Ms. Isabelle Arthur reports

AIR CANADA LAUNCHES TENDER OFFERS AND CONSENT SOLICITATIONS FOR ITS 9.250% SENIOR SECURED NOTES DUE 2015, 10.125% SENIOR SECURED NOTES DUE 2015, AND 12.000% SENIOR SECOND LIEN NOTES DUE 2016

Air Canada has launched cash tender offers for any and all of its 9.250-per-cent senior secured notes due 2015, 10.125-per-cent senior secured notes due 2015 and 12.000-per-cent senior second-lien notes due 2016 for cash consideration per $1,000 (U.S.) or $1,000 (Canadian) principal amount, as applicable, set forth next to the corresponding series of notes in the attached table. These offers consist of three separate offers, one for each series of notes listed herein. In connection with the offers, Air Canada is also soliciting consents to amend the notes and the respective indentures that govern them to eliminate most of the restrictive covenants and certain events of default contained in the indentures to release all of the collateral securing the notes. The offers and the consent solicitations are being made pursuant to an offer to purchase and consent solicitations statement, dated June 14, 2013, and related letters of transmittal and consent, each dated June 14, 2013.

Information related to the notes, the offers and the consent solicitations is listed in the attached table. The offer materials more fully set forth the terms and conditions of the offers and the consent solicitations.

                               NOTES, OFFERS AND CONSENT SOLICITATIONS

Description of notes                                    Cusip (144A/Reg S)          ISIN       Outstanding
                                                                                                 principal
                                                                                                    amount

9.250% senior secured notes due 2015      008911AK5/C01026AV2USC01026AV28/  US008911AK56  U.S.$600,000,000
10.125% senior secured notes due 2015     008911AM1/008911AN9CA008911AM15/  CA008911AN97   Cdn$300,000,000
12.000% senior second-lien notes due 2016 008911AP4/C01026AW0USC01026AW01/  US008911AP44  U.S.$200,000,000

Description of notes                       Tender offer              Early tender                    Total
                                       consideration (1)               premium (1)     consideration (1, 2)

9.250% senior secured notes due 2015      U.S.$1,020.70                U.S.$30.00            U.S.$1,050.70
10.125% senior secured notes due 2015      Cdn$1,025.25                 Cdn$30.00             Cdn$1,055.25
12.000% senior second-lien notes due 2016 U.S.$1,067.20                U.S.$30.00            U.S.$1,097.20

(1) Per $1,000 (U.S.) principal amount of U.S.-dollar senior secured notes and U.S.-dollar second-lien 
notes or $1,000 (Canadian) principal amount of Canadian-dollar senior secured notes, as applicable.
(2) Includes the early tender premium.   

Holders who validly tender (and do not validly withdraw) their notes and validly deliver (and do not validly revoke) their consents on June 27, 2013, at or prior to 5 p.m. (New York time), unless extended or earlier terminated, will be eligible to receive $1,050.70 (U.S.), $1,055.25 (Canadian) and $1,097.20 (U.S.) per $1,000 (U.S.) or $1,000 (Canadian) principal amount, as applicable, of U.S.-dollar senior secured notes, Canadian-dollar senior secured notes and U.S.-dollar second-lien notes, respectively, if such notes are accepted for purchase. The total consideration includes an early tender payment of $30 (U.S.) or $30 (Canadian) per $1,000 (U.S.) or $1,000 (Canadian) principal amount, as applicable, of notes.

As described more fully in the statement, the total consideration with respect to the senior secured notes was determined with consideration given to Air Canada's right to redeem 10 per cent of the original principal balance of each series of such notes at 103 per cent of the principal amount thereof and Air Canada's right to redeem the balance of such notes at a redemption price of, beginning Aug. 1, 2013, 104.625 per cent of the principal amount thereof in the case of the U.S.-dollar senior secured notes and 105.063 per cent of the principal amount thereof in the case of the Canadian-dollar senior secured notes. Air Canada currently intends to redeem any senior secured notes that remain outstanding following the consummation of the offers as part of an exercise of its satisfaction and discharge rights under the indenture governing the senior secured notes pursuant to a 10-per-cent redemption, with any remaining outstanding balance of such notes to be redeemed pursuant to a senior secured notes early redemption at the applicable Aug. 1, 2013, redemption prices. Similarly, Air Canada intends to redeem any U.S.-dollar second-lien notes that remain outstanding following the consummation of the offers as part of an exercise of its satisfaction and discharge rights under the indenture governing the U.S.-dollar second-lien notes at a redemption price of 109 per cent of the principal amount thereof.

