Citi files for Credit Card decision before AA leaves bankruptcy court
 

From http://aviationblog.dallasnews.com/2...leave-me.html/

Citibank, which has offered AAdvantage-branded credit cards for American Airlines for a quarter century, said Friday it’s time for American to decide whether it will stay with Citibank after American’s merger with US Airways.

It told the U.S. Bankruptcy Court that that decision would have a big impact on American’s bankruptcy case because Citibank has a big potential claim against the airline.

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EDIT: Sorry for typo in title. Apologies if posted elsewhere, I checked back several pages for a similar thread but did not see one.

Very interesting. My churning will be seriously affected if they come to the "wrong" decision!

Citi flies for Credit Card decision before AA leaves bankruptcy court
 

Very interesting. It looks like Citi is going to be the credit card provider. AA can't afford the chaos of not doing it.

really? Isnt bankruptcy precisely for getting out of these kind of agreements and stiffing other folks and businesses with broken contracts and financial losses?

1 billion in 2009 to purchase airline miles...in the middle of the economic crisis and that bank had 1 billion to fool around with.... that explain where all that government deficit money was spent.

Money to save Wall Street and screw the American taxpayer!

I guess I don't feel that bad about churning cards....maybe I should

For all other legacy airlines, bankruptcy was all about stiffing unsecured creditors.

For AA, bankruptcy has been all about renegotiating secured obligations and cramming new labor agreements down the employees' throats while paying all unsecured claims at 100%.

The Citi debt is fully secured and if rejected, AA would have to pay or surrender the collateral. AA's plan of reorganization did not propose rejecting the Citi debt - treating it instead as secured debt (properly, IMO).

TIL American Airlines is Wall Street, and the taxpayer funds Citibank's rewards program. :confused:

Citi has a better and more flexible CC program than Barclays. Hope AA stays with Citi.

While it's a total longshot, I'm hoping Amex somehow wins AA over.

AX has far more to bring to the table than Citi, and Ax already has club agreements with both US and AA, and elite status on US through the Centurion program.

The Citi cards are all pretty lame compared to offerings from Ax and Chase.

From the article:

"Citibank advanced $1 billion to American in September 2009 to pre-purchase miles in the AAdvantage frequent-flier program. The obligation is secured by takeoff and landing rights at airports, airport facilities, route authorities and other assets."


I think losing those assets would be chaotic for AA.

Funny. No, bankruptcy courts aren't precisely for that. In reorganization, you can get out only of certain kinds of agreements.

I don't think I've received an AA Citi card offer in the mail since March. They were usually arriving once a month (or so it seemed). Maybe this is why: Citi isn't yet certain the affiliation will continue.

What stops AA from cutting a deal with AMEX, Barclays and/or Chase, suitor(s) would advance the $1 billion to pay off Citi - possibly more.

Personally, I would LOVE to see Chase replace sh#ttybank.

The nearly $1 billion of outstanding debt is the small part of the obligation; the rest is the long-term contract between Citi and AA - Citi is alleging that rejecting that contract would result in several billion dollars of rejection damages. If upheld, those rejection damages would prevent AA from paying all unsecured claims at 100% (due to their size). That would certainly change the complexion of the AA POR.

One of the costs of integrating US and AA will be the buyout to get US out of its obligation with Barclays.

One wonders if this isn't leverage on US & Parker to commit to Citi pre-merger rather than risk a decision post-merger.