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~~SECURITIES~~ ~~AND~~ ~~EXCHANGE~~ F ~~COMMISSION Washington, D.C.~~O ~~20549~~ R M 6-K REPORT OF FOREIGN PRIVATE ISSUER

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

For Notice ~~Press~~of ~~Release~~Annual ~~issued~~General ~~February~~Meeting 6on May 13, 2003

AIR CANADA 7373 Côte Vertu West, P.O. Box 14000, Saint-Laurent, Quebec, Canada H4Y 1H4

7373 Côte Vertu West, P.O. Box 14000, Saint-Laurent, Quebec, Canada H4Y 1H4

Commission File Number: 0-27096

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:

Form 20-F

Form 40-F

Commission File Number: 0-27096

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 0-27096 .

~~CONTENTS~~C O N T E N T S

1. Notice ~~Press~~of ~~Release~~Annual ~~issued~~General Meeting on ~~February 6~~May 13, 2003.

February 19, 2003 ~~AIR CANADA REPORTS PRELIMINARY UNAUDITED YEAR 2002 AND FOURTH QUARTER RESULTS~~

~~YEAR~~Washington ~~2002~~Securities ~~OVERVIEW~~and Exchange ~~(UNAUDITED)~~Commission Division of International Corporate Finance Room 3057 450 - 5th Street N.W. Washington, DC 20549 U.S.A.

~~Q4 OVERVIEW~~RE: ~~(UNAUDITED)~~AIR CANADA — Common Shares — Class A Non-Voting Common Shares

~~MONTRÉAL, February 6,~~National ~~2003 — Air~~Instrument ~~Canada's preliminary, unaudited results for the year 2002 reflect an operating loss of $218 million, representing a $513 million improvement from 2001. Removing non~~54-recurring labour expenses of $26 million recorded in 2002, the adjusted (a) operating loss of $192 million improved $539 million from 2001. For the year, the preliminary, unaudited net loss amounted to $428 million or $3.56 per share, representing an $887 million improvement from 2001. Loss before foreign exchange on long-term monetary items and income taxes amounted to $384 million, $581 million better than the prior year. 101

~~For~~Dear ~~the quarter ended December 31~~Sir, 2002, the Corporation reported a preliminary, unaudited operating loss of $288 million, a $20 million improvement from the 2001 quarter. Removing non-recurring labour expenses of $26 million recorded in 2002, the adjusted operating loss of $262 million improved $46 million from the prior year. Loss before foreign exchange on long-term monetary items and income taxes was $359 million. The preliminary, unaudited net loss for the quarter amounted to $364 million or $3.02 per share compared to a net loss of $277 million or $2.31 per share in 2001.

Pursuant ~~Air~~to ~~Canada~~the isabove ~~releasing preliminary~~Policy, ~~unaudited~~Air ~~results for the fourth quarter and year 2002. In light of the increased economic uncertainty regarding the airline industry~~Canada, the ~~potential~~above-mentioned ~~for conflict in Iraq and significant increases in fuel prices~~issuer, ~~the~~has ~~Corporation~~set is completing a review of the carrying value of its future income tax asset. This review may result in a tax valuation allowance being recorded to reduce the value of the Mainline carrier's future income tax asset by an ~~amount~~Annual ~~ranging~~General ~~from~~Meeting ~~zero~~date ~~to $400 million from its current carrying value~~ of ~~$400~~May ~~million.~~13, ~~Any~~2003 ~~such allowance would increase~~ (the ~~provision~~"Annual ~~for~~General ~~income taxes and the net loss for the period by the amount of the tax valuation allowance. On the consolidated statement of financial position~~Meeting"), ~~any~~with ~~such allowance~~a ~~would~~record ~~also~~date ~~reduce the value~~ of ~~the future income tax asset and increase the deficit. Any such tax valuation allowance would result in an unrecognized tax benefit that would be available for~~ ~~use in the future. The allowance would~~March 24, however, have no impact on Air Canada's cash position or operating results. Air Canada expects that its financial statements for the fourth quarter and audited financial statements for the year 2002 will be finalized prior to the end of the first quarter of 2003. ~~All results reported and discussed in this release are presented on a preliminary and unaudited basis.~~

A Holders ~~number~~ of ~~non-recurring~~the orabove ~~significant~~issues ~~items~~will ~~were~~be ~~recorded~~entitled into ~~both~~receive ~~2001~~notice ~~and~~of ~~2002~~the meeting. ~~Please~~Holders ~~refer~~of Common Shares will be invited to ~~Attachments~~vote ~~One~~on ~~and~~all ~~Two~~items ~~for~~of abusiness ~~summary~~on the agenda. Holders of Class A ~~non~~Non-~~recurring~~Voting orCommon ~~other~~Shares ~~significant items~~will ~~and~~not abe ~~reconciliation~~entitled to vote since no item of ~~adjusted~~business ~~(non-GAAP)~~in ~~results~~respect of which they would be entitled to ~~published~~vote ~~results~~is on the agenda of the Annual Meeting.

~~"In~~ A acopy ~~year~~ of ~~ongoing~~this ~~crisis~~notice ~~for~~will ~~the~~be ~~airline~~forwarded ~~industry, Air Canada recorded 2002 results that continued~~ to ~~surpass all North American international carriers with an over $500 million improvement in our operating results and an $887 million improvement in net results for~~ the ~~year,"~~other ~~said~~Canadian ~~Robert~~Securities ~~Milton,~~Administrators ~~President~~ and ~~Chief~~to ~~Executive Officer. "While this represents encouraging progress under increasingly challenging circumstances, these results clearly demonstrate that~~ the ~~existing~~Exchanges ~~full-service network airline model is not sustainable without continued fundamental change~~concerned.

~~"Despite~~Yours ~~the unstable geopolitical situation~~truly, a stagnant economy and the other challenges ahead, we can still look back with satisfaction at our achievements in 2002 as we continued to transform Air Canada to compete in a changed industry environment. As anticipated at the start of the year, the company achieved profits in the two seasonally stronger quarters and, in the final analysis, was the only major full-service North American network carrier to do so," said Mr. Milton.

