101115 webconference ingles - 3 q10 v3
TRANSCRIPT
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3Q10 Results Presentation November 16th, 2010
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Warning -
Information and Projection
This 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 forward looking 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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Highlights
9.9% Highest EBIT margin over the last 15 quarters
-7% Reduction in adjusted* CASK ex-fuel 3Q10 x 3Q09
6%Increase in adjusted* RASK 3Q10 x 3Q09
* Adjusted values excluding the effect of the additional tariff reversal
82.7% Highest international load factor in a quarter
84.7%Highest international load factor in our
history recorded in October
12.6h/dayAircraft utilization registered is 4.4% higher
than the 3Q09
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Milestones of the TAM & LAN Combination
Non-Binding MOUOn August 13, a non-binding Memorandum of Understanding was signed between TAM and LAN, outlining the intention to combine.
Due Diligence ProcessThe due diligence process was completed in September.
ANAC PresentationThe definitive structure of the transaction was presented to the
Brazilian aviation authority –
ANAC (National Civil Aviation Agency), on October 20.
We believe that all steps should be completed between April and June 2011
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Our net revenue increased 23%
Net revenue (Million)
Operating expenses (Million)
EBIT (Million)
EBIT margin
EBITDAR (Million)
EBITDAR margin
Financial result + Others*(Million)
Net income (Million)
2,939
2,248
691
23.5%
975
33.2%
458
740
2,381
2,325
56
2.3%
348
14.6%
402
228
3Q10 vs
3Q09
23.4%
-3.3%
1,137.0%
21.2p.p.
180.3%
18.6p.p.
13.8%
224.0%
3Q10 vs
2Q10
12.5%
-12.8%
2,012.2%
22.2p.p.
237.2%
22.1p.p.
-
-
In Reais 3Q103Q10 3Q093Q09 2Q102Q10
2,611
2,579
33
1,3%
289
11.1%
(211)
(154)
Passengers revenue (Million) 2,369 1,971 20.2% 9.7%2,160
Cargo revenue (Million) 276 238 16.0% -3.0%285
Other revenues (Million) 369 262 41.2% 31.3%281
* Others includes “Movements in fair value of fuel derivatives”
and “Gains (losses) on aircraft revaluation”
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We reversed the additional tariff provision positively impacting 3Q10 results
JUN 2001AUG 2010 3Q 2010
SEP 2010Ad infinitum
Accounting for additional tariff, calculated at 1% on
the fare for all regular domestic tickets sold
Accounting provision reversion in the amount of R$
585.9 million
Operating profit impact (EBIT, EBITDA, EBITDAR) of R$ 404.7
million
Impact of R$ 181.2 million in the financial results
Net income impact of R$ 439.5 million
The Superior Court of Justice confirmed the
decision that definitively releases the Company
from paying the additional tariff
Ad infinitum positive impact of about 0.5%* of
the company's gross revenues
*Positive impact of 1% on regular domestic revenues. Participation of regular domestic revenue on the total gross revenue is about 50%.
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We reached the highest EBIT margin from the past 15 quarters: 9.9%
Adjusted Net Revenue (million)
Ad. Operating Expenses (million)
Adjusted EBIT (million)
Adjusted EBIT MarginAdjusted EBITDAR (million)
Adjusted EBITDAR MarginAd. Financ. Result + Others* (million)
Adjusted Net Income (million)
Total Adjusted RASK (cents)
Adjusted CASK (cents)
Adjusted CASK ex-fuel (cents)
Adjusted CASK USD (cents)
Adjusted CASK USD ex-fuel (cents)
3Q10 vs 3Q09
3Q10 vs 2Q10
In Reais 3Q103Q10 3Q093Q09 2Q102Q10
Note: Adjusted figures dos not consider the additional tariff reversion impact
* Others includes “Movements in fair value of fuel derivatives”
and “Gains (losses) on aircraft revaluation”
2,899
2,613286
9.9%
570
19.4%276
301
15.7
14.2
9.4
8.1
5.4
2,381
2,32556
2.3%
348
14.6%402
228
14.8
15.4
10.1
7.8
5.4
21.7%
12.4%411.9%
7.5p.p.
63.9%
4.8p.p.-31.3%
31.6%
6.3%
-1.9%
-6.6%
4.6%
-0.4%
11.0%
1.3%774.1%
8.6p.p.
97.3%
8.3p.p.-
-
2.3%
-6.6%
-7.5%
-4.3%
-5.2%
2,611
2,57933
1.3%
289
11.1%(211)
(154)
15.4
15.2
10.2
8.5
5.7
9
1,307 1,428 1,466
3Q09 2Q10 3Q10
Passenger Revenue - R$ Million
20.7 22.518.6
3Q09 2Q10 3Q10
Yield - R$ Cents
6,323 6,3357,897
3Q09 2Q10 3Q10
9,891 10,35711,919
ASK, RPK and Load Factor
Load Factor 67% 61% 70%
8%
13.0 13.0 12.4
3Q09 2Q10 3Q10
RASK - R$ Cents
5%
3%
18%
25%
We increased by 12% our domestic passengers revenue and our load factor by 3 p.p
comparing to the previous year
Domestic PassengersDomestic Passengers
18%
25%
12%
10%5%
*
*
* Does not consider the additional tariff reversion impact
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Load factor at the "off peak" hours increased considerably
*Domestic flights at weekdays
Load factor x Hour *
Off Peak Peak Off
PeakOff
PeakPeak
-12 p.p.
