Special Items, Net (Tables)

9 Months Ended

Sep. 30, 2018

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



	Three Months Ended September 30,					Nine Months Ended September 30,
	2018		2017			2018			2017
Fleet restructuring expenses ⁽¹⁾	$	109	$	62		$	275		$	174
Merger integration expenses ⁽²⁾	68		62			188			192
Severance expenses ⁽³⁾	20		—			20			—
Mark-to-market adjustments on bankruptcy obligations, net ⁽⁴⁾	17		(12		)	(39		)	7
Litigation settlement	—		—			45			—
Intangible asset impairment ⁽⁵⁾	—		—			26			—
Labor contract expenses	—		—			13			45
Other operating charges, net	1		—			35			14
Mainline operating special items, net	215		112			563			432

Regional operating special items, net	2		(5		)	1			(1		)

Mark-to-market adjustments on equity investments, net ⁽⁶⁾	15		—			82			—
Debt refinancing and extinguishment charges	—		3			13			12
Nonoperating special items, net	15		3			95			12

Income tax special items, net ⁽⁷⁾	—		—			40			—


⁽¹⁾	Fleet restructuring expenses principally included accelerated depreciation and remaining lease payments for aircraft and related equipment grounded or expected to be grounded earlier than planned.


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


⁽³⁾	Severance expenses primarily included costs associated with reductions in headcount of management and support staff team members.


⁽⁴⁾	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.


⁽⁵⁾	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.


⁽⁶⁾	Mark-to-market adjustments on equity investments relate to net unrealized losses resulting from the change in market value primarily associated with our equity investments in China Southern Airlines and Mesa Air Group, Inc.


⁽⁷⁾	Income tax special items for the nine months ended September 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 and an $18 million charge related to an international income tax matter.

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



	Three Months Ended September 30,					Nine Months Ended September 30,
	2018		2017			2018			2017
Fleet restructuring expenses ⁽¹⁾	$	109	$	62		$	275		$	174
Merger integration expenses ⁽²⁾	68		62			188			192
Severance expenses ⁽³⁾	20		—			20			—
Mark-to-market adjustments on bankruptcy obligations, net ⁽⁴⁾	17		(12		)	(39		)	7
Litigation settlement	—		—			45			—
Intangible asset impairment ⁽⁵⁾	—		—			26			—
Labor contract expenses	—		—			13			45
Other operating charges, net	1		—			35			14
Mainline operating special items, net	215		112			563			432

Regional operating special items, net	—		(1		)	—			3

Mark-to-market adjustments on equity investments, net ⁽⁶⁾	15		—			82			—
Debt refinancing and extinguishment charges	—		3			13			12
Nonoperating special items, net	15		3			95			12

Income tax special items, net ⁽⁷⁾	—		—			48			—


⁽¹⁾	Fleet restructuring expenses principally included accelerated depreciation and remaining lease payments for aircraft and related equipment grounded or expected to be grounded earlier than planned.


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


⁽³⁾	Severance expenses primarily included costs associated with reductions in headcount of management and support staff team members.


⁽⁴⁾	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.


⁽⁵⁾	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.


⁽⁶⁾	Mark-to-market adjustments on equity investments relate to net unrealized losses resulting from the change in market value primarily associated with our equity investments in China Southern Airlines and Mesa Air Group, Inc.


⁽⁷⁾	Income tax special items for the nine months ended September 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 and an $18 million charge related to an international income tax matter.