Blackstone and La Caisse Lead a C$2.5B Investment in Aeroplan
Asset manager Blackstone and Quebec's La Caisse pension fund have agreed to acquire a 25% stake in Air Canada's loyalty-points program for nearly US$2 billion, which the airline said would help reduce debt and take steps toward obtaining an investment-grade rating.
Blackstone, meanwhile, said the deal is a sign of the asset manager's confidence in Canada as a place to do business.
Montreal-based Air Canada, the nation's largest airline, said the proceeds would help repay an upcoming billion-dollar bond maturity and reduce debt. Air Canada said the transaction values its Aeroplan points program at 10 billion Canadian dollars (US$7.2 billion).
Blackstone and La Caisse are leading a consortium that also includes two other Canadian pension plans: PSP Investment and the British Columbia Investment Management Corporation. Montreal's La Caisse manages over a half-trillion Canadian dollars in assets on behalf of Quebec residents, and part of its mandate is to support companies in the province.
Aeroplan members collect points through Air Canada flights and purchases made with co-branded credit cards, which they can then redeem in exchange for air travel or other goods. Securities filings indicate that Aeroplan has over 10 million active members, or a total representing a quarter of Canada's population.
"The transaction strengthens Air Canada's financial position by unlocking value from Aeroplan while retaining full operational control," said John Di Bert, the airline's chief financial officer. "It provides additional financial flexibility, and supports our pursuit of an investment grade rating," he added. Moody's, S&P Global and Fitch Ratings all have speculative-grade ratings on Air Canada debt.
Air Canada reported second-quarter earnings on Tuesday, following news of the Aeroplan deal, and the airline said it is carrying C$12.79 billion of long-term debt and lease liabilities on its balance sheet. The company said its adjusted earnings for the quarter were 40 Canadian cents a share, above analysts' estimates for 15 Canadian cents a share according to FactSet.
About two decades ago, Air Canada spun off Aeroplan as a separate, publicly-traded entity to help raise money after a bankruptcy restructuring. In 2019, the airline reacquired Aeroplan for C$497 million in cash, along with the assumption of about C$2 billion in liability associated with unused Aeroplan points.
Aeroplan is an industry-leading loyalty platform, according to Mark Rutledge, a senior managing director at Blackstone. The travel-industry Freddie Awards named Aeroplan as this year's winner of the best loyalty-travel program in the Americas.
"Blackstone is a long-term believer in Canada as both a compelling place to invest and serve clients," Rutledge said.
"This transaction adds to our decades-long commitment to the country and is another example of our ability to provide flexible, efficient capital solutions to leading businesses around the world," he added.
Air Canada shares finished trading on Tuesday up 5.9%, at C$27.27, in Toronto.
Freschia Gonzales of Benefits and Pensions Monitor also reports Blackstone and La Caisse lead a $2.5 billion investment in Aeroplan:
Air Canada will sell a 25 percent stake in its Aeroplan loyalty program to an investor group that includes three of Canada's largest institutional and pension managers, in a $2.5bn transaction that values the program at $10bn.
The airline said on August 11 that funds managed by Blackstone and La Caisse are leading the minority investment, with PSP Investments and British Columbia Investment Management Corporation (BCI) also taking part.
Air Canada will keep the remaining 75 percent and, according to the company, full operational control over Aeroplan's strategy, operations and day-to-day management.
For retirement asset managers, the deal marks another large private equity commitment by Canadian public sector plans.
La Caisse, PSP Investments and BCI all invest pension money, and La Caisse framed its participation as a portfolio move.
"It is also an attractive diversification opportunity for our global portfolio, which ultimately benefits our depositors," said Martin Longchamps, executive vice-president and head of private equity and private credit at La Caisse.
Air Canada will direct the proceeds toward repaying an upcoming US$1.2bn ($1.7bn) bond maturity and toward accelerating share buybacks.
According to Air Canada, repaying the bond reduces gross debt without drawing down cash.
The transaction landed alongside weaker quarterly results.
Air Canada reported a net loss of $178m for the second quarter, compared with net income of $186m a year earlier, as per BNN Bloomberg.
That worked out to a diluted loss of 63 cents per share against diluted earnings of 51 cents a year before.
Revenue rose to $6.3bn from $5.6bn over the same period, BNN Bloomberg reported.
Settlement of the Aeroplan investment is planned for August 17, the company said. Air Canada will continue to consolidate Aeroplan in its financial statements and record the stake as a non-controlling interest within shareholders' equity. Investors will share in distributions declared by Aeroplan's board under an agreed policy.
