Tam Apr 4 T07 Eng

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Tam Apr 4 T07 Eng

  1. 1. 4Q07 Results Presentation São Paulo, March 31, 2008
  2. 2. 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 forwardlooking 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. 2007 was a year of many challenges High volatility (e.g. subprime crisis) Macro Economy Fuel prices Airline Industry Scarcity of aircraft, seats, etc due to overall growth in the sector Conclusion of the “Varig” questionmark Airlines Changes in the governing structure of the Brazil industry Collapse of BRA Impact of infrastructure on operations TAM Accident 3
  4. 4. The domestic market growth reached 12% in 2007 and 13% in February 2008 Domestic Market - Variation (vs previous period) 130 125 120 115 Current 110 period 105 100 Previous 95 period Accum. market Accum. market Accum. market 90 growth 2005 growth 2006 growth 2007 Accum. market growth 2008 85 19% 12% 12% 9.3% 80 J F M AM J J A S O N D J F M AM J J A S O N D J F MA M J J A S ON D J F 2005 2006 2007 2008 4 Source: ANAC
  5. 5. We have been domestic market leaders since 2003, reaching 51% in February 2008 Domestic Market Share (RPKs) Domestic Market Share (RPKs) 48.0% 48.9% 43.5% 35.8% 33.0% 2003 2004 2005 2006 2007 Domestic Market Share – 4Q07 Domestic Market Share – 4Q07 Domestic Market Share – Feb/08 Domestic Market Share – Feb/08 TAM TAM 48.2% 50.6% Outros Outros 7.2% 7.3% Varig GOL Varig GOL 3.0% 41.7% 3.7% 38.4% 5 Source: ANAC
  6. 6. The international market (among Brazilian carriers) is recuperating, and grew 50% in February 2008… International Market - Variation (vs previous period) Acum TAM 2007 Acum TAM 2008 71% 71% 200 180 Acum TAM 2006 Acum TAM 2005 41% TAM 160 40% Market 140 120 Previous 100 period Accum. market 80 growth 2005 Accum. market Accum. Market 7% decrease 2006 Accum. market growth 2008 60 30% decrease 2007 56% 5% 40 J F MAM J J A S O ND J F M AM J J A S ON D J F MA M J J A S ON D J F 2005 2006 2007 2008 6 Source: ANAC
  7. 7. …with higher growth anticipated for Brazilian carriers due to the unbalance in the bilateral agreements % international traffic 100% 80 53.3% 53.8% 65.0% 71.5% 60 40 Intl 46.7% 46.2% carriers 20 35.0% 28.5% Brazilian carriers 0 2004 2005 2006 2007* 7 * estimates
  8. 8. Since July 2006, we are international market leaders among the Brazilian companies International Market Share International Market Share 67.5% 37.5% 18.8% 12.0% 14.3% 2003 2004 2005 2006 2007 International Market Share – 4T07 International Market Share – 4T07 International Market Share – Feb/08 International Market Share – Feb/08 TAM TAM 71.5% 67.3% Varig Varig 15.4% GOL 19.7% GOL 11.8% 11.2% 8 Source: ANAC
  9. 9. 4Q07 Highlights (1/2) Steady strengthening of our fleet Delivery of 2 A340, 2 A330, 7 A320 and 1 A321 (versus 3Q07) Redelivery of 3 F100 (versus 3Q07) BNP Paribas – loan to finance PDP (Pre-Delivery-Payment) for 30 aircraft Operational efficiency 12.3 block hours per aircraft per day 13.3 block hours per aircraft per day, considering only the operating fleet Average total load factor of 71.0% in 4Q07 Agreements: Beginning of code-share flights with LAN Group and United Airlines (in November 2007) 9
  10. 10. 4Q07 Highlights (2/2) Strengthening of our network Beginning of international flights Montevideo (Uruguay) – November 5 Frankfurt (Germany) – November 30 Madrid (Spain) – December 21 Awards received Most Valuable Brands in Brazil - Interbrand The Most Shareholder-Friendly Company in the sector – Institutional Investor New branding 10
