Air Canada Reports December 2002 Traffic

Air Canada flew 0.6 per cent fewer revenue passenger miles (RPMs) in December 2002 than in December 2001, according to preliminary traffic figures. Capacity increased by 2.5 per cent, resulting in a load factor of 70.0 per cent, compared to 72.1 per cent in December 2001; a decrease of 2.1 percentage points.

In comparison to December 2000, revenue passenger miles declined 3.0 per cent while capacity was reduced by 7.9 per cent. Load factor improved 3.5 percentage points.

"Our December traffic results were negatively impacted by an increase in competitive capacity in the domestic market resulting in intensified low fare competition, particularly on the transcon routes," said Rob Peterson, Executive Vice President and Chief Financial Officer. "This had a dampening effect on domestic unit revenues."

"While U.S. transborder traffic and load factors were up due to stronger demand to the eastern U.S. and California, and the fact that a portion of the Thanksgiving travel period fell within December this year, we nevertheless experienced significant yield pressures within the North American market. In Asia, the solid performance of our Japan and China routes continued while the suspension of our service to Taiwan partially offset this growth in our total Pacific figures."

At the outset of 2002, Air Canada anticipated a return to profitability in the seasonably stronger second and third quarters. While this was achieved, the difficult global airline environment has resulted in a fourth quarter and full year operating loss. It is anticipated, however, that this fourth quarter operating loss will be less than the quarterly operating loss for the same period in each of the past two years.