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TAM DAY


November 10, 2008
TAM International Corporation
   ...with a strong local footprint

        David Barioni Neto
Despite the adversities of 2008, TAM succeeded
to establish as an International Corporation



    TAM Linhas Aéreas      ...
Our market capitalization places us among the top
  20 airlines in the world
Market Capitalization* - USD Billion         ...
TAM Linhas Aéreas, our major business, thrived
both in the domestic…
                                                     ...
…and international market
                                                                                                ...
Within TAM Linhas Aéreas, we continue to focus
on other value generation initiatives
                                     ...
TAM Airlines, our subsidiary in Paraguay is
capturing synergies from the Brazilian operations
                            ...
TAM Viagens, our tour operator, is one of the
biggest Brazilian tour operators
                                           ...
Regardless of the position we achieved, the future
remains challenging…
                                                  ...
… but we continue alert and resilient

Maintaining our growth plan…                        ...conscious about capital disc...
We signed a commitment



              To be the preferred airline company



                          Excellence       ...
TAM is prepared to face the challenges being people’s favorite
     with joy, creativity, respect and responsibility




12
Star Alliance
...joining an exclusive constellation

      Paulo Castello Branco
Star Alliance is the largest alliance and we are the
only Latin American member
                    23             14     ...
Joining Star Alliance will bring many benefits for
TAM
    Additional revenue and volume of
    passengers, from corporate...
Our brand will be seen all around the world




4
Our Loyalty program will be integrated to the ones
from member airlines
    Advantages at all loyalty programs
      Possi...
Passengers will have a better experience…

    Baggage re-check areas
    Baggage to final destination
    Common baggage ...
…having access to hundreds of lounges in the
world…
    More than 800 VIP lounges
    around the world
      First and bus...
...been able to connect in all of our international
long haul destinations
            CDG   FRA   JFK   LHR   MAD   MIA  ...
TAM + Star Alliance transported 38% of the
 international passengers in Brazil
                                           ...
Our code-share agreement with the LAN Group
 will remain unchanged
                                                       ...
Full integration in the alliance will take 18 months

                                    Star Alliance Requirements Check...
People
...our strategy for a sustainable future
         Guilherme Cavalieri
We understand it is fundamental to have a
sounding support from our people

TAM’s universe of people
goes beyond our
emplo...
We have a roadmap of priorities to allow these
people to develop…
        Management                 Culture              ...
4
    Modern   Sustainability
    Modern   Sustainability




             Spirit to Serve
             Spirit to Serve
  ...
Total focus on operations
 ...delivering more with less

 Fernando Sporleder Junior
Our target is to achieve excellence to passengers
and optimize operations


                                             C...
Crew procedures were revised to improve services
and gain productivity
    • Standardization of communication with passeng...
We integrated CCOA, DOV and GSE operations to
facilitate information flow
                                                ...
Airport continues to focus on enhancing passenger
experience
                                   Service                   ...
We have standardized our narrow body fleet with
the Airbus A320family...
• Complete phase out of the 100seat aircraft     ...
...while creating a “mixed” wide body fleet to
serve different destinations
    Incorporation of Boeing aircraft in the wi...
Despite of the improvements, the pursue of our
target continues as we signed a commitment




8
Unlocking Value
                 ...one year later

Paulo Castello Branco / Libano Barroso / Ruy Amparo
As announced last year, we evaluated new
potential business units in the company


                TAM Linhas Aéreas


   ...
TAM Linhas Aéreas


                                   MRO*
    Cargo    Loyalty Program    (São Carlos)




3
We continue to increase our cargo operations
                                                                             ...
Mainly due to the consolidation in our international
business
                                                            ...
In addition, we have implemented several
initiatives to reach cargo’s full potential…
                                    ...
…coordinating with the airline business
     Investment in the construction of TAM’s
                                     ...
TAM Linhas Aéreas


                                   MRO*
    Cargo    Loyalty Program    (São Carlos)




