Groupe Aeroplan Inc. Reports 2008 Year-end and Fourth Quarter Results

///Groupe Aeroplan Inc. Reports 2008 Year-end and Fourth Quarter Results
Groupe Aeroplan Inc. Reports 2008 Year-end and Fourth Quarter Results 2017-11-15T20:59:56+00:00

27.02.2009

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES/

Generates solid operating results including record gross billings in
Aeroplan Canada despite economic downturn

MONTREAL, Feb. 27 /CNW Telbec/ – Groupe Aeroplan Inc. (the “Corporation”)
(TSX: AER), today reported its 2008 year-end and fourth quarter results.

2008 Operating Highlights- Solid consolidated operating results and strong performance:
– Gross billings in Canada increased by 7.7%, surpassing the
$1 billion milestone
– Groupe Aeroplan Europe delivered targeted annual gross billings and
other income within the forecasted range of (pnds stlg)205-
(pnds stlg)215 million given at the time of acquisition
– Continuous expansion of retail coalitions in Canada, the UK and the
Middle East:
– Announced partnerships in Canada with four major new partners,
including Sobeys
– Launched multi-year partnership with Expedia in the UK
– Added participating partners in the Middle East to reach over 130
– Successful launch of LMG Insight and Communication data analytics
business in the UK”We completed the year with a strong balance sheet having cash and
short-term investments in excess of $665 million at year-end. We are confident
that we have the business model to succeed in this challenging global economic
environment. We posted solid consolidated operating results reflecting the
strength of our financial and travel partners as well as our growing number of
retail partners,” said Rupert Duchesne, President and CEO, Groupe Aeroplan
Inc. “While it is difficult to predict our future performance in the current
environment, we remain focused on organically growing the business and
pursuing expansion opportunities aimed at delivering additional value to our
members, partners and shareholders.”

2008 Consolidated Financial Highlights (compared to 2007)

– Increased consolidated gross billings by 49.2% to $1.4 billion
– Improved operating income (before amortization of accumulation
partners’ contracts and technology)(*) by 61.8% to $306.9 million
– Increased Adjusted EBITDA by 27.1% to $316.9 million
– Generated net earnings of $195.5 million(*) before a non-cash goodwill
and other intangibles impairment charge of $1.2 billion
– Generated solid free cash flow of $177.5 million, after distributions
and dividends of $123 million and including the effect of the
$63 million of temporarily accelerated payments to Air Canada.

“We generated solid consolidated free cash flow and managed to
significantly improve our liquidity position over the course of the year,”
added David Adams, Executive Vice President and Chief Financial Officer.
“Notwithstanding our strong performance, the current capital market climate
presents a challenging environment. Like many other publicly traded companies
that have intangible assets, we had to record a one-time, non-cash goodwill
and other intangibles impairment charge of $1.2 billion in the fourth quarter,
largely as a result of the general economic downturn and resulting capital
markets’ valuation decline.”

Financial Performance

Gross Billings
————–

Gross billings from the sale of miles, points and other loyalty program
units (Aeroplan Miles) issued by the Corporation’s subsidiaries in 2008
amounted to $1.4 billion compared to $952.2 million in 2007, representing an
increase of $468.4 million or 49.2%. While the majority of this increase is
attributable to the inclusion of the consolidated Groupe Aeroplan Europe
results, Aeroplan Miles issued under the Aeroplan Program during the year
increased by 7.7% over 2007.
At the time of the LMG acquisition UK GAAP revenues of (pnds
stlg)205-(pnds stlg)215 million were forecasted. Despite the poor economic
environment in the UK, (pnds stlg)214.4 million in gross billings and other
income were achieved.
Gross billings for the three months ended December 31, 2008 amounted to
$364.4 million compared to $248.4 million, representing an increase of $116.0
million or 46.7%. While the majority of this increase is also attributable to
the inclusion of the consolidated Groupe Aeroplan Europe results, Aeroplan
Miles issued under the Aeroplan Program in Canada during the three month
period increased 4.4% over the comparable period of the prior year.
The increase in gross billings for both the fourth quarter and the fiscal
year was driven by bonus miles issued related to the roll out of the
conversion initiative to CIBC Aerogold Visa Infinite credit cards, by growth
in consumer spending through credit and charge cards issued by Aeroplan
Canada’s accumulation partners, new initiatives in retail banking, and
strength in travel and retail activity.

