BUSINESS
08/03/2018 12:08 EDT | Updated 08/03/2018 12:11 EDT

Porter Airlines Partners With Aeroplan

Aeroplan's future has been in doubt since Air Canada announced its own loyalty program last year.

A Porter Airlines plane lands next to a taxiing plane at Toronto's Island Airport, Friday, Nov. 13, 2015. Aimia and Porter regional airline have formed a new Aeroplan partnership, to take effect July 2020.
A Porter Airlines plane lands next to a taxiing plane at Toronto's Island Airport, Friday, Nov. 13, 2015. Aimia and Porter regional airline have formed a new Aeroplan partnership, to take effect July 2020.

TORONTO — Aimia Inc. says it remains open to negotiating a fair deal for the purchase of its Aeroplan loyalty program by Air Canada and its partners despite striking a deal with Toronto-based Porter Airlines and holding discussions with the Oneworld airline alliance.

"We never stop negotiating. Should the consortium want to engage with us in a constructive dialogue, we would be happy to entertain that," Aimia CEO Jeremy Rabe said Friday during a conference call.

"At the same time, we feel very confident about our future plans. So either or, we're happy to go down either path."

Rabe insisted that Aimia didn't reject the Air Canada group's offer, but said it was very conditional and didn't fairly value the business.

The future of Aeroplan, which has more than five million members, has been in doubt since Air Canada announced in May 2017 that it planned to launch its own loyalty rewards plan in 2020.

Under a new deal announced Friday,Toronto-based Porter would become a preferred Canadian airline for the Aeroplan loyalty points program as of July 2020, when the current arrangement with Air Canada ends.

The privately owned airline, which has its main hub on the Billy Bishop airport on one of the islands near Toronto's downtown, currently serves Toronto, Ottawa, Montreal and other Canadian cities from St. John's, NL to Thunder Bay, Ont. as well as U.S. destinations including the New York City area, Chicago, Boston and Washington, D.C..

"This is a unique opportunity for Porter to join a well-established travel loyalty program and, in the future, reach its vast member base to aggressively promote our airline," said Michael Deluce, Porter's chief commercial officer.

The Canadian Press Images/Larry MacDougal
A Porter Airlines aircraft passes buildings in downtown Toronto as it prepares to land at Billy Bishop Toronto City Airport, Wed. Oct. 18, 2017.

Under terms of the deal, Porter's existing VIPorter loyalty points will be converted into Aeroplan miles.

Porter's fleet of aircraft is only a fraction the size of Air Canada's, but Aimia has also been in discussions with the Oneworld airline alliance, whose members include British Airways, American Airlines and Cathay Pacific.

Those partnerships would give Aeroplan members new options when the loyalty program's current deal with Air Canada expires in 2020.

Earlier on HuffPost Canada:


Aimia's shares increased nearly 10 per cent to $3.80 in Friday morning trading on the Toronto Stock Exchange.

There remains a reasonable likelihood that Aimia will reach an agreement to be bought out by Air Canada given the high uncertainty in transitioning Aeroplan through 2020, said Drew McReynolds of RBC Capital Markets.

"We also believe the difference in the perceived value of Aeroplan among the parties is not overly material to the consortium yet meaningful to the value of Aimia," he wrote in a report.

'Making solid progress'

Shortly before announcing the Porter agreement, Aimia reported that spending on Aeroplan credit cards remained strong in the second quarter and the company is "making solid progress" on streamlining its business.

The Montreal-based company also announced that its continuing operations had a net profit of $11.1 million or four cents per share in the second quarter, with revenue up 3.9 per cent to $375.4 million.

That contrasted with a year-earlier net loss of $25.1 million or 22 cents per share from continuing operations, or 18 cents per share if discontinued operations were included, with $361.3 million in the second quarter of 2017.