Groupe Aeroplan Inc. Reports Results for First Quarter of 2010


    
    - Strong start to the year despite challenging global economy
    - EPS adjusted for non-comparable items of $0.19(1&2) vs. $0.12 ($0.07
      including non-comparable items vs. $0.12)
    - Revenue diversification on track with consolidation of Carlson
      Marketing and launch of Nectar Italia
    - Announces normal course issuer bid for the repurchase of up to
      5 million common shares

    First Quarter Highlights
    Three months ended March 31, 2010 vs. three months ended March 31, 2009

    - Gross Billings of $517.9 million ($527.1 million on a constant currency
      basis) vs. $346.3 million
    - Total revenue of $506.8 million ($514.6 million on a constant currency
      basis) vs. $355.8 million
    - Operating income of $24.0 million ($22.9 million on a constant currency
      basis) vs. $38.7 million
    - Adjusted EBITDA(1) of $56.0 million ($54.2 million on a constant
      currency basis) vs. $65.2 million - Adjusted EBITDA of $77.8 million
      before non-comparable items(1&2) of $23.5 million, and including the
      effect of foreign exchange
    - Net earnings of $14.9 million ($14.4 million on a constant currency
      basis) vs. $23.2 million - net earnings of $37.9 million before non-
      comparable items(1&2) of $23.5 million, and including the effect of
      foreign exchange
    
