Aimia CEO Opens Door to Aeroplan Deal With Air Canada-Led Group

(Bloomberg) -- Aimia Inc. is leaving the door open to reaching an agreement with the Air Canada-led group that sought to acquire the company's Aeroplan rewards program, seeking a sweetened offer from the airline.

Aimia said late Thursday it wants at least C$450 million ($347 million) for Aeroplan after the Air Canada group boosted its bid to C$325 million from an initial proposal of C$250 million. The lower offers don't reflect “the value of the Aeroplan business to members and stakeholders,” according to Aimia.

“We never stop negotiating. Should the consortium want to engage with us in a constructive dialogue, we would be happy to entertain that,” Aimia Chief Executive Officer Jeremy Rabe said Friday on a conference call with analysts. “At the same time, we feel very confident about our future plans. Either or. We're happy to go down either path.”

Under Rabe, who was appointed CEO in May, Montreal-based Aimia has been bolstering attempts to prove its value as a stand-alone company after Air Canada announced plans last year to sever ties with the loyalty program to start its own. Aimia is in talks with the Oneworld airline alliance, which includes American Airlines, British Airways and Cathay Pacific, about making it a “preferred airline partner,” the company said Thursday. Then on Friday, Aimia announced an agreement with Air Canada rival Porter Airlines Inc., allowing the carrier to issue Aeroplan miles starting in July 2020.

With seven airlines that fly into Canada, Oneworld “is a tremendous opportunity for us,” Rabe said. “It's really a significant player. We're excited by these conversations.”

Aimia shares jumped 4.6 percent to C$3.62 at 11:20 a.m. in Toronto, taking their gain since Air Canada unveiled its initial offer to about 45 percent. The stock lost 72 percent of its value between May 2017, when Canada's biggest airline said it would pull out of Aeroplan, and the day before the offer was announced. Air Canada rose 1.6 percent to C$23.64.

Together with Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and Visa Inc., Air Canada initially offered C$250 million for the loyalty program plus the assumption of C$2 billion in points liabilities. The offer includes several conditions, including Air Canada reaching agreements with the banks over co-branded credit cards, Rabe said Friday.

Rabe said the company's board asked him “to make decisions about how to best maximize the value of Aeroplan” and PLM Premier, the Grupo Aeromexico frequent-flyer program in which Aimia is a minority shareholder. “This gave us an opportunity to determine whether a sale of our assets would be the best route to crystallize and maximize value for all our stakeholders.”

Air Canada, also based in Montreal, said Thursday its enhanced C$325 million offer “would have ensured value and continuity for Aeroplan members as well as customers of Air Canada, TD, CIBC and Visa.”

Aimia's counter-proposal, which includes revised terms and removes some conditions, “was a very fair offer,” Rabe said. “We think that was a very reasonable number, perhaps too reasonable. We were trying to be constructive in this process. We think that's the right value for the business, given what we know about the business today.”

To contact the reporters on this story: Kristine Owram in Toronto at kowram@bloomberg.net;Frederic Tomesco in Montreal at tomesco@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, David Scanlan, Steven Frank

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