Aimia (AIM.TO) is suspending all dividend payments amid fallout from Air Canada’s decision to branch out on its own.

The loyalty plan operator announced on Wednesday it’s halting payouts because it wouldn’t pass a capital impairment test required under the Canada Business Corporations Act. Aimia attributed that in part to its eroding market valuation since Air Canada announced on May 11 that it will launch its own loyalty program in 2020.

The company's shares tumbled as much as 17 per cent shortly after the opening bell on Wednesday. As of 11:30 a.m. ET the company's shares were down 0.28, or 14.81 per cent at $1.61. 

"[Aimia] currently has the requisite liquidity to pay these dividends, however the statutory capital impairment test legally prohibits us from doing so," said Aimia Chairman Robert Brown in a statement. "Our business continues to perform well and generate strong free cash flow."

Aimia has lost 76.6 per cent of its value since Air Canada announced its non-renewal plan on May 11, as of the close of trading on Tuesday.

Chief Executive Officer David Johnston added Aimia is “making progress” on a plan to cut costs by $70 million and is engaged in discussions with various parties for potential partnerships after 2020. 

Aimia also announced on Wednesday that three of its directors – Joanne Ferstman, Alan Rossy and Beth Horowitz – are resigning from the company’s board of directors.