Retirement Benefits

3 Months Ended

Mar. 31, 2012

Retirement Benefits [Abstract]

Retirement Benefits

8.        Retirement Benefits

The following tables provide the components of net periodic benefit cost for the three months ended March 31, 2012 and 2011 (in millions):

		000000000			000000000			000000000			000000000
	Pension Benefits						Retiree Medical and Other Benefits
	2012			2011			2012			2011
Components of net periodic benefit cost
Service cost	$	104		$	95		$	15		$	15
Interest cost		191			190			38			44
Expected return on assets		(166	)		(163	)		(4	)		(5	)
Amortization of:
Prior service cost		4			4			(7	)		(7	)
Unrecognized net (gain) loss		61			37			(2	)		(2	)
Net periodic benefit cost	$	194		$	163		$	40		$	45

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 Pension Benefit Guaranty Corporation 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. The Company's 2012 contributions to its defined benefit pension plans is subject to the Chapter 11 proceedings, as discussed below.

On February 1, 2012, the Company announced the principal terms of a new business plan. The chief components of the business plan included targets of an annual $2 billion in cost savings and $1 billion in revenue enhancement. The business plan contemplates, among other things, reducing headcount by approximately 13,000, terminating American's defined benefit pension plans, and discontinuing subsidized retiree medical coverage. On March 7, 2012, the Company announced that, in working with the Creditors' Committee and the PBGC, it had 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. These arrangements have not yet been presented to or approved by the Bankruptcy Court. In addition, the Company is continuing to work with the PBGC, the Creditors' Committee and the Allied Pilots Association on a solution that could allow the Company to freeze the defined benefit pension plan for pilots instead of seeking termination.

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 accounting charges as a result of this business plan, including pension related curtailment or settlement charges upon modification of the retirement plans. The business plan 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 business plan 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.