American Airlines says credit card deals will boost income

FORT WORTH, Texas – Shares of American Airlines jumped Tuesday after the company said that new credit-card deals will increase pretax income by $1.55 billion over the next three years.

Most airlines have a single credit card issuer, but American is taking a new route.

American will continue offering credit cards from Citi, a relationship that has lasted nearly three decades. The airline also struck a new agreement with Barclay’s card business, which was the credit card provider for US Airways before that carrier merged with American in late 2013.

All the cards will be MasterCards, the airline said.

Citi will be able to promote its cards on American’s website, mobile apps, direct mail and in Admirals Club airport lounges. Barclays will have the exclusive right to tout its cards on board American Airlines flights beginning in January.

American, the world’s biggest airline, said in a regulatory filing that the deals will increase pretax income by $200 million this year, by $550 million next year, and by $800 million in 2018 compared with the current contracts.

In afternoon trading, shares of Fort Worth-based American rose $2.78, or 8.9 per cent, to $33.94. They began the day down 26 per cent in 2016. Airline stocks were pummeled in the second quarter on concern about falling average fares due to too many flights.