JetBlue Sells Loyalty Points to Bolster Cash by $150 Million

(Bloomberg) -- JetBlue Airways Corp. sold loyalty points to Barclays Plc for $150 million, making the carrier among the first in the U.S. to use the method to raise cash as the coronavirus pandemic all but extinguishes demand for travel.

“It was a good opportunity for us to get a small amount of incremental liquidity at attractive terms,” Chief Financial Officer Stephen Priest said on a conference call Thursday to discuss first-quarter financial results. Barclays, which issues JetBlue’s co-branded credit card, confirmed the sale.

The deal adds a new dimension to fundraising efforts by the battered airline industry. Carriers have been rushing to build liquidity and slash spending amid a 95% drop in travel demand from a year ago and expected declines in revenue of as much as 90% this quarter.

JetBlue has raised more than $2 billion since mid-March and received $936 million from the U.S. Treasury Department to support payroll expenses. The airline is seeking to raise an additional $750 million over “the next couple of months,” Priest said.

Consumers can earn points in the airline’s TrueBlue loyalty program by, for example, flying on JetBlue, using the credit card or booking hotels or rental cars through the carrier’s vacation unit.

JetBlue’s sale of loyalty points echoes moves by Hilton Worldwide Holdings Inc. and Marriott International Inc., which have raised $1 billion and $920 million, respectively, in recent weeks from similar transactions.

Airlines disclose few financial details of their loyalty programs, including their primary source of revenue: selling miles to banks that then use them to reward credit card use by customers. JetBlue received $475 million from such deals last year, Stifel analyst Joe DeNardi said in an April report. American Airlines Group Inc. received total cash proceeds of $4.3 billion, while Delta Air Lines Inc. reaped $4.2 billion, he said.

Some carriers have discussed using their loyalty programs as collateral for U.S. government loans, Bloomberg News reported. JetBlue has applied for a $1.1 billion loan from the government and has discussed the loyalty program, Priest said Thursday.

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