Air Canada Creates New Aeroplan Division

Air Canada announced today that it has reorganized its Aeroplan frequent flyer unit as a new Division dedicated to fully developing Aeroplan's potential and realizing its true value as an international leader in customer loyalty management.

``The new Division will focus on leveraging the program's enormous potential through dedicated management and staff resources,'' said Calin Rovinescu, Executive Vice President Corporate Development and Strategy. ``Our objective is to structure Aeroplan in a more efficient and focused manner in order to further improve the quality of the program's customer service levels and incentives and to increase and further leverage our commercial partnerships.''

The creation of the new Aeroplan Division is the first of several new business ventures Air Canada is undertaking as part of its strategy to create new profit centres within the Corporation and to enhance shareholder value.

With this objective in mind, Air Canada will review the merits of establishing a separate corporate entity and of launching an Initial Public Offering for Aeroplan in the future. In case of an Initial Public Offering, Air Canada would retain the majority ownership and control of the company.

The new Division will be led by Rupert Duchesne, most recently Chief Integration Executive, Air Canada and Canadian Airlines, as the Division's President.

``I am delighted to appoint Rupert Duchesne to lead the new Aeroplan Division,'' said Mr. Rovinescu. ``Since joining Air Canada in 1996 as Vice President, Marketing, Rupert has successfully led Air Canada's commercial initiatives through numerous milestones, most recently as Chief Integration Officer for Air Canada and Canadian Airlines.''

Since their inception in 1984, Aeroplan and Canadian Plus have become enormously successful vehicles, both in cementing brand loyalty and in generating revenues. Today, Aeroplan members represent over 50% of the airline's traffic and contribute over 60% of its passenger revenue. The merger of Canadian Plus into Aeroplan in January 2001 will make the program even stronger, with over five million members.

Aeroplan's mandate is being expanded to channel the broad purchasing power of its huge membership base in ways that generate additional revenues and brand loyalty. The new Division will pursue an aggressive growth strategy with the ambition of adding significant revenues to this sector of activities.

This will be achieved by building on existing agreements as well as by developing new partnerships, including expansion into new consumer categories as well as loyalty and customer relationship management service and advisory businesses. In addition, Aeroplan will exploit e-commerce opportunities and expand its current on-line features to include a virtual shopping centre, where members will be able to earn Aeroplan miles for purchases of merchandise and other non-air services.

``Aeroplan miles are already a much valued incentive,'' said Rupert Duchesne. ``At the request of our customers, we aim at further increasing that value through a significant extension of accumulation and redemption opportunities through various types of partnerships, both travel and non-travel related.''

In addition, the new Division will create a number of exciting employment opportunities across the country.