~~2002 ACHIEVEMENTS~~ (signed)

~~Increased~~Johanne Drapeau Deputy ~~participation~~Secretary ~~and more effective competition in the low fare market~~

~~Page~~ 2 S I G N A T U R E S

Ongoing cost reductions

Further advanced strategy to enhance value of core assets and ancillary operations

Air Canada further advanced its strategy of creating new profit centres to increase the focus on certain key ancillary profitable operations and illuminate shareholder value as follows:

Page 3

Customer Service

"While we can be proud of what we have achieved, we still have far to go," said Mr. Milton. "The fourth quarter, always challenging due to seasonally weaker demand, confirmed that revenue trends and market dynamics have changed irreversibly. The new year is off to a rough start with the overhanging threat of war and escalating fuel prices.

"In Canada, we're continuing to see growth in competitive capacity from low cost carriers in a flat market. There is still no sign of recovery in the regional market with Air Canada Jazz recording a clearly unsustainable operating loss of almost $90 million in the past year due to a decline in demand on short haul routes, rising costs and the crippling effect of surcharges and fees on fares.

"U.S. carriers have significantly increased their mainline capacity and their feeder networks have added low-cost regional jet capacity in a transborder market that has remained weak.

"Consumers, including business travellers, are buying down and this trend is permanent. Rapidly growing online booking trends have made the complex pricing structures of network carriers based on yield management systems outdated. In addition, uncontrollable costs such as fuel, government-mandated fees and airport charges continue to rise.

"While we have made progress in all areas of controllable costs, the changed revenue environment means that much more must be done. Inefficiencies in all areas of our operation must be eliminated, including those resulting from outdated work rules agreed upon in the past when the world was different. Fundamental change is required immediately as it is increasingly clear that the industry as we knew it has permanently changed.

"As we did with our early recognition of the low fare travel phenomenon with the start-up of Tango and ZIP, we intend to stay ahead of the curve and lead this change with the collaboration of our employees and their unions.

"Major U.S. carriers have already cut wages, reduced staff and taken other measures to survive. Air Canada's salaries and benefits represent 31 per cent of our operating costs — over $3 billion annually — and we too must do things differently and take additional measures. To this end, talks have already started today with leaders of our unions to address the new reality and to discuss ways in which we can achieve a labour cost reduction in the range of $650 million annually.

Page 4

"Our recent announcement with respect to the agreement to sell an equity interest in Aeroplan confirmed the value of the Air Canada franchise. Consistent with our ongoing strategy to create new profit centres within the corporation to highlight the value of our core assets, we are announcing today the commencement of a process for the sale of a significant interest in Air Canada Technical Services and in a soon-to-be-constituted Airport Ground Handling Services subsidiary.

"We will continue to monitor our liquidity requirements and assess various financing transactions and initiatives with the objective of ensuring our liquidity needs are addressed.

"While the challenges ahead may be considered formidable by some, they are surmountable. My confidence in Air Canada's ability to not only survive but thrive is based on the progress we have made last year coupled with the proven resourcefulness and tenacity of our employees and the support and loyalty of our customers. We will weather the current storm with ongoing cost reductions, revenue maximization initiatives and product innovation, while delivering the best possible care and uncompromising safety to our customers," Mr. Milton concluded.

Removing non-recurring or other significant items described in Attachments One and Two, the year 2002 adjusted (a) loss before foreign exchange on long-term monetary items and income taxes would have amounted to $397 million, a $640 million improvement from the adjusted 2001 loss of $1,037 million. For the fourth quarter of 2002, the adjusted loss of $314 million, before foreign exchange and income taxes, improved $50 million from the adjusted fourth quarter 2001 result.

FOURTH QUARTER RESULTS (PRELIMINARY AND UNAUDITED)

Fourth quarter 2002 consolidated passenger revenues were up $101 million or 6 per cent on a 3 per cent increase to available seat mile (ASM) capacity compared to the fourth quarter of 2001. Passenger revenues at the Mainline carrier increased $115 million or 8 per cent. Consolidated passenger traffic grew 5 per cent and system load factor at 70.0 per cent improved 1.2 percentage points. Passenger yield per revenue passenger mile (RPM) increased 1 per cent. As a result, passenger revenue per available seat mile (RASM) was up 2 per cent (Mainline system RASM was up 3 per cent) from the fourth quarter of 2001.

For the 2002 quarter, consolidated domestic passenger revenues were down $21 million or 3 per cent on a 2 per cent increase to ASM capacity compared to the prior year. Domestic passenger traffic declined 3 per cent while yield per RPM improved 1 per cent. With lower load factors, consolidated domestic RASM decreased 5 per cent from the fourth quarter of 2001. Domestic passenger revenues at Mainline, including Tango and Zip, increased $3 million for the quarter but experienced weakness in the latter part of the year. For the quarter, Mainline domestic ASMs were up 5 per cent from the prior year but capacity growth was scaled back by December. With increased competition and lower load factors, Mainline RASM decreased 4 per cent compared to the fourth quarter of 2001. Domestic revenues at Air Canada Jazz declined $24 million or 13 per cent from the 2001 quarter due in part to capacity reductions and continuing traffic weakness in short-haul markets.

Consolidated US transborder passenger revenues were $34 million or 8 per cent above the fourth quarter of 2001 on a 1 per cent increase to ASM capacity. US transborder RASM increased 6 per cent (an increase of 5 per cent for the Mainline carrier).

Page 5

Other international passenger revenues grew $88 million or 18 per cent on a 6 per cent increase to ASM capacity. Load factor on these routes improved 4 percentage points and RASM grew by 12 per cent. Atlantic revenues rose 16 per cent on an ASM capacity increase of 5 per cent. Pacific revenues grew by 31 per cent on 5 per cent greater ASM capacity. South Pacific, Caribbean, Mexico and South America revenues were up 5 per cent.

Cargo revenues were $7 million or 5 per cent above fourth quarter 2001 levels. Other revenues increased $18 million or 8 per cent, mainly as a result of increased revenues from Aeroplan and Air Canada Vacations.

For the quarter, total operating revenues increased $126 million or 6 per cent from the prior year.

OPERATING EXPENSES

Consolidated operating expenses, including non-recurring labour expenses, rose $106 million or 4 per cent from the fourth quarter of 2001 on a 3 per cent increase to ASM capacity. Non-recurring labour expenses of $26 million were recorded in 2002 representing payments which will be made over three years for the completion of a collective agreement allowing the integration of Air Canada and former Canadian Airlines flight attendants. This agreement concludes the integration of Air Canada and Canadian Airlines. Removing non-recurring labour expenses, adjusted operating expenses rose $80 million or 3 per cent.

