Author Topic: AIM.TO - Aimia  (Read 155344 times)

Cigarbutt

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Re: AIM.TO - Aimia
« Reply #620 on: February 13, 2020, 02:49:12 PM »
 I guess it speaks to the growing importance of these programs to the economics of airlines as well as the fact that the accounting for these loyalty programs is tricky and full of assumptions.


Do I decode an apprehension about the notion of playing with numbers or is it a general hunch similar to what Mr. Munger says about "bullshyt earnings" (adjusted EBITDA)?
In terms of substance:
-Looking back over a long period, Aimia has been quite pro-active with loyalty accounting and reporting and it has been possible to coherently reconcile their reported adjusted EBITDA numbers with cash flows from operations over many years with consistent balance sheet effects. I also think they dealt adequately with changing breakage assumptions. I assume that they continue to use the same framework with PLM as they were the fundamental founding partner and have remained the operator since then.

On a related note, Areomexico is going through a tough patch with the Boeing planes being grounded (they've obtained compensation for this) and with local low-cost competitors increasing market share with likely low or negative returns on capital and they are maybe realizing more the value of a loyalty operation that is fairly immune to airline cyclicality and even counter-cyclical because excess capacity can be filled giving rise to extra cash flows at times when core operations fail to produce them.

More recently IFRS 15 has come along and it seems that Aimia has integrated the standards:
https://www.aimia.com/app/uploads/2019/07/Aimia_Whitepaper_Liability-Management_Oct2018.pdf