Annual report pursuant to Section 13 and 15(d)

COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS (Tables)

v3.6.0.2
COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS (Tables)
12 Months Ended
Dec. 31, 2016
Compensation and Retirement Disclosure [Abstract]  
Net Periodic Benefit Cost for Pension and Postretirement Benefit Plans
Information about net periodic benefit cost for the company-sponsored pension and postretirement benefit plans is as follows (in millions):
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension Benefits
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
Net Periodic Benefit Cost:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
1,412

 
$
1,527

 
$
1,137

 
$
28

 
$
34

 
$
62

 
$
49

 
$
48

 
$
43

Interest cost
1,828

 
1,694

 
1,604

 
124

 
117

 
152

 
41

 
44

 
49

Expected return on assets
(2,516
)
 
(2,489
)
 
(2,257
)
 
(6
)
 
(17
)
 
(25
)
 
(58
)
 
(61
)
 
(61
)
Amortization of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transition obligation

 

 

 

 

 

 

 

 

Prior service cost
166

 
168

 
169

 
5

 
5

 

 
1

 
1

 
1

Actuarial (gain) loss
2,520

 
70

 
991

 
17

 
17

 
767

 
114

 
31

 
48

Curtailment and settlement loss

 

 

 

 

 
356

 

 

 

Other

 

 

 

 

 

 

 

 
4

Net periodic benefit cost
$
3,410

 
$
970

 
$
1,644

 
$
168

 
$
156

 
$
1,312

 
$
147

 
$
63

 
$
84

Weighted Average Actuarial Assumptions Used Disclosure
The table below provides the weighted-average actuarial assumptions used to determine the benefit obligations of our plans.
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension Benefits
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
Discount rate
4.41
%
 
4.86
%
 
4.23
%
 
4.79
%
 
2.75
%
 
3.51
%
Rate of compensation increase
4.27
%
 
4.29
%
 
N/A

 
N/A

 
3.17
%
 
3.04
%
The table below provides the weighted-average actuarial assumptions used to determine the net periodic benefit cost.
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension Benefits
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
Discount rate
4.86
%
 
4.40
%
 
5.32
%
 
4.79
%
 
4.18
%
 
4.89
%
 
3.51
%
 
3.56
%
 
4.35
%
Rate of compensation increase
4.29
%
 
4.29
%
 
4.29
%
 
N/A

 
N/A

 
N/A

 
3.04
%
 
3.08
%
 
3.22
%
Expected return on assets
8.75
%
 
8.75
%
 
8.75
%
 
8.75
%
 
8.75
%
 
8.75
%
 
5.73
%
 
6.03
%
 
6.29
%
Effects of One Percent Change in Assumed Health Care Cost Trend
A one percent change in assumed healthcare cost trend rates would have had the following effects on 2016 results (in millions):
 
1% Increase
 
1% Decrease
Effect on total of service cost and interest cost
$
3

 
$
(3
)
Effect on postretirement benefit obligation
$
71

 
$
(76
)
Reconciliation of the Changes in the Plans' Benefit Obligations and Fair Value of Plan Assets
The following table provides a reconciliation of the changes in the plans’ benefit obligations and fair value of plan assets as of the respective measurement dates in each year (in millions).
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension
Benefits
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
Benefit Obligations:
 
 
 
 
 
 
 
 
 
 
 
Projected benefit obligation at beginning of year
$
36,846

 
$
37,521

 
$
2,673

 
$
2,883

 
$
1,219

 
$
1,274

Service cost
1,412

 
1,527

 
28

 
34

 
49

 
48

Interest cost
1,828

 
1,694

 
124

 
117

 
41

 
44

Gross benefits paid
(1,885
)
 
(1,056
)
 
(264
)
 
(261
)
 
(28
)
 
(30
)
Plan participants’ contributions

 

 
27

 
21

 
3

 
3

Plan amendments(1)
285

 

 
15

 

 

 
(2
)
Actuarial (gain)/loss
2,583

 
(2,840
)
 
126

 
(120
)
 
208

 
13

Foreign currency exchange rate changes

 

 

 

 
(67
)
 
(138
)
Curtailments and settlements

 

 

 

 
(3
)
 
(3
)
Other

 

 
1

 
(1
)
 
3

 
10

Projected benefit obligation at end of year
$
41,069

 
$
36,846

 
$
2,730

 
$
2,673

 
$
1,425

 
$
1,219

 
 
 
 
 
 
 
 
 
 
 
 
(1) Resulting from a new labor contract with the Independent Pilots Association. See "Status of Collective Bargaining Agreements" in note 5.
 
