MONTREAL – The company that runs Aeroplan in Canada and other customer loyalty programs around the world is cutting more than 200 jobs and pursuing a second round of cost-cutting as it adjusts to economic uncertainties and weak consumer confidence.
Montreal-based Aimia Inc. (TSX:AIM) said the affected employees from its global workforce of 4,000 will be gone by the end of the year and include a significant but unspecified number of jobs in Canada.
“We’re still a successful and profitable company but taking out just under five per cent of the workforce is uncomfortable when we’re trying to grow at the same time,” CEO Rupert Duchesne said Friday during an interview after releasing third-quarter results that prompted its shares to hit a 52-week low.
At one point Friday, Aimia’s shares hit a low of $9.39 before closing on the Toronto Stock Exchange at $9.65, a 14 per cent drop.
The job cuts flow from a $20-million cost-reduction plan announced in August. But weak economic conditions in Canada and Europe during the summer quarter have spurred the company to seek a further $20 million in annualized costs savings by the end of 2016. That is not expected to result in many job losses, Duchesne said.
Instead, Aimia said it will focus on reducing the number of its offices, much like it has already done by consolidating staff in downtown Toronto, gaining savings from procurement changes and possibly selling non-core assets.
The company said it has been hit by a number of factors, including lower credit card use and less marketing spending by credit card partners due to a cut in interchange fees paid by merchants.
Billings from Aeroplan — which manages points that can be exchanged for Air Canada tickets and upgrades as well as other goods and services — were weaker than expected in the quarter.
“We expect the fourth quarter to be a little better, but Canadian consumers caught a cold during the summer and still haven’t kicked it off,” Duchesne added.
The weakened loonie has hurt Aimia’s results. It has also prompted its card carriers to increasingly redeem their points on vacations within Canada instead of the U.S.
The company foresees modest improvement next year.
A promised tax increase for the wealthiest Canadians could have a negative impact on spending, but Duchesne said the vast majority of its loyalty plan members will benefit from tax cuts.
In the third quarter, Aimia’s gross billings were down 8.4 per cent from a year ago, falling to $580.3 million, and revenue was down 2.6 per cent to $529.3 million.
Net loss for the quarter ended Sept. 30 was $26.1 million or 20 cents per share, an increase from $24.1 million or 17 cents per share. Adjusted net earnings per share dropped 22.2 per cent to 14 cents from 18 cents per share.
Aimia said the weak quarter has prompted it to lower some of its financial estimates for a second time this year, including a drop in gross billings to a range of $2.4 billion and $2.46 billion for 2015.
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