Originally Posted by
lrdpenn
When the buy-ups are this low, it can be an interesting case of how the left and right hand don't talk. I wonder what AA's internal liability per mile is on their balance sheet. I have to imagine this $0.001 is getting close, if not below the value. Isn't it financially advantageous, then, for AA to clear the upgrade in these cases? One could create complex inventory arguments, but I would say the AAdvantage team could create a script to "purchase" the buy-up from the buy-up team when it makes sense and turn a small internal accounting profit. Same argument for SWUs. I'd guess internally SWUs are valued at roughly equivalent to the highest miles+points value. There should probably be some type of short circuit on C availability for these cases.
Any effect of internal accounting would get eliminated via consolidation (elimination) entries.
Cash is king and I’m sure AA management would take positive cash flow any day of the week over releasing a current liability (in the case of a SWU, which could release without any hit to income). In this case, the $377 offer. We don’t have details on when this flight is happening, but the low offer means they’re foregoing selling that seat for $2-4k.
The debits / credits of all of this are interesting (at least for me), but going into that would certainly take this off topic!