Air Canada CEO Speaks Following Star Alliance Board Meeting

In a press interview following a Star Alliance board meeting in Buckinghamshire, England today, Air Canada President and Chief Executive Officer Robert Milton made the following statements:

Mr. Milton expects Air Canada to meet its targeted CDN $700 million annual synergies resulting from the acquisition of Canadian Airlines and the company is committed to attempt to exceed this amount. These synergies are expected to commence being fully realized from mid-year 2001.

Consistent with the earnings warning issued on December 21, 2000, Air Canada's earnings are under tremendous pressure and the airline will post a net loss for the first quarter 2001, in part as a result of significantly increased year-over-year fuel prices. Mr. Milton acknowledged that he was more than guardedly optimistic about the company's prospects for the next nine months. This is as a result of the decisive action the company has taken and will continue to take on capacity deployment and workforce reductions.

Analysts' forecasts for Air Canada and the airline industry in general have been considerably lowered in recent months due to general economic conditions. Mr. Milton stated that it is his intention that Air Canada exceed these low expectations.