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#1
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Delta Air Lines May Drop Preparation For Chapter 11 Filing
"Frank F. Matthews" wrote:
will not go 11. Interesting that 500 ,million is prepayment for frequent flyer miles. That indicates that AE expects them to stay around but seats will be really hard to find. It won't make a difference to seat availabily. Amex already sends big fat cheques to Delta every month for the purchase of Delta FF miles which Amex then gives to customers for every dollr tehy spend on the card. The $500 million is simply prepayment for the miles AMEX will be giving to customers over the next X period. It would be interesting to know just how long it will take for AMEX to distribute those miles. If Amex negotiated a rate of say 2 cents per mile, that gives them 50*500 000 000 = 25000000000 FF points to hand out. It may take a while before cardholders of AMEX cards spend that much money. |
#2
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More details have come out. It turns out that AE negotiated a priority
position in case of default. I wonder what the accounting implications for that are? Delta may have a problem with how the payment is carried on the books. I suppose their team of crack ex Enron accountants has approved it though. nobody wrote: "Frank F. Matthews" wrote: will not go 11. Interesting that 500 ,million is prepayment for frequent flyer miles. That indicates that AE expects them to stay around but seats will be really hard to find. It won't make a difference to seat availabily. Amex already sends big fat cheques to Delta every month for the purchase of Delta FF miles which Amex then gives to customers for every dollr tehy spend on the card. The $500 million is simply prepayment for the miles AMEX will be giving to customers over the next X period. It would be interesting to know just how long it will take for AMEX to distribute those miles. If Amex negotiated a rate of say 2 cents per mile, that gives them 50*500 000 000 = 25000000000 FF points to hand out. It may take a while before cardholders of AMEX cards spend that much money. |
#3
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"Frank F. Matthews" wrote:
More details have come out. It turns out that AE negotiated a priority position in case of default. I wonder what the accounting implications for that are? FF points are a virtual liability. It costs nothing for Delta to provide the service AMEX paid for (authorize Amex to add points to customer FF accounts). And then, this virtual debt is slowly converted to a slightly less virtual debt (FF points in customer accounts) each year. Are all of FF points in customer balances aco****ed as liability now, or are airlines in the USA only declaring as debt the capacity that is allocated to FF freebies each year ? If AMEX usually gives 2.5 billion points per year, it means it would send DELTA $50 million bucks a year in payment for those points. So the deal could last 10 years. What is likely to happen is that Amex has minumum cash requirements as covenants for this debt, so that shoudl Delta liquidate, there would be enough cash to cover the cash balance remaining (which goes down as AMEX awards points each month) |
#4
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nobody wrote:
"Frank F. Matthews" wrote: will not go 11. Interesting that 500 ,million is prepayment for frequent flyer miles. That indicates that AE expects them to stay around but seats will be really hard to find. It won't make a difference to seat availabily. Amex already sends big fat cheques to Delta every month for the purchase of Delta FF miles which Amex then gives to customers for every dollr tehy spend on the card. The $500 million is simply prepayment for the miles AMEX will be giving to customers over the next X period. It would be interesting to know just how long it will take for AMEX to distribute those miles. If Amex negotiated a rate of say 2 cents per mile, that gives them 50*500 000 000 = 25000m000m000 FF points to hand out. It may take a while before cardholders of AMEX cards spend that much money. 25 billion divided by over 50 million cardholders? That's $500 per AMEX card holder. |
#5
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anon wrote:
25 billion divided by over 50 million cardholders? That's $500 per AMEX card holder. No. Credit cards typically give one point per dollar spent, and points cost anything between 2 to 4 cents. But in the case of Amex, it is likely that it is paying at the low end of the cost per point. Number of cardholders isn't so important. It is the number of cradholders with the Delta affinity card (eg: those who have their "goodies" converted to Delta FF point) with average spending for those customers. |
#6
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nobody wrote:
anon wrote: 25 billion divided by over 50 million cardholders? That's $500 per AMEX card holder. No. Credit cards typically give one point per dollar spent 500 points per cardholder = $500 spent per cardholder. Did I miss something in the math? |
#7
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"anon" wrote in message m... nobody wrote: anon wrote: 25 billion divided by over 50 million cardholders? That's $500 per AMEX card holder. No. Credit cards typically give one point per dollar spent 500 points per cardholder = $500 spent per cardholder. Did I miss something in the math? Yes - you get points worth one cent per dollar spent. To receive $500 worth of points you need to put $50,000 through the account. Keith |
#8
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For AMX you get 1 rewards point for each dollar spent. Spend 30K $$ you get about a free rt on most commercial Airlines in the Continental US. |
#9
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For AMX you get 1 rewards point for each dollar spent. Spend 30K $$ you get about a free rt on most commercial Airlines in the Continental US. |
#10
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American Express cards--as we the amex-delta cardholders know--aren't accepted
in some places that mastercard and visa are accepted the rejecting amex merchants do not see it as being enough to their gain, because the amex percentage is reportedly higher than visa and m.c. just for the helluvit--the ugly worst case scenario--what visa and mastercards have the better airline point deals? for instance, capital (?) which hawks it unmercifully, and who else? well, i know there are several, and many (if not most) of these banks/issuers don't have the up-front membership/cardholder fees of $50 --$85 or whatever dollars per annum i'm sure there's a site or two on the internet (wherever that thing is) that rates/evaluates the various issuers/banks, so nevermind if ya doesn't wanna expend time giving-out such tips anyhow, continue to talk but more clearly amongst yourselves, because i can't discern full comprehension in this thread b-t-w: my impression of sky miles is that it's a wonderful inducement for consumers (me), and american express company obviously finds it so lucrative enough to venture/gamble hundreds of millions of dollars in advances to a truly faltering business which is allegedly losing billions currently i watched the atlanta local tv news last night, and the negotiators of delta and unions are into a ... very momentous "poker game" for instance, the delta pilot pension union president/chair is very concerned of the prospect of the current retired pilot pension fund payout being revised downward if bankruptcy occurs a non psychic's prediction: some kind of pre-election announcement having to do with lowering of the fuel prices will occur within the next week |
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