@dfcatch, I respect your industry knowledge, frequently demonstrated on AFF, but your comments above both misrepresent what I'm saying (I don't think intentionally) and we obviously have a different definition of 'non core business'
.
For instance, I didn't say that the liability would be a 'problem' - merely that it was the liability for miles redemptions that AC wanted to acquire directly. The Air Canada CEO said it in the announcement, quoted above:
Straight to the point: we heard from many customers who were excited about our plans, and would prefer to transfer their Aeroplan Miles to the new Air Canada loyalty program. This is what this proposed deal allows us to do – if successful, all Aeroplan Miles would transfer into the new Air Canada loyalty program in 2020.
To me its pretty simple at first, but gets murkier when you look at the type of deal being proposed.
* Air Canada spun out its FF program years ago into what became Aeroplan.
* Over the years, Aeroplan became less and less useful for AC frequent flyers. The airline retained control of 'status' and 'upgrades', while Aeroplan managed the miles part. It was messy and Aeroplan, as it grew into a general points business, became less and less responsive to AC flyers. AC '100K Super Elite' and '75K Elite' members loathed it.
* As a 10 year member of Aeroplan (100K or 75K level mostly), believe me, it sucked! (I know, my bad but I didn't know as much about FF programs then as I do now, but for high status fliers, the AC upgrades etc were pretty good).
* When AC announced they would develop their own FF program once the Aeroplan contract ended the biggest issue for ACs frequent flyers was the orphaned miles issue. Without doubt, sorry, no question.
* So now AC have announced they may acquire Aeroplan. Reading between the lines, this looks like an Investment bankers deal, which in my experience (and I have quite a bit) usually end up much better for the bankers than the company. If it is a bankers deal, you can bet that AC won't be running most of the Aeroplan business if it is acquired!! Plump it up, lick of paint, on-sell or float it (been there, done that
). If the rest of the Aeroplan business is so bad, no bank in its right mind would back an airline to put it on its balance sheet!
Aeroplan would have its own investment bankers, advising it how to maximise its value. They and Aeroplan management would be criminally negligent if they didn't try to get their own deal up. It all depends how badly AC and the banks want their deal - but the
totality of that deal hasn't been revealed yet, I bet.