þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the quarterly period ended June 30, 2017
|
|
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
¨
|
|
Emerging growth company
¨
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,537
|
|
|
$
|
1,680
|
|
Short-term investments
|
1,615
|
|
|
1,625
|
|
||
Accounts and other receivables
|
576
|
|
|
546
|
|
||
Inventories of parts and supplies, at cost
|
365
|
|
|
337
|
|
||
Prepaid expenses and other current assets
|
250
|
|
|
310
|
|
||
Total current assets
|
4,343
|
|
|
4,498
|
|
||
|
|
|
|
||||
Property and equipment, at cost:
|
|
|
|
|
|
||
Flight equipment
|
20,506
|
|
|
20,275
|
|
||
Ground property and equipment
|
4,085
|
|
|
3,779
|
|
||
Deposits on flight equipment purchase contracts
|
1,207
|
|
|
1,190
|
|
||
Assets constructed for others
|
1,404
|
|
|
1,220
|
|
||
|
27,202
|
|
|
26,464
|
|
||
Less allowance for depreciation and amortization
|
9,523
|
|
|
9,420
|
|
||
|
17,679
|
|
|
17,044
|
|
||
Goodwill
|
970
|
|
|
970
|
|
||
Other assets
|
929
|
|
|
774
|
|
||
|
$
|
23,921
|
|
|
$
|
23,286
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
1,217
|
|
|
$
|
1,178
|
|
Accrued liabilities
|
1,561
|
|
|
1,985
|
|
||
Air traffic liability
|
4,012
|
|
|
3,115
|
|
||
Current maturities of long-term debt
|
307
|
|
|
566
|
|
||
Total current liabilities
|
7,097
|
|
|
6,844
|
|
||
|
|
|
|
||||
Long-term debt less current maturities
|
2,788
|
|
|
2,821
|
|
||
Deferred income taxes
|
3,540
|
|
|
3,374
|
|
||
Construction obligation
|
1,258
|
|
|
1,078
|
|
||
Other noncurrent liabilities
|
708
|
|
|
728
|
|
||
Stockholders' equity:
|
|
|
|
|
|
||
Common stock
|
808
|
|
|
808
|
|
||
Capital in excess of par value
|
1,422
|
|
|
1,410
|
|
||
Retained earnings
|
12,378
|
|
|
11,418
|
|
||
Accumulated other comprehensive loss
|
(263
|
)
|
|
(323
|
)
|
||
Treasury stock, at cost
|
(5,815
|
)
|
|
(4,872
|
)
|
||
Total stockholders' equity
|
8,530
|
|
|
8,441
|
|
||
|
$
|
23,921
|
|
|
$
|
23,286
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
OPERATING REVENUES:
|
|
|
|
|
|
|
|
||||||||
Passenger
|
$
|
5,233
|
|
|
$
|
4,905
|
|
|
$
|
9,658
|
|
|
$
|
9,303
|
|
Freight
|
44
|
|
|
45
|
|
|
86
|
|
|
87
|
|
||||
Other
|
467
|
|
|
434
|
|
|
883
|
|
|
820
|
|
||||
Total operating revenues
|
5,744
|
|
|
5,384
|
|
|
10,627
|
|
|
10,210
|
|
||||
|
|
|
|
|
|
|
|
||||||||
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries, wages, and benefits
|
1,867
|
|
|
1,639
|
|
|
3,600
|
|
|
3,179
|
|
||||
Fuel and oil
|
990
|
|
|
903
|
|
|
1,912
|
|
|
1,755
|
|
||||
Maintenance materials and repairs
|
251
|
|
|
280
|
|
|
494
|
|
|
543
|
|
||||
Aircraft rentals
|
53
|
|
|
59
|
|
|
107
|
|
|
118
|
|
||||
Landing fees and other rentals
|
332
|
|
|
309
|
|
|
645
|
|
|
611
|
|
||||
Depreciation and amortization
|
319
|
|
|
299
|
|
|
637
|
|
|
588
|
|
||||
Other operating expenses
|
682
|
|
|
619
|
|
|
1,324
|
|
|
1,196
|
|
||||
Total operating expenses
|
4,494
|
|
|
4,108
|
|
|
8,719
|
|
|
7,990
|
|
||||
|
|
|
|
|
|
|
|
||||||||
OPERATING INCOME
|
1,250
|
|
|
1,276
|
|
|
1,908
|
|
|
2,220
|
|
||||
|
|
|
|
|
|
|
|
||||||||
OTHER EXPENSES (INCOME):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense
|
27
|
|
|
32
|
|
|
56
|
|
|
62
|
|
||||
Capitalized interest
|
(13
|
)
|
|
(11
|
)
|
|
(23
|
)
|
|
(22
|
)
|
||||
Interest income
|
(8
|
)
|
|
(6
|
)
|
|
(15
|
)
|
|
(11
|
)
|
||||
Other (gains) losses, net
|
74
|
|
|
(43
|
)
|
|
167
|
|
|
71
|
|
||||
Total other expenses (income)
|
80
|
|
|
(28
|
)
|
|
185
|
|
|
100
|
|
||||
|
|
|
|
|
|
|
|
||||||||
INCOME BEFORE INCOME TAXES
|
1,170
|
|
|
1,304
|
|
|
1,723
|
|
|
2,120
|
|
||||
PROVISION FOR INCOME TAXES
|
424
|
|
|
484
|
|
|
626
|
|
|
787
|
|
||||
|
|
|
|
|
|
|
|
||||||||
NET INCOME
|
$
|
746
|
|
|
$
|
820
|
|
|
$
|
1,097
|
|
|
$
|
1,333
|
|
|
|
|
|
|
|
|
|
||||||||
NET INCOME PER SHARE, BASIC
|
$
|
1.24
|
|
|
$
|
1.30
|
|
|
$
|
1.80
|
|
|
$
|
2.09
|
|
|
|
|
|
|
|
|
|
||||||||
NET INCOME PER SHARE, DILUTED
|
$
|
1.23
|
|
|
$
|
1.28
|
|
|
$
|
1.80
|
|
|
$
|
2.07
|
|
|
|
|
|
|
|
|
|
||||||||
COMPREHENSIVE INCOME
|
$
|
795
|
|
|
$
|
1,086
|
|
|
$
|
1,157
|
|
|
$
|
1,756
|
|
|
|
|
|
|
|
|
|
||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
604
|
|
|
632
|
|
|
608
|
|
|
637
|
|
||||
Diluted
|
605
|
|
|
639
|
|
|
610
|
|
|
644
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per common share
|
$
|
.125
|
|
|
$
|
.100
|
|
|
$
|
.225
|
|
|
$
|
.175
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
746
|
|
|
$
|
820
|
|
|
$
|
1,097
|
|
|
$
|
1,333
|
|
Adjustments to reconcile net income to cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
|
319
|
|
|
299
|
|
|
637
|
|
|
588
|
|
||||
Loss on asset impairment
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
||||
Unrealized/realized (gain) loss on fuel derivative instruments
|
(6
|
)
|
|
(122
|
)
|
|
21
|
|
|
(34
|
)
|
||||
Deferred income taxes
|
69
|
|
|
54
|
|
|
131
|
|
|
80
|
|
||||
Changes in certain assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts and other receivables
|
12
|
|
|
(14
|
)
|
|
(23
|
)
|
|
(35
|
)
|
||||
Other assets
|
(119
|
)
|
|
(49
|
)
|
|
(200
|
)
|
|
(45
|
)
|
||||
Accounts payable and accrued liabilities
|
(338
|
)
|
|
(288
|
)
|
|
(245
|
)
|
|
25
|
|
||||
Air traffic liability
|
1
|
|
|
79
|
|
|
897
|
|
|
764
|
|
||||
Cash collateral received from derivative counterparties
|
99
|
|
|
347
|
|
|
136
|
|
|
116
|
|
||||
Other, net
|
(37
|
)
|
|
(35
|
)
|
|
(81
|
)
|
|
(85
|
)
|
||||
Net cash provided by operating activities
|
746
|
|
|
1,112
|
|
|
2,370
|
|
|
2,728
|
|
||||
|
|
|
|
|
|
|
|
||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital expenditures
|
(551
|
)
|
|
(462
|
)
|
|
(965
|
)
|
|
(900
|
)
|
||||
Assets constructed for others
|
(47
|
)
|
|
(26
|
)
|
|
(97
|
)
|
|
(37
|
)
|
||||
Purchases of short-term investments
|
(559
|
)
|
|
(773
|
)
|
|
(1,121
|
)
|
|
(1,029
|
)
|
||||
Proceeds from sales of short-term and other investments
|
573
|
|
|
591
|
|
|
1,130
|
|
|
1,122
|
|
||||
Other, net
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(5
|
)
|
||||
Net cash used in investing activities
|
(584
|
)
|
|
(674
|
)
|
|
(1,053
|
)
|
|
(849
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Proceeds from Employee stock plans
|
7
|
|
|
6
|
|
|
14
|
|
|
17
|
|
||||
Reimbursement for assets constructed for others
|
47
|
|
|
25
|
|
|
97
|
|
|
35
|
|
||||
Payments of long-term debt and capital lease obligations
|
(59
|
)
|
|
(48
|
)
|
|
(428
|
)
|
|
(103
|
)
|
||||
Payments of cash dividends
|
(76
|
)
|
|
(63
|
)
|
|
(199
|
)
|
|
(160
|
)
|
||||
Repayment of construction obligation
|
(2
|
)
|
|
(2
|
)
|
|
(5
|
)
|
|
(4
|
)
|
||||
Repurchase of common stock
|
(400
|
)
|
|
(700
|
)
|
|
(950
|
)
|
|
(1,200
|
)
|
||||
Other, net
|
7
|
|
|
(4
|
)
|
|
11
|
|
|
(7
|
)
|
||||
Net cash used in financing activities
|
(476
|
)
|
|
(786
|
)
|
|
(1,460
|
)
|
|
(1,422
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
(314
|
)
|
|
(348
|
)
|
|
(143
|
)
|
|
457
|
|
||||
|
|
|
|
|
|
|
|
||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
1,851
|
|
|
2,388
|
|
|
1,680
|
|
|
1,583
|
|
||||
|
|
|
|
|
|
|
|
||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
1,537
|
|
|
$
|
2,040
|
|
|
$
|
1,537
|
|
|
$
|
2,040
|
|
|
|
|
|
|
|
|
|
||||||||
CASH PAYMENTS FOR:
|
|
|
|
|
|
|
|
||||||||
Interest, net of amount capitalized
|
$
|
18
|
|
|
$
|
23
|
|
|
$
|
45
|
|
|
$
|
50
|
|
Income taxes
|
$
|
376
|
|
|
$
|
565
|
|
|
$
|
382
|
|
|
$
|
638
|
|
|
|
|
|
|
|
|
|
||||||||
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
|
|
|
|
|
|
|
|
