080623 citi

June, 2008

Citi's 1st Annual Brazil Equity Conference

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

PreviousPeriod

CurrentPeriod

J F MAM J J A S ON D J F MAM J J A S O N D J F MA M J J A S ON D J F MAM80859095

100105110115120125130

Domestic Market - Variation(vs previous period)

The domestic market grew 11% from January to May 2008

Source: ANAC

Accum. market growth 2006

12%


19%


12%


11%

2007

2005

2006

2008

4

PreviousPeriod

MarketTAM

J F MAM J J A S ON D J F MAM J J A S ON D J F MAM J J A S ON D J F MAM406080

100120140160180

200

International Market - Variation(vs previous period)

The international market (among Brazilian carriers) is recuperating, and grew 43% in 2008…

Source: ANAC

Accum. Marketgrowth 2008

43%

Acum TAM 200641%

Acum TAM 2007 71%

Acum TAM 200540%

Acum TAM 2008 48%


7%

Accum. market decrease 2006

30%

Accum. market decrease 2007

5%

2007

2005

2006

2008

5

…with higher growth anticipated for Brazilian carriers due to the unbalance in the bilateral agreements

* estimates

53.3%

46.7%

53.8%

46.2%

71.5%

28.5%

65.0%

35.0%

62.6%

37.4%

2004 2005 2006 2007* April2008*

0

20

40

60

80

100%

% international traffic

BrazilianCarriers

IntlCarriers

6

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% 49,2% 50,0% 49,3%43,5%

2003 2004 2005 2006 2007 Jan - May 2008 1Q08 May 2008

12,0% 14,3%

37,5%

67,5% 69,8% 67,7%74,3%

18,8%

2003 2004 2005 2006 2007 Jan - May 2008 1Q08 May 2008

7

We are strengthening our product in the international market through fleet and network Increased widebody fleet plan for the next 10 years,

substituting older aircraft 2 A340s (delivered in 2007) 8 B777-300ERs (4 in 2008, 4 in 2012) 22 A350s (as of 2013) New A330 reducing fleet average age Complete phase-out of F100 (impact on intra South American routes)

Expansion of network through additional destinations and frequencies

New full code share agreements at each major country – United Airlines; Lufthansa; LAN Group and TAP

Memorandum of understanding with Air Canada end Swiss Focus on South American coverage – integration of TAM

Mercosur activities

8

The international operations works as a natural hedge

24%

76%

33%

67%

2006 20070

20

40

60

80

100%

Revenue(Passenger + Cargo)

DomesticInternational

Dollarexchangerate

DomesticInternational

2.138

73%27%

1.771

64%36% Approximately

50% of our costs (including fuel) are exposed to foreign

currencies-17%

ASK proportion

Revenues originated in the

international operations are

expected to reach 45% - 50% until

Dec/2008

9

158157

506

1,093

199214

613

1,321

1Q07 1Q08

1,913

2,347

0

500

1,000

1,500

2,000

2,500

Gross Revenue (R$ M)

Dom.Pax

Int.Pax

CargoOthers

Domestic passenger revenue grew 21%

RPK increased 15%ASK increased 14%

International passenger revenue grew 21%

RPK increased 61%ASK increased 50%

Cargo revenue grew 37%Other revenue grew 26%

Our gross revenue increased 23%...

23%

10

...but total RASK reduced 2%...

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)

1Q07

16,72

14,54

69,4

22,00

14,07

71,3

19,789,65

4Q07

17,87

16,69

70,4

24,90

11,26

71,0

15,888,96

1Q08

16,38

15,37

69,9

23,09

11,39

76,9

14,828,47

1Q08 vs 1Q07

-2,1%

5,7%

0,5 p.p.

5,0%

-19,0%

5,6 p.p.

-25,1%-12,2%

1Q08 vs 4Q07

-8,3%

-7,9%

-0,5 p.p.

-7,3%

1,2%

5,9 p.p.

-6,7%-5,4%

R$ Cents

1 Includes charter, cargo and Other revenues, net of taxes2 Net of taxes3 Gross of taxes

11

CASK

CASK excl-fuel

1Q07 1Q08

15.92 16.25

0

5

10

15

20

Total CASKBR GAAP - R$ cents 1Q08 vs 1Q07

-5.5%

2.1%

...while total CASK increased 2%...

12

...reducing the spread (RASK-CASK)...

