Tam Day 08 20090115 Eng

November 10, 2008

TAM DAYTAM DAY

TAM International Corporation...with a strong local footprint

David Barioni Neto

2

Despite the adversities of 2008, TAM succeeded to establish as an International Corporation

TAM Financial100%

TAM Financial100%

TAM Capital100%

TAM Capital100%

TAM Viagens99,99%

TAM Viagens99,99%

TAM Mercosur94,98%

TAM Mercosur94,98%

TAM Linhas Aéreas100%

TAM Linhas Aéreas100%

TAM Financial 2100%

TAM Financial 2100%

TP Participações99,99%

TP Participações99,99%

SPC – Special Purpose Companies

3

Sin

gap

ore

Air

Sout

hw

est

JAL

ANA

Luft

han

sa

Rya

nai

rC

athay

Del

ta

Air F

rance

LAN

Air C

hin

a

Qan

tas

AM

R

British

Iber

iaea

syJe

t

Kore

an A

ir

United

CA

L

W

est

Jet

Copa

JetB

lue

Chin

aSouth

ern

US A

ir

EVA A

irA

lask

a

Chin

a A

ir

GO

LA

irAsi

a

Chin

aEa

ster

nA

irN

ew

Zea

land

ACE

Asi

ana

Air C

anad

aAir

Tran

Thai

Air

Air B

erlin

Jet

Airw

ays

Virgin

Blu

e0

2

4

6

8

10

Market Capitalization* - USD Billion

Our market capitalization places us among the top 20 airlines in the world

Americas

Europe

Other

*October 31, 2008

TAM Financial 100%

TAM Financial 100%TAM Capi tal

100%

TAM Capi tal 100%TAM Viagens

99,99%

TAM Viagens 99,99%

TAM Mercosur 94,98%

TAM Mer cosur 94,98%TAM Linhas Aéreas

100%

TAM Linhas Aéreas 100%

TAM Financial 2 100%


TP Par ti cipações 99,99%


4

TAM Linhas Aéreas, our major business, thrived both in the domestic…

Maintaining leadershipMaintaining leadership

14

20

42

21

9

14

40

31

14

39

12

35

12

34

19

33

9

31

22

36

25

26

41

10

34

48

40

49

37

50

2000 2001 2002 2003 2004 2005 2006 2007 2008²0

20

40

60

80

100%

Domestic Market Share (RPKs¹)

TAMGOLVARIGVASPTRANSBRASILBRAOther

1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q0820

22

24

26

28

30

32

Yield scheduled domesticR$ cents

Recovering yieldsRecovering yields

Standardizing fleetStandardizing fleet

Our narrow-body fleet operating domestic and South American routes is composed only by aircraft from the A320-family

A319 – 144 seats

A320 – 156/174 seats

A321 – 220 seats

Improving operating performanceImproving operating performance

Jan Feb Mar Apr May Jun Jul Aug Sep Oct

16%

14%

17%

15%

16%16%14%

14%

11%10%

TAM's Delayed flights2008

Source: ANAC¹ RPK – Revenue passenger kilometer² Accumulated January to September

TAM Financial 100%


100%


99,99%

TAM Viagens 99,99%

TAM Mercosur 94,98%


100%






5

7

75

7

82

14

87

12

88

12

85

14

77

18

50

7

37

13

14

67

17

10

72

2000 2001 2002 2003 2004 2005 2006 2007 2008²0

20

40

60

80

100%

International Market Share (RPKs¹)

TAMGOLVARIGVASPTRANSBRASILOther

…and international market

October 7, we announced our entry into the Star Alliance

We expect to start operations in 18 months, after achieving several minimum requirements

B777 MD11 A340 A330 B767

365

289267

212 205

0

100

200

300

400

Number of seats per aircraft typeIncorporated in 2008

We signed new code share agreements and memorandums of understanding:

Air Canada

Swiss International Air Lines

TAM Financial 100%


100%


99,99%

TAM Viagens 99,99%

TAM Mercosur 94,98%


100%






Consolidating leadershipConsolidating leadership Increasing our agreementsIncreasing our agreements

Entering in Star AllianceEntering in Star AllianceAdding flexibility to aircraft gaugeAdding flexibility to aircraft gauge

6

Within TAM Linhas Aéreas, we continue to focus on other value generation initiatives

TAM Linhas AéreasTAM Linhas Aéreas

MRO(São Carlos)

MRO(São Carlos) Loyalty ProgramLoyalty ProgramCargoCargo

Isolated business unit

Focus in maximizing assets profitability

Forming sales team

Direct benefits in cost reduction to the airline

To be structured as business unit

More fidelity from customer impacting passenger business

TAM Financial 100%


100%


99,99%

TAM Viagens 99,99%

TAM Mercosur 94,98%


100%






7

TAM Airlines, our subsidiary in Paraguay is capturing synergies from the Brazilian operations