 
 
 
 
 
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension
Benefits
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
Fair Value of Plan Assets:
 
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
$
28,887

 
$
28,828

 
$
130

 
$
259

 
$
1,014

 
$
1,042

Actual return on plan assets
1,735

 
67

 
3

 

 
108

 
43

Employer contributions
2,478

 
1,048

 
119

 
111

 
71

 
70

Plan participants’ contributions

 

 
27

 
21

 
3

 
3

Gross benefits paid
(1,885
)
 
(1,056
)
 
(264
)
 
(261
)
 
(28
)
 
(30
)
Foreign currency exchange rate changes

 

 

 

 
(73
)
 
(113
)
Curtailments and settlements

 

 

 

 
(3
)
 
(3
)
Other

 

 

 

 

 
2

Fair value of plan assets at end of year
$
31,215

 
$
28,887

 
$
15

 
$
130

 
$
1,092

 
$
1,014

Funded Status as of the Respective Measurement Dates in Each Year and the Amounts Recognized in Balance Sheet
The following table discloses the funded status of our plans and the amounts recognized in our consolidated balance sheets as of December 31st (in millions):
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension Benefits
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
Funded Status:
 
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets
$
31,215

 
$
28,887

 
$
15

 
$
130

 
$
1,092

 
$
1,014

Benefit obligation
(41,069
)
 
(36,846
)
 
(2,730
)
 
(2,673
)
 
(1,425
)
 
(1,219
)
Funded status recognized at December 31
$
(9,854
)
 
$
(7,959
)
 
$
(2,715
)
 
$
(2,543
)
 
$
(333
)
 
$
(205
)
Funded Status Recognized in our Balance Sheet:
 
 
 
 
 
 
 
 
 
 
 
Other non-current assets
$

 
$

 
$

 
$

 
$
28

 
$
48

Other current liabilities
(17
)
 
(16
)
 
(216
)
 
(98
)
 
(3
)
 
(3
)
Pension and postretirement benefit obligations
(9,837
)
 
(7,943
)
 
(2,499
)
 
(2,445
)
 
(358
)
 
(250
)
Net liability at December 31
$
(9,854
)
 
$
(7,959
)
 
$
(2,715
)
 
$
(2,543
)
 
$
(333
)
 
$
(205
)
Amounts Recognized in AOCI:
 
 
 
 
 
 
 
 
 
 
 
Unrecognized net prior service cost
$
(1,074
)
 
$
(954
)
 
$
(36
)
 
$
(26
)
 
$
(3
)
 
$
(4
)
Unrecognized net actuarial gain (loss)
(4,107
)
 
(3,263
)
 
(80
)
 
32

 
(150
)
 
(103
)
Gross unrecognized cost at December 31
(5,181
)
 
(4,217
)
 
(116
)
 
6

 
(153
)
 
(107
)
Deferred tax assets (liabilities) at December 31
1,948

 
1,585

 
44

 
(2
)
 
37

 
26

Net unrecognized cost at December 31
$
(3,233
)
 
$
(2,632
)
 
$
(72
)
 
$
4

 
$
(116
)
 
$
(81
)
Projected Benefit Obligation, Accumulated Benefit Obligation, and Fair Value of Plan Assets for Pension Plans With an Accumulated Benefit Obligation in Excess of Plan Assets
At December 31, 2016 and 2015, the projected benefit obligation, the accumulated benefit obligation and the fair value of plan assets for pension plans with benefit obligations in excess of plan assets were as follows (in millions):
 
Projected Benefit Obligation
Exceeds the Fair Value of Plan Assets
 
Accumulated Benefit Obligation
Exceeds the Fair Value of Plan Assets
2016
 
2015
 
2016
 
2015
U.S. Pension Benefits:
 
 
 
 
 
 
 
Projected benefit obligation
$
41,069

 
$
36,846

 
$
41,069

 
$
36,846

Accumulated benefit obligation
38,194

 
34,210

 
38,194

 
34,210

Fair value of plan assets
31,215

 
28,887

 
31,215

 
28,887

International Pension Benefits:
 
 
 
 
 
 
 
Projected benefit obligation
$
1,370

 
$
493

 
$
1,365

 
$
477

Accumulated benefit obligation
1,238

 
416

 
1,234

 
401

Fair value of plan assets
1,020

 
247

 
1,016

 
232

Fair Values of U.S. Pension and Postretirement Benefit Plan Assets by Asset Category as Well as the Percentage That Each Category Comprises of Total Plan Assets and the Respective Target Allocations
The fair values of U.S. and international pension and postretirement benefit plan assets by asset category as of December 31, 2016 are presented below (in millions), as well as the percentage that each category comprises of our total plan assets and the respective target allocations.
 
