Southwest Airlines is considering replacing JPMorgan Chase as the issuer of its credit card rewards program, according to two people familiar with the matter.
One of those people said Southwest has hired investment bank First Annapolis as an adviser as it reviews the relationship with Chase.
Who could Southwest rope into making a credible offer for their co-brand franchise?
Does Citi have the juice to pick up a second Dallas-based airline, after shooting the moon on Costco?
American Express can’t possibly make sense for an airline that pitches itself as discount, and of the people, even in a world where Amex co-brands with Walmart and Target.
Barclaycard lost US Airways and clearly needs a prize airline. Southwest’s relationship would be cheaper than American, Delta, or United. So while Barclays doesn’t have the history of spending the sort of cash necessary to put together the Southwest deal, it seems more plausible than Barclays having been positioned to beat out Citi for American’s business.
My guess? Chase retains the business because it’s more valuable to them than a new bank, and because they have the resources. This could simply be preparation for negotiations, and a signal to Chase that they plan to negotiate hard. They see the $2 billion Delta got, the big renegotiation between American and Citi, and they want more too.
They may have chosen, then, precisely the wrong time to make their points worth so much less.
(HT: Miles to Memories)