AIM.TO - Aimia

[wabuffo]

On the conference call today, the United CEO said that he thinks it will be 2024 (!) before business travel comes back.

 

https://seekingalpha.com/article/4379281-united-airlines-holdings-inc-ual-ceo-scott-kirby-on-q3-2020-results-earnings-call-transcript

 

Scott Kirby:

And business demand getting back to normal, I would guess, 2024.

 

When asked directly what will United do if business travel doesn't come back to pre-pandemic levels, United CEO says we're not telling you.

 

Catherine O'Brien:

Maybe just one more on business travel. So, if business travel is going to take longer to recover than leisure or – depending who you're talking to – potentially not fully recovered to pre COVID levels, what changes to the cost structure or product offering would United consider making to offset that change to the revenue mix maybe over the short term or perhaps over the longer term if it really does end up that we've had a structural shift down in just the amount of business travelers traveling in the future? Any thoughts there would be helpful. Thank you.

Scott Kirby:

I guess I'll start. And what I'd say is, we don't think that's going to happen. So, we actually think the opposite. We have been thinking about it. But I think that's probably something that is best kept to ourselves at this point in time for an outcome that we don't think is the base case scenario in any event.

 

wabuffo

[Homestead31]

the board has done some great work here on Aeromexico and the bankruptcy, and while risks remain, i think we can all agree that the process is proceeding as smoothly as can be expected.

 

therefore, i think it might be time to start spending some time trying to figure out what the story with Kognitiv is.  Clearly at this point its mostly a black box, although they have said they expect cash flow positive in 2021.  who knows if that will come to pass as in some ways it is surely tied to global travel etc., which in a Covid world cannot be counted on.

 

that being said - i'm going to throw out some positive considerations.  i of course realize there are negative considerations as well, but i am sure wabuff and others will take great pleasure in pointing those out.

 

so in no particular order, here are some things to think about

 

1) as with all things Aimia, insiders are aligned, have bought a ton of stock personally, and have also put a buyback in place.  i think its safe to say they wouldn't have done those things if they thought Aimia was a one trick pony a la PLM.

 

2) if you read between the lines on the conference calls when they reference Cardyltics, it seems clear that the plan here is to IPO Kognitiv in the not too distant future

 

3) take a look at the recent Nuvei IPO, which was the largest canadian IPO in history.  its a different businees - Nuvei is focused on payments - but there are some parallels.  Nuvei is burning $100M a year, growing through acquisition, and trading at ~20x revenue because it is "sexy"

 

4) the excitement around Nuvei seems to be that they do payments for online gambling.  to my knowledge Kognitiv is not attached to online gambling at this point, but it seems like an absolute no brainer. 

 

as i understand it, the way kognitiv works is that someone like a retailer or whoever can go to the "loyalty capital network" in order to find rewards (unused hotel rooms, flights etc) and then use them as customer incentives.  so one example that we are familiar with would be a car dealer that offers $1,000 cash back when you buy a car.  instead of cash back, they could offer a trip somewhere or something like that to a consumer that has greater than $1,000 value, but maybe costs the dealer less than $1,000 because the hotel etc is happy to unload its unused inventory.

 

this model seems like it would be a perfect fit for online gambling - rather than cash you could take your winnings in the form of travel etc.  it seems like this model would also work with online gaming as in video games.

 

i don't know how the mechanics of that would work, but i do know that that is the sort of story that the market would put a huge multiple on, and investment banks would be lining up down the block to run that IPO

 

5) prior to the Aimia merger, kognitiv bought a blockchain company.  an IPO touted as "online gambling rewards secured by blockchain" would probably trade at 8 billion times revenue in this market.

 

anyway - this is all of course just speculation, and i realize it may sound ridiculous considering what we know about the corporate history of Aimia's loyalty business.  that being said, it seems like the narrative here could go in new directions, and narrative is what sells IPOs at high multiples.

 

thoughts appreciated

 

65% YoY revenue growth for kognitiv from 2019 to 2020 if i'm reading this latest filing right?

