Air Canada said Blackstone, La Caisse, PSP Investments and British Columbia Investment Management Corporation are investing $2.5 billion for a 25% non-controlling stake in Aeroplan, valuing the loyalty program at $10 billion and leaving the airline with control of the business. The valuation is about $2.4 billion higher than Air Canada’s stock market capitalization, and the shares rose about 6% to their highest level since 2021 after the deal emerged. Analysts said the transaction terms were stronger than expected for Air Canada because the airline retained control and secured the right to repurchase the stake between the fifth and eighth anniversaries of closing, while the investor group’s upside is capped at a 6.5% internal rate of return net of distributions. Stifel analyst Daryl Young said Air Canada made few major concessions, though he noted some investors may debate whether the deal represents a full equity valuation because it resembles a hybrid debt instrument. Aeroplan’s value is tied largely to its relationships with credit-card issuers including American Express Co., Toronto-Dominion Bank and Canadian Imperial Bank of Commerce, which buy loyalty points to offer cardholders. The program has more than 10 million members worldwide who can redeem points across Air Canada, partner airlines, hotels and car-rental affiliates. Air Canada said the proceeds will help meet an upcoming US$1.2 billion bond maturity and fund buybacks, including a substantial issuer bid for up to $800 million of its Class A variable voting shares and Class B voting shares. The airline also cut its full-year adjusted Ebitda forecast to C$2.9 billion to C$3.2 billion from an earlier C$3.35 billion to C$3.75 billion outlook that was later suspended in April after the outbreak of war in the Middle East, citing surging jet fuel prices.