AIMIA

AIMIA

November 13, 2009 01:30 ET

Groupe Aeroplan Inc. Reports 2009 Third Quarter Results

Focus continues on operational and strategic execution

MONTREAL, Nov. 13 - Groupe Aeroplan Inc. (the "Corporation") (TSX: AER), today reported its 2009 third quarter results.

Third Quarter 2009 Operating Highlights

- Gross Billings on a constant currency basis down 3%, in line with
      macro-economic indicators, despite depressed average spend per active
      card affecting financial partners.
    - Secured multi-year agreement with the National Automobile, Aerospace,
      Transportation and General Workers Union CAW-Canada Local 2002,
      Aeroplan Canada's first collective agreement with its customer sales
      and service agents.
    - European operations continue to execute with notable wins including
      significant progress of the Homebase partnership with the acquisition
      of more than 700,000 new members and five million unique customer
      swipes, as well as Sainsbury's 'coupon at till' scheme and new double
      earn initiative on their financial consumer products.
    - Continued execution of international expansion plans, as evidenced by
      the pending acquisition of Carlson Marketing, a privately-owned,
      US-based loyalty marketing services provider and the planned launch of
      a loyalty coalition program in Italy in 2010.

"Our results this quarter further demonstrate the flexibility and strength of our business model in the face of a severe recession," said Rupert Duchesne, President and Chief Executive Officer. "We have acquired Carlson Marketing on the strength of our balance sheet. This is not only a logical extension of our business, but also diversifies our revenue base significantly; gives us a primary position in the critical US market; and, provides a platform for global growth. It is an immediately accretive deal and generates real shareholder value."

"Despite adverse economic conditions, which have had a direct impact on our commercial partners, our business model continues to prove the resilience of loyalty, producing profitability and allowing us to maintain a strong liquidity position," said David Adams, Executive Vice President and Chief Financial Officer.

Third Quarter 2009 Financial Highlights

- Gross Billings of $335.9 million
    - Revenue of $322.6 million
    - Operating income of $42.3 million
    - Net earnings of $18.8 million
    - Adjusted EBITDA of $76.7 million*
    - Adjusted net earnings of $45.4 million*

Financial Performance (compared to Third quarter of 2008)

Gross Billings
    --------------

Consolidated gross billings for the three months ended September 30, 2009, on a constant currency basis, amounted to $344.3 million compared to $355.6 million, representing a decrease of $11.3 million or 3.2%, compared to the third quarter of 2008. Including the currency impact, gross billings amounted to $335.9 million compared to $355.6 million, representing a decrease of $19.7 million or 5.5%.

Revenue
    -------

Revenue amounted to $322.6 million for the three months ended September 30, 2009, compared to $335.0 million for the three months ended September 30, 2008, representing a decrease of $12.4 million or just under 3.7%.

Operating Income
    ----------------

For the third quarter, operating income, before amortization of accumulation partners' contracts and technology, amounted to $62.4 million, compared to $68.4 million for the three months ended September 30, 2008, representing a reduction of $6.0 million.

Net Earnings
    ------------

Net earnings of $18.8 million for the quarter, compared to $35.0 million for the comparative period of 2008, reflecting an increase in the effective tax rate for the quarter, explained by the fact that included in earnings for the third quarter of 2008, were certain non-taxable acquisition related adjustments attributable to LMG.

Liquidity
    ---------

At the end of the third quarter 2009, the Corporation had $615.8 million of cash and cash equivalents and $23.9 million of short-term investments, for a total of $639.7 million including the Aeroplan Canada redemption reserve of $400 million.

Adjusted EBITDA* and Free Cash Flow*
    ----------------------------------------

Adjusted EBITDA for the three months ended September 30, 2009 amounted to $76.7 million, which represents 22.8% of Gross Billings, compared to $79.4 million generated during the third quarter of 2008 or 22.3 % of Gross Billings.

