Loyalty rewards manager Aimia (TSE:AIM) is going ahead with Toronto-Dominion Bank (TSE:TD) (NYSE:TD) as its new card partner for Aeroplan.
The agreement will last 10 years starting in January after CIBC (TSE:CM), the previous Aeroplan partner, opted not to match the terms of the agreement.
The deal means holders of a TD-issued credit card will be able to collect Aeroplan points as they make transactions with merchants. Aeroplan allows members to redeem points for a catalog of products, but its origins began in 1984 as Air Canada's (TSE:AC.B) frequent-flyer program.
Discussions are still underway, however, between Aimia, TD and CIBC on a plan to allow CIBC customers keep their Aeroplan cards. CIBC would keep half the entire portfolio and TD would acquire the rest. CIBC said it would give preference to clients who use the bank's other services.
The three parties set a deadline of Aug. 26 to work out an agreement.
In the meantime, CIBC is threatening legal action against Aimia, with claims that Aimia's proposed deal with TD breaches its existing partnership, set to expire on Dec. 31. CIBC argues that the proposal blocks its right of first refusal.
While TD said the pact will not have any meaningful impact on earnings next year, banks covet the co-branded cards because they use them to lure customers into signing up for other products.
Credit cards allows Aeroplan, meanwhile, to cast a wider net beyond Air Canada customers and the rest of its limited selection of retail partners.
Air Canada spun off Aeroplan as a separate entity in 2002. The company went public three years later and changed its name to Groupe Aeroplan in 2008. After a series of loyalty rewards program acquisitions, the company rebranded itself as Aimia.
TD shares fell 11 cents, CIBC gained $1.47 and Aimia moved 60 cents higher.