- Revenues of $696.2 million for the second quarter and $1.2 billion for the winter season.

- Margins1 of $79.3 million for the second quarter and $96.3 million for the winter season, increases of 96.2% and 112.8% respectively compared with 2003.

- Net income of $45.5 million for the second quarter or $1.10 per share fully diluted compared with a net income of $15.4 million or $0.39 per share fully diluted in 2003.

- Net income of $48.3 million for the winter season or $1.18 per share fully diluted compared with a net income of $8.4 million or $0.21 per share fully diluted in 2003.

- Cash and cash equivalents in the amount of $427.9 million (including $98.1 million held in trust or otherwise reserved) compared with $349.1 million (including $106.2 million held in trust or otherwise reserved) in 2003.

Transat A.T. Inc., one of the 10 leading holiday travel companies in the world and the leader in Canada, recorded revenues of $696.2 million for the quarter ended April 30, 2004, compared with $718.8 million in 2003, a decrease of 3.1%. The Corporation recorded a margin of $79.3 million for the quarter, almost double the $40.4 million recorded in 2003. Net income was $45.5 million or $1.10 per share on a fully diluted basis for the quarter, almost three times the net income of $15.4 million or $0.39 per share on a fully diluted basis for the corresponding quarter of 2003. Excluding the after-tax effect of the restructuring charge in 2003, the net income of the corresponding quarter in 2003 was $18.0 million or $0.46 per share on a fully diluted basis “There can be no doubt that Transat has continued to deliver on its objectives. We did what we said we would do and I am very proud of our employees for helping us deliver the best results in our history. Our long-term strategy has proven to be the right course of action for us. Our determination to improve our margins led us to concentrate on our core business and on reducing our costs,” stated Jean-Marc Eustache, President and Chief Executive Officer of Transat A.T. Inc. “We are now focused on our summer season where booking levels are almost back to the levels of 2002.” For the first six months of fiscal 2004, Transat recorded revenues of $1,233 million compared with $1,248 million in 2003, a decrease of 1.2%.

The Corporation recorded a margin of $96.3 million for the winter season, more than double the $45.2 million recorded in 2003. Net income was $48.3 million or $1.18 per share on a fully diluted basis for the season, compared with net income of $8.4 million ($0.21 per share on a fully diluted basis) for the corresponding period of 2003 ($11.0 million of net income or $0.29 per share on a fully diluted basis excluding the after-tax effect of the restructuring charge). As at April 30, 2004 the Corporation had $427.9 million in cash and cash equivalents (including $98.1 million held in trust or otherwise reserved) compared with $349.1 million as at October 31, 2003 (including $106.2 million held in trust or otherwise reserved). Working capital was $193.9 million compared with working capital of $144.5 million as at October 31, 2003.

Debt levels as at April 30, 2004 have decreased compared with October 31, 2003. The balance sheet debt dropped by $33.3 million to $32.1 million from $65.3 million and the off-balance sheet debt increased by $6.2 million from $529.9 million to $536.1 million resulting in a total debt(2) reduction of $27.1 million compared with October 31, 2003. When deduction is made of cash and cash equivalents that are not in trust or otherwise reserved from total debt, the net debt (3) drops to $238.4 million from $352.3 million, a 32.3% decrease.

Geographic business areas highlights

Canada
In Canada, revenues decreased slightly in the current quarter and increased slightly in the first six months of fiscal 2004 compared with the corresponding periods in 2003. Once the loss in revenue from Americanada is factored in, revenues also increased in the current quarter. These increases are due to an increase in the number of travellers by 7.5% and 5.3% respectively compared with the corresponding periods in 2003, offset by a reduction in sales made to external tour operators (i.e. tour operators outside the Transat group of companies). Demand was strong for destinations to the Caribbean, Europe and Florida. Higher prices also contributed to these increases.

The restructuring efforts undertaken in 2003 continued to be felt in the current quarter and current six-month period. The consolidation of the Canadian tour operators and distribution activities, the increased utilization of aircraft in Canada for the Corporation’s internal tour operators and the partnership with WestJet Airlines Ltd. along with reduced expenses and increased demand by travellers have led to increased margins. For the quarter, the Corporation’s margins increased to 15.1% compared with 7.4% in the corresponding quarter of 2003 and for the first six months margins increased to 11.0% compared with 5.6% in the corresponding period.

