Merrill Lynch Conference

December, 2006

2

We have delivered a strong 2006...

Average market share

Average load factor

Aircraft utilization per day (block hour)

CASK reduction yoy

New internationalflights

Guidance 2006Guidance 2006 Sept06 YTDSept06 YTD

Market demand growth (in RPK terms)

14.7%12%-15%

47%45%

72.9%69.5%

12.51above 12

2.1%5%

• Daily to NY• Flight to London

• Since May• Since October

TAMTAM

MarketMarket

3

…and believe in a very positive 2007

Average domestic market share above 50%

Average domestic load factor at approximately 70%

Aircraft utilization per day (block hour) higher than 13 hours

Reduction of 7% in total CASK ex-fuel in BR GAAP yoyOpportunity in the international market

Third frequency to ParisInauguration of two new international long haul frequencies

Market demand growth from 10% to 15% (in RPK terms)

TAMTAM

Guidance 2007Guidance 2007

MarketMarket

4

12Non-stop city links3

44264342Daily Roundtrips3

109129124848+272Destinations3

6444.7116.894ASKs1

TAM VarigGOL

81%89%90%Operational efficiency 1

TAM has the most extensive domestic network...

1 Based on 3Q06 ANAC numbers; in million ASKs

2 27 destinations served through operational agreements with OceanAir, Pantanal, Passaredo, Total, Trip

3 Based on December, 2006 reported routes (HOTRANs)

5

...and is the leading Brazilian internationalcarrier

Longhaul marketParis 2x per day

London 1x per day

NY 2x per day

Miami 3x per day

Latin American marketBuenos Aires 7x per day

Santiago 2x per day

Assuncion 8x per day

Lima 1x per day

Montevideo 1x per day

Ciudad del Este 3x per day

Sta Cruz dl Sierra 1x per day

Cochabamba 1x per dayNote: Based on Dec 2006 network

6

The international market has huge potential for growth on the Brazilian side

53%

47%

54%

46%

72%

28%

2004 2005 20060

20

40

60

80

100%

% International traffic

Braziliancarriers

Intlcarriers

7

In 2007, we will be expanding both frequenciesand destinations...

Domestic Market 2007Domestic Market 2007 International Market 2007International Market 2007

~30% increase in ASKs

At least an additional 3 destinations

Strengthening of internationalgateways for domestic market

Guarulhos

Galeão

Increasing of frequency on maindomestic markets

Brasília

Congonhas

Confins

Implementing overhub flights: new city-pairs

~60-70% increase in ASKs

Additional daily frequency to Paris beginning in January

New flight to Milan in 1S07

Additional longhaul frequency ordestination to be disclosed

Strengthening of Latin Americanpresence, both frequencies anddestinations

8

...expanding the fleet and maintaining one of theyoungest fleets in the world

TAM will be monofleet in the domestic market by 1S08

10

64

22

3

12

88

6

4

14

103

4

16

106

4

16

112

2006 2007 2008 2009 2010

96

109121 126

132

0

50

100

150

Total Fleet

F100A319/320A330MD11B777

AverageFleet Age 7 6 5 6 7

9

In order to take advantage of the opportunity in theinternational, we have closed a deal with Boeing

Firm contract for 4 B777-300ER + 4 options

Delivery for mid 2008

“Interim” contract for 3 MD-11s

Delivery within the next 6 months

Same cost per seat as B777-300ERs

Choice for B777-300ER based on:

More attractive cost per seat

Higher technological lifespan

Creation of a “mix” of aircraft size, allowing for more gradual capacityincrease per destination

New credit line (EXIM)

10

We attained domestic leadership in 2003 andinternational leadership in 2006

TAM 51.7%

GOL 35.3%

Others 4.8%Varig 5.1%

BRA 3.2%

● To achieve unchallenged domestic leadership

Varig17.1%

TAM61.2%GOL

13.2%

Others8.4%

Domestic Market Share (Nov 06)Domestic Market Share (Nov 06) Intl Market Share (Nov 06)Intl Market Share (Nov 06)

Source: ANAC

11

RASK

LoadFactor

Yield

2002 2003 2004 2005 Jan-Sep-06

13.8

18.1

20.8 20.3 20.8

10

20

30

40

Scheduled Domestic (Yield and RASK)R$ cents

40

50

60

70

80

Load Factor

Our RASK has been increasing while yieldsdecreasing...

