Aimia shrugs off ‘overreaction’ on future without Air Canada

very confident in the future of the Aeroplan business.”

Aimia shares rose 18.7 per cent to $2.54 in Toronto on Thursday, snapping a sevenday decline.

Air Canada said May 10 it will withdraw from Aimia’s Aeroplan program and start its own rewards plan in 2020. The key date for Aimia comes four years later — 2024 — when contracts with Toronto-Dominion Bank and Canadian Imperial Bank of Commerce are due to expire.

TD and CIBC offer Aeroplan-branded credit cards which channel about 10 per cent of Canadian credit-card purchase volume, according to Johnston. He’s “very confident” they’ll still be partners in 2024. TD said in a May 11 press release that there are no changes to its credit card program “at this time.” CIBC said in an emailed reply Wednesday that it divested a large portion of its Aerogold portfolio in 2013 but for the remaining clients, “it’s currently business as usual.”

“If I’m booking a family holiday, I care about where I’m going to go and who’s got the flight scheduled to get me there,” said Johnston, who was named CEO on May 10 as Rupert Duchesne retired from the post. “I’m not as choosy about the airline.”

Not everyone’s so confident.

“We expect Aimia to reposition Aeroplan as a thirdparty loyalty program in Canada,” Industrial Alliance Securities analyst Neil Linsdell wrote in a note. “It will need to act quickly, however, to maintain the loyalty of its 5 million members and provide compelling value as its credit-card partners already offer competing loyalty programs.”

Air Canada accounted for 11 per cent of Aimia’s gross billings in 2016. But 80 per cent of Aeroplan rewards are used for flights, either with Air Canada or on members of the Star Alliance airline coalition, of which Air Canada is a founding member. Nearly 59 per cent of Aimia’s revenue and more than 72 per cent of its operating income came from Aeroplan in 2016, according to Bloomberg data.

Meanwhile, some of Aimia bond investors are pushing the company to preserve cash. Among their targets: cutting the company’s quarterly dividend to shareholders, according to people with knowledge of the matter.