American Airlines 2007 Annual Report Download - page 59

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56
2. Restructuring Charges (Continued)
As a result of the revenue environment, high fuel prices and the Company’s restructuring activities, the Company
has recorded a number of other charges during the last few years. The following table summarizes the
components of these charges and the remaining accruals for future lease payments, aircraft lease return and
other costs, facilities closure costs and employee severance and benefit costs (in millions):
Aircraft
Charges
Facility
Exit Costs
Employee
Charges
Other
Total
Remaining accrual at
January 1, 2005
129
26
36
-
191
Restructuring charges 155 19 - (37) 137
Adjustments - (2) - - (2)
Non-cash charges (119) - - 37 (82)
Payments (13) (7) (36) - (56)
Remaining accrual at
December 31, 2005
152
36
-
-
188
Adjustments (3) (16) - - (19)
Payments (21) (1) - - (22)
Remaining accrual at
December 31, 2006
$ 128
$ 19
$ -
$ -
$ 147
Restructuring charges 63 - - - 63
Non-cash charges (53) - - - (53)
Payments (12) (1) - - (13)
Remaining accrual at
December 31, 2007
$ 126
$ 18
$ -
$ -
$ 144
Cash outlays related to the accruals for aircraft charges and facility exit costs will occur through 2017 and 2018,
respectively.
Other
On September 22, 2001, President Bush signed into law the Air Transportation Safety and System Stabilization
Act (the Stabilization Act). The Stabilization Act provides that, notwithstanding any other provision of law, liability
for all claims, whether compensatory or punitive, arising from the terrorist attacks of September 11, 2001 (the
Terrorist Attacks), 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 initially 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. The balance, recorded in the accompanying consolidated balance sheet,
was $1.8 billion at both December 31, 2007 and 2006. The Company also has a liability recorded of
approximately $381 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, respectively, 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.