MONTREAL, Aug. 14 /CNW Telbec/ - Groupe Aeroplan Inc. (the "Corporation")
(TSX: AER), today reported its 2008 second quarter results.Second Quarter 2008 Financial Highlights

    - Gross billings of $357.9 million
    - Operating income, excluding amortization of accumulation partners'
      contracts and technology, of $69.5 million
    - Earnings per share of $0.16
    - Adjusted EBITDA of $77.3 million
    - Adjusted net earnings of $60.8
    - Free cash flow of $43.6 million

    "Since the completion of the LMG acquisition, we have been focused on the
execution of our knowledge transfer strategy between our Canadian and UK
operations and we are beginning to realize results," said Rupert Duchesne,
President and CEO. "In June, Aeroplan successfully launched its eStore and
most recently we announced two key partnerships: Sobeys in Canada and Expedia
in the UK. With these early successes and our conversion to a corporation now
complete, we are well positioned to secure a leadership position in the
international loyalty market."

    Financial Performance

    Gross billings from the sale of miles, points and other loyalty program
currencies (Aeroplan Miles) issued by Aeroplan and its subsidiaries for the
three months ended June 30, 2008 amounted to $357.9 million compared to
$238.9 million for the three months ended June 30, 2007, representing an
increase of $119 million or 49.8%. Of this growth, $99.1 million is
attributable to Aeroplan Miles sold by LMG and RMMEL, and $19.9 million, which
represents a quarter-over-quarter increase of 8.3%, resulted from higher
purchases by Aeroplan Program accumulation partners due to growth in consumer
spending through credit and charge cards issued by such partners, and strength
in the travel segment.
    Operating income, excluding amortization of accumulation partners'
contracts and technology, amounted to $69.5 million for the quarter ended
June 30, 2008 compared to $47.2 million for the quarter ended June 30, 2007,
representing an increase of $22.3 million or 47.2%. This increase is mainly
attributable to higher reward redemption activity, including a higher
proportion of Aeroplan Miles redeemed, higher gross margins and the inclusion
of LMG and RMMEL in the consolidated results.
    At the end of the second quarter, the Corporation had $87.2 million of
cash and cash equivalents and $457.8 million of short-term investments, for a
total of $545 million including the Aeroplan redemption reserve of
$400 million.
    Adjusted EBITDA for the quarter amounted to $77.3 million or 21.6% (as a %
of Gross Billings) and Free Cash Flow generated amounted to $43.6 million or
12.2% (as a % of Gross Billings), compared to $65.2 million or 27.3% (as a %
of Gross Billings) and $26.2 million or 11% (as a % of Gross Billings),
respectively for the second quarter of 2007.

    Recent Developments

    Partnerships

    Sobeys
    ------

    Today, Groupe Aeroplan announced the signing of a multi-year partnership
with Sobeys that will enable members of the Aeroplan Program to earn miles on
groceries at Sobeys stores in certain provinces.

    Expedia
    -------

    On August 8, 2008, Groupe Aeroplan announced the execution of a multi-year
agreement with Expedia, Inc. that will enable Nectar members to earn points
when booking travel packages as well as individual flights, hotels or car
rentals.

    RadioShack, Telefonica
    ----------------------

    On August 1, 2008, Rewards Management Middle East further expanded its
suite of retail partners by signing agreements with the global link
communication companies RadioShack and Telefonica. The addition of these
brands will allow members to earn miles in any RadioShack or Telefonica stores
throughout the UAE.

    EgyptAir
    --------

    On July 11, 2008, Aeroplan announced the addition of Star Alliance
carrier, EgyptAir, to its roster of travel partners, bringing the total number
of airline partners to 31.

    New Products

    Aeroplan eStore
    ---------------

    On June 18, 2008, Aeroplan announced more opportunities to earn miles on
everyday purchases with the launch of Aeroplan eStore. Featuring more than
10 product categories and over 90 retailers, Aeroplan Members can now earn
miles as they shop at popular retailers.

    Aeroplan Arrival magazine
    -------------------------

    On May 29, 2008, Aeroplan announced that it will be launching Aeroplan
Arrival, an exclusive branded content magazine that encompasses travel,
lifestyle, culture and popular Aeroplan reward merchandise.

