NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. The income tax provision differed from amounts computed at the statutory federal income tax rate as follows (in millions): American provides a valuation allowance for its deferred tax assets, which include the net operating losses (NOLs), when it is more likely than not that some portion, or all of its deferred tax assets, will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. American considers all available positive and negative evidence and makes certain assumptions in evaluating the realizability of its deferred tax assets. Many factors are considered that impact American’s assessment of future profitability, including conditions which are beyond its control, such as the health of the economy, the level and volatility of fuel prices and travel demand. The total decrease to the valuation allowance was $6 million in 2018. In 2017, the total increase to the valuation allowance was $12 million, $8 million of which is included in the 2017 Tax Act amount in the table above. In 2016, the total decrease to the valuation allowance was $1 million. The components of American’s deferred tax assets and liabilities were (in millions): 154 December 31, 2018 2017 Deferred tax assets: Operating loss carryforwards $ 2,420 $ 2,409 Leases 2,176 107 Pensions 1,421 1,549 Loyalty program liability 1,770 1,809 Alternative minimum tax (AMT) credit carryforwards 231 457 Postretirement benefits other than pensions 145 170 Rent expense 136 160 Reorganization items 33 35 Other 588 638 Total deferred tax assets 8,920 7,334 Valuation allowance (19) (25) Net deferred tax assets 8,901 7,309 Deferred tax liabilities: Accelerated depreciation and amortization (5,243 ) (4,999 ) Leases (2,068) — Other (321 ) (274 ) Total deferred tax liabilities (7,632) (5,273) Net deferred tax asset $ 1,269 $ 2,036 Year Ended December 31, 2018 2017 2016 Statutory income tax provision $ 460 $ 1,244 $ 1,504 State income tax provision, net of federal tax effect 46 53 61 Foreign income taxes, net of federal tax effect 22 6 6 Book expenses not deductible for tax purposes 10 30 32 Bankruptcy administration expenses — 1 1 2017 Tax Act — 924 — Change in valuation allowance (6 ) 4 (1 ) Other, net 2 8 4 Income tax provision $ 534 $ 2,270 $ 1,607