</pre>
<p/>
<p><span class="xn-location">MONTREAL</span>, <span class="xn-chron">May 11</span> /CNW Telbec/ - (TSX:AER) Groupe Aeroplan Inc. ("Groupe Aeroplan" or the "Corporation"), today reported its financial results for the first quarter ended <span class="xn-chron">March 31, 2010</span>. All financial information is in Canadian dollars unless otherwise noted.</p>
<p>"Our financial results continue to be strong in the face of a challenging global economy," said <span class="xn-person">Rupert Duchesne</span>, Groupe Aeroplan's President and Chief Executive Officer. "With our acquisition of Carlson Marketing, the launch of Nectar Italia, and our recently announced strategic investment in AeroMexico's frequent flyer program, we are not only positioning ourselves as the global leader in loyalty management, but we are also well poised to benefit as the global economy turns."</p>
<p>Added Duchesne, "2010 is an important year of transition for Groupe Aeroplan as we integrate and build on the investments made over the past 12 months. The year is off to a strong start with positive top line growth and gross margin expansion in each of our Canadian and UK coalition businesses; first quarter performance of Carlson Marketing that is right on plan; and very positive launch results from Nectar Italia."</p>
<p/>
<p>Non-Comparable Items</p>
<p/>
<p>There are several non-comparable items totalling <span class="xn-money">$23.5 million</span>, which affect SG&A this quarter, including costs of <span class="xn-money">$11.1 million</span> associated with the launch of Nectar Italia, <span class="xn-money">$10.4 million</span> in connection with the transition and migration of Carlson Marketing and <span class="xn-money">$2.0 million</span> in strategic consulting fees at the corporate level.</p>
<p/>
<p>Business Segment Results</p>
<p/>
<p>Aeroplan <span class="xn-location">Canada</span></p>
<p/>
<p>Aeroplan <span class="xn-location">Canada</span> experienced 2.6% growth in Gross Billings from the sale of Aeroplan Miles driven by an improvement in average consumer spend per active financial card, in Air <span class="xn-location">Canada</span> and in our retail segment, which was driven by an increase in retail activity, from new partner growth and from increased consumer confidence. Aeroplan Miles issued continued to outpace the growth in Aeroplan Miles redeemed. In the first quarter, gross margin improved by 50 basis points while the Adjusted EBITDA margin, as a percentage of revenue, improved by 150 basis points.</p>
<p/>
<p>Groupe Aeroplan <span class="xn-location">Europe</span></p>
<p/>
<p>Groupe Aeroplan <span class="xn-location">Europe</span> achieved top line growth on a constant currency basis, with 16% growth in Gross Billings from the sale of Nectar points driven primarily by the launch of Nectar Italia, Sainsbury's and Homebase. As a result of the launch of Nectar Italia, Gross Billings in the quarter were positively impacted by certain one-time effects consistent with a program launch. While Groupe Aeroplan Europe's gross margin increased by 270 basis points, Adjusted EBITDA was negative. This is mostly attributable to the launch of Nectar Italia, with <span class="xn-money">$11.1 million</span> of launch costs and a significant increase in the outstanding points liability, which grew in part as a result of promotional points issued in connection with the Italian launch, the timing effect of certain promotional activities in the UK, and a full quarter of SG&A related to the Italian operations. Other factors influencing Adjusted EBITDA during the quarter were: (i) added personnel costs required by the I&C business to support increased contract activity, and (ii) additional international business development expenses, which have started to pay off, as I&C has signed its first international contract with CVS Caremark. We anticipate that I&C will start generating revenue from this contract in the second half of the year.</p>
<p/>
<p>Carlson Marketing</p>
<p/>
<p>Carlson Marketing experienced year-over-year growth with Gross Billings of <span class="xn-money">$156.9 million</span>. Its Canadian operations experienced a strong rebound in demand for its services over the previous quarter. Gross margin in the quarter was 46.5% while Adjusted EBITDA margin was 5.3%. Excluding <span class="xn-money">$2.6 million</span> in migration costs, the Adjusted EBITDA was 6.9%.</p>
<p/>
<p>Cash Flow and Financial Position</p>
<p/>
<p>At <span class="xn-chron">March 31, 2010</span>, Groupe Aeroplan had <span class="xn-money">$551.6 million</span> of cash and cash equivalents, <span class="xn-money">$6.8 million</span> of restricted cash and <span class="xn-money">$11.1 million</span> of short-term investments, for a total of <span class="xn-money">$569.5 million</span>. Of this total amount approximately <span class="xn-money">$419.8 million</span> is invested in Bankers' Acceptances and term deposits maturing on various dates through to <span class="xn-chron">May 2011</span>. Groupe Aeroplan's cash and cash equivalents and short-term investments are not invested in any asset-backed commercial paper.</p>
<p>Groupe Aeroplan's Free Cash Flow was negative <span class="xn-money">$66.0 million</span> for the first quarter of 2010.</p>
<p/>
<p>Capital Expenditures</p>
<p/>
<p>Capital expenditures for the three months ended <span class="xn-chron">March 31, 2010</span>, amounted to <span class="xn-money">$9.2 million</span>. Anticipated capital expenditures, which are primarily associated with software development initiatives for fiscal 2010, are expected to approximate <span class="xn-money">$40.0 million</span> for the year.</p>
