Condensed Consolidated Statement of Operations
As Recast for Adoption of New Accounting Standards on January 1, 2018
Twelve Months Ended December 31, 2017
(In millions, except share and per share amounts)
(Unaudited)
On January 1, 2018, the Company adopted two new Accounting Standard Updates (ASUs): ASU 2014-09: Revenue from Contracts with Customers (the “New Revenue Standard”) and ASU 2017-07: Compensation – Retirement Benefits (the “New Retirement Standard”). In accordance with the transition provisions of these new standards, the Company has recast certain 2017 financial information previously reported in accordance with GAAP in effect as of December 31, 2017 to reflect the expected effects of adoption. This recast financial information is labeled “As Recast” and is included for supplemental purposes only. The adoption and related disclosures required by GAAP will be reported in the Company’s 2018 first quarter report on Form 10-Q.
|
| | | | | | | | | | | | | | | | | | | |
| | | | New Revenue Standard | | New Retirement Standard | | |
| | As Reported | | Deferred Revenue Method | | Reclassifications | | Reclassifications | | As Recast |
| | | | (A) | | (B) | | (C) | | |
| Operating revenues: | | | | | | | | | |
| Passenger | $ | 36,133 |
| | $ | 311 |
| | $ | 2,642 |
| | $ | — |
| | $ | 39,086 |
|
| Cargo | 800 |
| | — |
| | 90 |
| | — |
| | 890 |
|
| Other | 5,274 |
| | — |
| | (2,628 | ) | | — |
| | 2,646 |
|
| Total operating revenues | 42,207 |
| | 311 |
| | 104 |
| | — |
| | 42,622 |
|
| Operating expenses: | | | | | | | | | |
| Aircraft fuel and related taxes | 6,128 |
| | — |
| | — |
| | — |
| | 6,128 |
|
| Salaries, wages and benefits | 11,816 |
| | — |
| | — |
| | 138 |
| | 11,954 |
|
| Regional expenses: | | | | | | | | |
|
| Fuel | 1,382 |
| | — |
| | — |
| | — |
| | 1,382 |
|
| Other | 5,164 |
| | — |
| | — |
| | — |
| | 5,164 |
|
| Maintenance, materials and repairs | 1,959 |
| | — |
| | — |
| | — |
| | 1,959 |
|
| Other rent and landing fees | 1,806 |
| | — |
| | — |
| | — |
| | 1,806 |
|
| Aircraft rent | 1,197 |
| | — |
| | — |
| | — |
| | 1,197 |
|
| Selling expenses | 1,477 |
| | — |
| | — |
| | — |
| | 1,477 |
|
| Depreciation and amortization | 1,702 |
| | — |
| | — |
| | — |
| | 1,702 |
|
| Special items, net | 712 |
| | — |
| | — |
| | — |
| | 712 |
|
| Other | 4,806 |
| | — |
| | 104 |
| | — |
| | 4,910 |
|
| Total operating expenses | 38,149 |
| | — |
| | 104 |
| | 138 |
| | 38,391 |
|
| Operating income | 4,058 |
| | 311 |
| | — |
| | (138 | ) | | 4,231 |
|
| Nonoperating income (expense): | | | | | | | | | |
| Interest income | 94 |
| | — |
| | — |
| | — |
| | 94 |
|
| Interest expense, net | (1,053 | ) | | — |
| | — |
| | — |
| | (1,053 | ) |
| Other, net | (15 | ) | | — |
| | — |
| | 138 |
| | 123 |
|
| Total nonoperating expense, net | (974 | ) | | — |
| | — |
| | 138 |
| | (836 | ) |
| Income before income taxes | 3,084 |
| | 311 |
| | — |
| | — |
| | 3,395 |
|
| Income tax provision | 1,165 |
| | 948 |
| | — |
| | — |
| | 2,113 |
|
| Net income | $ | 1,919 |
| | $ | (637 | ) | | $ | — |
| | $ | — |
| | $ | 1,282 |
|
| | | | | | | | | | |
| Earnings per common share: | | | | | | | | | |
| Basic | $ | 3.92 |
| | | | | | | | $ | 2.62 |
|
| Diluted | $ | 3.90 |
| | | | | | | | $ | 2.61 |
|
