#1AIR CANADA 2013 INVESTOR DAY June 10, 2013 Sheraton Gateway Hotel Toronto International Airport Terminal 3 A STAR ALLIANCE MEMBER#2CAUTION REGARDING FORWARD-LOOKING INFORMATION This press release includes forward-looking statements within the meaning of applicable securities laws. Forward-looking statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements may involve, but are not limited to, comments relating to preliminary results, guidance, strategies, expectations, planned operations or future actions. Forward-looking statements are identified by the use of terms and phrases such as "preliminary", "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions. Forward-looking statements, by their nature, are based on assumptions, including those described herein and are subject to important risks and uncertainties. Forward-looking statements cannot be relied upon due to, amongst other things, changing external events and general uncertainties of the business. Actual results may differ materially from results indicated in forward-looking statements due to a number of factors, including without limitation, industry, market, credit and economic conditions, the ability to reduce operating costs and secure financing, pension issues, energy prices, employee and labour relations, currency exchange and interest rates, competition, war, terrorist acts, epidemic diseases, environmental factors (including weather systems and other natural phenomena and factors arising from man-made sources), insurance issues and costs, changes in demand due to the seasonal nature of the business, supply issues, changes in laws, regulatory developments or proceedings, pending and future litigation and actions by third parties as well as the factors identified throughout this news release and those identified in section 18 "Risk Factors" of Air Canada's 2012 MD&A dated February 7, 2013 and in section 13 of Air Canada's First Quarter 2013 MD&A dated May 3, 2013. The forward- looking statements contained in this news release represent Air Canada's expectations as of the date of this news release (or as of the date they are otherwise stated to be made), and are subject to change after such date. However, Air Canada disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations. 2013 INVESTOR DAY 2#3FINANCIAL INFORMATION CONTAINED IN THIS PRESENTATION Financial information contained in this presentation has been derived from the historical consolidated financial statements of the Corporation for the applicable periods noted. Certain of the financial measures provided are non-GAAP financial measures. Reconciliations of those measures to comparable GAAP measures for the relevant periods can be found in Air Canada's Management's Discussion and Analysis reports, which are available on our website at aircanada.com. Financial information for the year 2009 and prior are based on old Canadian GAAP (prior to the adoption of IFRS) while financial information for the 2010 period and onwards is reported under IFRS. In addition, certain changes in IFRS were adopted on January 1, 2013 with retroactive restatement to January 1, 2012 - refer to Air Canada's interim unaudited condensed consolidated financial statements and notes for the first quarter of 2013 for additional information. Financial information for 2010 and 2011 have not been restated to be on the same basis. As a result of the above, financial information across periods may not be comparable. 2013 INVESTOR DAY 3#4AIR CANADA 2013 INVESTOR DAY June 10, 2013 Sheraton Gateway Hotel Toronto International Airport Terminal 3 A STAR ALLIANCE MEMBER#5Transforming Air Canada to Deliver Sustained Profitability and Shareholder Value Calin Rovinescu President and Chief Executive Officer 2013 INVESTOR DAY 2#6Overcame Past Challenges Weak balance sheet Onerous pension deficit payments • Labour Addressed each issue within four months 2013 INVESTOR DAY 3#7Our Future Working to become sustainable and profitable for the long term • Excellent management team Profit and results-driven Performance oriented compensation structure 2013 INVESTOR DAY 4#8EXECUTING OUR STRATEGY Liquidity and Financing Doubled our liquidity since 2009 Cash levels over $2B • More efficient financing vehicles EETC closed with face value of $715M and blended coupon rate of 4.7% • Looking at refinancing of high yield debt to reduce interest costs 2013 INVESTOR DAY 5#9EXECUTING OUR STRATEGY Capital Commitments • Boeing 777s mark first significant wide-body expansion in ten years • Overlap with delivery of 37 Boeing 787s 2013 INVESTOR DAY DEFAMUNER AIR CANADA AIR CANADA NAD 6#10EXECUTING OUR STRATEGY Competitive Response Domestic Replace CRJ100/200 with Q400 in Western Canada • Introduction of Q400 at Toronto City Centre Grow key transcon routes at lower unit cost 2013 INVESTOR DAY express 7#11EXECUTING OUR STRATEGY Competitive Response Transborder • Increased flexibility in new ACPA agreement for small jets at regional partners • Transition of EMB 175 to Sky Regional • Air Canada rouge on select high-volume leisure markets 2013 INVESTOR DAY NADA CADA rouge 8#12EXECUTING OUR STRATEGY Competitive Response AIR CANADA International • Air Canada rouge on Caribbean and some seasonal European leisure destinations • Introduction of low unit cost, high density Boeing 777s Increase 6th freedom traffic • Further expansion of Toronto Pearson Airport as international gateway 2013 INVESTOR DAY rouge AIR CANADA YYZ GLOBAL HUB PLAQUE TOURNANTE INTERNATIONALE 9#13EXECUTING OUR STRATEGY Competitive Response International • Introduction of Premium Economy • Introduction of Boeing 787 2013 INVESTOR DAY AIR CANADA#14Service Level Expectations Within Our Markets • Record load factor of 82.7% in 2012 Best International Airline in North America for three consecutive years • Ranked favourite airline by 80% of Canadian business travellers in Ipsos Reid survey 4 STAR AIRLINE SKYTRAX