It’s Happening: Air Canada Will Acquire Aeroplan

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A few weeks ago we learned that Air Canada made an offer to acquire Aeroplan, which is their spun off loyalty program. For over a decade Aeroplan has been the frequent flyer program of Air Canada, though in 2020 their contract ends. The termination of the contract has led to a lot of uncertainty for the future of Aeroplan.

At the beginning of the month it was revealed that talks had broken off between the two companies. Initially Air Canada and their financial partners had offered $250 million cash, plus about $2 billion in Aeroplan points liability.

Aimia (the parent company of Aeroplan) allegedly wanted $450 million, though Air Canada was only willing to raise their bid to $325 million.

Well, it seems that Air Canada really wanted Aeroplan, because the companies have reached an agreement in principle.

Air Canada will acquire Aeroplan for $450 million

It has been announced today that Air Canada and their financial partners have reached an agreement in principle to acquire Aeroplan for $450 million plus the roughly $1.9 billion mileage liability.

Air Canada must have really wanted Aeroplan, because they came up to the full asking price. This transaction is still subject to the conclusion of definitive transaction documents, Aimia shareholder approval, and some other conditions.

Here’s what Air Canada’s CEO, Calin Rovinescu, had to say about the deal:

“We are pleased to see that an agreement in principle has been reached as Aeroplan members can continue to earn and redeem with confidence. This transaction, if completed, should produce the best outcome for all stakeholders, including Aeroplan Members, as it would allow for a smooth transition to Air Canada’s new loyalty program launching in 2020, safeguarding their miles and providing convenience and value for millions of Canadians.”

What does this mean for Air Canada flyers & Aeroplan members?

I’ve explained in the past what Air Canada buying Aeroplan would mean for consumers. Whether this is good or bad news depends on what you think Aeroplan’s independent future would have looked like:

  • If you think Aeroplan could have succeeded independently and offered a compelling program, having a competitor for Air Canada would have absolutely been a good thing
  • If you think Aeroplan couldn’t have succeeded independently and offered a compelling program, having Air Canada acquire them would probably be the best, since your miles would be worth more

Personally I’ve been skeptical about what Aeroplan’s independent future would look like, since it’s tough for a loyalty program without an airline to deliver much value. Sure, they could have added some partnerships (as they’ve been trying to do all along), but chances are that there wouldn’t have been any outsized values with those redemptions.

So personally I’ve been skeptical of Aeroplan’s independent future, and therefore I view this as a net positive, since it means members’ miles are safe. At the same time, Canada already doesn’t have many competitive loyalty programs, and now Air Canada will have even more of a monopoly in the travel space.

Bottom line

Color me surprised by the way this deal is going down. Perhaps what’s most surprising to me about all of this is that Air Canada is paying full price for the Aeroplan acquisition. My gosh, Aimia played their hand very well.

But I do view all of this as a net positive, since it means there’s less uncertainty for members, and those with Aeroplan miles will continue to be able to redeem on Star Alliance airlines.

What do you make of the news of Air Canada acquiring Aeroplan?