Fourth Quarter 2002Preliminary & Unaudited

February 6, 2003

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Agenda - 4th Quarter

• Highlights

• Operating Statistics

• Competitive Environment

• Revenue Highlights

• Income Highlights

(millions)Consol.Q4 2002

Consol.Q4 2001

ChangeFav./(Unfav.)

Oper. Revenue $2,243 $2,117 $ 126

Oper. Expense 2,505 2,425 (80)

Non-recur. Labour Expense 26 - (26)

Oper. Income (Loss) (288) (308) 20

Non-oper. Income (Expense) (71) (66) (5)

Income (Loss) Before FX & Tax (359) (374) 15

FX on Long Term Monetary Items (14) 87 (101)

Income (Loss) Before Tax $ (373) $ (287) $ (86)

Operating Results* Improve By $46 Million Before Non-recur. Labour Charge of $26 mln.

*Preliminary & unaudited

(millions) Q4 2002Change

Fav./(Unfav.)

Net Interest Inc. (Exp.) $ (55) $ 14

Loss on Sale (34) 3Q4’02 acrft.provision of $32mln versus $41mln in Q4’01.

Other Non-Operating Inc. (Exp.) 18 (22)

Total Non-Operating Inc. (Exp.) $ (71) $ (5)

Gain onpurchase ofAC debt:

$15 mln ’02

$27 mln ‘01

Q4 Net Interest Exp.* Improves $14 Million

*Preliminary & unaudited

ASMs RPMs LF Yield RASM Rev

Domestic 6.1% 1.6% 5.4 PP 2.7% 4.7% 1.1%

Transborder 0.2% 5.2% 3.0 PP 0.3% 5.3% 5.5%

Oth. Int’l. 4.8% 11.5% 4.5 PP 5.4% 12.2% 17.5%

Total 4.1% 5.9% 1.1 PP 1.6% 3.3% 7.6%

Total Expense 3.4%

Total Net CASM 1.0%

Q4 Stats At a GlanceMainline Operations

2002

Q4

2002/2001

Q4

2002/2001

Y-T-D

Traffic (RPMs) 9.3 bln +5.9% +3.6%

Capacity (ASMs) 13.2 bln +4.1% +0.4%

Load Factor 70.7% +1.1 PP +2.3 PP

Strength In Transborder U.S. and International Pushes Load Factor Up

Mainline Operating Statistics

Canada and International Capacity Rises While U.S. Remains Unchanged(Y-O-Y Changes in Mainline Capacity)

-20%

-15%

-10%

-5%

0%

5%

10%

Canada U.S. Oth. Int'l Total

Q4 2001/2000 Q1 2002/2001 Q2 2002/2001 Q3 02/Adj Q3 01 Q4 2002/2001

% Change in ASMs

Dom. Trfc. Weak Due to Incr. Competition. U.S. Recovers & Pacific Remains Strong. Comp. is to Particularly Weak Q4 01 Period.(Y-O-Y Changes in Mainline Traffic)

-15%

-10%

-5%

0%

5%

10%

15%

Canada U.S. Oth. Int'l Total

Q4 2001/2000 Q1 2002/2001 Q2 2002/2001 Q3 02/Adj Q3 01 Q4 2002/2001

% Change in RPMs

System Yield Continues Recovery But Still Well Below 2000 Levels(Y-O-Y Changes in Mainline Passenger Yield)

-20%

-15%

-10%

-5%

0%

5%

10%

Canada U.S. Oth. Int'l Total

Q4 2001/2000 Q1 2002/2001 Q2 2002/2001 Q3 02/Adj Q3 01 Q4 2002/2001

% Change in Yield

System RASM Up As Higher U.S. & Very Strong Int’l Offsets Weak Canada(Y-O-Y Changes in Mainline Revenue per ASM)

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Canada U.S. Oth. Int'l Total

Q4 2001/2000 Q1 2002/2001 Q2 2002/2001 Q3 02/Adj Q3 01 Q4 2002/2001

% Change in RASM

Q4 Revenue Up on Recovering U.S. and Continued International Strength(Y-O-Y Changes in Mainline Passenger Revenue)

