If U files for bankrupcy, what does that mean for miles, redemption and accumulation, etc. Do we lose everything?

I guess I among the few that think US will survive, at least planning on that through this year.

Just disappointing to say another naysayer pop up every now and then talking about bankruptcy. I think the important issue is announcement of an alliance which we are all hopefully awaiting. Great things will happen when this takes place you'll see!

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"Fly me to the moon and let me earn alot of miles."

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Uflyer:
If U files for bankrupcy, what does that mean for miles, redemption and accumulation, etc. Do we lose everything?</font>
No. First, if US were to file (and that's not a given, especially if the ATSB funds are available), it would likely be Chapter 11 which will allow the airline to reorganize, and not shut down. What happens to miles is wholly dependent on any plan of reorganization. It takes a good while for a plan to get out there and get approved. So, they can't radically change things for a while.

I agree with worldbanker - the sky is not falling - and the airline has been through worse (see the early '90s for example) without filing for bankruptcy. Don't assume they'll have to file here.

So, you probably won't lose everything - you may lose nothing - just wait it out - see just what Siegel puts out there as the plan. After all, if they do apply for ATSB funding, they seem to have until June 28 to do so. There will be plenty of notice before something goes really wrong. If the airline were to file for liquidation (I think that's Chapter 7 or somewhere thereinabouts - I'm a lawyer, but I don't touch the bankruptcy stuff) then there's a problem.

And if you're really concerned about your miles - then consider AwardGuard - one of Randy Peterson's programs. Or start redeeming left and right.


[This message has been edited by CLTFlyer (edited 05-08-2002).]

I don't want to come across as a naysayer,I am praying that U can make it through this as I try to fly them everywhere I go. (U offers the best service in the industry). I am just really concerned that if we can't get the loan, then we may run out of money before any benefits from the restructuring can be realized......

... in which case (worst case IMO) US's frequent flier program gets merged (a la TWA/AA) with whatever airline buys the pieces of US left in a distress sale. Nothing really lost.

I'm sitting on close to 300k and I have no worries...

Thanks Geo - I am sitting on about 325K. I guess my concern was that if the s*@t hits the fan and we liquidate where several airlines buy us up in pieces, which program do our miles go to?????

I'm not worried either. BUT, only because I purchased insurance to cover the 2 million miles my wife and I have on US (and that's after 2 first class tickets on Swiss to Nairobi in July and 2 first class tickets to Barbados and Grand Cayman for Memorial Day and July 4th weekends). I love US, but I have all but stopped flying them because I have too much invested already. Consequently, I just made Gold elite on Continental, but it's not the same. I only get upgraded half the time (and I can't remember the last time I didn't get upgraded on US). I am still wondering how in the heck they keep winning the Freddie and JP Powers Awards. Oh well, at least until US announces an alliance partner or I feel that Siegel is turning things around, I'll keep flying Continental.

[This message has been edited by romadaro (edited 05-08-2002).]

I too shook off US this year because I have too much 'invested' in the program, even though it is 'only' around 250K. However, it is important to remember some of the following before dashing for the window....

1) US's FF program is one of it's most important 'assets' (gobs of high rev. pax) even though it is technically a debit.

2) AA coughed up $650M last for an airport (STL) and a frequent flyer program (no other assets) much smaller than US's - with a lot less lucrative member base. All TW miles were fully protected much to the irritation of many AA members due to the somewhat liberal attitude TW had taken towards padding member's accounts in recent years.

3) US is not Midway - any failure of US will take place over years, unless the airline sells it's pieces off, with the FF base being one of them (How much do you DL would pay to get the US customer base for north south traffic along the east coast). Remember PA and EA accounts (as well as CO through two trips to federal court) were fully protected even when the firms were fully liquidated.

CoMooter: VERY good points! 100% agreement.

