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101115 webconference ingles - 3 q10 v3

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  • 1. 3Q10 Results Presentation November 16th, 2010 1
  • 2. Warning - 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 forward looking 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
  • 3. Highlights 9.9% Highest EBIT margin over the last 15 quarters Increase in adjusted* RASK 3Q10 x 3Q09 6% -7% Reduction in adjusted* CASK ex-fuel 3Q10 x 3Q09 Aircraft utilization registered is 4.4% higher than the 3Q09 12.6h/day 82.7% Highest international load factor in a quarter Highest international load factor in our history recorded in October 84.7% * Adjusted values excluding the effect of the additional tariff reversal 4
  • 4. Milestones of the TAM & LAN Combination Non-Binding MOU On August 13, a non-binding Memorandum of Understanding was signed between TAM and LAN, outlining the intention to combine. Due Diligence Process The due diligence process was completed in September. ANAC Presentation The definitive structure of the transaction was presented to the Brazilian aviation authority – ANAC (National Civil Aviation Agency), on October 20. We believe that all steps should be completed between April and June 2011 5
  • 5. Our net revenue increased 23% In Reais 3Q10 3Q10 3Q09 3Q09 3Q10 vs 2Q10 2Q10 3Q10 vs 3Q09 2Q10 Passengers revenue (Million) 2,369 1,971 20.2% 2,160 9.7% Cargo revenue (Million) 276 238 16.0% 285 -3.0% Other revenues (Million) 369 262 41.2% 281 31.3% Net revenue (Million) 2,939 2,381 23.4% 2,611 12.5% Operating expenses (Million) 2,248 2,325 -3.3% 2,579 -12.8% EBIT (Million) 691 56 1,137.0% 33 2,012.2% EBIT margin 23.5% 2.3% 21.2p.p. 1,3% 22.2p.p. EBITDAR (Million) 975 348 180.3% 289 237.2% EBITDAR margin 33.2% 14.6% 18.6p.p. 11.1% 22.1p.p. Financial result + Others*(Million) 458 402 13.8% (211) - Net income (Million) 740 228 224.0% (154) - * Others includes “Movements in fair value of fuel derivatives” and “Gains (losses) on aircraft revaluation” 6
  • 6. We reversed the additional tariff provision positively impacting 3Q10 results JUN 2001 SEP 2010 AUG 2010 3Q 2010 Ad infinitum Accounting for additional Accounting provision The Superior Court of tariff, calculated at 1% on reversion in the amount of R$ Justice confirmed the the fare for all regular 585.9 million decision that definitively domestic tickets sold releases the Company Operating profit impact (EBIT, from paying the additional EBITDA, EBITDAR) of R$ 404.7 tariff million Impact of R$ 181.2 million in Ad infinitum positive the financial results impact of about 0.5%* of the company's gross Net income impact of R$ revenues 439.5 million *Positive impact of 1% on regular domestic revenues. Participation of regular domestic revenue on the total gross revenue is about 50%. 7
  • 7. We reached the highest EBIT margin from the past 15 quarters: 9.9% In Reais 3Q10 vs 3Q10 vs 3Q10 3Q10 3Q09 3Q09 2Q10 2Q10 3Q09 2Q10 Adjusted Net Revenue (million) 2,899 2,381 21.7% 2,611 11.0% Ad. Operating Expenses (million) 2,613 2,325 12.4% 2,579 1.3% Adjusted EBIT (million) 286 56 411.9% 33 774.1% Adjusted EBIT Margin 9.9% 2.3% 7.5p.p. 1.3% 8.6p.p. Adjusted EBITDAR (million) 570 348 63.9% 289 97.3% Adjusted EBITDAR Margin 19.4% 14.6% 4.8p.p. 11.1% 8.3p.p. Ad. Financ. Result + Others* (million) 276 402 -31.3% (211) - Adjusted Net Income (million) 301 228 31.6% (154) - Total Adjusted RASK (cents) 15.7 14.8 6.3% 15.4 2.3% Adjusted CASK (cents) 14.2 15.4 -1.9% 15.2 -6.6% Adjusted CASK ex-fuel (cents) 9.4 10.1 -6.6% 10.2 -7.5% Adjusted CASK USD (cents) 8.1 7.8 4.6% 8.5 -4.3% Adjusted CASK USD ex-fuel (cents) 5.4 5.4 -0.4% 5.7 -5.2% Note: Adjusted figures dos not consider the additional tariff reversion impact * Others includes “Movements in fair value of fuel derivatives” and “Gains (losses) on aircraft revaluation” 8
  • 8. We increased by 12% our domestic passengers revenue and our load factor by 3 p.p comparing to the previous year Domestic Passengers Domestic Passengers ASK, RPK and Load Factor Passenger Revenue - R$ Million * 18% 12% 11,919 9,891 10,357 8% 3% 25% 1,428 1,466 1,307 7,897 6,323 6,335 25% Load 3Q09 2Q10 3Q10 3Q09 2Q10 3Q10 Factor 67% 61% 70% Yield - R$ Cents RASK - R$ Cents * 5% 10% 5% 18% 13.0 13.0 12.4 20.7 22.5 18.6 3Q09 2Q10 3Q10 3Q09 2Q10 3Q10 9 * Does not consider the additional tariff reversion impact
