21 Responses

  1. GUWonder
    GUWonder at |

    Not a negotiating ploy?

    Reply
  2. Maxim Kovalchuk
    Maxim Kovalchuk at |

    That’s genius. Spin-off an asset for a lump sum. Making it irrelevant. And build new internal money making asset. Rinse and repeat.

    Reply
  3. Justin Lancy
    Justin Lancy at |

    Cindy Fan Nick Wynja

    Reply
    1. Cindy Fan
      Cindy Fan at |

      !!!

      Reply
  4. Brian
    Brian at |

    Makes total sense—the two companies have always had different priorities. Will be interesting to see what Aimia’s stock price is when the markets open in (checks watch) 33 minutes.

    Personally, I am rather tied to Aeroplan points through my work credit card, but am glad I have followed the principle of earn and burn.

    Reply
  5. DavidB
    DavidB at |

    Interesting timing considering the annual shareholder meeting for Aeroplan’s parent company AIMIA takes place here in Toronto at 10:30a today! As a shareholder (got my shares when ACE, the AC-holding company, spun AE off years ago…we also got shares in Jazz/Chorus when it was similarly spun off) I planned to attend.

    Reply
    1. Brian
      Brian at |

      Won’t be a fun meeting with stock down the way it is!

      Reply
  6. Brian
    Brian at |

    Aimia (Aeroplan) stock down nearly 60% this morning https://www.bloomberg.com/quote/AIM:CN
    Air Canada stock up 6% https://www.bloomberg.com/quote/AC:CN

    Reply
  7. Seth Kaplan
    Seth Kaplan at |

    Nice work as always, Seth. Generally speaking, successful airlines don’t spin off their loyalty plans. It’s almost always done out of desperation — basically, a high-interest loan. So this completes the cycle: Now that Air Canada is again successful, it is bringing the program back in house. (By the way, think of the bullet Qantas dodged. It was close to selling Frequent Flyer but instead managed to turn the airline around just in time.)

    Reply
    1. Maxim Kovalchuk
      Maxim Kovalchuk at |

      False. It was a very smart financial transaction. GOL is another example

      Reply
    2. Seth Miller
      Seth Miller at |

      Agree that it always comes off as a desperate financing move. I’m less convinced it is a high interest loan, though, as Air Canada is proving it can just trash the deal at the end and be super happy as a result. And during the interim period I’m not so sure AC really suffered financially for it.

      Reply
    3. Delvind Hullan
      Delvind Hullan at |

      You can sell the same cow twice apparently

      Reply
    4. Maxim Kovalchuk
      Maxim Kovalchuk at |

      No seriously, it was purely financial engineering move.

      Reply
    5. Seth Miller
      Seth Miller at |

      It is a great one-time transaction, Maxim. Longer term, however, it is hard to demonstrate that the total lifetime value of the customers can be properly managed and realized. Loyalty programs should be about far more than just selling boat loads of points via 3rd party partners.

      Reply
    6. Seth Kaplan
      Seth Kaplan at |

      Maxim, Gol? They are a perfect example of my point. They had an awful balance sheet and were trying to stay out of bankruptcy.

      Reply
    7. Maxim Kovalchuk
      Maxim Kovalchuk at |

      It’s just a DCF model.

      Reply
    8. Maxim Kovalchuk
      Maxim Kovalchuk at |

      You can make a point that every single airline is trying to stay out of bankruptcy.

      Reply
    9. Seth Kaplan
      Seth Kaplan at |

      Sure. But those actually closer to it are the ones that divest their loyalty plans. United was thinking of selling MileagePlus too before its fortunes turned around. Selling a loyalty plan is just one option, on a hierarchy of undesirable options, for airlines in trouble. Lightly leveraged airlines never do it.

      Reply
  8. Eric M. Monte
    Eric M. Monte at |

    What do their credit card partners think?

    Reply
  9. FT4RL Recap, Meet-ups, AMEX Platinum, Noise Cancelling Headphones - Tagging Miles

    […] Interesting news in in loyalty programs. Air Canada, which had spun off Aeroplan, will be dumping the idea in 2020. […]

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