After weeks of speculation, ACE Aviation Holdings has confirmed plans to spin off a 15-per-cent stake in its Aeroplan frequent flyer program as an income trust. Aeroplan has approximately five million members.
ACE will use a portion of the proceeds for general corporate purposes. Aeroplan will use its share to partially fund a reserve for Aeroplan Miles redemptions and certain capital expenditures.
The underwriting is being co-led by RBC Capital Markets, CIBC World Markets and Genuity Capital Markets. Other syndicate members will include BMO Nesbitt Burns, TD Securities and Scotia Capital.
"The Aeroplan public offering represents a giant step forward in the implementation of ACE's strategy of unlocking shareholder value through the monetization of its business units," ACE chairman, president and CEO Robert Milton said in a statement.
Meanwhile, ACE has agreed to invest $95 million in a merger between US Airways and America West, giving it a seven-per-cent interest in what will be the sixth-largest airline in the U.S. As part of the deal, Air Canada's maintenance division, Air Canada Technical Services, has secured a five-year, $1.5-billion contract to service and maintain all the aircraft in the US Airways-America West fleet.
The contract vaults Air Canada Technical Services into the number three spot among maintenance, repair and overhaul operators in the world. The contract is expected to create 700 new maintenance jobs in Montreal, Winnipeg, Calgary and Vancouver. The division currently employs about 3.600 technicians.
Many aviation industry analysts say ACE is trying to turn itself into an aviation conglomerate, with majority stakes in a range of aviation operations. The technical services division and the regional Jazz airline may soon follow Aeroplan down the road to income trust status.
