þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the quarterly period ended September 30, 2015
|
|
or
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from ________ to ________
|
TEXAS
|
74-1563240
|
(State or other jurisdiction of
|
(IRS Employer
|
incorporation or organization)
|
Identification No.)
|
P.O. Box 36611
|
|
Dallas, Texas
|
75235-1611
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer
þ
|
Accelerated filer
¨
|
Non-accelerated filer
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
¨
|
|
September 30, 2015
|
|
December 31, 2014
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,740
|
|
|
$
|
1,282
|
|
Short-term investments
|
1,356
|
|
|
1,706
|
|
||
Accounts and other receivables
|
465
|
|
|
365
|
|
||
Inventories of parts and supplies, at cost
|
308
|
|
|
342
|
|
||
Deferred income taxes
|
465
|
|
|
477
|
|
||
Prepaid expenses and other current assets
|
239
|
|
|
232
|
|
||
Total current assets
|
4,573
|
|
|
4,404
|
|
||
|
|
|
|
||||
Property and equipment, at cost:
|
|
|
|
|
|
||
Flight equipment
|
19,244
|
|
|
18,473
|
|
||
Ground property and equipment
|
3,066
|
|
|
2,853
|
|
||
Deposits on flight equipment purchase contracts
|
692
|
|
|
566
|
|
||
Assets constructed for others
|
823
|
|
|
621
|
|
||
|
23,825
|
|
|
22,513
|
|
||
Less allowance for depreciation and amortization
|
8,896
|
|
|
8,221
|
|
||
|
14,929
|
|
|
14,292
|
|
||
Goodwill
|
970
|
|
|
970
|
|
||
Other assets
|
687
|
|
|
534
|
|
||
|
$
|
21,159
|
|
|
$
|
20,200
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
1,235
|
|
|
$
|
1,203
|
|
Accrued liabilities
|
2,049
|
|
|
1,565
|
|
||
Air traffic liability
|
3,513
|
|
|
2,897
|
|
||
Current maturities of long-term debt
|
287
|
|
|
258
|
|
||
Total current liabilities
|
7,084
|
|
|
5,923
|
|
||
|
|
|
|
||||
Long-term debt less current maturities
|
2,381
|
|
|
2,434
|
|
||
Deferred income taxes
|
3,111
|
|
|
3,259
|
|
||
Construction obligation
|
684
|
|
|
554
|
|
||
Other noncurrent liabilities
|
931
|
|
|
1,255
|
|
||
Stockholders' equity:
|
|
|
|
|
|
||
Common stock
|
808
|
|
|
808
|
|
||
Capital in excess of par value
|
1,330
|
|
|
1,315
|
|
||
Retained earnings
|
8,922
|
|
|
7,416
|
|
||
Accumulated other comprehensive loss
|
(903
|
)
|
|
(738
|
)
|
||
Treasury stock, at cost
|
(3,189
|
)
|
|
(2,026
|
)
|
||
Total stockholders' equity
|
6,968
|
|
|
6,775
|
|
||
|
$
|
21,159
|
|
|
$
|
20,200
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
584
|
|
|
$
|
329
|
|
|
$
|
1,645
|
|
|
$
|
946
|
|
Adjustments to reconcile net income to cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
258
|
|
|
238
|
|
|
751
|
|
|
687
|
|
||||
Unrealized/realized (gain) loss on fuel derivative instruments
|
87
|
|
|
63
|
|
|
172
|
|
|
(4
|
)
|
||||
Deferred income taxes
|
(82
|
)
|
|
392
|
|
|
(40
|
)
|
|
472
|
|
||||
Changes in certain assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts and other receivables
|
4
|
|
|
(22
|
)
|
|
(86
|
)
|
|
(83
|
)
|
||||
Other assets
|
33
|
|
|
6
|
|
|
40
|
|
|
(7
|
)
|
||||
Accounts payable and accrued liabilities
|
380
|
|
|
(534
|
)
|
|
424
|
|
|
(86
|
)
|
||||
Air traffic liability
|
(301
|
)
|
|
(108
|
)
|
|
617
|
|
|
806
|
|
||||
Cash collateral received from (provided to) derivative counterparties
|
181
|
|
|
(98
|
)
|
|
(213
|
)
|
|
8
|
|
||||
Other, net
|
(308
|
)
|
|
(26
|
)
|
|
(396
|
)
|
|
(41
|
)
|
||||
Net cash provided by operating activities
|
836
|
|
|
240
|
|
|
2,914
|
|
|
2,698
|
|
||||
|
|
|
|
|
|
|
|
||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital expenditures
|
(230
|
)
|
|
(406
|
)
|
|
(1,231
|
)
|
|
(1,282
|
)
|
||||
Assets constructed for others
|
(32
|
)
|
|
(27
|
)
|
|
(76
|
)
|
|
(58
|
)
|
||||
Purchases of short-term investments
|
(506
|
)
|
|
(415
|
)
|
|
(1,383
|
)
|
|
(2,344
|
)
|
||||
Proceeds from sales of short-term and other investments
|
509
|
|
|
805
|
|
|
1,732
|
|
|
2,427
|
|
||||
Other, net
|
—
|
|
|
(1
|
)
|
|
(9
|
)
|
|
(2
|
)
|
||||
Net cash used in investing activities
|
(259
|
)
|
|
(44
|
)
|
|
(967
|
)
|
|
(1,259
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Proceeds from Employee stock plans
|
9
|
|
|
23
|
|
|
30
|
|
|
96
|
|
||||
Proceeds from termination of interest rate derivative instruments
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
||||
Reimbursement for assets constructed for others
|
9
|
|
|
26
|
|
|
14
|
|
|
26
|
|
||||
Payments of long-term debt and capital lease obligations
|
(79
|
)
|
|
(48
|
)
|
|
(170
|
)
|
|
(167
|
)
|
||||
Payments of cash dividends
|
(49
|
)
|
|
(41
|
)
|
|
(180
|
)
|
|
(138
|
)
|
||||
Repayment of construction obligation
|
(3
|
)
|
|
(3
|
)
|
|
(8
|
)
|
|
(8
|
)
|
||||
Repurchase of common stock
|
(500
|
)
|
|
(200
|
)
|
|
(1,180
|
)
|
|
(755
|
)
|
||||
Other, net
|
4
|
|
|
(3
|
)
|
|
(7
|
)
|
|
(16
|
)
|
||||
Net cash used in financing activities
|
(609
|
)
|
|
(246
|
)
|
|
(1,489
|
)
|
|
(962
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
(32
|
)
|
|
(50
|
)
|
|
458
|
|
|
477
|
|
||||
|
|
|
|
|
|
|
|
||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
1,772
|
|
|
1,882
|
|
|
1,282
|
|
|
1,355
|
|
||||
|
|
|
|
|
|
|
|
||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
1,740
|
|
|
$
|
1,832
|
|
|
$
|
1,740
|
|
|
$
|
1,832
|
|
|
|
|
|
|
|
|
|
||||||||
CASH PAYMENTS FOR:
|
|
|
|
|
|
|
|
||||||||
Interest, net of amount capitalized
|
$
|
33
|
|
|
$
|
35
|
|
|
$
|
86
|
|
|
$
|
102
|
|
Income taxes
|
$
|
409
|
|
|
$
|
132
|
|
|
$
|
975
|
|
|
$
|
144
|
|
|
|
|
|
|
|
|
|
||||||||
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
|
|
|
|
|
|
|
|
||||||||
Flight equipment under capital leases