8
Fidelidade continues to show a very healthy
growth in revenues and membership…
                                           ...
…but to reach its full potential, Fidelidade should
increase client base penetration…
                                    ...
..and strengthen partnership network
                                                                                     ...
Therefore TAM has dedicated a team with a clear
mandate
                                                                  ...
TAM Linhas Aéreas


                                    MRO*
     Cargo    Loyalty Program    (São Carlos)




13
We will focus in the market opportunities in Latin
  America for Airbus ...
                                              ...
…and for Boeing equipment
                                                                               • GOL
           ...
We are organizing to capture the opportunities…
                                                                          ...
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Transcript of "Tam Day 08 20090115 Eng"

  1. 1. TAM DAY November 10, 2008
  2. 2. TAM International Corporation ...with a strong local footprint David Barioni Neto
  3. 3. Despite the adversities of 2008, TAM succeeded to establish as an International Corporation 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% SPC – Special Purpose Companies 2
  4. 4. Our market capitalization places us among the top 20 airlines in the world Market Capitalization* - USD Billion TAM Linhas Aéreas TP Participações TAM Mercosur 100% 99,99% 94,98% 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% TAM Viagens TAM Capital TAM Financial TAM Financial 2 99,99% 100% 100% 100% 10 8 6 Americas 4 Europe Other 2 0 Singapore Air JAL British ChinaEastern Korean Air US Air AirNewZealand Qantas Thai Air Air China Asiana Air Canada Lufthansa Iberia Virgin Blue Cathay Southwest easyJet West Jet LAN CAL GOL ChinaSouthern AirTran Air Berlin United Jet Airways Ryanair EVA Air China Air AMR Delta Copa Alaska AirAsia Air France JetBlue ANA ACE 3 *October 31, 2008
  5. 5. TAM Linhas Aéreas, our major business, thrived both in the domestic… TAM Linhas Aéreas TP Participações TAM Mercosur 100% 99,99% 94,98% TAM Linhas Aéreas TP Participações TAM Mercosur Maintaining leadership Recovering yields 100% 99,99% 94,98% Maintaining leadership Recovering yields TAM Viagens TAM Capital TAM Financial TAM Financial 2 99,99% 100% 100% 100% TAM Viagens TAM Capital TAM Financial TAM Financial 2 99,99% 100% 100% 100% Domestic Market Share (RPKs¹) Yield scheduled domestic R$ cents 32 100% 9 9 12 14 14 10 30 14 80 25 31 20 34 40 37 28 39 34 60 40 26 26 22 19 42 12 40 24 Other BRA 50 49 48 41 22 20 TRANSBRASIL 36 35 33 31 VASP 21 VARIG 20 GOL 0 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 TAM 2000 2001 2002 2003 2004 2005 2006 2007 2008² Improving operating performance Standardizing fleet Improving operating performance Standardizing fleet TAM's Delayed flights Our narrow-body fleet operating domestic 2008 17% and South American routes is composed 16% 16% 16% only by aircraft from the A320-family 15% 14% 14% 14% A319 – 144 seats A320 – 156/174 seats 11% 10% A321 – 220 seats Jan Feb Mar Apr May Jun Jul Aug Sep Oct Source: ANAC ¹ RPK – Revenue passenger kilometer 4 ² Accumulated January to September
