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After a week spent swapping counteroffers, it came down to an ultimatum.

When the markets closed on Thursday afternoon, officials at Aimia Inc. were nowhere close to accepting an offer for their Aeroplan loyalty program from a group that included Air Canada, two major banks and one credit-card firm.

The group, which launched a $250-million bid for the Aeroplan business on July 25, had agreed to increase the price to $325-million and change some other terms. At a meeting late Thursday in a Bay Street office tower, Air Canada and its partners decided to turn up the pressure, according to a source familiar with the talks. You’ve got 32 minutes to give us a ‘yes’ or ‘no,’ the group said to Aimia representatives – and no more negotiating fine details.

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A half-hour later, Aimia walked away, leaving the fate of one of Canada’s most popular loyalty plans up in the air.

Air Canada and its partners – Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and Visa Canada Corp. – have not indicated what their next move will be. Aimia took the highly unusual step of disclosing that it had asked for $450-million during the negotiations.

In the meantime, it is pressing forward with its own restructuring plan, which includes trying to find new partners. Earlier in the week, the company confirmed that it is in talks with the Oneworld airline alliance, whose members include British Airways, American Airlines and Cathay Pacific, and on Friday it announced a deal with Porter Airlines Inc. The arrangement will allow those flying Porter to collect Aeroplan points and Aeroplan members to use their points to book tickets on the airline, beginning in July, 2020.

While Porter is small relative to Air Canada, it flies on crucial routes along the eastern corridor – particularly between Toronto, Ottawa and Montreal – that are attractive to business travelers and are dominated by Air Canada flights.

Aimia shares jumped another 8 per cent on Friday, bringing their total rise to 50 per cent since the Air Canada group’s bid.

In its battle against the unsolicited offer, Aimia is fighting against a rich history. Air Canada built Aeroplan as its in-house loyalty program in 1984, then spun it out in a 2005 initial public offering.

Aimia grew as an independent company – but then suffered a devastating blow last year when Air Canada said it would pull out of the companies’ partnership in 2020. For Aeroplan members, the ability to redeem points for Air Canada flights is by far the most important reason to belong to the loyalty program.

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The playing field in this takeover battle appears lopsided. Air Canada has teamed up with two of Canada’s largest lenders and also brought along the country’s largest credit card company. The four titans hold immense power, and they have huge balance sheets, which they argued could easily absorb Aimia’s $2-billion redemption liability – the estimated future cost of flights and other rewards for the billions of Aeroplan points that exist.

Aimia, meanwhile, had been struggling to figure out its future. The Aeroplan business has always been heavily dependent on Air Canada, and the relationship matters so much to Aimia that when the airline announced that it would let their contract expire, Aimia’s stock fell 63 per cent in a single day.

Amid the resulting turmoil, Aimia is on its third chief executive in 13 months. While it now has stable leadership in Jeremy Rabe, who started in May, the new CEO was just starting to turn the loyalty program away from Air Canada when the bid was made public.

To win investors over, Aimia has used the consortium’s hardball tactics against it. By revealing that it brought its asking price for Aeroplan to $450-million, it made it clear that Aimia really was trying to make a deal happen.

“We have a number of shareholders who are frankly upset that we offered a number that low,” Mr. Rabe said on a conference call Friday morning. “We think that was a very reasonable number – perhaps too reasonable.”

Meanwhile, an Aimia shareholder expressed exasperation at Air Canada’s final bid. “We’re scratching our heads as to why the offer is so low."

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With the Porter announcement, Aimia has also demonstrated that it is not necessarily doomed without its current Air Canada contract. The company also confirmed that the revamped Aeroplan will allow members to book seats on any airline, which some members prefer, and is dangling the potential for still more new partnerships.

Those developments put the $2-billion redemption liability in a new light. While Air Canada and its partners want investors to believe it will sink Aimia, which currently has about $530-million in cash to cover it, the liability is troubling only if Aeroplan members rush to cash in their miles before the Air Canada contract expires.

After Aimia reported quarterly earnings Friday morning, RBC Dominion Securities analyst Drew McReynolds noted the latest numbers suggest there are “no signs of meaningful changes to member behaviour at Aeroplan.”

Now Air Canada must play defence. On Bay Street, there are questions swirling as to why the airline apparently reversed course on building its own in-house loyalty program and sought to reacquire Aeroplan instead.

It is possible that building from scratch is harder than Air Canada anticipated. Banking sources have noted that most potential financial partners are already tied to an existing travel rewards plan, which could affect a potential credit card deal for Air Canada.

In an e-mailed statement, Air Canada rejected these theories. “The reality is that Aimia’s business plans are precarious at best, given their liquidity outlook,” said a spokesperson for the airline, adding that “there remains significant interest from numerous [credit card] partners.”

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TD and CIBC declined to comment for this story. Visa could not be reached for comment.

While talks have broken off, Aimia’s CEO stressed on Friday that it would come back to the table and have a “constructive dialogue.”

Whether that ever happens remains to be seen. If it doesn’t, everyone involved will have to find a way to get along: Air Canada remains an Aeroplan partner for two more years, while TD and CIBC, which issue Aeroplan credit cards, are tied to the program until 2024.

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