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Is British Airways dropping Amex for Mastercard? Willie Walsh drops vague hints

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IAG, the parent company of British Airways, announced its 2019 financial results on Friday.  There were no stand-out announcements, which is why we haven’t done a full article on it, except to note that:

Iberia is planning ‘improvements’ to its Business Class product this year and

LEVEL is struggling badly in France

Due to coronavirus, there was no financial guidance given.  A hiring freeze has been put in place and employees will be offered additional time off without pay.  British Airways retains a strong cash position – new product investment will continue and all aircraft due for delivery this year will be accepted and not deferred.

Avios wing 5

What is happening with IAG Loyalty?

IAG Loyalty, ex Avios Group, gets very little coverage in these results.  This is partly because it is relatively small in the context of the group but also, I think, because the market does not understand it.

The only point flagged in the results presentation – which you can download from here – is the new tie-up with Barclays Premier.

This is a red herring, frankly.  With the best will in the world, the new Barclays Premier relationship won’t amount to much.

For a start, we are looking at a very limited market – initially UK residents earning £75,000+.

Secondly, unlike taking out a credit card, the Barclays Premier deal involves moving your current account banking.  As the well-repeated fact goes, you are more likely to get divorced than move your main bank account during your lifetime.

Thirdly, how big is the Avios-earning potential per client?  During the Barclays Premier trial last year there was a 25,000 mile bonus for signing up.  However, it would be surprising if the on-going incentives are so big once Barclays has you as a customer.  There is likely to be an element of credit card earning, but we have had this via HSBC Premier for many years and it has always been of limited interest.

A quick fag-packet calculation would see 5,000 people opening an account and Barclays pay IAG Loyalty £200-£250 per account to cover the 25,000 Avios.  This would be a £1 million income stream which, frankly, isn’t much in context.  Let’s see.

But far more interesting ….. Mastercard

It is difficult to know if Willie Walsh, IAG’s out-going CEO and Chairman, let this slip by mistake or not.  In general, Willie Walsh does not let things slip ‘by mistake’ and there could be a point to it.  Perhaps it was said so that people like me write about it and get a message out.  Who knows?

Anyway …. Willie Walsh said that the CEO of Mastercard “has been in to see me three or four times in the last 12 months, mad keen to do business with us”.

This is not in the presentation but is in the webcast which you can find on the IAG Investor Relations website.  Registration is required.  It is about 79 minutes in, during the question on IAG Loyalty.

Why is this interesting?

The EU cap on interchange fees means that American Express no longer has a fee advantage over Visa and Mastercard, although I believe that Amex is still hoping to get the EU to amend the rules to exempt it.  Historically, because Amex received higher fees from retailers, there was more money sloshing around to fund rewards.  This is no longer the case.

Secondly, Amex is, of course, Amex – and comes with all of the issues over acceptability.  No-one walks around with just an American Express card in their wallet or purse.  There is also a Visa or Mastercard, which means that British Airways competes with another issuer – likely to be Virgin Atlantic in the UK – and does not get a 100% ‘share of wallet’.

A deal with Mastercard would allow BA to get a 100% ‘share of wallet’ in terms of credit card spend AND strike a blow to Virgin Atlantic and other Visa / Mastercard loyalty products.

The British Airways American Express cards generate over £1bn per month of purchases.  If switched to a Visa or Mastercard, I can easily see this reaching £2bn per month.  No wonder the CEO of Mastercard is mad keen …..

It is also worth remembering that the Iberia credit card in Spain is a Visa, so Mastercard would be keen to take this bit of business too.

To put these meetings in perspective, Mastercard has a market cap of $289 BILLION.  This compares to IAG’s £9 billion.  CEO’s don’t usually make ‘3 or 4 visits in the last 12 months’ to see the heads of companies which are just 5% of their size unless a serious deal is being contemplated.

Accor has just created a template for how this can be done.  The Accor hotel group has just agreed a global deal with Visa as we covered here.  Accor can now approach Visa card issuers in each country in which it is active and strike a co-brand deal on the back of the sweetheart terms it has already negotiated.

A switch from American Express to Mastercard, with the subsequent increase in Avios issuance, would also explain why IAG Loyalty produced such bullish forecasts for growth when it presented during the IAG Capital Markets Day last November.

This is clearly all speculation, of course, but things may be happening ….


Want to earn more points from credit cards? – May 2022 update

If you are looking to apply for a new credit or charge card, here are our top recommendations based on the current sign-up bonuses.

In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards. You qualify for the bonus on these cards even if you have a British Airways American Express card:

Barclaycard Avios Plus card

Barclaycard Avios Plus Mastercard

25,000 Avios for signing up and an upgrade voucher for spending £10,000 Read our full review

Barclaycard Avios card

Barclaycard Avios Mastercard

5,000 Avios for signing up and an upgrade voucher for spending £20,000 Read our full review

You can see our full directory of all UK cards which earn airline or hotel points here. Here are the best of the other deals currently available.

The Platinum Card has doubled its sign-up bonus to 60,000 Membership Rewards points, which convert to 60,000 Avios or other airline miles, if you apply by 1st June 2022.

