If You Didn’t Believe the Airlines Had to Keep Flying to Support The Underlying Credit Card Business…

United is getting a cash injection from the issuer of the United Visa to keep it going through to better times and lower fuel prices.

UAL Corporation (Nasdaq: UAUA), the holding company whose primary subsidiary is United Airlines, today announced that it reached an agreement in principle with its Mileage Plus co-branded bank card partner, Chase Bank U.S.A., N.A. (“Chase”), 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

(Emphasis mine.)

Previously United’s co-branded credit card issuer provided debtor-in-possession financing and exit financing for the carrier’s bankruptcy. And Delta’s co-branded partner, American Express, provided half a billion dollars in prepurchase of miles in a vain attempt to keep the airline out of bankruptcy.