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Back in May last year, Air Canada announced that they were ending their Aeroplan partnership. This caused a huge drop in Aimia’s share price, the company that owns Aeroplan. Last month, Air Canada offered to buy Aeroplan from Aimia in a $250 million cash deal and assumption of $2B in outstanding points liabilities. Aimia rejected this bid on August 2.
However, it looks like they’ve just accepted a new deal where Air Canada and their consortium (TD, CIBC, and Visa) will collectively hand over $450 million and assume the same liabilities of $1.9B. (Somehow, the liabilities managed to drop 5% in a month, impressive!) This is pending shareholder approval and other due diligence measures.
The original offer valued Aimia at $3.64, so this would mean that the new deal following the ratios should value each share at around $6.50. This is still under their share price of around $9 before this whole saga started. This latest news is absolutely incredible and is a little crazy.
This is breaking, so there will be more information later. However, if this bid is accepted and finalized, a number of things change substantially.
Aeroplan’s New Partners
Since the split was announced, Aeroplan has been in talks with many other domestic airline partners, including Air Transat, Flair, and Porter. They had also planned a transfer program where you could convert Aeroplan points to other partners, in line with what you can do with Points.com. If Air Canada does reacquire Aeroplan, these partnerships could be cut.
There’s still a lot of uncertainty because nobody knows how this will all work. Since Air Canada has hired a whole team to launch a new program, we don’t know whether that will continue. Air Canada has also not released any details at all about their new program.
The buyout could mean that Aeroplan points will transfer to the new program, or that Aeroplan would continue to be the brand and face of the program while changing benefits and redemptions to align with Air Canada’s to be revealed program.
It the acquisition does go through, the logistics of everything will be very messy.
What Happens to Aimia?
Given that Aeroplan is Aimia’s core business, this doesn’t leave Aimia with much. They own a stake in Aeromexico’s Club Premier, and also have minority holdings in several other companies.
I’m not happy about this one bit. The primary reason is that this will now mean there will again be no new competition in the Canadian market. I had been prepared to use all my miles in my Aeroplan account to make sure that I didn’t lose any value from holding my points, so any upcoming Aeroplan changes would not have affected me.
If Aeroplan had stayed independent, they then would be competing with Air Canada’s new program for market share and members. This now will not happen. I also think it’s a little sneaky and disruptive for consumers for all of these events to happen without anything actually changing (yet).