Good analysis @
Stranger on the challenges faced by AE.
A few more points to consider:
(1) Aimia has $600 million cash and short term investments, however discounted liabilities for future point redemption are $2.2 billion.
(2) The liabilities all ready have a healthy breakage amount built into their calculation. If the assumption on breakage do not prove to be true (e.g. small time AE members decide to clear out their account), this liability could increase at a rapid rate.
(3) Aimia has suspended their dividend and key finance are in the process of finding alternate employment. The CFO departed 10 days ago. All this points to AE going into cash conservation mode.
(4) There is a real risk that average joe AE members will stop collecting AE miles and move to other programs because everyone is under the impression that rewards end June 30, 2020. This could impact AE inbound cash.
This past week in YYC was Calgary Stampede. I had a long time in various pancake and BBQ lineups with my inlaws. They have all stopped collecting AE miles through Gas, hardware store, etc. Further, they have switched into a harvest mindset. Taking a 50,000 market price reward on YYC-LAS-YYC is a lot more appealing now. Before the divorce announcement, all my inlaws were hoping to cash in a J class reward to Europe.
So multiply my mother in law, wife's aunt and uncle over the "average joe/jane" person collecting AE miles, and the financing question faced by Aimia is whether they have a 2.2 billion liability or a 4 billion liability. This question is exclusive of SE and Altitude status holders, most of whom have redeemed as the earn on at least a few occasions.