cair issue no. 19 - july 2004

IVC MARKETINTELLIGENCE

REPORT

InterVISTAS Consulting Inc. Market Intelligence ReportJuly 2004 ©InterVISTAS Consulting Inc.

AIR CANADA UPDATEJuly 2004

On 1 April 2003, Air Canada filed for bankruptcy protection under the Companies’ CreditorArrangements Act with the Ontario Superior Court. In the October 2003 Market Intelligence Report,an update of the events in the first six months of the airline’s restructuring was provided. This month,we provide a summary of what has happened since then.

Equity PartnerAir Canada’s court-ordered stay period has been extended four times since 31 December 2003. Theairline is currently working towards exiting CCAA protection by its 30 September 2004 deadline.Since the last update, Air Canada had approved and secured $650 million in equity financing fromVictor Li’s Trinity Time Investments in December 2003. Cerebus Capital Management, the otherinvestment candidate, had submitted an unsolicited revised offer following the selection, which wasreconsidered along with a revised bid from Li’s company. Trinity was reconfirmed as the airline’sequity partner just before Christmas.

LabourIn February, however, the Office of the Superintendent of Financial Institutions (OSFI), representingairline employee and retiree pension interests, rejected Trinity’s attempt to renegotiate the company’spension plans. Trinity decided to pull out of its investment deal after the 30 April 2004 deadline forlabour concessions passed with no resolution. Air Canada had promised to leave its defined benefitplans alone in exchange for labour and wage concessions in 2003, but Trinity’s plan required that thepensions be switched to defined contribution plans. After Trinity’s departure, a pension agreementwas reached with the OSFI that would have the company pay off its pension deficit over 10 years asopposed to the five year maximum set by the 1985 Pension Benefits Standards Act. The plan alsoallows current employees to choose between defined benefit and defined contribution plans. Newemployees will automatically be enrolled in the defined contribution plan.

To meet the required $1.1 billion in concessions agreed to last year, mainline unions completed theirshare of the $200 million in remaining labour concessions in May and June 2004 required by the exitfinancing agreements set out by Deutsche Bank Group and GE Capital Aviation Services (GECAS).Air Canada Jazz just recently completed its ratifications, achieving its share of the requiredconcessions. After having missed the 9 July deadline, the subsidiary had been threatened with beingleft out of the restructuring process if it did not meet its concession targets by 16 July 2004 and wouldhave likely resulted in liquidation.

FleetMeanwhile, Air Canada renegotiated its fleet financing with GECAS and its other creditors. Theairline also negotiated a regional jet order with Bombardier and Embraer and reconfigured its fleetplan through 2007. Air Canada mainline will streamline its fleet composition and reduce its size from213 to 183 aircraft by 2006, followed by an increase to just over 200 in 2007. Both the 747 and 737types will be phased out, along with some older regional jets. (See “Air Canada Fleet Changes” inthis issue.)

Financing and RestructuringThe airline pursued other equity financing avenues through May and June, securing $850 million inexit financing from Deutsche Bank (up from the original $450 million) and an extension of the $535million deal with GECAS to 30 September, with an additional $950 million in regional jet financing.With the increase in Deutsche Bank funding, the airline no longer needed a large equity partner, butstill looked for a smaller investment. Air Canada secured a $250 million equity deal (convertible to

Geneva Tretheway

Project Analyst


AIR CANADA UPDATE – CON’T9.2% of the airline’s common equity) from Cerebus on 23 June and this was approved by the court on2 July, bringing its total equity capital to $1.1 billion.

The Ontario Supreme Court, overseeing the restructuring process, has set a Creditors’ Meeting for 17August for creditors to vote on Air Canada’s new restructuring plan. The plan includes postponingwage negotiations until 2006 at the earliest and turning its Technical Services, Cargo, andGroundhandling operations into separate businesses or limited partnerships. Under the revisedagreement, the carrier’s creditors will receive between 6.17¢ and 9.25¢ for each dollar of provenclaim. If the restructuring plan is approved, creditors will be eligible to buy rights shares at $20 each,part of the $850 million rights offering backed by the Deutsche Bank Group. Air Canada estimatesthat the total amount of proven claims by unsecured creditors is between $10 billion to $15 billion.The airline plans to reach its goal of exiting from CCAA protection by 30 September 2004.


U.S. GAO RELEASES REPORT ONCOMMERCIAL AVIATION14 July 2004

In June 2004, the U.S. General Accounting Office (GAO) issued a briefing that examined the financialstate of the commercial aviation industry over the last several years. This column outlines some ofthe key findings of the report.1

The U.S. airline industry, and in particular the full service legacy carriers have been faced with aseries of challenges over the last several years. 2 Domestically, the rise of low-cost carriers, 3 alongwith the growth of the Internet as a tool to sell and distribute tickets, has reshaped the industry andput downward pressure on fares, decreasing yields. In addition, a series of external events, includingthe outbreak of SARS, the terrorist attacks of September 11th, the war in Iraq, and economic downturnall had significant impacts on the demand for air travel.

Two Different Approaches. The U.S. GAO reports that during this time, the two carrier groupsadopted very different strategies. The full service legacy carriers began tocut costs and reduce capacity, while the low cost carriers continued toexpand and add services. Between 1 October 2001 (immediately after

September 11th) and the end of 2003, legacy carriers collectively reduced operating costs byapproximately 15%, or US$13 billion. The largest reductions came from labour, with a decrease ofUS$5.5 billion in costs. Legacy carriers also shifted traffic to regional carriers and grounded aircraft,reducing seat capacity by almost 13%.

In contrast, the low cost carriers as a group increased seat capacity by 26%,and operating expenses by almost 10% (over US$1 billion) as they expandedoperations and added services. However, in light of the expansion, the lowcost carriers still maintained a significant unit cost advantage over legacy carriers.

Financial Troubles. Between 2000 and 2003, GAO reports that the legacy carriers as a grouphave lost US$24 billion, while the low cost carriers made US$1.3 billion in profits over the same timeperiod. However, the increase in competition has limited revenue growth for both groups of carriers.Over the last three years, yield has decreased by 19% for both carrier groups. The legacy carriersare also faced with large debt and pension obligations over the next several years. In 2002, twomajor legacy carriers, United Airlines and U.S. Airways entered Chapter 11 bankruptcy protection.U.S. Airways has since emerged from bankruptcy protection, but another major U.S. carrier, DeltaAirlines, has warned that it may have to file for Chapter 11 bankruptcy protection.

