Air Canada today announced that an offer has
been made to all union heads to cover the cost of an arbitrator, in an effort
to help find a solution to resolving seniority issues and facilitate full
integration of Air Canada and Canadian Airlines.

Robert Milton, President and Chief Executive Officer, Air Canada, said
today, ``We respect that seniority is a union and employee issue and that we
cannot prejudge what the outcome might be. However, we want to help to find a
workable solution, and arbitration may be the catalyst that ultimately brings
resolution to this issue.``

An arbitrator would potentially chair a mediation or arbitration process
on issues related to seniority. Unions would each select an independent
arbitrator to hold meetings to reach an acceptable merging of seniority lists,
including common work rules and a voluntary intermingling of workforces.

In Canada, Air Canada and Canadian Airlines jointly employ 30,670
unionized staff in six unions, including the International Association of
Machinists (IAMAW), the Canadian Union of Public Employees (CUPE), the
Canadian Auto Workers (CAW), the Air Line Pilots Association (ALPA), the Air
Canada Pilots Association (ACPA) and the Canadian Air Line Dispatchers
Association (CALDA).

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