Salary and wage expense was up $32 million or 5 per cent from last year. Full-time equivalent (FTE) employees increased by approximately 500 personnel or 1 per cent compared to the fourth quarter of 2001 which was down by over 5,600 FTE employees from the 2000 quarter. Most of the 2002 employee growth was in the area of aircraft maintenance services. In 2002, Air Canada adopted the fair value method to account for employee stock options. This expense has been included in salaries and wages. Employee benefits expense increased $46 million. In the fourth quarter of 2001, a favourable adjustment relating to pension and employee future benefit expenses reduced employee benefits expense by $43 million. Fuel expense was down $7 million or 2 per cent despite higher base fuel prices. Fuel hedging gains amounted to $12 million in 2002, a $43 million improvement from the prior year. Commission expense decreased $15 million or 16 per cent largely as a result of the elimination of North American base commissions in the spring of 2002. Airport and navigation fees rose $15 million or 9 per cent due mostly to higher airport charges. Aircraft rent expense rose $24 million or 9 per cent. Of this increase, approximately $13 million was due to sale/leaseback transactions completed on existing fleet to increase liquidity and $11 million was due principally to new deliveries of leased aircraft, net of retirements. Depreciation expense was down $7 million due largely to sale and leaseback transactions and the retirement of owned aircraft. The Other expense category decreased $6 million or 1 per cent with reductions recorded in information technology, workers' compensation expense and other areas partially offset by higher costs for insurance, third party customer materials and various other expense categories.

Page 6

Air Canada continued to achieve year-over-year improvements in productivity although at a slower rate than in the previous quarters of 2002. In the fourth quarter of 2002, Mainline employee productivity, as measured by ASMs per full time equivalent (FTE) employee, improved 2 per cent. This reflected the significant employee reductions which were recorded in the fourth quarter of 2001 as well as increased economy seating on many aircraft types in 2002. Fuel productivity, as measured by ASMs per litre of fuel consumed, improved 5 per cent due to the increased use of newer and more fuel efficient aircraft and a greater number of economy seats on many aircraft types. Unit cost, as measured by operating expense per ASM, was 1 per cent below the fourth quarter of 2001 for the Mainline-related operations, excluding non-recurring labour expenses. Operating expense, net of cargo and other non-ASM revenues per ASM, also declined 1 per cent.

NON-OPERATING EXPENSE

Non-operating expense, excluding foreign exchange on long-term monetary assets and liabilities, amounted to $71 million in the quarter versus $66 million in 2001. Net interest expense at $55 million decreased $14 million mainly as a result of lower interest rates, debt repayments and the favourable effect of a swap agreement. Net non-operating losses from aircraft valuation provisions and asset sales amounted to $34 million compared to net losses from aircraft provisions and asset sales of $37 million in the prior year. Gains of $15 million were recorded in the 2002 quarter from the purchase of Air Canada debt versus $27 million of gains from debt purchases in 2001. The previously announced transaction regarding the replacement of Japanese yen 20 billion of Air Canada's subordinated perpetual debt with a Japanese yen 20 billion term loan has not yet been completed and discussions regarding documentation and certain terms are continuing. This transaction has not been reflected in 2002, and its impact, including whether or not a gain will be realized, will be recorded when completed.

Foreign Exchange on Long-Term Monetary Items

Air Canada recorded, in current income, $14 million of foreign exchange losses on long-term monetary assets and liabilities in the 2002 quarter. These foreign exchange losses resulted mainly from the effect of foreign exchange rate changes on long-term debt denominated in foreign currencies, net of hedging. A gain of $87 million was recorded in the 2001 quarter following the restatement necessary to retroactively adopt, as required, amendments to CICA standard #1650 — Foreign Currency Translation.

Page 7

CASH FLOW

Cash flows used for operations amounted to $236 million, a $183 million improvement from the 2001 quarter. Most of this improvement related to $145 million from net recoveries of deposits on leased aircraft relating to a financial transaction completed on 16 aircraft operating leases. Improved operating results, on a cash basis, were also a contributing factor to the cash flow improvement. Changes in accounts payable and accrued liabilities used $80 million more cash than in the 2001 quarter which included $73 million of special payments for separation programs and Canadian Airlines integration-related items. This increased cash usage was mainly due to differences in timing of payments relating to general trade payables and accrued liabilities including GST payable on aircraft deliveries.

In the fourth quarter of 2002, proceeds from long-term borrowing amounted to $78 million from the financing of seven aircraft simulators. Scheduled repayments of long-term debt amounted to $78 million and the purchase of debt amounted to $81 million. Proceeds from the sale and leaseback of assets were $108 million from the sale and leaseback of a cargo facility and the sale and leaseback of 12 Dash-8 aircraft. Included in the caption "Other" financing were $50 million realized from an ongoing swap agreement. Additions to property amounted to $2 million, net of $39 million of recovered progress payments relating to Airbus aircraft deliveries. In the quarter, Air Canada took delivery of two Airbus A320s and one Airbus A319 aircraft, under both short and long-term operating leases. One leased Boeing 747-400 and one Airbus A320 aircraft were returned to the lessors and five B737-200s were parked. Two previously parked DC9 and three parked B737-200 aircraft were also sold in the quarter.

Page 8

The Corporation closely monitors its liquidity requirements and is assessing various financing transactions and initiatives with the objective of ensuring its future liquidity needs are addressed. These activities could include additional sale and leaseback transactions, asset sales or other financing transactions. As at December 31, 2002, cash and committed financing amounted to $604 million of which the Corporation's cash and cash equivalents amounted to $558 million.

In addition, on January 27, 2003 Air Canada and Onex Corporation announced that they had entered into an agreement, under which Onex will pay Air Canada approximately $245 million for an investment in Aeroplan, a wholly-owned subsidiary of Air Canada. Under the agreement, Onex will acquire a 35 per cent equity interest in Aeroplan. The transaction is expected to close at the end of the first quarter of 2003, subject to certain conditions. Upon closing, the transaction will increase Air Canada's cash and cash equivalents by approximately $245 million.

Income Tax

Effective July 2001, Air Canada ceased to record income tax recoveries on losses from operations at the Mainline carrier. Fourth quarter 2002 results for the Mainline carrier are recorded on the same tax basis as in the prior year. However, because tax recoveries at the Mainline carrier were recorded in the first six months of 2001, year-to-date after-tax results from operations are not reflected on the same basis as in the first half of 2001. In addition, no tax valuation allowance has been provided for, pending Air Canada's further review, as discussed previously. Please refer to Note 1 to the Consolidated Financial Statements for more information.