Better Times Ahead? Although recent data indicates that passenger traffic is recovering, low costcarriers continue to maintain a unit cost advantage over the legacy carriers. In the first quarter of2004, low cost carriers reported an average unit cost of US$7.7 cents/ASM, compared to an averageunit cost of US$11.6 cents/ASM4 for legacy carriers, a difference of nearly 51%. It is clear that legacycarriers will have to improve their business operations to return to profitability, meanwhile low costcarriers will continue to grow.

1 Commercial Aviation: Despite Industry Turmoil, Low-Cost Airlines are Growing and Profitable (3 June 2004).2 Full service legacy carriers refer to Alaska, American, Continental, Delta, Northwest, United, and U.S. Airways.3 Low cost carriers include AirTran, America West, ATA, Frontier, JetBlue, Southwest, and Spirit.4 From Aviation Daily-1 July 2004, note that Alaska and ATA data are not included in this data.

Eugene Chu

Project Analyst


AIR CANADA FLEET CHANGES13 July 2004

Smaller Aircraft are the Focus for the FutureOn 30 June 2004, Air Canada submitted to the Ontario Superior Court its plan of reorganisation,compromise, and arrangement for the consideration and approval of its unsecured creditors. Amongthe elements of its restructuring plan, the document includes a detailed fleet forecast for the period upto and including 2007.

Air Canada states in the document that its product strategy going forward will be to reduce capacitywhile maintaining frequency on domestic and transborder routes. As a result, AC’s fleet plan focuseson reducing its fleet of larger aircraft in favour of smaller regional jets.

Fleet Plan Summary

Between now and 2007, Air Canada/Jazz will increase their overall operating fleet from 304 to 325aircraft. This includes a decrease in mainline jets from 213 to 200, and an increase in Jazz aircraftfrom 91 to 125. After an initial reduction of a dozen aircraft, the combined fleet will grow by 10-12planes annually for the remainder of the period.

Mar-04 Dec-04 Dec-05 Dec-06 Dec-07Air Canada

Airbus A340 9 11 11 11 11Airbus A330 8 8 8 8 8Boeing 747-400 3 0 0 0 0Boeing 767-300 30 30 30 29 29Boeing 767-200 13 12 10 9 7Airbus A321 13 13 13 13 13Airbus A320 52 52 49 47 42Airbus A319 48 48 48 46 46Boeing 737-200 12 0 0 0 0CRJ-200 25 25 22 0 0EMB-190 0 0 2 20 44Mainline Subtotal 213 199 193 183 200

JazzCRJ-200 10 22 28 50 50CRJ-705 0 0 15 15 15BAe-146 10 3 0 0 0Dash 8-300 26 26 26 26 26Dash 8-100 45 42 42 40 34Jazz Subtotal 91 93 111 131 125

Total 304 292 304 314 325

Operating Fleet

Air Canada’s widebody fleet will decrease by eight aircraft as the 747-400 Combis are retired andapproximately half of the 767-200s are removed. These are among the oldest long-haul aircraft inAC’s fleet.

AC will reduce its narrowbody fleet by 24 aircraft in the coming years. This includes the 12 737-200sthat will be retired as ZIP operations are folded back into the mainline carrier, as well as 12A319/A320 family aircraft. Fleet reductions are also planned for the turboprop aircraft in operation byJazz. While the 26 Dash 8-300s will remain in service, 11 of Jazz’s 45 Dash 8-100s will be removedby 2007.

John Weatherill

Manager, Airline Planning


AIR CANADA FLEET CHANGES -CON’TUnlike the other fleet types, Air Canada’s regional jet fleet will increase by 64 aircraft over the nextfour years, even after accounting for the removal of the 10 remaining BAe-146s. Following thedelivery of two A340-500 aircraft this summer, all of Air Canada’s planned fleet growth will come fromregional jets.

Regional Jets

In December 2003, Air Canada announced an order for 90 regional jet aircraft, including 45 Embraer190s (93 seats), 30 CRJ-705s (74 seats), and 15 CRJ-200s (50 seats). At the time of theannouncement, AC indicated that the exact allocation of aircraft would be subject to change. As thetable above displays, only 15 CRJ-705s are accounted for in the new fleet plan.

While negotiating cost concessions with ACPA and ALPA, Air Canada promised regional jet flying toboth Jazz and mainline pilots. The matter was sent to arbitration and in March 2004, an arbitratorruled that up to 65 regional jets could be allocated to the Jazz fleet, with the remaining RJs to beflown by mainline pilots. By 2006, Jazz will be operating the maximum 65 regional jets.1 Note thatsome media have incorrectly reported that Air Canada will be using the Embraer 190s to replaceCRJ-200s; in fact, AC’s current CRJs willbe transferred to Jazz beginning in 2005.

The Air Canada fleet plan also indicatesthat an additional 15 regional aircraft willbe added to the mainline fleet, on abasis to be determined in the future.

Observations

Clearly, Air Canada’s fleet strategy reflects the erosion of AC’s market share in the domestic sector.The plan to maintain frequency using smaller aircraft signals an expectation that competitors willcontinue to win passengers from AC.

The plan itself is similar to the one produced by Air Canada in 2003, as the focus remains on shorthaul aircraft. Air Canada officials have consistently stated a restructuring strategy which concentratesincreasingly on international services, with little or no growth domestically. With almost 15% of AC’slong haul aircraft to be removed from the fleet, this international strategy will seemingly be centred ontransborder markets.

1 All new CRJ-200 and CRJ-705 aircraft will be operated by Jazz; all new EMB-190 jets will be operated by ACmainline.


-30%-20%-10%

0%10%20%30%40%

Jun-03

Jul Aug Sep Oct Nov Dec Jan-04

Feb Mar April May Jun

Int'l RPK Int'l ASK

Air Canada InternationalAir Canada International

0%

10%

20%

30%

40%

50%

60%

Jun-03



RPK ASK

WestJetWestJet

AIRLINE DATA – CANADATraffic and Load Factors on Canada’s Major Air Carriers - June 2004

Passenger TrafficRevenue Passenger Kilometres

CapacityAvailable Seat Kilometres

Load FactorAir Carrier % Change

over 2003% Changefrom 2002

% Changeover 2003

% Changefrom 2002

Changeover 2003

Changefrom 2002

Air Canada1 +13.6% -6.3% +9.7% -9.2% +2.7 pts(to 79.4%)

+2.5 pts

Domestic(Mainline) +7.6% -4.3% -0.3% -11.0% +5.7 pts +5.4 pts

Jazz +4.7% +8.3% -0.4% -9.4% +3.3 pts +11.1 pts

International& Charter +16.6% -7.2% +15.3% -8.3% +0.9 pts +1.0 pts

WestJet +25.0% +68.9% +24.3% +78.5%+0.4 pts

(to 71.9%) -4.0 pts

Jetsgo +73.4% N/A +72.4% N/A+0.4 pts

(to 67.4%)N/A

Analysis:

§ Air Canada’s domestic traffic continuedto post year-to-year increases in June.Combined with a decrease in capacity,this resulted in a domestic load factorimprovement of nearly six points.

