Go Back  Fodor's Travel Talk Forums > Travel Topics > Air Travel
Reload this Page >

AA Chapter 11?? ...Do we lose our Frequent-Flyer miles?

AA Chapter 11?? ...Do we lose our Frequent-Flyer miles?

Old Oct 22nd, 2011, 04:06 PM
  #1  
Original Poster
 
Join Date: Feb 2009
Posts: 583
Likes: 0
Received 0 Likes on 0 Posts
AA Chapter 11?? ...Do we lose our Frequent-Flyer miles?

I see an article today (quoting Bloomberg) about AMR (parent company of AA) expected by some analyst to "succumb to bankruptcy"...

I have a lot of miles with AA which I'm keeping for 2 business-class tickets to Europe in a couple years.

I'm sure this was dealt with years ago when United was going into Chapter 11, but I'm asking ------ If AMR asks for bankruptcy protection -- do we lose our Frequent-Flyer Miles? Or do we lose them all only if the company stops all its operations?

...Thanks.
mamamia2 is offline  
Old Oct 22nd, 2011, 04:18 PM
  #2  
 
Join Date: Dec 2010
Posts: 373
Likes: 0
Received 0 Likes on 0 Posts
Interesting question. I googled it and here's an article that discusses the issue. There isn't, apparently, a clear cut answer: http://tinyurl.com/3gtdz5r
joannay is offline  
Old Oct 22nd, 2011, 04:42 PM
  #3  
 
Join Date: May 2003
Posts: 4,024
Likes: 0
Received 0 Likes on 0 Posts
I think the general consensus is that our AAdvantage miles will be fine. Remember that United, Delta, US Airways, Northwest, and Continental all went into Chapter 11 in recent years. (Continental did it twice.) Their FF programs and everybody's miles remained in place untouched.

Gardyloo would have more insight here.
Jeff_Costa_Rica is offline  
Old Oct 22nd, 2011, 05:27 PM
  #4  
JBX
 
Join Date: Jan 2003
Posts: 957
Likes: 0
Received 0 Likes on 0 Posts
Agree with similar discussions on Flyer Talk ..... airlines who've filed Ch. 11 and restructured have maintained their frequent flyer programs. And since it was American Airlines who created this marketing tool for customer loyalty, they should really understand how eliminating AAdvantage program would cause an uproar.

http://www.flyertalk.com/forum/ameri...-bankrupt.html
JBX is offline  
Old Oct 22nd, 2011, 09:13 PM
  #5  
Original Poster
 
Join Date: Feb 2009
Posts: 583
Likes: 0
Received 0 Likes on 0 Posts
Thanks for your help. I guess I shouldn't worry that much. I hope.
mamamia2 is offline  
Old Oct 23rd, 2011, 05:06 AM
  #6  
 
Join Date: Jun 2008
Posts: 12,268
Likes: 0
Received 0 Likes on 0 Posts
Been through it with DL and CO now with AA

In all others stock went to 0 but NEVER lost a

single FF mile.

Did have 18K of AA miles expire on me a couple of years ago

still pod with them bout that but got even by opening 2

AAdvantage cards picking up 80000 miles booking 2 TA tickets

and closing card about a month ago...

so use them or lose them book hotels flights whatever just

to be safe that is what my wife and I did recently.

odds are they will retain AAdvantage very profitable for them

The big AMR stock liability is their old pension plan

Just like DL and CO they will get out of that issue new stock

and come back stronger than ever.

AMR was the only US major NOT to do this so was just a matter

of time.

The only major I know of lately to go belly up and stay there

was Mexicana..

So odds are good you will be fine but personally them

ASAP so no worries... Good luck to u and me too!
qwovadis is offline  
Old Oct 23rd, 2011, 06:03 AM
  #7  
 
Join Date: Mar 2003
Posts: 2,032
Likes: 0
Received 0 Likes on 0 Posts
Of course, all the above comments assume Chapter 11, which is most probable. But if the very improbable Chapter 7 occurs, say bye bye the miles.
NoFlyZone is offline  
Old Oct 23rd, 2011, 06:30 AM
  #8  
 
Join Date: Jan 2003
Posts: 19,358
Received 79 Likes on 8 Posts
People don't seem to realize that FF programs are incredibly profitable to the airlines. A few years ago Air Canada was faced with bankruptcy, so they sold their FF program, Aeorplan, to an independent company. At the time, the value of Aeroplan was greater than the rest of the airline.