||||||||
Flight equipment under capital leases
|
$
|
65
|
|
|
$
|
83
|
|
|
$
|
104
|
|
|
$
|
251
|
|
Assets constructed for others
|
$
|
38
|
|
|
$
|
55
|
|
|
$
|
87
|
|
|
$
|
115
|
|
|
|
Maximum fuel hedged as of
|
|
|
|
|
|
June 30, 2017
|
|
Derivative underlying commodity type as of
|
|
Period (by year)
|
|
(gallons in millions) (a)
|
|
June 30, 2017
|
|
Remainder of 2017
|
|
641
|
|
|
WTI crude and Brent crude oil
|
2018
|
|
1,647
|
|
|
WTI crude and Brent crude oil
|
2019
|
|
1,300
|
|
|
WTI crude and Brent crude oil
|
2020
|
|
106
|
|
|
WTI crude oil
|
|
|
|
|
Asset derivatives
|
|
Liability derivatives
|
||||||||||||
|
|
Balance Sheet
|
|
Fair value at
|
|
Fair value at
|
|
Fair value at
|
|
Fair value at
|
||||||||
(in millions)
|
|
location
|
|
6/30/2017
|
|
12/31/2016
|
|
6/30/2017
|
|
12/31/2016
|
||||||||
Derivatives designated as hedges (a)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fuel derivative contracts (gross)
|
|
Prepaid expenses and other current assets
|
|
$
|
2
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
44
|
|
Fuel derivative contracts (gross)
|
|
Other assets
|
|
92
|
|
|
126
|
|
|
—
|
|
|
—
|
|
||||
Fuel derivative contracts (gross)
|
|
Accrued liabilities
|
|
23
|
|
|
4
|
|
|
315
|
|
|
412
|
|
||||
Interest rate derivative contracts
|
|
Other assets
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Interest rate derivative contracts
|
|
Other noncurrent liabilities
|
|
—
|
|
|
—
|
|
|
20
|
|
|
35
|
|
||||
Total derivatives designated as hedges
|
|
$
|
118
|
|
|
$
|
137
|
|
|
$
|
335
|
|
|
$
|
491
|
|
||
Derivatives not designated as hedges (a)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fuel derivative contracts (gross)
|
|
Prepaid expenses and other current assets
|
|
$
|
—
|
|
|
$
|
54
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fuel derivative contracts (gross)
|
|
Other assets
|
|
33
|
|
|
52
|
|
|
33
|
|
|
52
|
|
||||
Fuel derivative contracts (gross)
|
|
Accrued liabilities
|
|
156
|
|
|
201
|
|
|
200
|
|
|
262
|
|
||||
Interest rate derivative contracts
|
|
Other noncurrent liabilities
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Total derivatives not designated as hedges
|
|
|
|
$
|
189
|
|
|
$
|
307
|
|
|
$
|
237
|
|
|
$
|
314
|
|
Total derivatives
|
|
|
|
$
|
307
|
|
|
$
|
444
|
|
|
$
|
572
|
|
|
$
|
805
|
|
|
|
Balance Sheet
|
|
June 30,
|
|
December 31,
|
||||
(in millions)
|
|
location
|
|
2017
|
|
2016
|
||||
Cash collateral deposits held from counterparties for fuel
contracts - current
|
|
Offset against Prepaid expenses and other current assets
|
|
$
|
1
|
|
|
$
|
4
|
|
Cash collateral deposits held from counterparties for fuel
contracts - noncurrent
|
|
Offset against Other assets
|
|
1
|
|
|
6
|
|
||
Cash collateral deposits provided to counterparties for fuel
contracts - current
|
|
Offset against Accrued liabilities
|
|
167
|
|
|
311
|
|
||
Due to third parties for fuel contracts
|
|
Accounts payable
|
|
65
|
|
|
75
|
|
Offsetting of derivative liabilities
|
|
||||||||||||||||||||||||||
(in millions)
|
|
||||||||||||||||||||||||||
|
|
|
|
(i)
|
|
(ii)
|
|
(iii) = (i) + (ii)
|
|
(i)
|
|
(ii)
|
|
(iii) = (i) + (ii)
|
|
||||||||||||
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
|
||||||||||||||||||||
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
|
|
Gross amounts of recognized liabilities
|
|
Gross amounts offset in the Balance Sheet
|
|
Net amounts of liabilities presented in the Balance Sheet
|
|
||||||||||||
Fuel derivative contracts
|
|
Prepaid expenses and other current assets
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
48
|
|
|
$
|
(48
|
)
|
|
$
|
—
|
|
|
Fuel derivative contracts
|
|
Other assets
|
|
$
|
34
|
|
|
$
|
(34
|
)
|
|
$
|
—
|
|
(a)
|
$
|
58
|
|
|
$
|
(58
|
)
|
|
$
|
—
|
|
(a)
|
Fuel derivative contracts
|
|
Accrued liabilities
|
|
$
|
515
|
|
|
$
|
(346
|
)
|
|
$
|
169
|
|
(a)
|
$
|
674
|
|
|
$
|
(516
|
)
|
|
$
|
158
|
|
(a)
|
Interest rate derivative contracts
|
|
Other noncurrent liabilities
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
24
|
|
(a)
|
$
|
35
|
|
|
$
|
—
|
|
|
$
|
35
|
|
(a)
|
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
|
||||||||||||||||||
|
June 30,
|
|
June 30,
|
|
June 30,
|
||||||||||||||||||
(in millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
Fuel derivative contracts
|
$
|
54
|
|
*
|
$
|
(116
|
)
|
*
|
$
|
100
|
|
*
|
$
|
149
|
|
*
|
$
|
8
|
|
|
$
|
(3
|
)
|
Interest rate derivatives
|
1
|
|
*
|
2
|
|
*
|
2
|
|
*
|
3
|
|
*
|
—
|
|
|
(1
|
)
|
||||||
Total
|
$
|
55
|
|
|
$
|
(114
|
)
|
|
$
|
102
|
|
|
$
|
152
|
|
|
$
|
8
|
|
|
$
|
(4
|
)
|
Derivatives not in cash flow hedging relationships
|
|||||||||
|
(Gain) loss
|
|
|
||||||
|
recognized in income on
|
|
|
||||||
|
derivatives
|
|
|
||||||
|
Six months ended
|
|
Location of (gain) loss
|
||||||
|
June 30,
|
|
recognized in income
|
||||||
(in millions)
|
2017
|
|
2016
|
|
on derivatives
|
||||
Fuel derivative contracts
|
$
|
84
|
|
|
$
|
(12
|
)
|
|
Other (gains) losses, net
|
Interest rate derivatives
|
(2
|
)
|
|
—
|
|
|
Interest expense
|
||
|
$
|
82
|
|
|
$
|
(12
|
)
|
|
|
|
Counterparty (CP)
|
|
|
||||||||||||||||||||||||
(in millions)
|
A
|
|
B
|
|
C
|
|
D
|
|
E
|
|
Other
(a)
|
|
Total
|
||||||||||||||
Fair value of fuel derivatives
|
$
|
(160
|
)
|
|
$
|
(43
|
)
|
|
$
|
(45
|
)
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
(2
|
)
|
|
$
|
(242
|
)
|
Cash collateral held from (by) CP
|
(153
|
)
|
|
(14
|
)
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
(165
|
)
|
|||||||
Aircraft collateral pledged to CP
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Letters of credit (LC)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Option to substitute LC for aircraft
|
(200) to (600)(b)
|
|
(100) to (500)(c)
|
|
(150) to (550)(c)
|
|
N/A
|
|
N/A
|
|
|
|
|
||||||||||||||
Option to substitute LC for cash
|
N/A
|
|
>(500)(d)
|
|
(75) to (150) or >(550)(d)
|
|
(e)
|
|
N/A
|
|
|
|
|
||||||||||||||
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)
|
|
(75) to (150) or >(550)
|
|
>(100)
|
|
>(65)
|
|
|
|
|
||||||||||||||
Cash is received from CP
|
>50(f)
|
|
>150(f)
|
|
>250(f)
|
|
>0(f)
|
|
>30(f)
|
|
|
|
|
||||||||||||||
Aircraft or cash can be pledged to
CP as collateral
|
(200) to (600)(g)
|
|
(100) to (500)(c)
|
|
(150) to (550)(c)
|
|
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)
|
|
(0) to (150) or >(550)
|
|
(h)
|
|
(h)
|
|
|
|
|
||||||||||||||
Cash is received from CP
|
(h)
|
|
(h)
|
|
(h)
|
|
(h)
|
|
(h)
|
|
|
|
|
||||||||||||||
Aircraft or cash can be pledged to
CP as collateral
|
(200) to (600)
|
|
(100) to (500)
|
|
(150) to (550)
|
|
N/A
|
|
N/A
|
|
|
|
|
|
Three months ended June 30,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
NET INCOME
|
$
|
746
|
|
|
$
|
820
|
|
Unrealized gain on fuel derivative instruments, net of
deferred taxes of $27 and $155
|
46
|
|
|
265
|
|
||
Unrealized gain on interest rate derivative instruments, net of
deferred taxes of $1 and $1
|
1
|
|
|
1
|
|
||
Other, net of deferred taxes of $- and $-
|
2
|
|
|
—
|
|
||
Total other comprehensive income
|
$
|
49
|
|
|
$
|
266
|
|
COMPREHENSIVE INCOME
|
$
|
795
|
|
|
$
|
1,086
|
|
|
Six months ended June 30,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
NET INCOME
|
$
|
1,097
|
|
|
$
|
1,333
|
|
Unrealized gain on fuel derivative instruments, net of
deferred taxes of $32 and $249
|
55
|
|
|
424
|
|
||
Unrealized gain (loss) on interest rate derivative instruments, net of
deferred taxes of $2 and ($1)
|
3
|
|
|
(1
|
)
|
||
Other, net of deferred taxes of $- and $-