Free cash flow amounted $44.0 million, compared to $115.9 million for the three month period ended September 30, 2008, mainly as a result of:

- a $65.9 million decrease in cash provided by operating activities
      quarter over quarter, consisting of a $16.2 million decline in net
      earnings and a reduction of $49.7 million in non-cash adjustments to
      earnings and working capital, compared to the third quarter of 2008,
      mainly attributable to the payment of income tax instalments and the
      decline in Gross Billings during the quarter;
    - dividends of $25.0 million paid during the third quarter of 2009
      compared to distributions of $14.0 million during the comparative
      quarter of 2008, representing the last distribution paid by the Fund;
      and,
    - a $5.0 million reduction in capital expenditures during the third
      quarter of 2009 compared to the third quarter of 2008, partially
      offsetting the effect of lower net earnings.

Outlook for 2009

Assuming current economic conditions prevail and absent out of the ordinary events, Groupe Aeroplan would expect to see a decline of approximately 4% in consolidated gross billings, for the full year 2009, as compared to 2008. In addition, for 2009, the Corporation expects the Average Cost of Rewards per Mile Redeemed, under the Aeroplan Program, to remain in the low nineties for the remainder of the year and not to exceed 0.95 cents on an annual basis throughout 2010, with gross margin in the Canadian segment remaining relatively stable.

The outlook provided constitutes forward-looking statements within the meaning of applicable securities laws and should be read in conjunction with the section below entitled "Caution Concerning Forward-Looking Statements".

Corporate Developments

Dividend
    --------

The Corporation also announced today that the Board of Directors declared a quarterly dividend of $0.125 per common share, payable on December 14, 2009 to shareholders of record at the close of business on November 30, 2009.

Executive Appointments
    ----------------------

Groupe Aeroplan-Europe

On November 9, 2009, the Corporation announced the appointment of David Johnston to the position of President and Chief Executive Officer, Groupe Aeroplan-Europe and Executive Vice President, Groupe Aeroplan. Based in London, Mr. Johnston will have leadership responsibility for Groupe Aeroplan's current Europe-based businesses. His role will exclude leadership responsibility for any Carlson Marketing businesses. Joining the company on January 11, 2010, he will report directly to Rupert Duchesne, President and Chief Executive Officer of Groupe Aeroplan. With this appointment, Mr. Johnston will become a member of the Groupe Aeroplan Management Board, as well as a member of the Groupe Aeroplan European Advisory Board.

Also joining the European Advisory Board will be Ian Filby, formerly Trading Director, Boots, the United Kingdom's largest pharmacy and beauty chain, who has been supporting Groupe Aeroplan-Europe as Interim Chief Executive Officer since July 2009.

Air Miles Middle East

On October 28, 2009, the Corporation announced the appointment of Mark Mortimer-Davies to the role of Chief Executive Officer of Air Miles Middle East, the leading coalition loyalty program in the UAE, Qatar and Bahrain.

After serving as Chief Executive Officer of Air Miles Middle East for seven years, Dave Battiston has been promoted to the role of Managing Director, International Retail Programs, Groupe Aeroplan-Europe, based in London. Battiston will be responsible for exploring new coalition business opportunities with retailers in major global loyalty markets.

Acquisition of Carlson Marketing
    --------------------------------

On November 3, 2009, the Corporation announced that it has entered into an agreement with Carlson Companies, Inc. (CCI) to purchase Carlson Marketing, a privately-owned, US-based loyalty marketing services provider for a net purchase price of US$175.3 million (Cdn$188.0 million), including transaction costs of US$6.5 million (Cdn$7.0 million) and subject to certain working capital adjustments. In addition, Groupe Aeroplan expects to incur one-time costs of approximately US$15 million (Cdn$16.0 million), primarily related to the migration of technology infrastructure in the US out of CCI's systems. The acquisition is subject to customary closing conditions and standard antitrust approvals in the United States and Canada. The transaction is expected to close by early December 2009, and will be financed with cash on hand and bank facilities.

Labour Relations
    ----------------

On October 30, 2009, the Corporation announced that Aeroplan Canada Inc. reached a three-year agreement with the National Automobile, Aerospace, Transportation and General Workers Union CAW-Canada Local 2002 that represents Aeroplan customer sales and service agents. The collective agreement, which will be effective November 15, 2009, was ratified by 67 per cent of voters.

