Tam Brazil Day 20081030 Eng

649 views
567 views

Published on

Published in: Economy & Finance, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
649
On SlideShare
0
From Embeds
0
Number of Embeds
8
Actions
Shares
0
Downloads
2
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Tam Brazil Day 20081030 Eng

  1. 1. Brazil DAY New York, October 28, 2008
  2. 2. Information and Projection notice may contain estimates for future events. These estimates merely reflect the expectations of This 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. material has been prepared by TAM S.A. (“TAM“ or the “Company”) includes certain forward- This 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. material is published solely for informational purposes and is not to be construed as a solicitation This 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. TAM: An ethical and Entrepreneurship history Feb/2008 Dec/1996 National and Dec/1996 International territories National and Aug/1996 International territories National and International territories Jun/1996 Mercosur May/1994 South + Center-North Regions Aug/1986 Paraguay countryside May/1976 Center-North Region Feb/1961 Beginning center-West Region and then throughout Brazil 3
  4. 4. TAM’s corporate structure TAM Linhas Aéreas TP Participações TAM Mercosur 100% 99,99% 94,98% TAM Viagens TAM Capital TAM Financial TAM Financial 2 99,99% 100% 100% 100% 4
  5. 5. TAM is commited to high levels of corporate governance 53,9% Free Float  BR GAAP and US GAAP simultaneous,  in Portuguese and English, with high 1,5% ADTV  level of disclosed information CVM and SEC simultaneous  8 local analyst meetings and  minimum 4 investor/analyst visits abroad per year Investors Professional Board Two classes maintained   due to regulatory reasons 2 members of the family  Same conditions  5 independent members  concerning the sale of the company for both classes Audit Committee  of shares Sarbanes-Oxley Certification  5
  6. 6. Capital Market Participation Total Capital Paticipation 0.5% 100% 100% 100% 100% 100% 21.6% 26.9% 80 45.5% 53.9% 19.5% 60 40 72.6% 58.9% Free Float 54.5% 46.2% Investment 20 Funds** Amaro Family*** 0 3/10/2006 6/13/2005 Before IPO* June 2008 Follow-on Offering IPO BOVESPA BOVESPA and NYSE •IPO = Initial Public Offer •**Investment Funds liquidates its position at Follow-on 6 ***Amaro Family and its participations held 89.42% of TAM’s voting shares
  7. 7. The leading Brazilian international carrier haul market Long Paris 21x per week  London 7x per week  NY 14x per week  Miami 28x per week  Milan 7x per week  Frankfurt 7x per week  Madrid 7x per week  American market Latin Buenos Aires 63x per week  Bariloche 2x per week  Cochabamba 4x per week  Santa Cruz de Sierra 4x per week  Santiago 10x per week  Asuncion 21x per week  Ciudad del Leste 7x per week  Montevideo 7x per week  Caracas 7x per week  Lima 7x per week  market Domestic 42 destinations and through business  agreements signed with regional companies, it reaches 79 different destinations in Brazil Note: Based on Oct 2008 network 7
  8. 8. The domestic market grew 10% from January to September 2008 Market - Variation (vs previous period) 160 150 140 130 120 110 100 90 International 80 Market 70 Domestic 60 Market Previous 50 Period 40 J F MAM J J A S OND J F MAM J J A S OND J F MAM J J A S OND J F MAM J J A S 2005 2006 2007 2008 19% 12% 12% 10%* Domestic 7% -30% -5% 36%* International Source: ANAC 8 * Accumulated until September