EXECUTING OUR STRATEGY 2013 INVESTOR DAY 11#15EXECUTING OUR STRATEGY Service Level Expectations Within Our Markets • Products and services highly valued by customers ROGERS 10:42 AM Book Flight YUL Montréal Trudeau Going to... One Way Departs Sun 18 Mar Passengers Round Trip Returns Mon Mar 26 Promo Code Enter Code Search - - - - - Executive First lie-flat seats Maple Leaf Lounges Concierge Mobile apps Air Canada Altitude GOLD GOLD AIR CANADA ③ Al AL ALTITUDE DE SUPER ELITE E Q My Fights Book Flight Check Find Flight 2013 INVESTOR DAY 12#16EXECUTING OUR STRATEGY Becoming More Efficient • ASMs increased 13% 2009-2012 • Average annual load factor up steadily increasing - 2012 record load factor 82.7% • 30% year-over-year OTP improvement Reduction in unserviceable aircraft in April and May this year 2013 INVESTOR DAY 13#17EXECUTING OUR STRATEGY Lowering Risk and Pension Funding • Strengthening our balance sheet • Lowering overall risk profile • Reduced net debt by almost $1.5B from 2009 • Reduced net debt in first three months of 2013 by $150M • Changes negotiated to Defined Benefit plans. Extension of pension funding arrangements to January 30, 2021 2013 INVESTOR DAY 14#18Four Core Priorities COST REDUCTION AND TRANSFORMATION INTERNATIONAL GROWTH CUSTOMER ENGAGEMENT CULTURE CHANGE 2013 INVESTOR DAY 15#19OUR PRIORITIES A Cost Reduction and Transformation • Achieved annual cost savings in . excess of $530M CTP part of Air Canada DNA and transitions to Business Transformation • Efficiencies - - - Lower fuel consumption Better turnaround times Reduction of credit card fees - Rigorous RFP process 2013 INVESTOR DAY 16#20OUR PRIORITIES A Cost Reduction and Transformation Flexibility • CASM reduction through important changes to Collective Agreements such as - changed work rules - ability to launch Air Canada rouge - expanded use of 75-seat aircraft at regional carriers 2013 INVESTOR DAY 17#21OUR PRIORITIES A Cost Reduction and Transformation New Opportunities . Reduce costs through new MRO agreements following closure of Aveos - Expect substantial maintenance cost improvements and TATS • Arbitration on Jazz benchmarking 2013 INVESTOR DAY 18#22OUR PRIORITIES A Cost Reduction and Transformation Fleet Flexibility . Can adjust to market and competitive demands High-density Boeing 777s and deployment of Boeing 787s provide significant cost advantages Deploying Q400s at Toronto City Centre. • Outsourcing flying of EMB 175s to Sky Regional 2013 INVESTOR DAY 19#23A OUR PRIORITIES Cost Reduction and Transformation Revenue Initiatives • Growing ancillary revenues • Improving net Aeroplan revenues Loyalty program for small businesses • Introduction of new Revenue Management System Record operating revenue of $12.1B in 2012 2013 INVESTOR DAY 20 20#24OUR PRIORITIES A Cost Reduction and Transformation Cost transformation is continuous... • $50M Q2 cost reduction target good example of moving quickly 2013 INVESTOR DAY 21#25OUR PRIORITIES International Growth System ASM capacity to increase 9 to 11% in 2014 Investing in wide-body aircraft, products and services G 22#26OUR PRIORITIES 2013 INVESTOR DAY International Growth . STAR ALLIANCE Star Alliance Offering customers over 1,300 airports Continued development of commercial alliances . A++ SOUTH AFRICAN AIRWAYS TURKISH AIRLINES • New Code share agreements - South African Airlines, Turkish Airlines, Etihad الاتحاد ETIHAD AIRWAYS 23#27OUR PRIORITIES 2013 INVESTOR DAY International Growth New mainline destinations Copenhagen, Brussels, Geneva, and new Calgary-Narita route Copenhagen Brussels Geneva 24#28OUR PRIORITIES 2013 INVESTOR DAY International Growth Adding 7 flights a week to Beijing 11 daily departures to Asia, 43,000+ seats/ week crossing the Pacific • Capital investment of about $1.5B BEIJING SEOUL SHANGHAI —HONG KONG TOKYO VANCOUVER CALGARY TORONTO 25#29OUR PRIORITIES 2013 INVESTOR DAY International Growth 21% increase in 6th Freedom Traffic at Toronto Pearson New aircraft to introduce new routes - Toronto-Istanbul and Toronto-Seoul Istanbul Seoul 26#30OUR PRIORITIES International Growth 2013 INVESTOR DAY Air Canada rouge · rouge Dis Boeing 767s transfer to Air Canada rouge Operate in July to Europe and Caribbean • 40 routes from four Canadian cities by end of 2014 • Expand to 50 aircraft by end of 2015 27#31OUR PRIORITIES International Growth 2013 INVESTOR DAY Air Canada rouge • Lower cost structure - - Flexible work rules - Higher-density configuration Combined ACV with leisure group for higher profile, more heft in leisure market • Progress on aligning functions Air Canada rouge targets improved profitability in the leisure market 28#32OUR PRIORITIES Engaging Our Customers 2013 INVESTOR DAY • Substantial investment in product since 2006 puts us ahead of competition • Doubled movie content on free on-board entertainment system Refurbished Maple Leaf Lounges • Revamped loyalty program as Altitude Won numerous industry awards 29#33OUR PRIORITIES Culture Change 2013 INVESTOR DAY • Re-gaining momentum with . agreements in place Cross-functional approach motivates employees • Renewed focus on constructive and transparent dialogue • Talent management and training Employees better understand the competitive landscape New contracts narrow cost differential 30#34Achieving Results First annual profit since 2007 Adjusted net income $55M vs adjusted net loss in 2011 Improvements in metrics Profit, revenue, balance sheet and customer demand • Share price increased 76% during 2012 2013 INVESTOR DAY 31#35Share Price Trading at less than 4X EBITDAR multiple Share price continues to lag strengthening fundamentals 2013 INVESTOR DAY 32#36Going Forward Focused on execution of strategic priorities . Attack costs New revenues Improve customer experience Adapt to competitive environment 2013 INVESTOR DAY 33#37Going Forward • Sustainable, profitable airline Attain a return on invested capital that exceeds