Issuance of Senior Secured Notes
    --------------------------------

On August 27, 2009, the Corporation issued an aggregate of $150 million principal amount of 7.9% Senior Secured Notes Series 2, maturing on September 2, 2014.

Net proceeds from the offering were used as follows: $100,000,000 for the prepayment of the bank bridge facility entered into on June 12, 2009; $25,000,000 for the repayment of a portion of the amount outstanding under the bank term facility entered into on June 12, 2009; and the balance for general corporate purposes.

Air Canada Financing
    --------------------

On July 30, 2009 Aeroplan Canada Inc. entered into a credit agreement with Air Canada and other parties pursuant to which it advanced $150 million of a total of $600 million to the airline for a 5-year term, repayable starting in August 2010 and ending in July 2014. As part of this credit agreement, Aeroplan and Air Canada agreed to mutually beneficial commercial terms, none of which negatively affect the availability of capacity for redemptions and pricing applicable to the purchase of Aeroplan Miles or reward travel seats.

Recent Developments

Partnerships

Astral Media Radio, Canada
    --------------------------

On November 2, 2009, Aeroplan and Astral Media Radio announced the signing of an exclusive multi-year Business-to-Business agreement. The new program will reward Astral Media Radio's direct radio and web clients with Aeroplan Miles when they purchase airtime and web space. Astral Media's more than 20,000 existing and new direct clients can benefit from this program that will be offered to direct advertisers of Astral's 83 radio stations in 45 communities across the country.

Continental Airlines
    --------------------

On October 27, 2009, Aeroplan announced the addition of Continental Airlines to its growing roster of travel partners allowing Aeroplan Members to accumulate and redeem Aeroplan Miles for travel with Continental.

Imperial Oil, Canada
    --------------------

On October 15, 2009, Aeroplan announced the renewal of its agreement with Imperial Oil, which will enable members of the Aeroplan Program to continue earning miles on the purchase of gas, car washes and convenience store items at participating Esso-branded stations across Canada.

Sobeys, Canada
    --------------

On September 23, 2009, Aeroplan announced the expansion of its partnership with Sobeys Inc. to include more than 20 Thrifty Foods stores in British Columbia. Aeroplan Members can earn miles by joining Club Thrifty Foods and auto-converting their Club Thrifty Foods points into Aeroplan Miles.

Katz Group Canada
    -----------------

On August 13, 2009, Aeroplan signed a multi-year agreement with Katz Group Canada that enables members of the Aeroplan Program to earn miles on purchases at more than 130 Rexall and Rexall Pharma Plus stores in Manitoba, Saskatchewan, Alberta, British Columbia, Northwest Territories and four stores in Thunder Bay, Ontario.

Promotions

"Mile Maximizer"
    ----------------

On October 1, 2009, Aeroplan launched the "Mile Maximizer", the biggest Bonus Aeroplan Miles offer in the program's history which allows Aeroplan Members to earn more than 4 miles per dollar spent when they use their eligible CIBC or American Express Aeroplan-affiliated financial card for purchases with aircanada.com, Avis, Delta Hotels and Resorts and Fairmont Hotels & Resorts. This promotion will run until December 20, 2009.

Corporate Social Responsibility

Copenhagen Communiqué
    ---------------------

Together with over 500 companies based in over 60 countries, Groupe Aeroplan has endorsed the Copenhagen Communiqué on Climate Change, a statement from the international business community for an ambitious, robust and equitable global deal on climate change.

World Car-free Day
    ------------------

To celebrate World Car-free Day, Aeroplan matched all miles redeemed for carbon offsets by 25 per cent instead of the regular 20 per cent, between September 21 and 30, 2009.

On the occasion of World Car-free Day, Aeroplan also announced the addition of Toronto city monthly transit passes and carbon offsets on car rentals to its roster of eco-friendly rewards available at aeroplan.com.

Non-GAAP Measures

In order to provide a better understanding of the results, the following terms are used:

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization

EBITDA adjusted for certain factors particular to the business, such as changes in deferred revenue and Future Redemption Costs ("Adjusted EBITDA"), is used by management to evaluate performance, and to measure compliance with debt covenants. Management believes Adjusted EBITDA assists investors in comparing the Corporation's performance on a consistent basis without regard to depreciation and amortization, which are non-cash in nature and can vary significantly depending on accounting methods and non-operating factors such as historical cost.

