Air Canada Reports Unaudited Year 2002

MONTREAL, Feb. 6 /CNW Telbec/ - Air Canada`s preliminary, unaudited
results for the year 2002 reflect an operating loss of $218 million,
representing a $513 million improvement from 2001. Removing non-recurring
labour expenses of $26 million recorded in 2002, the adjusted (a) operating
loss of $192 million improved $539 million from 2001. For the year, the
preliminary, unaudited net loss amounted to $428 million or $3.56 per share,
representing an $887 million improvement from 2001. Loss before foreign
exchange on long-term monetary items and income taxes amounted to $384
million, $581 million better than the prior year.

For the quarter ended December 31, 2002, the Corporation reported a
preliminary, unaudited operating loss of $288 million, a $20 million
improvement from the 2001 quarter. Removing non-recurring labour expenses of
$26 million recorded in 2002, the adjusted operating loss of $262 million
improved $46 million from the prior year. Loss before foreign exchange on long-
term monetary items and income taxes was $359 million. The preliminary,
unaudited net loss for the quarter amounted to $364 million or $3.02 per share
compared to a net loss of $277 million or $2.31 per share in 2001.

Air Canada is releasing preliminary, unaudited results for the fourth
quarter and year 2002. In light of the increased economic uncertainty
regarding the airline industry, the potential for conflict in Iraq and
significant increases in fuel prices, the Corporation is completing a review
of the carrying value of its future income tax asset. This review may result
in a tax valuation allowance being recorded to reduce the value of the
Mainline carrier`s future income tax asset by an amount ranging from zero to
$400 million from its current carrying value of $400 million. Any such
allowance would increase the provision for income taxes and the net loss for
the period by the amount of the tax valuation allowance. On the consolidated
statement of financial position, any such allowance would also reduce the
value of the future income tax asset and increase the deficit. Any such tax
valuation allowance would result in an unrecognized tax benefit that would be
available for use in the future. The allowance would, however, have no impact
on Air Canada`s cash position or operating results. Air Canada expects that
its financial statements for the fourth quarter and audited financial
statements for the year 2002 will be finalized prior to the end of the first
quarter of 2003. All results reported and discussed in this release are
presented on a preliminary and unaudited basis.

A number of non-recurring or significant items were recorded in both 2001
and 2002. Please refer to Attachments One and Two for a summary of non-
recurring or other significant items and a reconciliation of adjusted (non-
GAAP) results to published results.

“In a year of ongoing crisis for the airline industry, Air Canada
recorded 2002 results that continued to surpass all North American
international carriers with an over $500 million improvement in our operating
results and an $887 million improvement in net results for the year,” said
Robert Milton, President and Chief Executive Officer. “While this represents
encouraging progress under increasingly challenging circumstances, these
results clearly demonstrate that the existing full-service network airline
model is not sustainable without continued fundamental change.

ADVERTISEMENT

“Despite the unstable geopolitical situation, a stagnant economy and the
other challenges ahead, we can still look back with satisfaction at our
achievements in 2002 as we continued to transform Air Canada to compete in a
changed industry environment. As anticipated at the start of the year, the
company achieved profits in the two seasonally stronger quarters and, in the
final analysis, was the only major full-service North American network carrier
to do so,” said Mr. Milton.

For full details see Air Canada Website.
——-