US Airways Group Inc. and AMR Corp. (AAMRQ:US)’s American Airlines are negotiating with banks including Barclays Plc (BARC) and Citigroup Inc. (C:US) to provide a branded credit card once they complete a merger creating the world’s largest carrier.
“As we bring two strong currencies together, we’ll have one, stronger currency,” Andrew Nocella, US Airways senior vice president for marketing and planning, said yesterday at a conference. “We are working with all our banks. Every single one wants to work with us.”
US Airways’ loyalty credit card has been handled by Barclays since 2006, while American’s has been issued by Citigroup for 26 years. The cards, which carry the airlines’ names, are valued by passengers because purchases made with them earn credits that can be used to buy tickets.
The new American may break with tradition and offer multiple cards, said Jay Sorensen, who runs frequent-flier consulting firm IdeaWorks in Shorewood, Wisconsin, and was the former director of marketing at Midwest Airlines.
Qantas Airways Ltd. has several credit card partners, and as a result has the highest per-passenger revenue globally from its program, at $26.49, Sorensen said. That’s about 15 percent more than other so-called legacy carriers such as American and United Continental Holdings Inc. earn, and double the amount some smaller carriers get, he said.
“I would advocate multi-bank relationships. They’re about to have a much bigger sandbox and I hope they take advantage of that,” Sorensen said. “When the banks compete, the airline consumer wins. We may see Barclays/Citi offerings side by side.”
US Airways and American expect their combination to be concluded in the third quarter, when Fort Worth, Texas-based AMR receives approval to exit bankruptcy protection. The combined carrier, which will retain the American name and be led by US Airways Chief Executive Officer Doug Parker, will pass United as the biggest airline, based on passenger traffic.
The eventual credit-card agreement “will be very lucrative to us,” Nocella told US Airways managers at the airline’s annual leadership conference near its headquarters in Tempe, Arizona.
Kevin Sullivan, a Barclays spokesman, did not return a phone call or e-mail seeking comment outside of regular business hours. Emily Collins, a spokeswoman for New York-based Citigroup, didn’t respond to e-mailed requests for comment.
The new American will have the second-largest card program in the world, behind only retailer Sears Holdings Corp. (SHLD:US), Nocella said.
US Airways’ Dividend Miles credit cards are supported by MasterCard Inc. (MA:US) and Visa Inc. (V:US), as are American’s AAdvantage cards. The combined card would “be the largest MasterCard program in the world,” he said. “Visa is calling me every day.”
United’s loyalty card is issued by JPMorgan Chase & Co., while Delta Air Lines Inc.’s is through American Express Co. (AXP:US)
US Airways rose 0.5 percent to $16.90 at the close of trading in New York. The shares previously climbed 25 percent this year.
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