Adjusted EBITDA is not a measurement based on GAAP, is not considered an alternative to operating income or net income in measuring performance, and is not comparable to similar measures used by other issuers. For a reconciliation to GAAP, please refer to the SUMMARY OF CONSOLIDATED OPERATING RESULTS AND RECONCILIATION OF EBITDA, ADJUSTED EBITDA, ADJUSTED NET EARNINGS AND FREE CASH FLOW included in the attached schedule. Adjusted EBITDA should not be used as an exclusive measure of cash flow because it does not account for the impact of working capital growth, capital expenditures, debt repayments and other sources and uses of cash, which are disclosed in the statements of cash flows.

Adjusted Net Earnings

Net earnings in accordance with GAAP adjusted for Amortization of Accumulation Partners' contracts and technology; Change in deferred revenue, Change in Future Redemption Costs and the income tax effect thereon calculated at the effective income tax rate as reflected in the statement of operations, provides a measurement of profitability calculated on a basis consistent with Adjusted EBITDA.

Adjusted Net Earnings is not a measurement based on GAAP, is not considered an alternative to net earnings in measuring profitability, and is not comparable to similar measures used by other issuers. For a reconciliation to GAAP, please refer to the SUMMARY OF CONSOLIDATED OPERATING RESULTS AND RECONCILIATION OF EBITDA, ADJUSTED EBITDA, ADJUSTED NET EARNINGS AND FREE CASH FLOW included in the attached schedule.

Standardized Free Cash Flow ("Free Cash Flow")

Free Cash Flow is a non-GAAP measure recommended by the CICA in order to provide a consistent and comparable measurement of free cash flow across entities of cash generated from operations and is used as an indicator of financial strength and performance.

Free Cash Flow is defined as cash flows from operating activities, as reported in accordance with GAAP, less adjustments for:

(a) total capital expenditures as reported in accordance with GAAP; and
    (b) dividends, when stipulated, unless deducted in arriving at cash flows
        from operating activities.

For a reconciliation to cash flows from operations please refer to the SUMMARY OF CONSOLIDATED OPERATING RESULTS AND RECONCILIATION OF EBITDA, ADJUSTED EBITDA, ADJUSTED NET EARNINGS AND FREE CASH FLOW included in the attached schedule.

EBITDA and Free Cash Flow are non-GAAP measurements recommended by the CICA in accordance with the draft recommendations provided in their February 2008 publication, Improved Communications with Non-GAAP Financial Measures - General Principles and Guidance for Reporting EBITDA and Free Cash Flow.

Quarterly Investor Conference Call/Audio Webcast

Groupe Aeroplan Inc. will hold an analyst call at 10:00 a.m. ET on Friday November 13, 2009 to discuss its 2009 third quarter results. The call may be accessed by dialing toll free: 1-877-974-0449 or 416-644-3424 for the Toronto area. The call will be simultaneously audio webcast at: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2815120.

An archive of the audio webcast will be available at: http://www.groupeaeroplan.com/pages/invEvents.php for ninety days following the original broadcast.

The unaudited consolidated financial statements, the MD&A and a slide presentation will be accessible on the investor relations website at www.groupeaeroplan.com under Financial Results.

About Groupe Aeroplan Inc.

Groupe Aeroplan Inc. is a leading international loyalty management corporation. Groupe Aeroplan owns Aeroplan, Canada's premier loyalty program and Nectar, the United Kingdom's leading coalition loyalty program. In the Gulf Region, Groupe Aeroplan owns 60 per cent of Rewards Management Middle East, the operator of Air Miles programs in the United Arab Emirates, Qatar and Bahrain. Groupe Aeroplan also operates LMG Insight & Communication, a customer-driven insight and data analytics business offering international services to retailers and their suppliers.

For more information about Groupe Aeroplan, please visit www.groupeaeroplan.com.

