Alaska Airlines and Horizon Air 2010 Annual Report Download - page 191

Company anticipates that it will continue with its
historical funding practice, which would result in
funding of approximately $35 million. The
Company expects to contribute approximately
$2.2 million to the nonqualified defined-benefit
pension plans during 2011.
Future benefits expected to be paid over the next
ten years under the defined-benefit pension
plans from the assets of those plans as of
December 31, 2010 are as follows (in millions):
Qualified Nonqualified
2011 ..................... $46.4 $ 2.3
2012 ..................... 50.7 2.4
2013 ..................... 59.6 2.4
2014 ..................... 65.7 2.6
2015 ..................... 74.7 2.9
2016—2020 ............... 451.5 17.9
Postretirement Medical Benefits
The Company allows retirees to continue their medical, dental, and vision benefits by paying all or a
portion of the active employee plan premium until eligible for Medicare, currently age 65. This results in
a subsidy to retirees, because the premiums received by the Company are less than the actual cost of
the retirees’ claims. The accumulated postretirement benefit obligation (APBO) for this subsidy is
unfunded. This liability was determined using an assumed discount rate of 5.55% and 5.85% at
December 31, 2010 and 2009, respectively. The Company does not believe the U.S. Health Care
Reform: The Patient Protection and Affordable Care Act and The Health Care and Education
Reconciliation Act will have a significant impact.
(in millions) 2010 2009
Accumulated postretirement benefit obligation
Beginning of year ............................................................ $ 117.3 $ 109.9
Service cost ................................................................ 5.3 5.6
Interest cost ................................................................ 6.7 7.8
Plan amendments ........................................................... —4.1
Actuarial (gain) loss .......................................................... 4.9 (6.7)
Transfer to pilot long-term disability plan .......................................... —(0.6)
Benefits paid ............................................................... (1.7) (2.8)
End of year ................................................................. $ 132.5 $ 117.3
Plan assets at fair value
Beginning of year ............................................................ $—$—
Employer contributions ........................................................ 1.7 2.8
Benefits paid ............................................................... (1.7) (2.8)
End of year ................................................................. $—$—
Funded status (unfunded) ..................................................... $(132.5) $(117.3)
The plan amendment and the transfer to the pilot
long-term disability plan in 2010 were the result
of plan changes in the new pilot collective
bargaining agreement ratified during the year.
See further discussion under “Pilot Long-term
Disability Benefits” below.
As of December 31, 2010 and 2009, the
amounts recognized in the consolidated balance
sheets were as follows (in millions):
2010 2009
Accrued benefit liability-current ....... $ 4.9 $ 4.2
Accrued benefit liability-long term ..... 127.6 113.1
Total liability recognized ............ $132.5 $117.3
AMOUNTS NOT YET REFLECTED IN NET
PERIODIC BENEFIT COST AND INCLUDED
IN AOCI:
(in millions) 2010 2009
Prior service cost ................. $ 2.5 $ 2.6
Net loss ........................ 20.3 15.7
Amount recognized in AOCI (pretax) . . . $22.8 $18.3
The expected combined amortization of prior
service cost and net loss from AOCI in 2011 is
$1.5 million.
The Company uses a December 31
measurement date to assess obligations
associated with the subsidy of retiree medical
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ŠForm 10-K