American will end Q2 with 11b in liquidity. The Advantage program was just valued at 18-30b (4B being collateral for Cares loan). AA isn't in a bind.

Someone asked the CEO of Jetblue yesterday at one of our virtual company-wide meetings if American is in threat of going bankrupt soon. He basically said he doesn’t see any major US airline going bankrupt with the amount of liquidity they’ve been able to raise. Unless things start to go downhill again from where we are today. Take it for what it’s worth.

Delta CEO said something along the same lines, except he was talking about no airlines going out of business.

Dumb question here, but why is the Advantage program so valuable? I have 211K miles with AA, it seems like that'd be a liability since I could use it for several free trips.

I've wondered this myself. How are people's free trips worth collateral?

Because they sells tons of miles that never get redeemed.
Its been quite sometime since I looked at the data but it was somewhere around 10-15% of the miles that we’re redeemed. Not to mention every few years the miles get devalued and becomes more points/miles for the same trip.

Because they get to sell the miles for more than they pay.

Its currency, if American Express pays .5 cent for a mile and sells to their customers for .1 cent they make money.

Customers don't view themselves as buying miles when they shop and use a card, but they are.

I think it's one of the reasons TWA went out of business.

A guy running it sold future seats to a bunch of travel agency company's, including some he owned, cheap, for money right now.

Then later the airline barley owned any inventory to sell because so many seats had been presold, but booking company's made a killing because the seats were theirs to charge and markup for.

I am sure American Express would have some legal clause in BK court for miles they have in their possession. Once they "sell" them to credit card users I doubt they care if the airline folds and the consumers currency is worthless.

The miles work well because probably no one has stoped using their airline credit card for fear of the currency devaluation down to 0.

I can believe that, we have had those AA miles for over 4 years now. Wife can't travel due to other health conditions that put her at very high risk if she gets CV-19 and I have no where to go other than CLT-JAX which I just drive. We have a Capital One Venture Card that give us 2% back on all purchases to be used for travel expenses, any airline, hotel, or rental car. I've used those rewards for CLT-DAL on SWA for the wife to visit family last year, they strongly prefer picking her up at DAL vs. DFW.

While I don't contest the cash they all raised I don't really trust these airline CEOs when they say bankruptcy is off the table. They will ALWAYS say that right up until the bk paperwork is handed in at the courthouse. Will these airlines go bust? Who knows. However what do you expect, Doug Parker to get on CNBC sweaty and wild eyed and say his company is doomed? The SEC would be there to lead him away in handcuffs before they even cut to commercial.

company management will always cheer-lead the company in public, in the media, etc. a CEO will never say "gee, we will be bankrupt soon" or "we kinda suck as a company"

the most important job of a CEO is do whatever it takes, within the law, to maintain shareholder value. CEO's get canned when shares tank.