Caution Concerning Forward-Looking Statements

Certain statements in this news release may contain forward-looking statements. Forward-looking statements, by their nature, are based on assumptions and are subject to important risks and uncertainties. Any forecasts or forward-looking predictions or statements cannot be relied upon due to, amongst other things, changing external events and general uncertainties of the business and its corporate structure. Results indicated in forward-looking statements may differ materially from actual results for a number of reasons, including without limitation, risks related to the business and the industry, Air Canada liquidity issues, dependency on top four Accumulation Partners that purchase loyalty marketing services including Aeroplan Miles, Air Canada or travel industry disruptions, Airline industry changes and increased airline costs, reduction in activity, usage and accumulation of Aeroplan Miles, retail market/economic downturn, greater than expected redemptions for rewards, industry competition, supply and capacity costs, unfunded Future Redemption Costs, failure to safeguard databases and consumer privacy, consumer privacy legislation, changes to the Aeroplan and Nectar Programs, seasonal nature of the business, other factors and prior performance, regulatory matters, VAT appeal, reliance on key personnel, labour relations and pension liability, technological disruptions and inability to use third party software, failure to protect intellectual property rights, currency fluctuations, interest rate and currency fluctuations, leverage and restrictive covenants in current and future indebtedness, dilution of Groupe Aeroplan shareholders, uncertainty of dividend payments, level of indebtedness - refinancing risk, managing growth as well as the other factors identified throughout the MD&A. The forward-looking statements contained herein represent Groupe Aeroplan's expectations as of November 12, 2009, and are subject to change after that date. However, Groupe Aeroplan disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

----------------------
    * See Non-GAAP measures below.


    SUMMARY OF CONSOLIDATED OPERATING RESULTS AND RECONCILIATION OF EBITDA,
          ADJUSTED EBITDA, ADJUSTED NET EARNINGS AND FREE CASH FLOW

