Air Canada Update on Restructuring

Ernst & Young Inc., Court-Appointed Monitor in the Air Canada Companies`
Creditors Arrangement Act proceedings has advised that the presiding judge,
the Honourable Mr. Justice Farley, has today directed and ordered that Air
Canada, Jazz, Zip and their respective unions commence meetings on May 12,
2003 with Honourable Mr. Justice Warren Winkler as Facilitator.
The Notice from Mr. Justice Farley states:
“I continue to be concerned that the maximum effort be made by all
parties to see if a resolution to an Air Canada restructuring can be made. I
note that all stakeholders at the April 22nd hearing agreed that they
preferred a solution involving a result whereby Air Canada was a viable entity
under foreseeable circumstances in the long run for the benefit of all
concerned. In that regard, the Court, given these special circumstances
prevailing here, finds it appropriate to take an extraordinary step. I am
therefore directing and ordering management of Air Canada and its constituent
unions to commence meeting with Mr. Justice Warren Winkler in an effort to
settle the remaining issues among them so that they may mutually come to a
resolution which will allow them to operate as a cohesive team, with trust and
respect flowing both ways. It is important that management and the unions come
to a coordinated approach as to how to make Air Canada competitive with
maximum efficiency and productivity while at the same time minimizing
disruption and other detrimental effects. A resolution in this regard will
provide a stabilized foundation to build upon with respect to the other
elements of the restructuring. Justice Winkler, in a facilitation function
akin to Court annexed ADR (alternative dispute resolution), will be working to
a practical deadline of May 21, 2003. Of course, an earlier resolution would
be most welcome. Given the special circumstances of the importance of Air
Canada to the societal and economic needs of Canada domestically and
internationally, I have determined that it would be appropriate to involve
Justice Winkler in this facilitation role.”
The Air Canada Pilots Association (ACPA) today advised that they would
provide a 10 per cent wage reduction for the months of June and July in order
to provide interim relief pending the completion of the labour cost
restructuring. “I commend ACPA and our pilots for their leadership in taking
this important step as we work our way to a sustainably viable cost
structure,” said Robert Milton, President and Chief Executive Officer of Air
Canada. “Upon ratification and concurrent with this 10 per cent wage
reduction, a similar wage reduction will also be implemented for management
and other non-unionized employees.”