There are no circumstances in which an airline loses money by filling as many empty seats as possible with award travellers, as soon as it's recognized those seats will be empty.

The miles accumulated by frequent flyers are a financial liability to the airline, just like the billions owed to banks and to Boeing. The airline can earn a substantial profit by letting an award traveller have a non-revenue seat for 25,000 or 50,000 miles, at an incremental cost (actually net cost) of a few bucks for ticket handling plus any consumables served on board. (And remember it's not the airline but the passenger flying "free" who has to pay the cash for taxes, airports, security charges etc.)

The consensus is that the value of a mile is about 1.5 cents. So paying 25,000 or 50,000 miles for an award booking is like paying $375 or $750. By making unsellable seats available for awards as early as possible, the airline is retiring this debt for pennies on the dollar

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Wright Brothers Were Wrong