Jazz Air Income Fund announces plans for conversion to a new corporate
holding company - Chorus Aviation Inc.

Proposed Dividend Policy to maintain current level of $0.60 annually

HALIFAX, Oct. 8 /CNW/ - Jazz Air Income Fund ("the Fund") (TSX: JAZ.UN, JAZ.DB) today announced details of proposed conversion of the Fund from an income trust to a corporate structure pursuant to a court approved plan of arrangement (the "Arrangement"). Subject to the receipt of certain approvals, units of the Fund ("Units") will be exchanged for shares in the capital of a new public corporation, Chorus Aviation Inc. ("Chorus"), and the Fund's obligations with respect to its outstanding convertible debentures will be assumed by Chorus. The Arrangement is expected to be completed on December 31, 2010.

Rationale and Benefits of the Arrangement

Changes have been made to the Canadian tax laws which will eliminate certain tax advantages of an income trust structure commencing January 1, 2011. Following the announcement of these changes, the Fund's board of trustees considered a number of restructuring alternatives and has determined that the Arrangement and conversion to a corporate structure provide the best opportunity for creating value and is in the best interests of the Fund and the unitholders. The Arrangement should:

    
    - promote efficient capital management;
    - permit financial and operational performance to be more easily valued
      relative to our corporate peers;
    - attract new investors and provide a more liquid market for our
      securities;
    - remove investor uncertainties which exist in the income trust
      marketplace today; and
    - provide opportunities for growth and expansion of the business.
    

Details of the Arrangement

The Arrangement is subject to certain approvals. As previously announced, the Fund is holding a special meeting of unitholders ("Special Meeting") on November 9, 2010 for unitholders to consider and approve the Arrangement. A proxy circular outlining the details of the Arrangement has been mailed and is available in the Investor Relations section at www.flyjazz.ca and at www.sedar.com. The Arrangement must be approved by more than 66 2/3% of the votes cast by unitholders properly voting at the meeting. The Arrangement also requires the approval of the Ontario Superior Court of Justice. The application to obtain the final approval of the court is expected to be held on November 10, 2010. In addition, certain third party approvals will be required in connection with the Arrangement.

The Arrangement will result in the exchange of Units held by unitholders who are "Canadians", as such term is defined in the Canada Transportation Act ("Qualified Canadians"), for Class B voting shares in the capital of Chorus ("Class B Voting Shares") on a one-for-one basis and the exchange of Units held by unitholders who are not Qualified Canadians for Class A variable voting shares in the capital of Chorus ("Class A Variable Voting Shares") on a one-for-one basis. The Arrangement will also result in Chorus assuming the obligations of the Fund under the trust indenture dated November 12, 2009 between the Fund and CIBC Mellon Trust Company which governs the Fund's outstanding convertible debentures. The Toronto Stock Exchange has conditionally approved the listing of the Class A Variable Voting Shares, Class B Voting Shares and convertible debentures assumed by Chorus subject to the satisfaction of certain customary requirements.

Chorus Aviation Inc.

Following completion of the Arrangement, the board of directors of Chorus will be comprised of the members of the board of trustees of the Fund and the board of directors of Jazz Air Holding GP Inc.

Further, it is expected that the board of directors of Chorus will establish a dividend policy pursuant to which a fixed dividend will be paid to Chorus shareholders on a quarterly basis. The amount of any dividends payable by Chorus will be at the discretion of its board of directors and will be established on the basis of Chorus' earnings, financial requirements, the satisfaction of solvency tests imposed by the Canada Business Corporations Act for the declaration of dividends and other conditions existing from time to time. If the Arrangement is approved by the unitholders, it is anticipated that the dividend will initially be set at $0.15 per Chorus share per quarter, with the first Chorus dividend to be declared in respect of the quarter ending March 31, 2011.

"The aviation industry is experiencing a moderate rebound in travel demand and due to the strength of our core operations, we're maintaining our previous guidance that the current level of cash distribution of $0.60 per unit annually is sustainable post corporate conversion," said Joseph Randell, President and Chief Executive Officer of the Fund. "We have taken a responsible and balanced approach in setting our dividend policy to provide both investor income and allow financial flexibility to fund growth. In fact, post conversion, Chorus is expected to offer investors one of the highest dividend paying stocks in the airline industry."

The planned dividend policy of $0.60 per Chorus share annually represents a $0.43 after-tax income for the retail taxable investors (assumes average marginal tax rate of Quebec and Ontario) versus the $0.32 after-tax equivalent income under the income trust structure, a 34% increase in after tax income for the same investors.

"The conversion of the Fund to a new public corporation is a significant step in the evolution of our business, supporting our objectives of growth and diversification" said Mr. Randell. "In selecting the new corporate brand name for the publicly traded company, consideration was given to what we value most about the Jazz culture. Chorus will foster harmony, creativity, passion, and collaboration that our dedicated and hard working employees demonstrate every day."

Audio Webcast

Jazz Air Income Fund will make available a webcast of Special Meeting on Wednesday, November 10, 2010, or sooner if possible.

To listen to the webcast and to view the presentation slides, please visit:

http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID= 3237520

or the Investor Relations section of Jazz's website at www.flyjazz.ca.

Replay of this broadcast is available on demand at the same web locations until February 8, 2011.

    
    CAUTION REGARDING FORWARD-LOOKING INFORMATION
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This news release should be read in conjunction with the Fund's unaudited consolidated financial statements for the period ended June 30, 2010 and MD&A dated August 3, 2010, filed with Canadian Securities regulatory authorities (available at www.sedar.com).

Certain statements in this news release may contain statements which are forward-looking statements. These forward-looking statements are identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "proposed", "intend", "may", "plan", "predict", "project", "will", "would", "should" and similar terms and phrases, including references to assumptions. Such statements may involve but are not limited to comments with respect to strategies, expectations, planned operations or future actions. Forward-looking statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and other uncertain events. Forward-looking statements, by their nature, are based on assumptions, including those described below, and are subject to important risks and uncertainties. Any forecasts or forward-looking predictions or statements cannot be relied upon due to, amongst other things, changing external events and general uncertainties of the business. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements to differ materially from those expressed in the forward-looking statements. Results indicated in forward-looking statements may differ materially from actual results for a number of reasons, including without limitation, risks relating to Jazz's relationship with Air Canada, risks relating to the airline industry, energy prices, general industry, market credit and economic conditions, competition, insurance issues and costs, supply issues, war, terrorist attacks, epidemic diseases, acts of God, changes in demand due to the seasonal nature of the business, the ability to reduce operating costs and employee counts, secure financing, employee relations, labour negotiations or disputes, restructuring, pension issues, currency exchange and interest rates, changes in laws, adverse regulatory developments or proceedings, pending and future litigation and actions by third parties, as well as the factors identified in the Risk Factors section of the Fund's MD&A dated August 3, 2010 and the Fund's proxy circular dated October 4, 2010, in particular the investment eligibility of Chorus' shares, the ability to satisfy the requirements of the TSX in connection with the listing of Chorus' shares and convertible debentures in connection with the Arrangement, the ability to obtain the required third party consents and regulatory approvals, including, but not limited to unitholder and court approval of the Arrangement, failure to realize the anticipated benefits of the Arrangement and such other risks described from time to time in the reports filed with securities regulatory authorities by the Fund, many of which will also be applicable to Chorus following the completion of the Arrangement. The forward-looking statements contained in this discussion represent the expectations of the Fund and Jazz as of October 8, 2010, and are subject to change after such date. However, the Fund and Jazz disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

About Jazz Air Income Fund

Jazz Air Income Fund is an unincorporated, open-ended trust established under the laws of the Province of Ontario, created to indirectly acquire and hold an interest in the outstanding limited partnership units of Jazz Air LP.

About Jazz Air LP

Jazz Air LP ("Jazz Air") is indirectly wholly owned by the Jazz Air Income Fund, and has a strong history in Canadian aviation with its roots going back to the 1930s. Since Jazz became publicly traded in February 2006, it has generated some of the strongest operational and financial results in the North American aviation industry. Under a capacity purchase agreement with Air Canada, Jazz Air provides service to and from lower-density markets as well as higher-density markets at off-peak times throughout Canada and to and from certain destinations in the United States. Jazz Air currently operates scheduled passenger service on behalf of Air Canada with approximately 840 departures per weekday to 85 destinations in Canada and in the United States with a fleet of Canadian-made Bombardier aircraft.

For more information, visit www.flyjazz.ca.

For further information: Media Contacts: Teri Lake, [phone], Halifax, Nova Scotia, [email protected]; Debra Williams, [phone], London, Ontario, [email protected]; Analyst Contact: Nathalie Megann, [phone], Halifax, Nova Scotia, [email protected]; www.flyjazz.ca