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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2023
Defined Benefit Plan Disclosure [Line Items] |
Employee Benefit Plans | Employee Benefit Plans We sponsor defined benefit and defined contribution pension plans for eligible employees. The defined benefit pension plans provide benefits for participating employees based on years of service and average compensation for a specified period of time before retirement. Effective November 1, 2012, substantially all of our defined benefit pension plans were frozen and we began providing enhanced benefits under our defined contribution pension plans for certain employee groups. We use a December 31 measurement date for all of our defined benefit pension plans. We also provide certain retiree medical and other postretirement benefits, including health care and life insurance benefits, to retired employees. Benefit Obligations, Fair Value of Plan Assets and Funded Status The following tables provide a reconciliation of the changes in the pension and retiree medical and other postretirement benefits obligations, fair value of plan assets and funded status as of December 31, 2023 and 2022:
| Pension Benefits |  | Retiree Medical and Other Postretirement Benefits
| 2023 |  | 2022 |  | 2023 |  | 2022
| (In millions)
Benefit obligation at beginning of period | $ | 14,037 |  |  | $ | 18,910 |  |  | $ | 906 |  |  | $ | 1,098 |
Service cost | 2 |  |  | 3 |  |  | 17 |  |  | 16 |
Interest cost | 758 |  |  | 556 |  |  | 55 |  |  | 30 |
Actuarial loss (gain) (1), (2) | 507 |  |  | (4,563) |  |  | 92 |  |  | (167) |
Plan amendments (3) | — |  |  | — |  |  | 339 |  |  | — |
Other | — |  |  | — |  |  | — |  |  | 3 |
Benefit payments | (894) |  |  | (869) |  |  | (84) |  |  | (74) |
Benefit obligation at end of period | $ | 14,410 |  |  | $ | 14,037 |  |  | $ | 1,325 |  |  | $ | 906 |
Fair value of plan assets at beginning of period | $ | 11,884 |  |  | $ | 14,691 |  |  | $ | 133 |  |  | $ | 167 |
Actual return (loss) on plan assets | 1,368 |  |  | (1,943) |  |  | 14 |  |  | (18) |
Employer contributions (4) | 73 |  |  | 5 |  |  | 70 |  |  | 58 |
Benefit payments | (894) |  |  | (869) |  |  | (84) |  |  | (74) |
Fair value of plan assets at end of period | $ | 12,431 |  |  | $ | 11,884 |  |  | $ | 133 |  |  | $ | 133 |
Funded status at end of period | $ | (1,979) |  |  | $ | (2,153) |  |  | $ | (1,192) |  |  | $ | (773) |
(1)The 2023 and 2022 pension actuarial loss (gain) primarily relates to the change in our weighted average discount rate assumption. (2)The 2023 and 2022 retiree medical and other postretirement benefits actuarial loss (gain) primarily relates to the change in our weighted average discount rate assumption and, in 2023, the change in health care cost assumptions. (3)As of September 30, 2023, we remeasured our retiree medical and other postretirement benefits to account for enhanced retirement benefits provided to our mainline pilots pursuant to the new collective bargaining agreement ratified in August 2023. As a result, we increased our postretirement benefits obligation by $339 million, which was included as a component of prior service cost in accumulated other comprehensive loss. (4)In 2023, we made required contributions of $69 million to our defined benefit pension plans. Balance Sheet Position
| Pension Benefits |  | Retiree Medical and Other Postretirement Benefits
| 2023 |  | 2022 |  | 2023 |  | 2022
| (In millions)
As of December 31, |  |  |  |  |  |  |
Current liability | $ | 5 |  |  | $ | 4 |  |  | $ | 122 |  |  | $ | 85 |
Noncurrent liability | 1,974 |  |  | 2,149 |  |  | 1,070 |  |  | 688 |
Total liabilities | $ | 1,979 |  |  | $ | 2,153 |  |  | $ | 1,192 |  |  | $ | 773 |
| Pension Benefits |  | Retiree Medical and Other Postretirement Benefits
| 2023 |  | 2022 |  | 2023 |  | 2022
| (In millions)
Net actuarial loss (gain) | $ | 3,566 |  |  | $ | 3,613 |  |  | $ | (383) |  |  | $ | (505) |
Prior service cost (benefit) | — |  |  | 18 |  |  | 197 |  |  | (148) |
Total accumulated other comprehensive loss (income), pre-tax | $ | 3,566 |  |  | $ | 3,631 |  |  | $ | (186) |  |  | $ | (653) |
Plans with Projected Benefit Obligations Exceeding Fair Value of Plan Assets
| Pension Benefits
| 2023 |  | 2022
| (In millions)
Projected benefit obligation | $ | 14,410 |  |  | $ | 14,037 |
Fair value of plan assets | 12,431 |  |  | 11,884 |
