Conference Call 4Q09

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Conference Call 4Q09

  1. 1. 4Q09 Results Release March 31, 2010
  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. Highlights Acquisition of Pantanal Acquisition of Pantanal Multiplus IPO Multiplus IPO Founded in 1993 Primary offer on Feb/4/2010 Market share of 0.14% in 2009 Green shoe: Mar/1/2010 245 employees 5 aircraft ATR-42 with 45 seats, 3 were Total shares issued: 43,274,000 operating in 2009 Price: R$ 16.00 Hub at Congonhas Airport 90% of business passengers Free float: 26.83% Gross revenue Total value: R$ 692 million R$72 million in 2006 Net value: R$ 662 million R$64 million in 2007 R$56 million in 2008 Advance to supplier to purchase of R$52 million in 2009 tickets in advance: R$ 622 million Slots position at Congonhas Slots position at Congonhas December 2009 March 2010 Others Others 10% 6% TAM + TAM Pantanal 44% 2an player 2an player 48% 46% 46% 3
  4. 4. Multiplus performance indicators show strong operational growth... Number of Members Number of Points Issued million 20% billion 14% 6,6 36 5,5 32 2008 2009 2008 2009 Number of Points Redeemed Breakage Rate billion % 21% 26 27% 27% 21 2008 2009 2008 2009 Note: Pro-forma carve out financials 4
  5. 5. … and financial growth, reaching 24% of adjusted EBITDA margin Gross Billings Net Revenues R$ million 23% R$ million 34% 906 796 736 596 2008 2009 2008 2009 Adjusted EBITDA and Margin Net Income R$ million R$ million 12% 43% 219 128 195 89 Margin 27% 24% Margin 15% 16% 2008 2009 2008 2009 Note: Pro-forma carve out financials 5
  6. 6. Our domestic revenue reached R$ 1,43 billion, representing an increase of 10% versus 3Q09 Domestic Passengers Domestic Passengers ASK, RPK and Load Factor Passenger Revenue - R$ Million 11% -13% 8% ASK 10,213 9,191 9,491 10% 17% 1,641 RPK 11% 7,024 1,307 1,433 6,323 6,016 4Q08 3Q09 4Q09 Load 4Q08 3Q09 4Q09 Factor 65% 67% 69% Scheduled Yield - R$ Cents Scheduled RASK - R$ Cents -25% -21% -2% 2% 27.6 17.0 21.0 20.7 13.1 13.4 4Q08 3Q09 4Q09 4Q08 3Q09 4Q09 6
  7. 7. The increase in the load factor was mainly driven by a higher mix of passengers flying on the off peak Load Factor x Hour * Off Peak Peak Off Peak Peak Off Peak 74% 69% 64% 59% 54% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 *Domestic flights at weekdays 4Q08 3Q09 4Q09 7
  8. 8. The international revenue increase in US dollars International Passengers International Passengers ASK, RPK and Load Factor Passenger Revenue - Million 9% ASK -1% R$ -19% 6,585 6,534 794 R$ 6,010 R$ -4% 663 640 13% RPK 4,878 4,935 6% 1% 4,366 U$ U$ U$ 4% 348 356 368 4Q08 3Q09 4Q09 Load 4Q08 3Q09 4Q09 Factor 73% 74% 76% Scheduled Yield - Cents Scheduled RASK - Cents R$ R$ 18.2 -29% 13.2 -26% R$ R$ R$ R$ -5% -3% 13.6 13.0 10.1 9.8 Avg US Dollar Avg US Dollar -24% -7% -7% -3% U$ U$ 2% U$ U$ U$ U$ 2.3 4% 8.0 7.3 7.5 1.9 1.7 5.8 5.4 5.6 4Q08 3Q09 4Q09 4Q08 3Q09 4Q09 4Q08 3Q09 4Q09 8
  9. 9. The economic crisis and the natural maturation period of the new routes impacted the international performance International Load Factor (versus same month of previous period) Results of international routes Results of international routes in the first months of 2010 in the first months of 2010 Beginning of route Beginning of route show a significant recovery show a significant recovery 115 Rio de Janeiro – Miami Rio de Janeiro – NY Current Period 105 Previous Period Beginning of route 95 São Paulo - Orlando 85 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Fev Mar Abr Mai Jun Jul Ago Set Out Nov Dez Jan Feb 2008 2009 2010 9
