Aimia ensures Survival "intact" of Aeroplan

           This month Aimia received an unsolicited offer from Air Canada,TD Bank,CIBC and Visa to save Aeroplan from non-renewal in July 2020 for $2.25 billion.This would cover all the obligations of Aeroplan and give Aimia an additional $250 million in equity.Aimia didn't take this offer because they were working on another proposal behind the scenes.And in the meantime they sold off some non-core assets and reduced debt from $330 to $70 million .And now the new proposal has emerged in some detail;3 new partners and Aimia have made a handshake just like the partners above.
            Three new Partners
         Now Aimia has announced that it has formed partnerships with Porter Airlines,Flair Airlines and Air Transat.Air Transat isCanada's number one holiday airline with 60 destinations.Flair was a charter service but now is a scheduled  service with 200 weekly flights.Now Aeroplan covers every domestic destination that Air Canada flies to and more foreign destinations than with Air Canada.This leaves this blog in a position to say that Aeroplan will now survive intact in July 2020.
      Second Quarter Results
   Aimia's share price took quite a hit after the announcement by Air Canada that there would be a non-renewal of their contract in July 2020.The price went down to $2.00 and Aimia started at first to divest some of their non-core assets which shored up the price.But it still lagged in the $2.75 to $3.50 price range.The price picked up slightly with the offer by Air Canada and it's 3 partners.But the market took this as a low ball offer and propped up the price only slightly.But strangely enough their financial indicators acted as if there was no impact at all.The second quarter shows the same trend as all financial indicators are up over Q2 in 2017.Consolidated revenues were up 4%;net earnings were up $36 million and cash flow was $27 million.More importantly adjusted EBITDA was up 180 basis points to $46 million.The only thing missing to their investors was when the dividend would be reinstated.This blog sees the announcement in Q4 of a small dividend to be paid out in Q1 2019.        
                The Second Half
    This blog expects that the intact survival of Aeroplan will bring back any lost customers and maybe some of Air Canada's Aeroplan customers.This ensures that revenues and earnings will be stronger than in Q2.So that adjusted EBITDA may hit $50 million in Q3 and $51 million in Q4.This will put it on track to hit $215 to $235 million for 2018.This will be up 50 to 60% from  the $145 million reported in 2017.This will allow Aimia to have a small dividend in the first quarter of 2019. And this means that Aimia should be trading in the $5 area in Q1 2019.       

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