The marketing and customer loyalty analytics provider Aimia has announced the completion of the previously-announced sale of Aimia Canada, owner and operator of the Aeroplan loyalty program. The sale to Air Canada, TD Bank, CIBC and Visa was first announced in November 2018. This article is copyright 2019 The Best Customer Guide.

The Aeroplan frequent flyer program was originally launched by Air Canada in 1984, but was then 'spun off' as a separate company in 2002. It was later sold to customer loyalty program management company Aimia. However, while in May 2017 Air Canada said it had plans to launch a completely new loyalty program to replace Aeroplan by 2020, the airline teamed up with TD, CIBC and Visa to acquire the Aeroplan program back from Aimia for Can$450 million, in cash. According to the program's entry in Wikipedia there are approximately 5 million active members in the loyalty program.

The final purchase price remains subject to certain post-closing adjustments, including for working capital and the miles-related redemption liability. Approximately half of Aimia's total headcount of 1,500 at year end 2018 will transition to Air Canada as a result of the transaction.

"Aimia is in the enviable position of having unrestricted cash of over half a billion dollars alongside its meaningful operating business and investments after accounting for the impact of the sale and the repayment of all of our financial indebtedness," said Robert E. Brown, Chair of the Board of Aimia.

Aeroplan flies home for the last time
As part of the acquisition process, Air Canada has confirmed that all Aeroplan Members' Miles will be honoured on a one-to-one basis in Air Canada's new loyalty program when it launches next year in 2020. As a result, customers can continue to earn and redeem Aeroplan Miles confident that their existing Air Canada Altitude status and privileges are secure.

Since announcing in May 2017 that it would launch its own, new loyalty program starting in 2020, Air Canada has undertaken extensive consultations with more than 30,000 customers to identify key program attributes. Customers expressed their strong preference to use their Aeroplan Miles in the new Air Canada loyalty program, expected to be the best loyalty program in the country and, based on their feedback, they can look forward to other features including:

  • Rewards for Air Canada flights, plus access to travel on over 40 partner airlines, including the Star Alliance global network.
  • Travel rewards credit cards offered by TD, CIBC and American Express.
  • Extra ways to earn and redeem points for travel, upgrades, experiences, on-board product and everyday indulgences.
  • An improved experience when traveling with friends and family.
  • Everything Air Canada has to offer in one place.

For more information, Air Canada customers and Aeroplan members should visit the company's web site: http://www.aircanada.com/loyalty

Concurrently with the conclusion of the Aeroplan purchase, Air Canada, The Toronto-Dominion Bank, Canadian Imperial Bank of Commerce (CIBC), and Visa Canada have finalised various commercial agreements relating to and in support of the acquisition, including credit card loyalty program and network agreements for future participation in Air Canada's new loyalty program. In addition, Air Canada has entered into an agreement in principle with American Express Canada, which also issues Aeroplan co-branded products, to secure its continued participation in Air Canada's loyalty program after 2020.

So... exactly how much money was involved?
For the financially minded, gross transaction proceeds at closing amounted to approximately $497 million, after initial closing adjustments of $47 million which were primarily related to favourable working capital adjustments relative to the target working capital set out in the share purchase agreement. Aimia does not expect any capital gains tax to be payable on the transaction. At closing, approximately $308 million of the proceeds were used to repay and terminate Aimia's credit facility and to defease and redeem all of its outstanding Senior Secured Notes. As previously announced, a further $100 million of the proceeds have been deposited into a restricted, interest-bearing account jointly controlled by Aimia and Air Canada in accordance with the terms of the transaction.

The aggregate purchase price for the acquisition consists of $450 million in cash plus $47 million in cash for pre-closing adjustments. The pre-closing adjustments relate to lower net liabilities assumed than projected. The purchase price is subject to post-closing adjustments and the acquisition also includes the assumption of the Aeroplan Miles liability. Air Canada received payments from TD and CIBC in the aggregate amount of $822 million. Visa also made a payment to Air Canada and assuming completion of the American Express agreement, AMEX will do likewise. In addition, TD and CIBC made payments to Aimia Canada Inc., now Air Canada's subsidiary, in the aggregate amount of $400 million as prepayments to be applied towards future monthly payments in respect of Aeroplan Miles.