<p/>
<p>Income Taxes</p>
<p/>
<p>Income taxes include <span class="xn-money">$10.4 million</span> in current income taxes, representing an effective tax rate of 19 per cent. The increase in the effective tax rate for the quarter is explained by the fact that included in earnings for the first quarter of 2009, were certain financing costs related to the currency swap. We continue to expect the average current income tax rate for the year to be approximately 30 per cent.</p>
<p/>
<p>Normal Course Issuer Bid</p>
<p/>
<p>The Corporation announced today that its Board of Directors has authorized a Normal Course Issuer Bid to purchase up to 2.5 per cent or up to 5 million of its issued and outstanding common shares during the period from <span class="xn-chron">May 14, 2010</span> to no later than <span class="xn-chron">May 13, 2011</span>.</p>
<p/>
<p>Dividends Declared</p>
<p/>
<p>Common Shares</p>
<p/>
<p>The Board of Directors has declared a quarterly dividend of <span class="xn-money">$0.125</span> per common share, payable on <span class="xn-chron">June 30, 2010</span> to shareholders of record at the close of business on <span class="xn-chron">June 16, 2010</span>.</p>
<p/>
<p>Preferred Shares</p>
<p/>
<p>The Board has also declared a quarterly dividend in the amount of $0.40625 per Cumulative Rate Reset Preferred Share, Series 1, payable on <span class="xn-chron">June 30, 2010</span> to the holders of record at the close of business on <span class="xn-chron">June 16, 2010</span>.</p>
<p>Dividends paid by Groupe Aeroplan to Canadian residents on both its common and preferred shares are "eligible dividends" for Canadian income tax purposes.</p>
<p/>
<p>Outlook</p>
<p/>
<p>For 2010 Groupe Aeroplan anticipates Gross Billings growth ranging between 2 and 4 per cent in its legacy businesses.</p>
<p>Groupe Aeroplan expects to realize growth in consolidated Adjusted EBITDA in 2010.</p>
<p>Groupe Aeroplan expects to realize growth in Adjusted EBITDA in its legacy businesses, after adjusting for operating costs, which are not expected to recur in the future, related to: (i) the launch of the Nectar Italia program; and (ii) the effect of brand investment promotional campaigns scheduled for 2010, in the Aeroplan and Nectar UK programs.</p>
<p>During 2010, Free Cash Flow levels are expected to be reduced as a result of investments required to support future growth.</p>
<p>In Aeroplan <span class="xn-location">Canada</span>, the Average Cost of Rewards per Aeroplan Mile Redeemed is not expected to exceed 0.95 cents on an annual basis throughout 2010, with gross margin remaining relatively stable.</p>
<p>Gross Billings from Carlson Marketing are expected to approximate US$600 million in 2010, with Adjusted EBITDA in the 6% to 8% range, before one time migration costs estimated at US$26 million. The successful migration of the technology solutions in the US, out of the vendor's platforms, represents both, the biggest opportunity and risk associated to Carlson Marketing's 2010 performance. While there is an expectation that the migration will be fully completed in 2010, should the network and customer applications and the financial systems implementation extend into 2011, the associated incremental costs of migration and any additional payments that may be required under an extension to the transition services agreement, may represent up to a total of US$4 million per month.</p>
<p>Groupe Aeroplan's portion of the funding requirements for the launch of the Nectar Italia program, which will affect consolidated Adjusted EBITDA, is expected to be in the range of (euro)15 million over 2010. Nectar Italia is expected to generate annual Gross Billings in the range of (euro)60 million to (euro)80 million within three years, with annual Gross Billings in the range of (euro)30 million to (euro)40 million in 2010.</p>
<p>The current income tax rate is anticipated to approximate 30% in <span class="xn-location">Canada</span>, and there is an expectation that no significant cash income taxes will be incurred in the rest of the Corporation's foreign operations.</p>
<p>The above guidance excludes the effect of any currency fluctuations on Groupe Aeroplan's operating results.</p>
<p>The outlook provided constitutes forward-looking statements within the meaning of applicable securities laws and should be read in conjunction with the "Caution Concerning Forward-Looking Information" section.</p>
<p/>
<p>Use of Non-GAAP Financial Information</p>
<p/>
<p>In order to provide a better understanding of the results, the following terms are used:</p>
<p/>
<p>Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization</p>
<p/>
<p>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.</p>
<p>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.</p>
<p/>
<p>Adjusted Net Earnings</p>
<p/>
<p>Net earnings in accordance with GAAP adjusted for Amortization of Accumulation Partners' contracts, customer relationships 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.</p>
<p>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.</p>
<p/>
<p>Standardized Free Cash Flow ("Free Cash Flow")</p>
<p/>
<p>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.</p>
<p>Free Cash Flow is defined as cash flows from operating activities, as reported in accordance with GAAP, less adjustments for:</p>
<p/>
<pre>
    
