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TAM, Brazil’s largest airline, had a net income of R$ 54.4 million (£17.15m) in the first quarter of 2009, a 26.16% growth compared to the R$ 43.1 million (£13.6) reported for the same period in 2008.
TAM’s operating income increased 129% in the first quarter, reaching R$ 197 million (£62.1m) in the first three months of 2009, compared to R$ 85.7 million (£27m) in the same period in 2008. The EBIT margin (the result of the operation before financial expenses and taxes) was 7.5% in the first quarter against 3.8% in 2008. When comparing both periods, the gross operating income showed a positive increase of 16.54%, rising from R$ 2.3 billion (£73m) to R$ 2.7 billion (£85m) in the quarter.
“Even with a global economic downturn, TAM’s results reflect the commitment, competence and professionalism of our 24,700 employees, who pursue our mission on a daily basis: to be the traveller’s preferred airline company”, says TAM’s president and CEO, Captain David Barioni Neto. He emphasised that the company’s pillars of action are based on Excellence in Service, Technical and Operational Excellence, and Excellence in Management.
Operational Performance
In consolidated figures, TAM carried 3% fewer passengers in the first three months of 2009: 7.3 million passengers compared to 7.5 million in the first quarter of 2008. There was a 3.7% and a 2.9% decline respectively in passenger numbers on international and domestic flights.
Despite the decrease in passenger numbers, positive results were driven by an increase in flight revenues (9.2% on domestic flights and 29.9% on international services), and by a 44.66% growth in revenues from other operating sources that increased from R$ 198.6 million (£62.61m) to R$ 287.3 million (£90.57), largely due to an increase in the number of partners involved with TAM’s frequent flyer program, TAM Fidelidade.
Also contributing to the improved results was a significant reduction of 17.7% in fuel costs that fell from R$ 844.8 million (£266.31m) in the first quarter of 2008 to R$ 695.1 million (£219.12m) in the first quarter of 2009. These results reflect the re-negotiation of hedge contracts announced earlier in the year, on 31 March.
Strategies and forecasts
TAM continues to maintain its strategy to consolidate the company’s leadership in both the domestic Brazilian and international passenger markets, pursuing high profitability levels, by offering a high quality product with an attractive cost/benefit ratio for its customers. TAM closed the first quarter of 2009 with an average market share of 49.5% in the domestic Brazilian market and an 85.5% international market share among Brazilian airline companies.
According to the 2009 forecasts announced on 31 March 2009, TAM expected a demand growth (in RPK – Revenue Passenger Kilometre) in the domestic Brazilian market of between one and five percent. The demand actually increased by 5.1%.
On the supply side (measured in ASK – Available Seat Kilometre), TAM estimated an 8% capacity increase for domestic Brazilian flights and a 20% capacity increase for international flights this year. Actual figures for the first quarter of 2009 were a 14% and 17.9% increase respectively.
During the first quarter of 2009, TAM achieved its goal for the fleet and currently has 132 aircraft in operation of which 125 are Airbus (20 – “A319”; 82 – “A320”; 5 – “A321”, 16 – “A330” and 2 – “A340”), four are Boeing 777-300ERs, and three are Boeing B767-300 aircraft.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
