Financial Derivative Instruments (Tables)

3 Months Ended

Mar. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Volume of Fuel Hedging

The following table provides information about the Company’s volume of fuel hedging for the years 2013 through 2017 on an “economic” basis considering current market prices:

	Fuel hedged as of
	March 31, 2013	Hedged commodity type as of
Period (by year)	(gallons in millions)(a)	March 31, 2013
Remainder of 2013	1,118	Brent crude oil and Gulf Coast jet fuel
2014	1,444	WTI crude and Brent crude oil
2015	597	WTI crude and Brent crude oil
2016	886	Brent crude oil
2017	619	WTI crude and Brent crude oil

(a) The Company determines gallons hedged based on market prices and forward curves as of March 31, 2013. Due to the types of derivatives utilized by the Company, these volumes may vary significantly as market prices fluctuate.

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following table presents the location of all assets and liabilities associated with the Company’s derivative instruments within the unaudited Condensed Consolidated Balance Sheet:

		Asset derivatives				Liability derivatives
	Balance Sheet	Fair value at		Fair value at		Fair value at		Fair value at
(in millions)	location	3/31/2013		12/31/2012		3/31/2013		12/31/2012
Derivatives designated as hedges*
Fuel derivative contracts (gross)	Prepaid expenses and other current assets	$	42	$	—	$	—	$	—
Fuel derivative contracts (gross)	Other assets	292		355		10		16
Interest rate derivative contracts	Other assets	29		31		—		—
Interest rate derivative contracts	Other noncurrent liabilities	—		—		115		126
Total derivatives designated as hedges		$	363	$	386	$	125	$	142
Derivatives not designated as hedges*
Fuel derivative contracts (gross)	Prepaid expenses and other current assets	$	259	$	375	$	261	$	327
Fuel derivative contracts (gross)	Other assets	112		233		222		351
Fuel derivative contracts (gross)	Accrued liabilities	—		10		—		60
Fuel derivative contracts (gross)	Other noncurrent liabilities	—		—		12		—
Total derivatives not designated as hedges		$	371	$	618	$	495	$	738
Total derivatives		$	734	$	1,004	$	620	$	880

* Represents the position of each trade before consideration of offsetting positions with each counterparty and does not include the impact of cash collateral deposits provided to or received from counterparties.  See discussion of credit risk and collateral following in this Note.

Cash Collateral Deposits, Due to/from Third Parties, and Net Unrealized Gains/Losses

In addition, the Company had the following amounts associated with fuel derivative instruments and hedging activities in its unaudited Condensed Consolidated Balance Sheet:

	Balance Sheet	March 31,		December 31,
(in millions)	location	2013		2012
Cash collateral deposits provided to counterparties for interest   rate contracts - noncurrent	Offset against Other noncurrent liabilities	$	61	$	89
Receivable from third parties for fuel contracts - noncurrent	Other assets	54		54
Prepaid settlements for fuel contracts - current	Prepaid expenses and other current assets	—		15

Offsetting Assets

The Company has the following recognized financial assets and financial liabilities resulting from those transactions that meet the scope of the disclosure requirements as necessitated by applicable accounting guidance for Balance Sheet Offsetting.

Offsetting of Derivative Assets
(in millions)
		(i)		(ii)			(iii) = (i) + (ii)			(i)		(ii)			(iii) = (i) + (ii)
		March 31, 2013								December 31, 2012
Description	Balance Sheet location	Gross amounts of recognized assets		Gross amounts offset in the Balance Sheet			Net amounts of assets presented in the Balance Sheet			Gross amounts of recognized assets		Gross amounts offset in the Balance Sheet			Net amounts of assets presented in the Balance Sheet
Fuel derivative contracts	Prepaid expenses and other current assets	$	301	$	(261	)	$	40	(a)	$	375	$	(327	)	$	48	(a)
Fuel derivative contracts	Other assets	$	404	$	(232	)	$	172		$	588	$	(367	)	$	221
Fuel derivative contracts	Accrued liabilities	$	—	$	—		$	—		$	10	$	(10	)	$	—
Interest rate derivative contracts	Other assets	$	29	$	—		$	29		$	31	$	—		$	31

(a) Amounts included in Prepaid expenses and other current assets.

