Air Canada Set to Fund Fleet Expansion & Renewal by Selling Minority Aeroplan Stake
by Bruce Parkinson
Aeroplan ranks 8th in a compilation of the world’s most valuable airline loyalty programs.
Several published reports suggest that Blackstone Inc. is close to acquiring a 20% stake in Aeroplan, Air Canada’s travel loyalty program, for approximately $2 billion.
Citing people familiar with the matter, Bloomberg says the deal could be announced as early as this week.
Blackstone Inc. is one of the world’s largest alternative investment firms. It manages money on behalf of institutional investors, companies and wealthy individuals, investing across areas such as private equity, real estate, credit and infrastructure.
Canadian funds are set to invest in Aeroplan alongside Blackstone at the same time, Bloomberg reported.
Air Canada is seeking to raise money to buy new aircraft and renovate the interiors of existing ones as it plots new routes. It currently operates more than 300 planes and expects to reach nearly 400 by 2030.
Like other carriers, Canada’s largest airline has been hard-hit by soaring fuel prices caused by the Iran war. According to Bloomberg Intelligence estimates, the company is expected to report an 85% drop in adjusted net profit from the prior year when it releases earnings on August 12.
In the past year, Air Canada has added flights to Europe and Asia to compensate for a drop in flying to the U.S., due to geopolitical tensions.
Aeroplan has more than 10 million members worldwide who can earn or redeem points on Air Canada’s partner network of more than 50 airlines and through its hotel and car rental partners.
Credit card issuers such as American Express and Toronto-Dominion Bank pay Aeroplan for the right to offer its loyalty points to customers, who exchange them for plane tickets or other perks.
Air Canada previously spun off Aeroplan in 2003 as part of a broader restructuring of the airline after it went into bankruptcy protection. Air Canada then repurchased the loyalty program in 2018 at a bargain price. The airline is now seeking to add liquidity without fully divesting the Aeroplan cash cow.
