Bankrupcy and Miles
May 12, 2002, 8:29 pm
#16
Join Date: Jan 2002
Location: atlanta, GA
Posts: 2,040
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 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.
May 12, 2002, 9:39 pm
#17
Original Member
Join Date: May 1998
Location: CT (NYC Suburbs), Gulf Stream, FL
Programs: United Premier 1K, American AAdvantage Gold
Posts: 3,089
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.
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.
May 13, 2002, 12:20 pm
#18
Join Date: Jan 2002
Location: atlanta, GA
Posts: 2,040
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?
Any thoughts on the likelihood of a DL bid and if so their likelihood to honor the miles?
May 13, 2002, 12:28 pm
#19
Join Date: Oct 2001
Location: DTW
Programs: BW Diamond, Choice Plat, National Exec Elite
Posts: 3,120
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....
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....
May 13, 2002, 1:38 pm
#20
Guest
Posts: n/a
<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>
I pick up about 1000 miles on AA each month using the cereal coupons...I have three small kids who live on cereal!!!</font>
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...
May 13, 2002, 1:40 pm
#21
Guest
Posts: n/a
<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>
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>
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.
May 13, 2002, 1:50 pm
#22
Join Date: Nov 2000
Location: Greenfield, NH
Programs: US Airways Chairman's Preferred, NWA Gold, Marriott Platinum, Hilton Diamond
Posts: 2,199
<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>
6. PIT? Who knows? Too close to CVG, IAD, PHL. Maybe to CO, who would move CLE hub?
</font>
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.
May 13, 2002, 1:52 pm
#23
Join Date: Oct 2001
Location: Almaty, Kazakhstan
Programs: UA Gold, Hyatt Discoverist, IHG Platinum, Accor Silver, Choice Privileges Gold
Posts: 2,070
<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>
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>
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 ....
May 13, 2002, 1:53 pm
#24
Join Date: Oct 2001
Location: DTW
Programs: BW Diamond, Choice Plat, National Exec Elite
Posts: 3,120
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...
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...
May 13, 2002, 2:32 pm
#25
Join Date: Nov 2000
Location: Greenfield, NH
Programs: US Airways Chairman's Preferred, NWA Gold, Marriott Platinum, Hilton Diamond
Posts: 2,199
<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>
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>
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.
May 13, 2002, 2:35 pm
#26
Join Date: Oct 1999
Location: Charleston,SC
Programs: DL PM & 3MM, UA 1K, Marriott Lifetime Plat
Posts: 19
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????
May 13, 2002, 2:56 pm
#27
Join Date: Oct 2001
Location: DTW
Programs: BW Diamond, Choice Plat, National Exec Elite
Posts: 3,120
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....
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....
May 13, 2002, 3:04 pm
#28
Join Date: Oct 2001
Location: Somewhere...
Programs: AA PLT/3MM, UA GM/1MM, DL DM/1MM, FB Plat, AS MVP Gold, WN AList+
Posts: 1,588
<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>
[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>
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).]
May 13, 2002, 3:21 pm
#29
Join Date: Oct 2001
Location: DTW
Programs: BW Diamond, Choice Plat, National Exec Elite
Posts: 3,120
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.
May 13, 2002, 4:54 pm
#30
FlyerTalk Evangelist
Join Date: Mar 2000
Location: West Seattle, WA
Posts: 10,469
Just a reminder...
From the Program Rules:
...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).]
From the Program Rules:
...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).]