The key is that the airlines get cash when they sell the miles to the credit card companies (nobody knows exactly how much, but probably less than 1 cent per mile.) The credit card companies (or florists, or rental car companies, or merchants.. whoever) then re-sell those miles to their customers, who pay for them in the form of higher annual credit card fees, or as part of the markup the card issuers charge to the merchants, whatever.

The redemption value of the miles go onto the airlines' books as liabilities, but there are some catches. First, most people who do redeem their miles do so for coach tickets, the effect of which is very minimal in terms of the airlines' operating costs.

By only releasing seats that would otherwise go unsold, according to the airlines' yield management calculations, filling the seats with mileage redeemers is a twofer - it takes those miles out of the liability column, and it fills empty seats with very, very little extra marginal cost - a little more fuel, maybe, a microscopic increase in cabin cleaning etc. costs. The redemption pax pay for checked baggage, pay for meals - all of which are profit centers now - so the airline lose even less.

But then, the other big factor comes into play - orphan and unredeemed miles.

Nobody knows the "leakage" numbers, but there are millions - maybe billions - of FF miles/points that never get redeemed. They sit around in quantities too small to be worth anything, then after 18 months or whatever, they expire. So the airline got paid when they sold the miles, but never have to incur any expense when they die. Cash. Cow. (PS the same thing applies to gift certificates you buy for Aunt Lucy for Christmas. Lots of them never get spent.)

So if AA goes into bankruptcy, the chances are that the AAdvantage program will be just fine. It will be an ongoing source of free cash, something the bankruptcy trustee(s) would be foolish to discard.
Gardyloo is offline  
Old Oct 23rd, 2011, 12:58 PM
  #9  
 
Join Date: May 2003
Posts: 4,024
Likes: 0
Received 0 Likes on 0 Posts
Thank you, Gardyloo. That's a great explanation.
Jeff_Costa_Rica is offline  
Old Oct 23rd, 2011, 04:29 PM
  #10  
Original Poster
 
Join Date: Feb 2009
Posts: 583
Likes: 0
Received 0 Likes on 0 Posts
Thanks, Gardyloo and all. Those (almost 300,000) miles I've been accumulating have been there for that one trip, so I really don't wanna to lose them....

OK, one less thing to worry about....
mamamia2 is offline  
Old Jan 14th, 2012, 03:55 PM
  #11  
Original Poster
 
Join Date: Feb 2009
Posts: 583
Likes: 0
Received 0 Likes on 0 Posts
.....Any updates on this issue? Some friends today were telling me there are rumors we might lose our FF miles, or some of them.....
mamamia2 is offline  
Old Jan 14th, 2012, 09:10 PM
  #12  
 
Join Date: Jul 2007
Posts: 9,285
Likes: 0
Received 0 Likes on 0 Posts
thanks for that explanation, gardyloo.
ncounty is offline  
Old Jan 15th, 2012, 09:44 PM
  #13  
Original Poster
 
Join Date: Feb 2009
Posts: 583
Likes: 0
Received 0 Likes on 0 Posts
Gardyloo's post was definitely informative and helpful ...I was just wondering if there's been ANYTHING NEW about this issue that I might have missed, especially after I heard those rumors from couple of my friends who fly a lot....
mamamia2 is offline  
Related Topics
Thread
Original Poster
Forum
Replies
Last Post
Frances
Air Travel
6
Jan 20th, 2014 09:25 PM
dannyyoung
Air Travel
7
Dec 14th, 2009 02:48 AM
al
United States
9
Jun 29th, 2004 06:37 AM
gail
Air Travel
6
Dec 19th, 2003 10:18 AM
Cissy
Air Travel
10
Apr 22nd, 2002 12:38 PM

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are On


Thread Tools
Search this Thread

Contact Us - Manage Preferences - Archive - Advertising - Cookie Policy - Privacy Statement - Do Not Sell or Share My Personal Information -