MESSAGE TO EMPLOYEES FROM KEVIN BENSON FEB 29

I do not know how many communiqués I have sent out to you over the past few years but I do know that this is the most difficult that I have written.

Change has been the dominant factor in all your lives in the past few weeks and the speed of that change has been nothing short of amazing. We are already looking at a totally revised summer schedule, changes to the wide body fleet, to the terminal we use in Toronto and even to the colour scheme on our airplanes. That so much has been accomplished is a tribute to every employee in both airlines and to their willingness and ability to see the opportunity ahead.

There are still some milestones to be achieved with the creditors, but with the support of Air Canada, good progress has already been made in this area and I am confident that the plan will be completed within the next few months. Back up financing has even been arranged to finance alternative aircraft should any creditor decide to find another operator for their airplane.

So it is an appropriate time for me to acknowledge that my contribution to the future of the airline will be limited and that it is time for me to step down as President and CEO of the airline. Over the past six weeks, many of you have a the opportunity to get to know Paul Brotto and I am delighted that he will succeed me as of March 1. Please understand that this move is at my request as I feel it more accurately reflects the real chain of command as well as the excellent relationship that Paul and I have developed in the past month.

In discussing this decision with the Board, I expressed the desire to continue to be involved with the airline in some capacity until the creditor restructuring is complete. I am very pleased to tell you that Robert immediately asked that I continue on the Board and I am delighted to be able to do so. I will still have an office at the new building in Calgary and rest assured you will continue to see more of me than you thought you might.

In 1995 I joined Canadian for a two-year stint as CFO. Things changed quickly and in 1996 I was standing in front of you asking for wage rollbacks, wage freezes and for your support at the same time. We did not know each other and the meetings and discussions were often long and always stressful for all of us. However you gave me that support and over the next three years we changed our network, our fleet, our logo and our attitude to each other. We endured the Asian collapse and the challenges of a low cost airline. In the end we missed our objective of a profitable business plan, but we were able to re-establish Canadian as the best airline in North America and one for which there were buyers.

As I have said to some of you, the past few years are ones that I would never have wanted to miss, but I sincerely hope I will never have to repeat. I leave with some very powerful memories, not of the sweaty days and nights as we tried to find the right answers to so many questions, but of the people that are Canadian. I have never worked with a management team with so much talent, so much commitment and so much loyalty to the group of people they led.

Just as important I have never seen a group of employees with the spirit, determination and guts that you have all displayed, time and time again. The award that you have just won for the airline is about the best way to demonstrate this that I know. Throughout most of 1999, the papers were full of our issues and woes. Our future was uncertain and the media seemed to delight in trumpeting this to us on every possible occasion. Your response was to turn up your service levels still further, to such an extent that our most critical customers, the frequent flyers, had no option but to vote you as the best.

I am very proud to have been your president for the past four years and value very highly the trust and confidence you gave me. I know I will cross paths with many of you in the future and will welcome the chance to tell you this face to face.

The future has tremendous opportunities for all employees of the airline. In the past three months, I have got to know Robert Milton pretty well. In doing so, I have also come to respect him and his determination to create an airline that every one of you will find challenge and reward in. Please give him the trust, loyalty and support that you have given me and I can assure you that you will not be disappointed.

Finally best wishes to each of you as you make history in the Canadian aviation industry. Much must, and will, change as you create a great national airline. Embrace this change but never forget the attitude and commitment that made you the best in the worst of times.

Kevin