Andrey Omelchak Aimia AIM-T DON'T BUY May 24, 2016

The former Aeroplan, originally in Canada and diversified to other countries. The CEO is taking a 4 months medical leave. He has concerns about growth going forward as well as debt levels. Dividend yield of about 9.3%.

This has the Aero plan business with Air Canada (AC-T), and that contract comes up for renewal in 2020. That is a massive part of their business. They are going to have to renegotiate the contract, and one of 2 or 3 things is going to happen. They are going to have to pay Air Canada for the rights to continue, and/or Air Canada is going to take it back. For Air Canada, this is a massive program. Until there is more clarity on that contract, people have to be nervous as to how it is going to turn out.

Air Canada (AC-T) just decided to bring the loyalty program in-house, and cancelled their contract. He would imagine there will be more redemptions on this. Theoretically this could go to zero.

Their Air Canada (AC-T) contract doesn’t expire for another 3 years. They will continue to generate good cash flow from that contract until it ends. The balance sheet is OK, but not pristine and isn’t really that problematic. Even though Air Canada does not represent a big percentage of revenues, flights in and of themselves are a big percentage of their revenues. The true concern here is what do the 2 banks do, which have contracts that expire in 2024. They may look at what Air Canada did and follow their example. That still gives 7 years before it gets to that point. There has been an overreaction on the stock. A very well-managed company. He would call this a Trade rather than an Investment, something you don’t buy and park it for 5 years.

He uses it because he uses Aeroplan, but their major client says they will not use it in the future. It is worth seeing how fragmented a customer base is. This is on his watch list still. The company thinks they will recover, but he wonders who will be their customers in the future.

The runner of the Aeroplan loyalty plan. Whenever a company loses its biggest customer it will impact it. This is not an opportunity to get in.

He cautions investors not to invest in AIM-T (Aeroplan) because they have only one customer. It could be acquired by a company to integrate into other operations, but he thinks that is speculative.

They are in trouble and can’t pay the dividend. It will be harder for them to make money in the future. He would take a tax loss with this one. They have a lot of problems they have to deal with. A lot of people may decide to cash in their Aeorplan points before they possibly go under.

Aimia preferred shares: It's run into problems. It'll be difficult going forward. The value was in the Air Canada miles, not Aeroplan. If you own a preferred share that's not paying a yield, then it's distressed. Take a loss.