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Special Charges and Mark-to-Market Adjustments | 9 Months Ended
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Sep. 30, 2018
Other Income and Expenses [Abstract] |
Special Charges and Mark-to-Market Adjustments | SPECIAL CHARGES AND MARK-TO-MARKET ADJUSTMENTS For the three and nine months ended September 30, special charges consisted of the following (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
Operating: | 2018 |  | 2017 |  | 2018 |  | 2017
Impairment of assets | $ | 11 |  |  | $ | 15 |  |  | $ | 145 |  |  | $ | 15 |
Severance and benefit costs | 9 |  |  | 23 |  |  | 34 |  |  | 101 |
(Gains) losses on sale of assets and other special charges | (3 | ) |  | 12 |  |  | 7 |  |  | 29 |
Total special charges | 17 |  |  | 50 |  |  | 186 |  |  | 145 |
Nonoperating mark-to-market ("MTM") (gains) losses on equity investments | (29 | ) |  | — |  |  | 61 |  |  | — |
Total special charges and MTM (gains) losses on equity investments | (12 | ) |  | 50 |  |  | 247 |  |  | 145 |
Income tax expense (benefit) | 3 |  |  | (18 | ) |  | (55 | ) |  | (52 | )
Total special charges and MTM (gains) losses on equity investments, net of tax | $ | (9 | ) |  | $ | 32 |  |  | $ | 192 |  |  | $ | 93 |
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 regulated by slot allocations that are limited by airport facility constraints. For the three and nine months ended September 30, 2018, the Company also recorded $11 million ($9 million net of taxes) and $40 million ($31 million net of taxes), respectively, of fair value adjustments related to aircraft purchased off lease, write-off of unexercised aircraft purchase options and other impairments related to certain fleet types and international slots no longer in use. During the three months ended September 30, 2017, the Company recorded a $15 million ($10 million net of taxes) intangible asset impairment charge related to a maintenance service agreement. During the three and nine months ended September 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 $5 million ($4 million net of taxes) and $19 million ($15 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 nine months ended September 30, 2018, the Company recorded other management severance of $4 million ($3 million net of taxes) and $15 million ($12 million net of taxes), respectively. During the three and nine months ended September 30, 2017, the Company recorded $16 million ($10 million net of taxes) and $73 million ($47 million net of taxes), respectively, of severance and benefit costs related to the voluntary early-out program for its technicians and related employees, and $7 million ($5 million net of taxes) and $28 million ($18 million net of taxes), respectively, of management severance. During the three and nine months ended September 30, 2018, the Company recorded $3 million ($2 million net of taxes) of gains primarily related to the sale of aircraft engines and $7 million ($5 million net of taxes) of losses primarily related to contract termination of regional aircraft operations in Guam, respectively. During the three months ended September 30, 2017, the Company recorded $12 million ($7 million net of taxes) of charges primarily related to damages from tropical storms. During the nine months ended September 30, 2017, in addition to the $12 million of third-quarter charges, the Company recorded $17 million ($11 million net of taxes) of charges primarily associated with aircraft gains and losses. During the three and nine months ended September 30, 2018, the Company recorded gains of $29 million ($23 million net of taxes) and losses of $61 million ($47 million net of taxes), respectively, for the change in market value of certain of its equity investments. For equity investments subject to MTM accounting, the Company records gains and losses to Nonoperating income (expense): Miscellaneous, net in its statements of consolidated operations. Accrual Activity The severance-related accrual as of September 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 by the end of 2018. The accrual balance for future lease payments on permanently grounded aircraft as of September 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 | 34 |  |  | — |
Payments | (42 | ) |  | (2 | )
Balance at September 30, 2018 | $ | 29 |  |  | $ | 20 |
| Severance and Benefits |  | Permanently Grounded Aircraft
Balance at December 31, 2016 | $ | 14 |  |  | $ | 41 |
Accrual | 101 |  |  | — |
Payments | (84 | ) |  | (13 | )
Balance at September 30, 2017 | $ | 31 |  |  | $ | 28 |

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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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