Southwest considering split from Chase

[SomeGuyNamedFred]

[QUOTE]

NEW YORK (TheStreet) -- Southwest Airlines (LUV - Get Report) is considering replacing JPMorgan Chase(JPM - Get Report) as the issuer of its credit card rewards program, according to two people familiar with the matter. 

One of those people said Southwest has hired investment bank First Annapolis as an adviser as it reviews the relationship with Chase. John Grund, who manages the credit card M&A advisory business at First Annapolis, did not respond to calls. Spokespeople for Chase and Southwest declined to comment. 

Visa (V) is also part of the relationship with Southwest and Chase, though it could not be determined whether that relationship, where less money is at stake, is also part of the review. An email message to Visa's press office was not returned. 

While the size of the Southwest program could not be determined, both sources said it is considerably larger than $1 billion in receivables, while one said it is "several multiples of that," and considerably larger than one would expect from an airline the size of Southwest. The other source, however, said it certainly didn't approach $10 billion. For comparison Costco's (CSCO) receivables, recently shifted from American Express (AXP) to Citigroup (C), are about $14 billion. 

Assuming a $5 billion receivables program, JPMorgan might be expected to hold $500 million in equity against those loans. Assuming a 15% return on equity, it means the business might generate $75 million in annual after-tax profits for JPMorgan, according to Sameer Gokhale, credit card industry analyst at Janney Capital Markets. Gokhale stressed that the figures were rough assumptions as he does not officially cover JPMorgan and doesn't know the size of the Southwest portfolio. 

Article continued in link below...

[/QUOTE]

http://www.thestreet.com/story/13117139/1/southwest-airlines-may-replace-chase-for-credit-cards-prog...

My mom wants to get this card.  Should she wait until after Southwest makes a decision?  I'd hate for her to get the card and then either have to re-apply again soon after adding another HP and new account, or have the card cancelled on her.

[CraigHwk]

I sure hope this doesn't put point transfer to Southwest via UR in jeopardy too.

[chalupaman]

That stinks. I might wanna do some point transfers there early before anything else happens.

Perhaps this is another airline card Barclay's or citi will back in the future.

[Anonymous]

I wouldn't rush to transfer points based on this alone.  Even if SW switched it would take months  to happen just like it is with Amex and Costco

[Anonymous]

SW pts are about to devalue anyway

[longtime_lurker]

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@Anonymous wrote:
SW pts are about to devalue anyway

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They just did, as of 4/17. Delta-like

[Anonymous]

Ew. Good thing I used a good chunk of em at 1.9cpp for ticket. ✈

[icyhot]

Hmm. First BP now Southwest. Who's next on the chopping board?

[Existentialist]

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@Anonymous wrote:
SW pts are about to devalue anyway

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This is a 'partially' true statement given that point debasement isnt across the board. As an SWRR cardholder I can confirm that decreases in points are dependent upon certain variables such as route in ?

For example a recently scheduled flight (after 4.17) yielded approx. the same point value as it has traditionally. A more prominent issue however is not always knowing in advance how much value (point wise) all flights will be worth. It appears (to me) to be an indication that SW is (beta) testing this new measure (via a newly introduced algorithm) with the goal of determining its long standing viability. As such I foresee (@ least in the immediate future) a few (possibly more) headaches since the formula seems anything but stable (based upon SW's inability/refusal to lay out any specifics re: consistency in model behavior for ALL of its flights).

That said I've been looking to add an addt travel card anyway so I dont feel overly pressed about what SW is doing. If anything they're merely joining the club of other airlines who have been doing essentially the same thing in one form or another. Very little surprises me anymore.

**On the plus side however no modification to change/cancellation or baggage fees and with airlines that remains to me a much more significant issue than who their co-branded partner is**

[pizza1]

God I sure hope so!!! Ive wanted this card forever, and Ive apped like 6 times for it, to be declined because of bk, and Chase hates me for good reason. It would be awesome if Southwest gives this card to another lender, I might have a chance in heck to get it, LOL