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Fair Value Measurements (Tables)
 3 Months Ended
Mar. 31, 2013
Fair Value Disclosures [Abstract]  
Assets and liabilities measured at fair value on a recurring basis
The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2013, and December 31, 2012:

 
 
 
 
Fair value measurements at reporting date using:
 
 
 
 
Quoted prices in
active markets
for identical assets
 
Significant
other observable
inputs
 
Significant
unobservable
inputs
Description
 
March 31, 2013
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
(in millions)
Cash equivalents
 
 
 
 
 
 
 
 
Cash equivalents (a)
 
$
1,085

 
$
1,085

 
$
—

 
$
—

Commercial paper
 
240

 
—

 
240

 
—

Certificates of deposit
 
13

 
—

 
13

 
—

Short-term investments:
 
 
 
 
 
 
 
 
Treasury bills
 
1,560

 
1,560

 
—

 
—

Certificates of deposit
 
237

 
—

 
237

 
—

Noncurrent investments (b)
 
 
 
 
 
 
 
 
Auction rate securities
 
38

 
—

 
—

 
38

Interest rate derivatives (see Note 5)
 
29

 
—

 
29

 
—

Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
94

 
—

 
94

 
—

Option contracts (c)
 
611

 
—

 
—

 
611

Other available-for-sale securities
 
54

 
49

 
—

 
5

Total assets
 
$
3,961

 
$
2,694

 
$
613

 
$
654

Liabilities
 
 
 
 
 
 
 
 
Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
$
(93
)
 
$
—

 
$
(93
)
 
$
—

Option contracts (c)
 
(400
)
 
—

 
—

 
(400
)
Option contracts (d)
 
(12
)
 
—

 
—

 
(12
)
Interest rate derivatives (see Note 5)
 
(115
)
 
—

 
(115
)
 
—

Deferred compensation
 
(140
)
 
(140
)
 
—

 
—

Total liabilities
 
$
(760
)
 
$
(140
)
 
$
(208
)
 
$
(412
)

(a) Cash equivalents are primarily composed of money market investments.
(b) Noncurrent investments are included in Other assets in the unaudited Condensed Consolidated Balance Sheet.
(c) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net asset.  See Note 5.
(d) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net liability.  See Note 5.



 
 
 
 
Fair value measurements at reporting date using:
 
 
 
 
Quoted prices in
active markets
for identical assets
 
Significant
other observable
inputs
 
Significant
unobservable
inputs
Description
 
December 31, 2012
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
(in millions)
Cash equivalents
 
 
 
 
 
 
 
 
Cash equivalents (a)
 
$
829

 
$
829

 
$
—

 
$
—

Commercial paper
 
170

 
—

 
170

 
—

Certificates of deposit
 
34

 
—

 
34

 
—

Eurodollar Time Deposits
 
80

 
—

 
80

 
—

Short-term investments:
 
 
 
 
 
 
 
 
Treasury bills
 
1,624

 
1,624

 
—

 
—

Certificates of deposit
 
233

 
—

 
233

 
—

Noncurrent investments (b)
 
 
 
 
 
 
 
 
Auction rate securities
 
36

 
—

 
—

 
36

Interest rate derivatives (see Note 5)
 
31

 
—

 
31

 
—

Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
113

 
—

 
113

 
—

Option contracts (c)
 
850

 
—

 
—

 
850

Option contracts (d)
 
10

 
—

 
—

 
10

Other available-for-sale securities
 
49

 
44

 
—

 
5

Total assets
 
$
4,059

 
$
2,497

 
$
661

 
$
901

Liabilities
 
 
 
 
 
 
 
 
Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
$
(57
)
 
$
—

 
$
(57
)
 
$
—

Option contracts (c)
 
(637
)
 
—

 
—

 
(637
)
Swap contracts (d)
 
(56
)
 
—

 
(56
)
 
—

Option contracts (d)
 
(4
)
 