 

that kind of growth, combined with the word "block chain" and the potential for online gaming and gambling is probably worth a billion times sales in this market

[wabuffo]

65% YoY revenue growth for kognitiv from 2019 to 2020 if i'm reading this latest filing right?

 

https://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/tsxaim-aimia/msg424868/#msg424868

That would mean its actual revenues are probably a single-digit percentage of that $1.3b.  Indeed, a quick check on Dun & Bradstreet says its annual revenue is $16.7m USD ($22.4m CAD).

Hey, I was pretty close!

 

Their actual revenues declined from $18.2m CAD for 2018 to $14.8m CAD for 2019.  That's why their losses increased from a loss of $34.4m in 2018 to $47.3m in 2019. They changed their year-end in 2018 (13 months) vs 2019 (12 months) so its a bit difficult to compare.  I also think they did a business strategy pivot in 2019 which further makes the two years' numbers not very comparable. 

 

With their year-end falling on Jan 31st - in 2020, unfortunately, they get the full impact of the pandemic.  Since most of what they sell is access to international hotels and destination resorts, 2020 is probably a big question mark with international travel down 80% or so.   

 

wabuffo

[Homestead31]

i don't think it is appropriate to say, "their actual revenues declined."  You could of course say, "Their IFRS revenues," but it would probably be most appropriate to say, "their NET revenues."

 

it seems pretty clear this (Kognitiv) is a tech company, and of course we have very limited details.

 

true to course, wabuffo of course gives the most pessimistic interpretation possible. but another interpretation is that like most fast growing tech companies, Kognitiv sacrificed some margin in order to grow fast.  Gross revenues did in fact grow 65% YoY.

 

We don't know enough to know if this is a good thing or not, but if we are looking at the public market tech sample set, we could say that the more money they lose in pursuit of growth, the higher multiple they deserve.  I will again reference Nuvei, which just went public as the largest ever Canadian IPO burning $100M, growing fast, and trading at 20x sales.

 

I am not saying this deserves to trade at 20x sales.

 

I am saying that if they IPO this, and the headline for the market is 65% gross revenue growth yada yada yada block chain blah blah blah online gambling, i think we will all be surprised at the valuation the public market gives it.

 

I am also saying you don't need to believe that because you're not paying for it in Aimia's stock price.  Its just a free lotto ticket that could be worth a whole bunch.

 

[Dr. Aybolit]

my two cents on Kognitiv:  I wouldn't get too hung up on the trend in valuation.  remember Cardlytics (CDLX)?  Aimia invested in that like 3 times, beginning in 2011 and with the last round in May 2017.  When it came public at $13 in early 2018 i think that was a major valuation cut versus the prior round.  this is all from memory since i am too lazy to look it up.  but i think i remember they ended up writing down the position massively, and then selling it all for a decent price after all (albeit painfully and seemingly needlessly prematurely).  I imagine one could have assumed the valuation cut meant it wasn't a good business to own, which clearly would have been the wrong inference.  So i wouldn't get too caught up in extrapolative analysis here, like CDLX, Kognitiv either works or it doesn't, and if it does Aimia probably makes some decent money, if not, a decent chunk of NAV will be lost but likely no more so than the cumulative cash burn from the status quo before that merger. so all-in-all, likely it was a good move. 

[samwise]

Aeromexico is targeting a 35% reduction in fleet size according to the VIC writeup for CONTROLADORA_VUELA_COMPANIA

 

[Homestead31]

https://www.yahoo.com/news/unwelcome-other-countries-americans-fleeing-110037262.html

[samwise]

Just some thoughts to start up a discussion. I think a bunch of people follow this much more closely than me, so would appreciate any thoughts from them.

 

Last earnings call said they were considering a 25% stake in a LBO, upto 50M commitment. They have been buying shares in the open market. Wouldn’t this trigger some reporting requirements after they buy 5%? Supposedly it’s a company with 60 years history of generating cash. Any ideas which company this is?

 

Mittlemans style of high leverage equity is actually like LBO, so this seems a reasonable way to go. Take private, lever and ditch the volatile mark-to-market which scares clients. But they don’t get to buy cheap shares and need to negotiate for the whole company. And not sure if they get any cash flow in between to cover company costs.

