~~AIR~~FORM CANADA Consolidated Statement of Operations and Retained Earnings (Deficit) =========================================================================================================================== (Under Creditor Protection as of April 1, 2003 - note 1) (in millions except per share figures - Canadian dollars) Year Ended December 31 2003 2002 2001 -------------- -------------- -------------- Operating Revenues Passenger $ 6~~,858 $ 8,190 $ 8,123 Cargo 519 585 578 Other 991 1,051 910~~ -------------- -------------- -------------- 8,368 9,826 9,611 -------------- -------------- -------------- Operating Expenses Salaries, wages and benefits 2,828 3,099 3,022 Aircraft 1,253 1,288 1,593 Aircraft rent 1,009 1,109 959 Airport and navigation fees 743 772 738 Aircraft maintenance, materials and supplies 383 508 569 Communications and information technology 388 459 479 Food, beverages and supplies 334 395 435 Depreciation, amortization and obsolescence 366 372 441 Commissions 272 369 476 Other 1,476 1,647 1,630 -------------- -------------- -------------- 9,052 10,018 10,342 -------------- -------------- -------------- Operating loss before the undernoted items (684) (192) (731) Non-recurring labour expenses (note 2) - (26) - Reorganization and restructuring items (note 7) (1,050) - - Non-operating income (expense) (note 6) Net interest expense (86) (221) (275) Loss on sale of and provisions on assets (168) (42) (85) Other (28) 97 126 -------------- -------------- -------------- (282) (166) (234) -------------- -------------- -------------- Loss before foreign exchange on non-compromised long-term monetary items and income taxes (2,016) (384) (965) FOreign Exchange On Non-compromised Long-term Monetary Items 137 (60) (20) -------------- -------------- -------------- Loss before income taxes (1,879) (444) (985) Recovery of (provision for) income taxes (note 17) 12 (384) (330) -------------- -------------- -------------- Loss for the year $ (1,867) $ (828) $ (1,315) Deficit, beginning of year (3,280) (2,452) (1,137) -------------- -------------- -------------- Deficit, end of year $ (5,147) $ (3,280) $ (2,452) ============== ============== ============== Loss per share (note 16) - basic and diluted $ (15.53) $ (6.89) $ (10.95) ============== ============== ============== The accompanying notes are an integral part of the consolidated financial statementsK

~~AIR~~SECURITIES ~~CANADA~~AND ~~Consolidated~~EXCHANGE ~~Statement of Financial Position =========================================================================================================================== (Under Creditor Protection as of April 1~~COMMISSIONWashington, ~~2003~~D.C. - note 1) (in millions - Canadian dollars) December 31 2003 2002 -------------- -------------- ASSETS Current Cash and cash equivalents $ 670 $ 558 Restricted cash (note 2) 157 63 Accounts receivable 502 697 Spare parts, materials and supplies 211 358 Prepaid expenses 171 86 -------------- -------------- 1,711 1,762 Property and equipment (note 3) 1,771 2,288 Deferred charges (note 4) 2,332 1,781 Goodwill 510 510 Other assets (note 5) 586 1,071 -------------- -------------- $ 6,910 $ 7,412 ============== ============== LIABILITIES Liabilities not subject to compromise Current Accounts payable and accrued liabilities $ 1,700 $ 1,713 Advance ticket sales 529 506 Current portion of long-term debt and capital lease obligations (note 9) 173 373 -------------- -------------- 2,402 2,592 Long-term and subordinated perpetual debt and capital lease obligations (note 9) 332 4,314 Future income taxes (note 17) 11 28 Other long-term liabilities (note 13) 1,643 1,405 Deferred credits (note 14) 1,364 1,361 -------------- -------------- 5,752 9,700 Liabilities subject to compromise (note 10) 5,313 - -------------- -------------- 11,065 9,700 -------------- -------------- Commitments (note 18) and Contingencies, Guarantees and Indemnities (note 21) and Going Concern (note 1) SHAREHOLDERS' EQUITY Share capital and other equity (note 15) 967 977 Contributed durplus 25 15 Deficit (5,147) (3,280) -------------- -------------- (4,155) (2,288) -------------- -------------- $ 6,910 $ 7,412 ============== ============== The accompanying notes are an integral part of the consolidated financial statements20549

~~AIR~~Report ~~CANADA Consolidated Statement~~ of Cash Flow ================================================================================================================================ (Under Creditor Protection as of April 1, 2003 - note 1) (in millions - Canadian dollars) Year Ended December 31 2003 2002 2001 -------------- -------------- -------------- Cash flows from (used for) Operating Loss for the year $ (1,867) $ (828) $ (1,315) Adjustments to reconcile to net cash provided by operations Reorganization and restructuring items (note 7) 986 - - Depreciation, amortization and obsolescence 366 372 441 Loss on sale of and provisions on assets (note 6) 168 42 85 Foreign ~~exchange~~Private onIssuerPursuant non-compromised long-term monetary items (137) 60 20 Future income taxes (note 17) (19) 372 319 Employee future benefit funding less than expense 179 188 156 Decrease in accounts receivable 89 87 142 Decrease (increase) in spare parts, materials and supplies 55 (21) 24 Increase (decrease) in accounts payable and accrued liabilities 50 (145) (490) Increase (decrease) in advance ticket sales 23 25 (17) Aircraft lease payments less than (in excess of) rent expense (note 1) 363 (253) (423) Recovery of lease rebates - 145 - Other (117) (139) (14) -------------- -------------- -------------- 139 (95) (1,072) -------------- -------------- -------------- Financing Short-term loans - - (178) Long-term borrowings - 78 996 Reduction of long-term debt and capital lease obligations (81) (672) (566) CIBC credit facility borrowings (note 1) 315 - - CIBC credit facility repayments (note 1) (159) - - DIP financing fees (note 1) (62) - - Proceeds from sale and leaseback of assets - 284 1,468 Other 9 - (2) -------------- -------------- -------------- 22 (310) 1,718 -------------- -------------- -------------- Investing Proceeds from sale of assets 45 17 164 Additions to ~~property~~Rule ~~and equipment, net of recovered progress payments (96) (109) (179) Investments and advances 2 (12) (1)~~ 13a-~~-------------~~16 ~~--------------~~or 15d-~~------------- (49) (104) (~~16) ~~--------------~~ofthe ~~--------------~~Securities ~~--------------~~Exchange ~~Increase~~Act ~~(decrease) in cash and cash equivalents 112 (509) 630 Cash and cash equivalents, beginning~~ of year 558 1,067 437 -------------- -------------- -------------- Cash and cash equivalents, end of year $ 670 $ 558 $ 1,067 ============== ============== ============== The accompanying notes are an integral part of the consolidated financial statements1934

