INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

Deferred tax (assets) and liabilities comprise the following (in millions):



	2017			2016
Excess of tax over book depreciation	$	964		$	1,282
Intangibles—net	14			39
Other—net	43			26
Gross deferred tax liabilities	1,021			1,347

Mileage Plan™	(208		)	(310		)
Inventory obsolescence	(16		)	(23		)
Deferred gains	(5		)	(8		)
Employee benefits	(154		)	(196		)
Acquired net operating losses	(127		)	(289		)
Other—net	(57		)	(62		)
Gross deferred tax assets	(567		)	(888		)
Valuation allowance	—			4
Net deferred tax (assets) liabilities	$	454		$	463

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

The components of income tax expense were as follows (in millions):



	2017			2016		2015
Current income tax expense:
Federal	$	127		$	392	$	397
State	35			48		30
Total current income tax expense	162			440		427

Deferred income tax expense (benefit):
Federal	(30		)	77		60
State	41			14		(23		)
Total deferred income tax expense (benefit)	11			91		37
Income tax expense	$	173		$	531	$	464

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

Income tax expense reconciles to the amount computed by applying the U.S. federal rate of 35% to income before income tax and the 2018 US federal rate of 21% for deferred taxes as follows (in millions):



	2017			2016			2015
Income before income tax	$	1,207		$	1,345		$	1,312

Expected tax expense	422			471			459
Nondeductible expenses	5			20			4
State income taxes	29			28			19
State income sourcing	9			13			(15		)
Tax law changes	(280		)	—			—
Other—net	(12		)	(1		)	(3		)
Actual tax expense	$	173		$	531		$	464

Effective tax rate	14.3		%	39.5		%	35.4		%

Summary of Income Tax Contingencies [Table Text Block]

Changes in the liability for gross unrecognized tax benefits during 2017, 2016 and 2015 are as follows (in millions):



	2017			2016		2015
Balance at January 1,	$	40		$	32	$	3
Additions related to prior years	16			—		29
Releases related to prior years	(2		)	—		—
Additions related to current year activity	2			—		—
Additions from acquisitions	—			8		—
Releases due to settlements	(11		)	—		—
Releases due to lapse of statute of limitations	(2		)	—		—
Balance at December 31,	$	43		$	40	$	32

The Company has identified its federal tax return and its state tax returns in Alaska, Oregon and California as “major” tax jurisdictions. A summary of the Company's jurisdictions and the periods that are subject to examination are as follows:



Jurisdiction	Period
Federal	2007 to 2016^(a)(b)
Alaska	2012 to 2016
California	2006 to 2016^(a)
Oregon	2003 to 2016^(a)

^(a)

The 2007-2012 Federal and California Virgin America tax returns are subject to examination only to the extent of net operating loss carryforwards from those years that were utilized in 2012 and later years. The 2003, 2004, 2008-2010 and 2011 Oregon tax returns are subject to examination only to the extent of net operating loss carryforwards from those years that were utilized in 2010 and later years.


^(b)	Income tax years 2012 and 2013 are currently under exam by the Internal Revenue Service.