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United Takes $5 Billion Loan Against MileagePlus User Data

United Takes $5 Billion Loan Against MileagePlus User Data
Joe Cortez

United Airlines is seeking a $5 billion loan secured by their MileagePlus loyalty program, justifying it with user data that suggests long-term growth. But the data revealed in a SEC filing shows that the program is skewed as a profit center for the airline, and not necessarily the passengers.

United Airlines believes their MileagePlus membership is worth $5 billion dollars, and is seeking a loan with their user base as capital. The airline revealed the plan in a Form 8-K report submitted to the U.S. Securities and Exchange Commission.

United’s Finance Plan for MileagePlus

With passenger load factor down to 35 percent in May, United’s business was significantly impacted by the COVID-19 pandemic and subsequent shutdown. At the end of the first quarter, the airline decided to take out a $2 billion credit facility, along with $5 billion from the CARES Act funding, after losing $2.1 billion in profit.

With the need to improve liquidity, the airline will also secure a $5 billion loan, secured by the MileagePlus loyalty program and the company’s internal subsidiaries. In total, the Chicago-based airline claims the program holds a value of $21.9 billion.

What Flyers Learned About the MileagePlus Program

United made the pitch to finance their loyalty program in a 47-page report, made public with their 8-K filing. Their notes gave a deep inside look to how their frequent flyer program works, and how they earn money on it.

With over 100 million members worldwide, the airline receives $5.3 billion in cash flow from loyalty program members. In addition, the airline claims over half of their flight revenues came from MileagePlus members.

From their data, the average United MileagePlus member is between the ages of 30 and 64. Nearly two-thirds of their members earn over $100,000 annually, while half live outside of a United hub region. New United MileagePlus members spend 34 percent more with the airline in their first membership year, compared to non-members.

Source: United Airlines

The troubling news for consumers comes from the data on mileage redemption. Between 2017 and 2019, miles issued grew by an average of six percent – but actual miles redeemed only grew by four percent in the same time period. In addition, 80 percent of all miles redeemed were used on United flights.

Source: United Airlines

Even more concerning is the way the majority of miles are earned. According to the company, 71 percent of all MileagePlus miles come from credit card programs. In the example they provided, if a member spends $10,000 with a credit card partner to earn 15,000 MileagePlus miles, the bank buys those miles from United at $0.02 each, for a profit of $300. When the customer redeems those miles for a flight, MileagePlus buys the ticket from United for $150, for a 50 percent profit for the airline – in addition to what the bank earns.

Source: United Airlines

Who Is Financing the MileagePlus Loan?

The loan will be financed by a team of banks: Goldman Sachs Lending Partners, Barclays Bank PLC and Morgan Stanley Senior Funding, with Goldman taking the lead. “It is expected that [Mileage Plus Holdings, LLC] and [Mileage Plus Intellectual Property Assets, Ltd.] will seek long-term debt financing in lieu of borrowing the full available amount under the committed term loan facility,” United notes in the 8-K filing. “Or in order to refinance amounts drawn under the committed term loan facility, subject to market and other conditions.”

Although the loan will allow United to maximize liquidity and cash-on-hand, it will increase the airline’s debt load. At the end of 2020’s first quarter, the carrier held long-term debt of $18.5 billion with $2 billion available from a revolving credit line.

The additional debt comes on the news that United will be removed from the NASDAQ 100, making them the second carrier to leave the index this year. On June 22, the airline will be replaced by technology company DocuSign.

View Comments (17)


  1. roberto99

    June 16, 2020 at 8:15 am

    The title SHOULD read “Mileage Plus Division”

    Not the data!

  2. wh6cto

    June 16, 2020 at 8:37 am

    The title is extremely misleading, as it says the loan was “against MileagePlus User Data”, when it was actually against the entire program as collateral (though technically, all user data would be included). To accurately represent this content, the title should really be “United Takes $5 Billion Loan Against MileagePlus Using Data.” Big difference.

  3. mvoight

    June 16, 2020 at 9:40 pm

    Interesting article.. Apparently the AVERAGE MP member is between 30-64.
    That’s one hell of an average range. Why not say their average is between 0 and 115 (or whatever their oldest is)

  4. RobertMurk

    June 17, 2020 at 4:57 am

    I never considered a Frequent Flyer program to exist to be a profit center for the passenger. The purpose is to generate more business for the airline, and as part of the deal, the passenger gets something in return.

