tam 3q11
DESCRIPTION
TRANSCRIPT
Warning - Information and Projectiong j
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 forthe 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-p p y ( p y )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
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judgment.
Agendag
Highlights
Financial ResultsFinancial Results
Guidance and Fleet Plan
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Achievements of our business units
• New positioning and a
•15th anniversary
• New terminal at Maceio
new visual identity•23 collision partners•Joint venture with AIMIA
• New Executive Director
R l f C di• Renewal of Canadian authority certification• 13th anniversary
• 120 stores in Brazil
We continue to study a potential investment in Tripy p p
FactSignat re of a non binding agreement to•Signature of a non-binding agreement to
acquire 31% of the total capital of TRIP•Capture market growth•More significant exposure in the mediumMore significant exposure in the medium density routes market•Due diligence process completed and satisfactory
Partnership Expansion•We increased the number of code-share flights from 120 to 211 (76% increase)flights from 120 to 211 (76% increase)•The number of cities served increased from 60 to 72. •We observed an increase of over 110% in the volume of passengers transported via code-share.
Next StepsNext Steps•Analysis of business plan and valuation
LATAM Airlines Group: Next Stepsp p
Next Steps:Antitrust Approvals:
Next Steps:
• Filings (SEC,CVM,SVS)
•Shareholders meetings
• Germany (July 2011)
• Italy (August 2011)
• Chilean TDLC (September 2011) •Shareholders meetings
•Exchange Offer & Closing (end of 1Q12)
Chilean TDLC (September 2011)
• Spain (October 2011)
•Brazil•SEAE (August 2011)•SEAE (August 2011)•SDE (August 2011)•CADE (pending)
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We completed one year of our retail projectp y p jSlide released in August 2010
AchievementsAchievements
• 120 TAM Vacations Stores
• 3 sales points in subway stationsAchievementsAchievements
• 10 kiosks at Casas Bahia
•Load factor at the "off peak" hoursincreased considerably
3Q10 3Q11
Load Factor X Hour*
-4 p.p.
-8 p.p.
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* Domestic flights at weekdays3Q11 3Q10 Average of the Quarters
Agendag
Highlights
Financial ResultsFinancial Results
Guidance and Fleet Plan
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Multiplus Highlights
Operating highlights
p g g
Item 3Q11 YoY QoY
Points issued 20.0 bln +38.5% +7.9%
Points redeemed 12.5 bln +171.7% +14.7%
Breakage rate 24.0% +140bps +70bps
Financial highlights
Item 3Q11 YoY QoY
Gross Billings of points R$ 397.3 mln +32.4% +12.1%
Net Revenue R$ 321.5 mln +147.3% +12.8%
EBITDA R$ 78.1 mln(margin of 24.3%)
+64.5% -14.6%
Adjusted EBITDA R$ 82.3 mln(margin of 22.2%)
-7.0% +1.3%
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Net Income R$ 51.3 mln(margin of 16.0%)
+15.3% -36.8%
Multiplus and Aimia signed a joint venture to explore the potential of the Brazilian marketpotential of the Brazilian market
Joint Venture50% 50%
Groupe Aeroplan
•8.9 million members
•168 partners of which 23 are coalition
•Annual revenues of over $ 1.4 billion
•More than 30 million active members in the Aeroplanprogram, Nectar and Air Miles Middle East
•Hundreds of partners and some of the world’s top brands
•Annual revenues of over $ 2 billions
New Company
• More than 100 employees in Brazil
Annual revenues of over $ 2 billions
•Over 3,800 employees in the world
CompanyDesign, development,
management, and value creation from data analysis
