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Air Canada Launches Tender Offers and Consent Solicitations for its 9.250% Senior Secured Notes due 2015, 10.125% Senior Secured

  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

PR Newswire

MONTREAL, June 14, 2013

MONTREAL, June 14, 2013 /PRNewswire/ - Air Canada today announced that it has
launched cash tender offers for any and all of its 9.250% Senior Secured Notes
due 2015 (the "USD Senior Secured Notes"), 10.125% Senior Secured Notes due
2015 (the "CAD Senior Secured Notes" and together with the USD Senior Secured
Notes, the "Senior Secured Notes"), and 12.000% Senior Second Lien Notes due
2016 (the "USD Second Lien Notes") (collectively, the "Notes") for the cash
consideration per US$1,000 or C$1,000 principal amount, as applicable, set
forth next to the corresponding series of Notes in the table below. These
offers consist of three separate offers, one for each series of Notes listed
below (each, an "Offer," and collectively, the "Offers"). In connection with
the Offers, Air Canada is also soliciting consents (the "Consent
Solicitations") 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 (the "Proposed Indenture Amendments") and
to release all of the collateral securing the Notes (the "Proposed Collateral
Release Amendments" and, together with the Proposed Indenture Amendments, the
"Proposed Amendments"). The Offers and the Consent Solicitations are being
made pursuant to an Offers to Purchase and Consent Solicitations Statement,
dated June14, 2013 (the "Statement"), and related Letters of Transmittal and
Consent, each dated June14, 2013 (the "Letters of Transmittal" and,
collectively with the Statement, the "Offer Materials").

Information related to the Notes, the Offers and the Consent Solicitations is
listed in the table below. The Offer Materials more fully set forth the terms
and conditions of the Offers and the Consent Solicitations.

              CUSIP                   Outstanding                        Early
Description (144A/Reg                  Principal      Tender Offer      Tender           Total
 of Notes       S)         ISIN          Amount     Consideration^(1) Premium^(1) Consideration^(1)(2)
9.250%
Senior
Secured
Notes due   008911AK5/ USC01026AV28/
2015       C01026AV2  US008911AK56  US$600,000,000 US$1,020.70       US$30.00    US$1,050.70
10.125%
Senior
Secured
Notes due   008911AM1/ CA008911AM15/
2015       008911AN9  CA008911AN97  C$300,000,000  C$1,025.25        C$30.00     C$1,055.25
12.000%
Senior
Second
Lien Notes  008911AP4/ USC01026AW01/
due 2016   C01026AW0  US008911AP44  US$200,000,000 US$1,067.20       US$30.00    US$1,097.20

     Per US$1,000 principal amount of USD Senior Secured Notes and USD Second
(1) Lien Notes or C$1,000 principal amount of CAD 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 or prior to
5:00p.m., New York City time, on June27, 2013, unless extended or earlier
terminated (the "Early Tender Deadline"), will be eligible to receive
US$1,050.70, C$1,055.25 and US$1,097.20 per US$1,000 or C$1,000 principal
amount, as applicable, of USD Senior Secured Notes, CAD Senior Secured Notes
and USD Second Lien Notes, respectively (the "Total Consideration"), if such
Notes are accepted for purchase. The Total Consideration includes an early
tender payment of US$30.00 or C$30.00 per US$1,000 or C$1,000 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% of the original principal balance of each series
of such Notes at 103% of the principal amount thereof (a "10% Redemption") and
Air Canada's right to redeem the balance of such Notes at a redemption price
of, beginning August 1, 2013, 104.625% of the principal amount thereof in the
case of the USD Senior Secured Notes and 105.063% of the principal amount
thereof in the case of the CAD Senior Secured Notes (a "Senior Secured Notes
Early Redemption"). 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% Redemption, with any
remaining outstanding balance of such Notes to be redeemed pursuant to a
Senior Secured Notes Early Redemption at the applicable August 1, 2013
redemption prices. Similarly, Air Canada intends to redeem any USD 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 USD Second Lien Notes at a redemption price of 109% of
the principal amount thereof.

The Offers and Consent Solicitations will expire at 11:59 p.m., New York City
time, on July12, 2013, unless extended or earlier terminated (as extended or
earlier terminated, the "Expiration Time").

