United May Still Lag Delta, American on Loyalty Revenue Even After New Credit Card Deal
Skift Take
United President Scott Kirby has a reputation for being a skilled negotiator. But because of a mistake by previous management, he had little leverage with JP Morgan Chase. That makes for tough contract renewal talks.
When the first airlines launched loyalty programs almost 40 years ago, they intended to do what you would expect — to keep customers from defecting to the competition. But over the past two decades, many programs have become independent business segments that generate massive cash for the corporate parent through agreements with banks that market co-branded credit cards.
United Airlines, after its merger with Continental Airlines, may not have seen the trend coming as clearly as other U.S. carriers. Just before Scott Kirby, then president of American Airlines, negotiated one of most lucrative credit card contracts ever, with Barclays and Citibank in 2016, United signed a long-term agreement with J.P. Morgan Chase. Airlines and banks never release terms, but within a few years United admitted it had fallen behind on credit card revenue. Joseph DeNardi, an analyst with Stifel, called the old deal "a well-below market contract," and when Kirby became United's president in 2016, he complained about it.
Now, three months before Kirby becomes CEO, United is poised to catch up — but not fully. In a deal that surprised some analysts and industry watchers, United said Friday it agreed to a contract extension with Chase with better economics. In a filing with the U.S.
