Delta adds $1B in AmEx deal

Airline, financial services company extend co-branded credit card agreement.

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By Lara Moscrip, CNNMoney.com contributing writer

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NEW YORK (CNNMoney.com) -- Delta Air Lines said Tuesday it will get an immediate $1 billion boost in liquidity as the result of the extension of a credit card agreement with American Express.

In a statement, Delta (DAL, Fortune 500) said the immediate $1 billion boost comes from a purchase of SkyMiles. The airline said it will receive an additional $1 billion from contract improvements through 2010.

Customers of American Express (AXP, Fortune 500) will get expanded options to book travel on the airline as part of the deal. The financial services company will also expand its merchant acceptance into more places in the Midwest.

Tuesday's agreement between the companies is a multiyear extension of their existing partnership, which has been in effect since 1996.

Delta merged with Northwest Airlines in October. By late 2009, the airline plans to merge its Northwest WorldPerks frequent flyer program with SkyMiles, according to Delta.

Earlier this month, the airline said it plans to cut overall flight capacity by 6% to 8% next year due to the global economic recession and weaker demand for air travel. Delta intends to trim domestic capacity by up to 10% while paring international seats by up to 5%.

On Nov. 10, the Federal Reserve reclassified American Express as a bank so it could more easily access government financing. It has reportedly asked for $3.5 billion under the bailout plan. To top of page

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