According to the announcement, Air Canada also secured the right to buy back the investor group's stake between the fifth and eighth anniversaries of settlement, and on certain specified events.
The repurchase price follows a formula that gives the investors an internal rate of return of 6.5 percent, calculated net of all distributions.
Separately, Air Canada said it plans a substantial issuer bid to buy back up to $800m of its Class A variable voting shares and Class B voting shares for cancellation.
The company will run the buyback as a modified Dutch auction, set its terms shortly after the August 17 settlement, and aim to complete it in September.
Air Canada intends to fund the bid with proceeds from the Aeroplan investment.
John Di Bert, executive vice-president and chief financial officer at Air Canada, said the transaction strengthens the airline's balance sheet and supports its pursuit of an investment-grade rating as it executes its long-term plan.
Blacktone issued a press release stating that Air Canada announced a CDN$2.5 billion minority equity investment in Aeroplan led by it and La Caisse:
- Blackstone and La Caisse are leading a CDN$2.5 billion, 25% minority equity investment in Aeroplan, valuing the program at CDN$10 billion
- Investor group also includes PSP Investments and British Columbia Investment Management Corporation
- Air Canada retains full control over Aeroplan’s strategy, operations and day-to-day management through its controlling interest
- Aeroplan Members, partners and employees will experience no changes as a result of the transaction
- The transaction supports investment in Air Canada’s strategic plan and long-term growth and underscores the value of Aeroplan’s industry-leading loyalty program.
- Proceeds will be used toward the repayment of upcoming US$1.2 billion bond maturity and accelerate share repurchases, including through a substantial issuer bid for up to CDN$800 million in shares
MONTRÉAL, August 11, 2026 – Air Canada today announced that funds managed by Blackstone and La Caisse, together with other leading Canadian institutions, are making a CDN$2.5 billion minority equity investment in Aeroplan Inc. The transaction terms provide that the investor group is acquiring a 25% non-controlling equity interest in Aeroplan, valuing the program at CDN$10 billion.[1]
Air Canada will maintain full operational control of Aeroplan and a controlling ownership interest after the minority investment. Aeroplan remains a core part of Air Canada’s commercial strategy and customer value proposition, and the experience of members, partners and employees will be unaffected by the transaction.
Proceeds from this investment will be used toward the repayment of Air Canada’s upcoming US$1.2 billion (CDN$1.7 billion) bond maturity, strengthening Air Canada's balance sheet through a reduction in gross indebtedness without a corresponding reduction in cash and cash equivalents. Most of the balance to be applied to accelerate the share repurchases contemplated in its 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. 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, for the benefit of our customers, employees and investors,” said John Di Bert, Executive Vice President and Chief Financial Officer at Air Canada.
“Air Canada has established Aeroplan as one of Canada’s leading loyalty programs, with strategic partnerships across travel, financial, and commercial sectors. We are pleased to welcome Blackstone, La Caisse and other leading Canadian institutions as minority investors in Aeroplan as we continue to strengthen and expand Aeroplan’s global appeal. Under the new partnership, Air Canada retains full control of the program, meaning partners, members, and employees can all expect full continuity of the program as they do today. Air Canada is committed to remaining the majority owner of Aeroplan, ensuring continued control of the program while positioning it for future growth and value creation,” said Craig Landry, Executive Vice President & Chief Innovation Officer at Air Canada, and President of Aeroplan.
"We are proud to support Air Canada and the leading loyalty platform they’ve built in Aeroplan,” said Mark Rutledge, Senior Managing Director, Blackstone. “Blackstone is a long-term believer in Canada as both a compelling place to invest and serve clients. This transaction adds to our decades-long commitment to the country and is another example of our ability to provide flexible, efficient capital solutions to leading businesses around the world."
“This investment in Aeroplan, one of the country’s leading loyalty programs built by Air Canada, reflects La Caisse's ability to structure tailored capital solutions backed by a strategic asset, alongside a strong group of co-investors," said Martin Longchamps, Executive Vice-President and Head of Private Equity and Private Credit at La Caisse. "It is also an attractive diversification opportunity for our global portfolio, which ultimately benefits our depositors.”
Transaction Details
The investor group is making a CDN$2.5 billion minority equity investment in Aeroplan Inc., acquiring a 25% equity interest in it. Air Canada will retain a 75% ownership interest and continue to control Aeroplan and its operations, strategic direction and day-to-day management. Proceeds from the transaction will primarily allow Air Canada to repay its upcoming US$1.2 billion debt maturity with most of the balance applied to accelerate the share repurchases contemplated in its long-term strategic plan. Settlement of the investment is planned to occur on August 17, 2026.
