Air Canada has announced a CA$2.5bn minority equity investment in Aeroplan from funds managed by Blackstone and La Caisse, alongside other Canadian institutional investors.
Under the transaction, the investor group will acquire a 25% non-controlling stake in Aeroplan, valuing the loyalty programme at CA$10bn.
Air Canada will retain a controlling ownership interest and full operational control of Aeroplan. The airline said Aeroplan remains a core part of its commercial strategy and that the transaction will not affect members, partners or employees.
Proceeds from the investment will be used in part to repay Air Canada’s upcoming US$1.2bn (CA$1.7bn) bond maturity. The airline said this will strengthen its balance sheet by reducing gross debt without a corresponding reduction in cash and cash equivalents.
Most of the remaining proceeds will be used to accelerate share repurchases contemplated under Air Canada’s long-term strategic plan.
The investor group, led by Blackstone and La Caisse, also includes PSP Investments and British Columbia Investment Management Corporation (BCI).
“This investment highlights Aeroplan as a differentiated loyalty platform and showcases the exceptional value created since its acquisition,” said John Di Bert, Air Canada Executive Vice-President and CFO.
“The transaction strengthens Air Canada’s financial position by unlocking value from Aeroplan while retaining full operational control. It provides additional financial flexibility, and supports our pursuit of an investment grade rating, as we execute our long-term strategic plan.”
