Mr. Calin Rovinescu reports

AIR CANADA ESTABLISHES NEW TARGETS FOR 2018-2020 AND PROVIDES UPDATE ON ITS LOYALTY BUSINESS

Air Canada will set new financial targets at its 2017 investor day to be held today in Toronto from 8:30 a.m. to 11:30 a.m. Eastern Time.

From 2018 until 2020, Air Canada is targeting an annual EBITDAR margin (earnings before interest, taxes, depreciation, amortization, impairment and aircraft rent, as a percentage of operating revenue) of 17 to 20 per cent and an annual return on invested capital (ROIC) of 13 to 16 per cent. Air Canada is also projecting cumulative free cash flow of $2-billion to $3-billion over the same period and a leverage ratio of 1.2 (measured by adjusted net debt over EBITDAR) by the end of 2020.

"We have made significant progress in executing our business plan over the last several years, as evidenced by our share price appreciation of approximately 3,000 per cent since early 2009," said Calin Rovinescu, president and chief executive officer of Air Canada.

"As our business strategy continues to evolve, we have expanded margins, increased adjusted net income and improved our return on invested capital. We have strengthened the balance sheet and improved our competitive position. We have significantly reduced the company's overall risk profile by aggressively managing our financial leverage and effectively transforming our pension plans from a large deficit to a significant surplus position. We have also built tremendous flexibility into our fleet, allowing us to effectively react to different economic environments and avail ourselves of more opportunities.

"Having achieved all of this, we are now ready to take it to a next level, building on this positive momentum with more ambitious objectives, which reflect our confidence in our strategic plan. Our business strategy that has yielded the success it has is centred on four core priorities and they remain: leveraging our international network, reducing costs and enhancing revenues, engaging our customers, and fostering a positive culture within our work force.

"We see many opportunities ahead, including the introduction of more efficient narrow-body aircraft into the mainline fleet, incremental benefits from our amended and extended capacity purchase agreement with Jazz and from the planned launch of our own loyalty program in 2020. In this respect, we are today initiating a comprehensive request for proposal (RFP) for a co-branded credit card partner and will be inviting key financial institutions to participate. We expect the net present value of the loyalty program over a 15-year period to range between $2-billion and $2.5-billion. We also anticipate realizing benefits from our investments in new technology, including a new passenger services system scheduled to deploy in 2019, and we continue to invest in tools and training for employees to better serve our customers," concluded Mr. Rovinescu.

The estimated NPV (net present value) of the loyalty program of $2-billion to $2.5-billion over a 15-year period is on a pretax basis, assumes the current regulatory environment remains unchanged and is calculated using a discount rate that approximates Air Canada's weighted average cost of capital of 7.6 per cent.

Attendance at Air Canada's 2017 investor day is by invitation only. A live, listen-only audio webcast of the event, along with accompanying presentation slides will be available through a link on Air Canada's website.

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