ACCOUNTING STANDARD CHANGES

CICA 1650 — Foreign Currency Translation

In January 2002, Air Canada adopted accounting standard amendments related to foreign exchange as prescribed by the Canadian Institute of Chartered Accountants standard #1650 — Foreign Currency Translation ("CICA 1650"). As expected, the new accounting standard has increased the volatility of earnings in periods of significant fluctuation in foreign currency exchange rates relative to the Canadian dollar. For the year 2002, Air Canada recorded, in current income, $60 million of foreign exchange losses on long-term monetary items compared to $20 million in 2001. Prior to January 2002, under GAAP, foreign exchange gains or losses on long-term monetary assets and liabilities were deferred and amortized to income over the life of the corresponding asset or liability.

Stock Based Compensation

The Corporation has adopted the fair value method to account for stock options granted to employees. The charge to salary and wage expense for stock options issued since January 1, 2002 is less than $1 million.

Page 9

YEAR-TO-DATE RESULTS (PRELIMINARY AND UNAUDITED)

For the year ended December 31, 2002, the Corporation recorded a consolidated operating loss of $218 million, a $513 million improvement from 2001. Included in this result were Jazz regional airline operations which had an operating loss of $88 million, a $41 million deterioration from 2001. Consolidated loss before foreign exchange on long-term monetary items and income taxes was $384 million, a $581 million improvement from the prior year. Net loss for 2002 was $428 million or $3.56 per share with an income tax recovery of $16 million compared to a net loss of $1,315 million or $10.95 per share with an income tax provision of $330 million in 2001.

Removing non-recurring labour expenses of $26 million, the adjusted operating loss was $192 million, a $539 million improvement from 2001. Removing non-recurring or other significant items as described in Attachment Two, the year 2002 would have produced an adjusted loss before foreign exchange on long-term monetary items and income taxes of $397 million, an improvement of $640 million from the similarly adjusted loss of $1,037 million in 2001.

On a year-to-date basis, cash flows from operations improved $977 million mainly as a result of better operating results, reduced integration-related payments, the recovery of deposits on leased aircraft and lower use of cash for aircraft lease payments in excess of rent expense.

ATTACHMENTS ONE AND TWO

Attachment One provides a breakdown of non-recurring or other significant items affecting the fourth quarter results for 2002 and 2001 together with a reconciliation between reported results and adjusted (non-GAAP) results. Attachment Two provides the same information pertaining to the full year 2002 and 2001 results. As previously discussed, the Corporation is completing a review of the carrying value of its future income tax asset. Accordingly, the fourth quarter and year 2002 results are preliminary and unaudited. This review may result in a tax valuation allowance being recorded to reduce the value of the Mainline carrier's future income tax asset by an amount ranging from zero to $400 million from its current carrying value of $400 million. Any such allowance would increase the provision for income taxes and the net loss for the period by the amount of the tax valuation allowance. On the consolidated statement of financial position, any such allowance would also reduce the value of the future income tax asset and increase the deficit. Any such tax valuation allowance would result in an unrecognized tax benefit that would be available for use in the future. The allowance would, however, have no impact on Air Canada's cash position or operating results. Air Canada expects that its financial statements for the fourth quarter and audited financial statements for the year 2002 will be finalized prior to the end of the first quarter of 2003. Attachments One and Two do not reflect any adjustment in respect of the review of the income tax asset.

MAINLINE

The terms "Mainline" and "Mainline-related" refer to the operations of unconsolidated Air Canada (including Tango) and include, as the context may require, the operations of Aeroplan, Zip, Air Canada Capital, Acetek, Destina.ca and Nettel. The terms "Mainline" and "Mainline-related" exclude the operations of Air Canada's regional airline, Jazz, Air Canada Vacations and other non-airline subsidiaries.

Page 10

Caution Concerning Forward-looking information:

Certain statements made in this press release are of a forward-looking nature and are subject to important risks and uncertainties. The results indicated in these statements may differ materially from actual results for a number of reasons, including without limitation, war, terrorist attacks, energy prices, general industry, market and economic conditions, the ability to reduce operating costs and employee counts, employment relations, labour negotiations or disputes, currency exchange and interest rates, changes in laws, adverse regulatory developments or proceedings, pending litigation and actions by third parties. The forward-looking statements contained in this press release represent Air Canada's expectations as of February 6, 2003, 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.

– 30 –

Contacts:	Isabelle Arthur (Montréal)	(514) 422-5788
	Laura Cooke (Toronto)	(416) 263-5576
	Angela Mah (Vancouver)	(604) 654-7022
Internet:	www.aircanada.ca

Page 11

ATTACHMENT ONE NON-RECURRING OR OTHER SIGNIFICANT ITEMS IN THE FOURTH QUARTER OF 2002 AND 2001

The table below describes the pre and after-tax impact of non-recurring or other significant items, which occurred in the fourth quarter of 2002 and 2001.

		Fourth Quarter 2002				Fourth Quarter 2001
		Before Tax		After Tax		Before Tax		After Tax
Operating income (loss)
	Non-recurring labour expenses	(26	)	(26	)
Non-operating income (expense)
	Provisions on aircraft and inventory values	(32	)	(35	)	(41	)	(37	)
	Gain (loss) on sale of assets	(2	)	(4	)	4		4
	Gain on purchase of debt	15		15		27		27
	Total non-operating income (expense)	(19	)	(24	)	(10	)	(6	)
Income (loss) impact		(45	)	(50	)	(10	)	(6	)

RECONCILIATION BETWEEN REPORTED FOURTH QUARTER RESULTS AND ADJUSTED FOURTH QUARTER RESULTS — PRELIMINARY AND UNAUDITED

The table below provides reconciliation between reported results and adjusted (non-GAAP) results for the fourth quarter of 2002 and 2001.

	GAAP Reported Results				Remove: Non-Recurring or Other Significant Items			Non-GAAP Adjusted Results
	Q4, 2002		Q4, 2001		Q4, 2002	Q4, 2001		Q4, 2002		Q4, 2001
Operating income (loss)	(288	)	(308	)	26	—		(262	)	(308	)
Non-operating income (expense)	(71	)	(66	)	19	10		(52	)	(56	)
Income (loss) before foreign exchange on long-term monetary items and income taxes	(359	)	(374	)	45	10		(314	)	(364	)
Foreign exchange income (expense) on long-term monetary items	(14	)	87		—	—		(14	)	87
Income (loss) before income taxes	(373	)	(287	)	45	10		(328	)	(277	)
Tax recovery (provision)	9		10		5	(4	)	14		6
Net income (loss)	(364	)	(277	)	50	6		(314	)	(271	)

Page 12

ATTACHMENT TWO NON-RECURRING OR OTHER SIGNIFICANT ITEMS FOR THE FULL YEAR 2002 AND 2001

The table below describes the pre and after-tax impact of non-recurring or other significant items, which occurred in the full year 2002 and 2001.

