<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by CountinPlaces:
How much of a liability can it be when the airlines can decide if they are ever going to honor it? Further, they can simply restate its value by redetermining award levels.
Generally speaking, this is a liability that should not be factored in when reviewing the Balance Sheet. However, the encompassing characteristics of the reward program can reflect on future profitability.
In the end, it is an extremely subjective measurement which can be a problematic issue in some financial statements. I personally put more weight on cash flow from operations and their profit/loss.</font>
You nailed it on the head. If an airline has decided that only X number of seats will be available for awards,that corresponds to Y miles. However, they distribute 3Y or 5Y miles every year. Hence, the additional miles really are not liabilities at all.