Plans with Accumulated Benefit Obligations Exceeding Fair Value of Plan Assets
| Pension Benefits |  | Retiree Medical and Other Postretirement Benefits
| 2023 |  | 2022 |  | 2023 |  | 2022
| (In millions)
Accumulated benefit obligation | $ | 14,403 |  |  | $ | 14,030 |  |  | $ | — |  |  | $ | — |
Accumulated postretirement benefit obligation | — |  |  | — |  |  | 1,325 |  |  | 906 |
Fair value of plan assets | 12,431 |  |  | 11,884 |  |  | 133 |  |  | 133 |
Net Periodic Benefit Cost (Income)
| Pension Benefits |  | Retiree Medical and Other Postretirement Benefits
| 2023 |  | 2022 |  | 2021 |  | 2023 |  | 2022 |  | 2021
| (In millions)
Defined benefit plans: |  |  |  |  |  |  |  |  |  |  |
Service cost | $ | 2 |  |  | $ | 3 |  |  | $ | 4 |  |  | $ | 17 |  |  | $ | 16 |  |  | $ | 12 |
Interest cost | 758 |  |  | 556 |  |  | 526 |  |  | 55 |  |  | 30 |  |  | 30 |
Expected return on assets | (918) |  |  | (1,138) |  |  | (1,084) |  |  | (11) |  |  | (12) |  |  | (12) |
Special termination benefits | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 139 |
Amortization of: |  |  |  |  |  |  |  |  |  |  |
Prior service cost (benefit) | 18 |  |  | 28 |  |  | 28 |  |  | (6) |  |  | (14) |  |  | (13) |
Unrecognized net loss (gain) | 106 |  |  | 156 |  |  | 212 |  |  | (34) |  |  | (30) |  |  | (24) |
Net periodic benefit cost (income) | $ | (34) |  |  | $ | (395) |  |  | $ | (314) |  |  | $ | 21 |  |  | $ | (10) |  |  | $ | 132 |
The service cost component of net periodic benefit cost (income) is included in operating expenses, the cost for the special termination benefits is included in special items, net and the other components of net periodic benefit cost (income) are included in nonoperating other income (expense), net on our consolidated statements of operations. Assumptions The following actuarial assumptions were used to determine our benefit obligations and net periodic benefit cost (income) for the periods presented:
| Pension Benefits |  | Retiree Medical and Other Postretirement Benefits
| 2023 |  | 2022 |  | 2023 |  | 2022
Benefit obligations: |  |  |  |  |  |  |
Weighted average discount rate | 5.2% |  | 5.6% |  | 5.3% |  | 5.7%
| Pension Benefits |  | Retiree Medical and Other Postretirement Benefits
| 2023 |  | 2022 |  | 2021 |  | 2023 |  | 2022 |  | 2021
Net periodic benefit cost (income): |  |  |  |  |  |  |  |  |  |  |
Weighted average discount rate | 5.6% |  | 3.0% |  | 2.7% |  | 5.7% |  | 2.8% |  | 2.4%
Weighted average expected rate of return on plan assets | 8.0% |  | 8.0% |  | 8.0% |  | 8.0% |  | 8.0% |  | 8.0%
Weighted average health care cost trend rate assumed for next year (1) | N/A |  | N/A |  | N/A |  | 6.5% |  | 5.8% |  | 4.8%
(1)The weighted average health care cost trend rate at December 31, 2023 is assumed to decline gradually to 4.5% by 2033 and remain level thereafter. As of December 31, 2023, our estimate of the long-term rate of return on plan assets was 8.0% based on the target asset allocation. Expected returns on long duration bonds are based on yields to maturity of the bonds held at year-end. Expected returns on other assets are based on a combination of long-term historical returns, actual returns on plan assets achieved over the last 10 years, current and expected market conditions, and expected value to be generated through active management and securities lending programs. Minimum Contributions We are required to make minimum contributions to our defined benefit pension plans under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (ERISA) and various other laws for U.S. based plans as well as underfunding rules specific to countries where we maintain defined benefit pension plans. Based on current funding assumptions, we have minimum required contributions of $284 million for 2024 including contributions to defined benefit pension plans for our wholly-owned subsidiaries. Our future funding obligations will depend on the performance of our investments held in a trust by the pension plans, interest rates for determining funding targets, the amount of and timing of any supplemental contributions and our actuarial experience. Benefit Payments The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (approximately, in millions):
| 2024 |  | 2025 |  | 2026 |  | 2027 |  | 2028 |  | 2029-2033
Pension benefits | $ | 952 |  |  | $ | 977 |  |  | $ | 1,002 |  |  | $ | 1,023 |  |  | $ | 1,036 |  |  | $ | 5,265 |
