Gross Amount of Recognized | Gross Amount of Cash Collateral | Net Amount Presented in Balance Sheet | ||||||||||||||||||
Assets | Liabilities | Offset | Assets | Liabilities | ||||||||||||||||
As of December 31, 2014 | ||||||||||||||||||||
Fuel derivatives | $ | — | $ | 102 | $ | 51 | $ | — | $ | 51 | ||||||||||
Interest rate derivatives | — | 1 | 1 | — | — | |||||||||||||||
As of December 31, 2013 | ||||||||||||||||||||
Fuel derivatives | $ | 6 | $ | — | $ | — | $ | 6 | $ | — | ||||||||||
Interest rate derivatives | — | 3 | 3 | — | — |
Jet fuel swap agreements | Jet fuel collar agreements | Heating oil collar agreements | Total | |||||
First Quarter 2015 | 10% | 10% | —% | 20% | ||||
Second Quarter 2015 | 10% | 10% | —% | 20% | ||||
Third Quarter 2015 | 5% | —% | 9% | 14% | ||||
Fourth Quarter 2015 | 5% | —% | 10% | 15% |
December 31, 2014 | December 31, 2013 | |||||||||||||||
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||
Public Debt | ||||||||||||||||
Floating rate enhanced equipment notes | ||||||||||||||||
Class G-1, due 2016 | $ | 35 | $ | 35 | $ | 55 | $ | 54 | ||||||||
Class G-2, due 2016 | 185 | 180 | 373 | 365 | ||||||||||||
Fixed rate special facility bonds, due through 2036 | 77 | 78 | 78 | 68 | ||||||||||||
6.75% convertible debentures due in 2039 | 86 | 283 | 162 | 297 | ||||||||||||
5.5% convertible debentures due in 2038 | 68 | 241 | 68 | 134 | ||||||||||||
Non-Public Debt | ||||||||||||||||
Fixed rate enhanced equipment notes, due through 2023 | 217 | 224 | — | — | ||||||||||||
Floating rate equipment notes, due through 2025 | 276 | 277 | 634 | 645 | ||||||||||||
Fixed rate equipment notes, due through 2026 | 1,119 | 1,211 | 1,110 | 1,161 | ||||||||||||
Total | $ | 2,063 | $ | 2,529 | $ | 2,480 | $ | 2,724 |
Aircraft Fuel Derivatives (1) | Interest Rate Swaps (2) | Total | ||||||||||
Beginning accumulated losses at December 31, 2011 | $ | (3 | ) | $ | (12 | ) | $ | (15 | ) | |||
Reclassifications into earnings (net of $0 of taxes) | (6 | ) | 7 | 1 | ||||||||
Change in fair value (net of $5 of taxes) | 8 | (2 | ) | 6 | ||||||||
Balance of accumulated losses at December 31, 2012 | (1 | ) | (7 | ) | (8 | ) | ||||||
Reclassifications into earnings (net of $7 of taxes) | 6 | 5 | 11 | |||||||||
Change in fair value (net of $(2) of taxes) | (4 | ) | 1 | (3 | ) | |||||||
Balance of accumulated income (losses), at December 31, 2013 | 1 | (1 | ) | — | ||||||||
Reclassifications into earnings (net of $12 of taxes) | 18 | 1 | 19 | |||||||||
Change in fair value (net of $(52) of taxes) | (82 | ) | — | (82 | ) | |||||||
Balance of accumulated losses, at December 31, 2014 | $ | (63 | ) | $ | — | $ | (63 | ) | ||||
(1) Reclassified to aircraft fuel expense | ||||||||||||
(2) Reclassified to interest expense |
2014 | 2013 | |||||||||||||
Secured Debt | ||||||||||||||
Floating rate equipment notes, due through 2025 (1) | $ | 276 | 3.2 | % | $ | 634 | 2.8 | % | ||||||
Floating rate enhanced equipment notes (2) (3) | ||||||||||||||
Class G-1, due 2016 | 35 | 4.4 | % | 55 | 4.5 | % | ||||||||
Class G-2, due 2016 | 185 | 1.0 | % | 373 | 1.0 | % | ||||||||
Fixed rate enhanced equipment notes, due through 2023 (4) | 217 | 4.5 | % | — | — | % | ||||||||
Fixed rate equipment notes, due through 2026 | 1,119 | 5.6 | % | 1,110 | 5.8 | % | ||||||||
Fixed rate special facility bonds, due through 2036 (5) | 77 | 5.0 | % | 78 | 5.0 | % | ||||||||
Unsecured Debt | ||||||||||||||
6.75% convertible debentures due in 2039 (6) | 86 | 162 | ||||||||||||
5.5% convertible debentures due in 2038 (7) | 68 | 68 | ||||||||||||
Capital Leases (8) | 170 | 4.1 | % | 105 | 3.9 | % | ||||||||
Total debt and capital lease obligations | 2,233 | 2,585 | ||||||||||||
Less: Current maturities | (265 | ) | (469 | ) | ||||||||||
Long-term debt and capital lease obligations | $ | 1,968 | $ | 2,116 |
Year | Maturities | |||
