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Special Charges | 6 Months Ended
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Jun. 30, 2017
Special Charges | NOTE 10 - SPECIAL CHARGES For the three and six months ended June 30, special charges consisted of the following (in millions):
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
Operating: |  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Severance and benefit costs |  | $ | 41 |  |  | $ | 6 |  |  | $ | 78 |  |  | $ | 14 |
Impairment of assets |  |  | — |  |  |  | 412 |  |  |  | — |  |  |  | 412 |
Labor agreement costs |  |  | — |  |  |  | 10 |  |  |  | — |  |  |  | 110 |
Cleveland airport lease restructuring |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 74 |
(Gains) losses on sale of assets and other special charges |  |  | 3 |  |  |  | 6 |  |  |  | 17 |  |  |  | 14 |
Special charges |  |  | 44 |  |  |  | 434 |  |  |  | 95 |  |  |  | 624 |
Nonoperating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other (gain) loss |  |  | — |  |  |  | (9) |  |  |  | — |  |  |  | (1) |
Special charges before income taxes |  |  | 44 |  |  |  | 425 |  |  |  | 95 |  |  |  | 623 |
Income tax benefit related to special charges |  |  | (16) |  |  |  | (153) |  |  |  | (34) |  |  |  | (225) |
Total special charges, net of tax |  | $ | 28 |  |  | $ | 272 |  |  | $ | 61 |  |  | $ | 398 |
During the three and six months ended June 30, 2017, the Company recorded $36 million ($23 million net of taxes) and $57 million ($37 million net of taxes), respectively, of severance and benefit costs related to a voluntary early-out program for its technicians and related employees represented by the International Brotherhood of Teamsters. In the first quarter of 2017, approximately 1,000 technicians and related employees elected to voluntarily separate from the Company and will receive a severance payment, with a maximum value of $100,000 per participant, based on years of service, with retirement dates through early 2019. Also, during the three and six months ended June 30, 2017, the Company recorded $5 million ($3 million net of taxes) and $21 million ($13 million net of taxes), respectively, of severance primarily related to its management reorganization initiative. During the three and six months ended June 30, 2016, the Company recorded $6 million ($4 million net of taxes) and $14 million ($9 million net of taxes), respectively, of severance and benefit costs primarily related to a voluntary early-out program for its flight attendants. In April 2016, the Federal Aviation Administration (“FAA”) announced that, effective October 30, 2016, it would designate Newark Liberty International Airport (“Newark”) as a Level 2 schedule-facilitated airport under the International Air Transport Association Worldwide Slot Guidelines. The designation was associated with an updated demand and capacity analysis of Newark by the FAA. In the second quarter of 2016, the Company determined that the FAA’s action impaired the entire value of its Newark slots because the slots are no longer the mechanism that governs take-off and landing rights. Accordingly, the Company recorded a $412 million special charge ($264 million net of taxes) to write off the intangible asset. In April 2016, the fleet service, passenger service, storekeeper and other employees represented by the International Association of Machinists and Aerospace Workers (the “IAM”) ratified seven new contracts with the Company which extended the contracts through 2021. During three and six months ended June 30, 2016, the Company recorded $10 million ($6 million net of taxes) and $110 million ($70 million net of taxes), respectively, of special charges primarily for bonus payments in conjunction with the IAM agreements. During the six months ended June 30, 2016, the City of Cleveland agreed to amend the Company’s lease, which runs through 2029, associated with certain excess airport terminal space (principally Terminal D) and related facilities at Hopkins International Airport. The Company recorded an accrual for remaining payments under the lease for facilities that the Company no longer uses and will continue to incur costs under the lease without economic benefit to the Company. This liability was measured and recorded at its fair value when the Company ceased its right to use such facilities leased to it pursuant to the lease. The Company recorded a special charge of $74 million ($47 million net of taxes) related to the amended lease. During the three and six months ended June 30, 2017, the Company recorded gains and losses on sale of assets and other special charges of $3 million ($2 million net of taxes) and $17 million ($11 million net of taxes), respectively. During the three and six months ended June 30, 2016, the Company recorded gains and losses on sale of assets and other special charges of $6 million ($4 million net of taxes) and $14 million ($9 million net of taxes), respectively. During the three months ended June 30, 2016, the Company recorded a $9 million ($6 million net of taxes) gain on the sale of an affiliate. Also during the six months ended June 30, 2016, the Company recorded $8 million ($5 million net of taxes) of losses due to exchange rate changes in Venezuela applicable to funds held in local currency. Both of these charges were recorded as part of Nonoperating income (expense): Miscellaneous, net. Accrual The accrual balance for severance and benefits was $27 million as of June 30, 2017, compared to $30 million as of June 30, 2016. The severance-related accrual as of June 30, 2017 is expected to be mostly paid through early 2019. The accrual balance for future lease payments on permanently grounded aircraft was $29 million as of June 30, 2017, compared to $41 million as of June 30, 2016. The grounded aircraft related accrual as of June 30, 2017 is expected to be mostly paid through 2025. The following is a reconciliation of severance and permanently grounded aircraft accrual activity for the six months ended June 30:
|  | Severance and Benefits |  |  | Permanently Grounded Aircraft |
Balance at December 31, 2016 |  | $ | 14 |  |  | $ | 41 |
Accrual |  |  | 78 |  |  |  | — |
Payments |  |  | (65) |  |  |  | (12) |
Balance at June 30, 2017 |  | $ | 27 |  |  | $ | 29 |
|  | Severance and Benefits |  |  | Permanently Grounded Aircraft |
Balance at December 31, 2015 |  | $ | 27 |  |  | $ | 78 |
Accrual |  |  | 14 |  |  |  | (17) |
Payments |  |  | (11) |  |  |  | (20) |
Balance at June 30, 2016 |  | $ | 30 |  |  | $ | 41 |

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- Definition The entire description for costs incurred to effect a business combination that have been expensed during the period. Such costs could include business integration costs, systems integration and conversion costs, and severance and other employee-related costs. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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