1Q11 Results Presentation    May 16, 2011              invest@tam.com.br   www.tam.com.br/ri1
Warning - Information and Projection      This notice may contain estimates for future events. These estimates merely refl...
Agenda     Highlights     Domestic Market     International Market     Financial Results     Guidance and Fleet Plan3
We started 2011 with achievements in several areas                                                        Daily Passenger ...
Status of TAM & LAN combination                                                Approvals &                                ...
Multiplus is presenting itself as an important source of    profitability             OPERATING HIGHLIGHTS     •   17 bill...
To capture the growth of cities not served by our network,    we announced an investment in TRIP                          ...
Agenda     Highlights     Domestic Market     Internacional Market     Financial Results     Guidance and Fleet Plan8
We increased by 8% our domestic passengers revenue                                                Domestic Passengers     ...
We have entered into strategic partnerships that will     increase the supply and distribution of our network             ...
Agenda      Highlights      Domestic Market      International Market      Financial Results      Guidance and Fleet Plan11
In dollars, we increased by 14% our international passengers revenue     and our RASK by 2% comparing to the previous year...
On May 13, we completed our first year as members of     Star Alliance       We recorded 63% increase in the number of pas...
Routes to Brazil have the higher volumes of passengers                                                    U.S. and Europe ...
Agenda      Highlights      Domestic Market      International Market      Financial Results      Guidance and Fleet Plan15
Our EBIT increased 44%, a 3.6% margin         In Reais                                                             1Q11   ...
Liquidity and debt profile                          Adequate debt profile                                                 ...
WTI Hedge Position                                   Volume¹   Strike²   Coverage³     2Q11                         1,020 ...
Agenda      Highlights      Domestic Market      International Market      Financial Result      Guidance and Fleet Plan19
2011 Guidance                                                                                     Guidance for    Actual  ...
Fleet Plan                                        Total Fleet (end of period)                                             ...
invest@tam.com.br22      www.tam.com.br/ir
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110516 webconference ingles tam- 1 t11 ss

  1. 1. 1Q11 Results Presentation May 16, 2011 invest@tam.com.br www.tam.com.br/ri1
  2. 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.2
  3. 3. Agenda Highlights Domestic Market International Market Financial Results Guidance and Fleet Plan3
  4. 4. We started 2011 with achievements in several areas Daily Passenger Record 136 thousand passengers transported on April 25th High levels of operational efficiency 5.4% increase in the daily aircraft utilization to 13.2 hours TAM Vacations had 17 new stores inaugurated in 2011, TAM Cargo launched two new trough the franchise model products: the Prepaid service and the Cooled Big Box Until the end of the year, its network will be composed by 200 stores in the whole country 10 years since its creation New website www.tammro.com.br Growth in sales for other companies4