  5. hammie

    June 17, 2020 at 5:37 am

    Revenue is the income that is received, profit is what’s left after paying expenses, if expenses exceed revenue, you have a loss.

  6. squiddy

    June 17, 2020 at 6:00 am

    Imagine, United saying people in the MPH program are people that fly United? I mean, that’s, uh,horrible?

    How is it “troubling news” that miles awarded increased by 6 percent but redemptions only grew by 4%?

    Or that it’s concerning that MPH makes a profit on miles sold to banks via CC affinity programs?

    As others have noted, the click-bait headline suggested they were using “User Data” as some kind of collateral for the loan – in fact, they’re trying to illustrate that they have a large, loyal base of consumers that fly their airline – and presumably, when air travel resumes, they’ll be back.

    I think the author was really, really trying hard to find something nefarious but failed. No wonder I’ve stopped reading Flyertalk-promoted stories – they’re inevitably click-bait.

  7. jimbous

    June 17, 2020 at 6:11 am

    Using the 0.02 cents/mile doesn’t make much financial sense for a bank like Chase that issues the UE credit cards.
    Say, at 60,000 sign up bonus it means that it costs Chase $1,200 to issue that card. That can not be the case.
    A new card holder will have to charge $60,000 in the first year for Chase to just break even assuming that it charges the merchants 2% for the credit card transactions.
    For the vast majority of new card holders that will not happen.
    Especially since many of these new card holders will very likely cancel the card after the first year or two, and that will be a real loss for Chase.
    There must be a different allocation of the cost for a new issue UE card.
    Perhaps United charges differently for these first time bonus miles or absorbs the entire cost.

  8. gay

    June 17, 2020 at 6:58 am

    How does this effect the average MileagePlus user? I get most of my points from credit cards. Is it time to switch cards?

  9. mhrb

    June 17, 2020 at 7:31 am

    Couldn’t find data on $ owed through miles issued but not yet redeemed but figure saying miles returned 3x greater than miles redeemed in apr and may is interesting.

    Couple of very interesting slides in the full 8-K.

  10. Intrepid

    June 17, 2020 at 7:35 am

    Note that JP Morgan/Chase is no longer among the financing lenders.
    It may mean that JPM/C is limiting its risk exposure towards United Holdings LLC.

    If you have been lately in the desolate mausoleum known as ORD (terminals 1 and 2), you may be skeptical if the Mileage Plus program is worth $5 billion.

  11. DCAFly

    June 17, 2020 at 7:58 am

    A(nother) misleading clickbait headline on flyertalk. It’s almost hard to believe!

  12. deadmoneywalking

    June 17, 2020 at 4:13 pm

    So basically the ‘bonus miles’ are just monopoly money sold for twice their usable value?

  13. Jackie_414

    June 17, 2020 at 11:12 pm

    I would say that United is double counting here and if the debtholders cannot see that then they deserve what is heading their direction in the future.

  14. Jackie_414

    June 18, 2020 at 10:15 am

    Another point is that the miles stored in the Mileage Plus program represent a liability for the airline. The accounting profession has for years been trying to get the airlines to recognize that liability on their financial statements, to no avail. So, how can an entity use a liability to collateralize debt?

    Further, it seems to me that what United is really after here is to strand the miles in the plan. That is, for the member the miles represent an asset that can be transferred into flights, or goods. My perception is that this is a mechanism to strand those assets that the members own, making them useless and valueless. The mentality at United is that when using miles it is a free flight. United representatives even use that terminology, a free flight. Each time I correct them, reminding the United rep that I earned those miles and they are an asset to me, a liability to the airline. So, there is no “free” about it.

  15. zyxlsy

    June 18, 2020 at 5:45 pm

    “In the example they provided, if a member spends $10,000 with a credit card partner to earn 15,000 MileagePlus miles, the bank buys those miles from United at $0.02 each, for a profit of $300.”

    It is NOT “a profit of $300”. It is revenue, or sales, NOT profit.

  16. volabam

    June 20, 2020 at 8:41 am

    LOL, someone’s going to pay to see that people left United in droves after their passenger assaulting, dog killing, and COVID-19 fearmongering.

  17. jayer

    June 24, 2020 at 9:44 am

    How any frequent flyer program can be worth $5 billion as collateral is beyond me. Yes it incentivizes members to book with United and they can sell bulk miles for good money, but once those miles go into a passenger’s account they all become just another unfunded liability.

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