Bank of Montreal announced on Friday that it has signed an agreement to acquire the Air Miles loyalty program in Canada, after its American parent company filed for bankruptcy.
Financial details of the agreement between the bank and LoyaltyOne were not immediately available.
Air Miles Reward Program President Shawn Stewart argued that the agreement ” [apportait] stability to the Air Miles program”.
“It gives us the opportunity to develop the program for our members and partners, and gives confidence in the future of the program,” he said in an interview.
“Our US parent company had a ton of debt and that just limited our ability to invest in member value. »
The agreement has no impact on reward mile balances or the ability to redeem miles, Stewart added.
Air Miles is one of Canada’s oldest and largest loyalty programs, with nearly 10 million active users.
Collectors earn reward miles from participating stores, services and payment cards. These miles can then be redeemed for “coveted rewards” such as merchandise, trips, events and attractions, or cash back.
Yet Air Miles has lost a string of major retailers in Canada over the past few years.
Last summer, Empire, the owner of Sobeys, IGA and Safeway, and office supply retailer Staples announced they would be dropping the Air Miles program, a year after the Liquor Control Board of Ontario (LCBO) and Lowe’s Canada (which owned Rona and Réno-Dépôt stores at the time) did the same.
Shares of Air Miles’ parent company, which traded on the NASDAQ stock exchange, fell after Sobeys withdrew from the program.
Loyalty Ventures, the parent company of LoyaltyOne, filed for Chapter 11 bankruptcy in the United States on Friday. It also withdrew its common stock from NASDAQ.
The Bank of Montreal deal for Air Miles was proposed as part of LoyaltyOne’s proceedings under the Companies’ Creditors Arrangement Act in Canada.
The process provides for a sales and investment solicitation process to solicit any further interest in Air Miles business.
The sale transaction is conditional on LoyaltyOne not receiving a more favorable offer, and will be subject to court approval.
Multiplication of loyalty programs
Bank of Montreal predicted the purchase would accelerate Air Miles’ future growth.
“If we are successful in acquiring the Air Miles business, we will bring ownership of Air Miles back to Canada and strengthen its offering for Canadian consumers and businesses,” said the head of personal and business banking. in North America, Ernie Johannson, in a press release.
The bank has been an Air Miles partner since the program was created in 1992.
Rewards programs have proliferated in recent years as companies seek to collect more data about customers and their buying habits.
The data collected through these programs is used to target customers with tailored advertising offers and promotions with the goal of increasing sales and loyalty.
The growing value of loyalty programs has prompted some retailers to adopt and expand their own programs.
Last June, Empire announced it would be discontinuing the Air Miles program after becoming co-owner of the Scene+ program, operated by theater operator Cineplex and Scotiabank.
Stewart, who joined Air Miles last spring after eight years of creating and developing Canadian Tire’s Triangle loyalty program, said it’s an increasingly competitive market .
But Air Miles still has a competitive edge, especially for small and medium-sized businesses that may not have the scale to invest in their own loyalty program, he argued.
“With Air Miles, you have immediate access to 10 million Collectors,” said Stewart. We lend our scale and a highly recognized brand to businesses. »
Yet, while Air Miles is offered by some small, family-owned stores, it continues to have a number of larger retail partners, including American Express Canada, Irving and Shell gas stations, and partner online stores. like Amazon and eBay.