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Southwest & Chase to Breakup?
There has been a lot of news lately about credit card co-branded partnerships. Most of the news this year has revolved around American Express losing huge partnerships with companies such as JetBlue and Costco.
One only needs to look at the American Express stock this year to see just how important these types of partnerships are. Since the beginning of the year, shares in American Express have dropped nearly 16%, mostly because of the loss of the $14 billion Costco contract.
Now there is some speculation that Southwest is looking into replacing Chase as their co-branded credit card partner. To investigate this option, Southwest has hired investment bank First Annapolis as advisors according to The Street.
I was unable to find out how long the contract between the two companies still has left, however it is pretty typical for companies to start this process between 1 to 2 years before the switchover. For example, Costco dumped Amex and signed with Citi more than a year before their current contract is up.
While neither Southwest nor Chase has commented on this story, the Street claims to have two reliable sources who are “familiar with the matter”. At this point I think this is probably nothing more than Southwest doing their due diligence, but it would be interesting to see another shakeup in the reward credit card space.
You can head over to this The Street article for the full details of this rumor including what the loss of Southwest might mean to Chase’s bottom line. What do you think about rumor? Which bank would be a better fit for Southwest? Let me know in the comments!
HT: Chad C.
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