Aug 21, 2018, 8:23 am
Last edit by: yyznomad
For those of you interested only in the revised $450-million deal and related discussion, it starts on post 418:
https://www.flyertalk.com/forum/air-canada-aeroplan/1926409-update-aimia-accepts-air-canada-td-cibc-visa-revised-450-million-aeroplan-bid-28.html#post30109427
https://www.flyertalk.com/forum/air-canada-aeroplan/1926409-update-aimia-accepts-air-canada-td-cibc-visa-revised-450-million-aeroplan-bid-28.html#post30109427
Update: Aimia accepts Air Canada, TD, CIBC & Visa revised $450-million Aeroplan bid
Jul 31, 2018, 11:36 am
#181
Join Date: Sep 2009
Location: YYZ
Programs: AC SE MM, Bonvoy Plat, Hilton G,Nexus, Amex MR Plat,IHG Plat
Posts: 4,428
So in your world view, Aimia are an innocent victim in this?
OK, but that's not my view. My read is that Aimia was spun off as a separate business a full 15 years ago. For that entire time, they have known that the contract with AC was up for renewal (and thus, potentially ending) in 2020. Despite this knowledge, in 15 years Aimia failed to diversify their customer base. Now, their primary customer is walking away, and Aimia are in desperate straits as a result.
If Aimia had done a proper job of diversifying and expanding their operations and their customer base, then the loss of a single customer (AC) would not have had a significant impact on their stock price. AC may still have wished to purchase the Aeroplan assets, in order to ease the transition of their (AC) customers from Aimia's loyalty program to AC's loyalty program .... but if Aimia had done a proper job over the past 15 years, then AC would have had to pay a premium for those assets.
The collapse of Aimia's stock price is entirely due to Aimia's lack of execution and business accumen over the past 15 years. Your anger (Dirty, Sleazy, Betrayal) seems like a reasonable set of emotions for how an Aimia shareholder should be feeling about the Aimia board. AC were just a customer who decided to walk away.
OK, but that's not my view. My read is that Aimia was spun off as a separate business a full 15 years ago. For that entire time, they have known that the contract with AC was up for renewal (and thus, potentially ending) in 2020. Despite this knowledge, in 15 years Aimia failed to diversify their customer base. Now, their primary customer is walking away, and Aimia are in desperate straits as a result.
If Aimia had done a proper job of diversifying and expanding their operations and their customer base, then the loss of a single customer (AC) would not have had a significant impact on their stock price. AC may still have wished to purchase the Aeroplan assets, in order to ease the transition of their (AC) customers from Aimia's loyalty program to AC's loyalty program .... but if Aimia had done a proper job over the past 15 years, then AC would have had to pay a premium for those assets.
The collapse of Aimia's stock price is entirely due to Aimia's lack of execution and business accumen over the past 15 years. Your anger (Dirty, Sleazy, Betrayal) seems like a reasonable set of emotions for how an Aimia shareholder should be feeling about the Aimia board. AC were just a customer who decided to walk away.
Jul 31, 2018, 11:42 am
#182
FlyerTalk Evangelist
Join Date: Jun 2003
Location: YYC
Posts: 23,804
So in your world view, Aimia are an innocent victim in this?
OK, but that's not my view. My read is that Aimia was spun off as a separate business a full 15 years ago. For that entire time, they have known that the contract with AC was up for renewal (and thus, potentially ending) in 2020. Despite this knowledge, in 15 years Aimia failed to diversify their customer base. Now, their primary customer is walking away, and Aimia are in desperate straits as a result.
OK, but that's not my view. My read is that Aimia was spun off as a separate business a full 15 years ago. For that entire time, they have known that the contract with AC was up for renewal (and thus, potentially ending) in 2020. Despite this knowledge, in 15 years Aimia failed to diversify their customer base. Now, their primary customer is walking away, and Aimia are in desperate straits as a result.
OTOH the deal was so bad for AC apparently that they had no real choice but not to extend.
If Aimia had done a proper job of diversifying and expanding their operations and their customer base, then the loss of a single customer (AC) would not have had a significant impact on their stock price. AC may still have wished to purchase the Aeroplan assets, in order to ease the transition of their (AC) customers from Aimia's loyalty program to AC's loyalty program .... but if Aimia had done a proper job over the past 15 years, then AC would have had to pay a premium for those assets.
The collapse of Aimia's stock price is entirely due to Aimia's lack of execution and business accumen over the past 15 years. Your anger (Dirty, Sleazy, Betrayal) seems like a reasonable set of emotions for how an Aimia shareholder should be feeling about the Aimia board. AC were just a customer who decided to walk away.
