Air Canada Provides Update On Pilot Dispute

In response to an earlier announcement today by
the Air Canada Pilots Association (ACPA) rejecting a proposal made by the
company on July 15 to submit the contract dispute to binding arbitration, Air
Canada reiterated its strong belief that some form of third party intervention
was the next logical step under the circumstances.

``We must bring this climate of uncertainty to a close for the travelling
public, cargo and freight forwarders, all sectors of the business community
and our other employees,`` said Calin Rovinescu, Executive Vice President,
Corporate Development & Strategy, who is leading the airline`s negotiating
team. ``There are many experienced arbitrators available with expertise in
various aspects of the aviation industry and issues relating to pilots in
particular,`` he added.

In addition, while ACPA failed to disclose this in today`s announcement,
ACPA advised the company and Minister of Labour Claudette Bradshaw, pursuant
to the industrial action provisions of the Labour Code, that it would issue a
bulletin to its members on Tuesday July 18 ``reminding them of their
regulatory, policy and contractual responsibilities required under their
profession and employment with Air Canada.`` This is unprecedented and should
that bulletin be issued, it is, in the company`s view, tantamount to the start
of a work to rule campaign.

``A work to rule campaign, or similar action could have the effect of
progressively interfering with, grounding or delaying Air Canada`s network in
an unpredictable manner with inconvenience to our customers,`` said Mr.
Rovinescu. ``We will be closely monitoring the extent and level of disruption
caused by any ACPA work to rule campaign and will take appropriate action to
minimize further inconvenience to the travelling public and all other
stakeholders,`` he added.

ACPA walked away from the table on Friday July 14 after three weeks of
negotiations during which the company had improved its previous offer by more
than $100 million and had also proposed numerous improvements to work rules,
working conditions and pension security.


``ACPA`s decision to break off talks at this critical time was totally
unjustified in view of the company`s clear resolve to reach agreement and has
already resulted in delay. It is disingenuous for ACPA to suggest that Air
Canada is somehow stalling this process,`` concluded Mr. Rovinescu.

ACPA has not given the company notice of intent to strike. According to
Canadian labour law, a union must give 72 hours notice prior to taking any
strike action.