See below excerpt from American Airlines press release.
+++
Today, the Company announced it has raised an additional $1.3 billion in liquidity by:
Amending an existing agreement under which AMR will receive $1 billion in cash from the advance sale of AAdvantage frequent flyer miles to Citi, American's long-standing credit card partner. The advance sale of AAdvantage miles largely will be treated as a loan for accounting purposes. Citibank has the right to use the miles in equal monthly installments over the 2012-2016 timeframe. The transaction provides other benefits for Citi, including an extension of the co-branded credit card program.
GreyRabbit said: How do we profit or learn anything from this article?
You would make more profit if you posted this on your blog and put up ads...
Sign up for AAdvantage cards. Or they might start making better offers. For example, the typical bonus offer on their website is for 25,000 miles when opening an AAdvantage card. However, I have been receiving targeted offers for a 30,000 bonus (to which I've already applied).
reuv said: GreyRabbit said: How do we profit or learn anything from this article?
You would make more profit if you posted this on your blog and put up ads...
Sign up for AAdvantage cards. Or they might start making better offers. For example, the typical bonus offer on their website is for 25,000 miles when opening an AAdvantage card. However, I have been receiving targeted offers for a 30,000 bonus (to which I've already applied).
Doesn't Citi let you close a card then reapply and get the signup bonus again?
Basically it means we can probably all continue to keep churning our AAdvantage cards every three months for the next six years. Those billions of miles have to go somewhere, so they might as well be me.
If you can't profit from miles, that might be your own problem.
GreyRabbit said: How do we profit or learn anything from this article?
You would make more profit if you posted this on your blog and put up ads...
ppatin
Focused.
posted: Sep. 17, 2009 @ 2:41p
billybwilde said: Basically it means we can probably all continue to keep churning our AAdvantage cards every three months for the next six years. Those billions of miles have to go somewhere, so they might as well be me.
If you can't profit from miles, that might be your own problem.
Are you serious? You can apply for a new card every three months and get the 30k miles each time? Is there any penalty for this other than a hit to your credit score?
ppatin
Focused.
posted: Sep. 17, 2009 @ 2:42p
By the way, I also heard that AA did a sale/leaseback deal with GECAS on a bunch of their planes. Sounds like they're burning the furniture to heat the house...
ppatin said: billybwilde said: Basically it means we can probably all continue to keep churning our AAdvantage cards every three months for the next six years. Those billions of miles have to go somewhere, so they might as well be me.
If you can't profit from miles, that might be your own problem.
Are you serious? You can apply for a new card every three months and get the 30k miles each time? Is there any penalty for this other than a hit to your credit score?
No, all you get is a hard inquiry. I've done this many times; it pays for my vacation flights. If you're denied, then that's another story. Given that they change how they compute credit scores all the time, the denial might hurt your score even more so.
ppatin said: Are you serious? You can apply for a new card every three months and get the 30k miles each time? Is there any penalty for this other than a hit to your credit score?
Ditto, I didn't know this either... I assumed it was just like the Delta/AMEX cards that have the once-in-a-lifetime bonus.
ppatin said: By the way, I also heard that AA did a sale/leaseback deal with GECAS on a bunch of their planes. Sounds like they're burning the furniture to heat the house...
Yet they're sniffing around at JAL. Airline folks aren't the best businesspeople...
kaiserben said: Doesn't Citi let you close a card then reapply and get the signup bonus again?
Yes. I called last month to ask if they'd waive the $85 annual fee and they say 'no' so I cancelled. A week later, I got a letter offering 30,000 miles with no annual fee for a year. What are they thinking?
ppatin
Focused.
posted: Sep. 18, 2009 @ 7:15a
marketingmike said: ppatin said: By the way, I also heard that AA did a sale/leaseback deal with GECAS on a bunch of their planes. Sounds like they're burning the furniture to heat the house...
Yet they're sniffing around at JAL. Airline folks aren't the best businesspeople...
In fairness, AA is the only remaining legacy carrier that hasn't taken at least one trip through Ch. 11.
diljs said: It's amazing that AA can effectively print the made up currency of miles and sell it to Citi for cash.
Well, these AA miles have value (as long as their in business). It costs AA fuel, etc. for your free flight. These are not standby tickets, so the usual marginal cost argument shouldn't really apply here. Because you have a confirmed seat, they cannot switch you with a passenger willing to pay full fare as opposed to your free ride.
ppatin said: By the way, I also heard that AA did a sale/leaseback deal with GECAS on a bunch of their planes. Sounds like they're burning the furniture to heat the house...If I read it correctly, they're selling planes that they haven't gotten yet, and then leasing them.
American has a lot of 737s on order, which they are planning to use to replace their fuel-guzzling MD-80 fleet. By selling the slots at Boeing, they get some portion of their deposits back, don't have to lay out the money to buy the planes once they are made, and, when they come up for major maintenance, they can step away.
Over the life of the plane, this is probably cheaper than straight out financing the purchase, and it allows greater flexibility in determining your fleet.
ppatin
Focused.
posted: Sep. 18, 2009 @ 12:48p
sechs said: ppatin said: By the way, I also heard that AA did a sale/leaseback deal with GECAS on a bunch of their planes. Sounds like they're burning the furniture to heat the house...If I read it correctly, they're selling planes that they haven't gotten yet, and then leasing them.
