First Quarter 2002 May 2, 2002 Note to Internet viewers: Please use “NOTES PAGES” view to access all notes and text.

Agenda - 1st Quarter Highlights Economic Environment Operating Statistics Competitive Environment Revenue Highlights Income Highlights

1st Quarter Results Recovery accelerated in quarter Traffic almost back to 2001 levels Decisive capacity reduction and cuts to cost more than offset ongoing impact of September 11 and weak economy Aircraft flying hours reduced by 12% Unit revenues rose while unit costs continue to decline Operating results improve by $133 million Best operating results among major international carriers in NA.

1st Quarter Results System load factor up 4.7 PP in quarter Tango load factor 83.4% Manpower level down 5,859 or 14.8% from 1st quarter 2001 Employee productivity up 11% Fuel prices still positive Net unit costs down 4.0% Quarter end cash of $0.9 billion

Recent Development - Zip Air Canada’s low cost carrier, Zip, will launch this summer in Western Canada, with six s Replaces mainline flying and regional (Jazz) Will eventually grow to twenty s all transferred from existing mainline fleet Zip unit costs will be lower than Tango, already 25% below mainline Labour costs will be significantly below mainline and Tango Designed to significantly improve contribution on intra west routes

Q1 Stats At a Glance Mainline Operations

Loss Before Tax Improves $194 Million Excl. One-time Gains and Reduced Gov. Assist.

Q1 Net Interest Exp. Improves

Economic Environment Air Fares

Business Fares - Canada continues to strengthen - International also up (Air Fare* Changes) *Average BSP fare % Change Y-O-Y

Leisure Fares - Domestic again up 20% - Data for chart becoming misleading (Air Fare* Changes) *Average BSP fare % Change Y-O-Y

Traffic Recovery Plus Capacity Cuts Pushes Load Factor Up Mainline Operating Statistics

Q1 Capacity Reductions In All Markets But U.S. (Y-O-Y Changes in Mainline Capacity) % Change in ASMs

Traffic Recovering In All Markets (Y-O-Y Changes in Mainline Traffic) % Change in RPMs

Domestic Yields Up 4.2% - While improving, U.S. yields still way down due to leisure expansion (Y-O-Y Changes in Mainline Passenger Yield) % Change in Yield

Canada & Other Int’l RASMs Way Up - US still weak but much improved (Y-O-Y Changes in Mainline Revenue per ASM) % Change in RASM

Strong Yield And Traffic Drive Canada Revenue Up - U.S. improving (Y-O-Y Changes in Mainline Passenger Revenue) % Change in Revenue

Canada RASM Powers Ahead On Load Factor And Yield Q1’01 Q2’01 J&A’01 Q4’01 Q1’02 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 Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

US RASM Down On Yield As Leisure Demand Expands Q1’01 Q2’01 J&A’01 Q4’01 Q1’02 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 Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

Other Int’l RASM Up On Capacity Reduction & Higher Load Factor Q1’01 Q2’01 J&A’01 Q4’01 Q1’02 Capacity - Other Int’l (Y-O-Y Changes in Capacity) % Change in ASMs Yield - Other Int’l (Y-O-Y Changes in Passenger Yield) RASM - Other Int’l (Y-O-Y Changes in Revenue per ASM) Load Factor- Other Int’l (Y-O-Y Changes in Load Factor) % Change in RASM PP Change in Load Factor % Change in Yield Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

Higher Load Factor Drives Higher RASM Q1’01 Q2’01 J&A’01 Q4’01 Q1’02 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 Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

Major Improvements In RASM & CASM Q1’01 Q2’01 J&A’01 Q4’01 Q1’02 Canada RASM % Change Y-O-Y Other Int’l RASM Total System USA RASM % Change Y-O-Y Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

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

Salaries & Wages: Manpower level down sharply (Air Canada - Mainline)

Average Salary Up 7.6%, Employee Levels Down 15.0% (Y-O-Y Change - Total Salaries * & Employees*) *Mainline % Change Y-O-Y

Fuel: Price sharply down (Air Canada - Mainline)

Mainline Cost Per Litre Down 22% While Productivity Up 4.8% (Fuel Productivity* & Unit Cost*) *Mainline % Change Y-O-Y

All Expense Categories Down except Aircraft Rent And User Fees *Mainline % Change Y-O-Y Q1 2002/2001 RPMs ASMs COMM. FOOD & BAR A/C MTCE USER FEES A/C RENT OTHER DEP.

Q1 Net Unit Cost Down 4.0% In Spite Of 5.3% Capacity Cut (Cost Per ASM*) *Mainline, adjusted for non-ASM revenue % Change Y-O-Y

Net CASM* Improves 4.0% - Improves 6% excluding 2001 S&W reversals *Mainline Labour FuelUnit cost decrease net of non-ASM revenue Other Effect of non-ASM revenue $40 mln S&W Q1’01 accrual reversals Net unit cost adjusted for reversals

Air Canada Has Lowest Net Unit Cost Of N.A. Majors *Adjusted for non-ASM producing activity. (Unit Cost* per ASM* - Q1‘02 & Q1‘01) U.S. cents

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