Special Items, Net (Tables)

9 Months Ended

Sep. 30, 2020

Restructuring Cost and Reserve [Line Items]

Components of Special Items, Net in Condensed Consolidated Statements of Operations

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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
PSP Financial Assistance ⁽¹⁾	$	(1,908)	$	—	$	(3,710)	$	—
Severance expenses ⁽²⁾	871		—		1,408		—
Fleet impairment ⁽³⁾	742		201		1,484		201
Labor contract expenses ⁽⁴⁾	—		—		228		—
Mark-to-market adjustments on bankruptcy obligations, net ⁽⁵⁾	—		(22)		(49)		(18)
Fleet restructuring expenses ⁽⁶⁾	—		72		—		232
Litigation reserve adjustments	—		(53)		—		(53)
Merger integration expenses	—		29		—		106
Other operating special items, net	—		1		(18)		19
Mainline operating special items, net	(295)		228		(657)		487

PSP Financial Assistance ⁽¹⁾	(228)		—		(444)		—
Severance expenses ⁽²⁾	4		—		18		—
Fleet impairment ⁽³⁾	—		—		117		—
Other operating special items, net	—		6		—		6
Regional operating special items, net	(224)		6		(309)		6
Operating special items, net	(519)		234		(966)		493

Mark-to-market adjustments on equity and other investments, net ⁽⁷⁾	(21)		45		159		37
Debt refinancing, extinguishment and other charges	—		(1)		48		6
Nonoperating special items, net	(21)		44		207		43

⁽¹⁾PSP Financial Assistance represents recognition of a portion of financial assistance received from Treasury pursuant to the PSP Agreement. See Note 1 for further information.

⁽²⁾Severance expenses principally include salary and medical costs associated with certain team members who opted in to voluntary early retirement programs offered as a result of reductions to our operation due to COVID-19. These expenses in the three months ended September 30, 2020 also include salary and medical costs associated with team members who were notified in the third quarter of 2020 they were being involuntarily furloughed starting October 1, 2020, subsequent to the expiration of the Payroll Support Program requirement against involuntary furloughs. Cash payments related to these charges for the three and nine months ended September 30, 2020 were approximately $120 million and $170 million, respectively.

⁽³⁾Fleet impairment resulted from our decision to retire certain aircraft earlier than planned driven by the decline in air travel due to COVID-19. Aircraft retired include Airbus A330-200, Boeing 757, Boeing 767, Airbus A330-300, Embraer 190, certain Embraer 140 and Bombardier CRJ200 aircraft. See Note 13 for further information related to these charges.

The three months ended September 30, 2020 included a $709 million non-cash write-down of Airbus A330-200 aircraft and spare parts and $33 million in cash charges primarily for lease return and other costs.

The nine months ended September 30, 2020 included a $1.5 billion non-cash write-down of mainline and regional aircraft and spare parts and $109 million in cash charges primarily for impairment of ROU assets and lease return costs.

⁽⁴⁾Labor contract expenses primarily relate to one-time charges resulting from the ratification of a new contract with the Transport Workers Union and International Association of Machinists & Aerospace Workers for our maintenance and fleet service team members, including signing bonuses and adjustments to vacation accruals resulting from pay rate increases.

⁽⁵⁾Bankruptcy obligations that will be settled in shares of our common stock are marked-to-market based on our stock price.

⁽⁶⁾Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment expected to be retired earlier than planned.

⁽⁷⁾Mark-to-market adjustments on equity and other investments, net primarily relates to net unrealized gains and losses associated with our equity investment in China Southern Airlines Company Limited (China Southern Airlines) and certain treasury rate lock derivative instruments.

American Airlines, Inc.

Restructuring Cost and Reserve [Line Items]

Components of Special Items, Net in Condensed Consolidated Statements of Operations

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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
PSP Financial Assistance ⁽¹⁾	$	(1,908)	$	—	$	(3,710)	$	—
Severance expenses ⁽²⁾	871		—		1,408		—
Fleet impairment ⁽³⁾	742		201		1,484		201
Labor contract expenses ⁽⁴⁾	—		—		228		—
Mark-to-market adjustments on bankruptcy obligations, net ⁽⁵⁾	—		(22)		(49)		(18)
Fleet restructuring expenses ⁽⁶⁾	—		72		—		232
Litigation reserve adjustments	—		(53)		—		(53)
Merger integration expenses	—		29		—		106
Other operating special items, net	—		1		(18)		19
Mainline operating special items, net	(295)		228		(657)		487

PSP Financial Assistance ⁽¹⁾	(228)		—		(444)		—
Fleet impairment ⁽³⁾	—		—		106		—
Regional operating special items, net	(228)		—		(338)		—
Operating special items, net	(523)		228		(995)		487

Mark-to-market adjustments on equity and other investments, net ⁽⁷⁾	(21)		45		159		37
Debt refinancing, extinguishment and other charges	—		7		48		14
Nonoperating special items, net	(21)		52		207		51

⁽¹⁾PSP Financial Assistance represents recognition of a portion of financial assistance received from Treasury pursuant to the PSP Agreement. See Note 1 for further information.

These expenses in the three months ended September 30, 2020 also include salary and medical costs associated with team members who were notified in the third quarter of 2020 they were being involuntarily furloughed starting October 1, 2020, subsequent to the expiration of the Payroll Support Program requirement against involuntary furloughs. Cash payments related to these charges for the three and nine months ended September 30, 2020 were approximately $120 million and $170 million, respectively.

⁽³⁾Fleet impairment resulted from American's decision to retire certain aircraft earlier than planned driven by the decline in air travel due to COVID-19. Aircraft retired include Airbus A330-200, Boeing 757, Boeing 767, Airbus A330-300, Embraer 190, certain Embraer 140 and Bombardier CRJ200 aircraft. See Note 12 for further information related to these charges.

⁽⁴⁾Labor contract expenses primarily relate to one-time charges resulting from the ratification of a new contract with the Transport Workers Union and International Association of Machinists & Aerospace Workers for American's maintenance and fleet service team members, including signing bonuses and adjustments to vacation accruals resulting from pay rate increases.

⁽⁵⁾Bankruptcy obligations that will be settled in shares of AAG common stock are marked-to-market based on AAG's stock price.

⁽⁶⁾Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment expected to be retired earlier than planned.

⁽⁷⁾Mark-to-market adjustments on equity and other investments, net primarily relates to net unrealized gains and losses associated with American's equity investment in China Southern Airlines Company Limited (China Southern Airlines) and certain treasury rate lock derivative instruments.