Air Canada (TSX: AC-A.TO, AC-B.TO), a founding member of Star Alliance, and TAM (Bovespa: TAMM4 and NYSE: TAM), Brazil's largest airline, today announced they have concluded an agreement to expand their networks on a codeshare basis, offering customers more choice of destinations and convenient transfers to major cities throughout Brazil and Canada. This bilateral agreement also provides for reciprocal travel reward benefits for the members of the carriers' frequent flyer programs, Aeroplan and TAM Fidelidade. The introduction of codeshare services and reciprocal travel reward benefits is planned to take effect November 2008, subject to government approval.

Separately, Star Alliance today announced that following the successful conclusion of membership talks with TAM, the Chief Executive Board of Star Alliance has voted to accept Latin America's largest air carrier as a future member.

"Air Canada is pleased to take these initial steps towards a stronger relationship with our partner TAM, Brazil's leading airline and Latin America's largest carrier, that will benefit the customers of both airlines by offering easier access to the most popular destinations in Brazil, Canada and beyond," said Montie Brewer, Air Canada's President and Chief Executive Officer, in Sao Paulo for the announcement that TAM has been invited to become a future Star Alliance member. "As a founding member of Star Alliance, we have seen the enormous benefits that the Alliance has brought to international travellers in terms of simplifying the travel experience, and providing more choice to connect the world more easily. We look forward to welcoming TAM as a Star Alliance member and offering an expanded range of benefits that our customers value most."

With the implementation of this new bilateral partnership agreement between Air Canada and TAM, customers of both airlines will benefit from simplified bookings, seamless connections on a single ticket and baggage check-through to final destination. Through connections at Sao Paulo Guarulhos International Airport, Air Canada's network will expand to serve six major Brazilian cities on a codeshare basis operated by TAM: Rio de Janeiro, Salvador, Recife, Belo Horizonte, Curitiba and Porto Alegre. TAM customers in turn, will benefit from an expanded network including daily codeshare service operated by Air Canada between Sao Paulo and Toronto with convenient connections in Toronto to: Vancouver, Calgary, Edmonton, Winnipeg, Montreal and Quebec City.

According to David Barioni, TAM's President, the agreement with Air Canada contributes to the company's strategy to expand their operations abroad as one of the major airline companies in the world. "We are committed to offering our clients high quality services compatible with international standards, within the three pillars our operation is based upon: excellence in services, excellence in technical operation and excellence in management," said Mr. Barioni.

Between Toronto and Sao Paulo, Air Canada operates year-round daily non-stop service with 211-seat Boeing 767-300ER aircraft, replaced with a larger 349-seat Boeing 777-300ER during the peak travel months December to March. Air Canada's new in-flight product features lie-flat beds in its international business class cabin, Executive First, and digital quality seatback entertainment on demand for all customers - on international as well as shorter North American flights, in both economy and business class.

Paulo Castello Branco, TAM's Vice President, Commercial and Planning, adds: "The agreement with Air Canada reinforces our strategy to establish partnerships with major airlines worldwide and allows us to offer our clients a broader range of destinations in North America."

About TAM - TAM Airlines (www.tam.com.br) has been the domestic market leader since July of 2003, and closed last May 2008 with 49.3% of market share. The company flies to 42 destinations in Brazil. With business agreements signed with regional companies, it reaches 79 different destinations in the country. TAM's market share among Brazilian companies that operate international flights stood at 74.3% in May. Operations abroad include TAM flights to 16 destinations in the United States, Europe and South America: New York and Miami (USA), Paris (France), London (England), Milan (Italy), Frankfurt (Germany), Madrid (Spain), Buenos Aires and Córdoba (Argentina), Santa Cruz de la Sierra (Bolivia), Santiago (Chile), Asuncion and Ciudad del Este (Paraguay), Montevideo and Punta del Este (Uruguay), and Caracas (Venezuela). It has code-share agreements that make possible the sharing of seats on flights with international airlines, enabling passengers to travel to 64 other destinations in the U.S., Europe and South America.

About Air Canada - Montreal-based Air Canada provides scheduled and charter air transportation for passengers and cargo to more than 170 destinations on five continents. Canada's flag carrier is the 14th largest commercial airline in the world and serves 33 million customers annually with a fleet consisting of 335 aircraft. Air Canada is a founding member of Star Alliance, providing the world's most comprehensive air transportation network.

Air Canada was ranked in 2007 as the "Best Airline in North America" for the second time in three years in an independent passenger survey of 14 million air travellers conducted by Skytrax. In addition, Air Canada was recently voted 'Best Airline in North America' and 'Best Airline in Canada' by the readers of Global Traveler magazine, and 'Best Business Class to Canada' by the readers of Business Traveler magazine. In 2007, Air Canada was recognized by the editors of Air Transport World as the airline industry leader in market innovation, specifically Air Canada's success in implementing an innovative and transparent pricing structure, its effectiveness in using online technology to meet consumers' needs and its fleet-wide renewal with a consistent, market-leading onboard product among North American airlines.

SOURCE: AIR CANADA

SOURCE: AIR CANADA - CORPORATE - FINANCIAL

SOURCE: AIR CANADA - ROUTE & NETWORK - FLEET

Air Canada Kids' Horizons is celebrating its fifth year of supporting children's charities and non-profit organizations in Canada by donating five million Aeroplan miles to each of its main partners and announcing a new major partner: Free The Children.

