American Airlines Working To Sell Debt Backed By The AAdvantage Frequent Flyer Program

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American Airlines is working to sell debt backed by its frequent flyer program, AAdvantage.

Gary Leff on February 13, 2021.

American Airlines plans to sell bonds guaranteed by its frequent flyer program to the public beginning in March. They could own a portion of AAdvantage’s revenue stream. They are doing this to refinance their government loan under the CARES Act program for which they have committed to a loyalty program.

Goldman is in talks with investors to refinance $7 to $9 billion for the Fort Worth (Texas) based company in the coming months, he said. There has been talk of a potential return of 6 to 7 percent.

The three largest U.S. airlines have mortgaged their frequent flyer programs for a total of $23 billion. Airline miles are literally the only reason United and American have not yet filed for bankruptcy.

Southwest Airlines has not promised its fast rewards program, but Chase has planned a $600 million points purchase for 2021.

American Airlines is the only airline that has pledged its frequent flyer program to the federal government. Currently, the Treasury Department has a “first lien on American Airlines’ rights under the joint US credit card agreements [with Citibank and Barclays] and certain other agreements regarding partner participation in frequent flyer programs” ( )….American Airlines AAdvantage® Loyalty Program (“Loyalty Program”)’. This means that your membership information will also be nationalized if American Airlines goes bankrupt.

Would you buy American Airlines debt guaranteed by AAdvantage?

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