Originally Posted by
IAH-OIL-TRASH
Are you sure about that? If you’re saying it’s an asset, doesn’t that mean it’s sitting in a bank somewhere? A plane secured by a loan is an asset. I’m sitting at a window seat at the LAX UC and I can see a UA asset in the form of a 739. Where is the money secured by ETCs? I think it’s sitting in the pockets of vendors, Boeing, employees, etc.
I’m not saying you’re wrong (I’m not an accountant), but it’s interesting to me UA is holding a bunch of money to offset ETCs.
They're not holding cash to offset ETCs (that I know of), they just carry a liability on the books that offsets the revenue so the net contribution to the bottom line for future bookings is close to $0. Anyone holding an ETC or an open ticket is an unsecured creditor to United. That liability goes away once the service is delivered (or the ETC expires), at which point they recognize that as revenue. (GAAP may allow them to recognize SOME of that revenue up front based on breakage, but it's likely minimal.)
(And just for the avoidance of doubt, none of this is saying that future bookings aren't important--they're critically important--but they're not significantly contributing to that $200M in the way you suggest.)