~~2003~~For ~~2002~~the ~~2001~~month ~~Net interest expense Interest income $ 25 $ 44 $ 38 Interest expense (115) (290) (352) Interest capitalized 4 25 39 -------------------------------- Total (86) (221) (275) Gain (loss) on sale~~ of ~~and~~April provision on assets Gain on sale of assets 16 9 84 Provision for loss on aircraft and inventory (165) (32) (176) Other (19) (19) 7 -------------------------------- Total (168) (42) (85) -------------------------------- Other Gain on purchase of debt - 118 52 Financing & other (28) (21) 74 -------------------------------- Total (28) 97 126 -------------------------------- Total $ (282) $(166) $(234) ================================2004

~~Repudiated~~Commission ~~leases,~~File ~~net~~No. (a) $300 Repudiated contracts (b) 250 Labour related items (c) 195 Write off of deferred financing costs on compromised debt and hedging adjustments (d) 124 Residual value guarantees and aircraft rent expense (e) 254 Foreign exchange adjustments on compromised debt (183) Professional fees 57 Amortization of DIP financing fees 67 Interest income on accumulated cash (f) (14) 000-~~----------------- Reorganization and restructuring items, net $1,050 ==================~~27096

~~Final~~Air ~~Maturity~~Canada ~~Interest Rate 2003 2002~~ (%)Translation ~~---------------------------------------------------------------~~of USregistrant’s ~~dollar~~name ~~debt~~into (aEnglish) ~~2009-2015~~7373 ~~6.495~~Côte -Vertu ~~7.17 $ 163 $ 1~~West,~~339~~ ~~Canadian dollar debt (b) 2004 4~~P.5O. ~~105~~Box ~~980~~14000, ~~Euro debt~~ Saint- ~~486 Japanese yen notes - 94 ----------------------------- 268 2~~Laurent,~~899~~ ~~Convertible subordinated debentures - 131 Subordinated perpetual debt - 1~~Quebec,~~193~~ ~~Capital~~Canada ~~lease~~H4Y ~~obligations~~1H4 (c)Address ~~2004-2027 3.0 - 11.8 237 464 ----------------------------- 505 4,687 Current portion~~ of ~~long-term~~principal ~~debt~~executive ~~(173~~offices) ~~(373) ----------------------------- Long-term and subordinated perpetual debt and capital lease obligations $ 332 $ 4,314 =============================~~

~~2004~~Indicate ~~2005~~by ~~2006~~check ~~2007~~mark ~~2008~~whether ~~-------------------------------------------------------------~~the ~~Long-term~~registrant ~~debt~~files $or ~~128~~will $file 20annual $reports 20under $cover Form 20-F $or 23Form ~~Capital lease principal obligations $ 45 $ 16 $ 38 $ 60 $ 9~~40F.

~~Claims~~Form ~~Review Status~~ 20-~~-----------------------------------------------------------------~~F ~~Revisions~~Form ~~Accepted / Revisions / Disputes Resolved (i) Disallowances Outstanding (ii)~~ 40-~~------------------------~~F ---------------------- Recorded Filed Accepted as Original Revision Original Revision Filed Claim Claim ------------------------------------ ------------------------- ---------------------- Long-term and $3,674 $4,928 $ - $ 48 $ 33 $1,488 $1,390 subordinated perpetual debt (a) Aircraft leases, 871 7,728 - - - 136 48 including capital lease obligations Accounts payable, 768 3,657 111 397 75 28 13 accrued liabilities, supplier repudiation and other Employee related - 6,546 - - - - - Litigation - 83,459 - 10,379 9 - - ------------------------------------ ------------------------- ---------------------- Liabilities subject to $5,313 $106,319 $111 $10,824 $117 $1,653 $1,451 compromise ==================================== ========================= ======================X

~~Final~~Indicate ~~Interest~~by ~~Maturity~~check ~~Rate~~mark ~~(%)~~if ~~-------------~~the ~~--------------~~registrant USis ~~dollar~~submitting ~~debt~~the ~~(i)~~Form ~~2005~~6-~~2011~~K ~~2.1~~in -paper ~~10.25~~as $permitted ~~890~~by ~~Canadian~~Regulation ~~dollar debt (ii) 2004~~S-~~2009~~T ~~5.0~~Rule ~~- 10.0 951 Euro debt~~ 101(~~iii~~b) ~~2005-2011 6.63 - 10.25 498 Japanese yen notes~~ (~~iv) 2007~~ 1~~.9 86 Convertible subordinated debentures (note 11~~) ~~150 Subordinated perpetual debt (note 12) 1,099 --------------- Long-term and subordinated perpetual debt 3,674 Capital lease obligation 2010 8.29 51 --------------- $ 3,725 ===============~~:

~~2003~~Indicate ~~2002~~by ~~34,000~~check ~~Japanese~~mark ~~yen~~if atthe ~~2.60%~~registrant ~~until~~is ~~2004~~submitting ~~Callable~~the inForm ~~2004 and every fifth year thereafter at par (a) $ 411 $ 452 300 Swiss francs at~~ 6~~.25%~~-K ~~Callable~~ in ~~2006~~paper ~~and~~as ~~every~~permitted ~~fifth~~by ~~year~~Regulation ~~thereafter~~S-T atRule 102% of par 313 343 200 Swiss francs at 5.75% Callable at 102% of par in 2004 and every fifth year thereafter at 102% of par 209 228 102 Euro at 3.25% Callable in 2006 and every third year thereafter at par 101(b) ~~166 170 ----------------------- Subordinated perpetual debt $1,099 $1,193 =======================~~(7):

~~2003~~Indicate ~~2002~~by ~~Gain~~check onmark ~~sale~~whether ~~and~~by ~~leaseback~~furnishing ofthe ~~assets~~information $contained ~~761 $ 786 Aircraft rent expense~~ in ~~excess~~this ofForm, ~~lease~~the ~~payments~~registrant ~~(a)~~is ~~537~~also ~~327~~thereby ~~Contributions~~furnishing ~~received~~the ininformation ~~exchange~~to ~~for~~the ~~extensions~~Commission ofpursuant ~~commercial~~to 64Rule ~~241 agreements~~ 12g3-2(b) ~~Other~~under 2the 7Securities ~~------------------------~~Exchange ~~Deferred~~Act ~~credits~~of ~~$ 1,364 $ 1,361 ========================~~1934.