weighed cost of capital Capable of rewarding shareholders AIR CANADA 2013 INVESTOR DAY 34#38AIR CANADA 2013 INVESTOR DAY June 10, 2013 Sheraton Gateway Hotel Toronto International Airport Terminal 3 A STAR ALLIANCE MEMBER#39Commercial Strategy Benjamin Smith Chief Commercial Officer 2013 INVESTOR DAY 2#40Our Objectives • Profitable international and leisure carrier growth Enhance and optimize revenue stream through new technology, product offering and segmentation • Leverage the brand Improved unit cost proposition 2013 INVESTOR DAY 3#41The Path Forward WHERE WE ARE 2013 INVESTOR DAY 4#42Air Canada Leading Share in All Markets Domestic accounts for 39% of passenger revenue Transborder accounts for 20% of passenger revenue International accounts for 41% of passenger revenue Other Airlines LCC WJA 4% DAL 19% 6% WJA 35% 10% AMR 10% Other Airlines Air Canada 55% 9% Air Canada 35% 2013 INVESTOR DAY • Other Airlines UAL 25% Air Canada 17% 37% SWG 4% WJA 4% LH 3% KLM 7% BA 4% TRZ CATH 10% 6% Source: OAG data, based on full year 2012 available seat miles (ASMs) AC Revenue Split based on 2012 full year revenues 5#43International Growth Strategy Underway BUILDING AN AIR CANADA INTERNATIONAL POWERHOUSE AIR CANADA rouge Five new Boeing 777-300ERS & three new Boeing 787-8 by summer 2014 • High density configuration of 458 seats +one in early 2014 New routes from Toronto to Istanbul & Seoul • Toronto-Seoul three weekly eff. June 2013 • Toronto-Istanbul three weekly eff. June 2013 Expansion to Asia • Calgary-Tokyo to daily eff. May 2013 • . Toronto-Beijing to 10 weekly eff. June 2013 and Vancouver-Beijing to 11 weekly eff. June 2013 Launch of Air Canada rouge July 2013 start with two Boeing 767 and two Airbus A319 Launch routes to Athens, Edinburgh and Venice Transferring over existing leisure Caribbean/Mexico/ Central America routes • Toronto-Dublin route to go year-round effective winter 2014/2015 2013 INVESTOR DAY 6#44Air Canada is Not Yet a Big Player in the USA International Market % of US-Europe/Asia Market by non-US Carriers 4.2% 3.2% 3.0% 2.8% 2.0% 0.9% 0.3% Air France Korean Air KLM Lufthansa Cathay Pacific Swiss Air Canada • Air Canada "fair share" is approximately 1.5% • Should Air Canada meet this target - this would equate to an additional 1.1M incremental passengers per year and over $400M in revenue ⚫ Canadian hubs have excellent geographic positioning & efficient transit facilities vs. other global hubs • Air Canada covers all major markets in the USA with multiple frequencies per day * Source: PaxIS - TME March 2013 2013 INVESTOR DAY 7#45Air Canada is Emulating the Successful KLM Hub Structure in Amsterdam AMS • KLM KLM services 132 destinations from its Amsterdam hub - despite a relatively small home base Focus is on sixth freedom flow traffic - 70% of KLM's traffic is international flow traffic - - KLM has seven distinct departure "waves" - tight connections over the day to allow optimal connectivity • KLM operates higher density aircraft to provide optimal seat cost for this type of transfer traffic 2013 INVESTOR DAY 8#46Roadmap to Sustained Profitability Network Product Fleet 2013 INVESTOR DAY Continue to build Toronto-Pearson into a global gateway • Maintain a leadership position in strategic North American markets • Drive more international traffic (sixth freedom) through Canada • Be a relevant player in leisure markets • Offer a best-in-class business class on all mainline aircraft • Introduce new Premium Economy to enhance revenues • Continue to raise brand profile through SkyTrax Four Star rating & SkyTrax "Best Airline in North America" Reconfigure widebody aircraft to decrease unit costs Delivery of new Boeing 787 enhances economic feasibility of many new route possibilities • Grow Air Canada rouge fleet to improve presence in leisure markets 9#47The Path Forward THE INFRASTRUCTURE IS ALREADY IN PLACE 2013 INVESTOR DAY 10#48Building On a Powerful Network BEIJING ANCHORAGE Air Canada Spring/Summer 2013 Air Canada rouge™ as at July 2013 179 Direct Destinations: ✈59 in Canada 53 in the U.S. ✈67 internationally ✈ 15th Largest Airline in the World ✈ 349 aircraft ✈ >1,500 daily flights ✈ ~35M passengers carried SEOUL TOKYO SHANGHAI HONG KONG SYDNEY PRINCE RUPERT CANDEPE WHITEHORSE YELLOWKNIFE TERRACE ORT ST JOHN SMITHERS PRINCE QUESNEL CRANDE FRAHMCMURRAY E GEORGE CAMPBELL KVIK COMOX NANAIMO VANCOUVER WILLIAMS LAKE EDMONTON KAMICOs KELOWNA CALGARY SASKATOON PENTICTON CRANBROD CASTLEBAR REGINA MEDICINDIAT WINNIPEG HONOLULU VICTORIA SEATTLE MAUI PORTLAND WABUSH ROSE BAY COPENHAGEN EDINBURGH DUBLIN LONDON BRUSSELS FRANKFURT PARIS PARIS MUNICH ZURICH GENEVA BARCELONA VENICE ROME MADRID ISTANBUL GANDER ATHENS TEL-AVIV THUNDER BAY SUDEURY SAULT STE MARIE MINNEAPOLIS MILWAUKEE GRAND RAPIDS TIMMINS TORONTO SAGUENAY SEPTILES ROUYN HERANDA VAL DOR MONTREAL OTTAWA KINGSTON SYRACUSE SARNIA ROCHESTERSHI DAE-COMEAU DEER LAKE MON OUTILS DE LA QUEBEC BATHURST MADELEINE CHICAGODETE BONDWETE THAND HAUTBOSTON HESBURGH NEW YORK (LGA-JFK) NEWALK CHARLOTTETOWN ST JOHN'S MONZTON FREDERICTON SYDNE SAINT JOHN HALIFAX SAN FRANCISCO DENVER LAS VEGAS KANSAS CITY INDIANAPOLI LUMBUSE HARRISERG ST. LOUIS CINCINNATI WASHINGTON DC RICHMOND LOS ANGELES SAN DIEGO PHOENIX SAN JOSE DEL CABO PUERTO VALLARTA DALLAS NEW ORLEANS HOUSTON CANCUN NASHVILLE ATLANTA RALEIGH CHARLOTTE ORLANDO/ TAMPA FORT MYERS FORT LAUDERDALE MIAMI NASSAU VARADERO HAVANA GEORGE TOWN SANTA CLARA CAYO COCO HOLGUIN COZUMEL MEXICO CITY GRAND CAYMAN MONTEGO BAY KINGSTON PROVIDENCIALES BERMUDA PORT-AU-PRINCE PUERTO PLATA SAMANA PUNTA CANA ANTIGUA PPOINTE-A-PITRE FORT-DE-FRANCE ST. LUCIA BRIDGETOWN CARACAS BOGOTÁ LIMA SÃO PAULO SANTIAGO- BUENOS AIRES 2013 INVESTOR DAY MAR 2013 LIBERIA SAN JOSE • ARUBA 11#49ANCHORAGE Air Canada is the Largest Foreign Carrier Operating in the USA HONOLULU VANCOUVER SEATTLE MAUI PORTLAND CALGARY MINNEAPOLIS TORONTO MONTRÉAL OTTAWA MILWAUKEE GRAND RAPIDS