Weighted average shares outstanding (in thousands): | | | | | | | | | |
| Basic | 489,164 |
| | | | | | | | 489,164 |
|
| Diluted | 491,692 |
| | | | | | | | 491,692 |
|
| |
| (A) | The adoption of the New Revenue Standard impacted the Company's accounting for outstanding mileage credits earned through travel by AAdvantage loyalty program members. There is no change in accounting for sales of mileage credits to co-brand card or other partners as those are currently reported in accordance with the New Revenue Standard. Previously, the Company used the incremental cost method to account for the portion of its loyalty program liability related to mileage credits earned through travel, which were valued based on the estimated incremental cost of carrying one additional passenger. The New Revenue Standard required the Company to change its policy to the deferred revenue method and apply a relative selling price approach whereby a portion of each passenger ticket sale attributable to mileage credits earned is deferred and recognized in passenger revenue upon future mileage redemption. The value of the earned mileage credits is materially greater under the deferred revenue method than the value attributed to these mileage credits under the incremental cost method. The retrospective application of the New Revenue Standard increased the Company's 2017 operating revenues and pre-tax income by $311 million. |
Additionally, the Company increased its loyalty program liability by $6.0 billion and initially increased its deferred tax asset by $2.2 billion, representing the tax effect of the increase to the loyalty program liability. As a result of tax reform enacted in December 2017 that reduced the federal income tax rate from 35% to 21%, the Company recognized an $830 million special charge to reduce this deferred tax asset to $1.4 billion at December 31, 2017 (see As Recast 2017 Balance Sheet on page 6).
| |
| (B) | The adoption of the New Revenue Standard required that the Company reclassify certain ancillary revenues previously classified and reported as “other revenue” to “passenger revenue” and as applicable to “cargo revenue.” Additionally, the New Revenue Standard required a gross presentation on the face of the Company’s statement of operations for certain revenues and expenses that had previously been presented on a net basis. |
| |
| (C) | The adoption of the New Retirement Standard required that the Company reclassify all components of its net periodic benefit cost (income), with the exception of service cost, previously classified and reported as operating expenses in "salaries, wages and benefits" to "other nonoperating expense." |
Condensed Consolidated Statement of Operations
As Recast for Adoption of New Accounting Standards on January 1, 2018
(In millions, except share and per share amounts)
(Unaudited)
As previously discussed, on January 1, 2018, the Company adopted the New Revenue Standard and the New Retirement Standard. The following table presents the As Recast quarterly and annual 2017 condensed consolidated statements of operations.
|
| | | | | | | | | | | | | | | | | | | |
| | 1Q17 | | 2Q17 | | 3Q17 | | 4Q17 | | FY17 |
| | | | | | | | (A) | | (A) |
| Operating revenues: | | | | | | | | | |
| Passenger | $ | 8,987 |
