Canadian Airlines International Ltd. has become
an indirect wholly owned subsidiary of Air Canada, following yesterday`s
acquisition by Air Canada of 853350 Alberta Ltd. The numbered Alberta company
had held the outstanding shares of Canadian Airlines Corporation since January
5, 2000.

As a result of the successful completion of the acquisition of Canadian
Airlines, Air Canada has today filed for common employer status with the
Canadian Industrial Relations Board (CIRB) in order to facilitate the
resolution of outstanding labour issues involving unions at both airlines.

``Today is an historic occasion for all stakeholders of both Air Canada
and Canadian Airlines as we formally welcome Canadian Airlines as new member
of the Air Canada family and proceed with the complete integration of both
companies,`` said Robert Milton, Air Canada`s President and Chief Executive
Officer. ``Our application for common employer status is an important step in
the integration process as it will allow us to address union issues shared by
employee groups of both airlines in a timely, fair and effective manner.``

``We are focused on the speedy resolution of union issues, notably those
of seniority and scope, which when resolved will pave the way for streamlined
customer service delivery.  Our objective remains achieving excellence in
customer service consistent with our status as one of the world`s great
airlines, while respecting the concerns of our employees through fair and
equitable processes.``

The Wage Reduction Program previously in effect at Canadian Airlines has
been eliminated for all Canadian Airlines employees effective July 1, 2000.
Collective agreements have been negotiated and ratified by the members of the
Canadian Airlines units of the Canadian Auto Workers (CAW), Canadian Union of
Public Employees (CUPE) and Airline Pilots Association (ALPA). Canadian
Airlines employees represented by these unions in addition have been granted
wage parity and their working conditions standardized with those of their Air
Canada counterparts. Negotiations with the Canadian Airlines unit of the
International Association of Machinists and Aerospace Workers (IAMAW) and the
Canadian Airlines Dispatchers Association (CALDA) are on-going.

Today`s announcement follows the approval June 27, 2000 by the Alberta
Court of Queen`s Bench of Canadian Airlines Corporation`s Plan of Compromise
and Arrangement under the Companies` Creditors Arrangement Act (CCAA).

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