SAO PAULO, Brazil – Air Canada, a founding member of Star Alliance, and TAM, Brazil’s largest airline, announced today 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 travelers 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, added, “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.”