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This case examines the problems faced by Canada''s leading airline company, Air Canada, during the 1990s that led to its filing for bankruptcy protection in 2003. It details the company''s growth from its inception as a government-owned entity in 1937 to becoming the 10th largest airline in the world by the 1990s. This growth has been examined against the backdrop of the changes that took place in the Canadian airline industry over the decades. The case takes a look at the circumstances that led to Air Canada''s merger with archrival Canadian Airlines International. Various problems that cropped up after the merger and the remedial measures adopted are also explored. The case also discusses the initiatives taken by Air Canada to restructure its operations after the 11 September, 2001 crisis. The case moves on to examine the various problems faced by Air Canada during the early 21 century, which forced it to seek creditor protection. Finally, it discusses the company''s future prospects in light of its restructuring plan and the uncertainties that plague the Canadian and global airline industries. The case is designed to enable students to: (1) understand the Canadian airline industry and the role played by the erstwhile state-owned monopoly player, Air Canada; (2) examine the nature of the problems and challenges faced by airline companies during the turbulent 1990s until 2003; (3) examine how changes in external factors (primarily the regulatory setup) impact the performance of the market leader as well as the smaller players; (4) study the various strategies adopted by the market leader to overcome the crisis caused by the external environment from time to time and evaluate the effectiveness of these strategies; (5) gain insight into the implications of merging an archrival with constricting conditions resulting in serious problems of integration; and (6) understand how and why a market leader can be driven towards bankruptcy and chalk out strategic alternatives for its revival. The case is aimed at MBA/PGDBA students and is intended to be part of the strategy and general management curriculum. The teaching note does not contain an analysis of the case.