§ In June 2004, Air Canada recordeddouble-digit year-to-year increases inboth international traffic and capacity.This reflects the ongoing recovery ininternational traffic, and the carrier’sexpansion of its Latin America services.

§ Reversing an earlier trend, WestJet’straffic growth was greater than thecarrier’s addition of capacity in June.As a result, the monthly load factorposted a year-to-year increase.Although WestJet’s increase in trafficand capacity continue to outpace AirCanada’s growth, the increase is wellbelow the growth rates the carrierrecorded in 2002.

1Air Canada Mainline consists of all Air Canada with the exception of Jazz.

OTHER CARRIERS:

LOAD FACTORS

Jetsgo: 67% (June)

Zip: not reported

-15%-10%-5%0%5%

10%15%20%

Jun-03



Dom RPK Dom ASK

Air Canada Domestic Mainline Air Canada Domestic Mainline

Jazz data is not includedin this graph


AIRLINE DATA – U.S.U.S. Airlines Release June 2004 Traffic Figures

Traffic Data – June 2004

Airline Load FactorTraffic

(RPMs – millions)Capacity

(ASMs – millions)

79.0 %

á 0.2 pts

11,748

á 8.2%

14,866

á 7.9%

72.4%

á 4.2pts

569

á 33.6%

786

á 25.9%

180.9 %

â 0.7 pts

1,207

á 4.6%

1,492

á 5.5%

182.4%

á 1.4 pts

6,039

á 12.2%

7,326

á 10.2%

81.9%

á 1.4 pts

10,267

á 16.6%

12,540

á 14.6%

85.5%

â 1.5 pts

1,368

á 41.1%

1,601

á 43.6%

86.4%

á 4.6 pts

6,735

á 12.7%

7,799

á 6.7%

78.8%

á 4.2 pts

4,956

á 11.9%

6,286

á 5.9%

286.0%

á 4.0 pts

10,615

á 16.9%

12,338

á 11.4%

281.6%

á 3.0 pts

3,731

á 5.4%

4,574

á 1.5%

Notes: 1. Mainline2. Load factor includes scheduled service only

Sources: Carrier traffic reports.


Summary of Total Year-Over-Year Passenger Traffic Performance at Selected Canadian Airports

Toronto Vancouver Montréal-Trudeau

Calgary Edmonton Ottawa Winnipeg Halifax Victoria Kelowna Saskatoon Regina St.John’s

May -17.3% -13.2% -7.4% -1.4% -5.3% -1.5% -0.5% -1.2% +0.4% -1.0% -5.3% -1.6% +4.5%June -9.0% -9.8% -0.7% +1.9% -0.4% +2.5% +5.0% +4.1% +0.6% -0.5% +1.4% +7.0% +17.8%

2nd Quarter -13.7% -12.1% -5.5% +0.7% -1.6% -2.1% +3.0% +2.9% +0.0% -0.7% -2.6% +1.3% +7.1%July -6.0% -4.5% +3.0% +4.7% +2.5% +3.0% +3.7% +5.7% +11.9% +5.0% +1.2% +4.7% +21.1%

August -7.6% -1.2% +2.0% +1.4% +0.3% -7.0% +0.4% +4.1% +9.8% +0.5% -4.8% -2.2% +22.5%September -5.9% -3.0% +2.3% -1.8% +8.6% +1.6% +1.5% -0.6% +10.8% -0.7% -2.4% -0.2% +12.3%3rd Quarter -6.6% -2.8% +2.4% +1.6% +3.4% -0.9% +1.8% +3.3% +10.8% +1.7% -2.0% +0.7% +19.0%

October -2.3% -3.1% +2.7% -0.7% +10.4% +1.4% +7.4% +2.5% +15.4% +1.1% -1.7% -1.3% +9.4%November +0.1% +2.2% +9.0% +8.0% +7.2% +6.5% +5.8% -0.05% +13.7% +9.6% -0.3% +19.8% +9.4%December +1.9% +2.8% +8.5% +5.4% +4.9% +6.0% +6.0% +2.9% +16.1% +9.1% +0.8% +2.0% +13.9%4th Quarter -0.1% +0.5% +6.4% +3.9% +7.4% +4.5% +6.4% +1.9% +15.6% +6.6% -0.4% +6.33% +10.8%

2003

Full Year -4.6% -3.7% +1.3% +2.7% +2.9% +1.3% +5.1% +4.2% +7.3% +2.9% -0.5% +2.4% +9.4%January +1.6% +1.5% +10.1% +4.2% +7.7% +3.5% +6.4% +3.2% +12.4% +5.9% -2.2% +8.3% +12.8%

February +7.9% +7.9% +19.6% +5.8% +10.7% +13.9% +11.7% +5.6% +11.4% +11.6% +7.8% +2.8% +19.8%March +8.7% +5.2% +21.4% +2.5% +8.0% +11.4% +11.4% +9.0% +8.2% +2.6% -2.4% +3.9% +21.3%

1st Quarter +6.1% +4.8% 17.1% +4.2% +8.6% +9.7% +9.9% +6.1% +10.5% + 6.5% +1.1% +5.0% +18.0%April +30.1% +20.5% +31.7% +12.2% +8.6% +20.8% +11.3% +16.9% +12.7% -0.3% +10.9% +2.6% +20.1%

2004

May +30.6% +20.4% +26.2% N/A +7.5% +7.6% +8.8% +19.4% +8.0% -1.3% -0.3% -5.5% +15.2%

Sources: Airport passenger statistics

CA

NA

DIA

N A

IRP

OR

TS


NEWS ARTICLESAIR CANADA UPDATEAIR CANADA SECURES INVESTMENT,LABOUR RATIFICATIONS; RELEASESRESTRUCTURING PLAN

Air Canada hassecured a $250 million

investment deal with Cerebus CapitalManagement, approved by the Court on 2 July.Mainline and Jazz labour agreement ratificationshave been completed, satisfying the labour costrealignment requirement of the Deutsche BankStandby Agreement and the GECAS GlobalRestructuring Agreement. The airline alsoreleased its restructuring plan on 30 June, whichwill be voted on by its creditors on 17 August.For more details, see “Air CanadaRestructuring Update” and “Air Canada FleetChanges” in this month’s issue.

