Retirement Benefits

12 Months Ended

Dec. 31, 2015

13. Retirement Benefits

The Company sponsors defined benefit and defined contribution pension plans for eligible employees. The defined benefit plans provide benefits for participating employees based on years of service and average compensation for a specified period of time before retirement. Effective November 1, 2012, substantially all of the Company’s defined benefit pension plans were frozen and the Company began providing enhanced benefits under its defined contribution plans for certain groups. The Company uses a December 31 measurement date for all of its defined benefit plans. The Company also provides certain retiree medical and other postretirement benefits, including health care and life insurance benefits, to retired employees. Effective November 1, 2012, the Company modified its retiree medical and life coverage to eliminate the company subsidy for employees who retire on or after November 1, 2012. As a result of modifications to its retiree medical plans in 2012, the Company recognized a negative plan amendment of $1.9 billion, which is included as a component of actuarial gain in OCI and will be amortized over the future service life of the active plan participants for whom the benefit was eliminated, or approximately eight years. As of December 31, 2015, $1.1 billion of actuarial gain remains to be amortized.

Year End Information

The following table provides a reconciliation of the changes in the pension and retiree medical and other postretirement benefit obligations and fair value of assets for the years ended December 31, 2015 and 2014, and a statement of funded status as of December 31, 2015 and 2014 (in millions):


	Pension Benefits						Retiree Medical and Other Postretirement Benefits
	2015			2014			2015			2014
Reconciliation of benefit obligation:
Obligation at January 1	$	17,594		$	14,899		$	1,325		$	1,385
Service cost		2			3			3			1
Interest cost		737			746			50			61
Actuarial (gain) loss		(1,159	)		2,573			(177	)		(39	)
Plan amendments		—			—			—			33
Settlements		(3	)		(20	)		—			—
Benefit payments		(776	)		(607	)		(94	)		(112	)
Other		—			—			24			(4	)

Obligation at December 31	$	16,395		$	17,594		$	1,131		$	1,325

Reconciliation of fair value of plan assets:
Fair value of plan assets at January 1	$	10,986		$	10,057		$	244		$	239
Actual return on plan assets		(506	)		746			(10	)		11
Employer contributions		6			810			89			106
Settlements		(3	)		(20	)		—			—
Benefit payments		(776	)		(607	)		(94	)		(112	)
Other (1)		—			—			24			—

Fair value of plan assets at December 31		9,707			10,986			253			244

Funded status at December 31	$	(6,688	)	$	(6,608	)	$	(878	)	$	(1,081	)

Amounts recognized in the consolidated balance sheets:
Current liability	$	7		$	10		$	109		$	117
Noncurrent liability (2)		6,681			6,598			769			964

	$	6,688		$	6,608		$	878		$	1,081

Amounts recognized in other comprehensive income:
Net actuarial loss (gain)	$	5,047		$	4,961		$	(339	)	$	(199	)
Prior service cost (benefit) (2)		216			245			(1,084	)		(1,326	)

	$	5,263		$	5,206		$	(1,423	)	$	(1,525	)


	Pension Benefits				Retiree Medical and Other Postretirement Benefits
	2015		2014		2015		2014
For plans with accumulated benefit obligations exceeding the fair value of plan assets:
Projected benefit obligation (PBO)	$	16,369	$	17,560	$	—	$	—
Accumulated benefit obligation (ABO)		16,357		17,548		—		—
Accumulated postretirement benefit obligation (APBO)		—		—		1,129		1,324
Fair value of plan assets		9,677		10,950		253		244
ABO less fair value of plan assets		6,680		6,598		—		—

(1)	At December 31, 2015, certain trust assets totaling approximately $24 million, were added to the retiree medical plan asset values that were previously offset against the benefit obligation.

(2)	The 2015 noncurrent liability does not include $17 million of other postretirement benefits or $1 million of prior service costs. The 2014 noncurrent liability does not include $18 million of other postretirement benefits or $2 million of prior service costs.

