Not sure what, exactly, the "best" course of action would be. However, for that card, it is quite common to be offered a retention bonus to keep it.

See http://www.flyertalk.com/forum/credi...all-cards.html

At the worst, they will probably offer to downgrade it to a card with no annual fee, so you can keep it open if you want to preserve the credit line. (Generally, Citi will not move a credit line to an existing card when you close a card.)

Regardless of any of that, you can certainly apply for whatever new card you want. See the link mia posted. However, if it has only been 11 months since your last successful AA application, you probably can not apply for any of the AA cards yet.