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Fair Value Measurements (Tables)
 6 Months Ended
Jun. 30, 2016
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, 2016, and December 31, 2015:

 
 
 
 
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, 2016
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
(in millions)
Cash equivalents
 
 
 
 
 
 
 
 
Cash equivalents (a)
 
$
1,686

 
$
1,686

 
$
—

 
$
—

Commercial paper
 
270

 
—

 
270

 
—

Certificates of deposit
 
9

 
—

 
9

 
—

Eurodollar time deposits
 
75

 
—

 
75

 
—

Short-term investments:
 
 
 
 
 
 
 
 
Treasury bills
 
1,098

 
1,098

 
—

 
—

Certificates of deposit
 
277

 
—

 
277

 
—

Interest rate derivatives
 
21

 
—

 
21

 
—

Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (b)
 
15

 
—

 
15

 
—

Swap contracts (c)
 
283

 
—

 
283

 
—

Option contracts (b)
 
15

 
—

 
—

 
15

Option contracts (c)
 
456

 
—

 
—

 
456

Other available-for-sale securities
 
104

 
78

 
—

 
26

Total assets
 
$
4,309

 
$
2,862

 
$
950

 
$
497

Liabilities
 
 
 
 
 
 
 
 
Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
$
(348
)
 
$
—

 
$
(348
)
 
$
—

Option contracts (b)
 
(10
)
 
—

 
—

 
(10
)
     Option contracts (c)
 
(1,368
)
 
—

 
—

 
(1,368
)
Interest rate derivatives
 
(44
)
 
—

 
(44
)
 
—

Total liabilities
 
$
(1,770
)
 
$
—

 
$
(392
)
 
$
(1,378
)
(a) Cash equivalents are primarily composed of money market investments.
(b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net asset. See Note 3.
(c) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as a net liability. See Note 3.

 
 
 
 
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, 2015
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
(in millions)
Cash equivalents
 
 
 
 
 
 
 
 
Cash equivalents (a)
 
$
1,337

 
$
1,337

 
$
—

 
$
—

Commercial paper
 
200

 
—

 
200

 
—

Certificates of deposit
 
13

 
—

 
13

 
—

Eurodollar time deposits
 
33

 
—

 
33

 
—

Short-term investments:
 
 
 
 
 
 
 
 
Treasury bills
 
1,248

 
1,248

 
—

 
—

Certificates of deposit
 
220

 
—

 
220

 
—

Interest rate derivatives (see Note 3)
 
2

 
—

 
2

 
—

Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (b)
 
38

 
—

 
38

 
—

Swap contracts (c)
 
931

 
—

 
931

 
—

Option contracts (b)
 
10

 
—

 
—

 
10

Option contracts (c)
 
956

 
—

 
—

 
956

Other available-for-sale securities
 
93

 
66

 
—

 
27

Total assets
 
$
5,081

 
$
2,651

 
$
1,437

 
$
993

Liabilities
 
 
 
 
 
 
 
 
Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
$
(774
)
 
$
—

 
$
(774
)
 
$
—

Option contracts (b)
 
(26
)
 
—

 
—

 
(26
)
Option contracts (c)
 
(2,616
)
 
—

 
—

 
(2,616
)
Interest rate derivatives (see Note 3)
 
(49
)
 
—

 
(49
)
 
—

Total liabilities
 
$
(3,465
)
 
$
—

 
$
(823
)
 
$
(2,642
)
(a) Cash equivalents are primarily composed of money market investments.
(b) In the unaudited Consolidated Balance Sheet amounts are presented as a net asset. See Note 3.
(c) In the unaudited Consolidated Balance Sheet amounts are presented as a net liability. See Note 3.
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, 2016:

 
Fair value measurements using significant
unobservable inputs (Level 3)
 
Fuel
 
Other
 
 
(in millions)
derivatives
 
securities
 
Total
Balance at March 31, 2016
$
(1,481
)
 
$
26

 
$
(1,455
)
Total gains (realized or unrealized)
 

 
 

 
 

Included in earnings
208

 
—

 
208

Included in other comprehensive income
187

 
—

 
187

Purchases
59

(a)
—

 
59

Sales
(28
)
(a)
—

 
(28
)
Settlements
148

 
—

 
148

Balance at June 30, 2016
$
(907
)
 
$
26

 
$
(881
)
The amount of total gains for the period
  included in earnings attributable to the
  change in unrealized gains or losses relating
  to option contracts still held at June 30, 2016
$
190

 
$
—

 
$
190

(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.
 
Fair value measurements using significant
unobservable inputs (Level 3)
 
Fuel
 
Other
 
 
(in millions)
derivatives
 
securities
 
Total
Balance at December 31, 2015
$
(1,676
)
 
$
27

 
$
(1,649
)
Total gains (realized or unrealized)
 

 
 

 
 

Included in earnings
174

 
—

 
174

Included in other comprehensive income
135

 
(1
)
 
134

Purchases
130

(a)
—

 
130

Sales
(57
)
(a)
—

 
(57
)
Settlements
387

 
—

 
387

Balance at June 30, 2016
$
(907
)
 
$
26

 
$
(881
)
The amount of total gains for the period
  included in earnings attributable to the
  change in unrealized gains or losses relating
  to option contracts still held at June 30, 2016
$
170

 
$
—

 
$
170

(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.
Fair Value Valuation Techniques
The following table presents a range of the unobservable inputs utilized in the fair value measurements of the Company’s fuel derivatives classified as Level 3 at June 30, 2016:

Quantitative information about Level 3 fair value measurements
 
Valuation technique
Unobservable input
Period (by year)
Range
Fuel derivatives
Option model
Implied volatility
Third quarter 2016
20-34%
 
 
 
Fourth quarter 2016
27-36%
 
 
 
2017
27-39%
 
 
 
2018
23-32%
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, 2016, 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
$
303

 
$
308

 
Level 2
5.25% Convertible Senior Notes due 2016
111

 
302

 
Level 2
5.125% Notes due 2017
305

 
313

 
Level 2
French Credit Agreements due 2018 - 1.60%
20

 
20

 
Level 3
Fixed-rate 737 Aircraft Notes payable through 2018 - 7.02%
14

 
14

 
Level 3
2.75% Notes due 2019
311

 
325

 
Level 2
Term Loan Agreement due 2019 - 6.315%
125

 
127

 
Level 3
Term Loan Agreement due 2019 - 4.84%
32

 
34

 
Level 3
2.65% Notes due 2020
512

 
528

 
Level 2
Term Loan Agreement due 2020 - 5.223%
307

 
299

 
Level 3
Floating-rate 737 Aircraft Notes payable through 2020
235

 
233

 
Level 3
Pass Through Certificates due 2022 - 6.24%
332

 
378

 
Level 2
7.375% Debentures due 2027
131

 
163

 
Level 2