Air Canada (TSX: AC) has completed its $800 million substantial issuer bid, purchasing and cancelling 27,586,206 Class A variable voting shares and Class B voting shares at $29.00 per share. The buyback, funded in part through Blackstone and La Caisse's minority equity investment in Aeroplan, returns Air Canada's share count to below pre-pandemic levels. The transaction leaves approximately 252.7 million shares outstanding, representing a reduction of about 9.8% of shares before the offer. Investors may be watching whether this capital allocation milestone influences the airline's balance sheet positioning relative to North American peers.

Key Points

  • Air Canada (TSX: AC) is Canada's largest airline and a founding member of Star Alliance
  • The company completed its $800 million substantial issuer bid, cancelling 27,586,206 shares at $29.00 per share
  • Approximately 252.7 million shares remain outstanding after the offer; settlement is due on or before October 2, 2026
  • Investors may watch for further capital allocation moves under Air Canada's New Frontiers strategy

Air Canada's $800 Million Buyback Cancels Nearly 10% of Outstanding Shares

The completed offer saw Air Canada take up 27,586,206 shares at a fixed price of $29.00 each, representing approximately 9.8% of total shares outstanding as of September 24, 2026, before the offer took effect. The release states that approximately 66.8 million shares were validly tendered, making the offer oversubscribed. As a result, Air Canada applied proration, purchasing about 41% of successfully tendered shares, with odd-lot tenders excluded from proration. Shares not purchased — whether due to proration or auction tenders above $29.00 — will be returned to shareholders as soon as practicable, the announcement confirms.

Aeroplan Minority Stake Proceeds Fund the Share Repurchase

Air Canada disclosed that the share purchase was funded using part of the proceeds from a minority equity investment in its Aeroplan loyalty programme by funds managed by Blackstone and La Caisse, together with other leading Canadian institutions. The company states the transaction supports one of the strongest balance sheets among its North American airline peers while allowing continued investment in its New Frontiers strategy. Settlement of approximately $800 million will be made by depositary TSX Trust Company (Canada) on or before October 2, 2026, in accordance with the offer terms and applicable law.

Tax Treatment for Canadian Shareholders Who Tendered Shares

Air Canada estimates paid-up capital per share at approximately $10.60 for purposes of the Income Tax Act (Canada). Shareholders who sold shares under the offer are deemed to have received a dividend of $18.40 per share — the amount by which the $29.00 purchase price exceeds the paid-up capital per share — for Canadian federal income tax purposes. The company has designated this deemed dividend as an "eligible dividend" under the ITA and applicable provincial and territorial tax legislation. The release explicitly advises shareholders to consult their own tax advisors regarding the income tax consequences of disposing of shares under the offer.