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77
10. Retirement Benefits (Continued)
In 2007, the Fair Treatment for Experienced Pilots Act (H.R. 4343) was signed into law, raising the mandatory
retirement age for commercial pilots from 60 to 65. Previously, the FAA required commercial pilots to retire once
they reached age 60. As a result, the Company has estimated the average retirement age for the pilot workgroup
to be 63, based on the approximate retirement age of the Company’s other work groups, which did not have the
same mandatory retirement age. This change in the estimate of pilot retirement age caused a decrease to the
pension and other postretirement liability of approximately $543 million at December 31, 2007.
The following table provides a reconciliation of the changes in the pension and retiree medical and other benefit
obligations and fair value of assets for the years ended December 31, 2008 and 2007, and a statement of funded
status as of December 31, 2008 and 2007 (in millions):
Pension Benefits
Retiree Medical and Other
Benefits
2008
2007
2008
2007
Reconciliation of benefit obligation
Obligation at January 1
$ 10,451
$ 11,048
$ 2,672
$ 3,256
Service cost
324
370
54
71
Interest cost
684
672
172
194
Actuarial (gain) loss
254
(1,021)
22
(693)
Plan amendments
(14)
-
-
-
Benefit payments
(815)
(618)
(141)
(156)
Obligation at December 31
$ 10,884
$ 10,451
$ 2,779
$ 2,672
Reconciliation of fair value of plan assets
Fair value of plan assets at January 1
$ 9,099
$ 8,565
$ 224
$ 202
Actual return on plan assets
(1,659)
766
(75)
9
Employer contributions
89
386
153
168
Benefit payments
(815)
(618)
(141)
(155)
Fair value of plan assets at December 31
$ 6,714
$ 9,099
$ 161
$ 224
Funded status at December 31
$ (4,170)
$ (1,352)
$ (2,618)
$ (2,448)
Amounts recognized in the
consolidated balance sheets
Current liability
$ 11
$ 6
$ 163
$ 170
Noncurrent liability
4,159
1,346
2,455
2,278
$ 4,170
$ 1,352
$ 2,618
$ 2,448
Amounts recognized in
other comprehensive loss
Net actuarial loss (gain)
$ 2,839
$ 245
$ (458)
$ (605)
Prior service cost (credit)
108
137
(53)
(65)
$ 2,947
$ 382
$ (511)
$ (670)
For plans with accumulated benefit
obligations exceeding the fair value
of plan assets
Pension Benefits
Retiree Medical and Other
Benefits
2008
2007
2008
2007
Projected benefit obligation (PBO)
$ 10,884
$ 10,451
$ -
$ -
Accumulated benefit obligation (ABO)
9,656
9,486
-
-
Accumulated postretirement benefit
obligation (APBO)
-
-
2,779
2,672
Fair value of plan assets
6,714
9,099
161
224
ABO less fair value of plan assets
2,942
387
-
-