Sky Talk

American Airlines signs credit card deals with Citi, Barclays

Two is better than one when it comes to American Airlines credit cards.

On Tuesday, the Fort Worth-based carrier announced new credit card deals for its AAdvantage cards with Citi and Barclaycard US.

American has partnered with Citi since 1987 with co-branded credit cards, while the former US Airways’ frequent-flier credit card was with Barclays.

In a filing with the Securities and Exchange Commission, American said it expects the new deals to add $200 million to its income in the second half of 2016 and $550 million in 2017. It will also boost income by $800 million in 2018.

Investors welcomed the news as shares of American (ticker: AAL) jumped almost 12 percent Tuesday, up $3.63 to close at $34.79.

“From earning miles to boarding early and checking a bag for free, our customers tell us how much they value their AAdvantage-affiliated cards,” said American chief marketing officer Andrew Nocella. “Our new dual-issuer arrangement is the first of its kind in the U.S. airline industry and was enabled by the progressive partnership with Citi, BarclaycardUS and Mastercard.”

Industry analysts had assumed American would choose one of the banks for a co-branded card, following the merger of the two airlines. But instead the airline decided to negotiate new agreements with both banks, and the cards offered will exclusively be MasterCards.

“To our surprise, American has achieved revised credit card agreements ahead of our 2017 expectation, in a deal that preserves the existing Citi and Barclays relationships rather than collapsing one into the other,” J.P. Morgan analyst Jamie Baker wrote in an investor note. “Essentially, consumers can continue to choose between issuers, with only modest constraints based on point-of-signup.”

The agreements will allow Citi to offer credit cards to new customers on, through direct mail campaigns and at Admirals Club lounges. Barclays will be able to offer its cards to new customers in airports and exclusively on flights starting in January 2017.

Andrea Ahles: 817-390-7631, @Sky_Talk