      (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.
    
</pre>
<p/>
<p>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.</p>
<p>EBITDA and Free Cash Flow are non-GAAP measurements recommended by the CICA in accordance with the draft recommendations provided in their <span class="xn-chron">February 2008</span> publication, Improved Communications with Non-GAAP Financial Measures - General Principles and Guidance for Reporting EBITDA and Free Cash Flow.</p>
<p/>
<p>Constant Currency</p>
<p/>
<p>Because exchange rates are an important factor in understanding period to period comparisons, the presentation of various financial metrics on a constant-currency basis or after giving effect to foreign exchange translation, in addition to the reported metrics helps improve the ability to understand operating results and evaluate performance in comparison to prior periods. Constant-currency information compares results between periods as if exchange rates had remained constant period over the periods. Constant currency is calculated by calculating prior-year results using current-year foreign currency exchange rates. Results calculated on a constant-currency basis should be considered in addition to, not as a substitute for, results reported in accordance with GAAP and may not be comparable to similarly titled measures used by other companies.</p>
<p/>
<p>Q1 2010 Conference Call / Audio Webcast</p>
<p/>
<p>Groupe Aeroplan will host a conference call to discuss its first quarter 2010 financial results <span class="xn-chron">Wednesday, May 12, 2010</span> at <span class="xn-chron">8:00 a.m. ET</span>. The call can be accessed by dialling 1- 888-231-8191 or 1-647-427-7450 for the <span class="xn-location">Toronto</span> area. The call will be simultaneously audio webcast at: <a href="http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3006300">http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3006300</a>.</p>
<p>Supporting slides for the call will also be available by <span class="xn-chron">7:00 a.m. ET</span> <span class="xn-chron">Wednesday, May 12, 2010</span>. An archive of the audio webcast and a copy of the slides will be available at: <a href="http://www.groupeaeroplan.com/pages/invEvents.php">http://www.groupeaeroplan.com/pages/invEvents.php</a> for ninety days following the original broadcast.</p>
<p/>
<p>The unaudited interim consolidated financial statements, the MD&A and a financial highlights presentation will be accessible on the investor relations website at <a href="http://www.groupeaeroplan.com">www.groupeaeroplan.com</a> under Financial Results.</p>
<p/>
<p>About Groupe Aeroplan Inc.</p>
<p/>
<p>Groupe Aeroplan Inc., a global leader in loyalty management, owns Aeroplan, Canada's premier coalition loyalty program, Carlson Marketing, an international loyalty marketing services, engagement and events provider headquartered in the U.S., as well as Nectar, the United Kingdom's leading coalition loyalty program. In the Gulf Region, Groupe Aeroplan holds a 60% interest in the Air Miles <span class="xn-location">Middle East</span> programs in the <span class="xn-location">United Arab Emirates</span>, <span class="xn-location">Qatar</span> and <span class="xn-location">Bahrain</span>. Groupe Aeroplan also operates LMG Insight & Communication, a customer-driven insight and data analytics business offering international services to retailers and their suppliers, and it has a majority 75% ownership position in Nectar Italia, the first independent loyalty coalition program uniting leading retailers in <span class="xn-location">Italy</span>.</p>
<p>For more information about Groupe Aeroplan, please visit <a href="http://www.groupeaeroplan.com">www.groupeaeroplan.com</a>.</p>
<p/>
<p>Caution Concerning Forward-Looking Statements</p>
<p/>
<p>Forward-looking statements are included in this news release. These forward-looking statements are identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions. Such statements may involve but are not limited to comments with respect to strategies, expectations, planned operations or future actions. 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.</p>
<p>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 <span class="xn-location">Canada</span> liquidity issues, dependency on top accumulation partners and clients, conflicts of interest, Air <span class="xn-location">Canada</span> or travel industry disruptions, airlines industry changes and increased airline costs, retail market/economic downturn, greater than expected redemptions for rewards, industry competition, integration of Carlson Marketing, supply and capacity costs, unfunded future redemption costs, failure to safeguard databases and consumer privacy, consumer privacy legislation, changes to loyalty programs, seasonal nature of the business, other factors and prior performance, regulatory matters, legal proceedings, reliance on key personnel, labour relations, pension liability, technological disruptions and inability to use third party software, failure to protect intellectual property rights, interest rate and currency fluctuations, leverage and restrictive covenants in current and future indebtedness, dilution of shareholders, uncertainty of dividend payments, level of indebtedness-refinancing risk, managing growth, credit ratings, as well as the other factors identified throughout Groupe Aeroplan's public disclosure record on file with the Canadian securities regulatory authorities.</p>
<p>The forward-looking statements contained herein represent Groupe Aeroplan's expectations as of <span class="xn-chron">May 11, 2010</span>, and are subject to change after such 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.</p>
<p/>
<pre>
    