AIR CANADA FLIES TO BOGOTÁ ANDCARACASA three times weekly non-stop flight fromToronto to Bogotá, Colombia began on 30 June2004, followed by a three times weekly non-stopToronto – Caracas, Venezuela service on 1July. Air Canada will also add a similar serviceto Lima, Peru starting 1 November 2004.

FIRST A340-500 IS DELIVERED TO AIRCANADAOn 27 June 2004, Air Canada became the firstNorth American operator of the Airbus 340-500when it received its first of two A340-500s to bedelivered this summer. The aircraft has 267seats (42J, 225Y) and a range of 8,976 mi(14,446 km), capable of flying Toronto – HongKong non-stop. The second plane will arrive inJuly.

E-TRAVEL OF AMADEUS HIRED BY AIRCANADAAir Canada has hired Massachusetts-based e-Travel, a unit of Amadeus North America LLC torevamp its consumer, travel agents andvacations websites. Until now, Air Canada hasbeen managing its websites internally, usingIBM technology. The new websites arescheduled to be online this fall.

OTHER CANADIAN AIRLINESJETSGO EXPANDS ATLANTIC CANADASERVICESStarting 15 July 2004,Jetsgo will fly from Torontoto Moncton, NB. This non-stop service operatedMonday – Friday is the carrier’s first year-roundservice to New Brunswick. Jetsgo’s summerservices to Fredericton and Saint John beganthe last week of June.

JETSGO EXPANDS WESTERN CANADASERVICESStarting 7 September, Jetsgo will launchservices between Vancouver and Edmontonthree times per day. The carrier’s servicesbetween Vancouver and Toronto will beincreased to five flights per day, including twovia Edmonton.In addition, Jetsgo will be expanding services toNew York with the introduction of two dailyflights between Toronto and LaGuardiabeginning 20 September. One additional dailyflight between Toronto and Newark will also beadded, for a total of three daily flights on theroute. With the new services, Jetsgo will beoffering five daily flights to New York.Jetsgo’s Toronto-Los Angeles service, whichstarts 30 July as a three times weekly service,will have a Sunday flight added 12 September.

FUEL PRICES

13 July 2004

SPOT OIL PRICES CONTINUETO INCREASEFUTURES PRICES INCREASE

Crude Oil Prices:

Spot – US $39.44(up 2.5% from June)

Futures

• 6 month - $38.71(November 2004 delivery)

• 12 month - $36.13(June 2005 delivery)

• 2 year - $33.67(June 2006 delivery)

• 5 year - $29.86(December 2009 delivery)


NEWS ARTICLESOTHER CANADIAN AIRLINES –CON’TWESTJET ANNOUNCES U.S. FLIGHTSCHEDULE

WestJet will begin itsfirst scheduled flights to

the U.S. on 20 September 2004 (WestJet hadpreviously offered charter flights to the U.S.)WestJet will start with twelve weekly non-stopflights from Toronto – New York, daily Calgary –Los Angeles and Toronto – Los Angeles flightson 20 Sept. Additional flights will be addedbetween October and January to San Francisco,Phoenix, Orlando, Fort Lauderdale, Tampa, andPalm Springs.To promote its new U.S. services and sell seats,WestJet is lowering its introductory fares. One-way “Oh-My-Gosh” fares will range from $49 forNew York flights to $59 on Tampa and PalmSprings flights, before taxes and surcharges.Regular one-way fares for these cities are $69,$117, and $89 respectively.

CANADA 3000 TO BE REINCARNATEDAS CHARTER AIRLINEOn 1 July, an Ontario entrepreneur announcedhis plan to launch a charter airline bearing thename Canada 3000 by December 2004. Theoriginal Canada 3000 went bankrupt inNovember 2001, stranding thousands oftravellers when its planes stopped flying.

CANJET STARTS FALL AND WINTERFLORIDA SCHEDULES EARLY

Due to popular demand,CanJet will launch its Fall

and Winter services to Florida three weeksearlier than in 2003. Effective 9 October 2004through 29 May 2005, flights to Orlando, St.Petersburg-Clearwater, West Palm Beach, andSarasota Bradenton will depart from CanJet’smajor eastern Canada airports. “Two-way

connections” via St. John’s have been built intothe schedules for Atlantic Canada customers.Newfoundland CanJet passengers must connecttwice, once at Halifax and also at a secondCanadian point.

U.S. AND INTERNATIONALAIRLINESUNITED AIRLINES AID REQUESTDENIED

UAL Corp.’s request for US$1.1billion in federal loan guarantees wasrejected by an Air Transportation

Stabilisation Board (ATSB) panel. The airline,currently under Chapter 11 protection, hadamended its previously rejected 1.6 billionapplication. The ATSB stated that it will notaccept any further applications from United.The carrier will now have to find more ways tocut costs from its expenses and through itsemployees in order for it to exit bankruptcyprotection.

JETBLUE ANNOUNCES PROSPECTIVECANADIAN CITIES

U.S. low-cost carrier JetBlueis looking at 38 cities to

potentially add to its growing route network. Theairline announced that it is looking at newservices to coincide with its Airbus and Embraeraircraft deliveries scheduled for 2005. Of the 38cities JetBlue is interested in, five are Canadian:Vancouver, Toronto, Calgary, Montréal, andHalifax. JetBlue is scheduled to take delivery of100 EMB-190 aircraft by 2011, the first five ofwhich will be delivered by 2005. JetBlue alsoadded 30 A320s to its Airbus order. The carriercurrently has 53 A320s in its fleet.


NEWS ARTICLESU.S. AND INTERNATIONALAIRLINES – CONT’DINDEPENDENCE AIR LAUNCHESSYRACUSE, NASHVILLE, ANDJACKSONVILLE SERVICES

Independence Airlaunched flights on 1

July 2004 from Washington Dulles InternationalAirport to Syracuse (8/day), Nashville (6/day),and Jacksonville (6/day) international airports.Each route, also served by United Airlines, willsee its capacity more than double withIndependence Air’s new services.

