1Newflyer

Are you saying they have this kind of money to redeem the points in buying tickets and such. AP said they have $ 700 M purchasing power per year that other lines may be interested. Do they have that much cash to work with? or do they rely on new cash coming in from sponsors for that.

PointWeasel

http://www.frugaltravelguy.com/2017/...-aeroplan.html

I was left a but puzzled by this article above.

It gives a rather rosey outlook for the breakup; not what I expect at all.

briantoronto

The whole points blogger industry is based on a rosy outlook so-as to keep us all churning the cards they peddle, and to a lesser extent use their services to book tickets.

robsaw

You'll need someone with more time and accounting expertise to answer those details with precision, but at the moment, yes, they have the cash and credit to make good on redeeming those miles for tickets AT the current rate of miles earned/burned. However, if there is a run on redemptions or major drop-off in billings (i.e. new sales of points to AC, TD, CIBC, etc that buy those points to distribute to their customers - the Aeroplan members) then they could run into a cash-flow problem in the future, which could trigger issues with debt and redemption reserve covenants.

pbd456

this 700m is meqningless. any company that has access to the deeply discount award space ought to be able to generate plenty of revenue.
if you sell something at a loss, you can get plenty of revenue easily.

aeroplan can access this space because air canada is part of the alliance and.contribute it share of award space.

yscleo

Fully agree with that. He didn't really say anything new to calm the nervous investors.

The company is damaged and bleeding. There is pressure for them to cut the already announced dividend, so save money. But if they cut that dividend, the stock will tank.

If they don't cut the dividend, the stock will definitely drop at the ex-dividend date. So speculators might buy now, hoping for a quick dividend, but stock don't drop more than the dividend amount come June 14.

We've shifted our earning of aeropeso from our ae cards, to other cards. We're also looking for redemptions soon than later. ae need to transform to an Air Miles kind of company, but AM got a headstart in signing up lots more companies. The future just doesn't look good for ae.

1Newflyer

I find Air Miles to be junk. If that is the route AP going, migrate to USA for earning real points.

Guava

I already provided the answers to that several days ago.

Post #550 from May 19th

Post #556 , May 19th

I deliberately emphasized part of my own quotes. As you can see, even a week prior to Aimia CEO finally came out and started to engage the public, I already sensed the market was overreacting and the why was explained in my post. The problem affecting Aeorplan is not fundamentally based, but rather emotions. We tend to think investors as logical beings but we also seem to forget they are humans like you and me, and other Aeroplan members.

I criticized Aimia for not coming out earlier to engage the public because that would have helped the company stemming the tide of free falling stock prices, which are being affected by nothing but raw emotions. By the time the CEO finally came out and issued his statement, some investors may be overjoyed by the attempt to engage and reassure, the truth is, the damage is already done. The effort is appreciated, for a time, but the lack of substance will likely do little to stem the tide. Many institutional investors will be paying a lot of attention to the dividend and if they don't like where things are going or if they panic, things could still go much further south for Aimia's stock prices.


Like I said a week ago, they need to do something - anything. The company finally did, albeit a week late and weak, at least Aimia is seeing better days for a day. Next week, I am not so sure. I think the Institutional investors will be very nervous as the ex-dividend date approaches. Many are holding on to the stock for now because they are expected to be paid very shortly. If anything should happen to that, it will be a bloodbath.

Tank is not a word I would use but more like free fall. Absent of a stable dividend payout policy, Institutional Investors will not hold what is otherwise a speculative "growth stock" or closer to distressed securities, for some.

The stock will likely drop more than the dividend amount on 14/06 because no one in their sound mind expect the current dividend payout to be sustainable, which was over 40% at one point last week. This may sound ironic given what I just said about the institutional investors but it may not be such a bad idea for Aimia to scrap the already declared dividend now, take a hit but offer a credible plan to rehabilitate the company post-AC. This will be more worthwhile than sticking to the current plan, just for the sake of appearance because volatility will once again accelerate after the declared dividend is paid, there will be a period of void between then and the next announcement.

It will be hard to Aeroplan to be another Air Miles. Aeroplan's target customers is upper middle class and above, which means Aeroplan cannot sign up as many companies as Air Miles can. But even such niche may be in danger without AC as partner. In other words, Aeroplan will need to redefine itself, if so, it may be to re-evaluate who and how it wants to segment the market. How does it differentiate itself from Air Miles? Air Miles does not in fact have a "Market Fare" for flights awards. Instead, Air Miles uses a somewhat old fashioned zone based but fixed price flight awards. Short-haul flights and/or intra-provincial flights using AM can potentially be cheaper than using Aeroplan even now.

Which will not be possible for most Canadian residents

YUL

PointWeasel: migrate to US based program: "will not be possible for most Canadian residents"

I believe United's MP can be as attractive as AP in terms of collecting points while flying. Also, awards are more plentifull, and there are little scamcharges, even on Air Canada metals.

Obviously, you can't collect points in any Canadian merchants currently, but that can change if demand materializes.

If MP expands in Canada, Air Canada would certainly not cooperate much more thought...

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FWIW: You can open a US Chase bank account and they'll get you a Chase MileagePlus Explorer CC if you want (As a Canadian, I got one easily).

jc94

Don't think I've seen this mentioned but I was just on the FT home page and there is a note about this saying "Don’t Panic, But Air Canada Is Dropping"

Now the entire text is "Don’t Panic, But Air Canada Is Dropping Aeroplan" but with the last word missing it looks a little unfortunate!

yscleo

AC is so smart.

1. Spin off (sell out) their FF program with a relationship. Receive a bundle of money.

2. Break off that relationship and create a new FF program. See that sold out company fail.

Repeat.

Do that a few times, receive many bundles of money.

YUL

So true! What a scam.

And how can you expect a third party FF program to succeed? You are adding a huge layer of complexity.

AP Shareholders (who paid Billions) expect a resonnable return. That reflects on all the scamcharges, un-availability of awards flts, and the rip-off marchandise offering.

Air Canada is definitely laughing all the way to the Caisse Populaire (ok, meant bank here)!

kalderlake

It would be interesting to know who the major share-holders are in the two companies, and how much overlap there is.

rehoult

I did a quick SEDI search and neither issuer has any 10%+ shareholders declared. Holdings under that by non-insiders don't have to be declared, so it's hard to find unless the entity is open about their position.

DrunkCargo

Yes, not 100's of millions, but rather trillions... just 100's of trillions however...

bigger... better... I hope altitude has 16 digits like credit cards... even bigger, even better. =) (won't comment on how I feel down there right now imagining the massive loyalty hard card... metal could be useful too... wrists sometimes need a scraping here and there)