|
$
|
48
|
|
|
$
|
31
|
|
|
$
|
130
|
|
|
$
|
94
|
|
Assets constructed for others
|
$
|
46
|
|
|
$
|
27
|
|
|
$
|
126
|
|
|
$
|
59
|
|
(in millions, except per share amounts)
|
Three months ended September 30, 2015
|
|
Nine months ended September 30, 2015
|
||||
Passenger revenue
|
$
|
(40
|
)
|
|
$
|
(40
|
)
|
Special revenue adjustment
|
172
|
|
|
172
|
|
||
Other revenue
|
171
|
|
|
171
|
|
||
Operating revenues
|
$
|
303
|
|
|
$
|
303
|
|
Net income
|
$
|
161
|
|
|
$
|
161
|
|
Net income per basic share
|
$
|
0.25
|
|
|
$
|
0.24
|
|
Net income per diluted share
|
$
|
0.24
|
|
|
$
|
0.24
|
|
(in millions, except per share amounts)
|
Three months ended September 30, 2015
|
|
Nine months ended September 30, 2015
|
||||
Passenger revenue
|
$
|
30
|
|
|
$
|
115
|
|
Net income
|
$
|
16
|
|
|
$
|
61
|
|
Net income per basic share
|
$
|
0.02
|
|
|
$
|
0.09
|
|
Net income per diluted share
|
$
|
0.02
|
|
|
$
|
0.09
|
|
|
|
Fuel hedged as of
|
|
|
|
|
|
September 30, 2015
|
|
Derivative underlying commodity type as of
|
|
Period (by year)
|
|
(gallons in millions)
|
|
September 30, 2015
|
|
Fourth quarter 2015
|
|
—
|
|
(a)
|
|
2016
|
|
1,188
|
|
(b)
|
Brent crude oil, Heating oil, and Gulf Coast jet fuel
|
2017
|
|
1,294
|
|
(b)
|
WTI crude and Brent crude oil
|
2018
|
|
466
|
|
(b)
|
Brent crude oil
|
|
|
|
|
Asset derivatives
|
|
Liability derivatives
|
||||||||||||
|
|
Balance Sheet
|
|
Fair value at
|
|
Fair value at
|
|
Fair value at
|
|
Fair value at
|
||||||||
(in millions)
|
|
location
|
|
9/30/2015
|
|
12/31/2014
|
|
9/30/2015
|
|
12/31/2014
|
||||||||
Derivatives designated as hedges*
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fuel derivative contracts (gross)
|
|
Accrued liabilities
|
|
$
|
36
|
|
|
$
|
—
|
|
|
$
|
414
|
|
|
$
|
—
|
|
Fuel derivative contracts (gross)
|
|
Other noncurrent liabilities
|
|
54
|
|
|
—
|
|
|
596
|
|
|
643
|
|
||||
Interest rate derivative contracts
|
|
Other assets
|
|
6
|
|
|
13
|
|
|
—
|
|
|
—
|
|
||||
Interest rate derivative contracts
|
|
Other noncurrent liabilities
|
|
—
|
|
|
—
|
|
|
54
|
|
|
61
|
|
||||
Total derivatives designated as hedges
|
|
$
|
96
|
|
|
$
|
13
|
|
|
$
|
1,064
|
|
|
$
|
704
|
|
||
Derivatives not designated as hedges*
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fuel derivative contracts (gross)
|
|
Accrued liabilities
|
|
$
|
1,358
|
|
|
$
|
1,190
|
|
|
$
|
1,536
|
|
|
$
|
1,432
|
|
Fuel derivative contracts (gross)
|
|
Other noncurrent liabilities
|
|
282
|
|
|
157
|
|
|
414
|
|
|
273
|
|
||||
Total derivatives not designated as hedges
|
|
|
|
$
|
1,640
|
|
|
$
|
1,347
|
|
|
$
|
1,950
|
|
|
$
|
1,705
|
|
Total derivatives
|
|
|
|
$
|
1,736
|
|
|
$
|
1,360
|
|
|
$
|
3,014
|
|
|
$
|
2,409
|
|
|
|
Balance Sheet
|
|
September 30,
|
|
December 31,
|
||||
(in millions)
|
|
location
|
|
2015
|
|
2014
|
||||
Cash collateral deposits provided to counterparties for fuel
contracts - current
|
|
Offset against Accrued liabilities
|
|
$
|
15
|
|
|
$
|
68
|
|
Cash collateral deposits provided to counterparties for fuel
contracts - noncurrent |
|
Offset against Other noncurrent liabilities
|
|
463
|
|
|
198
|
|
||
Due to third parties for fuel contracts
|
|
Accounts payable
|
|
41
|
|
|
16
|
|
Offsetting of derivative liabilities
|
||||||||||||||||||||||||||
(in millions)
|
||||||||||||||||||||||||||
|
|
|
|
(i)
|
|
(ii)
|
|
(iii) = (i) + (ii)
|
|
(i)
|
|
(ii)
|
|
(iii) = (i) + (ii)
|
||||||||||||
|
|
|
|
September 30, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
Description
|
|
Balance Sheet location
|
|
Gross amounts of recognized liabilities
|
|
Gross amounts offset in the Balance Sheet
|
|
Net amounts of liabilities presented in the Balance Sheet (a)
|
|
Gross amounts of recognized liabilities
|
|
Gross amounts offset in the Balance Sheet
|
|
Net amounts of liabilities presented in the Balance Sheet (a)
|
||||||||||||
Fuel derivative contracts
|
|
Accrued liabilities
|
|
$
|
1,950
|
|
|
$
|
(1,409
|
)
|
|
$
|
541
|
|
|
$
|
1,432
|
|
|
$
|
(1,258
|
)
|
|
$
|
174
|
|
Fuel derivative contracts
|
|
Other noncurrent liabilities
|
|
$
|
1,010
|
|
|
$
|
(799
|
)
|
|
$
|
211
|
|
|
$
|
916
|
|
|
$
|
(355
|
)
|
|
$
|
561
|
|
Interest rate derivative contracts
|
|
Other noncurrent liabilities
|
|
$
|
54
|
|
|
$
|
—
|
|
|
$
|
54
|
|
|
$
|
61
|
|
|
$
|
—
|
|
|
$
|
61
|
|
Derivatives in cash flow hedging relationships
|
|||||||||||||||||||||||
|
(Gain) loss recognized in AOCI on derivatives (effective portion)
|
|
(Gain) loss reclassified from AOCI into income (effective portion) (a)
|
|
(Gain) loss recognized in income on derivatives (ineffective portion) (b)
|
||||||||||||||||||
|
Three months ended
|
|
Three months ended
|
|
Three months ended
|
||||||||||||||||||
|
September 30,
|
|
September 30,
|
|
September 30,
|
||||||||||||||||||
(in millions)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||||||
Fuel derivative contracts
|
$
|
315
|
|
*
|
$
|
214
|
|
*
|
$
|
79
|
|
*
|
$
|
4
|
|
*
|
$
|
—
|
|
|
$
|
11
|
|
Interest rate derivatives
|
3
|
|
*
|
(2
|
)
|
*
|
3
|
|
*
|
4
|
|
*
|
—
|
|
|
(2
|
)
|
||||||
Total
|
$
|
318
|
|
|
$
|
212
|
|
|
$
|
82
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
9
|
|
Derivatives not in cash flow hedging relationships
|
|||||||||
|
(Gain) loss
|
|
|
||||||
|
recognized in income on
|
|
|
||||||
|
derivatives
|
|
|
||||||
|
Nine months ended
|
|
Location of (gain) loss
|
||||||
|
September 30,
|
|
recognized in income
|
||||||
(in millions)
|
2015
|
|
2014
|
|
on derivatives
|
||||
Fuel derivative contracts
|
$
|
330
|
|
|
$
|
(1
|
)
|
|
Other (gains) losses, net
|
|
Counterparty (CP)
|