The collapse of Aimia's stock price is entirely due to Aimia's lack of execution and business accumen over the past 15 years. Your anger (Dirty, Sleazy, Betrayal) seems like a reasonable set of emotions for how an Aimia shareholder should be feeling about the Aimia board. AC were just a customer who decided to walk away.
But I quite agree that there should be no room for anger. Apart, I suppose, for these late shareholders, who either were not up to speed and did not see it coming, or who gambled on a better outcome.
But for us frequent flyers the latest news are actually good news, AC trying to ease the transition and trrying to ensure our miles continue good.
Jul 31, 2018, 11:45 am
#183
Join Date: Apr 2007
Location: Toronto, Ont., Canada
Programs: Aeroplan; Marriott Platinum; IHG Platinum; Best Western Diamond
Posts: 2,165
So in your world view, Aimia are an innocent victim in this?
OK, but that's not my view. My read is that Aimia was spun off as a separate business a full 15 years ago. For that entire time, they have known that the contract with AC was up for renewal (and thus, potentially ending) in 2020. Despite this knowledge, in 15 years Aimia failed to diversify their customer base. Now, their primary customer is walking away, and Aimia are in desperate straits as a result.
If Aimia had done a proper job of diversifying and expanding their operations and their customer base, then the loss of a single customer (AC) would not have had a significant impact on their stock price. AC may still have wished to purchase the Aeroplan assets, in order to ease the transition of their (AC) customers from Aimia's loyalty program to AC's loyalty program .... but if Aimia had done a proper job over the past 15 years, then AC would have had to pay a premium for those assets.
The collapse of Aimia's stock price is entirely due to Aimia's lack of execution and business accumen over the past 15 years. Your anger (Dirty, Sleazy, Betrayal) seems like a reasonable set of emotions for how an Aimia shareholder should be feeling about the Aimia board. AC were just a customer who decided to walk away.
OK, but that's not my view. My read is that Aimia was spun off as a separate business a full 15 years ago. For that entire time, they have known that the contract with AC was up for renewal (and thus, potentially ending) in 2020. Despite this knowledge, in 15 years Aimia failed to diversify their customer base. Now, their primary customer is walking away, and Aimia are in desperate straits as a result.
If Aimia had done a proper job of diversifying and expanding their operations and their customer base, then the loss of a single customer (AC) would not have had a significant impact on their stock price. AC may still have wished to purchase the Aeroplan assets, in order to ease the transition of their (AC) customers from Aimia's loyalty program to AC's loyalty program .... but if Aimia had done a proper job over the past 15 years, then AC would have had to pay a premium for those assets.
The collapse of Aimia's stock price is entirely due to Aimia's lack of execution and business accumen over the past 15 years. Your anger (Dirty, Sleazy, Betrayal) seems like a reasonable set of emotions for how an Aimia shareholder should be feeling about the Aimia board. AC were just a customer who decided to walk away.
Cutting off the partnership is one thing. Cutting, driving down the price, then coming to buy on the cheap is another. AC is definitely far from innocent in this whole thing. AC will gain the most in buying back ae in cheap, because AC will then not have to develop their own system. AC/TD/CIBC also have a lot to lose, just like ae. All stand to lose customers/business in the lead up to June 2020, due to the uncertainty of where ae will go, but it's much better now ae announced the plan for ae 2.0. AC/TD/CIBC can avoid the oncoming bloodletting. So the buy offer is good for AC/TD/CIBC, and is still dirty/sleezy/underhanded by AC.
Jul 31, 2018, 11:49 am
#184
Join Date: Jan 2016
Location: YYZ
Programs: FOTSG Tangerine Ex E35k (AC)
Posts: 5,612
I did not say AIM is innocent. Sure AC span off ae 15 years ago. But they are still strong partners. (ae did diversify as others have pointed out)
Cutting off the partnership is one thing. Cutting, driving down the price, then coming to buy on the cheap is another. AC is definitely far from innocent in this whole thing. AC will gain the most in buying back ae in cheap, because AC will then not have to develop their own system. AC/TD/CIBC also have a lot to lose, just like ae. All stand to lose customers/business in the lead up to June 2020, due to the uncertainty of where ae will go, but it's much better now ae announced the plan for ae 2.0. AC/TD/CIBC can avoid the oncoming bloodletting. So the buy offer is good for AC/TD/CIBC, and is still dirty/sleezy/underhanded by AC.
Cutting off the partnership is one thing. Cutting, driving down the price, then coming to buy on the cheap is another. AC is definitely far from innocent in this whole thing. AC will gain the most in buying back ae in cheap, because AC will then not have to develop their own system. AC/TD/CIBC also have a lot to lose, just like ae. All stand to lose customers/business in the lead up to June 2020, due to the uncertainty of where ae will go, but it's much better now ae announced the plan for ae 2.0. AC/TD/CIBC can avoid the oncoming bloodletting. So the buy offer is good for AC/TD/CIBC, and is still dirty/sleezy/underhanded by AC.