		2002				2001
		Before Tax		After Tax		Before Tax		After Tax
Operating income (loss)						—		—
	Non-recurring labour expenses	(26	)	(26	)
Non-operating income (expense)
	Provisions on aircraft and inventory values	(32	)	(35	)	(176	)	(163	)
	Government assistance claim (charge)	(37	)	(37	)	105		102
	Gain (loss) on sale of assets	(10	)	(12	)	91		64
	Gain on purchase of debt	118		118		52		49
	Total non-operating income (expense)	39		34		72		52
Income tax valuation allowance		—		—		—		(453	)
Income (loss) impact		13		8		72		(401	)

RECONCILIATION BETWEEN REPORTED FULL YEAR RESULTS AND ADJUSTED FULL YEAR RESULTS — PRELIMINARY AND UNAUDITED

The table below provides a reconciliation between reported results and adjusted (non-GAAP) results for the full year 2002 and 2001.

					Remove: Non-Recurring or Other Significant Items
									Non-GAAP Adjusted Results
	GAAP Reported Results
							2001 (1)
	2002		2001		2002				2002		2001
Operating income (loss)	(218	)	(731	)	26		—		(192	)	(731	)
Non-operating income (expense)	(166	)	(234	)	(39	)	(72	)	(205	)	(306	)
Income (loss) before foreign exchange on long-term monetary items and income taxes	(384	)	(965	)	(13	)	(72	)	(397	)	(1,037	)
Foreign exchange income (expense) on long-term monetary items	(60	)	(20	)	—		—		(60	)	(20	)
Income (loss) before income taxes	(444	)	(985	)	(13	)	(72	)	(457	)	(1,057	)
Tax recovery (provision)	16		(330	)	5		473		21		143
Net income (loss)	(428	)	(1,315	)	(8	)	401		(436	)	(914	)

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HIGHLIGHTS Results are preliminary and unaudited.

	Periods ended December 31
	Three Months						Twelve Months
Financial (dollars in millions except per share figures)
	2002			2001			2002			2001
Operating revenues		2,243			2,117			9,826			9,611
Operating loss before non-recurring labour expenses (1)		(262	)		(308	)		(192	)		(731	)
Operating loss		(288	)		(308	)		(218	)		(731	)
Loss before foreign exchange on long-term monetary items and income taxes		(359	)		(374	)		(384	)		(965	)
Loss for the period		(364	)		(277	)		(428	)		(1,315	)
Operating margin before non-recurring labour expenses (1)		(11.7	)%		(14.5	)%		(2.0	)%		(7.6	)%
EBITDAR before non-recurring labour expenses (1) (2)		116			53			1,289			669
EBITDAR margin before non-recurring labour expenses (1)		5.2	%		2.5	%		13.1	%		7.0	%
Cash and cash equivalents		558			1,067			558			1,067
Cash and cash equivalents and committed financing		604			1,067			604			1,067
Cash flows used for operations		(236	)		(419	)		(95	)		(1,072	)
Weighted average common shares outstanding — basic		120			120			120			120
Weighted average common shares outstanding — diluted		140			140			140			141
Loss per share — basic and diluted	$	(3.02	)	$	(2.31	)	$	(3.56	)	$	(10.95	)

Operating Statistics (mainline-related) (3)							% Change								% Change
Revenue passenger miles (millions)		9,319			8,804		6			43,135			41,651		4
Available seat miles (millions)		13,181			12,657		4			57,325			57,104		0
Passenger load factor		70.7	%		69.6	%	1.1	pt		75.2	%		72.9	%	2.3	pt
Passenger revenue yield per revenue passenger mile (cents)		17.4			17.1		2			17.0			17.0		0
Passenger revenue per available seat mile (cents)		12.3			11.9		3			12.8			12.4		3
Operating revenue per available seat mile (cents)		15.1			14.7		3			15.4			14.8		4
Operating expense per available seat mile (cents) (4)		16.8			16.9		(1	)		15.6			16.0		(3	)
Operating expense (net of cargo and other non-ASM revenue) per available seat mile (cents) (4) (5)		14.0			14.1		(1	)		13.0			13.6		(4	)
Average number of employees (thousands)		35.2			34.6		2			34.8			37.5		(7	)
Available seat miles per employee (thousands)		374			366		2			1,649			1,524		8
Operating revenue per employee (thousands)	$	57		$	54		6		$	253		$	226		12
Aircraft in operating fleet at period end		232			228		2			232			228		2
Average aircraft utilization (hours per day) (6)		10.3			10.0		3			10.7			10.7		0
Average aircraft flight length (miles)		1,187			1,188		(0	)		1,225			1,217		1
Fuel price per litre (cents) (7)		36.1			36.0		0			33.7			38.9		(13	)
Fuel litres (millions)		806			812		(1	)		3,529			3,693		(4	)

Operating Statistics (consolidated)					% Change						% Change
Revenue passenger miles (millions)	9,701		9,224		5		44,707		43,723		2
Available seat miles (millions)	13,864		13,410		3		60,169		60,637		(1	)
Passenger load factor	70.0	%	68.8	%	1.2	pt	74.3	%	72.1	%	2.2	pt
Passenger revenue yield per revenue passenger mile (cents)	18.8		18.7		1		18.3		18.5		(1	)

Page 14

Price Range and Trading Volume of Air Canada Shares

	TORONTO STOCK EXCHANGE
2002
	High		Low		Volume
Common Shares:
October	$	5.95	$	3.75	9,310,934
November	$	6.29	$	5.32	5,906,197
December	$	5.95	$	4.45	8,320,419
Class A Non-Voting Shares:
October	$	3.70	$	2.20	3,364,762
November	$	4.30	$	3.29	1,551,208
December	$	3.92	$	2.51	3,532,880

Page 15

CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS (DEFICIT) (in millions except per share figures) (unaudited & preliminary)