~~Common~~Yes ~~Shares~~No Class A Shares Number (000) Amount Number (000) Amount -------------------------------------------------------------------- December 31, 2001 79,064 $ 521 41,115 $ 296 Share purchase options exercised 6 0 - - --------------------------------- -------------------------------- December 31, 2002 79,070 521 41,115 296 Share purchase options exercised 6 0 - - -------------------------------------------------------------------- December 31, 2003 79,076 $ 521 41,115 $ 296 ====================================================================X

~~Share~~If ~~Capital~~“Yes” ~~and~~is ~~Other~~marked, ~~Equity~~indicate ~~Summary~~below ~~(net~~the offile ~~issue~~number ~~costs):~~assigned ~~2003~~to ~~2002~~the ~~2001~~registrant ~~Common~~in ~~shares~~connection ~~$521~~with ~~$521~~Rule ~~$521 Class A shares 296 296 296 Series 1 preferred shares 125 125 125 Warrants~~ 12g3-2(1b) -: ~~10 10 Convertible subordinated debenture conversion option 25 25 25~~ 82-~~------------------------------------ Total $967 $977 $977 =====================================~~

~~Stock~~DOCUMENT Option Plan ------------------------------------------ Weighted Average Remaining Outstanding Exercisable Total Contractual Life Range of Weighted Average Total Weighted Average Outstanding (Years) Exercise Price Exercise Price Exercisable Exercise Price Expiry Dates ----------------------------------------------------------------------------------------------------------------------- Common 1,849 5 $4.73 - $6.99 $6.21 1,773 $6.21 2004 - 2012 2,782 7 $7.00 - $9.99 $8.73 1,579 $8.62 2005 - 2011 2,294 6 $10.00 - $12.99 $10.57 1,824 $10.70 2008 - 2010 375 6 $13.00 - $19.67 $16.05 282 $16.05 2010 ------------------- ------------------------------------------------ 7,300 $9.05 5,458 $8.91 =================== ================================================ Class A Non-Voting 714 6 $1.54 - $4.99 $4.14 427 $4.52 2006 - 2013 430 5 $5.00 - $6.99 $5.62 393 $5.67 2004 - 2011 841 6 $7.00 - $7.99 $7.25 525 $7.28 2005 - 2011 331 5 $8.00 -$12.49 $11.10 302 $11.27 2008 - 2010 ------------------- ------------------------------------------------ 2,316 $6.54 1,647 $6.91 =================== ================================================INDEX

2003 2002 2001 ------------------ --------------------- --------------------- Shares Weighted Shares Weighted Shares Weighted (000) average (000) average (000) average share share price share price price ---------------------------------------------------------------- Common Shares ------------------ Beginning of year 7,451 $ 9.07 7,500 $ 9.14 4,931 $ 9.24 Granted - - 100 6.38 2,640 8.93 Exercised (6) 2.79 (6) 3.38 (13) 6.60 Forfeited (145) 10.27 (143) 11.03 (58) 9.03 ------------------ --------------------- --------------------- End of year 7,300 $ 9.05 7,451 $ 9.07 7,500 $ 9.14 ================== ===================== ===================== Class A Shares ------------------ Beginning of year 2,334 $ 6.57 1,959 $ 7.06 1,258 $ 7.10 Granted 50 1.54 375 3.99 707 6.97 Exercised - - - - (6) 5.51 Forfeited (68) 3.74 - - - - ------------------ --------------------- --------------------- End of year 2,316 $ 6.54 2,334 $ 6.57 1,959 $ 7.06 ================== ===================== =====================


Document		Page No.

1	News Release dated April 26, 2004 ("Air Canada Announces Revised Agreement With Deutsche Bank For $850 Million Rights Offering")	4

~~Year~~Document ~~Ended December 31 2003 2002 2001 --------------------------------------------- Numerator: Numerator for basic earnings per share: Loss from continuing operations $ (~~1,867) $ (828) $ (1,315) Effect of potential dilutive securities: After tax income from convertible subordinated debentures 3 11 11 Add back anti-dilutive impact (3) (11) (11) --------------------------------------------- Adjusted loss for diluted earnings per share $ (1,867) $ (828) $ (1,315) ============================================= Denominator: Denominator for basic earnings per share: Weighted-average shares 120 120 120 --------------------------------------------- Effect of potential dilutive securities: Class A non-voting preferred shares 10 10 10 Convertible subordinated debentures 9 9 9 Stock options - 1 2 --------------------------------------------- 19 20 21 Add back anti-dilutive impact (19) (20) (21) --------------------------------------------- Denominator for diluted earnings per share: Adjusted weighted-average shares 120 120 120 ============================================= Basic and diluted loss per share: $ (15.53) $ (6.89) $ (10.95) =============================================

~~2003~~Air ~~2002~~Canada ~~Future~~[Air ~~tax~~Canada ~~assets~~Logo Non-capital loss carry forwards $ 83 $ 443 Deferred gains on sale and leaseback of assets 255 253 Post-employment obligations 203 68 Accounting provisions not currently deductible for tax 423 254 Book depreciation in excess of tax depreciation 414 - Eligible capital expenditures 196 97 Unearned revenues 130 (97) Unrealized foreign exchange losses 61 78 -------------------------- Total future tax assets 1,765 1,096 -------------------------- Future tax liabilities Tax depreciation in excess of book depreciation 55 50 Net other 66 30 -------------------------- Total future tax liabilities 121 80 -------------------------- Net future tax assets 1,644 1,016 -------------------------- Less valuation allowance 1,655 1,044 -------------------------- Net recorded future income tax liability $ (11) $ (28) ==========================Omitted]

~~2003~~Attention ~~2002~~Business/Financial ~~2001~~Editors: ~~Provision~~Air ~~(recovery)~~Canada ~~based~~Announces onRevised ~~combined~~Agreement ~~federal~~With ~~and~~Deutsche ~~provincial~~Bank ~~tax~~For ~~rates~~ $850 ~~(675)~~Million $Rights (167) $ (403) Non-taxable portion of capital gains (40) 16 (63) Large corporations tax 5 12 7 Non-deductible expenses 69 10 23 Effect of tax rate changes on future income taxes (57) 9 33 Effect of declining tax rates in future years 61 40 132 Other 14 11 31 ------------------------------------------ (623) (69) (240) Valuation allowance - recovery offset 611 53 117 Valuation allowance - asset write-off - 400 453 ------------------------------------------ 611 453 570 Provision for (recovery of) income taxes $ (12) $ 384 $ 330 ==========================================Offering