Total
Assets(1)
 
Level 1
 
Level 2
 
Level 3
 
Percentage of
Plan Assets -
2016
 
Target
Allocation
2016
Asset Category (U.S. Plans):
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
304

 
$
102

 
$
202

 
$

 
1.0
%
 
0-5
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Large Cap
4,883

 
2,327

 
2,556

 

 
 
 
 
U.S. Small Cap
542

 
393

 
149

 

 
 
 
 
Emerging Markets
1,396

 
1,236

 
160

 

 
 
 
 
Global Equity
2,603

 
2,555

 
48

 

 
 
 
 
International Equity
3,026

 
2,197

 
829

 

 
 
 
 
Total Equity Securities
12,450

 
8,708

 
3,742

 

 
39.9

 
35-55
Fixed Income Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Government Securities
6,173

 
5,821

 
352

 

 
 
 
 
Corporate Bonds
4,492

 

 
4,492

 

 
 
 
 
Global Bonds
161

 

 
59

 

 
 
 
 
Municipal Bonds
24

 

 
24

 

 
 
 
 
Total Fixed Income Securities
10,850

 
5,821

 
4,927

 

 
34.6

 
25-35
Other Investments:
 
 
 
 
 
 
 
 
 
 
 
Hedge Funds
2,867

 

 
763

 

 
9.2

 
5-15
Private Equity
1,716

 

 

 

 
5.5

 
1-10
Private Debt
496

 

 

 

 
1.6

 
1-10
Real Estate
1,734

 
122

 
144

 

 
5.6

 
1-10
Structured Products(2)
492

 

 
492

 

 
1.6

 
0-5
Risk Parity Funds
321

 

 

 

 
1.0

 
1-10
Total U.S. Plan Assets
$
31,230

 
$
14,753

 
$
10,270

 
$

 
100.0
%
 
 
Asset Category (International Plans):
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
54

 
$
37

 
$
17

 

 
4.9

 
0-15
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
Local Markets Equity
188

 

 
188

 

 
 
 
 
U.S. Equity
20

 

 
20

 

 
 
 
 
Emerging Markets
26

 
26

 

 

 
 
 
 
International / Global Equity
288

 
141

 
147

 

 
 
 
 
Total Equity Securities
522

 
167

 
355

 

 
47.7

 
50-65
Fixed Income Securities:
 
 
 
 
 
 
 
 
 
 
 
Local Government Bonds
84

 
22

 
62

 

 
 
 
 
Corporate Bonds
158

 
51

 
107

 

 
 
 
 
Total Fixed Income Securities
242

 
73

 
169

 

 
22.2

 
15-35
Other Investments:
 
 
 
 
 
 
 
 
 
 
 
Real Estate
93

 

 
57

 

 
8.5

 
0-17
Other
181

 

 
175

 

 
16.7

 
0-20
Total International Plan Assets
$
1,092

 
$
277

 
$
773

 
$

 
100.0
%
 
 
Total Plan Assets
$
32,322

 
$
15,030

 
$
11,043

 
$

 
 
 
 
(1) In accordance with ASU No. 2015-07, certain investments that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy but are included in the category totals.
(2) Represents mortgage and asset-backed securities.

The fair values of U.S. and international pension and postretirement benefit plan assets by asset category as of December 31, 2015 are presented below (in millions), as well as the percentage that each category comprises of our total plan assets and the respective target allocations.
 
Total
Assets(1)
 
Level 1
 
Level 2
 
Level 3
 
Percentage of
Plan Assets -
2015
 
Target
Allocation
2015
Asset Category (U.S. Plans):
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
811

 
$
716

 
$
95

 
$

 
2.8
%
 
0-5
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Large Cap
4,246

 
2,542

 
1,704

 

 
 
 
 
U.S. Small Cap
352

 
310

 
42

 

 
 
 
 
Emerging Markets
1,426

 
1,271

 
155

 

 
 
 
 
Global Equity
2,935

 
2,935

 

 

 
 
 
 
International Equity
3,089

 
2,308

 
781

 

 
 
 
 
Total Equity Securities
12,048

 
9,366

 
2,682

 

 
41.5

 
35-55
Fixed Income Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Government Securities
3,469

 
3,257

 
212

 

 
 
 
 
Corporate Bonds
3,961

 

 
3,682

 
6

 
 
 
 
Global Bonds
733

 

 
147

 

 
 
 
 
Municipal Bonds
36

 

 
36

 

 
 
 
 
