Accessibility/Mobile Features
Skip Navigation
Skip to Content
Editorial News
Business
Classified Sites

The Canadian Press - ONLINE EDITION

Aeroplan overhaul working well, growth expects:Aimia

MONTREAL - Travel rewards company Aimia Inc. says its gamble to overhaul its Aeroplan program paid off in the second quarter, as more members are signing up for and using credit cards in a trend that bodes well for the company's future growth.

Aimia CEO Rupert Duchesne said Thursday that the speed at which people are accumulating points and their engagement with the program shows the "fairly significant bet" the company took with the renegotiation of the credit card agreement and the redesign of the program is heading in the right direction.

"If we see the growth that we'd expect from all of these new cards sign-ups and the increased engagement of existing card holders, it's a very rosy future," he told financial analysts in a conference call.

Aeroplan membership is up four per cent to five million members since the changes, with co-branded credit card holders now at 1.5 million, the company said.

Aimia decided last year to pick TD Bank (TSX:TD) as the primary issuer of Visa credit cards for the Aeroplan program over CIBC, which had held that distinction for more than 20 years. CIBC contested Aimia's decision and eventually reached a deal to keep about half of its Aeroplan credit card customers.

Duchesne said that overall card spending has been ramping up as new cards are being activated, although spending by premium card holders has averaged down over the last few years.

"While we continue to see a healthy level of spend in a substantial portion of the cards being acquired by TD, the indications we have so far indicate that the remainder represent lower, though still premium, consumer spend," he said.

Aimia, which also operates or has stakes in other loyalty programs around the world, reported a sharp reduction in its net loss in the second quarter after the close of markets Wednesday, but also saw a big drop in adjusted earnings as a result of non-comparable changes in its so-called "breakage" estimates which factor in future redemption costs.

Breakage refers to estimates of the percentage of people who acquire rewards but fail to cash them in, thereby lowering the overall cost of the program.

The net loss was $18.8 million or 14 cents per share in the quarter, compared with a net loss of $415.2 million or $2.43 per share in the same 2013 period. Revenue, adjusted for breakage, was $555.4 million, compared with minus $123.3 million in the year-earlier period. Adjusted earnings per share were 17 cents, down from 53 cents in the 2013 period.

Aimia (TSX:AIM) said it still sees a lot of opportunity for growth in the sector however, noting that 90 per cent of Canadians have a membership in at least one loyalty program, with the average household belonging to more than eight programs, yet only 50 per cent of household expenditures being captured by Canadian loyalty programs.

"This represents an opportunity of around a billion dollars a year," Duchesne said.

Aimia also said it has inked a deal with Continente, Portugal's leading retailer from Sonae Group, to help it better understand the needs of its customers through its loyalty program, Continente card. It also mark's Aimias Intelligent Shoppers Solutions business entry into a new European market.

Aimia Inc. is a global leader in loyalty rewards management, employing more than 4,300 people in 20 countries worldwide. It owns and operates Aeroplan, Canada's premier coalition loyalty program, Nectar, the United Kingdom's largest coalition loyalty program, Nectar Italia, Italy's largest coalition program and has stakes in many others around the world.

On the Toronto stock market Thursday, shares in Aimia closed down 59 cents, ior 3.07 per cent, at $18.64.

  • Rate this Rate This Star Icon
  • This article has not yet been rated.
  • We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high. If you thought it was well written, do the same. If it doesn’t meet your standards, mark it accordingly.

    You can also register and/or login to the site and join the conversation by leaving a comment.

    Rate it yourself by rolling over the stars and clicking when you reach your desired rating. We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high.

Sort by: Newest to Oldest | Oldest to Newest | Most Popular 0 Commentscomment icon

You can comment on most stories on brandonsun.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

There are no comments at the moment. Be the first to post a comment below.

Post Your Commentcomment icon

Comment
  • You have characters left

The Brandon Sun does not necessarily endorse any of the views posted. Comments are moderated before publication. By submitting your comment, you agree to our Terms and Conditions. New to commenting? Check out our Frequently Asked Questions.

letters

Make text: Larger | Smaller

Election 2014
Brandon Sun Business Directory
The First World War at 100
Why Not Minot?
Welcome to Winnipeg

Social Media

Canadian Mortgage Rates