2015 | $ | 265 | ||
2016 | 464 | |||
2017 | 216 | |||
2018 | 227 | |||
2019 | 227 | |||
Thereafter | 834 |
December 31, 2014 | December 31, 2013 | |||||||||||||||
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||
Public Debt | ||||||||||||||||
Floating rate enhanced equipment notes | ||||||||||||||||
Class G-1, due 2016 | $ | 35 | $ | 35 | $ | 55 | $ | 54 | ||||||||
Class G-2, due 2016 | 185 | 180 | 373 | 365 | ||||||||||||
Fixed rate special facility bonds, due through 2036 | 77 | 78 | 78 | 68 | ||||||||||||
6.75% convertible debentures due in 2039 | 86 | 283 | 162 | 297 | ||||||||||||
5.5% convertible debentures due in 2038 | 68 | 241 | 68 | 134 | ||||||||||||
Non-Public Debt | ||||||||||||||||
Fixed rate enhanced equipment notes, due through 2023 | 217 | 224 | — | — | ||||||||||||
Floating rate equipment notes, due through 2025 | 276 | 277 | 634 | 645 | ||||||||||||
Fixed rate equipment notes, due through 2026 | 1,119 | 1,211 | 1,110 | 1,161 | ||||||||||||
Total | $ | 2,063 | $ | 2,529 | $ | 2,480 | $ | 2,724 |
Jet fuel swap agreements | Jet fuel collar agreements | Heating oil collar agreements | Total | |||||
First Quarter 2015 | 10% | 10% | —% | 20% | ||||
Second Quarter 2015 | 10% | 10% | —% | 20% | ||||
Third Quarter 2015 | 5% | —% | 9% | 14% | ||||
Fourth Quarter 2015 | 5% | —% | 10% | 15% |
As of December 31, | ||||||||
2014 | 2013 | |||||||
Fuel derivatives | ||||||||
Asset fair value recorded in prepaid expenses and other (1) | $ | — | $ | 6 | ||||
Liability fair value recorded in other accrued liabilities (1) | 102 | — | ||||||
Longest remaining term (months) | 12 | 12 | ||||||
Hedged volume (barrels, in thousands) | 2,808 | 1,320 | ||||||
Estimated amount of existing gains (losses) expected to be reclassified into earnings in the next 12 months | (102 | ) | 3 | |||||
Interest rate derivatives | ||||||||
Liability fair value recorded in other long term liabilities (2) | 1 | 3 | ||||||
Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months | (1 | ) | (2 | ) |
2014 | 2013 | 2012 | ||||||||||
Fuel derivatives | ||||||||||||
Hedge effectiveness gains (losses) recognized in aircraft fuel expense | $ | (30 | ) | $ | (10 | ) | $ | 10 | ||||
Gains (losses) on derivatives not qualifying for hedge accounting recognized in other expense | 2 | — | (3 | ) | ||||||||
Hedge gains (losses) on derivatives recognized in comprehensive income | (134 | ) | (6 | ) | 14 | |||||||
Percentage of actual consumption economically hedged | 20 | % | 21 | % | 30 | % | ||||||
Interest rate derivatives | ||||||||||||
Hedge losses on derivatives recognized in interest expense | (1 | ) | (8 | ) | (11 | ) | ||||||
Hedge gains (losses) on derivatives recognized in comprehensive income | — | 1 | (3 | ) |
(1) | Gross asset or liability of each contract prior to consideration of offsetting positions with each counterparty and prior to impact of collateral paid. |
(2) | Gross liability prior to impact of collateral posted. |
Gross Amount of Recognized | Gross Amount of Cash Collateral | Net Amount Presented in Balance Sheet | ||||||||||||||||||
Assets | Liabilities | Offset | Assets | Liabilities | ||||||||||||||||
As of December 31, 2014 | ||||||||||||||||||||
Fuel derivatives | $ | — | $ | 102 | $ | 51 | $ | — | $ | 51 | ||||||||||
Interest rate derivatives | — | 1 | 1 | — | — | |||||||||||||||
As of December 31, 2013 | ||||||||||||||||||||
Fuel derivatives | $ | 6 | $ | — | $ | — | $ | 6 | $ | — | ||||||||||
Interest rate derivatives | — | 3 | 3 | — | — |
2014 | 2013 | 2012 | |||||||||||||||||||
Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | ||||||||||||||||
Nonvested at beginning of year | 4,118,849 | $ | 5.94 | 2,483,664 | $ | 5.77 | 65,914 | $ | 5.08 | ||||||||||||
Granted | 1,930,851 | 8.62 | 2,653,842 | 6.08 | 2,570,891 | 5.79 | |||||||||||||||
