Not a good day for Aimia
Nov 13, 2015, 7:51 am
#1
Original Poster
Join Date: Mar 2008
Location: Toronto, Canada
Programs: Aeroplan, Bonvoy, Alaska, Avios
Posts: 1,290
Not a good day for Aimia
http://business.financialpost.com/in...by-end-of-year
MONTREAL — The company that runs Aeroplan in Canada and other customer loyalty programs around the world says its third-quarter results were weaker than anticipated and it’s planning a second round of cost-cutting measures.
Montreal-based Aimia Inc. says it expects more than 200 people will exit the business by the end of 2015 and suggested more jobs may be on the line next year.
The company says it has already booked $3 million in severance expenses related to a $20-million cost-cutting plan announced in August and expects that number to reach between $10 million and $15 million by the end of December.
Aimia also says weak economic conditions in Canada and Europe during the summer quarter have spurred the company to seek a further $20 million in annualized costs savings by the end of 2016.
Related
Aeroplan operator Aimia sees a bright 2015 despite recent stock decline
Aeroplan operator Aimia Inc takes a hit from slowing Canadian economy, restructures to cut costs
“Further to these actions and to accelerate the reallocation of capital to higher margin parts of the business, Aimia has also engaged advisors to consider and evaluate potential disposals of non-core assets,” Aimia said in its third-quarter report.
The company says it has been hit by a number of factors, including lower billings from Aeroplan — which manages points that can be exchanged for Air Canada tickets and upgrades as well as other goods and services.
It says Aeroplan billings were weaker than expected due to more constrained spending on credit cards issued by its banking partners. It also found the Sainsbury’s grocery business in the United Kingdom issued fewer Nectar points than expected because of lower food prices and a change in strategy.
Aeroplan is also coping with a change in the way the credit card industry operates behind the scenes, a process that has resulted in less marketing by partners due to negotiations about interchange rates.
“We knew that 2015 would be challenging, due to, most significantly, the effects of interchange rate negotiations and the slowing economy,” Aeroplan chief executive Rupert Duchesne said in a statement.
“As the impact of some of those issues became clearer, we took decisive action and have identified $40 million of annualized cost savings to be delivered over the next two years, to counter the economic uncertainty we are experiencing.”
In the third quarter, Aimia’s gross billings wee down 8.4 per cent from a year ago, falling to $580.3 million, and revenue was down 2.6 per cent to $529.3 million. Those declines would have been even bigger if currency exchange rate were constant.
Net loss for the quarter ended Sept. 30 was $26.1 million or 20 cents per share, an increase from $24.1 million or 17 cents per share. Adjusted net earnings per common share dropped 22.2 per cent to 14 cents from 18 cents per share.
Aimia says the weak quarter has prompted it to lower some of its financial estimates for a second time this year, including a drop in gross billings to a range of $2.4 billion and $2.46 billion for 2015.
The company had already lowered the estimate on Aug. 14 to a range of between $2.46 billion and $2.51 billion, down from its Feb. 27 guidance of a range of $2.56 billion and $2.61 billion.
MONTREAL — The company that runs Aeroplan in Canada and other customer loyalty programs around the world says its third-quarter results were weaker than anticipated and it’s planning a second round of cost-cutting measures.
Montreal-based Aimia Inc. says it expects more than 200 people will exit the business by the end of 2015 and suggested more jobs may be on the line next year.
The company says it has already booked $3 million in severance expenses related to a $20-million cost-cutting plan announced in August and expects that number to reach between $10 million and $15 million by the end of December.
Aimia also says weak economic conditions in Canada and Europe during the summer quarter have spurred the company to seek a further $20 million in annualized costs savings by the end of 2016.
Related
Aeroplan operator Aimia sees a bright 2015 despite recent stock decline
Aeroplan operator Aimia Inc takes a hit from slowing Canadian economy, restructures to cut costs
“Further to these actions and to accelerate the reallocation of capital to higher margin parts of the business, Aimia has also engaged advisors to consider and evaluate potential disposals of non-core assets,” Aimia said in its third-quarter report.
The company says it has been hit by a number of factors, including lower billings from Aeroplan — which manages points that can be exchanged for Air Canada tickets and upgrades as well as other goods and services.
It says Aeroplan billings were weaker than expected due to more constrained spending on credit cards issued by its banking partners. It also found the Sainsbury’s grocery business in the United Kingdom issued fewer Nectar points than expected because of lower food prices and a change in strategy.
Aeroplan is also coping with a change in the way the credit card industry operates behind the scenes, a process that has resulted in less marketing by partners due to negotiations about interchange rates.
“We knew that 2015 would be challenging, due to, most significantly, the effects of interchange rate negotiations and the slowing economy,” Aeroplan chief executive Rupert Duchesne said in a statement.