And yes, AC IT is terrible, and there's no guarantee they'd do a better job, but at least the AC website doesn't go down for nightly maintenance. Nightly being defined as "Eastern".
Better the devil you know?
Jul 31, 2018, 11:49 am
#185
Join Date: Nov 2017
Posts: 3,359
The point I'm trying to make is that AC needs Aeroplan at least as much as Aeroplan needs AC. Perhaps Aeroplan could be shopped to other *A partners like Avianca (their CEO is a Board Member on LifeMiles and no doubt Avianca wants to make inroads in North America and Aeroplan could be the way in). This would also put pressure on AC since they'll again be in the position of running an airline without a function FFP.
Safe Travels,
James
Jul 31, 2018, 12:14 pm
#186
Join Date: Dec 2011
Location: YYZ
Programs: AC SEMM / HH Diamond
Posts: 3,167
I don't pretend to be an expert in the Aimia portfolio - so if anyone can share more details, that would be grand - but from the little I do know, their diversification efforts were not very successful. For example (from wikipedia): In 2007 it purchased Nectar, the largest loyalty program in the United Kingdom, for £368m and sold it to UK grocer Sainsbury's in 2018 for ₤60m. Woops.
Jul 31, 2018, 12:23 pm
#188
A FlyerTalk Posting Legend
Join Date: Sep 2012
Location: SFO
Programs: AC SE MM, BA Gold, SQ Silver, Bonvoy Tit LTG, Hyatt Glob, HH Diamond
Posts: 44,347
I suspect this is all a case of desperate times calls for desperate measures. AC knows that if they ditch the whole Aeroplan infrastructure and have to build it from scratch for their most frequent flyers they won't have a functional system in place by 2020. Remember it's not just a matter of building a new software suite for their Altitude program, it also means rejiggering their booking, flight management, check in, and other existing software to support this new program. Presumably the Aeroplan suite also handled *A partner redemptions and point collection (i.e. I'm a UA FF and want to credit my AC flight to my program). Considering Aeroplan is used for more than just points collection and redemption (i.e. identification) I doubt AC was willing to roll the dice on this one.
If I was Aeroplan and AC pulled this one on me, I would call their bluff and say, the heck with it why don't we cancel our contract now and you work out the rest... good luck! I suspect AC would be in a way more desperate situation than Aimia would be in!
Safe Travels,
James
If I was Aeroplan and AC pulled this one on me, I would call their bluff and say, the heck with it why don't we cancel our contract now and you work out the rest... good luck! I suspect AC would be in a way more desperate situation than Aimia would be in!
Safe Travels,
James
The Flight Pass app is amazing. It may still be lacking in some features, with a bug here or there, but the overall quality makes it obvious that they no longer want to be the joke they currently are. There are over 4000 posts in aircanada.com/aeroplan.com - Experiences/Complaints/Issues.
They're not going to keep the Aeroplan system. They want the database, and they want frequent flyers to not be scared about what happens to miles earned from flights in June 2020.
If Aimia had done a proper job of diversifying and expanding their operations and their customer base, then the loss of a single customer (AC) would not have had a significant impact on their stock price. AC may still have wished to purchase the Aeroplan assets, in order to ease the transition of their (AC) customers from Aimia's loyalty program to AC's loyalty program .... but if Aimia had done a proper job over the past 15 years, then AC would have had to pay a premium for those assets.
Jul 31, 2018, 12:37 pm
#189
Join Date: Apr 2002
Location: YXE
Posts: 3,050
No they didn't. Those who bought AP units in the bubbly "income trust" era paid top dollar for the "deal" with AC. AC got the better end of the deal, as AP failed, in its entire existence, to provide a return on the capital invested by its unitholders.
No, the deal was absolutely fabulous for AC. They were able to obtain billions for an asset that cost them practically nothing to create, and now they get to buy it back for very little. And with all the scamcharges, points spoilage, etc., and the falling cost of air travel, in many cases they're receiving similar to lowest-P or lowest Tango on many redemptions.
That's what management wants investors in AP to believe, but it is highly likely that if they take over AP, it will be business as usual, and nothing new will be built. The "AP system" works just fine and does its job. No need to reinvent the proverbial wheel.
OTOH the deal was so bad for AC apparently that they had no real choice but not to extend.
My understanding is that AC is building their new program regardless of what happens with this proposal.
...They're not going to keep the Aeroplan system.
...They're not going to keep the Aeroplan system.
That's what management wants investors in AP to believe, but it is highly likely that if they take over AP, it will be business as usual, and nothing new will be built. The "AP system" works just fine and does its job. No need to reinvent the proverbial wheel.
