Q3 in Detail
Consolidated revenues were up 6% to $372 million while gross billings were down only 4%.Adjusted EBITDA was ahead by $3 million over Q3 in 2017.It is true that free cash flow is down about $13 million over 2017.And Aimia is till spending some of it's adjusted EBITDA on restructuring (after Aeroplan).The cost of loyalty awards is up in 2018 not down now.But Aimia has made a concerted effort to reduce operating expenses as Q3 operating expenses have come down from $76 million in 2017 to $66 million.
Aimia is Ready for Q4
Aimia sold Aeroplan for $450 million plus all liabilities and in this blog's mind this is not much for a loyalty plan that was once valued at $2.5 billion.So Aimia should explore all loopholes to remain in an equity role and get a share of profits; this would be their best strategy. It is realized that Aimia management is beefing up their positions in their other loyalty programs and this is bringing in increased revenues.But a new,improved Aeroplan will be able to throw off a lot of profit and Aimia should have a "preferred position" here.This blog believes that until July 2020 (the end of the present Aeroplan contract) Aimia has an excellent chance to improve their position.And Q4 is a good time to do this.Like the lumbermen in the caption below AIM should probably do it in stages.
In Summary
An earlier blog on Workathon expressed the opinion that it is probably not legal to cancel unilaterally a long running contract where there is no performance issue.At least Air Canada certainly does not have a strong ethical position. Aimia got $450 million but the value of it's liabilities could be valued at $1 billion with $.50 on each dollar of liabilities.And the blog on Workathon dated Feb.8,2018 expressed the opinion that Aimia should have a solid equity position in Aeroplan.The time to strike a bargain is before the present contract runs out on July,2020.
That aside Aimia is getting back on track financially.All of it's financial indicators are ahead of those in 2017.In addition, Aimia's guidance shows expected free cash flow of $155 to $175 million for 2018.Things could be done in stages here also;Aimia should announce a small dividend will be paid in Q1 2019.Only then will investors be confident that Aimia is indeed back on track.
Forecasts of past Blogs
Workathon has had quite a few blogs covering Aimia.Workathon dated 10/02/2018 announced that debt has been reduced to $208 million.Workathon dated 18/08/2017 forecasted a price of $3.25 to $3.50 by Christmas and that expenses would be cut back.And my other blog Blogdaleupsome dated 14/08/2018 forecasted adjusted EBITDA for this quarter of $51 to $53 million and a forecast of $5.00 for Q1 of 2019.In fact, adjusted EBITDA will be $56 million and the other forecasts have largely come true but it is not likely Aimia will be at $5.00 in Q1 without the announcement of a small dividend. http://www.caissepopulaire.ca/ http://www.canadapensionplaninvestmentboard.com/
