American Airlines 2009 Annual Report Download - page 81

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78
10. Retirement Benefits (Continued)
2009
2008
Assumed health care trend rates at
December 31
Health care cost trend rate assumed for
next year
7.0%
7.5%
Rate to which the cost trend rate is
assumed to decline (the ultimate
trend rate)
4.5%
4.5%
Year that the rate reaches the ultimate
trend rate
2015
2015
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 2009 service and interest cost
23
(22)
Impact on postretirement benefit obligation
as of December 31, 2009
232
(228)
The Company is required to make minimum contributions to its defined benefit pension plans under the minimum
funding requirements of ERISA, the Pension Funding Equity Act of 2004 and the Pension Protection Act of 2006.
The Company estimates its 2010 required contribution to its defined benefit pension plans to be approximately
$525 million under the provisions of these acts.
The following benefit payments, which reflect expected future service as appropriate, are expected to be paid:
Pension
Retiree Medical
and Other
2010
550
167
2011
572
169
2012
603
167
2013
678
168
2014
738
170
2015 – 2019
4,633
971
During 2008, AMR recorded a settlement charge totaling $103 million related to lump sum distributions from the
Company’s defined benefit pension plans to pilots who retired. Pursuant to U.S. GAAP, the use of settlement
accounting is required if, for a given year, the cost of all settlements exceeds, or is expected to exceed, the sum
of the service cost and interest cost components of net periodic pension expense for a plan. Under settlement
accounting, unrecognized plan gains or losses must be recognized immediately in proportion to the percentage
reduction of the plan's projected benefit obligation.