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Jul 15

American Airline Assures Frequent Flier Credit Card Holders Their Miles are Safe

If history offers any guidance, the 69 million members of American Airlines’ frequent-flier program shouldn’t fret about losing their miles following the recent bankruptcy filing by the airline’s parent company.

Travel experts said that there’s virtually no chance the airline would alter or eliminate its travel awards program, called AAdvantage, and alienate its best customers. Until this week, American was one of the only major U.S. carriers never to seek bankruptcy protection, following filings in the past decade by US Airways, Delta, Northwest and United. In each of those cases, frequent flier programs remained intact, with customers able to earn and redeem miles for trips just as before.

In an email to members of its frequent flier program, American said: “Your AAdvantage miles are secure. The AAdvantage miles that you’ve earned are yours and will stay yours, subject to usual policies, until you choose to redeem them for a great award with us.”

Although bankruptcy carries a stigma of failure, major U.S. airlines have used bankruptcy court in the past decade more as a business strategy to reduce costs. Under bankruptcy laws, airlines can force changes in labor contracts, escape from costly leases on older planes and emerge in stronger financial shape.

Rewards balances are endangered if a company liquidates much like a holder of a gift card is usually out of luck if a retailer closes. While smaller carriers such as Aloha Airlines and ATA Airlines stopped flying and canceled their frequent flier programs after bankruptcy filings, carriers of American’s size typically leave bankruptcy and become profitable or wind up merging with another airline (which also honors accumulated frequent flier miles, though with changes to the program). American is the country’s third largest airline.

Founded over 30 years ago, American AAdvantage is the country’s oldest and largest frequent flier program, and continues to add to its 69 million members. In the past eight months, it has averaged 7,100 new members a day, according to bankruptcy documents.

Like other frequent flier programs, much of the growth comes not from ticket sales but from people who buy things from other companies in exchange for miles that they can redeem for free trips. American says it sells miles to more than 1,000 companies, including Citi, which offers the Citi Gold AAdvantage World MasterCard and other co-branded American Airlines cards. Nearly two-thirds of all American frequent flier miles are issued through these partnerships, according to securities filings.

Your miles are safe and secure, travel safe and be a smart consumer, using your credit card to its full advantages.

Barry Norman is a contributor to and blogger at firstcredit.net. For over ten years FirstCredit.net has provided consumers free information helping them make sense of credit cards and the financial industry. Whether you are a longtime cardholder or looking for a frequent flyer credit card, FirstCredit.net can help you make informed decisions.

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