Air Canada
Premier Airline in Canada
Air Canada Maintains and
Strengthens Position in all Markets
AC
Other
73%
78%
55%
40%
14%
AC
Other
47%
49%
42%
38%
25%
16%
10%
2001 results based on start of the year.
Estimated market share.
12%
11%
15%
13%
2002 results based on OAG Q1 2002 scheduled
airline capacity share, published December, 2001
Q4’01:
Encouraging Performance
Despite Loss
2001
Q4
2000
Q4
Oper. Revenue
$ 2,117
$ 2,590
$ (473)
Oper. Expense
2,425
2,985
(560)
Oper. Income (Loss)
(308)
(395)
87
Non-oper. Expense
(82)
(84)
2
$ (390)
$ (479)
$ 89
(millions)
Income (Loss)
Before Tax
Change
Best Operating Results* of any
Major International Carrier in
North America
AC
US
% Operating Margin
0
-5
-10
-15
-20
-25
-30
Q1
Q2
* Pre-government assistance - US Industry = 6 majors
Q3
Q4
Air Canada’s 4th Quarter
RASM Outperforms Industry
2001/2000
% Change
AC
US
5
0
-5
-10
-15
-20
-25
Q1
* Source ATA
Q2
Q3
Q4
Unit Cost* Performance
Outpaces Industry
Throughout 2001
2001/2000
% Change
AC
US
10
8
6
4
2
0
-2
-4
Q1
Q2
* adjusted for one-timers – US industry = 6 majors
Q3
Q4
More Air Canada Strengths
• Proven track record of
superior service
• Top Brand recognition
throughout Canada
• Labor contract stability
• Labor rates lower than
U.S. carriers
Labor Contract
Stability
Maintenance and Ramp
Flight Attendants
Pilots
Customer Sales & Service
Air Canada
Canadian
June 2005
Oct. 2001
Apr. 2004
Mar. 2004
June 2004
-
Future Labor Cost
Much Lower Than U.S. Carriers
Air Canada
Maintenance and Ramp
Flight Attendants
Pilots
Customer Sales & Service
2002
2.5%
2.5%
2.5%
2003
2.5%
2.5%
2.5%
2004
2.5%
-
Favorable Competitive
Landscape
Service
Competitor Reductions
Trans Atlantic
Cancellations:
Virgin
Toronto-London
Sabena
Trans Pacific
Montreal-Brussels
Reductions:
Numerous carriers reduced
service via U.S.
EVA
Taiwan-Canada
Favorable Competitive
Landscape
Service
Competitor Reductions
Domestic
Canada 3000 ceases operations Nov/09
Transborder
USA
Cancellations:
AA
UA
USAir
Canada 3000
Boston-Halifax/Montreal/Ottawa
Toronto-Denver
Toronto-Indianapolis
Toronto-Newark, Los AngelesVancouver/Edmonton/Calgary/
Toronto
Reductions:
Chicago, LaGuardia, Denver, San Francisco, Seattle,
Portland, Los Angeles, Houston, Cleveland, Indianapolis,
Baltimore
Air Canada’s Action Plan
• Launch new products
• Reduce capacity
• Renew fleet
• Lower unit costs
• Lower manpower
levels
Air Canada’s Products
Air Canada’s Products
• “Air Canada”
• International
• Hub – network
• Two-class
• Transborder and
Domestic network
• Air Canada brand
• Rapidair
• Air Canada code
Air Canada’s Products
• Key feed to
mainline
• Distinct brand
• Unique code*
• Regional markets
• Good frequency
coverage
* Air Canada codeshare
Air Canada’s Products
• Low fare
• Lower cost
• Supplemental flying
in key markets
• Sun, long haul domestic,
transcontinental routes
• Distinct brand
• Air Canada code
Air Canada’s Products
• Specialty charter
• Executive First
configuration of
surplus B-737
• Focus on specialty charters
(i.e. sports teams, etc.)
• Concierge service
Air Canada’s Products
• Leisure, low yield
• Domestic/Transborder
• Low cost
• Distinct brand
• Point-to-point,
short haul
• Unique code*
* Air Canada codeshare
Capacity Discipline
% Change in ASM’s
2002
2001
10
5
0
-5
-10
-15
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
-20
Smaller / Younger Fleet
747
330/340
767-200/300
319/320/321
737
DC9
CRJ
Dec / 00 Dec / 01
7
5
16
20
51
45
82
85
43
26
17
4
25
25
Change
01/00
- 2
+ 4
- 6
+ 3
-17
-13
-
Dec/02
5
16
44
104
22
25
Change
02/01
- 4
- 1
+19
- 4
- 4
-
Total Mainline
Regional
241
134
210
114
-31
-20
216
105
+ 6
-9
TOTAL
375
324
-51
321
-3
Lower Unit Costs
• Fleet reconfiguration
• Lower cost on-board product
• Increased distribution efficiencies
• Increased airport productivity
• Maintenance / fuel / real estate
Manpower Levels
Coming Down
Full Time Equivalents
40,000
38,000
36,000
34,000
32,000
30,000
Q4 2000
Q2 2001
Q4 2001
Good Liquidity
• $1.2 billion in year-end
2001 cash
• Approximately $3.0 billion of
unencumbered assets
– aircraft
– engines and spares
– inventory
– real estate
– lease deposit receivables
– accounts receivable
2002 Mainline Aircraft Deliveries
A340-500
A321-200
A319-100
A320-200
Total
Sale/
Leasebacks
2
7
5
-
Operating
Leases
3
3
14
6
Low Cap Ex in 2002
($ millions)
Aircraft
Financing
$
602
( 658 )
Net
Other
$
(
Total Mainline
Subs
$
147
15
Total
$
162
56 )
203
Significant Value in
Air Canada’s Business Units
Investment Considerations
• Commanding share of all markets served
• Solid hub and network strategy
• Traffic almost back to normal
• Pricing recovering
• Industry capacity rationalized
• Unit costs coming down
• Adequate liquidity
• Low capital expenses going forward
• Substantial business unit value
Caution Concerning Forward-looking Information:
Certain statements made in this presentation may be of a forward-looking nature and subject
to important risks and uncertainties. The results indicated in these statements could differ
materially from actual results for a number of reasons, including without limitation, general
industry, market and economic conditions, the ability to reduce operating costs and fully
integrate the operations of Canadian Airlines, employment relations, energy prices, currency
exchange rates, interest rates, changes in laws, adverse regulatory developments or
proceedings and pending litigation. Any forward-looking statements contained in this
presentation represent Air Canada’s expectations as of February 11, 2002 and are subject to
change after such date. However, Air Canada disclaims any intention or obligation to update
or revise any forward-looking statements whether as a result of new information, future
events or otherwise.