Transat A.T. Inc. acquires British tour operator Canadian Affair
"Acquisition in line with strategic plan, helps Transat build multi-channel distribution system in the UK" ─ Transat CEO Jean-Marc Eustache

Montreal, July 14, 2006

Transat A.T. Inc., one of the largest integrated tourism companies in the world and Canada's holiday travel leader, has signed an agreement that will lead to Transat acquiring all of the shares of British tour operator The Airline Seat Company (TASC), which operates under the Canadian Affair brand, for £20.4 million in cash (approximately C$42.8 million). Closing is expected to take place at the end of this month.

"Transat, which already sells a significant number of seats between Canada and the U.K., thus becomes a tour operator in Canada's largest tourism market in Europe," said Jean-Marc Eustache, President and Chief Executive Officer of Transat A.T. Inc. "This acquisition squares perfectly with the strategic plan we adopted in 2005 that states our intention to expand the scope of Transat as an outgoing tour operator in Europe, building on our already significant position in France."

"In addition, TASC is very strong on direct sales to the consumer, which represent the fastest growing market segment in the U.K. This considerably enhances the strategic value of this acquisition by reinforcing the full-fledged multi-channel distribution system we are building in the U.K. More than 80% of TASC's sales are direct to the consumer, of which more than 50% are made online," added Mr. Eustache.

Anette Rayner, one of the two TASC founders and shareholders and also its Managing Director, is excited about the acquisition and the enormous potential that this presents. Ms Rayner said: "This deal is a credit to the success of TASC over the past 11 years and it meets all our strategic objectives. The management team and staff will work tirelessly to maximize the strategic synergy and other opportunities this deal affords. Our clients will be the first to benefit from our alliance with a major player in the international tourism market and we will continue to deliver the highest quality of products and customer service that we have become renowned for". Ms Rayner, who has over 25 years experience in the industry, the senior management team and the workforce will remain in place. The sale to Transat represents the next stage in TASC's long-term growth strategy and provides substantial synergies between the two companies. Established in 1995, TASC is one of the largest British tour operators specializing on U.K.-Canada routes, with annual sales of approximately £75 million (approximately C$155 million). Its head office is in London and it has offices in Glasgow (Scotland) and Vancouver (Canada). TASC has more than 60 employees. It serves seven Canadian destinations. In 2004 and 2005, TASC was recognized by the Canadian Tourism Commission as the best direct sale tour operator in the U.K.

Transat is already very active in Europe. In conjunction with sister companies Nolitours and Transat Holidays, wholly owned Transat subsidiary Air Transat is offering direct flights between several Canadian cities and 30 European destinations in 10 countries this summer, more than any other Canadian carrier. The U.K. alone represents 200,000 return seats. Air Transat flies to London, Birmingham, Edinburgh, Exeter, Glasgow, Manchester, Newcastle and Belfast, as well as Shannon and Dublin in the Republic of Ireland. In addition, Transat offers French travellers holiday packages in the Mediterranean Basin, the Caribbean, Europe and North America through its tour operators Vacances Transat France and Look Voyages, as well as numerous other destinations through its travel agencies. Transat also caters to international tourists in Greece through incoming tour operator Tourgreece.

Transat A.T. Inc., with its head offices in Montreal, is an integrated company specializing in the organization, marketing, and distribution of holiday travel. The core of its business consists of tour operators in Canada, France and now the United Kingdom. Transat is also involved in air transportation, value-added services at travel destinations, as well as in distribution through travel agency networks. Transat is listed on the Toronto Stock Exchange (TSX: TRZ.B; TRZ.A)

Financial analysts and media are invited to participate in a conference call with Jean-Marc Eustache, President and Chief Executive Officer of Transat, today, July 14 at 11.00 AM (Eastern). Please dial (514) 868-1042 or 1-866-898-9626 (North America) or 800-9559-6853 (international toll free).

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