|
|
||||||||||||||||||||||||||||
(in millions)
|
A
|
|
B
|
|
C
|
|
D
|
|
E
|
|
F
|
|
Other
(a)
|
|
Total
|
||||||||||||||||
Fair value of fuel derivatives
|
$
|
(514
|
)
|
|
$
|
(179
|
)
|
|
$
|
(153
|
)
|
|
$
|
(206
|
)
|
|
$
|
(108
|
)
|
|
$
|
(37
|
)
|
|
$
|
(33
|
)
|
|
$
|
(1,230
|
)
|
Cash collateral held (by) CP
|
(238
|
)
|
|
(50
|
)
|
|
(39
|
)
|
|
(146
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(478
|
)
|
||||||||
Aircraft collateral pledged to CP
|
(210
|
)
|
|
(90
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300
|
)
|
||||||||
Letters of credit (LC)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Option to substitute LC for aircraft
|
(200) to (600)(h)
|
|
(100) to (500)(d)
|
|
N/A
|
|
(150) to (550)(d)
|
|
N/A
|
|
N/A
|
|
|
|
|
||||||||||||||||
Option to substitute LC for cash
|
N/A
|
|
>(500)(e)
|
|
(225) to (275)(e)
|
|
(75) to (150) or >(550)(e)
|
|
(g)
|
|
(g)
|
|
|
|
|
||||||||||||||||
If credit rating is investment
grade, fair value of fuel
derivative level at which:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash is provided to CP
|
(50) to (200) or >(600)
|
|
(50) to (100) or >(500)
|
|
>(125)
|
|
(75) to (150) or >(550)
|
|
>(125)
|
|
>(50)
|
|
|
|
|
||||||||||||||||
Cash is received from CP
|
>50
|
|
>150
|
|
>175(c)
|
|
>250
|
|
>75
|
|
>50
|
|
|
|
|
||||||||||||||||
Aircraft or cash can be pledged to
CP as collateral
|
(200) to (600)(f)
|
|
(100) to (500)(d)
|
|
N/A
|
|
(150) to (550)(d)
|
|
N/A
|
|
N/A
|
|
|
|
|
||||||||||||||||
If credit rating is non-investment
grade, fair value of fuel derivative level at which:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash is provided to CP
|
(0) to (200) or >(600)
|
|
(0) to (100) or >(500)
|
|
(b)
|
|
(0) to (150) or >(550)
|
|
(b)
|
|
(b)
|
|
|
|
|
||||||||||||||||
Cash is received from CP
|
(b)
|
|
(b)
|
|
(b)
|
|
(b)
|
|
(b)
|
|
(b)
|
|
|
|
|
||||||||||||||||
Aircraft or cash can be pledged to
CP as collateral
|
(200) to (600)
|
|
(100) to (500)
|
|
N/A
|
|
(150) to (550)
|
|
N/A
|
|
N/A
|
|
|
|
|
|
Three months ended September 30,
|
||||||
(in millions)
|
2015
|
|
2014
|
||||
NET INCOME
|
$
|
584
|
|
|
$
|
329
|
|
Unrealized loss on fuel derivative instruments, net of
deferred taxes of ($139) and ($124)
|
(236
|
)
|
|
(210
|
)
|
||
Unrealized gain on interest rate derivative instruments, net of
deferred taxes of $- and $3
|
—
|
|
|
6
|
|
||
Other, net of deferred taxes of ($2) and $1
|
(3
|
)
|
|
1
|
|
||
Total other comprehensive loss
|
$
|
(239
|
)
|
|
$
|
(203
|
)
|
COMPREHENSIVE INCOME
|
$
|
345
|
|
|
$
|
126
|
|
|
Nine months ended September 30,
|
||||||
(in millions)
|
2015
|
|
2014
|
||||
NET INCOME
|
$
|
1,645
|
|
|
$
|
946
|
|
Unrealized loss on fuel derivative instruments, net of
deferred taxes of ($97) and ($60)
|
(164
|
)
|
|
(101
|
)
|
||
Unrealized gain on interest rate derivative instruments, net of
deferred taxes of $2 and $4
|
3
|
|
|
8
|
|
||
Other, net of deferred taxes of ($1) and $4
|
(4
|
)
|
|
4
|
|
||
Total other comprehensive loss
|
$
|
(165
|
)
|
|
$
|
(89
|
)
|
COMPREHENSIVE INCOME
|
$
|
1,480
|
|
|
$
|
857
|
|
(in millions)
|
Fuel derivatives
|
|
Interest rate derivatives
|
|
Defined benefit plan items
|
|
Other
|
|
Deferred tax
|
|
Accumulated other
comprehensive income (loss)
|
||||||||||||
Balance at June 30, 2015
|
$
|
(1,063
|
)
|
|
$
|
(40
|
)
|
|
$
|
41
|
|
|
$
|
8
|
|
|
$
|
390
|
|
|
$
|
(664
|
)
|
Changes in fair value
|
(501
|
)
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|
190
|
|
|
(321
|
)
|
||||||
Reclassification to earnings
|
126
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
(49
|
)
|
|
82
|
|
||||||
Balance at September 30, 2015
|
$
|
(1,438
|
)
|
|
$
|
(40
|
)
|
|
$
|
41
|
|
|
$
|
3
|
|
|
$
|
531
|
|
|
$
|
(903
|
)
|
(in millions)
|
Fuel derivatives
|
|
Interest rate derivatives
|
|
Defined benefit plan items
|
|
Other
|
|
Deferred tax
|
|
Accumulated other
comprehensive income (loss)
|
||||||||||||
Balance at December 31, 2014
|
$
|
(1,177
|
)
|
|
$
|
(45
|
)
|
|
$
|
41
|
|
|
$
|
8
|
|
|
$
|
435
|
|
|
$
|
(738
|
)
|
Changes in fair value
|
(525
|
)
|
|
(10
|
)
|
|
—
|
|
|
(5
|
)
|
|
200
|
|
|
(340
|
)
|
||||||
Reclassification to earnings
|
264
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
(104
|
)
|
|
175
|
|
||||||
Balance at September 30, 2015
|
$
|
(1,438
|
)
|
|
$
|
(40
|
)
|
|
$
|
41
|
|
|
$
|
3
|
|
|
$
|
531
|
|
|
$
|
(903
|
)
|
Three months ended September 30, 2015
|
||||||
(in millions)
|
|
Amounts reclassified from AOCI
|
|
Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income
|
||
AOCI components
|
|
|
||||
Unrealized loss on fuel derivative instruments
|
|
$
|
126
|
|
|
Fuel and oil expense
|
|
|
47
|
|
|
Less: Tax Expense
|
|
|
|
$
|
79
|
|
|
Net of tax
|
Unrealized loss on interest rate derivative instruments
|
|
$
|
5
|
|
|
Interest expense
|
|
|
2
|
|
|
Less: Tax Expense
|
|
|
|
$
|
3
|
|
|
Net of tax
|
|
|
|
|
|
||
Total reclassifications for the period
|
|
$
|
82
|
|
|
Net of tax
|
Nine months ended September 30, 2015
|
||||||
(in millions)
|
|
Amounts reclassified from AOCI
|
|
Affected line item in the unaudited Condensed Consolidated Statement of Comprehensive Income
|
||
AOCI components
|
|
|
||||
Unrealized loss on fuel derivative instruments
|
|
$
|
264
|
|
|
Fuel and oil expense
|
|
|
98
|
|
|
Less: Tax Expense
|
|
|
|
$
|
166
|
|
|
Net of tax
|
Unrealized loss on interest rate derivative instruments
|
|
$
|
15
|
|
|
Interest expense
|
|
|
6
|
|
|
Less: Tax Expense
|
|
|
|
$
|
9
|
|
|
Net of tax
|
|
|
|
|
|
||
Total reclassifications for the period
|
|
$
|
175
|
|
|
Net of tax
|
Other assets (in millions)
