• Transat has received only one alternative proposal and it is NOT a "superior proposal" to the arrangement with Air Canada
• Transat Board reconfirms its unanimous support FOR the acquisition by Air Canada

Following recent media reports that potential competing proposals for the acquisition of Transat A.T. Inc. ("Transat" or the "Corporation") may have been made, Transat wishes to clarify the situation for shareholders and other stakeholders.

Receipt of Only One Alternative Proposal

In late November 2020 Transat received an unsolicited proposal from a private investor, who is not actively involved in the airline and tourism industries, (the "New Offeror") for the acquisition of all of the issued and outstanding shares of the Corporation (the "Competing Proposal").

Transat has not received any other acquisition proposal since August 11, 2019, the date of the last amendment to the original arrangement agreement with Air Canada. This agreement has since been replaced by a revised arrangement agreement with Air Canada dated October 9, 2020 (the "Air Canada Arrangement Agreement").

As is customary with these agreements and consistent with directors' fiduciary duties, the Air Canada Arrangement Agreement contains specific terms allowing the Board of Directors of Transat (the "Board") to consider an unsolicited acquisition proposal received prior to the special meeting and determine if such acquisition proposal constitutes a "superior proposal" and is in the best interest of Transat and its stakeholders and thus entitles the Board to terminate the Air Canada Arrangement Agreement under certain conditions.

Following receipt of the Competing Proposal in late November 2020, Transat entered into a confidentiality and standstill agreement with the New Offeror who was allowed to complete a legal and financial due diligence investigation of Transat with full access to all of the materials provided to Air Canada in the course of Air Canada's  due diligence investigations relating to the Air Canada Arrangement Agreement.

Transat also engaged in discussions with the New Offeror with a view to determining if such proposal could constitute a "superior proposal" under the terms of the Air Canada Arrangement Agreement.

Competing Proposal is NOT a Superior Proposal

The Board carefully and thoroughly examined the terms of the Competing Proposal, including the supplementary information obtained from its investigations of, and discussions with, the New Offeror with the assistance of its legal and financial advisors. After having done so, the Board unanimously determined, upon recommendation of the Special Committee, that the Competing Proposal was not in the best interest of Transat and its stakeholders and NOT a "superior proposal" as contemplated under the terms of the Air Canada Arrangement Agreement.

Upcoming Special Shareholder Meeting

The special meeting of shareholders of the Corporation called to vote on the arrangement with Air Canada is scheduled for 10:00 a.m. today.

Transat Board Reconfirms its Unanimous Support for the Arrangement with Air Canada

Transat's Board and the special committee of the Board, supported by their financial and legal advisors, reiterate their unanimous recommendation that the arrangement with Air Canada is in the best interests of Transat and its stakeholders and is fair to Transat shareholders, and unanimously recommend that shareholders:

Vote FOR the special resolution approving the Arrangement with Air Canada

Transat has retained Kingsdale Advisors to act as its strategic shareholder advisor and proxy solicitation agent, to answer information requests from shareholders and to assist in the submission of proxies and voting instructions. Communications with Kingsdale Advisors may be made by phone toll free within North America at 1-888-518-1552, or collect call outside North America at 416-867- 2272, or by e-mail at contactus@kingsdaleadvisors.com.

A copy of the management proxy circular of the Corporation dated November 12, 2020 and related Meeting materials were mailed to shareholders on November 13, 2020 and are also available on SEDAR under Transat's profile at www.sedar.com, on Transat's website or by contacting Kingsdale Advisors.

Air Canada Arrangement Agreement

Under the terms of the Air Canada Arrangement Agreement unanimously approved by the Board, Air Canada will acquire all issued and outstanding shares of Transat for $5.00 per share, payable at holders' option either in cash or shares of Air Canada, or a combination thereof. Air Canada shares issuable under the share exchange option will be issued at a fixed price of $17.47 per Air Canada share, representing a fixed exchange ratio of 0.2862 Air Canada share per Transat share.

For illustrative purposes only, on December 14, 2020, the closing price of the Air Canada shares on the Toronto Stock Exchange was $26.10. Based on that closing price, the implied purchase price for Transat would be $7.47 per share for shareholders selecting the share exchange option.

Letters of Transmittal and Election Forms

Registered shareholders wishing to receive the share consideration must return the Letter of Transmittal and Election Form, attached to Transat's management proxy circular dated November 12, 2020, to AST Trust Company (Canada), acting as the depositary, by 5:00 p.m. (Montréal time) on or before the date that is two business days prior to the date of completion of the proposed acquisition (the "Election Deadline"). Non-registered shareholders should carefully follow the instructions of the intermediary holding their shares on their behalf. Transat will include notice of the Election Deadline in a press release disseminated over newswire service in Canada at the latest on the business day immediately before the Election Deadline.

Investors who purchase shares of Transat shortly before the completion of the transaction are advised that they may not have sufficient time in order to submit a duly completed Letter of Transmittal and Election Form by the Election Deadline in respect of such shares and should consult with their broker, trust company or other intermediary and seek advice from their professional advisers in advance of any such trade.

If you have any questions or require further information about the procedures to complete your Letter of Transmittal and Election Form, please contact AST Trust Company (Canada), Transat's transfer agent and depositary, at 1-800-387-0825 (toll free within North America) or 1-416-682-3860 (outside of North America) or by email at inquiries@astfinancial.com