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Will American Airlines’ Frequent Flyers Be Left Grounded?


Attention, nervous flyers: It may be time to buckle up and use your American Airlines miles. Shares at the airline plummeted by one-third Monday amid fears that it will seek Chapter 11 bankruptcy protection. As investors panicked and sold their shares, its 67 million frequent flyer members around the world were also left with a worrying question: In a worst-case scenario, will all those hard-earned miles be lost? The bad news: When airlines file for liquidation, loyal customers are usually among the last on the long list of creditors to be reimbursed. Experts say nearly all other major debts will be paid before these rewards are redeemed.

But there are exceptions: when the carrier is taken over or when air miles are part of a code-sharing deal with another airline. For instance, when PanAm went into liquidation in 1991, Delta Air Lines honored the leftover air miles when it took over the airline’s assets. And when Hawaii’s Aloha Airlines went bust in 2008, United Airlines honored flights booked as part of its code-sharing agreement. United also honored its own frequent flyers when it filed for bankruptcy protection in 2002. Tim Winship, founder of, says AA’s air miles would likely be sold to another airline even if it went into liquidation: “It’s one of AA’s most valuable assets.” 

American Airlines – credited with creating the first modern frequent flyer program 30 years ago – says it’s striving to avoid Chapter 11. “That is certainly not our goal or our preference,” it said in a statement. “We know we need to improve our results, and we are keenly focused as we work to achieve that.” But that has done little to appease some frequent flyers. Kate Hanni, founder of, says frequent flyers are not traditionally regarded as creditors and believes her air miles could be written off as goodwill losses in a bankruptcy or even restructuring. “I have 300,000 frequent flyer miles with American Airlines and I’m going to book my trip on one of their code shares for next summer now.”

Are you worried about your American Airlines points?


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About Pay Dirt

  • Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to or tweet @SMPayDirt.