Originally Posted by moondog
i'm confused. does "Airline's Annual Report" refer to a specific airline's annual report? if so, i'm in no position to judge. if not, i'll stick with my previous statement -- i've personally never seen "programs" in and of themselves recorded as liabilities.
"Airline's Annual Report" refers to a number of airlines, not just one, that I reserched for a class project and from class lectures. Since this board is a jetBlue board, this is how jetBlue does it... "Loyalty Program: We account for our customer loyalty program, TrueBlue Flight Gratitude, by recording a liability for the estimated incremental cost for points outstanding and awards we expect to be redeemed. We adjust this liability, which is included in air traffic liability, based on points earned and redeemed as well as changes in the estimated incremental costs." Its under note 1 of Notes to Consolidated Financial Statements.
You can also see this is true with American Airline on page 9 of their 2003 annual report (on the last paragraph of the page) where it states that "recorded as a component of Air Traffic Liability in the consolidated balance sheets". Than theres Southwest where it states that "the company accounts for its freqent flyer program obligations by recording a liability..." (page 25 of their PDF version of the 2003 Annual Report for Southwest.)