MANAGING AN AIRLINE REPUTATION IN TROUBLED GLOBAL SKIES

André Serpa Soares TAP Portugal October 16, 2012

38-75: TAP doubled its network Note: destinations in black were operated in 2000 2000 - 2011

Long haul 5 new destinations in Americas – Miami, Porto Alegre, Brasília, Belo Horizonte, Campinas 7 new destinations in Africa – Casablanca, Algiers, Marrakech, S. Vicente, Praia, Accra, Bamako

2000 - 2011

2000 2011

MPM

NYC

MIA

CCS

FOR

REC NAT

BSB SSA

BHZ RIO

SAO

POA

GRU

FNC

LIS

RAK

CMN ALG

OPO

LAD

TMS

ACC

OXB BKO

SID

DKR

RAI VXE

NYC

CCS

FOR

REC NAT

SSA

RIO GRU

FNC

LIS OPO

LAD

TMS

OXB

SID DKR

JNB MPM

12 new destinations in Africa And Americas

Europe 27 new destinations in Europe: Seville, Coruña, Bilbao, Malaga, Valencia, Nice, Toulouse, Marseille, Lyon, Bordeaux, Manchester, Oslo, Helsinki, Moscow, Warsaw, Hamburg, Dusseldorf, Vienna, Prague, Budapest, Zagreb, Dubrovnik, Venice, Bologna, Turin, Berlin and Bucharest.

2000 - 2011

2000 2011

OPO

LIS

SVO AGP

VLC MAD

TLS

BIO

BOD

BCN

MAN

LON

PAR BRU

AMS

DUS FRA

LUX

HAM BER

CPH

OSL STO HEL

MOS

WAW

PRG

MUC VIE BUD

BUC

DBV

ZAG VCE

ZRH GVA

LYS

MRS TUR NCE

MIL

BLG

ROM

FNC

OPO

LIS MAD BCN

LON

PAR

BRU

AMS

FRA

LUX

CPH

STO

MUC ZRH

GVA MIL

ROM

FNC FAO

27 new destinations in Europe

América Africa Europa

Evolution nº Weekly Frequencies Offered by TAP

HUB Enhancement

From 2001 to 2011, total weekly frequencies offered by TAP increased 217 %

2000 - 2011

150%

100%

50%

0%

-50%

200% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 TAP AEA

2000 - 2011 Traffic Growth (RPK’S) TAP and AEA airlines average – Evolution

2000

20

01

2002

20

03

2004

20

05

2006

20

07

2008

20

09

2010

20

11

-30%

0%

30%

60%

90%

120%

150% Europe Brazil

2000

20

01

2002

20

03

2004

20

05

2006

20

07

2008

20

09

2010

20

11

-50%

0%

50%

100%

200%

300%

400%

150%

250%

350%

Africa

-20%

0%

20%

40%

60%

80%

100%

2000

20

01

2002

20

03

2004

20

05

2006

20

07

2008

20

09

2010

20

11

TAP AEA

TAP and AEA airlines average – Evolution TRAFFIC GROWTH (RPK’S)

2000 - 2011

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

5,3 5,4 5,6 5,8 6 6,4

6,9

7,8

8,7 8,4

9,4 9,8

2011 9 752 000 + 7,3%

YEAR

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

PASSENGERS (million)

5,3 5,4 5,6 5,8 6 6,4 6,9 7,8 8,74 8,4 9 9,75

2000 - 2011 Passengers carried Million passengers

FLEET

2000 - 2011

2001 2002 2003 2004 2005

2006 2007

2008 2009 2010 2011

2000

35 35 38 39 41 42

64 67 69 71 71 71

16PGA 16PGA

16PGA 16PGA 16PGA 16PGA

2011 TRAFFIC

Portugal

Europe

Africa

USA

Brazil

Venezuela

Total TAP

27%

36%

6%

3,3%

23%

2,2%

9,1%

1,5%

0,2%

2%

0,2% 2,3%

9%

MARKET Share Var

2011 TICKET SALES (€)

OPERATING REVENUES AND GAINS 10º

HUMAN RESOURCES TAP, S.A + PGA, S.A

FUEL 10º

2.479 EUR milion

7.561 Employees

716.867 EUR thousand

100,8%

5,4% -1,6%

3,7%

37,1%

359,5%

1.235

2.351 2.479

156.007

Total Ground Staff

7.290

4.957

7.683 7.561

4.200 4.089

2000 2010 2011 2000 2010 2011 2000 2010 2011

522.933

716.867

1.015

724

295 USD p/ton.

Net income TAP,SA

-44 -6

19 2 4 2

54

-209

57 62

3

-200

-150

-100

-50

0

50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 M

€

-122

Profitability Crisis Profitability Consolidation Turnaround

DEBT TO FINANCIAL INSTITUTIONS

% Revenues and Gains (Total Debt/ Total Revenues and Gains)

