U.S. airlines have pawned gates, flight routes, and pretty much any asset they could find in the back of a hangar to protect the weather the corona crisis. Now they are considering selling Miles in bulk to their credit card partners to raise cash.
United Airlines Holdings Inc. and Delta Air Lines Inc. and their respective credit card partners, JPMorgan Chase & Co. and American Express Co., have discussed dumping miles ahead of schedule and for less than lenders would normally pay, folks with the Thing familiar.
The talks may not lead to any deals, but they show how desperate the airlines have become in the weeks since the coronavirus pandemic has put the US economy into hibernation and canceled thousands of flights. They’ve pledged many of their assets over the past few weeks to secure billions in loans, but it won’t be enough to get them through what is likely to be months of slump.
Banks routinely buy miles from airlines to reward consumers for their credit card spending. What you recently discussed is different: the banks would – all at once and at a discount – buy miles that they would otherwise have bought as cardholders in the future. The cash injection could help keep airlines alive and protect card partnerships that generate billions in annual spending.
Airlines relied on their card partners and during the 2008 downturn following the September 11, 2001 terrorist attacks trying to avert bankruptcy. But it’s not an attractive option. Airlines that do this are sacrificing future revenue and potentially the upper hand in negotiating with their credit partners.
