Dal gets extra Billion from Amex
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Dal gets extra Billion from Amex
Deal with American Express gives Delta $1-billion boost
BY MARY FRANCIS MASSON . FREE PRESS BUSINESS WRITER . December 10, 2008
Delta Air Lines will get a $1-billion boost from a credit card agreement it
has reached with American Express Co. -- an influx of cash that will help it
weather a downturn in demand for air travel.
The agreement between Delta and American Express is a multiyear extension of
an existing partnership. The companies have offered a portfolio of card
products since 1996. Delta, with its subsidiary Northwest Airlines, is the
largest carrier at Detroit Metro Airport.
In late 2009, Delta plans to merge Northwest's World Perks reward program
with Delta's Sky Miles program.
Delta will receive an immediate $1-billion boost to its liquidity from a
purchase of Sky Miles.
Delta said Tuesday that it expects to receive an additional $1 billion from
contract improvements through 2010. American Express card members will be
offered expanded options for booking travel on Delta, and American Express
will be able to increase merchant acceptance in more places in the Midwest.
Ed Bastian, Delta's president and chief executive of Northwest, said the
deal with American Express combines the world's largest loyalty program --
Sky Miles -- with the best marketer in the credit card industry. The deal
will be worth $15 billion to the company in the next seven years, Bastian
said during a conference with investors Tuesday.
Bastian said the deal is among the reasons Delta will remain solidly
profitable in 2009, despite predictions that airline industry revenues will
decline 8% to 12%.
Bastian said Delta would have to take a passenger-revenue hit of greater
than 20% to offset the predicted gains from the decline in the cost of fuel,
benefits of the merger and Delta's planned 6% to 8% reductions in flight
operations.
Delta officials said they expect much of the decline in demand to come from
corporate travel. Jim Cron, senior vice president for global sales and
distribution, said corporate travel from Detroit is expected to drop more
than the 8% to 12% average expected industrywide.
BY MARY FRANCIS MASSON . FREE PRESS BUSINESS WRITER . December 10, 2008
Delta Air Lines will get a $1-billion boost from a credit card agreement it
has reached with American Express Co. -- an influx of cash that will help it
weather a downturn in demand for air travel.
The agreement between Delta and American Express is a multiyear extension of
an existing partnership. The companies have offered a portfolio of card
products since 1996. Delta, with its subsidiary Northwest Airlines, is the
largest carrier at Detroit Metro Airport.
In late 2009, Delta plans to merge Northwest's World Perks reward program
with Delta's Sky Miles program.
Delta will receive an immediate $1-billion boost to its liquidity from a
purchase of Sky Miles.
Delta said Tuesday that it expects to receive an additional $1 billion from
contract improvements through 2010. American Express card members will be
offered expanded options for booking travel on Delta, and American Express
will be able to increase merchant acceptance in more places in the Midwest.
Ed Bastian, Delta's president and chief executive of Northwest, said the
deal with American Express combines the world's largest loyalty program --
Sky Miles -- with the best marketer in the credit card industry. The deal
will be worth $15 billion to the company in the next seven years, Bastian
said during a conference with investors Tuesday.
Bastian said the deal is among the reasons Delta will remain solidly
profitable in 2009, despite predictions that airline industry revenues will
decline 8% to 12%.
Bastian said Delta would have to take a passenger-revenue hit of greater
than 20% to offset the predicted gains from the decline in the cost of fuel,
benefits of the merger and Delta's planned 6% to 8% reductions in flight
operations.
Delta officials said they expect much of the decline in demand to come from
corporate travel. Jim Cron, senior vice president for global sales and
distribution, said corporate travel from Detroit is expected to drop more
than the 8% to 12% average expected industrywide.
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