The Canadian Press - ONLINE EDITION

Aeroplan overhaul working well, growth expects:Aimia

  • Print

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.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Bombers This Week: Huge game against Lions

View more like this

Photo Store Gallery

  • Marc Gallant/Winnipeg Free Press. Local- Korea Veterans Association stained glass window at Deer Lodge Centre. Dedication with Minister of Veterans Affairs Dr. Rey Pagtakhan. March 12, 2003.
  • Two Canada geese fly Wednesday afternoon at Oak Hammock Marsh- Front bird is banded for identification- Goose Challenge Day 3- - Apr 30, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)

View More Gallery Photos

Poll

Should the federal government be able to censor how Ottawa is portrayed in the CMHR?

View Results

Ads by Google