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Air Canada and IBM Form Strategic Partnership

$908 Million Agreement Includes Developing New Technologies for Airline Industry

TORONTO - 20 Jul 2001: Air Canada and IBM today announced a seven-year, $908 million ($1.4 billion CDN) strategic partnership to e-enable the airline, enhance customer service and develop future solutions based on a world-leading IT infrastructure that will benefit both Air Canada and other airlines around the world.

As a result of this agreement - the largest IBM airline services agreement worldwide - Air Canada expects to save approximately $130 million ($200 million CDN) in IT costs over the term of the contract.

As strategic business partners, IBM and Air Canada will work together pursuing new business opportunities in the areas of customer service and leading-edge travel industry solutions. To complement the IBM Canada team, they will work with highly-skilled individuals from IBM's T. J. Watson Research Laboratory in Yorktown Heights, NY, and its Travel and Transportation Solutions Development Center in Boca Raton, FL, to create innovative solutions. The first example of this new relationship will be the establishment of an IBM/Air Canada project management office at Toronto's Pearson International Airport. These jointly developed solutions will be offered to other companies through a marketing alliance created between Air Canada and IBM. In addition, IBM will invest in various venture capital and technology projects at Air Canada.

"We are entering into a strategic partnership with IBM which will go far beyond managing our computer systems and which, we expect, will set a new standard in the airline industry,'' said Air Canada's Calin Rovinescu, Executive Vice President, Corporate Development & Strategy. " Our partnership is about innovation, increasing shareholder value and improving the overall travel experience for customers. We are looking at developing new innovations that build on our award-winning Express Check-in Kiosks. Together, we will undertake research and development of future applications, services and products that will leverage the power of the Internet -- wireless and self-service applications -- giving customers increased flexibility and access to Air Canada's Web services. These represent only a few examples that are on the immediate horizon.''

IBM Corporation Senior Vice President & Group Executive Bill Etherington added, "We are entering into a partnership of innovation today with Air Canada, one of the world's great airlines, that represents a new wave of technology agreements. In order to compete successfully in today's global economy, companies need to constantly improve shareholder value. Technology plays a huge role in achieving that objective. IBM has led the world in patent innovation for eight straight years now and we are committed to putting our brightest minds together with Air Canada's people to develop the next generation of airline innovation.''

This agreement also expands on an IT services relationship forged between the two companies in August, 1994. Under Air Canada's direction, IBM will manage all of Air Canada's computer and IT operations. IBM will also manage Air Canada's global IT infrastructure, including application development and maintenance, 20,000 workstations, employee help desk services and network and computer server operations.

IBM is the world's largest information technology company and largest supplier to the airline industry, with 80 years of leadership in helping businesses innovate. IBM creates, develops and manufactures the industry's most advanced information technologies, including computer systems, storage devices and microelectronics. IBM is also the world's largest information technology services provider, with nearly 150,000 IBM Global Services professionals serving customers in 160 countries worldwide. Visit IBM's web site at www.ibm.com.

Air Canada is Canada's flagship air carrier and is recognized as a world leader in the global air transportation industry by pursuing a strategy based on value-added customer service, technical excellence and passenger safety. Air Canada is the tenth largest airline in the world with passenger and freight operations to more than 160 destinations on five continents. The Montreal-based airline employs 45,000 people worldwide serving 31 million customers annually with a fleet of more than 300 aircraft maintained at major facilities across Canada. Visit Air Canada's web site at www.aircanada.ca.

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Contact(s) information

Nancy Kaplan
IBM Media Relations
(914) 766-4265
nkaplan@us.ibm.com

or
Maureen Rourke
(905) 316-4425
mrourke@ca.ibm.com

or
Linda Hanson
(914) 642-5447
hansonmu@us.ibm.com

Marie Gregoire
IBM Media Relations, Canada
(514)422-5676
jreber@aircanada.ca

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