  6. 6. …and international market TAM Linhas Aéreas TP Participações TAM Mercosur 100% 99,99% 94,98% TAM Linhas Aéreas TP Participações TAM Mercosur Consolidating leadership Increasing our agreements 100% 99,99% 94,98% Consolidating leadership Increasing our agreements TAM Viagens TAM Capital TAM Financial TAM Financial 2 99,99% 100% 100% 100% TAM Viagens TAM Capital TAM Financial TAM Financial 2 99,99% 100% 100% 100% International Market Share (RPKs¹) We signed new code share agreements 100% and memorandums of understanding: 17 7 13 80 10 14 Air Canada 50 60 77 85 87 88 82 Swiss International Air Lines 75 7 40 72 67 Other 20 TRANSBRASIL 37 VASP 18 VARIG 14 14 12 12 7 GOL 0 TAM 2000 2001 2002 2003 2004 2005 2006 2007 2008² Adding flexibility to aircraft gauge Entering in Star Alliance Adding flexibility to aircraft gauge Entering in Star Alliance Number of seats per aircraft type October 7, we announced our entry into Incorporated in 2008 400 365 the Star Alliance 289 300 267 We expect to start operations in 18 212 205 200 months, after achieving several minimum requirements 100 0 B777 MD11 A340 A330 B767 5
  7. 7. Within TAM Linhas Aéreas, we continue to focus on other value generation initiatives TAM Linhas Aéreas TP Participações TAM Mercosur 100% 99,99% 94,98% 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% TAM Viagens TAM Capital TAM Financial TAM Financial 2 99,99% 100% 100% 100% TAM Linhas Aéreas MRO Cargo Loyalty Program (São Carlos) Isolated Forming sales To be structured business unit team as business unit Focus in Direct benefits More fidelity maximizing in cost from customer assets reduction to impacting profitability the airline passenger business 6
  8. 8. TAM Airlines, our subsidiary in Paraguay is capturing synergies from the Brazilian operations TAM Linhas Aéreas TP Participações TAM Mercosur 100% 99,99% 94,98% TAM Linhas Aéreas TP Participações TAM Mercosur 100% 99,99% 94,98% Fleet TAM Viagens TAM Capital TAM Financial TAM Financial 2 99,99% 100% 100% 100% TAM Viagens TAM Capital TAM Financial TAM Financial 2 99,99% 100% 100% 100% In 2008, we substituted the F100 fleet per modern Airbus A320, with lower maintenance costs and more comfort to the passenger Operational and administrative structure Unification of the management’s structure with TAM Linhas Aéreas New network Sta Cruz de La Sierra Reduction in the headcount Cochambaba Ciudad del Rio de Janeiro Este Cost reduction projects Assunção São Paulo Street stores closing Santiago Montevidéu Buenos Aires Revision of commercial costs Negotiation of commercial contracts to global ones 7
  9. 9. TAM Viagens, our tour operator, is one of the biggest Brazilian tour operators TAM Linhas Aéreas TP Participações TAM Mercosur 100% 99,99% 94,98% TAM Linhas Aéreas TP Participações TAM Mercosur 100% 99,99% 94,98% launched in Brazil in 1998. Based in São Paulo, with offices in TAM Viagens TAM Capital TAM Financial TAM Financial 2 99,99% 100% 100% 100% TAM Viagens TAM Capital TAM Financial TAM Financial 2 99,99% 100% 100% 100% Rio de Janeiro, Buenos Aires, and representatives in 49 additional Brazilian cities relies on qualified agents network, innovative packages and high quality services portfolio includes more than 250 products developed and managed according to the requirements and needs of our clients 8
  10. 10. Regardless of the position we achieved, the future remains challenging… Public hearing until December 1st, 2008 Sector growth in the domestic market will proposing changes in the slots distribution rule continue with the correlation of 2 to 3 times GDP growth Testing possibility to allow longer flights Consensus that GDP growth next year from Santos Dumont (RJ) and Re d gu will be shy Pampulha (MG) – airports currently an la em to limited to intraregional (state) r D In São Paulo region continues GOL + Varig (back to core fr to pose a question mark as n io tr business) Third airport project tit uc pe tu Improvements in Viracopos m re Webjet (aircraft order) Airport (Campinas) – new runway Co and new terminal Fast connection to Guarulhos Airport Trip (capitalized by Skywest) Potential concession model for Viracopos and Azul (new entrant) Galeão airports? 9