| | $ | 10,343 |
| | $ | 10,084 |
| | $ | 9,673 |
| | $ | 39,086 |
|
| Cargo | 191 |
| | 219 |
| | 223 |
| | 257 |
| | 890 |
|
| Other | 642 |
| | 665 |
| | 658 |
| | 681 |
| | 2,646 |
|
| Total operating revenues | 9,820 |
| | 11,227 |
| | 10,965 |
| | 10,611 |
| | 42,622 |
|
| Operating expenses: | | | | | | | | | |
| Aircraft fuel and related taxes | 1,402 |
| | 1,510 |
| | 1,570 |
| | 1,646 |
| | 6,128 |
|
| Salaries, wages and benefits | 2,859 |
| | 3,037 |
| | 3,030 |
| | 3,028 |
| | 11,954 |
|
| Regional expenses: | | | | | | | | | |
| Fuel | 318 |
| | 329 |
| | 352 |
| | 383 |
| | 1,382 |
|
| Other | 1,255 |
| | 1,291 |
| | 1,302 |
| | 1,315 |
| | 5,164 |
|
| Maintenance, materials and repairs | 492 |
| | 495 |
| | 487 |
| | 484 |
| | 1,959 |
|
| Other rent and landing fees | 440 |
| | 452 |
| | 471 |
| | 443 |
| | 1,806 |
|
| Aircraft rent | 295 |
| | 294 |
| | 304 |
| | 305 |
| | 1,197 |
|
| Selling expenses | 318 |
| | 376 |
| | 400 |
| | 383 |
| | 1,477 |
|
| Depreciation and amortization | 405 |
| | 418 |
| | 433 |
| | 447 |
| | 1,702 |
|
| Special items, net | 119 |
| | 202 |
| | 112 |
| | 280 |
| | 712 |
|
| Other | 1,180 |
| | 1,224 |
| | 1,248 |
| | 1,259 |
| | 4,910 |
|
| Total operating expenses | 9,083 |
| | 9,628 |
| | 9,709 |
| | 9,973 |
| | 38,391 |
|
| Operating income | 737 |
| | 1,599 |
| | 1,256 |
| | 638 |
| | 4,231 |
|
| Nonoperating income (expense): | | | | | | | | | |
| Interest income | 21 |
| | 24 |
| | 25 |
| | 24 |
| | 94 |
|
| Interest expense, net | (257 | ) | | (263 | ) | | (266 | ) | | (266 | ) | | (1,053 | ) |
| Other, net | 34 |
| | 29 |
| | 48 |
| | 12 |
| | 123 |
|
| Total nonoperating expense, net | (202 | ) | | (210 | ) | | (193 | ) | | (230 | ) | | (836 | ) |
| Income before income taxes | 535 |
| | 1,389 |
| | 1,063 |
| | 408 |
| | 3,395 |
|
| Income tax provision | 195 |
| | 525 |
| | 402 |
| | 991 |
| | 2,113 |
|
| Net income (loss) | $ | 340 |
| | $ | 864 |
| | $ | 661 |
| | $ | (583 | ) | | $ | 1,282 |
|
| | | | | | | | | | |
| Earnings (loss) per common share: | | | | | | | | | |
| Basic | $ | 0.67 |
| | $ | 1.76 |
| | $ | 1.36 |
| | $ | (1.22 | ) | | $ | 2.62 |
|
| Diluted | $ | 0.67 |
| | $ | 1.75 |
| | $ | 1.36 |
| | $ | (1.22 | ) | | $ | 2.61 |
|
Weighted average shares outstanding (in thousands): | | | | | | | | | |
| Basic | 503,902 |
| | 490,818 |
| | 484,772 |
| | 477,165 |
| | 489,164 |
|
| Diluted | 507,797 |
| | 492,965 |
| | 486,625 |
| | 477,165 |
| | 491,692 |
|
Note: Amounts may not recalculate due to rounding.
| |
| (A) | The fourth quarter and full year 2017 income tax provision includes an $830 million special charge to reduce the Company's deferred tax asset associated with its loyalty program liability as a result of tax reform enacted in December 2017 that reduced the federal income tax rate from 35% to 21%. |
2017 Quarterly Adjustments to Statement of Operations
Resulting From Adoption of New Accounting Standards on January 1, 2018
(In millions)
(Unaudited)
As previously discussed, on January 1, 2018, the Company adopted the New Revenue Standard and the New Retirement Standard. The following table presents the quarterly adjustments to the following line items impacted by these new accounting standards in the condensed consolidated statement of operations.
