Air Canada to Acquire Aeroplan Loyalty Program

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 [e-mail]

(END) Dow Jones Newswires

November 26, 2018 09:05 ET (14:05 GMT)

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