  11. 11. … but we continue alert and resilient Maintaining our growth plan… ...conscious about capital discipline No change in our fleet plan Reviewing CAPEX and postponing Maintaining technical and cabin crew non core investments Total fleet Implementing initiatives to reduce 151 149 143 138 8 8 130 4 4 4 4 125 4 4 costs non-related to the operation 22 4 22 22 4 4 20 4 18 16 Centralization of back office in Europe 117 115 113 110 104 101 potential shared services in Brazil 2008 2009 2010 2011 2012 2013 B777 Airbus narrow-body B767 Airbus wide-body 10
  12. 12. We signed a commitment To be the preferred airline company Excellence Excellence Excellence in Technical- in in Service Operational Management PASSION FOR AVIATION PASSION FOR AVIATION 11
  13. 13. TAM is prepared to face the challenges being people’s favorite with joy, creativity, respect and responsibility 12
  14. 14. Star Alliance ...joining an exclusive constellation Paulo Castello Branco
  15. 15. Star Alliance is the largest alliance and we are the only Latin American member 23 14 10 23 14 10 members members members members members members Americas Europe Other 2
  16. 16. Joining Star Alliance will bring many benefits for TAM Additional revenue and volume of passengers, from corporate contracts with the alliance Contracts with more than 100 “Blue Chips” global companies Better passenger distribution in the international market and optimization of our network Operations under the same terminal, in order to reduce the connecting time 3
  17. 17. Our brand will be seen all around the world 4
  18. 18. Our Loyalty program will be integrated to the ones from member airlines Advantages at all loyalty programs Possibility of accumulate and redeem points or miles in different loyalty programs More destination options Priority check-in and boarding 5
  19. 19. Passengers will have a better experience… Baggage re-check areas Baggage to final destination Common baggage service facilities Faster and more efficient baggage handling 6
  20. 20. …having access to hundreds of lounges in the world… More than 800 VIP lounges around the world First and business classes passengers Star Alliance Gold Members 7
  21. 21. ...been able to connect in all of our international long haul destinations CDG FRA JFK LHR MAD MIA MXP # Gateways CDG FRA JFK LHR MAD MIA MXP # Gateways 7 7 6 6 6 6 5 5 5 5 5 4 4 3 3 2 1 1 81 Total 13 15 13 16 9 5 10 8
  22. 22. TAM + Star Alliance transported 38% of the international passengers in Brazil Total = 11,411,608 Enplanements to and from Brazil in 2007 4,415,996 2,821,979 3,820,782 352,851 100% TAM TAM 15% TAM 19% 26% Star Alliance 80 Star Alliance Star Alliance 3% 13% Star Alliance One World 35% 60 15% Sky Team One World 8% One World 41% One World 40 16% None Sky Team 48% 20 23% None Sky Team 26% None 10% 0 Latin America USA and Canada Europe Other Source: ANAC’s 2007 annual report 9
  23. 23. Our code-share agreement with the LAN Group will remain unchanged Total = 11,411,608 Enplanements to and from Brazil in 2007 4,415,996 2,821,979 3,820,782 352,851 100% TAM TAM 15% TAM 19% 26% Star Alliance 80 Star Alliance Star Alliance 3% 13% Star Alliance LAN 35% One World 15% 60 0% Sky Team One World 8% One World 41% One World 40 16% None Sky Team 48% 20 23% None Sky Team 26% None 10% 0 Latin America USA and Canada Europe Other Source: ANAC’s 2007 annual report 10
