Air Canada Comments On Share Price Drop

6th Oct 2000

Air Canada expressed disappointment in today`s
fall in share price given that it appears to be based on previously available
or previously disclosed information. The company believes that the retreat in
share price since August was due mainly to the market`s reflection of
information already in the public domain.

``All of the components of the one-time reduction in third quarter
earnings were previously in the public domain, and are not expected to have
ongoing impact,`` said Rob Peterson, Executive Vice-President and Chief
Financial Officer.

The one-time charges that are expected to be taken in the third quarter
include charges for integration and passenger service costs relating to the
acquisition of Canadian Airlines, one-time labour costs related to the
settlement with Air Canada`s pilots, the effect of fuel price increases, and
the impact of both the pilot strike threat and the impact of United Airlines`
recent operational problems on Air Canada revenue. The company reviewed this
information with analysts on October 5 and 6.

``The integration and passenger service costs are expected to amount to
approximately $25-$27 million higher than previously anticipated earlier in
the year as was the case in the second quarter. The one-time pilot contract
settlement costs of $50 million were well publicized following the federal
mediator`s report. Fuel price increases are well known and their impact on
airlines in particular has been widely reported. We have previously discussed
the impact of the pilot strike threat and United Airlines` operational
problems are well known.`` said Mr. Peterson.

``When the above-mentioned higher than anticipated fuel increases in
September and one-time integration and labour contract settlement costs are
factored out, we meet earlier analyst expectations. The fundamental business
of Air Canada remains unchanged,`` concluded Mr. Peterson.





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