Retiree medical and other postretirement benefits | 138 |  |  | 144 |  |  | 150 |  |  | 150 |  |  | 148 |  |  | 674 |
Plan Assets The objectives of our investment policies are to: maintain sufficient income and liquidity to pay retirement benefits; produce a long-term rate of return that meets or exceeds the assumed rate of return for plan assets; limit the volatility of asset performance and funded status; and diversify assets among asset classes and investment managers. Based on these investment objectives, a long-term strategic asset allocation has been established. This strategic allocation seeks to balance the potential benefit of improving the funded position with the potential risk that the funded position would decline. The current strategic target asset allocation with the corresponding allowed range is as follows:
Asset Class/Sub-Class | Target Allocation |  | Allowed Range
Equity | 61 | % |  | 30% - 85%
Public: |  |  |
U.S. Large | 19 | % |  | 10% - 40%
U.S. Small/Mid | 5 | % |  | 0% - 10%
International Large | 13 | % |  | 5% - 25%
International Small/Mid | 3 | % |  | 0% - 10%
Emerging Markets | 6 | % |  | 0% - 15%
Private Equity | 15 | % |  | 5% - 30%
Fixed Income | 39 | % |  | 15% - 70%
Public U.S. Fixed Income | 30 | % |  | 15% - 60%
Private Income | 9 | % |  | 0% - 20%
Other | — | % |  | 0% - 5%
Cash Equivalents | — | % |  | 0% - 20%
Public equity investments are intended to provide a real return over a full market cycle and, therefore, to contribute to the pension plan’s long-term objective. Public fixed income investments are intended to provide income to the plan and offer the potential for long term capital appreciation. Private investments, such as private equity and private income, are used to provide higher expected returns than public markets over the long-term by assuming reduced levels of liquidity and higher levels of risk. The pension plan’s master trust participates in securities lending programs to generate additional income by loaning plan assets to borrowers on a fully collateralized basis. The pension plan’s master trust will also engage in derivative instruments to equitize residual levels of cash as well as hedge the pension plan’s exposure to interest rates. Such programs are subject to market risk and counterparty risk. Investments in securities traded on recognized securities exchanges are valued at the last reported sales price on the last business day of the year. Securities traded in the over-the-counter market are valued at the last bid price. Investments in limited partnerships are carried at estimated net asset value (NAV) as determined by and reported by the general partners of the partnerships and represent the proportionate share of the estimated fair value of the underlying assets of the limited partnerships. Mutual funds are valued once daily through a NAV calculation provided at the end of each trade day. Common/collective trusts are valued at NAV based on the fair values of the underlying investments of the trusts as determined by the sponsor of the trusts. No changes in valuation techniques or inputs occurred during the year. Benefit Plan Assets Measured at Fair Value on a Recurring Basis The fair value of our pension plan assets at December 31, 2023 and 2022, by asset category, were as follows (in millions) (1):
| December 31, 2023 |  | December 31, 2022
| Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Equity (2) | $ | 3,182 |  |  | $ | — |  |  | $ | — |  |  | $ | 3,182 |  |  | $ | 3,097 |  |  | $ | — |  |  | $ | — |  |  | $ | 3,097 |
Fixed income (3) | 260 |  |  | 3,238 |  |  | — |  |  | 3,498 |  |  | 227 |  |  | 2,917 |  |  | — |  |  | 3,144 |
Other, net (4) | (6) |  |  | 348 |  |  | 84 |  |  | 426 |  |  | 74 |  |  | 278 |  |  | 75 |  |  | 427 |
Measured at NAV (5): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common collective trusts (6) | — |  |  | — |  |  | — |  |  | 1,244 |  |  | — |  |  | — |  |  | — |  |  | 1,694 |
Private investments (7) | — |  |  | — |  |  | — |  |  | 4,081 |  |  | — |  |  | — |  |  | — |  |  | 3,522 |
Total plan assets | $ | 3,436 |  |  | $ | 3,586 |  |  | $ | 84 |  |  | $ | 12,431 |  |  | $ | 3,398 |  |  | $ | 3,195 |  |  | $ | 75 |  |  | $ | 11,884 |