    Corporate Developments

    ACE Secondary Offering and Disposition of Interests
    ---------------------------------------------------

    On April 2, 2008, ACE Aviation Holdings Inc. ("ACE") announced an
agreement with a group of underwriters to sell an aggregate of 20.4 million
units of Aeroplan Income Fund at a price of $17.50 per unit, for gross
proceeds of $357 million. This secondary offering, from which the Fund did not
receive any proceeds, closed on April 21, 2008. Following the completion of
the offering, ACE retained 9.9% of the issued and outstanding Fund units,
which were subsequently disposed of by ACE on May 28, 2008. Prior to such
disposal, ACE and the Fund terminated the Securityholders' Agreement which
entitled ACE to appoint two directors to the Board of Aeroplan Holding GP Inc.
irrespective of its level of ownership. As a result, ACE retains no further
interest in the Corporation and the Corporation is no longer related to ACE or
the other companies controlled or subject to significant influence by ACE.

    Plan of Arrangement
    -------------------

    On June 25, 2008, Groupe Aeroplan Inc. announced that the plan of
arrangement providing for the reorganization of Aeroplan Income Fund's trust
structure into a growth-oriented, dividend-paying global loyalty management
public corporation named "Groupe Aeroplan Inc." had been completed. As a
result of the arrangement, the holders of Fund units became the sole
shareholders of the Corporation.

    Non-GAAP Measures

    In order to provide a better understanding of the results, the following
terms are used:

    Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
    (Adjusted EBITDA).

    EBITDA adjusted for certain factors particular to the business, such as
changes in deferred revenue and Future Redemption Costs ("Adjusted EBITDA"),
is used by management to evaluate performance, and to measure compliance with
debt covenants. Management believes Adjusted EBITDA assists investors in
comparing the Corporation's performance on a consistent basis without regard
to depreciation and amortization, which are non-cash in nature and can vary
significantly depending on accounting methods and non-operating factors such
as historical cost.
    Adjusted EBITDA is not a measurement based on GAAP, is not considered an
alternative to operating income or net income in measuring performance, and is
not comparable to similar measures used by other issuers. For a reconciliation
to GAAP, please refer to the SUMMARY OF CONSOLIDATED OPERATING RESULTS AND
RECONCILIATION OF EBITDA, ADJUSTED EBITDA, ADJUSTED NET EARNINGS AND FREE CASH
FLOW included in the attached schedule. Adjusted EBITDA should not be used as
an exclusive measure of cash flow because it does not account for the impact
of working capital growth, capital expenditures, debt repayments and other
sources and uses of cash, which are disclosed in the statements of cash flows.

    Adjusted Net Earnings

    Net earnings in accordance with GAAP adjusted for Amortization of
Accumulation Partners' contracts and technology; Change in deferred revenue,
Change in Future Redemption Costs and the income tax effect thereon calculated
at the effective income tax rate as reflected in the statement of operations,
provides a measurement of profitability calculated on a basis consistent with
Adjusted EBITDA.
    Adjusted Net Earnings is not a measurement based on GAAP, is not
considered an alternative to net earnings in measuring profitability, and is
not comparable to similar measures used by other issuers. For a reconciliation
to GAAP, please refer to the SUMMARY OF CONSOLIDATED OPERATING RESULTS AND
RECONCILIATION OF EBITDA, ADJUSTED EBITDA, ADJUSTED NET EARNINGS AND FREE CASH
FLOW included in the attached schedule.

    Standardized Free Cash Flow ("Free Cash Flow")

    Free Cash Flow is a non-GAAP measure recommended by the CICA in order to
provide a consistent and comparable measurement of free cash flow across
entities of cash generated from operations and is used as an indicator of
financial strength and performance.
    Free Cash Flow is defined as cash flows from operating activities, as
reported in accordance with GAAP, less adjustments for:

    (a) total capital expenditures as reported in accordance with GAAP; and
    (b) dividends, when stipulated, unless deducted in arriving at cash flows
        from operating activities.

    For reconciliation to cash flows from operations please refer to the
SUMMARY OF CONSOLIDATED OPERATING RESULTS AND RECONCILIATION OF EBITDA,
ADJUSTED EBITDA, ADJUSTED NET EARNINGS AND FREE CASH FLOW included in the
attached schedule.
    EBITDA and Free Cash Flow are non-GAAP measurements prescribed by the CICA
in accordance with the draft recommendations provided in their February 2008
publication, Improved Communications with Non-GAAP Financial Measures -
General Principles and Guidance for Reporting EBITDA and Free Cash Flow.

