[CIBC LOGO]
CIBC, AIR CANADA AGREE TO REPLACE EXISTING AEROGOLD CONTRACT
TORONTO, April 17, 2003 -- CIBC presently has a contract with Air Canada,
expiring in 2009, under which CIBC purchases Aeroplan miles to issue to CIBC
Aerogold VISA credit card customers. CIBC and Air Canada have agreed to replace
the contract with a new contract, subject to monitor approval, court approval in
the CCAA proceedings and the fulfillment by Air Canada of certain conditions.
Under the proposed terms of the new arrangements between CIBC and Air Canada:
- CIBC's exclusive Aeroplan relationship would be extended to 2013.
- CIBC would pay Air Canada a higher price per Aeroplan mile acquired. The
cost of Aeroplan miles appears in CIBC's financial statements as a net
reduction to revenue.
- CIBC would make an Aeroplan miles prepayment of $350 million which would
appear as an asset on CIBC's balance sheet and be reduced monthly as CIBC
acquires points.
At the time the existing contract was entered into, CIBC made a payment of $200
million to Air Canada that has been amortizing since the contract came into
force on January 1, 2002. As at March 31, 2003 CIBC carried the payment at $181
million on its balance sheet. Upon the new contract taking effect, CIBC will
become an unsecured creditor of Air Canada for this unamortized balance and
expects to take an after-tax charge in the range of 22 to 26 cents a share in
the second quarter.
Thereafter, the net impact on CIBC's earnings of the higher cost per Aeroplan
mile together with the absence of the ongoing amortization of the existing
contract's initial payment is not expected to be material.
The new contract will allow CIBC Aerogold VISA customers to continue to receive
the benefits of Aerogold, Canada's most popular premium credit card, without
interruption or change in benefits.
CIBC has the leading credit card business in Canada with the No. 1 market share
both in card purchase volumes and average outstanding card balances. CIBC is
also the leading issuer of premium credit cards based on purchase volumes.
CIBC is one of North America's leading financial institutions. It offers a full
range of products and services through its comprehensive electronic banking
network, branches and offices across Canada and around the world. For more
detailed information, please visit CIBC's corporate website at xxx.xxxx.xxx.
This news release contains forward-looking statements which are made pursuant to
the `safe harbor' provisions of the United States Private Securities Litigation
Reform Act of 1995. These forward-looking statements include, but are not
limited to, statements about the operations, financial condition, strategies and
outlook of CIBC. A forward-looking statement is subject to inherent risks and
uncertainties that may be general or specific. A variety of factors, many of
which are beyond CIBC's control, including the receipt by Air Canada of monitor
approval, court approval in its CCAA proceedings and the fulfillment by Air
Canada of certain conditions, could cause actual results to differ materially
from the expectations expressed in CIBC's forward-looking statements. Readers
should not place undue reliance on CIBC's forward-looking statements. CIBC does
not undertake to update any forward-looking statement that is contained in this
news release.
- 30 -
Contact: Xxx XxXxxx (000) 000-0000