~~2003~~MONTREAL, ~~2002~~April ~~2001~~26 ~~Current~~/CNW ~~tax~~Telbec/ ~~expense~~— $Air 5Canada $announced 12today $that 7it ~~Future~~has ~~income~~reached ~~tax~~an ~~benefit~~agreement ~~relating~~in principle with Deutsche Bank AG to ~~temporary~~amend ~~differences~~the ~~(571)~~Stand-By ~~(90)~~Purchase ~~(280)~~Agreement ~~Future~~to ~~income~~extend ~~tax~~and ~~expense~~increase ~~(recovery)~~the ~~from~~rights ~~tax~~offering ~~rate~~available ~~(57)~~to 9creditors 33from ~~changes~~$450 ~~Valuation~~million ~~allowance~~to ~~611~~$850 ~~453~~million. ~~570~~The ~~---------------------------------------~~$850 ~~Provision~~million ~~for~~rights ~~(recovery~~offering ~~of)~~is ~~income~~greater ~~taxes~~than the $700 ~~(12)~~million $originally ~~384~~sought $by ~~330~~the ~~=======================================~~Company ~~Income~~at ~~taxes~~the ~~paid~~start of the equity solicitation process in July 2003. ~~were~~The $1agreement ~~(2002~~is ~~$7)~~subject to completion of appropriate documentation and Court approval.

~~Operating~~“Air ~~Leases~~Canada’s ~~--------------------------------------------------------------------------------------~~restructuring ~~Aircraft~~regains -its ~~Aircraft~~momentum -today ~~Other~~with ~~Other~~a ~~Property~~vote ~~Renegotiated~~of ~~and~~confidence Inin ~~Effect~~our ~~--------------------------------------------------------------------------------------~~restructuring ~~--------------------------------------------------------------------------------------~~business ~~2004~~plan $from ~~707~~a $major ~~185~~global $financial 72institution,” ~~--------------------------------------------------------------------------------------~~said ~~2005~~Air ~~650~~Canada ~~136~~CEO 58Robert ~~--------------------------------------------------------------------------------------~~Milton. ~~2006~~“The ~~571~~agreement ~~127~~with 51Deutsche ~~--------------------------------------------------------------------------------------~~Bank ~~2007~~will ~~570~~provide ~~127~~a 48solid ~~--------------------------------------------------------------------------------------~~foundation ~~2008~~for ~~435~~Air ~~123~~Canada’s 47restructuring ~~--------------------------------------------------------------------------------------~~and ~~Thereafter~~the ~~1,023~~flexibility ~~378~~to ~~109~~pursue ~~--------------------------------------------------------------------------------------~~an $equity ~~3,956~~partner $as ~~1,076~~we $work ~~385~~towards ~~------------------====================================================================~~a successful completion of the restructuring in the coming months.

~~Pension~~“Air ~~Benefits~~Canada -is ~~Pension~~well ~~Benefits~~positioned -to ~~Other~~carry ~~Benefits~~on ~~Registered~~business ~~Plans~~effectively ~~Supplemental~~and ~~Plans~~it ~~----------------------------------------------------------------~~is ~~2003~~business ~~2002~~as ~~2003~~usual ~~2002~~for ~~2003~~our ~~2002~~customers. ~~Change~~We inhave ~~benefit~~made ~~obligation~~significant ~~Benefit~~progress ~~obligation~~in ~~at beginning of year $ 9~~revenue,~~162~~ $fleet ~~8,698~~and ~~$ 688 $ 563 $ 673 $ 565 Service~~ cost ~~151~~restructuring ~~160~~over 16the 18past 71 56 Interest cost 579 559 45 42 46 39 Plan participants' contributions 97 109 4 6 - - Amendments - 59 (9) 71 20 1 Benefits paid (444) (418) (19) (17) (57) (49) Actuarial (gain) loss 524 (31) 75 5 103 61 Impact of curtailment 67 - - - (14) - Foreign exchange (63) 26 - - (23) - ----------------------------------------------------------------- Benefit obligation at end of year ~~10,073~~and ~~9,162~~our ~~800~~2004 ~~688~~revenues ~~819~~are ~~673~~tracking ~~----------------------------------------------------------------- Change~~ in ~~plan~~line ~~assets~~with ~~Fair~~what ~~value~~we ofprojected ~~plan~~in ~~assets~~our atbusiness ~~beginning of year 8,009 8,859 68 49 14 27 Actual return on~~ plan. ~~assets~~We ~~1,228~~are ~~(572)~~now 5entering ~~(5)~~our 1strongest ~~(1)~~travel ~~Employer~~period contribution 98 12 35 35 52 37 Plan participants' contributions 97 109 4 6 - - Benefits paid (444) (418) (19) (17) (57) (49) Foreign exchange (59) 19 - - - - ----------------------------------------------------------------- Fair value of ~~plan~~the ~~assets at end of~~ year 8,~~929~~ ~~8,009~~with 93positive 68cash 10flow 14and ~~-----------------------------------------------------------------~~approximately ~~Funded status (~~$1~~,144)~~ ~~(1,153)~~billion ~~(707)~~in ~~(620)~~cash ~~(809)~~on ~~(659)~~hand Unrecognized net actuarial (gain) loss 977 1,063 190 123 193 131 Unrecognized prior service cost 538 673 134 165 35 23 Unrecognized net transition obligation (7) (28) - - - - ----------------------------------------------------------------- Prepaid (accrued) benefit cost $ 364 $ 555 $ (383) $ (332) $ (581) $ (505) ================================================================= Weighted average assumptions as of ~~December~~the 31close ~~Discount~~of ~~rate~~business ~~6.00%~~last ~~6.50%~~week ~~6.00%~~in ~~6.50%~~addition ~~6.00%~~to ~~6.50%~~$500 ~~Expected~~million ~~return~~in onavailable ~~plan~~credit ~~assets~~lines ~~7.50%~~unchanged ~~8.00%~~from ~~7.50%~~the ~~8.00%~~most ~~8.00%~~recent 8update.~~00% Rate of compensation increase 4.00% 4.25% 4.00% 4.25%~~

~~Pension~~“Our ~~Benefits~~stakeholders, -including ~~Registered~~our ~~Pension~~largest ~~Benefits~~creditors, -have ~~Supplemental~~reaffirmed ~~Plans~~their ~~Plans~~support ~~2003~~in ~~2002~~ensuring ~~2001~~the ~~2003~~airline’s ~~2002~~successful ~~2001~~restructuring ~~Net~~and ~~benefit~~will ~~plan~~continue ~~expense~~to ~~Current~~work ~~service~~with ~~cost~~us $ 151 $ 160 $ 152 $ 16 $ 18 $ 11 Interest cost 579 559 539 45 42 33 Expected return on plan assets (638) (684) (660) (2) (2) (1) Amortization of prior service cost 82 86 82 14 16 12 Amortization of net transition obligation (21) (21) (21) - - - Amortization of experience (gains) losses 5 1 (4) 6 5 3 Negative balances due to ~~limit~~ensure 10Air 10Canada 24emerges -from -CCAA -protection ~~Special termination benefits - - 8 - - - Impact of curtailment/settlement (~~a) ~~120~~much -stronger 1airline,” 8said -Mr. - Decrease in valuation allowance - - (23) - - - ---------------------------------------------------------------------- $ 288 $ 111 $ 98 $ 87 $ 79 $ 58 ======================================================================Milton.

