TAM ended 2009 with a net profit of R$ 1.3 billion, reversing the loss of R$ 1.5 billion registered in 2008. The results are mainly due to fuel hedge positions and exchange variations as a consequence of the appreciation of the Brazilian currency, the Real, against the US Dollar. The figures are presented according to Brazilian accounting principles (BR GAAP and Law 11.638).
 
“With solid planning we were courageous and kept our investment and fleet plans,” explains TAM’s president, Libano Barroso. “At the same time we made concentrated cost cuttings, without compromising the quality of our service. The result was a 14.7% decrease in the unit costs of the seats offered (CASK – Cost per available seat kilometre). In this way we managed to respond well to the effects of the global crisis and are now well-positioned to continue to offer the best service as the economy improves.”

Earnings before interest and taxes (EBIT) were R$ 336 million in 2009, a 51.8% decrease on the previous year due to the combined effects of three factors caused by the global financial crisis. Those being a reduction in the number of business trips flown; a decrease in yield (average price paid per passenger for each kilometre flown); and a reduction in the load factor on domestic and international flights.

In 2009 TAM transported 30.4 million paying passengers on domestic and international flights, a slight increase of 0.9% in comparison to the total number of passengers transported in 2008. Even so the company’s gross operating income fell by 6.5% in 2009 compared to 2008, to R$ 10.3 billion, influenced by the global crisis, which affected mainly business trips – which historically account for 75% of the total passengers transported by TAM in a year, against a sector average of 68%.

As a result TAM registered an overall 14.2% decrease in average revenue per passenger per kilometre flown (yield), which was due to an 18% decrease in the domestic Brazilian market to 21.9 real cents; and a 15.6% decrease to 14.2 real cents in the international market. Load factor on international services decreased 2.8 percentage points to 68.2% in 2009, while on domestic flights the decrease was 2.7% in comparison to the previous year, to 72.4%. The company closed the year with a market share of 45.6% for domestic flights and 86.5% for international flights operated by Brazilian airlines, being the leading carrier in both these markets.

TAM’s fuel hedge policy was maintained in 2009. The company renegotiated its hedge positions with an aim to dilute the cash disbursement, which was concentrated in the first semester of 2009, and set the most of the contracts in a period with lower volatility and prices closer to the contracts (strikes). The result of the renegotiation was a US$ 117 million reduction in cash outflow in 2009, which made it possible to strengthen the company’s cash position. Furthermore, there was a reversal in the hedge accounting loss registered in 2008.

TAM closed 2009 with cash reserves of R$ 2.1 billion (taking into account cash and equivalents, as well as bonds and securities). During the year the company captured over R$ 1 billion, U$ 300 million in October issuing bonds and another R$ 600 million in July with the launching of non-convertible debentures.

Fourth quarter of 2009
The comparison between the results of the fourth quarter of 2009 with the previous quarter shows a recovery in TAM’s operations in relation to the trend for strong market growth registered in the period. Gross operating income increased 5.3% in this period to R$ 2.6 billion. Operational profit, in turn, increased 35.9%, to R$ 137.4 million from October to December and the net operating margins increased 1.2% to 5.4%. Net profit, in turn, decreased 58.6%, to R$ 143.9 million in the period, mainly due to the lower financial results.

In the annual quarter comparison, net income fell 13%, operating income decreased 55.2%, and net profit offset to the loss of R$ 1.2 billion registered in the 4th quarter of 2008, due to the accounting losses related to fuel hedge positions and the Real depreciation versus the US dollar; the opposite situation when compared to 2009.

The yield in the domestic market decreased 25.3% from 27.6 cents of real in the fourth quarter of 2008 to 20.7 cents of real in the same period in 2009. In the comparison between the third and fourth quarters of 2009, the fall was of only 1.2%, reflecting the strong recovery in demand. In the international market, the yield fell 28.7% in the annual comparison to 13 cents of real in the last three months of 2009, while the decrease from the third to the fourth quarter was 4.7%.

TAM ended 2009 with a fleet of 132 aircraft, being 125 from Airbus (2 A340, 16 A330, 5 A321, 81 A320 and 21 A319) and 7 from Boeing (4 B777-300ER and 3 B767). The fleet expansion plans have been reviewed and the forecast is to finish 2010 with 148 aircraft, 11 more than the previous plan, including the five from Pantanal. The estimate for 2014 is now for TAM to have a fleet of 165 aircraft.