Air Canada reportedly nearing US$2B Aeroplan stake sale

Air Canada is reportedly close to an agreement that would see Blackstone Inc. acquire a minority stake in Aeroplan for approximately US$2 billion.

Citing people familiar with the confidential discussions, Bloomberg reported that the deal could be announced as early as this week. 

Several Canadian funds are also expected to invest in the loyalty program alongside Blackstone.

The potential agreement comes as Air Canada prepares to report its earnings on Wednesday. 

Bloomberg Intelligence estimates the airline will post an 85 per cent year-over-year decline in adjusted net profit.

Air Canada, like other carriers, has been affected by rising jet-fuel prices linked to the war in Iran. 

The airline has also added service to Europe and Asia in recent months to offset reduced travel to the United States amid geopolitical tensions.

The reported Aeroplan transaction follows a strategy used by several airlines during the pandemic, when widespread travel restrictions pushed carriers to seek alternative sources of financing.

A deal with Blackstone would mark the second time in just over two decades that Air Canada has brought outside investors into Aeroplan.

The loyalty program was separated from Air Canada following the airline’s entry into bankruptcy protection in 2003. 

Aeroplan became a publicly traded company in 2005 before expanding into other loyalty businesses and changing its name to Aimia Inc.

The relationship between Aimia and Air Canada later deteriorated. 

In 2017, Air Canada announced it would not renew its agreement with Aimia and planned to launch a competing loyalty program. 

Aimia’s shares fell 63 per cent in one day following the announcement.

Aimia agreed in 2018 to sell Aeroplan back to Air Canada for $450 million in cash, along with the assumption of certain liabilities.

Aeroplan has more than 10 million members worldwide. 

Members can earn and redeem points through Air Canada’s network of more than 50 airline partners, as well as participating hotel and car rental companies.

Blackstone would reportedly make the equity investment through its credit and insurance division.

In July, Blackstone’s credit and insurance division led a US$5.34 billion investment in Williams Cos. power plants alongside Apollo Global Management Inc. and KKR & Co. Inc.

The division also supported Rogers Communications Inc.’s wireless network infrastructure through a $7 billion agreement last year. 

It provided EQT Corp. with US$3.5 billion in exchange for a non-controlling common equity interest in a new infrastructure joint venture.

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