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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.
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.
Know before you go.
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