Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis.
(3)Refinery segment operating results, including depreciation and amortization, are included within aircraft fuel and related taxes in our income statement.


Fair Value Obligations

The net fair value obligations presented in the table above are related to renewable fuel compliance costs and presented net of any related assets or fixed price purchase agreements. Their value is based on quoted market prices and other observable information and are therefore classified as Level 2 in the fair value hierarchy. Our obligation as of September 30, 2023 was calculated using the U.S. Environmental Protection Agency's ("EPA") Renewable Fuel Standard ("RFS") volume requirements, which were finalized in 2022 for the 2021 and 2022 obligations, and proposed in 2022 for 2023 obligations. In the March 2023 quarter, we settled a portion of our 2021 Renewable Identification Numbers ("RINs") obligation with the EPA. We expect to settle the remaining 2021 and our entire 2022 RINs obligation by the 2022 compliance deadline in the December 2023 quarter.