American Airlines (AMR) Could Raise Money From Citigroup (C)

The Financial Times reported that AMR Corp.'s (NYSE: AMR) American Airlines is in early talks to raise cash from Citigroup (NYSE: C), its credit card partner, after recently securing a $100 million loan from Germany's DVB Bank.

The liquidity would come at a crucial time for American. While gas prices have fallen, passenger demand has fallen even more, which raises concerns that several big carriers may head for bankruptcy protection.

The FT said American Airline's talks with Citi are focused on their co-branded credit card, which awards customers frequent-flyer miles with each purchase. The two companies are contemplating an arrangement in which American would sell Citi a block of miles in advance.

American Airlines' competitors such as, Delta Air Lines (NYSE: DAL), United Airlines (Nasdaq: UAUA) and Continental Airlines (NYSE: CAL) have already earned hundreds of millions of dollars in similar deals with their card partners.

Delta added $2 billion in cash by extending its card contract with American Express, while United and Continental each raised hundreds of millions of dollars from the advance sales of miles to JPMorgan Chase (NYSE: JPM), their partner.

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