Groupe Aeroplan Inc. has announced that it will take a minority stake in AeroMexico’s frequent flyer program, Club Premier. The transaction is expected to close in the third quarter of 2010. The Montreal based Aeroplan will initially invest $22 million in Club Premier with an additional $12 million to be invested if certain performance milestones are achieved within 18 months of closing.
“As Groupe Aeroplan’s first investment in an international frequent flyer program, this transaction represents a significant strategic milestone; it marks the export of our company’s very successful Aeroplan Canada business model,” said Rupert Duchesne, President and CEO, Groupe Aeroplan. “Mexico is a high growth market and one of the target countries of our global expansion strategy. This investment not only provides us with a stepping stone into the very important Latin American market, but it also reinforces our position as a global leader in loyalty management, allowing us to participate in the transformation of a frequent flyer program into a standalone, broad-based coalition loyalty program. We are looking forward to working with AeroMexico and Club Premier’s talented management teams,” added Duchesne.
AeroMexico is the domestic airline in Mexico with more than 600 daily flights to more than 60 destinations worldwide. AeroMexico is a privately held company, whose shareholders include Banamex, Mexico’s largest bank.
Groupe Aeroplan will have proportional representation on Club Premier’s Board of Directors, as well as approval rights in relation to certain significant business matters.
“This investment, which will be financed with cash on hand, allows Groupe Aeroplan to participate in the very early stages of the creation of Club Premier, as a standalone program,” said David Adams, Chief Financial Officer, Groupe Aeroplan. “The transaction provides significant opportunities for growth and we look forward to working with AeroMexico and Club Premier in pursuing strategies to maximize shareholder value. To that end, we may consider the potential merits of a future IPO of Club Premier, at an opportune time, if and when conditions are favourable.”
In connection with this transaction, RBC Capital Markets acted as financial advisor to Groupe Aeroplan.