Vested | (1,903,229 | ) | 5.97 | (828,291 | ) | 5.77 | (20,249 | ) | 5.09 | ||||||||||||
Forfeited | (361,385 | ) | 7.02 | (190,366 | ) | 5.82 | (132,892 | ) | 5.83 | ||||||||||||
Nonvested at end of year | 3,785,086 | $ | 7.18 | 4,118,849 | $ | 5.94 | 2,483,664 | $ | 5.77 |
2014 | 2013 | 2012 | |||||||||||||||||||
Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | ||||||||||||||||
Nonvested at beginning of year | 711,494 | $ | 6.00 | 2,029,081 | $ | 5.85 | 4,093,484 | $ | 5.64 | ||||||||||||
Granted | — | — | — | — | — | — | |||||||||||||||
Vested | (708,728 | ) | 6.00 | (1,257,045 | ) | 5.76 | (1,921,940 | ) | 5.41 | ||||||||||||
Forfeited | (2,766 | ) | 6.03 | (60,542 | ) | 5.99 | (142,463 | ) | 5.76 | ||||||||||||
Nonvested at end of year | — | $ | — | 711,494 | $ | 6.00 | 2,029,081 | $ | 5.85 |
2014 | 2013 | 2012 | |||||||||||||||||||
Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | ||||||||||||||||
Outstanding at beginning of year | 11,384,688 | $ | 13.45 | 15,845,124 | $ | 14.87 | 21,807,170 | $ | 13.91 | ||||||||||||
Granted | — | — | — | — | — | — | |||||||||||||||
Exercised | (1,950,482 | ) | 11.58 | (10,800 | ) | 7.79 | (493,731 | ) | 4.00 | ||||||||||||
Forfeited | — | — | — | — | — | — | |||||||||||||||
Expired | (3,456,986 | ) | 16.38 | (4,449,636 | ) | 18.50 | (5,468,315 | ) | 12.03 | ||||||||||||
Outstanding at end of year | 5,977,220 | $ | 12.38 | 11,384,688 | $ | 13.45 | 15,845,124 | $ | 14.87 | ||||||||||||
Vested at end of year | 5,977,220 | $ | 12.38 | 11,384,688 | $ | 13.45 | 15,845,124 | $ | 14.87 |
Options Outstanding, Vested & Exercisable | |||||||||||||
Range of exercise prices | Shares | Weighted average remaining contractual life (years) | Weighted average exercise price | Aggregate intrinsic value (millions) | |||||||||
$7.79 to $15.27 | 5,977,220 | 1.3 | $ | 12.38 | $ | 22 | |||||||
5,977,220 | $ | 22 |
2014 | 2013 | 2012 | |||||||||||||||||||
Shares | Weighted Average | Shares | Weighted Average | Shares | Weighted Average | ||||||||||||||||
Available for future purchases, beginning of year | 4,855,144 | 6,436,224 | 8,000,000 | ||||||||||||||||||
Common stock purchased | (2,332,823 | ) | $ | 8.04 | (1,581,080 | ) | $ | 6.20 | (1,563,776 | ) | $ | 4.75 | |||||||||
Available for future purchases, end of year | 2,552,321 | 4,855,144 | 6,436,224 |
2014 | 2013 | 2012 | ||||||||||
Numerator: | ||||||||||||
Net income | $ | 401 | $ | 168 | $ | 128 | ||||||
Effect of dilutive securities: | ||||||||||||
Interest on convertible debt, net of income taxes and profit sharing | 7 | 9 | 9 | |||||||||
Net income applicable to common stockholders after assumed conversions for diluted earnings per share | $ | 408 | $ | 177 | $ | 137 | ||||||
Denominator: | ||||||||||||
Weighted average shares outstanding for basic earnings per share | 294.7 | 282.8 | 282.3 | |||||||||
Effect of dilutive securities: | ||||||||||||
Employee stock options and restricted stock units | 2.4 | 2.1 | 1.2 | |||||||||
Convertible debt | 46.2 | 58.6 | 60.6 | |||||||||
Adjusted weighted average shares outstanding and assumed conversions for diluted earnings per share | 343.3 | 343.5 | 344.1 | |||||||||
Shares excluded from EPS calculation: | ||||||||||||
Shares issuable upon conversion of our convertible debt as assumed conversion would be antidilutive | — | — | — | |||||||||
Shares issuable upon exercise of outstanding stock options or vesting of restricted stock units as assumed exercise would be antidilutive | 6.9 | 13.8 | 19.5 |
As of December 31, 2014 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Cash equivalents | $ | 153 | $ | — | $ | — | $ | 153 | ||||||||
Available-for-sale investment securities | — | 125 | — | 125 | ||||||||||||
Aircraft fuel derivatives | — | — | — | — | ||||||||||||
$ | 153 | $ | 125 | $ | — | $ | 278 | |||||||||
Liabilities | ||||||||||||||||
Aircraft fuel derivatives | — | 102 | — | 102 | ||||||||||||