|
September 30, 2015
|
|
December 31, 2014
|
||||
Derivative contracts
|
$
|
6
|
|
|
$
|
13
|
|
Intangible assets (a)
|
469
|
|
|
363
|
|
||
Non-current investments
|
40
|
|
|
35
|
|
||
Other
|
172
|
|
|
123
|
|
||
Other assets
|
$
|
687
|
|
|
$
|
534
|
|
Accounts payable (in millions)
|
September 30, 2015
|
|
December 31, 2014
|
||||
Accounts payable trade
|
$
|
170
|
|
|
$
|
123
|
|
Salaries payable
|
340
|
|
|
160
|
|
||
Excise and other tax withholdings payable
|
157
|
|
|
163
|
|
||
Aircraft maintenance payable
|
162
|
|
|
314
|
|
||
Fuel payable
|
46
|
|
|
85
|
|
||
Other payables
|
360
|
|
|
358
|
|
||
Accounts payable
|
$
|
1,235
|
|
|
$
|
1,203
|
|
Accrued liabilities (in millions)
|
September 30, 2015
|
|
December 31, 2014
|
||||
ProfitSharing and savings plans
|
$
|
506
|
|
|
$
|
374
|
|
Aircraft and other lease related obligations
|
86
|
|
|
159
|
|
||
Vacation pay
|
310
|
|
|
292
|
|
||
Health
|
77
|
|
|
84
|
|
||
Derivative contracts
|
541
|
|
|
174
|
|
||
Workers compensation
|
181
|
|
|
165
|
|
||
Property and income taxes
|
129
|
|
|
81
|
|
||
Other
|
219
|
|
|
236
|
|
||
Accrued liabilities
|
$
|
2,049
|
|
|
$
|
1,565
|
|
Other noncurrent liabilities (in millions)
|
September 30, 2015
|
|
December 31, 2014
|
||||
Postretirement obligation
|
$
|
179
|
|
|
$
|
169
|
|
Non-current lease-related obligations
|
164
|
|
|
193
|
|
||
Other deferred compensation
|
171
|
|
|
174
|
|
||
Deferred gains from sale and leaseback of aircraft
|
45
|
|
|
53
|
|
||
Derivative contracts
|
265
|
|
|
622
|
|
||
Other
|
107
|
|
|
44
|
|
||
Other noncurrent liabilities
|
$
|
931
|
|
|
$
|
1,255
|
|
(in millions)
|
|
B717 lease/sublease liability
|
||
Balance at December 31, 2013
|
|
$
|
122
|
|
Lease/sublease accretion
|
|
5
|
|
|
Lease/sublease expense adjustment
|
|
22
|
|
|
Lease/sublease payments, net (a)
|
|
(86
|
)
|
|
Balance at December 31, 2014
|
|
$
|
63
|
|
Lease/sublease accretion
|
|
1
|
|
|
Lease/sublease expense adjustment
|
|
5
|
|
|
Lease/sublease payments, net (a)
|
|
(39
|
)
|
|
Balance at September 30, 2015
|
|
$
|
30
|
|
|
|
|
|
Fair value measurements at reporting date using:
|
||||||||||||
|
|
|
|
Quoted prices in
active markets
for identical assets
|
|
Significant
other observable
inputs
|
|
Significant
unobservable
inputs
|
||||||||
Description
|
|
September 30, 2015
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Assets
|
|
(in millions)
|
||||||||||||||
Cash equivalents
|
|
|
|
|
|
|
|
|
||||||||
Cash equivalents (a)
|
|
$
|
1,528
|
|
|
$
|
1,528
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial paper
|
|
125
|
|
|
—
|
|
|
125
|
|
|
—
|
|
||||
Certificates of deposit
|
|
25
|
|
|
—
|
|
|
25
|
|
|
—
|
|
||||
Eurodollar time deposits
|
|
62
|
|
|
—
|
|
|
62
|
|
|
—
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
|
||||||||
Treasury bills
|
|
1,149
|
|
|
1,149
|
|
|
—
|
|
|
—
|
|
||||
Certificates of deposit
|
|
207
|
|
|
—
|
|
|
207
|
|
|
—
|
|
||||
Noncurrent investments (b)
|
|
|
|
|
|
|
|
|
||||||||
Auction rate securities
|
|
27
|
|
|
—
|
|
|
—
|
|
|
27
|
|
||||
Interest rate derivatives
|
|
6
|
|
|
—
|
|
|
6
|
|
|
—
|
|
||||
Fuel derivatives:
|
|
|
|
|
|
|
|
|
||||||||
Swap contracts (c)
|
|
818
|
|
|
—
|
|
|
818
|
|
|
—
|
|
||||
Option contracts (c)
|
|
912
|
|
|
—
|
|
|
—
|
|
|
912
|
|
||||
Other available-for-sale securities
|
|
62
|
|
|
62
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
|
$
|
4,921
|
|
|
$
|
2,739
|
|
|
$
|
1,243
|
|
|
$
|
939
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Fuel derivatives:
|
|
|
|
|
|
|
|
|
||||||||
Swap contracts (c)
|
|
$
|
(679
|
)
|
|
$
|
—
|
|
|
$
|
(679
|
)
|
|
$
|
—
|
|
Option contracts (c)
|
|
(2,281
|
)
|
|
—
|
|
|
—
|
|
|
(2,281
|
)
|
||||
Interest rate derivatives
|
|
(54
|
)
|
|
—
|
|
|
(54
|
)
|
|
—
|
|
||||
Total liabilities
|
|
$
|
(3,014
|
)
|
|
$
|
—
|
|
|
$
|
(733
|
)
|
|
$
|
(2,281
|
)
|
|
|
|
|
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
|
)
|
|
Fair value measurements using significant
unobservable inputs (Level 3)
|
||||||||||||||
|
Fuel
|
|
Auction rate
|
|
Other
|
|
|
||||||||
(in millions)
|
derivatives
|
|
securities
|
|
securities
|
|
Total
|
||||||||
Balance at June 30, 2015
|
$
|
(1,055
|
)
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
(1,028
|
)
|
Total losses (realized or unrealized)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Included in earnings
|
(405
|
)
|
|
—
|
|
|
—
|
|
|
(405
|
)
|
||||
Included in other comprehensive income
|
(488
|
)
|
|
—
|
|
|
—
|
|
|
(488
|
)
|
||||
Purchases
|
408
|
|
(a)
|
—
|
|
|
—
|
|
|
408
|
|
||||
Sales
|
(11
|
)
|
(a)
|
—
|
|
|
—
|
|
|
(11
|
)
|
||||
Settlements
|
182
|
|
|
—
|
|
|
—
|
|
|
182
|
|
||||
Balance at September 30, 2015
|
$
|
(1,369
|
)
|
|
$
|
27
|
|
(b)
|
$
|
—
|
|
|
$
|
(1,342
|
)
|
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 September 30, 2015
|
$
|
(317
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(317
|
)
|
|
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
|
(413
|
)
|
|
—
|
|
|
(1
|
)
|
|
(414
|
)
|
||||
Included in other comprehensive income
|
(517
|
)
|
|
—
|
|
|
—
|
|
|
(517
|
)
|
||||
Purchases
|
652
|
|
(a)
|
—
|
|
|
—
|
|
|
652
|
|
||||
Sales
|
(182
|
)
|
(a)
|
—
|
|
|
(4
|
)
|
|
(186
|
)
|
||||
Settlements
|
182
|
|
|
—
|
|
|
—
|
|
|
182
|
|
||||
Balance at September 30, 2015
|
$
|
(1,369
|
)
|
|
$
|
27
|
|
(b)
|
$
|
—
|
|
|
$
|
(1,342
|
)
|
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 September 30, 2015
|
$
|
(324
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(324
|
)
|
(in millions)
|
Carrying value
|
|
Estimated fair value
|
|
