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National Bank Transportation ConferenceMarch 28, 2007

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Changing the Game

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Changing the GameCanada’s #1 domestic, trans-border and international airlineStrong brand recognitionInnovative revenue model driving customer loyaltyNew efficient fleetWell positioned for international growthStrong financial position Proven cost controlStrong operating performance

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Canada’s Largest International Carrier13th largest carrier in the worldExtensive global networkThree international gateways

Current RoutesCurrent Routes

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Aeroplan - Canada’s Premier Loyalty Program

90% of business travelers in Canada are Aeroplan membersStrategic long-term relationshipProvides a growing revenue source from Aeroplan through the purchase of seats

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An Independent Aeroplan Works for Air Canada

Aeroplan’s Business Model

Partners Buy MilesAeroplan Buys Seats / Services

/ Products for Redemptions

Aeroplan

CIBC, AMEX, Other Partners

Seats from

Seats/Services/Products from other vendors

Cash71%

Cash29%

Cash79%

Cash21%

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Embraer 190 - The Game Changer

EMB 190

CurrentDomestic Opportunity

CurrentTransborder

Opportunity

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Positioning for Efficiency and Growth

Boeing 77719 Firm (18 options)

Boeing 78714 Firm (46 options)

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Future Savings from Fleet Renewal

B777–26% cheaper on a CASM basis

compared to A340-500

B787– Expected to be 30% cheaper on fuel

and maintenance than B767-300

EMB190– Proven to be 18% cheaper than A319

on a per trip basis

Significant pilot and operational efficiencies contribute to reduced costs

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Wealth of Available Route Authorities

In serviceToronto expansionOther Canadian cities expansion

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Toronto 2007

Consolidation of Domestic, United States and other International operations in one terminalWorld class connecting facility5th largest port of entry to the U.S.

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Industry Leading International Product

Executive First Cabin– New executive suite (lie-flat beds)– State of the art individual inflight entertainment system– In-seat power access at all seats– Will improve passenger yield

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Simplified Fare Products

Flexibility

Price

Value

Choice

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Simplified Fare Display: The Key to Success

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“Air Canada matches us,dollar for dollar on every single fare, every single minute of every single day.”

Clive BeddoePresident and CEO, WestJet

�Air Canada Will Not Be UndersoldMatching Low-Fare Competition

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People will “Buy-Up”Tango Plus sales increase 39% in Q3, 34% in Q4 year over yearTango only accounts for 45% of domestic sales in Q448% “buy-up”

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Distribution Savings

aircanada.com is approximately 51 percent cheaper than other distribution channelsInternational web expansion will lead to greater penetration rate

Domestic Web Penetration

62%

System Web Penetration

32%

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The Math Works

Buy up for additional featuresBusiness classInternational feedSuperior network & schedule

Higher average fareHigher average fare

++Higher load factor

Our Advantage

International feedMore appropriate aircraft sizeTransborder feed

Higher load factor

Higher revenue premiumHigher revenue premium

Unit Cost GapUnit Cost GapLaborSingle fleet

LCC Advantage

= Profit Gap= Profit Gap

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Passes Contribute To New Revenue Model

Compressed fare gap limits buy down effectPasses have same average fare per departureAttraction of passes is ease of use not price discount30% of pass holders increase their travel on Air CanadaHistorically, 90% of pass holders repurchaseLeverages Air Canada strengthsHelps desensitize Air Canada from economic cycle

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New Revenue Model More Effective Than Old Model

10.29.0 8.5 8.7 8.6 9.1 9.9

18.717.2 17.2

15.2 16.118.1 18.6

2.0

7.0

12.0

17.0

22.0

2000 2001 2002 2003 2004 2005 2006

Air Canada & JazzAir Canada & Jazz CDN CDN ¢¢U.S. Markets (DOT)U.S. Markets (DOT) U.S. U.S. ¢¢

Cents per ASMDomestic Passenger Revenue per ASM

(1)

New Model Introduction

(1) 4th QTR. ‘05 + YTD Sept. ‘06

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Domestic Travel Demand is Easily Absorbing Capacity