  24. 24. Full integration in the alliance will take 18 months Star Alliance Requirements Check List* Star Alliance Requirements Check List* Frequent Flyer Accrual and Redemption Frequent Flyer Accrual and Redemption Safety Program and Audit Safety Program and Audit Communication Principles Communication Principles Premium Customer Benefits Premium Customer Benefits Star Alliance orientation training Star Alliance orientation training Star Alliance Gold Check-in Star Alliance Gold Check-in Branding Principles Branding Principles Lounge access policy Lounge access policy Usage of the Star Alliance Brand Customer Handling Usage of the Star Alliance Brand Customer Handling Quality Management Quality Management Special baggage procedures Special baggage procedures Quality assurance Baggage tracing and claim service Quality assurance Baggage tracing and claim service Business Support Tools Sales Strategy & Product Business Support Tools Sales Strategy & Product Management of Crisis and Emergency Star Alliance Corporate Plus Management of Crisis and Emergency Star Alliance Corporate Plus GDS alliance availability display Membership Agreements GDS alliance availability display Membership Agreements Impact of additional USD 60 million/year in revenues after integration * The complete check list is composed by 75 minimum requirements. 11
  25. 25. People ...our strategy for a sustainable future Guilherme Cavalieri
  26. 26. We understand it is fundamental to have a sounding support from our people TAM’s universe of people goes beyond our employees… ... we consider our passengers, customers, suppliers and others when developing our strategies, disseminating our essence 2
  27. 27. We have a roadmap of priorities to allow these people to develop… Management Culture Policies & Organizational Culture Policies & Organizational Management Development Management Procedures Structure Management Procedures Structure Development • Consolidation of the • Implement new • Consolidation of the • Competence Human Resources remuneration and quality culture, spirit methodology Business Partners benefits policy and to serve implementation concept strategy • Dissemination of cost • Leadership • Continue • Revision of culture assessment organizational capacitating and • Educational program • Management adjustments in the training processes on Sustainability Development national and Program to close international stations • Employee Survey competency gaps • Implement Shared • Structuring of “TAM • Succession plan for Services Center Memory” – museum all leadership • Restructure collection positions Personnel Administration area 3
  28. 28. 4 Modern Sustainability Modern Sustainability Spirit to Serve Spirit to Serve …and to echo our legacy for the future TAM’s essence should convey… Trust Trust
  29. 29. Total focus on operations ...delivering more with less Fernando Sporleder Junior
  30. 30. Our target is to achieve excellence to passengers and optimize operations Crew CCOA* Punctuality Regularity Service Airport DOV* Comfort GSE* * CCOA - Air Operations Control Center DOV - Flight Operating Dispatch 2 GSE - Ground Support Equipment
  31. 31. Crew procedures were revised to improve services and gain productivity • Standardization of communication with passengers Crew Punctuality Regularity Service Comfort Standardized speech Standardized rules Increase in the passengers’ perception • Optimization on crew’s scheduling Productivity increase Disparity decrease Absenteeism decrease Overnight at home 3
  32. 32. We integrated CCOA, DOV and GSE operations to facilitate information flow CC OA Punctuality Regularity Service V Comfort DO GSE • Higher punctuality and regularity Fast turnaround of the aircraft • Better services consistency At hub airports • Higher loading consistency turnaround time of 40 minutes • Safety increase Airports operated with • Quickness in operations jetway – 30 minutes • Routes rationalization Airports without jetway – 20 minutes • Better flight planning • Technical dispatchers in main bases * CCOA - Air Operations Control Center DOV - Flight Operating Dispatch 4 GSE - Ground Support Equipment
