American Airlines 1999 Annual Report Download - page 55

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54
10. RETIREMENT BENEFI TS
All employees of American and employees of certain other
subsidiaries are eligible to participate in pension plans. The
defined benefit plans provide benefits for participating employees
based on years of service and average compensation for a
specified period of time before retirement. Airline pilots and
flight engineers also participate in defined contribution plans for
which Company contributions are determined as a percentage
of participant compensation.
In addition to pension benefits, other postretirement
benefits, including certain health care and life insurance benefits,
are also provided to retired employees. The amount of health
care benefits is limited to lifetime maximums as outlined in the
plan. Substantially all employees of American and employees of
certain other subsidiaries may become eligible for these benefits if
they satisfy eligibility requirements during their working lives.
Certain employee groups make contributions toward funding
a portion of their retiree health care benefits during their working
lives. AMR funds benefits as incurred and makes contributions
to match employee prefunding.
The following table provides a reconciliation of the changes in
the plans’ benefit obligations and fair value of assets for the years
ended December 31, 1999 and 1998, and a statement of funded
status as of December 31, 1999 and 1998 (in millions):
Pension Benefits Other Benefits
1999 1998 1999 1998
Reconciliation of benefit
obligation
Obligation at January 1 $6,117 $5,666 $ 1,526 $ 1,356
Service cost 236 213 56 52
Interest cost 433 418 108 99
Actuarial loss (gain) (849) 300 (311) 84
Plan amendments 75 –––
Benefit payments (388) (464) (70) (65)
Curtailments/Special
termination benefits 4–(3) –
Settlements –(16) ––
Obligation at December 31 $5,628 $6,117 $ 1,306 $ 1,526
Reconciliation of fair value of
plan assets
Fair value of plan assets at
January 1 $5,564 $5,127 $ 62 $ 49
Actual return on plan assets 7850 14
Employer contributions 100 70 79 74
Benefit payments (388) (464) (70) (65)
Settlements –(16) ––
Transfers (1) (3) ––
Fair value of plan assets at
December 31 $5,282 $5,564 $ 72 $ 62
Funded status
Accumulated benefit
obligation (ABO) $4,700 $5,073 $1,306 $1,526
Projected benefit
obligation (PBO) 5,628 6,117 ––
Fair value of assets 5,282 5,564 72 62
Funded status at December 31 (346) (553) (1,234) (1,464)
Unrecognized loss (gain) 288 651 (395) (89)
Unrecognized prior service cost 139 68 (40) (45)
Unrecognized transition asset (7) (11) ––
Prepaid (accrued) benefit cost $ 74 $ 155 $(1,669) $(1,598)
At December 31, 1999 and 1998, plan assets of approximately
$71 million and $61 million, respectively, were invested in shares
of mutual funds managed by a subsidiary of AMR.