First Quarter 2002

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 737-200s • Replaces mainline flying and regional (Jazz) • Will eventually grow to twenty 737-200s 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) % Change Y-O-Y *Average BSP fare

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

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 Load Factor- Canada(Y-O-Y Changes in Load Factor) Capacity - Canada(Y-O-Y Changes in Capacity) PP Change in Load Factor % Change in ASMs Q1’01 Q2’01 J&A’01 Q4’01 Q1’02 Q1’01 Q2’01 J&A’01 Q4’01 Q1’02 RASM - Canada(Y-O-Y Changes in Revenue per ASM) Yield - Canada(Y-O-Y Changes in Passenger Yield) % Change in Yield % Change in RASM Q1’01 Q2’01 J&A’01 Q4’01 Q1’02 Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

US RASM Down On Yield As Leisure Demand Expands Load Factor- Transborder (Y-O-Y Changes in Load Factor) Capacity - Transborder(Y-O-Y Changes in Capacity) PP Change in Load Factor % Change in ASMs Q1’01 Q2’01 J&A’01 Q4’01 Q1’02 Q1’01 Q2’01 J&A’01 Q4’01 Q1’02 Yield - Transborder (Y-O-Y Changes in Passenger Yield) RASM - Transborder (Y-O-Y Changes in Revenue per ASM) % Change in Yield % Change in RASM Q1’01 Q2’01 J&A’01 Q4’01 Q1’02 Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

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

Higher Load Factor Drives Higher RASM Load Factor- Total (Y-O-Y Changes in Load Factor) Capacity - Total(Y-O-Y Changes in Capacity) PP Change in Load Factor % Change in ASMs Q1’01 Q2’01 J&A’01 Q4’01 Q1’02 Q1’01 Q2’01 J&A’01 Q4’01 Q1’02 Yield - Total (Y-O-Y Changes in Passenger Yield) RASM - Total (Y-O-Y Changes in Revenue per ASM) % Change in Yield % Change in RASM Q1’01 Q2’01 J&A’01 Q4’01 Q1’02 Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

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

Fuel: Price sharply down (Air Canada - Mainline)

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

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

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

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

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

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

First Quarter 2002