American Airlines 2007 Annual Report Download - page 78

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75
10. Retirement Benefits (Continued)
Pre-65 Individuals Post-65 Individuals
2007 2006 2007 2006
Assumed health care trend rates at
December 31
Health care cost trend rate assumed for
next year
7.0%
9.0%
7.0%
9.0%
Rate to which the cost trend rate is
assumed to decline (the ultimate
trend rate)
4.5%
4.5%
4.5%
4.5%
Year that the rate reaches the ultimate
trend rate
2010
-
2010
2010
A one percentage point change in the assumed health care cost trend rates would have the following effects (in
millions):
One Percent
Increase
One Percent
Decrease
Impact on 2007 service and interest cost 25 (24)
Impact on postretirement benefit obligation
as of December 31, 2007
192
(188)
The Company expects to contribute approximately $350 million to its defined benefit pension plans and $13
million to its retiree medical and other benefit plan in 2008. This amount is significantly higher than the Company’s
minimum required contribution and could be impacted by, among other things, pending pension legislation, the
financial position of the Company and other economic factors. The Company’s estimates of its defined benefit
pension plan contributions reflect the current provisions of the Pension Funding Equity Act of 2004 and the
Pension Protection Act of 2006. However, the U.S. Congress is considering legislation that would amend the
Pension Protection Act of 2006. As the proposed legislation is not yet finalized and could change significantly,
the Company is unable to determine the potential impact on its financial statements; however, if enacted the
proposed legislation could materially increase the Company’s minimum required contributions to its defined
benefit pension plans.
The following benefit payments, which reflect expected future service as appropriate, are expected to be paid:
Pension Retiree
Medical and
Other
2008 $ 472 $ 170
2009 514 176
2010 550 180
2011 594 185
2012 635 181
2013 – 2017 3,999 969