American Airlines is in talks to make Citigroup its unique bank card companion, dropping rival issuer Barclays from a partnership that dates again to the airline’s 2013 takeover of US Airways, stated individuals with data of the negotiations.

American has been working with banks and card networks on a brand new long-term deal for months with the intention of consolidating its enterprise with a single issuer to spice up the income haul from its loyalty program, in accordance with the individuals.

Talks are ongoing, and the timing of an settlement, which might be topic to regulatory approval, is unknown, stated the individuals, who declined to be recognized talking a few confidential course of.

Banks’ co-brand offers with airways, retailers and lodge chains are among the most hotly contested negotiations within the trade. Whereas they offer the issuing financial institution a captive viewers of hundreds of thousands of loyal prospects who spend billions of {dollars} a yr, the small print of the preparations could make an enormous distinction in how worthwhile it’s for both occasion.

Large manufacturers have been driving more durable bargains lately, demanding a much bigger slice of income from curiosity and costs, for instance. In the meantime, banks have been pushing again or exiting the area completely, saying that rising card losses, scrutiny from the Shopper Monetary Safety Bureau and better capital prices make for tight margins.

Airways depend on card packages to assist them keep afloat, incomes billions of {dollars} a yr from banks in change for miles that prospects earn once they use their playing cards. These partnerships have been crucial during the pandemic, when journey demand dried up however shoppers stored spending and incomes miles on their playing cards. Carriers have stated development in card spending has far exceeded that of passenger revenue lately.

Whereas it says it has the most important loyalty program, American was out-earned by Delta there, which made almost $7 billion in funds from its American Express card partnership final yr, in contrast with $5.2 billion for American.

“We proceed to work with all of our companions, together with our co-branded bank card companions, to discover alternatives to enhance the services we offer our mutual prospects and produce much more worth to the AAdvantage program,” American stated in an announcement.

It is nonetheless doable that objections from U.S. regulators, including the Division of Transportation, may additional delay and even scuttle a contract between American Airways and Citigroup, leaving the present association that features Barclays intact, in accordance with one of many individuals accustomed to the method.

If the deal between American and Citigroup is consummated, it could finish an uncommon partnership within the bank card world.

Most manufacturers settle with a single issuer, however when American merged with US Airways in 2013, it kept longtime issuer Citigroup on board and added US Airways’ card companion Barclays.

American renewed each relationships in 2016, giving every financial institution particular channels to market their playing cards. Citi was allowed to pitch its playing cards on-line, by way of unsolicited mail and airport lounges, whereas Barclays was relegated to on-flight solicitations.

When the connection got here up for renewal once more up to now yr, Citigroup had good footing to prevail over the smaller Barclays.

Run by CEO Jane Fraser since 2021, Citigroup has the extra worthwhile aspect of the AA enterprise; their prospects are likely to spend much more and have decrease default charges than Barclays prospects, one of many individuals stated.

Any renewal contract is more likely to be seven to 10 years in size, which might give Citigroup time to recoup the prices of porting over Barclays prospects and different investments it could have to make, this particular person stated. Banks are likely to earn many of the cash from these preparations within the again half of the offers.

With this and different giant partnerships, Fraser has been pushing Citigroup to intention greater in a bid to enhance the profitability of the cardboard enterprise, stated the individuals acquainted.  

“We’re all the time actively working with our companions, together with American Airways, to search for methods to collectively improve buyer merchandise and drive shared worth and development,” a Citigroup spokesperson instructed CNBC.

In the meantime, Barclays executives instructed traders earlier this yr that they aimed to diversify their co-branded card portfolio away from airways, for example, by added partnerships with retailers and tech firms.

Barclays declined to remark for this text.