~~Impact~~Under onthe ~~2003~~proposed ~~Pension~~amendments, ~~Expense~~the ~~.25~~previously ~~Percentage~~announced ~~.25~~$450 ~~Percentage~~million ~~Point~~rights ~~Increase~~offering ~~Point~~to ~~Decrease~~creditors ~~------------------------------------------------------------------------------------------------------~~will ~~Discount~~be ~~rate~~expanded onto ~~obligation~~$850 ~~assumption~~million ~~($13)~~at the same $16925 ~~Long~~million ~~term~~pre-investment ~~rate~~valuation of ~~return~~Air onCanada ~~plan~~as ~~assets~~had ~~assumption~~been ~~($19)~~provided ~~$20~~in the Trinity Agreement thus preserving and expanding a key element of potential creditor recovery in Air Canada’s restructuring plan.

~~Other~~Deutsche ~~Benefits~~Bank ~~2003~~as ~~2002~~Stand-by ~~2001~~Purchaser ~~Net~~will ~~benefit~~acquire ~~plan~~any ~~expense~~equity ~~Current~~not ~~service~~purchased ~~cost~~by $creditors 71at $a 56premium $price ~~50 Interest cost 46 40 35 Expected return on plan assets - (2) (2) Amortization~~ of ~~prior service cost 6 6~~ 107.5% ~~Amortization~~thus ofensuring ~~experience~~that ~~(gains)~~AC ~~losses~~will 8have 3the -full ~~----------------------------------------------~~ $850 ~~131~~million $available ~~103~~to $fund 88its ~~==============================================~~restructuring plan.

~~Year~~Air ~~Ended~~Canada ~~December~~will 31pursue ~~2003~~an ~~2002~~equity ~~2001~~solicitation ~~------------------------------------------~~process. ~~Transportation revenue Passenger Canada Mainline $ 2~~However,~~325~~ $as ~~2,845~~a $result ~~2,737~~of ~~Regional~~the ~~594~~funding ~~690~~that ~~845~~the ~~------------------------------------------~~proposed ~~2,919~~amendments ~~3,535~~will 3secure,~~582~~ USAir ~~Transborder~~Canada ~~Mainline~~will ~~1,396~~be ~~1,775~~seeking ~~1,931~~only ~~Regional~~$250 ~~182~~million ~~170~~instead ~~187~~of ~~------------------------------------------~~the ~~1,578~~$650 ~~1,945~~million ~~2,118~~provided ~~Atlantic~~for -in ~~Mainline~~the ~~1,472~~Trinity ~~1,556~~Agreement. ~~1,398~~This ~~Pacific~~equity -will ~~Mainline~~be ~~502~~used ~~802~~in ~~723~~part ~~Other~~to ~~International~~retire -the ~~Mainline~~GE ~~387~~convertible ~~352~~notes ~~302~~and ~~------------------------------------------~~warrants ~~Pacific~~if ~~revenue~~appropriate ~~6,858~~arrangements ~~8,190~~can ~~8,123~~be ~~Cargo~~negotiated ~~revenue~~with ~~519~~GE ~~585~~similar ~~578~~to ~~------------------------------------------~~those ~~Total~~formerly ~~transportation~~negotiated ~~revenue~~by ~~7,377~~Trinity. 8However,~~775~~ ~~8,701~~successful ~~------------------------------------------~~completion ~~Non-transportation~~of ~~revenue~~the ~~Aeroplan~~proposed ~~307~~equity ~~309~~investment ~~230~~will ~~Technical~~no ~~Services~~longer ~~169~~be ~~239~~a ~~224~~condition ~~Other~~precedent ~~515~~to ~~503~~Air ~~456~~Canada’s ~~------------------------------------------~~successful ~~991~~emergence ~~1,051~~from ~~910 ------------------------------------------ Total operating revenue $ 8,368 $ 9,826 $ 9,611 ==========================================~~CCAA.

~~2003~~In ~~2002~~addition ~~2001~~to ~~------------------------------------~~documentation ($and ~~millions)~~Court ~~GAAP~~approval, ~~operating~~the ~~income~~proposed ~~(loss)~~amendments ~~before~~contain ~~non-recurring~~two ~~labour~~significant ~~expenses~~conditions ~~and~~regarding ~~reorganization~~labour and ~~restructuring~~pension ~~items~~matters ~~(684)~~which ~~(192)~~must ~~(731)~~be ~~Add~~satisfied ~~back:~~by ~~Depreciation~~May 15, ~~amortization~~2004. ~~and~~The ~~obsolescence~~labour ~~366~~condition ~~372~~requires ~~441~~that ~~Aircraft~~Air ~~rent~~Canada ~~1,009~~obtain $200 million in annual cost reductions to realize the labour cost savings of approximately $1~~,109~~.1 ~~959~~billion ~~-----------~~agreed ~~------------~~to ~~-----------~~by ~~EBITDAR~~the various Air Canada unions last year. In addition, ~~before~~the ~~non-recurring~~agreement requires that Air Canada’s labour ~~expenses~~unions ~~and~~provide ~~reorganization~~“clean ~~and~~slate” ~~restructuring~~assurances ~~items~~that ~~691~~all 1material disputes or claims will be compromised or waived upon emergence. The pension conditions require Air Canada to reach satisfactory arrangements with the Office of the Superintendent of Financial Institutions (OSFI) to implement the February 18,~~289~~ ~~669~~2004 ~~===========~~agreement ~~============~~between ~~===========~~Air Canada and its pension beneficiaries regarding funding over 10 years of the solvency deficit in Air Canada’s pension plans. The proposed amendments do not require pension design changes as had previously been required by equity plan sponsors.

