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.
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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...
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?
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?
Message edited by: joebloe on 2009-09-18 04:01:11 CDT
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.
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.
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