AMR Corp's American Airlines is in early talks to raise cash from its credit card partner, Citigroup , by selling it frequent flyer miles, the Financial Times reported citing people familiar with the matter.

In a report on its website, the paper said the two companies were in discussion over an arrangement in which American Airlines would sell Citigroup a block of frequent-flyer miles in advance.

The talks were at an early stage and could end if other sources of financing opened up or if demand for travel improved, the paper said.

Rival airlines United Airlines and Continental Airlines both raised money in 2008 via advance sales of frequent flyer miles to their credit card partner JPMorgan Chase .

Weaker travel demand during an economic recession, volatile fuel prices and dwindling financing options have put pressure on balance sheets of airline companies.

In March, Brokerage Stifel Nicolaus had raised concerns about AMR Corp's liquidity.

(Reporting by Vikram Subhedar in Bangalore; Editing by Anshuman Daga)

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