		Three Months Ended December 31						Twelve Months Ended December 31
		2002			2001			2002			2001
Operating revenues
	Passenger	$	1,833		$	1,732		$	8,190		$	8,123
	Cargo		160			153			585			578
	Other		250			232			1,051			910
			2,243			2,117			9,826			9,611
Operating expenses
	Salaries and wages		642			610			2,492			2,495
	Benefits		131			85			607			527
	Aircraft fuel		316			323			1,288			1,593
	Depreciation, amortization and obsolescence (note 4)		94			101			372			441
	Commissions		81			96			369			476
	Food, beverages and supplies		89			92			395			435
	Aircraft maintenance, materials and supplies		151			150			508			569
	Airport and navigation fees		183			168			772			738
	Aircraft rent		284			260			1,109			959
	Other		534			540			2,106			2,109
			2,505			2,425			10,018			10,342
Operating loss before the undernoted item			(262	)		(308	)		(192	)		(731	)
	Non-recurring labour expenses (note 9)		26			—			26			—
Operating loss			(288	)		(308	)		(218	)		(731	)
Non-operating income (expense)
	Interest income		9			12			44			38
	Interest expense		(69	)		(90	)		(290	)		(352	)
	Interest capitalized		5			9			25			39
	Loss on sale of assets (notes 2 & 3)		(34	)		(37	)		(42	)		(85	)
	Other (note 2)		18			40			97			126
			(71	)		(66	)		(166	)		(234	)
Loss before foreign exchange on long-term monetary items and income taxes			(359	)		(374	)		(384	)		(965	)
Foreign exchange on long-term monetary items (note 5)			(14	)		87			(60	)		(20	)
Loss before income taxes			(373	)		(287	)		(444	)		(985	)
Recovery of (provision for) income taxes (note 1)			9			10			16			(330	)
Loss for the period		$	(364	)	$	(277	)	$	(428	)	$	(1,315	)
Deficit, beginning of period, as originally reported									(1,930	)		(676	)
Adjustment related to change in accounting standard (note 5)									(522	)		(461	)
Deficit, beginning of period, as restated									(2,452	)		(1,137	)
Deficit, end of period								$	(2,880	)	$	(2,452	)
Loss per share
	— Basic and diluted	$	(3.02	)	$	(2.31	)	$	(3.56	)	$	(10.95	)

Page 16

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (in millions) (unaudited & preliminary)

		December 31
		2002			2001
ASSETS
Current
	Cash and cash equivalents	$	558		$	1,067
	Accounts receivable		760			764
	Spare parts, materials and supplies		367			344
	Prepaid expenses		86			60
			1,771			2,235
Property and equipment			2,279			2,830
Future income taxes (note 1)			404			404
Deferred charges (note 5)			1,781			1,619
Goodwill (note 4)			510			510
Other assets			1,071			1,146
		$	7,816		$	8,744
LIABILITIES
Current
	Accounts payable and accrued liabilities	$	1,713		$	1,857
	Advance ticket sales		506			481
	Current portion of long-term debt and capital lease obligations		373			531
			2,592			2,869
Long-term and subordinated perpetual debt and capital lease obligations (notes 2 & 5)			4,314			4,580
Future income taxes			32			60
Other long-term liabilities			1,405			1,279
Deferred credits			1,361			1,416
			9,704			10,204
SHAREHOLDERS' EQUITY
Share capital (note 6)			977			977
Contributed surplus			15			15
Deficit			(2,880	)		(2,452	)
			(1,888	)		(1,460	)
		$	7,816		$	8,744

Page 17

CONSOLIDATED STATEMENT OF CASH FLOW (in millions except per share figures) (unaudited & preliminary)

			Three Months Ended December 31						Twelve Months Ended December 31
			2002			2001			2002			2001
Cash flows from (used for)
Operating
	Loss for the period		$	(364	)	$	(277	)	$	(428	)	$	(1,315	)
	Adjustments to reconcile to net cash provided by operations
		Depreciation, amortization and obsolescence		94			101			372			441
		Loss on sale of assets (notes 2 & 3)		34			37			42			85
		Foreign exchange on long-term monetary items (note 5)		14			(87	)		60			20
		Future income taxes		(11	)		(12	)		(28	)		319
		Employee future benefit funding less than expense		52			5			188			156
		Decrease in accounts receivable		153			161			87			142
		Decrease (increase) in spare parts, materials and supplies		(2	)		(21	)		(21	)		24
		Decrease in accounts payable and accrued liabilities		(83	)		(3	)		(145	)		(490	)
		Increase (decrease) in advance ticket sales		(116	)		(131	)		25			(17	)
		Aircraft lease payments in excess of rent expense		(118	)		(124	)		(253	)		(423	)
		Recovery of lease deposits (note 10)		145			—			145			—
		Other (note 2)		(34	)		(68	)		(139	)		(14	)
				(236	)		(419	)		(95	)		(1,072	)
Financing (note 2)
	Short-term loans			—			—			—			(178	)
	Long-term borrowings			78			—			78			996
	Reduction of long-term debt			(159	)		(101	)		(672	)		(566	)
	Proceeds from sale and leaseback of assets			108			725			284			1,468
	Other			44			(2	)		—			(2	)
				71			622			(310	)		1,718
Investing
	Proceeds from sale of assets (note 3)			8			4			17			164
	Additions to property and equipment, net of recovered progress payments			(2	)		(43	)		(109	)		(179	)
	Investments and advances			—			3			(12	)		(1	)
				6			(36	)		(104	)		(16	)
Increase (decrease) in cash and cash equivalents				(159	)		167			(509	)		630
Cash and cash equivalents, beginning of period				717			900			1,067			437
Cash and cash equivalents, end of period			$	558		$	1,067		$	558		$	1,067
Cash flow per share from operations
	— Basic and diluted		$	(1.97	)	$	(3.48	)	$	(0.79	)	$	(8.92	)
Cash payments of interest			$	64		$	64		$	283		$	303
Cash payments of income taxes			$	1		$	(11	)	$	7		$	(6	)

Page 18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited & preliminary) (currencies in millions) FOURTH QUARTER 2002

1. Accounting Policies

The unaudited consolidated interim financial statements are based upon accounting policies consistent with those used and described in the annual financial statements, with the exception of the following accounting standard changes adopted effective January 1, 2002:

In accordance with Canadian generally accepted accounting principles, the interim financial statements do not include all of the financial statement disclosures included in the annual financial statements. These interim financial statements should be read in conjunction with the most recent annual financial statements.

