Air Canada (AC) was busy after the bell, announcing Q2 results and reinstating a full-year guide that sits just under consensus on EBITDA and well below on FCF.

More interesting than that is its $2.5B, 25% sale of Aeroplan to Blackstone and CDPQ among other investors - with $800M of proceeds going towards a substantial issuer bid…

… and the remaining $1.7B earmarked for an upcoming bond maturity. While the headline $10B valuation looks good on paper (AC’s market cap is sub-$8B), the deal is structured like debt instead of equity…

… given it comes with a 5-8 year repurchase option at a 6.5% IRR cap, so a better frame would be a 25% LTV loan at 6.5% interest - and that’s if you believe in the $10B number (I don’t). We’ll see at the open if investors views this as a true valuation mark…

… or if they call it for what it is: good financial engineering paired with ridiculous marketing.

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