Annual report pursuant to Section 13 and 15(d)

COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS (Tables)

v3.8.0.1
COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS (Tables)
12 Months Ended
Dec. 31, 2017
Retirement Benefits [Abstract]  
Net Periodic Benefit Cost for Pension and Postretirement Benefit Plans
Information about net periodic benefit cost for the company-sponsored pension and postretirement defined benefit plans is as follows (in millions):
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension Benefits
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
Net Periodic Benefit Cost:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
1,543

 
$
1,412

 
$
1,527

 
$
29

 
$
28

 
$
34

 
$
60

 
$
49

 
$
48

Interest cost
1,813

 
1,828

 
1,694

 
112

 
124

 
117

 
40

 
41

 
44

Expected return on assets
(2,883
)
 
(2,516
)
 
(2,489
)
 
(7
)
 
(6
)
 
(17
)
 
(66
)
 
(58
)
 
(61
)
Amortization of prior service cost
192

 
166

 
168

 
7

 
5

 
5

 
1

 
1

 
1

Actuarial (gain) loss
729

 
2,520

 
70

 
53

 
17

 
17

 
18

 
114

 
31

Curtailment and settlement loss

 

 

 

 

 

 
2

 

 

Net periodic benefit cost
$
1,394

 
$
3,410

 
$
970

 
$
194

 
$
168

 
$
156

 
$
55

 
$
147

 
$
63

Weighted Average Actuarial Assumptions Used Disclosure
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
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
Discount rate
4.41
%
 
4.86
%
 
4.40
%
 
4.23
%
 
4.79
%
 
4.18
%
 
2.75
%
 
3.51
%
 
3.56
%
Rate of compensation increase
4.27
%
 
4.29
%
 
4.29
%
 
N/A

 
N/A

 
N/A

 
3.17
%
 
3.04
%
 
3.08
%
Expected return on assets
8.75
%
 
8.75
%
 
8.75
%
 
8.75
%
 
8.75
%
 
8.75
%
 
5.65
%
 
5.73
%
 
6.03
%
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
 
2017
 
2016
 
2017
 
2016
 
2017
 
2016
Discount rate
3.84
%
 
4.41
%
 
3.82
%
 
4.23
%
 
2.78
%
 
2.75
%
Rate of compensation increase
4.25
%
 
4.27
%
 
N/A

 
N/A

 
3.23
%
 
3.17
%
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 2017 results (in millions):
 
1% Increase
 
1% Decrease
Effect on total of service cost and interest cost
$
3

 
$
(3
)
Effect on postretirement benefit obligation
$
65

 
$
(71
)
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
 
2017
 
2016
 
2017
 
2016
 
2017
 
2016
Benefit Obligations:
 
 
 
 
 
 
 
 
 
 
 
Projected benefit obligation at beginning of year
$
41,069

 
$
36,846

 
$
2,730

 
$
2,673

 
$
1,425

 
$
1,219

Service cost
1,543

 
1,412

 
29

 
28

 
60

 
49

Interest cost
1,813

 
1,828

 
112

 
124

 
40

 
41

Gross benefits paid
(1,309
)
 
(1,885
)
 
(264
)
 
(264
)
 
(32
)
 
(28
)
Plan participants’ contributions

 

 
26

 
27

 
3

 
3

Plan amendments(1)

 
285

 

 
15

 

 

Actuarial (gain)/loss
4,256

 
2,583

 
159

 
126

 
26

 
208

Foreign currency exchange rate changes

 

 

 

 
129

 
(67
)
Curtailments and settlements
(1,525
)
 

 

 

 
(3
)
 
(3
)
Other

 

 

 
1

 
3

 
3

Projected benefit obligation at end of year
$
45,847

 
$
41,069

 
$
2,792

 
$
2,730

 
$
1,651

 
$
1,425

 
 
 
 
 
 
 
 
 
 
 
 
(1) Resulting from a new labor contract with the Independent Pilots Association.
 
