United Airlines raised roughly $6.8 billion against its MileagePlus loyalty program in July 2020 — $3.8 billion in senior secured notes and a $3.0 billion term loan — valuing the program at roughly $22 billion using a 12x multiplier on 2019 earnings.
Lenders took first-priority claims on program assets, including intellectual property and partner-fed cash accounts. The debt was scheduled to mature June 20, 2027, but United retired it early: the term loan was prepaid in July 2024 and the remaining notes redeemed July 7, 2025.
The summer of 2020 was a miserable time to be an airline with a payment due. Fleets sat parked, resale values were sliding, and nobody could promise when passengers would board again. Aircraft make lousy collateral when the whole world stops flying.
So when United Airlines went hunting for security that lenders would actually accept, it didn’t reach for its airplanes. It reached for your miles.
In July 2020, United raised roughly $6.8 billion against MileagePlus, its frequent flyer program. The package split into $3.8 billion of senior secured notes and a $3.0 billion term loan facility — all issued through the program’s own subsidiaries, not by the airline itself. The lenders’ logic was simple: a loyalty program earns money from credit-card partners and marketing deals whether or not a single plane leaves the gate.
What makes the transaction worth revisiting isn’t just the size. It’s that the program was priced by a method United handed its lenders in writing — a multiple applied to a single year’s earnings. That valuation, and the debt built on top of it, is the part the miles in your account never advertise.
How United turned MileagePlus into loan collateral
The 2020 filings describe a structure that deliberately separates the loyalty program from the airline that sells it. Program assets — the MileagePlus brand, member data, related intellectual property, and selected contractual cash flows — sit inside special-purpose subsidiaries. The borrowing happened there.
According to United Airlines Holdings, Inc., the notes and term loan were backed by first-priority security interests across substantially all of those subsidiary assets, including cash accounts fed by marketing partners and by United Airlines itself. If the program generates cash, lenders held the first claim on it.
That reach doesn’t stop at the subsidiaries. United Airlines Holdings, United Airlines, Inc., and certain other parent companies guarantee the MileagePlus obligations — so the debt points back toward the operating airline if the program entities can’t pay.
What the 12x multiplier actually measured
The number that gets quoted — roughly $22 billion — wasn’t a market price or an appraisal. It was arithmetic. United applied a 12x multiple to MileagePlus’s 2019 EBITDA, and the result became the program’s stated value.
That year choice deserves a pause. 2019 was the high-water mark of the pre-pandemic boom — the best year the industry had ever posted. Lenders accepted a valuation built on it anyway, because program revenue didn’t depend on flying.
This is also where the more dramatic version of the story runs into trouble. A widely circulated comparison holds that MileagePlus was worth more than United’s entire equity value, which was put at $10.6 billion in 2020. The program-side figure traces to the method in the filing; the equity figure does not, and no Tier 1–2 source reviewed for this piece confirms it.
The defensible version is narrower. United’s lenders accepted a valuation built on a stated method, and that method rested on a year that won’t come back.
A second carrier does appear in the documents, and it shows how differently these deals get framed. Spirit Airlines issued $850 million of senior secured notes in September 2020, secured against Free Spirit co-branded card proceeds and $9 Fare Club fees, per the U.S. Securities and Exchange Commission. What Spirit’s filing never provides is a valuation method — no multiple, no earnings base, nothing.
| Carrier | Program | Amount raised | Valuation methodology | Collateral pledged | Maturity date |
|---|---|---|---|---|---|
| United Airlines | MileagePlus | $3.8 billion senior secured notes plus a $3.0 billion term loan facility | 12x multiplier applied to 2019 EBITDA; the filing does not state the underlying EBITDA | MileagePlus intellectual property, brands, member data, substantially all issuer-subsidiary assets, and cash accounts receiving partner and United payments | June 20, 2027 |
| Spirit Airlines | Free Spirit and $9 Fare Club | $850 million senior secured notes | No valuation methodology disclosed in the reviewed filing | Cash proceeds from Free Spirit co-branded cards, $9 Fare Club fees, loyalty-program IP, and brand IP | 2025 |
| Source: U.S. Securities and Exchange Commission (SEC) | |||||
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The terms, the 2027 maturity, and a second collateral pool
The senior secured notes paid a fixed 6.50% a year and were scheduled to mature on June 20, 2027. The term loan carried a floating rate.
What’s less obvious is that United didn’t put all its borrowing power into one pot. Its separate September 2020 CARES Act credit agreement was secured by liens on route authorities, slots, and gate leaseholds — operating assets, not loyalty assets, according to the SEC filing.