In the third quarter 2001, the Corporation recorded a valuation allowance of $453 against the value of the non-cash future income tax asset. Previously reported at $410, this valuation allowance has been restated due to the impact of the adoption of the new accounting rules on Foreign Currency Translation (note 5). Since the third quarter 2001, the future income tax asset related to losses in Air Canada's unconsolidated results of operations has not been recognized. Air Canada's subsidiaries continue to tax affect results of operations where appropriate. As at December 31, 2002 the unrecognized income tax benefit amounts to $644. The unrecognized tax benefit remains available for use in the future. The valuation allowance reduces the carrying value of the Corporation's future income tax asset to $404.

In light of the increased economic uncertainty regarding the airline industry, the potential for conflict in Iraq and significant increases in fuel prices, the Corporation is completing a review of the carrying value of its future income tax asset. This review may result in a tax valuation allowance being recorded to reduce the value of the Mainline carrier's future income tax asset by an amount ranging from zero to $400 from its current carrying value of $400. Any such allowance would increase the provision for income taxes and the net loss for the period by the amount of the tax valuation allowance. On the consolidated statement of financial position, any such allowance would also reduce the value of the future income tax asset and increase the deficit. Any such tax valuation allowance would result in an unrecognized tax benefit that would be available for use in the future. The allowance would, however, have no impact on Air Canada's cash position or operating results. Air Canada expects that its financial statements for the fourth quarter and audited financial statements for the year 2002 will be finalized prior to the end of the first quarter of 2003.

2. Financing Transactions

In the fourth quarter 2002, the Corporation completed the following financing transactions:

The financing of seven aircraft simulators for proceeds of $78. The interest on this borrowing is currently 7.2%, based on LIBOR. This borrowing has a final maturity in 2015.

The sale and leaseback of a cargo and equipment maintenance facility for proceeds of $54. The net book value of the facility was $56, resulting in a loss of $2. The Corporation also has entered into an agreement to complete the sale and leaseback of the equipment related to this cargo and equipment maintenance facility for additional proceeds of $46.

Page 19

The sale and leaseback of 12 Dash-8 aircraft for proceeds of $54. The net book value of these aircraft was $55, resulting in a loss of $1.

The purchase of $96 debt for $81, resulting in a gain of $15. The Corporation also made scheduled debt repayments amounting to $78.

The Corporation realized $50 from an ongoing swap agreement. The swap, which is in place until 2011, converts a US$300 borrowing into a Japanese yen borrowing.

In the fourth quarter 2001, the Corporation completed the following financing transactions:

The sale and leaseback of 20 Airbus A320 and one Airbus A319 aircraft for proceeds of $725. The gain of $210 over the net book value of $515 has been deferred and is being amortized over the life of the leases as a reduction of aircraft rent.

The purchase of $66 debt for $39, resulting in a gain of $27. The Corporation also made scheduled and other debt payments amounting to $62.

3. Sale of and Provisions on Assets

In the fourth quarter 2002, the Corporation recorded provisions of $32 related to non-operating aircraft and spare parts. Also in the fourth quarter 2002, the Corporation sold assets and realized net proceeds of $8 and a gain of $1.

In the fourth quarter 2001, the Corporation recorded provisions of $41 related to aircraft and spare parts and future payments on leased aircraft. These provisions were recorded on both non-operating aircraft and on aircraft planned to be removed from active service.

The above provisions are based on management's best estimate of the net recoverable value of aircraft and spare parts and on undiscounted projected obligations for lease agreements.

Also in the fourth quarter 2001, the Corporation sold assets and realized net proceeds of $4 and a gain of $4.

4. Goodwill and Other Intangibles

Effective January 1, 2002, the Corporation prospectively adopted the new Canadian Institute of Chartered Accountants standard #3062 — Goodwill and Other Intangibles ("CICA 3062"), which no longer permits the amortization of goodwill and other indefinite life intangibles but subjects these assets to fair value impairment tests on at least an annual basis.

As required by CICA 3062, goodwill and indefinite life intangibles were tested for impairment as of January 1, 2002. This transitional impairment test was completed during the second quarter, and no impairment loss was recorded.

The annual impairment test was completed in the fourth quarter, and it was determined that no impairment had occurred.

Page 20

The following is what the reported loss would be for the fourth quarter of 2001 and for the twelve months ended December 31, 2001, after removing goodwill and indefinite life intangible amortization expense:

		Three Months Ended December 31,						Twelve Months Ended December 31,
		2002			2001			2002			2001
Reported loss		$	(364	)	$	(277	)	$	(428	)	$	(1,315	)
Add back:
	Goodwill amortization		—			5			—			17
	Amortization of route rights and slot purchase costs		—			2			—			5
Adjusted income loss for the period		$	(364	)	$	(270	)	$	(428	)	$	(1,293	)
Reported basic and diluted earnings per share		$	(3.02	)	$	(2.31	)	$	(3.56	)	$	(10.95	)
Add back:
	Goodwill amortization		—			0.04			—			0.14
	Amortization of route rights and slot purchase costs		—			0.02			—			0.04
		$	(3.02	)	$	(2.25	)	$	(3.56	)	$	(10.77	)

5. Foreign Currency Translation

Effective January 1, 2002, the Corporation retroactively adopted, with restatement of prior periods, the amendments to Canadian Institute of Chartered Accountants standard #1650 — Foreign Currency Translation ("CICA 1650"), which no longer permits the deferral and amortization of unrealized translation gains and losses on long-term foreign currency denominated assets and liabilities.

The impact of CICA 1650 as at January 1, 2001 is a charge to the deficit of $461 (charge of $522 as at December 31, 2001). Based on December 31, 2000 balances, this charge is the write off of deferred foreign exchange losses on long-term debt of $119 ($157 as at December 31, 2001) and the recording of foreign exchange losses on subordinated perpetual debt of $410 ($365 as at December 31, 2001), net of a tax asset of $68 (nil as at December 31, 2001). The impact of CICA 1650 on the statement of operations for the fourth quarter 2002 is unfavourable $7 ($33 unfavourable for the twelve months ended December 31, 2002). The impact on the statement of operations for the fourth quarter 2001 is favourable $103 ($61 unfavourable for the twelve months ended December 31, 2001).