Fair value level hierarchy
|
||||
5.75% Notes due 2016
|
$
|
308
|
|
|
$
|
324
|
|
|
Level 2
|
5.25% Convertible Senior Notes due 2016
|
112
|
|
|
294
|
|
|
Level 2
|
||
5.125% Notes due 2017
|
310
|
|
|
326
|
|
|
Level 2
|
||
French Credit Agreements due 2018 - 1.15%
|
31
|
|
|
31
|
|
|
Level 3
|
||
Fixed-rate 737 Aircraft Notes payable through 2018 - 7.02%
|
18
|
|
|
19
|
|
|
Level 3
|
||
2.75% Notes due 2019
|
308
|
|
|
313
|
|
|
Level 2
|
||
Term Loan Agreement due 2019 - 6.315%
|
152
|
|
|
158
|
|
|
Level 3
|
||
Term Loan Agreement due 2019 - 4.84%
|
36
|
|
|
38
|
|
|
Level 3
|
||
Term Loan Agreement due 2020 - 5.223%
|
340
|
|
|
337
|
|
|
Level 3
|
||
Floating-rate 737 Aircraft Notes payable through 2020
|
267
|
|
|
261
|
|
|
Level 3
|
||
Pass Through Certificates due 2022 - 6.24%
|
339
|
|
|
380
|
|
|
Level 2
|
||
7.375% Debentures due 2027
|
132
|
|
|
160
|
|
|
Level 2
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
NUMERATOR:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
584
|
|
|
$
|
329
|
|
|
$
|
1,645
|
|
|
$
|
946
|
|
Incremental income effect of interest on 5.25% convertible notes
|
1
|
|
|
1
|
|
|
3
|
|
|
3
|
|
||||
Net income after assumed conversion
|
$
|
585
|
|
|
$
|
330
|
|
|
$
|
1,648
|
|
|
$
|
949
|
|
|
|
|
|
|
|
|
|
||||||||
DENOMINATOR:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average shares outstanding, basic
|
655
|
|
|
683
|
|
|
665
|
|
|
690
|
|
||||
Dilutive effect of Employee stock options and restricted stock units
|
2
|
|
|
2
|
|
|
2
|
|
|
3
|
|
||||
Dilutive effect of 5.25% convertible notes
|
6
|
|
|
6
|
|
|
6
|
|
|
6
|
|
||||
Adjusted weighted-average shares outstanding, diluted
|
663
|
|
|
691
|
|
|
673
|
|
|
699
|
|
||||
|
|
|
|
|
|
|
|
||||||||
NET INCOME PER SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
0.89
|
|
|
$
|
0.48
|
|
|
$
|
2.47
|
|
|
$
|
1.37
|
|
Diluted
|
$
|
0.88
|
|
|
$
|
0.48
|
|
|
$
|
2.45
|
|
|
$
|
1.36
|
|
|
|
Three months ended September 30,
|
|
|
|
|||||||
|
|
2015
|
|
2014
|
|
Change
|
||||||
Revenue passengers carried
|
|
30,559,019
|
|
|
28,391,882
|
|
|
7.6
|
%
|
|
||
Enplaned passengers
|
|
37,765,903
|
|
|
35,255,248
|
|
|
7.1
|
%
|
|
||
Revenue passenger miles (RPMs) (000s)
(1)
|
|
31,052,660
|
|
|
28,522,164
|
|
|
8.9
|
%
|
|
||
Available seat miles (ASMs) (000s)
(2)
|
|
36,360,340
|
|
|
33,785,824
|
|
|
7.6
|
%
|
|
||
Load factor
(3)
|
|
85.4
|
%
|
|
84.4
|
%
|
|
1.0
|
|
pts
|
||
Average length of passenger haul (miles)
|
|
1,016
|
|
|
1,005
|
|
|
1.1
|
%
|
|
||
Average aircraft stage length (miles)
|
|
754
|
|
|
728
|
|
|
3.6
|
%
|
|
||
Trips flown
|
|
325,301
|
|
|
319,250
|
|
|
1.9
|
%
|
|
||
Seats flown
(4)
|
|
47,470,059
|
|
|
45,824,276
|
|
|
3.6
|
%
|
|
||
Seats per trip
(5)
|
|
145.93
|
|
|
143.54
|
|
|
1.7
|
%
|
|
||
Average passenger fare
(11)
|
|
$
|
154.33
|
|
|
$
|
160.74
|
|
|
(4.0
|
)%
|
|
Passenger revenue yield per RPM (cents)
(6)(11)
|
|
15.19
|
|
|
16.00
|
|
|
(5.1
|
)%
|
|
||
Operating revenues per ASM (cents)
(7)
|
|
14.15
|
|
|
14.21
|
|
|
(0.4
|
)%
|
|
||
Passenger revenue per ASM (cents)
(8)(11)
|
|
12.97
|
|
|
13.51
|
|
|
(4.0
|
)%
|
|
||
Operating expenses per ASM (cents)
(9)
|
|
11.26
|
|
|
12.39
|
|
|
(9.1
|
)%
|
|
||
Operating expenses per ASM, excluding fuel (cents)
|
|
8.68
|
|
|
8.29
|
|
|
4.7
|
%
|
|
||
Operating expenses per ASM, excluding fuel and profitsharing (cents)
|
|
8.19
|
|
|
7.99
|
|
|
2.5
|
%
|
|
||
Fuel costs per gallon, including fuel tax
|
|
$
|
1.89
|
|
|
$
|
2.97
|
|
|
(36.4
|
)%
|
|
Fuel costs per gallon, including fuel tax, economic
|
|
$
|
2.20
|
|
|
$
|
2.94
|
|
|
(25.2
|
)%
|
|
Fuel consumed, in gallons (millions)
|
|
493
|
|
|
466
|
|
|
5.8
|
%
|
|
||
Active fulltime equivalent Employees
|
|
48,642
|
|
|
45,750
|
|
|
6.3
|
%
|
|
||
Aircraft at end of period
(10)
|
|
692
|
|
|
685
|
|
|
1.0
|
%
|
|
|
|
Nine months ended September 30,
|
|
|
|
|||||||
|
|
2015
|
|
2014
|
|
Change
|
||||||
Revenue passengers carried
|
|
87,802,757
|
|
|
82,602,805
|
|
|
6.3
|
%
|
|
||
Enplaned passengers
|
|
107,535,145
|
|
|
101,701,969
|
|
|
5.7
|
%
|
|
||
Revenue passenger miles (RPMs) (000s)
(1)
|
|
87,771,907
|
|
|
81,267,478
|
|
|
8.0
|
%
|
|
||
Available seat miles (ASMs) (000s)
(2)
|
|
105,133,835
|
|
|
98,356,618
|
|
|
6.9
|
%
|
|
||
Load factor
(3)
|
|
83.5
|
%
|
|
82.6
|
%
|
|
0.9
|
|
pts
|
||
Average length of passenger haul (miles)
|
|
1,000
|
|
|
984
|
|
|
1.6
|
%
|
|
||
Average aircraft stage length (miles)
|
|
750
|
|
|
721
|
|
|
4.0
|
%
|
|
||
Trips flown
|
|
948,180
|
|
|
946,231
|
|
|
0.2
|
%
|
|
||
Seats flown
(4)
|
|
138,326,878
|
|
|
135,033,197
|
|
|
2.4
|
%
|
|
||
Seats per trip
(5)
|
|
145.89
|
|
|
142.71
|
|
|
2.2
|
%
|
|
||
Average passenger fare
(11)
|
|
$
|
156.55
|
|
|
$
|
160.39
|
|
|
(2.4
|
)%
|
|
Passenger revenue yield per RPM (cents)
(6)(11)
|
|
15.66
|
|
|
16.30
|
|
|
(3.9
|
)%
|
|
||
Operating revenues per ASM (cents)
(7)
|
|
13.95
|
|
|
14.21
|
|
|
(1.8
|
)%
|
|
||
Passenger revenue per ASM (cents)
(8)(11)
|
|
13.07
|
|
|
13.47
|
|
|
(3.0
|
)%
|
|
||
Operating expenses per ASM (cents)
(9)
|
|
11.18
|
|
|
12.58
|
|
|
(11.1
|
)%
|
|
||
Operating expenses per ASM, excluding fuel (cents)
|
|
8.50
|
|
|
8.38
|
|
|
1.4
|
%
|
|
||
Operating expenses per ASM, excluding fuel and profitsharing (cents)
|
|
8.04
|
|
|
8.12
|
|
|
(1.0
|
)%
|
|
||
Fuel costs per gallon, including fuel tax
|
|
$
|
1.98
|
|
|
$
|
3.03
|
|
|
(34.7
|
)%
|
|
Fuel costs per gallon, including fuel tax, economic
|
|
$
|
2.08
|
|
|
$
|
3.01
|
|
|
(30.9
|
)%
|
|
Fuel consumed, in gallons (millions)
|
|
1,420
|
|
|
1,357
|
|
|
4.6
|
%
|
|
||
Active fulltime equivalent Employees
|
|
