Star Alliance Airline Avianca Warns It May Go Bust, Are Your LifeMiles Safe?

Colombian flag carrier Avianca failed to timely file its 2019 annual 20-F report with the SEC. They explain this is because their auditors have ‘substantial doubt’ as to their ability to continue as a going concern. They plan to file their report in June, and include this caution.

The airline is currently in default on debt covenants. United Airlines disclosed that it expects to lose $697 million of the $700 million it has lent to Avianca.

In a 6-K filing Avianca says their problems are driven by the coronavirus crisis, and that’s certainly true, but financial challenges predate the current pandemic. Last summer the head of the airline was caught on video acknowledging that the carrier was ‘broke’. They’ve already planned for layoffs and a smaller fleet.

In 2015 Avianca sold 30% of its frequent flyer program LifeMiles for US$343.7 million. LifeMiles is a separate company. However the value of miles in the LifeMiles frequent flyer program is intimately tied to the health of its associated airline.

It’s through Avianca that LifeMiles has access to Star Alliance award redemptions. When Jet Airways collapsed, the separate JetPrivilege program had little to offer members though it has valiantly rebranded as InterMiles.

I would not buy LifeMiles at this point. However there’s little that can clearly be done to protect LifeMiles in your account. Partner airline redemptions aren’t a hedge against bankruptcy, although there’s some chance if LifeMiles survives while Avianca does not, that awards issued on Avianca ticket stock will still be honored to the extend that LifeMiles is able to pay for them.

The advice with LifeMiles – which has a good award chart, no fuel surcharges, and sells miles cheap – has long been to buy what you need to use right away, not to invest in the program long term.

That said I do think – despite warnings from Avianca’s auditors – that the airline will continue even if going through bankruptcy. As long as it remains operational, LifeMiles should be safe and retain value. And since United values their Avianca partnership long term, and has already written off the value of its loans, it seems unlikely that they would be the ones to force the airline into bankruptcy.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. […] Star Alliance Airline Avianca Warns It May Go Bust, Are Your LifeMiles Safe?  Gary covered a very similar situation with Avianca.  In this post Gary says that his advice has “long been to buy what you need to use right away, not to invest in the program long term.”  But he goes on to say that he thinks that “the airline will continue even if going through bankruptcy. As long as it remains operational, LifeMiles should be safe and retain value.” […]

  2. […] Air Canada Aeroplan is a Star Alliance frequent flyer program. They offer access to Star partner awards across the alliance, and far greater functionality and better customer service (telephone hold times back in winter notwithstanding) than LifeMiles which offers incredible deals when selling miles for around 1.35 cents apiece (and there’s currently consternation because of the precarious position of Avianca). […]


  1. this just broke —

    French government announces `historic’ 7 billion euros ($7.6 billion) aid package to save Air France.

  2. I’ve only bought LifeMiles once and immediately used them. I’m glad I put off the temptation to bulk up during a sale without a immediate use in mind.

  3. I too buy and burn them (as anyone should), but I got caught with this whole mess having to cancel a few hundred thousand miles worth of trips with them unfortunately.

  4. Wow, just wow. OMAAT pushed that garbage on the false assumption you get get Lufthansa first class.

  5. I unfortunately bought $1000 worth of Lifemiles during one of last year’s promotions. If those miles disappear, would I stand any chance being able to do a charge back with the credit card I used to purchase the miles?

  6. BB – what false assumption? It’s a fact that you can use them on Lufty. The point is that you need to buy them to use them immediately and not hoard them.

  7. So, if you have flights booked using LifeMiles on United or another partner and they go bankrupt, do you lose those tickets, or would they still be safe since you ticketed prior?

  8. @Chatter
    Can you show me an award that is available on Lifemiles for LH first?
    You’ll find availability with United but not with Avianca

  9. I have 2 paid tickets with them which were cancelled due to the coronavirus. I didn’t get the refund just credit. What will happen to these?

  10. @Gene – as I say, I think the airline will still exist even if it’s reorganized and as long as the airline still exists LifeMiles should still ahve value so yes.