  11. 11. Our gross revenue increased 16%... Domestic passenger revenue Gross Revenue (R$ M) 16% grew 6% 2,500 RPK increased 10% 2,361 2,037 242 ASK increased 9% 2,000 137 225 147 International passenger revenue 1,500 467 537 grew 15% RPK increased 65% 1,000 ASK increased 72% 1,285 1,357 500 Others Cargo Cargo revenue grew 53% Int. Pax Other revenue grew 76% Dom. Pax 0 4Q06 4Q07 11
  12. 12. ...but total RASK reduced 7.3%... R$ Cents 4Q07 vs 4Q07 vs 4Q07 vs 4Q07 vs 4Q06 4Q06 3Q07 3Q07 4Q07 4Q07 4Q06 4Q06 3Q07 3Q07 RASK Total 1 19.28 17.01 17.87 -7.3% 5.1% RASK Scheduled Domestic2 17.53 15.43 16.69 -4.8% 8.2% LF Scheduled Domestic - % 69.7 66.3 70.4 0.7 p.p. 4.1 p.p. Yield Scheduled Domestic3 26.42 24.42 24.90 -5.8% 2.0% RASK Scheduled Intl2 16.60 12.52 11.26 -32.2% -10.1% LF Scheduled 73.7 70.8 71.0 -2.7 p.p. 0.2 p.p. International - % Yield Scheduled Intl3 22.58 17.69 15.88 -29.7% -10.2% Yield Scheduled Intl3 10.56 9.62 8.96 -15.2% -6.8% (cents of USD) 1 Includes charter, cargo and Other revenues, net of taxes 12 2 Net of taxes 3 Gross of taxes
  13. 13. ...while total CASK increased 1.4%... Total CASK BR GAAP - R$ cents 4Q07 vs 4Q06 20 16.98 17.22 15 1.4% 10 CASK excl-fuel 4.1% 5 0 4Q06 4Q07 13
  14. 14. ...reducing the spread (RASK-CASK)... RASK/CASK (R$ Cents) BR GAAP 20 15 10 5 CASK RASK 0 4Q06 4Q07 Spread 2.3 0.7 EBIT 11.9% 3.6% Margin 14
  15. 15. ...impacting our margins in BR GAAP... BR GAAP EBITDAR - R$ M EBIT - R$ M Net Income - R$ M 500 300 150 -19% -64% 136 -63% 437 250 400 232 353 200 100 300 150 12% 200 23% 50 100 83 50 15% 7% 100 50 4% 2% 0 0 0 4Q06 4Q07 4Q06 4Q07 4Q06 4Q07 Margin over net revenue 15
  16. 16. ...and in US GAAP... US GAAP EBITDAR - R$ M EBIT - R$ M Net Income - R$ M 400 300 200 372 -16% -61% -28% 166 313 250 229 300 150 200 119 200 150 100 12% 100 90 9% 19% 100 50 5% 14% 50 4% 0 0 0 4Q06 4Q07 4Q06 4Q07 4Q06 4Q07 Margin over net revenue 16
  17. 17. ...reducing our earnings per share Earnings per share Earnings per share BR GAAP (R$) US GAAP (R$) -63% -29% 0.90 1.10 0.79 0.33 4Q06 4Q07 4Q06 4Q07 17
  18. 18. The main difference between BR and US GAAP is the accounting treatment of aircraft leasing Net Profit Reconciliation 44 aircrafts are 44 aircrafts are to US GAAP reclassified as capital reclassified as capital leases as per SFAS nº 13 leases as per SFAS nº 13 200 103 150 119 -25 -10 100 50 50 0 BR GAAP Leasing Income Others US GAAP Taxes 18
  19. 19. In an intra-year analysis we can see a strong recovery in the domestic market... Domestic - RASK and Yield Domestic Load Factor - % R$ Cents 30 69% 72% 70% 75 66% 24.4 24.9 25 60 22.0 22.3 20 16.7 15.3 15.4 40 15 14.5 10 20 5 0 0 1Q07 2Q07 3Q07 4Q07 RASK Yield Load Factor 19
  20. 20. ...increasing the total spread (RASK-CASK) RASK/CASK (R$ Cents) BR GAAP 18 RASK CASK 17 16 15 1Q07 2Q07 3Q07 4Q07 Spread 0.8 0.3 0.4 0.7 EBIT 4.8% 1.7% 2.8% 3.6% Margin 20
  21. 21. Our balance sheet remains solid R$ million - BRGAAP 2007 2006 2005 2004 Cash 2,607 2,453 995 297 Short-Term Debt 1,005 363 216 204 Long-Term Debt 1,345 895 425 399 Total Debt 2,350 1,258 641 603 Shareholder's Equity 1,492 1,449 760 191 Capitalization 2,837 2,344 1,185 590 Aircraft and flight equipment leases 6,166 5,032 4,389 4,557 Total Debt Adjusted 8,516 6,290 5,030 5,160 Total Capitalization Adjusted 9,003 7,376 5,574 5,147 Debt / Capitalization 83% 54% 54% 102% Adjusted Debt / Adjusted Capitalization 95% 85% 90% 100% Adjusted Net Debt / Adjusted Capitalization 66% 52% 72% 94% 21
