United Airlines pledges frequent flyer and passenger as collateral for $5 billion bank loan
In a filing with the US Securities and Exchange Commission, United Airlines has disclosed that it has agreed to transfer the ownership of its frequent flyer program and associated data to a subsidiary company and pledge the data as collateral to secure a $5 billion loan from a consortium of US banks. If the airline should default on the loan, the creditor banks will be able to seize the personal data and auction it to the highest bidder. Like all airlines, United has seen its business collapse during the pandemic-related travel restrictions; had it gone bankrupt (as it and other airlines still might), personal data including reservation records (PNRs) would have been auctioned along with the rest of the airline’s assets. At the valuation of $5 billion, the data is worth more than the airline’s landing and takeoff slots, gates, and routes, which have been valued at $4.5 billion to secure other loans. The use of personal data as collateral for a business loan is believed to be unprecedented.
Writer: Edward Hasbrouck
Publication: Edward Hasbrouck’s blog