Air Canada’s $800 Million Buyback Cleared at Its Floor Price. The Stock Fell Below It
Air Canada’s $800 million substantial issuer bid cleared at $29.00 a share, the very bottom of the range the airline set for it, and by midday the stock was trading well under that number. The company released preliminary results before Friday’s open, the morning after the bid expired. At 12:00 p.m. ET the shares were quoted at $27.12, down 6.35% from Thursday’s $28.96 close, with a low so far of $26.03. That is a live intraday bar rather than a close, and the session is not finished. Prices throughout are from Yahoo Finance, cross-checked at 11:47 a.m. ET against a stockanalysis.com quote.
This was not a broad tape move. At 12:00 p.m. ET, the same moment Air Canada was quoted 6.35% lower, the S&P/TSX Composite sat at 35,726.52, up 0.06%. Whatever happened here happened to Air Canada.
The auction floor sat above every close but one in the 25 sessions the bid was open
The single most useful fact about this bid is that its floor was above the market for almost its entire life. Across the 25 trading sessions the offer was open, from August 20 to September 24, Air Canada closed at or above $29.00 exactly once, on August 24, at exactly $29.00. The highest close in the whole window was that $29.00. The lowest was $27.29.
The sequence explains how the range ended up there. On Monday, August 10, the stock closed at $25.75. On Tuesday, August 11, Air Canada announced the Aeroplan transaction and the shares closed at $27.27 on 4.68 million shares. On Wednesday, August 12, they reached $31.45 intraday, a 52-week high, and closed at $30.61 on 9.52 million shares, nearly four times the volume the stock would average once the bid was running. On Monday, August 17, Air Canada set the auction range at $29.00 to $33.00 and the stock closed at $29.95. On Thursday, August 20, the bid opened with a close of $28.81, and the shares did not finish another session above $29.00.
So the range was calibrated to a post-announcement price that lasted a few days. An auction clearing at its floor was not a surprise outcome.
That also explains the size of the response. For 24 of those 25 sessions, $29.00 was a premium to the last traded price, which is a straightforward reason for 66.8 million shares to be deposited into the offer.
Closes from Yahoo Finance, the auction range from Air Canada’s August 17 terms release.
Nearly a quarter of the register asked to be bought out
Under the terms Air Canada finalized on August 17, the bid was a modified Dutch auction. Holders could name a price between $29.00 and $33.00 in ten cent increments, called an auction tender, or file a purchase price tender that accepted whatever price the auction produced. The clearing price is the lowest price at which enough stock is on offer to fill the order, and the company buys everything tendered at or below it, prorating if the total exceeds the cap.
The preliminary results release reports 66.8 million shares validly deposited and not withdrawn. Measured against the roughly 280.3 million shares outstanding immediately before take-up, that is 23.83% of the company on our arithmetic. Nearly a quarter of the register raised its hand at $29.00 or below.
Air Canada says tendering shareholders should expect about 41% of their validly deposited shares to be purchased, which is 27,586,206 divided by the full 66.8 million, or 41.3% on our arithmetic. The mechanic underneath that average is worth stating plainly, because it is not a flat haircut. Shares tendered above the clearing price are not bought at all and come back in full. Proration applies only to tenders at or below $29.00 and to purchase price tenders. A holder who named $31.00 is not in the 41%. Those shares come back whole.
The odd lot exemption is the other asymmetry, and it is sharper than it sounds. A holder of 99 shares was filled in full at $29.00. A holder of 100 shares had roughly 41 bought and 59 handed back.
These results are preliminary and remain subject to verification by TSX Trust Company.
The bid’s terms and its outcome
| Item | Detail |
|---|---|
| Structure | Modified Dutch auction |
| Price range | $29.00 to $33.00, in $0.10 increments |
| Purchase price set | $29.00 per share |
| Maximum shares sought | 27,586,206, about 9.8% of shares outstanding |
| Shares validly deposited and not withdrawn | 66.8 million, about 23.83% of the register |
| Shares to be taken up and paid for | 27,586,206 |
| Aggregate purchase price | About $800 million |
| Proration | About 41% of validly deposited shares, applied to tenders at or below $29.00 |
| Odd lot tenders, under 100 shares | Not subject to proration |
| Shares outstanding after completion | 252,745,331 |
| Bid period | Commenced August 20, 2026, expired 11:59 p.m. ET September 24, 2026 |
| Status | Preliminary, subject to verification by TSX Trust Company |
| Source of funds | Proceeds of the Aeroplan minority equity investment |
About 39.2 million tendered shares will come back to their holders
Sixty-six point eight million tendered against 27.586 million bought is an oversubscription of 2.42 times on our arithmetic. The difference, roughly 39.2 million shares, was deposited but will not be purchased, and will come back to the holders who deposited it.
It is worth sizing that block against the market it will return into. Average daily volume across the 25 sessions the bid was open was 2,460,716 shares, with a median of 2,344,800. At that average, 39.2 million shares represent roughly 16 sessions of normal turnover.
The sequence is simple. While the bid was open, a holder had access to a partial exit at no less than $29.00, above where the stock traded on all but one of those 25 sessions. On Thursday, the expiry day, Air Canada traded to a high of exactly $29.00 and closed at $28.96 on 2,555,300 shares. At 11:59 p.m. that option closed, and the only exit left is the open market, quoted at $27.12 at noon on Friday. By that point 2,775,471 shares had changed hands, already past the bid window’s full-day average with the afternoon still to run.
