Improved Performance

2002 2001 Change (millions) Q3 Q3 Fav./(Unfav.)

Oper. Revenue $2,745 $2,586 $ 159

Oper. Expense 2,577 2,644 67

Oper. Income (Loss) 168 (58) 226

Non-oper. Expense 37 (111) 148

Income (Loss) Before FX & Tax $ 205 $ (169) $ 374

FX on L/T Monetary Items (86) (253) 167

Income (Loss) Before Tax $ 119 $ (422) $ 541

Best Operating Results* of any Major International Carrier in North America

* Pre-government assistance & non-recurring charges, US = 6 majors, 5 majors in Q3’02

% OPERATING MARGIN

2001 2002

Air Canada Revenue Recovering Faster

Q3 2002/2001 % CHANGE

• Better geographic diversity

• Stronger markets

• High load factors

• Tight yield management

• Brand segmentation

Air Canada’s 3rd Quarter Passenger RASM Outperforms Industry

* Mainline** Source ATA

YEAR/YEAR % CHANGE

2001 2002

AC

Yield + 3.2%L.F. +1.8 PP

Air Canada Unit Cost** Performance Outpaces US Industry

YEAR/YEAR % CHANGE

* Mainline* * Adjusted for one-timers; US = 6 majors, 5 majors in Q3’02

2001 2002

All Expense Categories Down Except Ownership, User Fees, and Insurance

YTD Sept. 2002/2001 % change

Mainline

Higher Fleet ProductivityY-T-D September ASM’s* 1%, Block Hrs* 8%

* Mainline

2002/2001 % CHANGE

ASMs

Block Hours

Positioned For The Future

1. Multi-brand strategy

2. Increasing employee productivity

3. Falling distribution costs

4. Fleet simplification and commonality

5. Six Sigma

6. Low cap-ex and moderate debt repayment

Air Canada’s Products

Air Canada’s Products - Tango

• Low fare/leisure

• Simplified product

• Supplemental flying in key markets

• Medium, long haul

• Domestic, transcontinental, sun

• Point to point

• No interlining

• Low product cost

• Mainline labour cost

Underlying Tango Profitability

• Revenue certainty– no overbooking, no denied boardings

• No refunds• Single class seating• Low distribution costs

– 80% to 90% internet bookings– Global Distribution Systems (GDS) by-pass– all e-ticket

• “All frills extra” onboard service• No interlining, no baggage transfer• Fast turnaround, higher aircraft utilization• Low overhead

• Low fare/business/ leisure

• Simplified product

• Domestic/transborder

• Point-to-point, short haul

• Full interlining

• Low product cost

• Low labour cost

Air Canada’s Products - Zip

Employee Productivity Continues To Improve

Air Canada Pre-merger

Air Canada for full year + CAIL

from June 30/00

ASM = Available Seat Mile* YTD + estimate for balance of year** Mainline

*

ASM per EMPLOYEE**

Agency Commissions Cut By More Than Half Since 1998

9.3%

7.6%6.6%

5.9%

4.3%

COMMISSIONS AS % OF PASSENGER REVENUE

* YTD + estimate for balance of year

*

Narrow Body FleetMoving to all Airbus

2000 2002

167 Aircraft 157 Aircraft

DC-910%Airbus

49%B-73726%

Airbus68%

B-73716%

CRJ15%

CRJ16%

To be replaced with Airbus A319 aircraft when leases expire - some initially going to Zip.

Implementing Six Sigma

MBB = Master Black Belt, BB = Black Belt, GB= Green Belt

Trained Personnel

Target Areas

• Operations

– Airports, Air Canada Technical Services, System Operations Control, Flight Ops, In-Flight Services, Call Centres, Air Canada Jazz, Aeroplan, Air Canada Vacations

• Staff

– Marketing, Sales, Network Planning, Human Resources, Law, IT, Purchasing, Destina.ca

2002 2003

8 MBB 15 MBB30 BB 120 BB320 GB 1,380 GB

Low Cap-Ex & Moderate Debt Repayment

• Cap-Ex

– Annual steady state cap-ex = $150 million

– 2003 & 2004 aircraft deliveries fully financed

• ten A319/320/321s• two A340-500s• three A340-600s

• Debt Repayment

– $426 million current portion as of September 30, 2002

Good Liquidity

• $0.7 billion in cash + $0.2 billion in committed financing at September 30, 2002.

• Generating positive cash flow from operations.

• Approximately $2.5 billion of unencumbered assets

– aircraft

– engines and spares

– inventory

– real estate

– lease deposit receivables

– accounts receivable

Significant Value In Air Canada’s Business Units

YTD October 2002

Air Canada Price Performance

% change

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 November 14, 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.