Air Canada and VARIG Expand Networks

VARIG Brazilian airlines and Air Canada are jointly expanding their networks to offer customers easier access
to additional destinations in North and South America on a codeshare basis.
Effective December 5, 2002, Air Canada`s network will grow to serve Rio de
Janeiro, Porto Alegre and Salvador in Brazil as well as Buenos Aires,
Argentina and Santiago, Chile on flights operated by VARIG. At the same time,
VARIG`s network will grow to serve Montréal, Ottawa, Calgary and Vancouver on
flights operated by Air Canada. Schedules are timed to offer convenient
connections to Air Canada-operated non-stop flights between Sao Paulo and
Toronto, offered on a codeshare basis by VARIG.

“Expansion of the Air Canada network to additional markets in South
America in cooperation with our valued Star Alliance partner, VARIG, is good
for our customers because it improves air access between North and South
America while building on our non-stop service between our respective hubs in
Toronto and Sao Paulo,” said Robert Milton, Air Canada`s President and Chief
Executive Officer, in Rio at a meeting of Star Alliance chief executives.
“Doing this on a codeshare basis also makes good business sense because it
provides a cost effective way to maintain service as well as enter new markets
during this challenging economic environment.”

“Through this codeshare cooperation, VARIG customers will benefit from
convenient access to cities across Canada via Air Canada`s main hub in
Toronto,” said Arnim Lore, VARIG`s President and Chief Executive Officer. “The
growth in VARIG`s partnership with Air Canada reflects the value that Star
Alliance brings while linking the most important markets in Canada to the most
important markets in the Mercosur economic region, the third-largest trading
zone in the world after the EU and NAFTA.”

Celebrating its 75th anniversary in 2002, VARIG is Latin America`s
largest airline, with over 700 daily flights to 70 destinations in Brazil and
24 foreign cities. Renowned for its superior service, VARIG has received
numerous awards including having been named Best Airline in Central and South
America by OAG on multiple occasions.

Montréal-based Air Canada provides scheduled and charter air
transportation for passengers and cargo to more than 150 destinations on five
continents. Canada`s flag carrier is the 12th largest commercial airline in
the world and serves more than 30 million customers annually with a fleet
consisting of more than 300 aircraft. In 2002, Air Canada received the
prestigious OAG (Official Airline Guide) Awards as Best Airline in North
America and Best Frequent Flyer Program for Aeroplan.