Operating Income
—————-

For the full fiscal year, operating income, before amortization of
accumulation partners’ contracts and technology(*), amounted to $306.9 million
compared to $189.7 million in 2007, representing an increase of $117.2 million
or 61.8%.
For the fourth quarter, operating income, before amortization of
accumulation partners’ contracts and technology(*), amounted to $105.2 million,
compared to $46.3 million for the three months ended December 31, 2007,
representing an increase of $58.9 million or 127.2%.
The increase in operating income for both the fourth quarter and the year
is mainly attributable to the inclusion of the consolidated Groupe Aeroplan
Europe results, the net effect of changes to the breakage estimates.

Non-cash Impairment Charge
————————–

As a result of the outcome of the long lived intangible assets and
goodwill impairment tests required by GAAP, the Corporation recorded an
impairment charge, relating to those assets in the amount of $1,161 million;
with $841 million attributable solely to goodwill in the Canadian reporting
unit, and the difference of $320 million recorded in the European and Middle
East reporting unit, allocated to accumulation partners’ contracts, trademark,
software and technology and goodwill. Most of the goodwill had originally been
recorded at the Groupe Aeroplan level, following the exchange by ACE Aviation
Holdings Inc. (ACE) of Aeroplan Limited Partnership units for Aeroplan Income
Fund units, as part of ACE’s strategy to crystallize value and sell its
participation in Aeroplan in the open market. Accordingly, $2.4 billion of the
pre-impairment balance of goodwill had not originated from any
acquisition-related activities by the Corporation.
The impairment loss is attributable to the increased discount rates used
in determining fair values and a decline in expected future cash flows of the
Corporation. These changes were triggered by the recent deterioration in the
global capital markets’ conditions and the economic environment, which are
generally expected to affect general consumer spending and travel.

Liquidity
———

Cash, cash equivalents and short-term investments increased by $86.0
million, from $579.4 million at the end of 2007 to $665.4 million at the end
of 2008.
At the end of 2008, the Corporation had $188.0 million of cash and cash
equivalents and $477.3 million of short-term investments, for a total of
$665.3 million including the Aeroplan Canada redemption reserve of $400
million.
In November 2008, the Corporation entered into an agreement with Air
Canada to temporarily accelerate the contractual payment terms for air travel
rewards purchased from Air Canada for the period from October 2008 to May
2009. Under this arrangement, at December 31, 2008, Aeroplan had paid Air
Canada $63 million in advance of normal settlement terms. In consideration of
the foregoing, Aeroplan and Air Canada agreed to certain commercial
arrangements to their mutual benefit.

Adjusted EBITDA and Free Cash Flow
———————————-

On a year over year basis, Adjusted EBITDA amounted to $316.9 million or
22.3% (as a % of Gross Billings) and free cash flow generated amounted to
$177.5 million or 12.5 % (as a % of Gross Billings), compared to $118.9
million or 12.5% (as a % of Gross Billings) and 26.2 % and 12.5% (as a % of
Gross Billings), respectively for 2007.
Absent the reduction of the breakage rate in Groupe Aeroplan Europe, its
Adjusted EBITDA would have met the guidance provided at the time of
acquisition.
Free cash flow generated excluding the $63 million acceleration of
accounts payable to Air Canada, would have amounted to $240.5 million, an
increase of $121.6 million over 2007.
Adjusted EBITDA for the three months ended December 31, 2008 amounted to
$77.8 million or 21.4 % (as a % of Gross Billings) and free cash flow
generated amounted $42.5 million, after the payment of $63 million to Air
Canada, or 11.7% (as a % of Gross Billings) compared to $21.3 million or 8.6%
(as a % of Gross Billings) for the three month period ended December 31, 2007.

Outlook for 2009

Current market conditions with significantly reduced consumer
expenditures make it difficult to predict 2009 performance. Assuming no
further deterioration of the markets, and anticipating a mild recovery in the
latter part of the year, the Corporation would expect to see modest
consolidated growth in gross billings in 2009. In addition, for 2009, the
Corporation expects the Average Cost of Rewards per Mile, under the Aeroplan
Program to remain under 0.95 cents and for the gross margin in the Canadian
segment to remain 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 announced today that the Board of Directors declared a
quarterly dividend of $0.125 per common share, payable on March 20, 2009 to
shareholders of record at the close of business on March 9, 2009.