(1)See Note 7 for a description of the levels within the fair value hierarchy. (2)Equity investments include domestic and international common stock, preferred stock and mutual funds invested in equity securities. (3)Fixed income investments include corporate, government and U.S. municipal bonds, as well as mutual funds invested in fixed income securities. (4)Other primarily includes a short-term investment fund, net receivables and payables of the master trust for dividends, interest and amounts due to or from the sale and purchase of securities and cash and cash equivalents. (5)Includes investments that were measured at NAV per share (or its equivalent) as a practical expedient that have not been classified in the fair value hierarchy. (6)Common collective trusts include commingled funds primarily invested in equity securities. For some trusts, requests for withdrawals must meet specific requirements with advance notice of redemption preferred. (7)Private investments include limited partnerships that invest primarily in domestic private equity and private income opportunities. The pension plan’s master trust does not have the right to redeem its limited partnership investment at its NAV, but rather receives distributions as the underlying assets are liquidated. It is estimated that the underlying assets of these funds will be gradually liquidated over the next 10 years. As of December 31, 2023, the pension plan’s master trust has future funding commitments to these limited partnerships of approximately $1.3 billion, most of which are expected to be called over the next five years. Changes in fair value measurements of Level 3 investments during the years ended December 31, 2023 and 2022, were as follows (in millions):
| 2023 |  | 2022
Balance at beginning of year | $ | 75 |  |  | $ | 58 |
Actual gain (loss) on plan assets: |  |  |
Relating to assets still held at the reporting date | (9) |  |  | 1 |
Purchases | 20 |  |  | 29 |
Sales | (2) |  |  | (9) |
Transfers out | — |  |  | (4) |
Balance at end of year | $ | 84 |  |  | $ | 75 |
Plan assets in the retiree medical and other postretirement benefits plans are primarily Level 2 mutual funds valued by quoted prices on the active market, which is fair value, and represents the NAV of the shares of such funds as of the close of business at the end of the period. NAV is based on the fair market value of the funds’ underlying assets and liabilities at the date of determination. Defined Contribution and Multiemployer Plans The costs associated with our defined contribution plans were $1.1 billion, $949 million and $920 million for the years ended December 31, 2023, 2022 and 2021, respectively. We participate in the International Association of Machinists & Aerospace Workers (IAM) National Pension Fund, Employer Identification No. 51-6031295 and Plan No. 002 (the IAM Pension Fund). Our contributions to the IAM Pension Fund were $52 million, $46 million and $43 million for the years ended December 31, 2023, 2022 and 2021, respectively. The IAM Pension Fund reported $533 million in employers’ contributions for the year ended December 31, 2022, which is the most recent year for which such information is available. For 2022, our contributions represented more than 5% of total contributions to the IAM Pension Fund. On March 29, 2019, the actuary for the IAM Pension Fund certified that the fund was in “endangered” status despite reporting a funded status of over 80%. Additionally, the IAM Pension Fund’s Board voluntarily elected to enter into “critical” status on April 17, 2019. Upon entry into critical status, the IAM Pension Fund was required by law to adopt a rehabilitation plan aimed at restoring the financial health of the pension plan and did so on April 17, 2019 (the Rehabilitation Plan). Under the Rehabilitation Plan, we were subject to an immaterial contribution surcharge, which ceased to apply June 14, 2019 upon our mandatory adoption of a contribution schedule under the Rehabilitation Plan. The contribution schedule requires 2.5% annual increases to our contribution rate. This contribution schedule will remain in effect through the earlier of December 31, 2031 or the date the IAM Pension Fund emerges from critical status. Profit Sharing Program We accrue a percentage of our pre-tax income excluding net special items for our profit sharing program. For the year ended December 31, 2023, we accrued $261 million for this program, which will be distributed to employees in the first quarter of 2024.