ATA PLANS TO BEGIN EUROPEFLIGHTS

Low-cost carrier ATA(formerly American TransAir) plans to start offering

flights to European destinations as early as nextyear. The airline wants to fly to two or threeEuropean cities and is negotiating with Cologne-Bonn Airport in Germany. ATA said Cologne-Bonn was high on its list of potential destinationsbecause of its success in low-cost travel.

VIRGIN AMERICA PLACES AIRBUSORDERVirgin America, the latest branch of Sir RichardBranson’s air product offering, has placed anorder for 18 Airbus aircraft, comprising 11 A319sand 7 A320s to be delivered in 2005.Additionally, the airline will lease 15 A320 familyaircraft from GE Capital Aviation Services(GECAS) and up to 72 options with EADS’Airbus affiliate.

JAPAN AIR INCREASES BOMBARDIERORDER

Japan Air Commuter hasordered four more Q400

high-speed turboprop aircraft, bringing its firmorders to nine of the 74-seat Bombardier planes.

The deal is speculated to be worth aroundUS$110 million with an option for one more.

EMIRATES LAUNCHES ‘DOUBLEINAUGURAL’ SERVICE

Emirates Airlines launched itsDubai-Melbourne-Christchurch flights

at the beginning of July. The “double inaugural”flight marks the start of its non-stop Melbourneservice and its first flight to Christchurch.Emirates is flying A340-500s on the route threetimes per week, doubling to six per week on 16August.

SINGAPORE AIRLINES BREAKS FLIGHTTIME RECORDS - AGAIN

With the inaugurationof its non-stop round-

trip Singapore-New York service, SingaporeAirlines broke the record for the longestcommercial air service – for the second time inthe past year. The 18-hour 18-minute flight over16,600 km of land and water on an A340-500beat Singapore Airlines’ previous record of 14hours and 42 minutes on its 14,093 kmSingapore-Los Angeles service on 3 February2004.

CHINA EASTERN EXPANDS NORTHAMERICAN NETWORK WITHVANCOUVER SERVICES

Shanghai-basedChina EasternAirlines launched

flights to Vancouver, its second North Americandestination. The flights operate three times perweek on A340-300 aircraft. The airline says it isplanning to launch more North Americandestinations and will expand its services intoEurope with winter flights into Moscow this year.The carrier is currently in talks with VirginAtlantic on codesharing flights from China to theUnited Kingdom.


NEWS ARTICLESU.S. AND INTERNATIONALAIRLINES – CONT’DHONG KONG AND FRANCE SIGN INTER-MODAL SERVICE DEAL

Hong Kong has signed aninter-modal code-sharing

deal with France that allows Cathay Pacific toput its airline codes on France’s SNCF high-speed train service to ten major cities. Theagreement also allows airlines in both countriesto codeshare on flights to Papeete, Tahiti; andNoumea, New Caledonia.

AIRCRAFT MANUFACTURERSBOEING DELIVERS 75 PLANES IN Q2

Boeing delivered 75 commercialairplanes during the secondquarter, including 50 737s. Year-

to-date, Boeing has delivered 151 planes, 105 ofwhich were 737s. The airline expects to deliver285 planes by year-end.

BOEING ANNOUNCES DEALS FOR 10MORE 7E7SBoeing announced that two European carriers,including Britain’s First Choice Airways andItalian charter carrier Blue Panorama, haveplaced orders for 10 7E7s. First Choice signeda letter of intent for six jets, with options for threemore. Blue Panorama’s order includes four jets.Previously All Nippon Airways and Air NewZealand had announced orders for 50, and two7E7s respectively. The new deals puts thecurrent order at 62 jets. The 7E7 is scheduledto start commercial service in 2008.

FAIRCHILD DORNIER FILES FORBANKRUPTCYFairchild Dornier Aero Industries has filed forChapter 11-like insolvency with the district courtof Weilheim, Germany after two years of tryingto keep its 728 regional jet program afloat. Thecompany is a unit of D’Long InternationalStrategic Investments, a financially troubledChinese industrial conglomerate. The originalFairchild Dornier filed for bankruptcy in April

2002 after investors Clayton, Dubilier & Ricedecided against a second round of financing.Fairchild Dornier Aero Industries had 110 firmorders from Lufthansa and GE Capital AviationServices (GECAS). The test program for the728-jet prototype was due to begin this fall aftera two-year delay.

CARGOCARGO CAPACITY INCREASE BIGGERTHAN TRAFFIC INCREASE IN MAY

International freight traffic was up19% in May, according to theInternational Air Transport

Association (IATA). The Middle East and Asia-Pacific regions continued to show the mostgrowth with 33% and 20% increases in freighttonne kilometres respectively. However, overallavailable tonne kilometres were up 24% in May.

ATA MEMBERS TRAFFIC UP IN MAYAir Transport Association(ATA) members transported 2.1million revenue ton miles

(RTMs) in May, up 7.5% over 2003. Freight andexpress RTMs increased while mail RTMscontinued to drop, currently comprising only 5%of total cargo RTMs transported.

FEDEX REPORTS 47% Q4 INCREASEFedEx Corp reported a netincome of US$412 million for

the fourth quarter of its fiscal year. Revenueswere up 21% over Q4 2003 at $7.0 billion from$5.8 billion. The FedEx Express segmentreported an operating income of $407 million, up38% from 2003’s $295 million.

FEDEX OPENS NEW MIAMI HUBFedEx opened its new $50 million MiamiGateway Hub at Miami International Airport on 9July 2004. The 145,000 sq. ft facility willprocess 40,000 packages a day and willenhance Fed Ex’s Latin America and Caribbeanservices.


NEWS ARTICLESCARGO – CON’TDHL RELOCATES TO NEW CANADIANDISTRIBUTION CENTRE

DHL Danzas Air &Ocean, the logistics

division of DHL, has relocated its Canadianwarehousing operations, regional management,sales and customs brokerage and otheremployees to its new 89,721 sq. ft. facility inMississauga, Ontario. The new facility features12 truck-level cargo bays and 30 feet ofmaximum vertical capacity for stacking.

DHL ANNOUNCES PLAN FOR US$1.2BILLION EXPANSIONDHL said it plans to invest US$1.2 billion toexpand and upgrade its package-deliveryoperations in the U.S. by building seven newpackage sorting centres by the end of the year,and another in 2005. The company also said itwould consolidate some air delivery operationsby moving some jobs from Cincinnati/NorthernKentucky International Airport to its Wilmington,OH Air Park. Many of the Cincinnati employeeswill be transferred to the workforce of ABX AirInc., which operates the airport.

