American Chooses Citi As Post-Merger Credit Card Issuer; Judge Sends Merger Plan to Vote

by on June 4, 2013 · 35 comments

in Airline Industry, American, Citi, US Airways

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While not the most surprising piece of news, it looks like AMR (parent company of American Airlines) has agreed to continue its relationship with Citi once the merger with US Airways goes through.

On May 24 Citi filed a motion to make AMR choose whether or not to continue their relationship with Citi once the merger goes through. Citi has a serious amount of money invested in AMR – in 2009 they pre-purchased $1 billion dollars’ worth of frequent flyer miles which were secured by $2.58 billion in AMR assets, including the AAdvantage program itself. In the filing, Citi stated: “Were the Agreements to be rejected, Citibank would have a multi-billion-dollar claim secured by some of the Debtors’ most valuable assets, including virtually the entirety of the AAdvantage Program itself.”

One Step Closer to a Merger
Per the WSJ, this week AMR agreed to continue its contract with Citi, thus allowing a judge to clear AMR’s merger plans and send it off for a vote by AMR’s creditors. If AMR’s creditors approve, then the plan goes back to the judge for final approval this summer. The judge already put his stamp of approval on the plan (minus a couple issues like AMR’s CEO Tim Horton’s ~$20 million golden parachute) back in March, so I don’t foresee any issues with the merger happening from this point forward, though you never know in the airline business.

What the Merger Means For Flyers
I’ve already written about the merger in detail, but here are the high level things that are likely to change:

1) The merged airline will stay in Oneworld, so US Airways frequent flyers who are used to redeeming miles on Star Alliance carriers will have far fewer partner options in the new program.

2) Barclaycard, the current issuer of US Airways’ credit card, will eventually stop offering that product, so you might as well get it now since they will eventually become AAdvantage miles. Barclaycard may decide to run more lucrative bonuses on the card as they need to unload their remaining miles and as they seek to acquire as many new cardholders as possible. When US Bank lost the Northwest contract after the Delta merger, they converted all of their Northwest cardholders into Flexperks customers. I suspect Barclaycard will convert existing US Airways Mastercard holders into Arrival cardholders, but that is just a guess.

The current best offer on the US Airways Mastercard is 35,000 miles after first purchase, $89 annual fee waived the first year, 10,000 miles at account anniversary.

The best Citi AA offers are listed in this post.

3) My guess is that the new elite program will probably resemble US Airways’ 4 tiers and offer complimentary upgrades.

Lots more to come, but the merger is officially one step closer to happening…whether you like it or not.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • miffSC

    I just hope that some of the benefits of the Barclay Card will carry over to the Citi card…e.g. the 5000 mile award booking discount.

  • Alex

    Glad I got the US barclay card with my 40k miles lol. Ill just wait and see if citi comes out with anything worth wile.

  • JW

    TPG my card signups will be another month away, do you expect the US Air card to go away that soon? Thanks.

  • 286

    Is it possible to sign up for both the US Airways MC and the Barclaycard Arrival MC in the same app-o-rama? How does Barclays take to multiple card requests?

  • thepointsguy

    Definitely not that soon since the merger won’t even be approved until late summer. Hopefully the bonus will increase from 35k before your app!

  • thepointsguy

    Barclays is pretty strict so I wouldn’t recommend it, though I’ve never applied for 2 in a day. If anyone has please feel free to share

  • Rob philip

    FYI Barclay just rejected me for a second USAirways card last week, saying they don’t issue multiples any more – even when I offered to move part of the credit line. I’ve had the first one for 6 months or so. I’m thinking about getting a business card, canceling the personal and re-trying the personal one in a few months to get my total points up so I can book a trip on *A before the points slide over to AA…. PG – any feel for how long Barclays wants between canceling one card and applying for the next?

  • Jeremy

    I can’t see them upping the signup bonus on USAirways cards as why would they try and get new cardholders to a card not around for long. I do think they may try and entice current cardholders with more spending bonuses such as the common 15K one or maybe offer miles to those who choose to convert to a new card. I’d have to proactively close my account if they plan to convert to the Arrival card because I want that 40K signup bonus for the Arrival!

  • Dieuwer

    Citi should start offering credit cards that allow points to be transferred to American, just like Chase SP and AMEX.
    Citi is really behind the curve with this.

  • bydh

    hmm, if I have a current USAirways card from Barclays and it does end up getting converted into an Arrival Card, would that potentially prevent me from getting any associated sign up bonus for the Arrival Card?

    Should I just apply for the Arrival or cancel the usairways mc to prevent that?

  • tassojunior

    I don’t think Barclays bought a load of US miles like Citi did AA miles to get them out of trouble. So I doubt Barclays has any surplus US miles to unload.

