Share-based Compensation

12 Months Ended

Dec. 31, 2017

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

The 2013 AAG Incentive Award Plan (the 2013 Plan) provides that awards may be in the form of an option, restricted stock award, restricted stock unit award, performance award, dividend equivalent award, deferred stock award, deferred stock unit award, stock payment award or stock appreciation right. The 2013 Plan initially authorized the grant of awards for the issuance of up to 40 million shares. Any shares underlying awards granted under the 2013 Plan, or any pre-existing US Airways Group plan, that are forfeited, terminate or are settled in cash (in whole or in part) without the delivery of shares will again be available for grant.

Our salaries, wages and benefits expense for the years ended December 31, 2017, 2016 and 2015 included $90 million, $102 million and $274 million, respectively, of share-based compensation costs. Of the 2015 amount, $198 million was related to awards granted to certain employees in connection with the Merger and recorded in special items, net on the accompanying consolidated statements of operations.

During 2017, 2016 and 2015, we withheld approximately 1.1 million, 1.4 million and 7.0 million shares of AAG common stock, respectively, and paid approximately $51 million, $56 million and $306 million, respectively, in satisfaction of certain tax withholding obligations associated with employee equity awards.

(a) Restricted Stock Unit Awards (RSUs)

We have granted RSUs with service conditions (time vested primarily over three years) and performance conditions. The grant-date fair value of RSUs is equal to the market price of the underlying shares of common stock on the date of grant. For time vested awards, the expense is recognized on a straight-line basis over the vesting period for the entire award. For awards with performance conditions, the expense is recognized based on the expected achievement at each reporting period. Stock-settled RSUs are classified as equity awards as the vesting results in the issuance of shares of AAG common stock.

Stock-settled RSU award activity for all plans for the years ended December 31, 2017, 2016 and 2015 is as follows:



	Number of Shares		Weighted Average Grant Date Fair Value
	(In thousands)
Outstanding at December 31, 2014	21,342		$	26.43
Granted	2,213		46.62
Vested and released	(17,163	)	25.20
Forfeited	(785	)	27.12
Outstanding at December 31, 2015	5,607		$	38.08
Granted	2,655		41.34
Vested and released	(2,754	)	34.83
Forfeited	(321	)	40.15
Outstanding at December 31, 2016	5,187		$	41.48
Granted	2,309		48.58
Vested and released	(2,708	)	39.63
Forfeited	(464	)	44.48
Outstanding at December 31, 2017	4,324		$	46.94

As of December 31, 2017, there was $121 million of unrecognized compensation cost related to stock-settled RSUs. These costs are expected to be recognized over a weighted average period of one year. The total fair value of stock-settled RSUs vested during the years ended December 31, 2017, 2016 and 2015 was $123 million, $107 million and $750 million, respectively.

(b) Stock Appreciation Rights (SARs)

We assumed US Airways Group’s outstanding SARs in connection with the Merger using an exchange ratio of one to one. These SARs were granted with an exercise price equal to the underlying common stock’s fair value at the date of each grant, have service conditions, become exercisable over a three-year vesting period and expire if unexercised at the end of their term, which ranges from seven to ten years. During 2017, 2016 and 2015, 0.8 million, 1.7 million and 3.0 million SARs, respectively, were exercised at weighted average exercise prices of $15.71, $14.49 and $12.09, respectively, for a total intrinsic value of $27 million, $49 million and $102 million, respectively. As of December 31, 2017, we had 1.2 million SARs outstanding with an aggregate intrinsic value of $54 million and weighted average exercise price of $8.08 that expire between 2018 and 2020 if unexercised.

This ASU simplified the accounting for share-based payment award transactions including the financial statement presentation of excess tax benefits and deficiencies. We adopted this ASU during the second quarter of 2016, which resulted in the recognition of $418 million of previously unrecognized excess tax benefits in deferred tax assets and an increase to retained earnings on the consolidated balance sheet as of the beginning of 2016.

American Airlines, Inc. [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Share-based Compensation

American’s salaries, wages and benefits expense for the years ended December 31, 2017, 2016 and 2015 included $90 million, $102 million and $274 million, respectively, of share-based compensation costs. Of the 2015 amount, $198 million was related to awards granted to certain employees in connection with the Merger and recorded in special items, net on the accompanying consolidated statements of operations.

During 2017, 2016 and 2015, AAG withheld approximately 1.1 million, 1.4 million and 7.0 million shares of AAG common stock, respectively, and paid approximately $51 million, $56 million and $306 million, respectively, in satisfaction of certain tax withholding obligations associated with employee equity awards.

(a) Restricted Stock Unit Awards (RSUs)

AAG has granted RSUs with service conditions (time vested primarily over three years) and performance conditions. The grant-date fair value of RSUs is equal to the market price of the underlying shares of common stock on the date of grant. For time vested awards, the expense is recognized on a straight-line basis over the vesting period for the entire award. For awards with performance conditions, the expense is recognized based on the expected achievement at each reporting period. Stock-settled RSUs are classified as equity awards as the vesting results in the issuance of shares of AAG common stock.

Stock-settled RSU award activity for all plans for the years ended December 31, 2017, 2016 and 2015 is as follows:



	Number of Shares		Weighted Average Grant Date Fair Value
	(In thousands)
Outstanding at December 31, 2014	21,342		$	26.43
Granted	2,213		46.62
Vested and released	(17,163	)	25.20
Forfeited	(785	)	27.12
Outstanding at December 31, 2015	5,607		$	38.08
Granted	2,655		41.34
Vested and released	(2,754	)	34.83
Forfeited	(321	)	40.15
Outstanding at December 31, 2016	5,187		$	41.48
Granted	2,309		48.58
Vested and released	(2,708	)	39.63
Forfeited	(464	)	44.48
Outstanding at December 31, 2017	4,324		$	46.94

(b) Stock Appreciation Rights (SARs)

AAG assumed US Airways Group’s outstanding SARs in connection with the Merger using an exchange ratio of one to one. These SARs were granted with an exercise price equal to the underlying common stock’s fair value at the date of each grant, have service conditions, become exercisable over a three-year vesting period and expire if unexercised at the end of their term, which ranges from seven to ten years. During 2017, 2016 and 2015, 0.8 million, 1.7 million and 3.0 million SARs, respectively, were exercised at weighted average exercise prices of $15.71, $14.49 and $12.09, respectively, for a total intrinsic value of $27 million, $49 million and $102 million, respectively. As of December 31, 2017, AAG had 1.2 million SARs outstanding with an aggregate intrinsic value of $54 million and weighted average exercise price of $8.08 that expire between 2018 and 2020 if unexercised.

This ASU simplified the accounting for share-based payment award transactions including the financial statement presentation of excess tax benefits and deficiencies. American adopted this ASU during the second quarter of 2016, which resulted in the recognition of $418 million of previously unrecognized excess tax benefits in deferred tax assets and an increase to retained earnings on the consolidated balance sheet as of the beginning of 2016.