"Building on the support of Air Canada employees, volunteers and our customers' generosity, Kids' Horizons has made a difference to the lives of millions of children in Canada and throughout the world, "said Montie Brewer, President and Chief Executive Officer of Air Canada. " We welcome our new partner Free The Children and look forward to Kids' Horizons' ongoing support of organizations that promote the well-being of children worldwide."

New partner: Free The Children

Founded in 1995 by 12 year-old Ontario-born Craig Kielburger, Free The Children is the world's largest network of children helping children through education, with more than one million youth around the world focusing on developing educational programmes.

"Air Canada Kids' Horizons has been an incredible corporate partner to Free The Children. It's amazing to see this company bridge the gap between the corporate world and the non-profit sector in such a way that involves youth. They understand that these young people are our next generation of leaders and we are proud to be working with Air Canada Kids' Horizons to help community across North America and the world."

About Kids' Horizons www.aircanada.com/kids

Kids' Horizons, Air Canada's community investment program works in partnership with charities and non-profit organizations to offer effective programs that make a difference in the lives of young Canadians. It is focused on promoting child health, alleviating child poverty and fulfilling the special wishes of sick. Each year it assists over 350 charities and, drawing on the 32 million miles generously donated by customers, its unique hospital transportation program flies children in Canada and abroad for medical treatment unavailable in their communities.

Kids' Horizons six main partners are: The Children's Miracle Network Canada, Breakfast Clubs of Canada, Street Kids International, Starlight Children's Foundation Canada, Dreams Take Flight and the newest partner, Free the Children.

Montreal-based Air Canada provides scheduled and charter air transportation for passengers and cargo to more than 170 destinations on five continents. Canada's flag carrier is the 14th largest commercial airline in the world and serves 34 million customers annually with a fleet consisting of 335 aircraft. Air Canada is a founding member of Star Alliance, providing the world's most comprehensive air transportation network.

SOURCE: AIR CANADA

SOURCE: AIR CANADA - CORPORATE - FINANCIAL

Air Canada will operate the new Montreal-Geneva non-stop service using 211-seat Boeing 767-300 ER aircraft offering a choice of Economy Class and Executive First service featuring 24 lay flat bed suites. Further details and a virtual tour of Air Canada's new cabin amenities including personal seatback entertainment are available at: http://www.aircanada.com/en/travelinfo/onboard/cabincomfort.html

With the addition of non-stop service to Geneva, Air Canada expands its transatlantic network to complement its non-stop Toronto-Zurich flights operated on a codeshare basis with SWISS, and SWISS-operated Montreal-Zurich flights offered by Air Canada on a codeshare basis. The new Montreal-Geneva service will also provide easy access to a number of popular destinations in France served by train such as nearby Lyon, Annecy, Dijon and Grenoble.

Flights on the new Geneva route are timed to offer travellers convenient connections on Air Canada's extensive North America network via the carrier's Montreal hub to and from: Toronto (same plane), Ottawa, Quebec City, Halifax, Calgary, Edmonton, Vancouver, San Francisco, Los Angeles, Chicago, Boston and New York. In Geneva, connecting flights are available to/from a number of destinations including Beirut, as well as alternate routings for Barcelona and Zurich on SWISS. Operation of the new route is subject to obtaining necessary government approvals.

    <<
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                   Depart         Arrive         Depart         Arrive
    Flight         Toronto        Montreal       Montreal       Geneva
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    AC830          18:00          19:19          20:45          10:05
    LX4643                                                      (+1)
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                   Depart         Arrive         Depart         Arrive
    Flight         Toronto        Montreal       Montreal       Geneva
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    AC831          12:15          14:30          16:00          17:19
    LX4642
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    >>

Montreal-based Air Canada provides scheduled and charter air transportation for passengers and cargo to more than 170 destinations on five continents. Canada's flag carrier is the 14th largest commercial airline in the world and serves 33 million customers annually. Air Canada is a founding member of Star Alliance, providing the world's most comprehensive air transportation network.

SOURCE: AIR CANADA

SOURCE: AIR CANADA - ROUTE & NETWORK - FLEET

In its Decision No. 565-C-A-2008, the Agency ruled on a complaint from the Public Interest Advocacy Centre (PIAC) that the program differs only slightly from the historical customer service expectations of Air Canada passengers and tries to turn a carrier obligation into a revenue source.

The Agency said PIAC failed to provide compelling evidence to substantiate its allegations that the fee structure is unjust and unreasonable, but instructed Air Canada to ensure that its tariffs and corporate communications draw a clear distinction between the rights of passenger who purchase On My Way and others.

Furthermore, Air Canada is directed to ensure that its rules clearly indicate that when there is a flight disruption, OMW passengers and non-OMW passengers will have equal access to Air Canada's call centres and customer service agents for the purpose of rebooking passengers for next available flights. In such cases, the Agency must be satisfied that the introduction of a program such as On My Way does not adversely affect the rights of those passengers who choose not to purchase the program.

The Canadian Transportation Agency is an independent quasi-judicial tribunal which operates like a court. It regulates various modes of transportation under Government of Canada jurisdiction, including air, marine and rail. Its decision-making process is governed by the rules of fairness and natural justice to ensure that all parties in a complaint receive equitable treatment.

SOURCE: Canadian Transportation Agency

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