|
2
|
|
|
—
|
|
||
Total other comprehensive income
|
$
|
60
|
|
|
$
|
423
|
|
COMPREHENSIVE INCOME
|
$
|
1,157
|
|
|
$
|
1,756
|
|
(in millions)
|
Fuel derivatives
|
|
Interest rate derivatives
|
|
Defined benefit plan items
|
|
Other
|
|
Deferred tax
|
|
Accumulated other
comprehensive income (loss)
|
||||||||||||
Balance at March 31, 2017
|
$
|
(485
|
)
|
|
$
|
(15
|
)
|
|
$
|
(14
|
)
|
|
$
|
20
|
|
|
$
|
182
|
|
|
$
|
(312
|
)
|
Changes in fair value
|
(85
|
)
|
|
(1
|
)
|
|
—
|
|
|
2
|
|
|
31
|
|
|
(53
|
)
|
||||||
Reclassification to earnings
|
158
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
(59
|
)
|
|
102
|
|
||||||
Balance at June 30, 2017
|
$
|
(412
|
)
|
|
$
|
(13
|
)
|
|
$
|
(14
|
)
|
|
$
|
22
|
|
|
$
|
154
|
|
|
$
|
(263
|
)
|
(in millions)
|
Fuel derivatives
|
|
Interest rate derivatives
|
|
Defined benefit plan items
|
|
Other
|
|
Deferred tax
|
|
Accumulated other
comprehensive income (loss)
|
||||||||||||
Balance at December 31, 2016
|
$
|
(499
|
)
|
|
$
|
(18
|
)
|
|
$
|
(14
|
)
|
|
$
|
20
|
|
|
$
|
188
|
|
|
$
|
(323
|
)
|
Changes in fair value
|
(210
|
)
|
|
(1
|
)
|
|
—
|
|
|
2
|
|
|
77
|
|
|
(132
|
)
|
||||||
Reclassification to earnings
|
297
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
(111
|
)
|
|
192
|
|
||||||
Balance at June 30, 2017
|
$
|
(412
|
)
|
|
$
|
(13
|
)
|
|
$
|
(14
|
)
|
|
$
|
22
|
|
|
$
|
154
|
|
|
$
|
(263
|
)
|
Three months ended June 30, 2017
|
||||||
(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
|
|
$
|
158
|
|
|
Fuel and oil expense
|
|
|
58
|
|
|
Less: Tax expense
|
|
|
|
$
|
100
|
|
|
Net of tax
|
Unrealized loss on interest rate derivative instruments
|
|
$
|
3
|
|
|
Interest expense
|
|
|
1
|
|
|
Less: Tax expense
|
|
|
|
$
|
2
|
|
|
Net of tax
|
|
|
|
|
|
||
Total reclassifications for the period
|
|
$
|
102
|
|
|
Net of tax
|
Six months ended June 30, 2017
|
||||||
(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
|
|
$
|
297
|
|
|
Fuel and oil expense
|
|
|
109
|
|
|
Less: Tax Expense
|
|
|
|
$
|
188
|
|
|
Net of tax
|
Unrealized loss on interest rate derivative instruments
|
|
$
|
6
|
|
|
Interest expense
|
|
|
2
|
|
|
Less: Tax Expense
|
|
|
|
$
|
4
|
|
|
Net of tax
|
|
|
|
|
|
||
Total reclassifications for the period
|
|
$
|
192
|
|
|
Net of tax
|
(in millions)
|
June 30, 2017
|
|
December 31, 2016
|
||||
Derivative contracts
|
$
|
92
|
|
|
$
|
120
|
|
Intangible assets, net
|
419
|
|
|
426
|
|
||
Capital lease receivable
|
83
|
|
|
90
|
|
||
Non-current prepaid maintenance
|
186
|
|
|
6
|
|
||
Other
|
149
|
|
|
132
|
|
||
Other assets
|
$
|
929
|
|
|
$
|
774
|
|
(in millions)
|
June 30, 2017
|
|
December 31, 2016
|
||||
Accounts payable trade
|
$
|
171
|
|
|
$
|
138
|
|
Salaries payable
|
197
|
|
|
200
|
|
||
Taxes payable
|
266
|
|
|
184
|
|
||
Aircraft maintenance payable
|
31
|
|
|
26
|
|
||
Fuel payable
|
79
|
|
|
95
|
|
||
Other payables
|
473
|
|
|
535
|
|
||
Accounts payable
|
$
|
1,217
|
|
|
$
|
1,178
|
|
(in millions)
|
June 30, 2017
|
|
December 31, 2016
|
||||
ProfitSharing and savings plans
|
$
|
325
|
|
|
$
|
645
|
|
Aircraft and other lease related obligations
|
49
|
|
|
55
|
|
||
Vacation pay
|
339
|
|
|
355
|
|
||
Union bonuses
|
69
|
|
|
188
|
|
||
Health
|
96
|
|
|
96
|
|
||
Derivative contracts
|
169
|
|
|
158
|
|
||
Workers compensation
|
175
|
|
|
183
|
|
||
Property and income taxes
|
134
|
|
|
68
|
|
||
Other
|
205
|
|
|
237
|
|
||
Accrued liabilities
|
$
|
1,561
|
|
|
$
|
1,985
|
|
(in millions)
|
June 30, 2017
|
|
December 31, 2016
|
||||
Postretirement obligation
|
$
|
267
|
|
|
$
|
256
|
|
Non-current lease-related obligations
|
104
|
|
|
125
|
|
||
Other deferred compensation
|
218
|
|
|
204
|
|
||
Derivative contracts
|
24
|
|
|
35
|
|
||
Other
|
95
|
|
|
108
|
|
||
Other noncurrent liabilities
|
$
|
708
|
|
|
$
|
728
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
NUMERATOR:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
746
|
|
|
$
|
820
|
|
|
$
|
1,097
|
|
|
$
|
1,333
|
|
Incremental income effect of interest on 5.25% convertible notes
|
—
|
|
|
1
|
|
|
—
|
|
|
2
|
|
||||
Net income after assumed conversion
|
$
|
746
|
|
|
$
|
821
|
|
|
$
|
1,097
|
|
|
$
|
1,335
|
|
|
|
|
|
|
|
|
|
||||||||
DENOMINATOR:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average shares outstanding, basic
|
604
|
|
|
632
|
|
|
608
|
|
|
637
|
|
||||
Dilutive effect of Employee stock options and restricted stock units
|
1
|
|
|
1
|
|
|
2
|
|
|
1
|
|
||||
Dilutive effect of 5.25% convertible notes
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||
Adjusted weighted-average shares outstanding, diluted
|
605
|
|
|
639
|
|
|
610
|
|
|
644
|
|
||||
|
|
|
|
|
|
|
|
||||||||
NET INCOME PER SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
1.24
|
|
|
$
|
1.30
|
|
|
$
|
1.80
|
|
|
$
|
2.09
|
|
Diluted
|
$
|
1.23
|
|
|
$
|
1.28
|
|
|
$
|
1.80
|
|
|
$
|
2.07
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||
(in millions)
|
|
ACFO
|
ACFO,
Net (b)
|
Construction Obligation
|
|
ACFO
|
ACFO,
Net (b)
|
Construction Obligation
|
||||||||||||
FLL Terminal
|
(a)
|
$
|
229
|
|
$
|
229
|
|
$
|
229
|
|
|
$
|
132
|
|
$
|
132
|
|
$
|
132
|
|
LAX Terminal
|
(a)
|
397
|
|
386
|
|
397
|
|
|
344
|
|
336
|
|
344
|
|
||||||
LFMP - Terminal
|
|
538
|
|
478
|
|
518
|
|
|
538
|
|
486
|
|
522
|
|
||||||
LFMP - Parking Garage
|
(a)
|
114
|
|
114
|
|
114
|
|
|
80
|
|
80
|
|
80
|
|
||||||
HOU International Terminal
|
(c)
|
126
|
|
120
|
|
—
|
|
|
126
|
|
122
|
|
—
|
|
||||||
|
|
$
|
1,404
|
|
$
|
1,327
|
|
$
|
1,258
|
|
|
$
|
1,220
|
|
$
|
1,156
|
|
$
|
1,078
|
|
|
|
|
|
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, 2017
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Assets
|
|
(in millions)
|
||||||||||||||
Cash equivalents
|
|
|
|
|
|
|
|
|
||||||||
Cash equivalents (a)
|
|
$
|
1,295
|
|
|
$
|
1,295
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial paper
|
|
180
|
|
|
—
|
|
|
180
|
|
|
—
|
|
||||
Certificates of deposit
|
|
62
|
|
|
—
|
|
|
62
|
|
|
—
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
|
||||||||
Treasury bills
|
|
1,345
|
|
|
1,345
|
|
|
—
|
|
|
—
|
|
||||
Commercial paper
|
|
30
|
|
|
—
|
|
|
30
|
|
|
—
|
|
||||
Certificates of deposit
|
|
240
|
|
|
—
|
|
|
240
|
|
|
—
|
|
||||
Interest rate derivatives (see Note 3)
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Fuel derivatives:
|
|
|
|
|
|
|
|
|
||||||||
Swap contracts (c)
|
|
39
|
|
|
—
|
|
|
39
|
|
|
—
|
|
||||
Option contracts (b)
|
|
127
|
|
|
—
|
|
|
—
|
|
|
127
|
|
||||
Option contracts (c)
|
|
140
|
|
|
—
|
|
|
—
|
|
|
140
|
|
||||
Other available-for-sale securities
|
|
97
|
|
|
97
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
|
$
|
3,556
|
|
|
$
|
2,737
|
|
|
$
|
552
|
|
|
$
|
267
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Fuel derivatives:
|
|
|
|
|
|
|
|
|
||||||||
Swap contracts (c)
|
|
$
|
(48
|
)
|
|
$
|
—
|
|
|
$
|
(48
|
)
|
|
$
|
—
|
|
Option contracts (b)
|
|
(33
|
)
|
|
—
|
|
|
—
|
|
|
(33
|
)
|
||||
Option contracts (c)
|
|
(467
|
)
|
|
—
|
|
|
—
|
|
|
(467
|
)
|
||||
Interest rate derivatives (see Note 3)
|
|
(24
|
)
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
||||
Total liabilities
|
|
$
|
(572
|
)
|
|
$
|
—
|
|
|
$
|
(72
|
)
|
|
$
|
(500
|
)
|
|
|
|
|
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
|
)
|
Quantitative information about Level 3 fair value measurements
|
||||||||
|
|
Valuation technique
|
|
Unobservable input
|
|
Period (by year)
|
|
Range
|
Fuel derivatives
|
|
Option model
|
|
Implied volatility
|
|
Third quarter 2017
|
|
14-29%
|
|
|
|
|
|
|
Fourth quarter 2017