CHICAGO SYRACUSE ROCHESTER DETROIT CLEVELAND ALBANY ARTFOND BOSTON SAN FRANCISCO DENVER PITTSBURGH LAS VEGAS COLUMBUS RARRISBURG KANSAS CITY INDIANAPOLIS ST. LOUIS CINCINNATI NEW YORK (LGA-JFK) NEWARK PHILADELPHIA BALTIMORE WASHINGTON, D.C. 2013 INVESTOR DAY LOS ANGELES SAN DIEGO PHOENIX DALLAS NEW ORLEANS HOUSTON RICHMOND NASHVILLE RALEIGH CHARLOTTE ATLANTA ORLANDO TAMPA HALIFAX FORT LAUDERDALE FORT MYERS MIAMI 12#50A++ Partnership with United and Lufthansa Delivers Tangible Benefits to Air Canada . . Austrian Lufthansa UNITED AIR CANADA + SWISS →brussels airlines Global market presence leveraging each carriers' strengths in their home markets Co-ordinated approach to pricing, inventory management and capacity in this market segment Access to Corporate contracts in all markets where offered by A++ partners Results have been impressive: - - Increased US sixth freedom traffic and revenue All POS US Sales channels have shown considerable growth Increased corporate revenue on all services LH/UA traffic on AC Atlantic services grew significantly Average fares for local and behind/beyond traffic improved 2013 INVESTOR DAY 13#51WORLD AIRLINE Star Alliance - 6th time winner Best Airline Alliance in the 2012 Enhancing Global Market Presence Through Star AllianceTM & Joint Venture AIR CANADA US AIRWAYS UNITED 2012 SAS Scandinavian Airlines Lufthansa brussels T POLISH AIRLINES airlines SWISS Austrian CROATIA AIRLINES AEGEAN WINNER SKYTRAX AWARDS TAP PORTUGAL TURKISH AIRLINES 深圳航空 ADRIA Shenzhen Airlines EGYPTAIR Ethiopian የኢትዮጵያ Skytrax World Airline Awards™ AIR CHINA THAI ANA ASIANA AIRLINES SINGAPORE AIRLINES Ca M D Avianca TACA Copa Airlines TAM ✈ 27 Members ✈ 194 Countries Served ✈ 1,329 Airports ✈ >670M Passengers/year 2013 INVESTOR DAY SOUTH AFRICAN AIRWAYS 8° STAR ALLIANCE ✈ 4,570 Aircraft ✈ 21,900 Daily Departures ✈ >1000 Lounges AIR NEW ZEALAND#52Focusing on the International Activity at Toronto Pearson Airport Canada's largest city and financial powerhouse with a population of 5.5 million in the Greater Toronto Area Ranked as one of the most multi-cultural city in the world by UNESCO World Class facility to support the goal of World Class Hub - - Terminal 1 - all Star Alliance carriers under one roof Superior experience vs. US gateways Large demand from catchment area to all continents Excellent geographical position for connection traffic between South America - Asia and North America - Asia/Europe 2013 INVESTOR DAY 15#53Industry-Leading Products & Services aeroplan AIR CANADA MAPLE LEAF LOUNGE tf The only international carrier in N.A. to receive a four star ranking by Skytrax Frequent flyer recognition program "Air Canada Altitude" Star Alliance membership Maple Leaf Lounges Concierge program Lie-flat beds in Executive First Personal seat back entertainment at every seat Mobile-friendly booking and check-in 4 STAR AIRLINE SKYTRAX 2013 INVESTOR DAY 16#54Air Canada Continues to Receive Numerous Awards from the Industry 2012 Skytrax World Airline Awards - 3rd consecutive year 2012 Skytrax ranking: Four-Star Airline Global Traveler magazine - 2012 4th consecutive year ** 4 STAR AIRLINE SKYTRAX Executive Travel Magazine - 2012 Leading Edge Awards 5th consecutive year Business Traveler magazine - 2012 5th consecutive year Best International Airline in North America Ranked the only international Four-Star Airline in North America Best Airline in North America Best Flight Experience to Canada Best North American Airline for International Travel Premier Travel magazine 2013 INVESTOR DAY + Best North American Airline Inflight Experience + + Best North American Airline for Business Class Service Best North American Airline for International Travel Best Flight Attendants in North America 17#55Air Canada Express - Important Part of North American Strategy Provides feeder traffic to Air Canada's scheduled routes ✈ Cape+ express CRJ aircraft (41) 50-75 seats AIR CANADAR express Dash 8 and Q400 aircraft (86) 37-74 seats Embraer (15) 73 seats AIR CANADA express ATE CANADA + express Beech aircraft (17) 18 seats Jazz fleet at 122 aircraft (including 21 Q-400 aircraft) - Q-400 aircraft are optimized for short-haul operations and deliver fuel efficiency, passenger comfort and lower operating costs than the aircraft they replace New collective agreement with ACPA allows for transfer of jets/prop of less than 76 seats to regional carriers All 15 Embraer 175 aircraft transferred to Sky Regional by year-end 2013 under a Capacity Purchase Agreement with substantially lower cost than mainline 2013 INVESTOR DAY 18#56The Path Forward TRANSFORMING AIR CANADA INTO A GLOBAL CHAMPION 2013 INVESTOR DAY 19#57BEIJING Boeing 787 Could Allow Air Canada to Enter Many New International Markets SEOUL OSAKA SHANGHAI HONG KONG JUN 2013 TOKYO (HANEDA) BRISBANE 2013 INVESTOR DAY VANCOUVER CALGARY OTT TORONTO MONTRÉALT. JOHN'S HALIFAX LIMA RACAS MOSCOW DUBLIN COPENHAGE BRUSSELS FRANKFURT MTANICH GENERO RICH VENICE BARCEL ADRID OME ISTANBUL ATHENS BEIRUT TEL AVIV ACCRA LAGOS RIO DE JANEIRO SAO PAULO SANTIAGO BUENOS AIRES NEW DELHI 20 20#58New Boeing 777-300ERS Will Substantially Reduce Unit Costs • Five new Boeing 777s are expected to be strategically deployed on select international markets The product, seat configuration and cabin interior of the new Boeing 777s do not reflect the new standard being developed for the Boeing 787 arriving in 2014 Deployment strategy is primarily focused on improving competitive position on lower yielding but high volume markets Unit seat costs reduce in excess of 30% versus current 349 seat Air Canada Boeing 777-300 RASM compromise marginal given aircraft will still hold sizeable premium seating capacity New Boeing 777-300ER 24 - three class configuration 36 Executive First Premium Economy 44 inch pitch 38 inch pitch 398 Economy 31 inch pitch 2013 INVESTOR DAY 50 อง 1 2 3 4 S 9 7 AC DG BK 234 22222 23455 3333333 1344 DEFG 21#59Improving