Design, development, management, and value
creation from data analysis yand insight for third party
loyalty and incentive programs
yand insight for third party
loyalty and incentive programs
It will be a loyalty marketing services company
It will be a loyalty marketing services company
Domestic yield increased 2% compared to 3Q10 and 7% compared to 2Q11compared to 2Q11
Domestic Passengers
ASK11,310 11,956 12,232
ASK, RPK and Load Factor8%
2%
Passenger Revenue - R$ Million
6%
6%
RPK7,897
8,269 8,227-1%
4%
1,466 1,472 1,561
6%
3Q10 2Q11 3Q11Load Factor 70% 69% 67%
Yield - R$ Cents
3Q10 2Q11 3Q11
RASK - R$ Cents
2%4%
1%
18.6 17.8 19.0
7%12.3 11.7 12.1
11
3Q10 2Q11 3Q11 3Q10 2Q11 3Q11
* Adjusted
*
International passenger revenue increased 21% in dollarp g
International Passengers
ASK7,184 7,519 7,820
ASK, RPK and Load Factor
9%
4%R$903 R$865
R$1,025
Passenger Revenue - Million
13%
18%
RPK5,945
6,123 6,541
10%
7%U$516 U$541 U$625
$ 18%
15%
21%
3Q10 2Q11 3Q11Load Factor 83% 81% 84%
3Q10 2Q11 3Q11
R$ 15.2 R$ 14 1R$ 15.7
Yield - Cents
3%
11%R$12.6
R$11.5R$13.1
RASK - Cents
4%
1.75 1.60 1.64
3%
Avg US Dollar
U$ 8 7 U$ 8 9 U$ 9.6
$ R$ 14.1 11%
8%
10%
U$7.2 U$7.2 U$8.0
14%
11%
11%-6%
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3Q10 2Q11 3Q11
U$ 8.7 U$ 8.9 $
3Q10 2Q11 3Q11
8% $ $
3Q10 2Q11 3Q11
11%
At TAM S/A the EBIT margin was 16.7%g
In Reais 3Q11 vs 3Q10
3Q11 vs 2Q11
3Q11 3Q10** 2Q11
Net Revenue (million)
Operating Expenses (million)
EBIT ( illi )
3,3192,766 553
2,8992,258681
13.0%22,5%-18 7%
8.7%-8.9%
-
3,0533,038 15 6EBIT (million)
EBIT MarginEBITDAR (million)
55316.7%
8522 %
68123.2%
97533 2%
18.7%-6.5 p.p. 16.2p.p.
124%13 2
15,60.5%380-12.6%
EBITDAR MarginFinanc. Result + Others* (million)
Net Results (million)
25.7%(1.288)(620)
33.2%458733
-7.5 p.p.--
-13.2p.p.--
12.5%15860
Total RASK (cents)
CASK (cents)
CASK ex fuel (cents)
16.613.89 7
15.912.27 5
13.030 2%
5.6%11.6%2 9%
15.715.610 0
4.2%
CASK ex-fuel (cents)
CASK USD (cents)
CASK USD ex-fuel (cents)
9.78.45.9
7.57.04.3
30.2%20.7%39.1%
2.9%13.8%5.3%
10.09.86.3
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*Others includes “Movements in fair value of fuel derivatives” and “Gains (losses) on aircraft revaluation** Numbers for 2010 were impacted by the Additional Tariff reversal, which significantly reduced the Company's operating costs.
... however, we had a credit of PIS and COFINS that generated gains of R$ 426 million in the 3Q11generated gains of R$ 426 million in the 3Q11
According to the tax rules we can recognize credit considering the proportion between revenueAccording to the tax rules, we can recognize credit considering the proportion between revenue subject to the cumulative and to the non-cumulative regime
Recognized credit in the 3Q11R$ Million
recurring*24Through evolution of the Through evolution of the
R$ Million
402 non-recurring
ginterpretation of the law,
we revised the criteria used in determining credits, also in
ginterpretation of the law,
we revised the criteria used in determining credits, also in
Crédito
respect to international passenger revenue.
respect to international passenger revenue.
Credit
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* Recurring value estimated per quarter
Excluding non-recurring impacts, TAM S.A EBIT margin was 5 8%was 5.8%
3Q11 vs In Reais
3Q11 3Q10
Net Revenue (million)
Operating Expenses (million)
3,3193,127
3Q1014.5%19.2%
2,8992,623
EBIT (million)
EBIT margin
EBITDAR (million)
1925.8%491
-30.2%-3.7p.p.-13 9%
2769.5%570EBITDAR (million)
EBITDAR margin
Total RASK (cents)
49114.8%
16.6
-13.9%-4.9p.p.