|
|
20-31%
|
|
|
|
|
|
|
2018
|
|
22-30%
|
|
|
|
|
|
|
2019
|
|
16-25%
|
|
|
|
|
|
|
2020
|
|
16-21%
|
(in millions)
|
Carrying value
|
|
Estimated fair value
|
|
Fair value level hierarchy
|
||||
French Credit Agreements due 2018 - 2.15%
|
$
|
8
|
|
|
$
|
8
|
|
|
Level 3
|
Fixed-rate 737 Aircraft Notes payable through 2018 - 7.03%
|
4
|
|
|
4
|
|
|
Level 3
|
||
2.75% Notes due 2019
|
302
|
|
|
306
|
|
|
Level 2
|
||
Term Loan Agreement payable through 2019 - 6.315%
|
86
|
|
|
87
|
|
|
Level 3
|
||
Term Loan Agreement payable through 2019 - 4.84%
|
24
|
|
|
24
|
|
|
Level 3
|
||
2.65% Notes due 2020
|
496
|
|
|
502
|
|
|
Level 2
|
||
Term Loan Agreement payable through 2020 - 5.223%
|
261
|
|
|
261
|
|
|
Level 3
|
||
737 Aircraft Notes payable through 2020
|
184
|
|
|
182
|
|
|
Level 3
|
||
Term Loan Agreements payable through 2021 - 7.95%
|
18
|
|
|
18
|
|
|
Level 3
|
||
Pass Through Certificates due 2022 - 6.24%
|
311
|
|
|
343
|
|
|
Level 2
|
||
Term Loan Agreement payable through 2026 - 2.53%
|
215
|
|
|
215
|
|
|
Level 3
|
||
3.00% Notes due 2026
|
300
|
|
|
291
|
|
|
Level 2
|
||
7.375% Debentures due 2027
|
128
|
|
|
157
|
|
|
Level 2
|
|
|
Three months ended June 30,
|
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
Change
|
||||||
Revenue passengers carried
|
|
33,992,862
|
|
|
32,340,969
|
|
|
5.1
|
%
|
|
||
Enplaned passengers
|
|
41,436,991
|
|
|
39,479,241
|
|
|
5.0
|
%
|
|
||
Revenue passenger miles (RPMs) (000s)
(a)
|
|
34,382,696
|
|
|
32,707,694
|
|
|
5.1
|
%
|
|
||
Available seat miles (ASMs) (000s)
(b)
|
|
40,171,225
|
|
|
38,225,282
|
|
|
5.1
|
%
|
|
||
Load factor
(c)
|
|
85.6
|
%
|
|
85.6
|
%
|
|
—
|
|
pts
|
||
Average length of passenger haul (miles)
|
|
1,011
|
|
|
1,011
|
|
|
—
|
|
|
||
Average aircraft stage length (miles)
|
|
766
|
|
|
767
|
|
|
(0.1
|
)%
|
|
||
Trips flown
|
|
347,827
|
|
|
334,452
|
|
|
4.0
|
%
|
|
||
Seats flown
(d)
|
|
51,661,801
|
|
|
49,112,849
|
|
|
5.2
|
%
|
|
||
Seats per trip
(e)
|
|
148.53
|
|
|
146.85
|
|
|
1.1
|
%
|
|
||
Average passenger fare
|
|
$
|
153.95
|
|
|
$
|
151.67
|
|
|
1.5
|
%
|
|
Passenger revenue yield per RPM (cents)
(f)
|
|
15.22
|
|
|
15.00
|
|
|
1.5
|
%
|
|
||
Operating revenues per ASM (cents)
(g)
|
|
14.30
|
|
|
14.09
|
|
|
1.5
|
%
|
|
||
Passenger revenue per ASM (cents)
(h)
|
|
13.03
|
|
|
12.83
|
|
|
1.6
|
%
|
|
||
Operating expenses per ASM (cents)
(i)
|
|
11.19
|
|
|
10.75
|
|
|
4.1
|
%
|
|
||
Operating expenses per ASM, excluding fuel (cents)
|
|
8.72
|
|
|
8.38
|
|
|
4.1
|
%
|
|
||
Operating expenses per ASM, excluding fuel and profitsharing (cents)
|
|
8.22
|
|
|
7.84
|
|
|
4.8
|
%
|
|
||
Fuel costs per gallon, including fuel tax
|
|
$
|
1.84
|
|
|
$
|
1.75
|
|
|
5.1
|
%
|
|
Fuel costs per gallon, including fuel tax, economic
|
|
$
|
1.93
|
|
|
$
|
1.81
|
|
|
6.6
|
%
|
|
Fuel consumed, in gallons (millions)
|
|
535
|
|
|
513
|
|
|
4.3
|
%
|
|
||
Active fulltime equivalent Employees
|
|
55,347
|
|
|
52,301
|
|
|
5.8
|
%
|
|
||
Aircraft at end of period
|
|
735
|
|
|
719
|
|
|
2.2
|
%
|
|
|
|
Six months ended June 30,
|
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
Change
|
||||||
Revenue passengers carried
|
|
63,531,652
|
|
|
60,944,448
|
|
|
4.2
|
%
|
|
||
Enplaned passengers
|
|
77,015,341
|
|
|
74,107,682
|
|
|
3.9
|
%
|
|
||
Revenue passenger miles (RPMs) (000s)
(a)
|
|
63,723,355
|
|
|
61,115,858
|
|
|
4.3
|
%
|
|
||
Available seat miles (ASMs) (000s)
(b)
|
|
76,871,095
|
|
|
73,493,431
|
|
|
4.6
|
%
|
|
||
Load factor
(c)
|
|
82.9
|
%
|
|
83.2
|
%
|
|
(0.3
|
)
|
pts
|
||
Average length of passenger haul (miles)
|
|
1,003
|
|
|
1,003
|
|
|
—
|
|
|
||
Average aircraft stage length (miles)
|
|
762
|
|
|
762
|
|
|
—
|
|
|
||
Trips flown
|
|
669,617
|
|
|
648,989
|
|
|
3.2
|
%
|
|
||
Seats flown
(d)
|
|
99,407,889
|
|
|
95,214,170
|
|
|
4.4
|
%
|
|
||
Seats per trip
(e)
|
|
148.45
|
|
|
146.71
|
|
|
1.2
|
%
|
|
||
Average passenger fare
|
|
$
|
152.01
|
|
|
$
|
152.64
|
|
|
(0.4
|
)%
|
|
Passenger revenue yield per RPM (cents)
(f)
|
|
15.16
|
|
|
15.22
|
|
|
(0.4
|
)%
|
|
||
Operating revenues per ASM (cents)
(g)
|
|
13.82
|
|
|
13.89
|
|
|
(0.5
|
)%
|
|
||
Passenger revenue per ASM (cents)
(h)
|
|
12.56
|
|
|
12.66
|
|
|
(0.8
|
)%
|
|
||
Operating expenses per ASM (cents)
(i)
|
|
11.34
|
|
|
10.87
|
|
|
4.3
|
%
|
|
||
Operating expenses per ASM, excluding fuel (cents)
|
|
8.86
|
|
|
8.48
|
|
|
4.5
|
%
|
|
||
Operating expenses per ASM, excluding fuel and profitsharing (cents)
|
|
8.46
|
|
|
7.99
|
|
|
5.9
|
%
|
|
||
Fuel costs per gallon, including fuel tax
|
|
$
|
1.86
|
|
|
$
|
1.78
|
|
|
4.5
|
%
|
|
Fuel costs per gallon, including fuel tax, economic
|
|
$
|
1.94
|
|
|
$
|
1.80
|
|
|
7.8
|
%
|
|
Fuel consumed, in gallons (millions)
|
|
1,022
|
|
|
985
|
|
|
3.8
|
%
|
|
||
Active fulltime equivalent Employees
|
|
55,347
|
|
|
52,301
|
|
|
5.8
|
%
|
|
||
Aircraft at end of period
|
|
735
|
|
|
719
|
|
|
2.2
|
%
|
|
|
|
Three months ended
|
|
|
|
Six months ended
|
|
|
||||||||||||||
(in millions, except per share amounts)
|
|
June 30,
|
|
|
|
June 30,
|
|
|
||||||||||||||
GAAP
|
|
2017
|
|
2016
|
|
Percent Change
|
|
2017
|
|
2016
|
|
Percent Change
|
||||||||||
Operating income
|
|
$
|
1,250
|
|
|
$
|
1,276
|
|
|
(2.0
|
)%
|
|
$
|
1,908
|
|
|
$
|
2,220
|
|
|
(14.1
|
)%
|
Net income
|
|
$
|
746
|
|
|
$
|
820
|
|
|
(9.0
|
)%
|
|
$
|
1,097
|
|
|
$
|
1,333
|
|
|
(17.7
|
)%
|
Net income per share, diluted
|
|
$
|
1.23
|
|
|
$
|
1.28
|
|
|
(3.9
|
)%
|
|
$
|
1.80
|
|
|
$
|
2.07
|
|
|
(13.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income
|
|
$
|
1,212
|
|
|
$
|
1,267
|
|
|
(4.3
|
)%
|
|
$
|
1,838
|
|
|
$
|
2,219
|
|
|
(17.2
|
)%
|
Net income
|
|
$
|
748
|
|
|
$
|
757
|
|
|
(1.2
|
)%
|
|
$
|
1,120
|
|
|
$
|
1,326
|
|
|
(15.5
|
)%
|
Net income per share, diluted
|
|
$
|
1.24
|
|
|
$
|
1.19
|
|
|
4.2
|
%
|
|
$
|
1.84
|
|
|
$
|
2.06
|
|
|
(10.7
|
)%
|
|
Three months ended June 30,
|
|
Per ASM
change
|
|
Percent
change
|
|||||||||
(in cents, except for percentages)
|
2017
|
|
2016
|
|
|
|||||||||
Salaries, wages, and benefits
|
|
4.65
|
¢
|
|
|
4.29
|
¢
|
|
|
0.36
|
¢
|
|
8.4
|
%
|
Fuel and oil
|
2.47
|
|
|
2.37
|
|
|
0.10
|
|
|
4.2
|
|
|||
Maintenance materials and repairs
|
0.63
|
|
|
0.73
|
|
|
(0.10
|
)
|
|
(13.7
|
)
|
|||
Aircraft rentals
|
0.13
|
|
|
0.15
|
|
|
(0.02
|
)
|
|
(13.3
|
)
|
|||
Landing fees and other rentals
|
0.83
|
|
|
0.82
|
|
|
0.01
|
|
|
1.2
|
|
|||
Depreciation and amortization
|
0.79
|
|
|
0.78
|
|
|
0.01
|
|
|
1.3
|
|
|||
Other operating expenses
|
1.69
|
|
|
1.61
|
|
|
0.08
|
|
|
5.0
|
|
|||
Total
|
|
11.19
|
¢
|
|
|
10.75
|
¢
|
|
|
0.44
|
¢
|
|
4.1
|
%
|
Period
|
Maximum percent of estimated fuel consumption covered by fuel derivative contracts at varying West Texas Intermediate/Brent Crude Oil, Heating Oil, and Gulf Coast Jet Fuel-equivalent price levels (a)
|
|
2018
|
78%
|
|
2019
|
61%
|
|
2020
|
7%
|
Year
|
|
Fair value (liability) of fuel derivative contracts at June 30, 2017
|
|
Amount of gains (losses) deferred in AOCI at June 30, 2017 (net of tax)
|
||||
Remainder of 2017
|
|
$
|
(351
|
)
|
|
$
|
(204
|
)
|
2018
|
|
46
|
|
|
(53
|
)
|
||
2019
|
|
58
|
|
|
(2
|
)
|
||
2020
|
|
5
|
|
|
—
|
|
||
Total
|
|
$
|
(242
|
)
|
|
$
|
(259
|
)
|
|
|
Estimated economic jet fuel price per gallon,
including taxes |
||
Average Brent Crude Oil price per barrel
|
|
3Q 2017 (b)
|
|
Full Year 2017 (b)
|
$30
|
|
$1.40 - $1.45
|
|
$1.65 - $1.70
|
$40
|
|
$1.70 - $1.75
|
|
$1.80 - $1.85
|
Current Market (a)
|
|
$1.95 - $2.00
|
|
$1.95 - $2.00
|
$65
|
|
$2.25 - $2.30
|
|
$2.10 - $2.15
|
$80
|
|
