American Express Pre-Purchases £750m Worth Of Avios From IAG

In a press release, the International Airlines Group (IAG) has announced on July 24 that it has signed a renewal of its existing partnership with American Express. The multi-year extension will extend the ongoing worldwide commercial collaboration between the two companies. Under the agreement, American Express will make a payment to IAG Loyalty of approximately £750 million ($959 million). Most of this will be used for the purchase of Avios points.

British Airways, Boeing 747, Retirement
American Express and IAG have decided to extend their partnership. Photo: Boeing

The reason

The move will provide American Express users, specifically frequent fliers, an option of utilizing Avios instead of American Express Membership Rewards. IAG Loyalty is similar to other airline groups/alliances, for example, Star Alliance, oneworld, and SkyTeam. The group has its own rewards currency known as Avios, which can be used by the fliers of its member airlines. This includes those who are members of British Airways Executive Club, Iberia Plus, Aer Club, and Vueling Club customer programs.

The decision to buy Avios might have to do with American Express’ UK business. Specifically for those users of American Express, that hold a British Airways co-branded card or are a part of the Membership Rewards program.

IAG group is in severe financial trouble due to the pandemic. Photo: Iberia

Benefits for passengers

The deal between American Express and IAG is a win-win situation for both sides. Frequent fliers who have an existing membership with American Express can now avail award flights on IAG member airlines using their points. At the same time, the decision might do its bit in attracting future customers for American Express cards.

American Express Membership Rewards can easily be transferred to any kind of Avios. The ratio of the transfer is a generous 1:1, and they should process immediately. However, it has to be kept in mind that passengers should be aware of which kind of Avios to transfer to.

Although Avios is a common currency for all IAG member airlines, they are of three different types based on the airline. Aer Lingus, British Airways and Iberia, each has its kind of Avios for codeshare purposes. The Avios earned on any of these members can be used on flights operated by other member airlines but also on codeshare flights.

For example, Avios earned on the Aer Lingus loyalty program, can be used on codeshare flights operated by the airline’s partner United Airlines. This might not be the case if you have transferred your American Express reward points to British Airways’ loyalty program.

It is an unprecedented situation for IAG. Photo: Aer Lingus

Financial help

The massive purchase of Avios might prove to be a much-needed help for the IAG group. The airline group was reportedly burning $ 233 million every week because of the pandemic. The $960 million boost from the partnership deal will give it more breathing space. The whole sum might allow the group to sustain another month’s worth of cash burn. IAG is due to report second-quarter results on July 31.

Are you a member of American Express Membership? Let us know what you think of this partnership.