Breaking: Air Canada, TD, CIBC, Visa to Acquire Aeroplan

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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.

Source: AIMIA

Source: AIMIA

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.

Transitions

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.

Conclusion

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).

Source: Air Canada, TD, CIBC, Visa and Aimia Reach Agreement in Principle for Acquisition of Aeroplan Loyalty Business – Cision Newswire

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Comments

  1. Air Canada being part of this saga is very suspicious.First they tank the Aeroplan stock because they are leaving and then announce a new points program separate from Aeroplan and then buy Aeroplan meaning this will be the new Air Canada points program? If the new points program was serious they wouldn’t be dealing with Aeroplan at all would they?

    Aeroplan wasn’t a good deal with flights in the last 2-3 years.Most times you had 2-3 flights that would total layovers of over 20-24 hours or so and the taxes would be more than just buying the tickets somewhere else as the points were actually costing you $$ because the price of the tickets was higher.Now add to the 4-5 days/week with no market fare which kicks you to regular 50k++ aeroplan miles and it became unattainable as our last flights in Florida costs us 110k points instead of 50k.
    Worst they just lost Esso and buying at Home Hardware is not a regular place to shop…so 95% of the points are earned on CC spend.
    CC should have a diversified portfolio…2 banks and at least 1 CC going for Aeroplan while there’s nothing for hotels like HH,Marriott,etc is baffling.

    • I’ve flown around the world TWICE with 3 stops each on flights that I wanted, once in business once in economy, and I’m gonna do it in economy again next year. For 100k points…you’re just doing it wrong.

  2. Expect a BIG devaluation! HUGE! I would have liked the two to remain separate for the sake of competition.

    As much as Aeroplan isn’t perfect my biggest complaints about the program are not their fault:

    1) Award availability
    2) Fuel Surcharges

    Both are Air Canada’s doing!

      • From your post, “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.” Will you be still retaining this strategy? I was planning to do so and am now not sure what to do.I have enough for eco asia flight and would want to include 3 stops as I’ve done in the past.

  3. So, I agree with the posters, this will probably be a negative in the long run for us, maybe in the short term too, but I guess nothing will happen too fast. I’m working now to try and burn my last 100k on a Y-RTW, guess I better work faster!

    That being said, lemme put on my tinfoil hat for just a second. As a shareholder in AC this is a good thing imo.

    Just picture this, AC cuts ties with Aeroplan, announces their own FFP, which we’ve had 0 details, not a single one come out, because they had no intentions of ever starting an FFP from the ground up. They do this knowing it’ll crater Aimia’s stock price, because Aeroplan is 90% of their business. Then they offer to buy it back for like 1/3 the market cap, get shot down. So then they go back to the drawing board and say “ok our max offer is gonna be _____, if they don’t accept, then we just start our own FFP, can’t be that hard since we’ve got the partnerships built in already and we can make it look great for the first year before we devalue it”. Then they make the 2/3 value offer, Aimia accepts and poof. You’ve just bought yourself an entire FFP at a fraction of the price it’s valued at, you’ve “regained” all your customers and then a handful of other customers who were credit card only members and non-flyers.

    On paper, to me, this looks like a stroke of brilliance by AC upper management.

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