  10. 10. International cargo revenue presented a strong recovery Cargo – R$ Million Cargo – R$ Million Other Revenues – R$ Million Other Revenues – R$ Million -1% 278 275 -8% 15% 238 326 -2% 22 303 299 -4% 156 150 8% 112 124 133 120 20% -10% -14% 3% 192 122 114 125 158 165 10% 5% 4Q08 3Q09 4Q09 4Q08 3Q09 4Q09 Domestic International Loyalty Program Expired tickets Others 10
  11. 11. Our CASK is 16% lower when compared to 4Q08 CASK 2009 CASK 2009 CASK - Cents CASK ex-Fuel - Cents -16% -5% -6% R$ 15.4 14.5 R$ R$ R$ 17.2 R$ 0% R$ Fuel 10.7 0% -9% 10.1 10.0 14.4 14.4 11.3 10.2 1S09 2S09 9% 23% U$ U$ U$ U$ U$ U$ 7% 7.6 7.7 8.3 4.7 5.4 7% 5.8 4Q08 3Q09 4Q09 4Q08 3Q09 4Q09 CASK evolution CASK evolution 17.2 0.4 14.4 -2.2 -0.6 -0.2 -0.1 -0.1 CASK 4Q08 Fuel Personnel Maintenance Selling Landing, Others CASK 4Q09 and Mkt take-off and navigation 11
  12. 12. We consistently reduced our CASK over the years, and in a comparable route, we have a 9% higher CASK compared to the competitor in 2009 CASK evolution –R$ Cents CASK evolution –R$ Cents Br GAAP 6.404 US GAAP BR GAAP 11.638 20.1 20.1 18.6 17.9 17.5 17.3 16.1 16.1 14.8 Total CASK We delivered We delivered 15.7 15.0 sequentially sequentially 12.6 11.9 -3% 11.6 -8% 10.7 -4% -16% 10.8 -3% 10.5 1% 10.5 CASK consistent consistent ex-fuel CASK reductions of CASK reductions of CASK CASK ex-comb 2003 2004 2005 2005 2006 2007 2007 2008 2009 ex-fuel ex-fuel CASK released – R$ Cents CASK released – R$ Cents CASK comparable* – R$ Cents CASK comparable* – R$ Cents 17.3 17.8 16.1 15.8 16.4 15.8 14.6 14.8 14.1 14.6 15.4 14.1 11% 9% 5% 12% 13% 9% 2007 2008 2009 2007 2008 2009 TAM GOL TAM GOL * Includes adjustments in maintenance and fuel costs by stage length (proportionally larger as the stage length decreases) Sources: TAM e Gol quarterly reports in BR GAAP Law 11,638 12
  13. 13. Our CASK reduction actions are focused on the following fronts Reduction of fuel consumption on ground Weight on board reduction Fuel Increased New payment productivity with new personnel Sales options allow reduction on credit structure Personnel and card expenses Marketing Continuous Evolution Improved synergy New fleet plan Program Maintenance between air network and maintenance Increased in aircraft utilization Network and bases Reviews Optimization of Reduction of aircraft ground times Outsourced procurement and Services logistics processes and Others Renegotiations and contract review Standardization of the IT platform Optimization of internal processes 13
  14. 14. The negative financial result from 4Q08 was reversed Financial Result Variation - R$ Million Financial Result Variation - R$ Million 185 2 -15 93 100 913 -500 1,107 -1,100 -1,700 -2,100 -2,300 4Q08 Financial Exchange Income Interest Others 4Q09 Instruments gains 14
  15. 15. The hedge impact on our cash will be lower on the upcoming quarters Sensitivity of the hedge impact on our cash Sensitivity of the hedge impact on our cash (USD million) 125 In 2009 we saved US$ 117 In 2009 we saved US$ 117 million in cash due to million in cash due to hedge renegotiation hedge renegotiation 79 59 54 51 48 44 41 37 41 36 31 21 23 20 17 85 2 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 Realized 50 USD/barrel 70 USD/barrel 90 USD/barrel 15
  16. 16. EBITDAR, EBIT and Net Income Net Revenue Margin BR GAAP BR GAAP Net Income - R$ M EBIT - R$ M EBITDAR - R$ M 144 -31% 6% -55% 530 307 18% 364 10% 137 14% -42% 5% -1,229 4Q08 4Q09 4Q08 4Q09 4Q08 4Q09 IFRS IFRS Net Income - R$ M EBIT- R$ M EBITDAR - R$ M -41% 465 -20% -13% 214 373 -334 7% 126 16% 15% -43% 73% 5% -1,239 4Q08 4Q09 4Q08 4Q09 4Q08 4Q09 *EBIT and EBITDAR, exclude movement in fair value of fuel derivatives and aircraft revaluation 16
