Air Canada Reaches Settlement Agreement with Ontario and Québec Securities Commissions

27th Jul 2001

Air Canada announced that it had today reached
a Settlement Agreement with the Ontario Securities Commission and the Quebec
Securities Commission concerning allegations of selective disclosure on
October 5, 2000 of certain information impacting Air Canada`s earnings for its
third and fourth quarters for the year 2000.
In the Settlement Agreement, Commission staff noted that there was no
reason to believe that the conduct of October 5 reflected any culture of non-
compliance with Air Canada`s public disclosure obligations and that Air Canada
already had a comprehensive disclosure policy in place and no prior history of
compliance problems. The settlement does not include any finding or admission
of illegal conduct or breach of securities laws.

It was also noted that sensitivity to the issue of selective disclosure
has heightened in recent years. The standards being applied to the issue in
both Canada and the United States (where Regulation FD, addressing the issue
of selective disclosure, was in the final stage of implementation at the time)
are the subject of continuing debate and are evolving.
Air Canada has responded quickly by extensively broadening its own
disclosure policies and practices in light of the new environment through
webcasting, posting of speeches on its website, dial in conference calls with
analysts open to the public and media advisories notifying the public of such
disclosure events.
“Materiality decisions, taken in real time and in the context of complex
circumstances, are often difficult,” said John M. Baker, Air Canada`s Senior
Vice-President and General Counsel. “Air Canada takes its compliance
responsibilities very seriously. The legal and factual matters at issue in
these proceedings were complex. In the circumstances, we felt that a
settlement was more appropriate to allow us to better focus on the challenges
facing Air Canada moving forward.”

Air Canada will not be providing further comment on this matter.



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