United Airlines to mortgage MileagePlus for coronavirus funds, anticipates no impact to members
United Airlines thinks it has the cash it needs to navigate the rest of the coronavirus pandemic without further impacts on customers with a new $5 billion mortgage of the MileagePlus loyalty program.
The deal coupled with an expected $4.5 billion loan from the federal government's CARES Act coronavirus aid package would give the Chicago-based carrier around $17 billion in liquidity — or cash — by the end of September, senior United executives said Monday. They believe funds would be enough navigate the crisis and a multi-year recovery that's expected before the industry returns to 2019 passenger numbers.
“It is quite a large war chest to get us through a second wave, or third wave of COVID if that happens," they said. "$17 billion should see us through until there’s a vaccine or demand has recovered.”
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The United executives emphasized that the transaction would "bring no changes" to how customers use MileagePlus. The airline also maintains control of the program, ceding none to lenders. The loan, in essence, leverages the loyalty program's nearly $22 billion value and $5.3 billion in annual revenue to raise liquidity to carry United through the crisis.
Other airlines have sold miles or points to credit card partners to raise funds. For example, JetBlue Airways raised $150 million through an advance sale of TrueBlue points to Barclays in March.
Others, like American Airlines' AAdvantage program, have said they plan to use their loyalty program as collateral for a potential CARES Act loan.
Related: United Airlines joins American in signaling that the summer may not be lost
Ample cash is seen as key for airlines to weather the COVID-19 crisis. Revenue all but disappeared during the early days of the pandemic as more people cancelled flights than bought new tickets. That has begun to reverse, but numbers remain low.
Data from trade group Airlines for America (A4A) shows that U.S. air passenger bookings remained down 80% year-over-year during the week ending June 7.
All of the major airline bankruptcies that have occurred since the coronavirus outbreak have been attributed to the lack of revenue. Carriers have had to continue paying bills, for example on aircraft, even as revenue virtually disappeared and customers demanded refunds for cancelled flights. Restructurings including United partner Avianca as well as fellow South American carrier LATAM Airlines have occurred under such a scenario.
Related: State-by-state guide to coronavirus reopening
United continues to see monthly improvements. The number of travelers on flights continues to rise with the carrier expecting to fill around 55% of seats in July even as it plans a double-digit increase in the number of flights compared to June. During the month United plans to fly roughly 30% of what it flew in July 2019.
Most of the added flights are U.S. domestic ones with many going to destinations popular with leisure travelers, for example the Rocky Mountains in Colorado or beaches in Florida.
Returning travelers also means United is losing money at a slower pace. The carrier expects its cash burn -- or the amount it losses on a daily basis -- to drop to $40 million a day by the end of June and $30 million a day by the end of September.
Related: What aircraft could U.S. airlines send to the boneyard after the crisis?
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- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
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Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
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Intro Offer
You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
Credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.Excellent to Good
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.