Air Canada goes Private Equity

Air Canada is selling a 25% stake in its Aeroplan loyalty program to a group of well-intentioned and customer-loving individuals from Blackstone and Canadian pension fund La Caisse for a cool $2 billion. This puts the valuation of the program(me) at $8 billion, which its awfully high when compared to what the carrier currently holds in poutine futures.

Air Canada says it will retain control of the program (for now…we assume) and it will use the funds to reduce debt and buy a new maple syrup vat for its Dreamliner fleet. The irony here, of course, is that this is part of a cycle for Air Canada and Aeroplan. The carrier spun it off in 2003, and it would then try to give it a go at its own new loyalty scheme before buying Aeroplan back in 2019. It’s expected that this will not create any waves in the near future, but rarely do these firms invest literal billions in something and just sit on the sideline and cross their fingers.

It seems this might be the result of Air Canada playing the long game brilliantly. It bought Aeroplan back from Aimia for just US$323 million and seven years later flipped 25% of it for $2 billion. That’s a return rate so high, we can’t even handle the math. So while AC takes a victory lap on the transaction, the rest of us will hold our breath to hope that Aeroplan doesn’t one day create the Canadian version of Delta SkyMiles, and charge 400,000 points for a coach redemption from Kitchener to Saskatoon.

Delta Connects Austin with the Austin of France

Delta Air Lines continues its ramp up in Austin as the airline will begin daily service next summer from its burgeoning focus city in Texas’s capital to Paris. One daily A330-900neo service begins in March and will operate for the IATA summer, wrapping up in October. The aircraft will feature 29 Delta One seats for those with Texas-sized wallets (or SkyMiles balances), and 28 in Premium Select recliners with the remaining 224 behind the curtain.

When the flight begins, it’ll be the fourth transatlantic route for Austin, and the first to be operated by a U.S. carrier. The three others are evenly spread with one per alliance: BA to London/Heathrow, KLM to Amsterdam, and Lufthansa to Frankfurt.

In addition to Paris, the carrier will also begin new nonstop service to San Diego on April 12. It will go head-to-head with both Alaska and Southwest on the route. It also plans to expand its winter-only service from AUS to Cancún to operate year-round and to add a second daily nonstop on Austin – San Jose (CA) — before the first daily nonstop begins operating this October.

Air Canada Posts C$215 Million Q2 Loss

A loss of about US$155 million doesn’t hurt so bad when you announce you sold a quarter of your loyalty program for $2 billion, so perhaps its not all pessimisme et désespoir in Saint-Laurent as Air Canada released its Q2 earnings this week. Just like its counterparts south of the border, Air Canada set records both for Q2 gross revenue and expenses, with C$6.2 billion in revenue offset by C$6.4 billion in expenses.

This does mark a major drop from Q2 last year in which the airline posted a C$418 million profit. Capacity increased by a whopping 0.3%. The carrier internally had hopes for a larger capacity increase but when no Canadian teams reached June’s Stanley Cup Final — as usual — it knew that dream was dead. Fuel costs jumped 50% to C$1.7 billion compared with last year, and it managed to recover about half that amount in fares.

AC finished the quarter with about C$7.5 billion in cash and cash equivalents, or roughly the amount of funds it takes to heat one home on the Canadian prarie through a harsh winter.

American Shifts the Deck Chairs

With American settled into a solid third place amongst the big-3 U.S. carriers, CEO Robert Isom’s current solution to challenge Delta and American is to…shake up the org chart.

Former Spirit COO John Bendoraitis will come on to run the carrier’s technical operations, Nat Pieper will see his role expand from CCO to include marketing, branding, advertising, and partnerships, while Chief Customer Officer Heather Garboden will take over reservations and service recovery (good luck) and JC Gulbranson will add airports and planning to his portfolio.

Current Chief Communications Officer Ron DeFeo communicated that he will be stepping down from his current role, along with Kevin Brickner (Senior VP for Technical Ops) who will retire and Nate Gatten (EVP for American Eagle and Governmental Affairs) will also be leAAving. Brickner had been with the carrier since joining US Airways in 1996. Caroline Clayton will take over communications and Steve Neuman will oversee Government Affairs and Sustainability. Garboden, Gulbranson, Clayton, and Neuman will join AA’s senior leadership team which means they’ll have another few hours of meetings on their already-full calendars each week.

The AAirline expects to break-even in 2026, which compares poorly to its two main rivals which are having to find new places to store all the cash that keeps rolling in. These changes will surely do the trick.

Is airBaltic on the Ropes?

Latvian flag carrier airBaltic has been hit especially hard by the closure of Russian airspace for commercial flights, and when that is added to a stew that includes sky-high fuel pricing and its precarious cash situation, the carrier is not in tip-top health as we head towards fall.

The carrier unveiled a radical new business plan to help stave off the inevitable. First off is a reduction in fleet size from 54 A220-300s to just 36 by the end of the year. While that in of itself may not seem drastic, it replaces the airline’s original plan of expanding that fleet to 100. Riga would remain the carrier’s main hub while it uses secondary bases and focus cities to provide “selected point-to-point services.”

Despite the reduction in fleet, it believes it can maintain its current capacity by reducing its extensive wet-leasing program for other carriers, including for Lufthansa Group. airBaltic CEO Erno Hildén is going hat-in-hand to acquire EUR225 million in interim financing to keep the doors open. Much of airBaltic’s A220 fleet flies wet-leases, but in the summer months only. The lack of year-round contracts dramatically reduces the profitability of those airplanes.

• Air Canada plans to begin service to Lagos next year.
• Air Montenegro added an E-195 on lease. Plan accordingly.
• Airlink‘s first long-haul destination will be Doha through a Qatar codeshare.
• Allegiant was buoyed by last night’s preseason opener at Allegiant Stadium, so it added five new routes.
• Belavia is scooping up three B737-800s.
• Cabo Verde Airlines received $4.7 million in funding to keep the doors open.
• Delta Concierge is a thing that really isn’t a thing but Delta is trying to make it a thing.
• Etihad is adding 4x weekly winter-only service to Göthenburg.
• GOL‘s new CEO is André Fehlauer. He will assume the role next month, replacing Ceslo Ferrer,
• Israir is closer to operating into the United States.
• ITA claims it turned a profit. Sorta.
• Lufthansa claims to be seeking labor peace. “Claims” is doing a lot of work here.
• Riyadh Air will begin 3x weekly service to Bangkok next month.
• Royal Brunei is finally expanding its codeshare with Turkish. Breathe easy, folks.
• Ryanair is saying goodbye to Niš, Serbia later this year. Cranky can confirm as of press time that Niš is a real place.
• S7 is struggling to stay on runways.
• Southwest added two CEOs to its board.
• t’way plans a h’ybrid model with T’rinity Airways.
• Wizz Air is opening a new base in Brasov, Romania.

I’m excited for the next Fibonacci convention…

It’s going to be as big as the last two combined