American Airlines, Inc. |
Defined Benefit Plan Disclosure [Line Items] |
Employee Benefit Plans | Employee Benefit Plans American sponsors defined benefit and defined contribution pension plans for eligible employees. The defined benefit pension plans provide benefits for participating employees based on years of service and average compensation for a specified period of time before retirement. Effective November 1, 2012, substantially all of American’s defined benefit pension plans were frozen and American began providing enhanced benefits under its defined contribution pension plans for certain employee groups. American uses a December 31 measurement date for all of its defined benefit pension plans. American also provides certain retiree medical and other postretirement benefits, including health care and life insurance benefits, to retired employees. Benefit Obligations, Fair Value of Plan Assets and Funded Status The following tables provide a reconciliation of the changes in the pension and retiree medical and other postretirement benefits obligations, fair value of plan assets and funded status as of December 31, 2023 and 2022:
| Pension Benefits |  | Retiree Medical and Other Postretirement Benefits
| 2023 |  | 2022 |  | 2023 |  | 2022
| (In millions)
Benefit obligation at beginning of period | $ | 13,948 |  |  | $ | 18,791 |  |  | $ | 906 |  |  | $ | 1,098 |
Service cost | 2 |  |  | 3 |  |  | 17 |  |  | 16 |
Interest cost | 753 |  |  | 552 |  |  | 55 |  |  | 30 |
Actuarial loss (gain) (1), (2) | 501 |  |  | (4,534) |  |  | 92 |  |  | (167) |
Plan amendments (3) | — |  |  | — |  |  | 339 |  |  | — |
Other | — |  |  | — |  |  | — |  |  | 3 |
Benefit payments | (890) |  |  | (864) |  |  | (84) |  |  | (74) |
Benefit obligation at end of period | $ | 14,314 |  |  | $ | 13,948 |  |  | $ | 1,325 |  |  | $ | 906 |
Fair value of plan assets at beginning of period | $ | 11,821 |  |  | $ | 14,605 |  |  | $ | 133 |  |  | $ | 167 |
Actual return (loss) on plan assets | 1,356 |  |  | (1,924) |  |  | 14 |  |  | (18) |
Employer contributions (4) | 71 |  |  | 4 |  |  | 70 |  |  | 58 |
Benefit payments | (890) |  |  | (864) |  |  | (84) |  |  | (74) |
Fair value of plan assets at end of period | $ | 12,358 |  |  | $ | 11,821 |  |  | $ | 133 |  |  | $ | 133 |
Funded status at end of period | $ | (1,956) |  |  | $ | (2,127) |  |  | $ | (1,192) |  |  | $ | (773) |
(1)The 2023 and 2022 pension actuarial loss (gain) primarily relates to the change in American’s weighted average discount rate assumption. (2)The 2023 and 2022 retiree medical and other postretirement benefits actuarial loss (gain) primarily relates to the change in American’s weighted average discount rate assumption and, in 2023, the change in health care cost assumptions. (3)As of September 30, 2023, American remeasured its retiree medical and other postretirement benefits to account for enhanced retirement benefits provided to its mainline pilots pursuant to the new collective bargaining agreement ratified in August 2023. As a result, American increased its postretirement benefits obligation by $339 million, which was included as a component of prior service cost in accumulated other comprehensive loss. (4)In 2023, American made required contributions of $67 million to its defined benefit pension plans. Balance Sheet Position
| Pension Benefits |  | Retiree Medical and Other Postretirement Benefits
| 2023 |  | 2022 |  | 2023 |  | 2022
| (In millions)
As of December 31, |  |  |  |  |  |  |
Current liability | $ | 6 |  |  | $ | 4 |  |  | $ | 122 |  |  | $ | 85 |
Noncurrent liability | 1,950 |  |  | 2,123 |  |  | 1,070 |  |  | 688 |
Total liabilities | $ | 1,956 |  |  | $ | 2,127 |  |  | $ | 1,192 |  |  | $ | 773 |
| Pension Benefits |  | Retiree Medical and Other Postretirement Benefits
| 2023 |  | 2022 |  | 2023 |  | 2022
| (In millions)
Net actuarial loss (gain) | $ | 3,561 |  |  | $ | 3,609 |  |  | $ | (382) |  |  | $ | (505) |
Prior service cost (benefit) | — |  |  | 18 |  |  | 197 |  |  | (148) |
Total accumulated other comprehensive loss (income), pre-tax | $ | 3,561 |  |  | $ | 3,627 |  |  | $ | (185) |  |  | $ | (653) |
Plans with Projected Benefit Obligations Exceeding Fair Value of Plan Assets
| Pension Benefits
| 2023 |  | 2022
| (In millions)
Projected benefit obligation | $ | 14,314 |  |  | $ | 13,948 |
Fair value of plan assets | 12,358 |  |  | 11,821 |
