View
210
Download
0
Category
Preview:
Citation preview
Brazil DAY
New York, October 28, 2008
2
Information and ProjectionThis 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.
3
TAM: An ethical and Entrepreneurship history
May/1976
Beginning center-West Region and then throughout Brazil
Aug/1986
Center-North Region
May/1994
Paraguay countryside
Jun/1996
South + Center-North Regions
Aug/1996
Mercosur
Dec/1996
National and International territories
Dec/1996
National and International territories
Feb/1961
National and International territories
Feb/2008
4
TAM’s corporate structure
TAM Financial100%
TAM Capital100%
TAM Viagens99,99%
TAM Mercosur94,98%
TAM Linhas Aéreas100%
TAM Financial 2100%
TP Participações99,99%
5
TAM is commited to high levels of corporate governance
Info
rmat
ion Free-float
Board 100%
tag-
alon
g
Investors
BR GAAP and US GAAP simultaneous,
in Portuguese and English, with high
level of disclosed information
CVM and SEC simultaneous
Professional Board
2 members of the family
5 independent members
Audit Committee
Sarbanes-Oxley Certification
Two classes maintained due to regulatory reasons
Same conditions concerning the sale of the company for both classes of shares
53,9% Free Float
1,5% ADTV
8 local analyst meetings and
minimum 4 investor/analyst
visits abroad per year
6
0.5%
26.9%
72.6%
21.6%
19.5%
58.9%
45.5%
54.5%
53.9%
46.2%
Before IPO* 6/13/2005IPO BOVESPA
3/10/2006Follow-on Offering
BOVESPA and NYSE
June 2008
100% 100% 100% 100%
0
20
40
60
80
100%
Total Capital Paticipation
AmaroFamily***
InvestmentFunds**
Free Float
•IPO = Initial Public Offer •**Investment Funds liquidates its position at Follow-on***Amaro Family and its participations held 89.42% of TAM’s voting shares
Capital Market Participation
7
The leading Brazilian international carrierLong haul market
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
Latin American market 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
Domestic market
42 destinations and through business agreements signed with regional companies, it reaches 79 different destinations in Brazil
Note: Based on Oct 2008 network
8
J F MAM J J ASOND J FMAM J J ASOND J F MAM J J A SOND J F MAM J J A S405060708090
100110120130140150160
Market - Variation(vs previous period)
PreviousPeriod
DomesticMarket
InternationalMarket
The domestic market grew 10% from January to September 2008
20072005 2006 2008Domestic
International
19%
7%
12%
-30%
12%
-5%
10%*
36%*
Source: ANAC
* Accumulated until September
9
We are both domestic and international market leaders
TAM’s Domestic Market Share*
Source: ANAC
* RPK – Revenue passenger kilometer
TAM’s International Market Share* – Among Brazilian carriers
33,0%35,8%
48,0% 48,9% 50,2% 52,4% 52,8%
43,5%
2003 2004 2005 2006 2007 Jan - Sep 2008 3Q08 Sep/08
12,0% 14,3%
37,5%
67,5%72,4% 75,8%
82,1%
18,8%
2003 2004 2005 2006 2007 Jan - Sep 2008 3Q08 Sep/08
10
No. take-offs (K)
Load Factor
- LF Dom
- LF Int
Aircraft Utilization (block hrs/day)
- Narrow bodies
- Wide bodies
2003
76
147
61%
58%
71%
7.6
5.8
7.3
TAM S.A. 2004
75
159
66%
64%
71%
8.9
6.9
12.6
2005
81
210
71%
70%
73%
11.4
10.2
14.1
2006
93
245
74%
73%
76%
12.7
12.6
15.1
No. operating aircraft
2002
102
219
55%
53%
61%
9.5
9.2
10.0
2007
110
261
70%
70%
71%
12.6
12.6
15.8
Jan-Jun2008
115
135
72%
69%
77%
12.6
12.3
14.8
In the past 4 years, we have improved every operational metric…
11
