Where does an airline go for cash when it’s short? Its frequent flyer program, even when that program is a separately traded entity. Aeroplan is pre-paying Air Canada for award tickets:
Air Canada (ACa.TO: Quote, Profile, Research, Stock Buzz) said on Monday that Groupe Aeroplan Inc (AER.TO: Quote, Profile, Research, Stock Buzz), the operator the airline’s frequent flyer plan, has agreed to speed payment for reward tickets issued under the plan, raising C$70 million ($56.6 million) for the cash-strapped carrier.
Air Canada, the country’s biggest airline, said in a statement the payment is for reward tickets issued by Aeroplan through May 29, 2009. The airline also said Air Canada and Aeroplan have also agreed to unspecified “commercial terms that are beneficial to both parties.”
Air Canada said the deal was a part of a move to improve short and long-term liquidity by “both traditional and nontraditional means”.