-geo

CoMooter - your information is greatly appreciated. I can breathe easier now. Although, I have read that there is strong opposition to eliminating the ATSB loans in the House. Hopefully this will be good for U. I hate to see such a good airline fall. Like many other posts I've read on this board, I also believe U has the best customer service in the industry. Only when I fly U do I not feel like cattle being thrown on board. Best of luck to all the employees.............

Comooter -

On points 1 and 2, you have valid arguments, but on point 3, you make a dangerous assumption. It would take years for U to fail? Not necessarily. No they are not Midway, but neither was Ansett or Swissair. Both of those shut down very suddenly, following some well publicized financial problems.

Nobody ever thought PanAm would fail, even after DL left them at the altar. But the money people wasted no time shutting down the airline when it became obvious that they couldn't continue. And let's face it, Frank Lorenzo lost the gamble of OnePass when Eastern shut down. Had EA had a stand alone FF program, they would've been out of luck, IMO.

But I agree with those of you who feel the Dividend Miles will be protected in some way, should U file CH.11. My hunch? It'll be similar to a TW bankruptcy, except that the airline won't go lock,stock, and barrel to another carrier. It'll be broken up, unless they can find a way to lower costs dramatically in the same manner that Alaska Air had to do when faced with the Southwest threat.

All good points. I have no doubt that should US fail, someone will pick up the frequent flyer customer base, which is US'greatest asset. However, I've just got far too many miles in the program to keep piling them up in this age of uncertainty. I truly miss flying US and find myself sitting on Continental comparing the service between the two and US wins, hands down, in my opinion. I am praying that Siegel can turn this thing around so I can start "flying the flag" again!

On a related topic, I am flying AZ in late Sept to Rome using US miles. If the carrier does, by chance, declare 11 before then, is my ticket impacted? Since I am flying on US ticket stock, will AZ accept the ticket? Should I consider alternative, albeit, much more expensive options like purchasng a ticket. If 11 were to cause a problem with AZ, I figure it is better to prepare now rather than close to the travel date when purchasing a ticket could be much more expensive. Any insights are appreciated.

Thanks for the information - I'm 90% US Airways and have watched my account grow rapidly this year (mostly due to bonus points, etc.).

Being in IND US Airways is a major carrier - although certainly less so then 5-10 years ago.

If you really get nervous, then I would suggest you diversify your portfolio. One way I do so is to have my hotel and rental car FF miles go to AA, my back up airline for locations where US Air does not fly. In addition, I pick up about 1000 miles on AA each month using the cereal coupons...I have three small kids who live on cereal!!!

WorldBanker, the airline itself on Friday said it might file for bankruptcy, so I don’t think it’s a matter of naysayers anymore. (I know you posted 2 days before they made that announcement.) I’m not saying that bankruptcy is a certainty, but its now more than the speculation of pessimists.

I agree with CLT Flyer that what happens to our miles is wholly dependent on any plan of reorganization. But once the company files bankruptcy, it is no longer obligated to honor the miles. They represent claims just like any other creditors’ claim and if the airline disappears we will get nothing (or almost nothing). If they think they can reorganize, then its likely they’ll continue to honor the miles but this is by no means certain.

I don’t understand CoMooter’s comments about other airlines seeing the program as an asset, when in fact it is a huge liability. Not saying he’s wrong—just not convinced that other airlines will want to honor the miles. Can you elaborate on the history you refer to?

Finally, a troubled company can sell its assets instead of merging. So theoretically another airline could take the planes and routes but not the mileage program.

I think it’s a good time to redeem like crazy.

I went through 2 bankruptcies with Continental, and we never lost a mile. I still think its posturing for the consumption of the help. Bankruptcy is a little like suicide, if you'll forgive a crude analogy. The people who really mean to do it just do. The one's who talk about it aren't really serious. Note to the company about that last reference:
There's a corollary here. Sometimes, even though they don't mean to do it, it happens anyway. You want to be really careful running around flashing the doomsday button.