American has a lot of 737s on order, which they are planning to use to replace their fuel-guzzling MD-80 fleet. By selling the slots at Boeing, they get some portion of their deposits back, don't have to lay out the money to buy the planes once they are made, and, when they come up for major maintenance, they can step away.
Over the life of the plane, this is probably cheaper than straight out financing the purchase, and it allows greater flexibility in determining your fleet.
Good point, for a second I thought they were selling off planes that they already owned. I once tried to read an explanation of how buying vs. leasing worked for airlines, but it quickly got so complex that it made my head spin.
If you want a used plane in need of a major maintenance check, I'm sure there's one for you in the desert somewhere....
wu9tiger
Tired Member
posted: Oct. 26, 2009 @ 12:19p
billybwilde said: Basically it means we can probably all continue to keep churning our AAdvantage cards every three months for the next six years. Those billions of miles have to go somewhere, so they might as well be me.
If you can't profit from miles, that might be your own problem.
I am having problems finding a card with no annual fees for the first year now (I think it was still available last month). At $85, it seems expensive to churn the miles. Anyone has a link to the no annual fee version?
It is surprising that Citi bought $1B AA mile yet they just tightened the rules for churning.
kjgco
Senior Member - 1K
posted: Oct. 26, 2009 @ 12:26p
wu9tiger said: billybwilde said: Basically it means we can probably all continue to keep churning our AAdvantage cards every three months for the next six years. Those billions of miles have to go somewhere, so they might as well be me.
If you can't profit from miles, that might be your own problem.
I am having problems finding a card with no annual fees for the first year now (I think it was still available last month). At $85, it seems expensive to churn the miles. Anyone has a link to the no annual fee version?
It is surprising that Citi bought $1B AA mile yet they just tightened the rules for churning.Try this one. There are 3 choices: Mastrcard, AMEX or Biz. Each offers 30K miles after $750 purchases and no fee for the first year.
TheRealRayCharles
Member
posted: Oct. 26, 2009 @ 1:39p
reuv said: diljs said: It's amazing that AA can effectively print the made up currency of miles and sell it to Citi for cash.
Well, these AA miles have value (as long as their in business). It costs AA fuel, etc. for your free flight. These are not standby tickets, so the usual marginal cost argument shouldn't really apply here. Because you have a confirmed seat, they cannot switch you with a passenger willing to pay full fare as opposed to your free ride.
Either they flight won't be full, in which case the marginal cost argument does apply, or the flight is full, in which case they sell a full fare ticket and say "I'm sorry, the flight has been overbooked! We'll have to put you on standby, how could this have happened?". I'm sure it's just a coincidence that on my (regular) flights to the south the standby passengers are always the ones who used cc miles or got a fs&f discount.
glxpass
Senior Member - 5K
posted: Oct. 26, 2009 @ 3:08p
^^^It's nice to see that the money from all the rewards that Citi cheated people from (by closing their Shell Oil cards and other products and not paying accrued CashBack) has been put to good use.
diljs said: It's amazing that AA can effectively print the made up currency of miles and sell it to Citi for cash.I wonder how many miles are included for that $1-billion?
ProfessorEd
Senior Member - 1K
posted: Oct. 27, 2009 @ 4:32p
I applied through their web site after logging in to my account which appears to lack the first year waiver of the fee and fewer miles.
Any suggestion on what to do given there is a better offer (30,000 just posted).
One possibility is to open a CITI Gold account which I believe then gets one card fee waived. Apparently you have 6 months before they start charging you a fee (waived if your average balance is $100,000 across accounts). The only downside seems to be they request permission to do a credit check in the application. Does anyone know if they do routinely do the credit check when upgrading an account?
I assume there is a number you can call to cancel the application or E-mail.
tolamapS
Senior Member - 2K
posted: Oct. 27, 2009 @ 10:02p
reuv said: diljs said: It's amazing that AA can effectively print the made up currency of miles and sell it to Citi for cash.
Well, these AA miles have value (as long as their in business). It costs AA fuel, etc. for your free flight. These are not standby tickets, so the usual marginal cost argument shouldn't really apply here. Because you have a confirmed seat, they cannot switch you with a passenger willing to pay full fare as opposed to your free ride.
Questions is: what lattitude does AA have in devaluing miles or imposing conditions.
Say, AA could one day price a regular domestic flight at 50K miles as opposed to 25K miles. That would basically screw Citi, because now Citi will have to shell out more miles for "intro" offers.
ProfessorEd
Senior Member - 1K
posted: Nov. 4, 2009 @ 10:42a
Thanks to kjgco for posting the new more generous offer. In a phone call I learned they could not change the offer on an existing application. My wife canceled her application and will reapply for the new more generous offer. In same conversation learned they had approved her but for only $1,000 line (several other cards with CITI)and had phoned to see if she would agree to reallocating some of the line from other cards to the new one. At least on new applications they are still smart enough to permit reallocation (very sensible since one can imagine that a customer with an Aadvantage account and applying for a card with a fee might occasionally want to charge more than $1,000 in a month, possibly even for one ticket).
Now we watch to see if they reject the new application because she had too many previous applications (or someone does not notice the last application had been canceled). For what it was worth, the lady on the phone indicated she would watch for the new application and try to avoid that (suggesting a possibly sophisticated computer system since I suspect they are too large for a certain person to expect to see all applications coming in).
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