 
 
 
 
 
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension
Benefits
 
2017
 
2016
 
2017
 
2016
 
2017
 
2016
Fair Value of Plan Assets:
 
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
$
31,215

 
$
28,887

 
$
15

 
$
130

 
$
1,092

 
$
1,014

Actual return on plan assets
4,717

 
1,735

 
(2
)
 
3

 
96

 
108

Employer contributions
7,309

 
2,478

 
408

 
119

 
77

 
71

Plan participants’ contributions

 

 
26

 
27

 
3

 
3

Gross benefits paid
(1,309
)
 
(1,885
)
 
(264
)
 
(264
)
 
(32
)
 
(28
)
Foreign currency exchange rate changes

 

 

 

 
100

 
(73
)
Curtailments and settlements

 

 

 

 
(3
)
 
(3
)
Fair value of plan assets at end of year
$
41,932

 
$
31,215

 
$
183

 
$
15

 
$
1,333

 
$
1,092

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
 
2017
 
2016
 
2017
 
2016
 
2017
 
2016
Funded Status:
 
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets
$
41,932

 
$
31,215

 
$
183

 
$
15

 
$
1,333

 
$
1,092

Benefit obligation
(45,847
)
 
(41,069
)
 
(2,792
)
 
(2,730
)
 
(1,651
)
 
(1,425
)
Funded status recognized at December 31
$
(3,915
)
 
$
(9,854
)
 
$
(2,609
)
 
$
(2,715
)
 
$
(318
)
 
$
(333
)
Funded Status Recognized in our Balance Sheet:
 
 
 
 
 
 
 
 
 
 
 
Other non-current assets
$
284

 
$

 
$

 
$

 
$
35

 
$
28

Other current liabilities
(18
)
 
(17
)
 
(77
)
 
(216
)
 
(5
)
 
(3
)
Pension and postretirement benefit obligations
(4,181
)
 
(9,837
)
 
(2,532
)
 
(2,499
)
 
(348
)
 
(358
)
Net liability at December 31
$
(3,915
)
 
$
(9,854
)
 
$
(2,609
)
 
$
(2,715
)
 
$
(318
)
 
$
(333
)
Amounts Recognized in AOCI:
 
 
 
 
 
 
 
 
 
 
 
Unrecognized net prior service cost
$
(880
)
 
$
(1,074
)
 
$
(29
)
 
$
(36
)
 
$
(2
)
 
$
(3
)
Unrecognized net actuarial gain (loss)
(4,277
)
 
(4,107
)
 
(195
)
 
(80
)
 
(126
)
 
(150
)
Gross unrecognized cost at December 31
(5,157
)
 
(5,181
)
 
(224
)
 
(116
)
 
(128
)
 
(153
)
Deferred tax assets (liabilities) at December 31
1,840

 
1,948

 
69

 
44

 
31

 
37

Net unrecognized cost at December 31
$
(3,317
)
 
$
(3,233
)
 
$
(155
)
 
$
(72
)
 
$
(97
)
 
$
(116
)
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, 2017 and 2016, 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
2017
 
2016
 
2017
 
2016
U.S. Pension Benefits:
 
 
 
 
 
 
 
Projected benefit obligation
$
37,113

 
$
41,069

 
$
37,113

 
$
41,069

Accumulated benefit obligation
35,538

 
38,194

 
35,538

 
38,194

Fair value of plan assets
32,914

 
31,215

 
32,914

 
31,215

International Pension Benefits:
 
 
 
 
 
 
 
Projected benefit obligation
$
1,138

 
$
1,370

 
$
647

 
$
1,365

Accumulated benefit obligation
992

 
1,238

 
549

 
1,234

Fair value of plan assets
798

 
1,020

 
342

 
1,016

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, 2017 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

 
Target
Allocation

Asset Category (U.S. Plans):
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents(2)
$
5,725

 
$
5,292

 
$
433

 
$

 
13.6
%
 
0-5
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Large Cap
5,924

 
3,121

 
2,803

 

 
 
 
 
U.S. Small Cap
591

 
421

 
170

 

 
 
 
 
