For immediate distribution.

MONTREAL, May 16 /CNW Telbec/ - Air Canada announced that it has reached
a tentative agreement on cost realignment with the International Association
of Machinists and Aerospace Workers (IAMAW), representing 14,500 technical
operations and airport ground service, finance, cargo and clerical personnel.
The agreement, subject to ratification by union membership, meets the target
set for the IAMAW's share of the $200 million cost savings to be achieved in
order to satisfy the labour condition in the Deutsche Bank Standby Purchase
Agreement.

"I commend the IAMAW executive for their leadership role in ensuring our
restructuring remains on track," said Paul Brotto, Executive Vice President,
Planning and Cost Management. "Progress has been made and talks are
ongoing with Air Canada's other unions."

On May 14, 2004, Air Canada and The Office of the Superintendent of
Financial Institutions (OSFI) reached an agreement which satisfies the pension
funding relief condition in the Deutsche Bank Standby Purchase Agreement,
eliminating one of the two remaining conditions to be satisfied.