Friday News Finds – July 20, 2018

By Tegan Valentine

Air Canada who? It’s been two months since Air Canada announced it would be cutting ties with Aeroplan by 2020, and while many were concerned that the loss of its largest client would trigger the downfall of Aimia Inc. (Aeroplan’s parent company) has not taken the hit lying down. On Thursday, Aimia announced a plan to compensate for the loss of Air Canada, and it’s impressive. The company intends to replace Air Canada with a new airline – its own. Aimia hopes that its new charter business (designed to offer flights to popular destinations in the Caribbean) will continue to add value for Aeroplan points collectors. When Air Canada’s decision to abandon the points program was first announced in May, many were left wondering if the program (and the intel company that runs it) would remain viable. The company has since announced plans to release a new online travel booking tool and revamp the Aeroplan points shop, but neither announcement gained much traction. Aimia’s announced charter airline is the first announcement to be released by new Aimia CEO Jeremy Rabe. Time (and the markets) will tell if ‘Aimia Air’ will allow the company to continue to grow in the post-Air Canada era.

Let’s keep our eyes on the sky, shall we? This week Calgary based WestJet and the United States’ Delta Airlines signed an agreement that will give customers access to each other’s route networks across the continent. The two airlines have been working together as partner airlines since 2017, but this week’s announcement signals a change. The revamped partnership will offer customers increased flight options between Canada and the United States, and sync up benefits programs, booking systems, and more. The hope is that the new partnership will allow for growth both north and south of the US/Canada border. While the proposed agreement still needs regulatory approval, both companies are optimistic that the partnership will take off (pun intended) sooner rather than later.

Onex Corp. just made a new investment, and this one’s kid friendly. On Thursday the Toronto-based private equity firm announced it would be buying KidsFoundation – the largest child-care company in the Netherlands. With 281 childcare centres caring for more than 30,000 kids across the Netherlands, KidsFoundation purports to elevate childcare, by combining unstructured play, with the latest developments in early childhood education. With over $32 billion in assets under management, Onex Corp. is among the oldest and most successful private equity firms in Canada, and while at first glance investing in childcare might be an unusual choice – it is in keeping with the corporation’s recent investment trend. In April, Onex announced it would acquire a stake in both PowerSchool Group LLC and PeopleAdmin – two companies that hope to modernize education through software and personnel management respectively. Clearly, Onex believes that children (and education) truly are the future.

For De Beers, diamonds are more than just beautiful objects – diamonds mean business. De Beers is one of the largest diamond companies in the world, and this week the company’s portfolio got just a bit bigger. On Thursday De Beers Canada announced that it would be taking over Peregrine Diamonds – the company behind a significant mining operation north of Iqaluit, Nunavut. This new mine will be De Beers’ fourth diamond mine in Canada, and cost the company approximately $107 million. While De Beers’ decision to acquire Peregrine is relatively fresh, this is not the first time the company has looked at the Nunavut operation. Back in 2013, Peregrin sought an investment from De Beers that would see the mining behemoth invest almost $60-million over five years. De Beers said ‘no’ then, but clearly, the company now sees the potential Peregrin found buried in Nunavut.

And finally, Canada’s cost of living is rising at the fastest rate since 2012, but one essential service may be getting cheaper! This week, Shaw Communications Inc.’s Freedom Mobile announced two low-cost wireless data plans that are significantly cheaper than those offered by the competition. Canadian cellphone bills are among the highest in the world, largely due to intense government regulation and an oligopolistic market structure (Rogers, Bell, and Telus – the so-called ‘big three’ – dominate the telecom industry and face little outside competition). While the CRTC has demanded cheaper plans in the past, price reductions and so-called “low-cost” plans have been largely panned by critics. Freedom’s new offerings will be the lowest on the market, and Shaw is spending billions to increase network speed, and reliability.