-30%

-20%

-10%

0%

10%

20%

Canada U.S. Oth. Int'l Total

Q4 2001/2000 Q1 2002/2001 Q2 2002/2001 Q3 02/Adj Q3 01 Q4 2002/2001

% Change in Revenue

Load Factor Decline Pushes RASM Down

-15%

-10%

-5%

0%

5%

10%

Q4’01 Q1’02 Q2’02 Q3’02 Q4’02

Capacity - Canada(Y-O-Y Changes in Capacity)

% Change in ASMs

-10%

-5%

0%

5%

10%

-10%

-5%

0%

5%

10%

Yield - Canada(Y-O-Y Changes in Passenger Yield)

RASM - Canada(Y-O-Y Changes in Revenue per ASM)

Load Factor- Canada(Y-O-Y Changes in Load Factor)

% Change in RASM

PP Change in Load Factor

% Change in Yield

Q4’01 Q1’02 Q2’02 Q3’02 Q4’02 Q4’01 Q1’02 Q2’02 Q3’02 Q4’02

Q4’01 Q1’02 Q2’02 Q3’02 Q4’02-10

-5

0

5

10

Higher U.S. Load Factor & Improving Yield Pushes Up RASM

-5

-3

0

3

5

-15%

-10%

-5%

0%

5%

Q4’01 Q1’02 Q2’02 Q3’02 Q4’02

Capacity - Transborder(Y-O-Y Changes in Capacity)

% Change in ASMs

-30%

-20%

-10%

0%

10%

-25%

-20%

-15%

-10%

-5%

0%

5%

Yield - Transborder(Y-O-Y Changes in Passenger Yield)

RASM - Transborder (Y-O-Y Changes in Revenue per ASM)

Load Factor- Transborder (Y-O-Y Changes in Load Factor)

% Change in RASM

PP Change in Load Factor

% Change in Yield

Q4’01 Q1’02 Q2’02 Q3’02 Q4’02 Q4’01 Q1’02 Q2’02 Q3’02 Q4’02

Q4’01 Q1’02 Q2’02 Q3’02 Q4’02

Other Int’l RASM Up On Continued Higher Load Factor And Yield

-5

0

5

10

-20%

-15%

-10%

-5%

0%

5%

10%

Q4’01 Q1’02 Q2’02 Q3’02 Q4’02

Capacity - Other Int’l(Y-O-Y Changes in Capacity)

% Change in ASMs

-5%

0%

5%

10%

15%

-10%

-5%

0%

5%

10%

Yield - Other Int’l(Y-O-Y Changes in Passenger Yield)

RASM - Other Int’l (Y-O-Y Changes in Revenue per ASM)

Load Factor- Other Int’l (Y-O-Y Changes in Load Factor)

% Change in RASM

PP Change in Load Factor

% Change in Yield

Q4’01 Q1’02 Q2’02 Q3’02 Q4’02 Q4’01 Q1’02 Q2’02 Q3’02 Q4’02

Q4’01 Q1’02 Q2’02 Q3’02 Q4’02

System RASM Up On Higher Load Factor And Improved Yield

-5

0

5

10

-20%

-15%

-10%

-5%

0%

5%

Q4’01 Q1’02 Q2’02 Q3’02 Q4’02

Capacity - Total(Y-O-Y Changes in Capacity)

% Change in ASMs

-10%

-5%

0%

5%

-15%

-10%

-5%

0%

5%

Yield - Total(Y-O-Y Changes in Passenger Yield)

RASM - Total (Y-O-Y Changes in Revenue per ASM)

Load Factor- Total (Y-O-Y Changes in Load Factor)

% Change in RASM

PP Change in Load Factor

% Change in Yield

Q4’01 Q1’02 Q2’02 Q3’02 Q4’02 Q4’01 Q1’02 Q2’02 Q3’02 Q4’02

Q4’01 Q1’02 Q2’02 Q3’02 Q4’02

-30%

-20%

-10%

0%

10%

-10%

-5%

0%

5%

CASM RASM

U.S. & Int’l Services Drive Higher System RASM - Unit Cost Continues Improvement

-10%

-5%

0%

5%

10%

Q4’01 Q1’02 Q2’02 Q3’02 Q4’02

Canada RASM% Change Y-O-Y

-5%

0%

5%

10%

15%

Other Int’l RASM Total System

USA RASM

% Change Y-O-Y

% Change Y-O-Y

% Change Y-O-Y

Q4’01 Q1’02 Q2’02 Q3’02 Q4’02 Q4’01 Q1’02 Q2’02 Q3’02 Q4’02

Q4’01 Q1’02 Q2’02 Q3’02 Q4’02

U.S. Carriers Posted Larger Increases Over The Post 9-11 4th Quarter ‘01 (Y-O-Y Traffic Change)

