v3.25.3
Financial Derivative Instruments
 9 Months Ended
Sep. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
FINANCIAL DERIVATIVE INSTRUMENTS FINANCIAL DERIVATIVE INSTRUMENTS
Fuel Contracts
Airline operators are inherently dependent upon energy to operate and, therefore, are impacted by changes in jet fuel prices. Furthermore, jet fuel typically represents one of the largest operating expenses for airlines. The Company has historically aimed to reduce volatility in operating expenses through its fuel hedging program. However, based on higher fuel hedging premium costs over time and other factors, the Company discontinued its fuel hedging program in 2025 and does not intend to add additional fuel derivatives at this time.

During second quarter 2025, the Company terminated its remaining portfolio of fuel hedging contracts, which were scheduled to settle through 2027, to effectively close its fuel hedging portfolio. This resulted in the derecognition of all remaining related hedge assets in the unaudited Condensed Consolidated Balance Sheet. The cash proceeds from this transaction totaled approximately $40 million, which will reduce future premium costs. Approximately $36 million that was previously expended on hedge positions in prior periods was reclassified from Accumulated Other Comprehensive Income ("AOCI") and recognized as an increase to Fuel and oil expense within the unaudited Condensed Consolidated Statement of Comprehensive Income during third quarter 2025, all of which is characterized as premium expense from terminated fuel hedging positions. As of September 30, 2025,
approximately $173 million remained in AOCI related to these closed positions. This balance in AOCI, which does not include any tax impact, will also be characterized as premium expense and similarly reclassified as an increase to Fuel and oil expense in future periods when the originally forecasted transactions occur (through the end of 2027), and is net of the impact of the cash proceeds from the hedge terminations. See Note 4 for additional information on AOCI.

All cash flows associated with purchasing and selling fuel derivatives (including terminations) are classified as Other operating cash flows in the unaudited Condensed Consolidated Statement of Cash Flows. The following table presents the location of all assets and liabilities associated with the Company’s derivative instruments within the unaudited Condensed Consolidated Balance Sheet:
  Asset derivatives
 Balance SheetFair value atFair value at
(in millions)location9/30/202512/31/2024
Derivatives designated as hedges (a)   
Fuel derivative contracts (gross)Prepaid expenses and other current assets$— $22 
Fuel derivative contracts (gross)Other assets— 108 
Total derivatives designated as hedges$— $130 
(a) Represents the position of each trade before consideration of offsetting positions with each counterparty and does not include the impact of cash collateral deposits provided to or received from counterparties.

In addition, the Company had the following amounts associated with fuel derivative instruments and hedging activities in its unaudited Condensed Consolidated Balance Sheet:

 Balance SheetSeptember 30,December 31,
(in millions)location20252024
Cash collateral deposits held from counterparties for fuel contracts - currentOffset against Prepaid expenses and other current assets$— $4 
Cash collateral deposits held from counterparties for fuel contracts - noncurrentOffset against Other assets— 18 
Receivable from third parties for fuel contractsAccounts and other receivables— 1 

All of the Company's prior period fuel derivative instruments were subject to agreements that follow the netting guidance in the applicable accounting standards for derivatives and hedging. The types of derivative instruments the Company determined were subject to netting requirements in the accompanying unaudited Condensed Consolidated Balance Sheet are those in which the Company paid or received cash for transactions with the same counterparty and in the same currency via one net payment or receipt. For cash collateral held by the Company or provided to counterparties, the Company netted such amounts against the fair value of the Company's derivative portfolio by each counterparty. The Company elected to utilize netting for its prior period fuel derivative instruments and also classified such amounts as either current or noncurrent, based on the net fair value position with each of the Company's counterparties in the unaudited Condensed Consolidated Balance Sheet.

The Company had the following recognized financial assets and financial liabilities resulting from those transactions that meet the scope of the disclosure requirements as necessitated by applicable accounting guidance for balance sheet offsetting:
Offsetting of derivative assets
(in millions)
(i)(ii)(iii) = (i) + (ii)(i)(ii)(iii) = (i) + (ii)
September 30, 2025December 31, 2024
DescriptionBalance Sheet locationGross amounts of recognized assetsGross amounts offset in the Balance SheetNet amounts of assets presented in the Balance SheetGross amounts of recognized assetsGross amounts offset in the Balance SheetNet amounts of assets presented in the Balance Sheet
Fuel derivative contractsPrepaid expenses and other current assets$— $— $— $22 $(4)$18 
Fuel derivative contractsOther assets$— $— $— $108 $(18)$90 (a)
(a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 8.