The offers and consent solicitations will expire on July 12, 2013, at 11:59 p.m. (New York time), unless extended or earlier terminated.

Holders who validly tender (and do not validly withdraw) their notes and deliver (and do not validly revoke) their consents after the early tender deadline, but on or before the expiration time, will receive $1,020.70 (U.S.), $1,025.25 (Canadian) and $1,067.20 (U.S.) per $1,000 (U.S.) or $1,000 (Canadian) principal amount, as applicable, of U.S.-dollar senior secured notes, Canadian-dollar senior secured notes and U.S.-dollar second-lien notes, respectively, if such notes are accepted for purchase.

Upon the terms and conditions described in the offer materials, payment for notes accepted for purchase will be made: (a) with respect to notes validly tendered and not validly withdrawn at or prior to the early tender deadline, on any date, at the company's sole option, between the early tender deadline and the expiration time (which payment date is currently expected to be July 3, 2013), and (b) with respect to notes validly tendered after the early tender deadline but at or prior the expiration time, promptly after the expiration time. Holders whose tendered notes are accepted for purchase also will receive accrued and unpaid interest from the most recent interest payment date for the notes, to, but not including, the applicable payment date for the notes in the offers.

The offers and consent solicitations are part of an anticipated refinancing of Air Canada's outstanding indebtedness and are subject to the satisfaction or waiver of certain conditions, including a financing condition and general conditions. The offers are not conditioned upon receipt of the requisite consents with respect to the proposed amendments. With respect to each offer and consent solicitation, if any conditions to such offer and consent solicitation are not satisfied, Air Canada is not obligated to accept for payment, purchase or pay for, and may delay the acceptance for payment of, any tendered notes in respect of such offer and consent solicitation, and may even terminate or withdraw the offer and consent solicitation.

Consents in respect of at least a majority in aggregate principal amount of the outstanding U.S.-dollar senior secured notes and Canadian-dollar senior secured notes (voting together as a single class) are required to approve the proposed indenture amendments under the indenture governing the senior secured notes, and consents in respect of at least a majority in aggregate principal amount of the outstanding U.S.-dollar second-lien notes are required to approve the proposed indenture amendments under the indenture governing the U.S.-dollar second-lien notes. Consents in respect of at least 75 per cent in aggregate principal amount of the outstanding U.S.-dollar senior secured notes and Canadian-dollar senior secured notes (voting together as a single class) are required to approve the proposed collateral release amendments under the indenture governing the senior secured notes, and consents in respect of at least 75 per cent in aggregate principal amount of the outstanding U.S.-dollar second-lien notes are required to approve the proposed collateral release amendments under the indenture governing the U.S.-dollar second-lien notes.

Holders may not tender their notes without delivering their consents pursuant to the consent solicitations and may not deliver consents without tendering their notes pursuant to the offers, and holders are not permitted to revoke a consent validly without validly withdrawing the previously tendered notes to which the consent relates. Notes tendered can only be withdrawn, and related consents revoked, before June 27, 2013, at 5 p.m. (New York time), unless extended or earlier terminated, except in certain limited circumstances where additional withdrawal rights are required by law.

The complete terms and conditions of the offers and consent solicitations are described in the offer materials, copies of which may be obtained by contacting Global Bondholder Services Corp., the information agent for the offers, and related consent solicitations with respect to the U.S.-dollar senior secured notes and U.S.-dollar second-lien notes at 866-794-2200 (United States toll-free) or 212-430-3774, or by contacting CST Phoenix Advisors, the information agent for the offer, and related consent solicitation with respect to the Canadian-dollar senior secured notes at 800-332-6309 (North America toll-free) or 201-806-2222 (collect calls). Air Canada has engaged Citigroup Global Markets Inc. to serve as dealer manager and solicitation agent for the offers and consent solicitations. Questions concerning the offers and consent solicitations should be directed to Citigroup Global Markets at 800-558-3745 (toll-free) or 212-723-6106.

We seek Safe Harbor.