American Airlines and Citi have just announced an expansion of their partnership, and it’s coming at Barclays’ expense.
American expands Citi partnership, dumps Barclays
Loyalty programs (and in particular, credit cards) are big businesses for airlines. For the “big three” US carriers, a large chunk of their profits come from their lucrative credit card deals. Delta partners with American Express, United partners with Chase, and American partners with both Citi and Barclays.
As you can see, American is the only one of those airlines to partner with two banks. That’s because back in the day, American partnered with Citi and US Airways partnered with Barclays. When the two airlines merged in 2013, those contracts were renegotiated, and in the end neither bank was willing to pay a premium for exclusivity.
That will now be changing. American and Citi have announced an extension of their co-branded partnership, with a 10-year extension of the contract. This will have major implications, as Citi is now willing to pay the price for exclusivity. Starting in 2026, Citi will become the exclusive issuer of co-branded American AAdvantage credit cards.
As part of this, Citi has reached an agreement to acquire the Barclays co-branded card portfolio, and will begin transitioning cardmembers to the Citi portfolio in 2026. For now details are limited, but we’re told that Barclays cardmembers will continue to receive the same benefits that they do today. More information about the transition will be made available in the coming months.
There’s another huge development here, which is that American AAdvantage will finally likely become a Citi ThankYou transfer partner, which is great for those with products like the Citi Strata Premier® Card (review). I say “likely” because the press release states “that the agreement creates an innovative alignment between the Citi ThankYou and AAdvantage card programs,” so that’s how I would interpret that. However, the details and timeline remain to be seen.
For some background, American has been lagging Delta when it comes to the profitability from the co-branded credit card portfolio. Last year, Delta made nearly $7 billion from its deal with American Express, while American made $5.2 billion from its deal with Barclays and Citi.
Currently the two card issuers have different channels through which they can market — Citi is allowed to market cards online, via direct mail, and in airport lounges, while Barclays is allowed to market cards inflight. Once this change occurs, Citi will of course have the rights to also market cards inflight.
Here’s how American CEO Robert Isom describes this development:
“American is proud to have launched the first airline loyalty program, and with Citi, the travel industry’s first co-branded credit card. The strength of our relationship with Citi has enabled us to deliver first-class products and customer service to millions of AAdvantage cardmembers. This expanded partnership will unlock even more value and exciting new benefits for all of our customers in the future.”
Meanwhile here’s how Citi CEO Jane Fraser describes this:
“American Airlines and Citi have built something truly special together — a partnership rooted in delivering excellence to our customers. We’re now excited to take this relationship to greater heights through an expanded customer base and a series of new loyalty and reward offerings. Together, we’re creating more opportunities to welcome new cardmembers, deepen our connection with our existing ones and make our co-branded card the clear favorite in everyone’s wallets.”
My take on American & Citi credit card exclusivity
There’s simply no denying that American having an exclusive credit card agreement is much more efficient, both for the airline and for the credit card partner.
Let me start with the obvious downside for consumers — currently you can earn welcome bonuses on both Barclays and Citi cards, so that will go away with just one issuer. Those of us into miles & points aren’t going to be fans of that.
But in every other way, this seems way more efficient, and to even have consumer benefit:
- The card portfolio can be marketed globally, rather than having such a fragmented marketing strategy
- The card products can be refreshed with a more tiered setup for cards, similar to what Delta does (where there are several tiers of cards, and personal and business versions of each), instead of the current portfolio, which has little differentiation
- More marketing dollars can be put into actually getting people to spend on the cards, rather than putting so much money into acquisition bonuses, given how cards are hawked on American flights (“you can get X number of miles by just buying a cup of coffee or pack of gum”)
- Citi was able to negotiate AAdvantage being a transfer partner of the ThankYou program, and that makes it a much more compelling rewards currency
Personally I consider this exclusive contract to be good for consumers in the long run, if executed correctly. Citi executives say they want to grow their wallet share in the travel space, so a renewed focus on the American co-brand deal plus the Citi ThankYou program should help accomplish that. It will also make American’s co-brand card portfolio more competitive (financially) to the Delta and United portfolios.
I’m curious to see what kind of changes are made to products like the Citi® / AAdvantage® Executive World Legend Mastercard® (review), Citi® / AAdvantage Business™ World Elite Mastercard® (review), etc.
Bottom line
American and Citi have negotiated an exclusive credit card deal for AAdvantage, whereby Citi is also buying the Barclays card portfolio. This will apply as of 2026, so we will have to be patient to learn more details. What’s also exciting is that AAdvantage will be added as a Citi ThankYou partner.
While I don’t love not being able to double dip welcome bonuses, this seems like a logical development in every other way, and I actually think it will help competition, in terms of American having a more compelling card portfolio, compared to Delta and United.
What do you make of American having an exclusive credit card deal with Citi?
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