Alaska Airlines Records Charges for Changes in Mileage Plan Accounting.Business Editors SEATTLE--(BUSINESS WIRE)--July 14, 2000 Alaska Air Group (NYSE NYSE See: New York Stock Exchange :ALK ALK Alkohol (German: alcohol) ALK Alkaline ALK Anaplastic Lymphoma Kinase ALK Automatisierte Liegenschaftskarte ALK Activin Receptor-Like Kinase ALK Alkylation ALK Srilankan Airlines (ICAO code) ) announced today that its Alaska Airlines Alaska Airlines, (NYSE: ALK) is an airline based in Seattle, Washington, United States. It operates hubs at Seattle-Tacoma International Airport, Ted Stevens Anchorage International Airport, Los Angeles International Airport, and Portland International Airport. subsidiary will record a one-time non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. to reflect a change in the accounting of revenues related to the sale of frequent flier frequent flier n. One who travels often by air, especially on one airline. fre  quent-fli miles.
The change is in response to SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB SAB Spontaneous abortion. See Abortion. 101"). Alaska's change is consistent with other airlines' implementation of SAB101. Under the new accounting method, a majority of the revenue from the sale of miles is deferred, and recognized when the award transportation is provided. The company will record a charge of $56.9 million (after-tax) or $2.15 per share for the cumulative effect of this change in accounting principle and an increase in the previously recorded first quarter net loss before accounting change of $1.7 million or $.06 per share. Accounting rules require that the change be made retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin as if the change had occurred on January 1, 2000, the beginning of the company's fiscal year. Accordingly, first quarter results are being restated to reflect the charge. As a result of the company's study of the new accounting method, certain other estimates related to frequent flier accounting have also been adjusted, resulting in a one-time charge of $14.8 million ($24.0 million before tax or $.56 per share). The change in estimate is primarily related to increases in the estimated costs that the company incurs to acquire award travel for its Mileage Plan members on other airlines. This charge will be recorded in the company's second quarter results. "What this really represents is a change in the timing of when we recognize revenues and expenses from our partner programs," said Brad Tilden, vice president finance and chief financial officer. "The Mileage Plan is a key and growing part of our marketing effort, and we believe that we offer very attractive ways for our members to earn and redeem miles. The fundamental economics of the plan are strong." Alaska Air Group, Inc. is the parent company of Alaska Airlines and Horizon Air Industries. |
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