Air Canada to launch own loyalty program; shares soar

(Adds details, updates shares to close)

Shares of Canada’s biggest carrier closed up 10.5 percent at
C$16.46, while those of Aimia Inc, which owns and
operates Aeroplan, ended down 62.7 percent at C$3.33 on
Thursday.

Aimia’s shares plunged as much as 65 percent to a record low
of C$3.13 during regular trading.

The contract with Aimia will be in effect until June 29,
2020, and miles earned from Air Canada and Star Alliance flights
will be credited to the new program after that, Air Canada said.

Aimia in its quarterly earnings report on Wednesday had said
the “tenor” of its discussions with Air Canada indicated that
the carrier would not renew its partnership with Aeroplan.

Air Canada, which started Aeroplan in 1984 as an incentive
program for frequent flyers, spun it off in 2002.

“Aeroplan’s pending reformulation will inevitably see it
lose its point of differentiation and has implications not only
for members but also financial card partners whose contracts
will still continue through 2024,” National Bank Financial
analyst Adam Shine wrote.

Air Canada said it would provide greater detail at its
Investor Day on Sept. 19 about the expected financial benefits
and costs involved in the transition.

The move “greatly improves” Air Canada’s ability to manage
its revenue, analysts at AltaCorp Capital said in a client note.

Air Canada said last week that it had not ruled out
expanding its own discounted offering to take on the new ultra
low-cost carrier planned by smaller rival WestJet Airlines
.

(Reporting by John Benny in Bengaluru; Additional reporting by
Anya George Tharakan; Editing by Martina D’Couto and Sriraj
Kalluvila)