$2.50 - $2.55
|
|
$2.20 - $2.25
|
Estimated premium costs (c)
|
|
Approximately $35 million
|
|
$135 - $140 million
|
|
Three months ended June 30,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
Mark-to-market impact from fuel contracts settling in future periods
|
$
|
25
|
|
|
$
|
(81
|
)
|
Ineffectiveness from fuel hedges settling in future periods
|
8
|
|
|
(3
|
)
|
||
Realized ineffectiveness and mark-to-market (gains) or losses
|
7
|
|
|
(7
|
)
|
||
Premium cost of fuel contracts
|
34
|
|
|
48
|
|
||
|
$
|
74
|
|
|
$
|
(43
|
)
|
|
Six months ended June 30,
|
|
Per ASM
|
|
Percent
|
|||||||||
(in cents, except for percentages)
|
2017
|
|
2016
|
|
change
|
|
change
|
|||||||
Salaries, wages, and benefits
|
|
4.69
|
¢
|
|
|
4.33
|
¢
|
|
|
0.36
|
¢
|
|
8.3
|
%
|
Fuel and oil
|
2.48
|
|
|
2.39
|
|
|
0.09
|
|
|
3.8
|
|
|||
Maintenance materials and repairs
|
0.64
|
|
|
0.74
|
|
|
(0.10
|
)
|
|
(13.5
|
)
|
|||
Aircraft rentals
|
0.14
|
|
|
0.16
|
|
|
(0.02
|
)
|
|
(12.5
|
)
|
|||
Landing fees and other rentals
|
0.84
|
|
|
0.83
|
|
|
0.01
|
|
|
1.2
|
|
|||
Depreciation and amortization
|
0.83
|
|
|
0.80
|
|
|
0.03
|
|
|
3.8
|
|
|||
Other operating expenses
|
1.72
|
|
|
1.62
|
|
|
0.10
|
|
|
6.2
|
|
|||
Total
|
|
11.34
|
¢
|
|
|
10.87
|
¢
|
|
|
0.47
|
¢
|
|
4.3
|
%
|
|
Six months ended June 30,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
Mark-to-market impact from fuel contracts settling in future periods
|
$
|
69
|
|
|
$
|
(5
|
)
|
Ineffectiveness from fuel hedges settling in future periods
|
21
|
|
|
1
|
|
||
Realized ineffectiveness and mark-to-market (gains) or losses
|
15
|
|
|
(7
|
)
|
||
Premium cost of fuel contracts
|
68
|
|
|
83
|
|
||
Other
|
(6
|
)
|
|
(1
|
)
|
||
|
$
|
167
|
|
|
$
|
71
|
|
|
Three months ended June 30,
|
|
Percent
|
|
Six months ended June 30,
|
|
Percent
|
||||||||||||
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||||||
Fuel and oil expense, unhedged
|
$
|
867
|
|
|
$
|
716
|
|
|
|
|
$
|
1,683
|
|
|
$
|
1,293
|
|
|
|
Add: Fuel hedge (gains) losses included in Fuel and oil expense, net
|
123
|
|
|
187
|
|
|
|
|
229
|
|
|
462
|
|
|
|
||||
Fuel and oil expense, as reported
|
$
|
990
|
|
|
$
|
903
|
|
|
|
|
$
|
1,912
|
|
|
$
|
1,755
|
|
|
|
Add: Net impact from fuel contracts
|
46
|
|
|
30
|
|
|
|
|
83
|
|
|
22
|
|
|
|
||||
Fuel and oil expense, excluding special items (economic)
|
$
|
1,036
|
|
|
$
|
933
|
|
|
11.0%
|
|
$
|
1,995
|
|
|
$
|
1,777
|
|
|
12.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total operating expenses, as reported
|
$
|
4,494
|
|
|
$
|
4,108
|
|
|
|
|
$
|
8,719
|
|
|
$
|
7,990
|
|
|
|
Add (Deduct): Reclassification between Fuel and oil and Other (gains) losses, net, associated with current period settled contracts
|
7
|
|
|
(7
|
)
|
|
|
|
15
|
|
|
(7
|
)
|
|
|
||||
Add: Contracts settling in the current period, but for which gains and/or (losses) have been recognized in a prior period (a)
|
39
|
|
|
37
|
|
|
|
|
68
|
|
|
29
|
|
|
|
||||
Deduct: Asset impairment
|
—
|
|
|
(21
|
)
|
|
|
|
—
|
|
|
(21
|
)
|
|
|
||||
Deduct: Lease termination expense
|
(8
|
)
|
|
—
|
|
|
|
|
(13
|
)
|
|
—
|
|
|
|
||||
Total operating expenses, excluding special items
|
$
|
4,532
|
|
|
$
|
4,117
|
|
|
10.1%
|
|
$
|
8,789
|
|
|
$
|
7,991
|
|
|
10.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income, as reported
|
$
|
1,250
|
|
|
$
|
1,276
|
|
|
|
|
$
|
1,908
|
|
|
$
|
2,220
|
|
|
|
Add (Deduct): Reclassification between Fuel and oil and Other (gains) losses, net, associated with current period settled contracts
|
(7
|
)
|
|
7
|
|
|
|
|
(15
|
)
|
|
7
|
|
|
|
||||
Deduct: Contracts settling in the current period, but for which gains and/or (losses) have been recognized in a prior period (a)
|
(39
|
)
|
|
(37
|
)
|
|
|
|
(68
|
)
|
|
(29
|
)
|
|
|
||||
Add: Asset impairment
|
—
|
|
|
21
|
|
|
|
|
—
|
|
|
21
|
|
|
|
||||
Add: Lease termination expense
|
8
|
|
|
—
|
|
|
|
|
13
|
|
|
—
|
|
|
|
||||
Operating income, excluding special items
|
$
|
1,212
|
|
|
$
|
1,267
|
|
|
(4.3)%
|
|
$
|
1,838
|
|
|
$
|
2,219
|
|
|
(17.2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income, as reported
|
$
|
746
|
|
|
$
|
820
|
|
|
|
|
$
|
1,097
|
|
|
$
|
1,333
|
|
|
|
Add (Deduct): Mark-to-market impact from fuel contracts settling in future periods
|
25
|
|
|
(81
|
)
|
|
|
|
69
|
|
|
(5
|
)
|
|
|
||||
Add (Deduct): Ineffectiveness from fuel hedges settling in future periods
|
8
|
|
|
(3
|
)
|
|
|
|
21
|
|
|
1
|
|
|
|
||||
Deduct: Other net impact of fuel contracts settling in the current or a prior period (excluding reclassifications)
|
(39
|
)
|
|
(37
|
)
|
|
|
|
(68
|
)
|
|
(29
|
)
|
|
|
||||
Add: Asset impairment
|
—
|
|
|
21
|
|
|
|
|
—
|
|
|
21
|
|
|
|
||||
Add: Lease termination expense
|
8
|
|
|
—
|
|
|
|
|
13
|
|
|
—
|
|
|
|
||||
Add (Deduct): Net income tax impact from fuel and special items (b)
|
—
|
|
|
37
|
|
|
|
|
(12
|
)
|
|
5
|
|
|
|
||||
Net income, excluding special items
|
$
|
748
|
|
|
$
|
757
|
|
|
(1.2)%
|
|
$
|
1,120
|
|
|
$
|
1,326
|
|
|
(15.5)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share, diluted, as reported
|
$
|
1.23
|
|
|
$
|
1.28
|
|
|
|
|
$
|
1.80
|
|
|
$
|
2.07
|
|
|
|
Add (Deduct): Net impact to net income above from fuel contracts divided by dilutive shares
|
—
|
|
|
(0.19
|
)
|
|
|
|
0.04
|
|
|
(0.05
|
)
|
|
|
||||
Add: Impact of special items
|
0.01
|
|
|
0.03
|
|
|
|
|
0.02
|
|
|
0.03
|
|
|
|
||||
Add (Deduct): Net income tax impact of fuel and special items (b)
|
—
|
|
|
0.07
|
|
|
|
|
(0.02
|
)
|
|
0.01
|
|
|
|
||||
Net income per share, diluted, excluding special items
|
$
|
1.24
|
|
|
$
|
1.19
|
|
|
4.2%
|
|
$
|
1.84
|
|
|
$
|
2.06
|
|
|
(10.7)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses per ASM (cents)
|
|
11.19
|
¢
|
|
|
10.75
|
¢
|
|
|
|
|
11.34
|
¢
|
|
|
10.87
|
¢
|
|
|
Deduct: Fuel and oil expense divided by ASMs
|
(2.47
|
)
|
|
(2.37
|
)
|
|
|
|
(2.48
|
)
|
|
(2.39
|
)
|
|
|
||||
Deduct: Impact of special items
|
(0.02
|
)
|
|
(0.05
|
)
|
|
|
|
(0.02
|
)
|
|
(0.02
|
)
|
|
|
||||
Operating expenses per ASM, excluding Fuel and oil and special items (cents)
|
|
8.70
|
¢
|
|
|
8.33
|
¢
|
|
4.4%
|
|
|
8.84
|
¢
|
|
|
8.46
|
¢
|
|
4.5%
|
|
|
|
|
||||
|
Twelve Months Ended
|
|
Twelve Months Ended
|
||||
|
June 30, 2017
|
|
June 30, 2016
|
||||
Operating income, as reported
|
$
|
3,449
|
|
|
$
|
4,471
|
|
Special revenue adjustment
|
—
|
|
|
(172
|
)
|
||
Union contract bonuses
|
356
|
|
|
279
|
|
||
Net impact from fuel contracts
|
(263
|
)
|
|
(354
|
)
|
||
Acquisition and integration costs
|
—
|
|
|
13
|
|
||
Asset impairment
|
—
|
|
|
21
|
|
||
Lease termination expense
|
35
|
|
|
—
|
|
||
Operating income, non-GAAP
|
$
|
3,577
|
|
|
$
|
4,258
|
|
Net adjustment for aircraft leases (a)
|
107
|
|
|
117
|
|
||
Adjustment for fuel hedge accounting (b)
|
(137
|
)
|
|
(159
|
)
|
||
Adjusted Operating income, non-GAAP (A)
|
$
|
3,547
|
|
|
$
|
4,216
|
|
|
|
|
|
||||
Debt, including capital leases (c)
|
$
|
3,239
|
|
|
$
|
3,039
|
|
Equity (c)
|
8,208
|
|
|
7,360
|
|
||
Net present value of aircraft operating leases (c)
|
906
|
|
|
1,125
|
|
||
Average invested capital
|
$
|
12,353
|
|
|
$
|
11,524
|
|
Equity adjustment for hedge accounting (b)
|
546
|
|
|
1,072
|
|
||
Adjusted average invested capital (B)
|
$
|
12,899
|
|
|
$
|
12,596
|
|
|
|
|
|
||||
Non-GAAP ROIC, pre-tax (A/B)
|
27.5
|
%
|
|
33.5
|
%
|
1.
|
A one-time $172 million Special revenue adjustment in July 2015 as a result of the Company's amendment of its co-branded credit card agreement with Chase Bank USA, N.A. and the resulting required change in accounting methodology. This increase to revenue represented a nonrecurring required acceleration of revenues associated with the adoption of Accounting Standards Update 2009-13;
