Does lossless audio over Apple AirPlay have preserved audio quality? AirPlay is very convenient to bring up the sound on my big stereo speakers, but I am wondering whether the AirPlay protocol preserves audio quality, e.g. bitrate?

I understand that if the WiFi is poor, audio may be interrupted, but when it is good, shouldn't it be possible to transfer the exact copy, considering the relative low bitrate of e.g. Apple Lossless? The other possible option is that Apple transcodes audio before it goes over AirPlay, e.g. to AAC.

Anyone got a clue?
I always thought that the Express had a decoder inside, so it could just receive the digital data. Much more robust against bad connectivity.

Also, from Wikipedia:


  An often-overlooked feature of the AirPort Express is that it uses an audio connector that combines a 3.5 mm jack socket and a mini-TOSLINK optical digital transmitter, allowing connection to an external digital-to-analog converter (DAC) or amplifier with internal DAC. This allows iTunes (and other applications which can stream to the device, such as Rogue Amoeba's Airfoil) to output a bitstream instead of analog audio. DTS-encoded CDs ripped to Apple Lossless audio files which decode as digital noise in iTunes will play back correctly when the AirPort Express is connected via TOSLINK to a DTS-compatible amplifier–Decoder.