1Q07 1Q08

16.72 15.92 16.38 16.25

0

5

10

15

20

RASK/CASK (R$ Cents)BR GAAP

RASKCASK

EBITMargin

Spread

4.8%

0.80

0.8%

0.13

13

1Q07 1Q08

340

272

0

100

200

300

400EBITDAR - R$ M

...impacting our margins in BR GAAP...

Margin over net revenue

1Q07 1Q08

88

18

0

20

40

60

80

100EBIT - R$ M

1Q07 1Q08

59

30

20

40

60

80Net Income - R$ M

BR GAAP

-20%

19%

12%

-80%

5%

0,8%

3% 0,1%

-96%

14

1Q07 1Q08

331

283

0

100

200

300

400EBITDAR - R$ M

...and in US GAAP...

1Q07 1Q08

146

83

0

50

100

150EBIT - R$ M

1Q07 1Q08

138

47

0

50

100

150Net Income - R$ M

US GAAP

Margin over net revenue

-14%

18%

13%

-43%

8%

4%

8%

2%

-66%

15

1Q07 1Q08

0.39

0.02

Earnings per shareBR GAAP (R$)

1Q07 1Q08

0.92

0.31

Earnings per share US GAAP (R$)

-96%

...reducing our earnings per share

-66%

16

BR GAAP Leasing IncomeTaxes

Others US GAAP3

57

-19

6 47

0

20

40

60

Net Profit Reconciliation to US GAAP

44 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

17

We are well positioned compared to other airline companies

Repu

blic

Copa

Wes

tJet

Lan

Alleg

iant

Jazz

SkyW

est

Sout

hwes

t

TAM

Pinna

cle

JetB

lue

Air C

anad

a

ACE

Aviat

ion

Gol

Cont

inen

tal

Delta

AMR

North

west

Alas

ka

AirT

ran

US A

irway

s

Expr

essJ

et

UAL

18% 17%

14%12% 11%

9% 8%

4% 4% 3%2%

-0% -1% -1% -2%-3% -3% -3%

-5% -6%-7% -8%

-9%-10

-5

0

5

10

15

20%

Operating Margin (Mar Q 2008) US GAAP

18

Our balance sheet remains solid R$ million - BRGAAP 2008* 2007 2006 2005 2004

Cash 2,226 2,607 2,453 995 297

Short-Term Debt 959 1,098 363 216 204

Long-Term Debt 1,365 1,345 895 425 399

Total Debt 2,324 2,443 1,258 641 603

Shareholder's Equity 1,489 1,527 1,449 760 191

Capitalization 2,855 2,872 2,344 1,185 590

Aircraft and flight equipment leases 5,949 5,976 5,032 4,389 4,557

Total Debt Adjusted 8,273 8,419 6,290 5,030 5,160

Total Capitalization Adjusted 8,804 8,848 7,376 5,574 5,147

Debt / Capitalization 81% 85% 54% 54% 102%

Adjusted Debt / Adjusted Capitalization 94% 95% 85% 90% 100%

Adjusted Net Debt / Adjusted Capitalization 69% 66% 52% 72% 94%

* LTM

19

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

100107.3 111.4

117.4100

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

20

High concentration of passengers in 10 airports

Source: ANAC

% Total Domestic Passengers Boarded

Curitiba

Recife

PortoAlegre

Confins

Salvador

Galeão

Guarulhos

Brasília

Congonhas

Santos Dumont

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

% TAM slots

44%

42%

33%

30%

39%

37%

27%

39%

36%

25%

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

21

As Brazil becomes “stable”, the leisure segment will become increasingly more important

Leisu

reBu

sines

s

2000 2001 2002 2003 2004 2005 2006 2007

17.9

26.6 27.0 25.228.2

35.439.7

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

22

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

23

...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 slips Automatic debit Financing for passengers via direct consumer credit with

the main retail banks

Focus on leisure/lower income segments

24

...optimizing the utilization of our aircraft on off peak hours

* Average day in October, 2007

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 2350

55

60

65

70

75

80%

Domestic load factor per hour

Off Peak Off Peak Off PeakPeakPeak

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

We have a positive outlook for 2008

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

TAM

Market

Actual - 1Q08

10.9%

49.2% dom*69.8% intl*

14.2%49.7%73.2%

-5.5%

---

* From January to May

27

Our growth plan is supported by a flexible fleet plan

3

14

88

10

4

2

16

101

4

2

18

104

4

2

20

110

4

2

22

113

8

2

22

115

2007 2008 2009 2010 2011 2012

115123 128

136 141 147

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

080623 citi

Business