As previously announced, the Board of Directors of Transat A.T. Inc. (“Transat”) is informing shareholders and the investment community of the following decisions. The Board has approved a three-year strategic plan to foster growth and capitalize on the Company's position among the largest travel and tourism companies worldwide. In addition, following a thorough review of the Company’s business environment and outlook for fiscal 2006, and taking into account the newly approved strategic plan, the Board has decided to proceed with a return of capital of $125 million. Finally, the Board has considered and ruled out the option of converting Transat into an income trust.

In view of the above, the Company wishes to update its shareholders and the investment community on its strategic plan, business outlook and use of cash.

Strategic Plan
The Board has unanimously approved a three-year strategic plan that focuses on growth and increased profitability in coming years, based on an expansion of operations in current and new markets, as well as the implementation of strategies to increase margins. “In our 18 years operating as a public company, we have grown to become one of the largest players in our industry globally. We have determined that the creation of value for our shareholders calls for further growth and the penetration of new markets. This will be achieved through organic growth, acquisitions and maximizing the benefits of vertical integration,” said Jean-Marc Eustache, Chairman and Chief Executive Officer.

The plan can be summarized as follows:
· In Canada – Become a market leader across Canada, mainly by (a) expanding Transat's presence in Ontario; (b) developing new destinations; and (c) increasing the scope of the Company's distribution network.

· In Europe – Increase market share and pursue vertical integration in France and the United Kingdom, two high-potential markets where the Company already has a strong presence. The Company will also pursue efforts to expand its presence as a major tour operator in other European countries, especially to Canadian destinations.

· New Markets – Become a significant tour operator in the United States. The Company has been studying and prospecting that market for some time now and believes that establishing a presence in the US is strategically important. In addition, expanding operations into other markets like Asia and Latin America will continue to be considered.

· Destination services and accommodation – Accelerate the development of destination services and gain control of a portion of Transat’s accommodation needs. This will allow the Company to better control its capacity and the quality of its product, and increase margins. Destinations where Transat already has critical mass will be prioritized.

The Company anticipates that up to $300 million over three years will be needed to execute its strategic plan which would be funded through a mix of cash on hand, future cash flows and external sources, if required.

Transat will not seek to adopt an income trust structure. Management and the Board of Directors do not believe that the business of Transat is suitable as an income trust, given the volatility of cash flows in the tourism industry and the ongoing risk for unforeseen events that can materially affect results. In addition, there is significant uncertainty in the market regarding the status of income trust conversions in Canada.

Business Outlook
As stated in its quarterly report for the period ended July 31, 2005, the Company expects to generate considerably lower margins in the fourth quarter of fiscal 2005, compared with the corresponding period in the previous year. The Company expects its EPS for the fourth quarter to be more than 50% lower than the amount for the corresponding period in the previous year.

Due to high and volatile fuel prices, continuing and significant competition in key markets, namely in Ontario and on Canada/UK routes, and uncertain general economic conditions, the Company expects that fiscal 2006 will be a difficult and challenging year. In light of the above, the Company currently anticipates fiscal 2006 earnings to be below the earnings expected for the current fiscal year.

Unrestricted cash (total cash excluding cash in trust or otherwise reserved) available as at October 31, 2005 is expected to be lower than the $366 million as of July 31, 2005 and closer to the $311 million balance recorded as at October 31, 2004. This takes into account anticipated results from operations and that the Company has used its normal course issuer bid to buy shares in the amount of approximately $10 million since July, 31, 2005.

Under the same normal course issuer bid, the Company has bought back shares for a total of $22.5 million since November 1st 2004.

Use of Cash
Management and the Board of directors of Transat believe that it is in the best interests of all shareholders that the Company keeps a cash reserve of approximately $100 million for ongoing working capital needs and unforeseen events such as high fuel prices, the fear of an avian flu outbreak or other traumatic events similar to 9/11.

In addition, the Board has determined to fund part of the strategic plan described above using available cash. In this regard, Transat anticipates using approximately $85 million in fiscal 2006 to fund acquisitions, some of which may be completed by the end of the 2005 calendar year.

After consideration of the aforementioned and based on the estimated unrestricted cash balance as at October 31, 2005, the Board has decided that, if the current economic and business environment prevails, an amount of $125 million will be returned to shareholders. The form of the return of capital, as well as timing and terms, will be determined and disclosed as soon as practically possible, but at the latest by mid January.

The Company is of the view that its intended use of cash represents the best option for the Company and its shareholders considering current business environment and outlook for 2006. The anticipated scenario shall provide a return of capital to investors and allow for the implementation of the strategic plan, hence growing the Company and creating shareholder value.

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 (TSX:TRZ.B; TRZ.RV.A).

Caution regarding 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 2004 Annual Information Form and the 2004 Annual Report (Management Discussion and Analysis) filed with Canadian securities commissions. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law.