  33. 33. Airport continues to focus on enhancing passenger experience Service Punctuality Service Punctuality Punctuality t Airpor Regularity Service Comfort • Quality assurance at airports to Claims on delays (Talk to the President) Per 100.000 enplanements guarantee service level 45 40 New training scheme 35 30 Modification of hiring policy based 25 on adjusted profile 20 15 Dissemination of culture after rapid 10 growth 5 0 Fast track project Jan/07 Jun/07 Nov/07 Apr/08 Sep/08 Web and self check-in Initiatives to decrease lost luggage Web and self check-in Initiatives to decrease lost luggage • • Reduce check-in time trough web and self check-in KPIs linked to lost luggage reduction Occurrences with luggage per 1,000 enplanements in 2008 % of domestic passengers boarded via web and self check-in 6 50% 40 4 30 20 2 10 0 0 Jan/07 Jun/07 Nov/07 Apr/08 Sep/08 Jan/06 May/06 Sep/06 Jan/07 May/07 Sep/07 Jan/08 May/08 Sep/08 5
  34. 34. We have standardized our narrow body fleet with the Airbus A320family... • Complete phase out of the 100seat aircraft Punctuality Regularity Service Comfort • Reduction of maintenance costs • Interchangeability of crew and aircraft in the network • More comfort to our passengers with modern aircraft (average age of 5.6 years) • A320 operational excellence with one of the highest flown hours per day Source: Airbus 6
  35. 35. ...while creating a “mixed” wide body fleet to serve different destinations Incorporation of Boeing aircraft in the wide body fleet Punctuality Regularity Service Comfort Creation of a “mix” of aircraft size, allowing for adequate capacity per destination (traffic and infrastructure) B777 opens a huge opportunity for the cargo operations Continuous effort to offer best in class product to passengers Firm orders of A350-XWB to substitute the A330s as of 2013 New generation of aircraft with reduced noise, weight and emissions 7
  36. 36. Despite of the improvements, the pursue of our target continues as we signed a commitment 8
  37. 37. Unlocking Value ...one year later Paulo Castello Branco / Libano Barroso / Ruy Amparo
  38. 38. As announced last year, we evaluated new potential business units in the company TAM Linhas Aéreas MRO* Cargo Loyalty Program (São Carlos) 2
  39. 39. TAM Linhas Aéreas MRO* Cargo Loyalty Program (São Carlos) 3
  40. 40. We continue to increase our cargo operations TAM Linhas Aéreas TAM Linhas Aéreas Cargo Revenues (R$M) MRO* Loyalty Cargo MRO* (São Carlos) Loyalty Program Cargo (São Carlos) Program CAGR 1,000 777 800 730 600 417 45.1% 393 487 407 165 400 307 130 239 123 200 83 360 13.9% 337 322 277 Intl 184 156 Domestic 0 2003 2004 2005 2006 2007 2008* Intl ASK growth - 46% 34% 35% 65% 40% 12% Dom ASK - 9% 33% 24% 18% 14% 29% growth * Jan-Sep 4
  41. 41. Mainly due to the consolidation in our international business TAM Linhas Aéreas TAM Linhas Aéreas MRO* Loyalty Cargo MRO* (São Carlos) Loyalty Program Cargo (São Carlos) In 2007, the addition of 7 wide Program In 2007, the addition of 7 wide bodies, increased cargo bodies, increased cargo Total fleet international revenues in 153% international revenues in 153% 151 149 143 8 8 138 4 4 4 130 4 4 4 125 22 4 22 22 4 4 115 20 4 18 3 16 14 96 95 9 10 84 83 10 9 44 117 115 113 110 88 64 44 104 101 49 43 30 25 21 10 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 F100 MD11 B777 B767 Airbus wide-body Airbus narrow-body 5 * Tons per Kilometer (cargo unit)
