Air Canada and IBM Form Strategic Partnership; $1.4 Billion (CDN) Agreement includes Developing New

Air Canada and IBM today announced a
seven-year, $1.4 billion (CDN) strategic partnership to e-enable the airline,
enhance customer service and develop future solutions based on a world-leading
IT infrastructure that will benefit both Air Canada and other airlines around
the world. As a result of this agreement - the largest IBM airline services
agreement worldwide - Air Canada expects to save approximately $200 million
(CDN) in IT costs over the term of the contract.

As strategic business partners, IBM and Air Canada will work together
pursuing new business opportunities in the areas of customer service and
leading-edge travel industry solutions. To complement the IBM Canada team,
they will work with highly-skilled individuals from IBM`s T. J. Watson
Research Laboratory in Yorktown Heights, NY, and its Travel and Transportation
Solutions Development Center in Boca Raton , FL, to create innovative
solutions. The first example of this new relationship will be the
establishment of an IBM/Air Canada project management office at Toronto`s
Pearson International Airport. These jointly-developed solutions will be
offered to other companies through a marketing alliance created between Air
Canada and IBM. In addition, IBM will invest in various venture capital and
technology projects at Air Canada.

“We are entering into a strategic partnership with IBM which will go far
beyond managing our computer systems and which, we expect, will set a new
standard in the airline industry,” said Air Canada`s Calin Rovinescu,
Executive Vice President, Corporate Development & Strategy. “Our partnership
is about innovation, increasing shareholder value and improving the overall
travel experience for customers. We are looking at developing new innovations
that build on our award-winning Express Check-in Kiosks. Together, we will
undertake research and development of future applications, services and
products that will leverage the power of the Internet- - wireless and self-
service applications giving customers increased flexibility and access to Air
Canada`s Web services. These represent only a few examples that are on the
immediate horizon.”

IBM Corporation Senior Vice President & Group Executive Bill Etherington
added, “We are entering into a partnership of innovation today with Air
Canada, one of the world`s great airlines, that represents a new wave of
technology agreements. In order to compete successfully in today`s global
economy, companies need to constantly improve shareholder value. Technology
plays a huge role in achieving that objective. IBM has led the world in patent
innovation for eight straight years now and we are committed to putting our
brightest minds together with Air Canada`s people to develop the next
generation of airline innovation.”

This agreement also expands on an IT services relationship forged between
the two companies in August, 1994. Under Air Canada`s direction, IBM will
manage all of Air Canada`s computer and IT operations. IBM will also manage
Air Canada`s global IT infrastructure, including application development and
maintenance, 20,000 workstations, employee help desk services and network and
computer server operations.


IBM is the world`s largest information technology company and largest
supplier to the airline industry, with 80 years of leadership in helping
businesses innovate. IBM creates, develops and manufactures the industry`s
most advanced information technologies, including computer systems, storage
devices and microelectronics. IBM is also the world`s largest information
technology services provider, with nearly 150,000 IBM Global Services
professionals serving customers in 160 countries worldwide. Visit IBM`s web
site at

Air Canada is Canada`s flagship air carrier and is recognized as a world
leader in the global air transportation industry by pursuing a strategy based
on value-added customer service, technical excellence and passenger safety.
Air Canada is the tenth largest airline in the world with passenger and
freight operations to more than 160 destinations on five continents. The
Montreal-based airline employs 45,000 people worldwide serving 31 million
customers annually with a fleet of more than 300 aircraft maintained at major
facilities across Canada. Visit Air Canada`s web site at