Presented to Scotia Capital at the Canadian Transportation Conference Toronto - May 9, 2002

Substantially Improved Performance (millions) Q1Q1 Change Oper. Revenue$2,286$2,344$(58) Oper. Expense2,4462,637(191) Oper. Loss(160)(293)133 Non-oper. Expense(65)(1)(64) Loss Before Tax$(225)$(294)$69 Non-recurring Items(36)89(125) Loss Before Tax Excl. Non-recur. Items$(189)$(383)$194

Strengthening demand Unit revenue performance beats all U.S. Majors –market share up in all services –disciplined capacity –highest load factors in North America –yield recovering Key Performance Factors

Fleet renewed and reconfigured –hours flown cut……………………...13% –seat mile capacity down only……...7% Labour productivity increases –capacity per employee up………….11% –traffic per employee up…………….19% –employee numbers down 6,400 or..14% Key Performance Factors

Costs cut –commissions –maintenance –fuel price down –fuel productivity up due to new aircraft & more seats –fleet more efficient –over 170 ongoing projects Unit cost performance beats U.S. industry Key Performance Factors

* Pre-government assistance - US = 6 majors % Operating Margin Best Operating Results* Of Any Major International Carrier In North America AC US Q1Q2Q3Q4Q

Air Canada Revenue Recovering Faster Q1 2002/2001 % change UnitedUSDeltaCont.NWAMRAC

Air Canada’s 1st Quarter RASM Outperforms Industry * Mainline * *Source ATA Year/Year % Change AC* US** Q1Q2Q3Q4Q

Unit Cost** Performance Outpaces Industry * Mainline * * Adjusted for one-timers; US = 6 majors AC* US Year/Year % Change Q1Q2Q3Q4Q

-30% -20% -10% 0% 10% 20% 30% All Expense Categories Down Except Aircraft Rent And User Fees Q1 2002/2001 RPMsASMsComm.Food & Bar A/C Mtce User Fees A/C Rent Other Dep. Year/Year % Change

Air Canada’s Products JazzZipAC JetzMainlineTango

Air Canada’s Products “Air Canada” Hub – network Transborder and Domestic network Rapidair International Two-class Air Canada brand Air Canada code JazzZipAC Jetz Mainline Tango

Key feed to mainline Regional markets Good frequency coverage Distinct brand Unique code* * Air Canada codeshare Air Canada’s Products Jazz ZipAC JetzMainlineTango

Air Canada’s Products Low fare Lower cost Supplemental flying in key markets Sun, long haul domestic, transcontinental routes Distinct brand Air Canada code JazzZipAC Jetz Mainline Tango

Air Canada’s Products Leisure, low yield Low cost Point-to-point, short haul Domestic/Transborder Distinct brand Unique code* * Air Canada codeshare Jazz Zip AC JetzMainlineTango

Air Canada’s Products Specialty charter Executive First configuration of surplus B-737 Focus on specialty charters (i.e. sports teams, etc.) Concierge service JazzZip AC Jetz MainlineTango

Why Tango and Zip? Full fare business segment has shrunk Will return but not at same level Leisure and price sensitive business market growing Full service costs too high for that market Low fare segment strong in good times and bad Full service remains critical for long-haul international and high volume/frequency North American markets

Goal: Higher margins in low fare markets Seating MixedAll economyAll economy NetworkWorldwideMostly long haul,Short haul point to point N.A. N.A. Aircraft utilizationStandardAboveAbove mainline mainline Labour cost Standard Same asLower than (incl. work rules) mainline mainline and Tango ZipMainlineTango

Goal: Higher margins in low fare markets Food & bar/ Full serviceLimited + pay forLimited entertainment InternetAbout 4% 80%Primarily in 2001 internetinternet TicketingE-ticket – All e-ticket Mostly e-ticket paperpaper for fee available Interlining Full NoneFull ZipMainlineTango

Goal: Higher margins in low fare markets Global dist. YesNoYes systems AeroplanStandard Half pointTBD award RefundsYesNoYes Planned domestic60%20%20% runrate capacity ZipMainlineTango

Manpower Levels Coming Down 30,000 32,000 34,000 36,000 38,000 40,000 Q4 2000Q2 2001Q Full Time Equivalents (mainline) Q1 2002

Labor Contract Stability Air CanadaCanadian Maintenance and RampJune Flight AttendantsOct. 2001June 2004 PilotsApr Customer Sales & ServiceMar

Future Labor Cost Much Lower Than U.S. Carriers Maintenance and Ramp2.5% 2.5% 2.5% Flight Attendants--- Pilots 2.5% 2.5%- Customer Sales & Service 2.5% 2.5%- Air Canada

Smaller / Younger FleetChange Dec / 00Dec / 0101/00Dec/0202/ / / /320/ DC CRJ Total Mainline Jazz TOTAL

2002 Aircraft Deliveries Sale/Operating Leasebacks Leases A A A A CRJ (Jazz)-10 Total1216

Low Cap Ex In 2002 ($ millions) Aircraft$919 Financing(918) Net$1 Other227 Total Mainline$228 Subs15 Total$243

Good Liquidity $924 million in cash at March 31, 2002 Approximately $2.8 billion of unencumbered assets –aircraft –engines and spares –inventory –real estate –lease deposit receivables –accounts receivable

Significant Value In Air Canada’s Business Units

Leverage Better Than It Looks - One time charges in shareholders’ equity ($millions)

Leverage Better Than It Looks - Debt and underlying assets Underlying Assets Total Debt Cash generating airline at start of cycle$3.6billionLTD $2.8 billion in unencumbered assets0.5Current LTD Value in business units0.8Perpetuals 0.1Convert. debs 5.0 (.9)Cash $4.1billionNet debt $8.2 billion + in leased aircraft…….$8.2 billionOperating leases

Investment Considerations Commanding share of all markets served Comprehensive low fare market strategy Solid hub and network strategy Traffic almost back to normal Pricing recovering Industry capacity rationalized Unit costs coming down Good liquidity Low capital expenses going forward Substantial business unit value

Caution Concerning Forward-looking Information: Certain statements made in this presentation may be of a forward-looking nature and subject to important risks and uncertainties. The results indicated in these statements could differ materially from actual results for a number of reasons, including without limitation, general industry, market and economic conditions, the ability to reduce operating costs and fully integrate the operations of Canadian Airlines, employment relations, energy prices, currency exchange rates, interest rates, changes in laws, adverse regulatory developments or proceedings and pending litigation. Any forward-looking statements contained in this presentation represent Air Canada’s expectations as of May 9, 2002 and are subject to change after such date. However, Air Canada disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.