yscleo

Let's wait for Amex to announce a proposal to buy AIM at a slightly higher price, pending satisfactory contract of between Amex and ae.

Then Amex can further announce transfer of ae points to MR points, and merge the travel business of the new ae and Amex. The new program will be able to redeem on all airlines, not restricted to Star Alliance. This also shuts out TD/CIBC and Visa.

YUL-Insider

It looks so planned. I now understand why TD insisted that I don't get the Aeroplan-branded CC when I tried to apply for it a few months back.
I think this proves AC is realizing they will not meet the 2020 deadline and Aimia likely knows this. My guess is Aimia says no and waits for AC to ask for an extension to current contract. I wonder who else will make an offer for Aeroplan.

imverge

I was looking forward to being able to transfer my Aeroplan points to Lifemiles where you can book ALL Star-Alliance airlines without scam-charges!

songsc

Either this or Aimia is forcing AC to bid at a higher price to buy AP back.

Vaguswarrior

Now I'm wondering if it's worth blowing my miles on the mini-RTW I was thinking of or holding off to see what happens in 2020. As a dirty casual FOTSG, I don't earn much so this has been a few years of saving up.

Symmetre

It's definitely popcorn time. So much for all of this talk from AC about building a bigger better loyalty program moving forward. Looks like everything old is new again.

YUL

Exactly!

Furthermore, such a new combined Amex-Aeroplan entity (controlling a much bigger customer base than AE alone) would more likely achieve a critical mass permitting it to create a more robust chartered flight "network" (well, big word here...) - thus stealing even more passengers from AC.

24left

You know, among all the things one could buy with Aeroplan points - flights, hotel stays, panini grills, maybe a lawn mower, I would trade all of my miles just to be a fly on the wall in EACH of the meetings held to discuss this "divorce" and "possible dating leading to a new life partner"

QUOTE:

"What I’ve learned about this offer

The way Air Canada views it, taking over Aeroplan would create assurance for customers and remove any doubts they may have about their miles. Miles would covert at 1:1 ratio, so there would be no funny business.

No matter what, Air Canada intends to launch their own loyalty program, and they’ve already purchased a lot of new systems that will be required for a new program. They’re not looking to maintain Aeroplan, because they can do so much more with their program in-house. Instead they view a takeover of Aeroplan as providing more stability, giving them access to intellectual property, and making the transition more seamless."

Full article

"What Would Air Canada Buying Aeroplan Mean For Consumers?"
https://onemileatatime.boardingarea....roplan-impact/

Adam Smith

Will be interesting to see where that one goes.

I haven't tried to look up the posts from either of you specifically (or the others who are posting similar claims), but let's get real here: what people were generally predicting was that AC would buy Aimia. If that's what you predicted, you're wrong. This is an extremely different deal. AC is not doing the deal, it's partnered with the banks and Visa, and they're not buying all the other garbage in Aimia.

The accounting liability on Aimia's books will essentially be whatever the points were sold for. So, if the points were sold for $0.01 apiece and AC's cost to actually deliver the reward is, say, 25% of that, it's a big arbitrage between that accounting number and the true cost.

Sue for what? Accoreding to a lawyer who is specialized in shareholder class actions, the only case against AC would be if it had committed some sort of fraud. And no, saying it was planning to launch its own FFP and terminating its relationship with Aeroplan doesn't count, as long as that was the plan, even if they had really hoped that they would ultimately be able to buy Aeroplan cheaper than they could launch their own FFP. What AC has effectively done is a short sale, something that's legal and common in the capital markets. If anyone here followed Sino-Forest, you may remember that its fraud came to light largely as a result of a short-selling investment firm publishing a report on the activities that it viewed to be fraudulent - after shorting the shares. It made a killing by either buying the shares back for a tiny fraction of where it originally sold them or simply letting them become worthless in the insolvency.

This has nothing to do with antitrust. If AC were to try to buy WestJet and consolidate the airline industry to a massive degree, that would be an antitrust matter.

Yes, so much egg on the faces of the people who are gloating about how they predicted this, when in fact they predicted that AC would buy Aimia, which is a totally different outcome.

No one is offering to buy Aimia for $3.64 per share. The consortium has launched an offer for Aeroplan, to which they have ascribed a value of $3.64 per share, but Aimia shareholders would not be getting $3.64 in cash.

