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US Airways in Chapter 11: What should you do with your miles?

On Sunday, September 12, US Airways filed for Chapter 11 bankruptcy protection for the second time in two years. Increased fuel costs, competitive pressure from the low-cost carriers, and the failure to reach additional concessions from the pilots and flight attendants hindered the airline’s ability to achieve a competitive cost structure, and it was forced to file for bankruptcy rather than default on payments coming due in September.

US Airways now hopes to lower costs and increase revenue with a transformation plan that centers around decreasing distribution and operating costs, implementing lower and more simplified pricing, focusing on its East Coast and international routes, and offering amenities—such as two-class service, a global network, and service to key business-travel destinations—that its low-cost competitors do not.

But how will US Airways’ bankruptcy affect your travel plans, and what should you do to protect your miles? First of all, Chapter 11 does not mean liquidation; US Airways is not disappearing anytime soon. You can continue to fly, book tickets, and earn and burn frequent flyer miles as you normally would. Many airlines maintain business as usual during bankruptcies that can last anywhere from a few months to a few years, and then they effectively restructure and continue operations.

However, if you are fearful that US Airways may eventually liquidate—an event that has a strong possibility of occurring—or if you’ve lost confidence in the airline altogether, here are a few steps you can take to protect your miles:

Take an impromptu vacation

In the event of a liquidation, your miles will become worthless, except in the unlikely event that another airline purchases US Airways’ Dividend Miles program. So now might be a good time to use your miles for their intended purpose: travel awards. Book your upcoming holiday travel with miles or plan a spur-of-the-moment getaway to Europe or the Caribbean this fall. US Airways offers several discounted, off-peak awards, so if you book a flight in the next few months, you can get excellent value for your miles.

Turn miles into tickets

Can’t get away now? You might consider redeeming your US Airways miles for award tickets anyway. Although you may have heard of the expiring Aviation and Transportation Security Act, which forces airlines to accommodate passengers with paid tickets on a newly defunct airline, award tickets are not specifically protected by the ruling. However, it’s very possible that, in the event of a liquidation, other airlines will honor the award tickets in the hopes of gaining your business. It is also possible that US Airways will still be flying when your departure date arrives, and you’ll be able to take your trip with no problems.

Take advantage of partners

An alternate option is to book your award tickets on US Airways’ partner airlines, such as United, Lufthansa, or Air New Zealand. While each airline has its own financial problems, US Airways’ partners are unlikely to liquidate in the near future. You may feel safer with your ticket booked through another, more stable airline.

Redeem other awards

You can also use your miles for non-flight awards. You can redeem miles for cruise or resort vacations, as well as magazine subscriptions at Or, give up your miles for a good cause and donate them to the Make-A-Wish Foundation through the Dividend Miles Charity Program.

Swap your elite status

If you’re worried about losing your elite status and accompanying bonuses, either through an eventual liquidation or because you intend to fly US Airways less in the next few months, you can ask another airline to give you complimentary elite status in its frequent flyer program. Some airlines may ignore their qualifying-flight restrictions and bump you right to elite tiers if you can show proof of your US Airways Preferred membership and explain how you intend to make the new airline your preferred carrier. Just be sure to take advantage of your new special status by flying on that airline; usually, you will only get comped once in your life by a carrier, so you want to make the most of the experience.

Change your credit card

Many frequent flyers earn thousands of miles with an airline-affiliated credit card, such as the US Airways Dividend Miles Visa. If your card will soon be up for renewal, you might want to consider switching credit cards, rather than pay the annual fee and earn miles that may become useless in the future. Plus, if you switch to another affiliated credit card, you can get a big boost in your mileage account on that airline from the signup bonus. However, if your card is not up for renewal, you won’t want to switch cards just yet and pay two annual fees in one year.

Don’t worry so much

Keep in mind, that it is possible that US Airways will effectively restructure under bankruptcy protection and emerge a stronger airline within a year or two. But as there is no way of knowing what the future holds for the carrier, it’s difficult to predict the best course of action to take. The best advice is to assess your situation based on the number of miles you have, whether you can afford to lose them, and the time you have to take extra flights, and then earn or burn your Dividend Miles depending on what feels right to you.

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