United Airlines Holdings (UAL) - Get United Airlines Holdings Inc. Report and Delta Air Lines (DAL) - Get Delta Air Lines Inc. Report and their respective credit-card partners, JPMorgan Chase (JPM) - Get JP Morgan Chase & Co. Report and American Express, (AXP) - Get American Express Company Report have talked about selling miles ahead of schedule and for less than money to raise cash to weather the coronavirus pandemic, a news story said.
The discussions might not result in any deals, the Wall Street Journal said, citing people familiar with the matter.
But they underscore airlines' desperation since the pandemic shut down the U.S. economy and canceled thousands of flights.
U.S. carriers have cut about 70% of flying this month and have warned that deeper reductions might be ahead.
At last check United Airlines shares were down 8.4% at $28.87. Delta shares were off 5% at $23.16.
U.S. airlines have mortgaged gates, flight paths and other assets to secure billions of dollars of loans in recent weeks. But that will not be enough to get the companies through a slump that is expected to last for months.
Banks routinely buy miles from airlines to reward consumers for spending on their credit cards. But these discussions would see the banks buy miles all at once and at a discount, instead of buying them later as cardholders accrued points.
The cash infusion could help keep the airlines alive, protecting card partnerships that generate billions of dollars of annual spending volume.
Airlines that chose this option sacrifice future revenue and could lose the upper hand in negotiations with their lending partners.
The $2 trillion stimulus package Congress passed last month set aside as much as $50 billion in grants and loans for U.S. airlines, though participation would likely require surrendering equity stakes to the U.S. Treasury.
Delta said in a statement that it "does not comment on any kind of industry speculation."
United Airlines did not respond to a request for comment.