The following tables provide the components of net periodic benefit cost (income) for the years ended December 31, 2015, 2014 and 2013 (in millions):


	Pension Benefits									Retiree Medical and Other Postretirement Benefits
	2015			2014			2013			2015			2014			2013

Defined benefit plans:
Service cost	$	2		$	3		$	3		$	3		$	1		$	—
Interest cost		737			746			654			50			61			50
Expected return on assets		(851	)		(786	)		(720	)		(19	)		(19	)		(16	)
Curtailments		—			—			2			—			—			—
Settlements		1			4			(1	)		—			—			—
Amortization of:
Prior service cost (benefit) (1)		28			28			28			(243	)		(244	)		(251	)
Unrecognized net loss (gain)		112			43			90			(9	)		(8	)		(9	)

Net periodic benefit cost (income) for defined benefit plans		29			38			56			(218	)		(209	)		(226	)
Defined contribution plans		662			546			328			N/A			N/A			N/A

	$	691		$	584		$	384		$	(218	)	$	(209	)	$	(226	)

(1)	The 2015 prior service cost does not include amortization of $3 million related to other postretirement benefits. The 2014 prior service cost does not include amortization of $14 million related to other postretirement benefits.

The estimated amount of unrecognized net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is $126 million.

The estimated amount of unrecognized net gain for the retiree medical and other postretirement plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is $16 million.


	Pension Benefits						Retiree Medical and Other Postretirement Benefits
	2015			2014			2015			2014
Weighted-average assumptions used to determine benefit obligations as of December 31:
Discount rate		4.70	%		4.30	%		4.42	%		4.00	%

Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:
Discount rate 1/1 – 12/31		4.30	%		5.10	%		4.00	%		4.74	%
Expected return on plan assets		8.00	%		8.00	%		8.00	%		8.00	%

As of December 31, 2015, the Company’s estimate of the long-term rate of return on plan assets was 8% based on the target asset allocation. Expected returns on longer duration bonds are based on yields to maturity of the bonds held at year-end. Expected returns on other assets are based on a combination of long-term historical returns, actual returns on plan assets achieved over the last ten years, current and expected market conditions, and expected value to be generated through active management, currency overlay and securities lending programs.

The objectives of the Company’s investment policies are to: maintain sufficient income and liquidity to pay retirement benefits; produce a long-term rate of return that meets or exceeds the assumed rate of return for plan assets; limit the volatility of asset performance and funded status; and diversify assets among asset classes and investment managers.

Based on these investment objectives, a long-term strategic asset allocation has been established. This strategic allocation seeks to balance the potential benefit of improving funded position with the potential risk that the funded position would decline. The current strategic target asset allocation is as follows:


Asset Class/Sub-Class	Allowed Range
Equity		62% - 72%
Public:
U.S. Value		20% - 35%
International Value		14% - 24%
Emerging Markets		5% - 11%
Alternative Investments		0% - 18%
Fixed Income		28% - 38%
U.S. Long Duration		26% - 36%
Emerging Markets		0% - 4%
Other		0% - 5%
Cash Equivalents		0% - 5%

Public equity and emerging market fixed income securities are used to provide diversification and are expected to generate higher returns over the long-term than longer duration U.S. bonds. Public stocks are managed using a value investment approach in order to participate in the returns generated by stocks in the long-term, while reducing year-over-year volatility. Longer duration U.S. bonds are used to partially hedge the assets from declines in interest rates. Alternative (private) investments are used to provide expected returns in excess of the public markets over the long-term. Additionally, the pension plan’s master trust engages currency overlay managers in an attempt to increase returns by protecting non-U.S. dollar denominated assets from a rise in the relative value of the U.S. dollar. The pension plan’s master trust also participates in securities lending programs to generate additional income by loaning plan assets to borrowers on a fully collateralized basis. These programs are subject to market risk.

Investments in securities traded on recognized securities exchanges are valued at the last reported sales price on the last business day of the year. Securities traded in the over-the-counter market are valued at the last bid price. The money market fund is valued at fair value which represents the net asset value of the shares of such fund as of the close of business at the end of the period. Investments in limited partnerships are carried at estimated net asset value as determined by and reported by the general partners of the partnerships and represent the proportionate share of the estimated fair value of the underlying assets of the limited partnerships. Common/collective trusts are valued at net asset value based on the fair values of the underlying investments of the trusts as determined by the sponsor of the trusts. The pension plan’s master trust also invests in a 103-12 investment entity (the 103-12 Investment Trust) which is designed to invest plan assets of more than one unrelated employer. The 103-12 Investment Trust is valued at net asset value which is determined by the issuer at the end of each month and is based on the aggregate fair value of trust assets less liabilities, divided by the number of units outstanding. No changes in valuation techniques or inputs occurred during the year.

The fair value of the Company’s pension plan assets at December 31, 2015 and 2014, by asset category, are as follows (in millions):


	Fair Value Measurements as of December 31, 2015
Asset Category	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash and cash equivalents	$	287		$	—	$	—	$	287
Equity securities:
International markets (a), (b)		2,873			—		—		2,873
Large-cap companies (b)		1,999			—		—		1,999
Mid-cap companies (b)		361			—		—		361
Small-cap companies (b)		18			—		—		18
Mutual funds (c)		47			—		—		47
Fixed income:
Corporate bonds (d)		—			2,204		—		2,204
Government Securities (e)		—			917		—		917
U.S. municipal securities		—			48		—		48
Alternative instruments:
Private equity partnerships (f)		—			—		722		722
Common/collective trusts and 103-12 Investment Trust (g)		—			219		—		219
Insurance group annuity contracts		—			—		2		2
Dividend and interest receivable		50			—		—		50
Due to/from brokers for sale of securities – net		23			—		—		23
Other assets – net		8			—		—		8
Other liabilities – net		(71	)		—		—		(71	)

Total	$	5,595		$	3,388	$	724	$	9,707

a)	Holdings are diversified as follows: 16% United Kingdom, 12% Japan, 10% France, 7% Switzerland, 7% Netherlands, 6% Republic of Korea, 11% of other emerging markets and the remaining 31% with no concentration greater than 5% in any one country.

b)	There are no significant concentrations of holdings by company or industry.

c)	Investment includes mutual funds invested 40% in equity securities of large-cap, mid-cap and small-cap U.S. companies, 35% in U.S. treasuries and corporate bonds and 25% in equity securities of international companies.

d)	Includes approximately 74% investments in corporate debt with a Standard and Poor’s (S&P) rating lower than A and 26% investments in corporate debt with an S&P rating A or higher. Holdings include 82% U.S. companies, 16% international companies and 2% emerging market companies.

e)	Includes approximately 75% investments in U.S. domestic government securities and 25% in emerging market government securities. There are no significant foreign currency risks within this classification.

Includes limited partnerships that invest primarily in U.S. (89%) and European (11%) buyout opportunities of a range of privately held companies. The pension plan’s master trust does not have the right to redeem its limited partnership investment at its net asset value, but rather receives distributions as the underlying assets are liquidated. It is estimated that the underlying assets of these funds will be gradually liquidated over the next one to ten years. Additionally, the pension plan’s master trust has future funding commitments of approximately $428 million over the next ten years.

Investment includes 73% in an emerging market 103-12 Investment Trust with investments in emerging country equity securities, 14% in Canadian segregated balanced value, income growth and diversified pooled funds and 13% in a common/collective trust investing in securities of smaller companies located outside the U.S., including developing markets. Requests for withdrawals must meet specific requirements with advance notice of redemption preferred.


	Fair Value Measurements as of December 31, 2014
Asset Category	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash and cash equivalents	$	332	$	—	$	—	$	332
Equity securities:
International markets (a), (b)		2,943		—		—		2,943
Large-cap companies (b)		2,488		—		—		2,488
Mid-cap companies (b)		362		—		—		362
Small-cap companies (b)		21		—		—		21
Mutual funds (c)		51		—		—		51
Fixed income:
Corporate bonds (d)		—		2,384		—		2,384
Government Securities (e)		—		1,184		—		1,184
U.S. municipal securities		—		65		—		65
Alternative instruments:
Private equity partnerships (f)		—		—		818		818
Common/collective trusts and 103-12 Investment Trust (g)		—		240		—		240
Insurance group annuity contracts		—		—		2		2
Dividend and interest receivable		52		—		—		52
Due to/from brokers for sale of securities – net		39		—		—		39
Other assets – net		5		—		—		5

Total	$	6,293	$	3,873	$	820	$	10,986

a)	Holdings are diversified as follows: 18% United Kingdom, 11% Japan, 10% France, 7% Switzerland, 7% Netherlands, 6% Republic of Korea, 13% of other emerging markets and the remaining 28% with no concentration greater than 5% in any one country.

b)	There are no significant concentrations of holdings by company or industry.

c)	Investment includes mutual funds invested 46% in equity securities of large-cap, mid-cap and small-cap U.S. companies, 35% in U.S. treasuries and corporate bonds and 18% in equity securities of international companies.

d)	Includes approximately 74% investments in corporate debt with an S&P rating lower than A and 26% investments in corporate debt with an S&P rating A or higher. Holdings include 81% U.S. companies, 16% international companies and 3% emerging market companies.

e)	Includes approximately 73% investments in U.S. domestic government securities and 27% in emerging market government securities. There are no significant foreign currency risks within this classification.

