Originally Posted by Djlawman

Turns out that is now correct for Delta. I just went and read their latest 10-Q, filed on 8/2/2007.

Effective with their emergence from bankruptcy, they changed their accounting policy for the FF liability from an incremental cost basis (i.e., recognize the sale of the Skymiles as revenue immediately, except for a small amount, and only show a liability for the incremental cost of carrying the additional passenger in a seat which might otherwise be empty--which one of the airlines, I forget which one, estimated a few years ago at $24 per FF ticket redeemed ) to a deferred revenue model (only recognize the revenue from the sale of the miles to AMEX and others when the tickets are actually redeemed).

Of course, this accounting change allows them to pile up accumulated cash in their account, at a substantially greater revenue achieved than marginal cost for actually providing the seats to FFers.

I believe many of the other airlines are still accounting for their FF obligations on an incremental cost basis.