The morning after walking away from takeover talks with Air Canada and three financial partners, Aimia Inc. announced a new deal with Porter Airlines that will see the Toronto-based airline become a preferred Canadian partner for the Aeroplan loyalty points program.

Aimia, which is Aeroplan’s parent company, revealed the new partnership when reporting its latest quarterly earnings. The deal starts in July, 2020, and could be a blow to Air Canada.

Even though Porter’s fleet of aircraft is only a fraction the size of Air Canada’s, Porter flies on crucial routes along the eastern corridor – particularly between Toronto, Ottawa and Montreal – and competes with Air Canada for customers along them.

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However, Aimia chief executive officer Jeremy Rabe said Friday that takeover talks with Air Canada could resume – a development that may change the prospects for a Porter partnership.

“We never stopped negotiating,” Mr. Rabe said of the Air Canada talks on a conference call. While Aimia ultimately rejected a revised offer, “should the consortium want to engage with us in a constructive dialogue, we would be happy to entertain that. At the same time, we feel very confident about our future plans.”

Last week, Air Canada teamed up with Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and Visa Canada Corp. on an offer to purchase the Aeroplan program for $250-million in cash.

During the negotiations, Air Canada and its partners raised their initial bid for the loyalty plan to $325-million, from $250-million. Aimia demanded $450-million.

Aimia argued that neither the original bid nor the higher offer “reflects the value of the Aeroplan business to members and stakeholders,” according to a statement.

To negotiate, Aimia lowered its price expectations during the talks. On Friday, Mr. Rabe revealed that its $450-million price tag frustrated some investors.

“We have a number of shareholders who are frankly upset that we offered a number that low,” he said. “We think that was a very reasonable number – perhaps too reasonable.”

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Air Canada and its partners, however, were dismissive and would not budge, according to someone familiar with the talks.

Aimia walked away from the negotiations late on Thursday.

Aimia is now focused on pivoting the company away from the existing Air Canada contract. Mr. Rabe took over as CEO in May and in the three months since he has made some major announcements. Chiefly, come 2020, Aeroplan members will be able to book seats on any airline.

Aimia has also been negotiating new partnerships. In addition to the Porter deal, Aimia is in discussions with the Oneworld airline alliance, whose member airlines include British Airways, American Airlines and Cathay Pacific. Oneworld is a direct competitor to Star Alliance, of which Air Canada is a member.

“This is a unique opportunity for Porter to join a well-established travel loyalty program and, in the future, reach its vast member base to aggressively promote our airline,” Michael Deluce, Porter’s chief commercial officer, said of his airline’s new deal.

Porter’s existing VIPorter loyalty points will be converted into Aeroplan miles but it is not yet clear what will become of currently accumulated Aeroplan points after July 2020, when Air Canada will switch to its own loyalty program.

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The takeover bid, which was launched eight days ago, was to expire on Thursday. Last week, Air Canada chief executive Calin Rovinescu stressed that a short fuse was necessary for the offer because Air Canada needed time to move on and negotiate a credit card partner for its own program.

After Aimia announced its rejection on Thursday, Air Canada and its three partners put out a statement that acknowledged the rejection, but they did not elaborate on their future plans.

With two years to go until the current Air Canada contract ends, investors have worried that Aeroplan members will redeem their existing miles at a faster pace, which could force Aimia to face a cash crunch. The company currently has around $500-million in cash available to cover this $2-billion liability.

However, the latest quarterly earnings do not show any serious acceleration of redemptions – at least not yet. In a research note Friday morning, RBC Dominion Securities analyst Drew McReynolds wrote that the latest earnings suggest there are “no signs of meaningful changes to member behaviour at Aeroplan.”

The Montreal-based company also announced that its continuing operations had a net profit of $11.1-million or 4 cents per share in the second quarter, with revenue up 3.9 per cent to $375.4 million.

That contrasted with a year-earlier net loss of $25.1-million or 22 cents per share from continuing operations, or 18 cents per share if discontinued operations were included, with $361.3-million in the second quarter of 2017.

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With files from the Canadian Press