48,642
|
|
|
45,750
|
|
|
6.3
|
%
|
|
||
Aircraft at period-end
(10)
|
|
692
|
|
|
685
|
|
|
1.0
|
%
|
|
|
Three months ended September 30,
|
|
Percent
|
|
Nine months ended September 30,
|
|
Percent
|
||||||||||||
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
||||||||
Total operating revenues, as reported
|
$
|
5,318
|
|
|
$
|
4,800
|
|
|
|
|
$
|
14,843
|
|
|
$
|
13,977
|
|
|
|
Deduct: Special revenue adjustment
|
(172
|
)
|
|
—
|
|
|
|
|
(172
|
)
|
|
—
|
|
|
|
||||
Operating Revenues, Non-GAAP
|
$
|
5,146
|
|
|
$
|
4,800
|
|
|
7.2%
|
|
$
|
14,671
|
|
|
$
|
13,977
|
|
|
5.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fuel and oil expense, unhedged
|
$
|
843
|
|
|
$
|
1,395
|
|
|
|
|
$
|
2,634
|
|
|
$
|
4,171
|
|
|
|
Add (Deduct): Fuel hedge (gains) losses included in Fuel and oil expense
|
93
|
|
|
(9
|
)
|
|
|
|
184
|
|
|
(46
|
)
|
|
|
||||
Fuel and oil expense, as reported
|
$
|
936
|
|
|
$
|
1,386
|
|
|
|
|
$
|
2,818
|
|
|
$
|
4,125
|
|
|
|
Add (Deduct): Net impact from fuel contracts
|
152
|
|
|
(12
|
)
|
|
|
|
143
|
|
|
(27
|
)
|
|
|
||||
Fuel and oil expense, non-GAAP (economic)
|
$
|
1,088
|
|
|
$
|
1,374
|
|
|
(20.8)%
|
|
$
|
2,961
|
|
|
$
|
4,098
|
|
|
(27.7)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total operating expenses, as reported
|
$
|
4,093
|
|
|
$
|
4,186
|
|
|
|
|
$
|
11,753
|
|
|
$
|
12,372
|
|
|
|
Add (Deduct): Reclassification between Fuel and oil and Other (gains) losses, net, associated with current period settled contracts
|
61
|
|
|
(5
|
)
|
|
|
|
61
|
|
|
(5
|
)
|
|
|
||||
Add (Deduct): Contracts settling in the current period, but for which gains have been recognized in a prior period*
|
91
|
|
|
(7
|
)
|
|
|
|
82
|
|
|
(22
|
)
|
|
|
||||
Deduct: Acquisition and integration costs
|
(6
|
)
|
|
(23
|
)
|
|
|
|
(32
|
)
|
|
(78
|
)
|
|
|
||||
Add: Litigation settlement
|
—
|
|
|
—
|
|
|
|
|
37
|
|
|
—
|
|
|
|
||||
Deduct: Labor ratification bonuses
|
(140
|
)
|
|
—
|
|
|
|
|
(195
|
)
|
|
—
|
|
|
|
||||
Total operating expenses, non-GAAP
|
$
|
4,099
|
|
|
$
|
4,151
|
|
|
(1.3)%
|
|
$
|
11,706
|
|
|
$
|
12,267
|
|
|
(4.6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income, as reported
|
$
|
1,225
|
|
|
$
|
614
|
|
|
|
|
$
|
3,090
|
|
|
$
|
1,605
|
|
|
|
Add (Deduct): Reclassification between Fuel and oil and Other (gains) losses, net, associated with current period settled contracts
|
(61
|
)
|
|
5
|
|
|
|
|
(61
|
)
|
|
5
|
|
|
|
||||
Add (Deduct): Contracts settling in the current period, but for which gains have been recognized in a prior period*
|
(91
|
)
|
|
7
|
|
|
|
|
(82
|
)
|
|
22
|
|
|
|
||||
Add: Acquisition and integration costs
|
6
|
|
|
23
|
|
|
|
|
32
|
|
|
78
|
|
|
|
||||
Deduct: Litigation settlement
|
—
|
|
|
—
|
|
|
|
|
(37
|
)
|
|
—
|
|
|
|
||||
Add: Labor ratification bonuses
|
140
|
|
|
—
|
|
|
|
|
195
|
|
|
—
|
|
|
|
||||
Deduct: Special revenue adjustment
|
(172
|
)
|
|
—
|
|
|
|
|
(172
|
)
|
|
—
|
|
|
|
||||
Operating income, non-GAAP
|
$
|
1,047
|
|
|
$
|
649
|
|
|
61.3%
|
|
$
|
2,965
|
|
|
$
|
1,710
|
|
|
73.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Percent
|
|
Nine months ended September 30,
|
|
Percent
|
||||||||||||
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
||||||||
Net income, as reported
|
$
|
584
|
|
|
$
|
329
|
|
|
|
|
$
|
1,645
|
|
|
$
|
946
|
|
|
|
Add: Mark-to-market impact from fuel contracts settling in future periods
|
179
|
|
|
44
|
|
|
|
|
271
|
|
|
5
|
|
|
|
||||
Add (Deduct): Ineffectiveness from fuel hedges settling in future periods
|
(1
|
)
|
|
11
|
|
|
|
|
(16
|
)
|
|
(31
|
)
|
|
|
||||
Add (Deduct): Other net impact of fuel contracts settling in the current or a prior period (excluding reclassifications)
|
(91
|
)
|
|
7
|
|
|
|
|
(82
|
)
|
|
22
|
|
|
|
||||
Add (Deduct): Income tax impact of fuel contracts
|
(32
|
)
|
|
(23
|
)
|
|
|
|
(65
|
)
|
|
2
|
|
|
|
||||
Add: Acquisition and integration costs (a)
|
4
|
|
|
14
|
|
|
|
|
20
|
|
|
49
|
|
|
|
||||
Deduct: Litigation settlement (a)
|
—
|
|
|
—
|
|
|
|
|
(23
|
)
|
|
—
|
|
|
|
||||
Add: Labor ratification bonuses (a)
|
88
|
|
|
—
|
|
|
|
|
122
|
|
|
—
|
|
|
|
||||
Deduct: Special revenue adjustment (a)
|
(108
|
)
|
|
—
|
|
|
|
|
(108
|
)
|
|
—
|
|
|
|
||||
Net income, non-GAAP
|
$
|
623
|
|
|
$
|
382
|
|
|
63.1%
|
|
$
|
1,764
|
|
|
$
|
993
|
|
|
77.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share, diluted, as reported
|
$
|
0.88
|
|
|
$
|
0.48
|
|
|
|
|
$
|
2.45
|
|
|
$
|
1.36
|
|
|
|
Add (Deduct): Net impact to net income above from fuel contracts divided by dilutive shares (a)
|
0.08
|
|
|
0.05
|
|
|
|
|
0.15
|
|
|
(0.01
|
)
|
|
|
||||
Add (Deduct): Impact of special items (a)
|
(0.02
|
)
|
|
0.02
|
|
|
|
|
0.03
|
|
|
0.07
|
|
|
|
||||
Net income per share, diluted, non-GAAP
|
$
|
0.94
|
|
|
$
|
0.55
|
|
|
70.9%
|
|
$
|
2.63
|
|
|
$
|
1.42
|
|
|
85.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses per ASM (cents)
|
|
11.26
|
¢
|
|
|
12.39
|
¢
|
|
|
|
|
11.18
|
¢
|
|
|
12.58
|
¢
|
|
|
Deduct: Fuel and oil expense divided by ASMs
|
(2.58
|
)
|
|
(4.10
|
)
|
|
|
|
(2.68
|
)
|
|
(4.20
|
)
|
|
|
||||
Deduct: Impact of special items
|
(0.40
|
)
|
|
(0.07
|
)
|
|
|
|
(0.19
|
)
|
|
(0.08
|
)
|
|
|
||||
Operating expenses per ASM, non-GAAP, excluding Fuel and oil and special items (cents)
|
|
8.28
|
¢
|
|
|
8.22
|
¢
|
|
0.7%
|
|
|
8.31
|
¢
|
|
|
8.30
|
¢
|
|
0.1%
|
|
|
|
|
||||
|
Twelve Months Ended
|
|
Twelve Months Ended
|
||||
|
September 30, 2015
|
|
September 30, 2014
|
||||
Operating income, as reported
|
$
|
3,711
|
|
|
$
|
1,991
|
|
Net impact from fuel contracts
|
(142
|
)
|
|
40
|
|
||
Acquisition and integration costs