Offsetting of derivative liabilities
(in millions)
(i)(ii)(iii) = (i) + (ii)(i)(ii)(iii) = (i) + (ii)
September 30, 2025December 31, 2024
DescriptionBalance Sheet locationGross amounts of recognized liabilitiesGross amounts offset in the Balance SheetNet amounts of liabilities presented in the Balance SheetGross amounts of recognized liabilitiesGross amounts offset in the Balance SheetNet amounts of liabilities presented in the Balance Sheet
Fuel derivative contractsPrepaid expenses and other current assets$— $— $— $4 $(4)$— 
Fuel derivative contractsOther assets$— $— $— $18 $(18)$— 
(a)
(a) The net amounts of derivative assets and liabilities are reconciled to the individual line item amounts presented in the unaudited Condensed Consolidated Balance Sheet in Note 8.

The following tables present the impact of derivative instruments, including terminations, within the unaudited Condensed Consolidated Statement of Comprehensive Income for the three and nine months ended September 30, 2025 and 2024:

Location and amount recognized in income on cash flow hedging relationships
Three months ended September 30, 2025Three months ended September 30, 2024
(in millions)Fuel and oilOther operating expensesFuel and oilOther operating expenses
Total$36 $2 $15 $2 
Loss on cash flow hedging relationships
Commodity contracts:
Amount of loss reclassified from AOCI into income
36 
(a)
15 
Other:
Amount of loss reclassified from AOCI into income— 2 — 2 
(a) Includes amounts reclassified from Accumulated Other Comprehensive Income associated with hedges previously terminated.
Location and amount recognized in income on cash flow hedging relationships
Nine months ended September 30, 2025Nine months ended September 30, 2024
(in millions)Fuel and oilOther operating expensesFuel and oilOther operating expenses
Total$110 $5 $54 $6 
Loss on cash flow hedging relationships
Commodity contracts:
Amount of loss reclassified from AOCI into income110 
(a)
— 54 — 
Other:
Amount of loss reclassified from AOCI into income— 5 — 6 
(a) Includes amounts reclassified from Accumulated Other Comprehensive Income associated with hedges previously terminated.

Derivatives designated and qualified in cash flow hedging relationships
 (Gain) loss recognized in AOCI on derivatives, net of tax
 Three months ended
 
September 30,
(in millions)20252024
Fuel derivative contracts$— $61 


Derivatives designated and qualified in cash flow hedging relationships
 (Gain) loss recognized in AOCI on derivatives, net of tax
 
Nine months ended
 
September 30,
(in millions)2025 2024
Fuel derivative contracts$69 $83 

Derivatives not designated as hedges
 (Gain) loss recognized in income on derivatives 
  
 Three months endedLocation of (gain) loss recognized in income on derivatives
 
September 30,
(in millions)20252024
Fuel derivative contracts$— $29 Other (gains) losses, net
Derivatives not designated as hedges
 (Gain) loss recognized in income on derivatives 
  
 
Nine months ended
Location of (gain) loss recognized in income on derivatives
 
September 30,
(in millions)20252024
Fuel derivative contracts$— $31 Other (gains) losses, net


The Company also recorded expenses associated with net premiums paid for fuel derivative contracts that settled/expired and/or terminated during the three and nine months ended September 30, 2025 and 2024. Gains and/or losses associated with fuel derivatives that qualified for hedge accounting were ultimately recorded to Fuel and oil expense. Gains and/or losses associated with fuel derivatives that did not qualify for hedge accounting were recorded to Other (gains) losses, net. The following tables present the expense impacts and their locations within the unaudited Condensed Consolidated Statement of Comprehensive Income during the periods the contracts settled or were scheduled to settle:

 
Expense (benefit) recognized in income on derivatives
 
  
 Three months ended
Location of expense (benefit) recognized in income on derivatives
 
September 30,
(in millions)20252024
Fuel derivative contracts designated as hedges$36 $34 Fuel and oil
Fuel derivative contracts not designated as hedges— 5 Other (gains) losses, net


 
Expense (benefit) recognized in income on derivatives
 
  
 
Nine months ended
Location of expense (benefit) recognized in income on derivatives
 
September 30,
(in millions)20252024
Fuel derivative contracts designated as hedges$110 $114 Fuel and oil
Fuel derivative contracts not designated as hedges— 5 Other (gains) losses, net


Interest Rate Swaps
The Company is at times party to certain interest rate swap agreements that are accounted for as cash flow hedges, but had none in place as of September 30, 2025, or as of December 31, 2024. The Company also did not have any interest rate swap agreements designated as fair value hedges, as defined, during the periods presented.

Credit Risk and Collateral
The Company had no cash collateral posted or received as of September 30, 2025.