MONTREAL, July 28 /CNW Telbec/ - Air Canada has concluded a Memorandum of
Understanding (MOU) with Jazz Air LP (Jazz) to modify the terms and conditions
of their Capacity Purchase Agreement (CPA), effective August 1, 2009. The CPA
Amendments are subject to Air Canada securing new financing in a minimum
amount of $600 million and certain other conditions.
    "The participation of important suppliers and partners such as Jazz is
key to the successful execution of the significant cost reduction program
needed for Air Canada to achieve sustainable profitability," said Calin
Rovinescu, President and CEO of Air Canada. "The CPA Amendments will provide
us with reduced capacity purchase costs that are more consistent with market
realities and will allow us to enjoy greater flexibility in our fleet
deployment. This mutually beneficial agreement with Jazz is an important step
in the restructuring of our business to reflect the new revenue and yield
environment."

    Highlights of the revised agreement include:- A reduction in the mark-up rate paid to Jazz on the first 375,000 block
      hours of flying from 16.7 per cent to 12.5 per cent and to 5 per cent
      on block hours above 375,000.
    - A reduction in Air Canada's commitment to Jazz's minimum fleet from 133
      to 125 aircraft.
    - A contract term extension of five years (Jan 1, 2016 - Dec 31, 2020),
      during which the rates will be subject to a benchmarking review.
    - A commitment to work together on Jazz's turboprop fleet renewal
      strategy over the term of the contract.Accordingly, the amendments are expected to provide Air Canada with
significantly reduced capacity purchase costs for the Jazz network feed over
the term of the contract, as extended.

    CAUTION REGARDING FORWARD-LOOKING INFORMATION

    Air Canada's public communications may include written or oral
forward-looking statements within the meaning of applicable securities laws.
Forward-looking statements, by their nature, are based on assumptions and are
subject to important risks and uncertainties. Any forecasts or forward-looking
predictions or 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, currency exchange and
interest rates, employee and labour relations, competition, war, terrorist
acts, epidemic diseases, 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 Air
Canada's public disclosure file available at www.sedar.com. The
forward-looking statements contained in this news release represent Air
Canada's expectations as of the date of this news release 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.
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