“As the impact of some of those issues became clearer, we took decisive action and have identified $40 million of annualized cost savings to be delivered over the next two years, to counter the economic uncertainty we are experiencing.”
In the third quarter, Aimia’s gross billings wee down 8.4 per cent from a year ago, falling to $580.3 million, and revenue was down 2.6 per cent to $529.3 million. Those declines would have been even bigger if currency exchange rate were constant.
Net loss for the quarter ended Sept. 30 was $26.1 million or 20 cents per share, an increase from $24.1 million or 17 cents per share. Adjusted net earnings per common share dropped 22.2 per cent to 14 cents from 18 cents per share.
Aimia says the weak quarter has prompted it to lower some of its financial estimates for a second time this year, including a drop in gross billings to a range of $2.4 billion and $2.46 billion for 2015.
The company had already lowered the estimate on Aug. 14 to a range of between $2.46 billion and $2.51 billion, down from its Feb. 27 guidance of a range of $2.56 billion and $2.61 billion.
Nov 13, 2015, 8:05 am
#2
Join Date: Jul 2013
Location: MLL / AC Cafe
Programs: It's hard to get status when the website won't let me book flights.
Posts: 5,706
How many want to bet that this "constrained spending" is actually end users going to different programs because Aeroplan is impossible to redeem with the horrible online booking, the long phone wait times, and the CS agents who don't know what they are doing or how to book available inventory but still want to charge you an extra $30 because their website sucks so much you can't use it?
Nov 13, 2015, 8:28 am
#3
Join Date: Apr 2007
Location: Toronto, Ont., Canada
Programs: Aeroplan; Marriott Platinum; IHG Platinum; Best Western Diamond
Posts: 2,165
So they need to cut costs.
Expect longer wait times on the phone, and more website outages. Hang on, they already have more outages. But maybe not enough from management point of view.
Expect longer wait times on the phone, and more website outages. Hang on, they already have more outages. But maybe not enough from management point of view.
Nov 13, 2015, 8:54 am
#5
Join Date: Jan 2014
Location: yyz
Posts: 1,611
Constrained spending is code for: (1) "they had a good year last year when TD was cross-selling the card a whole lot and we sold a bunch of points to them, not as many now"; (2) "CIBC is de-emphasizing Aeroplan in favour of Aventura"; and (3) Amex is really hurting from having lost the Costco partnership.
Look at the slide deck...TD/CIBC are doing ok (slide 7), Amex not so much (slide 11).
http://www.aimia.com/content/dam/aim...esentation.pdf
Look at the slide deck...TD/CIBC are doing ok (slide 7), Amex not so much (slide 11).
http://www.aimia.com/content/dam/aim...esentation.pdf
Nov 13, 2015, 9:06 am
#7
Join Date: Mar 2007
Posts: 4,784
Nov 13, 2015, 9:12 am
#8
Join Date: Aug 2010
Location: YWG
Programs: Aeroplan, MileagePlus, Marriott Rewards
Posts: 2,159
How many want to bet that this "constrained spending" is actually end users going to different programs because Aeroplan is impossible to redeem with the horrible online booking, the long phone wait times, and the CS agents who don't know what they are doing or how to book available inventory but still want to charge you an extra $30 because their website sucks so much you can't use it?
Nov 13, 2015, 9:38 am
#11
Join Date: Dec 2014
Location: Canada
Posts: 822
Interesting. If they were to fail,I wonder if Air Canada would take responsibility of the aeroplan program. But then again.....why would they? They could introduce a new frequent flyer program and too bad so sad for aeroplan point holder's?
Nov 13, 2015, 9:49 am
#14
Join Date: Oct 2009
Location: YUL
Programs: AC SE (*A Gold), Bonvoy Platinum Elite, Hilton Gold, Amex Platinum / AP Reserve, NEXUS, Global Entry
Posts: 5,691
How many want to bet that this "constrained spending" is actually end users going to different programs because Aeroplan is impossible to redeem with the horrible online booking, the long phone wait times, and the CS agents who don't know what they are doing or how to book available inventory but still want to charge you an extra $30 because their website sucks so much you can't use it?
I don't know if the general public's realization that Aeroplan is absolutely useless for redemptions is a good thing or a bad thing for the future of the program.
Nov 13, 2015, 9:53 am
#15
Original Poster
Join Date: Mar 2008
Location: Toronto, Canada
Programs: Aeroplan, Bonvoy, Alaska, Avios
Posts: 1,290
I think they have hit the tipping point, the frog has realized he's being boiled and has jumped ship. They cannot turn the heat up anymore as increased fees will lose them more revenue as people leave for greener pastures.
This frog for instance is keeping his MR miles as MR miles and putting a good portion of spend in SPG. While AP has it's uses it's not the be and end all it once was.