|
2.
|
Union contract bonuses recorded for certain workgroups. As the bonuses would only be paid at ratification of the associated tentative agreement and would not represent an ongoing expense to the Company, management believes its results for the associated periods are more usefully compared if the impacts of ratification bonus amounts are excluded from results. Generally, union contract agreements cover a specified three- to five- year period, although such contracts officially never expire, and the agreed upon terms remain in place until a revised agreement is reached, which can be several years following the amendable date;
|
3.
|
Expenses associated with the Company’s acquisition and integration of AirTran Holdings, LLC, the parent company of AirTran Airways, Inc. ("AirTran"). Such expenses were primarily incurred during the acquisition and integration period of the two companies from 2011 through 2015 as a result of the Company’s acquisition of AirTran, which closed on May 2, 2011. The exclusion of these expenses provides investors with a more applicable basis with which to compare results in future periods now that the integration process has been completed;
|
4.
|
A noncash impairment charge related to leased slots at Newark Liberty International Airport as a result of the FAA announcement in April 2016 that this airport was being changed to a Level 2 schedule-facilitated airport from its previous designation as Level 3 (a "slot" is the right of an air carrier, pursuant to regulations of the FAA, to operate a takeoff or landing at a specific time at certain airports); and
|
5.
|
Lease termination costs recorded during the twelve months ended
June 30, 2017
, as a result of the Company acquiring nine of its Boeing 737-300 aircraft off operating leases, as part of the Company’s strategic effort to phase out its Classic aircraft from operations by the end of third quarter 2017 in the most economically advantageous manner possible. The Company had not budgeted for these early lease termination costs, as they were subject to negotiations being concluded with the third party lessors. The Company recorded the fair value of the aircraft, as well as any associated remaining obligations to the balance sheet as debt.
|
|
The Boeing Company
|
|
|
|
|
||||
|
-800 Firm Orders
|
MAX 7
Firm Orders |
MAX 8
Firm Orders |
|
MAX 8 Options
|
|
Additional -700s
|
Total
|
|
2017
|
39
|
—
|
14
|
|
—
|
|
18
|
71
|
(b)
|
2018
|
26
|
—
|
13
|
|
—
|
|
4
|
43
|
|
2019
|
—
|
15
|
—
|
|
5
|
|
—
|
20
|
|
2020
|
—
|
14
|
—
|
|
8
|
|
—
|
22
|
|
2021
|
—
|
1
|
13
|
|
20
|
|
—
|
34
|
|
2022
|
—
|
—
|
15
|
|
21
|
|
—
|
36
|
|
2023
|
—
|
—
|
34
|
|
23
|
|
—
|
57
|
|
2024
|
—
|
—
|
41
|
|
23
|
|
—
|
64
|
|
2025
|
—
|
—
|
40
|
|
36
|
|
—
|
76
|
|
2026
|
—
|
—
|
—
|
|
36
|
|
—
|
36
|
|
2027
|
—
|
—
|
—
|
|
23
|
|
—
|
23
|
|
Total
|
65
|
30
|
170
|
(a)
|
195
|
|
22
|
482
|
|
|
|
|
|
Average
Age (Yrs)
|
|
Number
of Aircraft
|
|
Number
Owned
|
|
Number
Leased
|
||||
Type
|
|
Seats
|
|
|
|
|
||||||||
737-300
|
|
137 or 143
|
|
22
|
|
|
69
|
|
(a)
|
44
|
|
|
25
|
|
737-700
|
|
143
|
|
13
|
|
|
502
|
|
|
397
|
|
|
105
|
|
737-800
|
|
175
|
|
3
|
|
|
164
|
|
|
157
|
|
|
7
|
|
Totals
|
|
|
|
12
|
|
|
735
|
|
|
598
|
|
|
137
|
|
•
|
the Company's network and schedule optimization plans and strategies;
|
•
|
the Company’s capacity and fleet plans and related operational and financial expectations;
|
•
|
the expected functionality and related benefits associated with the Company's new reservations system;
|
•
|
the Company’s financial outlook and projected results of operations, including factors and assumptions underlying the Company’s projections;
|
•
|
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 its plans for repayment of debt and capital lease obligations, as well as its 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.
|
•
|
changes in demand for the Company's services and other changes in consumer behavior;
|
•
|
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;
|
•
|
the impact of economic conditions, fuel prices, and actions of competitors (including, without limitation, pricing, scheduling, capacity, and network decisions and consolidation and alliance activities) and other factors beyond the Company’s control on the Company's business decisions, plans, and strategies;
|
•
|
the Company's dependence on third parties, in particular with respect to its technology and fleet plans and expectations;
|
•
|
changes in the price of aircraft fuel, the impact of hedge accounting, and any changes to the Company's fuel hedging strategies and positions;
|
•
|
the Company’s ability to timely and effectively prioritize its initiatives and related expenditures;
|
•
|
the impact of governmental regulations and other governmental actions related to the Company and its operations; 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, 2016.
|
Issuer Purchases of Equity Securities (1)
|
|
||||||||||||||
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
||||||
|
|
|
|
|
|
Total number of
shares purchased
as part of publicly
announced plans
or programs
|
|
Maximum dollar
value of shares that
may yet be purchased
under the plans
or programs
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
|
|
Total number
of shares
purchased
|
|
Average
price paid
per share
|
|
|
|
||||||||
|
|
|
|
|
|
||||||||||
Period
|
|
|
|
|
|
||||||||||
April 1, 2017 through
April 30, 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
400,018,496
|
|
|
May 1, 2017 through
May 31, 2017
|
|
—
|
|
|
$
|
—
|
|
(2)
|
—
|
|
|
$
|
2,000,000,000
|
|
(1)(2)
|
June 1, 2017 through
June 30, 2017
|
|
5,075,798
|
|
|
$
|
—
|
|
(2)
|
5,075,798
|
|
|
$
|
2,000,000,000
|
|
|
Total
|
|
5,075,798
|
|
|
|
|
5,075,798
|
|
|
|
|
(1)
|
On May 18, 2016, the Company’s Board of Directors authorized the repurchase of up to $2.0 billion of the Company’s common stock. Following the completion of the May 2016 share repurchase authorization, on May 17, 2017, the Company’s Board of Directors authorized the repurchase of up to $2.0 billion of the Company’s common stock in a new share repurchase authorization. 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)
|
The Company completed its May 2016 $2.0 billion share repurchase authorization with the launch of the Second Quarter 2017 ASR Program, pursuant to which the Company paid $400 million on May 8, 2017, and received an initial delivery of 5,075,798 shares on June 9, 2017, representing an estimated 75 percent of the shares to be purchased by the Company under the Second Quarter 2017 ASR Program based on a price of $59.104 per share, which was the volume-weighted average price per share of the Company’s common stock on the New York Stock Exchange between May 8, 2017 and June 8, 2017. Final settlement of the Second Quarter 2017 ASR Program occurred in July 2017 and was determined based generally on a discount to the volume-weighted average price per share of the Company's common stock during a calculation period completed in July 2017. Upon settlement, the third party financial institution delivered 1,564,332 additional shares of the Company's common stock to the Company. In total, the average purchase price per share for the 6,640,130 shares repurchased under the Second Quarter 2017 ASR Program, upon completion of the Second Quarter 2017 ASR Program in July 2017, was $60.24.