Premium Revenues with new Premium Economy From: Montreal, Trudeau, QC (YUL) To: Paris, Charles De Gaulle, FR (CDG) Op. • New class of service on both mainline and rouge fleets • Will provide more seating pitch and width than economy class . · Segmented product aimed towards higher end customers seeking to improve comfort and travel experience Enhanced travel experience (priority check-in, baggage allowance, on-board meals, bar, etc.) Easy to book on aircanada.com Economy Tango Flex Latitude Flights Depart Arrive Aircraft Duration Connections Direct Flights AC870 20:55 09:45 + 1 day 77W 6hr50 2013 INVESTOR DAY Compare our fare options Premium Economy Executive First Lowest Flexible $465 $515 $1965 $854 $1910 22 22#60rouge is Tool Which Will Position Air Canada Profitably in the Leisure Market CANADA Toronto Montréal Edinburgh/Édimbourg UNITED Nou HOTAUMUN Venice/Venise TALY Athens/Athènes GREGE ROUGE MEANS GO. Introducing Air Canada's new leisure airline. rouge Varadero Santa Clara Kingston JAMAICA Cayo Coco Puerto Plata Samana Punta Cana Liberia San José CONTA AIR CANADA rouge go more • Air Canada rouge offers significantly lower seat cost than mainline • Air Canada rouge will pursue opportunities in markets made viable by its lower operating cost structure, and subject to market conditions, will expand to other destinations as Air Canada takes delivery of new Boeing 787 aircraft • Air Canada rouge may operate up to 20 Boeing 767-300ER and 30 Airbus A319 2013 INVESTOR DAY 23#61Leveraging Opportunities for Revenue Growth • Growing ancillary revenues through various passenger-related fees and opportunity to further optimize . • Improved net Aeroplan revenue - Reduced Aeroplan frequent flyer accumulation fees to 50% on Tango service for international routes • Launch of loyalty program for small businesses Loyalty program caters to small and medium-size businesses allowing them to earn rewards and complimentary services Introduction of new Revenue Management System (RMS) which is being phased in over the next two years Lowest price guarantee assures customers of best available price on-line 2013 INVESTOR DAY 24#62Enhancement of Revenue Management System • Implementation of a new origin-destination based revenue management system - - PROS® O&DIII Benefits will come from better optimization of passenger flows across the network - Expected incremental revenue in excess of $100M in 2015 Note: Cutover planned for Q4/2014 2013 INVESTOR DAY 25#63. Ongoing Focus on Revenue Optimization Implementation of customer centricity system • Customer Database: 360°Integrated View Of the Customer Strategic Benefits CRM platform: Targeted Campaign Management Ability to fully understand customers' experience with AC and act upon it Recovery, retention, re-acquisition • Modeling of Customer Lifetime Value Extract max value from customers - • Sophisticated segmentation - Allows us to strategically develop products, services and communications differently for different customer segments Advanced Analytics: Segmentation, ROI, Customer Insights Tactical Benefits • Optimized marketing offers Maximize efficiency and ROI Improvement measurement Personalization • Customer engagement Relevant offers and messaging Timely customer recovery • New channels for traffic stimulation, yield improvement Increased competitiveness 2013 INVESTOR DAY 26#64Ongoing Focus on Revenue Optimization AIR CANADA ALTITUDE AIR CANADA ALTITUDE AIR CANADA A CANADA AIR CANADA ALTITUDE ALTITUDE AIR CANADA ALTITUDE ALTITUDE ELITE Altitude membership cards AIR CANADA MY ALTITUDE ALTITUDE ABOUT ALTITUDE eUpgrades to Executive First The Aude Experience A CANADA ALTITUDE Air Canada Altitude & Star Alliance Frankfurt Maple Leaf Lounge Desings FC Ma altitude.aircanada.com Air Canada launched Altitude on March 1, 2013, a new brand for the program which recognizes & rewards our most frequent flyers Two new status levels were introduced, for a total of five: - - Altitude Prestige 25K Altitude Elite 35K Altitude Elite 50K (new) Altitude Elite 75K (new) Altitude Super Elite 100K Long time members are also recognized through the Altitude Million Mile program Altitude offers members a range of privileges, such as upgrades, lounge access, priority reservation & airport services, recognition across the Star Alliance network and threshold gifts, depending on the status reached Altitude members are also Aeroplan members, and benefit from Air Canada's partnership with Canada's premier coalition loyalty program 2013 INVESTOR DAY 27#65The Path Forward 2014 AND BEYOND 2013 INVESTOR DAY 28#66System Capacity Growth Directed at Higher Margin International Flying ASMS (billions) 80 70 0 60 50 50 2013 INVESTOR DAY +1.2% +4.7% +1.5% to 2.5% +9.0% to 11.0% 2010 2011 2012 2013E 2014E 29#67The Air Canada INC. Widebody Fleet Plan Calls for Growth Mainline Boeing 787 Boeing 777-300 Boeing 777-200 Boeing 767-300 Airbus A330-300 Airbus A321 Airbus A320 Airbus A319 EMBRAER 190 EMBRAER 175 Total Mainline Air Canada rouge™ Boeing 767-300 Dec 2012 Dec 2013 Planned Fleet Dec 2014 Dec 2015 12 41 WE ∞ w 30 10 16282 27 21 10 41 38 30 13 45 45 45 12 17 22 6 7 % 27% F 7 17 17 8 10 10 41 262834 45 41 8 15 . . 