During the second quarter 2002, the Corporation designated a portion of future net foreign currency revenue streams as hedges of a majority of the subordinated perpetual debt. As a result, unfavourable foreign exchange adjustments of $48 arising from the translation of the subordinated perpetual debt, were deferred during the fourth quarter ($151 since the inception of the revenue stream hedges). The deferred foreign exchange adjustments will be included in earnings in a future period should the principal of the subordinated perpetual debt be settled.

Page 21

6. Share Capital

The issued and outstanding common shares and Class A non-voting common shares ("Class A shares") of the Corporation along with securities convertible into common shares and Class A shares are as follows (in thousands):

		December 31, 2002	December 31, 2001
Issued and outstanding
	Common shares	79,070	79,064
	Class A shares	41,115	41,115
		120,185	120,179
Securities convertible into common shares and Class A shares
	Class A non-voting preferred shares	10,417	10,417
	Warrants	4,700	4,700
	Convertible subordinated debentures	9,375	9,375
	Stock options	9,785	9,459
Total		154,462	154,130

7. Stock-Based Compensation

Effective January 1, 2002, the Corporation prospectively adopted the new Canadian Institute of Chartered Accountants standard #3870 — Stock-Based Compensation and Other Stock-Based Payments ("CICA 3870"). As recommended by CICA 3870, the Corporation adopted the fair value method to account for stock-based transactions with employees. The Corporation has a stock option plan as described in the annual financial statements. The fair value of stock options granted is recognized as a charge to salary and wage expense over the applicable vesting period, with an offset to contributed surplus. When stock options are exercised, the consideration paid by employees, together with the amount in contributed surplus, is credited to share capital.

The fair value of options granted during the fourth quarter was less than $1. The charge to compensation expense for stock options issued since January 1, 2002 is less than $1. As the fair value method of accounting has not been applied to prior years, the charge for the current year may not be representative of that expected in future years.

The Corporation also has share appreciation plans as described in the annual financial statements. Compensation costs are accrued up until the first date of redemption at the amount by which the market value of the shares exceeds the value specified under the plan. Any subsequent change in the market value of the shares is recorded in income thereafter.

CICA 3870 requires additional disclosures of the Corporation's stock-based compensation plans, however these disclosures have been provided in Note 12 — Share Capital to the Corporation's 2001 annual financial statements. There are no material updates to these disclosures as at December 31, 2002.

Page 22

8. Segment Information

The Corporation has one reportable segment, air transportation and related services. The services within that segment are as follows:

			Three Months Ended December 31						Twelve Months Ended December 31
			2002		2001		% Change		2002		2001		% Change
Transportation revenue
Passenger
	Canada
		Mainline	$	637	$	634	0		$	2,845	$	2,737	4
		Regional		166		190	(13	)		690		845	(18	)
				803		824	(3	)		3,535		3,582	(1	)
	US Transborder
		Mainline		419		395	6			1,775		1,931	(8	)
		Regional		44		34	29			170		187	(9	)
				463		429	8			1,945		2,118	(8	)
	Atlantic — Mainline			314		271	16			1,556		1,398	11
	Pacific — Mainline			172		131	31			802		723	11
	Other International — Mainline			81		77	5			352		302	17
Passenger revenue				1,833		1,732	6			8,190		8,123	1
Cargo revenue				160		153	5			585		578	1
Total transportation revenue				1,993		1,885	6			8,775		8,701	1
Non-transportation revenue
	Aeroplan			66		55	20			309		230	34
	Technical Services			62		62	—			239		224	7
	Other			122		115	6			503		456	10
Total non-transportation revenue				250		232	8			1,051		910	15
Total operating revenue			$	2,243	$	2,117	6		$	9,826	$	9,611	2

For passenger, the allocation to service is determined based on flight destination. Cargo revenues are not allocated by service as the amounts are not significant. Non-transportation revenues are almost exclusively attributable to Canada.

Property and equipment

Air Canada is a Canadian based domestic and international carrier and while the Corporation's flight equipment is used on various routes internationally, for purposes of segment reporting, the Corporation attributes the location of flight equipment to Canada. As a consequence, substantially all of the Corporation's property and equipment and goodwill are related to operations in Canada.

9. Non-recurring Labour Expenses

Non-recurring labour expenses represent costs for completing the collective agreement between the Corporation and the Canadian Union of Public Employees ("CUPE"), representing Air Canada's 8000 flight attendants. These payments will be made over a three year period. The ratification of the CUPE agreement formally concludes the integration of Air Canada and Canadian Airlines.

Page 23

10. Recovery of Lease Deposits

In the fourth quarter 2002, the Corporation completed a transaction whereby an amount of $150 ($145 net of transaction fees) was recovered from lease deposits under 16 aircraft operating leases. The additional liquidity was made possible due to a decline in interest rates since the inception of these leases.

11. Comparative Figures

Certain comparative figures have been reclassified to conform with the financial statement presentation adopted in the current period.

12. Seasonal Nature of Business

The Corporation has historically experienced considerably greater demand for its services in the second and third quarters of the calendar year and significantly lower demand in the first and fourth quarters of the calendar year. This demand pattern is principally a result of the high number of leisure travelers and their preference for travel during the spring and summer months. The Corporation has substantial fixed costs in its cost structure that do not meaningfully fluctuate with passenger demand in the short-term. Seasonally low passenger demand normally results in significantly lower operating cash flow and margins in the first and fourth quarters of each calendar year compared to the second and third quarters.

13. Subsequent Events

Aeroplan

On January 27, 2003, the Corporation announced that it has entered into an agreement to sell a 35% equity interest in Aeroplan, a wholly owned subsidiary of Air Canada, for approximately $245. This value could increase based on certain performance and other earn-outs. Such value increase would be payable in cash or achieved through a dilution of the minority partner's interest, after approximately two years. This transaction is subject to due diligence, completion of final documentation and certain other closing conditions. The transaction is expected to close at the end of the first quarter.

Japanese Yen Perpetual Debt Amendment

The previously announced transaction regarding the replacement of 20 billion JPY of the Corporation's subordinated perpetual debt with a 20 billion JPY term loan has not yet been completed and discussions regarding the documentation and certain terms are continuing. This transaction has not been reflected in 2002, and its impact, including whether or not a gain will be realized, will be recorded when completed.

Page 24

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AIR CANADA
Registrant:
By:	/s/ ~~JOHANNE~~Johanne ~~DRAPEAU~~Drapeau
	Johanne Drapeau Deputy Secretary
	Deputy Secretary
	Dated:	~~February 11, 2003~~	February 19, 2003

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