Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2019

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, 2019, and December 31, 2018:

				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, 2019			(Level 1)		(Level 2)			(Level 3)
Assets	(in millions)
Cash equivalents
Cash equivalents (a)	$	1,870		$	1,870	$	—		$	—
Commercial paper	440			—		440			—
Certificates of deposit	9			—		9			—
Time deposits	25			—		25			—
Short-term investments:
Treasury bills	1,289			1,289		—			—
Certificates of deposit	228			—		228			—
Fuel derivatives:
Option contracts (b)	254			—		—			254
Other available-for-sale securities	162			162		—			—
Total assets	$	4,277		$	3,321	$	702		$	254
Liabilities
Interest rate derivatives (see Note 3)	$	(23	)	$	—	$	(23	)	$	—

(a) Cash equivalents are primarily composed of money market investments.

(b) In the unaudited Condensed Consolidated Balance Sheet amounts are presented as an asset. 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, 2018			(Level 1)		(Level 2)			(Level 3)
Assets	(in millions)
Cash equivalents
Cash equivalents (a)	$	1,392		$	1,392	$	—		$	—
Commercial paper	454			—		454			—
Certificates of deposit	8			—		8			—
Short-term investments:
Treasury bills	1,582			1,582		—			—
Certificates of deposit	228			—		228			—
Time deposits	25			—		25			—
Fuel derivatives:
Option contracts (b)	138			—		—			138
Other available-for-sale securities	127			127		—			—
Total assets	$	3,954		$	3,101	$	715		$	138
Liabilities
Interest rate derivatives (see Note 3)	$	(14	)	$	—	$	(14	)	$	—

(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.

Fair Value, Assets 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, 2019:

Fair value measurements using significant unobservable inputs (Level 3)
(in millions)	Fuel derivatives
Balance at December 31, 2018	$	138
Total gains (realized or unrealized) included in other comprehensive income	91
Purchases	44			(a)
Sales	(2		)	(a)
Settlements	(17		)
Balance at March 31, 2019	$	254

(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 was 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, 2019:

Quantitative information about Level 3 fair value measurements
	Valuation technique	Unobservable input	Period (by year)	Range
Fuel derivatives	Option model	Implied volatility	Second quarter 2019	14-29%
			Third quarter 2019	21-27%
			Fourth quarter 2019	22-27%
			2020	19-27%
			2021	18-21%
			2022	17-18%

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, 2019, 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 five 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
Term Loan Agreement payable through May 2019 - 6.315%	$	11	$	11	Level 3
Term Loan Agreement payable through July 2019 - 4.84%	5		5		Level 3
2.75% Notes due November 2019	300		300		Level 2
2.65% Notes due 2020	495		494		Level 2
Term Loan Agreement payable through 2020 - 5.223%	174		174		Level 3
737 Aircraft Notes payable through 2020	45		44		Level 3
2.75% Notes due 2022	300		299		Level 2
Pass Through Certificates due 2022 - 6.24%	225		236		Level 2
Term Loan Agreement payable through 2026 - 3.88%	197		197		Level 3
3.00% Notes due 2026	300		290		Level 2
3.45% Notes due 2027	300		298		Level 2
7.375% Debentures due 2027	124		148		Level 2