American Airlines Selects Citi as Sole Credit Card Issuer
Skift Take
Key Points
- American Airlines has selected Citi as its exclusive credit card provider, aiming for a 10% increase in related payments.
- The agreement concludes a unique dual-issuer arrangement with Citi and Barclays, ending the partnership with Barclays.
- Citi will manage Barclays' portfolio starting in 2026, with American Airlines projecting significant financial gains from the deal.
Summary
American Airlines has chosen Citi as its sole credit card issuer in a move expected to increase payments to the airline by 10%. This decision ends its partnership with Barclays, which had continued after the merger with US Airways. Citi will take over the portfolio from Barclays in 2026, and American Airlines anticipates a substantial financial boost, with expected payouts nearing $10 billion annually and a pre-tax income benefit of $1.5 billion per year.
American Airlines picked Citi as its sole credit card provider in a deal that it expects to boost payments to the carrier by 10%.
The deal ends months of negotiations and is part of an effort to boost American’s revenues from its loyalty program.
American long had an unusual credit card partnership in the industry, signing on both Citi and Barclays as its issuers. The carrier kept Barclays as a credit card issuer after the merger with US Airways. However, the new deal means that American’s partnership with Barclays will come to an end.
“I view what we did at the time of the merger unique and very conscious, of taking care of our customers and beneficial from a financial perspective at American at a time that we really needed it,” American CEO Robert Isom said at the Skift Aviation Forum in November, referring to its dual deals with Barclays and Citi.
Citi will take over Barclays’ portfolio and start transitioning credit cardholders in 2026. Holders of American’s Barclays cards will still receive the same benefits, the carrier said.
American said it received $5.6 billion from its credit card partners in the 12 months through September. The carrier said as these payouts approach $10 billion a year, it expects an annual pre-tax income benefit of $1.5 billion.
Co-branded credit cards have become increasingly more important for airlines. Typically, carriers sell miles to banks, which are then awarded to customers who sign up and swipe those credit cards. These deals bring in billions in revenue and create a loyal customer base for the airline.
One of the most lucrative co-branded credit card deals is Delta’s partnership with American Express. Last year, Delta generated $6.8 billion from the partnership.
A major part of American’s strategy has been boosting engagement with its loyalty program and making it more competitive. In an investor day presentation from March, American said it was expecting 80% of its revenues to come from its loyalty program and premium products.
Watch Robert Isom at the 2024 Skift Aviation Forum:
Photo Credit: American Airlines aircraft at the airport. American Airlines American Airlines / American Airlines
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