    -------------------
    (1) A Non-GAAP measurement
    (2) Non-comparable items of $23.5 million affecting SG&A include costs of
        $11.1 million associated with the launch of Nectar Italia,
        $10.4 million in connection with the transition and migration of
        Carlson Marketing and $2.0 million in strategic consulting fees at
        the corporate level.


     Summary of Consolidated Operating Results and Reconciliation of EBITDA,
            Adjusted EBITDA, Adjusted Net Earnings and Free Cash Flow

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (in thousands, except share          Three months ended
     and per share information)               March 31,             % Change
                                    -----------------------------------------
                                    -----------------------------------------

                                            2010          2009
                                    -----------------------------------------
                                               $             $
    -------------------------------------------------------------------------
    Gross Billings                       517,947       346,328          49.6
    -------------------------------------------------------------------------
    Gross Billings from the sale of
     GALUs                               338,269       326,248           3.7
    -------------------------------------------------------------------------
    Revenue                              483,992       335,744          44.2
    Other revenue                         22,787        20,080          13.5
    -------------------------------------------------------------------------
    Total revenue                        506,779       355,824          42.4
    Cost of rewards and direct costs    (305,740)     (228,656)         33.7
    -------------------------------------------------------------------------
    Gross margin                         201,039       127,168          58.1
    Selling, general and
     administrative expenses            (146,435)      (63,847)        129.4
    Depreciation and amortization         (7,627)       (4,937)         54.5
    -------------------------------------------------------------------------
    Operating income before
     amortization of  Accumulation
     Partners' contracts, customer
     relationships and technology         46,977        58,384         (19.5)
    -------------------------------------------------------------------------
    Depreciation and amortization          7,627         4,937          54.5
    -------------------------------------------------------------------------
    EBITDA(a)                             54,604        63,321         (13.8)
    -------------------------------------------------------------------------
    Adjustments:
      Change in deferred revenue
        Gross Billings                   517,947       346,328
        Revenue                         (506,779)     (355,824)
      Change in Future Redemption
       Costs(b)                           (9,782)       11,403
        (Change in Net GALUs
         outstanding x Average Cost
         of Rewards per GALUs for
         the period)
    -------------------------------------------------------------------------
    Subtotal of Adjustments                1,386         1,907
    -------------------------------------------------------------------------
    Adjusted EBITDA(a)                    55,990        65,228         (14.2)
    -------------------------------------------------------------------------
    Net earnings in accordance with
     GAAP                                 14,872        23,228
    Weighted average number of
     shares                          199,506,259   199,383,818
    Earnings per share                      0.07          0.12
    Earnings per share after
     non-comparable items(a)(d)             0.19          0.12
    -------------------------------------------------------------------------
    Net earnings in accordance with
     GAAP                                 14,872        23,228
    Amortization of Accumulation
     Partners' contracts, customer
     relationships and technology         22,968        19,715
    Subtotal of Adjustments (from
     above)                                1,386         1,907
    Effective tax rate(c)                   19.0%         15.7%
    Tax on adjustments at the
     effective rate                         (263)         (299)
    -------------------------------------------------------------------------
    Adjusted net earnings(a)              38,963        44,551
    Adjusted net earnings per share         0.20          0.22
    -------------------------------------------------------------------------
    Net earnings                          14,872        23,228
    Earnings per share                      0.07          0.12
    -------------------------------------------------------------------------
    Cash flow from operations            (29,731)      (16,012)
    Capital Expenditures                  (9,159)       (7,982)
    Dividends                            (27,149)      (24,997)
    -------------------------------------------------------------------------
    Free cash flow(a)                    (66,039)      (48,991)         34.8
    -------------------------------------------------------------------------
    Total assets                       5,083,160     4,916,570
    Total long-term liabilities        1,453,416     1,528,593
    Total dividends                       27,149        24,997
    Total dividends per preferred
     share                                 0.312             -
    Total dividends per common share       0.125         0.125
    -------------------------------------------------------------------------
    (a) A non-GAAP measurement
    (b) 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.
    (c) Effective tax rate calculated as follows: income tax expense per the
        statement of operations / earnings before income taxes for the
        period.
    (d) Non-comparable items of $23.5 million affecting SG&A include costs of
        $11.1 million associated with the launch of Nectar Italia,
        $10.4 million in connection with the transition and migration of
        Carlson Marketing and $2.0 million in strategic consulting fees.
    
