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Air Canada Premier Airline in Canada. Air Canada Maintains and Strengthens Position in all Markets. AC Other. AC Other. 78%. 73%. 55%. 47%. 49%. 42%. 40%. 38%. 25%. 16%. 15%. 14%. 12%. 13%. 11%. 10%. 2001 results based on start of the year. Estimated market share.

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air canada maintains and strengthens position in all markets
Air Canada Maintains and Strengthens Position in all Markets

AC

Other

AC

Other

78%

73%

55%

47%

49%

42%

40%

38%

25%

16%

15%

14%

12%

13%

11%

10%

2001 results based on start of the year. Estimated market share.

2002 results based on OAG Q1 2002 scheduled airline capacity share, published December, 2001

q4 01 encouraging performance despite loss
Q4’01: Encouraging Performance Despite Loss

2001 2000(millions) Q4 Q4 Change

Oper. Revenue $ 2,117 $ 2,590 $(473)

Oper. Expense 2,425 2,985 (560)

Oper. Income (Loss) (308) (395) 87

Non-oper. Expense (82) (84) 2

Income (Loss) Before Tax $ (390) $ (479) $ 89

best operating results of any major international carrier in north america
Best Operating Results* of any Major International Carrier in North America

AC

% Operating Margin

0

-5

-10

-15

-20

-25

-30

US

Q1 Q2 Q3 Q4

* Pre-government assistance - US Industry = 6 majors

air canada s 4 th quarter rasm outperforms industry
Air Canada’s 4th Quarter RASM Outperforms Industry

2001/2000

% Change

AC

5

0

-5

-10

-15

-20

-25

US

Q1 Q2 Q3 Q4

* Source ATA

unit cost performance outpaces industry throughout 2001
Unit Cost* Performance Outpaces Industry Throughout 2001

2001/2000

% Change

AC

US

10

8

6

4

2

0

-2

-4

Q1 Q2 Q3 Q4

* adjusted for one-timers – US industry = 6 majors

more air canada strengths
More Air Canada Strengths
  • Proven track record of superior service
  • Top Brand recognition throughout Canada
  • Labor contract stability
  • Labor rates lower than U.S. carriers
labor contract stability
Labor Contract Stability

Air CanadaCanadian

Maintenance and Ramp June 2005-

Flight Attendants Oct. 2001June 2004

Pilots Apr. 2004-

Customer Sales & Service Mar. 2004-

future labor cost much lower than u s carriers
Future Labor Cost Much Lower Than U.S. Carriers

2002 2003 2004

Maintenance and Ramp 2.5% 2.5% 2.5%

Flight Attendants - - -

Pilots 2.5% 2.5% -

Customer Sales & Service 2.5% 2.5% -

Air Canada

favorable competitive landscape
Favorable Competitive Landscape

Service Competitor Reductions

Trans AtlanticCancellations:

Virgin Toronto-London

Sabena Montreal-Brussels

Trans PacificReductions:

Numerous carriers reduced

service via U.S.

EVA Taiwan-Canada

favorable competitive landscape1
Favorable Competitive Landscape

Service Competitor Reductions

DomesticCanada 3000 ceases operations Nov/09

Transborder Cancellations:USAAA Boston-Halifax/Montreal/OttawaUA Toronto-DenverUSAir Toronto-Indianapolis

Canada 3000 Toronto-Newark, Los Angeles- Vancouver/Edmonton/Calgary/ Toronto

Reductions:

Chicago, LaGuardia, Denver, San Francisco, Seattle, Portland, Los Angeles, Houston, Cleveland, Indianapolis, Baltimore

air canada s action plan
Air Canada’s Action Plan
  • Launch new products
  • Reduce capacity
  • Renew fleet
  • Lower unit costs
  • Lower manpower levels
air canada s products1
“Air Canada”

Hub – network

Transborder and Domestic network

Rapidair

International

Two-class

Air Canada brand

Air Canada code

Air Canada’s Products
air canada s products2
Key feed to mainline

Regional markets

Good frequency coverage

Air Canada’s Products
  • Distinct brand
  • Unique code*

* Air Canada codeshare

air canada s products3
Low fare

Lower cost

Supplemental flying in key markets

Air Canada’s Products
  • Sun, long haul domestic, transcontinental routes
  • Distinct brand
  • Air Canada code
air canada s products4
Specialty charter

Executive First configuration of surplus B-737

Air Canada’s Products
  • Focus on specialty charters (i.e. sports teams, etc.)
  • Concierge service
air canada s products5
Leisure, low yield

Low cost

Point-to-point, short haul

Air Canada’s Products
  • Domestic/Transborder
  • Distinct brand
  • Unique code*

* Air Canada codeshare

capacity discipline
Capacity Discipline

% Change in ASM’s

2002

2001

10

5

0

-5

-10

-15

-20

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

smaller younger fleet
Smaller / Younger Fleet

Change Change

Dec / 00 Dec / 01 01/00 Dec/02 02/01

747 7 5 - 2 5 -

330/340 16 20 + 4 16 - 4

767-200/300 51 45 - 6 44 - 1

319/320/321 82 85 + 3 104 +19

737 43 26 -17 22 - 4

DC9 17 4 -13 - - 4

CRJ 25 25 - 25 -

Total Mainline 241 210 -31 216 + 6

Regional 134 114 -20 105 -9

TOTAL 375 324 -51 321 -3

lower unit costs
Lower Unit Costs
  • Fleet reconfiguration
  • Lower cost on-board product
  • Increased distribution efficiencies
  • Increased airport productivity
  • Maintenance / fuel / real estate
manpower levels coming down
Manpower Levels Coming Down

Full Time Equivalents

40,000

38,000

36,000

34,000

32,000

30,000

Q4 2000

Q2 2001

Q4 2001

good liquidity
Good Liquidity
  • $1.2 billion in year-end 2001 cash
  • Approximately $3.0 billion of unencumbered assets
    • aircraft
    • engines and spares
    • inventory
    • real estate
    • lease deposit receivables
    • accounts receivable
2002 mainline aircraft deliveries
2002 Mainline Aircraft Deliveries

Sale/ Operating

Leasebacks Leases

A340-500 2 -

A321-200 7 -

A319-100 5 3

A320-200 - 3

Total 14 6

low cap ex in 2002 millions
Low Cap Ex in 2002($ millions)

Aircraft $ 602

Financing ( 658 )

Net $ ( 56 )

Other 203

Total Mainline $ 147

Subs 15

Total $ 162

investment considerations
Investment Considerations
  • Commanding share of all markets served
  • Solid hub and network strategy
  • Traffic almost back to normal
  • Pricing recovering
  • Industry capacity rationalized
  • Unit costs coming down
  • Adequate liquidity
  • Low capital expenses going forward
  • Substantial business unit value
slide29

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 February 11, 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.