Air Canada to Convert Aeroplan into a Wholly-Owned Subsidiary

15th May 2001

Air Canada today announced that it will proceed
with its plan to convert Aeroplan into a wholly-owned subsidiary by the end of
the summer of 2001.

“Today`s announcement is part of our strategy to convert Aeroplan into a
solid loyalty management business with an entrepreneurial culture,” said Calin
Rovinescu, Executive Vice President, Corporate Development and Strategy, who
will serve as Chairman of the newly created subsidiary. “Our objective is to
realize Aeroplan`s full potential for profit and to further enhance
shareholder value. We will therefore continue to review the merits of
launching an Initial Public Offering for Aeroplan.”

The new subsidiary will pursue an aggressive growth strategy by building
on existing agreements in the traditional travel, entertainment and financial
credit card sectors as well as by developing new partnerships, including
expansion into new consumer categories. In addition, Aeroplan will exploit e-
commerce opportunities and expand its current on-line features to include a
virtual shopping mall, where members will earn Aeroplan miles for purchases of
merchandise and other non-air services.

“Our vision is that within five years, Aeroplan will be North America`s
leading customer loyalty program,” added Rupert Duchesne, President and Chief
Executive Officer, Aeroplan. “By negotiating partnerships with major brand
retailers and e-commerce partners, we will offer our members a greater range
of ways to accumulate and redeem Aeroplan miles. Of course, the mileage
accumulated by Aeroplan members to date will not in any way be affected.”

Since its inception in 1984, Aeroplan has become Canada`s premier loyalty
program and a significant income generator for Air Canada. In 2000, Aeroplan
and Canadian Plus together generated more than $350 million in third party
operating revenues. The six million Aeroplan members not only represent Air
Canada`s most valued customers but also the majority of premier households in




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