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UPDATE 1-ACE sells remaining stakes in Aeroplan, Jazz Air
May 28, 2008 / 9:50 PM / 9 years ago

UPDATE 1-ACE sells remaining stakes in Aeroplan, Jazz Air

(Adds details, background)

CALGARY, Alberta, May 28 (Reuters) - ACE Aviation Holdings Inc ACEa.TO, Air Canada's parent company, said on Wednesday it sold its remaining stakes in Aeroplan Income Fund AER_u.TO and Jazz Air Income Fund JAZ_u.TO for C$434 million ($438 million), moving closer to its goal of winding up operations.

ACE, which has been jettisoning interests in its operating units for more than two years, said it sold 20 million trust units of Aeroplan, its fast-expanding frequent flier program, for C$349 million.

The Montreal-based holding company also sold 11.7 million units of Jazz, Air Canada's regional affiliate, for C$85 million, it said.

The sale leaves ACE with a 75 percent interest in Air Canada, the country's biggest airline, and a 23 percent stake in aircraft maintenance and repair firm ACTS.

ACE Chief Executive Robert Milton has been evaluating the best way to part with the Air Canada stake as a way to end the holding company structure it set up in 2004 as part of the airline's bankruptcy protection proceedings.

Air Canada's weak stock price amid a downturn in the global airline industry and record high fuel prices has made his decision difficult.

Options include buying back the minority interest, parting with the majority or structuring a deal to sell the airline to a third-party investor.

Earlier this month, Milton said chances of an imminent sale of Air Canada were low due to the surge in fuel prices.

ACE shares closed up 17 Canadian cents at C$21.46 on the Toronto Stock Exchange. Air Canada was down 5 Canadian cents at C$8.10.

$1=$0.99 Canadian Reporting by Jeffrey Jones; editing by Rob Wilson

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