Includes limited partnerships that invest primarily in U.S. (91%) and European (9%) buyout opportunities of a range of privately held companies. The pension plan’s master trust does not have the right to redeem its limited partnership investment at its net asset value, but rather receives distributions as the underlying assets are liquidated. It is estimated that the underlying assets of these funds will be gradually liquidated over the next one to ten years. Additionally, the pension plan’s master trust has future funding commitments of approximately $403 million over the next ten years.

Investment includes 74% in an emerging market 103-12 Investment Trust with investments in emerging country equity securities, 14% in Canadian segregated balanced value, income growth and diversified pooled funds and 12% in a common/collective trust investing in securities of smaller companies located outside the U.S., including developing markets. Requests for withdrawals must meet specific requirements with advance notice of redemption preferred.

Changes in fair value measurements of Level 3 investments during the year ended December 31, 2015, were as follows (in millions):


	Private Equity Partnerships			Insurance Group Annuity Contracts
Beginning balance at December 31, 2014	$	818		$	2
Actual return on plan assets:
Relating to assets still held at the reporting date		(105	)		—
Relating to assets sold during the period		115			—
Purchases		145			—
Sales		(251	)		—

Ending balance at December 31, 2015	$	722		$	2

Changes in fair value measurements of Level 3 investments during the year ended December 31, 2014, were as follows (in millions):


	Private Equity Partnerships			Insurance Group Annuity Contracts
Beginning balance at December 31, 2013	$	848		$	2
Actual return on plan assets:
Relating to assets still held at the reporting date		(38	)		—
Relating to assets sold during the period		158			—
Purchases		148			—
Sales		(298	)		—

Ending balance at December 31, 2014	$	818		$	2

The fair value of the Company’s other postretirement benefit plan assets at December 31, 2015 by asset category, were as follows (in millions):


	Fair Value Measurements as of December 31, 2015
Asset Category	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Money market fund	$	4	$	—	$	—	$	4
Mutual funds – Institutional Class		19		—	$	—	$	19
Mutual funds – AMR Class		—		230		—		230

Total	$	23	$	230	$	—	$	253

The fair value of the Company’s other postretirement benefit plan assets at December 31, 2014 by asset category, were as follows (in millions):


	Fair Value Measurements as of December 31, 2014
Asset Category	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Money market fund	$	2	$	—	$	—	$	2
Mutual funds – AMR Class		—		242		—		242

Total	$	2	$	242	$	—	$	244

Investments in the other postretirement benefit plan’s mutual funds are valued by quoted prices on the active market, which is fair value and represents the net asset value of the shares of such funds as of the close of business at the end of the period. AMR Class shares are offered without a sales charge to participants. Purchases are restricted to certain retirement benefit plans, including the Company’s other postretirement benefit plan, resulting in a fair value classification of Level 2. Investments include approximately 27% and 28% of investments in non-U.S. common stocks in 2015 and 2014, respectively. Net asset value is based on the fair market value of the funds’ underlying assets and liabilities at the date of determination.


	2015			2014
Assumed health care trend rates at December 31
Health care cost trend rate assumed for next year		5.21	%		5.25	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		4.56	%		4.55	%
Year that the rate reaches the ultimate trend rate		2024			2023

A one percentage point change in the assumed health care cost trend rates would have the following effects (in millions):


	1% Increase		1% Decrease
Impact on 2015 service and interest cost	$	3	$	(3	)
Impact on other postretirement benefits obligation as of December 31, 2015		61		(60	)

The Company is required to make minimum contributions to its defined benefit pension plans under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 and various other laws. Based on current funding assumptions, the Company has no minimum required contributions until 2018. Currently, the Company’s minimum funding obligation for its pension plans is subject to temporary favorable rules that are scheduled to expire at the end of 2017. The Company’s pension funding obligations are likely to increase materially following expiration of the temporary funding rules, when the Company will be required to make contributions relating to the 2018 fiscal year. The amount of these obligations will depend on the performance of the Company’s investments held in trust by the pension plans, interest rates for determining liabilities and the Company’s actuarial experience.