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| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Quarterly Adjustments | | |
| | | FY17 As Reported | | 1Q17 | | 2Q17 | | 3Q17 | | 4Q17 | | FY17 As Recast |
| Passenger revenue | | $ | 36,133 |
| | $ | 832 |
| | $ | 761 |
| | $ | 707 |
| | $ | 654 |
| | $ | 39,086 |
|
| Cargo revenue | | 800 |
| | 19 |
| | 23 |
| | 23 |
| | 25 |
| | 890 |
|
| Other revenue | | 5,274 |
| | (655 | ) | | (662 | ) | | (643 | ) | | (668 | ) | | 2,646 |
|
| | | | | | | | | | | | | |
| Salaries, wages and benefits | | 11,816 |
| | 34 |
| | 34 |
| | 35 |
| | 35 |
| | 11,954 |
|
| Other operating expenses | | 4,806 |
| | 26 |
| | 24 |
| | 28 |
| | 28 |
| | 4,910 |
|
| | | | | | | | | | | | | |
| Other nonoperating expenses | | (15 | ) | | 34 |
| | 34 |
| | 35 |
| | 35 |
| | 123 |
|
| | | | | | | | | | | | | |
| Income tax provision (A) | | 1,165 |
| | 64 |
| | 37 |
| | 22 |
| | 824 |
| | 2,113 |
|
Note: Amounts may not recalculate due to rounding.
| |
| (A) | The fourth quarter and full year 2017 income tax provision includes an $830 million special charge to reduce the Company's deferred tax asset associated with its loyalty program liability as a result of tax reform enacted in December 2017 that reduced the federal income tax rate from 35% to 21%. |
Reconciliation of 2017 Financial Measures As Recast to Non-GAAP Financial Measures As Recast
As previously discussed, on January 1, 2018, the Company adopted the New Revenue Standard and the New Retirement Standard. The following table presents certain quarterly and annual 2017 financial measures As Recast and non-GAAP financial measures As Recast.
The Company sometimes uses financial measures that are derived from the consolidated financial statements but that are not presented in accordance with GAAP to understand and evaluate its current operating performance and to allow for period-to-period comparisons. The Company believes these non-GAAP financial measures may also provide useful information to investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with GAAP. The Company is providing a reconciliation of non-GAAP financial measures As Recast to their comparable 2017 financial measure As Recast.
The tables below present the reconciliations of the following financial measures As Recast to their non-GAAP measures As Recast:
- Pre-Tax Income As Recast to Pre-Tax Income As Recast Excluding Special Items (non-GAAP measure)
- Pre-Tax Margin As Recast to Pre-Tax Margin As Recast Excluding Special Items (non-GAAP measure)
- Net Income As Recast to Net Income As Recast Excluding Special Items (non-GAAP measure)
- Basic and Diluted Earnings Per Share As Recast to Basic and Diluted Earnings Per Share As Recast Excluding Special Items (non-GAAP measure)
Management uses these non-GAAP financial measures to evaluate the Company's current operating performance and to allow for period-to-period comparisons. As special items may vary from period-to-period in nature and amount, the adjustment to exclude special items allows management an additional tool to better understand the Company’s core operating performance.
Additionally, the tables below present the reconciliations of total operating costs As Recast to total operating costs As Recast excluding special items and fuel (non-GAAP measure). Management uses total operating costs excluding special items and fuel to evaluate the Company's current operating performance and for period-to-period comparisons. The price of fuel, over which the Company has no control, impacts the comparability of period-to-period financial performance. The adjustment to exclude aircraft fuel and special items allows management an additional tool to better understand and analyze the Company’s non-fuel costs and core operating performance.
