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101115 webconference ingles - 3 q10 v3

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  • 1. 1 3Q10 Results Presentation November 16th , 2010
  • 2. 3 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. 4 Highlights 9.9% Highest EBIT margin over the last 15 quarters -7% Reduction in adjusted* CASK ex-fuel 3Q10 x 3Q09 6%Increase in adjusted* RASK 3Q10 x 3Q09 * Adjusted values excluding the effect of the additional tariff reversal 82.7% Highest international load factor in a quarter 84.7% Highest international load factor in our history recorded in October 12.6h/day Aircraft utilization registered is 4.4% higher than the 3Q09
  • 4. 5 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. 6 Our net revenue increased 23% Net revenue (Million) Operating expenses (Million) EBIT (Million) EBIT margin EBITDAR (Million) EBITDAR margin Financial result + Others*(Million) Net income (Million) 2,939 2,248 691 23.5% 975 33.2% 458 740 2,381 2,325 56 2.3% 348 14.6% 402 228 3Q10 vs 3Q09 23.4% -3.3% 1,137.0% 21.2p.p. 180.3% 18.6p.p. 13.8% 224.0% 3Q10 vs 2Q10 12.5% -12.8% 2,012.2% 22.2p.p. 237.2% 22.1p.p. - - In Reais 3Q103Q10 3Q093Q09 2Q102Q10 2,611 2,579 33 1,3% 289 11.1% (211) (154) Passengers revenue (Million) 2,369 1,971 20.2% 9.7%2,160 Cargo revenue (Million) 276 238 16.0% -3.0%285 Other revenues (Million) 369 262 41.2% 31.3%281 * Others includes “Movements in fair value of fuel derivatives” and “Gains (losses) on aircraft revaluation”
  • 6. 7 We reversed the additional tariff provision positively impacting 3Q10 results JUN 2001 AUG 2010 3Q 2010 SEP 2010 Ad infinitum Accounting for additional tariff, calculated at 1% on the fare for all regular domestic tickets sold Accounting provision reversion in the amount of R$ 585.9 million Operating profit impact (EBIT, EBITDA, EBITDAR) of R$ 404.7 million Impact of R$ 181.2 million in the financial results Net income impact of R$ 439.5 million The Superior Court of Justice confirmed the decision that definitively releases the Company from paying the additional tariff Ad infinitum positive impact of about 0.5%* of the company's gross revenues *Positive impact of 1% on regular domestic revenues. Participation of regular domestic revenue on the total gross revenue is about 50%.
  • 7. 8 We reached the highest EBIT margin from the past 15 quarters: 9.9% Adjusted Net Revenue (million) Ad. Operating Expenses (million) Adjusted EBIT (million) Adjusted EBIT Margin Adjusted EBITDAR (million) Adjusted EBITDAR Margin Ad. Financ. Result + Others* (million) Adjusted Net Income (million) Total Adjusted RASK (cents) Adjusted CASK (cents) Adjusted CASK ex-fuel (cents) Adjusted CASK USD (cents) Adjusted CASK USD ex-fuel (cents) 3Q10 vs 3Q09 3Q10 vs 2Q10 In Reais 3Q103Q10 3Q093Q09 2Q102Q10 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” 2,899 2,613 286 9.9% 570 19.4% 276 301 15.7 14.2 9.4 8.1 5.4 2,381 2,325 56 2.3% 348 14.6% 402 228 14.8 15.4 10.1 7.8 5.4 21.7% 12.4% 411.9% 7.5p.p. 63.9% 4.8p.p. -31.3% 31.6% 6.3% -1.9% -6.6% 4.6% -0.4% 11.0% 1.3% 774.1% 8.6p.p. 97.3% 8.3p.p. - - 2.3% -6.6% -7.5% -4.3% -5.2% 2,611 2,579 33 1.3% 289 11.1% (211) (154) 15.4 15.2 10.2 8.5 5.7
  • 8. 9 1,307 1,428 1,466 3Q09 2Q10 3Q10 Passenger Revenue - R$ Million 20.7 22.5 18.6 3Q09 2Q10 3Q10 Yield - R$ Cents 6,323 6,335 7,897 3Q09 2Q10 3Q10 9,891 10,357 11,919 ASK, RPK and Load Factor Load Factor 67% 61% 70% 8% 13.0 13.0 12.4 3Q09 2Q10 3Q10 RASK - R$ Cents 5% 3% 18% 25% We increased by 12% our domestic passengers revenue and our load factor by 3 p.p comparing to the previous year Domestic PassengersDomestic Passengers 18% 25% 12% 10% 5% * * * Does not consider the additional tariff reversion impact