    Quarterly Investor Conference Call / Audio Webcast

    Groupe Aeroplan Inc. will hold an analyst call at 14:00 - 15:00 EDT on
August 14, 2008 to discuss its second quarter results. The call may be
accessed by dialing toll free: 1-866-540-8136, or 416-641-6112 for the Toronto
area. The call will be simultaneously audio webcast at
http://events.startcast.com/events/20/B0064
    The conference call webcast and a presentation to investors and analysts
will be archived on the investor relations website at www.aeroplan.com. A
playback of the call will also be accessible until midnight EDT on
September 14, 2008. The playback can be accessed by dialing toll free:
1-800-408-3053, or 416-695-5800 for the Toronto area, passcode: 3261999.
    The unaudited interim consolidated financial statements and the Investor
Presentation will be accessible on the investor relations website at
aeroplan.com.

    About Groupe Aeroplan Inc.

    Groupe Aeroplan Inc. is a leading international loyalty management
corporation. Groupe Aeroplan owns the Aeroplan program, Canada's premier
loyalty program and Nectar, the United Kingdom's leading coalition loyalty
program. In the Gulf Region, Groupe Aeroplan owns 60 per cent of Rewards
Management Middle East, the operator of Air Miles programs in the United Arab
Emirates, Qatar and Bahrain. Groupe Aeroplan also operates Insight &
Communication, a customer-driven insight and data analytics company offering
worldwide services to retailers and their suppliers.

    Caution Concerning Forward-Looking Statements

    Certain statements in this news release may contain forward-looking
statements. Forward-looking statements, by their nature, are based on
assumptions and are subject to important risks and uncertainties. Any
forecasts or forward-looking predictions or statements cannot be relied upon
due to, amongst other things, changing external events and general
uncertainties of the business and its corporate structure. Results indicated
in forward-looking statements may differ materially from actual results for a
number of reasons, including without limitation, dependency on top
accumulation partners, Air Canada or travel industry disruptions, reduction in
activity, usage and accumulation of Aeroplan Miles, retail market or economic
downturn, greater than expected redemptions for rewards, industry competition,
supply and capacity costs, unfunded future redemption costs, changes to the
Aeroplan and Nectar Programs, seasonal nature of the business, regulatory
matters, VAT appeal and value and liquidity of the common shares, as well as
the other factors identified throughout the MD&A. The forward-looking
statements contained in this discussion represent the Corporation's
expectations as of August 13, 2008, and are subject to change after such date.
However, the Corporation disclaims any intention or obligation to update or
revise any forward-looking statements whether as a result of new information,
future events or otherwise, except as required under applicable securities
regulations.


    SUMMARY OF CONSOLIDATED OPERATING RESULTS AND RECONCILIATION OF EBITDA,
          ADJUSTED EBITDA, ADJUSTED NET EARNINGS AND FREE CASH FLOW