Total Debt Net Debt

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

902 923 815 677 576 568 615 750

1.115 1.020 878 885

948 975 874 738

611 806

1.109 1.059

1.270 1.139 1.084 1.042

79% 78%

67% 61%

48% 57%

66% 54% 57% 58%

50% 46%

10^6 Euro

2011

0

500

1.000

1.500

2.000

2.500

0%

20%

40%

60%

80%

100%

Net Profit Margin

2.0%

(0.6%)

(0.5%)

(1.9%)

2.0%

(3.6%)

(2.8%)

(3.4%)

EBIT Margin

3.8%

0.5%

2.2%

0.5%

1.6%

(1.6%)

(2.5%)

(4.1%)

EBITDAR Margin

8.3%

5.4%

12.3%

11.3%

9.5%

9.1%

8.7%

8.4%

TAP HAS ON AVERAGE OUTPERFORMED ITS EUROPEAN AIRLINE PEER GROUP IN TERMS OF PROFITABILITY OVER THE PAST 3 YEARS, DESPITE ITS UNDERCAPITALISED BALANCE SHEET Peer Margins (2009 -2011 Average)

Note:(1) 2009 Pro-forma for British Airways and Iberia. (2) TAP Group EBITDAR and EBIT include losses from associates. (3) Lufthansa Passenger Airline Group financials for 2011.

Source: Company filings.

S.A.

(1)

SGPS (2)

(3)

TAP AND PORTUGAL

TAP PROMOTES PORTUGUESE PRODUCTS

Portuguese wines served onboard TAP considered of the best in the world

1 million bottles / year

6 of the most reknowned Portuguese Chefs create meals for onboard service The best of Portuguese cuisine onboard TAP

UP MAGAZINE: SUCCESS IN PORTUGUESE

“Best inflight magazine” Marie Claire Spain

“World best inflight magazine” U-city-guides

“Best reading of the moment” RES Travel Magazine

“A Must” Monocle

1 million readers / month The best bilingual vehicle in the promotion of Portugal and Portuguese tourism destinations

UNIFORMS: PORTUGUESE FASHION, TEXTILE AND FOOTWEAR INDUSTRIES

PROMOTION OF PORTUGAL Campaigns based on price

WEB actions with Google e Expedia

PROMOTION OF PORTUGAL Campaigns to promote destinations Press Trips

Europe

Brazil Africa Portugal

LISBON HUB IS CENTRAL

O CLIENTE MOSTRA O CAMINHO

SOCIAL MEDIA IS CHANGING BUSINESS

2009: TAP FLASHMOB AT LISBON AIRPORT

Over 2 million views on YouTube

Many new fans to TAP’s Facebook page

2010 A VULCANO CALLED EYJAFJALLAJÖKULL

It was quite a challenge!

Thousands of passengers grounded

Call centres overloaded

Desperate passengers turned to facebook questioning airlines

THE BEST SOCIAL MEDIA LEARNING PROGRAMME: "ON JOB TRAINING”

TAP replied delivering: • Up to date info • And the adequate answers to our fans

And gained a multi-disciplinary working team with a good know-how

Sales 194 million euro

2011/+34%

Corporate communications, Crisis management COMMUNICATION & PUBLIC RELATIONS

Customer Service FACEBOOK TEAM CALL CENTRE

Dynamization (promotion and

competitions) MARKETING

SOCIAL MEDIA IT’S ALL ABOUT CARE

Customer Service FACEBOOK TEAM CALL CENTRE

Corporate communications, Crisis management COMMUNICATION & PUBLIC RELATIONS

Dynamization (promotion and

competitions) MARKETING

listen engage

No matter if a fan likes or dislikes us, we want to

Gestão de crise e comunicação institucional COMUNICAÇÃO E RELAÇÕES PÚBLICAS

Serviço ao Cliente FACEBOOK TEAM CALL CENTRE

Dinamização (promoções e passatempos)

MARKETING

SOCIAL MEDIA IT’S ABOUT HAVING CONVERSATIONS

listen engage

No matter if a fan likes or dislikes us, we want to

MANAGING AN AIRLINE REPUTATION IN TROUBLED GLOBAL SKIES

André Serpa Soares TAP Portugal October 16, 2012 afsoares@tap.pt