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Air Canada, CIBC, TD, Visa and AIMIA agree to acquire Aeroplan

This post is also available in: FR

After making an offer to acquire Aeroplan at the beginning of the month, which was considered too low by AIMIA, the consortium led by Air Canada finally reached an agreement with AIMIA on the acquisition of Aeroplan.

air canada cibc td visa

Air Canada (re)acquires Aeroplan

Here are the highlights of the Air Canada press release:

The aggregate purchase price includes $450 million in cash and the assumption of a liability ofapproximately $1.9 billion in Aeroplan miles.

AIMIA itself had announced the desired amount for the transaction to be done after the consortium had made a low offer (250 million, raised to 325 million).

The agreement in principle was unanimously approved by Aimia’s Board of Directors and is supported by Mittleman Investment Management.

It should be noted that Mittleman Investment Management is the largest shareholder of AIMIA. It is therefore certain that this transaction will be completed.

The transaction would provide value to Aeroplan members as well as continuity for Air Canada, TD Bank, CIBC and Visa customers.

Most importantly, this allows:

  • Air Canada to recover “its” members
  • TD and CIBC banks to ensure that they maintain their Aeroplan credit card customers: no more Air Canada’s call for tenders for a new banking partner
  • Visa to ensure that it does not cede significant transaction volume to Mastercard in 2020

The transaction is subject to the negotiation of closing conditions and other terms and is expected to be completed in the fall of 2018.

Air Canada continues to indicate that it will launch its new loyalty program by 2020. So nothing should change between now and then for the Aeroplan program as we know it. It’s the rest that is now much more unclear.

Aeroplan’s post-2020 partnerships appear to be on hold

Air Transat, Porter, Flair… All these partnerships that AIMIA had announced for Aeroplan in the post-2020 period seem to be out of date. We don’t see Air Canada partnering with these companies… competitors.

What does the future hold for current Aeroplan members?

While the consortium boasts that this “Enable the seamless transition of Aeroplan member points to Air Canada’s new loyalty program launching in 2020, protecting points and enhancing convenience and value for millions of Canadians“Let us be a little less confident.

The consortium will acquire a program, but especially a huge “debt” valued at 1.9 billion. This is the value of all Aeroplan miles currently outstanding.

No doubt the consortium will try to “make up for it” by devaluing the program to reduce the burden.

Our take

There are several points on this file:

What to do with Aeroplan Miles before 2020?

We have always advised milesopedia to collect and use your points & miles in all programs.

So now, more than ever, we advise you to use your Aeroplan Miles – wisely – between now and 2020. Indeed, Air Canada has so far given no indication of the future fare structure of its program, and as explained above, no doubt a devaluation will be applied to reduce the value of Aeroplan miles. There is no guarantee today that the miles will transfer to the future Air Canada 1:1 program.

And milesopedia community members KNOW how to use their aeroplan miles! Check out all the #mercimilesopedia testimonials in the group🙂

The competition in Canada

The future Aeroplan as it was being developed had a lot to appeal to the vast majority of program members: being able to book airline tickets on any airline for any flight. This is indeed one of the big complaints that Aeroplan members have about the current program: not being able to use their miles as they wish to travel when they want.

Air Canada is eliminating a potential competitor to its future loyalty program. Less competition means a less interesting program for Air Canada. We hope we are wrong about this.

The Suite

The good news? CIBC and TD may be re-launching the Aeroplan-affiliated credit card promotional offer machine in the near future. Indeed, since the May 2017 announcement of the divorce between Air Canada and Aeroplan, both banks had completely stopped promoting these cards.

They will surely want to win back members they lost over the past year! A good opportunity for points & miles hunters!

In the meantime?

We should know more sometime in the fall of 2018 (Air Canada is expected to unveil its cards on its new program and the future the company has in store for Aeroplan members).

In the meantime, if you haven’t earned Aeroplan miles yet and you’re just starting out on the hunt for points & miles, I’d advise you to look into other types of points and miles:

  • American Express Membership Rewards points: they have the advantage of being flexible and transferable (to different airline loyalty programs in the 3 global alliances: Skyteam, Star Alliance, Oneworld, or to hotel partners) or of being usable as travel credit or even for everyday expenses!
  • or banking points: they are generally applicable on the cost of an airplane ticket, a hotel night or an airbnb stay. Scotia Bonus points are the best in the business.

This post is also available in: FR

Come to discuss that topic in our Facebook Group!
Jean-Maximilien
Jean-Maximilien is an expert in Canada and France about Loyalty programs, Credit cards and Travel. He is the Founding President of Milesopedia.

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