100517 webconference ingles - 1 t10

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100517 webconference ingles - 1 t10

  1. 1. 1Q10 Results Presentation May 17th, 2010 Welcome to Star Alliance!
  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. We grew our operations consistently in the past years, with emphasis in the international market Billion of ASKs 64.7 CAGR International 57.1 Domestic 47.6 40% 39% 39% 35.6 36% 28.0 27% 21.0 25% 18.0 60% 20% 25% 61% 64% 18% 73% 75% 80% 75% 2003 2004 2005 2006 2007 2008 2009 3
  4. 4. We are already the 19th largest airline in the world and we decided the best strategy for our internationalization Without Alliances Without Alliances Bilateral Alliances Bilateral Alliances Merger Merger Reduced connectivity Limited capacity to capture Risk of capital demobilization traffic with the acquisition Higher competitive Higher exposure to political weakness Potential integration and economic located risk complexity between different Restrictions to expand agreements with other cultures airlines (members of Global Alliances) We identified weaknesses in the three scenarios * We are the 19th largest airline in transported passengers, according to the 53rd edition of the report WATS (last published version). 4
  5. 5. The entry into a global alliance is the best option... Global scope in sales, routs network and traffic coverage Global Higher competitive ability Scope Adds specific expertise from partners Positioning Synergy Global Alliance Complementary networks Preservation of culture and identity Network Identity Exposure Visual exposure globally 5
  6. 6. ... and in this scenario, Star Alliance is definitely the one that best fits the Brazilian market Factors that influence passenger’s choices Factors that influence passenger’s choices Frequency of flights – more than 21,000 daily flights Direct services – more than 1,100 airports served VIP Lounges – about 1,000 in 181 countries Connection time – under the same roof Volume of international passengers transported to / from Brazil¹ Volume of international passengers transported to / from Brazil¹ EUA e Canadá EUA and Canada Europa Europe Total Total We are the 7th th largest 44% 51% 49% 50% 50% 56% company in Star Alliance² TAM + Partners TAM + Partners TAM + Partners 4 other companies 12 other companies 28 other companies ¹Source: 2008 Annual Report from ANAC TAM + Partners, considers companies members of Star Alliance + LAN + Pluna ²In transported passengers, according to the 53rd edition of the report WATS 6
  7. 7. In the domestic market, the acquisition of Pantanal, allowed us to act in another market niche 1st International long haul flights Level Scheduled flights to EUA and Europe 2nd Short haul trunk routes Now we are Level Link between major cities in Brazil and South American countries present in all levels of the 3rd Mid density Level aviation market Cities with mid density population 4th Regional market Level Through commercial agreements Ideal positioning for strategic decisions 7
  8. 8. The growth that we can only be supported by a solid technological platform Processes aligned with best market practices Core Processes Back-Office Processes • Amadeus: • Oracle R12, ARACs and Ecomex: - Commercial (reserves, direct and - Accounting indirect channels) - Audit and SOX - Check-in & Airports - Revenue - Revenue Management - Treasury - Weight and balance (Flight - Foreign trade Operational Dispatch) • Payment Gateway Transformation creating systems and processes integrated into TAM and with partners • New technological platform • More services offered to passengers • Connectivity and stability • More features fore the users • Access to supplier’s and market’s • Revision and standardization of processes innovations • Increase sales and reduce costs • Change Management 8
  9. 9. Our domestic passengers revenue reached R$ 1,4 billion Domestic Passengers Domestic Passengers ASK, RPK and Load Factor Passenger Revenue - R$ Million 7% -3% ASK 2% 10,213 10,422 -3% 9,713 16% 1,443 1,433 1,397 RPK 7,024 3% 7,220 6,232 1Q09 4Q09 1Q10 Load 1Q09 4Q09 1Q10 Factor 64% 69% 69% Scheduled Yield - R$ Cents Scheduled RASK - R$ Cents -9% -16% -5% -4% 14.1 13.4 12.8 23.6 20.7 19.7 1Q09 4Q09 1Q10 1Q09 4Q09 1Q10 9
