ACE has received a lot of interest from parties interested in buying its 75 per cent stake in Canada's largest airline, but the timing may not be right to obtain maximum return, Milton said.

He said the "likelihood of something happening imminently with Air Canada vis-a-vis a sale is low," given the impact of high fuel prices.

"But we're going to continue to monitor the situation and keep all our options open," Milton said during a conference call to discuss ACE's first quarter results.

Among its options is to sell Air Canada to a public company or private equity buyer, or engage in a share tender for the airline's minority shares.

In February, Milton said the holding company had been approached by private equity and pension funds and that it was "not inconceivable" for Air Canada to be an attractive target against the backdrop of consolidation amongst the U.S. carriers.

On Friday, he said ACE continues to be on track to windup its operations as a holding company in three to six months.

The holding company created by Air Canada's restructuring in 2004 took another step towards that eventuality by announcing it is buying back and cancelling another $500 million worth of its shares.

ACE also said Friday it lost $182 million in the first quarter, pulled down by a $125-million Air Canada (TSX:AC.A, TSX:AC.B) provision for probes and litigation over alleged price-fixing in the air cargo industry, as well as $89 million in foreign exchange losses and a $38-million aircraft writedown.

On the plus side, there was an $89-million gain from selling units of its Jazz regional airline (TSX:JAZ.UN) in January.

ACE said the quarter's operating loss was $27 million, compared with $29 million a year ago.

"I'm particularly pleased with the operating performance of Air Canada in the first quarter," chief financial officer Brian Dunne told analysts.

"While the fuel price environment is very difficult, Air Canada is well-positioned to meet the challenges ahead."

The next move for ACE is to buy back more of its shares through a Dutch auction in which shareholders can tender their stock at between $21 and $24 per share, with ACE paying the lowest available price to take up the most stock available for a total of $500 million.

It also plans to soon sell its remaining 9.9 per cent interest in Aeroplan Income Fund (TSX:AER.UN), which announced Friday it plans to convert into a dividend-paying corporation, and 9.5 per cent stake in Jazz Income Fund.

"I would expect over the next number of weeks we will do something on both," Dunne said.

ACE could use the proceeds to pay down its debt in June, but the current arrangement provides the holding company with flexibility until it decides how to proceed with Air Canada, he added.

Besides Air Canada, ACE has a 22.8 per cent interest in airliner maintenance provider ACTS, formerly Air Canada Technical Services.

ACE's first-quarter $182-million net loss, $2.96 per share, is not directly comparable to year-ago results which included Jazz, Aeroplan and Air Canada Technical Services, now no longer consolidated in the ACE accounts after share sales in the past year.

ACE lost $72 million or 70 cents in last year's first quarter, the seasonally slowest period for Air Canada. Operating revenue in the latest quarter was $2.73 billion, up from $2.63 billion a year ago.

On the Toronto Stock Exchange, ACE's A shares gained 7.03 per cent, or $1.41 to $21.46 Friday. Air Canada's A shares closed up 20 cents or 2.44 per cent to $8.40.