Transcript
Bear Stearns Global Transportation Conference
New York, May 2007
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164.2
138.7
116.1
103.7110.1109.1
100.0 115.5111.4108.8103.4103.2101.3100.0
100
139
126.4 118.3
143.6
207.7
270.3
2000 2001 2002 2003 2004 2005 2006
Domestic Market with High Growth Potential
Source: ANAC, IBGE, and TAM’s Annual Reports
Growth of Brazilian Domestic Market
RPK
GDP
1.70
1.85
2.32
0.62
0.60
0.55
0.50
0.82
Japan
US
Argentina
Chile
Mexico
Russia
Brazil
Boardings per capita
Boardings per capita, adjusted by GDP per capita at PPP
Source: World Bank Data, Credit Suisse Research as of 2005
TAM’s RPK
Annual Trips / Person
Germany
3
74.1
104.698.090.491.294.0100.0
100.0 104.1
221.4180.6
260.7
360.4
505.8
2000 2001 2002 2003 2004 2005 2006
International Market Overview
Source: ANAC and IBGE
2004
2005
2006
Intl. carriersBrazilian carriers
46%
Growth of Brazilian International Market International Traffic (in %)
Imbalance / RPK Disruption created in 2006 due to Varig’s
bankruptcy
RPK
TAM’s RPK
47%
28%
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Low Cost Airline with Better Service
Low OperatingCosts
IndisputablyBetter Service
CompetitivePrices
Sustainable Strategyto Maintain Market
Leadershipand Profitability
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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
TAM is the Leading Domestic Airline since 2003...
Domestic Market Share (RPK’s)
Source: ANAC
BRA 3,4%
Varig 4,6%
Other 5,1%
TAM 48,5%
GOL 38,5%
TAM 51,70%
GOL37,1%
Other 4,8%
Varig 4,7%
BRA 3,9%
Domestic Market Share (RPK’s) – 1Q07 Domestic Market Share (RPK’s) - Mar/07
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% Total Domestic Passengers Boarded
Important barrier to entry for newcomers
Limited ability for other competitors to grow
10 main airports in Brazil carry 70% of all passenger traffic
TAM has in aggregate ~40% of all slots available in these airports
% TAM slots
… controlling ~40% of Slots at 10 Largest Airports
Congonhas
Brasília
Guarulhos
SantosDumont
Galeão
Salvador
Confins
PortoAlegre
Curitiba
Recife
0 2 4 6 8 10 12 14 16 18 20
46%
52%
31%
37%
33%
42%
47%
31%
36%
46%
Source: ANAC
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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)
TAM is the International Market Leader since 20061,…
Note 1: among Brazilian airlinesSource: ANAC
TAM 60,9%
Varig12,1%
GOL 17,9%
Other9,1%
Varig11,0%
TAM61,0%
GOL18,3%
Other7,8%
International Market Share– 1Q07 International Market Share– Mar/07
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…with Diversified International Routes
Long haul market Paris1 3x per day London 1x per day NY 2x per day Miami 3x per day Milan2 1x per day
Latin American market Buenos Aires 7x per day Santiago 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 Cordoba 1x per day
Note 1: 3rd daily flight to Paris started in January 2007Note 2: Started on March 30, 2007
Selected Network Coverage to 3 Continents Leading Brazilian International Carrier
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Strong Financial and Operating Results in 2006...
Net revenues EBITDAR
Margin % EBIT
Margin % Net income
Margin % RASK (R$ cents) CASK (R$ cents) Spread (R$ cents) ASK (MM) RPK (MM) Net Rev. Passengers (K) Load Factor Daily block hours per
day
2003 2004 2005 2006
3,59177522
(32)(1)174
519.9520.13(0.18)18,00310,91611,19860.6%
7.6
4,5201,039
23295
7341
821.5320.121.41
20,99913,85413,52266.0%
9.0
5,6491,140
204258
1873
20.1618.631.53
28,02419,79719,57170.6%11.4
7,3451,817
2599614
5568
20.6517.852.80
35,56426,28925,02273.9%12.7
BRGAAP – R$ MMCAGR02-06
26.9%32.8%
214.5%
47.3%
1.1%(3.9%)
25.4%34.0%30.7%
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(R$ MM)
2003 2004 2005 2006
172 297
995
2,453
...Enhanced TAM's Solid Financial Condition
21%
79%
28%
72%
4Q05 4Q06Note 2: Includes revenues passenger and cargo
DomesticInternational
Liquidity1
Adjusted Debt 3 / Adjusted Cap (%)
Increasing International Revenues2
2003 2004 2005 2006
6,1335,160 5,030
6,2907.7x
4.7x 3.5x
2.1x
Net adjusted Debt3 / EBITDAR
Total Adjusted Debt
(R$ MM)
Gross Debt3
Note 3: Adjusted for capitalized leases
Note 1: Cash and banks, and financial investments
99 9687 81
2003 2004 2005 2006
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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 Paris Inauguration of two new international
long haul frequencies
Market demand growth from 10% to 15% (in RPK terms)
TAM
Market
Guidance for 2007
12.1%
• Since January• Milan since
March 30
48.5%70.5%
NA
NA
Guidance 2007 1Q07
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~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 1H07 Additional long haul frequency
or destination to be disclosed Strengthening of Latin American
presence, through addition of frequencies and destinations
Expansion of Frequencies and Destinations
Domestic Market 2007 International Market 2007
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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 In sourcing 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 org. structure
Implementation of new automated processes
Improved sourcing capabilities
Aggressive Cost Targets
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Fleet Expansion Plan
TAM will be monofleet in the domestic market by 1H08
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64 88 103 106 112
1012
14 1616
6
44
43
7.8 yrs
7.0 yrs6.0 yrs
5.0 yrs6.0 yrs
0
20
40
60
80
100
120
140
2006 2007 2008 2009 2010
Num
ber o
f Airc
raft
s
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0A
verage Fleet Age (years)
F100 A319/320 A330 B777 MD11 Avg fleet age
95109
121
126
132
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Recent Developments
Innovative Services: Fare Bundles launched in 4Q06 (website sales increased by 40% in the 1st month)
Inclusion in the Corporate Sustainability Index (ISE)
IOSA certification was obtained in Jan 2007 (IATA Operational Safety Audit)
Section 404 of the Sarbanes-Oxley Act (SOX) Certification
Code-share with TAP operating by next July, translating into a significant increase of flight options for passengers, as well as into the linkage of the companies' mileage programs, TAM's Fidelidade and TAP's Victoria
On April 25, 2007 closed an offering of US$300 million 7.375% Senior Notes due 2017
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One of the Best Airlines in the World
Source: Public Reports of December 31, 2006 (except for Air Asia and Malaysia, which refer to 2005 figures)
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
8.0 13.0 18.0 23.0 28.0 33.0 38.02006 EBITDAR Margin (%)
Cash
Cos
ts (
$ ce
nts/
ASK)
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Contact details
Investor Relations
Phone: +55 11 5582 9715
Fax: +55 11 5582 8149
Email: invest@tam.com.br
Site: www.tam.com.br/ri
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