  11. Better not to have many miles bunked in your whatever airlines..AirBerlin showed how thousands of people are fooled and lost a lot of miles and money. NOT a single cent to every damaged FFlyers until today! With the non existing airline travels, closed borders and most of all the fear to get infected…there will be a lot airline bankcruptcy to come…and the AB trauma will repeat itself!!

  12. Curious to know if using Lifemiles AND cash to book an award ticket (US to Asia) would make it any “safer” in the event of an Avianca failure. Does that somehow change the fare class or security of the ticket in the eyes of the airlines I’d be traveling on OR is it still just a regular award ticket that Aviance just charged fewer miles for because of the cash supplement?

  13. Great content, Gary, as usual! What’s the best bet/Best Buy for using Avianca life miles right now?

  14. @BB – your comments are rubbish, and an outright lie, but I’ll come back to that. @James – yes, I can show you one. In spite of LH only flying a handful of long haul routes and only two flights per day to the USA, you can fly FRA-ORD next Friday May 1 in First Class for 87,000 Lifemiles plus $111.00 and I haven’t even checked all dates. Every single blogger has always said that LH First is hit and miss and only available within two weeks of departure. However, at certain times, at least twice in the past 5 years, the entire LH First Class inventory was opened up for the entire 11 months forward to almost every destination in the world. Since 2015, I have crossed the Atlantic 20 times in LH First, all using Lifemiles, saving me at least $50,000. All bloggers including OMAAT have always stressed that Lifemiles were a speculative buy, not to hoard them, and that you needed the stomach for it. And of course, not to mention the fact that you could almost always find Business Class seats to almost all US destinations on LH and LX for the whole year. There has probably been more long haul First and Business Class seats on LH with Lifemiles than on AA with their own miles. Anyway, that’s what bloggers do, they tell you what you can do and it’s up to you to decide if it’s suitable for you or not. I’ve got 250,000 Lifemiles in my account, so what. Do I give a damn? No. Why? Because I got immense value for the 2,000,000 that I bought since 2015. And so did many people. You both read these blogs for a reason, and you obviously get something out of it. Nobody knew 6 months ago that most airlines would become insolvent overnight. The trillions in losses that people will suffer from this pandemic is going to be the real tragedy, not the few frequent flyer miles that people lose from airlines going bankrupt. You need to put things into perspective rather than take it out on the bloggers.

  15. @Tim poses a good question. If you buy frequent flyer miles and the airline goes bust, can you initiate a chargeback with your credit card? What is the difference between not being able to use an airline ticket and not being able to use frequent flyer miles?

  16. Hey Gary, thanks for this. Question: Would it be safer to use LM points for refundable hotel stays (ie, would hotels honor the stays if Avianca goes bust)? Thanks.

  17. Gary,
    I was about to book 5 business class seats on United with the cash and points option, for travel later on this year. What happens if they go under? Will United honor the booking?

  18. @Leon nobody knows for sure what would happen but if I had to choose, I’d put my chances on the 5 United tickets. If Avianca fails completely, it’s very likely we’d lose the Lifemiles. There are more chances United would honour the tickets. But that’s only my opinion.

  19. Don’t think Avianca is sinking to the depths…it’s the national carrier for a country with 50 million people. …..2nd place is a relatively distant LATAM. Avianca is the 2nd oldest airline (by a couple of months vs KLM which is #1)

    Downsize..sure…sink totally – no. Thus, Lifemiles will retain value as the carrier still exists.

    WIth that said…have 19,000 or so LM left…spent about $200 USD for some of it…ended up being extra for a award flight – which went on sale – so didn’t need. Thus, in a way, it’s gravy.

  20. Quasimodo I hope your right but I’m not as optimistic for several reasons:
    1. The Colombian Government are proby not going bail out Avianca.
    2. Colombia has local Carriers such as Viva, Tac and Wingo which can cover domestic and nearby country routes.
    3. Copa, Latam, and US Carriers can cover further international routes, with Copa expanding it’s footprint in Colombia and Peru.

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