British Airways BA Premium Plus American Express Amex credit card

British Airways American Express Premium Plus

25,000 Avios and the UK’s most valuable card perk – the 2-4-1 voucher Read our full review

American Express Amex Gold

American Express Preferred Rewards Gold

Your best beginner’s card – 20,000 points, FREE for a year & two airport lounge passes Read our full review

American Express Platinum card Amex

The Platinum Card from American Express

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Virgin Rewards Plus credit card

Virgin Atlantic Reward+ Mastercard

30,000 points bonus (SPECIAL OFFER) and 1.5 points for every £1 you spend Read our full review

Earning miles and points from small business cards

If you are a sole trader or run a small company, you may also want to check out these offers:

Amex Platinum Business American Express

American Express Business Platinum

40,000 points sign-up bonus and a long list of travel benefits Read our full review

American Express Business Gold

20,000 points sign-up bonus and free for a year Read our full review

British Airways Accelerating Business American Express card

British Airways Accelerating Business American Express

30,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review

Capital on Tap Visa card

Capital On Tap Business Rewards Visa

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For a non-American Express option, we also recommend the Barclaycard Select Cashback card for sole traders and small businesses. It is FREE and you receive 1% cashback on your spending.

Barclaycard Select Cashback credit card

1% cashback (3% on business travel for four months) and no annual fee Read our full review

Comments (146)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Tom says:

    100% that BA will leave Amex.

    This will happen, but not until 2021 at least.

    Amex have lost Costco already worldwide.

    However, whether it is better for members is another matter. Sure, more options to spend but far less offers – so swings and roundabouts.

    This has of course been discussed for weeks.

    • paul says:

      Costco Reading still takes Amex…used it on Saturday. Think only the US dropped amex!

      • Rhys says:

        I think Tom means that the Costco Amex card is now closed to new applicants 🙂

        • JP-MCO says:

          There is also no longer AMEX exclusivity at Costco in the UK. Until recently you could only pay with a debit card or AMEX – now you can use Mastercard and Visa credit cards too.

  • Phil Gollings says:

    The service if you need any help can’t get worse than Amex

    • Trevor says:

      For my two cents, the service I have received over the years has been excellent.

      • BJ says:

        +1, wish all other UK financial service providers and utility companies I have used were even half as good. Worst are Hilton (Hotels and Cards), Monese, and Creation.

      • illuminatus says:

        +1 – I’ve always had much better service with Amex than with HSBC Premier, NatWest etc

      • Paul says:

        I too have had really great service from Amex until two weeks ago. I firstly forgot my wallet when going overseas and then had an accident. The wallet issue I had expected would be easy to resolve but not a bit of it. 5-7 working days for new platinum card and no cash advance unless I cancelled the card. As this was guaranteeing hotels and transport I couldn’t do this. Thanks god for Sterling bank and my Euro account.
        Be repatriated after the accident was awful. Amex have no presence in Austria and no one touches it. getting medical support impossible and I operated on a pay and claim basis.
        Seriously deficient service and not what I have had in the past. Not yet enough to drive me away but serious dent in confidence.
        IF BA PP card goes (mine is free from gran fathered rights) then the £450 fee starts to look way too expensive.

    • Cwyfan says:

      I always have had efficient and helpful responses from Amex

    • Genghis says:

      For simple front line stuff, Amex are excellent. When a bit of brain power and common sense is required, they fail.

      • BJ says:

        If that happens you just have to ask for the right person.

        • Freddy says:

          For straight forward enquiries via live chat they are fine but when I had to raise a Thomas Cook s.75 claim they were completely useless which was escalated to the ombudsman

        • The Streets says:

          Took over six months to get bonus Hilton points from an AMEX offer posted to my account. I must have spoken to every AMEX employee during this period

        • Genghis says:

          Even the senior non front line staff lack common sense and ability to think. We came to a compromise once FOS reviewed case.

          • Lady London says:

            Not sure how much you can say Genghis but were you, broadly, winning on that with the FOS? or were they leaning more towards Amex POV that their action was justified.

    • Nick_C says:

      If you are lucky enough to get through to Brighton, the staff are excellent. If you get through to the Phillipines, the staff are charming but utterly useless.

      • Polly says:

        Always HUACA when you get the Philippines crew. Generally can’t fault their cs in Brighton.

        • BJ says:

          No need, just ask and Philippines puts you through to Brighton if they have problems with your query. Just a reminder to folks though, these are probably precious jobs in the Philippines so please don’t put somebodys livelihood at risk for some petty first world issue. It is not their fault that amex chooses to have their call centre in the Philippines and not in the UK, or that there may be shortcomings in their training.

          • Jill (Kinkell) says:

            Only recently had CS issues with AMEX. Took ages to sort out one problem my OH had and I am currently taking issue with failure to credit 3x Shop Small. ( I know…hardly worth the effort ,but…)Been on Chat, phoned, letter ignored and contemplating. recorded letter effort. I have absolute proof , screenshots etc. credit should have been given.