POLAR MOVES EUROPEAN HUB TOSCHIPHOL

Polar Air Cargo willtransfer its European cargohub from Liége, Belgium to

Amsterdam Schiphol this fall. Schiphol serviceswill increase from 3 to 16 weekly scheduledintercontinental flights. Construction of a semi-permanent facility to house Polar’s transhipmentactivities is expected to begin later in the year.

WORLD AIRWAYS ADDS TWO CARGOJETS TO FLEET

World Airways has signeda letter of intent to lease two

MD-11F aircraft to boost capacity in itsinternational cargo fleet. The aircraft arescheduled to arrive in the spring of 2005,bringing the carrier’s MD-11 fleet to five cargoand eight passenger aircraft.

VOLGA-DNEPR SECURES LOAN FORRUSSIA’S FIRST SCHEDULED CARGOAIRLINE

Volga-Dnepr Group hassecured a US$14 million loan

from HSBC Bank to finance the fleet expansionof its new scheduled cargo carrier, AirBridgeCargo. HSBC has also provided an additional$15 million short-term credit to increase Volga-Dnepr Group’s working capital. The new airlinewill fly both Russian and Western aircraft and isalready operating its first B747-200.

NEW AAT CARGO TERMINAL TO TRIPLEHONG KONG INTERNATIONALHANDLING CAPACITY

Asia Airfreight Terminal (AAT), aHong Kong based handler, hasannounced that it will invest HK$1.75

billion (US$224 million) on a new 117,500m 2 aircargo terminal at the Hong Kong InternationalAirport. The new terminal is expected to becompleted by December 2006, adding anannual capacity of 910,000 tonnes to AAT’scurrent 458,600 tonnes.

REGULATORY/GOVERNMENTEUROPEAN PARLIAMENT TO ASK FORANNULMENT OF U.S.-E.U. PNRAGREEMENTEuropean Parliament President Pat Cox hasasked the E.U. Court of Justice to annul thePassenger Name Record (PNR) agreementrecently signed between the U.S. and E.U. Alaw requiring all foreign airlines entering,departing or crossing U.S. airspace to provideaccess to their PNR data was put in placefollowing the 9/11 terrorist attacks. Due toEuropean concerns that it violates E.U. privacyprotection laws, the implementation of the lawwas delayed until an agreement could bereached between the U.S. government andEuropean parliament.


NEWS ARTICLESCARGO – CON’TCHINA AND U.S. SIGN BILATERALAGREEMENT

The agreement betweenChina and the U.S.,which extends through

2010, will open up new routes and allow 195more weekly flights for each nation over sixyears. The agreement provides for 111 of theflights to go to cargo carriers and will allow U.S.cargo carriers to establish hubs in China, oncespecific criteria are met. The US DoT will beresponsible for allocating the flights beginning inAugust.

FY 2005 DHS SPENDING BILLAPPROVED BY U.S. HOUSE OFREPRESENTATIVES

The U.S. House ofRepresentatives approved itsversion of the US$32 billion

Department of Homeland Security (DHS)spending bill for 2005. The bill includes $269million for explosives detection system (EDS)installations and ensures that a portion of thismoney goes to EDS installation at medium andsmall airports. The bill continues therequirement that the TSA pay for space it usesat airports outside of the necessary securitycheckpoints. $118 million is included for aircargo security.

FAA HEADQUARTERS RENAMED TOHONOUR WRIGHT BROTHERS

Two Federal AviationAdministration (FAA) officebuildings in Washington D.C. have

been renamed in honour of Orville and WilburWright, the inventors of powered, sustained,controlled flight.

TSA LAUNCHES REGISTEREDTRAVELLER PILOT PROGRAMThe U.S. Transportation SecurityAdministration (TSA) launched the RegisteredTraveller Pilot Program on 7 July 2004 atMinneapolis/St. Paul International Airport in co-operation with Northwest Airlines. Travellers willbe able to apply to the program which, aftermeeting screening and security checks, willallow them to pass through an expeditedsecurity process at select airports. By the endof August, the program will be implemented atLos Angeles International with United Airlines,Houston Intercontinental with ContinentalAirlines, Boston Logan, and Reagan National incoordination with American Airlines.

CAPPS II SCRAPPEDDue to privacy concerns, the U.S. governmenthas decided to drop plans to develop itsComputer Assisted Passenger Pre-screeningSystem (CAPPS II). The program waslaunched after 9/11 but gained criticism fromprivacy advocates when it was revealed thatsome airlines provided passenger informationwhich was used to test the system. Theprogram could be replaced by the voluntaryRegistered Traveller Program recently launchedat Minneapolis/St. Paul airport.

NAV CANADA TO INCREASE SERVICECHARGENav Canada will increase its air navigationservice charges on 1 Sept 2004 by an averageof 7.9 percent. The increase is required in orderto avoid a projected revenue shortfall in the nextfiscal year, but service charges will still be 20%below the old Air Transportation Tax theyreplaced.


NEWS ARTICLESPEOPLE

The Vancouver InternationalAirport Authority has appointed

two new directors: Ruston Goepel, Senior VicePresident of Raymond James Ltd., and Mary B.Jordan, Executive Director of the B.C. Centrefor Disease Control. Reappointed to the boardis Bruna Giacomazzi , Director-At-Large.

Bill Boesch has beennamed CEO of

Deutsche Post Global Mail USA. Don Berrywas named chief operating officer and FlorianSchuhbauer was named CFO.

Pierre Gramegna was namedchairman of Cargolux. He isthe current president of theLuxembourg Chamber ofCommerce.

Wake Smith has beenpromoted to Senior Vice

President and Chief Operating Officer of AtlasAir Worldwide Holdings. He will oversee allaspects of AAWH’s operation, includingexecuting the company’s restructuring plan, setto emerge from Chapter 11 in late July.

The Canadian Airports Council (CAC) hasmade the following appointments to its executiveboard: Howard P. Goldberg is appointed VicePresident Economic Affairs and PolicyDevelopment, Fred L. Jones is appointed VicePresident Operational, Technical, andEnvironmental Affairs and Sandi London isappointed Director, Small Airports. RolandDorsay is no longer the President and CEO ofthe CAC. The board is currently searching forcandidates to fill his position.

