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NEWS: The Overall Northwest To File Chpt 11 Thread

NEWS: The Overall Northwest To File Chpt 11 Thread

 
Old Aug 6, 2005, 4:00 pm
  #1  
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Accumulated miles and chapter 11.

If NW files Chapter 11, I assume that my miles will be lost -- True?

Also, if I were to purchase an award ticket for a future flight, would the ticket still be valid after a Chapter 11 filing?

Finally, if I use the WorldPerk miles for tickets on Delta and NW goes under, will the ticket still be valid?
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Old Aug 6, 2005, 4:12 pm
  #2  
 
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UA has been in bankrupcy for 2.5 years. US is bankrupt for the second time in three years.

Not a single mile has been lost.
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Old Aug 6, 2005, 4:18 pm
  #3  
 
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I cannot think of any Frequent Flyer Mileage ever lost by a Chapter 11 bankruptcy

Chapter 11 bankruptcy is for re-organizing a business, not liquidating it.

Don't worry about your miles, they aren't going anywhere (in my opinion) and NW will sooner or later work out its labor and pension issues.

RC
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Old Aug 6, 2005, 4:43 pm
  #4  
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To answer your question about the redemption of an award ticket, yes, if NW were to file for Chapter 11, there's not a doubt in my mind that they'll honor it.

Liquidation is an entirely different story.
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Old Aug 7, 2005, 9:30 pm
  #5  
 
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While it is probably true that we will not lose our accumulated miles, there are no guarantees. Unredeemed miles are considered to be a liability of the corporation and could be cancelled in a bankrupcy proceeding. Not likely, but a possibility none the less.
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Old Aug 7, 2005, 9:33 pm
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Loyalty programs are profitable (within airlines) and AC recently had an IPO

Many of the US carriers are considering spinning off thier Lyalty program (or a portion of it) in an IPO.

AC successfully sold (in an IPO) about 20% of the AC loyalty program. I can't imagine NWA shutting down or limiting the WP's program, it makes money as it is.

RC
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Old Aug 7, 2005, 9:49 pm
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Originally Posted by Radiocycle
Many of the US carriers are considering spinning off thier Lyalty program (or a portion of it) in an IPO.

AC successfully sold (in an IPO) about 20% of the AC loyalty program. I can't imagine NWA shutting down or limiting the WP's program, it makes money as it is.

RC
Exclude my economic ignorance but how exactly do the carriers make this money and how do they actually ascertain that money made is from the loyalty programs?

Is this extra revenue additional to what they would make if the FF program did not exist or is that due to customers they attract from competitors because of the FF program. If there were no FF programs would the same number of people not fly and different factors will keep them loyal to the airline. Or is the presumption that because a NW plat brings them a particular revenue that the revenue would have been lost if not for the FF miles? Or do they make the money because of the 'scam' whereby the majority of miles issued are never redeeemed?

Must say I had imagined that the FF programs were a burden to airlines because of the cost of elite services, complimentary upgrades, non-profitable mileage runs by aspiring elites, and relatively cheap award travel but I obviously got it wrong; that's what I like about FT, you learn something new everyday.
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Old Aug 7, 2005, 10:06 pm
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Good Questions

Airlines charge "partners" .02 cents per mile as a marketing tool to create customer loyalty. The largest generator of Frequent Flyer points is not from flying, it is from purchased points by credit card companies. They are paying NWA and all the other airlines for the miles that get deposited in member's accounts. This is where the income (external) comes from. NWA also sets aside money for WP award redemption expenses. In an IPO the public would buy a percentage of the spun off company. In AC's IPO under 20% was spun off and generated over 200 million.

RC

Originally Posted by ani90
Exclude my economic ignorance but how exactly do the carriers make this money and how do they actually ascertain that money made is from the loyalty programs?

Is this extra revenue additional to what they would make if the FF program did not exist or is that due to customers they attract from competitors because of the FF program. If there were no FF programs would the same number of people not fly and different factors will keep them loyal to the airline. Or is the presumption that because a NW plat brings them a particular revenue that the revenue would have been lost if not for the FF miles? Or do they make the money because of the 'scam' whereby the majority of miles issued are never redeeemed?