 

If they just become a hedge fund permanent capital vehicle, they will always stay at a discount, like Senvest. But not sure what happens if they become a private equity fund with permanent capital. My guess is those are also at discount to NAV. So returns should come from growth in NAV, and only a little can be expected from closing of the discount.

 

Good thing is the big chunks of NAV like PLM, Clear Media are growth businesses (if AIM can keep control during the current turbulence).

 

Oh and any views on the comparison of mittleman and biglari? https://www.valueinvestorsclub.com/idea/AIMIA_INC/8344917203/messages/172720

 

[LTcap]

Thanks for question.  First, I wouldn’t confuse Chris Mittleman for AIM.  Look at what the AIM board has achieved in < 12 months. Very different portfolio than Chris w/very strong personalities/good investors outside of Chris.  If you spend time w/Phil, you’ll also find he’s not Chris. To be clear, I think Chris has added value (source for Clear Media, Village Roadshow) and will continue to.  BUT, AIM is not Mittleman portfolio 2.0.  To your questions….

 

Not sure on LBO & haven’t wasted time trying to guess the company.  Given track record of new board, comfortable will certainly not destroy value and very likely add value.

 

Apologies, don’t follow how AIM becomes a “hedge fund permanent capital vehicle” and not sure what that means.  Mittleman isn’t even a HF (no shorting) and this again is not Mittleman.  AIM very much has permanent capital given it’s a corporate entity so even more so than PE (b/c no fund lives or LPs).  They will look to invest in public and private companies that will create most value. 

 

As far as closing the discount to NAV…as you rightfully stated, AIM’s current value is in EXISTING assets.  And esp at AIM’s current share price, you aren’t paying for the current cash to generate any kind of return (though the Board already has via public equities + Village Roadshow).

 

How does NAV discount close?  Aeromexico on a path to exit BK in coming months/quarters.  Then, Aero and new owner (Apollo) required to facilitate PLM paying a dividend of > $1.35/sh to AIM.  BUT…I think there’s a good chance, Apollo buys AIM’s 49% PLM stake and skips the dividend.  I fail to believe Apollo just wanted to own an airline w/out its crown jewel (PLM). Further, Kognitive seems to fit in the current market bubble for high-growth/tech companies. Wouldn’t shock me if Kognitive/AIM start to discuss an IPO or sale to SPAC later this year – again, not banking on this but think Kognitive is a better biz than some of the garbage currently peddled by SPaCs.

 

The Biglari comparison is laughable.  If that’s not obvious to the VIC poster, then AIM is not for him/her. See my comments and all value created by AIM’s new board.  Thanks again for questions.

[wabuffo]

Good thing is the big chunks of NAV like PLM

 

Is it though?

 

Why won't Aeromexico accept the contracts that govern the relationship between the airline and its loyalty program.  Bankruptcy law allows a debtor to reject contracts as a way of lessening its liabilities.  While Aeromexico hasn't rejected them, you'd think they would want to accept them if they are so vital to the airline.  And yet here we are seven months into the bankruptcy.

 

Meanwhile, AIMIA won't file a proof of claim (which unsecured and secured creditors must do) so the two parties keeping asking the Court for an exemption to the claim bar date.  At some point the Court will force the issue since its patience will reach an end.

https://document.epiq11.com/document/getdocumentsbydocket/?docketId=881319&projectCode=AEM&docketNumber=799&source=DM

 

The Debtors and the PLM Parties have been negotiating, among other things, an agreed resolution of the PLM Parties’ purported claims in the Chapter 11 Cases.

 

I'm sure the relationship between Aeromexico and AIMIA is amiable (LOL) - but Aeromexico is keeping the option to end the agreement and reject all of the contracts related to PLM open while it is in Chapter 11.  Perhaps this is a low probability, but it is not a zero probability.....

 

wabuffo

[LTcap]

Thanks as always for sharing w/half glass full lens.  It's certainly a risk, but AIM isn't forcing the issue b/c makes more sense to work together amicably.  I believe Aero/Apollo have less leverage than you insinuate...Aero will need PLM's cash & the contracts were clearly signed before BK.  Time will tell which one of us is right.