  9. 9. We are both domestic and international market leaders TAM’s Domestic Market Share* 52,8% 52,4% 50,2% 48,9% 48,0% 43,5% 35,8% 33,0% 2003 2004 2005 2006 2007 Jan - Sep 2008 3Q08 Sep/08 TAM’s International Market Share* – Among Brazilian carriers 82,1% 75,8% 72,4% 67,5% 37,5% 18,8% 14,3% 12,0% 2003 2004 2005 2006 2007 Jan - Sep 2008 3Q08 Sep/08 Source: ANAC 9 * RPK – Revenue passenger kilometer
  10. 10. In the past 4 years, we have improved every operational metric… Jan-Jun 2002 2003 2004 2005 2006 2007 TAM S.A. 2008 102 76 75 81 93 110 115 operating aircraft No. 219 147 159 210 245 261 135 take-offs (K) No. 55% 61% 71% 66% 74% 70% 72% Factor Load 53% 58% 70% 64% 73% 70% 69% - LF Dom 61% 71% 71% 73% 76% 71% 77% - LF Int 9.5 7.6 8.9 11.4 12.7 12.6 12.6 Aircraft Utilization  (block hrs/day) 6.9 12.6 12.6 12.3 9.2 5.8 10.2 - Narrow bodies 10.0 7.3 14.1 12.6 15.1 15.8 14.8 - Wide bodies 10
  11. 11. …resulting in an outstanding improvement in our financial metrics Jan-Jun BR GAAP 2002 2003 2004 2005 2006 2007 2008 3,429 3,667 4,520 5,649 7,345 8,151 4,775 Net revenues 475 775 1,039 1,140 1,817 1,259 572 EBITDAR 13.9% 21.1% 23.0% 20.2% 24.7% 15.5% 12.0% % EBITDAR (236) (32) 295 426 996 261 85 EBIT -6.9% -0.9% 6.5% 7.5% 13.6% 3.2% 1.8% % EBIT (606) 174 341 187 612 129 53 Net Income -17.7% 4.7% 7.6% 3.3% 8.3% 1.6% 1.1% % Net Income 11
  12. 12. We have a positive outlook for 2008 Jan – Sep 2008 2008 Guidance Domestic market demand growth from 8% to 12% (in  Market 10.2% RPK terms) 50.2% dom Maintain leadership in both domestic and international  72.4% intl markets ASK growth of   Domestic 14% 14.2% 32.2%  International 40% Average load factor at approximately 70% overall 72.1% TAM  Reduction of 7% in total CASK ex-fuel in BR GAAP yoy -4.5%*  Three additional international destinations or Brasília – Buenos Aires   frequencies in 2008 Rio de Janeiro – Miami  São Paulo – Lima  Rio de Janeiro – NY**  São Paulo – Orlando**  * Accumulated from January to June, 2008 12 ** In final approval phase by ANAC
  13. 13. Our growth plan is supported by a flexible fleet plan Total fleet 149 150 143 8 138 4 4 4 130 4 4 125 3 4 22 22 4 4 115 20 4 18 16 14 100 Since dec/07 we are 115 113 110 88 monofleet 104 50 101 in domestic operations 10 0 2007 2008 2009 2010 2011 2012 B777 MD11 B767 Airbus wide-body Airbus narrow-body F100 13
  14. 14. 14
  15. 15. …with higher growth anticipated for Brazilian carriers due to the unbalance in the bilateral agreements… % international passenger 100% 80 57.7% 58.2% 66.5% 66.9% 71.2% 60 40 Intl Carriers 42.3% 41.8% 20 33.5% 33.1% 28.8% Brazilian Carriers 0 2004 2005 2006 2007 Jan - Sep 2008* Source: ANAC annual report 15 * estimates
  16. 16. …observed in many countries, as the example between Brazil and USA Weekly Frequencies Brazilian Carriers Foreign Carriers USA 126* 105 42 126* Spain 51 7 51 35 France 30 28 21 30 Germany 21 7 14 21 England 14 7 10 14 Italy 14 77 14 150 100 50 0 50 100 150 Available space on bilateral Operated by Brazilian Carriers Operated by Foreign Carriers * 21 frequencies limited to the cities in the north, northeast and central west regions of 16 Brazil and/or Belo Horizonte
