Aimia (AIM-T)

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.

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.

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.

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 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.

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.

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.

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.

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%.

The book value has been steadily heading down for the last 4 years. It has always peaked at 4 times book value, where it is now. It is paying out more than it ought to in a dividend.

At this stage, this would be in a holding pattern, because they do have a contract coming up with Air Canada in 2020, and negotiations are underway to renew it. It is yet to be seen whether or not they can apply their model beyond what it traditionally has been. Great dividend.

One reason he has not invested in this is that he has had trouble understanding the accounting. They have adjusted EBITDA, and sometimes they adjust the adjusted EBITDA. A very bizarre accounting. Also, the stock has not performed very well technically.

There is a question as to how attractive this can be, given that Air Canada (AC-T) has repeatedly said they want to renegotiate the contract. In the end, he thinks it will be a mutually beneficial solution that comes out. He would wait to see how the renegotiation goes. Dividend yield of 9.05% is very attractive and thinks they have enough cash to keep paying it for a couple of years.

Has a one-year contract with Air Canada (AC-T) and you don’t know if that will be renewed. Be very careful with this. Have a sizable level of debt, and he is not quite sure how the business model will evolve. Despite the potential of a high dividend yield, you have to stay away until there is a resolution of sizable contracts for negotiation.