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Groupe Aeroplan CEO Rupert Duchesne (Sami Siva)
Groupe Aeroplan CEO Rupert Duchesne (Sami Siva)

Aeroplan earnings hit by European tax ruling Add to ...

Loyalty rewards program Groupe Aeroplan Inc. expects future growth opportunities to lessen the impact of an unfavourable European tax ruling that impacted its third-quarter profit.

Aeroplan, which manages customer loyalty cards for Air Canada and a host of other clients, reported a $40.4-million net loss in the third quarter. That was due to the recent ruling in the European Court of Justice related to a tax battle begun years ago by a U.K. company that was subsequently acquired by Aeroplan, resulting in a $52.9-million charge to earnings.

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Chief executive officer Rupert Duchesne said Thursday that while he was "disappointed" with the ruling, Aeroplan had a solid quarter.

"The impact of the VAT (value-added tax) judgment makes it difficult to see the solid performance underlying this quarter," he told analysts on a conference call.

"We're confident we'll mitigate the ongoing adverse affect of the judgment, given our control over the business and the inherent growth opportunities that we're pursuing," he said.

The charge was in line with an estimate provided by Aeroplan on Oct. 7.

After adjusting for that, Aeroplan earned $6.2-million on $442-million in revenue.

The Montreal-based company has said it's looking for more international growth to expand its loyalty reward program and reach more consumers with specific offers based on their shopping patterns.

Germany, France, Spain and Japan are among countries where Aeroplan may expand.

The Montreal-based company has acquired loyalty reward programs with partners such as grocery and home improvement stores in the United Kingdom, Italy, the Middle East as well as Canada.

Mr. Duchesne said Aeroplan Canada had a strong quarter with a 4.9 per cent increase in gross billings from the sale of Aeroplan miles.

He said Aeroplan's European operations continue to grow and remain profitable.

"The growth in points issued in the U.K. continues to surpass growth in points redeemed on a year-to-date basis."

 

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