Southwest Airlines 2009 Annual Report Download - page 79

Download and view the complete annual report

Please find page 79 of the 2009 Southwest Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 108

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2009
In addition, the Company also had the following amounts associated with fuel derivative instruments and
hedging activities in its Consolidated Balance Sheet:
Balance Sheet
Location
December 31,
(in millions) 2009 2008
Cash collateral deposits provided to counterparty — noncurrent ......... Offset against Other
deferred liabilities $238 $240
Cash collateral deposits provided to counterparty — current ............ Offset against
Accrued liabilities 92 —
Due to third parties for settled fuel contracts ......................... Accrued liabilities 15 16
Net unrealized losses from fuel hedges, net of tax ..................... Accumulated other
comprehensive loss 580 946
The following tables present the impact of derivative instruments and their location within the Consolidated
Statement of Operations for the years ended December 31, 2009 and 2008:
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)
Year Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
(in millions) 2009 2008 2009 2008 2009 2008
Fuel derivative contracts .......................... $12* $1,528* $(378)* $(638)* $ (91) $128
Interest rate derivatives ........................... (27)* 46 — — — —
Total .......................................... $(15) $1,574 $(378) $(638) $ (91) $128
* Net of tax
(a) Amounts related to fuel derivative contracts and interest rate derivatives are included in Fuel and oil and
Interest expense, respectively.
(b) Amounts are included in Other (gains) losses, net.
Derivatives not in Cash Flow Hedging Relationships
(Gain) Loss Recognized
in Income on
Derivatives
Year Ended
December 31, Location of (Gain) Loss
Recognized in Income
on Derivatives(in millions) 2009 2008
Fuel derivative contracts ................................ $(117) $(109) Other (gains) losses, net
The Company also recorded expense associated with premiums paid for fuel derivative contracts that
settled/expired during 2009, 2008, and 2007, respectively, of $148 million, $69 million, and $58 million. These
amounts are excluded from the Company’s measurement of effectiveness for related hedges.
71