[LTcap]

This is my last reply b/c going back & forth w/you has proven a waste of my time.  AIM made $6mm or 25% return in 2 months.  Better than earning nothing and if they did that every 2 mths then annualized is 10% bump in value to current share price (not assuming or saying they will but dinging them seems silly).  ILS was burning cash and now it's a nice call option b/c given zero (or maybe still negative) value.

[samwise]

Thanks everyone for your replies.

 

LT I won’t debate semantics of what is a HF vs mutual fund. But doing public market investments within a corporation earns a discount in many cases, even despite a good record with no shenanigans like for Senvest.

 

I don’t understand the price paid for asset management business. Last conference call showed no profitability and only 150m AUM.

 

I also don’t understand how the mittlemans retain control of AIM, if they keep losing their LPs. Is the remaining 150m their own money?

 

Good thing is the big chunks of NAV like PLM

 

Is it though?

 

Why won't Aeromexico accept the contracts that govern the relationship between the airline and its loyalty program.  Bankruptcy law allows a debtor to reject contracts as a way of lessening its liabilities.  While Aeromexico hasn't rejected them, you'd think they would want to accept them if they are so vital to the airline.  And yet here we are seven months into the bankruptcy.

 

Meanwhile, AIMIA won't file a proof of claim (which unsecured and secured creditors must do) so the two parties keeping asking the Court for an exemption to the claim bar date.  At some point the Court will force the issue since its patience will reach an end.

https://document.epiq11.com/document/getdocumentsbydocket/?docketId=881319&projectCode=AEM&docketNumber=799&source=DM

 

The Debtors and the PLM Parties have been negotiating, among other things, an agreed resolution of the PLM Parties’ purported claims in the Chapter 11 Cases.

 

I'm sure the relationship between Aeromexico and AIMIA is amiable (LOL) - but Aeromexico is keeping the option to end the agreement and reject all of the contracts related to PLM open while it is in Chapter 11.  Perhaps this is a low probability, but it is not a zero probability.....

 

wabuffo

 

Always optimal to retain an option to the very end, even if you intend to exercise  it. Why close your options? And a PE vulture shop will look for every way to get best value. That’s their culture, as well as fiduciary duty to LPs. Hence the qualifier “ if they retain control “.

 

I find it interesting that AIM chose to give the money and agreement before BK. Would waiting till after BK give them more leverage? Or is the leverage better with an extended agreement? Does that translate to a bigger claim if the agreement is rejected.

 

 

[LTcap]

AIM paid for more than Mittleman's AUM.  They paid for Phil's full attention.  I don't love the price paid either, but Phil has been instrumental in transforming AIM and the "overpay" is immaterial to the thesis/value of AIM.

 

Mittleman manages SMAs, not a fund/LP.  So when clients leave Mittleman, then they take the shares and sell them. Unsurprisingly, they saw several large clients leave after being acquired by AIM.  This kept the stock depressed for a while.  I think clients that decided to stay from that point will be at Mittleman for a while.  I suspect 2021 has started off very well given his exposure to AMC/REV/etc.

 

But big picture...Mittleman's investment could be a zero.  I'm invested b/c I believe in the value of existing assets, clear catalysts on horizon w/Aero exiting BK, and gaining confidence that AIM's board can wisely deploy excess cash.

[samwise]

Thanks LT. Yes I agree some of the assets are good, and growing, as long as bankruptcy doesn’t throw up any surprises.

 

I understand the other parts. AIM paid dearly for Phil. Hope it turns out well.

[SafetyinNumbers]

Mittleman’s letter

 

https://files.constantcontact.com/7da71a1c601/489fd7f5-687a-4d76-8e92-68cefee269e8.pdf

 

 

They sold their position in AMC for $14 in the last week of January. It was $2.12 at year end and 2.5% of assets. That’s a good way to start 2021.

 

I have no position.

[Dr. Aybolit]

I posted this back in August and still think it shows how low probability is that PLM contract gets rejected.  sure, not a zero probability, but has to be pretty close based on the circumstances. 