So the government facility and the private MileagePlus lenders drew on two distinct pools. That split left MileagePlus standing as its own self-contained collateral base rather than one line item inside a blanket lien over United’s assets.
Where the money actually sat
The structural trick was legal distance. United moved the program’s assets — and a hand-picked set of contractual cash flows — into subsidiaries created for the purpose, one of which was an intellectual-property issuer designed to stay outside a bankruptcy estate and holding the brand and member data. The borrowing sat at those entities rather than at the airline, with United and its parent companies guaranteeing the obligations and lenders holding the senior claim on the pledged assets and designated cash accounts.
That arrangement is why a loyalty program can be borrowed against at all. Put the brand, the member data, and the partner cash flows inside a company the airline’s other troubles can’t reach, and you’ve built something a lender can seize if things go wrong. The airline keeps operating the program; the collateral stays quarantined.
Members saw none of this in their accounts. Earning and redeeming miles worked exactly as before, and no filing reviewed here puts a lender in charge of what an individual award costs. The difference stayed invisible — until a default, when creditors could have reached into that quarantined pool.
What the early payoff does — and doesn’t — tell you
The MileagePlus debt never reached its advertised finish line. United prepaid the $1.80 billion term loan in July 2024, then redeemed the last $1.52 billion of notes on July 7, 2025. By the airline’s own account, the program’s assets now sit unencumbered.
For a member, that’s the headline worth holding onto. A program mortgaged to the hilt in 2020 was, five years later, debt-free.
The covenant question, though, never got a clean answer. Under United’s disclosures, a breach could have let lenders accelerate the debt, foreclose on the collateral, or pursue other remedies. But nothing in the reviewed documents fixed award values, blocked a devaluation, or locked in partner terms. The financing never handed lenders a lever over the price of an award — the exposure to members was always indirect, working through pressure on program cash flow, not through a clause about redemption rates.
Reporting by
Key terms
- EBITDA
- EBITDA — earnings before interest, taxes, depreciation, and amortization — is a measure of operating profit that strips out financing costs and accounting charges. Lenders use it as a rough proxy for cash generation and often value a business by applying a multiple to it. In the MileagePlus financing, EBITDA was the earnings base United’s lenders accepted — a figure drawn from a year when the airline industry was flying at full strength.
- Senior secured notes
- Senior secured notes are debt obligations that give their holders a claim on specific pledged assets ahead of other creditors if the borrower defaults. Because that claim is backed by collateral, they generally carry lower interest rates than unsecured debt. United’s MileagePlus notes were secured by the program’s brand, member data, and partner cash flows rather than by aircraft, which is what let the airline borrow against its loyalty program.
- Special-purpose subsidiary
- A special-purpose subsidiary is a separate legal entity created to hold specific assets or carry out a specific transaction, keeping them apart from the parent company’s other business. When it is structured to be bankruptcy-remote, a parent’s insolvency does not automatically pull its assets into the estate. United placed MileagePlus’s brand and member data in exactly this kind of entity, which is what allowed lenders to take collateral in the program without also taking the airline.
- CARES Act
- The CARES Act was the U.S. federal government’s pandemic relief package, passed in 2020. Airlines were among the industries it was meant to help. United used it that September for a credit agreement secured by route authorities, slots, and gate leaseholds — collateral kept entirely separate from the MileagePlus pool.
Questions? Answers.
What is the United Airlines MileagePlus loyalty program?
MileagePlus is United Airlines’ frequent flyer program. Under the 2020 financing structure, its intellectual property — including the brand and member data — was contributed to a bankruptcy-remote subsidiary, which is what allowed the program to be pledged as collateral separately from the airline’s other assets.
Did any airline other than United pledge its loyalty program as collateral in 2020?
Spirit Airlines is the one other carrier the primary filings confirm. In September 2020 it issued $850 million in senior secured notes at 8.00% through its Free Spirit and $9 Fare Club financing entities, with a 2025 maturity. Whether American’s AAdvantage or Delta’s SkyMiles were similarly pledged is not documented in the sources reviewed here.
Does the MileagePlus financing give lenders any control over award prices or devaluations?
Not directly. The reviewed material does not establish any covenant that fixes MileagePlus award values, prevents a devaluation, or requires particular partner terms. It does state that covenant noncompliance could permit acceleration of the debt, foreclosure on the collateral, or other lender remedies — but that is a general default mechanism, not day-to-day control over award pricing.
Is United’s MileagePlus debt still outstanding today?
No. United prepaid the $1.80 billion MileagePlus term loan in July 2024, and on July 7, 2025 it redeemed the remaining $1.52 billion of 6.50% notes. Once both repayments cleared, the filing indicates the MileagePlus assets stood unencumbered.
