Lots of fun data though:
https://ir.united.com/node/23771/html
Yup.
A few interesting tidbits: 77% of redemptions are UA metal, and 19% are other travel partners. They disclose the portion of the 19% that are partner airlines vs other travel companies like Mariott.
While they're paying UAL $0.01 per redeemed mile, it is very hard to believe other airlines are getting paid based on the amount MP decides to charge the member. I assume when a member redeems MP for an LH seat, MP pays UAL $0.01 and UAL buys/barters the seat from LH on a per miles basis. If MP pays LH directly, it would also be an accounting headache for mixed metal awards.
Interestingly, since MP pays UAL more for every mile the member redeems, MP stands to gain from lower redemption rates, except in cases where charging more miles will result in the member buying more miles at a rate higher than MP pays UAL, such as transferring from Chase at a price of $0.02. (On page 23 footnote 2 they claim MPH has full discretion to set redemption rates for UAL metal, but that is quite difficult to believe)
It is evident from the $0.02 price that the US airlines, being far fewer and less replaceable than financial institutions, have the upper hand in price negotiations and are getting a very large portion of the total interchange margin that the card issuers collect. It stands to reason that the banks get better rates from foreign airlines, and should thus prefer members earning/transferring on those.
What does this potentially mean? Excuse my ignorance...
Likely less devaluations until the loan is paid, since devaluations help UAL while hurting MPH and MPH is pledged to the lenders. See page 32 of the slideshow and T&C pages 9 & 33 which outline severe limitations on material modifications including pricing terms.
All currently existing or future agreements governing the sale, transfer or redemption of Miles (as defined below), use of the MileagePlus Intellectual Property and Excluded Intellectual Property or provision of services by the Parent Guarantors or any of their subsidiaries to either Borrower or the Company Subsidiary Guarantors in connection with the MileagePlus Program (the “Intercompany Agreements”) including: (a) the Third Amended and Restated General Services Agreement, dated on or about the Closing Date, between the Company and United (the “General Services Agreement”), (b) the Fourth Amended and Restated MileagePlus Operating Agreement, dated on or about the Closing Date (the “Operating Agreement”), between the Company and United, (c) the Fourth Amended and Restated Umbrella Agreement, dated on or about the Closing Date, between the Company and United (the “Umbrella Agreement”, together with the General Services Agreement and the Operating Agreement, the “Integrated Agreements”) and (d) for certain circumstances, the IP Agreements, as defined below. United may terminate its obligations to the Company under the Integrated Agreements upon written notice at any time upon or after (i) the payment in full of all senior secured debt obligations or (ii) the sale or disposition of the Company (or any equity interests in the Company) by the Master Collateral Agent to third parties other than the secured parties after foreclosure following an Event of Default, the Company ceases to be affiliated with United; provided that such termination would not affect the rights and obligations of the parties to such agreements that may have accrued prior to such termination, or as a result of such termination, or that expressly survive termination pursuant to the terms thereof.
