BenSenise

I thought for sure that someone would have posted this by the time I had read it this morning.
Aimia, the owner of Aeroplan, has sold the Air Miles Trademarks for Canada to Diversified Royalty Corp.
Press release here on the Aimia website.

The reason I'm posting this here, is because a search of all FT forums finds discussion of Aimia almost exclusively in this forum.

I'm wondering what their strategy is with Aeroplan since AC will be ditching them in a few years. I've had the impression that AirMiles has been upping their game a lot since AC's announcement with miles offers seemingly much more generous. I guess that Aeroplan would become much more like AirMiles since it won't have a direct airline association once AC leaves.

$54M doesn't seem like much either.

Anyone have thoughts or insights into this situation? Time to dump AirMiles quickly?

capedreamer

Interesting. I think this explains the rationale pretty well (bolding mine):

24left

Thanks for posting the news.

This thread had a wiki with various announcements including Aeroplan/Aimia

I had asked about starting a separate thread for Aeroplan/Aimia.

http://www.flyertalk.com/forum/air-c...2020-a-55.html

RCyyz

I know about LoyaltyOne and AirMiles but I had no idea that Aimia was the trademark owner for AirMiles in Canada. Interesting that Aimia let LoyaltyOne more or less compete with them but charged $8.5 mil per year for that privilege.

I concur that $54 mil isn't very much, but it also demonstrates what these programs are "worth" if all you can realistically do is buy toasters.

Bonaventure

This is a royalty / trademark and has no impact on Air Miles / LoyaltyOne's operating business. The only thing that surprised me was they were not able to buy it themselves.

On the other hand this has a very positive impact on Aimia's business and is something we have been expecting as one of many steps to come.

The Lev

$54-$67 million is a pretty low price for an $8.5 million annual annuity.

Guess Aimia needs the cash.

RoutingWonk

Aimia is certainly trying to maximize cash on hand to weather the AC split, but isn't it to Aeroplan's advantage to have someone other than LoyaltyOne owning the trademark?

If loyaltyOne bought it they would take the $54m cost in year 1 and then show profits up in subsequent years. Aimia doesn't want Airmiles to be able to claim that they're bigger or more profitable than Aeroplan.

If they sell the trademark to someone else then there's a profit motive to squeeze LoyaltyOne for more money at the next negotiation.

Jumper Jack

That's some pretty high discount rate they got to get that NPV above 0

1Newflyer

AirMiles sounds like a more valuable trademark that Aimia or Aeroplan. At least it means something even to people that own none of the above. Why in a hell would anyone sell it instead of monetizing it after the AC divorce. $8 M a year for a program that has revenue of billions. Cut the contract and use it yourself. Current AirMiles program would crush.

robsaw

Aimia can't arbitrarily terminate a contract now - and they need cash now and before the Air Miles licensing agreement would renew and before the AC agreement with Aeroplan expires. I suspect the operators of Air Miles in Canada have terms on the name licensing contract that would make any other option financial untenable for Aimia.

jazzsax

Not sure if they would expense this right off the hop in year 1. Probably needs to be booked as an asset (Trademark / Goodwill) or something similar and depreciated over time. They might write it off on paper in year 1, but from a tax perspective wouldn't be able to use the whole transaction value to offset tax in year 1.

The Lev

Market seems to like it. Stock up 16 cents (11%) on a down day.

24left

Why Aimia Just Sold Off the Canadian Air Miles Program

by Gary Leff on August 28, 2017

http://viewfromthewing.boardingarea....miles-program/

canadiancow

I thought they sold the trademark, not the program?

24left

Right. He left out that part but did include the link to the CTV news item

"Aimia sells Air Miles Trademarks for Canada for nearly $54 million"

http://www.ctvnews.ca/business/aimia...lion-1.3562293