…resulting in an outstanding improvement in our financial metrics
Net revenues
EBITDAR
% EBITDAR
EBIT
% EBIT
Net Income
% Net Income
2002
3,429
475
13.9%
(236)
-6.9%
(606)
-17.7%
2003
3,667
775
21.1%
(32)
-0.9%
174
4.7%
2004
4,520
1,039
23.0%
295
6.5%
341
7.6%
2005
5,649
1,140
20.2%
426
7.5%
187
3.3%
2006
7,345
1,817
24.7%
996
13.6%
612
8.3%
BR GAAP 2007
8,151
1,259
15.5%
261
3.2%
129
1.6%
Jan-Jun2008
4,775
572
12.0%
85
1.8%
53
1.1%
12
Maintain leadership in both domestic and international markets
ASK growth of
Domestic 14%
International 40%
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
Domestic market demand growth from 8% to 12% (in RPK terms)
2008 Guidance
We have a positive outlook for 2008
TAM
Market
Jan – Sep 2008
10.2%
50.2% dom72.4% intl
14.2%
32.2%
72.1%
-4.5%*
* Accumulated from January to June, 2008** In final approval phase by ANAC
Brasília – Buenos Aires Rio de Janeiro – Miami São Paulo – Lima Rio de Janeiro – NY** São Paulo – Orlando**
13
Our growth plan is supported by a flexible fleet plan
3
14
88
10
44
16
101
44
18
104
44
20
110
44
22
113
84
22
115
2007 2008 2009 2010 2011 2012
115125
130138
143149
0
50
100
150
Total fleet
B777 MD11 Airbus wide-body Airbus narrow-body F100
Since dec/07 we
are monofleet in
domestic operations
B767
14
15
…with higher growth anticipated for Brazilian carriers due to the unbalance in the bilateral agreements…
Source: ANAC annual report
* estimates
58.2%
41.8%
57.7%
42.3%
66.9%
33.1%
71.2%
28.8%
66.5%
33.5%
2004 2005 2006 2007 Jan - Sep2008*
0
20
40
60
80
100%
% international passenger
BrazilianCarriers
IntlCarriers
16
…observed in many countries, as the example between Brazil and USA
77
107
147
2821
357
10542
Italy
England
Germany
France
Spain
USA
1414
1414
2121
3030
5151
126*126*
150 100 50 0 50 100 150
Weekly Frequencies
* 21 frequencies limited to the cities in the north, northeast and central west regions of Brazil and/or Belo Horizonte
Brazilian Carriers Foreign Carriers
Available space on bilateral Operated by Brazilian Carriers Operated by Foreign Carriers
17
Our mix of international revenue reduced due to the appreciation of Real and increase of domestic yield
34%
66%
31%
69%
2Q07 2Q080
20
40
60
80
100%
Revenue(Passenger + Cargo)
Dollarexchangerate
DomesticInternational
1.926
63%37%
1.592
62%38%
Approximately 50% of our costs
(including fuel) are exposed to foreign
currencies
-17%
ASK proportion
International(Dollar denominated)
Domestic(Real denominated)
18
156196
531
1,170
226
256
603
1,530
2Q07 2Q08
2,054
2,615
0
500
1,000
1,500
2,000
2,500
3,000
Gross Revenue (R$ M) Domestic passenger revenue grew 31%
RPK increased 8%
ASK increased 14%
International passenger revenue grew 13%
RPK increased 29%
ASK increased 22%
Cargo revenue grew 31%
Other revenue grew 45%
Our gross revenue increased 27%...
27%
Domestic Pax International Pax Cargo Other
19
... total RASK increased 9.5%...
RASK total ¹ ²
RASK scheduled domestic²
Domestic load factor - %
Yield scheduled domestic³
RASK scheduled international²
International load factor - %
Yield scheduled international³
Yield scheduled international³ (USD cents)
2Q07 1Q08 2Q08 vs 2Q07
2Q08 vs 1Q08
R$ Cents
1 Includes charter. cargo and Other revenues. net of taxes2 Net of taxes3 Gross of taxes
16.80
15.26
71.9
22.25
12.30
69.1
17.83
9.26
16.38
15.37
69.9
23.09
11.39
76.9
14.82
8.47
18.40
17.66
68.1
27.23
11.48
73.4
15.64
9.82
9.5
15.7
-3.9 p.p.
