Insiders close to the negotiations initially speculated that CIBC may not be out of the picture. But as the deadline passed, the competing offer from TD Bank to become the new partner with Aeroplan became more tempting for the Montreal-based Aimia.
The TD offer paid Aimia $100 million upfront for the Aeroplan rewards program, and increased Aimia’s share of each sold Air Mile by 15 percent over a 10 year agreement. Aimia agreed to pay TD $80 million for breaking the agreement if a new arrangement with CIBC was reached before the deadline, which analysts indicated was a sign the TD deal was expected to pass.
The new deal with TD is troubling news for CIBC as the Aerogold credit card that provides Aeroplan points is the bank’s most popular credit card with consumers. Records indicate that the Aeroplan credit cards are responsible for at least half of CIBC’s credit card business, and up to 8 percent of its total revenue.
Aeroplan was established in 1984 as a rewards program for Air Canada travellers, which expanded over the years into a program that rewards points for purchases made at other businesses. While the partnership with CIBC appears to be over, customers with Aerogold credit card rewards points will keep their existing points but won’t be able to collect new points once the TD deal begins in 2014.