Offsetting Liabilities

Offsetting of Derivative Liabilities
(in millions)
		(i)		(ii)			(iii) = (i) + (ii)		(i)		(ii)			(iii) = (i) + (ii)
		March 31, 2013							December 31, 2012
Description	Balance Sheet location	Gross amounts of recognized liabilities		Gross amounts offset in the Balance Sheet			Net amounts of liabilities presented in the Balance Sheet		Gross amounts of recognized liabilities		Gross amounts offset in the Balance Sheet			Net amounts of liabilities presented in the Balance Sheet
Fuel derivative contracts	Prepaid expenses and other current assets	$	261	$	(261	)	$	—	$	327	$	(327	)	$	—
Fuel derivative contracts	Other assets	$	232	$	(232	)	$	—	$	367	$	(367	)	$	—
Fuel derivative contracts	Accrued liabilities	$	—	$	—		$	—	$	60	$	(10	)	$	50
Fuel derivative contracts	Other noncurrent liabilities	$	12	$	—		$	12	$	—	$	—		$	—
Interest rate derivative contracts	Other noncurrent liabilities	$	115	$	(61	)	$	54	$	126	$	(89	)	$	37

Derivatives in Cash Flow Hedging Relationships

The following tables present the impact of derivative instruments and their location within the unaudited Condensed Consolidated Statement of Comprehensive Income for the three months endedMarch 31, 2013 and 2012:

Derivatives in cash flow hedging relationships
	(Gain) loss recognized in AOCI on derivative (effective portion)								(Gain) loss reclassified from AOCI into income (effective portion)(a)						(Gain) loss recognized in income on derivatives (ineffective portion)(b)
	Three months ended								Three months ended						Three months ended
	March 31,								March 31,						March 31,
(in millions)	2013				2012				2013			2012			2013		2012
Fuel derivative contracts	$	29		*	$	(136	)	*	$	26	*	$	23	*	$	10	$	32
Interest rate derivatives	(3		)	*	(2		)	*	5		*	4		*	—		—
Total	$	26			$	(138	)		$	31		$	27		$	10	$	32

*Net of tax

(a) Amounts related to fuel derivative contracts and interest rate derivatives are included in Fuel and oil and Interest expense, respectively.

(b) Amounts are included in Other (gains) losses, net.

Derivatives Not in Cash Flow Hedging Relationships

Derivatives not in cash flow hedging relationships
	(Gain) loss
	recognized in income on
	derivatives
	Three months ended					Location of (gain) loss
	March 31,					recognized in income
(in millions)	2013		2012			on derivatives
Fuel derivative contracts	$	61	$	(208	)	Other (gains) losses, net

Fair Values of Fuel Derivatives, Amounts Posted as Collateral, and Collateral Posting Threshold Amounts

The following table provides the fair values of fuel derivatives, amounts posted as collateral, and applicable collateral posting threshold amounts as of March 31, 2013, at which such postings are triggered:

Counterparty (CP)

(in millions)

A

B

C

D

E

F

Other(a)

Total

Fair value of fuel derivatives

$

23

$

44

$

5

$

16

$

72

$

24

$

16

$

200

Cash collateral held (by) CP

—

—

—

—

—

—

—

—

Aircraft collateral pledged to CP

—

—

—

—

—

—

—

—

Letters of credit (LC)

—

—

—

—

—

—

—

—

Option to substitute LC for aircraft

(340) to (740)(d)

>(125)(d)

N/A

N/A

N/A

N/A

Option to substitute LC for cash

N/A

N/A

(100) to (150)(e)

N/A

>(50)(e)

N/A

If credit rating is investment grade, fair value of fuel derivative level at which:

Cash is provided to CP

(40) to (340) or >(740)

0 to (125) or >(625)

>(50)

>(75)

>(50)

>(50)

Cash is received from CP

>75

>150

>175(c)

>125(c)

>200

>30

Aircraft or cash can be pledged to   CP as collateral

(340) to (740)(d)

(125) to (625)(d)

N/A

N/A

N/A

N/A

If credit rating is non-investment grade, fair value of fuel derivative level at which:

Cash is provided to CP

(40) to (340) or >(740)

0 to (125) or >(625)

(b)

(b)

(b)

(b)

Cash is received from CP

(b)

(b)

(b)

(b)

(b)

(b)

Aircraft can be pledged to CP as   collateral

(340) to (740)

(125) to (625)

N/A

N/A

N/A

N/A

(a) Individual counterparties with fair value of fuel derivatives <$20 million.

(b) Cash collateral is provided at 100 percent of fair value of fuel derivative contracts.

(c) Thresholds may vary based on changes in credit ratings within investment grade.

(d) The Company has the option of providing cash, letters of credit, or pledging aircraft as collateral. No cash, letters of credit, or aircraft were pledged as collateral with such counterparties as of March 31, 2013.

(e) The Company has the option of providing cash or letters of credit as collateral. No cash or letters of credit were pledged as collateral with such counterparties as of March 31, 2013.