-8 p.p.
65% 65%
72%73%
10 11 12 13 14 15 16 17
54%54%
66%
61%
10 11 12 13 14 15 16 17
3Q10
2Q10
50%
55%
60%
65%
70%
75%
80%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
2T10 3T102Q10 3Q10
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We continue increasing sales through direct channels, obtaining several benefits
Website
Others
3Q09 2Q10 3Q10
416465
581
0
200
400
600
Direct channel sales - Brazil(R$ Million)
% direct channel% website
24%
16%
24%
17%
26%
19%
17%
26%
1%22%
•
Sales channel with
lower operating costs
•
Important research
tool for price-sensitive passengers
•
Through the website
you can view all the fare bundles, directing the passenger for the fare
that best suits their profile
•
Helps passengers with
flexible travel dates to find the cheaper tickets
•
Sales channel with
lower operating costs
•
Important research
tool for price-sensitive passengers
•
Through the website
you can view all the fare bundles, directing the passenger for the fare
that best suits their profile
•
Helps passengers with
flexible travel dates to find the cheaper tickets
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1.9 1.8 1.7
3Q09 2Q10 3Q10
U$ 7.3 U$ 8.1 U$ 8.7
3Q09 2Q10 3Q10
R$ 13.6 R$ 14.5 R$ 15.2
Yield - Cents
7%
-2%
RPK4,878
5,0555,945
3Q09 2Q10 3Q10
ASK6,585 6,621
7,184
ASK, RPK and Load Factor
Load Factor 74% 76% 83%
In dollars, we increased by 45% our international passengers revenue and our RASK by 33% comparing to the previous year
U$356 U$409U$516
3Q09 2Q10 3Q10
R$664R$732
R$903
Passenger Revenue - Million
U$5.4 U$6.2 U$7.2
3Q09 2Q10 3Q10
R$10.1R$11.1
R$12.6
Scheduled RASK - Cents
Avg
US DollarAvg
US Dollar
International PassengersInternational Passengers
9%
9%
22%
18%
12%
5%
19%
36%
23%
26%
45%
25%
14%
16%
33%-6%
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By the end of 2010 we will have five new international flights in three continents
Rio de Janeiro –
LondonRio de Janeiro –
Frankfurt
Started
in August
Belo Horizonte –
MiamiBrasília –
MiamiSão Paulo –
Bogota
To begin in December
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Liquidity and debt profile
Cash 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200
300
600
900
1,200
1,500
1,800
2,100
2,400
2,700
2005 2006 2007 2008 2009 3T10
995
2,4532,607
1,9142,166
2,333
0
500
1,000
1,500
2,000
2,500
3,000
87%
13%
Adequate debt profileAdequate debt profile Liquidity PositionLiquidity Position
Adjusted Net Debt / EBITDARAdjusted Net Debt / EBITDAR
US$
Obs.1: 2010 EBITDAR considers last 12 months from 3Q10Obs.2: Net Debt Adjusted includes annual operating leases x 7Obs.3: Debt is considered in US GAAP for 2005 and 2006 and in IFRS since 2007
R$ Million
Debt mix by currency
R$
US$
Debentures, bonds and othersLeasing on the balance sheet
4.1
2005 2006 2007 2008 2009 3T10
3.8
2.1
5.66.3 6.5
5.1
0.0
2.0
4.0
6.0
8.0 Without additional tariff reversal
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2010 Guidance
Domestic MarketDomestic Market Demand growth (RPK) 22% -
25% 25%
Supply growth (ASK) 12% 9%
Domestic 14% 11%
International 8% 7%
Load factor 69% 72%
Domestic 66% 67%
International 75% 80%
New international frequency or destination 2 5 1
CASK ex-fuel -6% -9%2
Average WTI USD 85 USD 78
Average US dollar rate R$ 1,81 R$ 1,77AssumptionsAssumptions
Guidancefor 2010
Guidancefor 2010
ActualJan - OctActual
Jan - Oct
1 Two new flights started (from Rio de Janeiro to Frankfurt and London) and three have been authorized by ANAC to begin in December (São Paulo to Bogota, and Brasilia and Belo Horizonte to Miami)2 Considers the period from January to September
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Fleet plan
B767 Airbus wide-body Airbus narrow-bodyB777 ATR-42
43
A340 - 2
A33016
A321 - 5
A32081
A31921
43
2
18
7
83
26
5
43
2
18
7
85
27
5
43
2
20
9
85
30
5
83
20
128
103
18
132
10
21
137
2009 3Q10 2010 2011 2012 2013 2014
132
148 151158 159 163
168
Total Fleet (end of period)Total Fleet (end of period)
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[email protected] www.tam.com.br/ir