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Fair Value Measurements (Tables)
 3 Months Ended
Mar. 31, 2017
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, 2017, and December 31, 2016:

 
 
 
 
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, 2017
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
(in millions)
Cash equivalents
 
 
 
 
 
 
 
 
Cash equivalents (a)
 
$
1,614

 
$
1,614

 
$
—

 
$
—

Commercial paper
 
230

 
—

 
230

 
—

Certificates of deposit
 
7

 
—

 
7

 
—

Short-term investments:
 
 
 
 
 
 
 
 
Treasury bills
 
1,347

 
1,347

 
—

 
—

Certificates of deposit
 
284

 
—

 
284

 
—

Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
44

 
—

 
44

 
—

Option contracts (b)
 
132

 
—

 
—

 
132

Option contracts (c)
 
169

 
—

 
—

 
169

Other available-for-sale securities
 
82

 
82

 
—

 
—

Total assets
 
$
3,909

 
$
3,043

 
$
565

 
$
301

Liabilities
 
 
 
 
 
 
 
 
Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
$
(77
)
 
$
—

 
$
(77
)
 
$
—

Option contracts (b)
 
(46
)
 
—

 
—

 
(46
)
     Option contracts (c)
 
(559
)
 
—

 
—

 
(559
)
Interest rate derivatives (see Note 3)
 
(30
)
 
—

 
(30
)
 
—

Total liabilities
 
$
(712
)
 
$
—

 
$
(107
)
 
$
(605
)
(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, 2016
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets
 
(in millions)
Cash equivalents
 
 
 
 
 
 
 
 
Cash equivalents (a)
 
$
1,344

 
$
1,344

 
$
—

 
$
—

Commercial paper
 
325

 
—

 
325

 
—

Certificates of deposit
 
11

 
—

 
11

 
—

Short-term investments:
 
 
 
 
 
 
 
 
Treasury bills
 
1,345

 
1,345

 
—

 
—

Certificates of deposit
 
280

 
—

 
280

 
—

Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
42

 
—

 
42

 
—

Option contracts (b)
 
239

 
—

 
—

 
239

Option contracts (c)
 
163

 
—

 
—

 
163

Other available-for-sale securities
 
83

 
83

 
—

 
—

Total assets
 
$
3,832

 
$
2,772

 
$
658

 
$
402

Liabilities
 
 
 
 
 
 
 
 
Fuel derivatives:
 
 
 
 
 
 
 
 
Swap contracts (c)
 
$
(110
)
 
$
—

 
$
(110
)
 
$
—

Option contracts (b)
 
(96
)
 
—

 
—

 
(96
)
Option contracts (c)
 
(564
)
 
—

 
—

 
(564
)
Interest rate derivatives (see Note 3)
 
(35
)
 
—

 
(35
)
 
—

Total liabilities
 
$
(805
)
 
$
—

 
$
(145
)
 
$
(660
)
(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 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, 2017:

Fair value measurements using significant unobservable inputs (Level 3)
(in millions)
Fuel derivatives
 
Balance at December 31, 2016
$
(258
)
 
Total losses (realized or unrealized)
 

 
Included in earnings
(89
)
 
Included in other comprehensive income
(125
)
 
Purchases
33

(a)
Sales
—

(a)
Settlements
135

 
Balance at March 31, 2017
$
(304
)
 
The amount of total losses for the period
  included in earnings attributable to the
  change in unrealized gains or losses relating
  to option contracts still held at March 31,
  2017.
$
(77
)
 
(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 March 31, 2017:

Quantitative information about Level 3 fair value measurements
 
 
Valuation technique
 
Unobservable input
 
Period (by year)
 
Range
Fuel derivatives
 
Option model
 
Implied volatility
 
Second quarter 2017
 
15-29%
 
 
 
 
 
 
Third quarter 2017
 
21-30%
 
 
 
 
 
 
Fourth quarter 2017
 
22-30%
 
 
 
 
 
 
2018
 
20-29%
 
 
 
 
 
 
2019
 
17-24%
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 March 31, 2017, 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. Debt under eight of the Company’s debt agreements is 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
French Credit Agreements due 2018 - 2.25%
$
14

 
$
14

 
Level 3
Fixed-rate 737 Aircraft Notes payable through 2018 - 7.03%
7

 
7

 
Level 3
2.75% Notes due 2019
301

 
305

 
Level 2
Term Loan Agreement payable through 2019 - 6.315%
96

 
97

 
Level 3
Term Loan Agreement payable through 2019 - 4.84%
24

 
25

 
Level 3
2.65% Notes due 2020
492

 
497

 
Level 2
Term Loan Agreement payable through 2020 - 5.223%
273

 
273

 
Level 3
737 Aircraft Notes payable through 2020
195

 
193

 
Level 3
Term Loan Agreements payable through 2021 - 7.94%
18

 
19

 
Level 3
Pass Through Certificates due 2022 - 6.24%
311

 
345

 
Level 2
Term Loan Agreement payable through 2026 - 2.36%
215

 
215

 
Level 3
3.00% Notes due 2026
300

 
285

 
Level 2
7.375% Debentures due 2027
129

 
157

 
Level 2