~~RESULTS~~In ~~OF OPERATIONS --------------------- 2003 2002 2001 ---------------------------------------------------- ($ millions~~addition, ~~except~~the ~~per~~agreement ~~share~~requires ~~figures)~~satisfactory ~~Operating~~assurances ~~Revenues~~from ~~Passenger~~the ~~6,858~~Government ~~8,190~~of ~~8,123~~Canada ~~Cargo 519 585 578 Other 991 1~~that,~~051~~ ~~910~~upon ~~----------------- ---------------- ----------------- 8~~emergence,~~368~~ ~~9,826~~Air ~~9,611~~Canada ~~-----------------~~will ~~----------------~~be ~~-----------------~~able ~~Operating~~to ~~Expenses~~compete Salaries, wages and benefits 2,828 3,099 3,022 Aircraft fuel 1,253 1,288 1,593 Aircraft rent 1,009 1,109 959 Other 3,962 4,522 4,768 ----------------- ---------------- ----------------- 9,052 10,018 10,342 ----------------- ---------------- ----------------- Operating loss before the undernoted items (684) (192) (731) Non-recurring labour expenses - (26) - Reorganization and restructuring items (1,050) - - Non-operating expense (282) (166) (234) Foreign exchange on ~~non-compromised~~a ~~long-term~~level ~~monetary~~playing ~~items~~field ~~137~~with ~~(60)~~all ~~(20)~~Canadian ~~Recovery~~carriers ofin ~~(provision~~regards ~~for)~~to ~~income taxes 12 (384) (330) ----------------- ---------------- ----------------- Loss for~~ the ~~year~~regulatory ~~(1,867) (828) (1,315) ================= ================ ================= Loss per share - Basic and diluted (15~~environment.~~53) (6.89) (10.95) Weighted average common shares outstanding (millions) - basic and diluted 120 120 120~~

~~Passenger~~The ~~Revenues~~timeline -for ~~2003~~the ~~versus~~equity ~~2002~~solicitation ~~-------------------------------------~~process ~~Passenger~~remains ~~Revenue~~under ~~Capacity~~discussion ~~Traffic~~and ~~Yield~~will %be ~~Change~~subject ~~(ASMs)~~to ~~(RPMs)~~approval ~~per~~by ~~RPM~~the ~~RASM~~Court. %However, ~~Change~~the %amended ~~Change~~agreement %will ~~Change~~provide %for ~~Change~~Air ~~--------------------- ---------------- ----------------- --------------- -----------------~~ Canada ~~(17)~~to ~~(7)~~emerge ~~(8)~~from ~~(10)~~CCAA ~~(11)~~protection USno ~~(19)~~later ~~(12)~~than ~~(13)~~September ~~(7)~~30, ~~(8) Atlantic (5) (1) (2) (4) (5) Pacific (37) (32) (36) (2) (7) Other 10 5 6 3 4 System (16) (10) (12) (5) (7)~~2004.

Passenger Revenues - 2002 versus 2001 ------------------------------------- Passenger Revenue Capacity Traffic Yield % Change (ASMs) (RPMs) per RPM RASM % Change % Change % Change % Change ------------------ --------------------- -------------------- ----------------- -------------------- Canada (1) (2) (3) 1 0 US (8) (3) (2) (6) (6) Atlantic 11 (1) 4 7 12 Pacific 11 (3) 10 1 15 Other 17 21 20 (3) (3) System 1 (1) 2 (1) 2SIGNATURES

$Pursuant ~~millions~~to ~~-------------------------------------~~the ~~2003~~requirements ~~2002~~of ~~2001~~the ~~-------------------------------------~~Securities ~~Pre-tax~~Exchange ~~loss~~Act (1of 1934,~~879)~~ ~~(444)~~the ~~(985)~~registrant ~~Tax~~has ~~recovery~~duly 12caused 69this ~~240~~report ~~Valuation~~to ~~allowance~~be -signed ~~recovery~~on ~~offset~~its 0behalf ~~(53)~~by ~~(117)~~the ~~Valuation allowance - asset write-off 0 (400) (453) --------- -------------- ------------- Net loss (1~~undersigned,~~867)~~ ~~(828)~~thereunto ~~(1,315)~~duly ~~========= ============== =============~~authorized.

~~BALANCE~~Air ~~SHEET~~Canada ANALYSIS Balance Sheet Table (Under Creditor Protection as of April 1, 2003) As at December 31 2003 2002 2001 ----------------------------------------- ASSETS ($ millions) Current Cash and cash equivalents 670 558 1,067 Other current assets 1,041 1,204 1,168 ----------------------------------------- 1,711 1,762 2,235 Property and equipment 1,771 2,288 2,830 Deferred charges 2,332 1,781 1,619 Goodwill 510 510 510 Other assets 586 1,071 1,550 ----------------------------------------- 6,910 7,412 8,744 ========================================= LIABILITIES Liabilities not subject to compromise Current liabilities 2,402 2,592 2,869 Long-term and subordinated perpetual debt and capital lease obligations 332 4,314 4,580 Future income taxes 11 28 60 Other long-term liabilities 1,643 1,405 1,279 Deferred credits 1,364 1,361 1,416 ----------------------------------------- 5,752 9,700 10,204 Liabilities subject to compromise 5,313 - - ----------------------------------------- 11,065 9,700 10,204 ----------------------------------------- SHAREHOLDERS' EQUITY (4,155) (2,288) (1,460) ----------------------------------------- 6,910 7,412 8,744 =========================================Registrant

2003 Changes in Cash Position ($ Millions) (tabular version of graphic display) Cash Inflows Cash Outflows ------------ ------------- Cash flows from operations 139 Reduction of long-term debt and capital lease obligations (81) CIBC credit facility borrowings 315 CIBC credit facility repayments (159) DIP financing fees (62) Proceeds from sale of assets 45 Additions to P&E, net of recovered progress payments (96) Other 11 Net increase in cash 112

Date:	April 28, 2004	By:	/s/ John Baker

			(Signature)

~~2004~~John ~~2005~~Baker ~~2006~~Senior ~~2007 2008~~ Vice-~~---------------------------------------------------~~President ~~($ millions) Debt repayments (1) 128 20 20 20 23 Capital lease principal repayments (1) 45 16 38 60 9 Lufthansa Cooperation Agreement 16 16 16 16 16 Operating leases of aircraft - Renegotiated~~ and inGeneral effect (2) 707 650 571 570 435 Operating leases of aircraft - Other (3) 185 136 127 127 123 Property operating leases 72 58 51 48 47 Other property & equipment (4) 42 - - - - --------- ---------- ---------- ---------- --------- Total 1,195 896 823 841 653 ========= ========== ========== ========== =========Counsel

