Reader David writes:
- Hey there. This is a question for your blog.
I’ve heard about Delta’s financial troubles, and for the first time heard them mention the “B” word.
Since I really concentrate on accumulating Delta FF miles, I was wondering what would happen to them if they went bankrupt — heaven forbid.
What’s happened historically in other airline bankrupcy situations. Any insight on that?
I wouldn’t worry about your Delta miles. United and
USAirways recently went through Chapter 11 (United is still there) and their miles are still being put to good use.
I have no worries about United miles at all.
USAirways miles are a somewhat different story — they may have to re-enter bankruptcy, and their future as an independent carrier is a bit murkier. Even so, all hope is not lost there, and USAirways is in alot more trouble than Delta.
First, mileage programs themselves are
independently profitable. Airlines sell miles to credit card companies, phone companies, mortgage companies, and make a profit doing so. Even when an airline can’t make money by flying, it can make money selling its miles. So the programs themselves are an attractive asset. And that’s apart from the hugely valuable marketing database that these accounts represent. There’s some chance that even if an airline
ceased to be in business that their miles would be honored (such as with Pan Am/Delta and TWA/American). This
isn’t 100% assured, of course – the Midway Airlines
bankruptcy left mileage balances stranded.
But Delta just isn’t at a place where it’s necessary to be thinking about such things. They aren’t at risk for liquidation. They just pay their pilots too much.
United has already reduced pilot costs in bankruptcy. If Delta had United’s pilot costs last quarter they would have made money. Bankruptcy is a controlled business strategy under consideration for the airline, not a weigh station on the road to Skymiles extinction.
Bottom line: Don’t sweat it!