France and other
In Europe both revenues and expenses decreased in the current quarter and current six-month period compared with the corresponding periods in 2003 resulting in negative margins. Despite increases in the number of travellers in both the current quarter and six month period by 7.0% and 8.9% respectively, Transat’s French operations recorded lower revenues and negative margins due to a drop in passengers for air-only travel at Look Voyages of approximately 22% in both periods. The increase in travellers was mostly due to increased demand for long-haul travel from Europe to Caribbean destinations both at Vacances Air Transat (France) and Look Voyages at lower overall prices. The lower prices were the result of competitive pressures.

Acquisitions
On June 10, 2004 the Corporation acquired an additional 50% participation in Tourgreece S.A. (“Tourgreece”), an incoming tour operator, for a total consideration of 1.6 million euros ($2.6 million) in cash. Pursuant to this transaction, the Corporation will hold a 90% interest in Tourgreece

On April 8, 2004 the Corporation completed the acquisition of the remaining 50% participation in Jonview Corporation (“Jonview”), an incoming tour operator, in partnership with the Solidarity Fund QFL (a minority shareholder of Jonview) for $12.8 million, including $0.1 million in transaction costs.

A total of $9.6 million was paid at closing with the balance to be paid in cash in three instalments until September 2006. In connection with this transaction, a $3.2 million dollar debenture was issued to the minority shareholder in order to finance a portion of this acquisition.

The Corporations percentage ownership in Jonview is approximately 80% as a result of this transaction.

Outlook
With a successful winter season completed, the Corporation’s attention now turns to its upcoming summer season for which Transat is cautiously optimistic. The bookings to date do not permit us to provide a reliable forecast since the majority of the booking cycle continues to be 1 to 6 weeks prior to departure.

In Canada, overall booking levels for the summer season are ahead of last year by approximately 13% and European bookings are almost back to the levels of 2002. As for the margins, although pricing has not returned to pre-SARS levels, the cost reduction efforts at the airline are ahead of plan. The impact of the recent increase in the cost of fuel will be partially mitigated by the Corporation’s hedging program, fuel surcharges and the favorable impact of the stronger Canadian dollar. As a result, the summer season in Canada is off to a good start.

In France, Transat is on track with its initiatives at Look Voyages with regards to reducing exposure to air only business and increasing holiday package business. The Corporation does, however, expect the summer season to be very competitive with regards to both capacity and prices. As a result, no improvements in Look Voyages’ results for the summer season are expected compared to last year. Transat will continue to support Look Voyages in its turnaround efforts and will accelerate its efforts and update its plan regarding Look Voyages in light of the financial results and expects to have this updated plan approved by the Board of Directors of Transat by this fiscal year end.

At the beginning of the second quarter, the Corporation discontinued using the equity method in accounting for its investment in its French airline company, Star, because of the inability to exercise any significant influence over this company. As a result Transat will not be recording any share in net income related to Star in the upcoming summer season. In the 2003 summer season Transat recorded an after-tax net income of $3.7 million, most of which was recorded in the fourth quarter of 2003.

The profitability of the remainder of the French operations is ahead of last year.

Overall, Transat is on track with its stated objectives. The Corporation basically did what it said it would do and proved that its long-term strategy was the right course of action. Now Transat must accelerate its efforts related to Look Voyages and be prepared for a challenging season in France.

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, value-added services at travel destinations, as well as in distribution through travel agency networks. Transat is listed on the Toronto Stock Exchange (TSE:TRZ).

Non-GAAP measures
We prepare our financial statements in accordance with Canadian generally accepted accounting principles (“GAAP”). We will occasionally refer to non-GAAP financial measures in the news release. These non-GAAP financial measures do not have any meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. They are furnished to provide additional information and should not be considered as a substitute for measures of performance prepared in accordance with GAAP.

(1) Revenues less operating expenses (non-GAAP financial measure used by management as an indicator to evaluate ongoing and recurring operational performance).
(2) Debt plus off-balance sheet arrangements (non-GAAP financial measure used by management to assess the Corporation’s future liquidity requirements).
(3) Total debt less cash and cash equivalents not in trust or otherwise reserved (non-GAAP financial measure used by management to assess its liquidity position).

Forward-looking statements
This news release contains certain forward-looking statements with respect to the Corporation. These forward-looking statements, by their nature, necessarily involve risks and uncertainties 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 affect the Corporation. For additional information with respect to these and other factors, see the Annual Information Form and Annual Report (Management Discussion and Analysis) 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.

To view the results for the first quarter 2004, see Financial reports page.