Transat A.T. Inc. – Status of cash holdings and short-term investments

Montreal, August 22, 2007

In light of the current disruption of credit markets, particularly asset-backed commercial paper (ABCP), Transat A.T. Inc. provides the following update on the status of its cash holdings and short-term investments. Excluding cash in trust or otherwise reserved, Transat A.T. Inc. had a total available cash position of approximately $340 million as of August 20, 2007, including $154.5 million invested in ten different ABCP trusts, certain of which are managed by Coventree Capital Group Inc. Despite liquidity concerns related to ABCP products, Transat has sufficient cash available to meet all of its financial, operational and regulatory obligations.

Cash in trust, representing deposits from customers, as well as the remaining $185 million of available cash, are either held as cash or invested in highly rated liquid instruments (mainly cash and term deposits) with a broad range of large financial institutions, and have no exposure whatsoever to the current asset-backed commercial paper market disruption.

Over 90% of Transat's ABCP investments are in trusts rated R1-High by Dominion Bond Rating Service (DBRS) — the highest credit quality — and are therefore supported by liquidity facilities that are intended to protect investors from a market disruption. Transat understands that certain banks providing such liquidity facilities may have so far refused to provide the requested funding. The said asset-backed commercial paper are securities that met the criteria of Transat's investment policy and were purchased on the basis of professional advice from National Bank of Canada. Maturity dates go from August 21, 2007 to January 29, 2008, and repayments in the amount of $15 million, due August 21, have not been repaid.

DBRS has placed several ABCP issuers "Under Review with Developing Implications" following the announcement on August 16, 2007, that a consortium representing banks, asset providers and major investors had agreed in principle to a long term proposal and an interim agreement regarding third party asset-backed commercial paper. The effect of this would, among other things, be to convert ABCP into term floating rate notes maturing no earlier than the scheduled termination dates of the underlying assets. Transat is in discussion with its bank and the trust managers, and is closely monitoring the situation.

Transat A.T. Inc. is an integrated international tour operator with more than 60 destination countries and that distributes products in over 50 countries. A holiday travel specialist, Transat operates mainly in Canada and Europe, as well as in the Caribbean, Mexico and the Mediterranean Basin. Montreal-based Transat is also active in air transportation, destination services and distribution. (TSX: TRZ.B, TRZ.A)

Transat will hold a conference call for financial analysts, investors and media representatives, today August 22, 2007 at 9.00 a.m. Dial 1-866-696-5910 or 514-861-2255. Name of conference: Transat. The archived call will be available at 1-800-408-3053 or 514-861-2272 access code 3233001 pound sign, until August 29, 2007.

Caution regarding forward-looking statements
This news release may contain forward-looking statements regarding, without limitations, the Corporation’s financial, operational and regulatory obligations, and the risks related to the repayment of asset-backed commercial paper held by the company. Factors that could lead actual results to differ materially from those contemplated by the forward-looking statements also include general economic conditions, competition, extreme weather conditions, disease outbreaks, war, terrorism, and other risks detailed from time to time in the Corporation’s continuous disclosure documents.

These forward-looking statements, by their nature, necessarily involve risks and uncertainties, many of which are beyond the Corporation's control, that could cause actual results to differ materially from those contemplated by these forward-looking statements. The Corporation considers the assumptions on which these forward-looking statements are based to be reasonable, but cautions the reader that these assumptions regarding future events, many of which are beyond its control, may ultimately prove to be incorrect since they are subject to risks and uncertainties that may affect the Corporation. For additional information with respect to these and other factors, see the Annual Information Form and Annual Report for the year ended October 31, 2006, filed with Canadian securities commissions. The Corporation disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law.

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