The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (in millions):


	2016		2017		2018		2019		2020		2021-2025
Pension	$	662	$	690	$	725	$	764	$	805	$	4,642
Retiree medical and other postretirement benefits		109		104		99		90		84		353

American Airlines, Inc. [Member]

Retirement Benefits

11. Retirement Benefits

American sponsors defined benefit and defined contribution pension plans for eligible employees. The defined benefit plans provide benefits for participating employees based on years of service and average compensation for a specified period of time before retirement. Effective November 1, 2012, substantially all of American’s defined benefit pension plans were frozen and American began providing enhanced benefits under its defined contribution plans for certain groups. American uses a December 31 measurement date for all of its defined benefit plans. American also provides certain retiree medical and other postretirement benefits, including health care and life insurance benefits, to retired employees. Effective November 1, 2012, American modified its retiree medical and life coverage to eliminate the company subsidy for employees who retire on or after November 1, 2012. As a result of modifications to its retiree medical plans in 2012, American recognized a negative plan amendment of $1.9 billion, which is included as a component of actuarial gain in OCI and will be amortized over the future service life of the active plan participants for whom the benefit was eliminated, or approximately eight years. As of December 31, 2015, $1.1 billion of actuarial gain remains to be amortized.

Year End Information


	Pension Benefits						Retiree Medical and Other Postretirement Benefits
	2015			2014			2015			2014
Reconciliation of benefit obligation:
Obligation at January 1	$	17,504		$	14,826		$	1,324		$	1,383
Service cost		2			2			3			1
Interest cost		733			742			50			61
Actuarial (gain) loss		(1,153	)		2,559			(178	)		(39	)
Plan amendments		—			—			—			33
Settlements		(3	)		(20	)		—			—
Benefit payments		(773	)		(605	)		(94	)		(111	)
Other		—			—			24			(4	)

Obligation at December 31	$	16,310		$	17,504		$	1,129		$	1,324

Reconciliation of fair value of plan assets:
Fair value of plan assets at January 1	$	10,935		$	10,009		$	244		$	239
Actual return on plan assets		(505	)		742			(10	)		11
Employer contributions		6			809			89			105
Settlements		(3	)		(20	)		—			—
Benefit payments		(773	)		(605	)		(94	)		(111	)
Other (1)		—			—			24			—

Fair value of plan assets at December 31		9,660			10,935			253			244

Funded status at December 31	$	(6,650	)	$	(6,569	)	$	(876	)	$	(1,080	)

Amounts recognized in the consolidated balance sheets:
Current liability	$	7		$	10		$	109		$	117
Noncurrent liability (2)		6,643			6,559			767			963

	$	6,650		$	6,569		$	876		$	1,080

Amounts recognized in other comprehensive income:
Net actuarial loss (gain)	$	5,036		$	4,949		$	(339	)	$	(199	)
Prior service cost (benefit) (2)		216			245			(1,084	)		(1,326	)

	$	5,252		$	5,194		$	(1,423	)	$	(1,525	)

For plans with accumulated benefit obligations exceeding the fair value of plan assets:
Projected benefit obligation (PBO)	$	16,283		$	17,471		$	—		$	—
Accumulated benefit obligation (ABO)		16,272			17,461			—			—
Accumulated postretirement benefit obligation (APBO)		—			—			1,129			1,324
Fair value of plan assets		9,630			10,899			253			244
ABO less fair value of plan assets		6,642			6,562			—			—

(1)	At December 31, 2015, certain trust assets totaling approximately $24 million, were added to the retiree medical plan asset values that were previously offset against the benefit obligation.

(2)	The 2015 noncurrent liability does not include $17 million of other postretirement benefits or $1 million of prior service costs. The 2014 noncurrent liability does not include $18 million of other postretirement benefits or $2 million of prior service costs.

The following tables provide the components of net periodic benefit cost (income) for the years ended December 31, 2015, 2014 and 2013 (in millions):


	Pension Benefits									Retiree Medical and Other Postretirement Benefits
	2015			2014			2013			2015			2014			2013
Defined benefit plans:
Service cost	$	1		$	2		$	3		$	3		$	1		$	—
Interest cost		733			742			654			50			61			50
Expected return on assets		(848	)		(783	)		(720	)		(19	)		(19	)		(16	)
Curtailments		—			—			2			—			—			—
Settlements		1			4			(1	)		—			—			—
Amortization of:
Prior service cost (benefit) (1)		28			28			28			(243	)		(244	)		(251	)
Unrecognized net loss (gain)		111			43			90			(9	)		(8	)		(9	)

Net periodic benefit cost (income) for defined benefit plans		26			36			56			(218	)		(209	)		(226	)
Defined contribution plans		657			527			311			N/A			N/A			N/A

	$	683		$	563		$	367		$	(218	)	$	(209	)	$	(226	)

(1)	The 2015 prior service cost does not include amortization of $3 million related to other postretirement benefits. The 2014 prior service cost does not include amortization of $14 million related to other postretirement benefits.


