Air Canada sells 25% stake in Aeroplan for $2.5 bln

Air Canada announced the sale of a 25% stake in its Aeroplan loyalty program to a consortium of investors for $2.5 billion, valuing the unit at $10 billion.

The transaction, structured as a secondary offering, includes commitments from existing shareholders TD Bank Group and Aimia Inc., which will maintain their combined 17% ownership. Air Canada will retain majority control with a 58% stake in Aeroplan, a unit it spun off in 2020.

Proceeds from the sale will be used to reduce debt and bolster liquidity, the airline said. Aeroplan operates one of Canada’s largest loyalty programs, with over 5 million active members and partnerships spanning retail, financial services, and travel sectors.

The deal underscores Air Canada’s strategy to monetize non-core assets while maintaining operational control. The airline has faced financial strain from the pandemic but reported improving cash flows in recent quarters amid a rebound in travel demand.

Analysts noted the valuation reflects Aeroplan’s strong recurring revenue model and diversified partnerships, though the airline’s leverage remains a key focus for investors. Air Canada’s debt stood at approximately $4.5 billion as of its last quarterly filings.

The transaction is expected to close in the second half of 2024, subject to regulatory approvals.