If U does file BR, who might buy them? I have heard that DL is doing as good or better than any of the the majors, and presumably DL's east coast location would make such a deal feasible. Still, DL did not get involved when UA was bidding.

Any thoughts on the likelihood of a DL bid and if so their likelihood to honor the miles?

DL didn't get involved in the US/UA deal because of antitrust issues. DL was too big at the time along the east coast to get involved.

Here's my .02 on the future of US, i.e. the big breakup:

1. CLT to UA, who would then use it the move their Latin America ops out of MIA.

2. PHL to NW, including the European network

3. Shuttle to AA, strenghening their position in NY.

4. LGA slots and terminal to UA, as they try to gain share in NYC.

5. BOS slots and gates to DL or CO, both of whom would like a bigger presence.

6. PIT? Who knows? Too close to CVG, IAD, PHL. Maybe to CO, who would move CLE hub?

Just random thoughts....

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by PersonalCareChemist:
I pick up about 1000 miles on AA each month using the cereal coupons...I have three small kids who live on cereal!!!</font>

Hmmmmmm. I wonder if chexfan would be interested in helping my cause? http://www.flyertalk.com/forum/wink.gif


Special announcement: A Chap. 11 fling by US does not mean they stop flying. IMO, the worst case scenario is that the govt. loans come through with just enough cash to allow US to limp along as it has for the past few years. Best case is they go through a chap. 11 reorg and come out a stronger airline without the ridiculous labor costs they are currently burdened with. Somewhere in between is a break up asset sale with all our miles being absorbed by a carrier that may or may not fly where we (as individuals) want to go...

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by duxfan:
Here's my .02 on the future of US, i.e. the big breakup:

1. CLT to UA, who would then use it the move their Latin America ops out of MIA.
</font>

Your other 'random thoughts' are plausable.

But regarding #1: there is too much South American banking and commerce that takes place in Miami for UA to give up all that O&D traffic to AA and the South American carriers.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by duxfan:
6. PIT? Who knows? Too close to CVG, IAD, PHL. Maybe to CO, who would move CLE hub?
</font>

PIT goes "poof" as a hub. U would probably do themselves a big favor by zapping it as part of the restructuring but that isn't too likely to actually happen. As it is it seems to be being converted into an RJ hub.

Don't get me wrong -- PIT is a lovely airport and operates much more smoothly than PHL. But it's in the wrong place. Sooner or later its going to go.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by CoMooter:
1) US's FF program is one of it's most important 'assets' (gobs of high rev. pax) even though it is technically a debit.

2) AA coughed up $650M last for an airport (STL) and a frequent flyer program (no other assets) much smaller than US's - with a lot less lucrative member base. All TW miles were fully protected much to the irritation of many AA members due to the somewhat liberal attitude TW had taken towards padding member's accounts in recent years.

3) US is not Midway - any failure of US will take place over years, unless the airline sells it's pieces off, with the FF base being one of them (How much do you DL would pay to get the US customer base for north south traffic along the east coast). Remember PA and EA accounts (as well as CO through two trips to federal court) were fully protected even when the firms were fully liquidated. </font>

Let me respond in turn:

1) Yes, if US is bought by one carrier, but if it's broken up (ie bought by a number of different carriers), does this still hold true? it would seem to me if you're only getting some US's routes, than the database is much less valuable; (caveat: this is simply uninformed musings on my part)

2) Yes, but we had a different economic environment back then. Who is healthy enough to by US as a whole now?

3) Same point, which is that if DL or any carrier only gets some of the routes
assets ...

I don't know. If I had to bet, I'd say that the miles are *probably* safe, but I'm far from sure. I burned 60k miles on a first class flight to the caribbean last winter and i'm burning 25k more on a trip to sfo this memorial day; that'll leave me w/ 17k; of course, i'm hoping US makes it ....