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| | | | | | | | | | | | | | | | | | | | |
| Reconciliation of Pre-Tax Income As Recast Excluding Special Items | | 1Q17 | | 2Q17 | | 3Q17 | | 4Q17 | | FY17 |
| | | (in millions) |
| Pre-tax income As Recast | | $ | 535 |
| | $ | 1,389 |
| | $ | 1,063 |
| | $ | 408 |
| | $ | 3,395 |
|
| Pre-tax special items: | | | | | | | | | | |
| Special items, net (1) | | 119 |
| | 202 |
| | 112 |
| | 280 |
| | 712 |
|
| Regional operating special items, net (1) | | 2 |
| | 1 |
| | (5 | ) | | 23 |
| | 22 |
|
| Nonoperating special items, net (1) | | 5 |
| | 2 |
| | 3 |
| | 11 |
| | 22 |
|
| Total pre-tax special items | | 126 |
| | 205 |
| | 110 |
| | 314 |
| | 756 |
|
| Pre-tax income As Recast excluding special items | | $ | 661 |
| | $ | 1,594 |
| | $ | 1,173 |
| | $ | 722 |
| | $ | 4,151 |
|
| | | | | | | | | | | |
| Calculation of Pre-Tax Margin As Recast | | | | | | | | | | |
| Pre-tax income As Recast | | $ | 535 |
| | $ | 1,389 |
| | $ | 1,063 |
| | $ | 408 |
| | $ | 3,395 |
|
| Total operating revenues As Recast | | $ | 9,820 |
| | $ | 11,227 |
| | $ | 10,965 |
| | $ | 10,611 |
| | $ | 42,622 |
|
| Pre-tax margin As Recast | | 5.4 | % | | 12.4 | % | | 9.7 | % | | 3.8 | % | | 8.0 | % |
| | | | | | | | | | | |
Calculation of Pre-Tax Margin As Recast Excluding Special Items | | | | | | | | | | |
| Pre-tax income As Recast excluding special items | | $ | 661 |
| | $ | 1,594 |
| | $ | 1,173 |
| | $ | 722 |
| | $ | 4,151 |
|
| Total operating revenues As Recast | | $ | 9,820 |
| | $ | 11,227 |
| | $ | 10,965 |
| | $ | 10,611 |
| | $ | 42,622 |
|
| Pre-tax margin As Recast excluding special items | | 6.7 | % | | 14.2 | % | | 10.7 | % | | 6.8 | % | | 9.7 | % |
| | | | | | | | | | | |
Reconciliation of Net Income As Recast Excluding Special Items | | | | | | | | | | |
| Net income (loss) As Recast | | $ | 340 |
| | $ | 864 |
| | $ | 661 |
| | $ | (583 | ) | | $ | 1,282 |
|
| Special items: | | | | | | | | | | |
| Total pre-tax special items (1) | | 126 |
| | 205 |
| | 110 |
| | 314 |
| | 756 |
|
| Income tax special items As Recast (2) | | — |
| | — |
| | — |
| | 823 |
| | 823 |
|
| Net tax effect of special items | | (52 | ) | | (64 | ) | | (42 | ) | | (110 | ) | | (269 | ) |
| Net income As Recast excluding special items | | $ | 414 |
| | $ | 1,005 |
| | $ | 729 |
| | $ | 444 |
| | $ | 2,592 |
|
Note: Amounts may not recalculate due to rounding.
Reconciliation of 2017 Financial Measures As Recast to Non-GAAP Financial Measures As Recast
|
| | | | | | | | | | | | | | | | | | | | |
| Reconciliation of Basic and Diluted Earnings Per Share As Recast Excluding Special Items | | 1Q17 | | 2Q17 | | 3Q17 | | 4Q17 | | FY17 |
| | | (in millions, except per share amounts) |
| Net income As Recast excluding special items | | $ | 414 |
| | $ | 1,005 |
| | $ | 729 |
| | $ | 444 |
| | $ | 2,592 |
|
| Shares used for computation (in thousands): | | | | | | | | | | |
| Basic | | 503,902 |
| | 490,818 |
| | 484,772 |
| | 477,165 |
| | 489,164 |
|
| Diluted | | 507,797 |
| | 492,965 |
| | 486,625 |
| | 479,382 |
| | 491,692 |
|
| Earnings per share As Recast excluding special items: | | | | | | | | | | |
| Basic | | $ | 0.82 |
| | $ | 2.05 |
| | $ | 1.50 |
| | $ | 0.93 |
| | $ | 5.30 |
|
| Diluted | | $ | 0.82 |
| | $ | 2.04 |
| | $ | 1.50 |
| | $ | 0.93 |
| | $ | 5.27 |
|
