New Generation Boeing 737-700

We are pleased to introduce the newest member of our fleet to the world - the new generation Boeing 737-700. You will notice a dramatic change in the livery of the aircraft inside and out. This change is significant and reflective of where we are going as your Airline. The interior has a fresh widebody look with the newest Business Class and Economy Class seats in a rich blue colour and a crisp professional look. The exterior of the aircraft carries the message further with a focus on professionalism. Over the new few months all of our fleet will move to this new look.

We have driven dramatic changes this year focusing on what is important and brings value to our internal and external customers. We have re-organised the structure of the Company. We have engaged our employees in a co-operative “Re-engineering” of our internal work processes that involves every area with Management and labour working side by side to craft our Airline to effectively, efficiently, creatively and co-operatively be the Airline of the future! We call this effort “PROJECT RAINBOW”.

There are a host of other initiatives that we have taken to further addressing our need to change. They are:

* Resolution of a Pilot contract that had been in work for 7 years

* Total recompile of the Flight Attendant Contract for the first time in 19 years


* Re-evaluation of our Inflight Service package

* Restructure of existing Boeing 747-200 lease and acquisition of a second Boeing 747-200 effective December 1998

* Dramatic change in our sales and marketing focus in all major markets with over 16 different fare initiatives in 1998
* Two new Boeing 737-800 in 1999

All of these changes are a focus on reducing unnecessary costs and maximising revenue opportunities bringing greater value to our customer, our industry partners and our Airline.

We are excited and optimistic and we greatly appreciate your participation in our celebration.
Michael McQuay—Managing Director & Chief Executive Officer