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Table of Contents
2011
Cost
Accumulated
Amortization
Net Book Value
Amortized intangible assets:
Airport operating rights
$509
$ 361
$148
Gate lease rights
160
125
35
Total
$669
$ 486
$183
Airport operating and gate lease rights are being amortized on a straight-line basis over 25 years to a zero residual value. The Company recorded amortization
expense related to these intangible assets of approximately $25 million, $27 million, and $28 million for the years ended December 31, 2012, 2011 and 2010,
respectively. The Company expects to record annual amortization expense averaging approximately $19 million in each of the next five years related to these
intangible assets.
13. Accumulated Other Comprehensive Income (Loss)
The components of Accumulated other comprehensive income (loss) are as follows (in millions):
Pension
and
Retiree
Medical
Liability
Unrealized
Gain/(Loss)
on
Investments
Derivative
Financial
Instruments
Income
Tax
Benefit/
(Expense)
Total
Balance at December 31, 2011
$(3,887)
$(4)
$ 28
$(212)
$(4,075)
Current year change
(1,910)
6
(1,904)
Amortization of actuarial loss and prior service cost
130
—
—
—
130
Benefit plan modifications
3,345
3,345
Reclassification of derivative financial instruments
into earnings
—
—
(3)
—
(3)
Change in fair value of derivative financial
instruments
—
—
(12)
—
(12)
Non-cash tax provision
$ —
$ —
$ —
$(569)
$(569)
Balance at December 31, 2012
$(2,322)
$ 2
$13
$(781)
$(3,088)
As of December 31, 2012, the Company estimates that during the next twelve months it will reclassify from Accumulated other comprehensive income/(loss)
into earnings approximately $15 million in net gains (based on prices as of December 31, 2012) related to its fuel derivative hedges.
The Company recognized a $569 million non-cash income tax benefit, offset by a $569 million charge to other comprehensive income, during the fourth
quarter of 2012 related to gains in other comprehensive income. See Note 9 to the consolidated financial statements for further information.
Amounts allocated to other comprehensive income for income taxes as further described in Note 9 will remain in Accumulated other comprehensive income
until the Company ceases all related activities, such as termination of the pension plan.
14. Transactions with Related Parties
American invests funds, including funds of certain affiliates, if any, in a combined short-term investment portfolio and passes through interest income on
such funds at the average rate earned on the portfolio. These amounts are classified as Payable to affiliate on the accompanying consolidated balance sheets.
Pursuant to a capacity purchase agreement between American and the American Eagle carriers, American receives all passenger revenue from flights performed
for it by the American Eagle carriers and pays the American Eagle carriers a fee for each flight. The capacity purchase agreement reflects what the Company
believes are current market rates received by other regional carriers for similar flying. Amounts paid to the American Eagle carriers under the capacity purchase
agreement are available to pay for various operating expenses of the American Eagle carriers, such as crew expenses, maintenance, and other aircraft related
expenses. As of December 31, 2012, the American Eagle carriers operated approximately 1,500 daily departures, offering scheduled passenger
100