FleetIn 2008, we substituted the F100 fleet per modern Airbus A320, with lower maintenance costs and more comfort to the passenger

TAM Financial 100%


100%


99,99%

TAM Viagens 99,99%

TAM Mercosur 94,98%


100%






Buenos Aires

Santiago

Montevidéu

Assunção

Sta Cruz de La Sierra

CochambabaRio de Janeiro

São Paulo

Ciudad delEste

Operational and administrative structureUnification of the management’s structure with TAM Linhas Aéreas

New network

Reduction in the headcount

Cost reduction projectsStreet stores closing

Revision of commercial costs

Negotiation of commercial contracts to global ones

8

TAM Viagens, our tour operator, is one of the biggest Brazilian tour operators

launched in Brazil in 1998. Based in São Paulo, with offices in Rio de Janeiro, Buenos Aires, and representatives in 49 additional Brazilian cities

relies on qualified agents network, innovative packages and high quality services

portfolio includes more than 250 products developed and managed according to the requirements and needs of our clients

TAM Financial 100%


100%


99,99%

TAM Viagens 99,99%

TAM Mercosur 94,98%


100%






9

Regardless of the position we achieved, the future remains challenging…

Sector growth in the domestic market will continue with the correlation of 2 to 3 times GDP growth

GOL + Varig (back to core

business)

São Paulo region continues to pose a question mark

Third airport project

Improvements in ViracoposAirport (Campinas) – new runway and new terminal

Fast connection to Guarulhos Airport

Potential concession model for Viracopos and Galeão airports?

Public hearing until December 1st, 2008 proposing changes in the slots distribution rule

Dem

and Regulator

Infrastructure Compe

tition

Consensus that GDP growth next year will be shy

Webjet (aircraft order)

Trip (capitalized by Skywest)

Azul (new entrant)

Testing possibility to allow longer flights from Santos Dumont (RJ) and

Pampulha (MG) – airports currently limited to intraregional (state)

10

… but we continue alert and resilient

Maintaining our growth plan… ...conscious about capital discipline

44

16

101

44

18

104

44

20

110

44

22

113

84

22

115

84

22

117

2008 2009 2010 2011 2012 2013

125 130138 143 149 151

Total fleet

B767 Airbus wide-body

Airbus narrow-bodyB777

No change in our fleet plan

Maintaining technical and cabin crew

Reviewing CAPEX and postponing

non core investments

Implementing initiatives to reduce

costs non-related to the operation

Centralization of back office in Europe

potential shared services in Brazil

11

To be the preferred airline company

Excellence in Technical-

Operational

Excellence in Service

Excellence in

Management

We signed a commitment

PASSION FOR AVIATIONPASSION FOR AVIATION

12

TAM is prepared to face the challenges being people’s favorite with joy, creativity, respect and responsibility TAM is prepared to face the challenges being people’s favorite with joy, creativity, respect and responsibility

Star Alliance...joining an exclusive constellation

Paulo Castello Branco

2

Star Alliance is the largest alliance and we are the only Latin American member

Americas

Europe

Other

23 members

23 members

14 members

14 members

10 members

10 members

3

Joining Star Alliance will bring many benefits for TAM

Additional revenue and volume of passengers, from corporate contracts with the alliance

Contracts with more than 100 “Blue Chips” global companies

Better passenger distribution in the international market and optimization of our network

Operations under the same terminal, in order to reduce the connecting time

4

Our brand will be seen all around the world

5

Our Loyalty program will be integrated to the ones from member airlines

Advantages at all loyalty programsPossibility of accumulate and redeem points or miles in different loyalty programs

