Southwest Airlines 2011 Annual Report Download - page 119
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Including AirTran as of the acquisition date, the following table shows the change in the accumulated
postretirement benefit obligation (APBO) for the years ended December 31, 2011 and 2010:
(in millions) 2011 2010
APBO at beginning of period .............................. $ 91 $86
Service cost ............................................ 17 16
Interest cost ............................................ 4 4
Benefits paid ........................................... (5) (7)
Acquisition of AirTran ................................... 3 —
Actuarial (gain)/loss ..................................... (3) (8)
APBO at end of period ................................... $107 $91
The assumed healthcare cost trend rates have a significant effect on the amounts reported for the
consolidated postretirement plans. A one percent change in all healthcare cost trend rates used in measuring the
APBO at December 31, 2011, would have the following effects:
(in millions) 1% increase 1% decrease
Increase (decrease) in total service and interest
costs ...................................... $2 $(2)
Increase (decrease) in the APBO ................. $8 $(7)
All plans are unfunded, and benefits are paid as they become due. For 2011 and 2010, contributions to the
consolidated plans were $5 million and $7 million, respectively. Estimated future benefit payments expected to
be paid for each of the next five years are $6 million in 2012, $7 million in 2013, $9 million in 2014, $11 million
in 2015, $14 million in 2016, and $108 million for the next five years thereafter.
The funded status (i.e., the difference between the fair value of plan assets and the projected benefit
obligations) of its consolidated benefit plans are recognized in the Consolidated Balance Sheet, with a
corresponding adjustment to AOCI. The following table reconciles the funded status of the plans to the accrued
postretirement benefit cost recognized in Other non-current liabilities on the Company’s Consolidated Balance
Sheet at December 31, 2011 and 2010.
(in millions) 2011 2010
Funded status ......................................... $(107) $(91)
Unrecognized net actuarial gain ........................... (53) (57)
Unrecognized prior service cost ........................... 1 2
Accumulated other comprehensive income .................. 52 55
Cost recognized on Consolidated Balance Sheet .............. $(107) $(91)
The consolidated periodic postretirement benefit cost for the years ended December 31, 2011, 2010, and
2009, included the following:
(in millions) 2011 2010 2009
Service cost .............................................. $17 $16 $10
Interest cost .............................................. 4 4 4
Amortization of prior service cost ............................. — — 1
Recognized actuarial gain ................................... (6) (5) (7)
Net periodic postretirement benefit cost ........................ $15 $15 $ 8
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