TD Bank could replace CIBC as Aeroplan bank credit card partner

Oct 8, 2019 zwwiibed

MONTREAL — The company that runs the Aeroplan customer loyalty program says it’s prepared to replace CIBC as its bank credit card partner at the end of this year unless it matches contractual terms offered by TD Bank.A shift to TD would mark the end of a long-standing relationship between CIBC and Aeroplan, which originated as Air Canada’s frequent flyer program and is now a broader loyalty system operated by Aimia.It has been known for some time that Toronto-based CIBC and Montreal-based Aimia were preparing for hard-bargaining as they approach the end of their current 10-year agreement.Aimia said Thursday that TD would make a $100-million upfront payment in 2014 to help fund program enhancements if it becomes the new bank to offer a co-branded Aeroplan credit card under a 10-year deal starting Jan. 1, 2014.CIBC was quick to respond to Aimia’s announcement, saying it’s reviewing the proposed terms to see if it will exercise its right of first refusal and that, for credit card users, it will be business as usual in the meantime.The bank has said previously that it was investing millions of dollars this year to explore the potential for setting up its own loyalty-point credit cards.Aimia said CIBC has until Aug. 9 to exercise its contractual right to match the deal it has arranged with TD. If CIBC does so, Aimia has agreed to pay TD an $80 million break fee in 2013.“The news that AIMIA has signed with TD is not necessarily shocking, however, it will still likely weigh on CIBC’s valuation as we do not believe the likelihood was not necessarily completely priced in,” wrote Barclays analyst John Aiken in a note Thursday morning.Aimia also announced it’s preparing to make “groundbreaking” changes to the Aeroplan program, starting in 2014, including the launch of new co-branded financial credit cards with new features.“The enhancements we’re announcing today are the most significant changes we’ve made in the Aeroplan program’s history,” said Vince Timpano, Aimia’s president and chief executive officer for Canada.Among other things, Aimia is launching Distinction — a new recognition program that rewards top-accumulating members with exclusive privileges and cancellation of a policy that sees Aeroplan Miles expire after seven years.“Air Canada welcomes the significant program improvements Aeroplan is announcing today,” said Craig Landry, the airline’s vice-president of marketing.“Enjoying travel is the most popular use for Aeroplan Miles and these enhancements will benefit all members by making redemptions more attractive while recognizing our shared best customers.”With a file from Financial Post staff

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