conference call 2q09
TRANSCRIPT
São Paulo, August 14, 2009
2Q09 Results Presentation
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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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Historical record quarterly net income of R$ 789 million
Operational efficiencyPunctuality index of 93.4%
11.6 block hours per aircraft per day (-8% versus 2Q08)
12.2 block hours per aircraft per day, considering only the operating fleet (-10% versus 2Q08)
AgreementsBeginning of code-share operations and integration of Loyalty programs with SwissIntegration of our TAM Fidelidade with Aeroplan - Air Canada’s mileage programAnnouncement of code-share with Air China
Strengthening the operations at Santos Dumont Airport – Rio de JaneiroTAM Viagens updates its line of products and services
MRO – contracts for LAN Group’s aircraft maintenance
Airbus Operational Excellence Award for the A320 family
Highlights
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We launched the Multiplus
Fidelidade aiming to explore all potential of the customers loyalty
Hotel
Bank
CreditCard
Retail
Bank
TAM Loyalty Program – Unilateral approach
Client
Sales of points to partners
Partners award clients with point
Clients redeem points to fly with TAM
Multiplus Fidelidade – Multilateral approach
ClientTelco
Bookstore
Products
Advantages
Cellular
Book
Package
Sales of points to partners
Partners award clients with point
Clients redeem points with several partners
Clients will be able to accrue points from different partners in
the same account
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$ $
Multiplus
Fidelidade cash flow model and levers
Cash InSales of points to partners
Cash OutBuying awards to members when points are redeemed
PhoneCompany
Retail
Bookstores
Travel packages
Phonesor
discounts
Airline tickets
Products
Books
Profit fromSpread between point sales and acquisition of awardsBreakageCRMOutsourcing
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Working capital strength
Increase in Company’s liquidity
Guarantee credit conditions
Total offer of R$ 600 million
600 regular debentures
Unitary par value of R$ 1 million
Not convertible into shares
Amortization
As of July 24, 2010
13 quarterly and consecutive payments
Expire date – July 24, 2013
Remunerative interest rate of 126.5% of the Daily Interbank Deposit
Guaranteed by fiduciary assignment of receivables
We strengthened our cash with a debenture offer of R$ 600 million
Offer details
Offer details
RationalRational
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Gross revenue
Domestic passenger revenue reduced 16%
RPK decreased 0.5%
ASK increased 11%
International passenger revenue reduced 3%
RPK increased 15%
ASK increased 23%
Cargo revenue decreased 16%
Other revenue grew 37%Domestic Pax International Pax Cargo Other
226
256
603
1,530
310
215
584
1,286
2Q08 2Q09
2,6152,395
0
500
1,000
1,500
2,000
2,500
3,000
Gross Revenue (R$ M)
BR GAAP
8%
8
Our total RASK decreased 21%
RASK Total ¹ ²
RASK scheduled domestic ²
Scheduled load factor (%)
Scheduled yield ³
RASK scheduled international ²
Scheduled load factor (%)
Scheduled yield ³
RASK scheduled international ²(USD cents)
Scheduled yield ³(USD cents)
2Q082Q08
18.40
17.66
68.1
27.23
11.48
73.4
15.64
7.21
9.83
1Q091Q09
16.39
14.21
63.1
23.59
12.48
71.7
17.40
5.39
7.52
2Q092Q09
14.55
13.21
61.4
22.60
8.99
68.5
13.13
4.61
6.73
2Q09 vs 2Q08
-20.9%
-25.2%
-6.7
p.p.
-17.0%
-21.7%
-4.9
p.p.
-16.1%
-36.1%
-31.6%
2Q09 vs 1Q09
-11.2%
-7.6%
-1.7
p.p.
-4.2%
-28.0%
-3.2
p.p.
