2026-06-14 · S-04A

Worth More Than the Airline

title: "Worth More Than the Airline" date: "2026-06-14" summary: "American Airlines is worth about ten billion dollars; the mileage program inside it is appraised at nearly three times that." sector: "S-04A"

In June 2020, United Airlines needed money. The planes were parked, almost nobody was flying, and the company that owned them was worth about 10 billion dollars on the stock market, less than half of what it had been a few months earlier. So United did the thing a household does when the rent is due and the salary has stopped: it walked around the house looking for something to pawn. What it found was MileagePlus, the frequent-flyer program. In the documents it filed to borrow against the thing, United's bankers valued MileagePlus at 21.9 billion dollars, arrived at by taking the program's 2019 earnings and multiplying by twelve.

It is worth reading that sequence twice. The airline was worth ten billion. The points program inside the airline was worth twenty-two. United pledged the part that issues points and raised 6.8 billion against it: 3.8 billion in senior secured notes paying 6.5% and due in 2027, plus a three-billion term loan. The scheme that gives you a free flight after enough trips to Denver was, on paper, worth more than twice the company that ran it.

United was not doing anything unusual. Delta borrowed 9 billion dollars against SkyMiles the same year. American borrowed 10 billion against AAdvantage, which at the time was the largest airline-backed financing anyone had ever done. When the entire industry is on fire and lenders will only accept one kind of collateral, that tells you which part of an airline a bank actually wants to own. It is not the aircraft.

The mile is the product

The reason a points program outvalues its airline is that it stopped being a points program some time ago. It became a wholesaler of currency.

Here is the mechanism, with the romance removed. A bank, usually American Express or Chase, pays the airline cash, upfront, to buy miles in bulk. The bank then hands those miles to its cardholders as sign-up bonuses and spending rewards. The airline books the cash today and owes a seat at some unspecified point in the future, if the customer ever redeems, on a flight with availability, which is a separate negotiation. The airline has sold a promise it controls the value of, for money it receives now. This is generally considered a desirable position to be in.

The numbers involved have stopped being airline numbers. Delta's partnership with American Express generated about 7 billion dollars in 2024 and 8.2 billion in 2025, which is roughly 10% of the entire airline's revenue, and Delta has said in public that it would like to reach 10 billion. Spending on Delta's co-branded Amex cards now runs at close to 1% of US gross domestic product. That is one airline's credit card accounting for a penny of every dollar Americans spend, which is a strange sentence to be able to write about a company that mostly moves people to Atlanta.

By now the proportions have inverted. Something like 57% of all the frequent-flyer miles issued in the United States come from a credit-card swipe rather than from anyone actually getting on a plane. The flying is no longer how you earn the miles. The flying is the place you eventually spend them.

The present-day version

You might assume the 2020 figures were a pandemic distortion, the kind of valuation that looks silly once the planes are full again. The planes are full again. The figures got bigger.

On Point Loyalty, a consultancy that does this for a living, published its 2026 ranking after going through more than 170 airlines. Delta's SkyMiles came first, valued at 31.7 billion dollars, the most valuable airline loyalty program in the world. American's AAdvantage came in at 26.7 billion. United's MileagePlus at 25.3 billion. The average value of the hundred biggest programs is now 2.4 billion, up from 2.0 billion in 2023.

Now hold the AAdvantage figure, 26.7 billion, next to the open market. On the 13th of June 2026, the entire market capitalization of American Airlines Group, the whole company, every plane, gate, slot, pilot and baggage carousel, was about 9.9 billion dollars. The mileage program is appraised at very nearly three times the airline that owns it.

So that sounds good.

It is not only an American habit. IAG's Avios rose 45% to 10.3 billion. Qantas Frequent Flyer jumped 63% to 7.0 billion. PhoenixMiles, Air China's program, very nearly doubled, up 90% to 5.9 billion. Across the industry, the part that prints loyalty currency is appreciating while the part that burns jet fuel is not.

Which raises a reasonable question. If a company earns most of its money selling a currency to banks, and runs a large and expensive transport operation chiefly so that the currency has somewhere to be redeemed, is the transport operation the business, or is it the marketing department?

To be fair, it is a genuinely good business

This is the point where it would be easy to treat the whole thing as a swindle, and it is not one. It is, in cold terms, an excellent business, and considerably better than flying.

The cash arrives years before the obligation comes due. The margins are high in a way that selling economy seats has never been. And the obligation itself is a liability whose value the company gets to set, because a mile is worth exactly what the airline says it is worth on any given morning, and the airline can quietly say it is worth less. Owing people something you are allowed to mark down at will is, broadly speaking, a comfortable kind of debt. A frequent flyer is a creditor who can be paid back in a currency the borrower mints and devalues.

This is why the argument has gone the other way among people who read the filings. It is now routinely pointed out that the major US carriers make their real profit in the loyalty arm, and that the flying business, stripped of the card revenue, is somewhere between marginal and a reason to apologise to shareholders. The planes are the cost of running the casino. The casino is the credit card.

What could go wrong

The arrangement rests on one assumption: that banks keep earning enough from cardholders to keep buying miles by the billion. Pull on that thread and things get interesting.

There is talk in Washington of capping credit-card interest rates, and analysts have flagged, as Yahoo Finance reported earlier this year, that airline loyalty programs would be squarely in the blast radius if it happened. The banks pay for the miles out of what they make from cardholders. Cap what the banks make, and the bulk-mile order shrinks, and the most valuable thing the airline owns gets less valuable, at exactly the moment it has been borrowing against it.

There is also the customer, who is in the awkward position of being both the product and the collateral. Every devaluation that improves the liability annoys the people whose loyalty is the entire asset. So far they have absorbed it, on the reasonable theory that the miles are still better than nothing. That theory holds right up until it doesn't.