SEGMENTS

12 Months Ended

Dec. 31, 2023

Segment Reporting [Abstract]

SEGMENTS

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 businesses. 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 fleet type and route economics, but gives no weight to the financial impact of the resource allocation decision on a geographic region or mainline/regional carrier basis. Our objective in making resource allocation decisions is to optimize our consolidated financial results.

Refinery Segment

Our Monroe subsidiary operates 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. Monroe's operations include 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, 2023, 2022 and 2021 was $2.4 billion, $3.5 billion and $2.3 billion, respectively.

A refinery is subject to annual Environmental Protection Agency ("EPA") requirements to blend renewable fuels into the gasoline and on-road diesel fuel it produces. A refinery may meet its obligation by blending the necessary volumes of renewable fuels, by purchasing Renewable Identification Numbers ("RINs") in the open market or through a combination of blending and purchasing RINs. Because Monroe is able to blend only a small amount of renewable fuels, it must purchase the majority of its RINs requirement in the secondary market. Renewable fuel compliance costs are accrued in accounts payable each period as the RINs obligation is generated. Purchased RINs are carried at the lower of cost and net realizable value and are recorded in prepaid expenses and other. During 2023, we acquired RINs assets to satisfy substantially all of our 2023 RINs obligation. The RINs asset and obligation are retired when used to satisfy EPA requirements. During 2023, we retired approximately $700 million of our 2021 and 2022 RINs assets to settle our 2021 and 2022 obligations prior to the compliance deadlines.

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
Year Ended December 31, 2023
Operating revenue	$	54,669	$	7,572	$	(4,193)	(1)	$	58,048
Depreciation and amortization	2,341		94		(94)		(2)	2,341
Operating income(2)	5,136		385					5,521
Interest expense, net	834		17		(17)			834
Total assets, end of period	71,529		2,174		(59)			73,644
Capital expenditures	5,088		235					5,323
Year Ended December 31, 2022
Operating revenue	$	45,605	$	10,706	$	(5,729)	(1)	$	50,582
Depreciation and amortization	2,107		93		(93)		(2)	2,107
Operating income(2)	2,884		777					3,661
Interest expense, net	1,029		12		(12)			1,029
Total assets, end of period	69,355		3,039		(106)			72,288
Capital expenditures	6,217		149					6,366
Year Ended December 31, 2021
Operating revenue	$	26,670	$	6,054	$	(2,825)	(1)	$	29,899
Depreciation and amortization	1,998		95		(95)		(2)	1,998
Operating income/(loss)(2)	1,888		(2)					1,886
Interest expense, net	1,279		7		(7)			1,279
Total assets, end of period	70,417		2,099		(57)			72,459
Capital expenditures	3,188		59					3,247

(1)See table below for detail of the intersegment operating revenue amounts.

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

Operating Revenue Intersegment Sales/Other
	Year Ended December 31,
(in millions)	2023		2022		2021
Sales to airline segment(1)	$	(1,535)	$	(1,976)	$	(492)
Exchanged products(2)	(2,354)		(3,475)		(2,293)
Sales of refined products	(304)		(278)		(40)
Total Operating Revenue Intersegment Sales/Other	$	(4,193)	$	(5,729)	$	(2,825)

(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.