Air Canada is teaming up with three financial services giants to try to buy its former loyalty program, Aeroplan, from its current owner.
Air Canada, Toronto-Dominion Bank, CIBC and Visa made the announcement Wednesday they want to buy Aeroplan from Aimia, in exchange for taking over the liability of $2 billion worth of outstanding Aeroplan points, plus $250 million in cash.
The airline announced last year it would soon be ending its 20-year partnership with Aeroplan, a development that sent Aeroplan’s stock price tumbling and scrambling for new partners.
Air Canada started Aeroplan as its loyalty program in 1984, before selling it off in an initial public offering in 2008, when Aimia was formed.
Aimia has since diversified into other loyalty programs, but its core holding is still Aeroplan.
Aimia is valued at roughly $472 million on the TSX (based on where the shares were trading before Wednesday’s announcement) — about a third of what the company was worth last summer when Air Canada announced it was leaving.
The airline recently announced plans to start its own loyalty program from scratch, and the offer Wednesday seems to be part of that, as the plan would be to convert all five million Aeroplan members and points to the new Air Canada program. A news release said Air Canada and its partners plan to launch the program in 2020.
Aimia’s shares surged as much as 44 per cent to $3.52 per share after trading on the Toronto Stock Exchange opened on Wednesday morning.
Both TD and CIBC offer Visa credit cards that allow users to accrue Aeroplan points, so the financial partners in the deal also have a vested interest in Aeroplan’s future.
The clock is ticking on the offer, however. Air Canada and its financial partners say their offer requires an answer by Aug. 2. Aimia is scheduled to reveal its latest quarterly results the next day.
Last weekend, Aeroplan unveiled its own vision for its future, built around offering its own charter flights and functioning much like a travel agency.