  22. 22. Even with the appreciation of the Real, revenue in foreign currencies increased Revenue (Passenger + Cargo) Approximately 50% Approximately 50% of our costs of our costs 100% (including fuel) are (including fuel) are 28% 31% exposed to foreign exposed to foreign 80 currencies currencies 60 40 72% 69% 20 International Domestic 0 4Q06 4Q07 ASK proportion International 28% 38% Domestic 72% 62% Dollar exchange -17% 2.138 1.771 rate 22
  23. 23. Stocks performance since follow-on Stocks performance Variation Variation TAMM4 = -35% TAMM4 = -35% IBOV = 44% IBOV = 44% TAMN = -22% TAMN = -22% 350% DJBR20 = 63% DJBR20 = 63% Variation Variation TAMM4 = 133% TAMM4 = 133% 250% IBOV = 43% IBOV = 43% Variation Variation TAMM4 = 56% TAMM4 = 56% 150% IBOV = 21% IBOV = 21% TAMN = 62% TAMN = 62% DJBR20 = 12% DJBR20 = 12% 50% -50% IPO Follow-on 12/28/2006 12/28/2007 Jun/14/2005 Mar/10/2006 TAMM4 TAMN IBOV DJBR20 23 www.tam.com.br/ir
  24. 24. On January 30, 2008 we announced a share buy- back program The program has the following characteristics Shares will be held in treasury and subsequently cancelled or transferred, without reducing the company's capital stock. The acquisition will respect the limit of up to 4,000,000 preferred shares, equivalent to 5.56% of the total of this class of shares in circulation Will remain in effect for a maximum period of 365 days UBS Pactual Corretora and Credit Suisse will mediate the operations We already started the purchase 24
  25. 25. Our guidance for 2007, released in the end of 2006 2007 Guidance 2007 Realized Market demand growth from 10% to 15% Market (in RPK terms) 11.9% Average domestic market share above 50% 48.9% Average domestic load factor at approximately 70.5% 70% Aircraft utilization per day (block hour) higher 12.6 than 13 hours TAM Reduction of 7% in total CASK ex-fuel in BR 5.2% GAAP yoy Opportunity in the international market Third frequency to Paris • Since January • Milan (Mar) Inauguration of two new international long haul frequencies • Frankfurt (Nov) • Madrid (Dec) 25
  26. 26. CASK reduction reached 74% of the target due to block hours and additional international destinations CASK ex-fuel BR GAAP (R$ Cents) -7,1% 12.0 -5,2% 11.86 11.5 11.25 -0.62 -0.14 11.02 11.0 -0.08 10.5 10.0 2006 Actual Actual 2007 Block hours International 2007 reduction Destinations Adjusted 26
  27. 27. We have a positive outlook for 2008 2008 Guidance Market Domestic market demand growth from 8% to 12% (in RPK terms) Maintain leadership in both domestic and international markets ASK growth of Domestic 14% International 40% TAM Average load factor at approximately 70% overall Reduction of 7% in total CASK ex-fuel in BR GAAP yoy Three additional international destinations or frequencies in 2008 27
  28. 28. Our growth plan is supported by a flexible fleet plan Total fleet 150 147 141 8 136 4 128 4 3 123 4 24 24 115 4 22 20 18 14 100 Since Since dec/07 we dec/07 we are are 110 113 115 88 104 monofleet in monofleet in 50 101 domestic domestic operations operations 10 0 2007 2008 2009 2010 2011 2012 B777 MD11 Airbus wide-body Airbus narrow-body F100 28
  29. 29. 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 29
  30. 30. 4Q07 Results Presentation São Paulo, March 31, 2008 30

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