  • 9. 10 Load factor at the "off peak" hours increased considerably *Domestic flights at weekdays Load factor x Hour * Off Peak Peak Off Peak Off Peak Peak -12 p.p. -8 p.p. 65% 65% 72% 73% 10 11 12 13 14 15 16 17 54%54% 66% 61% 10 11 12 13 14 15 16 17 3Q10 2Q10 50% 55% 60% 65% 70% 75% 80% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2T10 3T102Q10 3Q10
  • 10. 11 We continue increasing sales through direct channels, obtaining several benefits Website Others 3Q09 2Q10 3Q10 416 465 581 0 200 400 600 Direct channel sales - Brazil (R$ Million) % direct channel % website 24% 16% 24% 17% 26% 19% 17% 26% 1% 22% • Sales channel with lower operating costs • Important research tool for price-sensitive passengers • Through the website you can view all the fare bundles, directing the passenger for the fare that best suits their profile • Helps passengers with flexible travel dates to find the cheaper tickets • Sales channel with lower operating costs • Important research tool for price-sensitive passengers • Through the website you can view all the fare bundles, directing the passenger for the fare that best suits their profile • Helps passengers with flexible travel dates to find the cheaper tickets
  • 11. 12 1.9 1.8 1.7 3Q09 2Q10 3Q10 U$ 7.3 U$ 8.1 U$ 8.7 3Q09 2Q10 3Q10 R$ 13.6 R$ 14.5 R$ 15.2 Yield - Cents 7% -2% RPK 4,878 5,055 5,945 3Q09 2Q10 3Q10 ASK 6,585 6,621 7,184 ASK, RPK and Load Factor Load Factor 74% 76% 83% In dollars, we increased by 45% our international passengers revenue and our RASK by 33% comparing to the previous year U$356 U$409 U$516 3Q09 2Q10 3Q10 R$664 R$732 R$903 Passenger Revenue - Million U$5.4 U$6.2 U$7.2 3Q09 2Q10 3Q10 R$10.1 R$11.1 R$12.6 Scheduled RASK - Cents Avg US DollarAvg US Dollar International PassengersInternational Passengers 9% 9% 22% 18% 12% 5% 19% 36% 23% 26% 45% 25% 14% 16% 33% -6%
  • 12. 13 By the end of 2010 we will have five new international flights in three continents Rio de Janeiro – London Rio de Janeiro – Frankfurt Started in August Belo Horizonte – Miami Brasília – Miami São Paulo – Bogota To begin in December
  • 13. 14 Liquidity and debt profile Cash 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 0 300 600 900 1,200 1,500 1,800 2,100 2,400 2,700 2005 2006 2007 2008 2009 3T10 995 2,453 2,607 1,914 2,166 2,333 0 500 1,000 1,500 2,000 2,500 3,000 87% 13% Adequate debt profileAdequate debt profile Liquidity PositionLiquidity Position Adjusted Net Debt / EBITDARAdjusted Net Debt / EBITDAR US$ 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 R$ Million Debt mix by currency R$ US$ Debentures, bonds and othersLeasing on the balance sheet 4.1 2005 2006 2007 2008 2009 3T10 3.8 2.1 5.6 6.3 6.5 5.1 0.0 2.0 4.0 6.0 8.0 Without additional tariff reversal
  • 14. 15 2010 Guidance Domestic MarketDomestic 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 5 1 CASK ex-fuel -6% -9%2 Average WTI USD 85 USD 78 Average US dollar rate R$ 1,81 R$ 1,77 AssumptionsAssumptions Guidance for 2010 Guidance for 2010 Actual Jan - Oct Actual Jan - Oct 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. 16 Fleet plan B767 Airbus wide-body Airbus narrow-bodyB777 ATR-42 4 3 A340 - 2 A330 16 A321 - 5 A320 81 A319 21 4 3 2 18 7 83 26 5 4 3 2 18 7 85 27 5 4 3 2 20 9 85 30 5 8 3 20 128 10 3 18 132 10 21 137 2009 3Q10 2010 2011 2012 2013 2014 132 148 151 158 159 163 168 Total Fleet (end of period)Total Fleet (end of period)
  • 16. 17
  • 17. 18
  • 18. 19 invest@tam.com.br www.tam.com.br/ir