Air Canada completes $800 million substantial issuer bid

Further to Air Canada’s last update (Sept. 25) indicating its plans to buy back $800M in shares, returning share count to pre-COVID levels, the national carrier reports in its release today (Sep. 28) that it has taken up and paid for 27,586,206 of its Class A variable voting shares and Class B voting shares (collectively, the "shares") at a price of $29.00 per share under its $800 million substantial issuer bid (the "offer") to purchase shares for cancellation.

The shares bought under the offer represent about 9.8 per cent of the total number of Air Canada's outstanding shares as of Sept. 24, 2026, before giving effect to the offer. After the offer, about 252.7 million shares will remain outstanding.

According to Air Canada, the completion of the offer is an important milestone in the airline's disciplined execution of its capital allocation framework and priorities, allowing it to complete the return of its share count to below pre-pandemic levels.

Air Canada shared that the share purchase was funded with part of the proceeds from the minority equity investment in Aeroplan by funds managed by Blackstone and La Caisse, together with other leading Canadian institutions.

The airline says completion of the offer allows it to return value to shareholders while continuing to invest in its New Frontiers strategy and support one of the strongest balance sheets among its North American peers.

Offer details

Air Canada reports that a total of about 66.8 million shares were validly deposited in the offer and not withdrawn pursuant to auction tenders at $29.00 or purchase price tenders. Since the offer was oversubscribed, about 41 per cent of the successfully tendered shares were purchased by Air Canada, other than "odd lot" tenders not subject to proration.

Air Canada has paid TSX Trust Company (Canada), the depositary under the offer, about $800 million for the purchased shares. Settlement will be made by the depositary on or before Oct. 2, 2026, in accordance with the offer and applicable law.

Any shares that are not purchased, including as a result of proration or auction tenders at more than $29.00, will be returned to shareholders as soon as practicable.

Air Canada estimates that, for purposes of the Income Tax Act (Canada) (the "ITA"), the paid-up capital per share is about $10.60. Shareholders who have sold shares to Air Canada under the offer will as a result, be deemed to have received a dividend equal to $18.40 per share, the amount by which the purchase price exceeds the paid-up capital per share for Canadian federal income tax purposes.

According to the airline, the dividend deemed to have been paid by Air Canada to Canadian resident persons is designated as an "eligible dividend" for purposes of the ITA and any corresponding provincial and territorial tax legislation.

The "specified amount" for purposes of subsection 191(4) of the ITA is $18.40. Air Canada advises that shareholders should consult their own tax advisors with respect to the income tax consequences of the disposition of their shares under the offer.

The full details of the offer were described in the offer to purchase and issuer bid circular dated Aug. 20, 2026, as well as the related letter of transmittal and notice of guaranteed delivery, copies of which were filed and are available under Air Canada's profile on SEDAR+ found here.

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