|
80
|
|
|
97
|
|
||
Labor ratification bonuses
|
204
|
|
|
—
|
|
||
Special revenue adjustment
|
(172
|
)
|
|
—
|
|
||
Litigation settlement
|
(37
|
)
|
|
—
|
|
||
Operating income, non-GAAP
|
$
|
3,644
|
|
|
$
|
2,128
|
|
Net adjustment for aircraft leases (1)
|
113
|
|
|
136
|
|
||
Adjustment for fuel hedge premium expense
|
(94
|
)
|
|
(70
|
)
|
||
Adjusted Operating income, non-GAAP
|
$
|
3,663
|
|
|
$
|
2,194
|
|
|
|
|
|
||||
Average invested capital (2)
|
$
|
11,011
|
|
|
$
|
11,616
|
|
Equity adjustment for hedge accounting
|
761
|
|
|
(61
|
)
|
||
Adjusted average invested capital
|
$
|
11,772
|
|
|
$
|
11,555
|
|
|
|
|
|
||||
ROIC, pre-tax
|
31.1
|
%
|
|
19.0
|
%
|
|
|
Three months ended
|
|
|
|
Nine months ended
|
|
|
||||||||||||||
(in millions, except per share amounts)
|
|
September 30,
|
|
|
|
September 30,
|
|
|
||||||||||||||
GAAP
|
|
2015
|
|
2014
|
|
Percent Change
|
|
2015
|
|
2014
|
|
Percent Change
|
||||||||||
Operating income
|
|
$
|
1,225
|
|
|
$
|
614
|
|
|
99.5
|
%
|
|
$
|
3,090
|
|
|
$
|
1,605
|
|
|
92.5
|
%
|
Net income
|
|
$
|
584
|
|
|
$
|
329
|
|
|
77.5
|
%
|
|
$
|
1,645
|
|
|
$
|
946
|
|
|
73.9
|
%
|
Net income per share, diluted
|
|
$
|
0.88
|
|
|
$
|
0.48
|
|
|
83.3
|
%
|
|
$
|
2.45
|
|
|
$
|
1.36
|
|
|
80.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating income
|
|
$
|
1,047
|
|
|
$
|
649
|
|
|
61.3
|
%
|
|
$
|
2,965
|
|
|
$
|
1,710
|
|
|
73.4
|
%
|
Net income
|
|
$
|
623
|
|
|
$
|
382
|
|
|
63.1
|
%
|
|
$
|
1,764
|
|
|
$
|
993
|
|
|
77.6
|
%
|
Net income per share, diluted
|
|
$
|
0.94
|
|
|
$
|
0.55
|
|
|
70.9
|
%
|
|
$
|
2.63
|
|
|
$
|
1.42
|
|
|
85.2
|
%
|
Period
|
Average percent of estimated fuel consumption covered by fuel derivative contracts at varying WTI/Brent Crude Oil, Heating Oil, and Gulf Coast Jet Fuel-equivalent price levels
|
|
Fourth quarter 2015 (1)
|
—
|
|
2016 (2)
|
Approx. 35%
|
|
2017 (2)
|
Approx. 65%
|
|
2018 (2)
|
Approx. 25%
|
Year
|
|
Fair value (liability) of fuel derivative contracts at September 30, 2015
|
|
Amount of gains (losses) deferred in AOCI at September 30, 2015 (net of tax)
|
||||
Fourth quarter 2015
|
|
$
|
(114
|
)
|
(a)
|
$
|
(71
|
)
|
2016
|
|
(634
|
)
|
|
(509
|
)
|
||
2017
|
|
(493
|
)
|
|
(308
|
)
|
||
2018
|
|
11
|
|
|
(17
|
)
|
||
Total
|
|
$
|
(1,230
|
)
|
|
$
|
(905
|
)
|
|
Estimated economic jet fuel price per gallon,
including taxes |
Average Brent Crude Oil price per barrel
|
4Q 2015 (2)
|
$30
|
$1.45 - $1.50
|
$40
|
$1.75 - $1.80
|
Current Market (1)
|
$2.05 - $2.10
|
$60
|
$2.30 - $2.35
|
$70
|
$2.65 - $2.70
|
Estimated Premium Costs (3)
|
$40M - $45M
|
|
Three months ended September 30,
|
||||||
(in millions)
|
2015
|
|
2014
|
||||
Mark-to-market impact from fuel contracts settling in future periods
|
$
|
179
|
|
|
$
|
44
|
|
Ineffectiveness from fuel hedges settling in future periods
|
(1
|
)
|
|
11
|
|
||
Realized ineffectiveness and mark-to-market (gains) or losses
|
61
|
|
|
(5
|
)
|
||
Premium cost of fuel contracts
|
33
|
|
|
15
|
|
||
Other
|
—
|
|
|
1
|
|
||
|
$
|
272
|
|
|
$
|
66
|
|
|
Nine months ended September 30,
|
||||||
(in millions)
|
2015
|
|
2014
|
||||
Mark-to-market impact from fuel contracts settling in future periods
|
$
|
271
|
|
|
$
|
5
|
|
Ineffectiveness from fuel hedges settling in future periods
|
(16
|
)
|
|
(31
|
)
|
||
Realized ineffectiveness and mark-to-market (gains) or losses
|
61
|
|
|
(5
|
)
|
||
Premium cost of fuel contracts
|
81
|
|
|
49
|
|
||
Other
|
(3
|
)
|
|
(2
|
)
|
||
|
$
|
394
|
|
|
$
|
16
|
|
|
The Boeing Company
737 NG
|
|
|
|
The Boeing Company
737 MAX
|
|
|
|||||||
|
-700 Firm Orders
|
|
-800 Firm Orders
|
Options
|
|
Additional -700 A/C
|
|
-7
Firm Orders |
-8
Firm Orders |
|
Options
|
|
Total
|
|
2015
|
—
|
|
19
|
—
|
|
24
|
|
—
|
—
|
|
—
|
|
43
|
(3)
|
2016
|
—
|
|
31
|
—
|
|
15
|
|
—
|
—
|
|
—
|
|
46
|
|
2017
|
15
|
|
—
|
12
|
|
14
|
|
—
|
14
|
|
—
|
|
55
|
|
2018
|
10
|
|
—
|
12
|
|
4
|
|
—
|
13
|
|
—
|
|
39
|
|
2019
|
—
|
|
—
|
—
|
|
—
|
|
15
|
10
|
|
—
|
|
25
|
|
2020
|
—
|
|
—
|
—
|
|
—
|
|
14
|
22
|
|
—
|
|
36
|
|
2021
|
—
|
|
—
|
—
|
|
—
|
|
1
|
33
|
|
18
|
|
52
|
|
2022
|
—
|
|
—
|
—
|
|
—
|
|
—
|
30
|
|
19
|
|
49
|
|
2023
|
—
|
|
—
|
—
|
|
—
|
|
—
|
24
|
|
23
|
|
47
|
|
2024
|
—
|
|
—
|
—
|
|
—
|
|
—
|
24
|
|
23
|
|
47
|
|
2025
|
—
|
|
—
|
—
|
|
—
|
|
—
|
—
|
|
36
|
|
36
|
|
2026
|
—
|
|
—
|
—
|
|
—
|
|
—
|
—
|
|
36
|
|
36
|
|
2027
|
—
|
|
—
|
—
|
|
—
|
|
—
|
—
|
|
36
|
|
36
|
|
Total
|
25
|
(1)
|
50
|
24
|
|
57
|
|
30
|
170
|
(2)
|
191
|
|
547
|
|
|
|
|
|
Average
|
|
Number
|
|
Number
|
|
Number
|
||||
Type
|
|
Seats
|
|
Age (Yrs)
|
|
of Aircraft
|
|
Owned
|
|
Leased
|
||||
737-300
|
|
137 or 143
|
|
22
|
|
|
119
|
|
(a)
|
76
|
|
|
43
|
|
737-500
|
|
122
|
|
24
|
|
|
12
|
|
|
9
|
|
|
3
|
|
737-700
|
|
143
|
|
11
|
|
|
463
|
|
|
395
|
|
|
68
|
|
737-800
|
|
175
|
|
2
|
|
|
98
|
|
|
91
|
|
|
7
|
|
TOTALS
|
|
|
|
12
|
|
|
692
|
|
|
571
|
|
|
121
|
|
•
|
the Company's network plans and expectations, including its network and schedule optimization plans;
|
•
|
the Company's fleet and capacity plans;
|
•
|
the Company’s financial outlook and projected results of operations, including specific factors expected to impact the Company’s results of operations;
|
•
|
the Company’s plans and expectations with respect to managing risk associated with changing jet fuel prices;
|
•
|
the Company's expectations with respect to liquidity and capital expenditures, including anticipated needs for, and sources of, funds;
|
•
|
the Company's assessment of market risks; and
|
•
|
the Company's plans and expectations related to legal proceedings.
