- Air Canada sold a 25pc stake in Aeroplan to an investor group led by Blackstone for CA$2.5 billion.
- The shares jumped 12pc on the Toronto Stock Exchange following the announcement.
- The sale proceeds will repay CA$1.7 billion in bonds and fund up to CA$800 million in share buybacks.
- The implied valuation of Aeroplan now stands at $10 billion, up from $497 million in 2019.
- Michael Rousseau confirmed no changes to how members earn or burn points will occur.
Air Canada shares jumped 12pc after the country’s largest airline announced it would sell a quarter of its Aeroplan loyalty program to Blackstone and a trio of Canadian pension funds for CA$2.5 billion. The carrier’s stock price reached its highest level since early 2020, closing at $30.61 on the Toronto Stock Exchange. The buyers are led by private equity giant Blackstone and the Caisse de dépôt et placement du Québec, with the Public Sector Pension Investment Board and the British Columbia Investment Management Corp. also investing.
The sale marks a windfall for the airline just as high jet fuel prices caused by the Middle East war delivered a half-billion-dollar hit to its earnings this year. Air Canada will maintain full control of day-to-day operations at the travel rewards program, which it repurchased in 2019 for less than $500 million. The implied valuation now stands at $10 billion. The company plans to use proceeds from the deal to repay $1.7 billion in bonds and buy back up to $800 million in shares in September.
Outgoing CEO Michael Rousseau confirmed there is no intention of relinquishing control of this valuable and strategically important component of Air Canada, seeking to reassure members about the frequent-flyer system. He added that there will be no changes to the way members earn or burn points or to any other element of the program because of this transaction. The sale is set to close on Monday, and the CEO will step down at the end of August.
Michael Rousseau shared there is no intention of relinquishing control of this valuable and strategically important component of Air Canada, and there will be no changes to the way members earn or burn points or to any other element of the programme.
