-Injection of more than $40 million in additional cash
-$100 million writeoff due to reduced capacity
-For fiscal 2001 and before unusual items, the Company expects to break even or record a minor loss.

Transat A.T. Inc., a leader in the organization, marketing, and distribution of holiday travel, is introducing financial adjustment measures to follow through on the actions it took in immediate response to the decreased demand in the travel industry caused by the events of September 11.

'After having moved swiftly following the September 11 events to adjust our capacity and cost structure, we are announcing the writeoff of assets and non-recurring expenses, representing an after-tax total of approximately $90 million, mainly related to the reduction in demand,' Jean-Marc Eustache, President and Chief Executive Officer of Transat, said today. 'We are also announcing an agreement with certain shareholders and another with our lenders in order to increase our available cash by more than $40 million.

'Transat has reviewed its assets in light of the decreased demand for travel services, the subsequent reduction of the Company's capacity and the possibility that it could take several months before sales volumes in the travel and airline industries return to previous years' levels. The review has prompted the Company to reduce the book value of certain tangible and intangible assets by approximately $105 million.

 This particularly covers a writeoff associated with the accelerated retirement of its seven Lockheed L-1011-150s from Air Transat's fleet. This writeoff involves no cash outlay, but allows the Company to recover significant amounts of taxes paid in previous years. When combined with certain non-recurring expenses, the writeoff will negatively impact Transat's fourth-quarter 2001 and fiscal 2001 results by an after-tax amount of approximately $90 million. This includes a $15-million valuation allowance related to future income tax assets, Mr. Eustache added.

In addition, the Company has signed agreements-in-principle with two of its largest shareholders, CDP Capital d'Amérique, a subsidiary of the Caisse de dépôt et placement du Québec, and the Solidarity Fund QFL under which each of those partners would invest $10 million in non-convertible debentures in the Company and its wholly-owned subsidiary Air Transat, for a total of $20 million. The agreements are subject to the approval of regulatory authorities, certain aircraft lessors and other closing conditions. Transat management would also invest between $1 million and $3 million in non-convertible debentures. This issue of non-convertible debentures would also provide holders with warrants allowing for the issue and acquisition of a maximum of 1,495,000 common shares over the next five years at a price of $6.75 a share. Debentures would pay a 6% annual interest and feature a premium which, at maturity, would provide an internal rate of return of 15%. The debentures would mature in seven years, but could be redeemed at the Company's discretion after three years. The Company expects closing before the end of December.

Moreover, the Company's banking syndicate has agreed to renew, for an additional year, Transat's revolving credit facility that was to expire in February 2002 and to release collateral that will increase the Company's available cash by $20 million, subject to similar conditions as those related to the issuance of debentures.

Transat's results for fiscal 2001, which will be released as scheduled in January 2002, were impacted by the severely decreased demand that immediately followed the attacks and lasted through October. Transat moved swiftly to adjust to emerging market conditions, announcing measures on September 24 to reduce Air Transat's capacity by 30%, decrease its Canadian workforce by 25% overall, cut management wages from 5% to 20%, freeze wages for all non-unionized employees, and reduce certain expenses. For fiscal 2001 and before unusual items, the Company expects to break even or record a minor loss.

Although the market is recovering and the Company improved its positioning in the wake of Canada 3000 and Canada 3000 Holidays ceasing operations, demand remains lower than it was at the same date last year and some uncertainty continues to prevail. Both the winter and summer 2002 seasons will be impacted by the September 11 events.

'Today, thanks to our partners' support, we are announcing complementary financial measures to further reinforce our overall situation,' said Mr. Eustache. 'With the help of our employees, we will now devote our energies to returning to profitability and positioning the Company to fully benefit when the travel industry gets back to normal. International tourism has proven to be a durable phenomena, featuring solid growth over the last 50 years, and we are in a good situation to bounce back.'

About Transat A.T. Inc.
Transat A.T. Inc., with its head office 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 and France. Transat is also involved in air transportation, hotel management, and value-added services offered at travel destinations, as well as in distribution through both travel agency networks and e-commerce initiatives. Transat A.T. Inc. is a public corporation listed on the Toronto Stock Exchange(TSE:TRZ). In 2000 Transat recorded revenues of $1.9 billion.