Airlines Make More Money Selling Miles

Justin Bachman:

“Airlines are earning upwards of 50 percent of [income] from selling miles to a credit card company, which we believe is a great business to be in,” DeNardi wrote on March 20, boosting his target prices on American and United Continental Holdings Inc. by $30, raising his outlook for Southwest Airlines Inc. by $15, and adding $10 for Delta Air Lines Inc. shares. He cited the likelihood that airlines will begin disclosing more information over the next year or two. Stifel also upgraded its target share price for Alaska Airlines’ parent to $145. That stock traded at $93.66 on March 30. DeNardi argues that more transparency about loyalty plans would also pressure airline executives to further improve profits in their core business—namely flying.

Love that: "namely flying." The airlines are about to tip into being financial vehicles -- quite literally -- rather than transportation vehicles. Fascinating.


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