Air Canada and GTAA Reach Comprehensive Agreement On Pearson Airport

Air Canada and the Greater Toronto Airports
Authority (GTAA) announced today that they have entered into a comprehensive
letter of intent relating to Air Canada`s operations at Toronto Pearson
International Airport. The resolution of all outstanding issues between the
GTAA and Air Canada has been covered in this agreement.

Air Canada has agreed to sell to the GTAA certain specified assets
located at Pearson Airport`s Terminal 2 for $90 million in order to pave the
way for Air Canada to occupy the New Terminal (T1-New) scheduled to open in
2003.

The letter of intent confirmed Air Canada`s acceptance and endorsement of
the GTAA`s $4.415 billion Airport Development Program (ADP) and the Terminal 3
Redevelopment Project and provided the framework for future cooperation on
airport development. The ADP also includes expansion to a six-runway operation
from the current four and a dual taxiway system to improve aircraft traffic
ground flow and access to runways.

In consideration of $65 million payable by the GTAA, Air Canada has
agreed to sell to the GTAA the Canadian Airlines existing hangar at Pearson to
make way for one of the new runways. Air Canada will relocate its hangar
operations to a new exclusive use replacement hangar to be leased from the
GTAA.

“We are very pleased at having reached an agreement that allows us to
move forward with plans to grow our operation at Pearson into one of the
world`s truly great airline hubs, building on shareholder value and allowing
Air Canada to compete on the global stage as a major international carrier for
Canada,” said Calin Rovinescu, Air Canada Executive Vice-President, Corporate
Development & Strategy “The infrastructure development in progress at Air
Canada`s major hub will ultimately enable us to deliver more efficient,
reliable service to our customers throughout our network.”

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Louis A. Turpen, President and CEO of the GTAA expressed his satisfaction
with the agreement. “This agreement paves the way for a cooperative effort to
complete the much needed Airport Development Program as rapidly as possible,
recognizing Toronto`s status as a major international gateway and North
American hub” he stated.

The agreement calls for Air Canada and the GTAA to settle and mutually
release all litigation and damage claims currently pending between the two
parties, including the litigation on the Guiding Principles at Terminal 2. It
also provides that Air Canada can continue to seek a judicial determination of
certain powers and duties of an airport with respect to the National Airports
Policy.

The documents contemplated by the letter of intent are subject to the
approval of the Boards of both corporations and to final agreements being
signed by January 31, 2001.


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