	Pension Benefits						Retiree Medical and Other Postretirement Benefits
	2015			2014			2015			2014
Weighted-average assumptions used to determine benefit obligations as of December 31:
Discount rate		4.70	%		4.30	%		4.42	%		4.00	%
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:
Discount rate 1/1 – 12/31		4.30	%		5.10	%		4.00	%		4.74	%
Expected return on plan assets		8.00	%		8.00	%		8.00	%		8.00	%

As of December 31, 2015, American’s estimate of the long-term rate of return on plan assets was 8% based on the target asset allocation. Expected returns on longer duration bonds are based on yields to maturity of the bonds held at year-end. Expected returns on other assets are based on a combination of long-term historical returns, actual returns on plan assets achieved over the last ten years, current and expected market conditions, and expected value to be generated through active management, currency overlay and securities lending programs.

The objectives of American’s investment policies are to: maintain sufficient income and liquidity to pay retirement benefits; produce a long-term rate of return that meets or exceeds the assumed rate of return for plan assets; limit the volatility of asset performance and funded status; and diversify assets among asset classes and investment managers.


Asset Class/Sub-Class	Allowed Range
Equity		62% - 72%
Public:
U.S. Value		20% - 35%
International Value		14% - 24%
Emerging Markets		5% - 11%
Alternative Investments		0% - 18%
Fixed Income		28% - 38%
U.S. Long Duration		26% - 36%
Emerging Markets		0% - 4%
Other		0% - 5%
Cash Equivalents		0% - 5%

The fair value of American’s pension plan assets at December 31, 2015 and 2014, by asset category are as follows (in millions):


	Fair Value Measurements as of December 31, 2015
Asset Category	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash and cash equivalents	$	287		$	—	$	—	$	287
Equity securities:
International markets (a), (b)		2,873			—		—		2,873
Large-cap companies (b)		1,999			—		—		1,999
Mid-cap companies (b)		361			—		—		361
Small-cap companies (b)		18			—		—		18
Fixed income:
Corporate bonds (c)		—			2,204		—		2,204
Government Securities (d)		—			917		—		917
U.S. municipal securities		—			48		—		48
Alternative instruments:
Private equity partnerships (e)		—			—		722		722
Common/collective trusts and 103-12 Investment Trust (f)		—			219		—		219
Insurance group annuity contracts		—			—		2		2
Dividend and interest receivable		50			—		—		50
Due to/from brokers for sale of securities – net		23			—		—		23
Other assets – net		8			—		—		8
Other liabilities – net		(71	)		—		—		(71	)

Total	$	5,548		$	3,388	$	724	$	9,660

a)	Holdings are diversified as follows: 16% United Kingdom, 12% Japan, 10% France, 7% Switzerland, 7% Netherlands, 6% Republic of Korea, 11% of other emerging markets and the remaining 31% with no concentration greater than 5% in any one country.

b)	There are no significant concentrations of holdings by company or industry.

c)	Includes approximately 74% investments in corporate debt with a Standard and Poor’s (S&P) rating lower than A and 26% investments in corporate debt with an S&P rating A or higher. Holdings include 82% U.S. companies, 16% international companies and 2% emerging market companies.

d)	Includes approximately 75% investments in U.S. domestic government securities and 25% in emerging market government securities. There are no significant foreign currency risks within this classification.


