Will Delta’s reported plan to leverage SkyMiles for cash impact frequent flyers?

Aug 27, 2020

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

There’s no question that airlines around the world are facing a bleak financial future, especially over the next few years. In the meantime, most carriers have valuable assets they can tap for much-needed liquidity — their aircraft fleets — with some choosing to leverage a “sale-and-leaseback” option to add much-needed cash.

Given the scale of this latest crisis, though, U.S. airlines have begun looking beyond their previous fundraising arsenal. In June, for example, American Airlines pledged its brand and a mix of slots, gates and routes to lock in funds, while United Airlines secured billions of dollars using its MileagePlus frequent flyer program as collateral.

Related: Delta Air Lines retires more jets amid shaky outlook, nearly $6B quarterly loss

Now, according to a Bloomberg report, Delta Air Lines plans to follow United’s MileagePlus move, leveraging its SkyMiles program in order to fund additional financing. While a Delta spokesperson declined to comment on the upcoming deal, it seems the carrier is planning to offer SkyMiles-secured bonds and loans on Sept. 7, according to Bloomberg’s report.

SkyMiles members can redeem miles for flights on Delta and its partners. Photo by Zach Honig/The Points Guy.
SkyMiles members can redeem miles for flights on Delta and its partners. Photo by Zach Honig/The Points Guy.

Of course, the natural question for SkyMiles loyalists is how this latest move will impact the program. I turned to industry analyst and Atmosphere Research president Henry Harteveldt for more.

“It certainly won’t have any immediate impact on SkyMiles members, and if Delta runs its business well it won’t have any impact on its customers whatsoever,” Harteveldt said. “This is certainly an unusual move but it doesn’t raise any red flags with me.”

Related: United Airlines mortgages MileagePlus for coronavirus funds

“What I do worry about though is when an airline starts leveraging too many of its assets. That’s generally a negative sign, because it has fewer levers to pull later,” Harteveldt added. “I think the challenge for all airlines right now is to be very careful in terms of what assets they are collateralizing and for how much.”

In other words, if Delta’s financial situation worsens significantly, the SkyMiles program could be impacted either way. The sooner leisure and especially business travel return, the better the industry’s prospects. Still, Harteveldt doesn’t expect this particular move to have any direct impact on SkyMiles members, so we can rest easy — for now.

Featured photo by Zach Honig/The Points Guy.

Chase Sapphire Preferred® Card

WELCOME OFFER: 80,000 Points


CARD HIGHLIGHTS: 3X points on dining and 2x points on travel, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

Apply Now
More Things to Know
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 when you redeem through Chase Ultimate Rewards®.
  • Enjoy benefits such as a $50 annual Ultimate Rewards Hotel Credit, 5x on travel purchased through Chase Ultimate Rewards®, 3x on dining and 2x on all other travel purchases, plus more.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,000 toward travel.
  • With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
Regular APR
16.24% - 23.24% Variable
Annual Fee
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.