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In a recent development, American Airlines is in talks to make Citigroup its exclusive credit card partner, potentially dropping Barclays from a longstanding partnership. This move is part of American Airlines’ strategy to boost revenue from its loyalty program by consolidating business with a single issuer. Negotiations are ongoing, with the timing of an agreement yet to be determined.
Co-brand deals between banks and airlines are crucial for both parties, with details of the arrangements playing a significant role in their profitability. American Airlines, despite having the largest loyalty program, was out-earned by Delta last year. These partnerships are essential for airlines, especially during challenging times like the pandemic when travel demand decreases but consumers continue to use their cards.
Delays and regulatory risks may affect the potential agreement between American Airlines and Citigroup, with objections from U.S. regulators possibly impacting the outcome. If finalized, this deal would mark the end of a unique partnership in the credit card world, as most brands typically settle with a single issuer.
Under the leadership of CEO Jane Fraser, Citigroup is actively working to secure a renewal contract with American Airlines, leveraging their profitable customer base and lower default rates compared to Barclays. On the other hand, Barclays is looking to diversify its co-branded card portfolio away from airlines.
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