Air Canada sells 25% stake in Aeroplan loyalty program for $1.7bn

Air Canada has agreed to sell a 25% non-controlling stake in its Aeroplan loyalty program to an investor group led by Blackstone and La Caisse for approximately $1.7 billion, according to the airline. The deal values Aeroplan at roughly $7.17 billion. The investor consortium also includes PSP Investments and the British Columbia Investment Management Corporation.

According to Air Canada, proceeds from the transaction will be used to repay about $1.2 billion in bonds coming due, with the airline saying the move will strengthen its balance sheet by cutting gross debt without a matching reduction in cash reserves.

Air Canada will retain a 75% stake in Aeroplan and continue to control its operations. The airline said the transaction will not affect the experience of Aeroplan members, partners or employees, describing the program as a central part of its overall business strategy.

John Di Bert, Air Canada's chief financial officer, said the agreement gives the airline greater financial flexibility and supports its goal of reaching an investment-grade credit rating as it carries out its long-term strategic plan. Craig Landry, who leads Aeroplan for Air Canada, said the airline remains committed to being the program's majority owner.

A representative for Blackstone said the deal reflects the firm's long-standing interest in investing in Canada and builds on its existing presence in the country.