NEW YORK--(BUSINESS WIRE)--We expect the merger of AMR Corporation (the parent of American Airlines) and US Airways Group Inc. to have minimal impact on the co-branded credit card asset-backed securities issued by their related institutions. We consider the possible effect on securitized credit card receivables including decreased card utilization or performance deterioration in the related receivables that may be driven by shifts in consumer behaviour as a result of the merger. AMR Corp.'s $11 billion merger with US Airways Group Inc. was announced in mid-February.
American Airlines co-branded credit cards are issued by Citibank, N.A. and represent nearly one-quarter of the receivables issued in the Citibank Credit Card Master Trust I. Presently, it is unclear as to whether the rewards programs offered by American (AAdvantage) and US Airways Group Inc. (Dividend Mile) will be consolidated under a single credit card program or remain separate, be re-branded and convert under a new credit card, or (although highly unlikely) terminated in their entirety.
In any of the above cases, the impact to Fitch-rated credit card trusts would be minimal. Any decline in card usage is covered under the purchase rate stress scenarios employed in Fitch's cash flow modelling. Performance deterioration resulting from shifts in consumer behaviour is also reflected in the cash flow stresses we apply to yield, monthly payment rate, and chargeoffs. Additionally, performance deterioration and/or failure of the originator to replenish the trust with new receivables would largely be mitigated by early amortization events present in the trust structure. We will continue to monitor the progress of the merger and Citibank trust performance through its surveillance process on an ongoing basis.
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