Historically under-appreciated loyalty plans being leveraged to maximize liquidity opportunity for the rest of the global sector to follow the US lead: We have watched with keen interest as a number of the largest US airlines have utilized loyalty plans (off balance sheet assets) to raise credit over the past year, while in Europe IAG has also sold forward Avios points to Amex. With loyalty plan values potentially representing 7%- 278% of current market caps across the airlines under our global coverage, we see significant opportunity to take advantage of increasing loyalty plan value appreciation. 

Loyalty plans helpful to liquidity strategies during, but also beyond, the pandemic: In European Airlines: Liquidity the key short-term focus – but long-term liquidity thinking also likely to change, we outlined our view that the aftermath of COVID-19 should include higher liquidity buffers for the sector, with airlines potentially needing to hold up to 40% of annual revenues in cash to absorb a crisis such as COVID-19. Comments from Lufthansa’s new CFO that it will look to maintain €6bn-€8bn in liquidity access going forward (versus €3.4bn cash pre-pandemic), suggest the industry may be moving in this direction, and we think the use of loyalty plans could help the short and long term.