Air Canada today clarified the applicable process for shareholders of Air Canada and Canadian Airlines to accept Air Canada`s proposal to restructure the industry. A press release issued yesterday referred to shareholders of Air Canada and Canadian Airlines voting on the merits of its proposal. In fact, Air Canada shareholders will have the opportunity to tender into the issuer bid by Air Canada for up to 35 per cent of its own shares and Canadian Airlines shareholders will have the opportunity to tender into the takeover bid by Air Canada for shares of Canadian Airlines. No shareholder votes are contemplated as such. However, Air Canada shareholders will be voting on resolutions relating to Airco`s offer which Air Canada believes to be clearly inferior to its own proposal.

Air Canada notes that an independent research report issued on October 20, 1999 by one of Canada`s leading airline analysts has concluded that Air Canada`s proposal represents at least $4.00 more value per Air Canada share than the Airco proposal, and more if Air Canada can successfully restructure Canadian Airlines` debt, which Air Canada believes will be achievable. The Airco offer is subject to greater regulatory risk and Air Canada considers it to be illegal.

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