Special Items, Net

6 Months Ended

Jun. 30, 2018

Special items, net in the condensed consolidated statements of operations consisted of the following expenses (income) (in millions):



	Three Months Ended June 30,					Six Months Ended June 30,
	2018			2017		2018			2017
Fleet restructuring expenses ⁽¹⁾	$	83		$	48	$	166		$	111
Merger integration expenses ⁽²⁾	60			68		120			130
Mark-to-market adjustments on bankruptcy obligations ⁽³⁾	(57		)	38		(56		)	20
Intangible asset impairment ⁽⁴⁾	26			—		26			—
Litigation settlement	5			—		45			—
Labor contract expenses	—			45		13			45
Other operating charges, net	35			3		33			14
Mainline operating special items, net	152			202		347			320

Regional operating special items, net	—			1		—			4

Mark-to-market adjustments on equity investments ⁽⁵⁾	66			—		66			—
Debt refinancing and extinguishment charges	14			2		14			7
Nonoperating special items, net	80			2		80			7

Income tax special items, net ⁽⁶⁾	18			—		40			—


⁽¹⁾	Fleet restructuring expenses principally included the acceleration of depreciation and impairments for aircraft and related equipment grounded or expected to be grounded earlier than planned.


⁽²⁾	Merger integration expenses included costs associated with our remaining integration projects, principally our flight attendant, human resources, payroll and technical operations integrations.


⁽³⁾	Bankruptcy obligations will ultimately be settled in shares of our common stock. Accordingly, fluctuations in our stock price result in mark-to-market adjustments to these obligations.


⁽⁴⁾	Intangible asset impairment includes a non-cash charge to write-off our Brazil route authority as a result of ratification of the U.S.-Brazil open skies agreement.


⁽⁵⁾	Mark-to-market adjustments on equity investments principally relate to unrealized losses on our investment in China Southern Airlines.


⁽⁶⁾	Income tax special items for the three months ended June 30, 2018 included an $18 million charge related to an international income tax matter. Additionally, the six months ended June 30, 2018 included a $22 million charge to income tax expense to establish a required valuation allowance related to our estimated refund for Alternative Minimum Tax (AMT) credits.

Special items, net in the condensed consolidated statements of operations consisted of the following expenses (income) (in millions):



	Three Months Ended June 30,					Six Months Ended June 30,
	2018			2017		2018			2017
Fleet restructuring expenses ⁽¹⁾	$	83		$	48	$	166		$	111
Merger integration expenses ⁽²⁾	60			68		120			130
Mark-to-market adjustments on bankruptcy obligations ⁽³⁾	(57		)	38		(56		)	20
Intangible asset impairment ⁽⁴⁾	26			—		26			—
Litigation settlement	5			—		45			—
Labor contract expenses	—			45		13			45
Other operating charges, net	35			3		33			14
Mainline operating special items, net	152			202		347			320

Regional operating special items, net	—			1		—			4

Mark-to-market adjustments on equity investments ⁽⁵⁾	66			—		66			—
Debt refinancing and extinguishment charges	14			2		14			7
Nonoperating special items, net	80			2		80			7

Income tax special items, net ⁽⁶⁾	18			—		48			—


⁽¹⁾	Fleet restructuring expenses principally included the acceleration of depreciation and impairments for aircraft and related equipment grounded or expected to be grounded earlier than planned.


⁽²⁾	Merger integration expenses included costs associated with American's remaining integration projects, principally its flight attendant, human resources, payroll and technical operations integrations.


⁽³⁾	Bankruptcy obligations will ultimately be settled in shares of AAG common stock. Accordingly, fluctuations in AAG's stock price result in mark-to-market adjustments to these obligations.


⁽⁴⁾	Intangible asset impairment includes a non-cash charge to write-off American's Brazil route authority as a result of ratification of the U.S.-Brazil open skies agreement.


⁽⁵⁾	Mark-to-market adjustments on equity investments principally relate to unrealized losses on American's investment in China Southern Airlines.


⁽⁶⁾	Income tax special items for the three months ended June 30, 2018 included an $18 million charge related to an international income tax matter. Additionally, the six months ended June 30, 2018 included a $30 million charge to income tax expense to establish a required valuation allowance related to American's estimated refund for Alternative Minimum Tax (AMT) credits.