  5. 5. Status of TAM & LAN combination Approvals & Registrations: • CVM (Brazil), SVS August 13, (Chile), SEC (USA) 2010: March 1, 2011: • Antitrust authorities in We announced ANAC approved Chile, Brazil, Spain, the intetion to the proposed Germany, Italy and Exchange combine with corporate Argentina Offer & LAN structure Closing LATAM January 18, 2011: May 26, 2011: Shareholders’ LAN and TAM Public Hearing Meetings signed LAN, TAM and binding agreements interested parties will give their opinion about the transaction to the TDLC Court.5
  6. 6. Multiplus is presenting itself as an important source of profitability OPERATING HIGHLIGHTS • 17 billion points issued, a growth of 62% versus 1Q10 and of 6% versus 4Q10 • 9 billion points redeemed, compared to 1.3 billion points in 1Q10 and 7.7 billion points in 4Q10 • Average Breakage rate (12 months) of 23%, versus 22,6% in both periods 1Q10 and 4Q10 FINANCIAL HIGHLIGHTS • Gross Billings of points of R$ 340 million, a growth of 48% versus 1Q10 and of 4.5% compared to 4Q10 • Net Revenue of R$ 242 million, compared to R$ 41 million in 1Q10 and R$ 206 million in 4Q10 • Adjusted EBITDA of R$ 103 million 55% higher than 1Q10 and 124% higher than 4Q10 (margin of 33%) • Net Income of R$ 71 million, versus R$ 7.5 million in the 1Q10 and R$ 43 million in 4Q10 (margin of 29%) NEW PARTNERSHIPS CAPITAL REDUCTION 1Q11 • On March 18, 2011 was approved a reduction of the Company’s in the amount of R$600 million 2Q11 • Company’s shareholders will receive reimbursement of R$3.72 per share6
  7. 7. To capture the growth of cities not served by our network, we announced an investment in TRIP Signature of a non-binding agreement to acquire 31% of the total capital of TRIP Capture market growth More significant exposure in the medium density routes market About TRIP 43 Aircraft fleet – Embraers and ATRs 82 Destinations in Brazil R$ 747 million of revenues in 20107
  8. 8. Agenda Highlights Domestic Market Internacional Market Financial Results Guidance and Fleet Plan8
  9. 9. We increased by 8% our domestic passengers revenue Domestic Passengers ASK, RPK e Load Factor Passenger Revenue - R$ Million 13% ASK 11,872 11,767 8% 10,422 1% 4% 15% 1,581 1,511 RPK 8,225 8,288 1,397 7,220 1% Load 1Q10 4Q10 1Q11 1Q10 4Q10 1Q11 Factor 69% 69% 70% Yield - R$ Cents RASK - R$ Cents 3% 6% 3% 5% 12.6 12.7 12.3 19.3 19.2 18.2 1Q10 4Q10 1Q11 1Q10 4Q10 1Q119
  10. 10. We have entered into strategic partnerships that will increase the supply and distribution of our network Bus tickets to 29 cities in 3 states served by Princesa do Agreste Piauí Ceará Pernambuco Minas Gerais Pássaro Marron serves 50 cities in the states of São Paulo and Minas Gerais São Paulo We will sell ​bus tickets through TAM Vacations stores and our air tickets will be sold on bus terminals10
  11. 11. Agenda Highlights Domestic Market International Market Financial Results Guidance and Fleet Plan11
  12. 12. In dollars, we increased by 14% our international passengers revenue and our RASK by 2% comparing to the previous year International Passengers ASK, RPK e Load Factor Passenger Revenue - Million 12% 6% ASK 7,198 7,334 2% R$862 6,557 R$816 R$833 3% 16% RPK 5,749 5,838 14% 5,020 2% U$453 U$491 5% U$517 Load 1Q10 4Q10 1Q11 1Q10 4Q10 1Q11 Factor 77% 80% 80% Yield - Cents RASK - Cents 9% 6% R$ 16.2 R$12.4 R$11.6 R$11.7 R$ 14.5 2% R$ 14.8 1% Avg US Dollar -8% 2% -2% 2% 1.80 1.70 3% U$ 9.0 U$ 8.5 4% U$ 8.9 1.67 U$6.9 U$6.8 U$7.0 1T10 4T10 1T11 1Q10 4Q10 1Q11 1Q10 4Q10 1Q1112
  13. 13. On May 13, we completed our first year as members of Star Alliance We recorded 63% increase in the number of passengers with tickets from partner airlines Additional revenues generated by the Star Alliance member companies exceeded the estimate of US$ 60 million per year Billion of international RPKs 7 6 5 4 3 2 1 -13
