Air Canada is improving its offer for Quebec tour operator Transat A.T. Inc., increasing its purchase price from $13 to $18 per share winning the support of the company's largest shareholder.

In a statement issued late Sunday, Air Canada announced a new total purchase price of approximately $720 million, up from its initial $520 million proposal.

The press release also reports the conclusion of a blocking and support agreement with the investment manager Letko Brosseau, which holds 19 per cent of outstanding Transat shares.

Air Canada will, therefore, be able to count on the support of Transat's largest shareholder at the shareholders' meeting scheduled for August 23.

Groupe Mach submitted a rival bid on a large block of shares of Transat, in an attempt to derail its sale to Air Canada. The real estate developer offers $14 per share.