Airlines are no strangers to the debt financing markets — aircraft, gates, and other assets have historically been used as collateral for debt structures. But in 2020, for the first time in history, U.S. carriers collateralized the future cash flows of their loyalty programs to raise billions in loans.
How Loyalty Programs Are Saving Airlines
The pandemic has cast a spotlight on a historically undervalued asset.
April 02, 2021
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Summary.
Under financial pressure from the pandemic, many airlines are turning to their loyalty programs as collateral for loan programs. They are discovering that these programs are often worth more than their market capitalizations. But experience suggests that the relationship between the programs and the airlines is symbiotic and that airlines should retain control of them in order for the value to be fully realized.
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Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Customer Focus. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
Learn how to keep your customers—and their most important needs—front and center.