Edited from THE WALL STREET JOURNAL...
December 6, 2002

Industry experts are split over whether United's frequent-flier program, which has the second-largest number of members world-wide, would get an overhaul. Some note that an airline in bankruptcy reorganization tends to improve its program as it worries about losing loyal passengers. United could offer double miles for select routes, give extra credits toward elite status or extend elite status into the following year, says David Stempler, president of the Air Travelers Association, an advocacy group in Washington, D.C. But some fear that United, to cut costs, would make it more difficult for travelers to redeem miles for tickets.

Either way, an immediate plus for members of United's program is that the airline has an array of options to cash in miles. United has partnerships with behemoth Delta Air Lines and US Airways, and is also part of the Star Alliance network of more than 14 carriers, most overseas.

A longer-term impact of a United bankruptcy could include reduced flight schedules. Mr. Baker says he expects United to shrink capacity 10% to 12% next year. The cuts likely will come first in small to midsize markets rather than big business centers. United's main hubs, Chicago and Denver, should remain largely intact, Mr. Baker says, while Dulles, Va., United's weakest hub, could be a candidate for downsizing.

I lost over 250k miles (actually km's in Australia) and my wife nearly 100k when Ansett went bust last year. Despite earning a significant number of them on almost every *A airline none of them would be honoured in any way by *A airlines.

I even had confirmed e-mail award bookings (no tickets) that were booked the day before they went bust on many of the *A partners in Europe which were not honoured either.

My advice...use them and use them quickly.

Nothing. TWA's miles got incorporated in to American's program. USAirways still has their mileage program going. United will, too.

Of things to stress about, what happens to your miles is the last thing that should be on your mind.

There's really no difference in miles pre or post-bankruptcy. After all, at any time they want, they can just kill the program with no recourse to you. It's in the terms and conditions.

As reported on CNN Moneyline:
UA MP division was the ONLY one to actually make money for UA last year. I seem to remember that it was between $1.2-1.4B profit. I doubt very much that any bankrupcy judge would shut the only profit producing entity during re-organization. So I would not worry too much at this time. Although I'm AA flyer, I sincerely do hope that UA gets through this sooner than later. Healthy competition is good for all the consumers.

[This message has been edited by andrzej (edited 12-08-2002).]

While I don't disagree that there is a good chance that the miles will be honored, there are several misconceptions on this thread.

the MP division makes money because they sell miles to credit card companies, loan companies, long distance companies etc. to award as premiums. Airlines book the cost of hte miles at the incremental cost to allow you to fly--basically food and gas--and then reduce it by a percentage based on teh likelihood that you'll never redeem an award because you dont' have enough points, etc. So if the sell miles for a penny or two each and record a cost of a tenth or less of that, of course they will show a profit. But they can't keep this division open if the planes aren't flying, so analyzing it by divisions is misleading.

Also, its incorrect to say nothing will be done. The miles represent a liability that must be addressed in teh bankruptcy plan. The law requires all unsecured creditors to get at least as much as they would get if the company liquidated (went out of business), but they can pay you well less than $100. Other types of creditors like secured creditors and people who provide value after the date the BR filing was made have greater protections. But 2 things are inescapable--1., that they don't have to pay you any more than probably pennies on the dollar, and 2. they have to decide what to do with the claims to free tickets that we have. They can be more generous to certain classes of creditors, and often are. Often times, everyone below a certain threshhold might be paid 100% to make things more convenient.

Not to sound cold-hearted, but UAL employees are the highest paid in the business. Although there were some bad business decisions by managements along the way, the employee oweners of UAL got themselves into the situation they are currently in.

UA is required to give 6 months notice for killing the program. They can make changes at their discretion, but complete termination (or changes which have the same effect) require 6 months notice per the terms of the MP program.

The confidence that mileage programs will be protected may stem from the TWA, Eastern, and Pan Am liquidation, but the recent Ansett liquidation suggests something different might happen the next time around.

Plato90s,

I dont know if they are *required* to do much of anything but I could be wrong. They are sort of expected to/hoped to do that 6 month thing, but it may be possible that the ch 11 lets them out of pretty much anything they chose. I think they will continue much like US AIR did, however, so there should be nothing to worry about.

For all our sake (anyone with UAL miles) let's hope they do. I tickets booked and also I have 36k on the airline. I will wait and see.



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If speed is not your thing, distance may as well be. Enjoy and embrace it all!

Are you sure about that? This is from UAL's website.

Looks to me like they can kill it any time they want, so please point me to information to the contrary.

[This message has been edited by mdtony (edited 12-09-2002).]

The BK judge will decide what is done with the FF miles regardless of terms previously issued by UA.

The BK court has confirmed that MileagePlus will NOT be affected. MilagePlus WILL reman the SAME. All passengers can stil Redeem and Accure miles on UA and ALL of it's partners. UA will STILL remain in Star Alliance and currently NO code-share/mileage agreement will be dissolved.

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Attention all UA flyers! United will STAY UNITED! NO MATTER WHAT!

The BR judge really doesn't decide, and he hasn't decided yet unless you mean what happens in the interim.

UA has 180 days to submit a plan for approval. The creditors get to vote on it. After 180 days (can be extended) creditors can submit a plan. Its who ever drafts the approved plan that decides what happens to the mileage plan.

No plan has been confirmed yet and probably will not be confirmed for at least a year.

Again, they are unlikey to dismantly the plan, although with a smaller carrier like US that is more a possibility since they theoretically might merge or be sold off in parts.

Why would UA allow its DEN hub to close? This is not only a critical part of their hub and spoke network, but is a virtual fortress hub for them since CO pulled out and Western Pacific folded! Frontier has very limited routes, so flights on many of UAs routes in and out of DEN can be priced however they wish, contributing significantly to their potential profitability/reduction of losses. Unless UA folds, I don't see them pulling out of Denver, even if they could sell their interest there at a profit, since that would impair their national network operations.

Further, it seems unlikely that even the Bush administration would allow UA to fold. While most of its routes, MP members, equipment, and employees would probably be picked up by other carriers, the effect on their bondholders, creditors, etc. would be too devastating. Additionally, the new & improved Bush economic team is probably smart enough to realize the wider negative impact this would have on both the national economy and the securities and capital markets.

Usually the frequent flier miles are safe.