Air Canada is making a significant financial move as it prepares for a strong fall travel season while facing higher operating costs.

The airline announced a transaction allowing external investors to acquire a minority stake in Aeroplan, its loyalty-program business. The deal is expected to provide funds that Air Canada can use to strengthen its balance sheet, including repaying about C$1.2 billion of debt and funding an C$800 million share buyback.

Air Canada shares rose sharply following the announcement, reflecting investor optimism about the potential financial benefits of the transaction.

The carrier is also expecting strong fall travel demand, particularly from corporate travellers, as international and business travel continues to support airline revenues.

However, rising fuel and labour costs remain significant risks. Air Canada has lowered its 2026 core profit forecast to between C$2.9 billion and C$3.2 billion, below its earlier upper projection of C$3.75 billion.

The company is using fuel hedging to reduce some of the impact of volatile energy prices.

The Aeroplan transaction could nevertheless strengthen Air Canada's financial position and support efforts to improve its credit profile.

For Canada's aviation and business sectors, the development highlights how airlines are balancing strong passenger demand, loyalty-program revenues, debt reduction and rising operating costs.