Alaska Airlines is raising $1.5 billion in debt against its Mileage Plan frequent flyer program, which it expects to use in part to pay down the $900 million in Hawaiian Airlines debt it’s taken on as part of acquiring the Honolulu-based carrier.

• Mileage Plan is now controlled by a Cayman Islands subsidiary, AS Mileage Plan IP Ltd.

• It’s able to borrow against the program’s future revenue streams, primarily from Bank of America but also from other partners (like Cartera Commerce which runs the shopping portal, Rewards Network which runs Dining, and Bilt which offers points transfers).

Last month, JetBlue announced a big deal to raise cash against its frequent flyer program and the stock tanked. In a day so far where the markets are flat, Alaska stock remains up sharply.

Hawaiian Miles will transfer 1:1 into Alaska at will in a matter of days. Alaska will offer reciprocal status matching with Hawaiian. And there’s a great opportunity to acquire credit cards from both carriers while the loyalty programs remain separate (and Hawaiian cardholders can transfer points to and from other members free, so if your friends and family get Hawaiian cards their points can end up in your Alaska account).

During the pandemic, United, American and Delta raised $6.5 to $10 billion apiece against their loyalty programs. Taking on debt against future co-brand credit card income streams was a much bigger play than pre-selling miles to bank partners during the financial crisis (structured as debt), which is the play Southwest Airlines engaged in during the pandemic era again.

In fact, Hawaiian Airlines had issued approximately $1 billion in senior secured notes against HawaiianMiles at both 5.75% and 11%. Alaska sees the opportunity to lower its borrowing cost here – Mileage Plan is going to be even bigger going forward.