Aeroplan on the acquisition trail
Canadian loyalty marketing group Aeroplan is looking to acquire companies in countries where it does not already have a presence.
The former Air Canada subsidiary, which is now an independent publicly traded company, says it plans to either buy a minority stake in an existing frequent-flier firm, acquire a struggling company in the sector, or combine small loyalty programmes into larger coalitions.
Aeroplan CEO Rupert Duchesne said in a conference call with analysts that some companies in the sector were already offering themselves for sale.
“A lot of stuff is being brought to us at the moment, and we expect that to increase as we go through the year and into 2010,” he said.
Chief financial officer David Adams said that Aeroplan would target acquisitions in Group of 20 countries where it does not operate. Currently, the company is active in Canada, Britain (where it owns the Nectar multi-partner scheme), the United Arab Emirates, Qatar and Bahrain.
Adams added that there are a number of countries in the G20 that currently do not have a coalition loyalty program me operating there, which provided it with a good opportunity.
Adams aid that some countries have retailers with individual loyalty schemes, but these would benefit from being combined into larger coalitions using Aeroplan’s expertise.
In Canada, Aeroplan’s partners include retailers, credit card companies and airline Air Canada.
To pay for acquisitions, Aeroplan will use its surplus cash and borrow against its EBITDA (earnings before interest, taxes, depreciation and amortization), CEO Duchesne said.
The company’s hares have recently fallen to C$8, having been worth C$20 a year ago. This week it reported a 45% fall in Q1 profits, but said it expects to see an improvement in its results as the economy turns around. The company says suitable international acquisitions would help to diversify its revenue base.
Aeroplan says the recession has had little impact on the collection or redemption of loyalty points, and that customers do not seem to have been tempted to use their points because of difficult times.