Originally Posted by pauldb
Good spot. A little more information:
Suggests miles earnt by flying isn't very expensive to them: i.e. the sum total liability for miles earnt but not spent to date is £15m (0.4% of market cap), and presumably the auditors ensure it's a valid estimate.
And selling miles is a nice little earner: £31m of revenue in 2006 from expiring miles worthless. Only 0.4% of revs, but presumably 100% gross margin. (But that doesn't account for them being sold above/below fair value which would be an immediate gain/loss.)
No - unflown miles are not miles expiring worthless, they are miles yet to be used for flying. BA includes this as a deferred revenue, as they describe, which is released to the P&L when the miles are used (at the same time, of course, as the associated costs). This was discussed some time, somewhere in another thread. So, in the short term, the more miles outstanding the better the balance sheet!