        • Lady London says:

          +1 such bad experiences with below freezing-level incompetent Philippines call centre staff I will do anything to avoid. PayPal was the worst one. Only deal with one excellent Indian call centre regularly and find other Indian ones are still a paradise comoared to Philippines.

          No the excellent Indian call centre is Three’s (Hutchison) not British Airways’s one. With a bit of luck I’ve more than paid back my treatment at the hands of British Airways’s horrible Indian call centre a few times over.

          • BJ says:

            Only had a single issue where amex Philippines call centre let me down, apart from that they have been fine. Bit durd where Hilton and Creation are, by far the worst IME.

          • Jill (Kinkell) says:

            A few years ago we were booked LATAM from SCL to GIG in Business on Avios . Flight time’s changed repeatedly and In order to get connections ended up in economy. Spent ages over a period of several months getting BA to refund the difference in Avios. Complete shambles. However, one final try ,ended up dealing with Indian call centre. The agent took time to read through everything and track the problem. Sorted. He was brilliant. I suppose, like anything , these days, it’s the luck of the draw..Pity it’s not a helpful, competent experience every time..

  • Rocket says:

    Interestingly last year I did an online survey regarding a CC product which pitched different options of Avios and annual fees. At the time I thought this was either AMEX looking for feedback or another provider testing the market. Actually came down on the side of a new provider.

  • BJ says:

    Probably just a coincidence but I will put it out here FWIW in the event others may have experience similar and a trend may or may not be identified. On my previous two calls to amex within the last week I got proactive had-sells on upgrading my BA blue to BAPP from the CSA. This is not normal in my own personal experience with amex, they usually ask if they can be of any further assistance but I don’t recall getting the hard-sell on another card. The thing that prompted one of these calls was that amex doubled the credit limit on my BA blue card without informing me or seeking my approval.

    • thehornets says:

      Hey BJ,
      I may be incorrectly remembering, but I am pretty sure there is a setting somewhere that allows you to automatically approve/confirm with cardholder/reject increased credit limits. It may have been during the application process.

      On one of our accounts, I selected ‘confirm’ and each time I log on I now get a full screen message asking if I wish to accept the increase.

      • BJ says:

        You remember correctly but I’m opted out which is why I was annoyed. Btw, left a reply to your comment late last night.

        • thehornets says:

          I saw your response BJ but forgot to say Thank you. Apologies! It was very useful!

      • Lady London says:

        There’s newish legislation that they can’t increase your credit limit without your consent IIRC.

        • BJ says:

          Yes, that’s my point, they did.

        • Roy says:

          That makes no sense. Next you’ll be telling me they’re not allowed to reduce the annual fee without my consent.

          Surely it should be changes to the customers’ detriment that they should seek consent for, not changes to the customers’ benefit.

          • Rhys says:

            It’s only in the customer’s benefit if you can manage your money without wracking up thousands of pounds of debt 🙂

  • Ben says:

    Hopefully the 2-4-1 voucher would be kept 😮

  • Cwyfan says:

    I already get avios on my HSBC MasterCard.

    • BJ says:

      And there is the Lloyd’s Mastercard too but it’s currently closed to new applicants I think.

  • Cwyfan says:

    Is the EU cap still relevant?

  • Mark says:

    Really hope they don’t do what Virgin has done and limit companion ticket redemptions in premium cabins to those with BAEC status

    • Polly says:

      Yes that’s a bummer.
      It’s the main reason we don’t collect virgin miles.

    • BJ says:

      If the story my partner heard from cabin manager in December is true you have a lot more than that to be worried about but I think it’s just cabin crew gossip.

      • Paul Pogba says:

        You can’t leave us hanging like that 😀 What area does the gossip centre around (fees, availability, RFS)?

        • BJ says:

          The story was that redemptions and upgrades to First will be restricted to G/GL only. I don’t think it’s credible unless they introduce a super new F product, most will want to redeem Club Suites anyway.

          • Polly says:

            Well, let’s hope they sort out the LH supposed catering issues that appears to limit them assigning the new c suites to Asia etc. Would be quite happy with club suites to KUL etc on a 241.

          • BJ says:

            Is that real about catering issues? It’s hard to believe on a plane which I think might currently has the longest range.

          • Rhys says:

            Less of an issue than you might think – the majority of the Club Suite fleet is 777 – 23 vs 9 A350s at the end of 2020. And the A350 is still flying to Tokyo this summer – not entirely clear what the catering issues are, exactly

          • marcw says:

            The catering issues are just bollocks. First impression of cabin crew is “no way catering fits in these galleys”. Obviously they do. That first impression of cabin crew has happened at IB and Delta, AFAIK.

            Anyway, cabin crew don’t like working on a 350. The space is very tight, not generous as the 777, 330 or 340.

          • BJ says:

            When I was in London I knew a guy who was a purser on CX, he said cab8n crew hated the 777 do much that some would change airlines just to avoid working on it.

          • ankomonkey says:

            @marcw, if the catering issue is just bollocks then everyone should just order something else of the menu.

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