Frequent flier miles, infrequent flying, and credit cards

 The WSJ has the story of how frequent flier programs keep airlines afloat even when there is less frequent flying:

American Airlines to Use Frequent-Flier Program to Raise $7.5 Billion. Carrier will use funds to replace a loan from the federal government  By Micah Maidenberg

The airline on Monday said it would issue $5 billion in notes and seek a $2.5 billion term loan backed by AAdvantage, its loyalty initiative for customers, to secure the funds. Both Delta Air Lines Inc. and United Airlines Holdings Inc. also have tapped their respective frequent-flier programs to land financing.

"Carriers have found the relatively stable cash flows that their frequent-flier programs bring in to be a rich source of collateral for financing.

"Airlines mainly earn money from frequent-flier programs by selling miles to banks and retailers that then award them to customers who sign up for credit cards and make purchases. That means airlines stand to benefit from every swipe of a co-branded card, whether customers are buying plane tickets or clothing. Airlines have said this revenue has held up better than ticket sales as travel demand dried up last year."

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Earlier post:

Thursday, October 15, 2020

Frequent flier programs during the pandemic slowdown in air travel