This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Airlines Mull Frequent-Flier Spinoffs

CHARLOTTE, N.C. -- Anybody want to buy a frequent-flier program?

That shouldn't be a problem. Not to say that legacy airlines move in lockstep, but in the past month, five of the six have said they are evaluating frequent-flier program spinoffs.

This movement has two principal sets of backers. One is made of investors such as the Icelandic company FL Group, which has apparently lost money by choosing the wrong time to buy 9.1% of the shares of American parent AMR (AMR). In September, CEO Hannes Smarason wrote AMR a letter urging a quick spinoff.

"We believe that there is no time to lose," he noted.

The other group that champions spinoffs is made of investment banks "looking for fees," according to US Airways (LCC) CEO Doug Parker. The airline, though skeptical, is reviewing a spinoff, promoted by "people coming and making pitches to us about it," Parker said last month.

But clearly, many industry insiders see value in spinning off mileage programs.

"To a certain extent, these programs print money," says Jay Sorensen, president of the airline marketing consultant IdeaWorks. They sell miles that cost little to produce but have vast appeal. United (UAUA) says Mileage Plus 2006 revenue was $600 million. Revenue from American Advantage is believed to exceed $1 billion. Founded in 1981, Advantage was the first frequent-flier program, and it was quickly copied by competitors.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
LCC $0.00 0.00%
AXP $64.26 0.00%
DAL $41.43 0.00%
AAPL $94.19 0.00%
FB $118.06 0.00%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs