Air North News

Issuance of 600 Class D Shares authorized by Superintendent's Order

Background
On Feb 28, 2008, Air North, Yukon’s Airline, received authorization from Yukon Government ("YG"), Department of Economic Development, to issue Class C shares under the Yukon Small Business Investment Tax Credit ("YSBITC") Program for a total of six share offerings, each in the amount of $795,000.00, for each of the tax years 2008-2013 inclusive. On March 3, 4, and 5, 2008, Air North received Subscription Agreements for all 636 shares permitted under the YSBITC approval.

In subsequent discussions with YG officials, it become apparent that the issuance of Class C shares prior to the year for which the tax credit applies may cause complications with respect to the tax credit.

In view of this:

1. Except for the first offering under the YSBITC program for the 2008 Tax Year, Air North has not accepted any of the Subscription Agreements; and
2. Air North requested and yesterday received an Order from the Yukon Superintendent of Securities to issue up to 600 Class D shares (the "Superintendent's Order") on the terms set out in the order. A copy of the Superintendent's Order is attached.

Class D Shares
Under the terms of the Superintendent's Order, Air North may issue up to 600 Class D non-voting shares at an issue price of $7,500.00 each, $4,500,000.00 for the total offering. Air North intends to issue the shares subscribed to pursuant to this offering on or before June 30, 2008 (the "Issue Date"). Complete details with respect to this offering are set out in the attached Investor Fact Sheet – Class D Offering.

The Class D shares which will be issued under the Superintendent's Order are identical to the shares available under the conversion privilege attached to the existing Class C shares previously issued by Air North under the YSBITC program in 2002 to 2004.

They have annual flight dividends identical to the Class C shares – i.e. the holders of Class D shares are entitled to receive in each year ending August 31^st commencing August 31, 2009¹, flight dividends for two return flights from any destination then being served by Air North to any other destination then being served by Air North.

In addition, these Class D shares are freely transferable by holders upon issue.

However, the holders of the Class D shares will not be eligible for a tax credit under the YSBITC program and they will not receive the 4% annual cash dividends payable under the Class C shares. Instead, the holders of Class D shares will receive, immediately following issue of their shares, a bonus one time flight dividend of eight flight segments (or four return trips).

Contacting Subscribers
Specifically, with respect to the Subscription Agreements Air North has received for the 636 Class C shares under the YSBITC program, Air North will proceed as follows:

1. YSBITC Offering No. 1 – Tax Year 2008: As noted above, Air North has already accepted the Subscription Agreements for these 106 Class C shares and holders should receive copies of their accepted Subscription Agreements and share certificates in the mail in the next week to 10 days.
2. YSBITC Offering No. 2 – Tax Year 2009: Air North intends to accept the Subscription Agreements for these 106 Class C shares in early January 2009. However, it will be necessary for these subscribers to sign new Subscription Agreements.
3. YSBITC Offerings Nos. 3 thru 6 – Tax Years 2010 thru 2013: Air North will not be accepting any of the Subscription Agreements for the 424 Class C shares under these four offerings under the YSBITC program.
   
   Each subscriber will be given the option of either:
   
   a. receiving back the her/his/their subscription monies; or
   b. subscribing for an equivalent number of Class D shares.

Over the next few weeks, each subscriber in the 2^nd thru 6^th offerings will be contacted (in order) by Air North's solicitors, Lamarche Pearson, to review their respective options with them. Air North would request subscribers to wait patiently for their call as calls to Air North solicitors will only slow the process.

Additional Class D Shares
Under the terms of the Superintendent's Order, Air North may issue up to 600 Class D shares – 176 more than required to replace the 424 Class C shares subscribed to under YSBITC Offerings 3 thru 6. When all of the existing subscribers have been canvassed, Air North will have its solicitors contact (in order) the persons remaining on the list of individuals who contacted Air North about acquiring Air North shares.

Any inquiries with respect to this Press Release should be made to either Joe Sparling, President, or Murray J. Leitch, Vice-President, Administration & General Counsel.

Joseph Sparling
President

¹ From the Issue Date to August 31, 2009, each holder shall be entitled to flight dividends for four segments (two return flights) from any destination then being served by Air North to any other destination then being served by Air North. Thereafter, yearly in each year from September 1^st to August 31^st until conversion or redemption, each holder is entitled to flight dividends for a further four flight segments (two return flights). Each holder will receive a T5 for the value of the annual flight dividends as dividend income.