Regional Expenses

Regional expenses associated with American's wholly-owned regional airline and third party regional carriers operating as American Eagle are classified as Regional expenses on the consolidated statements of operations. Regional expenses consist of the following (in millions)



	Year Ended December 31,
	2013		2012		2011
Aircraft fuel and related taxes	$	1,055	$	1,012	$	945
Salaries, wages and benefits	20		33		32
Capacity purchases from third-party regional carriers	1,234		1,271		1,626
Maintenance, materials and repairs	7		5		3
Other rent and landing fees	207		203		111
Aircraft rent	1		6		42
Selling expenses	142		152		153
Depreciation and amortization	149		154		34
Special items, net	—		—		—
Other	259		213		153
Total regional expenses	$	3,074	$	3,049	$	3,099

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 American believes are current market rates received by third-party 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, 2013, the American Eagle carriers operated approximately 1,400 daily departures, offering scheduled passenger service to over 170 destinations in North America, Mexico and the Caribbean. On a separate company basis, AMR Eagle reported $1.2 billion in revenue in 2013. However, this historical financial information is not indicative of what AMR Eagle's future revenues might be if AMR Eagle were a stand-alone entity.

In 2013 and 2012, American made payments to the American Eagle carriers of approximately $1.0 billion and $1.1 billion, respectively, related to the capacity purchase agreement. In addition, American incurred costs associated with generating third-party regional carriers' revenue for flights on AMR Eagle of $109 million and $128 million in 2013 and 2012, respectively, recorded in Regional expenses - fuel and Regional expenses - other in the accompanying consolidated statements of operations.

In consideration for certain services provided, the AMR Eagle carriers paid American approximately $16 million, $16 million and $18 million in 2013, 2012 and 2011, respectively.

American recognizes compensation expense associated with certain AAG common share-based awards for employees of American (see Note 11). In addition, American incurs pension and postretirement benefit expense for American employees working at affiliates of American. American transfers pension and postretirement benefit expense for these employees to its affiliates based on a percentage of salaries and cost per employee, respectively (see Note 12).