Interest rate swap | — | 1 | — | 1 | ||||||||||||
$ | — | $ | 103 | $ | — | $ | 103 |
As of December 31, 2013 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Cash equivalents | $ | 51 | $ | — | $ | — | $ | 51 | ||||||||
Available-for-sale investment securities | — | 188 | — | 188 | ||||||||||||
Aircraft fuel derivatives | $ | — | $ | 6 | $ | — | $ | 6 | ||||||||
$ | 51 | $ | 194 | $ | — | $ | 245 | |||||||||
Liabilities | ||||||||||||||||
Aircraft fuel derivatives | $ | — | $ | — | $ | — | $ | — | ||||||||
Interest rate swap | — | 3 | — | 3 | ||||||||||||
$ | — | $ | 3 | $ | — | $ | 3 |
2014 | 2013 | 2012 | ||||||||||
Deferred: | ||||||||||||
Federal | $ | 192 | $ | 95 | $ | 68 | ||||||
State | 20 | 12 | 8 | |||||||||
Deferred income tax expense | 212 | 107 | 76 | |||||||||
Current income tax expense | 10 | 4 | 5 | |||||||||
Total income tax expense | $ | 222 | $ | 111 | $ | 81 |
2014 | 2013 | 2012 | ||||||||||
Income tax expense at statutory rate | $ | 218 | $ | 98 | $ | 73 | ||||||
Increase resulting from: | ||||||||||||
State income tax, net of federal benefit | 18 | 9 | 6 | |||||||||
Valuation Allowance, federal and state | (19 | ) | — | — | ||||||||
Other, net | 5 | 4 | 2 | |||||||||
Total income tax expense | $ | 222 | $ | 111 | $ | 81 |
2014 | 2013 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 152 | $ | 157 | ||||
Employee benefits | 41 | 40 | ||||||
Deferred revenue/gains | 102 | 95 | ||||||
Rent expense | 30 | 24 | ||||||
Terminal 5 lease | 32 | 29 | ||||||
Capital loss carryforwards | — | 20 | ||||||
Other | 27 | 31 | ||||||
Valuation allowance | — | (20 | ) | |||||
Financial derivative instruments | 40 | 1 | ||||||
Deferred tax assets, net | 424 | 377 | ||||||
Deferred tax liabilities: | ||||||||
Accelerated depreciation | (1,082 | ) | (862 | ) | ||||
Deferred tax liabilities, net | (1,082 | ) | (862 | ) | ||||
Net deferred tax liability | $ | (658 | ) | $ | (485 | ) |
Unrecognized tax benefits December 31, 2011 | 12 | |
Increases for tax positions taken during the period | 1 | |
Unrecognized tax benefits December 31, 2012 | 13 | |
Increases for tax positions taken during the period | 2 | |
Decreases for settlement with tax authorities during the period | (4 | ) |
Unrecognized tax benefits December 31, 2013 | 11 | |
Increases for tax positions taken during a prior period | 2 | |
Increases for tax positions taken during the period | 4 | |
Decreases for tax positions taken during a prior period | (1 | ) |
Unrecognized tax benefits December 31, 2014 | 16 |
Aircraft | Other | Total | ||||||||||
2015 | $ | 150 | $ | 85 | $ | 235 | ||||||
2016 | 90 | 80 | 170 | |||||||||
2017 | 75 | 65 | 140 | |||||||||
2018 | 75 | 60 | 135 | |||||||||
2019 | 58 | 57 | 115 | |||||||||
Thereafter | 213 | 487 | 700 | |||||||||
Total minimum operating lease payments | $ | 661 | $ | 834 | $ | 1,495 |
2014 | 2013 | |||||||
Available-for-sale securities | ||||||||
Time deposits | $ | 125 | $ | 70 | ||||
Commercial paper | — | 118 | ||||||
125 | 188 | |||||||
Held-to-maturity securities | ||||||||
Corporate bonds | 254 | 275 | ||||||
Time deposits | 48 | 53 | ||||||
302 | 328 | |||||||
Total | $ | 427 | $ | 516 |
Estimated Useful Life | Residual Value | ||
Aircraft | 25 years | 20 | % |
In-flight entertainment systems | 5-10 years | 0 | % |
Aircraft parts | Fleet life | 10 | % |
Flight equipment leasehold improvements | Lower of lease term or economic life | 0 | % |
Ground property and equipment | 2-10 years | 0 | % |
Leasehold improvements—other | Lower of lease term or economic life | 0 | % |
Buildings on leased land | Lease term | 0 | % |
Estimated Useful Life | Residual Value | ||
Aircraft | 25 years | 20 | % |
In-flight entertainment systems | 5-10 years | 0 | % |
Aircraft parts | Fleet life | 10 | % |
Flight equipment leasehold improvements | Lower of lease term or economic life | 0 | % |