 

I'm no bankruptcy expert, but can Aeromexico really reject a contract they signed a day before filing chp. 11? 

 

How would they explain the reasoning to the judge?  "Your honor, although we signed this one day before filing our petition in your courtroom, we feel its terms are no longer suitable for our changed circumstances." 

 

Wouldn't that constitute pre-petition fraud, or at least a bad faith rejection that the court would thus not allow if Aimia contested it?

 

https://www.justice.gov/jm/civil-resource-manual-60-executory-contracts-bankruptcy

 

B. Standard of Review By Bankruptcy Court. A debtor's decision to assume an executory contract is subject to review under the "business judgment standard." See, e.g., In re Orion Pictures Corp., 4 F.3d 1095, 1099 (2d Cir. 1993); In re Gardiner, Inc., 831 F.2d 974, 975 n.2 (11th Cir. 1987); In re Health Science Products, Inc., 191 B.R. 895, 909 n.15 (Bankr. N.D. Ala. 1995) (Bankruptcy courts must approve a debtor's decision to assume or reject an executory contract "unless there is bad faith or a gross abuse of discretion." In other words, the court must decide "whether the decision of the debtor is so manifestly unreasonable that it could not be based on sound business judgment, but only on bad faith, whim, or caprice.").

[Cigarbutt]

I posted this back in August and still think it shows how low probability is that PLM contract gets rejected.  sure, not a zero probability, but has to be pretty close based on the circumstances. 

I'm no bankruptcy expert, but can Aeromexico really reject a contract they signed a day before filing chp. 11? 

How would they explain the reasoning to the judge?  "Your honor, although we signed this one day before filing our petition in your courtroom, we feel its terms are no longer suitable for our changed circumstances." 

Wouldn't that constitute pre-petition fraud, or at least a bad faith rejection that the court would thus not allow if Aimia contested it?

https://www.justice.gov/jm/civil-resource-manual-60-executory-contracts-bankruptcy

B. Standard of Review By Bankruptcy Court. A debtor's decision to assume an executory contract is subject to review under the "business judgment standard." See, e.g., In re Orion Pictures Corp., 4 F.3d 1095, 1099 (2d Cir. 1993); In re Gardiner, Inc., 831 F.2d 974, 975 n.2 (11th Cir. 1987); In re Health Science Products, Inc., 191 B.R. 895, 909 n.15 (Bankr. N.D. Ala. 1995) (Bankruptcy courts must approve a debtor's decision to assume or reject an executory contract "unless there is bad faith or a gross abuse of discretion." In other words, the court must decide "whether the decision of the debtor is so manifestly unreasonable that it could not be based on sound business judgment, but only on bad faith, whim, or caprice.").

This line of thinking contains valid points and could be framed (what was true yesterday must be true today) to question the consistency in business judgement. However, there are several problems with this line of argument:

-Aeromexico had clearly entered the zone of insolvency (unprecedented decline in business, other similar players filing for bankruptcy, their own reported numbers clearly showing massive distress) and every member entering contractual negotiations should have been aware of the potential imminence of filing.

-Pre-petition, parties negotiating with Aeromexico were, in substance, negotiating with the Board of Directors, whose fiduciary duties, at the time, involved to take actions in the best interests of the company (Aeromexico), which, arguably, they did.

-Filing meant a change of interested parties and ownership profile (directors out of the picture) and the idea becomes, over time, to maximize the value of the debtor's estate. Under bankruptcy rules, this involves, over time, using business judgement to consider rejecting contracts if those contracts don't maximize the value of such estate.

-The nature of the environment that led to the filing and the protracted period required to figure out the new blueprint for the new Aeromexico suggest that there may be flexibility (time required to evaluate) before taking action.

Aimia always had levers to use but has never been in the driver's seat for the PLM venture.

Good luck (sincerely).

[wabuffo]

This recent AIMIA discussion caused me to take another look at what's happening with Aeromexico's Ch. 11 case.