| | | | | | | | | | | |
| Reconciliation of Total Operating Cost per ASM As Recast Excluding Special Items and Fuel | | | | | | | | | | |
| | | (in millions) |
| Total operating expenses As Recast | | $ | 9,083 |
| | $ | 9,628 |
| | $ | 9,709 |
| | $ | 9,973 |
| | $ | 38,391 |
|
| Special items: | | | | | | | | | | |
| Special items, net (1) | | (119 | ) | | (202 | ) | | (112 | ) | | (280 | ) | | (712 | ) |
| Regional operating special items, net (1) | | (2 | ) | | (1 | ) | | 5 |
| | (23 | ) | | (22 | ) |
| Total operating expenses As Recast, excluding special items | | 8,962 |
| | 9,425 |
| | 9,602 |
| | 9,670 |
| | 37,657 |
|
| Fuel: | | | | | | | | | | |
| Aircraft fuel and related taxes - mainline | | (1,402 | ) | | (1,510 | ) | | (1,570 | ) | | (1,646 | ) | | (6,128 | ) |
| Aircraft fuel and related taxes - regional | | (318 | ) | | (329 | ) | | (352 | ) | | (383 | ) | | (1,382 | ) |
| Total operating expenses As Recast, excluding special items and fuel | | $ | 7,242 |
| | $ | 7,586 |
| | $ | 7,680 |
| | $ | 7,641 |
| | $ | 30,147 |
|
| | | (in cents) |
| Total operating expenses per ASM As Recast | | 14.12 |
| | 13.42 |
| | 13.29 |
| | 14.81 |
| | 13.88 |
|
| Special items per ASM: | | | | | | | | | | |
| Special items, net (1) | | (0.18 | ) | | (0.28 | ) | | (0.15 | ) | | (0.42 | ) | | (0.26 | ) |
| Regional operating special items, net (1) | | — |
| | — |
| | 0.01 |
| | (0.03 | ) | | (0.01 | ) |
| Total operating expenses per ASM As Recast, excluding special items | | 13.93 |
| | 13.14 |
| | 13.14 |
| | 14.35 |
| | 13.62 |
|
| Fuel per ASM: | | | | | | | | | | |
| Aircraft fuel and related taxes - mainline | | (2.18 | ) | | (2.10 | ) | | (2.15 | ) | | (2.44 | ) | | (2.22 | ) |
| Aircraft fuel and related taxes - regional | | (0.49 | ) | | (0.46 | ) | | (0.48 | ) | | (0.57 | ) | | (0.50 | ) |
| Total operating expenses per ASM As Recast, excluding special items and fuel | | 11.25 |
| | 10.57 |
| | 10.51 |
| | 11.34 |
| | 10.90 |
|
| | | | | | | | | | | |
| Total Revenue per Available Seat Mile (TRASM) As Recast (in cents) | | 15.26 |
| | 15.65 |
| | 15.01 |
| | 15.75 |
| | 15.42 |
|
Note: Amounts may not recalculate due to rounding.
FOOTNOTES:
| |
| (1) | Refer to the Company's fourth quarter 2017 earnings release filed on Exhibit 99.1 included herein for further detail of special items. |
| |
| (2) | The fourth quarter and full year 2017 income tax special items of $823 million are the result of a non-cash charge to income tax expense to reflect the impact of lower corporate income tax rates on the Company’s deferred tax assets and liabilities resulting from tax reform. The fourth quarter and full year 2017 income tax special items as previously reported due to the impact of tax reform was a $7 million benefit. The $830 million increase was due to the decrease in the Company's deferred tax asset associated with its loyalty program liability as a result of the reduction in the federal income tax rate from 35% to 21%. |
Condensed Consolidated Balance Sheets
As Recast for Adoption of the New Revenue Standard on January 1, 2018
December 31, 2017
(In millions)
(Unaudited)
As previously discussed, on January 1, 2018, the Company adopted the New Revenue Standard. The following table presents the effects of the adoption of the New Revenue Standard on the December 31, 2017 consolidated balance sheet.