Emerging Markets
2,101

 
1,669

 
432

 

 
 
 
 
Global Equity
2,817

 
2,400

 
417

 

 
 
 
 
International Equity
4,791

 
2,950

 
1,841

 

 
 
 
 
Total Equity Securities
16,224

 
10,561

 
5,663

 

 
38.5

 
35-55
Fixed Income Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Government Securities
7,695

 
7,323

 
372

 

 
 
 
 
Corporate Bonds
3,865

 

 
3,857

 
8

 
 
 
 
Global Bonds
53

 

 
53

 

 
 
 
 
Municipal Bonds
21

 

 
21

 

 
 
 
 
Total Fixed Income Securities
11,634

 
7,323

 
4,303

 
8

 
27.6

 
25-35
Other Investments:
 
 
 
 
 
 
 
 
 
 
 
Hedge Funds
2,910

 

 
1,031

 

 
6.9

 
5-15
Private Equity
2,107

 

 

 

 
5.0

 
1-10
Private Debt
953

 

 
237

 

 
2.3

 
1-10
Real Estate
2,031

 
157

 
139

 

 
4.8

 
1-10
Structured Products(3)
172

 

 
172

 

 
0.4

 
0-5
Risk Parity Funds
359

 

 

 


 
0.9

 
1-10
Total U.S. Plan Assets
$
42,115

 
$
23,333

 
$
11,978

 
$
8

 
100.0
%
 
 
Asset Category (International Plans):
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
78

 
$
43

 
$
35

 


 
5.8

 
0-10
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
Local Markets Equity
213

 

 
213

 


 
 
 
 
U.S. Equity
30

 

 
30

 


 
 
 
 
Emerging Markets
38

 
38

 

 


 
 
 
 
International / Global Equity
356

 
166

 
190

 


 
 
 
 
Total Equity Securities
637

 
204

 
433

 

 
47.7

 
30-60
Fixed Income Securities:
 
 
 
 
 
 
 
 
 
 
 
Local Government Bonds
103

 
25

 
78

 


 
 
 
 
Corporate Bonds
198

 
59

 
139

 


 
 
 
 
Total Fixed Income Securities
301

 
84

 
217

 

 
22.6

 
25-50
Other Investments:
 
 
 
 
 
 
 
 
 
 
 
Real Estate
124

 

 
79

 


 
9.3

 
5-10
Other
193

 

 
184

 


 
14.6

 
0-20
Total International Plan Assets
$
1,333

 
$
331

 
$
948

 
$

 
100.0
%
 
 
Total Plan Assets
$
43,448

 
$
23,664

 
$
12,926

 
$
8

 
 
 
 
(1) 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) Includes $5 billion in contributions made in December 2017 that had not yet been invested according to the targeted allocation.
(3) 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, 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

 
Target
Allocation

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) 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, 2017 and 2016 (in millions).
 
Corporate
Bonds
 
Other
 
Total
Balance on January 1, 2016
$
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
$

 
$

 
$

Actual Return on Assets:
 
 
 
 
 
Assets Held at End of Year

 

 

Assets Sold During the Year

 

 

Purchases
9

 

 
9

Sales
(1
)
 

 
(1
)
Transfers Into (Out of) Level 3

 

 

Balance on December 31, 2017
$
8

 
$

 
$
8

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 2018 are as follows (in millions):
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International Pension
Benefits
Prior service cost
$
193

 
$
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:
 
 
 
 
 
2018 to plan trusts
$

 
$

 
$
75

2018 to plan participants
19

 
78

 
5

Expected Benefit Payments:
 
 
 
 
 
2018
$
1,294

 
$
237

 
$
24

2019
1,418

 
239

 
27

2020
1,551

 
237

 
30

2021
1,691

 
231

 
36

2022
1,836

 
222

 
41

2023 - 2027
11,358

 
967

 
286

schedule of one basis point change in discount rate on the projected benefit obligation [Table Text Block]
As of December 31, 2017, 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
$
(75
)
 
$
(2
)
One basis point decrease in discount rate
$
80

 
$
3