Comments by "" (@TheDavidlloydjones) on "How Airlines Quietly Became Banks" video.

  1. A very frequent cause of bankruptcy is people confusing good and bad. "Debits" sounds like debt, which it isn't, and "credits" sounds good which it may be -- or not. This video shows us a classical case of this confusion in action. Loyalty is sweet and good, so a loyalty program ought to be an asset. These folks have found dollar numbers at the bottom of their programs' tally sheets, so that must be a bankable asset, right? Not right. These loyalty programs are services owed by the airlines to past customers, and those footings are the worst case of how much they might have to pay out, in services, if those customers come back to cash in. (When those "miles" went on the books they were reserves against income, i.e. tax reductions. Here in this video that are called "income" when in reality they are the future expenditure of flying customers free. Bookkeeping flim-flam in both instances. ） One more example of why Warren Buffett says he never invests in airlines. No, they're not banks here: they're beggars rattling their very empty cups.
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