    AA morphs into America West, just like US did.

  • thepointsguy

    You’re right that they didn’t bail US out of bankruptcy by buying billions (like Amex with Delta, Citi with AA) however I’m sure they have a contract that allows them to buy a significant amount to keep their flagship card operating. Barclays will be losing a huge product, so I wouldn’t be surprised if they tried to use their #1 travel card as a way to bring in new cardholders while they can, so they can potentially rollover those cardholders into different products in the future (like US Bank with their Northwest cardholders)

  • thepointsguy

    Continental cardholders who got converted into United Explorer cards did not get sign-up bonuses, so I’d get the Arrival before this happens. That being said, it will likely be at least a year- if not more- so I wouldn’t panic now. Once we have an approved merger, we should be able to get a better view on the timeline of events, including the combining of frequent flyer programs and thus end of US Airways Dividend Miles.

  • Yati

    I cancelled my US Airways Barclays card at the beginning of April. I’ve heard that you can get this bonus multiple times. Any suggestions how long i should wait before applying again for this card? Thanks for your thoughts.

  • Dee

    I just got rejected for the USAirways business card last week. I already have the personal card. The reason they gave is that I have sufficient credit with the personal card. I didn’t call the reconsideration line. I just went with the next step in my multi-prong strategy and got another Chase card (my 4th). Chase approved me with another very generous line of credit. Amex just gave me my 4th card today. So, I don’t think it is me. I’ll be thrilled if my USAirways miles roll into my AA miles. Can’t happen soon enough for me.

  • Rob philip

    Well, from Denver *A awards are more convenient for the places I want to go, so AA miles are less useful. Now I’m even more intrigued to try the business card…

  • Curious

    How many US Airways cards can you have at one time? And, how long do you have to wait each time before you apply and get the bonus?

  • Diamond Vargas

    I applied for the card in August 2012, canceled it in March 2013, and applied and was approved again after applying about 3 weeks post-cancellation. Both signup bonuses and a 15k ongoing spend bonus received, waiting for another 15k offer to arrive.

  • RDMWorldTravel

    Two pending issue I have not seen brought up… Complimentary Platinum status with US Air from AMEX Centurion, does it transition over to AA? And would US Air miles rollover into AAdavantage program?

  • Nick

    I tried this ~1 month ago and was approved for the US Airways MC and denied for the Barclaycard Arrival MC. I called the reconsideration line and worked all the angles, but to no avail. For what it is worth, I did acquire the Barclay’s NFL card in February of this year, so that may have hurt my chances of getting both cards on the same day.

  • Justin

    I can’t imagine how they’d tell a bunch of US Airways mileage millionaires (a.k.a. great customers) “sorry you now have 0 AAdvantage miles and there’s no more Dividend Miles program.” Anything other than a 1:1 replacement of US miles with AA miles — perhaps with the ability to transfer between programs in the interim — would be shocking.

  • Miles To The Wild

    Actually, I had a Continental MC which was converted to a United Explorer MC with the same card number. I cancelled it soon afterwards and was able to get a United Explorer Visa. I do hope the US MC sticks around until November so I can get one more anniversary bonus!

  • namtuge

    Any prediction about US Air $99 companion certificates issued by Barclay? Will AA honor them?

  • Derf

    During my last app-o-rama, both my wife and I applied for the US Air & Arrival cards on the same day (US Air first in both cases). US Air was approved instantly and Arrival was “Pending” in both cases. I called the reconsideration line and was denied for the Arrival even after working all angles and I have better credit than my wife. I just let me wife’s be and after 10 business days it was approved. Neither one of us had Barclay cards. So, I would suggest NOT calling the reconsideration line if you apply for two in one day and just let it work its way through the “Pending” status, but, of course, YMMV.

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  • sam

    i dont think US airways miles will become AA miles after the merger. None form the 2 airlines or the 2 card companies have confirmed that. So I might redeem my 40k US airways miles for gift card or something now since i don’t have any travel coming up

  • thepointsguy

    Agreed! They kind of do with Thank you transfers to Hilton

  • thepointsguy

    Yes they will. They can’t comment now but they will once approved

  • Robert

    How come my yesterday’s post about Citi CC disappeared?

  • thepointsguy

    Not sure- I haven’t deleted any comments- try reposting

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  • Shaun

    I have the same question… the AMEX Centuion benefits are really going to stop being worth it if they lose another airline partner.

  • droha

    On a US Airways flight this week they had brochures for the US Airways card for 40,000 miles after first purchase but annual fee not waived the first year. That is 5,000 miles more than the best offer posted here but the fee is not waived as the best offer is. Would you pay $89 for 5,000 Dividend Miles?

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