Delta and Amex Credit Cards: They Love to Fly and it Shows

Buried on page B2 of today’s Wall Street Journal is an interesting factoid. In 2017, Delta Airlines generated $3 billion from its co-branded credit card with American Express.

  • Delta Air LinesDAL +1.43% is banking on branded credit cards, repairing jets and plusher passenger amenities to drive growth.
  • The No. 2 U.S. carrier beat quarterly earnings forecasts on Thursday thanks to rising passenger and cargo traffic as well as non-ticket revenue that is growing at an even faster pace.
  • Delta said American Express secured more than a million new accounts for their joint credit card last year, plus a record number in the first quarter that gave the airline a sales boost through payments the company receives for frequent flier miles.
  • Delta generated $3 billion in revenue from the card last year.

Hmm, those co-branded cards can offer value to consumers, and be a plum for the issuer and co-brand partner also. American Express’ Delta co-brand is a well-valued credit card, with nice bonuses such as free bags, Medallion point kickers.

From my personal experience, the tie-in between point redemption at Amex and perfect execution at Delta is flawless. Even better than the prioritized boarding.

It is important to Delta. Without a card relationship, profits would be sub-optimal.

  • Delta reported profits of $547 million in the March quarter compared with $561 million a year earlier, lifted by buoyant international traffic. Per-share earnings rose a penny to 78 cents, with the adjusted total of 74 cents beating Wall Street estimates.

It is hard to get deeper into the numbers, such as what are the components of Delta’s $3 billion. It could be that the card generated $3 billion in sales revenue, or it could be that Delta’s participation in the venture generated $3 billion in fee revenue from their revenue share, but it surely illustrates there is substantial revenue in those cobrands.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

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