Last week I read a piece over on Loyalty Lobby about the struggling financial situation of Avianca Airlines. This is on the heels of the near-total collapse of Avianca Brazil. The Brazilian wing of the airline is so far in debt that assets are being repossessed and their airport slots are being auctioned off.

The fact that the Colombia-based parent airline is struggling as well indicates to me that we could potentially see some major changes, if not a catastrophic collapse of the Latin American airline. They posted a loss of $68 million during the first quarter of this year, and much of their debt is being sold off by investors looking to rid themselves of the liability. Avianca shares are trading at a mere $3, which is way under the $18 high just five years ago.

Reading through the Loyalty Lobby piece, it sounds like Avianca has adjusted aircraft deliveries and canceled some orders that should allow them to keep operating through the next couple years. Let’s hope they can turn things around.

Should you burn your LifeMiles?

This question hit me immediately as I read multiple articles. I’m not saying it’s time for to immediately divest yourself of all LifeMiles, but I wouldn’t want to be caught holding a worthless currency. Currently, I’m sitting on 105,000 LifeMiles, which is a sizeable stash. I’ve typically used these to fly intra-zone U.S. short-haul, which offers amazing value from our tiny regional airport (SEE: 3 reasons I am super excited for the new LifeMiles short-haul awards). What I have is enough for seven round-trip tickets within the U.S.

Ultimately, I decided to pull the trigger and book a couple itineraries. There is a trip I had penciled in for the fall, and locking in some short-haul United awards cut the stash by 15,000. The second, more speculative, booking was an ANA first class return from Asia using 82,000 miles. This is less than the 90,000-mile list price, but I managed to work in a decent domestic economy segment, and LifeMiles prices awards as a weighted average of segments, plus other hidden magic.

I’m left with ~8,000 that I wanted to book on an ACV-LAX segment, but for some reason it looks like none of the ACV-LAX award inventory is loaded into the LifeMiles search engine. Bah.

Conclusion

I’m not trying to tell you to hurry up and burn your LifeMiles, as Avianca isn’t exactly on the verge of folding. But things aren’t looking pretty, so I want readers to be aware of the situation so that we all don’t end up stuck “holding the bag”. LifeMiles is notoriously less-than-helpful, and if Avianca went under, I wouldn’t be surprised if they just shuttered and told everyone, “tough luck”.

LifeMiles have some great uses, but I wouldn’t speculatively buy them or transfer Citi or Amex points into LifeMiles unless you have an immediate itinerary to burn them on. Let the “earn and burn” mantra ring even more true in this situation.

Featured image courtesy of J. Babinski used under CC-BY-2.0 license.