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Delta Just Revealed the Surprising Amount They Make From Credit Cards

Frequent flyers know credit cards can be a big revenue generator for airlines. But Delta Air Lines is revealing just how much money a co-branded partnership can be worth. During Delta’s Q1 earnings call, the carrier revealed $3 billion in revenue from their agreement with American Express.

Frequent flyers love credit cards as much as their favorite frequent flyer programs for their ability to drive big rewards over time. Airlines love them too because the right partnership can turn into a major financial tailwind and recurring revenue stream.

Delta Air Lines is a prime example of how a co-branded credit card can benefit shareholders. MarketWatch reports the airline drove $3 billion in revenue from cards issued by American Express last year – and are on pace to do the same in 2018.

The numbers were revealed during the airline’s first quarter earnings call. While going over the airline’s financial performance, Delta president Glen Haustien noted the progress Delta made from their credit card partnership alone.

“Last year, the Delta-American Express co-brand portfolio had record acquisitions, and we just had another record quarter,” Haustein said on the call, according to a transcript from Seeking Alpha. “Co-brand spend was up 14 percent which helped drive $85 million of incremental value from our American Express agreement this quarter, and we’re on track to deliver $3.3 billion in total contribution for the full year.”

But that wasn’t the only impressive revenue point from cards alone. Executives went on to note that between January and March 2018, American Express opened over one million new Delta SkyMiles credit card accounts between their four products. When combined with other non-traditional revenue operations, including cargo transportation and repair services for other airlines, the unit drove over $1 billion in revenue during the quarter for the Atlanta-based carrier.

The move to seek stable monetary value from frequent flyer programs comes as flyers reduce their ancillary spend aboard aircraft. Ed Bastian, chief executive at Delta, said that leveraging credit card partnerships and the loyalty program can help the company achieve stability now and into the future.

“One of the things I think’s real important is that we’ve aimed to provide better transparency and disclosure around…looking into the loyalty arrangement and the profitability that it drives,” Bastian noted on the call, according to the Seeking Alpha transcript. “And hopefully the marketplace is seeing that, that we’ve got a more sustainable and durable base revenue stream that’s a bit – I wouldn’t say disconnected, but it’s not fully dependent upon the airlines in and of itself.”

Comments are Closed.
viajero boricua April 15, 2018

I'm NOT SURPRISED by the profitability of credit card programs.I remember that before Sears sold their credit card portfolio to Citi Cards it was revealed they in Puerto Rico (my neck of the woods) made more money from their credit cards than from selling their goods. And that was many moons ago... If DL benefits so much, imagine AMEX.

strickerj April 14, 2018

One more observation - it looks like Delta’s total revenue last year was over $41B, so the $3B from the AmEx credit cards is actually less of the total than I thought it’d be.

strickerj April 14, 2018

I’m curious how that revenue breaks down. Is that all from AmEx paying Delta for the miles issued for card spending? Are there additional commissions/fees that AmEx pays per transaction or as part of signup bonuses? And how much does Delta value each outstanding mile on their books? Obviously there’s cost to Delta when those miles are redeemed, which isn’t included in the above figure. I’m sure these details are well-kept secrets, but it would provide more insight into just how these partnerships work.

diver858 April 13, 2018

Any speculation on what the AA Advantage program is worth - said to be much larger than Delta.

wuzziduzziman April 13, 2018

Interesting figures. While Delta is publishing this, their transatlantic JV partner Air France KLM just devaluated its co-branded AMEX card: No more qualification miles (XP) relative to the spending on tickets.