Plans with Accumulated Benefit Obligations Exceeding Fair Value of Plan Assets
| Pension Benefits |  | Retiree Medical and Other Postretirement Benefits
| 2023 |  | 2022 |  | 2023 |  | 2022
| (In millions)
Accumulated benefit obligation | $ | 14,307 |  |  | $ | 13,941 |  |  | $ | — |  |  | $ | — |
Accumulated postretirement benefit obligation | — |  |  | — |  |  | 1,325 |  |  | 906 |
Fair value of plan assets | 12,358 |  |  | 11,821 |  |  | 133 |  |  | 133 |
Net Periodic Benefit Cost (Income)
| Pension Benefits |  | Retiree Medical and Other Postretirement Benefits
| 2023 |  | 2022 |  | 2021 |  | 2023 |  | 2022 |  | 2021
| (In millions)
Defined benefit plans: |  |  |  |  |  |  |  |  |  |  |
Service cost | $ | 2 |  |  | $ | 3 |  |  | $ | 3 |  |  | $ | 17 |  |  | $ | 16 |  |  | $ | 12 |
Interest cost | 753 |  |  | 552 |  |  | 523 |  |  | 55 |  |  | 30 |  |  | 30 |
Expected return on assets | (914) |  |  | (1,133) |  |  | (1,078) |  |  | (11) |  |  | (12) |  |  | (12) |
Special termination benefits | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 139 |
Amortization of: |  |  |  |  |  |  |  |  |  |  |
Prior service cost (benefit) | 18 |  |  | 28 |  |  | 28 |  |  | (6) |  |  | (14) |  |  | (13) |
Unrecognized net loss (gain) | 106 |  |  | 156 |  |  | 211 |  |  | (34) |  |  | (30) |  |  | (24) |
Net periodic benefit cost (income) | $ | (35) |  |  | $ | (394) |  |  | $ | (313) |  |  | $ | 21 |  |  | $ | (10) |  |  | $ | 132 |
The service cost component of net periodic benefit cost (income) is included in operating expenses, the cost for the special termination benefits is included in special items, net and the other components of net periodic benefit cost (income) are included in nonoperating other income (expense), net on American’s consolidated statements of operations. Assumptions The following actuarial assumptions were used to determine American’s benefit obligations and net periodic benefit cost (income) for the periods presented:
| Pension Benefits |  | Retiree Medical and Other Postretirement Benefits
| 2023 |  | 2022 |  | 2023 |  | 2022
Benefit obligations: |  |  |  |  |  |  |
Weighted average discount rate | 5.2% |  | 5.6% |  | 5.3% |  | 5.7%
| Pension Benefits |  | Retiree Medical and Other Postretirement Benefits
| 2023 |  | 2022 |  | 2021 |  | 2023 |  | 2022 |  | 2021
Net periodic benefit cost (income): |  |  |  |  |  |  |  |  |  |  |
Weighted average discount rate | 5.6% |  | 3.0% |  | 2.7% |  | 5.7% |  | 2.8% |  | 2.4%
Weighted average expected rate of return on plan assets | 8.0% |  | 8.0% |  | 8.0% |  | 8.0% |  | 8.0% |  | 8.0%
Weighted average health care cost trend rate assumed for next year (1) | N/A |  | N/A |  | N/A |  | 6.5% |  | 5.8% |  | 4.8%
(1)The weighted average health care cost trend rate at December 31, 2023 is assumed to decline gradually to 4.5% by 2033 and remain level thereafter. As of December 31, 2023, American’s estimate of the long-term rate of return on plan assets was 8.0% based on the target asset allocation. Expected returns on long duration bonds are based on yields to maturity of the bonds held at year-end. Expected returns on other assets are based on a combination of long-term historical returns, actual returns on plan assets achieved over the last 10 years, current and expected market conditions, and expected value to be generated through active management and securities lending programs. Minimum Contributions American is required to make minimum contributions to its defined benefit pension plans under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (ERISA) and various other laws for U.S. based plans as well as underfunding rules specific to countries where American maintains defined benefit pension plans. Based on current funding assumptions, American has minimum required contributions of $280 million for 2024. American’s future funding obligations will depend on the performance of American’s investments held in a trust by the pension plans, interest rates for determining funding targets, the amount of and timing of any supplemental contributions and American’s actuarial experience. Benefit Payments The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (approximately, in millions):
| 2024 |  | 2025 |  | 2026 |  | 2027 |  | 2028 |  | 2029-2033
Pension benefits | $ | 947 |  |  | $ | 972 |  |  | $ | 996 |  |  | $ | 1,017 |  |  | $ | 1,030 |  |  | $ | 5,232 |
