JPMorgan Chase & Co. said Tuesday that it had reached an agreement in principle to renew its cobranded card contract with UAL Corp.'s United Airlines.
Under the multiyear renewal, JPMorgan Chase would continue to issue cards that earn consumers frequent flier rewards in the airline's Mileage Plus program. Stephanie Jacobson, a spokeswoman for the New York banking company, would not disclose the exact length of the renewal.
There is no specific deadline for the parties "to finalize all the specific terms" in the agreement, Ms. Jacobson said, but she expects that to happen "quickly."
UAL Corp. said it would receive $600 million from JPMorgan Chase for "the advance purchase of frequent flier miles and the extension of the contract." The airline, which reported a second-quarter net loss of $2.73 billion on Tuesday, also said it expected the transaction to "improve cash flow by about $200 million in the next two years."
One of United's credit card processors, Chase Paymentech Solutions LLC, a joint venture that JPMorgan Chase and First Data Corp. are unwinding, would reduce its level of "holdbacks" to $25 million. UAL said the reduction in collateral levels against credit card purchases of tickets "will result in the release of approximately $350 million in previously restricted cash."
JPMorgan Chase would retain the Chase Paymentech name, and United's business, after the venture's breakup, Ms. Jacobson said.
Last month United and Continental Airlines Inc. announced a global alliance to cut costs, link their domestic networks, and let each other's frequent fliers "earn miles in their accounts when flying on either partner airline and redeem awards on both carriers."
JPMorgan Chase also issues cobranded reward cards for Continental's OnePass frequent flier program. Ms. Jacobson said the alliance between the two airlines would have no impact on either of her company's cobranding contracts.