Air Canada Announces Public Offering of Senior Unsecured Debentures

Air Canada today announced that it has filed
with securities authorities of Canadian provinces a short form prospectus for
an issue of five year senior unsecured debentures for a total principal amount
of $250 million.

The debentures will be offered through a syndicate co-led by National
Bank Financial Inc. and Merrill Lynch Canada Inc. and including BMO Nesbitt
Burns Inc., RBC Dominion Securities Inc., Scotia Capital Inc., CIBC World
Markets Inc., TD Securities Inc. and HSBC Securities (Canada ) Inc. The
underwriters have exercised in full their option to purchase an additional
$150 million principal amount of debentures for a total size of the offering
of $250 million.

Air Canada will use the net proceeds from the offering for debt
refinancing and for general corporate purposes

Air Canada is Canada`s flagship carrier and is recognized as a leader in
the global transportation market. In 2000, Air Canada acquired Canadian
Airlines International, thus becoming the world`s twelfth largest commercial
carrier.

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