Odds Of American Still Being Added As A Citi ThankYou Transfer Partner?

Last November I wrote a post speculating that American AAdvantage would eventually be added as a Citi ThankYou mileage transfer partner. It was purely speculation on my part, but I predicted that after American’s AAdvantage award chart devaluation, they’d eventually be added as a Citi ThankYou transfer partner.

With the recent news of American’s new credit card agreement with both Barclaycard and Citi, I figured I’d write a follow-up post on that, as I have some further thoughts.

Why American would be added as a Citi ThankYou transfer partner

The “big three” US carriers all seem to follow one another. The three major transferrable points currencies are Amex Membership Rewards, Chase Ultimate Rewards, and Citi ThankYou.

Membership Rewards points can be transferred to Delta SkyMiles, Ultimate Rewards points can be transferred to United MileagePlus, and oddly up until American AAdvantage points can’t be transferred to Citi ThankYou, despite the fact that American’s credit card agreement is with Citi.

Why do I think this hasn’t happened up until now?

• American devalued their award chart on March 22, 2016, so I figured the’d perhaps allow points from Citi to be transferred after that, since presumably they’d be willing to offer Citi a better rate on less valuable miles
• Citi only introduced a truly transferrable points currency a couple of years ago, so it’s much newer than Amex Membership Rewards or Chase Ultimate Rewards; my assumption was simply that they hadn’t gotten around to negotiating their contract in such a way yet

American’s credit card negotiations are now done

Earlier in the week it was announced that going forward, American will have credit cards issued by both Citi and Barclaycard. Keep in mind that US Airways’ former cards were issued by Barclaycard, while American’s credit cards are issued by Citi.

This is a bit of a surprising resolution, given that it means American will be the only one of the “big three” US carriers to not have an exclusive credit card agreement. That means that neither issuer was willing to pay the price American wanted for exclusivity.

As View from the Wing pointed out, per American’s 8K filing, they’ll see huge gains as a result of this:

As a result of the new arrangements announced today, American Airlines Group Inc. and American presently expect consolidated pre-tax income for financial reporting purposes to increase by approximately $200 million in the second half of 2016, $550 million in 2017 and $800 million in 2018, with continued modest improvement in pre-tax income each year beyond, in each case as compared to results expected under the prior credit card arrangements.

Those are increases of $550-800 million per year over the next couple of years — wow!

What does this mean for Citi ThankYou & American?

So, as it pertains of AAdvantage being added as a ThankYou points transfer partner, what can we make of the recent announcement of American striking a deal with both Citi and Barclaycard?

Some might argue that the recent announcement makes it less likely that AAdvantage is added as a ThankYou transfer partner. In theory I suppose that’s true, since clearly American’s relationship with Citi isn’t as close as Amex’s relationship with Delta, or Chase’s relationship with United.

However, I actually think this increases the odds of AAdvantage being added as a ThankYou transfer partner. Why?

• As a bargaining technique, American and Citi may have ultimately agreed on a non-exclusive agreement with the condition that AAdvantage would be added as a Citi ThankYou transfer partner
• American is planning on seeing huge gains from this new agreement, and part of that may very well come from increased revenue through transferrable points
• Citi ThankYou points can already be redeemed for 1.33-1.6 cents each towards the cost of a ticket on American, so surely American is willing to sell their points to Citi at a lower cost than that, especially now that they’ve devalued their award chart and greatly decreased the number of miles they’re issuing through travel, since they’re awarding miles based on revenue

American’s recent credit card negotiations could also explain why we haven’t seen anything on this front yet. If the points do transfer, presumably they were part of these negotiations.

Bottom line

American’s recent credit card deal suggests to me they’re doing everything they can to monetize the AAdvantage program (as they should). Now that American has devalued their miles and is issuing fewer miles through travel, I imagine Citi and American could come to a mutually beneficial deal on a points transfer option. The huge gains American is expecting to see from this new credit card agreement point in that direction as well.

Citi ThankYou points can already be redeemed for 1.33-1.6 cents each towards the cost of travel on American, so I imagine Citi could pay even less through a transfer option.

Again, this is all speculation on my part, so I’m just sharing my take, given that I’ve been asked this question several times over the past few days.

In light of the recent credit card announcement, do you think AAdvantage will be added as a Citi ThankYou transfer partner?