Investor Presentaiton

- 17 - would like to pay, or not. Examples of "à la carte" options include, checked baggage, advance seat assignment, Aeroplan miles, Maple Leaf lounge access, among others. Air Canada is the only major international carrier that allows this degree of customization and Air Canada is planning to continue to introduce new and innovative attributes on its "à la carte" menu. Since its inception on October 28, 2006, 13% of customers purchasing through the Air Canada website took advantage of the "à la carte" offerings. The "à la carte" options generate higher incidental revenues and higher customer satisfaction resulting in brand preference. High Degree of Web-Penetration All three offerings, "passes", "subscription" and "à la carte" options, are available on Air Canada websites. This strategy has generated a higher level of web-penetration. During 2006, Air Canada enjoyed an average system-wide web-penetration of 26% while web penetration in Canada reached 52%. Domestic web penetration for the fourth quarter of 2006 was 57% and the year was capped with a 61% domestic web penetration figure for the month of December 2006. Air Canada domestic direct sales (www.aircanada.com and call centres) for the fourth quarter of 2006 was 69%. Transborder web penetration for the fourth quarter of 2006 was 30%, an increase of six percentage points from the fourth quarter of 2005. Air Canada believes that the growth in direct sales is due in part to the fact that these new and unique products that Air Canada's customers desire can only be found through Air Canada's websites and call centres. Air Canada maintains two websites, one for non-travel agent customers and the other for travel agencies. Both websites offer the same unique products. The growth in web penetration continues to allow Air Canada to reduce its distribution costs. In addition, Air Canada's customers continue to benefit from the ability to check into Air Canada flights departing from any Canadian city and from select U.S. and international cities to Canada 24 hours prior to departure by using the web check-in facility provided on the Air Canada website. Air Canada believes this additional feature results in improved customer satisfaction and generates cost savings for Air Canada. Potential for International Route Expansion Air Canada believes that Canada's multi-ethnic demography provides Air Canada with growing demand for international travel. Coupled with the large number of unused route authorities, Air Canada believes it is well poised for growth in the Canada-international market. Air Canada expects to expand its existing services to international destinations, including leveraging capacity growth using the Star Alliance network, and serve new international destinations in order to benefit from the higher margins available in international markets. Multi-hub Strategy and Seamless Transfers at Toronto Air Canada uses three main hubs (Toronto, Montreal and Vancouver) across Canada for its domestic, transborder and international routes. Being geographically well positioned, Air Canada believes that all three hubs provide natural advantages to serve customers traveling to or from the U.S to Asia and Europe. Since the opening on January 30, 2007 of the latest development at Toronto Pearson Airport, Air Canada operates all its transborder flights from Terminal 1. This provides Air Canada with the ability to more seamlessly transfer passengers to and from the U.S. to Europe and Asia. This is a major improvement from the prior challenges of checking out of Terminal 2 and checking into Terminal 1 or vice-versa. Air Canada's Toronto operations are now consolidated in one terminal, in one of North America's newest and most convenient facilities from which to travel internationally. Enhance its Product Offering through a Redesigned Network and a Renewed Fleet Within North America, Air Canada adopted a demand-based network strategy. This resulted in offering improved frequencies on key routes, maintaining competitive frequencies on other routes and introducing new non-stop routes thus serving its customers to destinations where such demand was expected. Air Canada is achieving its network redesign in the North American market through the increased use of large regional jet aircraft which have lower trip costs than conventional narrow-body aircraft. In order to support the expansion of its international operations and deliver a superior aircraft product in the international market to and from Canada, Air Canada expects to start receiving 19 Boeing 777 aircraft, beginning in March 2007, and 14 Boeing 787 aircraft, beginning in 2010. The new aircraft will be used to modernize and re-size the fleet, improve passenger load factors and yields, reduce operating costs through fuel efficiencies and are expected to provide Air Canada with the ability to serve new markets that could not be previously served in an efficient manner.

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