Air Canada Update on Restructuring

Air Canada provides the following update
on the airline`s restructuring under the Companies` Creditors Arrangement Act:
Company to Request Court Approval for Funding of 2003 Pension Plan

Service Costs:
Air Canada said today that it will be asking the Court next week to amend
the initial CCAA order to permit the Company to make contributions to its
defined benefit pension plans equal to the 2003 current service costs for
those plans. In the aggregate, these contributions will total approximately
$120 million to be allocated to the various plans in accordance with actuarial
valuation requirements. These plans cover all of Air Canada`s unionized and
non-unionized employees and retirees in Canada and the U.K. as well as a group
of Jazz pilots. The making of this contribution has been approved by the Board
of Directors of the Company, the Monitor and Trinity Time Investments Limited
pursuant to its investment agreement approved by the Court on December 8,
On December 10, the Court approved the Company`s request to remit the
2003 employer contributions in the aggregate amount of approximately
$15 million to the Jazz defined contribution pension plans and group RRSP, the
Air Canada pilots` retirement compensation arrangement and the Air Canada
flight attendants` group RRSP.
“Our request to the Court for a timely contribution of current service
costs to the pension plans is a reflection of our commitment to preserve
existing benefits for employees and retirees,” said Robert Milton, President
and CEO of Air Canada. “This contribution will strengthen the financial
position of our pension plans. While significant issues relating to the
deficits in the defined benefit plans remain outstanding, we will continue to
work with Air Canada`s equity sponsor, the regulator and other stakeholders to
arrive at a resolution as soon as possible.”