Air Canada provides the following update
on the airline’s restructuring under the Companies’ Creditors Arrangement Act: Mr. Justice James Farley of the Ontario Superior Court of Justice today
approved an extension of the stay period granted to Air Canada on
April 1, 2003 until September 30, 2004.The extension will allow Air Canada, in conjunction with the Monitor and
its stakeholders, to resolve several outstanding business issues that must
occur before the final Plan of arrangement can be filed in Court. The
Monitor’s 26th Report, dated May 20, 2004, gives an overview of the position
as to these matters.

Air Canada reiterates that shareholders of the corporation will receive
only nominal, if any, consideration for their shares upon the Corporation’s
emergence from CCAA protection. The participation of shareholders is expected
to be valued at less than 0.01% of the total equity of the emerging
corporation.

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