Filing of Universal Shelf Prospectus
————————————

The Corporation announced today that it has filed with the securities
regulators in each of the provinces and territories of Canada, a preliminary
short form universal base shelf prospectus for the issuance of up to $1.0
billion of securities, which may consist of debentures, medium term notes,
notes or other types of debt securities, common shares, preferred shares and
convertible securities. These securities may be offered from time to time,
during a 25-month period for which the short form base shelf prospectus
remains valid.
The specific terms of any securities will be described in one or more
shelf prospectus supplements. This news release shall not constitute an offer
to sell or the solicitation of an offer to buy, nor shall there be any sale or
any acceptance of an offer to buy these securities in any province or
territory of Canada in which such offer, solicitation or sale would be
unlawful prior to qualification under securities laws of any such province or
territory.

European Advisory Board
———————–

The Corporation announced yesterday the appointment of Richard Baker,
formerly Chief Executive of Alliance Boots plc, to chair its European Advisory
Board.
The advisory board will assist and advise the Groupe Aeroplan European
executive team on how it can capitalize on growth opportunities for its
loyalty programs across Europe and the international expansion of I&C.
The advisory board will initially consist of Richard Baker, Tony Buffin,
Managing Director of Groupe Aeroplan Europe and Rupert Duchesne, the
Corporation’s President and Chief Executive Officer. Other members of the
advisory board are expected to be appointed during 2009.

Appointments to Board of Directors
———————————-

On January 19, 2009, the Corporation announced the appointments of the
Honourable Michael M. Fortier, and Mr. David H. Laidley to its Board of
Directors. Both bring extensive business experience and a wealth of knowledge
that will be of strategic value to Groupe Aeroplan as the company continues to
grow.

Recent Developments

Partnerships

Futura
——

On February 5, 2009, Aeroplan Canada announced a multi-year agreement
with The Futura Loyalty Group Inc. that will enable Futura to offer Aeroplan
Miles to small and mid-size retailers and service providers across Canada.
Futura has contracted more than 40 new businesses who will offer Aeroplan
Miles to customers and many more have shown interest. This partnership builds
on Aeroplan’s strategy to expand its already strong roster of national
partners with select businesses in local communities.

Direct Energy
————-

Since February 16, 2009, Aeroplan Members can accumulate Aeroplan Miles
with Direct Energy’s natural gas and electricity price protection plans in
British Columbia, Alberta and Ontario. Depending on the energy products they
purchase, members may be entitled to earn anywhere from 2,500 – 10,000 miles
upon registering for a multi-year contract.

Operations

Launch of LMG Insight & Communication in North America
——————————————————

On November 27, 2008, the Corporation announced the launch of its highly
successful UK-based customer-driven insight and communication business in
North America, with offices based in Toronto and Chicago. LMG Insight &
Communication (I&C) and its industry leading data analytics tool, Self Serve,
will provide retailers with unprecedented insight into consumers’ shopping
habits as well as the ability to work with consumer packaged goods companies
to develop targeted product communications.

Online Booking Capabilities
—————————

On February 20, 2009, Aeroplan launched a number of online booking
enhancements offering members more choice, greater flexibility, ease of use
and robust self-service functionality.

Contact Centres
—————

On January 28, 2009, the Corporation announced that the tentative labour
agreement between Aeroplan, the CAW Local 2002 and Air Canada as announced on
January 14, 2009 had not been ratified.
In line with the Corporation’s November 14, 2008 announcement, all agents
working in Aeroplan’s Contact Centres in Vancouver and Montreal are being
offered continued employment effective June 1, 2009, in the same positions,
unless, if eligible, they elect to return to Air Canada.

Corporate Social Responsibility

Beyond Miles Program
——————–

On November 18, 2008, Aeroplan Canada welcomed War Child Canada as its
newest charitable partner in Beyond Miles. Beyond Miles is a program that
enables Aeroplan Members to donate Aeroplan Miles to outstanding Canadian
charities that are committed to improving lives and enriching communities
across Canada and abroad. Aeroplan launched the partnership with a 1,250,000
donation of Aeroplan Miles and, as part of its commitment to the environment;
Aeroplan will also fully offset all carbon emissions from War Child Canada
flights taken using donated miles.

Green It Up
———–

Aeroplan and its Green Coalition of partners: CIBC, American Express and
Avis celebrated the first anniversary of its Green it Up program on December
5, 2008 by matching all Aeroplan Miles redeemed for carbon offsets by 50 per
cent. Aeroplan Members from across Canada redeemed more than 3 million miles
for carbon offset credits. Once matched, the total miles redeemed for offsets
that day added up to over 9 million Aeroplan Miles – equivalent to 3,856.04
tonnes of emissions or the equivalent of pulling 641 large cars off the road
for one year.

