American Airlines 2008 Annual Report Download - page 40

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37
The Company’s obligation for pension and retiree medical and other benefits increased from $3.6 billion at
December 31, 2007 to $6.6 billion at December 31, 2008, largely the result of negative investment returns on the
Company’s pension assets in 2008 related to the broader stock market decline. A significant portion of this
increase is recorded in Accumulated other comprehensive loss, a component of stockholders’ equity.
Consequently, the Company’s 2009 pension expense will be substantially higher than in 2008. Also, although the
Company is not required to make contributions to its defined benefit pension plans in 2009, based on current
funding levels of the plans, the Company expects that the amount of the required contributions will be substantial
in 2010 and future years (these estimates are reflected in the above table). The Company expects to contribute
approximately $13 million to its retiree medical and other benefit plan in 2009.
Results of Operations
The Company recorded a net loss of $2.1 billion in 2008 compared to net earnings of $504 million in 2007. The
Company’s 2008 results include an impairment charge of $1.1 billion to write the McDonnell Douglas MD-80 and
Embraer RJ-135 fleets and certain related long-lived assets down to their estimated fair values, a $71 million
accrual for employee severance cost and a $33 million expense related to the grounding of leased Airbus A300
aircraft prior to lease expiration, all in connection with announced capacity reductions and included in Special
charges in the Consolidated Statements of Operations. These charges are described in Note 2 to the
consolidated financial statements. In addition, the Company’s 2008 results include the sale of American Beacon
for a net gain of $432 million included in Miscellaneous-net on the Consolidated Statements of Operations and the
impact of a pension settlement charge of $103 million for one of the Company’s defined benefit plans included in
Wages, salaries and benefits on the Consolidated Statements of Operations and as described in Note 14 and
Note 10, respectively.
The Company recorded net earnings of $504 million in 2007 compared to $231 million in 2006. The Company’s
2007 results reflected an improvement in revenues somewhat offset by fuel prices and certain other costs that
were higher in 2007 compared to 2006. The 2007 and 2006 results were impacted by productivity improvements
and by cost reductions resulting from progress under the Turnaround Plan. The 2007 results include the impact of
several items including: a $138 million gain on the sale of AMR’s stake in ARINC included in Other Income,
Miscellaneous – net, a $39 million gain to reflect the positive impact of the change to an 18-month expiration of
AAdvantage miles included in Passenger revenue, and a $63 million charge associated with the retirement and
planned disposal of 24 MD-80 aircraft and certain other equipment that previously had been temporarily stored
included in Special charges.