205 183 168 164 2 8 12 Airbus A319 8 25 30 Total Air Canada rouge™ 10 33 42 Combined total fleet 205 193 201 206 2013 INVESTOR DAY 30 30#68Larger Size of the Aircraft Reduces Unit Cost expres express CRJ to Q400 and 75 seat jets AIR CANADA One family of new technology / low unit cost narrowbody equipment Cost per Seat 2013 INVESTOR DAY New generation aircraft offer seat cost improvement at similar trip cost Cost per Trip AIR CANADA ( AIR CANADA AIR CANADA 763/333 to -777/787 31#69Building a Resilient Network & Fleet for the Future 2013 INVESTOR DAY Grow Revenues • Expand the profitable international network • Become a serious player in the USA sixth freedom market • Position Toronto Pearson (YYZ) as a global hub • Leverage Air Canada rouge in leisure markets • Enhance premium revenues through new products such as Premium Economy and Economy Plus • Optimize aircraft configurations to improve overall profitability Reduce Unit Costs • Simplify fleet to fewer types to improve commonality Focus on reducing seat cost and frequency to improve overall network cost 32#70AIR CANADA 2013 INVESTOR DAY June 10, 2013 Sheraton Gateway Hotel Toronto International Airport Terminal 3 A STAR ALLIANCE MEMBER#71Focused on Improving On-Time Performance, Reliability, Customer Service and Sustainable Profitability Klaus Goersch Executive Vice President & Chief Operating Officer 2013 INVESTOR DAY 2#72Our Objectives • Safety is foundational in everything we do Improve operational statistics to be in the top quartile of North American Major Carriers • Reduce operating expense Redesign the organizational structure to reduce layers Renegotiate contracts with major maintenance vendors and OEMs 2013 INVESTOR DAY 3#73SAFETY 4#74Safety • Safety is foundational - - Strong reporting culture and with tools and processes to validate data Renewal of IOSA registration, "no findings; no observations" for 5th consecutive time • Safe operations through strong SOPS - - Reduction in employee injuries and ground damage to aircraft and other equipment • Occupational safety and health of employees Reduction in on-the-job injuries and lost time through back injury prevention programs - Engaged with WCBs to design safety programs 2013 INVESTOR DAY 5#75IMPROVING OPERATING PERFORMANCE 734#76Circle of Life for a Flight Improved start up Improved aircraft readiness Improved Efficiency Fewer cancelled flights 2013 INVESTOR DAY Reliable MTC activity Improved departures Improved arrivals Improved baggage delivery 7#77On Time Performance Initiatives Boarding pass checks Detailed roadmaps for each branch • Renewed focus on start up Realigned Station resources • "Work Together" program Updated block time calculation methodology • Reduced minimum turnaround time . Making more aircraft available to fly the schedule 2013 INVESTOR DAY ထ 8#78Improving Operational Statistics On-time Performance in Past 13 Months Success Rate 2013 INVESTOR DAY 100% 90% 80% 70% 60% 50% 40% 30% May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Departures Arrivals Start-Up Departures 9#792013 INVESTOR DAY 150 200 250 300 May-12 Jun-12 350 100.0% 99.0% 98.0% 97.0% 96.0% 95.0% 94.0% 93.0% 92.0% May-12 Jun-12 Jul-12 Flight Completion Other Performance Measures Improving Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Aircraft Defects (Daily Average) Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Aircraft Defects (Daily Average) Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Apr-13 May-13 10.0 9.0 8.0 7.0 6.0 50 4.0 8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 May-12 Jun-12 Jul-12 Aug-12 Unserviceable Aircraft for Start-Up Sep-12 Oct-12 Unserviceable Aircraft for Start-Up Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Passengers Arriving Without Bags (per 1000 passengers) May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 -Passengers Arriving Without Bags (per 1000 passengers) Feb-13 Mar-13 Apr-13 May-13 Apr-13 May-13 10#80Moving Forward We are on Track 90% 85% 80% 75% 70% 65% 60% Arrival Performance Targets 55% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec A+14 Target A+14 Actual Arrival targets for the remainder of the year continue to be aggressive aiming for the 1st quartile 2013 INVESTOR DAY 11#81Strong Performance Against Industry Arrivals @14 ACM 87.0% 9E WS 84.1% ACM 89.4% ACM 87.8% FL Arrivals @14 93.2% DL - Apr 19 Apr 25 Apr 26 - May 02 May 03 - May 09 May 10 - May 16 May 17 - May 23 May 24 - May 30 Arrivals @14 Arrivals @14 91.5% OO Arrivals @14 84.8% DL Arrivals @14 LEGEND 89.2% 9E - Pinnacle Airlines 88.3% 9E 88.5% ACM 84.6% ACM 88.9% - AA American Airlines 00 83.5% DL 87.6% WS 87.3% FL 88.1% WS 82.1% FL 88.8% ACM AC Mainline - DL 82.7% UA 86.0% DL 87.1% US 87.4% US 77.3% WS 85.3% - B6 JetBlue Airways 9E 80.7% 00 85.7% 9E 85.7% 00 85.0% DL 77.2% B6 84.6% - DL Delta Air Lines FL 76.3% B6 85.5% 00 82.8% ACM 83.1% UA 76.0% US 83.5% - EV Express Jet US 73.9% US 84.8% US 81.7% UA 82.2% 9E 74.9% 00 82.5% FL - AirTran UA 73.4% AA 84.0% UA 81.1% B6 82.1% B6 73.3% UA 80.3% MQ American Eagle AA 73.4% MQ 83.1% AA 81.0% AA 80.4% FL 69.7% 9E 79.9% EV 70.5% FL 81.3% B6 78.6% WS 78.9% AA 68.8% EV 78.6% UA 00- SkyWest Airlines United Airlines MQ 66.1% WS 80.9% EV 78.5% EV 78.2% EV 67.2% AA 75.3% US US Airways B6 58.3% EV 77.6% MQ 76.1% MQ 75.6% MQ 63.2% MQ 68.8% - WS WestJet Data Source: FlightStats North American Operations exclude Mexico and Caribbean 2013 INVESTOR DAY 12#82AIR AIR CANADA ③ Aide à l'enregistrement Check-in Assistance STAR ALLIANCE AIR CANADA Aide à l'enregistrement Check-in Assistance STAR ALLIANCE AIR CANADA Aide à l'enregistrement Check-in Assistance STAR ALLIANCE AIR CANADA Aide à l'enregistrement Check-in Assistance STAR ALLIANCE R CANADA REDUCING OPERATING EXPENSE AND IMPROVING CUSTOMER EXPERIENCE AIR CAN Aide à l'en Check- STAR ALLIA STAR ALLIANCE 13#83Reduce Operating Expenses and Improve Productivity • Improve crew and aircraft scheduling parameters to enhance crew productivity • Several maintenance initiatives underway to improve aircraft reliability and to reduce out-of- service costs and customer interrupted trip cost Applied to Transport Canada to change the flight attendant ratio from 1:40 passengers to 1:50 seats 2013 INVESTOR DAY 14#84Reduce Operating Expenses and Improve Productivity New fuel initiatives to reduce consumption - - In collaboration with IBM, Watson and Simon, new route optimization that is estimated to reduce 6M kilos of fuel annually, or about $7M Increased engine compressor washes estimated to save 4.6M kilos of fuel or about $5M Flight re-dispatch, contingency fuel and over fueling initiatives estimated to reduce consumption by 