-30%

-20%

-10%

0%

10%

20%

AC AMR CONT DEL UAL USAIR

Q4 2001/2000 Q1 2002/2001 Q2 2002/2001 Q3 2002/2001 Q4 2002/2001

% Change in RPMs

**Not available

**

2002Q4

2002/2001Q4

2002/2001Y-T-D

Salaries, Wages &Benefits

$692 mln +11.1% +2.7%

Excl. $43 million infavourable Q4 ’01 adj.re pension & otherbenefit expenses and$40 million in S&Waccrual reversals inQ1 ‘01

+3.9% -0.3%

Salaries & Wages: Manpower level up; average salary & benefits cost up

(Air Canada - Mainline)

Average Salary Up 1.5%, Employee Levels Up 594 or 1.7%(Y-O-Y Change - Total Salaries * & Employees*)

-20%

-15%

-10%

-5%

0%

5%

10%

Q4'01 Q1'02 Q2'02 Q3'02 Q4'02

Average Salaries Employees

*Mainline

% Change Y-O-Y

2002Q4

2002/2001Q4

2002/2001Y-T-D

Aircraft Fuel $291 mln -0.3% -17.1%

Fuel: Total price unchanged due favourable hedging comparison to 2001

(Air Canada - Mainline)

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

Q4'01 Q1'02 Q2'02 Q3'02 Q4'02

Fuel Productivity (ASMs/Lt) Fuel Cost (Cdn cts/Lt)

Mainline Cost Per Litre Up 0.4% While Productivity Up 4.9%(Fuel Productivity* & Unit Cost*)

*Mainline

% Change Y-O-Y

-20%

-10%

0%

10%

20%

All Expense Categories Down except Acft. Rent & User Fees - Mtce. & Food & Bar Unchanged

% Change Y-O-Y

Q4 2002/2001

RPMs ASMs COMM. FOOD& BAR

A/CMTCE

USERFEES

A/CRENT

OTHERDEP.

-10%

-5%

0%

5%

Q4'01 Q1'02 Q2'02 Q3'02 Q4'02

Q4 Net Unit Cost Down 1.0%(Cost Per ASM*)

*Mainline, adjusted for non-ASM revenue

% Change Y-O-Y

-4%

-3%

-2%

-1%

0%

1%

2%

3%

Other Reductions (commissions, I.T., bld. rent, crew cycle, workers comp., etc.) Key To Net CASM* Improvement Of 1.0%**

*Mainline** Not adjusted for $43 mln Q4/01one-time reduction in benefits expense

Labour**Labour**& Benefits& Benefits

FuelFuel Unit cost** decrease

net of non-ASM

revenue

OtherEffect of Effect of non-ASM non-ASM revenuerevenue

9.9 9.6 9.810.4

9.3 9.5 9.0 9.0 8.9 9.0 8.5 9.1

7.2 6.8

0

4

8

12

UAL AMR DEL NWEST AC CONT SWEST

Q4'02 Q4'01

Air Canada’s Net Unit Cost At Low End Of N.A. Majors

*Adjusted for non-ASM producing activity.

(Unit Cost* per ASM - Q4‘02 & Q4‘01)

U.S. cents

Dec 31/02$ mlns

Dec 31/01$ mlns

%Change

Cash $ 558 $ 1,067 -47.7% Current Assets $ 1,771 $ 2,235 -20.8% Property & Equip. $ 2,279 $ 2,830 -19.5% Current Liabilities $ 2,597 $ 2,869 -9.5% Long Term Debt $ 4,102 $ 4,580 -10.4% Shareholder’s Equity $ (1,888) $ (1,460) NM Book Value per share $ (15.71) $(12.15) NM

Balance Sheet* - Liquidity is Adequate(Air Canada - Consolidated)

*Preliminary & unauditedNM - not meaningful