Dunno Geo1004 -

DL has made ATL into a Latin America hub, and CO does it at both IAH and EWR. Why keep chasing the same customer, especially when they don't respond? What UA's share at MIA? CLT would be a smart place to build a network from. Especially with all that feed from the east coast and midwest. AA has one daily flight from CLE feeding MIA, UA has nothing. CLT could really open up a good chunk of the midwest to Lat. Am. destinations. Combine it with all the east coast destinations that could feed it, and it could work...

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by thelostshark:
Yes, if US is bought by one carrier, but if it's broken up (ie bought by a number of different carriers), does this still hold true? it would seem to me if you're only getting some US's routes, than the database is much less valuable; (caveat: this is simply uninformed musings on my part)
</font>

It's probably worth more, not less, in pieces than as a monolithic database.

Two options spring to mind:

1) Let the customers decide which program to transfer to.

2) Split them up based on the zip-code in their profile.

Hybrid approaches are certainly possible.

A friend of mine is a U Captain and stated that the rumor among the pilots was that DL would buy CLT & PHL routes and slots. DL is hording some cash here in the last few weeks so maybe????

Welcome Horvin -

Over time, you'll find that most "rumors I heard from a pilot" are nothing more than wishful thinking. My experience with most airline pilots is that they are very good at flying airplanes, but they all THINK they could run the airline better.

Neither CLT nor PHL are slot restricted airports. As I said earlier, it's doubtful that a CLT deal with DL would pass the antitrust test. DL also greatly cut service at JFK post 9/11, so they wouldn't need the capacity that PHL would bring. sounds to me like a pilot talking about who he'd like to work for in the future....

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by duxfan:
[B]Comooter -

On points 1 and 2, you have valid arguments, but on point 3, you make a dangerous assumption. It would take years for U to fail? Not necessarily. No they are not Midway, but neither was Ansett or Swissair. Both of those shut down very suddenly, following some well publicized financial problems...</font>

Sorry for the delay in responding...but I have been travelling (of course!!!)...

My assumption is that US will take at least one crack at Ch. 11, which will take years under the U.S. system. Other countries have different bankruptcy procedures which frequently do not offer Ch. 11-like protections. An important point can be shown by SR and AN's spectacular collapses.

The people that lost their miles in Ansett's program (SR's program - qualiflier - carried over to Swiss - it still exists and all accounts are safe) were basically screwed for same reason people with large CP accounts were screwed over by AC - when these airlines went under effective monopolies were created with no real remaining competition. The victors (QF & AC) knew there was no need to chase after customers who would have no choice who to use.

No competition=no need to capture the dead entities' customer base. Thankfully the U.S. still has a competitive landscape, US accounts will be sought after by the competition if US is no longer able to serve them. Even if US were to Ch. 13 liquidate and not reorganize (like PA & EA), those accounts will be sold off like all of the airline's other assets-and someone will be very interested in them - my vote is on DL & UA.

[This message has been edited by CoMooter (edited 05-13-2002).]

I thought AC DID take on the CP accounts. I know that AN flyers got hung out in the wind tho. SR had government involvement as well, probably why those accounts were saved.

Just a reminder...
From the Program Rules: (http://usairways.com/dividendmiles/programinfo/programrules.htm)

...The Dividend Miles program official rules, partners, special offers, blackout dates, awards and mileage levels, and service fees are subject to change, and may be discontinued with or without prior notice. US Airways reserves the right to terminate the Dividend Miles program or portions of the program at any time. This means that regardless of activity level, the ability to accumulate mileage or claim awards can be terminated with or without prior notice...

[This message has been edited by chexfan (edited 05-13-2002).]

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by duxfan:
I thought AC DID take on the CP accounts. I know that AN flyers got hung out in the wind tho. SR had government involvement as well, probably why those accounts were saved.</font>

Duxfan you are absolutely correct, I was a complete lunkhead when I threw CP in with AN...CP accounts became AC (albeit with a lot less benefits as of late) ones.

