Bank was already loyalty program’s biggest single partner.
BMO Financial Group has signed a deal to acquire the Air Miles rewards program from LoyaltyOne Co., which has gone into bankruptcy protection.
In a press release, Air Miles president Shawn Stewart says the deal will have no impact on the points balances of the program’s 10 million customers, or on their ability to use their miles to pay for items.
The transaction is happening because Air Miles’ U.S. parent company, LoyaltyOne, is seeking court protection from its creditors in the U.S. and Canada.
In U.S. court filings, LoyaltyOne says it has assets of about $10 million, against liabilities of up to $1 billion.
Air Miles was once one of the biggest names in the loyalty space, but the company has seen its popularity slowly erode in recent years, as more and more retail partners left.
The most recent major blow to Air Miles came last year when Empire Company, which owns the Sobey’s and Safeway grocery chains, joined the Scene+ rewards program, founded by Scotiabank and Cineplex.
Patrick Sojka, the founder of loyalty program portal Rewards Canada, says Air Miles has been in trouble for a while now.
“They’ve lost partners left, right and centre, not just the Sobey’s group … they lost Staples, they lost Old Navy, they lost Rona, Lowe’s,” he told CBC News in an interview.
While Bank of Montreal is calling the deal a “made-in-Canada opportunity to enable a reinvigoration for one of Canada’s largest loyalty programs,” there is a chance that another suitor could emerge for Air Miles.
As part of the insolvency proceedings under Chapter 11 of the U.S. Bankruptcy Code and the Company Creditors’ Arrangement Act in Canada, LoyaltyOne will undergo a sale process, one that could see a buyer other than BMO emerge with a better offer.
But Sojka says that’s unlikely to happen. “There’s no big partners outside of Bank of Montreal itself left in that program. And so without a lot of options for additional revenue … it’s less and less surprising that this is happening.”
ABOUT THE AUTHOR
Pete Evans is the senior business writer for CBCNews.ca. Prior to coming to the CBC, his work has appeared in the Globe & Mail, the Financial Post, the Toronto Star, and Canadian Business Magazine. Twitter: @p_evans Email: firstname.lastname@example.org
With files from the CBC’s Meegan Read
Credit belongs to : www.cbc.ca