Jul 31, 2018, 12:38 pm
#190
Join Date: Dec 2011
Location: YYZ
Programs: AC SEMM / HH Diamond
Posts: 3,167
Very interesting point, and I would be much more sympathetic if true. I will observe that Aimia holds a 48.9% interest in, and jointly controls with Grupo Aeromexico - so they are clearly not completely prohibited from working with other airlines.
Jul 31, 2018, 1:52 pm
#191
Join Date: Sep 2009
Location: YYZ
Programs: AC SE MM, Bonvoy Plat, Hilton G,Nexus, Amex MR Plat,IHG Plat
Posts: 4,428
Aimia can have other airline partners, AE cannot. At least not till the AC contract ends.
Jul 31, 2018, 3:01 pm
#192
Join Date: Dec 2011
Location: YYZ
Programs: AC SEMM / HH Diamond
Posts: 3,167
Besides, the point I'm making is that Aimia should have been diversifying more .... if Aimia had signed up 15 new airline partners (one per year), then the loss of Air Canada (with or without Aeroplan) would have had a much smaller impact on the Aimia valuation overall ... and from that, it would likely have increased the perceived value of the Aeroplan program.
Air Canada are only getting (bidding for) Aeroplan for a steal, because Aimia have allowed themselves to get backed into a corner.
Jul 31, 2018, 3:12 pm
#193
Join Date: Nov 2017
Posts: 3,359
I don't understand this sentence. Aimia is a company, and they can partner with airline partners. Aeroplan is a program that is (currently) owned by Aimia. I'm not sure what it means to have a program partner with a company.
Besides, the point I'm making is that Aimia should have been diversifying more .... if Aimia had signed up 15 new airline partners (one per year), then the loss of Air Canada (with or without Aeroplan) would have had a much smaller impact on the Aimia valuation overall ... and from that, it would likely have increased the perceived value of the Aeroplan program.
Air Canada are only getting (bidding for) Aeroplan for a steal, because Aimia have allowed themselves to get backed into a corner.
Besides, the point I'm making is that Aimia should have been diversifying more .... if Aimia had signed up 15 new airline partners (one per year), then the loss of Air Canada (with or without Aeroplan) would have had a much smaller impact on the Aimia valuation overall ... and from that, it would likely have increased the perceived value of the Aeroplan program.
Air Canada are only getting (bidding for) Aeroplan for a steal, because Aimia have allowed themselves to get backed into a corner.
Again we aren't sure what the agreements were between AC, Aeroplan and Star but I suspect this could be one of the reasons why they weren't so agile.
Safe travels,
.James
Jul 31, 2018, 3:16 pm
#194
Join Date: Sep 2009
Location: YYZ
Programs: AC SE MM, Bonvoy Plat, Hilton G,Nexus, Amex MR Plat,IHG Plat
Posts: 4,428
I don't understand this sentence. Aimia is a company, and they can partner with airline partners. Aeroplan is a program that is (currently) owned by Aimia. I'm not sure what it means to have a program partner with a company.
Besides, the point I'm making is that Aimia should have been diversifying more .... if Aimia had signed up 15 new airline partners (one per year), then the loss of Air Canada (with or without Aeroplan) would have had a much smaller impact on the Aimia valuation overall ... and from that, it would likely have increased the perceived value of the Aeroplan program.
Air Canada are only getting (bidding for) Aeroplan for a steal, because Aimia have allowed themselves to get backed into a corner.
Besides, the point I'm making is that Aimia should have been diversifying more .... if Aimia had signed up 15 new airline partners (one per year), then the loss of Air Canada (with or without Aeroplan) would have had a much smaller impact on the Aimia valuation overall ... and from that, it would likely have increased the perceived value of the Aeroplan program.
Air Canada are only getting (bidding for) Aeroplan for a steal, because Aimia have allowed themselves to get backed into a corner.
Jul 31, 2018, 3:59 pm
#195
Join Date: Mar 2014
Programs: AC SE100k, Marriott Titanium, UA Silver
Posts: 2,648
Regardless of the outcome, it is better to burn off all Aeroplan points.
1) if Aeroplan stays with Amia, then redemption options likely will become much more limited (i.e. the recent email listing only economy class redemptions). Or worse yet, Amia may go belly up.
2) if the points liabilities are pick up by air Canada, then the redemption rates can still be devalued.
3) a devaluation can happen any time between now and June 2020.
1) if Aeroplan stays with Amia, then redemption options likely will become much more limited (i.e. the recent email listing only economy class redemptions). Or worse yet, Amia may go belly up.
2) if the points liabilities are pick up by air Canada, then the redemption rates can still be devalued.
3) a devaluation can happen any time between now and June 2020.