Air Canada (TSX:AC) has repurchased 27.6mn shares for CAD800mn ($571mn) through a tender offer, cutting its share count below pre-pandemic levels, the airline said on September 28.
The buyback was paid for with part of the proceeds from the sale of a 25% stake in Aeroplan, the airline’s loyalty programme, to an investor group led by Blackstone and La Caisse. That CAD2.5bn deal, announced on August 11, valued Aeroplan at CAD10bn and left Air Canada in control of the programme. The carrier earmarked the proceeds for share repurchases and an upcoming $1.2bn bond maturity, while continuing to invest in network growth under its New Frontiers strategy, including a partnership with Abra Group across the Americas.
Air Canada paid CAD29.00 per share. The shares bought represent about 9.8% of those outstanding as of September 24, and about 252.7mn shares remain in issue.
The offer was oversubscribed. Shareholders tendered about 66.8mn shares at or below the purchase price, and Air Canada bought about 41% of those successfully tendered, excluding odd-lot tenders. Depositary TSX Trust Company will settle the purchase on or before October 2, and shares not bought will be returned.
The airline estimates paid-up capital at about CAD10.60 per share for Canadian tax purposes, so selling shareholders are deemed to have received a dividend of CAD18.40 per share.
Air Canada is Canada’s largest airline and a founding member of Star Alliance. Headquartered in Montreal, it flies directly to more than 180 airports in Canada, the US and internationally, and Aeroplan has more than 10mn members.