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Fair Value Measurements (Tables)
 9 Months Ended
Sep. 30, 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 September 30, 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
 
September 30, 2013
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
(in millions)
Cash equivalents
 
 
 
 
 
 
 
 
Cash equivalents (a)
 
$
1,107

 
$
1,107

 
$
—

 
$
—

Commercial paper
 
215

 
—

 
215

 
—

Certificates of deposit
 
11

 
—

 
11

 
—

Short-term investments:
 
 
 
 
 
 
 
 
Treasury bills
 
1,760

 
1,760

 
—

 
—

Certificates of deposit
 
235

 
—

 
235

 
—

Noncurrent investments (b)
 
 
 
 
 
 
 
 
Auction rate securities
 
39

 
—

 
—

 
39

Interest rate derivatives (see Note 5)
 
22

 
—

 
22

 
—

Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
46

 
—

 
46

 
—

Option contracts (c)
 
435

 
—

 
—

 
435

Option contracts (d)
 
20

 
—

 
—

 
20

Other available-for-sale securities
 
58

 
53

 
—

 
5

Total assets
 
$
3,948

 
$
2,920

 
$
529

 
$
499

Liabilities
 
 
 
 
 
 
 
 
Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
(38
)
 
—

 
(38
)
 
—

Option contracts (c)
 
(335
)
 
—

 
—

 
(335
)
Option contracts (d)
 
(41
)
 
—

 
—

 
(41
)
Interest rate derivatives (see Note 5)
 
(87
)
 
—

 
(87
)
 
—

Deferred compensation
 
(149
)
 
(149
)
 
—

 
—

Total liabilities
 
$
(650
)
 
$
(149
)
 
$
(125
)
 
$
(376
)

(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 tables present the Company’s activity for items measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2013:

 
Fair value measurements using significant
unobservable inputs (Level 3)
 
Fuel
 
Auction rate
 
Other
 
 
(in millions)
derivatives
 
securities
 
securities
 
Total
Balance at June 30, 2013
$
(76
)
 
$
36

 
$
5

 
$
(35
)
Total gains (realized or unrealized)
 

 
 

 
 

 
 

Included in earnings
62

 
—

 
—

 
62

Included in other comprehensive income
155

 
3

 
—

 
158

Purchases
26

(a)
—

 
—

 
26

Sales
(88
)
(a)
—

 
—

 
(88
)
Settlements
—

 
—

 
—

 
—

Balance at September 30, 2013
$
79

 
$
39

(b)
$
5

 
$
123

The amount of total gains for the period
  included in earnings attributable to the
  change in unrealized gains or losses relating
  to assets still held at September 30, 2013
$
58

 
$
—

 
$
—

 
$
58

(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 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
73

 
—

 
—

 
73

Included in other comprehensive income
(190
)
 
3

 
—

 
(187
)
Purchases
301

(a)
—

 
—

 
301

Sales
(371
)
(a)
—

 
—

 
(371
)
Settlements
47

 
—

 
—

 
47

Balance at September 30, 2013
$
79

 
$
39

(b)
$
5

 
$
123

The amount of total gains for the period
  included in earnings attributable to the
  change in unrealized gains or losses relating
  to assets still held at September 30, 2013
$
92

 
$
—

 
$
—

 
$
92

(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 September 30, 2013:

Quantitative information about Level 3 fair value measurements
 
Valuation technique
Unobservable input
Period (by year)
Range
Fuel derivatives
Option model
Implied volatility
Fourth quarter 2013
11-26%
 
 
 
2014
14-28%
 
 
 
2015
14-22%
 
 
 
2016
14-20%
 
 
 
2017
14-17%
Auction rate securities
Discounted cash flow
Time to principal recovery
 
5-8 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
359

 
364

 
Level 2
5.75% Notes due 2016
322

 
353

 
Level 2
5.25% Convertible Senior Notes due 2016
115

 
153

 
Level 2
5.125% Notes due 2017
324

 
353

 
Level 2
Fixed-rate 717 Aircraft Notes payable through 2017 - 10.38%
55

 
52

 
Level 2
French Credit Agreements due 2018 - 1.12%
51

 
51

 
Level 3
Fixed-rate 737 Aircraft Notes payable through 2018 - 7.02%
31

 
32

 
Level 3
Term Loan Agreement due 2019 - 6.315%
218

 
221

 
Level 3
Term Loan Agreement due 2019 - 6.84%
85

 
91

 
Level 3
Term Loan Agreement due 2020 - 5.223%
422

 
396

 
Level 3
Floating-rate 737 Aircraft Notes payable through 2020
348

 
343

 
Level 3
Pass Through Certificates due 2022 - 6.24%
371

 
423

 
Level 2
7.375% Debentures due 2027
137

 
149

 
Level 2