United Airlines may sell part of MileagePlus to raise cash, report says

United Airlines is considering selling a minority stake in its MileagePlus frequent flyer program, according to a new report from Bloomberg.

The sale would be for a stake of up to 15% of the program, Bloomberg reported, citing people familiar with the matter who asked not to be identified.

Under such a sale, which United is in the earliest stages of exploring, according to Bloomberg, the airline would retain the majority ownership of the loyalty program. This would contrast with Air Canada, which spun off its frequent flyer program, Aeroplan, into an entirely separate entity, before eventually purchasing it back.

Frequent flyer programs are tremendously valuable and profitable assets for airlines. The programs generate revenue through sales of frequent flyer miles to various partners, including financial institutions that offer cobranded credit cards. The banks then distribute the miles to customers as rewards for spending.

Airlines and investors have also begun looking at more ways to monetize the data collected by frequent flyer programs.

Although investors have put pressure on U.S. airlines to consider selling stakes in the programs for at least a decade, according to Bloomberg, carriers have instead used the loyalty programs as collateral for loans, or leveraged them to come up with short-term cash boosts by arranging advance sales of miles to banks.

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In 2020, United reorganized MileagePlus into a wholly-owned subsidiary company, valuing it at $22 billion, which it used as collateral on $6.8 billion in loans and bonds to help it manage cash flow through the COVID-19 pandemic.

The sale is far from certain, with Bloomberg's sources telling the outlet that the airline is merely exploring the possibility and gauging interest at this point.

Regardless, the timing could be helpful for United; the airline has more than 500 new aircraft on order with deliveries scheduled through the next four years, part of the airline's "United Next" initiative. Although United reported $18.4 billion in cash liquidity available at the end of the fourth quarter, the additional cash generated from a sale of part of MileagePlus would give the airline more room to work with, and likely reassure investors.

United did not respond to TPG's request for comment by press time.

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It remains unknown what — if any — impact the sale would have for consumers. As the majority shareholder, it appears likely that United would maintain control and management of the program, as opposed to what happened when Air Canada sold Aeroplan.

Regardless, we'll see exactly what the sale looks like if United ends up following through on these initial steps.