Must say I had imagined that the FF programs were a burden to airlines because of the cost of elite services, complimentary upgrades, non-profitable mileage runs by aspiring elites, and relatively cheap award travel but I obviously got it wrong; that's what I like about FT, you learn something new everyday.
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Old Aug 7, 2005, 10:20 pm
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Originally Posted by Radiocycle
Airlines charge "partners" .02 cents per mile as a marketing tool to create customer loyalty.
I'm assuming you mean $0.02 (2 cents, not .02 cents). But I have a hard time beliving it's that much for a large partner (or it's even a fixed price for all partners). Someone like an affiliated credit card purchasing millions of miles per month will clearly get a much lower rate compared to say a smaller merchant who buys miles in smaller increments.
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Old Aug 8, 2005, 12:43 am
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Originally Posted by clifh2
If NW files Chapter 11, I assume that my miles will be lost -- True?

Also, if I were to purchase an award ticket for a future flight, would the ticket still be valid after a Chapter 11 filing?

Finally, if I use the WorldPerk miles for tickets on Delta and NW goes under, will the ticket still be valid?
Chapter 11 is a business re-organization; as a customer, it'll be business as usual like it is on United, US Airways, and Hawaiian, all three which are currently in Chapter 11.

Your miles will be fine and any award tickets you have issued will be fine.

FWIW, the FF program is actually a revenue generator for the airline. Look at all of the businesses (partners) NWA is hooked up with - they all pay NWA to purchase miles for their customers. The US Bank WorldPerks Credit and Debit cards are also generate income for NWA. One may view the outstanding FF miles as a "liability", but lots of mileage doesn't end up being used and it's all paid for one way or another. Additionally, inventory is limited when it comes to FF mile redemption and changes based on the yield management of specific flights.

Northwest cannot afford to drop their FF program, period.

Earn your miles, book your awards, and don't worry.

SDF_Traveler
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Old Aug 8, 2005, 12:53 am
  #11  
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Originally Posted by SDF_Traveler
Chapter 11 is a business re-organization; as a customer, it'll be business as usual like it is on United, US Airways, and Hawaiian, all three which are currently in Chapter 11.
Actually Hawaiian exited Chapter 11 back in June 2005. The first domestic carrier since 2001 that's "successfully" re-organized.
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Old Sep 4, 2005, 8:37 am
  #12  
 
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NW eyeing bankruptcy

I don't think this has been posted yet.

http://money.cnn.com/2005/09/02/news...ex.htm?cnn=yes
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Old Sep 4, 2005, 12:30 pm
  #13  
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Originally Posted by hoyateach
I don't think this has been posted yet.

http://money.cnn.com/2005/09/02/news...ex.htm?cnn=yes
Not today, at least. How 'bout Fri.?

Last edited by tcook052; Sep 4, 2005 at 12:33 pm
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Old Sep 13, 2005, 12:32 pm
  #14  
 
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Angry NWAC stock crashing...heavy selling ...end is near!

Looks like the end is near for NW as we know it...soon it will be up to the courts to decide its future direction....Management has driven NW into the brink of bankruptcy - and will point the finger to the unions...they all should share the blame...and there is plenty of it to go around in my opinion!

Extremely heavy selling in NWAC today - well over 21 million shares (4 + x normal) and price per share now BELOW $2.20 share...and the market is still open!

Hope those in management at NW who have planned for this for 18 months and have wished for this to happen are happy....they all will be sadder in the end - as will so many good and loyal employees and retirees as they will see their pensions lost or significantly reduced.....Many employees will be replaced or lose their jobs.

Who will NW merge with ??? With Delta and United on the rocks ....and soon we probably will see Continental also hit the financial skids when they disclose more of their losses....

It is an amazing financial world we are living....NW bk reality is at our doorstep!

I am very sad to see all this unfold.

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Old Sep 13, 2005, 12:37 pm
  #15  
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Chicken Little imitation today? I think there's a 50/50 chance of filing BK by the October change. However, I think NW has a lot of good assets, and at worst will have to merge with someone else.
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