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
     (in thousands, except
      share and per share      Three months ended           Six months ended
      information)                    June 30,                 June 30,
                          ---------------------------------------------------
                                 2008       2007(1)        2008       2007(1)
                          ------------ ------------ ------------ ------------
    -------------------------------------------------------------------------
    Gross Billings from
     the sale of Aeroplan
     Miles                   $357,858     $238,931     $700,508     $466,908
    -------------------------------------------------------------------------
    Aeroplan Miles revenue    317,579      207,086      654,865      435,647
    Other revenue              19,149       13,198       38,078       29,951
    -------------------------------------------------------------------------
    Total revenue             336,728      220,284      692,943      465,598
    Cost of rewards          (192,593)    (128,541)    (415,820)    (283,675)
    -------------------------------------------------------------------------
    Gross margin              144,135       91,743      277,123      181,923
    Selling, general and
     administrative expenses  (69,627)     (41,707)    (134,138)     (81,110)
    Depreciation and
     amortization              (4,998)      (2,811)      (9,670)      (5,515)
    -------------------------------------------------------------------------
    Operating income
     before amortization
     of Accumulation
     Partners' contracts
     and technology           $69,510      $47,225     $133,315      $95,298
    -------------------------------------------------------------------------
    Depreciation and
     amortization               4,998        2,811        9,670        5,515
    Foreign exchange loss      (4,529)           -         (216)           -
    -------------------------------------------------------------------------
    EBITDA(3)                 $69,979      $50,036     $142,769     $100,813
    -------------------------------------------------------------------------
    Change in deferred
     revenue
      Gross billings
       from the sale of
       Aeroplan Miles         357,858      238,931      700,508      466,908
      Aeroplan Miles
       revenue               (317,579)    (207,086)    (654,865)    (435,647)
    Change in Future
     Redemption Costs(2)
      (Change in Net
       Aeroplan Miles
       outstanding x
       Average Cost of
       Rewards per Mile
       for the period)        (32,931)     (16,710)     (32,501)      (7,788)
    -------------------------------------------------------------------------
    Adjustments                 7,348       15,135       13,142       23,473
    -------------------------------------------------------------------------
    Adjusted EBITDA(3)        $77,327      $65,171     $155,911     $124,286
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings in
     accordance with GAAP     $31,454      $49,450      $73,586      $99,566
    Weighted average
     number of shares
     (units)              199,402,234  199,500,582  199,402,426  199,519,955
    Earnings per share
     (unit)                     $0.16        $0.25        $0.37        $0.50
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings in
     accordance with
     GAAP                     $31,454      $49,450      $73,586      $99,566
    Amortization of
     accumulation
     partners' contracts
     and technology            22,688            -       45,366            -
    Adjustments                 7,348       15,135       13,142       23,473
    Effective tax rate(4)        9.09%                     0.15%
    Tax on adjustments at
     the effective rate          (668)           -          (20)           -
    -------------------------------------------------------------------------
    Adjusted net earnings(3)  $60,822      $64,585     $132,074     $123,039
    Adjusted earnings per
     share (unit)               $0.31        $0.32        $0.66        $0.62
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash flow from
     operations               $92,188      $71,142     $116,591     $144,371
    Maintenance Capital
     Expenditures              (6,558)      (2,979)     (13,423)      (5,352)
    Dividends /
     distributions            (41,994)     (42,000)     (83,988)     (89,000)
    -------------------------------------------------------------------------
    Free cash flow(3)         $43,636      $26,163      $19,180      $50,019
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total monthly
     distributions declared   $41,994      $42,000      $83,988      $84,000
    Total monthly
     distributions declared
     per unit                   $0.21        $0.21        $0.42        $0.42
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (in thousands, except
      share and per share                                      % change
      information)
                                                    -------------------------
                                                             Q2          YTD
                                                    ------------ ------------
    -------------------------------------------------------------------------
    Gross Billings from
     the sale of Aeroplan
     Miles                                                 49.8         50.0
    -------------------------------------------------------------------------
    Aeroplan Miles revenue                                 53.4         50.3
    Other revenue                                          45.1         27.1
    -------------------------------------------------------------------------
    Total revenue                                          52.9         48.8
    Cost of rewards                                        49.8         46.6
    -------------------------------------------------------------------------
    Gross margin                                           57.1         52.3
    Selling, general and
     administrative expenses                               66.9         65.4
    Depreciation and
     amortization                                          77.8         75.3
    -------------------------------------------------------------------------
    Operating income
     before amortization
     of Accumulation
     Partners' contracts
     and technology                                        47.2         39.9
    -------------------------------------------------------------------------
    Depreciation and
     amortization
    Foreign exchange loss
    -------------------------------------------------------------------------
    EBITDA(3)                                              39.9         41.6
    -------------------------------------------------------------------------
    Change in deferred
     revenue
      Gross billings
       from the sale of
       Aeroplan Miles
      Aeroplan Miles
       revenue
    Change in Future
     Redemption Costs(2)
      (Change in Net
       Aeroplan Miles
       outstanding x
       Average Cost of
       Rewards per Mile
       for the period)                                     97.1        317.3
    -------------------------------------------------------------------------
    Adjustments
    -------------------------------------------------------------------------
    Adjusted EBITDA(3)                                     18.7         25.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings in
     accordance with GAAP                                 (36.4)       (26.1)
    Weighted average
     number of shares
     (units)
    Earnings per share
     (unit)                                               (36.0)       (26.0)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings in
     accordance with
     GAAP                                                 (36.4)       (26.1)
    Amortization of
     accumulation
     partners' contracts
     and technology
    Adjustments
    Effective tax rate(4)
    Tax on adjustments at
     the effective rate
    -------------------------------------------------------------------------
    Adjusted net earnings(3)                               (5.8)         7.3
    Adjusted earnings per
     share (unit)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash flow from
     operations                                            29.6        (19.2)
    Maintenance Capital
     Expenditures
    Dividends /
     distributions
    -------------------------------------------------------------------------
    Free cash flow(3)                                      66.8        (61.7)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total monthly
     distributions declared
    Total monthly
     distributions declared
     per unit
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) 2007 results presented for comparative purposes are those of the
        Partnership;
    (2) The per unit cost derived from this calculation is retroactively
        applied to all prior periods with the effect of revaluing the
        liability on the basis of the latest available average unit cost;
    (3) A non-GAAP measurement;
    (4) Effective tax rate calculated as follows: income tax expense per
        statement of operations / earnings before income taxes for the
        period.