Air Canada Comments on Ongoing Competition Tribunal Hearing

Pursuant to the requirements of applicable
securities laws, Air Canada today confirmed the substance of its position in
the case currently before the Competition Tribunal, respecting pricing issues
on seven routes in Eastern Canada. The first phase of the hearing, which is
scheduled to resume in mid-October, is addressing how to interpret and
implement the avoidable costs test under regulations passed after the merger
of Air Canada and Canadian Airlines International.
In its filings and arguments before the Competition Tribunal, Air Canada
has presented its position, namely that the avoidable costs test which the
Commissioner of Competition proposes to apply to Air Canada does not accord
with the economics of the airline industry and ignores competition law and
policy. If the Commissioner`s test is accepted, the potential impact upon the
way in which Air Canada operates across its system could be materially adverse
to Air Canada and could impose unworkable constraints on its operations. The
events of September 11, 2001 only exacerbate the potential impact of an
adverse decision on Air Canada.
Air Canada has no further comment at this time.