|
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
|
Second Amended and Restated Bylaws of the Company, effective November 17, 2016 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed November 21, 2016 (File No. 1-7259)).
|
10.1
|
Supplemental Agreement No. 102 to Purchase Agreement No. 1810, dated January 19, 1994, between The Boeing Company and the Company. (1)
|
10.2
|
Consulting Agreement, dated as of June 30, 2017, by and between Arthur Jefferson Lamb III and Southwest Airlines Co. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8–K filed July 3, 2017 (File No. 1–7259)). (2)
|
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. (3)
|
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.
|
|
|
|
|
July 31, 2017
|
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
|
Second Amended and Restated Bylaws of the Company, effective November 17, 2016 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed November 21, 2016 (File No. 1-7259)).
|
10.1
|
Supplemental Agreement No. 102 to Purchase Agreement No. 1810, dated January 19, 1994, between The Boeing Company and the Company. (1)
|
10.2
|
Consulting Agreement, dated as of June 30, 2017, by and between Arthur Jefferson Lamb III and Southwest Airlines Co. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8–K filed July 3, 2017 (File No. 1–7259)). (2)
|
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. (3)
|
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.
|
Supplemental Agreement No. 102
|
|
to
|
|
Purchase Agreement No. 1810
|
|
between
|
|
THE BOEING COMPANY
|
|
and
|
|
SOUTHWEST AIRLINES CO.
|
|
Relating to Boeing Model 737-7H4 and 737-8H4 Aircraft
|
RECITALS
:
|
P.A. No. 1810
|
SA-102-
1
|
|
|
BOEING PROPRIETARY
|
|
THE BOEING COMPANY
|
SOUTHWEST AIRLINES CO.
|
|
|
By:
/s/ Kyle L. Kersavage
|
By:
/s/ Tammy Romo
|
|
Tammy Romo
|
Its:
Attorney‑In‑Fact
|
Its:
EVP & CFO
|
P.A. No. 1810
|
SA-102-
2
|
|
|
BOEING PROPRIETARY
|
|
TABLE OF CONTENTS
|
|
|
|
Page
|
SA
|
|
Number
|
Number
|
ARTICLES
|
|
|
|
|
|
|
|
1.
|
Subject Matter of Sale…………………………….
|
1-1
|
SA-92
|
|
|
|
|
2.
|
Delivery, Title and Risk
|
|
|
|
of Loss…………………………………………….
|
2-1
|
SA-28
|
|
|
|
|
3.
|
Price of Aircraft…………………………………...
|
3‑1
|
SA-92
|
|
|
|
|
4.
|
Taxes………………………………………………
|
4-1
|
|
|
|
|
|
5.
|
Payment……………………………………………
|
5‑1
|
|
|
|
|
|
6.
|
Excusable Delay…………………………………...
|
6‑1
|
|
|
|
|
|
7.
|
Changes to the Detail
|
|
|
|
Specification………………………………………
|
7-1
|
SA-73
|
|
|
|
|
8.
|
Federal Aviation Requirements and
|
|
|
|
Certificates and Export License…………………...
|
8-1
|
|
|
|
|
|
9.
|
Representatives, Inspection,
|
|
|
|
Flights and Test Data……………………………...
|
9-1
|
|
|
|
|
|
10.
|
Assignment, Resale or Lease……………………...
|
10‑1
|
|
|
|
|
|
11.
|
Termination for Certain Events…………………...
|
11‑1
|
|
|
|
|
|
12.
|
Product Assurance; Disclaimer and
|
|
|
|
Release; Exclusion of Liabilities;
|
|
|
|
Customer Support; Indemnification
|
|
|
|
and Insurance……………………………………...
|
12-1
|
|
|
|
|
|
13.
|
Buyer Furnished Equipment and
|
|
|
|
Spare Parts………………………………………...
|
13-1
|
|
|
|
|
|
14.
|
Contractual Notices and Requests………………...
|
14‑1
|
|
|
|
|
|
15.
|
Miscellaneous……………………………………...
|
15‑1
|
|
P.A. No. 1810
|
i
|
|
K/SWA
|
|
SA-
102
|
TABLE OF CONTENTS
|
|
|
SA
|
|
Number
|
TABLE
|
1b
|
Aircraft Information Table - Block 800LUV Aircraft
|
SA-82
|
|
||
1c
|
Aircraft Information Table - Block 800LUV Aircraft
|
SA-100
|
|
(non-ETOPS Configuration)
|
|
|
||
1d
|
Aircraft Information Table - Block 800LUV Aircraft
|
SA-102
|
|
(non-ETOPS Configuration)
|
|
|
EXHIBITS
|
A-6
|
Aircraft Configuration - Block 800LUV Aircraft
|
SA-75
|
|
|
|||
A-7
|
Aircraft Configuration - Block 800LUV Aircraft
|
SA-84
|
|
|
(non-ETOPS Configuration)
|
||
|
|||
B
|
***
|
SA-75
|
|
|
|||
C
|
Customer Support Document
|
||
|
|||
C-2
|
737-800 Customer Support Document
|
SA-75
|
|
|
|||
D-2
|
Economic Price Adjustment
|
SA-75
|
|
|
ECI-MFG/CPI (July 2011 Base Price)
|
||
|
|||
E
|
Buyer Furnished Equipment
|
SA-75
|
|
|
Provisions Document
|
||
|
Attachment A - 737-7H4 Aircraft (through 2012)
|
||
|
Attachment B - 737-8H4 Aircraft (2012-2018)
|
SA-101
|
|
|
|||
F
|
Defined Terms Document
|
||
|
|
|
|
LETTER AGREEMENTS
|
|
|
|
|
|
|
|
1810-1R1
|
Waiver of Aircraft Demonstration Flight
|
SA-75
|
P.A. No. 1810
|
ii
|
|
K/SWA
|
|
SA-
102
|
TABLE OF CONTENTS
|
|
|
SA
|
|
Number
|
RESTRICTED LETTER AGREEMENTS
|
|
||
|
|
|
|
6‑1162‑RLL‑932R3
|
***
|
SA-75
|
|
|
|||
6‑1162‑RLL‑934R5
|
Disclosure of Confidential Information
|
SA-75
|
|
|
|||
6‑1162‑RLL‑941R3
|
Other Matters
|
SA-75
|
|
|
|||
6-1162-KJJ-055R1
|
Structural Matters
|
SA-25
|
|
|
|||
6-1162-KJJ-056
|
Noise and Emission Matters
|
SA-13
|
|
|
|||
6-1162-KJJ-057
|
Product Development Matters
|
SA-13
|
|
|
|||
SWA-PA-1810-LA-1001315R4
|
***
|
SA-92
|
|
|
Attachment A
|
SA-100
|
|
|
|||
SWA-PA-1810-LA-1003498R1
|
***
|
SA-75
|
|
|
|||
SWA-PA-1810-LA-1003490R4
|
***
|
SA-92
|
|
|
|||
SWA-PA-1810-LA-1003367R1
|
***
|
SA-75
|
|
|
|||
SWA-PA-1810-LA-1105883
|
Aircraft Model Substitution
|
SA-75
|
|
|
|||
SWA-PA-1810-LA-1105884R2
|
Option Aircraft
|
SA-92
|
|
|
Attachment A - Model 737-8H4 Aircraft
|
SA-92
|
|
|
Attachment B - Option Aircraft Information Table
|
SA-101
|
|
|
|||
SWA-PA-1810-LA-1105885R3
|
***
|
SA-90
|
|
|
|||
SWA-PA-1810-LA-1105886R2
|
***
|
SA-92
|
|
|
|
||
|
|||
SWA-PA-1810-LA-1105887
|
***
|
SA-75
|
|
|
|
||
|
|||
SWA-PA-1810-LA-1105888R5
|
***
|
SA-92
|
|
|
|||
SWA-PA-1810-LA-1105889
|
***
|
SA-75
|
|
|
|||
SWA-PA-1810-LA-1303010R1
|
***
|
SA-92
|
|
|
|||
SWA-PA-1810-LA-1504814
|
***
|
SA-92
|
|
|
P.A. No. 1810
|
iii
|
|
K/SWA
|
|
SA-
102
|
ADDITIONAL LETTERS (FOR REFERENCE) -
INACTIVE (as of SA-82)
|
|
6-1162-MSA-288
|
Business Offer - Enhanced Ground Proximity
|
|
Warning System (EGPWS) - Activiation - Peaks
|
|
and Obstacles Feature
|
|
(
Not applicable to Block 700LUV & Block 800LUV Aircraft)
|
|
|
6-1162-JMG-501R2
|
Business Offer - ACARS package
|
|
(
Not applicable to Block 700LUV & Block 800LUV Aircraft)
|
INACTIVE / DELETED TABLES, EXHIBITS, AND LETTER AGREEMENTS
|
TABLE
|
|
|
|
|
|
|
|
Table
|
Title
|
Last Updated under SA
|
Current Status
|
1
|
Aircraft Information Table
|
SA-75
|
Inactive
|
2
|
Option Aircraft Information Table
|
SA-74
|
Deleted under SA-75
|
1a
|
Aircraft Information Table - Block 700LUV Aircraft
|
SA-91
|
Deleted Under SA-92
|
EXHIBITS
|
|
|
|
|
|
|
|
Exhibits
|
Title
|
Last Updated under SA
|
Current Status
|
A
|
Aircraft Configuration - 737-700
|
SA-36
|
Inactive
|
A-Winglet
|
Aircraft Configuration
|
SA-36
|
Inactive
|
A-1-Winglet
|
Aircraft Configuration
|
SA-36
|
Inactive
|
A-1A
|
Aircraft Configuration - 737-700 Block T-W-2c
|
SA-36
|
Inactive
|
A-2
|
Aircraft Configuration - 737-700 Block T-W-2 / T-W-2a
|
SA-47
|
Inactive
|
A-3
|
