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Fair Value Measurements (Tables)
 6 Months Ended
Jun. 30, 2015
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, 2015, and December 31, 2014:

 
 
 
 
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, 2015
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
(in millions)
Cash equivalents
 
 
 
 
 
 
 
 
Cash equivalents (a)
 
$
1,565

 
$
1,565

 
$
—

 
$
—

Commercial paper
 
125

 
—

 
125

 
—

Certificates of deposit
 
8

 
—

 
8

 
—

Eurodollar time deposits
 
74

 
—

 
74

 
—

Short-term investments:
 
 
 
 
 
 
 
 
Treasury bills
 
1,150

 
1,150

 
—

 
—

Certificates of deposit
 
210

 
—

 
210

 
—

Noncurrent investments (b)
 
 
 
 
 
 
 
 
Auction rate securities
 
27

 
—

 
—

 
27

Interest rate derivatives
 
1

 
—

 
1

 
—

Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
294

 
—

 
294

 
—

Option contracts (c)
 
332

 
—

 
—

 
332

Other available-for-sale securities
 
67

 
67

 
—

 
—

Total assets
 
$
3,853

 
$
2,782

 
$
712

 
$
359

Liabilities
 
 
 
 
 
 
 
 
Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
$
(267
)
 
$
—

 
$
(267
)
 
$
—

Option contracts (c)
 
(1,387
)
 
—

 
—

 
(1,387
)
Interest rate derivatives
 
(54
)
 
—

 
(54
)
 
—

Total liabilities
 
$
(1,708
)
 
$
—

 
$
(321
)
 
$
(1,387
)
(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 liability.

 
 
 
 
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, 2014
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
(in millions)
Cash equivalents
 
 
 
 
 
 
 
 
Cash equivalents (a)
 
$
1,110

 
$
1,110

 
$
—

 
$
—

Commercial paper
 
70

 
—

 
70

 
—

Certificates of deposit
 
4

 
—

 
4

 
—

Eurodollar time deposits
 
98

 
—

 
98

 
—

Short-term investments:
 
 
 
 
 
 
 
 
Treasury bills
 
1,450

 
1,450

 
—

 
—

Certificates of deposit
 
256

 
—

 
256

 
—

Noncurrent investments (b)
 
 
 
 
 
 
 
 
Auction rate securities
 
27

 
—

 
—

 
27

Interest rate derivatives
 
13

 
—

 
13

 
—

Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
455

 
—

 
455

 
—

Option contracts (c)
 
892

 
—

 
—

 
892

Other available-for-sale securities
 
68

 
63

 
—

 
5

Total assets
 
$
4,443

 
$
2,623

 
$
896

 
$
924

Liabilities
 
 
 
 
 
 
 
 
Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
$
(365
)
 
$
—

 
$
(365
)
 
$
—

Option contracts (c)
 
(1,983
)
 
—

 
—

 
(1,983
)
Interest rate derivatives
 
(61
)
 
—

 
(61
)
 
—

Total liabilities
 
$
(2,409
)
 
$
—

 
$
(426
)
 
$
(1,983
)
(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 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, 2015:

 
Fair value measurements using significant
unobservable inputs (Level 3)
 
Fuel
 
Auction rate
 
Other
 
 
(in millions)
derivatives
 
securities
 
securities
 
Total
Balance at March 31, 2015
$
(1,245
)
 
$
27

 
$
—

 
$
(1,218
)
Total gains (realized or unrealized)
 

 
 

 
 

 
 

Included in earnings
85

 
—

 
—

 
85

Included in other comprehensive income
50

 
—

 
—

 
50

Purchases
182

(a)
—

 
—

 
182

Sales
(127
)
(a)
—

 
—

 
(127
)
Balance at June 30, 2015
$
(1,055
)
 
$
27

(b)
$
—

 
$
(1,028
)
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, 2015
$
85

 
$
—

 
$
—

 
$
85

(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, 2014
$
(1,091
)
 
$
27

 
$
5

 
$
(1,059
)
Total losses (realized or unrealized)
 
 
 

 
 

 
 

Included in earnings
(8
)
 
—

 
(1
)
 
(9
)
Included in other comprehensive income
(29
)
 
—

 
—

 
(29
)
Purchases
244

(a)
—

 
—

 
244

Sales
(171
)
(a)
—

 
(4
)
 
(175
)
Balance at June 30, 2015
$
(1,055
)
 
$
27

(b)
$
—

 
$
(1,028
)
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 June 30, 2015
$
(8
)
 
$
—

 
$
—

 
$
(8
)
(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, 2015:

Quantitative information about Level 3 fair value measurements
 
Valuation technique
Unobservable input
Period (by year)
Range
Fuel derivatives
Option model
Implied volatility
Third quarter 2015
18-33%
 
 
 
Fourth quarter 2015
26-35%
 
 
 
2016
23-37%
 
 
 
2017
17-29%
 
 
 
2018
19-23%
Auction rate securities
Discounted cash flow
Time to principal recovery
 
8 years
 
 
Illiquidity premium
 
3-4%
 
 
Counterparty credit spread
 
1-2%
Fair value, by Balance Sheet Grouping
The carrying amounts and estimated fair values of the Company’s long-term debt (including current maturities), as well as the applicable fair value hierarchy tier, at June 30, 2015, are presented in the table below. The fair values of the Company’s publicly held long-term debt are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets; therefore, the Company has categorized these agreements as Level 2. Six of the Company’s debt agreements are not publicly held. The Company has determined the estimated fair value of this debt to be Level 3, as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes indicative pricing from counterparties and a discounted cash flow method to estimate the fair value of the Level 3 items.

(in millions)
 Carrying value
 
Estimated fair value
 
Fair value level hierarchy
5.75% Notes due 2016
$
310

 
$
328

 
Level 2
5.25% Convertible Senior Notes due 2016
112

 
264

 
Level 2
5.125% Notes due 2017
312

 
331

 
Level 2
French Credit Agreements due 2018 - 1.15%
31

 
31

 
Level 3
Fixed-rate 737 Aircraft Notes payable through 2018 - 7.02%
20

 
21

 
Level 3
2.75% Notes due 2019
302

 
308

 
Level 2
Term Loan Agreement due 2019 - 6.315%
161

 
167

 
Level 3
Term Loan Agreement due 2019 - 6.84%
67

 
72

 
Level 3
Term Loan Agreement due 2020 - 5.223%
351

 
347

 
Level 3
Floating-rate 737 Aircraft Notes payable through 2020
279

 
275

 
Level 3
Pass Through Certificates due 2022 - 6.24%
347

 
395

 
Level 2
7.375% Debentures due 2027
133

 
157

 
Level 2