Retiree medical and other postretirement benefits | 138 |  |  | 144 |  |  | 150 |  |  | 150 |  |  | 148 |  |  | 674 |
Plan Assets The objectives of American’s investment policies are to: maintain sufficient income and liquidity to pay retirement benefits; produce a long-term rate of return that meets or exceeds the assumed rate of return for plan assets; limit the volatility of asset performance and funded status; and diversify assets among asset classes and investment managers. Based on these investment objectives, a long-term strategic asset allocation has been established. This strategic allocation seeks to balance the potential benefit of improving the funded position with the potential risk that the funded position would decline. The current strategic target asset allocation with the corresponding allowed range is as follows:
Asset Class/Sub-Class | Target Allocation |  | Allowed Range
Equity | 61 | % |  | 30% - 85%
Public: |  |  |
U.S. Large | 19 | % |  | 10% - 40%
U.S. Small/Mid | 5 | % |  | 0% - 10%
International Large | 13 | % |  | 5% - 25%
International Small/Mid | 3 | % |  | 0% - 10%
Emerging Markets | 6 | % |  | 0% - 15%
Private Equity | 15 | % |  | 5% - 30%
Fixed Income | 39 | % |  | 15% - 70%
Public U.S. Fixed Income | 30 | % |  | 15% - 60%
Private Income | 9 | % |  | 0% - 20%
Other | — | % |  | 0% - 5%
Cash Equivalents | — | % |  | 0% - 20%
Public equity investments are intended to provide a real return over a full market cycle and, therefore, to contribute to the pension plan’s long-term objective. Public fixed income investments are intended to provide income to the plan and offer the potential for long term capital appreciation. Private investments, such as private equity and private income, are used to provide higher expected returns than public markets over the long-term by assuming reduced levels of liquidity and higher levels of risk. The pension plan’s master trust participates in securities lending programs to generate additional income by loaning plan assets to borrowers on a fully collateralized basis. The pension plan’s master trust will also engage in derivative instruments to equitize residual levels of cash as well as hedge the pension plan’s exposure to interest rates. Such programs are subject to market risk and counterparty risk. Investments in securities traded on recognized securities exchanges are valued at the last reported sales price on the last business day of the year. Securities traded in the over-the-counter market are valued at the last bid price. Investments in limited partnerships are carried at estimated net asset value (NAV) as determined by and reported by the general partners of the partnerships and represent the proportionate share of the estimated fair value of the underlying assets of the limited partnerships. Mutual funds are valued once daily through a NAV calculation provided at the end of each trade day. Common/collective trusts are valued at NAV based on the fair values of the underlying investments of the trusts as determined by the sponsor of the trusts. No changes in valuation techniques or inputs occurred during the year. Benefit Plan Assets Measured at Fair Value on a Recurring Basis The fair value of American’s pension plan assets at December 31, 2023 and 2022, by asset category, were as follows (in millions) (1):
| December 31, 2023 |  | December 31, 2022
| Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Equity (2) | $ | 3,134 |  |  | $ | — |  |  | $ | — |  |  | $ | 3,134 |  |  | $ | 3,055 |  |  | $ | — |  |  | $ | — |  |  | $ | 3,055 |
Fixed income (3) | 235 |  |  | 3,238 |  |  | — |  |  | 3,473 |  |  | 206 |  |  | 2,917 |  |  | — |  |  | 3,123 |
Other, net (4) | (6) |  |  | 348 |  |  | 84 |  |  | 426 |  |  | 74 |  |  | 278 |  |  | 75 |  |  | 427 |
Measured at NAV (5): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common collective trusts (6) | — |  |  | — |  |  | — |  |  | 1,244 |  |  | — |  |  | — |  |  | — |  |  | 1,694 |
Private investments (7) | — |  |  | — |  |  | — |  |  | 4,081 |  |  | — |  |  | — |  |  | — |  |  | 3,522 |
Total plan assets | $ | 3,363 |  |  | $ | 3,586 |  |  | $ | 84 |  |  | $ | 12,358 |  |  | $ | 3,335 |  |  | $ | 3,195 |  |  | $ | 75 |  |  | $ | 11,821 |
