How Delta Looks to Leverage Rewards From Its Own Frequent Flyer Program
Skift Take
Delta Air Lines needs cash. Its SkyMiles program is one of its only remaining profitable assets. The airline is being smart in using it to secure new funding.
Delta Air Lines, which plans to use its frequent flyer program to back about $6.5 billion in new debt, sold roughly $4.2 billion in SkyMiles to third-party customers last year, the majority to American Express, which used them to incentivize its customers for credit card spending.
Delta is at least the fourth U.S. airline to use its loyalty program to secure new cash, joining United Airlines, American Airlines and Spirit Airlines. Delta's plan is most similar to United's, with Delta expecting to raise debt from private markets secured against a new entity called SkyMiles IP Ltd. and registered in the Cayman Islands.
Airlines have been using loyalty programs as collateral because they believe they are immune to some industry pressures. While they were created to keep customers loyal, frequent flyer programs have become more like stand-alone businesses that create points and sell them to third-party firms, such as credit card issuers and h
