When Loyalty Program Saves the Airline: United Story

UAL Corporation, the holding company whose primary subsidiary is United Airlines, has announced that it has reached an agreement in principle with its Mileage Plus co-branded bank card partner, Chase Bank, and Paymentech, one of its credit card processors, to extend the term of their respective agreements.

As part of the transaction, United will receive a payment of $600
million from Chase, which relates to the advance purchase of frequent-flyer miles and the extension of the contract. The company
also expects this transaction will improve cash flow by about $200
million in the next two years.

In addition, the level of reserve or holdback that United is
required to maintain under its credit card processing agreement with
Chase / Paymentech L.L.C. has been reduced to $25 million. This
reduction will result in the release of approximately $350 million in
previously restricted cash.

As a result of its agreement with Chase, the company expects to
increase its cash position by approximately $1.2 billion, including $1
billion in the short term and an additional $200 million over the next
two years. Combined with the previously announced approximately $550
million raised from new transactions in the second and third quarters,
the company will have increased its total cash balance by $1.7 billion
and continues to have more than $3 billion in unencumbered hard assets.

Source: United Airlines

Source: COLLOQUY

Customer Loyalty and Customer Lifetime Value | CustomerThink

Customer Loyalty and Customer Lifetime Value | CustomerThink

Customer Loyalty and Customer Lifetime Value

By Bob E. Hayes, Ph.D., Business Over Broadway





Customer loyalty and customer lifetime value are two
different, yet related, areas of study. The purpose of this discussion
is to outline each area and highlight how knowledge in both areas is
necessary to better understand how to grow a company. Companies
are not static entities; they make business decisions in hopes to
increase customer loyalty and grow their business. The key to business
growth is to make decisions that will improve customer loyalty.
Customer loyalty management is the practice of determining how to
maximize customer loyalty. To understand how improvements in customer
loyalty will improve business growth, we need to first understand the
value of customers to the organization.

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