Aimia suddenly suspends dividends following Air Canadas decision to severe ties

Posted On Oct 8 2019 by

MONTREAL — Aimia Inc. is immediately suspending all dividends on common and preferred shares, including previously declared payments that were to be made at the end of this month.Shares in Aimia were down 10 per cent at $1.70 in morning trading Wednesday.The Montreal-based company runs Aeroplan and other customer reward programs for various businesses including Air Canada, its original customer.Aimia says the dividend suspension is required following Air Canada’s decision to stop using Aeroplan and launch its own customer reward program in 2020.Why investors should be wary of doubling down on these five losing stocksAimia shares soar 20% after CEO says Aeroplan operator can make it without Air CanadaFive things you should know about Aeroplan points and Air Canada’s new loyalty programThat announcement sparked a major decline for Aimia shares, which closed at $1.89 on Tuesday, worth less than one-quarter what they were worth prior to May 10.Aimia says a capital impairment test required by the Canada Business Corporations Act prevents it from paying the dividends, even though it has the liquidity to do so.“Our business continues to perform well and generate strong free cash flow,” executive chairman Robert Brown said in a statement.Shareholders who are entitled to previously declared dividends may be paid at a future date.Aimia says it’s actively working on forming new long-term relationships for the period after Air Canada departs and is making progress on cutting $70 million of costs from its business.The company also announced Wednesday that it will reduce the size of its board of directors to nine members, from 12.It says Joanne Ferstman, Alan Rossy and Beth Horowitz have resigned as directors.

Last Updated on: October 8th, 2019 at 7:12 am, by

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