May 12, 2009 / 11:06 AM / 9 years ago

UPDATE 2-Aeroplan profit falls, says may help Air Canada

* Q1 adjusted EPS C$0.22 vs estimated C$0.27

* Says would consider financial support for Air Canada

* Has no plans for share buybacks (Adds details from conference call)

VANCOUVER, British Columbia , May 12 (Reuters) - Groupe Aeroplan Inc AER.TO posted a lower quarterly profit on Tuesday and said reduced consumer spending made it difficult to predict its 2009 performance, sending the shares lower.

Aeroplan, best known as operator of Air Canada’s ACa.TO frequent flier program, also said it would consider giving financial support to the cash-strapped airline over and above a current “faster payments” agreement it has with Air Canada.

“We will do what we need to do to preserve our commercial relationship with (Air Canada), but we wouldn’t take any unreasonable risks to do that,” Aeroplan Chief Executive Rupert Duchesne said.

“I think you can expect us to be prudent, but we would be crazy not to help out if we were asked, if that would make a fundamental difference to them,” he said on a conference call with analysts.

Aeroplan announced last December it will pay Air Canada C$70 million ($60 million) ahead of schedule for reward tickets issued to help ease a cash crunch at Canada’s biggest airline. That agreement is due to expire on May 29 but Duchesne said Aeroplan could consider extending it.

Analysts have speculated that Air Canada could be headed for bankruptcy again hobbled by a C$2.85 billion pension shortfall, tough economic conditions and stiff competition. The airline has said it is working to avoid a bankruptcy filing.

Duchesne also said Aeroplan was open to using its surplus cash for acquisitions and that “a lot of stuff” was being brought to the company to look at.

Although Aeroplan stock has been under pressure — it fell 7 percent to C$8.21 on the Toronto Stock Exchange on Tuesday and is down 47 percent in the past 12 months — Duchesne said the firm has no plans to buy back its stock.

“If we get to the point at the end of this year and next year we haven’t found any interesting acquisition opportunities, you can work out that we’ll have substantial surplus cash at that point, then we would consider a buyback,” he said.

For the first quarter, Aeroplan earned C$23.2 million, or 12 Canadian cents a share, down from C$42.1 million, or 21 Canadian cents a share, a year earlier.

Excluding charges, the loyalty program operator earned C$44.6 million, or 22 Canadian cents a share. Analysts had expected earnings of 27 Canadian cents a share, before items, according to Reuters Estimates.

Revenue, including gross billings on the sale of Aeroplan Miles, fell slightly to C$355.8 million.

The company declared a quarterly dividend of 12.5 Canadian cents.

$1=$1.16 Canadian Reporting by Nicole Mordant; additional reporting by Chakradhar Adusumilli in Bangalore; editing by Rob Wilson

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