Aircraft Configuration - 737-700 Block T-W-2 / T-W-2a
|
SA-61
|
Inactive
|
A-4
|
Aircraft Configuration - 737-700 Block T-W-2b Aircraft
|
SA-66
|
Inactive
|
A-5
|
Aircraft Configuration - Block 700LUV Aircraft
|
SA-75
|
Deleted under SA-92
|
C.2
|
737-800 Customer Support Variables
|
SA-71
|
Deleted under SA-75
|
D
|
Price Adjustment Due to
Economic Fluctuations - Aircraft Price Adjustment
(July 1992 Base Price)
|
|
Inactive
|
D-1
|
Price Adjustment Due to Economic Fluctuations - Aircraft Price Adjustment
(July 1999 Base Price)
|
SA-13
|
Inactive
|
P.A. No. 1810
|
iv
|
|
K/SWA
|
|
SA-
102
|
TABLE OF CONTENTS
|
|||
|
|
|
|
Exhibits
|
Title
|
Last Updated under SA
|
Current Status
|
|
Aircraft Price Adjustment
(July 1999 Base Price)
|
|
|
E.2
|
737-800 Buyer Furnished Equipment Provisions Document
|
SA-73
|
Deleted under SA-75
|
RESTRICTED LETTER AGREEMENTS
|
|
|
|
|
|
|
|
Letter Agreement
|
Title
|
Last Updated under SA
|
Current Status
|
6‑1162‑RLL‑933R21
|
Option Aircraft
|
SA-60
|
Deleted under SA-75
|
6‑1162‑RLL‑935R1
|
Performance Guarantees
|
SA-1
|
Inactive
|
6‑1162‑RLL‑936R4
|
Certain Contractual Matters
|
SA-4
|
Inactive
|
6‑1162‑RLL‑937
|
Alternate Advance Payment Schedule
|
|
Inactive
|
6‑1162‑RLL‑938
|
***
|
|
Inactive
|
6‑1162‑RLL‑939R1
|
Certification Flight Test Aircraft
|
SA-1
|
Inactive
|
6‑1162‑RLL‑940R1
|
Training Matters
|
SA-1
|
Inactive
|
6‑1162‑RLL‑942
|
Open Configuration Matters
|
|
Inactive
|
6‑1162‑RLL‑943R1
|
Substitution Rights
|
SA-6
|
Deleted under SA 75
|
6‑1162‑RLL‑944
|
***
|
|
Inactive
|
6-1162-RLL-945
|
Comparison of 737-7H4 and 737-3H4 Block Fuel Burn
|
|
Inactive
|
6-1162-RLL-1855R3
|
Additional Contractual
Matters
|
SA-4
|
Inactive
|
6-1162-RLL-1856
|
***
|
SA-1
|
Inactive
|
6-1162-RLL-1857
|
Service Ready Validation Program Field Test
|
SA-1
|
Inactive
|
6-1162-RLL-1858R1
|
Escalation Matters
|
SA-4
|
Inactive
|
6-1162-RLL-2036
|
Amortization of Costs for Customer Unique Changes
|
SA-1
|
Inactive
|
6-1162-RLL-2037
|
Reconciliation of the Aircraft Basic Price
|
SA-1
|
Inactive
|
6-1162-RLL-2073
|
Maintenance Training Matters
|
SA-1
|
Inactive
|
6-1162-KJJ-058R1
|
Additional Substitution Rights
|
SA-71
|
Deleted under SA-75
|
6-1162-KJJ-150
|
Flight Control Computer & Mode Control Panel Spares Matter
|
SA-14
|
Inactive
|
6-1162-MSA-185R3
|
Delivery Change Contractual Matters
|
SA-21
|
Inactive
|
P.A. No. 1810
|
v
|
|
K/SWA
|
|
SA-
102
|
P.A. No. 1810
|
vi
|
|
K/SWA
|
|
SA-
102
|
Table 1d to
|
Purchase Agreement No. PA-01810
|
Aircraft Delivery, Description, Price and Advance Payments
|
Block 800LUV Aircraft (non-ETOPS Configuration)
|
Airframe Model/MTOW:
|
737-800
|
174,200 pounds
|
|
Detail Specification:
|
D019A001SWA38 (1/9/2015)
|
|
|
|
|
|
|
|
|
Engine Model/Thrust:
|
CFM56-7B27
|
27,300 pounds
|
|
Airframe Price Base Year/Escalation Formula:
|
Jul-11
|
ECI-MFG/CPI
|
|
|
|
|
|
|
|
Airframe Price:
|
***
|
|
Engine Price Base Year/Escalation Formula:
|
N/A
|
N/A
|
|
|
|
|
|
|
|
|
Optional Features:
|
|
***
|
|
|
|
|
|
|
|
Sub-Total of Airframe and Features:
|
***
|
|
Airframe Escalation Data:
|
|
|
|
|
|
|
|
|
Engine Price (Per Aircraft):
|
***
|
|
Base Year Index (ECI):
.
|
***
|
|
|
|
|
|
|
|
Aircraft Basic Price (Excluding BFE/SPE):
|
***
|
|
Base Year Index (CPI):
|
***
|
|
Buyer Furnished Equipment (BFE) Estimate:
|
***
|
|
|
|
|
Seller Purchased Equipment (SPE) Estimate:
|
***
|
|
|
|
|
Deposit per Exercised Option Aircraft (OPEX):
|
***
|
|
|
|
|
|
|
|
|
|
|
|
|
Delivery
Date
|
Number of
Aircraft
|
Escalation
Factor
(Airframe)
|
Aircraft
Serial
Number
|
Escalation
Forecast
|
|
Escalation Estimate
Adv Payment Base
Price Per A/P
|
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
|
|||
At Signing
***
|
24 Mos.
***
|
21/18/12/9/6 Mos.
***
|
Total
***
|
|||||||
Dec-2016
|
2
|
***
|
63593, 63594
|
***
|
OPEX
|
***
|
***
|
***
|
***
|
***
|
May-2017
|
1
|
***
|
63592
|
***
|
OPEX
|
***
|
***
|
***
|
***
|
***
|
May-2017
|
1
|
***
|
63575
|
***
|
|
***
|
***
|
***
|
***
|
***
|
May-2017
|
1
|
***
|
63576
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Jun-2017
|
2
|
***
|
63577, 63578
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Jun-2017
|
3
|
***
|
63596, 63595,
63598
|
***
|
OPEX
|
***
|
***
|
***
|
***
|
***
|
Jun-2017
|
2
|
***
|
63571, 63586
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Jun-2017
|
1
|
***
|
63,599
|
***
|
OPEX
|
***
|
***
|
***
|
***
|
***
|
Jul-2017
|
1
|
***
|
63581
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Aug-2017
|
1
|
***
|
63587
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Aug-2017
|
2
|
***
|
63573, 63574
|
***
|
|
***
|
***
|
***
|
***
|
***
|
Sep-2017
|
1
|
***
|
63572
|
***
|
|
***
|
***
|
***
|
***
|
***
|
|
|
SA
-102
|
SWA-PA-01810 82233
/
88233 / 93899
|
Boeing Proprietary
|
Page
1
|
Table 1d to
|
Purchase Agreement No. PA-01810
|
Aircraft Delivery, Description, Price and Advance Payments
|
Block 800LUV Aircraft (non-ETOPS Configuration)
|
Delivery
Date
|
Number of
Aircraft
|
Escalation
Factor
(Airframe)
|
Aircraft
Serial
Number
|
Escalation
Forecast
|
|
Escalation Estimate
Adv Payment Base
Price Per A/P
|
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
|
|||||
At Signing
***
|
24 Mos.
***
|
21/18/12/9/6 Mos.
***
|
Total
***
|
|||||||||
Oct-2017
|
1
|
***
|
63579
|
***
|
|
***
|
***
|
***
|
***
|
***
|
||
Oct-2017
|
1
|
***
|
63597
|
***
|
OPEX
|
***
|
***
|
***
|
***
|
***
|
||
Nov-2017
|
1
|
***
|
63580
|
***
|
|
***
|
***
|
***
|
***
|
***
|
||
Dec-2017
|
2
|
***
|
63582, 63583
|
***
|
|
***
|
***
|
***
|
***
|
***
|
||
Dec-2017
|
4
|
***
|
63600, 63601,
63602, 36993
|
***
|
OPEX
|
***
|
***
|
***
|
***
|
***
|
||
Jan-2018
|
1
|
***
|
64115
|
***
|
OPEX
|
***
|
***
|
***
|
***
|
***
|
||
Jan-2018
|
2
|
***
|
63584, 63585
|
***
|
|
***
|
***
|
***
|
***
|
***
|
||
Feb-2018
|
2
|
***
|
64171, 64172
|
***
|
OPEX
|
***
|
***
|
***
|
***
|
***
|
||
Mar-2018
|
1
|
***
|
64174
|
***
|
OPEX
|
***
|
***
|
***
|
***
|
***
|
||
Apr-2018
|
1
|
***
|
64248
|
***
|
OPEX
|
***
|
***
|
***
|
***
|
***
|
||
May-2018
|
2
|
***
|
63588, 63589
|
***
|
|
***
|
***
|
***
|
***
|
***
|
||
May-2018
|
2
|
***
|
64251, 64250
|
***
|
OPEX
|
***
|
***
|
***
|
***
|
***
|
||
Jun-2018
|
2
|
***
|
63590, 63591
|
***
|
|
***
|
***
|
***
|
***
|
***
|
||
Jun-2018
|
2
|
***
|
64350, 64349
|
***
|
OPEX
|
***
|
***
|
***
|
***
|
***
|
||
Jul-2018
|
2
|
***
|
64347, 64348
|
***
|
OPEX
|
***
|
***
|
***
|
***
|
***
|
||
Aug-2018
|
3
|
***
|
64799, 64800,
64801
|
***
|
OPEX
|
***
|
***
|
***
|
***
|
***
|
||
Total:
|
|
47
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
1) ***
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SA
-102
|
SWA-PA-01810 82233
/
88233 / 93899
|
Boeing Proprietary
|
Page
2
|
|
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
|