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070910 Morgan Final

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  • Transcript

    • 1. Morgan Stanley 10 th Annual Latin America Conference London, September 11 & 12, 2007
    • 2. Information and Projection
      • This notice may contain estimates for future events. These estimates merely reflect the expectations of the Company’s management, and involve risks and uncertainties. The Company is not responsible for investment operations or decisions taken based on information contained in this communication. These estimates are subject to changes without prior notice.
      • This material has been prepared by TAM S.A. (“TAM“ or the “Company”) includes certain forward-looking statements that are based principally on TAM’s current expectations and on projections of future events and financial trends that currently affect or might affect TAM’s business, and are not guarantees of future performance. They are based on management’s expectations that involve a number of business risks and uncertainties, any of each could cause actual financial condition and results of operations to differ materially from those set out in TAM’s forward-looking statements. TAM undertakes no obligation to publicly update or revise any forwardlooking statements.
      • This material is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Likewise it does not give and should not be treated as giving investment advice. It has no regard to the specific investment objectives, financial situation or particular needs of any recipient. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment.
    • 3. TAM is a low cost company with better service at competitive prices Low Operating Costs Undisputable Better Service Competitive Prices Sustainable Strategy to Maintain Market Leadership and Profitability
    • 4. The domestic market growth still strong in 2007, reaching 13% in the first 7 months of the year 2004 Source: ANAC Accum. market growth 2006 12% Accum. market growth 2005 19% Accum. market growth 2004 12% Accum. market growth 2007 13% 2007 2006 2005
    • 5. We have been domestic market leaders since 2003, ending July with 49,3% Domestic Market Share - July/07 Domestic Market Share (RPK’s) Source: ANAC Domestic Market Share – 2Q07
    • 6. The international market (among Brazilian carriers) is recuperating Source: ANAC Accum. market growth 2004 8% Accum. market growth 2005 7% Accum. market decrease 2006 30% Accum. market decrease 2007 24% Acum TAM 2006 41% Acum TAM 2007 75% Acum TAM 2005 40% Acum. TAM 2004 30% 2004 2007 2005 2006
    • 7. Since July 2006, we are international market leaders among the Brazilian companies International Market Share– July/07 International Market Share Source: ANAC International Market Share – 2Q07
    • 8. In the past 5 years, we have improved every operational metric…
      • No. take-offs (K)
      • Load Factor
      - LF Dom - LF Int
      • Market Share Dom
      • MS/CS Domestic
      • Aircraft Utilization (block hrs/day)
      - Narrow bodies - Wide bodies 2003 76 147 61 % 58 % 71 % 33 % 0.97 7.6 5.8 7.3 2004 76 151 66 % 64 % 71 % 36 % 0.98 9.0 6.9 12.6 2005 81 210 71 % 70 % 73 % 44 % 1.00 11.4 10.2 14.2 2006 92 245 74 % 73 % 76 % 48 % 1.02 12.7 12.4 15.1
      • No. operating aircraft
      2002 102 219 55 % 53 % 61 % 35 % 0 . 94 9.5 9.2 1 0.0 1H07 101 130 71 % 71 % 70 % 49 % 1.03 12.8 12.4 15.7 TAM S.A.
    • 9. …resulting in an outstanding improvement in our financial metrics Net revenues EBITDAR % EBITDAR EBIT % EBIT Net Income % Net Income 2002 3,429 475 13.9% (236) -6.9% (606) -17.7% 2003 3,667 775 21.1% (32) -0.9% 174 4.7% 2004 4,520 1,038 23.0% 294 6.5% 342 7.6% 2005 5,649 1,140 20.2% 426 7.5% 187 3.3% 2006 7 ,3 45 1, 817 2 4 . 7 % 996 1 3 . 6 % 556 7. 6 % 1H07 3 ,3 22 593 1 5.6% 120 3 .2% 31 0 .8% BR GAAP
    • 10. And a solid balance sheet improvement
    • 11. However the competitive dynamic in the domestic market lead to a reduction of our spread in the 1H07
    • 12. Structure of legal authorities involved in the industry AIR FORCE COMMAND DECEA AIR TRAFFIC/ SPACE CONTROL Civil & Military Aircraft NAVY COMMAND ARMY COMMAND CENIPA Accident Investigation and Prevention Board Air Traffic Control A&I Investigation MINISTRY OF DEFENSE PRESIDENT CONAC National Civil Aviation Council Design Manufacturing Operations Maintenance Licensing Airports Register Facilitation Security Air Services Intl. Air Navigation Ergonomics Human Factors INFRAERO National Civil Aviation Agency
    • 13. CONAC announced guidelines for future implementation (1/2)
      • Resolution no. 6, dated July 20, 2007, states that:
        • By ANAC
          • ANAC´s supervisory duties will be enhanced in order to assure unrestricted support to the victim´s family members
          • In 60 days, the take-off and landing rights at Congonhas will be reviewed, restricting them to point-to-point, direct flights
          • New international flights will be allocated outside the São Paulo terminal (Guarulhos and Congonhas)
          • No charter flights are allowed out of Congonhas
          • A permanent contingency plan for aircraft and crew must be established
    • 14. CONAC announced guidelines for future implementation (2/2)
        • By ANAC and Air Force Command
          • Further restrict the use of Congonhas for General Aviation purposes
          • In 90 days, submit a study on possible locations for a new aiport site in São Paulo
        • By Infraero
          • In 90 days, submit a study for expansion and redesigning of airports in São Paulo
          • Seek clearance from the courts for spaces currently occupied by companiese under bankrupcy or reorganization
          • Promptly adopt redistribution of spaces to permit accomodation of a larger number of passengers at Guarulhos
    • 15. We revised our fleet plan due to lower expectations for the domestic demand
    • 16. However, our guidance for 2007, disclosed in December 2006, is still the same
      • Average domestic market share above 50%
      • Average domestic load factor at approximately 70%
      • Aircraft utilization per day (block hour) higher than 13 hours
      • Reduction of 7% in total CASK ex-fuel in BR GAAP yoy
      • Opportunity in the international market
        • Third frequency to Paris
        • Inauguration of two new international long haul frequencies
      • Market demand growth from 10% to 15% (in RPK terms)
      Guidance 2007 TAM Market 12.6%* 1S07
      • Since January
      • Milan (March), Frankfurt and Madrid (December)
      49.3%* 72.1%* 12.8 9.2% * Accumulated from January to July
    • 17. We continue to pursue our strategy, already with strong deliveries in 2007
      • Increased block hours
      • Insourcing of stations
      • Increased direct website sales (110% increase 1S07 vs 1S06)
      • Ongoing sourcing improvements
      • Optimized GDS costs
      • Increased use of technology
      • New check-in procedures, including higher use of self check-in totems and web check-in
      • Additional staff for directing passengers
      • Zone boarding
      • Revised onboard services
      • New international call center
      • Increased “dispatchability” with Operational Centre
      Superior Customer Service Increase Revenues Reduce Costs
      • Increase in international revenues (70% increase with a 88% ASK increase, in 1S07 vs 1S06)
      • Increase in international cargo (170% increase 1S07 vs 1S06)
      • Initial development of new customer base with popularized methods of payment
    • 18. We are well positioned to serve every part of the client spectrum (from leisure to business)
      • Launching new methods of payment
        • Payment at lottery stores
        • Billing slips
        • Automatic debit
        • Financing for passengers via direct consumer credit with the main retail banks
      • Providing specific products for the different segments
    • 19.