Ground property and equipment | 2-10 years | 0 | % |
Leasehold improvements—other | Lower of lease term or economic life | 0 | % |
Buildings on leased land | Lease term | 0 | % |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||
2014 (1) | ||||||||||||||||
Operating revenues | $ | 1,349 | $ | 1,493 | $ | 1,529 | $ | 1,446 | ||||||||
Operating income | 41 | 141 | 164 | 169 | ||||||||||||
Net income | 4 | 230 | 79 | 88 | ||||||||||||
Basic earnings per share | $ | 0.01 | $ | 0.79 | $ | 0.27 | $ | 0.29 | ||||||||
Diluted earnings per share | $ | 0.01 | $ | 0.68 | $ | 0.24 | $ | 0.26 | ||||||||
2013 (2) | ||||||||||||||||
Operating revenues | $ | 1,299 | $ | 1,335 | $ | 1,442 | $ | 1,365 | ||||||||
Operating income | 59 | 102 | 152 | 115 | ||||||||||||
Net income | 14 | 36 | 71 | 47 | ||||||||||||
Basic earnings per share | $ | 0.05 | $ | 0.13 | $ | 0.25 | $ | 0.16 | ||||||||
Diluted earnings per share | $ | 0.05 | $ | 0.11 | $ | 0.21 | $ | 0.14 |
Aircraft Fuel Derivatives (1) | Interest Rate Swaps (2) | Total | ||||||||||
Beginning accumulated losses at December 31, 2011 | $ | (3 | ) | $ | (12 | ) | $ | (15 | ) | |||
Reclassifications into earnings (net of $0 of taxes) | (6 | ) | 7 | 1 | ||||||||
Change in fair value (net of $5 of taxes) | 8 | (2 | ) | 6 | ||||||||
Balance of accumulated losses at December 31, 2012 | (1 | ) | (7 | ) | (8 | ) | ||||||
Reclassifications into earnings (net of $7 of taxes) | 6 | 5 | 11 | |||||||||
Change in fair value (net of $(2) of taxes) | (4 | ) | 1 | (3 | ) | |||||||
Balance of accumulated income (losses), at December 31, 2013 | 1 | (1 | ) | — | ||||||||
Reclassifications into earnings (net of $12 of taxes) | 18 | 1 | 19 | |||||||||
Change in fair value (net of $(52) of taxes) | (82 | ) | — | (82 | ) | |||||||
Balance of accumulated losses, at December 31, 2014 | $ | (63 | ) | $ | — | $ | (63 | ) | ||||
(1) Reclassified to aircraft fuel expense | ||||||||||||
(2) Reclassified to interest expense |
2014 | 2013 | 2012 | ||||||||||
Deferred: | ||||||||||||
Federal | $ | 192 | $ | 95 | $ | 68 | ||||||
State | 20 | 12 | 8 | |||||||||
Deferred income tax expense | 212 | 107 | 76 | |||||||||
Current income tax expense | 10 | 4 | 5 | |||||||||
Total income tax expense | $ | 222 | $ | 111 | $ | 81 |
2014 | 2013 | |||||||||||||
Secured Debt | ||||||||||||||
Floating rate equipment notes, due through 2025 (1) | $ | 276 | 3.2 | % | $ | 634 | 2.8 | % | ||||||
Floating rate enhanced equipment notes (2) (3) | ||||||||||||||
Class G-1, due 2016 | 35 | 4.4 | % | 55 | 4.5 | % | ||||||||
Class G-2, due 2016 | 185 | 1.0 | % | 373 | 1.0 | % | ||||||||
Fixed rate enhanced equipment notes, due through 2023 (4) | 217 | 4.5 | % | — | — | % | ||||||||
Fixed rate equipment notes, due through 2026 | 1,119 | 5.6 | % | 1,110 | 5.8 | % | ||||||||
Fixed rate special facility bonds, due through 2036 (5) | 77 | 5.0 | % | 78 | 5.0 | % | ||||||||
Unsecured Debt | ||||||||||||||
6.75% convertible debentures due in 2039 (6) | 86 | 162 | ||||||||||||
5.5% convertible debentures due in 2038 (7) | 68 | 68 | ||||||||||||
Capital Leases (8) | 170 | 4.1 | % | 105 | 3.9 | % | ||||||||
Total debt and capital lease obligations | 2,233 | 2,585 | ||||||||||||
Less: Current maturities | (265 | ) | (469 | ) | ||||||||||
Long-term debt and capital lease obligations | $ | 1,968 | $ | 2,116 |
2014 | 2013 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 152 | $ | 157 | ||||
Employee benefits | 41 | 40 | ||||||
Deferred revenue/gains | 102 | 95 | ||||||
Rent expense | 30 | 24 | ||||||
Terminal 5 lease | 32 | 29 | ||||||
Capital loss carryforwards | — | 20 | ||||||
Other | 27 | 31 | ||||||
Valuation allowance | — | (20 | ) | |||||
Financial derivative instruments | 40 | 1 | ||||||
Deferred tax assets, net | 424 | 377 | ||||||
Deferred tax liabilities: | ||||||||
Accelerated depreciation | (1,082 | ) | (862 | ) | ||||
