MONTREAL - Tour operator Transat A.T. (TSX:TRZ.B) is hoping to expand its presence and revenues in France by partnering with that country's largest travel agency network.

The Montreal-based company said Friday it has signed a new commercial agreement between Transat France and AFAT Voyages Selectour, itself a merger between two agency groups.

The network to officially begin Jan. 1 will expand Transat's retail distribution reach in France by working with 1,170 travel agencies, whose total billings are about euro2.9 billion (C$4.6 billion).

"By having this partnership with what is now the biggest network in France, it allows us to have a stronger presence in France to sell our products," spokesman Jacques Bouchard said in an interview.

Transat France's 35 Look Voyages agencies will be affiliated with AFAT Voyages Selectour and become the partner of choice. Also, an undisclosed number of French agencies will eventually adopt the Look Voyages brand. Although Transat's products are sold by the agency networks, the agreement increases its visibility in a highly competitive market, added Bouchard.

The company hasn't provided any financial estimates of how much additional revenue could be realized.

With annual revenues of about euro500 million (C$796 million), Transat France is among the five largest tour operators in France, operating under the Vacances Transat, Look Voyages and Amplitravel brands.

It has about 600 employees and carried about 563,000 travellers in 2008.

Transat France president Patrice Caradec said the "innovative agreement" will benefit all parties.

"It will allow Transat France, which is firmly committed to a multi-channel distribution strategy, to reinforce its market presence and to make its offering known and available to more potential customers," he stated.

Look Voyages specializes in all-inclusive travel to the Mediterranean and Caribbean. Vacances Transat focuses on travel mainly to the United States and Canada, which accounts for one-third of its business. It also offers tours to Latin America, Asia, Africa, Scandinavia, Eastern Europe, Scotland and Ireland.

Cameron Doerksen of Versant Partners said the agreement to expand Transat's distribution appears positive, but it's unclear what it will mean financially.

"It's an opportunity to grow business, an opportunity to improve their position in the French marketplace, which is fairly competitive," he said.

Transat has said increasing its profitability is the top target in 2010 after the economic recession and intense competition has reduced its revenues and prices.

It earned $31 million in the quarter ended July 31, as lower fuel prices and operating costs offset the impact of lower revenues in a challenging travel environment.

Revenue was $819.4 million, down 4.7 per cent from $859.9 million in the year-earlier period, although margins improved.

Meanwhile, Air Transat has extended its contract with Lufthansa Technik AG for servicing its Airbus A310 engines by another three years.

Engine overhauls will take place in Hamburg.

Transat A.T. Inc. operates tours in more than 60 countries and sells its products in over 50 countries.

On the Toronto Stock Exchange, Transat's shares closed up a penny at $15.57.