Grupo Aeromexico SAB is working toward an initial public offering of its frequent-flier rewards program that would value the business at about $1 billion, according to two people with knowledge of the matter.

The probable timetable for an IPO involving part of Premier Loyalty & Marketing SAPI is 2017, said one of the people, who asked not to be identified because details aren’t public. Mexico’s largest airline is now moving forward on the effort after studying it for more than a year, the other person said.

An IPO would add Aeromexico to a roster of airlines reaping cash by selling stock in their loyalty plans. During the past decade, Brazil’s two biggest carriers followed former Air Canada parent ACE Aviation Holdings Inc. in going public with their awards operations. Colombia’s Avianca Holdings SA agreed this month to sell 30 percent of its miles unit to private-equity firm Advent International Corp. for $343.7 million.

Carlos Torres, a spokesman for Mexico City-based Aeromexico, didn’t respond to requests for comment about any plans for the program.

With a $1 billion valuation, Aeromexico’s frequent-flier business would rival that of the airline itself. That’s not unheard of: When investors urged similar divestitures by U.S. carriers in 2007, analysts estimated that the operations might be worth more than their owners.

Program Mechanics

Frequent-flier programs make money by selling miles to banks or hotels to give to customers, earning interest on the cash before awards are redeemed by customers. They can also sell points to carriers and retailers and then buy airline seats and other rewards at a discount, pocketing the difference.

Aeromexico owns 51 percent of the loyalty program. The rest is held by Aimia Inc., which traces its roots to the 2005 IPO held for Air Canada’s frequent-flier plan. ACE Aviation eventually unloaded all of the Air Canada mileage unit, and the stand-alone loyalty-plan operator took the Aimia name in 2011.

Aeromexico wouldn’t go that route and would retain a significant ownership stake, one of the people said. The airline and Montreal-based Aimia have discussed the IPO plan, the person said.

Aimia already has signaled that it expects a share sale for the Aeromexico program, with Chief Financial Officer David Adams telling analysts on a conference call in May that “within a few years, Club Premier should be ready for a liquidity event.”

Krista Pawley, an Aimia spokeswoman, declined to elaborate on those remarks. “We are focused on helping them build the business,” she said in an e-mailed statement.

This article was written by Nacha Cattan and Jonathan Levin from Bloomberg and was legally licensed through the NewsCred publisher network.