Air Canada Welcomes Canadian Airlines As Subsidiary, Files For Common Employer Status

Canadian Airlines International Ltd. has become an indirect wholly owned subsidiary of Air Canada, following yesterday's acquisition by Air Canada of 853350 Alberta Ltd. The numbered Alberta company had held the outstanding shares of Canadian Airlines Corporation since January 5, 2000.

As a result of the successful completion of the acquisition of Canadian Airlines, Air Canada has today filed for common employer status with the Canadian Industrial Relations Board (CIRB) in order to facilitate the resolution of outstanding labour issues involving unions at both airlines.

``Today is an historic occasion for all stakeholders of both Air Canada and Canadian Airlines as we formally welcome Canadian Airlines as new member of the Air Canada family and proceed with the complete integration of both companies,'' said Robert Milton, Air Canada's President and Chief Executive Officer. ``Our application for common employer status is an important step in the integration process as it will allow us to address union issues shared by employee groups of both airlines in a timely, fair and effective manner.''

``We are focused on the speedy resolution of union issues, notably those of seniority and scope, which when resolved will pave the way for streamlined customer service delivery. Our objective remains achieving excellence in customer service consistent with our status as one of the world's great airlines, while respecting the concerns of our employees through fair and equitable processes.''

The Wage Reduction Program previously in effect at Canadian Airlines has been eliminated for all Canadian Airlines employees effective July 1, 2000.

Collective agreements have been negotiated and ratified by the members of the Canadian Airlines units of the Canadian Auto Workers (CAW), Canadian Union of Public Employees (CUPE) and Airline Pilots Association (ALPA). Canadian Airlines employees represented by these unions in addition have been granted wage parity and their working conditions standardized with those of their Air Canada counterparts. Negotiations with the Canadian Airlines unit of the International Association of Machinists and Aerospace Workers (IAMAW) and the Canadian Airlines Dispatchers Association (CALDA) are on-going.

Today's announcement follows the approval June 27, 2000 by the Alberta Court of Queen's Bench of Canadian Airlines Corporation's Plan of Compromise and Arrangement under the Companies' Creditors Arrangement Act (CCAA).