  42. 42. In addition, we have implemented several initiatives to reach cargo’s full potential… TAM Linhas Aéreas TAM Linhas Aéreas Domestic MRO* Loyalty Cargo MRO* (São Carlos) Loyalty Program Cargo (São Carlos) Program Inauguration of two new cargo terminals (Galeão and Manaus) Addition of commercial functionalities in domestic IT system Quality assurance area created to speed up problems solution Massive participation on sector events Management and organization model optimization at stations International New software (Cargospot) to improve commercial, operational and financial efficiency (in implementation) Insourcing of the USA cargo commercial unit – increasing commercial efforts and decreasing costs Better commercial approach trough cargo and client segmentation Cargo agreements with Airline partners and key clients 6
  43. 43. …coordinating with the airline business Investment in the construction of TAM’s TAM Linhas Aéreas TAM Linhas Aéreas MRO* Loyalty Cargo MRO* (São Carlos) Loyalty Program Cargo (São Carlos) Program largest cargo terminal in Manaus… Operational area of 2,160 square meters and 540 square meters of admin/commercial area More than 80 tons per day of storage capacity Faster dispatch of freight shipments Individualized service and total access for the handicapped Exclusive areas for different types of freight, and cold storage for perishables ... and substitution of the aircraft type flying the route Manaus - Miami from an A320 to an A330 so that there is more available capacity for cargo 7
  44. 44. TAM Linhas Aéreas MRO* Cargo Loyalty Program (São Carlos) 8
  45. 45. Fidelidade continues to show a very healthy growth in revenues and membership… TAM Linhas Aéreas TAM Linhas Aéreas MRO* Loyalty Cargo MRO* (São Carlos) Loyalty Program Cargo (São Carlos) Program Revenue Number of R$ Million members (Million) CAGR CAGR 5.9 6 350 337 300 290 5 4.4 250 4 3.8 31% 207 200 3.0 3 82% 2.5 150 2.0 2 100 85 58 32% 1 2.1 50 1.7 31 1.4 1.1 0.8 0.7 0 0 2003 2004 2005 2006 2007 Jan-Sep 2003 2004 2005 2006 2007 Sep 2008 2008 Total Active Source: TAM 9
  46. 46. …but to reach its full potential, Fidelidade should increase client base penetration… TAM Linhas Aéreas TAM Linhas Aéreas MRO* Loyalty Cargo MRO* (São Carlos) Loyalty Program Cargo (São Carlos) Program Penetration on TAM passengers Penetration on population Penetration on TAM passengers Penetration on population Penetration on country population (%) 30 27 26% 40% 24 24 4% 56% 21 21 73% 20 18 23% 5% 16 None/ do not 16% 13 13 know 12 10% Others 31% 7% 10 20% Red card 9% 8% 6 5 Blue card 6% 3 3% 19% 19% 17% White card 9% 0 14 to 24 Up to 7 8 to 12 Over 24 M NM rF Ai s s ile ) Br irg lan Ae UK A L nc NZ ft ar a Ai ue U ta ay uy JA ns C TA KL Lu ct Ai s (A l Average trips per year an sh B p s rw ra r ha s e e/ ro ile in Q rM rM yb Ai V iti Fl Ai There is an opportunity to increase penetration among both, frequent and non-frequent flyers 10 Source: TAM
  47. 47. ..and strengthen partnership network TAM Linhas Aéreas TAM Linhas Aéreas MRO* Loyalty Cargo MRO* (São Carlos) Loyalty Program Cargo (São Carlos) Program Top mileage earnings sources Opportunities Top mileage earnings sources Opportunities There is a significant opportunity to grow Fidelidade’s penetration in Car Rentals Personal partners from non-financial industries Financial 1.4% Flowers 0.9% 0.6% Retail Shopping Less than 1% of TAM Fidelidade’s gross 3.1% billing come from non-financial partners Other 0.5% Hotels 4.9% Other top FFPs reach 10-20% of earnings Flying, Elite Telephone, sources from non-financial partners Status/Other Wireless 9,3% Bonuses High volume of miles could be sold to 59.6% Credit Cards new partners, such as retail and telecom 19.7% (large scale industries) More options for accrual and Total from other partners (excluding flight and credit redemptions also improve FFP’s value cards partners): 20,7% proposition 11 Source: Wall Street Research; TAM
