Santander Conference

January, 2007

2

We have delivered a strong 2006...

Average market share

Average load factor

Aircraft utilization per day (block hour)

CASK reduction yoy

New international flights

Guidance 2006 Sept06 YTD

Market demand growth (in RPK terms)

14.7%12%-15%

47%45%

72.9%69.5%

12.51above 12

2.1%5%

• Daily to NY• Flight to London

• Since May• Since October

TAM

Market

3

…and believe in a very positive 2007

Average domestic market share above 50%

Average domestic load factor at approximately 70%

Aircraft utilization per day (block hour) higher than 13 hours

Reduction of 7% in total CASK ex-fuel in BR GAAP yoyOpportunity in the international market

Third frequency to ParisInauguration of two new international long haul

frequencies

Market demand growth from 10% to 15% (in RPK terms)

TAM

Guidance 2007

Market

4

12Non-stop city links3

44264342Daily Roundtrips3

109129

124848+272Destinations3

7805.3767.299ASKs1

TAM VarigGOL

81%89%90%Operational efficiency4

TAM has the most extensive domestic network...

1 Based on 4Q06 ANAC numbers; 2 27 destinations served through operational agreements with OceanAir, Pantanal, Passaredo, Total, Trip3 Based on December, 2006 reported routes (HOTRANs)4 Based on 3Q06 ANAC numbers

5

...and is the leading Brazilian international carrier

Longhaul marketParis

2x per dayLondon

1x per dayNY

2x per dayMiami

3x per day

Latin American marketBuenos Aires

7x per daySantiago

2x per day Assuncion

8x per day Lima

1x per day Montevideo

1x per day Ciudad del Este

3x per day Sta Cruz dl Sierra

1x per day Cochabamba

1x per day

Note: Based on Dec 2006 network

6

The international market has huge potential for growth on the Brazilian side

53%

47%

54%

46%

72%

28%

2004 2005 20060

20

40

60

80

100%

% International traffic

Braziliancarriers

Intlcarriers

7

In 2007, we will be expanding both frequencies and destinations...

Domestic Market 2007 International Market 2007

~30% increase in ASKs At least an additional 3

destinations Strengthening of international

gateways for domestic market Guarulhos Galeão

Increasing of frequency on main domestic markets Brasília Congonhas Confins

Implementing overhub flights: new city-pairs

~60-70% increase in ASKs

Additional daily frequency to Paris beginning in January

New flight to Milan in 1S07

Additional longhaul frequency or destination to be disclosed

Strengthening of Latin American presence, both frequencies and destinations

8

...expanding the fleet and maintaining one of the youngest fleets in the world

TAM will be monofleet in the domestic market by 1S08

10

64

22

3

12

88

6

414

103

416

106

416

112

2006 2007 2008 2009 2010

96109

121 126 132

0

50

100

150

Total Fleet

F100A319/320A330MD11B777

AverageFleet Age 7 6 5 6 7

9

In order to take advantage of the opportunity in the international, we have closed a deal with Boeing

Firm contract for 4 B777-300ER + 4 options

Delivery for mid 2008

“Interim” contract for 3 MD-11sDelivery within the next 6 months

Same cost per seat as B777-300ERs

Choice for B777-300ER based on:More attractive cost per seat

Higher technological lifespan

Creation of a “mix” of aircraft size, allowing for more gradual capacity increase per destination

New credit line (EXIM)

10

19.2% 21.8%

30.7%34.9% 33.0%

35.8%

43.5%47.8%

27.2%

1998 1999 2000 2001 2002 2003 2004 2005 2006

Domestic Market Share (RPK’s)

Domestic Market Share (RPK’s) – 4Q06 Domestic Market Share (RPK’s) - Dez/06

Source: ANAC

GOL , 36.1%

TAM ; 51,1%

Others; 4,8%

BRA, 3.6%

Varig, 5.0%

TAM , 49.1%

GOL , 37.1%

Others; 4,8%

Varig, 4.7%

BRA, 3.9%

We attained domestic leadership in 2003 ...

11

0.1%3.8%

13.9% 12.5% 12.0%14.3%

18.8%

37.3%

7.9%

1998 1999 2000 2001 2002 2003 2004 2005 2006

International Market Share (RPK’s)

International Market Share (RPK’s) – 4Q06 International Market Share (RPK’s) - Dez/06

Source: ANAC

TAM 60.0%

Varig16.9%

GOL 13.2%

Others9.9% Varig

15.4%

TAM61,2%GOL

13.3%

Others10.8%

…and since July 2006, the leading Brazilian carrier in the international market

12

RASK

LoadFactor

Yield

2002 2003 2004 2005 Jan-Sep-06

13.8

18.120.8 20.3 20.8

10

20

30

40

Scheduled Domestic (Yield and RASK)R$ cents

40

50

60

70

80

Load Factor

Our RASK has been increasing while yields decreasing...