  14. 14. Routes to Brazil have the higher volumes of passengers U.S. and Europe passenger destinations in South America Finland Sweden WA MT ND ME Norway OR MN ID SD WI MI NY WY Estonia IA PA Denmark NE NJ Ireland Latvia NV OH Nether- UT IL IN United Lithuania CA CO WV lands KS Kingdom MO VA Belarus KY Poland NC Germany AZ OK TN Czech NM AR Ukraine SC Rep. Slovakia AL GA Switzerland Austria Hungar Moldavia MS y France TX Croatia Romania LA Portugal Yugos- FL Spain lavia Bulgaria Italy Alb. Greece Source: Airbus DEMAX – IATA PAXis14
  15. 15. Agenda Highlights Domestic Market International Market Financial Results Guidance and Fleet Plan15
  16. 16. Our EBIT increased 44%, a 3.6% margin In Reais 1Q11 1Q10 1Q11 vs 4Q10 1Q11 vs 1Q10 4Q10 Net Revenue (million) 3,043 2,604 16.8% 3,225 -5.6% Operating Expenses (million) 2,932 2,527 16.0% 3,006 -2.5% EBIT (million) 110 77 43.5% 218 -49.5% EBIT Margin 3.6% 2.9% 0.7p.p. 6.8% -3.1p.p. EBITDAR (million) 380 376 1.1% 507 -25.0% EBITDAR Margin 12.5% 14.5% -2.0p.p. 15.7% -3.2p.p. Financ. Result + Others* (million) 140 (173) - 66 111.9% Net Income (million) 129 (71) - 151 -14.4% Total RASK (cents) 15.9 15.3 3.9% 16.9 -5.8% CASK (cents) 15.4 14.9 3.1% 15.8 -2.6% CASK ex-fuel (cents) 9.8 10.2 -3.8% 10.9 -9.7% CASK USD (cents) 9.2 8.3 11.5% 9.3 -0.9% CASK USD ex-fuel (cents) 5.9 5.7 4.0% 6.4 -8.1% * Others includes “Movements in fair value of fuel derivatives” and “Gains (losses) on aircraft revaluation”16
  17. 17. Liquidity and debt profile Adequate debt profile Liquidity Position R$ Million R$ Million 3,000 2,700 2,607 2,569 2,500 2,453 2,400 2,145 2,083 2,100 2,000 1,914 1,800 1,500 1,500 995 1,000 1,200 500 900 600 0 2005 2006 2007 2008 2009 2010 1Q11 300 0 Caixa 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Adjusted Net Debt / EBITDAR Leasing on the balance sheet Debentures, bonds and others 8.0 Debt mix by currency R$ 6.3 6.5 6.0 5.6 16% 4.0 3.8 3.8 3.8 2.1 2.0 84% US$ 0.0 2005 2006 2007 2008 2009 2010 1Q11 Obs.1: Net Debt Adjusted includes annual operating leases x 7 Obs.2: Debt is considered in US GAAP for 2005 and 2006 and in IFRS since 200717
  18. 18. WTI Hedge Position Volume¹ Strike² Coverage³ 2Q11 1,020 86 25% 2H11 2,040 86 24% 1H12 1,810 91 21% 2H12 900 97 10% 1Q13 150 97 3% Apr11 –Mar12 4,180 87 25% Apr12 –Mar13 1,740 96 10% 1 – Volume in thousands of barrels 2 – Average Strike (USD/barrel) Hedge Cash Impact Sensitivity 3 – Projected consumption coverage (USD Million) 9 9 9 9 6 5 5 5 2 -1 -1 -1 -1 -1 -2 -1 -3 -3 70 USD/barrel -7 -9 90 USD/barrel -12 -12 -12 -14 110 USD/barrel 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q1318
  19. 19. Agenda Highlights Domestic Market International Market Financial Result Guidance and Fleet Plan19
  20. 20. 2011 Guidance Guidance for Actual 2011 Jan-Mar Domestic Market Demand growth (RPK) 15% - 18% 17% Supply growth (ASK) 10% - 13% 13% Domestic 10% - 14% 13% International 10% 12% Load Factor 73% - 75% 74% Domestic 67.5% - 70% 70% International 83% 80% New international frequency or destination 2 3 CASK ex-fuel -5% -3.8% Average WTI USD 93 USD 99* Assumptions Average US dollar rate R$ 1.78 1.64* * Accumulated until May 13, 201120
  21. 21. Fleet Plan Total Fleet (end of period) 182 A340 -2 3 174 12 2 168 163 12 152 156 8 10 3 24 4 4 3 22 3 19 A330 21 20 18 A321 - 8 9 A320 86 86 140 146 131 136 A319 29 26 3 5 1Q11 2011 2012 2013 2014 2015 B777 B767 Airbus wide-body Airbus narrow-body ATR-4221
  22. 22. invest@tam.com.br22 www.tam.com.br/ir

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