As for Amex, yes, it's true that other avenues for MR redemption exist, but for many cardholders, I imagine that Aeroplan is the primary conversion route for MR because the value is so much better, especially for those with status. Some of the other MR options are okay, while some (e.g. Hilton) are downright awful.

I don't think you understand how financial statements work. You can't just compare one line on the asset side and one line on the liability side. Aimia has other assets that have value (including both short- and long-term investments) and it also has other liabilities (including bank and bond debt). You also don't understand deferred revenue. That points "liability" isn't at the cost to redeem the points, it's at what the points are sold for. When the sale is made, Aimia records the cash in as cash and records an offsetting liability for deferred revenue. When the reward is redeemed, the deferred revenue associated with the points is recorded as revenue, along with an expense for whatever was actually spent to fulfill the reward. So, if $100 of points are sold today, that's $100 of cash on the asset side of the balance sheet and deferred revenue of $100. When the reward is redeemed, revenue of $100 goes out of deferred revenue on to the income statement, along with the expense associated with the reward. So if the reward costs Aimia $60, then there's $100 of revenue, $60 of expense and gross profit of $40.

There's no doubt the balance sheet is ugly, but that discussion starts with the $2.6 billion of goodwill and intangibles that may actually have little to no value. Aimia is also different than many other business in the vast majority of its long-term liabilities are deferred revenue ($3 billion), which liability may be possible to extinguish for a fraction of the accounting liability currently on the books. For example, let's just say for argument's sake that a round-trip in North America Y costs Aeroplan $100 from AC and that Aeroplan charged $0.01 per point for the 25K points they charge the customer to redeem that flight. Aeroplan spends $100 to earn that $250 of revenue (i.e. cancels $250 worth of deferred revenue liability on Aimia's balance sheet). But if Aeroplan increases the cost to 50K points, all of a sudden that $100 reward eliminates $500 of liability. Of course, devalue the award chart too much and it will drive customers away, but that ability to devalue the points does give Aimia a somewhat unique advantage relative to other struggling companies.

Aeroplan got a contract that was about 15 years long. That was the protection. Adding a non-compete on top of a contract like this makes no sense whatsoever, because it would force the airline to either be locked in to that particular FFP provider or forgo an FFP altogether.

Cledaybuck

I think that is pretty much guaranteed.

YEG-Bound

1. Very pleased with the move to repatriate the Aeroplan program. Creates higher level of confidence that I will be able to use my points

2. AC has already paid AIM for the program points. Now AC has to forgo revenue for that liability since AIM would have been required to pay AC for awards. With only $300 million, AIM would not have capability of satisfying the current liability

3. In the event of eventual failure or AIM, AC would out of necessity have to build their software engine sooner than 2020.

4. Downside would be that in order to minimize effect of liability, AC may further cut back on availability of flight awards. I currently find the program has been very poor in the last year for finding flight awards.

anorg90

I don't think it changes much in terms of the spend/don't spend advice from before. Yes, miles would transfer from Aeroplan into the new AC program, but it would still be the new AC program which currently doesn't have award charts / mileage levels. There's no guarantee that the new program would have the same or better redemption rates / rules as the current Aeroplan

Adam Smith

The other interesting point here that I think has not been appreciated much in this thread is that, based on AC's customer e-mail and updated FAQ this morning, they're still proceeding with the new program, regardless of whether they buy Aeroplan, which makes it sound like this is just a bridge move to keep existing customers happy by not stranding their points, and that Aeroplan would effectively be killed in 2020.

Inaccurate. I've already addressed this in detail in my last post.

ChrisA330

Agreed. This is basically buying the customer base, I assume the data associated with that, and the points.

On another note, AIMIA has responded.
https://www.aimia.com/newsroom/news-...plan-business/

It appears there have been private discussions for a while, and this is just making it public, and putting a time frame on an answer.

RangerNS

Amadeus allegedly has an addon package to provide a rewards/point system. Air Canada would not have a particularly difficult time filling in their program rules by 2020. They don't need the IT "intellectual property", and indeed, with a consortium of CCs as well, likely would have an easier time building out a greenfield system with the Amadeus (or some other) bundle than trying to upgrade the Aimia's internal tooling.