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(Bloomberg) — Blackstone Inc. is nearing a deal to pick up a minority stake in Aeroplan, Air Canada’s travel loyalty program, for about $2 billion, according to people familiar with the matter.
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The deal could be announced as early as this week, said the people, who asked not to be identified discussing confidential information. Some Canadian funds are set to invest in Aeroplan alongside Blackstone at the same time, the people said.
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Air Canada is seeking to raise money in the midst of a multibillion-dollar program to buy new aircraft and renovate the interiors of existing ones as it plots new routes. The airline operates more than 300 planes and expects to reach nearly 400 by 2030.
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Like its peers, the carrier has been hard hit by the surge in jet fuel prices due to the Iran war. In recent months, it has added flights to Europe and Asia to compensate for the drop in flying to the US, due to geopolitical tensions.
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Still, the firm is expected to report an 85% drop in adjusted net profit from the prior year when it releases earnings on Wednesday, according to Bloomberg Intelligence estimates.
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Blackstone and Air Canada declined to comment on the deal.
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Aeroplan has more than 10 million members worldwide who can earn or redeem points on Air Canada’s airline partner network of more than 50 airlines and through its hotel and car rental partners.
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Blackstone is providing the equity investment from its credit and insurance business, the people said. The $1.3 trillion asset manager has referred to these types of deals as corporate solutions, and they are “a really new avenue,” Blackstone Chief Financial Officer Michael Chae said in a call with analysts following second-quarter results last month.
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“There’s a substantial opportunity for investment-grade rated corporates where we’ve become a trusted solutions provider,” Chae said.
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In July, Blackstone’s credit and insurance business led a $5.34 billion investment in Williams Cos. power plants alongside Apollo Global Management Inc. and KKR & Co. Inc. It also backed Rogers Communications Inc.’s wireless network infrastructure with a C$7 billion ($5.02 billion) deal last year.
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In addition, Blackstone’s credit and insurance business provided Swedish fund manager EQT AB with $3.5 billion of cash in exchange for a non-controlling common equity interest in a new joint venture for infrastructure assets.
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—With assistance from Siddharth Philip.
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English (US)