1.7M kilos per year, or about $2M Transitioning to a new lighter paint to reduce aircraft weight by about 500 - 800 kilos per wide body aircraft 2013 INVESTOR DAY 15#85Reduce Operating Expenses and Improve Productivity We have negotiated new, more cost effective maintenance component contracts for our entire fleet • Currently in negotiation with providers to further reduce our engine maintenance cost and enter into a long term power by the hour program for the majority of our fleet Reevaluating our crew optimization software to improve crew efficiencies and cost reductions We have introduced new maintenance planning software to improve maintenance forecasting and streamline our supply chain 2013 INVESTOR DAY 16#86Reduce Operating Expenses and Improve Productivity • Flattened the organization by eliminating a senior vice president in operations • Streamlined reporting lines • Consolidated crew scheduling into one department Continuing to review the organization to further eliminate duplication and gain further efficiencies throughout the organization 2013 INVESTOR DAY 17#87Improving the Customer Experience • Improvements in on-time performance and reliability Streamlining the boarding process Improved international connections through our major hubs by not having to re-claim luggage Improving our on-board offerings and consistency of service especially on our long haul international flights 2013 INVESTOR DAY 18#88Our Path Forward Operational excellence Engaged employees Deliver the best product and drive lower cost 10 CAFE 19#89AIR CANADA 2013 INVESTOR DAY June 10, 2013 Sheraton Gateway Hotel Toronto International Airport Terminal 3 A STAR ALLIANCE MEMBER#90Focused on Improving ROIC and Sustainable Profitability Michael Rousseau Executive Vice President & Chief Financial Officer 2013 INVESTOR DAY AIR CANADA 2#91Our Objectives • EBITDAR, adjusted net income and ROIC improvement Execute strategic initiatives . - - Lower cost structure - Targeted deployment of growth capital Stronger balance sheet - Lower risk profile 1 New financing arrangements • Create shareholder value - Increase earnings and ROIC leading to a higher multiple and lower risk profile 2013 INVESTOR DAY 3#92LOWER COST STRUCTURE Air Canada rouge Lower CASM expected due to increased number of seats, lower flight and cabin crew wages, competitive work rules and lower overhead costs A319 CASM reduction* 2013 INVESTOR DAY -21% Boeing 767 CASM reduction* Mainline Air Canada rouge Mainline -29% Air Canada rouge * Estimates 4#93LOWER COST STRUCTURE Boeing 787s and 777s • Boeing 787 CASM reduction expected due to improved fuel efficiency, lower maintenance costs and increased number of seats Boeing 777 CASM reduction expected due to increased number of seats Fuel and Maintenance CASM reduction* New Boeing 777s CASM reduction* -29% Boeing 763 Boeing 787 2013 INVESTOR DAY -21% Boeing 773 (349 seats) Boeing 77P (458 seats) * Estimates 5#94LOWER COST STRUCTURE Transfer of Embraer 175 Aircraft to Lower Cost Regional Provider Embraer 175 CASM reduction expected due to lower wages and benefits and lower net overhead Embraer 175 CASM reduction* -11% 2013 INVESTOR DAY Mainline Sky Regional * Estimates 6#95LOWER COST STRUCTURE Realizing Significant Cost Savings Through New Maintenance Agreements C$ (millions) 681 143 -7% 94 632 2011 Maintenance Annual benefits Volume & other 2013 Forecast factors expense 2013 INVESTOR DAY Annual benefits of $143M represent the value of pre- and post-Aveos rates • Expected revenue benefits of increased aircraft availability from improved turnaround times is estimated at $100M over the 2013-2016 period • Additional annual depreciation savings of $40M - incorporated in guidance 7#96LOWER COST STRUCTURE 1:50 Flight Attendant Rule $19M Expected Savings $10M Mainline narrowbody Air Canada aircraft rouge • Proposed change to go to 1:50 seats rather than 1:40 passengers • Expected savings of $19M at mainline narrowbody - Full impact at mainline in 2014 • Expected savings of $10M at Air Canada rouge - Impact at Air Canada rouge when it reaches 50 aircraft 2013 INVESTOR DAY 8#97Other Strategic Initiatives LOWER COST STRUCTURE • Air Canada is aggressively pursuing its claim for a meaningful reduction in the mark-up rate under the Jazz CPA - Arbitrator's decision is expected by the end of 2013 • Procurement initiatives - Since mid-2010, achieved annual savings of 12%, representing $70M per year on a run-rate basis Spend areas being addressed include marketing & communications, global airside services and IT end-user services 2013 INVESTOR DAY 6#98Other Strategic Initiatives cont'd LOWER COST STRUCTURE • Business transformation initiatives - Expected run-rate benefits of $55M to $75M annually Initiatives include: - - 1 Improving productivity in Call Centres - Enhancing supply chain & maintenance planning processes - Maximizing check-in automation and streamline gate processes Employing better processes involved in turnaround of aircraft and increase asset utilization - Lowering fuel consumption 2013 INVESTOR DAY 10 10#99Lower Cost Structure • If implemented today, cost reduction initiatives would be expected to decrease CASM by an estimated 15% Cents CDN -15% 17.5 17.0 16.5 16.0 15.5 15.0 14.5 14.0 13.5 1.5 1.0 0.5 0.0 2012 AC CASM High-density Boeing 777 Boeing 787's Air Canada rouge Other 2013 INVESTOR DAY Expected AC CASM* Assumes that all other cost drivers remain at 2012 levels 11#100Tactical Approach to Cost Reduction Implemented a $50M cost reduction program to support earnings growth in short term - 1 - Company-wide hiring freeze Manpower cost reductions promoting undertime providing leave of absences • maintaining strict control on overtime Termination of consultant arrangements Reductions negotiated with key suppliers Further improvements being identified for Q3 and Q4 crew complements • peak December capacity • aircraft maintenance requirements 2013 INVESTOR DAY 12 12#101Targeting Return on Invested Capital to Exceed Cost of Capital 7.7% 2012 actual 10-13% Roadmap ● Increase return on invested capital through strategic investments in aircraft and technology, lower CASM and debt reduction • Reduce weighted average cost of capital 2015 objective - - 9.6% (pre-tax) - 7.6% (after tax) Return is calculated based on adjusted net income, excluding interest expense and implied interest on off-balance-sheet aircraft operating leases. Invested capital includes average long-term debt, average finance lease obligations, market capitalization and off-balance-sheet aircraft operating leases. 