Total Fixed Income Securities
8,199

 
3,257

 
4,077

 
6

 
28.2

 
25-35
Other Investments:
 
 
 
 
 
 
 
 
 
 
 
Hedge Funds
3,617

 

 

 

 
12.5

 
5-15
Private Equity
1,415

 

 

 

 
4.9

 
1-10
Real Estate
1,848

 
126

 
155

 

 
6.4

 
1-10
Structured Products(2)
324

 

 
324

 

 
1.1

 
0-5
Risk Parity Funds
755

 

 

 

 
2.6

 
1-10
Total U.S. Plan Assets
$
29,017

 
$
13,465

 
$
7,333

 
$
6

 
100.0
%
 
 
Asset Category (International Plans):
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
25

 
$
9

 
$
16

 

 
2.5

 
0-5
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
Local Markets Equity
240

 
133

 
107

 

 
 
 
 
U.S. Equity
16

 
16

 

 

 
 
 
 
Emerging Markets
16

 
16

 

 

 
 
 
 
International / Global Equity
176

 
84

 
92

 

 
 
 
 
Total Equity Securities
448

 
249

 
199

 

 
44.1

 
50-65
Fixed Income Securities:
 
 
 
 
 
 
 
 
 
 
 
Local Government Bonds
72

 
72

 

 

 
 
 
 
Corporate Bonds
149

 
56

 
93

 

 
 
 
 
Total Fixed Income Securities
221

 
128

 
93

 

 
21.8

 
15-35
Other Investments:
 
 
 
 
 
 
 
 
 
 
 
Real Estate
111

 

 
69

 

 
10.9

 
0-17
Other
209

 

 
160

 
49

 
20.7

 
0-20
Total International Plan Assets
$
1,014

 
$
386

 
$
537

 
$
49

 
100.0
%
 
 
Total Plan Assets
$
30,031

 
$
13,851

 
$
7,870

 
$
55

 
 
 
 

(1) In accordance with ASU No. 2015-07, certain investments that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy but are included in the category totals.
(2) Represents mortgage and asset-backed securities.
Fair Value Measurement of Plan Assets Using Significant Unobservable Inputs (Level 3)
The following table presents the changes in the Level 3 instruments measured on a recurring basis for the years ended December 31, 2016 and 2015 (in millions).
 
Corporate
Bonds
 
Other
 
Total(1)
Balance on January 1, 2015
$
8

 
$
53

 
$
61

Actual Return on Assets:
 
 
 
 
 
Assets Held at End of Year
(1
)
 
(4
)
 
(5
)
Assets Sold During the Year

 

 

Purchases
3

 

 
3

Sales
(4
)
 

 
(4
)
Transfers Into (Out of) Level 3

 

 

Balance on December 31, 2015
$
6

 
$
49

 
$
55

Actual Return on Assets:
 
 
 
 
 
Assets Held at End of Year

 

 

Assets Sold During the Year

 
(49
)
 
(49
)
Purchases

 

 

Sales
(6
)
 

 
(6
)
Transfers Into (Out of) Level 3

 

 

Balance on December 31, 2016
$

 
$

 
$

Amounts in AOCI Expected to be Amortized and Recognized as a Component of Net Periodic Benefit Cost
The estimated amounts of prior service cost in AOCI expected to be amortized and recognized as a component of net periodic benefit cost in 2017 are as follows (in millions):
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International Pension
Benefits
Prior service cost / (benefit)
$
192

 
$
7

 
$
1

Expected Cash Flows for Pension and Postretirement Benefit Plans
Information about expected cash flows for the pension and postretirement benefit plans is as follows (in millions):
 
U.S.
Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International Pension
Benefits
Expected Employer Contributions:
 
 
 
 
 
2017 to plan trusts
$
2,291

 
$
154

 
$
66

2017 to plan participants
17

 
87

 
3

Expected Benefit Payments:
 
 
 
 
 
2017
$
1,180

 
$
239

 
$
23

2018
1,292

 
235

 
23

2019
1,412

 
236

 
26

2020
1,542

 
232

 
29

2021
1,680

 
225

 
34

2022-2026
10,627

 
986

 
235

schedule of one basis point change in discount rate on the projected benefit obligation [Table Text Block]
As of December 31, 2016, the impact of each basis point change in the discount rate on the projected benefit obligation of the pension and postretirement medical benefit plans is as follows (in millions):
 
Increase (Decrease) in the Projected Benefit Obligation
 
Pension Benefits
 
Postretirement Medical Benefits
One basis point increase in discount rate
$
(67
)
 
$
(2
)
One basis point decrease in discount rate
$
71

 
$
3