American Airlines 2009 Annual Report Download - page 43

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40
Other Income (Expense)
Other income (expense) consists of Interest income and expense, Interest capitalized and Miscellaneous - net.
2009 Compared to 2008 Decreases in both short-term investment balances throughout most of 2009 and
decreases in interest rates caused a decrease in Interest income of $147 million, or 81.2 percent, to $34 million.
Interest expense decreased $59 million, or 7.3 percent, to $744 million primarily as a result of a decrease in the
Company’s long-term debt balance throughout most of 2009 and decreases in interest rates on variable rate debt.
2008 Compared to 2007 Decreases in both short-term investment balances and interest rates caused a
decrease in Interest income of $156 million, or 46.4 percent, to $181 million. Interest expense decreased $159
million, or 16.5 percent, to $803 million primarily as a result of a decrease in the Company’s long-term debt
balance. Miscellaneous – net includes a gain of $432 million for the sale of American Beacon in 2008 and $138
million for the sale of ARINC in 2007.
Income Tax Benefit
The Company did not record a net tax provision (benefit) associated with 2008 net loss due to the Company
providing a valuation allowance, as discussed in Note 8 to the consolidated financial statements. However, during
2009, the Company generated a pre-tax loss of $1.8 billion and other comprehensive income of approximately
$701 million. In accordance with accounting standards, the net zero tax provision is required to be allocated
between Operating loss and Accumulated other comprehensive income. Application of this guidance during 2009
resulted in a non-cash income tax benefit of $248 million, offset by a $248 million charge to other comprehensive
income related to such items being recognized in 2009. See Note 8 for additional information regarding the
allocation of income tax benefit to Operating income and Accumulated other comprehensive income.
The Company has also recorded an income tax expense credit of approximately $36 million in 2009 resulting from
the Company’s anticipated election under Section 3081 of the Housing and Economic Recovery Act of 2008 (as
extended by Section 1201(b) of the American Recovery and Reinvestment Act of 2009), allowing corporations a
refund of certain research and alternative minimum tax (AMT) credit carryforwards in lieu of applicable bonus
depreciation on certain qualifying capital investments.