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Goldman Sachs Is Vying for JetBlue's Credit-Card Business -- Update

03/18/2021 | 10:58am EDT

By AnnaMaria Andriotis and Peter Rudegeair

Goldman Sachs Group Inc. is talking to JetBlue Airways Corp. about taking over its credit-card program, according to people familiar with the matter, the latest effort from the Wall Street firm to push deeper into consumer finance.

Goldman is competing against Barclays PLC, which is the current issuer of the JetBlue credit cards and is in discussions to hold on to the deal, the people said. Discussions are ongoing, and JetBlue may decide to stick with Barclays. JetBlue's contract with Barclays doesn't end for another roughly three years, some of the people said.

Known for most of its history as an adviser to blue-chip companies and elite money managers, Goldman entered the credit-card business in 2019 as part of a broader expansion into digital-banking services for the masses. Its first credit card was launched in partnership with Apple Inc. Last year, General Motors Co. decided to move its credit-card offering from Capital One Financial Corp. to Goldman.

As of December, outstanding balances on Goldman's credit cards totaled $4.3 billion, more than double their level the year before. The bank expects to add about $2 billion in GM credit-card balances when that deal closes in September. That is still small compared with the big card issuers. JPMorgan Chase & Co. had $144 billion in credit-card balances as of the fourth quarter 2020.

Airline co-branded cards are among the most competitive in the credit-card industry. While there are hundreds of retailers that banks could partner with to offer credit cards, there are a limited number of U.S. airlines. The cards have historically appealed to banks because they attracted big-spending frequent travelers.

But credit-card spending, particularly on airfare and other travel, has been hit hard by the pandemic. Many people, worried about taking on new debt in an uncertain job market, switched to debit cards. Card issuers are betting that pent-up demand will create a travel boom when the pandemic ends, boosting demand for and usage of airline cards.

American Express Co. and JPMorgan have long run the credit-card programs for Delta Air Lines Inc. and United Airlines Holdings Inc., respectively. Citigroup Inc. and Barclays both issue credit cards for American Airlines Group Inc.

In the past several years, Goldman has reached out to many U.S. airlines to see if they were interested in partnerships, according to people familiar with the matter. One challenge: Many of the major credit-card deals have five years or more left to them.

A JetBlue deal could be risky for Goldman because of the unusually long gap between when the deal would be signed and when it would take effect, especially given the uncertainty around what will happen to travel demand in the intervening years.

Barclays began issuing JetBlue credit cards in 2016, after JetBlue parted ways with AmEx.

Goldman has courted JetBlue for a few years, according to one of the people familiar with the matter. The bank recently started offering a loan option to consumers who book vacation packages through JetBlue Vacations, allowing them to pay in installments.

Late last year, JetBlue asked Barclays to extend its contract years before it was set to expire, in hopes that it would smooth the way to JetBlue getting a loan from the Treasury Department, people familiar with the matter said.

Soon after, JetBlue put out a formal request for bids from other card issuers and entered into serious conversations with Goldman, the people said. JetBlue is also in discussions with Barclays about extending its contract, according to the people.

A JetBlue spokeswoman said Barclays has "been an instrumental partner to our business and the success of our loyalty program." She said JetBlue's request for bids "will help us evaluate the right partner for us in this new travel landscape as we emerge from this crisis."

Goldman started in consumer lending by mailing out unsolicited offers for unsecured personal loans, but it scaled back those offers during the pandemic. In addition to the new co-branded credit-card deals, Goldman spent last year inking deals with Amazon.com Inc. and Walmart Inc. to make loans to merchants that sell goods through those companies.

Last month, David Stark, the executive who ran the partnership strategy in Goldman's consumer business, decided to leave the bank for a role at Walmart's recently-established financial-tech subsidiary.

--Alison Sider contributed to this article.

Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com and Peter Rudegeair at Peter.Rudegeair@wsj.com

(END) Dow Jones Newswires

03-18-21 1157ET

Stocks mentioned in the article
ChangeLast1st jan.
AMERICAN AIRLINES GROUP INC. -1.56% 19.53 Delayed Quote.25.81%
AMERICAN EXPRESS COMPANY 0.28% 177.31 Delayed Quote.46.24%
APPLE INC. 1.51% 148.76 Delayed Quote.10.45%
BARCLAYS PLC 0.03% 199.52 Delayed Quote.35.98%
CAPITAL ONE FINANCIAL CORPORATION 0.37% 169.79 Delayed Quote.70.34%
CITIGROUP INC. 0.21% 71.76 Delayed Quote.16.14%
DELTA AIR LINES, INC. -1.37% 40.45 Delayed Quote.1.99%
GENERAL MOTORS COMPANY -0.07% 56.85 Delayed Quote.36.62%
JETBLUE AIRWAYS CORPORATION -0.40% 14.9 Delayed Quote.2.89%
JPMORGAN CHASE & CO. 1.21% 168.57 Delayed Quote.31.12%
THE GOLDMAN SACHS GROUP, INC. -0.37% 412.16 Delayed Quote.56.87%
UNITED AIRLINES HOLDINGS, INC. -2.01% 46.22 Delayed Quote.9.06%
WALMART INC. 2.12% 144.69 Delayed Quote.-1.71%
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Financials (USD)
Sales 2021 58 673 M - -
Net income 2021 21 416 M - -
Net Debt 2021 302 B - -
P/E ratio 2021 6,89x
Yield 2021 1,57%
Capitalization 133 B 133 B -
EV / Sales 2021 7,42x
EV / Sales 2022 9,50x
Nbr of Employees 40 800
Free-Float 37,0%
Duration : Period :
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Technical analysis trends THE GOLDMAN SACHS GROUP, INC.
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 27
Last Close Price 413,69 $
Average target price 443,24 $
Spread / Average Target 7,14%
EPS Revisions
Managers and Directors
David Michael Solomon Chairman & Chief Executive Officer
John Edward Waldron President & Chief Operating Officer
Stephen M. Scherr Chief Financial Officer & Executive Vice President
Marco Argenti Co-Chief Information Officer
George C. Lee Co-Chief Information Officer
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