5.6%
57019.7%
15.7CASK (cents)
CASK ex-fuel (cents)
CASK USD (cents)
15.69.79.5
10.0%3.1%17.5%
14.29.58.1( )
CASK USD ex-fuel (cents) 6.0 10.2%5.4
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Numbers in this slide exclude the non-recurring credit of PIS and COFINS and tariffs payments to Infraero regarding the previous year in 3Q11 and in 3Q10 excludes the additional tariff reversal
Liquidity and debt profileq y p
Adequate debt profile
R$ Milli
Liquidity Position
R$ Million
1 800
2,100
2,400
2,7002,453
2,607
1,9142,145
2,568
2,1262,000
2,500
3,000
600
900
1,200
1,500
1,800
2005 2006 2007 2008 2009 2010 3Q11
995
0
500
1,000
1,500
Debentures, bonds and othersLeasing on the balance sheetAdjusted Net Debt / EBITDAR
Cash 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 20210
3002005 2006 2007 2008 2009 2010 3Q11
Debt mix by currencyR$
3 8
5.66.3 6.5
3 84.6
6.0
8.0
10%
US$
3.8
2.1
3.8
0 0
2.0
4.0
90%
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US$
Obs.1: Net Debt Adjusted includes annual operating leases x 7Obs.2: Debt is considered in US GAAP for 2005 and 2006 and in IFRS since 2007
2005 2006 2007 2008 2009 2010 3Q110.0
WTI Hedgeg
We understand that our coverage level and price contracts are appropriate to b i d d k t lit
We understand that our coverage level and price contracts are appropriate to b i d d k t litbusiness needs and market realitybusiness needs and market reality
According to our hedging policy, defined by the risk committee
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Agendag
Highlights
Financial ResultFinancial Result
Guidance and Fleet Plan
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2011 Guidance
Domestic
Guidance for2011
ActualJan-Sep
Domestic Market Demand growth (RPK) 15% - 18% 19%
Supply growth (ASK) 10% - 13% 12%Supply growth (ASK) 10% 13% 12%
Domestic 10% - 14% 12%
International 10% 12%
Load Factor 73% - 75% 74%
Domestic 67.5% - 70% 69%
International 83% 82%
New international frequency or destination 2 3
CASK ex fuel 5% 1 5%
Assumptions
CASK ex-fuel -5% -1.5%
Average WTI USD 93 USD 95*
Average US dollar rate R$ 1.78 1.65*
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* accumulated until October 2011
Average WTI in R$ R$ 166 R$ 154*
We remain focused on reducing costs and we have several action plansseveral action plans
Sales and Sales and O tiO ti O h dO h dMarketingMarketing OperationsOperations OverheadOverhead
Review of commissioning model and incentive paid to agencies
Management and control optimization of the aircraft maintenance and components
Frequent revisions in the organizational structure
Renegotiation of contractsMarketing investments
focused on retail
components
Review of GSE model
Process improvement at
Renegotiation of contracts with third parties
Optimization of the antifraud credit card systemProcess improvement at
airports reducing the cost of damage and loss of luggage
Suitability of our network to
credit card system
Suitability of our network to our operation
Several actions to reduce fuel consumption
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fuel consumption
We adjusted our networkj
Network redesign Replacement of A340 by changing more than
30% of flightsA330 on the route São Paulo - Milan
Improved connectivity for passengers
Second daily flight between São Paulo
and Orlando and new flight to Mexico City
InternationalMarket
InternationalMarket
Domestic Market
Domestic Market
Adjustments in theOptimization of aircraft utilization
Adjustments in the frequencies to Paris, Frankfurt and London
Focus on profitabilityEstimated annualized
gains of USD50 million
21
million
Focused on profitability and cash generation, we revised our fleet planour fleet plan
164 171179
Revised Fleet Plan
168 174182
Former Fleet Plan
29 3232
3436
156 159 164
2932
3234
36
156 163 168
4-3 -3
127 127 132 137 143127 131 136 140 146
-4 -4
2011 2012 2013 2014 20152011 2012 2013 2014 2015
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Narrow Body Wide Body Variation
