United and Delta Consider Selling Miles at Discount to Raise Cash
United and Delta are considering selling miles at a discount in order to raise cash during the coronaviurs pandemic. The airline industry has been hit the hardest by the outbreak, as travel demand has plummeted around the world. Airlines are already trying to hold on to cash that they should pay out to customers for canceled flights.
This latest option to raise cash by selling miles was talked about with the respective card issuers JPMorgan Chase and American Express, as per Wall Street Journal. The companies have talked about selling miles ahead of schedule and for less than normal, in order to raise cash to weather the coronavirus pandemic. People familiar with the matter acknowledged the talks but added that the discussions might not result in any deals.
Banks buy miles from airlines to reward consumers for welcome bonuses and spending on their credit cards. But these discussions would see the banks more discounted miles in bulk, instead of buying them gradually as needed.
U.S. airlines have mortgaged gates, flight paths and just about any asset in order to secure billions needed. Airlines are also hopping to get billions from the government, but the amount of grants is lower than expected. $25 billion in cash grants was approved, but it will actually be $17.5 billion. The other $7.5 billion will now be loans airlines will be required to re-pay.
With airlines selling discounted miles to credit card issuers, customers could see bigger welcome bonuses and spending offers. That is if issuers choose to pass the saving along. We could also see more deals directly from airlines, where travelers can buy miles. Buying miles is normally not a great deal, and especially now with the risk of airlines going under, is even less appealing.