 

One thing I like to do with BK filings is to review the applications for interim compensation by the various legal and consulting advisors to the Court.  These are basically professional service invoices with lots of mind-numbing time sheet detail as back-up documentation for the billing amounts.  What one sometimes finds is a nugget of information that hasn't been made public yet but slips through in the appendices of these invoices.  Since these documents go on for hundreds of pages, I just plug in a search term like "PLM" in the Adobe pdf and search the filing for hits.

 

So with all that throat clearing out of the way, the latest batch of invoices from FTI Consulting and Davis Polk (one of the Debtor's legal firms) keeps bringing up "PLM stipulation" in the invoice detail for the quarterly billings thru Dec. 31st that were just filed.

 

What is the PLM stipulation?  I'm not sure - but some more digging brought out these descriptions:

 

From the FTI invoice filing:

https://document.epiq11.com/document/getdocumentbycode/?docId=3861457&projectCode=AEM&source=DM

Additionally, FTI reviewed the operating and loan agreements between the Debtors and PLM Premier, the joint venture partner for the Debtors’ customer loyalty program (“PLM”). FTI reviewed historical transaction level data with PLM in order to assess the costs and benefits of the forthcoming stipulation between the two parties. The Debtors and FTI continue to analyze the partnership with PLM in order to assess the most beneficial path forward for the estate.

 

That sounds like some sort of deal is about to be finalized between Aeromexico and PLM (and by inference AIMIA).

 

Let's search further - this time the Davis Polk invoice filing:

https://document.epiq11.com/document/getdocumentsbydocket/?docketId=884156&projectCode=AEM&docketNumber=863&source=DM

 

Drafted and reviewed stipulation with PLM and motion approving stipulation and authorizing assumption of the Club Premier agreements allowing the Debtor to obtain a loan through an intercompany loan facility

 

...and we hit paydirt.

 

Thus the long-awaited assumption by Aeromexico of the agreements governing its commercial and legal relationship with its loyalty program (PLM) may be about to be finalized.  But in exchange, PLM is going to loan more money to Aeromexico either through an outright loan or another PLM pre-pay of Aeromexico seats.

 

Of course, there's no guarantee that this stipulation has been or will be approved by all parties (and the BK court).  But if it does get approved, I guess it will be announced soon (perhaps during the upcoming year-end AIMIA earnings release).

 

Its clear from all of the invoices, PLM drew (and is perhaps still drawing) a lot of attention in the Oct-Dec time frame by the Debtor's advisors.  For example, Alix Partners, a cost-cutting/restructuring consulting firm, also has a lot of references to PLM in its invoices.  Mostly references to "PLM Cost Savings Initiative" with terms like "projections for 2021-2025".

 

I guess we'll see what, if anything, happens with all of this behind-the-scenes stuff.  It does perhaps make sense of this recent filing by PLM and Aeromexico in the Court Docket filed on Jan. 13th.

https://document.epiq11.com/document/getdocumentsbydocket/?docketId=881319&projectCode=AEM&docketNumber=799&source=DM

 

This was an agreement to exempt PLM from meeting the claim bar date for filing its claim amounts against the Debtor (Aeromexico) that all claimants had to adhere to by order of the Court.

The General Bar Date shall be extended solely for the PLM Parties through February 16, 2021 at 5:00 p.m. (prevailing Pacific Time).

 

The date is interesting - that's tomorrow.  I bet we get a press release by AIMIA sometime tomorrow?

 

wabuffo

[samwise]

Wabuffo, I admire the dedication and skill at financial sleuthing!

That is quite a find, and good news for AIM .

[wabuffo]

Wabuffo, I admire the dedication and skill at financial sleuthing! That is quite a find, and good news for AIM.

 

SW - there appear to be other sleuths that were on this trail before me.  The Davis Polk invoice was filed right at the end of January (Friday night, Jan 29th) to the Court Docket.  You'll notice that AIMIA's share price jumped the very next trading day (Monday, Feb. 1st).