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (in thousands, except
     miles, share and per
     share information)         Three months ended        Nine months ended
    (unaudited)                    September 30,             September 30,
                            -------------------------------------------------
                            -------------------------------------------------
                                 2009         2008         2009         2008
                            -------------------------------------------------
                                    $            $            $            $
    -------------------------------------------------------------------------
    Gross Billings from
     the sale of Aeroplan
     Miles                    335,882      355,603      999,962    1,056,111
    -------------------------------------------------------------------------
    Aeroplan Miles revenue    303,181      313,319      951,325      968,184
    Other revenue              19,467       21,635       60,662       59,713
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total revenue             322,648      334,954    1,011,987    1,027,897
    Cost of rewards          (187,994)    (191,033)    (616,084)    (606,853)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Gross margin              134,654      143,921      395,903      421,044
    Selling, general and
     administrative
     expenses                 (67,761)     (71,027)    (202,528)    (205,165)
    Depreciation and
     amortization              (4,494)      (4,472)     (14,558)     (14,142)
    -------------------------------------------------------------------------
    Operating income
     before amortization
     of Accumulation
     Partners' contracts
     and technology            62,399       68,422      178,817      201,737
    -------------------------------------------------------------------------
    Depreciation and
     amortization               4,494        4,472       14,558       14,142
    -------------------------------------------------------------------------
    EBITDA(1)                  66,893       72,894      193,375      215,879
    -------------------------------------------------------------------------
    Adjustments:
      Change in deferred
       revenue
        Gross billings
         from the sale
         of Aeroplan Miles    335,882      355,603      999,962    1,056,111
        Aeroplan Miles
         revenue             (303,181)    (313,319)    (951,325)    (968,184)
      Change in Future
       Redemption Costs(2)    (22,888)     (35,812)     (30,784)     (67,744)
        (Change in Net
         Aeroplan Miles
         outstanding x
         Average Cost of
         Rewards per Mile
         for the period)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Subtotal of
     Adjustments                9,813        6,472       17,853       20,183
    -------------------------------------------------------------------------
    Adjusted EBITDA(1)         76,706       79,366      211,228      236,062
    -------------------------------------------------------------------------
    Net earnings in
     accordance with GAAP      18,756       34,956       68,730      108,542
    Weighted average
     number of shares     199,462,480  199,383,818  199,423,366  199,395,277
    Earnings per share           0.09         0.18         0.34         0.54
    -------------------------------------------------------------------------
    Net earnings in
     accordance with GAAP      18,756       34,956       68,730      108,542
    Amortization of
     Accumulation
     Partners' contracts
     and technology            20,079       22,636       60,279       68,002
    Subtotal of
     Adjustments
     (from above)               9,813        6,472       17,853       20,183
    Effective tax rate(3)        33.0%        12.9%        27.6%         4.7%
    Tax on adjustments at
     the effective rate        (3,243)        (835)      (4,935)        (949)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Adjusted net
     earnings(4)               45,405       63,229      141,927      195,778
    Adjusted net earnings
     per share                   0.23         0.32         0.71         0.98
    -------------------------------------------------------------------------
    Cash flow from
     operations                75,193      141,078      181,024      257,669
    Maintenance Capital
     Expenditures              (6,182)     (11,212)     (20,169)     (24,635)
    Dividends                 (24,997)     (13,998)     (74,991)     (97,986)
    -------------------------------------------------------------------------
    Free cash flow(4)          44,014      115,868       85,864      135,048
    -------------------------------------------------------------------------
    Total dividends
     declared                  24,997            -       74,991       83,988
    Total dividends
     declared/share             0.125            -        0.375        0.421
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (in thousands, except
     miles, share and per
     share information)                                        %Variation
    (unaudited)                                    --------------------------
                                                   --------------------------
                                                             Q3          YTD
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Gross Billings from
     the sale of Aeroplan
     Miles                                                 (5.5)        (5.3)
    -------------------------------------------------------------------------
    Aeroplan Miles revenue                                 (3.2)        (1.7)
    Other revenue                                         (10.0)         1.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total revenue                                          (3.7)        (1.5)
    Cost of rewards                                        (1.6)         1.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Gross margin                                           (6.4)        (6.0)
    Selling, general and
     administrative
     expenses                                              (4.6)        (1.3)
    Depreciation and
     amortization                                           0.5          2.9
    -------------------------------------------------------------------------
    Operating income
     before amortization
     of Accumulation
     Partners' contracts
     and technology                                        (8.8)       (11.4)
    -------------------------------------------------------------------------
    Depreciation and
     amortization                                           0.5          2.9
    -------------------------------------------------------------------------
    EBITDA(1)                                              (8.2)       (10.4)
    -------------------------------------------------------------------------
    Adjustments:
      Change in deferred
       revenue
        Gross billings
         from the sale
         of Aeroplan Miles
        Aeroplan Miles
         revenue
      Change in Future
       Redemption Costs(2)
        (Change in Net
         Aeroplan Miles
         outstanding x
         Average Cost of
         Rewards per Mile
         for the period)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Subtotal of
     Adjustments
    -------------------------------------------------------------------------
    Adjusted EBITDA(1)                                     (3.4)       (10.5)
    -------------------------------------------------------------------------
    Net earnings in
     accordance with GAAP
    Weighted average
     number of shares
    Earnings per share
    -------------------------------------------------------------------------
    Net earnings in
     accordance with GAAP                                 (46.3)       (36.7)
    Amortization of
     Accumulation
     Partners' contracts
     and technology
    Subtotal of
     Adjustments
     (from above)
    Effective tax rate(3)
    Tax on adjustments at
     the effective rate
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Adjusted net
     earnings(4)                                          (28.2)       (27.5)
    Adjusted net earnings
     per share
    -------------------------------------------------------------------------
    Cash flow from
     operations                                           (46.7)       (29.7)
    Maintenance Capital
     Expenditures
    Dividends
    -------------------------------------------------------------------------
    Free cash flow(4)                                     (62.0)       (36.4)
    -------------------------------------------------------------------------
    Total dividends
     declared
    Total dividends
     declared/share
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) A non-GAAP measurement, excluding the effect of the "Foreign
        Exchange" line of the Statement of Operations, as it reflects the
        impact of the currency swap.
    (2) The per unit cost derived from this calculation is retroactively
        applied to all prior periods with the effect of revaluing the Future
        Redemption Cost liability
        on the basis of the latest available average unit cost.
    (3) Effective tax rate calculated as follows: income tax expense per the
        statement of operations/earnings before income taxes for the period.
    (4) A non-GAAP measurement.


