Air Canada is considering the possibility of converting some of its Aeroplan loyalty points program to an income trust fund as the airline emerges from bankruptcy protection, a Canadian newspaper reported on Monday.
But Robert Milton, the company's chief executive, said Air Canada is in no hurry to hive off the frequent flier plan, which has 6 million members, as it has already undertaken a massive cost-cutting program and overhaul of its balance sheet as part of the airline's restructuring.
"We'll take our time and if the right opportunity presents itself, Aeroplan could be an income trust fund. But there's nothing that I would intend to cede control on, at this stage," he told the Globe and Mail newspaper.
Trusts have become popular with investors seeking higher yields, which has spurred the conversion of a range of companies. Trusts do not pay corporate tax, but distribute cash flow to their investors, who are taxed on the payouts they receive.
Air Canada reached a tentative deal with Onex in 2003 that would have seen the conglomerate acquire a 35 percent stake in the 20 year old rewards program, but Air Canada scuttled the deal when it filed for bankruptcy protection in April, 2003.
The airline emerges from bankruptcy protection on Thursday and its new parent company ACE Aviation Holdings will begin trading on the Toronto Stock Exchange on October 4.
