Much creative writing time was also devoted to the new Mileage Plus accounting system: "The negative effect of the change to a deferred revenue method for the company's frequent flyer accounting depressed first quarter revenue by $107 million. ... United now applies the same deferred revenue accounting, previously used for miles sold to third parties, to also account for miles earned for flight activity." The new method "...also leads to greater revenue volatility, increases revenue seasonality, and lowers the amount of passengers revenue recognized in the current period."In short, United reported $107 million of it's loss because passengers earned miles for flying. I estimate you'll be seeing statements like this one until United can figure out how to utilize the new accounting method for a profit:
"If the company had continued to account for Mileage Plus under the old incremental cost method, first quarter passenger revenue is estimated to have been $107 million higher."
For more of the non-accountant view on this, check out: "How does Fresh Start Accounting effect Mileage Plus".
For the complete filing, go to united.com.