	Fair Value Measurements as of December 31, 2014
Asset Category	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash and cash equivalents	$	332	$	—	$	—	$	332
Equity securities:
International markets (a), (b)		2,943		—		—		2,943
Large-cap companies (b)		2,488		—		—		2,488
Mid-cap companies (b)		362		—		—		362
Small-cap companies (b)		21		—		—		21
Fixed income:
Corporate bonds (c)		—		2,384		—		2,384
Government Securities (d)		—		1,184		—		1,184
U.S. municipal securities		—		65		—		65
Alternative instruments:
Private equity partnerships (e)		—		—		818		818
Common/collective trusts and 103-12 Investment Trust (f)		—		240		—		240
Insurance group annuity contracts		—		—		2		2
Dividend and interest receivable		52		—		—		52
Due to/from brokers for sale of securities – net		39		—		—		39
Other assets – net		5		—		—		5

Total	$	6,242	$	3,873	$	820	$	10,935

a)	Holdings are diversified as follows: 18% United Kingdom, 11% Japan, 10% France, 7% Switzerland, 7% Netherlands, 6% Republic of Korea, 13% of other emerging markets and the remaining 28% with no concentration greater than 5% in any one country.

b)	There are no significant concentrations of holdings by company or industry.

c)	Includes approximately 74% investments in corporate debt with an S&P rating lower than A and 26% investments in corporate debt with an S&P rating A or higher. Holdings include 81% U.S. companies, 16% international companies and 3% emerging market companies.

d)	Includes approximately 73% investments in U.S. domestic government securities and 27% in emerging market government securities. There are no significant foreign currency risks within this classification.

Changes in fair value measurements of Level 3 investments during the year ended December 31, 2015, were as follows (in millions):


	Private Equity Partnerships			Insurance Group Annuity Contracts
Beginning balance at December 31, 2014	$	818		$	2
Actual return on plan assets:
Relating to assets still held at the reporting date		(105	)		—
Relating to assets sold during the period		115			—
Purchases		145			—
Sales		(251	)		—

Ending balance at December 31, 2015	$	722		$	2

Changes in fair value measurements of Level 3 investments during the year ended December 31, 2014, were as follows (in millions):


	Private Equity Partnerships			Insurance Group Annuity Contracts
Beginning balance at December 31, 2013	$	848		$	2
Actual return on plan assets:
Relating to assets still held at the reporting date		(38	)		—
Relating to assets sold during the period		158			—
Purchases		148			—
Sales		(298	)		—

Ending balance at December 31, 2014	$	818		$	2

The fair value of American’s other postretirement benefit plan assets at December 31, 2015 by asset category, were as follows (in millions):


	Fair Value Measurements as of December 31, 2015
Asset Category	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Money market fund	$	4	$	—	$	—	$	4
Mutual funds – Institutional Class		19		—		—		19
Mutual funds – AMR Class		—		230		—		230

Total	$	23	$	230	$	—	$	253

The fair value of American’s other postretirement benefit plan assets at December 31, 2014 by asset category, were as follows (in millions):


	Fair Value Measurements as of December 31, 2014
Asset Category	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Money market fund	$	2	$	—	$	—	$	2
Mutual funds – AMR Class		—		242		—		242

Total	$	2	$	242	$	—	$	244

Investments in the other postretirement benefit plan’s mutual funds are valued by quoted prices on the active market, which is fair value and represents the net asset value of the shares of such funds as of the close of business at the end of the period. AMR Class shares are offered without a sales charge to participants. Purchases are restricted to certain retirement benefit plans, including American’s other postretirement benefit plan, resulting in a fair value classification of Level 2. Investments include approximately 27% and 28% of investments in non-U.S. common stocks in 2015 and 2014, respectively. Net asset value is based on the fair market value of the funds’ underlying assets and liabilities at the date of determination.


Assumed health care trend rates at December 31	2015			2014
Health care cost trend rate assumed for next year		5.21	%		5.25	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		4.56	%		4.55	%
Year that the rate reaches the ultimate trend rate		2024			2023

A one percentage point change in the assumed health care cost trend rates would have the following effects (in millions):


	1% Increase		1% Decrease
Impact on 2015 service and interest cost	$	3	$	(3	)
Impact on other postretirement benefits obligation as of December 31, 2015		61		(60	)

American is required to make minimum contributions to its defined benefit pension plans under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 and various other laws. Based on current funding assumptions, American has no minimum required contributions until 2018. Currently, American’s minimum funding obligation for its pension plans is subject to temporary favorable rules that are scheduled to expire at the end of 2017. American’s pension funding obligations are likely to increase materially following expiration of the temporary funding rules, when American will be required to make contributions relating to the 2018 fiscal year. The amount of these obligations will depend on the performance of American’s investments held in trust by the pension plans, interest rates for determining liabilities and American’s actuarial experience.

The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (in millions):


	2016		2017		2018		2019		2020		2021-2025
Pension	$	660	$	687	$	722	$	761	$	802	$	4,621
Retiree medical and other postretirement benefits		109		104		98		90		84		353