Air Canada to Acquire Aeroplan Loyalty Program
November 26 2018 - 9:20AM
Dow Jones News
By Michael Dabaie
Air Canada (AC.T) said Monday it agreed with Aimia Inc. (AIM.T)
to acquire Aimia Canada Inc., owner and operator of the Aeroplan
loyalty business, for $450 million Canadian dollars in cash.
With the deal, Air Canada, Toronto-Dominion Bank (TD), Canadian
Imperial Bank of Commerce (CM) and Visa (V) signed commercial
agreements, including credit card loyalty program and network
agreements for future participation in Air Canada's new loyalty
program. These are conditional on the Aimia Canada deal closing,
which Air Canada said it expects in January.
The purchase price consists of C$450 million in cash and
includes assumption of about C$1.9 billion of Aeroplan Miles
liability. Air Canada said it will receive payments from TD and
CIBC of C$822 million.
Visa will also make a payment to Air Canada, the airline company
said. TD and CIBC will make payments to Air Canada, at closing, of
C$400 million as prepayments to be applied to future monthly
payments in respect of Aeroplan miles.
TD said Monday it would become the primary credit card issuer
for Air Canada's new loyalty program when it launches in 2020
through to 2030. CIBC said the agreements will enable it to offer
credit cards under the new loyalty program and allow a smooth
transition for CIBC's Aeroplan cardholders to the new program.
TD said it expects to incur additional pre-tax costs of C$100
million over two years to build the functionality required to
facilitate the new program. The bank said the proposed transaction
is expected to reduce TD's CET 1 ratio on close by about 13 basis
points.
Air Canada said it remains in negotiations with American Express
(AXP), which also issues Aeroplan co-branded products, to secure
its continued participation in the Aeroplan program after 2020.
Write to Michael Dabaie at michael.dabaie@wsj.com
(END) Dow Jones Newswires
November 26, 2018 09:05 ET (14:05 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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