Second Quarter 2002 August 1, 2002 Note to Internet viewers: Please use NOTES PAGES view to access all notes and text.

Agenda - 2nd Quarter Highlights Economic Environment Operating Statistics Competitive Environment Revenue Highlights Income Highlights

2nd Quarter Results Air Canada records only profit among major international carriers in North America Operating results improve by $134 million Operations generate $81 million in cash Traffic resumes growth over 2001 Increased productivity and lower unit costs underlie higher profitability Aircraft flying hours reduced by 8% while available seat miles remain unchanged

2nd Quarter Results System load factor up 1.8 PP in quarter Manpower level down 3,338 or 8.7% from 2nd quarter 2001 Employee productivity up 10% Fuel price per litre down 18% Net unit cost down 6.9% Quarter end cash of $0.9 billion

Q2 Stats At a Glance Mainline Operations

Loss Before FX & Tax Improves $159 Million

Q2 Net Interest Exp. Improves

Traffic Growth Pushes Load Factor Up Mainline Operating Statistics

Capacity Reductions Still In Place In Q2 U.S. Market (Y-O-Y Changes in Mainline Capacity) % Change in ASMs

Atlantic & Pacific Markets Drive Traffic Growth (Y-O-Y Changes in Mainline Traffic) % Change in RPMs

Strong Domestic & Atlantic Yields - While Improving, U.S. Remains Weak (Y-O-Y Changes in Mainline Passenger Yield) % Change in Yield

Very Strong Atlantic & Pacific RASM Performance (Y-O-Y Changes in Mainline Revenue per ASM) % Change in RASM

Q2 Revenue growth powered by Canada & Atlantic/Pacific (Y-O-Y Changes in Mainline Passenger Revenue) % Change in Revenue

Increased Yield Lifts Domestic RASM Q201 J&A01 Q401 Q102 Q202 Capacity - Canada (Y-O-Y Changes in Capacity) % Change in ASMs Yield - Canada (Y-O-Y Changes in Passenger Yield) RASM - Canada (Y-O-Y Changes in Revenue per ASM) Load Factor- Canada (Y-O-Y Changes in Load Factor) % Change in RASM PP Change in Load Factor % Change in Yield Q201 J&A01 Q401 Q102 Q202

US RASM Down Primarily On Weak Pricing Q201 J&A01 Q401 Q102 Q202 Capacity - Transborder (Y-O-Y Changes in Capacity) % Change in ASMs Yield - Transborder (Y-O-Y Changes in Passenger Yield) RASM - Transborder (Y-O-Y Changes in Revenue per ASM) Load Factor- Transborder (Y-O-Y Changes in Load Factor) % Change in RASM PP Change in Load Factor % Change in Yield Q201 J&A01 Q401 Q102 Q202

Other Intl RASM Up On Higher Load Factor Q201 J&A01 Q401 Q102 Q202 Capacity - Other Intl (Y-O-Y Changes in Capacity) % Change in ASMs Yield - Other Intl (Y-O-Y Changes in Passenger Yield) RASM - Other Intl (Y-O-Y Changes in Revenue per ASM) Load Factor- Other Intl (Y-O-Y Changes in Load Factor) % Change in RASM PP Change in Load Factor % Change in Yield Q201 J&A01 Q401 Q102 Q202

System RASM Unchanged As Higher Load Factor Offsets Soft Yield Q201 J&A01 Q401 Q102 Q202 Capacity - Total (Y-O-Y Changes in Capacity) % Change in ASMs Yield - Total (Y-O-Y Changes in Passenger Yield) RASM - Total (Y-O-Y Changes in Revenue per ASM) Load Factor- Total (Y-O-Y Changes in Load Factor) % Change in RASM PP Change in Load Factor % Change in Yield Q201 J&A01 Q401 Q102 Q202

Declining Unit Cost Drives Increased Profits Q201 J&A01 Q401 Q102 Q202 Canada RASM % Change Y-O-Y Other Intl RASM Total System USA RASM % Change Y-O-Y Q201 J&A01 Q401 Q102 Q202

Air Canada Continues to Record The Best Traffic Results Of Any Major N.A. Carrier (Y-O-Y Traffic Change) % Change in RPMs

Salaries & Wages: Manpower level down sharply; benefits cost up (Air Canada - Mainline)

Average Salary Up 4.9%, Employee Levels Down 8.7% (Y-O-Y Change - Total Salaries * & Employees*) *Mainline % Change Y-O-Y

Fuel: Price still sharply down (Air Canada - Mainline)

Mainline Cost Per Litre Down 18% While Productivity Up 5.9% (Fuel Productivity* & Unit Cost*) *Mainline % Change Y-O-Y

All Expense Categories Down except Aircraft Rent, User Fees and Mtce. *Mainline % Change Y-O-Y Q2 2002/2001 RPMs ASMs COMM. FOOD & BAR A/C MTCE USER FEES A/C RENT OTHER DEP.

Q2 Net Unit Cost Down 6.9% (Cost Per ASM*) *Mainline, adjusted for non-ASM revenue % Change Y-O-Y

Fuel a Major Component Of Net CASM* Improvement Of 6.9% *Mainline LabourFuel Unit cost decrease net of non-ASM revenue Other Effect of non-ASM revenue

Air Canada Has Lowest Net Unit Cost Of N.A. Majors *Adjusted for non-ASM producing activity. (Unit Cost* per ASM* - Q202 & Q201) U.S. cents

Balance Sheet - Liquidity is Good (Air Canada - Consolidated) NM - not meaningful