Alaska Airlines Suffers From Accounting Rules

Posted by accountingweb on Jul 20 2000 158 printer friendly

Due to a Securities and Exchange Commission change in accounting for frequent flyer mileage, the parent company of Alaska Airlines will suffer a cumulative adjustment of $56.9 million for the years prior to December 1999.

As a result of this change, the troubled airline - known as the 10th-largest carrier in the United States, will see an increase of $1.7 million in the first quarter 2000 loss.

The accounting change calls for deferring recognition of a part of the revenue from the sale of mileage credits until passengers redeem the miles. Other airlines also have adopted the rules.

A spokesperson for the airlines said the changes are consistent with industry standards and that the financial aspects of its mileage program are strong.

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