IMHO the only reason SR accounts were saved and will continue to exist is that Crossair (i.e. - the new Swiss management) realized that many peeved SR customers would run to LH, AF, AZ, etc. for much of their business if they were not induced to stay. SR was an international airline, and customers would have many choices...

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by CoMooter:
Even if US were to Ch. 13 liquidate and not reorganize (like PA & EA)</font>

Companies can't go Chapter 13--it's the individual counterpart to Chapter 11. A liquidation bankruptcy (for either) is a Chapter 7.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by romadaro:
I'm not worried either. BUT, only because I purchased insurance to cover the 2 million miles my wife and I have on US</font>

How do you get paid those lost 2 million miles if the FF program is defunct? I thought those insurance programs limited the yearly redemption, making it almost as worthless if you can't redeem two nice F tickets to somewhere far, far away.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by PHL:
How do you get paid those lost 2 million miles if the FF program is defunct? I thought those insurance programs limited the yearly redemption, making it almost as worthless if you can't redeem two nice F tickets to somewhere far, far away.</font>

Not 100%, but I think Award Guard has an $8,000 yearly redemption limit. You're absolutely right, PHL, that this makes it
impossible to get 2 first class tickets anywhere, let alone somewhere far away. I bought AwardGuard though to cover my 800,000+ miles at the time (now burned off to about 300K or so...) for two reasons.

* You could use miles to pay for part of it...
* A few protected coach class tickets is better than nothing at all.

Very true, though, that the dreams of flying in Swiss First Class to Africa would go out the door.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">
IMHO the only reason SR accounts were saved and will continue to exist is that Crossair (i.e. - the new Swiss management) realized that many peeved SR customers would run to LH, AF, AZ, etc. for much of their business if they were not induced to stay. SR was an international airline, and customers would have many choices...[/B]</font>

Partly correct, IMHO. One important reason was that the Qualiflyer program is a separate legal entity that buys and sells miles. Qualiflyer Loyalty Ltd. (that's the legal name) never was in any solvency problems and other airlines participated in the program, so there was no reason to discontinue it (e.g. Crossair was also part of it). Of course they also didn't want to lose their customer base.

Do you guys think there is any advantage to ticketing award reservations now if something were to happen to U that would break up the airline?
Would another carrier be more likely to honor an award ticket than miles?
Also, what about issuing an award ticket on a partner.
For example, issue 2 bus tix on Swiss, hope U doesn't go under, but if they do, would Swiss still honor the tickets for next spring?

I think if a BR filing happens that a ticket is more likely to be honored than miles because it is a specific obligation, and they can't just terminate the ticket once its awarded like the rules say they can with the milage program (although that's of dubious legality). But many believe the chance of losing miles is low, so don't ticket something you aren't going to use.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by kv99:
Not 100%, but I think Award Guard has an $8,000 yearly redemption limit.
</font>

When I looked into Award Guard, the person I spoke to at their customer service said that the $8000 limit was per year that a program in your portfolio went bankrupt. In other words, if US goes under, then you've got $8000 to use. But, you don't get another $8000 next year to use for your defunct US miles. The only way you'd get another $8000 for the next year is if ANOTHER program went under. Then you'd have that $8000 to use for either US or that other program for that year. Likewise, if TWO programs went under in a single year, you'd have $8000 to use between the two.

So, it sounds like if US goes under and no one else ever does, and you've got Award Guard to cover it, then all you get is $8000 for LIFE, not per year.

Can someone tell me this is incorrect? When the Award Guard customer care rep explained this to me, I changed my mind about it, because it doesn't even begin to protect the real value of my 400K+ miles I have on US if I can only spend $8000 in a lifetime...

[This message has been edited by ThisFlightNoFuel (edited 05-14-2002).]

Back to question about ticketing awards versus holding miles--I'm Chairmans so I don't have to worry about redeposit fees, right?

Right!!!
There are no fee's for Chairmans THIS year.