  17. 17. Aircraft revaluation adjustments is the main difference between BR GAAP and IFRS Net Income Reconciliation - 4Q09 Net Income Reconciliation - 4Q09 144 -40 256 -334 49 -743 Net Income Loyalty Program Aircraft Taxes over Net Income Others BR GAAP Adjustment Revaluation adjustments IFRS 1 Adjustment 1 Obs.: Profit (loss) before minority interest Income tax and social contribution 17
  18. 18. Liquidity and debt profile (pro-forma) Adequate debt profile (pro-forma) Adequate debt profile (pro-forma) Strategic liquidity position Strategic liquidity position R$ Million 3,000 R$ Million 3,000 2,807 2,607 2,700 2,500 2,453 IPO MPLU 2,400 2,000 1,914 2,100 1,800 1,500 1,500 995 1,000 1,200 500 900 600 0 2005 2006 2007 2008 2009 300 0 Cash 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Net Debt Adjusted / EBITDAR Net Debt Adjusted / EBITDAR Leasing on the balance sheet Debentures, bonds and others 8.0 Debt mix by currency R$ 6.0 x 5.7 x 6.0 16% 5.0 x 4.0 3.9 x 2.2 x 2.0 84% US$ 0.0 2005 2006 2007 2008 2009 Obs.1: Cash considers R$ 662MM added by Multiplus IPO in January of 2010 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 BR GAAP from 2007 to 2009, including Multiplus’ IPO pro-forma cash 18
  19. 19. We will pay an amount of R$ 237 million in interest on capital and dividends Distribution Indicator Value Interest on Capital Net Income (R$ thousand) 1,342,539 11% 1 Distribution for the year (R$ thousand) 236,722 Number of shares 150,182,836 Share price (R$) 28.48 2009 Results destination (R$ Million) Net Income per share (R$) 8.94 Dividends 1 Distribution per share (R$) 1.58 1,500 89% 2 Dividend Yield (%) 5.53% 1,343 1,000 3 983 -363 -49 697 -237 500 1 Distributionfor the year considers gross interest on capital and dividends 0 Net Income Accumulated Others Remaining Legal Mandatory Profit 2The Dividend Yield is calculated using 2009 Defficit Net Income Reserve Minimum Retention 2010, March 30, share value of R$ 28,48 Dividends Reserve 19
  20. 20. 2009 Guidance Guidance Guidance Actual Actual for 2009 for 2009 2009 2009 Domestic Domestic Demand Growth (RPK) 7% - 10% 17.7% Market Market We will maintain market leadership Domestic --- 45.6% International --- 86.5% Supply Growth (ASK) Domestic 8% 10.4% International 20% 19.0% Total approximate load factor 67% 68.5% New international frequency or destination 2009 1 --- 20
  21. 21. 2010 Guidance Guidance Guidance Actual Actual for 2010 for 2010 Jan - Feb Jan - Feb Domestic Domestic Demand growth (RPK) 14% - 18% 36% Market Market Supply growth (ASK) 12% 6% Domestic 14% 8% International 8% 3% Load factor 69% 75% Domestic 66% 73% International 75% 80% New international frequency or destination 2 --- CASK ex-fuel -6% --- Average WTI USD 85 USD 77 Assumptions Assumptions Average US dollar rate R$ 1,81 R$ 1,81 21
  22. 22. We revised our fleet plan to incorporate the domestic market reality and the acquisition of Pantanal Total Fleet (end of period) Total Fleet (end of period) 2 165 156 160 2 155 10 A340 - 2 148 4 3 8 10 3 Aircraft to be received in Aircraft to be received in 3 4 3 21 2010 will replace the ones 2010 will replace the ones 132 20 20 18 4 18 that will be redelivered that will be redelivered 3 A330 7 9 and already have pre and already have pre 16 committed financing committed financing A321 - 5 84 Average fleet age of 6 Average fleet age of 6 84 A320 125 129 134 years by the end of years by the end of 81 4Q09 4Q09 25 28 A319 21 5 5 2009 2010 2011 2012 2013 2014 B777 B767 Airbus wide-body Airbus narrow-body ATR-42 22
  23. 23. You don’t need to be at home to feel at home. Business Class at TAM 23

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