v3.22.2.2
Segments
 9 Months Ended
Sep. 30, 2022
Segment Reporting [Abstract]  
Segments SEGMENTS
Refinery Operations

Our refinery segment operates for the benefit of the airline segment by providing jet fuel to the airline segment from its own production and through jet fuel obtained through agreements with third parties. The refinery's production consists of jet fuel, as well as non-jet fuel products. We use several counterparties to exchange the non-jet fuel products produced by the refinery for jet fuel consumed in our airline operations. The gross fair value of the products exchanged under these agreements during the three and nine months ended September 30, 2022 was $834 million and $2.6 billion, respectively, compared to $629 million and $1.7 billion for the three and nine months ended September 30, 2021, respectively.

Segment Reporting

Segment results are prepared based on our internal accounting methods described below, with reconciliations to consolidated amounts in accordance with GAAP. Our segments are not designed to measure operating income or loss directly related to the products and services included in each segment on a stand-alone basis.

Financial information by segment
(in millions)AirlineRefineryIntersegment Sales/OtherConsolidated
Three Months Ended September 30, 2022
Operating revenue:$12,841 $2,599 $13,975 
Sales to airline segment$(504)
(1)
Exchanged products(834)
(2)
Sales of refined products(127)
(3)
Operating income1,264 192 — 1,456 
Interest expense, net248 3 (3)248 
Depreciation and amortization538 23 (23)
(4)
538 
Total assets, end of period69,680 2,977 (61)72,596 
Net fair value obligations, end of period— (291)— (291)
Capital expenditures1,393 49 — 1,442 
Three Months Ended September 30, 2021
Operating revenue:$8,282 $1,696 $9,154 
Sales to airline segment$(183)
(1)
Exchanged products(629)
(2)
Sales of refined products(12)
(3)
Operating income2,108 97 — 2,205 
Interest expense, net314 2 (2)314 
Depreciation and amortization501 24 (24)
(4)
501 
Total assets, end of period70,783 2,012 (12)72,783 
Net fair value obligations, end of period— (547)— (547)
Capital expenditures818 12 — 830 
(1)Represents transfers, valued on a market price basis, from the refinery to the airline segment for use in airline operations. We determine market price for jet fuel from the refinery by reference to the market index for the primary delivery location, which is New York Harbor.
(2)Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis.
(3)These sales were at or near cost; accordingly, the margin on these sales is de minimis.
(4)Refinery segment operating results, including depreciation and amortization, are included within aircraft fuel and related taxes in our income statement.
Financial information by segment
(in millions)AirlineRefineryIntersegment Sales/OtherConsolidated
Nine Months Ended September 30, 2022
Operating revenue:$33,312 $8,265 $37,147 
Sales to airline segment$(1,557)
(1)
Exchanged products(2,623)
(2)
Sales of refined products(250)
(3)
Operating income1,676 515 — 2,191 
Interest expense, net791 7 (7)791 
Depreciation and amortization1,554 70 (70)
(4)
1,554 
Capital expenditures4,069 97 — 4,166 
Nine Months Ended September 30, 2021
Operating revenue:$18,240 $4,177 $20,429 
Sales to airline segment$(292)
(1)
Exchanged products(1,667)
(2)
Sales of refined products(29)
(3)
Operating income (loss)1,809 (186)— 1,623 
Interest expense, net1,014 5 (5)1,014 
Depreciation and amortization1,494 72 (72)
(4)
1,494 
Capital expenditures1,994 35 — 2,029 
(1)Represents transfers, valued on a market price basis, from the refinery to the airline segment for use in airline operations. We determine market price for jet fuel from the refinery by reference to the market index for the primary delivery location, which is New York Harbor.
(2)Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis.
(3)These sales were at or near cost; accordingly, the margin on these sales is de minimis.
(4)Refinery segment operating results, including depreciation and amortization, are included within aircraft fuel and related taxes in our income statement.

Fair Value Obligations

The net fair value obligations presented in the financial information by segment for the three month periods table above are related to renewable fuel compliance costs, are presented net of any related assets or fixed price purchase agreements and are based on quoted market prices and other observable information and are therefore classified as Level 2 in the fair value hierarchy. Our obligation as of September 30, 2022 was calculated using the U.S. Environmental Protection Agency's ("EPA") Renewable Fuel Standard ("RFS") volume requirements, which were finalized in the June 2022 quarter. The compliance deadlines to retire our obligations for 2020 and 2021 are in the fourth quarter of 2022 and first quarter of 2023, respectively.