  17. 17. Our mix of international revenue reduced due to the appreciation of Real and increase of domestic yield Revenue Approximately (Passenger + Cargo) 50% of our costs 100% (including fuel) are exposed to foreign 31% 34% 80 currencies 60 40 69% 66% International 20 (Dollar denominated) Domestic (Real denominated) 0 2Q07 2Q08 ASK proportion International 37% 38% Domestic 63% 62% Dollar exchange -17% 1.926 1.592 rate 17
  18. 18. Our gross revenue increased 27%...  Domestic passenger revenue Gross Revenue (R$ M) grew 31% 3,000 27% increased 8% RPK 2,615 2,500 226 increased 14% ASK 256 2,054 2,000  International passenger revenue 156 603 196 grew 13% 1,500 531 increased 29% RPK 1,000 increased 22% 1,530 ASK 1,170 500  Cargo revenue grew 31% 0  Other revenue grew 45% 2Q07 2Q08 Domestic Pax International Pax Cargo Other 18
  19. 19. ... total RASK increased 9.5%... 2Q08 vs 2Q08 vs R$ Cents 2Q07 1Q08 2Q08 2Q07 1Q08 total ¹ ² 16.80 16.38 18.40 9.5 12.3 RASK scheduled domestic² 15.26 15.37 17.66 15.7 14.9 RASK Domestic load factor - % -3.9 p.p. -1.8 p.p. 71.9 69.9 68.1  Yield scheduled domestic³ 22.25 23.09 27.23 22.4 17.9  scheduled international² 12.30 11.39 11.48 -6.7 0.8 RASK 69.1 76.9 73.4 4.3 p.p. -3.5 p.p. International load factor - %  17.83 14.82 15.64 -12.3 5.5 Yield scheduled international³  RASK scheduled  6.39 6.51 7.21 12.9 10.7 international² (USD cents) Yield scheduled international³ 9.26 8.47 9.82 6.1 16.0  (USD cents) 1 Includes charter. cargo and Other revenues. net of taxes 19 2 Net of taxes 3 Gross of taxes
  20. 20. ...and the total CASK increased 8.4%... Total CASK BR GAAP - R$ cents 2Q08 vs 2Q07 20 17.91 16.52 15 8.4% CASK 10 CASK excl-fuel -3.4% 5 0 2Q07 2Q08 20
  21. 21. ...improving our margins and earnings BR GAAP Earnings per share - R$ EBIT - R$ M Net Income - R$ M 0.33 80 60 50 67 103% 40 60 20 2% 40 33 0 3% 20 2% -1% -20 -0.19 -29 0 -40 2Q07 2Q08 2Q07 2Q08 2Q07 2Q08 US GAAP Earnings per share - R$ EBIT - R$ M Net Income - R$ M 1.42 100 250 92 214 34% 209% 209% 80 200 69 60 150 40 100 0.46 4% 69 3% 9% 20 50 4% 0 0 2Q07 2Q08 2Q07 2Q08 2Q07 2Q08 Margin over net revenue 21
  22. 22. The main difference between BR and US GAAP is the accounting treatment of aircraft leasing 46 aircrafts are reclassified Net Profit Reconciliation as capital leases as per to US GAAP SFAS nº 13 400 261 300 214 -84 200 -13 100 50 0 BR GAAP Leasing Income Others US GAAP Taxes 22
  23. 23. Our balance sheet remains solid R$ million - BRGAAP 2008* 2007 2006 2005 2004 Cash (1) 2.009 2.607 2.453 995 297 Short-Term Debt (2) 837 1.005 363 216 204 Long-Term Debt (3) 1.301 1.345 895 425 399 Total Debt (A) = (2) + (3) 2.138 2.350 1.258 641 603 Shareholder's Equity (4) 1.539 1.527 1.449 760 191 Capitalization (B) = (3 + 4) 2.839 2.872 2.344 1.185 590 Aircraft and flight equipment leases** (5) 6.193 5.976 5.032 4.389 4.557 Total Debt Adjusted (C) = (A + 5) 8.331 8.326 6.290 5.030 5.160 Total Capitalization Adjusted (D) = (3 + 4 + 5) 9.032 8.848 7.376 5.574 5.147 Debt / Capitalization (A / B) 75% 82% 54% 54% 102% Adjusted Debt / Adjusted Capitalization (C / D) 92% 94% 85% 90% 100% Adjusted Net Debt / Adjusted Capitalization (C - 1) / (D) 70% 65% 52% 72% 94% * LTM 23 ** Aircraft and flight equipment leases of the last twelve months x 7