  • 9. Load factor at the "off peak" hours increased considerably 73% 72% Load factor x Hour * -8 p.p. Off Off Off Peak Peak Peak Peak Peak 80% 65% 65% 75% 10 11 12 13 14 15 16 17 70% 3Q10 65% 60% 66% 55% 61% 50% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 -12 p.p. 2Q10 2T10 3Q10 3T10 54% 54% 2Q10 10 11 12 13 14 15 16 17 *Domestic flights at weekdays 10
  • 10. We continue increasing sales through direct channels, obtaining several benefits Direct channel sales - Brazil (R$ Million) • Sales channel with • Sales channel with lower operating costs lower operating costs 600 581 • Important research • Important research tool for price-sensitive tool for price-sensitive 465 passengers passengers 416 400 26% • Through the website • Through the website you can view all the fare you can view all the fare bundles, directing the bundles, directing the 17% passenger for the fare passenger for the fare Website that best suits their that best suits their profile profile 200 • Helps passengers with • Helps passengers with 22% flexible travel dates to flexible travel dates to 1% find the cheaper tickets Others find the cheaper tickets 0 3Q09 2Q10 3Q10 % website 16% 17% 19% % direct channel 24% 24% 26% 11
  • 11. In dollars, we increased by 45% our international passengers revenue and our RASK by 33% comparing to the previous year International Passengers International Passengers ASK, RPK and Load Factor Passenger Revenue - Million 9% ASK 36% 7,184 R$903 6,585 6,621 9% R$732 23% R$664 22% RPK 5,945 45% 5,055 4,878 18% U$516 U$356 U$409 26% 3Q09 2Q10 3Q10 Load 3Q09 2Q10 3Q10 Factor 74% 76% 83% Yield - Cents Scheduled RASK - Cents 12% 25% R$12.6 R$ 14.5 5% R$ 15.2 R$11.1 14% R$ 13.6 R$10.1 Avg US Dollar Avg US Dollar -6% 19% 33% -2% U$ 8.7 1.9 U$7.2 U$ 7.3 U$ 8.1 7% 1.8 1.7 U$5.4 U$6.2 16% 3Q09 2Q10 3Q10 3Q09 2Q10 3Q10 3Q09 2Q10 3Q10 12
  • 12. By the end of 2010 we will have five new international flights in three continents Started in August To begin in December Rio de Janeiro – London Belo Horizonte – Miami Rio de Janeiro – Frankfurt Brasília – Miami São Paulo – Bogota 13
  • 13. Liquidity and debt profile Adequate debt profile Adequate debt profile Liquidity Position Liquidity Position 3,000 R$ Million 2,607 2,453 2,700 2,500 2,333 2,166 2,400 2,000 1,914 2,100 1,500 1,800 1,000 995 1,500 1,200 500 900 0 600 2005 2006 2007 2008 2009 3T10 300 0 Cash 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Adjusted Net Debt / EBITDAR Adjusted Net Debt / EBITDAR Leasing on the balance sheet Debentures, bonds and others Debt mix by currency 8.0 Without additional tariff reversal 6.3 6.5 R$ 6.0 5.6 13% 5.1 4.0 3.8 4.1 2.1 2.0 87% US$ US$ 0.0 2005 2006 2007 2008 2009 3T10 Obs.1: 2010 EBITDAR considers last 12 months from 3Q10 Obs.2: Net Debt Adjusted includes annual operating leases x 7 Obs.3: Debt is considered in US GAAP for 2005 and 2006 and in IFRS since 2007 14
  • 14. 2010 Guidance Guidance Guidance Actual Actual for 2010 for 2010 Jan - Oct Jan - Oct Domestic Market Domestic Market Demand growth (RPK) 22% - 25% 25% Supply growth (ASK) 12% 9% Domestic 14% 11% International 8% 7% Load factor 69% 72% Domestic 66% 67% International 75% 80% New international frequency or destination 2 51 CASK ex-fuel -6% -9%2 Average WTI USD 85 USD 78 Assumptions Assumptions Average US dollar rate R$ 1,81 R$ 1,77 1 Two new flights started (from Rio de Janeiro to Frankfurt and London) and three have been authorized by ANAC to begin in December (São Paulo to Bogota, and Brasilia and Belo Horizonte to Miami) 2 Considers the period from January to September 15
  • 15. Fleet plan Total Fleet (end of period) Total Fleet (end of period) 168 2 2 163 2 158 159 10 151 10 148 4 4 3 8 3 3 A340 - 2 3 21 3 20 18 132 4 18 20 4 3 18 9 A330 7 7 16 A321 - 5 85 85 83 A320 132 137 128 81 26 27 30 A319 21 5 5 5 2009 3Q10 2010 2011 2012 2013 2014 B777 B767 Airbus wide-body Airbus narrow-body ATR-42 16
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  • 18. invest@tam.com.br 19 www.tam.com.br/ir