(1)See Note 6 for a description of the levels within the fair value hierarchy. (2)Equity investments include domestic and international common stock and preferred stock. (3)Fixed income investments include corporate, government and U.S. municipal bonds, as well as mutual funds invested in fixed income securities. (4)Other primarily includes a short-term investment fund, net receivables and payables of the master trust for dividends, interest and amounts due to or from the sale and purchase of securities and cash and cash equivalents. (5)Includes investments that were measured at NAV per share (or its equivalent) as a practical expedient that have not been classified in the fair value hierarchy. (6)Common collective trusts include commingled funds primarily invested in equity securities. For some trusts, requests for withdrawals must meet specific requirements with advance notice of redemption preferred. (7)Private investments include limited partnerships that invest primarily in domestic private equity and private income opportunities. The pension plan’s master trust does not have the right to redeem its limited partnership investment at its NAV, but rather receives distributions as the underlying assets are liquidated. It is estimated that the underlying assets of these funds will be gradually liquidated over the next 10 years. As of December 31, 2023, the pension plan’s master trust has future funding commitments to these limited partnerships of approximately $1.3 billion, most of which are expected to be called over the next five years. Changes in fair value measurements of Level 3 investments during the years ended December 31, 2023 and 2022, were as follows (in millions):
| 2023 |  | 2022
Balance at beginning of year | $ | 75 |  |  | $ | 58 |
Actual gain (loss) on plan assets: |  |  |
Relating to assets still held at the reporting date | (9) |  |  | 1 |
Purchases | 20 |  |  | 29 |
Sales | (2) |  |  | (9) |
Transfers out | — |  |  | (4) |
Balance at end of year | $ | 84 |  |  | $ | 75 |
Plan assets in the retiree medical and other postretirement benefits plans are primarily Level 2 mutual funds valued by quoted prices on the active market, which is fair value, and represents the NAV of the shares of such funds as of the close of business at the end of the period. NAV is based on the fair market value of the funds’ underlying assets and liabilities at the date of determination. Defined Contribution and Multiemployer Plans The costs associated with American’s defined contribution plans were $1.1 billion, $916 million and $893 million for the years ended December 31, 2023, 2022 and 2021, respectively. American participates in the International Association of Machinists & Aerospace Workers (IAM) National Pension Fund, Employer Identification No. 51-6031295 and Plan No. 002 (the IAM Pension Fund). American’s contributions to the IAM Pension Fund were $52 million, $46 million and $43 million for the years ended December 31, 2023, 2022 and 2021, respectively. The IAM Pension Fund reported $533 million in employers’ contributions for the year ended December 31, 2022, which is the most recent year for which such information is available. For 2022, American’s contributions represented more than 5% of total contributions to the IAM Pension Fund. On March 29, 2019, the actuary for the IAM Pension Fund certified that the fund was in “endangered” status despite reporting a funded status of over 80%. Additionally, the IAM Pension Fund’s Board voluntarily elected to enter into “critical” status on April 17, 2019. Upon entry into critical status, the IAM Pension Fund was required by law to adopt a rehabilitation plan aimed at restoring the financial health of the pension plan and did so on April 17, 2019 (the Rehabilitation Plan). Under the Rehabilitation Plan, American was subject to an immaterial contribution surcharge, which ceased to apply June 14, 2019 upon American’s mandatory adoption of a contribution schedule under the Rehabilitation Plan. The contribution schedule requires 2.5% annual increases to its contribution rate. This contribution schedule will remain in effect through the earlier of December 31, 2031 or the date the IAM Pension Fund emerges from critical status. Profit Sharing Program American accrues a percentage of its pre-tax income excluding net special items for its profit sharing program. For the year ended December 31, 2023, American accrued $261 million for this program, which will be distributed to employees in the first quarter of 2024.

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