AA in talks to choose Citigroup over Barclays | Wilnesh News

American Airlines Negotiating Citigroup Its exclusive credit card partner, ditching rival issuer barclays bank People familiar with the negotiations said the partnership dates back to the airline’s acquisition of US Airways in 2013.

American Airlines has been working with banks and credit card networks for months on a new long-term agreement aimed at merging its operations with a single card issuer to boost revenue from its loyalty program, people familiar with the matter said.

Negotiations are ongoing and the timing of a deal, which requires regulatory approval, is unclear, the people said, speaking on condition of anonymity.

Banks’ co-branding deals with airlines, retailers and hotel chains are among the most hotly contested negotiations in the industry. While they provide card-issuing banks with millions of loyal customers who spend billions of dollars each year, the details of these arrangements can have a huge impact on either party’s bottom line.

Big brands have been stepping up their bargaining power in recent years, demanding a greater share of revenue from interest and fees. Banks, meanwhile, have been delaying or exiting the space entirely, citing rising card losses, scrutiny from the Consumer Financial Protection Bureau and rising capital costs that have squeezed margins.

Airlines rely on credit card programs to stay afloat, earning billions of dollars from banks each year in exchange for the miles customers earn using their cards. These partnerships have been crucial during the pandemic, when travel demand dried up but consumers continued to spend and earn miles with their cards. Operators say that in recent years the growth in card consumption has far exceeded the growth in passenger income.

American Airlines outpaces American Airlines in revenue despite claiming to have largest loyalty program delta Nearly $7 billion in payments were made there American Express Last year’s cooperation with US credit cards amounted to US$5.2 billion.

American Airlines said in a statement: “We will continue to work with all partners, including our co-branded credit card partners, to explore opportunities to improve the products and services we offer our mutual customers and bring more value to the AAdvantage program.

U.S. regulators are still likely to object, include The U.S. Department of Transportation may further delay or even terminate the contract between American Airlines and Citigroup, leaving current arrangements that include Barclays intact, according to a person familiar with the matter.

If the deal between American Airlines and Citigroup goes through, it would end an unusual partnership in the credit card world.

Most brands settled with a single issuer, but when American Airlines merged with US Airways in 2013, reserve Longtime issuer Citigroup is also on board, as is US Airways’ credit card partner Barclays.

American updated Both relationships were established in 2016, providing each bank with specific channels for marketing credit cards. Citibank is allowed to market its cards online through direct mail and in airport lounges, while Barclays can only do so on planes.

when relationships arise renew Last year, Citigroup once again beat smaller Barclays on good footing.

Citigroup, run by Chief Executive Jane Fraser since 2021, has the more profitable side of the AA business; their clients compared with those of Barclays, one of the people said They tend to cost more and have lower default rates.

The person said any renewal would likely be seven to 10 years in length, which would give Citigroup time to recoup the cost of moving Barclays clients and other investments needed. Banks tend to make most of their money from these arrangements in the second half of the deal.

Through this and other large partnerships, Fraser has been pushing Citigroup to set bigger goals to improve the profitability of its credit card business, people familiar with the matter said.

“We are always proactively working with our partners, including American Airlines, to find ways to jointly enhance our customer offerings and drive shared value and growth,” a Citigroup spokesperson told CNBC.

Meanwhile, Barclays executives told investors earlier this year that they aimed to diversify their co-branded card portfolio away from airlines by increasing partnerships with retailers and technology companies.

Barclays declined to comment for this article.