ADJUSTING 2001-2003 RESULTS FOR SIGNIFICANT ITEMS (cont'd) Provisions on Aircraft and Inventory Values, Restructuring Adjusted Non-recurring Labour Items, Gains/ Non-GAAP Actual Expenses and Tax Losses and Other Results ($ millions) GAAP Valuation Allowance Significant Items unaudited, except for actual results Results ------------------------------------------------ ------------ ---------------------- -------------------- ------------ 2003 Operating revenues 8,368 - - 8,368 Operating expenses 9,052 - - 9,052 ------------ ---------------------- -------------------- ------------ Operating loss before the undernoted item (684) - - (684) Reorganization and restructuring items (1,050) - 1,050 - Non-operating income (expense) (282) 165 3 (1) (114) ------------ ---------------------- -------------------- ------------ Income (loss) before foreign exchange on non-compromised long-term monetary items and income taxes (2,016) 165 1,053 (798) Foreign exchange on non-compromised long-term monetary items 137 - - 137 Recovery of income taxes 12 - - 12 ------------ ---------------------- -------------------- ------------ Income (loss) for the year (1,867) 165 1,053 (649) ============ ====================== ==================== ============ 2002 Operating revenues 9,826 - - 9,826 Operating expenses 10,018 - - 10,018 ------------ ---------------------- -------------------- ------------ Operating loss before the undernoted item (192) - - (192) Non-recurring labour expenses 26 (26) - - Non-operating income (expense) (166) 32 (71) (2) (205) ------------ ---------------------- -------------------- ------------ Income (loss) before foreign exchange on non-compromised long-term monetary items and income taxes (384) 58 (71) (397) Foreign exchange on non-compromised long-term monetary items (60) - - (60) Recovery of income taxes 16 3 - 19 Tax valuation allowance (400) 400 - - ------------ ---------------------- -------------------- ------------ Income (loss) for the year (828) 461 (71) (438) ============ ====================== ==================== ============

ADJUSTING 2001-2003 RESULTS FOR SIGNIFICANT ITEMS (cont'd) Provisions on Aircraft and Inventory Values, Restructuring Adjusted Non-recurring Labour Items, Gains/ Non-GAAP Actual Expenses and Tax Losses and Other Results ($ millions) GAAP Valuation Allowance Significant Items unaudited, except for actual results Results ------------------------------------------------ ------------ ---------------------- -------------------- ------------ 2001 (3) Operating revenues 9,611 - - 9,611 Operating expenses 10,342 - - 10,342 ------------ ---------------------- -------------------- ------------ Operating loss (731) - - (731) Non-operating income (expense) (234) 176 (248) (4) (306) ------------ ---------------------- -------------------- ------------ Income (loss) before foreign exchange on non-compromised long-term monetary items and income taxes (965) 176 (248) (1,037) Foreign exchange on non-compromised long-term monetary items (20) - - (20) Recovery of (provision for) income taxes 123 (13) 33 143 Tax valuation allowance (453) 453 - - ------------ ---------------------- -------------------- ------------ Income (loss) for the year (1,315) 616 (215) (914) ============ ====================== ==================== ============ (1) 2003 net loss on sale of and provisions on other assets $3 million ($3 million after tax). (2) 2002 loss on asset sales $10 million ($10 million after tax); charge for September 11 government assistance claim $37 million; and 2002 gains on purchase of debt $118 million, for a total net gain of $71 million ($71 million after tax). (3) In 2001, Air Canada estimated and previously presented that $163 million of operating income was lost in the September 11 to 30, 2001 period as a result of the September 11 terrorist attacks and subsequent events. This estimate has not been included in the tables above as it is not possible to accurately estimate the continuing impact of the September 2001 events on 2002 results and therefore it is not possible to provide a proper year-over-year comparison. (4) 2001 gains on asset sales $91 million ($64 million after tax); gains on purchase of debt $52 million ($49 million after tax); and expected government assistance claim re September 11 airspace closure $105 million ($102 million after tax); for a total net gain of $248 million ($215 million after tax).

Average Total Number Age of Operating Operating Number of Operating Operating Aircraft- Aircraft- of Operating Aircraft Aircraft- Capital Operating Aircraft Aircraft (1) (Years) Owned Lease Lease (2) -------------- ---------------- --------------- ------------ -------------- ------------ Widebody Aircraft Airbus A340-300 9 9 6.5 - - 9 Airbus A330-300 8 8 3.2 - - 8 Boeing 747-400 3 3 12.5 - - 3 Boeing 747-200 3 - - - - - Boeing 767-300 30 30 10.4 - 4 26 Boeing 767-200 20 13 17.8 9 - 4 Narrowbody Aircraft Airbus A321 13 13 2.9 - - 13 Airbus A320 52 52 10.8 - - 52 Airbus A319 48 48 5.0 - - 48 Boeing 737-200 (2) 16 13 22.6 - 3 10 DC-9 18 - - - - - Canadair Regional Jet 25 25 8.2 - - 25 -------------- ---------------- --------------- ------------ -------------- ------------ Total Aircraft 245 214 9.3 9 7 198 ============== ================ =============== ============ ============== ============ (1) Excludes three owned Boeing 747-200, seven owned Boeing 767-200, 18 owned DC-9 and three owned Boeing 737-200 aircraft which were permanently removed from service. Certain owned permanently parked aircraft were available for sale as at December 31, 2003. (2) ZIP operated with 13 Boeing 737-200 aircraft which are included in the Mainline fleet.

Total Number Average Total Number of Age of Total Aircraft- of Operating Operating Aircraft- Operating Aircraft (1) Aircraft (2) Fleet Owned (1) Lease (1) (Years) ---------------- ---------------- -------------- ------------- --------------- Jazz Canadair Regional Jet 10 10 5.1 - 10 British Aerospace BAe 146 10 10 14.8 - 10 de Havilland DHC-8-300 26 26 13.8 17 9 de Havilland DHC-8-100 55 48 15.5 47 8 ---------------- ---------------- -------------- ------------- --------------- Total Aircraft 101 94 13.9 64 37 ================ ================ ============== ============= ===============