Coherent with our strategy to offer competitive prices

13

...maintaining a 10-15% price differential due to our product features

GOL

TAM

2001 2002 2003 2004 2005 2006 YTD15

20

25

30

35

Yield scheduled domesticR$ Cents

GAP 60% 30% 18% 13% 15% 10%

Note: GOL Yield Grossed up 1.05X in order to include taxes

14

In retrospect, TAM was in a strong competitive position at the end of the ’90s

0.8

1.0

1.2

1.4

1.6

0 1 2 3 4 5

TransbrasilTAM

VASP

Varig

Relative cost position

Network/Service/Brand

R$ 1.3B

High

Low

Low High

Note: for domestic market; Varig includes Rio Sul/Nordeste

Disadvantage

Advantage

AVERAGE 97/00

15

Increase in costs and loss of service awareness put TAM in a difficult position

Average 97-002002

0.8

1.0

1.2

1.4

1.6

0 1 2 3 4 5

Gol

Vasp

Vasp

TAM

TAM

Varig

Varig

Relative cost position

Network/Service/Brand

R$1,5B

High

Low

High Low

However, TAM became “squeezed” between Varig, the flagship carrier, and Gol, the new entrant

Note: for domestic market; Varig includes Rio Sul/Nordeste

16

0.8

1.0

1.2

1.4

1.6

0 1 2 3 4 5

OceanAirBRA

Varig

GolVasp

TAM

TAM

Gol

Varig

Varig

TAM

Relative cost position

Network/Service/Brand

Today, TAM is “out of the squeeze” with a superior product acknowledgement and financial position

Average 97-0020022006

New entrants/smaller players will be looking to

lower costs and serve the low end passengers

17

Our methodology for stage length adjustments on CASK show us a 10-12% gap to Gol today…

STEP 1

Separate Narrow from Wide Bodies

To compare “apples to apples”, TAM removes the results from wide bodies

Otherwise, we would be assuming that a widebody A330 would fly the shuttle service

STEP 2

Standardize Maintenance Costs

GOL has maintenance as a “provision” on their P&L (Phased Maintenance + Supplemental Lease)

TAM accounts for Maintenance only when incurred TAM substitutes for a provision

STEP 3

Adjustment for stage length

Only 2 lines require adjustments for stage length purposes: Fuel – the more take-offs, the higher the fuel

burn Maintenance – the more landings, the higher

wear of the aircraft

18

…which will reduce to 5% by December 2007

The 5% gap “translates” into our 7% reduction y-o-y ex-fuel

2002 2003 2004 2005 2006 YTD

20.4

15.5

19.1

15.4

20.1

16.7

18.6

16.3

18.2

15.8

12

14

16

18

20

22

CASK total (BR GAAP - R$ centavos)

TAMGOL

Gap to Gol 32% 24% 20% 14% 15%

Our domestic gap is 10-12%

YTD

19

Our cost targets are aggressive, but the roadmap is already laid out

Fleet and network Distribution costs Overhead

Increase of block hours to over 13 hours per day per aircraft in 2007

6 extra seats in the A319/320 fleet

Increase in direct sales through: Site improvement Fare bundles Call center

outsourcing New means of

payment Insourcing of

representatives Adjusting indirect sales

commissions to higher % on offpeak flights

Outsourcing of non-core activities

Redefinition of service standards

Review of spans&layers in the hierarquy

Implementation of new automated processes

Improved sourcing capabilities

20

We are innovating in the way we offer our product, servicing the client better at a lower cost

TAM has specific products designed for every part of the client

spectrum (from leisure to business)

21

Today, we are one of the most lucrative airlines in the world…

TAM, GOL and Virgin Blue with 2006 annualized; LTM September 30, 2006 for other airlines; USGAAP1 Assumes average period exchange rates.

TAM

GOL

Ryanair

Southwest

Virgin

West Jet

Jet Blue

Avg (ex-TAM)

EBITDAR (1)

(US$ MM)

801

510

819

1.587

389

343

267

652

OperatingIncome (1)

(US$ MM)

522

357

593

924

177

178

(9)

370

NetIncome (1)

(US$ MM)

389

289

495

528

113

79

(60)

241

EBITDARMargin (%)

24,5

30,2

33,0

18,0

20,9

23,4

12,3

23,0

OperatingMargin (%)

16,0

21,1

23,9

10,5

9,5

12,1

(4,0)

12,2

NetIncome

Margin (%)

11,9

17,1

19,9

6,0

6,1

5,4

(2,7)

8,6

22

In 4 years, we have become one of the best in the world, with more to come

● To be the most competitive, solid and profitable airline in Latin America

Source: Public Reports, December 31, 2005

Coherent business plan

Focused and capable management, delivering results

Quick response to market conditions