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 US$1,020.70,
C$1,025.25 and US$1,067.20 per US$1,000 or C$1,000 principal amount, as
applicable, of USD Senior Secured Notes, CAD Senior Secured Notes and USD
Second Lien Notes, respectively (the "Tender Offer Consideration"), 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
July3, 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 USD Senior Secured Notes and CAD 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 USD Second Lien Notes are required to approve the Proposed
Indenture Amendments under the indenture governing the USD Second Lien Notes.
Consents in respect of at least 75% in aggregate principal amount of the
outstanding USD Senior Secured Notes and CAD 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% in aggregate principal amount of the
outstanding USD Second Lien Notes are required to approve the Proposed
Collateral Release Amendments under the indenture governing the USD 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 validly
revoke a consent without validly withdrawing the previously tendered Notes to
which the consent relates. Notes tendered can only be withdrawn, and related
consents revoked, before 5:00p.m., New York City time, on June27, 2013,
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 Corporation, the Information Agent for
the Offers and related Consent Solicitations with respect to the USD Senior
Secured Notes and USD Second Lien Notes, at (866) 794-2200 (U.S. 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 CAD 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 Inc. at (800) 558-3745
(toll-free) or (212) 723-6106.

This announcement is not an offer to purchase, a solicitation of an offer to
sell or a solicitation of consents with respect to the Notes or any new
securities. The Offers and Consent Solicitations are made solely by means of
the Offer Materials. The Offers and Consent Solicitations are not being made
in any jurisdiction in which the making or acceptance thereof would not be in
compliance with the securities, "blue sky" or other laws of such
jurisdiction. None of Air Canada, the dealer manager, the information agents,
the depositaries, the trustee and the collateral trustees under the indentures
governing the Notes or any of their respective affiliates is making any
recommendation as to whether or not holders should tender all or any portion
of their Notes in the Offers or deliver their consents to the Proposed
Amendments and, if so, as to the amount of Notes to tender.

About Air Canada

Air Canada is Canada's largest domestic and international airline serving more
than 175 destinations on five continents. Canada's flag carrier is the 15th
largest commercial airline in the world and in 2012 served close to 35 million
customers. Air Canada provides scheduled passenger service directly to59
Canadian cities, 53 destinations in the United States and67 cities in Europe,
the Middle East, Asia, Australia, the Caribbean, Mexico and South America. Air
Canada is a founding member of Star Alliance, the world's most comprehensive
air transportation network serving 1,329 destinations in194 countries. Air
Canada is the only international network carrier in North America to receive a
Four-Star ranking according to independent U.K. research firm Skytrax that
ranked Air Canada in a worldwide survey of more than 18 million airline
passengers as Best International Airline in North America in 2012 for the
third consecutive year. For more information, please visit:
www.aircanada.com.

Caution Regarding Forward-Looking Information

This press release includes forward-looking statements within the meaning of
applicable securities laws. Forward-looking statements in this press release
may involve, but are not limited to, statements regarding the payment of the
Total Consideration and the Tender Offer Consideration, anticipated amendments
to the indentures governing the Notes and the release of collateral securing
the Notes, Air Canada's intention to redeem any untendered Notes, anticipated
refinancing plans and related matters. Forward-looking statements are
identified by the use of terms and phrases such as "preliminary",
"anticipate", "believe", "could", "estimate", "expect", "intend", "may",
"plan", "predict", "project", "will", "would" and similar terms and phrases,
including references to assumptions. Risks, uncertainties and assumptions
that could cause actual results to differ materially from the results
indicated in the forward-looking statements include, among other things, the
successful completion and composition of any refinancing transaction, the
completion of the Offers and the receipt of consents sufficient to approve the
Proposed Indenture Amendments and Proposed Collateral Release Amendments.

Forward-looking statements, by their nature, are based on assumptions,
including those described herein and are subject to important risks and
uncertainties. Forward-looking statements cannot be relied upon due to,
amongst other things, changing external events and general uncertainties of
the business and the capital markets. Actual results may differ materially
from results indicated in forward-looking statements due to a number of
factors, including without limitation, industry, market, credit and economic
conditions, the ability to reduce operating costs and secure financing,
pension issues, energy prices, employee and labour relations, currency
exchange and interest rates, competition, war, terrorist acts, epidemic
diseases, environmental factors (including weather systems and other natural
phenomena and factors arising from man-made sources), insurance issues and
costs, changes in demand due to the seasonal nature of the business, supply
issues, changes in laws, regulatory developments or proceedings, pending and
future litigation and actions by third parties as well as the factors
identified throughout this news release and those identified throughout Air
Canada's public disclosure file available at www.sedar.com. In particular,
the proposed Offers and Consent Solicitations are subject to general market
and other conditions and there are no assurances that the proposed Offers and
Consent Solicitations will be completed or that the terms of the Offers and
Consent Solicitations will not be modified. The forward-looking statements
contained in this news release represent Air Canada's expectations as of the
date of this news release (or as of the date they are otherwise stated to be
made), and are subject to change after such date. However, Air Canada
disclaims any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise, except as required under applicable securities regulations.

SOURCE Air Canada

Contact:

IsabelleArthur (Montréal)514 422-5788
PeterFitzpatrick (Toronto)416 263-5576
AngelaMah (Vancouver)604 270-5741

Internet:aircanada.com
 
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