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.)
Correct me if I'm wrong but my reading of this was that they have £15m of flights to be taken that have been redeemed using miles, as at 31/3/06. However the total provision for the possible flights that may be taken if all the outstanding BA miles were used is £359m. So assuming an average redemption of say 100k miles for a J return LHR-JFK, that means about 1.3m flights at an average cost of £281 per redemption. Or am I talking cr*p?