Both domestic and U.S. transborder traffic remained essentially unchanged with Canada up slightly and U.S. down less than one per cent. Air Canada's March system load factor is the highest March figure in the company's history.

"While March system available seat mile (ASM) capacity was only down slightly from last year, aircraft hours flown measured as block hours were reduced by 8.4 per cent for the month," said Rob Peterson, Executive Vice President and Chief Financial Officer. "For the quarter, aircraft hours flown were 12.1 per cent below last year's level. The improvement in block hours in comparison to ASMs reflects efficiencies achieved through our fleet renewal program, a part of which involved the removal of older, smaller DC-9 and 737 aircraft. Another contributing factor is our seat reconfiguration program, in which we reduced some Business Class capacity to add economy seating while maintaining the Canadian industry's most comfortable seating pitch standards. These actions together allow Air Canada to carry more people with less flying at significant savings in cost. These savings together with the continued modest year-over-year increase in revenue per available seat mile (RASM) should result in an improvement over last year in first quarter 2002 operating results."

This discussion contains certain forward-looking statements, which involve a number of risks and uncertainties. As a result of many factors including acts or potential acts of terrorism, government regulations and government mandated restrictions on operations and pricing, fuel prices, industry restructuring, labour negotiations, the economic environment in general including foreign exchange and interest rates, the airline competitive and pricing environment, industry capacity decisions and new entrants as well as external events, actual results could differ from expected results and the differences could be material.