Barclaycard Credit Card Contract With US Airways and American Extended Through 2017

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One of the major points of speculation surrounding the American Airlines-US Airways merger has been what will happen to the US Airways Mastercard issued by Barclaycard once US Airways’ Dividend Miles program is folded into American’s AAdvantage program and whether the card will go away before or after that. Last week, Barclaycard issued a letter to cardholders saying that the US Airways Mastercard would be around for a while to come and is still accepting new applications.

UnknownBut the issue still remains that American already chose Citi as its credit card issuer through 2016, which still leaves the Barclaycard US Airways Mastercard’s future in question. However, Payment Source has reported that while Citi will remain the issuer of frequent-flyer credit cards for new combined airline, Barclaycard has agreements in place that will allow it to maintain its existing accounts under American’s branding.

Payment Source reports that during a Citi investor call yesterday, Citi’s CFO John Gerspach told investors that, “Following the planned integration of the AAdvantage and US Airways Dividend Miles frequent flier loyalty programs by mid-2015, Citi will exclusively issue new credit card accounts in support of the combined American frequent flier program.”

Until then, Barclaycard plans to continue offering the US Airways card and Barclaycard’s Managing Director of Co-Branding Partnerships, Dennis Nealon, told PS that, “We have a unique opportunity before the brands merge for us to go out there and continue to acquire new card members for the US Airways Dividend Miles program…Our goal over the period between merger and frequent flier program integration is absolutely to maximize the number of new cardholders that we can bring in.”

If the merger goes through, it will eventually mean the end of the US Airways World Mastercard.
Looks like this card will be around for a while yet.

Hopefully we can take that at face value, and it will be much less urgent to apply for the US Airways card since it sounds like it won’t be going anywhere. And unlike what just happened when Barclaycard ended its relationship with Virgin America and transitioned Virgin credit cardholders to the Arrival card, that will not be the case here. Nealon himself said so in the following statement: “We are not planning to rebrand any US Airways card member to Arrival. They will become American AAdvantage card members and they will have all the benefits that come along with that.” There’s no telling exactly when that will happen, but my guess is it will be right around the time the two mileage programs formally merge in mid-2015.

So come mid-2015, it looks like both Citi and Barclaycard will have American Airlines products on the marketplace, though Barclay’s will just be the one while Citi should still be fielding its full range of cards. Barclaycard’s contract with US Airways was also negotiated through 2017, so their new American card could be around for several years to come as well – and in fact it sounds like Barclaycard’s contract has been extended past that date to end at the same time as Citi’s so that for a while the new airline will have two issuers.

The major thing that will differentiate the two issuers is that while Citi will be able to sign up new cardholders, Barclaycard will be limited to serving its existing cardholders. No wonder they sound like they’re in a rush to create new accounts.

To me, that means there’s suddenly a new sense of competition between the two issuers – especially since Barclaycard will not be able to issue new cards after the merger and will be stuck just with its current cardholder roster, so they might get pretty aggressive about signing up new accounts between now and the final merger. It also means that the bank might be more aggressive and engaged when it comes to retaining those customers since once they’re gone, they’re gone and they can’t get them back – at least not with the same card.

So hopefully we’ll see some interesting offers, bonuses and promotions in the days and years to come as Citi and Barclaycard work out this dual-issuer situation. Eventually Citi is likely to be the winner, if not when the two issuers’ contracts with the airline expire, then perhaps even sooner if Citi and Barclaycard negotiate a cardholder hand off, though I’m not sure how likely that is.

In the meantime, if you’re looking for a way to boost your Dividend Miles account – for instance to book a Star Alliance award before March 30 or to take advantage of the program’s award chart sweet spots before they likely go away – or to bank some miles that you can count on eventually being AAdvantage miles, it’s a great opportunity to apply for a card from an issuer that’s not Citi, bank these miles and then apply for future AAdvantage credit card offers as they come up.

If you’re thinking of applying for the US Airways Mastercard, it looks like the offer of 35,000 bonus miles with first purchase and $89 annual fee waived the first year has gone away for now (if you have a working link, please send it to me and I’ll include!), so the best offer out there at the moment is the following one of up to 50,000 bonus miles.

  • 40,000 bonus miles with first purchase
  • Up to 10,000 bonus miles for completing a balance transfer within 90 days (note: you will incur extra costs)
  • Earn 2 miles per $1 on US Airways purchases
  • Earn 1 mile per $1 spent everywhere else
  • Redeem flights for 5,000 fewer miles. Reward travel now starts at only 20,000 miles
  • Annual companion certificate good for up to 2 companion tickets at $99 each, plus taxes and fees
  • Earn up to 10,000 Preferred-qualifying miles every calendar you spend $25,000 or more on purchases
  • First class check-in
  • One complimentary US Airways Club day pass every year
  • $89 annual fee not waived the first year

So I’ll be following these developments with interest, but let me know your thoughts in the comments section below.

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