|
| | | | | | | | | | | | |
| | | As Reported | | New Revenue Standard | | As Recast |
| Assets | | | | (A) | | |
|
| Current assets | | | | | | |
| Cash | | $ | 295 |
| | $ | — |
| | $ | 295 |
|
| Short-term investments | | 4,771 |
| | — |
| | 4,771 |
|
| Restricted cash and short-term investments | | 318 |
| | — |
| | 318 |
|
| Accounts receivable, net | | 1,752 |
| | — |
| | 1,752 |
|
| Aircraft fuel, spare parts and supplies, net | | 1,359 |
| | — |
| | 1,359 |
|
| Prepaid expenses and other | | 651 |
| | — |
| | 651 |
|
| Total current assets | | 9,146 |
| | — |
| | 9,146 |
|
| Operating property and equipment | | | | | | |
| Flight equipment | | 40,318 |
| | — |
| | 40,318 |
|
| Ground property and equipment | | 8,267 |
| | — |
| | 8,267 |
|
| Equipment purchase deposits | | 1,217 |
| | — |
| | 1,217 |
|
| Total property and equipment, at cost | | 49,802 |
| | — |
| | 49,802 |
|
| Less accumulated depreciation and amortization | | (15,646 | ) | | — |
| | (15,646 | ) |
| Total property and equipment, net | | 34,156 |
| | — |
| | 34,156 |
|
| Other assets | | | | | | |
| Goodwill | | 4,091 |
| | — |
| | 4,091 |
|
| Intangibles, net | | 2,203 |
| | — |
| | 2,203 |
|
| Deferred tax asset | | 427 |
| | 1,389 |
| | 1,816 |
|
| Other assets | | 1,373 |
| | — |
| | 1,373 |
|
| Total other assets | | 8,094 |
| | 1,389 |
| | 9,483 |
|
| Total assets | | $ | 51,396 |
| | $ | 1,389 |
| | $ | 52,785 |
|
| | | | | | | |
| Liabilities and Stockholders’ Equity (Deficit) | | | | | | |
| Current liabilities | | | | | | |
| Current maturities of long-term debt and capital leases | | $ | 2,554 |
| | $ | — |
| | $ | 2,554 |
|
| Accounts payable | | 1,688 |
| | — |
| | 1,688 |
|
| Accrued salaries and wages | | 1,672 |
| | — |
| | 1,672 |
|
| Air traffic liability | | 3,978 |
| | 64 |
| | 4,042 |
|
| Loyalty program liability | | 2,791 |
| | 384 |
| | 3,175 |
|
| Other accrued liabilities | | 2,281 |
| | — |
| | 2,281 |
|
| Total current liabilities | | 14,964 |
| | 448 |
| | 15,412 |
|
| Noncurrent liabilities | | | | | |
|
|
| Long-term debt and capital leases, net of current maturities | | 22,511 |
| | — |
| | 22,511 |
|
| Pension and postretirement benefits | | 7,497 |
| | — |
| | 7,497 |
|
| Loyalty program liability | | — |
| | 5,647 |
| | 5,647 |
|
| Other liabilities | | 2,498 |
| | — |
| | 2,498 |
|
| Total noncurrent liabilities | | 32,506 |
| | 5,647 |
| | 38,153 |
|
| Stockholders' equity (deficit) | | | | | |
|
|
| Common stock | | 5 |
| | — |
| | 5 |
|
| Additional paid-in capital | | 5,714 |
| | — |
| | 5,714 |
|
| Accumulated other comprehensive loss | | (5,154 | ) | | — |
| | (5,154 | ) |
| Retained earnings (deficit) | | 3,361 |
| | (4,706 | ) | | (1,345 | ) |
| Total stockholders' equity (deficit) | | 3,926 |
| | (4,706 | ) | | (780 | ) |
| Total liabilities and stockholders’ equity (deficit) | | $ | 51,396 |
| | $ | 1,389 |
| | $ | 52,785 |
|
| |
| (A) | As previously discussed, the New Revenue Standard required the Company to adopt the deferred revenue method of accounting for outstanding mileage credits earned through travel by AAdvantage loyalty program members. As a result, the Company increased its loyalty program liability by $6.0 billion and recorded a $1.4 billion increase to the deferred tax asset representing the tax effect, including the impact of tax reform, of the increase to the loyalty program liability. |
Additionally, the Company currently recognizes change fees at the time the change to the passenger itinerary is processed. Under the New Revenue Standard, change fees are deferred and recognized in passenger revenue when the ticket is flown. The table above reflects a $64 million adjustment to air traffic liability to establish a deferred revenue liability for change fees related to itineraries that have not yet flown.