Financial Reporting, Governance and Ongoing Control
This investment includes customary minority investor rights. Air Canada will retain control of Aeroplan's strategy, operations, and day-to-day management. Air Canada will continue to consolidate Aeroplan in its consolidated financial statements and this investment will be reflected as a non-controlling interest within shareholders' equity.
Distribution Policy and Call Option
The investors will be entitled to participate in distributions from Aeroplan, as and when declared by its board of directors, pursuant to an agreed distribution policy.
Air Canada will also have the right to repurchase the interest held by the investor group in Aeroplan between the fifth and eighth anniversaries of the transaction’s settlement, as well as upon the occurrence of specified events. The repurchase price will be determined pursuant to an agreed formula that provides the investors with an internal rate of return of 6.5% calculated net of all distributions.
Air Canada Announces Substantial Issuer Bid
Air Canada also announced today that it intends to conduct a substantial issuer bid (the “proposed offer”) to purchase for cancellation up to CDN$800 million of its Class A variable voting shares and Class B voting shares (collectively, the “shares”). The terms and pricing of the proposed offer are expected to be determined soon after the planned settlement of the Aeroplan minority investment on August 17, 2026. The proposed offer would thereafter be launched with a view to being completed in September 2026. Air Canada intends to fund the proposed offer with proceeds from the investment in Aeroplan.
The proposed offer will proceed by way of modified Dutch Auction. Once launched, shareholders may tender their shares in response to the proposed offer in one of two ways: (i) an “auction tender" specifying the number of shares tendered and a tender price per share within a range set by Air Canada shortly before the proposed offer commences or (ii) a “purchase price tender" specifying the number of shares tendered, to be sold at the purchase price determined by the auction tender rather than at a specified price. Shareholders who choose not to tender shares or whose tendered shares are not purchased will see their equity interest in Air Canada increase in proportion to the number of shares purchased under the proposed offer. The proposed offer will not be conditional on any minimum number of shares being tendered but will be subject to conditions customary for transactions of this nature.
The contents of this news release relating to the proposed offer are for informational purposes only and do not constitute an offer to buy or the solicitation of an offer to sell Air Canada's shares. The proposed offer has not yet commenced. The solicitation and the offer to buy shares will only be made pursuant to an issuer bid circular, which will contain the details of the proposed offer and will be filed with Canadian securities regulatory authorities and sent through notice-and-access to Air Canada’s shareholders in accordance with applicable legal requirements.
Advisors
BofA Securities, Stikeman Elliott LLP and Deloitte LLP respectively acted as advisors to Air Canada and Aeroplan. Scotiabank, Kirkland and Ellis LLP and Blake, Cassels & Graydon LLP respectively acted as advisors to Blackstone.
About Air Canada
Air Canada is Canada's largest airline, the country’s flag carrier and a founding member of Star Alliance, the world's most comprehensive air transportation network. Headquartered in Montréal, Air Canada provides scheduled service directly to more than 180 airports in Canada, the United States and Internationally on six continents. It holds a Four-Star ranking from Skytrax. Air Canada’s Aeroplan program is Canada’s premier travel loyalty program, with more than 10 million members worldwide. Members can earn or redeem points on the world’s largest airline partner network of more than 50 airlines, plus through an extensive range of merchandise, hotel and car rental partners. Through Air Canada Vacations, it offers a selection of vacation and Flight & Hotel packages, tours, cruises, car rentals, and experiences. Its freight division, Air Canada Cargo, provides air freight lift and connectivity to hundreds of destinations across six continents using Air Canada’s passenger and freighter aircraft. Air Canada’s climate-related ambition includes a long-term aspirational goal of net-zero greenhouse gas emissions by 2050. For additional information, please see Air Canada’s TCFD disclosure. Air Canada shares are publicly traded on the TSX (AC).
About Aeroplan
Aeroplan Inc. operates Canada’s leading travel loyalty program, with more than 10 million active members worldwide. Aeroplan Members can earn or redeem points with over 50 airlines to 1,300+ destinations globally, without blackouts or surcharges. Members can redeem Aeroplan points for a variety of travel, merchandise, gift cards and other rewards provided directly by participating partners or made available through Aeroplan’s suppliers. Aeroplan Elite Status recognizes Air Canada’s frequent flyers, as well as Aeroplan’s most engaged members, with a range of priority travel services and membership benefits. To join Aeroplan and start turning daily purchases into points for flights, hotel stays, gifts and more, visit aircanada.com/aeroplan.