  10. 10. We continue with our strategy of stimulating passengers flying by leisure purposes Load Factor x Hour * Off Peak Peak Off Peak Peak Off Peak 79% 74% 69% 64% 59% 54% 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 1T09 1Q09 4T09 4Q09 1T10 1Q10 10
  11. 11. Direct sales showed significant increases due to means of payment and the implementation of Amadeus Means of payment via website Means of payment via website Direct sales growth Direct sales growth Credit card Direct channel sales (R$ Million) After Cobranded (up to 10 installments) Amadeus 500 Before Amadeus Other operators (up to 6 installments) 400 Financing (up to 48 installments) 300 Website Direct debt 200 100 Bank payment slip Others We are the airline 0 We are the airline 1Q09 2Q09 3Q09 4Q09 1Q10 Lottery kiosks company with more company with more options of means of options of means of % direct payment payment channel 22% 22% 24% 28% 28% 11
  12. 12. We can observe international passengers revenue’s growth in US dollars International Passengers International Passengers ASK, RPK and Load Factor Passenger Revenue - Million 3% 2% ASK 0% R$ R$ 6,391 6,534 6,556 797 28% 816 R$ 640 10% RPK 4,935 5,020 31% 4,573 2% U$ U$ U$ 23% 368 453 345 1Q09 4Q09 1Q10 Load 1Q09 4Q09 1Q10 Factor 72% 76% 77% Scheduled Yield - Cents Scheduled RASK - Cents R$ R$ 0% R$ -7% R$ 17.4 12.5 16.2 12.4 R$ R$ 27% 13.0 25% 9.8 Avg US Dollar Avg US Dollar -22% 20% 28% 4% U$ U$ U$ U$ U$ U$ 7.5 7.5 21% 9.0 2.3 1.8 5.6 23% 6.9 1.7 5.4 1Q09 4Q09 1Q10 1Q09 4Q09 1Q10 1Q09 4Q09 1Q10 12
  13. 13. Financial Indicators In Reais 1Q10 vs 1Q10 vs 1Q10 1Q10 1Q09 1Q09 4Q09 4Q09 1Q09 4Q09 Net Revenue (million) 2.604 2.618 -0,5% 2.497 4,3% Operating Expenses (million) 2.508 2.486 0,9% 2.371 5,8% EBIT (million) 96 132 -26,8% 126 -23,7% EBIT Margin 3,7% 5,0% -1,3p.p. 5,1% -1,4p.p. EBITDAR (million) 377 476 -20,9% 373 0,9% EBITDAR Margin 14,5% 18,2% -3,7p.p. 14,9% -0,5p.p. Financial Result + Others* (million) (173) (91) -89,9% 93 - Net Income (million) (58) 26 - (334) 82,6% Total RASK (cents) 15,3 16,3 -5,7% 14,9 2,9% CASK (cents) 14,8 15,4 -4,3% 14,2 4,3% CASK ex-fuel (cents) 10,1 11,1 -9,3% 9,8 2,6% CASK USD (cents) 8,2 6,7 22,7% 8,1 0,6% CASK USD ex-fuel (cents) 5,6 4,8 16,3% 5,7 -1,0% * Others includes “Movements in fair value of fuel derivatives” and “Gains (losses) on aircraft revaluation” 13
  14. 14. Liquidity and debt profile Adequate debt profile Adequate debt profile Strategic liquidity position Strategic liquidity position R$ Million 3,000 R$ Million 2,700 2,607 2,637 2,400 2,500 2,453 2,166 2,100 1,914 2,000 1,800 1,500 1,500 1,000 995 1,200 900 500 600 0 300 2005 2006 2007 2008 2009 1T10 0 Cash 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Adjusted Net Debt / EBITDAR Adjusted Net Debt / EBITDAR Leasing on the balance sheet Debentures, bonds and others 8.0 Debt mix by currency 6.3 6.5 6.6 R$ 6.0 5.6 16% 4.0 3.8 2.1 2.0 84% US$ 0.0 2005 2006 2007 2008 2009 1Q10 Obs.1: 2010 EBITDAR considers last 12 months from 1Q10 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 14
  15. 15. New WTI hedging policy Hedging Policy After four years, we revised our After four years, we revised our 100% hedging policy, in order to reflect hedging policy, in order to reflect % coverage of the estimated consumption the new market conditions the new market conditions 80 Maximum level 60 40 20 Coverage level Minimum level 0 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 Timeline (months) 15
  16. 16. 2010 Guidance Guidance Guidance Actual Actual for 2010 for 2010 Jan - Apr Jan - Apr Domestic Domestic Demand growth (RPK) 14% - 18% 32% Market Market Supply growth (ASK) 12% 5% Domestic 14% 7% International 8% 1% Load factor 69% 71% Domestic 66% 68% International 75% 76% New international frequency or destination 2 --- CASK ex-fuel -6% -9%1 Average WTI USD 85 USD 80 Assumptions Assumptions Average US dollar rate R$ 1,81 R$ 1,79 1 Considers the period from January to March 16
  17. 17. Fleet plan Total Fleet (end of period) Total Fleet (end of period) 2 165 2 156 160 155 10 2 148 4 8 10 3 3 A340 - 2 140 4 3 3 21 132 4 3 20 20 18 4 3 18 16 9 A330 7 16 5 A321 - 5 84 84 81 134 A320 125 129 81 24 25 28 A319 21 5 5 5 2009 1T10 2010 2011 2012 2013 2014 B777 B767 Airbus wide-body Airbus narrow-body ATR-42 17
  18. 18. invest@tam.com.br www.tam.com.br/ir

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