An American Airlines’ Embraer E175LR (front), an American Airlines’ Boeing 737 (C) and an American Airlines’ Boeing 737 are seen parked at LaGuardia Airport in Queens, New York on May 24, 2024.
Charly Triballeau | AFP | Getty Images
American Airlines is in talks to make Citigroup its exclusive credit card partner, dropping rival issuer Barclays from a partnership that dates back to the airline’s 2013 takeover of US Airways, said people with knowledge of the negotiations.
American has been working with banks and card networks on a new long-term deal for months with the aim of consolidating its business with a single issuer to boost the revenue haul from its loyalty program, according to the people.
Talks are ongoing, and the timing of an agreement, which would be subject to regulatory approval, is unknown, said the people, who declined to be identified speaking about a confidential process.
Banks’ co-brand deals with airlines, retailers and hotel chains are some of the most hotly contested negotiations in the industry. While they give the issuing bank a captive audience of millions of loyal customers who spend billions of dollars a year, the details of the arrangements can make a huge difference in how profitable it is for either party.
Big brands have been driving harder bargains in recent years, demanding a bigger slice of revenue from interest and fees, for example. Meanwhile, banks have been pushing back or exiting the space entirely, saying that rising card losses, scrutiny from the Consumer Financial Protection Bureau and higher capital costs make for tight margins.
Airlines rely on card programs to help them stay afloat, earning billions of dollars a year from banks in exchange for miles that customers earn when they use their cards. Those partnerships were crucial during the pandemic, when travel demand dried up but consumers kept spending and earning miles on their cards. Carriers have said growth in card spending has far exceeded that of passenger revenue in recent years.
While it says it has the largest loyalty program, American was out-earned by Delta there, which made nearly $7 billion in payments from its American Express card partnership last year, compared with $5.2 billion for American.
“We continue to work with all of our partners, including our co-branded credit card partners, to explore opportunities to improve the products and services we provide our mutual customers and bring even more value to the AAdvantage program,” American said in a statement.
Delays, regulatory risk
It’s still possible that objections from U.S. regulators, including the Department of Transportation, could further delay or even scuttle a contract between American Airlines and Citigroup, leaving the current arrangement that includes Barclays intact, according to one of the people familiar with the process.
If the deal between American and Citigroup is consummated, it would end an unusual partnership in the credit card world.
Most brands settle with a single issuer, but when American merged with US Airways in 2013, it kept longtime issuer Citigroup on board and added US Airways’ card partner Barclays.
American renewed both relationships in 2016, giving each bank specific channels to market their cards. Citi was allowed to pitch its cards online, via direct mail and airport lounges, while Barclays was relegated to on-flight solicitations.
‘Actively working’
When the relationship came up for renewal again in the past year, Citigroup had good footing to prevail over the smaller Barclays.
Run by CEO Jane Fraser since 2021, Citigroup has the more profitable side of the AA business; their customers tend to spend far more and have lower default rates than Barclays customers, one of the people said.
Any renewal contract is likely to be seven to 10 years in length, which would give Citigroup time to recoup the costs of porting over Barclays customers and other investments it would need to make, this person said. Banks tend to earn most of the money from these arrangements in the back half of the deals.
With this and other large partnerships, Fraser has been pushing Citigroup to aim bigger in a bid to improve the profitability of the card business, said the people familiar.
“We are always actively working with our partners, including American Airlines, to look for ways to jointly enhance customer products 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, for instance, through added partnerships with retailers and tech companies.