22.4
-6.7
4.3 p.p.
-12.3
6.1
12.3
14.9
-1.8 p.p.
17.9
0.8
-3.5 p.p.
5.5
16.0
6.39 6.51 7.21 12.9 10.7 RASK scheduled
international² (USD cents)
2Q08
20
...and the total CASK increased 8.4%...
CASK
CASK excl-fuel
2Q07 2Q08
16.5217.91
0
5
10
15
20
Total CASKBR GAAP - R$ cents
2Q08 vs 2Q07
-3.4%
8.4%
21
2Q07 2Q08
69
92
0
20
40
60
80
100EBIT - R$ M
...improving our margins and earnings
Margin over net revenue
2Q07 2Q08
33
67
0
20
40
60
80EBIT - R$ M
2Q07 2Q08
-29
50
-40
-20
0
20
40
60Net Income - R$ M
BR GAAP
US GAAP
2Q07 2Q08
69
214
0
50
100
150
200
250Net Income - R$ M
2Q07 2Q08
0.46
1.42Earnings per share - R$
2Q07 2Q08
-0.19
0.33Earnings per share - R$
103%
2%3%
-1%
2%
34%
3% 4%
4%
9%
209% 209%
22
BR GAAP Leasing IncomeTaxes
Others US GAAP
50
261
-84 -13214
0
100
200
300
400
Net Profit Reconciliation to US GAAP
46 aircrafts are reclassified as capital
leases as per SFAS nº 13
The main difference between BR and US GAAP is the accounting treatment of aircraft leasing
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
** Aircraft and flight equipment leases of the last twelve months x 7
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
25
We are beginning to evaluate new potential business units in the company
TAM Linhas Aéreas
MRO(São Carlos)
Loyalty Program
HandlingCargo
Already structured as a business unit with focus in maximizing assets
None or little focus on selling services to third-parties
Not structured as business units
26
Brazilian domestic market has high growth potential
Boardings per capita
Boardings per capita, adjusted by GDP per capita at PPP
Source: World Bank Data, Credit Suisse Research as of 2006
Annual Trips / Person
1.70
1.85
2.32
0.62
0.60
0.55
0.50
0.82
Japan
US
Argentina
Chile
Mexico
Russia
Brazil
Germany
100107.3
111.4117.4100
140.6
157.6
100
121.2
175.4
228.2
256.8
104.9
176.4
112.0
2003 2004 2005 2006 2007
Market’s RPK
GDP
TAM’s RPK
Growth of Brazilian Domestic Market
27
High concentration of passengers in 11 airports
Source: ANAC
Important barrier to entry for newcomers
Limited ability for other competitors to grow
11 main airports in Brazil carry 72% of all passenger traffic
TAM has in aggregate ~40% of all slots available in these airports
% TAM slots
43%
34%
39%
32%
44%
42%
27%
26%
40%
32%
46% Fortaleza
Rio de Janeiro4
Recife
Curitiba
Porto Alegre
Belo Horizonte
Salvador
Rio de Janeiro³
Brasília
São Paulo²
São Paulo¹
% Total Domestic Passengers Boarded
0% 5% 10% 15% 20%
20062007
1 Congonhas2 Guarulhos3 Galeão4 Santos Dumont
28
As Brazil becomes “stable”, the leisure segment will become increasingly more important
Leis
ure
Busi
nes
s
2000 2001 2002 2003 2004 2005 2006 2007
17.9
26.6 27.025.2
28.2
35.4
39.7
44.4
0
10
20
30
40
50
Domestic Market Passenger Mix (RPK M)
CAGR
11%
22%
Traveling is one of the top “desire” items for consumption
* TAM Estimates
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
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 slipsAutomatic debit Financing for passengers via direct consumer credit with the
main retail banks
Focus on leisure/lower income segments
31
...optimizing the utilization of our aircraft on off peak hours
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 2355
60
65
70
75
80%
Load Factor per hour
2Q08Oct 2007
Off Peak Peak Off Peak Peak Off Peak
Recommended