  24. 24. Debt deals Debentures – R$ 500 million (September 2006)  Subscription of 50,000 nominative, registered, non convertible debentures  with a nominal unit value of R$ 10 thousand 6 years term with the first payment in 2010  Bonds – US$ 300 million (April 2007)  7.375% Senior Notes due 2017  Loan agreements to finance pre-delivery payment  Calyon and other banks to finance up to US$ 331 million for 4 B777-300ERs  BNP Paribas to finance up to US$ 117 million for 30 Airbus aircraft until 2010  Guaranties to support the financing of aircraft  Ex-Im Bank for the Boeing fleet  ECAs for the Airbus fleet  24
  25. 25. We are beginning to evaluate new potential business units in the company TAM Linhas Aéreas MRO Loyalty Cargo Handling (São Carlos) Program  Already  None or little focus on selling structured as services to third-parties a business  Not structured as business units unit with focus in maximizing assets 25
  26. 26. Brazilian domestic market has high growth potential Growth of Brazilian Domestic Market Annual Trips / Person 2.32 US 256.8 1.85 Japan TAM’s RPK 228.2 1.70 Germany 0.82 Argentina 176.4 175.4 Market’s RPK 0.62 157.6 Chile 140.6 0.60 Mexico 121.2 GDP 100 0.55 112.0 117.4 Russia 111.4 107.3 104.9 100 0.50 Brazil 2003 2004 2005 2006 2007 Boardings per capita Boardings per capita, adjusted by GDP per capita at PPP Source: World Bank Data, Credit Suisse Research as of 2006 26
  27. 27. High concentration of passengers in 11 airports % Total Domestic Passengers Boarded % TAM slots Important barrier to entry  43% São Paulo¹ for newcomers 34% São Paulo² Limited ability for other 39%  Brasília competitors to grow 32% Rio de Janeiro³ 44% Salvador 11 main airports in Brazil  42% Belo Horizonte carry 72% of all passenger 27% Porto Alegre traffic 26% Curitiba 40% Recife TAM has in aggregate  32% Rio de Janeiro4 ~40% of all slots available 46% Fortaleza in these airports 0% 5% 10% 15% 20% 2007 2006 1 Congonhas 2 Guarulhos 27 3 Galeão Source: ANAC 4 Santos Dumont
  28. 28. As Brazil becomes “stable”, the leisure segment will become increasingly more important Domestic Market Passenger Mix (RPK M) CAGR 50 44.4 39.7 Leisure 40 22% 35.4 30 28.2 27.0 26.6 25.2 Business 20 17.9 11% 10 0 2000 2001 2002 2003 2004 2005 2006 2007 Traveling is one of the top “desire” items for consumption * TAM Estimates 28
  29. 29. We will be expanding our fare bundle strategy for the domestic market in 2008... Addition of extra  features in the segmented bundles Ability to “sell up”  categories Potential for  further revenue increase Harmonization of  the fare bundle strategy to TAM Fidelidade growth 29
  30. 30. ...increasing capillarity of sales through our new methods of payments...  Launched new methods of payment in May 2007  Payment at lottery stores Approximately 9,000 stores in Brazil  Already functioning as bank correspondent   Billing slips  Automatic debit  Financing for passengers via direct consumer credit with the main retail banks Focus on leisure/lower income segments 30
  31. 31. ...optimizing the utilization of our aircraft on off peak hours Load Factor per hour Off Peak Peak Off Peak Peak Off Peak 80% 75 70 65 60 Oct 2007 2Q08 55 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 31

×