In a move designed to raise cash during the corona crisis, United Airlines has taken a $5 billion mortgage on its MileagePlus loyalty program. The airline says it will have no effect on members or operations.
Airline loyalty programs, although they are often thought of as give-aways, are actually money-makers for the airlines, which sell miles to credit card, retail and other partners to distribute. Many of those miles, of course, never get used, making them even more profitable.
Because of the value of the programs, the airlines have realized, they are good collateral for loans. American has already said it will use its AAdvantage program as collateral for its CARES act loans. Other airlines have used their programs in other ways; JetBlue, for instance, $150 million worth of miles to Barclays bank in March.
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