  48. 48. Therefore TAM has dedicated a team with a clear mandate TAM Linhas Aéreas TAM Linhas Aéreas MRO* Loyalty Cargo MRO* (São Carlos) Loyalty Program Cargo (São Carlos) Program Increase airline and financial services penetration Prospect and develop profitable relationship with members (i.e. CRM) New businesses within existing industries (i.e. debit cards) Explore new industries (i.e. retail, telecom) Renegotiation of current partnership agreements Focus on higher price partnerships Design lower cost redemption options Focus on cheaper partnerships Management of breakage 12
  49. 49. TAM Linhas Aéreas MRO* Cargo Loyalty Program (São Carlos) 13
  50. 50. We will focus in the market opportunities in Latin America for Airbus ... TAM Linhas Aéreas Mexicana TAM Linhas Aéreas MRO* MRO* Cargo Loyalty Program (São Cargo Loyalty Program (São 10 A318 Carlos) Cubana Carlos) Air Jamaica 20 A319 2 A320 9 A320 32 A320 6 A321 18 F100 2 A340 Aircraft Total TAM: Mexicana - A320/F100 15 A319 BWIA: 2 A340 70 A320 Air Caraïbes:3 A330 A318 15 TACA 3 A321 Dutch Antilles: 2 F100 7 A319 12 A330 26 A320 A319 58 Aeroman 2 A340 Avianca Governo Venezuela 4 A321 A319/320 OceanAir: F100 1 A319 16 F100 A320 161 TAM Avianca A319/320/321/330 A321 13 13 F100 A330 15 TAME TAM Airlines 2 A320 3 A320 A340 17 LAN A318/319/320/340 F100 49 LAN 5 A318 Total 328 Aerolíneas 15 A319 6 A340 17 A320 5 A340 Aerolíneas Argentinas – A340 Airlines MRO Facilities 14 Source: ATW /Flight International / Speednews / Aerohobby
  51. 51. …and for Boeing equipment • GOL Mexicana TAM Linhas Aéreas TAM Linhas Aéreas • TAM: 14 B737-300 Aeromexico MRO* 02 B767(300ER) MRO* Cargo Loyalty Program (São Cargo Loyalty Program (São Carlos) 04 B767 30 B737-700 Carlos) B737;757;767;777 04 B777 35 B737-800 Aeromexico • Ocean • Varig 33 B737-700 Air: 14 B737-300 06 B737-800 03 B737- 01 B737-700 Aircraft Total 03 B767-200ER 300 07 B737-800 01 B767-300ER 02 B767 01 B737-700 04 B777-200ER 01 B767-200ER B727 2 22 MD-80 family 01 B767-300ER Mexicana B727;737;757;767 BWIA: 07 B737- B737 161 800 Aeroman/TACA (AirCanada) B737;747;757;767 B747 2 Avianca Services B757/767(tbc) B757 7 Avianca VEM: B767-200ER B727;737;747;757;767;777;BBJ; B767-300ER B767 51 MD11;DC10 B757-200 GOL: B737 TAME MD-83 02 Boeing 727 B777 8 • Aerolíneas Argentinas 05 B767-200ER 02 B767-300ER LAN/Goodrich MD80 22 07 B757-200 Full Boeing MRO LAN Total 253 08 B737-200 22 B767-300ER Aerolíneas 02 B737-200F Argentinas 08 B767-300F B757/767(tbc) 02 B747-200 Airlines MRO Facilities 15 Source: ATW /Flight International / Speednews / Aerohobby
  52. 52. We are organizing to capture the opportunities… TAM Linhas Aéreas TAM Linhas Aéreas MRO* MRO* Cargo Loyalty Program (São Cargo Loyalty Program (São Carlos) Carlos) Future Capabilities Current Capabilities Airbus aircraft and F100 Boeing aircraft People Line maintenance, checks C and D Running at optimized productivity Components: hard-time, on-condition and condition monitoring IOSA ISO14001 Certifications Full EASA 145 certification (A330 and FAA A321 included) B767 airframe certification Certification for A340, B767 and B777 All targeted for 2009 components Hangars for up to 7 narrow body aircraft Construction of a new Facilities simultaneously (or 1 wide body and 5 hangar for B777-300 and narrow bodies) A350 (target 2010) Painting hangar in full compliance with Full utilization of facilities environmental laws Non restricted 24h operations 16
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