Retirement Benefits

6 Months Ended

Jun. 30, 2012

Compensation and Retirement Disclosure [Abstract]

Retirement Benefits

Retirement Benefits

The following tables provide the components of net periodic benefit cost for the three and six months ended June 30, 2012 and 2011 (in millions):

	Pension Benefits
	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Components of net periodic benefit cost
Service cost	$	104		$	97		$	208		$	192
Interest cost	191			189			382			379
Expected return on assets	(166		)	(165		)	(332		)	(328		)
Amortization of:
Prior service cost	3			3			7			7
Unrecognized net (gain) loss	63			39			124			76
Net periodic benefit cost	$	195		$	163		$	389		$	326

	Retiree Medical and Other Benefits
	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Components of net periodic benefit cost
Service cost	$	15		$	15		$	30		$	30
Interest cost	38			44			76			88
Expected return on assets	(4		)	(5		)	(8		)	(10		)
Amortization of:
Prior service cost	(7		)	(7		)	(14		)	(14		)
Unrecognized net (gain) loss	(2		)	(2		)	(4		)	(4		)
Net periodic benefit cost	$	40		$	45		$	80		$	90

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, the Pension Protection Act of 2006, and the Pension Relief Act of 2010.

As a result of the Chapter 11 Cases, AMR contributed $6.5 million to its defined benefit pension plans on January 13, 2012 to cover the post-petition period of November 29, 2011 to December 31, 2011. As a result of only contributing the post-petition portion of the required contribution, the PBGC filed a lien against certain assets of the Company’s non-debtor subsidiaries. On April 13, 2012, the Company contributed $86 million to its defined benefit pension plans to cover the post-petition period of January 1, 2012 to March 31, 2012. Additionally, the Company contributed $86 million on July 13, 2012 to its defined benefit pension plans to cover the post-petition period of April 1, 2012 to June 30, 2012. The Company’s 2012 contributions to its defined benefit pension plans is subject to the Chapter 11 Cases, as discussed below.

On March 7, 2012, the Company announced that, in working with the Creditors' Committee and the PBGC, it developed a solution that would allow the Company to pursue a freeze of its defined benefit pension plans for non-pilot employees instead of seeking termination. The Company and the PBGC have since reached an agreement on freezing three of the airline's four defined benefit plans. The agreement was filed with the Bankruptcy Court on May 4, 2012.

In addition, the Company is continuing to work with the PBGC, the Creditors' Committee and the APA on a solution that could allow the Company to freeze the defined benefit pension plan for pilots instead of seeking termination. On June 20, 2012, the U.S. Department of Treasury published a proposed regulation, which, if finalized, would create a process by which American would seek to remove certain impediments to freezing the defined benefit plan for pilots. The proposed regulation has a 60 day comment period at which time the U.S. Department of Treasury could issue a final ruling.

As a result of these announcements, the Company’s Pension and postretirement benefits liability has been classified as liabilities subject to compromise.

The Company may incur significant pension related curtailment or settlement charges upon modification of the retirement plans. Such modifications will require continued collaboration with the Creditors’ Committee, various economic stakeholders and union representatives, and in some instances, approval of the Bankruptcy Court. The Company cannot predict whether, or to what extent, the modifications will be implemented. As such, at this time, the Company is not able to reasonably estimate the amount and timing of such charges or the portion of these charges that will result in future cash expenditures.