Average Average FTE FTE Employees Employees % Employee Group Union (1) 4th Qtr 2003 4th Qtr 2002 (2) Change Change ----------------------------------------------------------------------------------------------------------------------- Mainline-related Management & administrative n/a 3,614 4,723 (1,109) (23) support employees Pilots ACPA 2,830 3,100 (270) (9) Flight attendants CUPE 5,898 6,789 (891) (13) Customer sales & service CAW / IBT 4,899 6,303 (1,404) (22) agents Ramp & cargo employees IAMAW 4,769 5,428 (659) (12) Technical Services IAMAW / other 5,459 6,830 (1,371) (20) maintenance employees U.K. unionized employees AMICUS/TGWU 743 850 (107) (13) Other unionized employees various 681 820 (139) (17) Other n/a 305 362 (57) (16) ---------------------------------------------- Total Mainline-related 29,198 35,205 (6,007) (17) Air Canada Jazz and other various 3,926 4,791 (865) (18) subsidiaries ---------------------------------------------- Total Consolidated 33,124 39,996 (6,872) (17) ==============================================

Quarterly Financial Data - Condensed Consolidated $ millions (except per share figures) 2003 2002 ----------------------------------------------------------------------------------------------- Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Passenger revenues 1,745 1,597 1,901 1,615 6,858 1,857 2,164 2,336 1,833 8,190 Cargo revenues 144 122 122 131 519 130 141 154 160 585 Other revenues 322 233 205 231 991 299 247 255 250 1,051 ----------------------------------------------------------------------------------------------- Operating revenues 2,211 1,952 2,228 1,977 8,368 2,286 2,552 2,745 2,243 9,826 Operating expenses 2,565 2,222 2,211 2,054 9,052 2,446 2,490 2,577 2,505 10,018 ----------------------------------------------------------------------------------------------- Operating income (loss) before the undernoted items (354) (270) 17 (77) (684) (160) 62 168 (262) (192) Non-recurring labour expenses - - - - - 0 0 0 (26) (26) Reorganization and restructuring items - (217) (273) (560) (1,050) - - - - - Non-operating income (expense) (61) (69) (20) (132) (282) (86) (46) 37 (71) (166) ----------------------------------------------------------------------------------------------- Income (loss) before foreign exchange on non-compromised long-term monetary items and income taxes (415) (556) (276) (769) (2,016) (246) 16 205 (359) (384) Foreign exchange on non-compromised long-term monetary items 132 (4) 16 (7) 137 21 19 (86) (14) (60) -------- -------- --------- --------- -------- --------- --------- -------- --------- --------- Income (loss) before income taxes (283) (560) (260) (776) (1,879) (225) 35 119 (373) (444) Recovery of (provision for) income taxes 13 (6) (3) 8 12 6 (5) 6 (391) (384) -------- -------- --------- --------- -------- --------- --------- -------- --------- --------- Net income (loss) (270) (566) (263) (768) (1,867) (219) 30 125 (764) (828) ======== ======== ========= ========= ======== ========= ========= ======== ========= ========= Earnings (loss) Per share - basic (2.25) (4.70) (2.18) (6.39) (15.53) (1.83) 0.25 1.04 (6.35) (6.89) - (2.25) (4.70) (2.18) (6.39) (15.53) (1.83) 0.23 0.91 (6.35) (6.89) diluted

2003 2002 ---------------------------------------------- ------------------------------------------------ Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Quarterly Operating Statistics - Consolidated Operations Revenue passenger miles (millions) 9,586 9,073 11,617 9,289 39,565 10,213 11,511 13,282 9,701 44,707 Available seat miles (millions) 13,310 12,579 15,156 13,115 54,160 13,636 15,358 17,311 13,864 60,169 Passenger load factor (%) 72.0 72.1 76.6 70.8 73.1 74.9 75.0 76.7 70.0 74.3 Quarterly Operating Statistics - Mainline-related Operations Revenue passenger miles (millions) 9,186 8,653 11,171 8,878 37,888 9,853 11,086 12,877 9,319 43,135 Domestic 2,599 2,886 3,801 2,847 12,133 2,952 3,480 3,979 2,902 13,313 International 6,587 5,767 7,370 6,031 25,755 6,901 7,606 8,898 6,417 29,822 Available seat miles (millions) 12,626 11,889 14,416 12,409 51,340 12,970 14,587 16,587 13,181 57,325 Domestic 3,648 4,108 5,124 4,066 16,946 3,883 4,683 5,378 4,220 18,164 International 8,978 7,781 9,292 8,343 34,394 9,087 9,904 11,209 8,961 39,161 Passenger load factor (%) 72.8 72.8 77.5 71.5 73.8 76.0 76.0 77.6 70.7 75.2 Domestic 71.2 70.3 74.2 70.0 71.6 76.0 74.3 74.0 68.8 73.3 International 73.4 74.1 79.3 72.3 74.9 75.9 76.8 79.4 71.6 76.2

Target January 1, 2003 December 31, 2003 Allocation ------------------------ ---------------------------- ------------------- Equity 60.4% 64.8% 65.0% Real Estate 0.7% 0.3% 0.0% Bonds and Mortgages 35.9% 32.9% 35.0% Short-term and Other 3.0% 2.0% 0.0% ------------------------ ---------------------------- ------------------- Total 100.0% 100.0% 100.0% ======================== ============================ ===================

2004 Contributions -------------------------- ($ millions) Current service cost for registered pension plans 112 Past service cost for registered pension plans 83 Other pension arrangements 49 -------------------------- Total 244 ==========================

0.25 percentage point Impact on 2003 Pension Expense Increase Decrease ------------------------------ ----------------------------------------- ($ millions) Discount rate on obligation assumption (13) 16 Long-term rate of return on plan assets assumption (19) 20

----------------------------------------------------------------------------------------------------------- CONSOLIDATED Estimated Operating 2003 Sensitivity Income Key Variable Routes Measure Factor Impact ----------------------------------------------------------------------------------------------------------- Revenue Measures ($ millions) ---------------- Passenger yield per RPM System 17.3 1% change in 58 (cents) Canada 21.7 yield per RPM 25 Traffic (RPMs) (millions) System 39,565 1% change in traffic 51 Canada 13,393 22 Passenger load factor (%) System 73.1 1 percentage point 70 change RASM (cents) System 12.63 1% change in RASM 55 ----------------------------------------------------------------------------------------------------------- Cost Measures Labour & benefit expenses $2,828 1% change 28 ($ millions) Fuel - WTI price US$30.87 US$1/barrel change 28 (US$/barrel) to WTI Fuel - Jet fuel price 37.0 1% change 12 (CDN cents/litre) Cost per ASM (cents) 16.71 1% change 91 Currency Exchange Canada to US (CDN$) $1.40 CDN1(cent)change (e.g. $1.32 7 to $1.31 CDN dollar) -----------------------------------------------------------------------------------------------------------

Filing Compare · AIR CANADA /QUEBEC/