About Blackstone
Blackstone is the world’s largest alternative asset manager. Blackstone seeks to deliver compelling returns for institutional and individual investors by strengthening the companies in which the firm invests. Blackstone’s over US$1.3 trillion in assets under management include global investment strategies focused on real estate, private equity, credit, infrastructure, life sciences, growth equity, secondaries and hedge funds. Further information is available at www.blackstone.com. Follow @blackstone on LinkedIn, X (Twitter), and Instagram.
About La Caisse
For more than 60 years, La Caisse has invested with a dual mandate: generate optimal long-term returns for its 48 depositors, who represent over six million Quebecers, while contributing to Québec’s economic development.
As a global investment group, La Caisse is active in major financial markets, private equity, infrastructure, real estate and private credit. As at December 31, 2025, its net assets totaled CDN$517 billion. Learn more at LaCaisse.com, LinkedIn and Instagram.
La Caisse is a registered trademark of Caisse de dépôt et placement du Québec that is protected in Canada and other jurisdictions and licensed for use by its subsidiaries.
This is a huge private equity deal in Canada involving Air Canada, Blackstone, La Caisse, PSP Investments and BCI.
The fact that Blackstone and La Caisse led the deal and PSP and BCI also took part in it tells me it was a win-win for all parties involved.
Air Canada gets C$2.5 billion in cash, retains full operational control of Aeroplan, and the Blackstone-La Caisse led consortium are acquiring a significant minority stake in a very profitable loyalty program.
In fact, the first thing that stood out to me is this (from WSJ article above):
About two decades ago, Air Canada spun off Aeroplan as a separate, publicly-traded entity to help raise money after a bankruptcy restructuring. In 2019, the airline reacquired Aeroplan for C$497 million in cash, along with the assumption of about C$2 billion in liability associated with unused Aeroplan points.
Think about it: Air Canada reacquired Aeroplan seven years ago for C$497 million in cash, along with the assumption of about C$2 billion in liability associated with unused Aeroplan points, and are now selling a 25% minority stake to world-class investors for C$2.5 billion.
From Google AI:
Aeroplan is exceptionally profitable because it functions as a high-margin financial and data business rather than a traditional airline service. Air Canada recently valued the loyalty program at a staggering $10 billion when selling a 25% minority stake to investors like Blackstone and La Caisse for $2.5 billion.
That shows you how profitable this business is: a huge cash cow, a dream investment for any private equity investor.
Blackstone rightly partnered up with La Caisse on this deal since Air Canada's head office is in Montreal and invited PSP Investments and BCI to also take part in the deal.
And the fact that Blackstone, not Brookfield, led the deal tells me the global private equity giant is getting very serious about its investments in Canada.
The second thing I noticed is this (from the second BPM article):
Settlement of the Aeroplan investment is planned for August 17, the company said. Air Canada will continue to consolidate Aeroplan in its financial statements and record the stake as a non-controlling interest within shareholders' equity. Investors will share in distributions declared by Aeroplan's board under an agreed policy.
According to the announcement, Air Canada also secured the right to buy back the investor group's stake between the fifth and eighth anniversaries of settlement, and on certain specified events.
The repurchase price follows a formula that gives the investors an internal rate of return of 6.5 percent, calculated net of all distributions.
Air Canada wisely secured the right to buy back the consortium's minority stake between the fifth and sixth anniversaries of settlement, and on certain specified events and the repurchase price follows a formula that gives the investors an internal rate of return of 6.5 percent, calculated net of all distributions.
The investors secured a minimum IRR of 6.5%, net of all distributions, which will be significant if Aeroplan keeps growing the way it has done over the past five years.
Smart move by Air Canada and this investor group; everyone is probably hedging their investment.
Anyways, this is an excellent deal, one that business schools around the world will use as a case study.
Lastly, to all my wealthy friends who keep boasting how they have 50K, 75K or more Aeroplan points and keep getting bumped up to business class, just remember who owns a stake in Aeroplan now and also keep in mind senior executives at Canada's Maple 8 who travel all the time have a lot more points than you'll ever collect (another major perk to their job).
Below, Jamie Murray, president of The Murray Wealth Group, joins BNN Bloomberg to discuss Air Canada and to provide an outlook on the markets.
Also, for my buddies, a breakdown of the best credit cards to use to gain access to lounges at airports (they're obsessed with this nonsense).
Comments
Post a Comment