-24.5%
-14.5%
-10.5%
1 Includes charter, cargo and Other revenues, net of taxes2 Net of taxes3 Gross of taxes
R$ Cents
BR GAAP
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Our CASK reduced 11%
RASK(R$ Cents)
CASK(R$ Cents)
CASK excl Fuel(R$ Cents)
CASK(USD Cents)
CASK excl Fuel(USD Cents)
USD average rate
2Q082Q08
18.40
17.32
10.08
10.46
6.09
1.66
14.55
15.52
11.59
7.49
5.60
2.07
2Q09 vs 2Q08
-21%
-11%
15%
-28%
-8%
25%
2Q092Q09BR GAAP
10
Exchange variation and hedge impacted our financial result
Financial income Interest income from financial investments Exchange variation Financial instrument/gains –
WTI* Realized Unrealized
Other
Financial expense Exchange variation Interest expense Financial instrument/loss –
WTI* Realized
Other
Financial result, net
2Q082Q08
46.1 563.2
43.9 41.6 2.9
697.7
(227.3)(76.2)(3.5)(7.1)(9.8)
(323.9)
373.8
2Q092Q09
14.1 1,249.4
-471.6 11.9
1,747.0
(193.3)(99.6)
-(160.4)(9.8)
(463.1)
1,283.9
R$ Million
BR GAAP
*WTI West Texas Intermediate
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EBITDAR, EBIT and Net Income in BR GAAP and IFRS
Margin over net revenue
2Q08 2Q09
318
192
EBITDAR - R$ M
-40%
13%
8%
BR GAAP
2Q08 2Q09
142
-95
EBIT - R$ M
6%
-4%
2Q08 2Q09
337
789
Net Income - R$ M
13%
34%
2Q08 2Q09
255
175
EBITDAR - R$ M
-31%
10%
8%
2Q08 2Q09
75
-143
EBIT - R$ M
3%
-6%
2Q08 2Q09
241
540
Net Income - R$ M
24%
10%
IFRS
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Flight equipment impairment represented the main difference between BR GAAP and IFRS
Net incomeBR GAAP
Loyalty FlightEquipmentImpairment
Deferred Taxes Net incomeIFRS
788.9
-26.9
-331.5
109.1 539.6
0
200
400
600
800
1,000
Net income reconciliation - 2Q09R$ Million
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The cash consumption was mainly due to hedge and operations
OpeningBalanceMar/09
Hedge Operating Investing Financing ClosingBalanceJun/09
Debentures Cashincluding
debentures
1,327
-160
203
-76
-2361,057
600 1,657
0
500
1,000
1,500
2,000
CashR$ Million
BR GAAP Restrict cash
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Our hedge position remains unchanged
1Q09 2Q09 3Q09 4Q09 Total 2009 1Q10 2Q10 3Q10 4Q10 Total 2010 1Q11
Renegotiated positionRenegotiated position
Volume¹
1,927 1,245 1,145 830
5,146 890 955 865 720
3,429 145
Strike²
107113110109109114115114113114107
Coverage³
52%33%30%22%34%23%25%22%19%22%4%
Original positionOriginal position
Volume¹
2,730 1,980
Strike²
105 112
Coverage³
73%53%
1 – Volume in thousand barrels2 – Average strike (USD/barrel)3 – Projected consumption covered
The hedge renegotiation avoided a cash outflow of USD 95 million in the first
half of the year
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1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
125
79
58
43
29
49
32
16
54
37
21
59
41
23
51
36
20
44
31
178 5 2
0
50
100
150
Hedge Cash Impact Sensitivity(USD million)
The hedge impact in our cash will be lower in the upcoming quarters
50 USD/barrel 70 USD/barrel 90 USD/barrelRealized
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Positive with the domestic market growth, we revised our guidance
TAMTAM
Domestic Market
Domestic Market
Realized Jan -Jul
Realized Jan -Jul
Demand growth (RPK)
Maintain market share leadership in both markets
Domestic
International
Supply growth (ASK)
Domestic
International
Average overall load factor at approximately
Additional international destinations or frequencies in 2009
Guidance 2009
Guidance 2009
7% - 10%
- - -
- - -
8%
20%
67%
1
6.6%
47.1%
86.4%
10.6%
22.6%
66.9%
- - -
17
43
A340 2
A330 - 16
A321 - 5
A32082
A31920
43
18
107
43
20
110
43
22
113
83
22
115
103
22
117
2Q09 2009 2010 2011 2012 2013
132 132137
142148 152
Total Fleet(End of Period)
Our fleet size will be maintained until the end of this year
B767 Airbus wide-body Airbus narrow-bodyB777
Average fleet age of 5.8 years by the end of
2Q09
Average fleet age of 5.8 years by the end of
2Q09
Standardization of narrow body fleet:
A320 family
Standardization of narrow body fleet:
A320 family
Aircraft to be received in 2009 will replace the ones that will be redelivered and already
have pre committed financing
Aircraft to be received in 2009 will replace the ones that will be redelivered and already
have pre committed financing
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February 19, 2008