 

wabuffo

[wabuffo]

Yesterday, Aeromexico filed its Periodic Report which provides financials for its non-debtor/bankruptcy-remote subsidiaries.

https://document.epiq11.com/document/getdocumentbycode/?docId=3863783&projectCode=AEM&source=DM

 

This is the second filing (its usually filed every six months or so).  What's interesting is what isn't in the report.  There are no financials for PLM Premier.  Compare this filing with the previous one from August, 2020 (PLM's financials were in that one):

https://document.epiq11.com/document/getdocumentbycode/?docId=3744124&projectCode=AEM&source=DM

 

Am I reading too much into this? Very likely.  But with all the background noise from the invoices through Dec, 2020 highlighting the back-and-forth about assuming the PLM contracts, another possible interCo loan from PLM to Aeromexico - it does get one's spider sense tingling.

 

We'll see if AIMIA has anything to announce when they release their Q4, 2020 results any day now.

 

------------------------------------------------------------------------------------------------------

Also - the executive revolving door at Kognitiv seems to be accelerating....

https://www.newswire.ca/news-releases/kognitiv-corporation-announces-shawn-pearson-joins-as-president--890145706.html

 

https://www.newswire.ca/news-releases/kognitiv-corporation-accelerates-platform-as-a-service-capabilities-with-key-hires-853036368.html

 

Looking at linkedin, it looks like the old Aimia ISS/ILS leadership might've gotten pushed out/retired (not sure about this) at the end of 2020 (Cindy Faust, Richard Peake).  Thus the new executive hires...

 

wabuffo

 

[wabuffo]

Hmmm - AIMIA should've released Q4 results this week which is their usual timing.  Seems now they are pushing them out to late March.  That seems odd.

 

https://www.aimia.com/wp-content/uploads/2021/02/AIM_Q4-2020_Media_Advisory_vF-newswire.pdf

 

wabuffo

[Cigarbutt]

^That seemed to be Aeromexico's justification for not reporting PLM's numbers in recent filings ie wait for the public filing of involved parties.

It's likely crunch time for negotiations, not necessarily bad or good even if Aimia (opinion) seems to be on the weaker side of the table.

 

With the recent announcement of the DIP completion there was this (typical of distressed situations but it is what it is):

"The price of our common stock has been volatile following the commencement of our Chapter 11 process and may significantly decrease in value in the future. Therefore, any trading in our common stock during the pendency of our Chapter 11 process is highly speculative and involves substantial risks to buyers of our stock. Future recoveries in our Chapter 11 process for our shareholders will depend upon our ability to negotiate and confirm a Plan of Reorganization, the terms of such Plan, the recovery of our business from the COVID-19 pandemic and the future value of our assets upon conversion of our liabilities. Although at this stage we cannot predict how our common stock will eventually be treated under a Plan, we believe that it is unlikely that stockholders would receive a recovery through a Plan since it is expected that the holders of unsecured indebtedness will not be paid in full and will need to convert their claims into new stock to be issued by the Company."

 

The positives: loyalty subs are very valuable and financial partners are probably still looking to contribute, somehow

The negatives: the emerging adjusted blueprint is likely smaller than anticipated and payback may be related to future equity realization (perhaps far into the future)

[wabuffo]

It's likely crunch time for negotiations, not necessarily bad or good even if Aimia (opinion) seems to be on the weaker side of the table.

 

this is what I believe as well.  The airline recovery is slower than anyone expected (well at least what most expected  8)).  Borders are still largely closed and international travel is dead. 

 

The Debtors (and their financing partners) know that the one remaining valuable asset that can be used for collateral is PLM.  The invoicing through December showed a lot of consulting/legal advisor focus/time/billing on PLM.  I think they are trying to see if they can cook a deal but have no money to offer AIMIA.  I still think the template is the Avianca/LifeMiles template.  Worst case is that they tap PLM for more interco loans/prepaid seats - but not sure what they can offer AIMIA as a quid pro quo this time around.

 

That seemed to be Aeromexico's justification for not reporting PLM's numbers in recent filings ie wait for the public filing of involved parties.

 

Well - Aeromexico published PLM's results thru June 30, 2020 via the periodic report on August 20th, yet AIMIA did not release its Q2 results until mid-Sept.  Doesn't seem to have been a consideration then.

 

There's no reason to push out Q4 earnings release - unless the hope is for something to announce.  But it could end up that there is nothing to announce. 

 

We'll see.

 

wabuffo