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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 FrequentFlier.com, 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 FlyersRights.org, 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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    • My wife and I have nearly half a million miles that we have saved up over a very long time. Is there a forumn in which we can sell or trade our miles? Otherwise is the safeest bet to schedule a long multi stop trip for the distant future?

    • 301 Moved Permanently I was recommended this blog by my cousin. I’m not sure whether this post is written by him as nobody else know such detailed about my trouble. You’re amazing! Thanks! your article about 301 Moved PermanentlyBest Regards Lawrence

    • I am not sure you are correct on point no. 3 with eerpsct to portability that the ten million exemption does not disappear upon another marriage of the surviving spouse but the surviving spouse’s exemption is set to whatever the portability exemption was from the last predeceased spouse. So if the surviving spouse A had 7 million exemption (5 for spouse and 2 unused) from the previous marriage and then got remarried and the new spouse B died with 5 million exemption (because it was all used up and only surviving spouse’s 5 million exemption remained) then the surviving spouse was stuck with only their exemption and lost the 2 million exemption from their first marriage. Of course, this all depends on if surviving spouse A filed an estate tax otherwise it doesn’t matter because they failed to perserve their exemption by not filing an estate tax return.

    • It’s always something… I’ve got 200,000 miles & exclusively use a credit card wt AA miles….. but not any more. Looks like the best bet is switch cards & book something with a codeshare airline asap. If anyone has input, post it. Thanks for the info.

    • American is already changing the rules as to what miles qualify one for elite status. Some actual flight miles won’t even get credit in the AAdvantage program if you pay too low a price for the seat. I guess they want to cut back on the perks they offer to Executive Platinum and Platinum levels. Too bad. They’re damaging their loyalty among these high mileage customers.

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  • 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 quentin.fottrell@dowjones.com or tweet @SMPayDirt.