2013 INVESTOR DAY 13#102STRONGER BALANCE SHEET Stronger Balance Sheet Our Objectives • Maintain at least $1.7B in unrestricted cash • Reduce net debt • Eliminate defined benefit pension plan deficit 2013 INVESTOR DAY 14#103STRONGER BALANCE SHEET Maintaining Strong Liquidity Position Liquidity position well above target minimum level of $1.7B C$ (billions) 1.4 1.2 1.0 2.2 2.1 2.0 % of trailing 2007 2008 2009 2010 2011 2012 12-month 12% 9% 14% 20% 18% 17% operating revenues 2013 INVESTOR DAY 15#104STRONGER BALANCE SHEET Solid Progress on Net Debt Reduction • Reduction accomplished through free cash flow C$ (millions) 5,460 Adjusted net debt down almost $1.5B from 2009 4,874 4,576 4,137 3,987 Dec 31 2011 Dec 31 2012 Mar 31 2013 2013 INVESTOR DAY Dec 31 2009 Dec 31 2010 Operating leases have been capitalized using 7x aircraft rent expense 16#105STRONGER BALANCE SHEET Managing Financial Leverage Net debt to EBITDAR ratio* (Number of times) 4.1 6.8 8.0 3.5 3.7 3.1 Target ceiling 3.5 times. 2007 2008 2009 2010 2011 2012 *Reflects adjusted net debt to trailing 12-month normalized EBITDAR ratio 2013 INVESTOR DAY 17#106STRONGER BALANCE SHEET Schedule of Principal Repayment on Debt is Manageable C$ (millions) 412 361 485 ROY 2013 Assumes potential refinancing 2014 Includes principal repayments from EETC financing 2015 U.S. dollar amounts are converted using the March 31, 2013 closing rate of CDN $1.016 2013 INVESTOR DAY 18#107Concrete Actions Taken to Reduce Pension Deficit and Manage Future Risk Profile • Elimination of 90% of company sponsored defined benefit pension plan accruals for new hires • Benefit changes to all defined benefit pension plans. resulting in approximately $1.1B reduction in solvency. liabilities based on January 1, 2012 actuarial valuations (subject to OSFI approval) • New funding relief to January 30, 2021 agreed to with the Government of Canada, subject to the adoption of enabling regulations STRONGER BALANCE SHEET 2013 INVESTOR DAY 19#108Concrete Actions Taken to Reduce Pension Deficit and Manage Future Risk Profile Interest Rate Sensitivity • Discount rate of 3.0% at January 1, 2013, compared to 4.5% at five years previous and 6.2% at ten years previous • Increase of 1% in discount rate causes a decrease of $2.0B in solvency liabilities STRONGER BALANCE SHEET 2013 INVESTOR DAY 20 20#109STRONGER BALANCE SHEET Assuming Funding Relief Adopted, Plausible Conditions (discount rate, return on assets) Could Have Solvency Deficit Eliminated No Later Than 2020 $4.0 $3.0 $2.0 $1.0 - - - Reflects funding relief to end of 2020 Assumed return on asset of 6.7% per year Assumed discount rate of 3.0% on January 1, 2013 increasing to 3.3% over the long-term Estimated Pension Unfunded Liability in ($B) on solvency basis on January 1 2014 2015 2016 2017 2018 2019 2020 2021 Note: Actual results will be dependent on a number of factors, including the assumptions used, plan demographics, plan provisions, pension legislation and changes in economic conditions, particularly asset returns and interest rates. See Air Canada's 2012 and Q1 2013 MD&As for additional information. $0.0 2013 ($1.0) ($2.0) 2013 INVESTOR DAY Without Benefit Reduction With Benefit Reduction 21 24#110STRONGER BALANCE SHEET Pension - Solvency Position Update C$ (millions) Estimated solvency deficit at January 1, 2013 Interest on deficit + solvency incremental cost Past service contributions - YTD May 31, 2013 Estimated impact of economic factors to May 31, 2013 21 bps increase in solvency discount rate Solvency Deficit $3,660 110 (90) (450) Return above assumption (2013 year-to-date estimated return of 5.6% before expenses) (470) Estimated solvency deficit as at May 31, 2013 $2,760 Estimated solvency deficit including $1.1B solvency liabilities reduction* $1,660 * Estimated reduction in solvency liabilities from benefit reductions based on January 1, 2012 assumptions; subject to OSFI's approval 2013 INVESTOR DAY 22#111New Financing Arrangements STRONGER BALANCE SHEET Implementation of Cape Town Convention (CTC) in Canada provides: - - New and attractive source of aircraft financing in the U.S. markets Level playing field with U.S. airlines Successfully concluded a private offering of enhanced trust certificates (EETCS), which relies on CTC, to finance five new Boeing 777-300ER aircraft 2013 INVESTOR DAY 23 23#112New Financing Arrangements cont'd . Offering comprised of three tranches of certificates (with the A tranche rated investment grade) with a combined face value of US$715M and blended coupon rate for all tranches of 4.7% for a maximum term of 12 years • Positive development for the financing of Air Canada's upcoming Boeing 787 aircraft deliveries as more financing alternatives overall should lead to more favourable terms STRONGER BALANCE SHEET 2013 INVESTOR DAY 24 24#113Roadmap to Sustained Profitability and Investor Value Proposition • Execute strategic and tactical initiatives to reduce CASM . • Strengthen balance sheet and reduce overall risk profile by aggressively managing leverage • Increase return on invested capital through significant investment in new aircraft, technology, lower CASM and debt reduction • Strong brand, extensive worldwide network and partnerships, and award-winning service 2013 INVESTOR DAY 25 25