Air Canada hopes loyalty program will attract new investors
MONTREAL— Air Canada’s move to launch its own loyalty program in 2020 will help to attract more foreign investors and narrow the value gap with its American rivals, CEO Calin Rovinescu said Monday.
Air Canada said it is negotiating with potential credit card partners and expects to announce a decision by year-end. The airline served notice last year that it does not plan to renew its 30-plus-year partnership with Aimia Inc.-operated Aeroplan when the current contract ends in 2020.
Rovinescu said the industry as a whole isn’t fully rewarded because past airline bankruptcies on both sides of border made such investments risky.
But he said its decision not to renew its Aeroplan partnership will deliver up to about $2.5 billion of value for investors.
“That can actually go a long way to eliminating that multiple differential that exists with the U.S. carriers,” he said at the annual meeting in response to a shareholder’s question.
Part of the differential is due to the higher cost of doing business in Canada because of the fee and charges that U.S. airlines don’t face operating out of its airports.
Chief financial officer Michael Rousseau added that the share multiple gap should also be helped as it attracts more investors from the U.S., Europe and Asia. Currently, 42 per cent of its shareholders are from outside of Canada.
Air Canada said it is preparing to deploy its Rouge low-cost airplanes this summer on transcontinental routes to Western Canada in order to compete with ultra-low-cost rivals.
The routes will be between Montreal and Victoria, along with Toronto to Nanaimo and Kamloops, B.C., starting in June.
Air Canada reported a smaller-than-expected loss in its first quarter as its revenue grew compared with a year ago, boosted by increased capacity and passenger traffic.