|
•
|
the Company's dependence on third parties, in particular with respect to its fleet and capacity plans;
|
•
|
the impact of governmental regulations and other governmental actions related to the Company’s operations;
|
•
|
the Company's ability to timely and effectively implement, transition, and maintain the necessary information technology systems and infrastructure to support its operations and initiatives;
|
•
|
changes in demand for the Company's services and the impact of economic conditions, fuel prices, and actions of competitors (including, without limitation, pricing, scheduling, and capacity decisions and consolidation and alliance activities) and other factors beyond the Company’s control on the Company's business decisions, plans, and strategies;
|
•
|
other changes in consumer behavior, including with respect to the Company's co-branded credit card;
|
•
|
changes in the price of aircraft fuel, the impact of hedge accounting, and any changes to the Company's fuel hedging strategies and positions; and
|
•
|
other factors as set forth in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading “Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2014.
|
Issuer Purchases of Equity Securities (1)
|
|
||||||||||||||
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
||||||
|
|
|
|
|
|
Total number of
|
|
Maximum dollar
|
|
||||||
|
|
|
|
|
|
shares purchased
|
|
value of shares that
|
|
||||||
|
|
Total number
|
|
Average
|
|
as part of publicly
|
|
may yet be purchased
|
|
||||||
|
|
of shares
|
|
price paid
|
|
announced plans
|
|
under the plans
|
|
||||||
Period
|
|
purchased
|
|
per share
|
|
or programs
|
|
or programs
|
|
||||||
July 1, 2015 through
July 31, 2015
|
|
—
|
|
|
$
|
—
|
|
(2)
|
—
|
|
|
$
|
700,000,000
|
|
(2)
|
August 1, 2015 through
August 31, 2015
|
|
9,679,195
|
|
|
$
|
—
|
|
(2)
|
9,679,195
|
|
|
$
|
700,000,000
|
|
|
September 1, 2015 through
September 30, 2015
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
700,000,000
|
|
|
Total
|
|
9,679,195
|
|
|
|
|
9,679,195
|
|
|
|
|
(1)
|
In May 2015, the Company’s Board of Directors authorized the repurchase of up to $1.5 billion of the Company’s common stock. Repurchases are made in accordance with applicable securities laws in open market, private, or accelerated repurchase transactions from time to time, depending on market conditions, and may be discontinued at any time.
|
(2)
|
Under the Third Quarter ASR Program, the Company paid $500 million in July 2015 and received an initial delivery of 9,679,195 shares on August 21, 2015, representing an estimated 75 percent of the shares to be purchased by the Company under the Third Quarter ASR Program based on a volume-weighted average price of $38.7429 per share of the Company’s common stock on the New York Stock Exchange during a calculation period between August 3, 2015 and August 20, 2015. The specific number of shares that the Company ultimately will repurchase under the Third Quarter ASR Program will be determined based generally on a discount to the volume-weighted average price per share of the Company’s common stock during a calculation period to be completed in fourth quarter 2015. At settlement, under certain circumstances, the third party financial institution may be required to deliver additional shares of common stock to the Company, or under certain circumstances, the Company may be required to deliver shares of its common stock or may elect to make a cash payment to the third party financial institution.
|
3.1
|
Restated Certificate of Formation of the Company, effective May 18, 2012 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 (File No. 1-7259)).
|
3.2
|
Amended and Restated Bylaws of the Company, effective November 19, 2009 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed November 20, 2009 (File No. 1-7259)).
|
10.1
|
Supplemental Letter Agreement No. 1810-LA-1501773 to Purchase Agreement No. 1810, dated January 19, 1994, between The Boeing Company and the Company.
|
31.1
|
Rule 13a-14(a) Certification of Chief Executive Officer.
|
31.2
|
Rule 13a-14(a) Certification of Chief Financial Officer.
|
32.1
|
Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer. (1)
|
101.INS
|
XBRL Instance Document.
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
SOUTHWEST AIRLINES CO.
|
|
|
|
|
October 29, 2015
|
By
|
/s/ Tammy Romo
|
|
|
|
|
|
Tammy Romo
|
|
|
Executive Vice President & Chief Financial Officer
|
|
|
(On behalf of the Registrant and in
|
|
|
her capacity as Principal Financial
|
|
|
and Accounting Officer)
|
3.1
|
Restated Certificate of Formation of the Company, effective May 18, 2012 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 (File No. 1-7259)).
|
3.2
|
Amended and Restated Bylaws of the Company, effective November 19, 2009 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed November 20, 2009 (File No. 1-7259)).
|
10.1
|
Supplemental Letter Agreement No. 1810-LA-1501773 to Purchase Agreement No. 1810, dated January 19, 1994, between The Boeing Company and the Company.
|
31.1
|
Rule 13a-14(a) Certification of Chief Executive Officer.
|
31.2
|
Rule 13a-14(a) Certification of Chief Financial Officer.
|
32.1
|
Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer. (1)
|
101.INS
|
XBRL Instance Document.
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
The Boeing Company
P.O. Box 3707
Seattle, WA 98124‑2207
|
Subject:
|
Cancelation of Option Aircraft
|
Reference:
|
a)
|
Purchase Agreement No. 1810 (as amended, modified or supplemented from time to time, the
Purchase Agreement
) between The Boeing Company (
Boeing
) and Southwest Airlines Co. (
Customer
) relating to Model 737-7H4 aircraft (
Aircraft
)
|
|
b)
|
Letter Agreement No. LA 1105884R1, titled Option Aircraft, dated December 5, 2014 (
Option Letter Agreement
)
|
1.
|
Cancelation of Option Aircraft
.
|
2.
|
Confidential Treatment
|
THE BOEING COMPANY
|
ACCEPTED AND AGREED TO this
|
|
|
Date: 7/6/2015
|
|
/s/ Jon W. Lewis
|
SOUTHWEST AIRLINES CO.
|
|
|
|
|
By
|
Jon W. Lewis
|
By /s/ Chris Monroe
|
|
Chris Monroe
|
|
Its
|
Attorney-In-Fact
|
Its VP, Treasurer
|
July 2, 2015
|
BOEING PROPRIETARY
|
|
By:
|
/s/ Gary C. Kelly
|
|
|
Gary C. Kelly
|
|
|
Chief Executive Officer
|
|
By:
|
/s/ Tammy Romo
|
|
|
Tammy Romo
|
|
|
Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
By:
|
/s/ Gary C. Kelly
|
|
|
Gary C. Kelly
|
|
|
Chief Executive Officer
|
|
By:
|
/s/ Tammy Romo
|
|
|
Tammy Romo
|
|
|
Chief Financial Officer
|