If an airline goes bankrupt what happens to your frequent flier points?

Question

I think that the points disappear and you loose them all. Someone told me that they will transfer them to another airline. Anyone know actually what happened - like with TWA or other airline that never made it back from bankrupcy? Especially curious for US airlines that are always on the rocks like United, Delta, American, NWA - is there any official guarantee they make to its Frequent flier customers??

Answer 1

As the person before stated, they are unsecure. It all comes out in the bankrupcy court procedings. BUT, I worked for Delta for many years, trust me...you have nothing to worry about. I believe when Delta took over Pan Am and Eastern's program, their miles converted to Delta's program. If another airline takes over, they will convert the miles to their FF program. But, in the liklihood an airline goes under completely, the miles are then dissolved. But you really shouldnt sweat. If Delta airlines were to go under, the entire economy of Atlanta would be at stake. The shareholders and congress officials are doing everything they can to keep Delta flying. Delta alone employs nearly 80% of the city between the airline itself and cargo companies and other indirect companies involved.

Smaller airlines didnt have the means to make it, like Independance Air. But, Delta isnt going anywhere. US Air came out, merged with America West, but they survived. In the years to come, who knows which name will carry on, but their programs will be honored. Rumors of merger have circulated for years, but if Delta and Continental merged, neither airline can agree to drop their company name. NWA has too much debt and is unionized. For years Delta ground employee's have voted down a union and will continue to do so.

As of right now, continue as you normally would. Accrue miles but use them as soon as you can. The years of sitting on your miles to get enough for a long vacation are over. As volitile as the airline industry is, you never know what tomorrow may bring.

The airline industry is unstable of course from 9/11. BUT a major factor is the cost of fuel. Load plans were built around $32 a barrel for fuel, which has now doubled. The internet has killed the industry with the bulk consolidator websites. Airlines have had no choice but to lower fares to rediculous levels. Half the people on a full 767 are just paying for the cost to run the airplane in the gate.

Keep in mind that you can redeem your miles on partner airlines that belong to Skyteam as well as many many others. I redeemed my dads miles from Delta to fly to Sydney on Qantas. It takes more to use, but it can be done. If you have something in mind, call the FF desk and ask which other airlines honor the miles and redeem them.

Hope that helps explain a little.

Answer 2

While legally frequent fliers are considered unsecured creditors, historically frequent flier miles are NOT lost. The bankruptcy judge has significant discretion when it comes to matters such as this and the company generally wants the existing plans, including miles already earned, to be preserved. Airlines believe fliers, particularly full fare fliers, are very frequent flier program sensitive.

United just exited bankruptcy and their frequent flier program was continued and existing miles were preserved. Both my wife and I continue to accumulate miles and our balances weren't wiped out. In fact, I've used miles recently to fly us to San Francisco for Memorial Day weekend.

However, there is no guarantee that a future bankruptcy filing won't cause miles to be lost.

Answer 3

It completely depends on the terms of the bankuptcy reorganization plan that is approved by the courts. Frequent flier mileage holders are unsecured creditors. Bankruptcy judges and trustees are motivated to protect the interests of the average consumer on the street, so sometimes miles survive, but with limits or changes of some kind. You just never know... my United Miles Plus have survived for ten years, except for normal disclosed expirations.

Answer 4

Look at Ansett Australia airlines...when they went bust everyone lost thier FF points and thier pre-paid airfairs and employees didn't get thier pay. Yes you loose your points unless thier is a previous agreement between two airlines to accept them .

Answer 5

They go flying out the window

Answer 6

no you lose it, u might get a complimentary gift bag or something if youn call the credit card company

Answer 7

Your points go bankrupt also.

Answer 8

poof they are gone with the wind