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:	2018			2017			2018			2017
Impairment of assets	$	111		$	—		$	134		$	—
Severance and benefit costs	11			41			25			78
(Gains) losses on sale of assets and other special charges	7			3			10			17
Special charges	129			44			169			95
Income tax benefit related to special charges	(29		)	(16		)	(38		)	(34		)
Total special charges, net of tax	$	100		$	28		$	131		$	61

In May 2018, the Brazil–United States open skies agreement was ratified, which provides air carriers with unrestricted access between the United States and Brazil. The Company determined that the approval of the open skies agreement impaired the entire value of its Brazil route authorities because the agreement removes all limitations or reciprocity requirements for flights between the United States and Brazil. Accordingly, the Company recorded a $105 million special charge ($82 million net of taxes) to write off the entire value of the intangible asset associated with its Brazil routes. This asset is not part of any collateral pledged against any of the Company's borrowings. The Company continues to maintain its slot assets related to Brazil since airport access is still restricted by slot allocations that are limited by airport facility constraints. For the three and six months ended June 30, 2018, the Company also recorded $6 million ($5 million net of taxes) and $29 million ($22 million net of taxes), respectively, of fair value adjustments related to aircraft purchased off lease and other impairments related to certain fleet types and international slots no longer in use.

During the three and six months ended June 30, 2018, the Company recorded severance and benefit costs related to a voluntary early-out program for its technicians and related employees represented by the International Brotherhood of Teamsters of $6 million ($4 million net of taxes) and $14 million ($11 million net of taxes), respectively. 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 2018. Also during the three and six months ended June 30, 2018, the Company recorded other management severance of $5 million ($4 million net of taxes) and $11 million ($8 million net of taxes), respectively.

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 the voluntary early-out program for its technicians and related employees, and $5 million ($3 million net of taxes) and $21 million ($13 million net of taxes), respectively, of management severance.

During the three and six months ended June 30, 2018, the Company recorded $7 million ($5 million net of taxes) and $10 million ($8 million net of taxes), respectively, of other special charges related primarily to contract termination of regional aircraft operations in Guam.

Accrual Activity

The severance-related accrual as of June 30, 2018 is primarily related to severance and other compensation expense associated with voluntary employee early retirement programs and is expected to be mostly paid in the second half of 2018. The accrual balance for future lease payments on permanently grounded aircraft as of June 30, 2018 is expected to be mostly paid through 2025. Activity related to these accruals is as follows (in millions):



	Severance and Benefits			Permanently Grounded Aircraft
Balance at December 31, 2017	$	37		$	22
Accrual	25			—
Payments	(34		)	(2		)
Balance at June 30, 2018	$	28		$	20



	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