                         SUMMARY OF QUARTERLY RESULTS

    This section includes sequential quarterly data for the seven quarters
    ended September 30, 2009.

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (in thousands,
     except per
     share amounts)                                   2009
    -------------------------------------------------------------------------
    (unaudited)                              Q3           Q2           Q1
                                              $            $            $
    -------------------------------------------------------------------------
    Gross Billings                      335,882      337,832      326,248
    -------------------------------------------------------------------------
    Aeroplan Miles
     revenue                            303,181      312,400      335,744
    Other revenue                        19,467       21,115       20,080
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total revenue                       322,648      333,515      355,824
    Cost of rewards                    (187,994)    (201,728)    (226,362)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Gross margin                        134,654      131,787      129,462
    Selling, general
     and administrative
     expenses                           (67,761)     (68,626)     (66,141)
    Depreciation and
     amortization                        (4,494)      (5,127)      (4,937)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Operating income
     before amortization
     of Accumulation
     Partners' contracts
     and technology                      62,399       58,034       58,384
    Amortization of
     Accumulation
     Partners' contracts
     and technology                     (20,079)     (20,485)     (19,715)
    -------------------------------------------------------------------------
    Operating income                     42,320       37,549       38,669
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings (loss)                  18,756       26,746       23,228
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Adjusted EBITDA(1)                   76,706       70,564       65,228 (4)
    -------------------------------------------------------------------------
    Adjusted net
     earnings(1)                         45,405       52,254       44,551
    -------------------------------------------------------------------------
    Net earnings                         18,756       26,746       23,228
    Earnings per share                     0.09         0.13         0.12
    -------------------------------------------------------------------------
    Free cash flow(1)                    44,014       90,841      (48,991)
    -------------------------------------------------------------------------
    Earnings per share,
     in accordance with
     GAAP                                  0.09         0.13         0.12
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (in thousands,
     except per
     share amounts)                              2008
    -------------------------------------------------------------------------
    (unaudited)                 Q4           Q3           Q2           Q1
                                 $            $            $            $
    -------------------------------------------------------------------------
    Gross Billings         364,437      355,603      357,858      342,650
    -------------------------------------------------------------------------
    Aeroplan Miles
     revenue               409,552      313,319      317,579      337,286
    Other revenue           20,780       21,635       19,149       18,929
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total revenue          430,332      334,954      336,728      356,215
    Cost of rewards       (252,229)    (191,033)    (192,593)    (223,227)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Gross margin           178,103      143,921      144,135      132,988
    Selling, general
     and administrative
     expenses              (66,426)     (71,027)     (69,627)     (64,511)
    Depreciation and
     amortization           (6,494)      (4,472)      (4,998)      (4,672)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Operating income
     before amortization
     of Accumulation
     Partners' contracts
     and technology        105,183       68,422       69,510       63,805
    Amortization of
     Accumulation
     Partners' contracts
     and technology        (19,836)     (22,636)     (22,688)     (22,678)
    -------------------------------------------------------------------------
    Operating income        85,347       45,786       46,822       41,127
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings (loss) (1,073,752)(2)   34,956       31,454       42,132
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Adjusted EBITDA(1)      80,559 (4)   79,366 (4)   81,856 (4)   73,267 (4)
    -------------------------------------------------------------------------
    Adjusted net
     earnings(1)            84,661 (3)   63,229       60,822       69,971
    -------------------------------------------------------------------------
    Net earnings            86,948 (3)   34,956       31,454       42,132
    Earnings per share        0.44 (3)     0.18         0.16         0.21
    -------------------------------------------------------------------------
    Free cash flow(1)       42,492      115,868       43,636      (24,456)
    -------------------------------------------------------------------------
    Earnings per share,
     in accordance with
     GAAP                    (5.39)        0.18         0.16         0.21
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) A non-GAAP measurement.
    (2) Includes impairment charge.
    (3) Excludes impairment charge.
    (4) A non-GAAP measurement, excluding the effect of the "Foreign
        Exchange" line of the Statement of Operations, as it reflects the
        impact of the currency swap.

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