American Airlines 2004 Annual Report Download - page 58

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55
2. Special charges and U.S. government grant (Continued)
Other
In addition, the Stabilization Act provides for compensation to individual claimants who were physically injured or
killed as a result of the Terrorist Attacks. Furthermore, the Stabilization Act provides that, notwithstanding any
other provision of law, liability for all claims, whether compensatory or punitive, arising from the terrorist-related
events of September 11, 2001 against any air carrier shall not exceed the liability coverage maintained by the air
carrier. Based upon estimates provided by the Company’s insurance providers, the Company recorded a liability of
approximately $2.3 billion for claims arising from the Terrorist Attacks, after considering the liability protections
provided for by the Stabilization Act. In 2004, this liability was adjusted to $1.9 billion based on revised estimates
from the insurance carriers, due primarily to the expiration of certain statutes of limitations. The Company has also
recorded a liability of approximately $500 million related to flight 587, which crashed on November 12, 2001. The
Company has recorded a receivable for all of these amounts, which the Company expects to recover from its
insurance carriers as claims are resolved. These insurance receivables and liabilities are classified as Other
assets and Other liabilities and deferred credits on the accompanying consolidated balance sheets, and are based
on reserves established by the Company’s insurance carriers. These estimates may be revised as additional
information becomes available concerning the expected claims. One of the Company’s insurance carriers has
entered liquidation. The carrier provides approximately five percent of the Company’s coverage related to the
Terrorist Attacks and flight 587, as well as other covered items. This results in approximately $80 million in
receivables, net of reserves, from the insurance carrier as of December 31, 2004. The Company expects to
recover the net receivable via the liquidation process or other means available.
3. Investments
Short-term investments consisted of (in millions):
December 31,
2004 2003
Overnight investments and time deposits $ 222 $ 718
Corporate and bank notes 2,214 1,245
U. S. government agency notes 212 496
U. S. government agency mortgages 115 17
Asset backed securities 24 -
Other 22 10
$ 2,809 $ 2,486
Short-term investments at December 31, 2004, by contractual maturity included (in millions):
Due in one year or less $ 1,128
Due between one year and three years 1,566
Due after three years 115
$ 2,809
All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and
losses, net of deferred taxes, are reflected as a component of Accumulated other comprehensive loss.