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
(Adjusted EBITDA)

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 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 prescribed 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 1:00 p.m. ET on Friday,
February 27, 2009 to discuss its 2008 year-end and fourth quarter results. The
call may be accessed by dialing toll free: 1-800-732-0232 or 416-644-3420 for
the Toronto area. The call will be simultaneously audio webcast at
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2551340
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 audited consolidated financial statements and a slide presentation
will be accessible on the investor relations website at 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 worldwide
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, dependency on top
accumulation partners, Air Canada or travel industry disruptions, Air Canada
liquidity issues, labour relations and pension liability, reduction in
activity, usage and accumulation of Aeroplan Miles, retail market or economic
downturn, greater than expected redemptions for rewards, industry competition,
supply and capacity costs, unfunded future redemption costs, changes to the
Aeroplan and Nectar Programs, seasonal nature of the business, regulatory
matters, VAT appeal and value and liquidity of the common shares, as well as
the other factors identified throughout the MD&A. The forward-looking
statements contained in this discussion represent the Corporation’s
expectations as of February 26, 2009, and are subject to change after such
date.
However, the Corporation 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.

——————–
(*) Non-GAAP measureSUMMARY OF CONSOLIDATED OPERATING RESULTS AND RECONCILIATION OF
EBITDA, ADJUSTED EBITDA, ADJUSTED NET EARNINGS AND FREE CASH FLOW
————————————————————————-
————————————————————————-
(in thousands, except Year
share and per share over year
information) % change % change
———————————————————-
2008 2007
over over
2008 2007(1) 2006(2) 2007 2006
————————————————————————-
Gross Billings
from the sale
of Aeroplan
Miles 1,420,548 952,165 851,851 49.2 11.7
————————————————————————-
Aeroplan Miles
revenue 1,377,736 848,665 709,269 62.3 19.6
Other revenue 80,493 57,750 60,118 39.4 (3.9)
————————————————————————-
Total revenue 1,458,229 906,415 769,387 60.9 17.8
Cost of rewards (859,082) (540,061) (465,254) 59.1 16.1
————————————————————————-
Gross margin 599,147 366,354 304,133 63.5 20.5
Selling,
general and
administrative
expenses (271,591) (164,841) (149,406) 64.8 10.3
Depreciation
and
amortization (20,636) (11,804) (14,260) 74.8 (17.2)
————————————————————————-
Operating income
before
amortization of
Accumulation
Partners’
contracts and
technology 306,920 189,709 140,467 61.8 35.1
————————————————————————-
Depreciation and
amortization 20,636 11,804 14,260 74.8 (17.2)
Foreign exchange
gain (loss) (2,301) (2,875) – (20.0) –
————————————————————————-
EBITDA(4) 325,255 198,638 154,727 63.7 28.4
————————————————————————-
Adjustments:
Change in
deferred
revenue
Gross billings
from the sale
of Aeroplan
Miles 1,420,548 952,165 851,851
Aeroplan Miles
revenue (1,377,736) (848,665) (709,269)
Change in Future
Redemption
Costs (3) (51,202) (52,916) (80,915)
(Change in Net
Aeroplan Miles
outstanding x
Average Cost
of Rewards per
Mile for the
period)
————————————————————————-
Subtotal of
Adjustments (8,390) 50,584 61,667
————————————————————————-
Adjusted
EBITDA(4) 316,865 249,222 216,394 27.1 15.2
————————————————————————-
————————————————————————-
Net earnings
(loss) in
accordance
with GAAP (965,210) (4,819) 143,529
Weighted
average
number of
shares
(units) 199,392,420 190,023,236(7) 199,707,713
Earnings
(loss) per
share (unit) (4.84) (0.03) 0.72
————————————————————————-
————————————————————————-
Net earnings
(loss) in
accordance
with GAAP (965,210) (4,819) 143,529
Amortization of
accumulation
partners’
contracts and
technology 87,838 – –
Subtotal of
Adjustments
(from above) (8,390) 50,584 61,667
Effective tax
rate(5) (0.38) – –
Tax on
adjustments at
the effective
rate 32 – –
————————————————————————-
Adjusted net
earnings before
impairment
charge (4) 274,970 45,765 205,196
Adjusted net
earnings before
impairment charge
per share
(unit) 1.38 0.24 1.03
————————————————————————-
————————————————————————-
Net earnings
(loss) before
impairment
charge 195,490 (4,819) 143,529
Earnings (loss)
per share
before
impairment
charge 0.98 (0.03) 0.72
————————————————————————-
————————————————————————-
Cash flow from
operations 323,079 308,245 320,977
Maintenance
Capital
Expenditures (22,558) (16,325) (21,923)
Dividends /
distributions (122,981) (173,000)(6) (144,169)
————————————————————————-
Free cash
flow(4) 177,540 118,920 154,885 49.3 (23.2)
————————————————————————-
————————————————————————-
Total assets 5,017,720 6,118,340 824,383
Total long-term
liabilities 1,428,503 1,579,297 967,921
Total monthly
dividends /
distributions
declared, post
offering 108,983 168,000(6) 146,460
Total monthly
dividends /
distributions
declared per
unit, post
offering 0.55 0.84 0.73
————————————————————————-
————————————————————————-
(1) Has been derived by adding the results of the Partnership prior to
March 14, 2007 to the results of the Fund for the year;
(2) 2006 results presented for comparative purposes are those of the
Partnership;
(3) The per unit cost derived from this calculation is retroactively
applied to all prior periods with the effect of revaluing the
liability on the basis of the latest available average unit cost;
(4) A non-GAAP measurement;
(5) Effective tax rate calculated as follows: income tax expense per
statement of operations / earnings before income taxes for the
period;
(6) Distributions paid and declared in 2007 are those of the Partnership.
(7) Represents the weighted average number of units of the Fund