</pre>
<p/>
<p/>
<p>SEGMENTED INFORMATION</p>
<p/>
<p>At <span class="xn-chron">March 31, 2010</span>, the Corporation has three operating segments: Aeroplan <span class="xn-location">Canada</span>, Carlson Marketing and Groupe Aeroplan <span class="xn-location">Europe</span>.</p>
<p/>
<p>The tables below summarize the relevant financial information by segment:</p>
<p/>
<pre>
    
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (in thousands, except
     miles information)                  Three months ended March 31,
    -------------------------------------------------------------------------
                                    2010        2009        2010        2009
    -------------------------------------------------------------------------
    Operating segments            Aeroplan Canada         Groupe Aeroplan
                                                               Europe
    -------------------------------------------------------------------------
    Number of Aeroplan Miles
     issued (in billions)           19.9        19.5           -           -
    Number of Total Miles
     redeemed (in billions)         18.0        19.1           -           -
    Number of Aeroplan Miles
     redeemed (in billions)         17.6        18.2           -           -
                              -----------------------------------------------
                                       $           $           $           $
                              -----------------------------------------------
    Gross billings(d)            260,553     254,726     100,503      91,602
                              -----------------------------------------------
    Gross billings from the
     sale of GALUs               246,491     240,184      91,778      86,064
                              -----------------------------------------------
    Revenue                      258,533     263,295      70,439      72,449
    Other revenue                 14,062      14,542       8,725       5,538
                              -----------------------------------------------
    Total revenue                272,595     277,837      79,164      77,987
    Cost of rewards and
     direct costs                168,501     173,046      54,283      55,610
                              -----------------------------------------------
    Gross margin                 104,094     104,791      24,881      22,377
    Selling, general and
     administrative expenses      35,832      37,263      33,545      19,108
    Depreciation and
     amortization(a)              21,950      21,493       2,941       3,159
    Interest on long-term debt         -           -           -           -
    Interest income                6,458       1,402       3,362       1,968
    Foreign exchange loss              -           -           -           -
    Adjusted EBITDA(b)            68,553      65,469      (9,440)      7,235
    Earnings (loss) before
     income taxes                 52,158      45,547      (8,243)      1,980
                              -----------------------------------------------
    Additions to capital
     assets                        4,125       6,607       1,182       1,375
    Goodwill                   1,675,842   1,676,108     257,692     297,990
    Deferred revenue           1,655,646   1,618,515     257,457     292,195
    Total assets               4,906,650   4,794,070      26,944     122,500
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (in thousands, except
     miles information)                  Three months ended March 31,
    -------------------------------------------------------------------------
                                    2010        2009        2010        2009
    -------------------------------------------------------------------------
    Operating segments           Carlson Marketing           Corporate(c)

