Investor Day 2013 (London, UK): Transforming the Canadian Coalition Model


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Investor Day 2013 (London, UK): Transforming the Canadian Coalition Model

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Investor Day 2013 (London, UK): Transforming the Canadian Coalition Model

  1. 1. AEROPLAN 2.0 Transforming the Canadian Coalition Model Around Member Value Rupert Duchesne October 1, 2013
  2. 2. AEROPLAN HAS ROOM FOR STRONG GROWTH IN CANADA 3 GoalsLoyalty Currently Capturing Only 50% of Total Household Expenditures $1B • Market share leadership • Outstanding member satisfaction and engagement • Exceptional value delivered to key partners • Top line growth and cash flow generation 3.0 1.8 1.3 Market Opportunity Current Aimia Penetration Other
  3. 3. STARTING POINT: CANADA’S FLAGSHIP PREMIUM COALITION 4 Canada’s Most Affluent Member Base 4.7 Million Active Members Leveraging the power of our brand and member base on behalf of our partners… …with our members as our partners’ best customers Unique and Flexible Set of Partnership Models EXCLUSIVE CO-EXISTENCE CONVERSION PROMOTIONAL & OTHER 34 million Canadians
  4. 4. TRANSFORMATION AIMED AT ADDING GROWTH TO AN IMPORTANT DRIVER OF GLOBAL GROSS BILLINGS F2012 Aimia Consolidated Gross Billings $2.243B Coalition (Loyalty Units) – Canada Coalition (Loyalty Units) – EMEA Proprietary and Other Gross Billings from Sale of Loyalty Units $1.628B High Volume Members Low Volume Members 48% 27% 25% Canadian Gross Billings $1.292B 34% 17%10% 76% 24% 5 Canadian Coalition 48% Canada (Partner A) EMEA (Partner B) Canada (Partner C) Canada (Air Canada) All Other 34.0% 17.4%9.8% 15.7% 23.1% Canada 58%
  5. 5. AEROPLAN’S MEMBER-CENTRIC TRANSFORMATION IS DIRECTLY IN-LINE WITH OUR STRATEGIC PILLARS Member Value Partner Value Coalition Value Loyalty spend advocacy Invest in reward value 6 1 2 3 4 Strengthen our current position Codify and replicate successful models globally Evolve our operating model Break away from the pack
  6. 6. LAUNCHING A TRANSFORMED AEROPLAN PROGRAM WITH TWO LEADING CANADIAN ISSUERS * Rankings by purchase volume, 2012., based on Neilson Report, #1015, April 2013, adjusted to account for the transfer of $20 billion in Purchase Volume from CIBC to TD post the transaction ** The number of cardholders does not include AMEX co-branded cards. • The $38 billion Aeroplan financial card portfolio, which represents around 12% of total purchase volume in the Canadian credit card market and a total of 1.2 million Cardholder accounts, was confirmed as an attractive asset due to the premium nature of the cardholder base • The transaction shifts purchase volume of approximately $20 billion from CIBC to TD • Aimia’s ten year agreements, with two of Canada’s largest credit card issuers, provide a strong and stable platform from which to grow 7 1st Largest bank by TPV* 3rd Largest bank by TPV* 4.7m Premium Members 1.2m Premium Credit Cardholders** +
  7. 7. NEW AGREEMENTS SIGNED WITH TD AND CIBC • New 10-year financial credit card agreements with each of TD and CIBC • A purchase agreement between CIBC, TD, and Aimia, pursuant to which TD will acquire approximately half of the Aeroplan card portfolio from CIBC, which at September 2013, represented approximately: – $38B+ of spend – 1.2 million cards – $6B of receivables • TD purchasing ‘card-only’ accounts; positioned with exclusive right to mass market Aero credit card and broader banking products • CIBC retaining accounts with banking relationships; positioned to continue originating new credit card accounts within proprietary Bank channels • Both banks will introduce an enhanced suite of Aeroplan credit cards, including exciting new Distinction and Air Canada benefits from January 2014 8
  8. 8. • Ground breaking transformation of the Aeroplan program, as announced in June 2013, which will drive longer-term growth and benefits to Air Canada • Momentum and marketing behind the program with two leading credit card issuers to drive market share • A straightforward conveyance of the Cardholders transitioning to TD, with Cardholders able to accumulate Aeroplan Miles seamlessly through the transition • A strong and stable platform for Gross Billings growth with our financial card partners, with an increased price per mile and a stable cardholder base • The balance sheet strength and financial flexibility to continue to invest in growth opportunities WHAT THE AGREEMENTS DELIVER FOR SHAREHOLDERS 9
  9. 9. Provide differentiated experience and recognition based on member value Address key points of program vulnerability Initiate a multi-year journey to rework the entire member experience MEMBER-VALUE DRIVEN PROGRAM TRANSFORMATION WILL DRIVE PREMIUM SHARE GROWTH Our program transformation shifts the emphasis to member satisfaction and engagement as the prime lever to drive growth and value creation 10
  10. 10. 11
  11. 11. Source: Aimia estimates OUR NEW AIR TRAVEL REWARDS WILL BE UNPARALLELED IN THE MARKET Getting Members to Departures Faster Months to North American Long Haul Air Reward Redemption Market fare product Fixed grid product Notes: 1. Based on combined average card spend and coalition activity, and average Toronto-Vancouver fare 2. Card spend assumed to be the same for all card products, not disclosed due to confidentiality. 3. Additional spend bonuses estimated for competitive cards (e.g., gas, grocery, drug, travel spend). 4. Months required to reach reward exclude impact of welcome bonuses. 5. Fare Source: Average fare observed for Toronto – Vancouver ClassicPlus rewards in 2012, confidential. 6. CIBC Aventura World Elite figure may differ depending on grid pricing at the time of redemption; figure displayed assumes points required matches RBC Avion (35K). Aeroplan Market Fare vs ClassicFlight Rewards vs MarketFare Rewards for Distinction Diamond Member 1.1x 1.8x1.2x 1.8x1.3x 2.7x1.8x 1.7x ~12 Months Aeroplan ClassicFlight Aeroplan CLASSICPLUS 12
  12. 12. WHERE WE WILL GO • Aeroplan focus is modest growth of premium membership base • Primary goal is to generate higher gross billings by upgrading the membership profile • New capabilities and data will allow for more strategic and valuable use of miles (e.g., recent announcement on higher earn rates on higher Air Canada fare class tickets) 4,366 2012 +10% 2010 4,821 2009 2013 YTD 4,570 4,663 4,728 2011 Aeroplan Active Membership Base Thousands of 12-month Active Members 13
  13. 13.  Aeroplan reinvigorated by delivering outstanding member and partner value  Differentiated leadership position built on unique data, brand strength, analytics capability and aligned models DRIVING CONTINUED LEADERSHIP IN THE CANADIAN COALITION PROGRAM “Be the recognized global leader in loyalty, inspiring brands to build unparalleled relationships with their customers by making engagement more rewarding, lasting, and fun” Strengthen our current position Codify and replicate successful models globally Evolve our operating model Break away from the pack Strategic Aspiration Strategic Pillars Vision of Success 1 2 3 4 14