Mark Hill, WestJet’sVice President of

Strategic Planning, has resigned from hisposition at the company effective 14 July 2004.Hill, a former employee of Air Canada, decidedto resign from WestJet in light of the currentlawsuit between WestJet and Air Canadaconcerning his involvement in downloadingroute information from an Air Canada employeewebsite.

James F. Parker hasretired as CEO ofSouthwest Airlines

and as a member of the Board of Directors. TheBoard of Directors has appointed Gary Kelly totake Parker's place as Vice Chairman of theBoard and CEO, and member of the Board ofDirectors. Kelly has been with Southwest since1989 and previously held the position ofSouthwest's Executive Vice President and CFO.Laura Wright, who is currently Vice PresidentFinance and Treasurer, will take over Kelly'sprevious position as CFO.


CAN FULL SERVICE AIRLINESSURVIVE?July 2004

It’s been well over a year since the full service airlines (FSAs) in North America won major wageconcessions from employees, lessors, and other suppliers. At the time, carriers touted theseconcessions as the ingredients for restoring profitability. What has been the record since then? HereI provide some data and commentary. My view is that the North American FSAs have not restoredprofitability and may be unable to do so without further consolidation. Whether winning costconcessions under bankruptcy protection like United, US Airways and Air Canada, or whether winningthem by barely skirting bankruptcy like American, it simply has not been enough, and only domesticFSA contraction and consolidation will restore the industry to health.

FSAs are still operating below Break-even Load Factors, even after major costconcessions. First, the plot below shows actual and break-even load factors for the U.S. aircarriers. I include both the FSAs as well as the low cost carriers and the larger regional carriers. Thedata is for the 12 months ending March 2004, and thus is the most current.

In spite of the wage and supplier concessions, and in spite of recovery of traffic in recent months, theU.S. full service airlines are still operating below break even. The one exception is Continental,perhaps one of the best managed airlines in the U.S. Of course, it went through two episodes ofbankruptcy protection to get there.

The LCCs are all operating above break-even load factors. In contrast to the FSAs, all ofthe 7 listed LCCs are above break-even. More importantly, with the exception of Spirit, all the LCCshave break-even load factors below those of the FSAs.

The regional carriers are operating above break-even load factors. What may besurprising to many is that all of the listed U.S. regional carriers are operating above break-even, andhave break even load factors even lower than the LCCs. In previous issues of the Market IntelligenceReport, we have reported that many of the U.S. regional carriers have market capitalisations greaterthan the large US FSAs.

Michael Tretheway

Vice President &Chief Economist

US CarriersLoad Factor vs. Break-even Load Factor

4045505560657075808590

UN

DL

NW US

AM

CO .

Spi

rit

AW JB ATA

FR

Atr

an SW

.

Hor

izon

Air

Wi

Atl

SE

Com

air

Mea

sba

Exe

c

Tr S

tate

s

Am

Eag

le

12 months ended 2004 Q1

perc

ent

Break-even LF Load Factor BELF- LCCs LF - LCCs


CAN FULL SERVICE AIRLINESSURVIVE? – CON’TInternational services are not the problem. The problem is in domestic FSA services. Furtherinvestigation of break-even load factors indicates that the FSAs are generally at or above break-evenon their international services. Their problems are confined to their domestic services.

I think the message is clear here. The U.S. FSAs simply are unable to compete against the LCCs.Around the year 2000, the LCCs reached a critical mass in the U.S. market, roughly 25% of domesticcapacity. At this point, yields in the domestic U.S. market fell precipitously. This in turn drove up thebreak-even load factors of the FSAs.

Contrary to what many think, the drop in domestic yields occurred before 9/11. The graph aboveshows this quite clearly using U.S. monthly domestic yield data. Yields dropped steadily fromDecember 2000 to August 2001. The drop in yields was completed prior to 9/11. In fact, yieldsrose slightly after 9/11 and ever since have been bouncing around the 12 cent range. 9/11 is not toblame for the woes of the U.S. full service airlines. It is the impact of domestic competition from LCCswhich has driven the FSAs to the edge of bankruptcy.

Cost concessions offset by reduced traffic. The data show that the U.S. FSAs have been unableto reduce costs for domestic services sufficient to compete against the LCCs and independentregionals. To survive, they need to do one ofthree things: increase yields, further reducecosts, or withdraw from domestic services.

The LCCs are profitable with current yields,and are adding a lot of capacity, so it isunlikely that domestic yields will improve.

Cost cutting will be difficult, especially sincethe FSAs are losing market share and trafficto the LCCs. The airline industry has

Reconciling Reduced Factor Costwith Increased Unit Cost

Traffic level (number of passengers)

A

B

Unit

cost

(Cos

t per

pas

seng

er)

FSAs reduced unit cost by wage and supplier concessions

FSAs experienced offsetting unit cost increases as they lost traffic to LCCs and independent regional carriers

U.S. Major Carriers Average Domestic Yield

9.0

10.0

11.0

12.0

13.0

14.0

15.0

16.0

Jan

-00

Ma

r

Ma

y

Jul

Se

p

No

v

Jan

-01

Ma

r

Ma

y

Jul

Se

p

No

v

Jan

-02

Ma

r

Ma

y

Jul

Se

p

No

v

Jan

-03

Ma

r

Ma

y

Jul

Se

p

No

v

Jan

-04

Ma

r

Ma

y

Ce

nts

pe

r R

PM

Source: ATA Monthly Passenger Yield Report 2000 -May 2004


CAN FULL SERVICE AIRLINESSURVIVE? – CON’Tsubstantial economies of traffic density. What this means is that as traffic falls, unit costs go up.What happened in the last few years is that the U.S. FSAs won important and large cost concessions,but these were largely offset by higher unit costs as they lost economies of traffic density. At the riskbeing somewhat academic, I show the figure on the previous page which shows the concept. Costconcessions were obtained, but these were offset by loss of economies of traffic density. This is infact what happened last year. All six FSAs lost traffic last year, and three of them experienced higherunit costs in spite of wage and supplier concessions.

The future? With the FSAs caught in a downward spiral, the way out of this may have to beconsolidation. Either one (or more) of the FSAs will have to exit the industry, or some will have tomerge. Mergers would allow the FSA industry to continue to contract as the LCCs expand, whileallowing the surviving FSAs to maintain size sufficient to restore economies of traffic density. Notethat the needed mergers could potentially cross national borders – if foreign ownership laws wereupdated.

