CALGARY, Alberta -- In the midst of reorganizational bankruptcy
proceedings and a pending acquisition by rival Air Canada, Canadian
Airlines announced that it plans to withdraw from American Express'
Membership Rewards Program.
An American Express Canada Inc. partner for nine years,
Canadian's decision to cease offering transfers of points into the
carrier's Canadian Plus frequent flyer program breaks the terms of
its contract with American Express, set to run through 2002.
According to a Canadian Airlines spokeswoman, the airline
decided as part of its restructuring process to discontinue its
membership in the program for an extended period of time and
contended the decision came only after negotiations with American
Express about the program's future broke down.
"We had been negotiating with American Express for two months,"
she said.
"We offered to continue the program through the end of this
year, which would have given [Amexco] seven months to restructure
its plan," she added. "As that offer proved unsatisfactory, we had
no choice but to pull out, effective immediately."
Travel already booked using MRP points will be unaffected by the
change, she said, but the company has ceased accepting any points
transfers from the American Express program.
Under the terms of the Companies' Creditors Arrangement Act
(CCAA), which is Canada's bankruptcy code, companies under
restructuring protection are permitted to terminate contracts they
deem contrary to their best interests.
But American Express officials, who announced a revamping of the
Membership Rewards Program's travel component in response to
Canadian's pullout, claimed the airline's only offer of negotiation
consisted of an "ultimatum" to raise the price of MRP points,
despite the standing contract.
"Perhaps this fits someone's definition of negotiation, but not
ours," an American Express Bank of Canada spokesman said, adding
that the company was notified April 20 that Canadian would be
canceling its contract on April 24.
"That they would appeal to their protection under the CCAA says
quite a bit about how convenient this announcement was on their
part."
The spokesman declined to estimate the size of American Express'
Canadian Membership Rewards program, offering only that a
"significant number" of its more than 2 million Canadian
cardholders will be affected by the change.
In response, American Express announced that it will now allow
members to redeem their MRP points for travel certificates, which
can be applied for up to half the value of airline and other
travel-related purchases booked through one of American Express
Canada's 85 retail travel locations.
Additionally, program participants will receive a "loyalty
bonus" of 10% on all points they accrue between May 1 and year's
end.