Deferred tax liabilities, net | (1,082 | ) | (862 | ) | ||||
Net deferred tax liability | $ | (658 | ) | $ | (485 | ) |
As of December 31, | ||||||||
2014 | 2013 | |||||||
Fuel derivatives | ||||||||
Asset fair value recorded in prepaid expenses and other (1) | $ | — | $ | 6 | ||||
Liability fair value recorded in other accrued liabilities (1) | 102 | — | ||||||
Longest remaining term (months) | 12 | 12 | ||||||
Hedged volume (barrels, in thousands) | 2,808 | 1,320 | ||||||
Estimated amount of existing gains (losses) expected to be reclassified into earnings in the next 12 months | (102 | ) | 3 | |||||
Interest rate derivatives | ||||||||
Liability fair value recorded in other long term liabilities (2) | 1 | 3 | ||||||
Estimated amount of existing losses expected to be reclassified into earnings in the next 12 months | (1 | ) | (2 | ) |
2014 | 2013 | 2012 | ||||||||||
Fuel derivatives | ||||||||||||
Hedge effectiveness gains (losses) recognized in aircraft fuel expense | $ | (30 | ) | $ | (10 | ) | $ | 10 | ||||
Gains (losses) on derivatives not qualifying for hedge accounting recognized in other expense | 2 | — | (3 | ) | ||||||||
Hedge gains (losses) on derivatives recognized in comprehensive income | (134 | ) | (6 | ) | 14 | |||||||
Percentage of actual consumption economically hedged | 20 | % | 21 | % | 30 | % | ||||||
Interest rate derivatives | ||||||||||||
Hedge losses on derivatives recognized in interest expense | (1 | ) | (8 | ) | (11 | ) | ||||||
Hedge gains (losses) on derivatives recognized in comprehensive income | — | 1 | (3 | ) |
(1) | Gross asset or liability of each contract prior to consideration of offsetting positions with each counterparty and prior to impact of collateral paid. |
(2) | Gross liability prior to impact of collateral posted |
2014 | 2013 | 2012 | ||||||||||
Numerator: | ||||||||||||
Net income | $ | 401 | $ | 168 | $ | 128 | ||||||
Effect of dilutive securities: | ||||||||||||
Interest on convertible debt, net of income taxes and profit sharing | 7 | 9 | 9 | |||||||||
Net income applicable to common stockholders after assumed conversions for diluted earnings per share | $ | 408 | $ | 177 | $ | 137 | ||||||
Denominator: | ||||||||||||
Weighted average shares outstanding for basic earnings per share | 294.7 | 282.8 | 282.3 | |||||||||
Effect of dilutive securities: | ||||||||||||
Employee stock options and restricted stock units | 2.4 | 2.1 | 1.2 | |||||||||
Convertible debt | 46.2 | 58.6 | 60.6 | |||||||||
Adjusted weighted average shares outstanding and assumed conversions for diluted earnings per share | 343.3 | 343.5 | 344.1 | |||||||||
Shares excluded from EPS calculation: | ||||||||||||
Shares issuable upon conversion of our convertible debt as assumed conversion would be antidilutive | — | — | — | |||||||||
Shares issuable upon exercise of outstanding stock options or vesting of restricted stock units as assumed exercise would be antidilutive | 6.9 | 13.8 | 19.5 |
2014 | 2013 | 2012 | ||||||||||
Income tax expense at statutory rate | $ | 218 | $ | 98 | $ | 73 | ||||||
Increase resulting from: | ||||||||||||
State income tax, net of federal benefit | 18 | 9 | 6 | |||||||||
Valuation Allowance, federal and state | (19 | ) | — | — | ||||||||
Other, net | 5 | 4 | 2 | |||||||||
Total income tax expense | $ | 222 | $ | 111 | $ | 81 |
As of December 31, 2014 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Cash equivalents | $ | 153 | $ | — | $ | — | $ | 153 | ||||||||
Available-for-sale investment securities | — | 125 | — | 125 | ||||||||||||
Aircraft fuel derivatives | — | — | — | — | ||||||||||||
$ | 153 | $ | 125 | $ | — | $ | 278 | |||||||||
Liabilities | ||||||||||||||||
Aircraft fuel derivatives | — | 102 | — | 102 | ||||||||||||
Interest rate swap | — | 1 | — | 1 | ||||||||||||
$ | — | $ | 103 | $ | — | $ | 103 |