-5%

0%

5%

10%

15%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Estimated Domestic Industry Revenue Growth*(4 Quarter Rolling)

200620062005200520042004

*Air Canada Estimate of Domestic Revenue Growth For The Industry

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Financial ReviewChanging the Game

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$9,509$10,239

2005 2006

$ MillionsRevenue(1)

7.7% revenue growth achieved with only 3.9% ASM growth– Record load factors– Strengthening yields

+7.7%

(1) Revenues figures of Air Canada Services. Excludes special charge for Aeroplan miles of $102 million

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Focused Cost Control12 Months Ended Dec. 31, 2006 vs. Dec. 31, 2005

(1) Refers to combination of aircraft rent and depreciation, amortization and obsolescence(2) Communications and information technology, building rent and maintenance, terminal handling, professional fees and services, crew meals

and hotels, advertising and promotion, insurance costs, credit card fees and other expenses

Total Costs Controllable Costs% Change of Operating Expenses Per ASM

Fuel 25%

Ownership(1)

8%

Airport and Navigation Fees

10%

Capacity Purchase Fees Paid to Jazz

9%Other(2)

17%

Controllable Costs31%

7%

-4%

-4%

-9%

-11%

Commissions

Salary and Wages

Food, Beverages and Supplies

Benefits

Aircraft Maintenance, Materials and Supplies

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$936$1,043

2005 2006

$ Millions and % MarginEBITDAR(1)

+11.4%

Excluding spike in fuel costs, EBITDAR would have been $1,390M

(1) EBITDAR figures for Air Canada Services excluding special charges of $122 million

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Strong Financial Position

Cash resources $2,110Long-term debt(1)

Senior secured revolving credit facility ($400 million availability) $--Aircraft and equipment related financing 1,008Capital leases 1,281Debt consolidated under ACG-15 (excluding Jazz) 1,110

Other 49$3,448

Capitalized LTM Leases (@ 7.5x) 2,355Adjusted Net Debt(2) $3,693

Adjusted Net Debt / LTM EBITDAR(3) 3.5xCash / LTM Revenues 20.6%

December 31, 2006

(1) Excludes Prepayment Loan Payable to ACTS of $535 million(2) Adjusted Net Debt = Total Debt plus capital leases plus 7.5x LTM aircraft leases of $314 million minus cash & cash equivalents(3) EBITDAR = Earnings before interest, taxes, depreciation, amortization and rent and excludes special charges of $122 million

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Committed Financing

Capital Expenditures(1)

Fleet Renewal

Fleet Refurbishment

Technological Investment$1,273

$302

$1,530

2007 2008 2009

$2,390

$1,751

$606

$ Millions

(1) From Air Canada Services financial information

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12 Month RollingMargin Gap Widening(1)

10.00

11.00

12.00

13.00

14.00

15.00

16.00

17.00

Dec Mar Jun Sept Dec Mar Jun Sept Dec Mar Jun Sept Dec

Cents

12% 42%

20062006200520052004200420032003

RASMRASM CASM with FuelCASM with Fuel CASM excl. FuelCASM excl. Fuel

(1) Excludes special charges which occurred in the 12 months ended Dec. 31, 2006

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Margin Growth Driven by Innovation

Subscriptions

PassesBranded Fares

A la CarteBuy-up Revenue

Route Opportunities

Ancillary Revenues

RASMTRADITIONAL

CARRIER

TRANSITION

CASM

EBITDAR

MARGIN

New

20% Less Management - 2006

New Fleet-Lower Fuel-Lower Maintenance costs

-Lower Trip costs-Pilot Compatibility

Polaris-Faster transactions-Lower operating costs-Less Accounting

and Admin.-Less Distribution Costs

Web and Kiosks-Faster transactions-Customer self-help

Point-to-Point Operations

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Changing the GameCanada’s #1 domestic, trans-border and international airlineStrong brand recognitionInnovative revenue model driving customer loyaltyNew, efficient fleetWell positioned for international growthStrong financial position Proven cost controlStrong operating performance

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The Next LevelChanging the Game