Coherent with our strategy to offer competitive prices

12

...maintaining a 10-15% price differential due to our product features

GOL

TAM

2001 2002 2003 2004 2005 2006 YTD15

20

25

30

35

Yield scheduled domesticR$ Cents

GAP 60% 30% 18% 13% 15% 10%

Note: GOL Yield Grossed up 1.05X in order to include taxes

13

VARIGVARIG’s situation is developing

14

In retrospect, TAM was in a strong competitiveposition at the end of the ’90s

0.8

1.0

1.2

1.4

1.6

0 1 2 3 4 5

Transbrasil

TAM

VASP

Varig

Relative cost position

Network/Service/Brand

R$ 1.3B

High

Low

Low High

Note: for domestic market; Varig includes Rio Sul/Nordeste

Disadvantage

Advantage

AVERAGE 97/00

15

Increase in costs and loss of service awareness put TAM in a difficult position

Average 97-00

2002

0.8

1.0

1.2

1.4

1.6

0 1 2 3 4 5

Gol

Vasp

Vasp

TAM

TAM

Varig

Varig

Relative cost position

Network/Service/Brand

R$1,5B

High

Low

High Low

However, TAM became “squeezed” between Varig, the flagship carrier, and Gol, the new entrant

Note: for domestic market; Varig includes Rio Sul/Nordeste

16

0.8

1.0

1.2

1.4

1.6

0 1 2 3 4 5

OceanAirBRA

Varig

Gol

Vasp

TAM

TAM

Gol

Varig

Varig

TAM

Relative cost position

Network/Service/Brand

Today, TAM is “out of the squeeze” with a superior product acknowledgement and financial position

Average 97-00

2002

2006

New entrants/smallerplayers will be looking to

lower costs and serve the low end passengers

New entrants/smallerplayers will be looking to

lower costs and serve the low end passengers

17

Our methodology for stage length adjustments on CASK show us a 10-12% gap to Gol today…

STEP 1

Separate Narrowfrom Wide Bodies

STEP 1

Separate Narrowfrom Wide Bodies

To compare “apples to apples”, TAM removes theresults from wide bodies

Otherwise, we would be assuming that a widebody A330 would fly the shuttle service

STEP 2

StandardizeMaintenance Costs

STEP 2

StandardizeMaintenance Costs

GOL has maintenance as a “provision” on theirP&L (Phased Maintenance + SupplementalLease)TAM accounts for Maintenance only whenincurred

TAM substitutes for a provision

STEP 3

Adjustment for stagelength

STEP 3

Adjustment for stagelength

Only 2 lines require adjustments for stage lengthpurposes:

Fuel – the more take-offs, the higher the fuelburnMaintenance – the more landings, the higherwear of the aircraft

18

…which will reduce to 5% by December 2007

The 5% gap “translates” into our 7% reduction y-o-y ex-fuel

2002 2003 2004 2005 2006 YTD

20.4

15.5

19.1

15.4

20.1

16.7

18.6

16.3

18.2

15.8

12

14

16

18

20

22

CASK total (BR GAAP - R$ centavos)

TAMGOL

Gap to Gol 32% 24% 20% 14% 15%

Our domesticgap is 10-12%

YTD

Our domesticgap is 10-12%

YTD

19

Our cost targets are aggressive, but the roadmap is already laid out

Fleet and networkFleet and network Distribution costsDistribution costs OverheadOverhead

Increase of block hoursto over 13 hours per day per aircraft in 2007

6 extra seats in theA319/320 fleet

Increase in direct salesthrough:

Site improvement

Fare bundles

Call centeroutsourcing

New means ofpayment

Insourcing ofrepresentatives

Adjusting indirect salescommissions to higher% on offpeak flights

Outsourcing of non-core activities

Redefinition of servicestandards

Review of spans&layers in the hierarquy

Implementation of new automated processes

Improved sourcing capabilities

20

We are innovating in the way we offer our product, servicing the client better at a lower cost

TAM has specificproducts designed for every part of the client

spectrum (from leisure to business)

TAM has specificproducts designed for every part of the client

spectrum (from leisure to business)

21

Today, we are one of the most lucrative airlines in the world…

TAM, GOL and Virgin Blue with 2006 annualized; LTM September 30, 2006 for other airlines; USGAAP1 Assumes average period exchange rates.

TAM

GOL

Ryanair

Southwest

Virgin

West Jet

Jet Blue

Avg (ex-TAM)

EBITDAR (1)

(US$ MM)EBITDAR (1)

(US$ MM)

801

510

819

1.587

389

343

267

652

OperatingIncome (1)

(US$ MM)

OperatingIncome (1)

(US$ MM)

522

357

593

924

177

178

(9)

370

NetIncome (1)

(US$ MM)

NetIncome (1)

(US$ MM)

389

289

495

528

113

79

(60)

241

EBITDARMargin (%)EBITDAR

Margin (%)

24,5

30,2

33,0

18,0

20,9

23,4

12,3

23,0

OperatingMargin (%)OperatingMargin (%)

16,0

21,1

23,9

10,5

9,5

12,1

(4,0)

12,2

NetIncome

Margin (%)

NetIncome

Margin (%)

11,9

17,1

19,9

6,0

6,1

5,4

(2,7)

8,6

22

In 4 years, we have become one of the best in the world, with more to come

● To be the most competitive, solid and profitable airline in Latin America

Source: Public Reports, December 31, 2005

Coherent business plan

Focused and capablemanagement, deliveringresults

Quick response to marketconditions