This suggests that the future structure of the airline industry might look as follows:

§ LCCs building to 40-60% of domestic trunk markets.

§ Fewer FSAs, which focus on profitable international and regional services.

§ FSAs contracting dramatically in the domestic trunk market, confining themselves to domesticservices which connect major domestic points to hubs, especially those with internationalservices.

§ Large regional carriers expanding their market shares.


THE OTTAWA REPORT20 July 2004

Prime Minister announces new ministry and Minister of Transport

On 20 July 2004, Prime Minister Paul Martin unveiled a new cabinet to Canadians.Minister Tony Valeri, appointed Minister of Transport in December 2003, has beenappointed Leader of the Government in the House of Commons. Taking over asMinister of Transport is the Honourable Jean C. Lapierre, MP for the Montreal-areariding of Outremont, Quebec.

Jean Lapierre was elected to the House of Commons from 1979 to 1990 and was re-elected in 2004. He served as Parliamentary Secretary to a number of ministers and was Minister of State for Youthand for Fitness and Amateur Sport. In Opposition, he was critic for foreign trade, economicdevelopment and constitutional affairs.

Originally from the Magdalen Islands, Jean Lapierre studied Law at the University of Ottawa and wascalled to the Quebec Bar in 1979. While at university, Mr. Lapierre began his political career. Between 1974 and 1979, he was special assistant to the Minister of Consumer and Corporate Affairsand executive assistant to the Minister of State for Urban Affairs. In 1992, Mr. Lapierre became aradio host with CKAC, a position he held until recently. In 2001, he also became an anchor for themain news program of the TQS television network.

With Lapierre as Minister of Transport, Quebec will loom large in the formation of transportationpolicy, especially with respect to VIA, Air Canada and Bombardier. It remains to be seen what thenew Minister will mean for files such as airport rent and international air policy.

While Lapierre will need to reach out to the transport industry, as his predecessor Tony Valeri hadalready done, it is unknown at this point how much Lapierre will adopt from Valeri who had talkedabout market-based, economic-driven transport policy. It seems likely that a repeal of Air Canada’sPublic Participation Act will not be on the radar screen – including the issues of location ofheadquarters and bilingual requirements.

The Honourable Jim Karygiannis, MP for the Toronto area riding of Scarborough Agincourt, remainsas Parliamentary Secretary to the Minister of Transport. First elected in 1988, Jim Karygiannis hasserved as a member of the Joint Standing Committee on the Library of Parliament, and the StandingCommittee on Public Accounts. In 2003, he was named Parliamentary Secretary to the Minister ofTransport with special emphasis on Transportation and Environment.

New Position of Minister of State

The Prime Minister also announced a new position of Minister of State (Infrastructure andCommunities). This change will better position the government to advance its agenda for Canadiancities and communities in strong collaboration with partners across the country. The new Minister ofState (Infrastructure and Communities) is the Honourable John Ferguson Godfrey, from the Torontoarea riding of Don Valley West.

Sam BaroneRegional Vice President,

Ottawa


THE WASHINGTON REPORT14 July 2004

TSA Announces Additional Airport EDS AidTSA announced in mid-June that it was providing funding to SanFrancisco International Airport and Seattle-Tacoma InternationalAirport to offset costs for Explosives Detection Systems (EDS). ForSan Francisco, TSA is providing $15 million to offset costs forcompleting a permanent in-line EDS. For Seattle-Tacoma, TSA isproviding $2.2 million to offset costs for planning and design work to deploy additional EDS machinesin various terminals. According to the agency, it has so far authorised $955 million to airports fordeploying permanent checked baggage security systems over the next three years.

TSA Issues Guidance for Private ScreeningOn 23 June, TSA released its "Guidance on the Screening Partnership Program" (SPP) that providesinformation for airports interested in having private companies provide screeners. Under the Aviationand Transportation Security Act, after 19 November 2004, airports can “opt-out" of having Federalscreeners and choose private security service companies to conduct screening operations under TSAmanagement.

TSA tested private screening at five U.S. airports and has determined that security and customerservice at these airports is comparable to that of airports staffed with Federal screeners. TSA plansto solicit proposals from private companies to become qualified vendors, who can then bid oncontracts to provide screening services at airports authorised for the SPP. TSA expects contractors toprovide their services that are cost competitive with equivalent Federal operations.

TSA Begins Registered Traveller TestTSA announced on 16 June that it had reached agreements with several airports and airlines to beginthe Registered Traveller Pilot Program (RTPP). Participating air carriers solicit frequent flyers thattravel at least once a week in selected markets for participation. Each volunteer must provide TSAwith personal information along with a biometric imprint including finger and iris for a securityassessment. Once approved, the volunteer will be enrolled in the RTPP. Once the program isoperational at their home airports, volunteers will proceed to a Registered Traveller lane to providetheir biometrics to confirm their valid registrations and allow them to proceed to primary screeningwhile secondary screening will be largely eliminated.

Airports and airlines participating in the RTPP and their implement dates include Minneapolis-St. Paulwith Northwest Airlines in late June, Los Angeles with United Airlines in late July 2004, HoustonIntercontinental with Continental Airlines in early August 2004, and Boston Logan and WashingtonNational both with American Airlines by the end of August 2004.

China-U.S. Bilateral Agreement ExpandedOn 18 June, the U.S. and China expanded their air services agreement. The new agreement willallow five additional airlines from each country to serve the U.S.-China market, entering the market ineach of the years 2004, 2005, 2006, 2008, and 2010. This more than doubles the number of U.S.airlines that may serve China. Each side will receive an additional 195 weekly flights over the next six

Charles ChambersRegional Vice President

InterVISTAS Consulting Inc.

AND

Senior Vice PresidentGA2

Washington, D.C.


THE WASHINGTON REPORT –CONT’Dyears, including 111 flights by all-cargo carriers and 84 flights by passenger airlines. The agreementpermits unlimited codesharing between each country’s airlines and allows the carriers to serve anycity in the other country. The agreement will also substantially increase so-called “doing business”freedoms of U.S. carriers in China, including the right for U.S. cargo airlines to establish hubs inChina.

This is a collection of information gathered from public sources, such as press releases,media articles, etc., information from confidential sources, and items heard on the street.Thus some of the information is speculative and may not materialize. Information containedherein is provided for the use of InterVISTAS Consulting Inc. only, and may not bedistributed beyond the office.

Prepared by InterVISTAS Consulting Inc.

cair issue no. 19 - july 2004

Documents