Avianca Files For Bankruptcy, LifeMiles Not Affected (Yet)

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As per a Reuters news report, Avianca has filed for bankruptcy today.

Avianca has stated that this has been brought about as a result of COVID-19 because their revenues have dropped by more than 80% in the last couple of months. While that has certainly been terrible for its finances, they were already in trouble and there had been rumors swirling regarding the company’s viability for quite some time.

Filing for Chapter 11 bankruptcy will give Avianca some time to try to reorganize the company to try and make it through, but there’s no knowing right now on how successful those attempts will be.

Avianca is of interest to many due to LifeMiles, their loyalty program. LifeMiles is run separately to Avianca and isn’t included in the bankruptcy filing, so it’s currently unaffected. That being said, if Avianca doesn’t make it through this bankruptcy process, the usefulness of LifeMiles could be called into question as their access to Star Alliance partner flights could be impacted.

LifeMiles has frequently run sales offering a 140-150% bonus on purchased miles, plus they offer a subscription where you can buy miles each month at a relatively low cost. Given the increased uncertainty, it would be best to avoid purchasing any further LifeMiles until Avianca’s future is a little clearer, despite Avianca and LifeMiles being administered as separate companies.

h/t OMAAT

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Frank
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Frank

DW and I have 220K Lifemiles, entirely from bonuses. Let’s hope they will have some value when we can fly again.

James
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James

Does it make sense to cash out LifeMiles for hotel stays, Amazon purchases, etc. at this point? It’s a poor value compared to flight redemptions, but better than getting nothing if LifeMiles collapses.

Carl WV
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Carl WV

@James – Here was my choice,

Another use is to make Amazon purchases (including physical Amazon gift cards). They convert out at .65 cents per mile.

I made a personal decision based on my situation (which follows)

1) I have a little over a million miles stashed
2) 75% is in US airlines
3) 117,000 Lifemiles
4) I am 65, retired, and do not anticipate flying outside US this year
5) I may fly in the US late in the year
6) This was to be my year for my first travel beyond North America, and the Caribbean
7) Then COVID-19 happened – See # 6
8) A part of me would just like the Lifemiles future to be irrelevant (peace of mind)

Last night (before the Avianca bankruptcy or at least before I knew) I used my 117,000 Lifemiles in Amazon transaction, I ordered a physical $600 Amazon gift card (I couldn;t get an ecard to work) and about $160 in merchandise.

So I got a total of $750. Yes I know that’s about 1/2 of what they’re selling for (not really relevant for me). Yes I know if I had at least somewhat near term plans I could get a much greater value. But for my situation when I weighed Lifemiles uncertainty, when I would use them (devaluation risk), and the situation with other miles I pulled the trigger.

Afterwards, and perhaps even more today, I feel good about the conversion. I won’t feel bad if all goes well for Lifemiles (and I hope it does for others’ benefit) because I find Monday morning quarterbacking to be counterproductive.

As to the mechanics it was easy to load the Chromebook app. Then a “buy with Lifemiles” button appears when checking out (except when I tried an Amazon egift card). When I hit the button the transaction took about 30 seconds. The order showed as paid and my Lifemiles total was reduced.

A heads up… I did have a momentary jolt when the Amazon email showed the order being paid by Mastercard. First I confirmed I had no such Mastercard, and then I saw a Mastercard in payment methods that said LIFEMILES. Evidently the conversion process uses an intermediary creation of a prepaid Mastercard, although I may not be wording that well.

Again this won’t be for everybody (or maybe even many).. It’s all a balance of your situation, including peace of mind.

Carl WV
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Carl WV

I got an email from Lifemiles that the deduction for the Amazon gift card had been cancelled. I have not seen any similar email about other orders for merchandise. The order still showed as open on the Amazon end, so it looks like this was initiated by Lifemiles. The miles were returned.

For now I cancelled the gift card order on Amazon and will try some other purchases.

Not sure what’s up, but this makes me feel less comfortable with Lifemiles rather than more.

Mike
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Mike

Just read through the terms on the use of LifeMiles on Amazon; the third party processor is a company in Florida called Iguama. They explicitly state that you cannot purchase gift cards. And they talk about how they use a virtual Mastercard to pay Amazon for your purchases. But apparently they can’t really track returns very well and it sounds like if you make a return, you have to contact them in order to get your LifeMiles credited back to your account. My experience with returning things to Amazon is that they usually offer you the choice between a refund to your payment card OR simply a credit to your Amazon account. Not that it really matters I suppose – you’d still be taking a haircut on the exchange rate – as you pointed out, Carl, it’s just over half a cent per LifeMile. But that certainly beats ZERO if the program goes under!

Carl WV
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Carl WV

Thanks! I had seen a mention of the third party, but had not yet chase it as far as you have. I had wondered about gift cards, I guess it doesn’t immediately now allow the order. Amazon accepts – then Lifemiles/Iguana rejects it.

Granted it is lower valuation (all the orders did .65 cent). Part of my thought process is that I’ve never used any Lifemiles yet, and I have all the others (AA, United, BA AVios, Hawaiian, Alaska, etc.)

Thanks again!

CaveDweller
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CaveDweller

That’s why u do USA based AL’s their 1/2 honest in good times unlike now .
#trustnoonestayincave

CaveDweller
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CaveDweller

Lifemiles is a separate company u may Dodge the Nuke !!!
#stayincavebutnotmine

maumau
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maumau

Hi,
l am looking for advise from someone more experienced in these matters, if not one of the Frequent Milers themselves.
Last year I booked tickets to Colombia and back, as well as a roundtrip within Colombia, all with Avianca for last March. I booked the roundtrip from US with Ultimate Rewards, The trip within Colombia through the Amex portal, but credit card payment.
I changed the flights after hours on the phone with a very nice agent to November. I paid a change in fare difference in early March just after they allowed the changes given the global pandemic exploding.. Then, of course after just I believe a week or two, they even closed the borders to all flights in and out of Colombia, so I felt glad I changed the flights and I was also threatened with quarantine without pay at work, so had to in any case.
Now come to today, the borders are still closed in Colombia, as we are told by relatives that Colombia has no plan of reopening them, so closed indefinitely. Then yesterday Avianca files for bankruptcy.

My question, given the context, is twofold:

1) When the Avianca agent rebooked, it was never an issue whether they were points or other, and they rebooked with a new code altogether with the new fares. I paid the difference and they issued new tickets with the price on them. I suppose for them UR portal purchases are like cash so they did not seem to have an issue. (I point out also that the return flight to the US had already been cancelled – twice by Avianca for a very inconvenient one stop from direct out of Cartagena – the rebooking was handled through Chase Travel since they are the ones that notified me).
2) If I can request a refund at this point for the current flight booking for November, which seems like I might, but it is not entirely clear to me honestly, if they approve the refund would it be in UR for the original portion of the tickets, or would the refund end up being cash to the card since they rebooked us with a new booking code? If they say it was in UR (which honestly at this point I am not sure they can see), would the UR refund be automatic and Avianca would refund the difference paid this March, or would I need to contact UR as well?

I realize this is a long post, but if anyone read this far, thank you and hope someone has insight or advice in this situation.

Thanks