Aeromexico Helps Aimia Rally With Bid for Rewards Plan Stake

(Bloomberg) -- Aimia Inc. received its second offer in two days from carriers wanting to take control of their own airline rewards plans from the global operator of loyalty programs.

The company on Thursday rejected an $180 million bid from Grupo Aeromexico for a minority stake in the PLM Premier rewards plan operator, saying the offer is too low. The offer followed a proposal from Air Canada Wednesday to take back ownership of its Aeroplan program.

The rapid succession of offers piles more pressure on Aimia to restructure its business amid investors’ calls for change, including new management and asset sales. Last year the company’s stock plunged 58 percent after Air Canada announced in May that it would break off its relationship with Aimia to run its own rewards program.

Shares rose 2.1 percent to C$3.46 at 3:13 p.m. in Toronto after surging 36 percent Wednesday.

In March, Aimia reached a settlement with U.S. activist investment firm Mittleman Brothers to have three new directors nominated to the company’s board. In April, Chief Executive Officer David Johnston agreed to step down, replaced by Jeremy Rabe, an industry veteran with a long history running loyalty programs.

Air Canada Offer

Air Canada teamed up with Visa Inc. and two Canadian banks to make its C$250 million ($192 million) cash offer for Aeroplan. If accepted, the deal would return the loyalty program to Canada’s biggest airline, which spun it off in 2005. Aimia said it is considering the proposal.

Like Air Canada, Aeromexico said its offer is based on its intention to take full control of its loyalty rewards, which rules out other options such as spinning off the business into a separate publicly traded company. Aeromexico owns a 51.5 percent stake in PLM, while Aimia acts as operator with a 48.5 percent share.

“It is Aeromexico’s view that the best long term solution for all stakeholders is for Aeromexico to acquire the equity stake currently held by Aimia," the airline said in a statement.

Insufficient Price

Aimia’s stake in PLM “is worth significantly more than the offer price, which reflected no improvement whatsoever” to the terms previously proposed by Aeromexico in prior discussions, according to the Canadian company. PLM had adjusted earnings before interest, taxes, depreciation and amortization of $77.4 million last year, Aimia said.

Events such as the Aeromexico offer “highlight the strength, quality and desirability of both Aimia’s core business as well as its other assets and investments,” the Montreal-based company added.

The two sales would inject some much-needed cash into Aimia, which had current assets of C$533 million as of March 31, including C$272 million in cash. That compared with current liabilities of C$1.58 billion, according to financial data on the company’s website. Aeromexico said its offer, including dividends and marketing fees paid to Aimia since its investment, represents an annualized rate of return of about 18 percent.

If it sold Aeroplan and PLM, Aimia would be left with its Air Miles Middle East program, which has more than 1.6 million members in countries such as Qatar and Bahrain, and 20 percent of Think Big Digital, the owner and operator of AirAsia’s loyalty program. The company also owns a stake in Cardlytics Inc., an Atlanta-based company that works with retailers on their customer reward programs.

©2018 Bloomberg L.P.