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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Reconciliation of Reported Amounts to non-GAAP Financial Measures (unaudited) (in millions, except per
share and per ASM amounts)
Year ended
December 31, Percent
Change2013 2012
Fuel and oil expense, unhedged ............................................. $ 5,645 $ 5,963
Add: Fuel hedge losses included in Fuel and oil expense .......................... 118 157
Fuel and oil expense, as reported ........................................... $ 5,763 $ 6,120
Deduct: Net impact from fuel contracts ........................................ (84) (32)
Fuel and oil expense, non-GAAP ........................................... $ 5,679 $ 6,088 (6.7)%
Total operating expenses, as reported ....................................... $ 16,421 $ 16,465
Add (Deduct): Reclassification between Fuel and oil and Other (gains) losses, net,
associated with current period settled contracts ................................ 3 (42)
Add (Deduct): Contracts settling in the current period, but for which gains and/or (losses)
have been recognized in a prior period* ..................................... (87) 10
Deduct: Charge for Acquisition and integration costs, net ......................... (86) (183)
Total operating expenses, non-GAAP ....................................... $ 16,251 $ 16,250 — %
Operating income, as reported ............................................. 1,278 623
Add (Deduct): Reclassification between Fuel and oil and Other (gains) losses, net,
associated with current period settled contracts ................................ (3) 42
Add (Deduct): Contracts settling in the current period, but for which gains and/or (losses)
have been recognized in a prior period* ..................................... 87 (10)
Add: Charge for Acquisition and integration costs, net ............................ $ 86 $ 183
Operating income, non-GAAP ............................................. $ 1,448 $ 838 72.8%
Net income, as reported ................................................... 754 421
Deduct: Mark-to-market impact from fuel contracts settling in future periods .......... (103) (221)
Add: Ineffectiveness from fuel hedges settling in future periods .................... 11 42
Add (Deduct): Other net impact of fuel contracts settling in the current or a prior period
(excluding reclassifications) ............................................... 87 (10)
Income tax impact of fuel contracts ........................................... 2 73
Add: Charge for Acquisition and integration costs, net (a) ......................... $ 54 $ 112
Net income, non-GAAP ................................................... $ 805 $ 417 93.0%
Net income per share, diluted, as reported ................................... $ 1.05 $ 0.56
Deduct: Net impact to net income above from fuel contracts divided by dilutive
shares (a) ............................................................. $ — $ (0.15)
Add: Impact of special items, net (a) .......................................... $ 0.07 $ 0.15
Net income per share, diluted, non-GAAP ................................... $ 1.12 $ 0.56 100.0%
Operating expenses per ASM (Cents) ....................................... $ 12.60 $ 12.85
Deduct: Fuel expense divided by ASMs ....................................... $ (4.42) $ (4.78)
Deduct: Impact of special items .............................................. $ (0.07) $ (0.14)
Operating expenses per ASM, non-GAAP, excluding fuel and special items
(cents) ............................................................... $ 8.11 $ 7.93 2.3%
* As a result of prior hedge ineffectiveness and/or contracts marked to market through earnings.
(a) Amounts net of tax.
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