As of December 31, 2013 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Cash equivalents | $ | 51 | $ | — | $ | — | $ | 51 | ||||||||
Available-for-sale investment securities | — | 188 | — | 188 | ||||||||||||
Aircraft fuel derivatives | $ | — | $ | 6 | $ | — | $ | 6 | ||||||||
$ | 51 | $ | 194 | $ | — | $ | 245 | |||||||||
Liabilities | ||||||||||||||||
Aircraft fuel derivatives | $ | — | $ | — | $ | — | $ | — | ||||||||
Interest rate swap | — | 3 | — | 3 | ||||||||||||
$ | — | $ | 3 | $ | — | $ | 3 |
Aircraft | Other | Total | ||||||||||
2015 | $ | 150 | $ | 85 | $ | 235 | ||||||
2016 | 90 | 80 | 170 | |||||||||
2017 | 75 | 65 | 140 | |||||||||
2018 | 75 | 60 | 135 | |||||||||
2019 | 58 | 57 | 115 | |||||||||
Thereafter | 213 | 487 | 700 | |||||||||
Total minimum operating lease payments | $ | 661 | $ | 834 | $ | 1,495 |
Year | Maturities | |||
2015 | $ | 265 | ||
2016 | 464 | |||
2017 | 216 | |||
2018 | 227 | |||
2019 | 227 | |||
Thereafter | 834 |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||
2014 (1) | ||||||||||||||||
Operating revenues | $ | 1,349 | $ | 1,493 | $ | 1,529 | $ | 1,446 | ||||||||
Operating income | 41 | 141 | 164 | 169 | ||||||||||||
Net income | 4 | 230 | 79 | 88 | ||||||||||||
Basic earnings per share | $ | 0.01 | $ | 0.79 | $ | 0.27 | $ | 0.29 | ||||||||
Diluted earnings per share | $ | 0.01 | $ | 0.68 | $ | 0.24 | $ | 0.26 | ||||||||
2013 (2) | ||||||||||||||||
Operating revenues | $ | 1,299 | $ | 1,335 | $ | 1,442 | $ | 1,365 | ||||||||
Operating income | 59 | 102 | 152 | 115 | ||||||||||||
Net income | 14 | 36 | 71 | 47 | ||||||||||||
Basic earnings per share | $ | 0.05 | $ | 0.13 | $ | 0.25 | $ | 0.16 | ||||||||
Diluted earnings per share | $ | 0.05 | $ | 0.11 | $ | 0.21 | $ | 0.14 |
2014 | 2013 | 2012 | ||||||||||
Domestic | $ | 4,093 | $ | 3,886 | $ | 3,666 | ||||||
Caribbean & Latin America | 1,724 | 1,555 | 1,316 | |||||||||
Total | $ | 5,817 | $ | 5,441 | $ | 4,982 |
2014 | 2013 | 2012 | |||||||||||||||||||
Shares | Weighted Average | Shares | Weighted Average | Shares | Weighted Average | ||||||||||||||||
Available for future purchases, beginning of year | 4,855,144 | 6,436,224 | 8,000,000 | ||||||||||||||||||
Common stock purchased | (2,332,823 | ) | $ | 8.04 | (1,581,080 | ) | $ | 6.20 | (1,563,776 | ) | $ | 4.75 | |||||||||
Available for future purchases, end of year | 2,552,321 | 4,855,144 | 6,436,224 |
2014 | 2013 | 2012 | |||||||||||||||||||
Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | ||||||||||||||||
Nonvested at beginning of year | 4,118,849 | $ | 5.94 | 2,483,664 | $ | 5.77 | 65,914 | $ | 5.08 | ||||||||||||
Granted | 1,930,851 | 8.62 | 2,653,842 | 6.08 | 2,570,891 | 5.79 | |||||||||||||||
Vested | (1,903,229 | ) | 5.97 | (828,291 | ) | 5.77 | (20,249 | ) | 5.09 | ||||||||||||
Forfeited | (361,385 | ) | 7.02 | (190,366 | ) | 5.82 | (132,892 | ) | 5.83 | ||||||||||||
Nonvested at end of year | 3,785,086 | $ | 7.18 | 4,118,849 | $ | 5.94 | 2,483,664 | $ | 5.77 |
2014 | 2013 | 2012 | |||||||||||||||||||
Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | ||||||||||||||||
Nonvested at beginning of year | 711,494 | $ | 6.00 | 2,029,081 | $ | 5.85 | 4,093,484 | $ | 5.64 | ||||||||||||
Granted | — | — | — | — | — | — | |||||||||||||||
Vested | (708,728 | ) | 6.00 | (1,257,045 | ) | 5.76 | (1,921,940 | ) | 5.41 | ||||||||||||
Forfeited | (2,766 | ) | 6.03 | (60,542 | ) | 5.99 | (142,463 | ) | 5.76 | ||||||||||||
Nonvested at end of year | — | $ | — | 711,494 | $ | 6.00 | 2,029,081 | $ | 5.85 |
Options Outstanding, Vested & Exercisable | |||||||||||||
Range of exercise prices | Shares | Weighted average remaining contractual life (years) | Weighted average exercise price | Aggregate intrinsic value (millions) | |||||||||
$7.79 to $15.27 | 5,977,220 | 1.3 | $ | 12.38 | $ | 22 | |||||||
5,977,220 | $ | 22 |
2014 | 2013 | 2012 | |||||||||||||||||||
Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | ||||||||||||||||
Outstanding at beginning of year | 11,384,688 | $ | 13.45 | 15,845,124 | $ | 14.87 | 21,807,170 | $ | 13.91 | ||||||||||||
Granted | — | — | — | — | — | — | |||||||||||||||
Exercised | (1,950,482 | ) | 11.58 | (10,800 | ) | 7.79 | (493,731 | ) | 4.00 | ||||||||||||
Forfeited | — | — | — | — | — | — | |||||||||||||||
Expired | (3,456,986 | ) | 16.38 | (4,449,636 | ) | 18.50 | (5,468,315 | ) | 12.03 | ||||||||||||
Outstanding at end of year | 5,977,220 | $ | 12.38 | 11,384,688 | $ | 13.45 | 15,845,124 | $ | 14.87 | ||||||||||||
Vested at end of year | 5,977,220 | $ | 12.38 | 11,384,688 | $ | 13.45 | 15,845,124 | $ | 14.87 |
Additions | |||||||||||||||||||||
Description | Balance at beginning of period | Charged to Costs and Expenses | Charged to Other Accounts | Deductions | Balance at end of period | ||||||||||||||||
Year Ended December 31, 2014 | |||||||||||||||||||||
Allowances deducted from asset accounts: | |||||||||||||||||||||
Allowance for doubtful accounts | $ | 5,795 | $ | 2,949 | $ | — | $ | 3,014 | (1) | $ | 5,730 | ||||||||||
Allowance for obsolete inventory parts | 6,355 | 1,719 | — | — | (3) | 8,074 | |||||||||||||||
Valuation allowance for deferred tax assets | 20,149 | — | — | 19,752 | (2) | 397 | |||||||||||||||
Year Ended December 31, 2013 | |||||||||||||||||||||
Allowances deducted from asset accounts: | |||||||||||||||||||||
Allowance for doubtful accounts | $ | 6,593 | $ | 3,618 | $ | — | $ | 4,416 | (1) | $ | 5,795 | ||||||||||
Allowance for obsolete inventory parts | 5,046 | 1,309 | — | — | (3) | 6,355 | |||||||||||||||
Valuation allowance for deferred tax assets | 20,268 | — | — | 119 | (2) | 20,149 | |||||||||||||||
Year Ended December 31, 2012 | |||||||||||||||||||||
Allowances deducted from asset accounts: | |||||||||||||||||||||
Allowance for doubtful accounts | $ | 7,586 | $ | 5,472 | $ | — | $ | 6,465 | (1) | $ | 6,593 | ||||||||||
Allowance for obsolete inventory parts | 3,886 | 1,250 | — | 90 | (3) | 5,046 | |||||||||||||||
Valuation allowance for deferred tax assets | 20,872 | — | — | 604 | (2) | 20,268 |
(1) | Uncollectible accounts written off, net of recoveries. |
(2) | Attributable to recognition and write-off of deferred tax assets. |
(3) | Inventory scrapped |
2014 | 2013 | 2012 | ||||||||||
Domestic | $ | 4,093 | $ | 3,886 | $ | 3,666 | ||||||
Caribbean & Latin America | 1,724 | 1,555 | 1,316 | |||||||||
Total | $ | 5,817 | $ | 5,441 | $ | 4,982 |
2014 | 2013 | |||||||
Available-for-sale securities | ||||||||
Time deposits | $ | 125 | $ | 70 | ||||
Commercial paper | — | 118 | ||||||
125 | 188 | |||||||
Held-to-maturity securities | ||||||||
Corporate bonds | 254 | 275 | ||||||
Time deposits | 48 | 53 | ||||||
302 | 328 | |||||||
Total | $ | 427 | $ | 516 |
Estimated Useful Life | Residual Value | ||
Aircraft | 25 years | 20 | % |
In-flight entertainment systems | 5-10 years | 0 | % |
Aircraft parts | Fleet life | 10 | % |
Flight equipment leasehold improvements | Lower of lease term or economic life | 0 | % |
Ground property and equipment | 2-10 years | 0 | % |
Leasehold improvements—other | Lower of lease term or economic life | 0 | % |
Buildings on leased land | Lease term | 0 | % |
Unrecognized tax benefits December 31, 2011 | 12 | |
Increases for tax positions taken during the period | 1 | |
Unrecognized tax benefits December 31, 2012 | 13 | |
Increases for tax positions taken during the period | 2 | |
Decreases for settlement with tax authorities during the period | (4 | ) |
Unrecognized tax benefits December 31, 2013 | 11 | |
Increases for tax positions taken during a prior period | 2 | |
Increases for tax positions taken during the period | 4 | |
Decreases for tax positions taken during a prior period | (1 | ) |
Unrecognized tax benefits December 31, 2014 | 16 |