Repairs. Aircraft maintenance materials and outside repairs consists of costs associated with maintenance of aircraft used in our operations and maintenance sales to third parties by our MRO services business. The increase in maintenance costs is primarily due to the cyclical timing of maintenance events on our fleet. Additionally, maintenance cost increased as we accelerated certain maintenance events into 2012, resulting in a lower total cost for those activities, and completed maintenance initiatives to improve our operational reliability.  

 

Passenger Commissions and Other Selling Expenses. The decrease in passenger commissions and other selling expenses is primarily due to lower booking fees and international commission rates, partially offset by increases in sales.  

 

Contracted Services. Contracted services expense decreased year-over-year due primarily to the impact of severe winter storms on our operations in the March 2011 quarter.  

 

Profit Sharing. Our broad based employee profit sharing program provides that, for each year in which we have an annual pre-tax profit, as defined by the terms of the program, we will pay a specified portion of that profit to employees. In determining the amount of profit sharing, the terms of the program specify the exclusion of special items, such as MTM adjustments and restructuring and other items, from pre-tax profit. During the June 2012 quarter, our profit sharing program was modified so that we will pay 10% of profits on the first $2.5 billion of annual profits effective with the plan year beginning January 1, 2013 compared to paying 15% of annual profits for the 2012 plan year. Under the program, we will continue to pay 20% of annual profits above $2.5 billion. 



Non-Operating Results  



The decline in interest expense, net is driven by reduced levels of debt and lower interest rates. Our principal amount of debt has declined from $15.4 billion at the beginning of 2011 to $11.2 billion at December 31, 2013 . During 2012 and 2011, we recorded $118 million and $68 million in losses from the early extinguishment of debt, which primarily related to the write-off of debt discounts. These debt discounts are primarily a result of fair value adjustments recorded in 2008 to reduce the carrying value of Northwest long-term debt due to purchase accounting. As a result of these write-offs and scheduled amortization, our unamortized debt discount has decreased from $935 million at the beginning of 2011 to $383 million at December 31, 2013 .  

 

Income Taxes  

 

We consider all income sources, including other comprehensive income, in determining the amount of tax benefit allocated to continuing operations. 

During the December 2013 quarter, after considering all relevant factors, we concluded that our deferred income tax assets are more likely than not to be realized. Accordingly, at December 31, 2013, we released almost all of our valuation allowance against our net deferred income tax assets. The release of the allowance primarily resulted in a net tax benefit of $8.0 billion that was recorded in income tax benefit (provision) in our Consolidated Statement of Operations. Beginning in