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Low OperatingCosts
UndisputableBetter Service
CompetitivePrices
Sustainable Strategyto Maintain Market
Leadershipand Profi tabil i ty
TAM is a low cost company with better service at competitive prices
3
Previousperiod
Currentperiod
J F M AM J J A S OND J F MA M J J A S O ND J F MA M J J A S ON D J F8085
9095
100105
110115
120125
130
Domestic Market - Variation
2004
Source: ANAC
Accum. market growth 2006 ~12%
Since 2004 the domestic market growth has been double digit
Accum. market growth 2005 ~19%
Accum. market growth 2004 ~12%
Accum. market growth 2007 ~14%
2005 2006 2007
4
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
BRA 3,6%
Varig 5,0%
Other 5,0%
TAM 50,3%
GOL 36,1%
TAM 47,3%
GOL37,1%
Other 4,8%
Varig 4,7%
BRA 3,9%
We have been domestic market leaders since 2003
Domestic Market Share (RPK’s) – 4Q06 Domestic Market Share (RPK’s) - Feb/06
Domestic Market Share (RPK’s)
Source: ANAC
5
Previousperiod
Market
TAM
J F MAM J J A S O ND J F MA M J J A S ON D J F MA M J J A S O ND J F40
60
80
100
120
140
160
180
International Market - Variation(vs previous year)
Source: ANAC
The international market (among the Brazilian carriers) has been diminishing…
Accum. market growth 2004 ~8%
Accum. market growth 2005 ~7%
Accum. market
decrease 2006 ~30%
2004 2005 2006 2007
Accum. market
decrease 2007 ~40%
Acum TAM 2006~41%
Acum TAM 2007~65%
Acum TAM 2005~40%
Acum. TAM 2004~30%
6
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
TAM 60,0%
Varig16,9%
GOL 13,2%
Other9,9%
Varig11,8%
TAM61,0%
GOL18,9%
Other8,2%
International Market Share– 4Q06 International Market Share– Feb/06
International Market Share
Since July 2006, we are international market leaders among the Brazilian companies
Source: ANAC
7
12Non-stop city links3
44264342Daily Roundtrips3
109129124848+262Destinations3
7805.3767.299ASKs 4Q061
TAM VarigGOL
TAM has the most extensive domestic network...
1 In million ASKs
2 26 destinations served through operational agreements with OceanAir, Pantanal, Passaredo, Total, Trip
3 Based on December, 2006 reported routes (HOTRANs)
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...and is the leading Brazilian international carrier
Long haul marketParis 3x per dayLondon 1x per dayNY 2x per dayMiami 3x per day
Latin American marketBuenos Aires 7x per daySantiago 2x per day Asuncion 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 Jan 2007 network
9
68
121
292
1,175
137147
467
1,285
4Q05 4Q06
1,658
2,037
0
600
1,200
1,800
2,400
Gross Revenues (R$ M)
Dom.Pax
Int.Pax
CargoOther
23%
Domestic passenger revenue growth 9.4%
RPK growth 27%ASK growth 26%
International passenger revenue growth 60%
RPK growth 45%ASK growth 47%
Cargo revenue growth 21% Other revenue growth 101%
Increase of sales of Loyalty Program points and expired tickets compensated by the sub-leasing
Strong revenue growth quarter over quarter
10
4T05
20.6
20.6
68.0
31.8
15.3
74.7
20.4
8.7
3T06
22.2
22.4
75.1
31.4
18.5
79.6
23.3
10.7
4T06
19.3
17.5
69.7
26.4
16.6
73.7
22.6
10.6
4T05 vs 4T06
-6.3%
-15.0%
1.7 p.p.
-16.9%
8.8%
-1.1 p.p.
10.5%
21.0%
3T06 vs 4T06
-13.0%
-21.7%
-5.4 p.p.
-15.9%
-10.4%
-5.9 p.p.
-3.0%
-1.4%
Our total RASK reduced 6.3%, but international RASK increased 8.8%...
RASK Total1
RASK Scheduled Domestic2
LF Scheduled Domestic
Yield Scheduled Domestic3
RASK Scheduled International2
LF Scheduled International
Yield Scheduled International3 (em R$)
Yield Scheduled International3 (em USD)
1 Includes charter, cargo and Other revenues, net of taxes2 Net of taxes3 Gross of taxes
11
CASK
CASKex-fuel
4Q05 1Q06 2Q06 3Q06 4Q06
18.7717.43
18.69 18.4316.98
0
5
10
15
20
Total CASK (BR GAAP - R$ cents)
4Q06 vs 4Q05
-6.1%
-9.6%
...and our CASK decreased 9.6%, reaching the lowest CASK in the past 3 years…
12
RASK
CASK
2002 2003 2004 2005 200615
20
25
RASK/CASK (R$ Cents)BR GAAP
EBITMargin
Spread
-7.1%
-0.3
-0.9%
-0.2
6.5%
1.4
7.5%
1.5
13.6%
2.8
…increasing our spread (RASK – CASK)…
13
4Q05 4Q06
323
437
0
100
200
300
400
500
EBITDAR(BR GAAP - R$ M)
4Q05 4Q06
139
236
0
50
100
150
200
250
300
EBIT(BR GAAP - R$ M)
20.4%
8.8%
12.1%
Margin over Net Revenue
22.5%
4Q05 4Q06
65
135
0
50
100
150
Net Income(BR GAAP - R$ M)
6.9%
36%
4.1%
70%107%
...improving our margins in BR GAAP...
