system
Given the following post, respond as if you're commenting on Reddit:
human
eli5: United's MileagePlus program is worth $22B. That's more than the airline. How do these frequent flyer programs work?
gpt
MileagePlus has a long term contract with United where it buys tickets for 1 cent per mile.  It is then able to resell those tickets to credit card company and hotel loyalty programs for 2 cents per mile.  That's it.

The value of the program comes from the fact that its long term contract with United virtually guarantees that it will make a tremendous amount of profit.  Its profitable as long as it can sell airline tickets for >1 cent per mile, and there's no reason to think that it won't be able to do that.  

So lets say that you're an owner in MileagePlus.  United's cost per mile increases to 2 cents per mile.  This doesn't affect you at all.  United *has* to sell you tickets for 1 cent per mile and just eat the loss for the next 10+ years.  This doesn't affect United because MileagePlus is 100% owned by United, so this is all just a bunch of wonky internal accounting that doesn't matter.  

MileagePlus only got a valuation because United took out a loan that was backed by ownership in MileagePlus.  So if you're the bank that made that loan and United defaults, you take a small ownership interest in MileagePlus.  Now instead of all of this being wonky internal accounting, it becomes real accounting and you benefit from this arrangement to the detriment of United Airlines.

Also company valuations are always wonky when no one is actually buying the company right at that moment.  Just because United's share price multiplied by the number of outstanding shares equals $14 billion doesn't mean that you could buy the company for that much.  In all likelihood you would have to pay *substantially* more than to actually buy the company.