————————————————————————-
SUMMARY OF QUARTERLY RESULTS

This section includes sequential quarterly data for the eight quarters
ended December 31, 2008.
————————————————————————-
————————————————————————-
(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) 34,956 31,454 42,132
————————————————————————-
————————————————————————-

————————————————————————-
Adjusted EBITDA(2) 77,814 80,026 77,327 77,580
————————————————————————-

Adjusted net earnings
excluding impairment
charge(2) 84,661 63,229 60,822 69,229
————————————————————————-
Net earnings before
impairment charge 86,948 34,956 31,454 42,132
EPS before impairment
charge 0.44 0.18 0.16 0.21
————————————————————————-
Free cash flow(2) 42,492 115,868 43,636 (24,456)
————————————————————————-

Earnings per share (unit),
in accordance with GAAP
– Groupe Aeroplan / Fund (5.39) 0.18 0.16 0.21
Earnings per share (unit),
in accordance with GAAP
– Partnership n/a n/a n/a n/a
————————————————————————-
————————————————————————-

————————————————————————-
(in thousands, except
per share amounts) 2007
(unaudited) Q4 Q3 Q2(1) Q1(1)
$ $ $ $
————————————————————————-
Gross Billings 248,380 236,877 238,931 227,977
————————————————————————-
Aeroplan Miles revenue 207,944 205,074 207,086 228,561
Other revenue 13,634 14,165 13,198 16,753
————————————————————————-
Total revenue 221,578 219,239 220,284 245,314
Cost of rewards 129,181 127,205 128,541 155,134
————————————————————————-
Gross margin 92,397 92,034 91,743 90,180
Selling, general and
administrative expenses 43,017 40,713 41,707 39,403
Depreciation and
amortization 3,059 3,230 2,811 2,704
————————————————————————-
Operating income before
amortization of
Accumulation Partners’
contracts and technology 46,321 48,091 47,225 48,073
Amortization of
Accumulation Partners’
contracts and technology 18,112 18,112 – –
————————————————————————-
Operating income 28,209 29,979 47,225 48,073
————————————————————————-
————————————————————————-
Net earnings (loss) 51,697 32,259 49,450 50,116
————————————————————————-
————————————————————————-

————————————————————————-
Adjusted EBITDA(2) 64,131 64,519 65,171 59,980

————————————————————————-
Adjusted net earnings
excluding impairment
charge(2) 84,561 63,569 64,585 59,319
————————————————————————-
Net earnings before
impairment charge 51,697 32,259 49,450 50,116
EPS before impairment
charge 0.27 0.17 0.26 0.26
————————————————————————-
Free cash flow(2) 21,271 47,667 26,163 23,856
————————————————————————-

Earnings per share (unit),
in accordance with GAAP
– Groupe Aeroplan / Fund 0.26 0.16 (0.68) 0.16
Earnings per share (unit),
in accordance with GAAP
– Partnership 0.24 0.26 0.25 0.25
————————————————————————-
————————————————————————-

(1) Results presented for comparative purposes are those of the
Partnership.
(2) A non-GAAP measurement.
For further information: Media: Michèle Meier, (514) 205-7028,
michele.meier@aeroplan.com; JoAnne Hayes, (416) 352-3706,
joanne.hayes@aeroplan.com; Analysts: Trish Moran, (416) 352-3728,
trish.moran@aeroplan.com