14
4Q05 4Q06
290
372
0
100
200
300
400
EBITDAR (US GAAP - R$ M)
4Q05 4Q06
158
229
0
50
100
150
200
250
300
EBIT(US GAAP - R$ M)
18,5%10,1%
11,7%
Margin over Net Revenue
19,1%
4Q05 4Q06
-48
166
-50
0
50
100
150
200
Net Income(US GAAP - R$ M)
8,5%
29%
-3,1%
45%
...and US GAAP...
446%
15
BR GAAP Leasing IncomeTaxes
Others US GAAP
135
30
-15
16 166
0
50
100
150
200
Net Profit Reconciliationto US GAAP
39 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
16
4Q05 4Q06
0.45
0.90
Earnings per shareBR GAAP (R$)
4Q05 4Q06
-0.33
1.10
Earnings per shareUS GAAP (R$)
100%
433%
…resulting in a significant improvement in the EPS
17
Net revenues
EBIT
Net income
RASK total
CASK
EPS
No. shares (k)
2003 2004 2005 2006
3,891M
(194)M
174M
19.95
20.13
R$2.83
61,365
4,520M
295M
341M
21.53
20.12
R$5.56
61,365
5,649M
425M
187M
20.16
18.63
R$1.30
144,059
7,345M
996M
556M
20.65
17.84
R$3.69
150,563
2006 results were the best reported since the beginning of our turnaround…
18
…increasing our foreign revenues, reducing the mismatch in currencies…
21%
79%
28%
72%
4Q05 4Q06
100% 100%
0
20
40
60
80
100%
Revenues(Passenger + Cargo)
DomesticInternational
Approximately 50% of our costs
(including fuel) are exposed to foreign
currencies
19
(Net Adjusted Debt = Financial Debt + Operational Leases – Cash)
2003 2004 2005 2006
6,133
5,160 5,030
6,290
Net Adjusted Debt (R$ M)
Adj Debt /Adj Cap
106% 100% 90% 85%
7,7x
4,7x 3,5x
2,1x
Net adjusted Debt / EBITDAR
2003 2004 2005 2006
172297
995
2,453
Cash (R$ M)
...reflecting in an even more solid balance sheet
20
TAMM4
IBOVESPA
DOW JONES
ADR TAM
3/10/2006 3/21/20070.6
0.8
1.0
1.2
1.4
1.6
1.8
Accumulated variation since March,10 2006
Since our second public share offer, our share has outperformed both the Ibovespa and Dow Jones
21
12.3%
Guidance 2006 2006
• Since May• Started in October
TAM
Market
47.8%
73.1%
12.7
4.3%(ex-fuel 6.0%)
We have delivered a strong 2006
Average market share
Average load factor
Aircraft utilization per day (block hour)
CASK reduction yoy
New international flights
Market demand growth (in RPK terms)
12% a 15%
45%
69.5%
above 12
5%
• Daily to NY• Flight to London
22
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
yoy Opportunity 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)
Guidance 2007
TAM
Market
Our expectations for 2007, disclosed in December 2006, are still the same
14.0%
Acum. 2007
• Since January• Milan as of
March, 30
47.3%
71.2%NA
NA
23
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 over hub flights: new city-pairs
~60-70% increase in ASKs
Additional daily frequency to Paris beginning in January
New flight to Milan in 1S07
Additional long haul frequency or destination to be disclosed
Strengthening of Latin American presence, both frequencies and destinations
In 2007, we will be expanding both frequencies and destinations...
24
...increasing our fleet and maintaining one of the youngest fleets in the world
TAM wil l be monofleet in the domestic market by 1S08
10
64
21
3
12
88
6
4
14
103
4
16
106
4
16
112
2006 2007 2008 2009 2010
95
109
121126
132
0
50
100
150
Total Fleet
F100A319/320A330MD11B777
Average Age 7.8 6.0 5.0 6.0 7.0
25
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 off-peak 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
Our cost targets are aggressive, but the roadmap is already laid out
26
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)
27
TAM is one of the most lucrative airlines in the world
Virgin Blue with 2006 annualized based Nine months to June 2006; WestJet with 2006 annualized based on Nine Months Ended September 2006
Period ended December 2006 for the other airlines; USGAAP
TAM
GOL
Ryanair
Southwest
Virgin
West Jet
Jet BlueMédia (ex.TAM)
779
489
778
1.607
321
455
381
672
501
322
580
934
177
206
127
391
372
262
488
499
133
117
(1)
246
23,1
28,0
33,8
17,7
23,0
34,6
16,1
25,5
14,9
18,4
25,2
10,3
12,7
15,7
5,4
14,6
11,0
15,0
21,2
5,5
8,1
8,9
0,0
9,8
EBITDAR(US$ MM)
EBIT(US$ MM)
Net Income(US$ MM)
EBITDARMargin (%)
EBITMargin (%)
NetIncome
Margin (%)
28
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.
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