Air Canada Reports December Traffic

MONTREAL, Jan. 13 /CNW Telbec/ - Air Canada flew 0.6 per cent fewer
revenue passenger miles (RPMs) in December 2002 than in December 2001,
according to preliminary traffic figures.  Capacity increased by 2.5 per cent,
resulting in a load factor of 70.0 per cent, compared to 72.1 per cent in
December 2001; a decrease of 2.1 percentage points.

In comparison to December 2000, revenue passenger miles declined 3.0 per
cent while capacity was reduced by 7.9 per cent. Load factor improved 3.5
percentage points.

“Our December traffic results were negatively impacted by an increase in
competitive capacity in the domestic market resulting in intensified low fare
competition, particularly on the transcon routes,” said Rob Peterson,
Executive Vice President and Chief Financial Officer.  “This had a dampening
effect on domestic unit revenues.”

“While U.S. transborder traffic and load factors were up due to stronger
demand to the eastern U.S. and California, and the fact that a portion of the
Thanksgiving travel period fell within December this year, we nevertheless
experienced significant yield pressures within the North American market.  In
Asia, the solid performance of our Japan and China routes continued while the
suspension of our service to Taiwan partially offset this growth in our total
Pacific figures.”

At the outset of 2002, Air Canada anticipated a return to profitability
in the seasonably stronger second and third quarters.  While this was
achieved, the difficult global airline environment has resulted in a fourth
quarter and full year operating loss. It is anticipated, however, that this
fourth quarter operating loss will be less than the quarterly operating loss
for the same period in each of the past two years.