    -------------------------------------------------------------------------
    Number of Aeroplan Miles
     issued (in billions)              -           -           -           -
    Number of Total Miles
     redeemed (in billions)            -           -           -           -
    Number of Aeroplan Miles
     redeemed (in billions)            -           -           -           -
                              -----------------------------------------------
                                       $           $           $           $
                              -----------------------------------------------
    Gross billings(d)            156,891           -           -           -
                              -----------------------------------------------
    Gross billings from the
     sale of GALUs                     -           -           -           -
                              -----------------------------------------------
    Revenue                      155,020           -           -           -
    Other revenue                      -           -           -           -
                              -----------------------------------------------
    Total revenue                155,020           -           -           -
    Cost of rewards and
     direct costs                 82,956           -           -           -
                              -----------------------------------------------
    Gross margin                  72,064           -           -           -
    Selling, general and
     administrative expenses      65,732           -      11,326       7,476
    Depreciation and
     amortization(a)               5,704           -           -           -
    Interest on long-term debt         -           -      14,868       5,532
    Interest income                    6           -           -           -
    Foreign exchange loss              -           -           -       6,968
    Adjusted EBITDA(b)             8,202           -     (11,325)     (7,476)
    Earnings (loss) before
     income taxes                    634           -     (26,194)    (19,976)
                              -----------------------------------------------
    Additions to capital
     assets                        3,852           -         N/A         N/A
    Goodwill                     101,274           -         N/A         N/A
    Deferred revenue              11,974           -         N/A         N/A
    Total assets                 149,566           -         N/A         N/A
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (in thousands, except
     miles information)                  Three months ended March 31,
    -------------------------------------------------------------------------
                                                            2010        2009
    -------------------------------------------------------------------------
    Operating segments                                       Consolidated

    -------------------------------------------------------------------------
    Number of Aeroplan Miles
     issued (in billions)                                      -           -
    Number of Total Miles
     redeemed (in billions)                                    -           -
    Number of Aeroplan Miles
     redeemed (in billions)                                    -           -
                              -----------------------------------------------
                                                               $           $
                              -----------------------------------------------
    Gross billings(d)                                    517,947     346,328
                              -----------------------------------------------
    Gross billings from the
     sale of GALUs                                       338,269     326,248
                              -----------------------------------------------
    Revenue                                              483,992     335,744
    Other revenue                                         22,787      20,080
                              -----------------------------------------------
    Total revenue                                        506,779     355,824
    Cost of rewards and
     direct costs                                        305,740     228,656
                              -----------------------------------------------
    Gross margin                                         201,039     127,168
    Selling, general and
     administrative expenses                             146,435      63,847
    Depreciation and
     amortization(a)                                      30,595      24,652
    Interest on long-term debt                            14,868       5,532
    Interest income                                        9,826       3,370
    Foreign exchange loss                                      -       6,968
    Adjusted EBITDA(b)                                    55,990      65,228
    Earnings (loss) before
     income taxes                                         18,355      27,551
                              -----------------------------------------------
    Additions to capital
     assets                                                9,159       7,982
    Goodwill                                           2,033,808   1,974,098
    Deferred revenue                                   1,925,077   1,910,710
    Total assets                                       5,083,160   4,916,570
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (a) Includes amortization of Accumulation Partners' contracts, customer
        relationships and technology.
    (b) A non-GAAP measurement.
    (c) Includes revenue and expenses that are not directly attributable to
        any operating segment.
    (d) Includes Gross Billings of $98.5 million in the UK (consisting of
        activity from Groupe Aeroplan Europe and Carlson Marketing EMEA
        operations) and $74.0 million in the US for the three months ended
        March 31, 2010 compared to Gross Billings of $85.8 million in the UK
        for the three months ended March 31, 2009.
    

For further information: For further information: Media: Michele Meier, (514) 205-7028, michele.meier@groupeaeroplan.com; JoAnne Hayes, (416) 352-3706, joanne.hayes@aeroplan.com; Analysts & Investors: Trish Moran, (416) 352-3728, trish.moran@groupeaeroplan.com


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