The cap was defined at the floor price in August, so the extra stock was structural
The maximum share count in this bid was never a round number, and that is the tell. Exactly $800,000,000 divided by $29.00 is 27,586,206. Air Canada sized the cap off the bottom of its own range five weeks before anyone knew where the auction would clear.
The consequence is that a low clear is efficient for the company. Had the price settled at the $33.00 ceiling, $800 million would have retired 24,242,424 shares. At $29.00 it retires 27,586,206, which is 3,343,782 more shares, or 13.8% more stock for identical cash on our arithmetic. For scale on the pace of ordinary repurchases, the second quarter results note $125 million deployed in the quarter for over six million shares, which puts that quarter’s average below $20.83 a share as an upper bound rather than a figure.
Retiring 9.8% of the count lifts per share figures by 10.9% with no change to the business
Add the shares being taken up back to the 252,745,331 expected to remain and the count immediately before take-up was 280,331,537. The shares retired are 9.84% of that. Divide the old count by the new one and every per share measure, earnings, cash flow, book value, mechanically rises 10.91%.
The numerator did not move to produce that. Air Canada’s second quarter brought record operating revenues of $6.3 billion, up 11 per cent year over year, adjusted EBITDA of $719 million at the top end of guidance, and an operating loss of $215 million that included $388 million of labour-related and other charges. Full-year adjusted EBITDA guidance is $2.9 billion to $3.2 billion. Against a business of that size, $800 million is real money leaving, and the per share improvement it produces is a denominator effect rather than an operating one. Separating those two is one of the harder habits to build, and our guide to what moves a stock price works through the distinction.
Aeroplan paid for the buyback, and it is a large share of what the market is pricing
The cash came from outside the airline’s operations. In August, Air Canada sold a 25% minority equity interest in Aeroplan for $2.5 billion to funds managed by Blackstone and La Caisse, alongside PSP Investments and British Columbia Investment Management Corporation, implying a $10 billion valuation for the whole program. Air Canada keeps 75% and full control of Aeroplan’s strategy, operations and day-to-day management, and said the proceeds would repay an upcoming US$1.2 billion bond maturity, with most of the balance going to accelerate share repurchases.
Put that beside what the market is paying. At the post-bid count of 252,745,331 shares and the $27.12 quote, the equity is worth about $6.85 billion. Add the last reported net debt of $5.27 billion and enterprise value is about $12.12 billion on our arithmetic, or roughly 3.8 to 4.2 times the guided full-year adjusted EBITDA range. The retained 75% of Aeroplan, marked at August’s $10 billion, implies $7.5 billion, and that $7.5 billion sits inside the $12.12 billion. Deduct it and about $4.6 billion is left for everything else Air Canada does. That $4.6 billion cannot then be divided by the EBITDA guidance to produce a multiple for the rest of the airline, because the guidance includes the earnings Aeroplan generates while the residual has had Aeroplan’s value taken out. The two sides of that fraction would not describe the same business.
Two further things about the arithmetic. The $5.27 billion of net debt is as at June 30 and predates the $2.5 billion of Aeroplan proceeds, the US$1.2 billion bond repayment and the $800 million going out here, so it is the last reported figure rather than a current one. And a $2.5 billion price for a 25% minority interest scaled up to $10 billion is the mark those four buyers set on that stake, not an independent valuation of the program.
The balance sheet is where the $800 million shows up next
At June 30, 2026, Air Canada reported long-term debt and lease liabilities of $12.794 billion, and net debt of $5.27 billion against trailing twelve month adjusted EBITDA of $3.17 billion, a leverage ratio of 1.7. A year earlier the same three measures read $4.757 billion, $3.515 billion and 1.4.
Net debt and that leverage ratio are both non-GAAP measures, which means the company defines them and reconciles them itself, on page 10 of its own release in this case. Knowing to go find that reconciliation rather than take a headline ratio on faith is the core skill in reading financial statements, and it matters more than usual when a company has just committed $800 million of cash.
What a tendering shareholder is now holding
A holder whose tender was at or below $29.00 has roughly 41% of those shares sold at a fixed price on a fixed date, with the rest coming back. The sold portion is a disposition with a capital gain or loss to report, and the returned shares carry on with their original per share cost. If you are running that calculation this weekend, our explainer on adjusted cost base covers how the per share figure is tracked and why a partial sale does not change it.
For a reader arriving cold, the range of the past year frames the move: Air Canada traded as low as $16.45 on March 16, 2026 and as high as $31.45 on August 12, closing that August day at $30.61.
Price data as of 12:00 p.m. ET on Friday, September 25, 2026, a live intraday bar rather than a close, from Yahoo Finance cross-checked against stockanalysis.com. Company figures as of the documents cited. Bid results remain preliminary and subject to verification by TSX Trust Company.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. Air Canada’s bid figures come from the company’s own press releases: the preliminary results release of September 25, 2026, the terms release of August 17, 2026, and the Aeroplan investment release of August 11, 2026. Revenue, adjusted EBITDA, the operating loss, full-year guidance, net debt and the leverage ratio come from Air Canada’s second quarter 2026 news release, pages 1, 2 and 10. Share prices and volumes are Toronto Stock Exchange data from Yahoo Finance, cross-checked at 11:47 a.m. ET against a stockanalysis.com quote; the September 25 figures are a live intraday bar taken at 12:00 p.m. ET, not a close. Index levels are from the same 12:00 p.m. ET pull. The oversubscription ratio, the proration arithmetic, the share of the register tendered, the per share uplift, the equity and enterprise values and the chart are computed by us from those figures.