Check out the companies making headlines before the bell: Rigetti Computing , Quantum Computing , D-Wave Quantum — Stocks tied to quantum computing were surging in premarket trading, building on a strong year-end rally for the budding industry . Shares of Rigetti rose 27%, while D-Wave Quantum’s stock jumped 5% and Quantum Computing shares added almost 8%. KULR Technology Group — The stock added more than 11%. On Thursday, shares of the space technology company soared more than 40% after it said it bought 217.18 bitcoin worth about $21 million. The purchase was the company’s first since its announcement of a new bitcoin treasury initiative on Dec. 4, when bitcoin topped $100,000 for the first time. Honda — The automaker’s U.S.-listed shares continued to advance after Honda officially began merger talks with fellow Japanese automaker Nissan . The stock was up nearly 3% in early Friday trading and was last on pace for a 19% weekly gain. Toyota Motor — Shares rose more than 2%, extending the nearly 9% gain seen in the previous session. Earlier this week, Nikkei, citing an executive who asked not to be named, reported that the Japanese automaker is aiming to double its return on equity, or ROE, to 20% . MicroStrategy — Shares of the bitcoin proxy gained nearly 1% as the price of the cryptocurrency advanced above $96,000 on Friday. This comes a day after crypto markets were under pressure on Thursday. During that trading session, MicroStrategy fell 4.8%. GameStop — The stock fell nearly 2%, reversing the gains seen in the previous sessions. Shares of the video game retailer have been on a five-day winning streak and have surged more than 88% this year. Red Cat Holdings — Shares gained more than 3%, continuing a massive run this year. In 2024, the drone stock has gained nearly 1,424%. The stock has also risen about 14% month to date amid a broader rally in the category, as drone sightings across the Northeast spurred retail interest in the sector and the company partnered with Palantir . Amedisys , UnitedHealth — Shares of Amedisys rose more than 4%, while UnitedHealth was marginally lower after a filing revealed the companies entered into a new waiver agreement , extending the deadline for closing their $3.3 billion merger. The new deadline is 10 days after a final court decision is issued in the lawsuit or on Dec. 31, 2025, whichever is earlier. Netflix — The stock fell almost 1%. On Thursday, the National Football League said in a statement that nearly 65 million combined viewers watched the streaming giant’s NFL coverage, setting streaming records. According to the statement , the game between the Kansas City Chiefs and the Pittsburgh Steelers brought in an average of 24.1 million viewers, while the game between the Baltimore Ravens and the Houston Texans scored 24.3 million viewers. That makes them the most-streamed NFL games in U.S. history. — CNBC’s Jesse Pound and Lisa Kailai Han contributed reporting.
Check out the companies making headlines in midday trading: Rigetti Computing — The quantum computing stock soared 10%, adding to the sector’s robust end-of-year rally . Shares of Rigetti are now up 1,674% on the year. KULR Technology Group — Shares pulled back around 9%, reversing the gains seen in the previous session. On Thursday, the stock advanced more than 40% after the space technology company said it bought 217.18 bitcoin worth about $21 million. This was the company’s first purchase since it announced a new bitcoin treasury initiative on Dec. 4, when bitcoin passed the $100,000 level for the first time. Honda — The automaker added 1%, extending gains after announcing earlier this week that it officially began merger talks with fellow Japanese carmaker Nissan. That lifted Honda’s week-to-date gain to 20.7%, putting the stock on track to notch its best week since 1988. Amedisys , UnitedHealth — Shares of Amedisys rose about 5%, while UnitedHealth stock was fractionally lower after the companies entered into a new waiver agreement, a filing revealed. This new agreement extends the deadline to close their $3.3 billion merger. MicroStrategy — The cryptocurrency-linked stock slipped nearly 4%. It had previously traded higher early Friday morning as the price of bitcoin rose above $96,000. Red Cat Holdings — The drone stock plunged nearly 10%. It was previously trading higher on Friday morning, adding on to its massive year-to-date rally of 1,275%. Shares of Red Cat rose in December after drone sightings in the Northeast reignited Wall Street interest in the sector. South Korea stocks — U.S.-listed shares of South Korean stocks retreated on Friday after lawmakers impeached acting President Han Duck-soo , ousting the nation’s second head of state since a short-lived martial decree earlier this month. The iShares MSCI South Korea ETF (EWY) slid 1%. U.S.-listed shares of Korea Electric Power and Coupang shed 2%, while Posco Holdings and KT Corporation declined 1%. — CNBC’s Sean Conlon and Alex Harring contributed reporting.
Treasury yields were slightly higher early Friday after a mixed set of data on weekly jobless claims.
The yield on the benchmark 10-year Treasury was 3 basis points higher at 4.607%, slightly down from its peak earlier in the week but back above the 4.6% level it had not breached since May. The 2-year Treasury was fractionally higher at 4.334%.
One basis point is equal to 0.01%. Yields move inversely to prices.
After the Christmas break, jobless claims data released Thursday for the week ending Dec. 21 came in 1,000 lower at 219,000, below the 225,000 consensus forecast from Dow Jones.
However, continuing claims rose by 46,000 for the week ending Dec. 14 to the highest level since November 2021.
The 10-year Treasury yield has risen more than 40 basis points in December as traders anticipate a more hawkish Federal Reserve in 2025. The central bank next meets at the end of January, when a rate hold is expected.
Monthly data on wholesale inventories is due Friday.
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