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Fair Value Measurements (Tables)
 6 Months Ended
Jun. 30, 2014
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 June 30, 2014, and December 31, 2013:

 
 
 
 
Fair value measurements at reporting date using:
 
 
 
 
Quoted prices in
active markets
for identical assets
 
Significant
other observable
inputs
 
Significant
unobservable
inputs
Description
 
June 30, 2014
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
(in millions)
Cash equivalents
 
 
 
 
 
 
 
 
Cash equivalents (a)
 
$
1,388

 
$
1,388

 
$
—

 
$
—

Commercial paper
 
340

 
—

 
340

 
—

Certificates of deposit
 
12

 
—

 
12

 
—

Eurodollar time deposits
 
142

 
—

 
142

 
—

Short-term investments:
 
 
 
 
 
 
 
 
Treasury bills
 
1,880

 
1,880

 
—

 
—

Certificates of deposit
 
232

 
—

 
232

 
—

Noncurrent investments (b)
 
 
 
 
 
 
 
 
Auction rate securities
 
32

 
—

 
—

 
32

Interest rate derivatives
 
17

 
—

 
17

 
—

Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
48

 
—

 
48

 
—

Option contracts (c)
 
704

 
—

 
—

 
704

Other available-for-sale securities
 
64

 
59

 
—

 
5

Total assets
 
$
4,859

 
$
3,327

 
$
791

 
$
741

Liabilities
 
 
 
 
 
 
 
 
Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
$
(29
)
 
$
—

 
$
(29
)
 
$
—

Option contracts (c)
 
(298
)
 
—

 
—

 
(298
)
Interest rate derivatives
 
(72
)
 
—

 
(72
)
 
—

Deferred compensation
 
(155
)
 
(155
)
 
—

 
—

Total liabilities
 
$
(554
)
 
$
(155
)
 
$
(101
)
 
$
(298
)

(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.

 
 
 
 
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, 2013
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
(in millions)
Cash equivalents
 
 
 
 
 
 
 
 
Cash equivalents (a)
 
$
992

 
$
992

 
$
—

 
$
—

Commercial paper
 
280

 
—

 
280

 
—

Certificates of deposit
 
23

 
—

 
23

 
—

Eurodollar time deposits
 
60

 
—

 
60

 
—

Short-term investments:
 
 
 
 
 
 
 
 
Treasury bills
 
1,570

 
1,570

 
—

 
—

Certificates of deposit
 
227

 
—

 
227

 
—

Noncurrent investments (b)
 
 
 
 
 
 
 
 
Auction rate securities
 
39

 
—

 
—

 
39

Interest rate derivatives
 
20

 
—

 
20

 
—

Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
16

 
—

 
16

 
—

Option contracts (c)
 
458

 
—

 
—

 
458

Option contracts (d)
 
9

 
—

 
—

 
9

Other available-for-sale securities
 
63

 
58

 
—

 
5

Total assets
 
$
3,757

 
$
2,620

 
$
626

 
$
511

Liabilities
 
 
 
 
 
 
 
 
Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
$
(8
)
 
$
—

 
$
(8
)
 
$
—

Option contracts (c)
 
(274
)
 
—

 
—

 
(274
)
Option contracts (d)
 
(21
)
 
—

 
—

 
(21
)
Interest rate derivatives
 
(77
)
 
—

 
(77
)
 
—

Deferred Compensation
 
(158
)
 
(158
)
 
—

 
—

Total liabilities
 
$
(538
)
 
$
(158
)
 
$
(85
)
 
$
(295
)

(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.
(d) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net liability
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 six months ended June 30, 2014:


 
Fair value measurements using significant
unobservable inputs (Level 3)
 
Fuel
 
Auction rate
 
Other
 
 
(in millions)
derivatives
 
securities
 
securities
 
Total
Balance at March 31, 2014
$
206

 
$
32

 
$
5

 
$
243

Total gains (realized or unrealized)
 

 
 

 
 

 
 

Included in earnings
36

 
—

 
—

 
36

Included in other comprehensive income
166

 
—

 
—

 
166

Purchases
79

(a)
—

 
—

 
79

Sales
(73
)
(a)
—

 
—

 
(73
)
Settlements
(8
)
 
—

 
—

 
(8
)
Balance at June 30, 2014
$
406

 
$
32

(b)
$
5

 
$
443

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 June 30, 2014
$
36

 
$
—

 
$
—

 
$
36

(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, 2013
$
172

 
$
39

 
$
5

 
$
216

Total gains (realized or unrealized)
 
 
 

 
 

 
 

Included in earnings
105

 
—

 
—

 
105

Included in other comprehensive income
144

 
2

 
—

 
146

Purchases
100

(a)
—

 
—

 
100

Sales
(100
)
(a)
(9
)
 
—

 
(109
)
Settlements
(15
)
 
—

 
—

 
(15
)
Balance at June 30, 2014
$
406

 
$
32

(b)
$
5

 
$
443

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 June 30, 2014
$
98

 
$
—

 
$
—

 
$
98

(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 June 30, 2014:

Quantitative information about Level 3 fair value measurements
 
Valuation technique
Unobservable input
Period (by year)
Range
Fuel derivatives
Option model
Implied volatility
Third quarter 2014
8-19%
 
 
 
Fourth quarter 2014
12-19%
 
 
 
2015
12-20%
 
 
 
2016
11-19%
 
 
 
2017
11-16%
 
 
 
2018
11-14%
Auction rate securities
Discounted cash flow
Time to principal recovery
 
8 years
 
 
Illiquidity premium
 
3%
 
 
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
$
352

 
$
355

 
Level 2
5.75% Notes due 2016
317

 
348

 
Level 2
5.25% Convertible Senior Notes due 2016
114

 
226

 
Level 2
5.125% Notes due 2017
319

 
348

 
Level 2
Fixed-rate 717 Aircraft Notes payable through 2017 - 10.38%
7

 
8

 
Level 2
French Credit Agreements due 2018 - 1.03%
41

 
41

 
Level 3
Fixed-rate 737 Aircraft Notes payable through 2018 - 7.02%
27

 
28

 
Level 3
Term Loan Agreement due 2019 - 6.315%
195

 
201

 
Level 3
Term Loan Agreement due 2019 - 6.84%
79

 
85

 
Level 3
Term Loan Agreement due 2020 - 5.223%
393

 
378

 
Level 3
Floating-rate 737 Aircraft Notes payable through 2020
320

 
322

 
Level 3
Pass Through Certificates due 2022 - 6.24%
363

 
420

 
Level 2
7.375% Debentures due 2027
135

 
164

 
Level 2