—

 
—

 
(4
)
Interest rate derivatives (see Note 5)
 
(126
)
 
—

 
(126
)
 
—

Deferred Compensation
 
(137
)
 
(137
)
 
—

 
—

Total liabilities
 
$
(1,017
)
 
$
(137
)
 
$
(239
)
 
$
(641
)

(a) Cash equivalents are primarily composed of money market investments.
(b) Noncurrent investments are included in Other assets in the unaudited Condensed Consolidated Balance Sheet.
(c) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net asset.  See Note 5.
(d) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net liability.  See Note 5.
Fair Value Assets And Liabilities Measured On Recurring Basis Unobservable Input Reconciliation
 The following table presents the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2013:
 
Fair value measurements using significant
unobservable inputs (Level 3)
 
Fuel
 
Auction rate
 
Other
 
 
(in millions)
derivatives
 
securities
 
securities
 
Total
Balance at December 31, 2012
$
219

 
$
36

 
$
5

 
$
260

Total gains or (losses) (realized or unrealized)
 

 
 

 
 

 
 

Included in earnings
27

 
—

 
—

 
27

Included in other comprehensive income
(46
)
 
2

 
—

 
(44
)
Purchases
189

(a)
—

 
—

 
189

Sales
(213
)
(a)
—

 
—

 
(213
)
Settlements
23

 
—

 
—

 
23

Balance at March 31, 2013
$
199

 
$
38

(b)
$
5

 
$
242

The amount of total losses for the period
  included in earnings attributable to the
  change in unrealized gains or losses relating
  to assets still held at March 31, 2013
$
(49
)
 
$
—

 
$
—

 
$
(49
)
(a) The purchase and sale of fuel derivatives are recorded gross based on the structure of the derivative instrument, and
whether a contract with multiple derivatives is purchased as a single instrument or separate instruments.
(b) Included in Other assets in the unaudited Condensed Consolidated Balance Sheet.
Fair Value Valuation Techniques
The following table presents a range of the unobservable inputs utilized in the fair value measurements of the Company’s assets and liabilities classified as Level 3 at March 31, 2013:

Quantitative information about Level 3 fair value measurements
 
Valuation technique
Unobservable input
Period (by year)
Range
Fuel derivatives
Option model
Implied volatility
Second quarter 2013
10-22%
 
 
 
Third quarter 2013
15-24%
 
 
 
Fourth quarter 2013
16-25%
 
 
 
2014
15-25%
 
 
 
2015
16-22%
 
 
 
2016
16-21%
 
 
 
2017
16-20%
Auction rate securities
Discounted cash flow
Time to principal recovery
 
6-8 years
 
 
Illiquidity premium
 
3-4%
 
 
Counterparty credit spread
 
1-3%
Fair value, by Balance Sheet Grouping
(in millions)
 Carrying value
 
Estimated fair value
 
Fair value level hierarchy
5.25% Notes due 2014
364

 
374

 
Level 2
5.75% Notes due 2016
329

 
363

 
Level 2
5.25% Convertible Senior Notes due 2016
116

 
146

 
Level 2
5.125% Notes due 2017
328

 
357

 
Level 2
Fixed-rate 717 Aircraft Notes payable through 2017 - 10.36%
57

 
55

 
Level 2
French Credit Agreements due 2018 - 1.21%
56

 
56

 
Level 3
Fixed-rate 737 Aircraft Notes payable through 2018 - 7.02%
34

 
36

 
Level 3
Term Loan Agreement due 2019 - 6.315%
233

 
236

 
Level 3
Term Loan Agreement due 2019 - 6.84%
90

 
98

 
Level 3
Term Loan Agreement due 2020 - 5.223%
442

 
410

 
Level 3
Floating-rate 737 Aircraft Notes payable through 2020
388

 
381

 
Level 3
Pass Through Certificates due 2022 - 6.24%
385

 
452

 
Level 2
7.375% Debentures due 2027
138

 
154

 
Level 2