Update: Lifemiles has put out a statement that they have a strong balance sheet, remain separate from Avianca, and will continue normal operations as Avianca proceeds through Chapter 11.
While technically true, if Avianca were to go out of business, Lifemiles would lose their ability to book Star Alliance award tickets.
Avianca has filed for Chapter 11 bankruptcy in the US as it looks to reduce debts between $1-$10 billion, after their home country of Colombia refused a bailout. The airline had struggled even before coronavirus hit.
Avianca’s most useful aspect for mileage junkies is their Lifemiles program, which has mileage bargains for Star Alliance flights on airlines like United. United has also invested in Avianca in the past, as it looked to maintain weak Star Alliance coverage in South America.
Traditionally airlines look to save people’s mileage balances in bankruptcy as mileage programs are often the only profitable part of the airline. Hopefully that happens with Lifemiles as well, but it’s another reminder that you should keep your mileage balances with banks that can transfer points to miles on demand instead of storing them with airlines.
Do you think Avianca and Lifemiles will make it through Chapter 11 unscathed?