More destination options

Priority check-in and boarding

6

Passengers will have a better experience…

Baggage re-check areas

Baggage to final destination

Common baggage service facilities

Faster and more efficient baggage handling

7

…having access to hundreds of lounges in the world…

More than 800 VIP lounges around the world

First and business classes passengers

Star Alliance Gold Members

8

...been able to connect in all of our international long haul destinations

Total

CDGCDG

13

FRAFRA

15

JFKJFK

13

LHRLHR

16

MADMAD

9

MIAMIA

5

MXPMXP

10

# Gateways# Gateways

776666555554433211

81

9

TAM + Star Alliance transported 38% of the international passengers in Brazil

TAM26%

Star Alliance3%

One World15%

Sky Team8%

None48%

TAM19%

Star Alliance13%

One World41%

Sky Team26%

TAM15%

Star Alliance35%

One World16%

Sky Team23%

None10%

Sta

r Alli

ance

One W

orl

dN

one

Latin America USA and Canada Europe Other

4,415,996 2,821,979 3,820,782 352,851

Total =11,411,608

0

20

40

60

80

100%

Enplanements to and from Brazil in 2007

Source: ANAC’s 2007 annual

report

10

Our code-share agreement with the LAN Group will remain unchanged

TAM26%

Star Alliance3%

LAN15%One World

0%

Sky Team8%

None48%

TAM19%

Star Alliance13%

One World41%

Sky Team26%

TAM15%

Star Alliance35%

One World16%

Sky Team23%

None10%

Sta

r Alli

ance

One W

orl

dN

one

Latin America USA and Canada Europe Other

4,415,996 2,821,979 3,820,782 352,851

Total =11,411,608

0

20

40

60

80

100%

Enplanements to and from Brazil in 2007

Source: ANAC’s 2007 annual

report

11

Full integration in the alliance will take 18 months

Star Alliance Requirements Check List*Star Alliance Requirements Check List*

Safety Program and AuditPremium Customer Benefits

Star Alliance Gold Check-inLounge access policy

Customer HandlingSpecial baggage proceduresBaggage tracing and claim service

Sales Strategy & ProductStar Alliance Corporate PlusGDS alliance availability display

Safety Program and AuditPremium Customer Benefits

Star Alliance Gold Check-inLounge access policy

Customer HandlingSpecial baggage proceduresBaggage tracing and claim service

Sales Strategy & ProductStar Alliance Corporate PlusGDS alliance availability display

Frequent Flyer Accrual and RedemptionCommunication Principles

Star Alliance orientation training

Branding PrinciplesUsage of the Star Alliance Brand

Quality ManagementQuality assurance

Business Support ToolsManagement of Crisis and EmergencyMembership Agreements

Frequent Flyer Accrual and RedemptionCommunication Principles

Star Alliance orientation training

Branding PrinciplesUsage of the Star Alliance Brand

Quality ManagementQuality assurance

Business Support ToolsManagement of Crisis and EmergencyMembership Agreements

Impact of additional USD 60 million/year in revenues after integration

* The complete check list is composed by 75 minimum requirements.

People...our strategy for a sustainable future

Guilherme Cavalieri

2

We understand it is fundamental to have a sounding support from our people

TAM’s universe of people goes beyond our employees…

... we consider our passengers, customers, suppliers and others when developing our strategies, disseminating our essence

3

We have a roadmap of priorities to allow these people to develop…

• Competence methodology implementation

• Leadership assessment

• Management Development Program to close competency gaps

• Succession plan for all leadership positions

Management DevelopmentManagement Development

Culture Management

Culture Management

Policies & ProceduresPolicies & Procedures

Organizational Structure

Organizational Structure

• Consolidation of the quality culture, spirit to serve

• Dissemination of cost culture

• Educational program on Sustainability

• Employee Survey

• Structuring of “TAM Memory” – museum collection

• Implement new remuneration and benefits policy and strategy

• Revision of capacitating and training processes

• Consolidation of the Human Resources Business Partners concept

• Continue organizational adjustments in the national and international stations

• Implement Shared Services Center

• Restructure Personnel Administration area

4

…and to echo our legacy for the future

TAM’s essence should convey…

Mod

ern

Mod

ern

Spiri

t to

Serv

eSp

irit t

o Se

rve

Sust

aina

bilit

ySu

stai

nabi

lity

Trus

tTr

ust

Total focus on operations...delivering more with less

Fernando Sporleder Junior

2

Our target is to achieve excellence to passengers and optimize operations

CCOA*

DOV*

GSE*

Airport

Crew

PunctualityRegularity

ServiceComfort

* CCOA - Air Operations Control CenterDOV - Flight Operating DispatchGSE - Ground Support Equipment

3

Crew procedures were revised to improve services and gain productivity• Standardization of communication with passengers

Standardized speech

Standardized rules

Increase in the passengers’ perception

• Optimization on crew’s scheduling

Productivity increase

Disparity decrease

Absenteeism decrease

Overnight at home


ServiceComfort

Crew

4

We integrated CCOA, DOV and GSE operations to facilitate information flow

• Higher punctuality and regularity

• Better services consistency

• Higher loading consistency

• Safety increase

• Quickness in operations

• Routes rationalization

• Better flight planning

• Technical dispatchers in main bases

At hub airports turnaround time of 40 minutes

Airports operated with jetway – 30 minutes

Airports without jetway– 20 minutes

Fast turnaround of the aircraftFast turnaround of the aircraft


ServiceComfort

CCOA

DOV

GSE

* CCOA - Air Operations Control CenterDOV - Flight Operating DispatchGSE - Ground Support Equipment

5

Airport continues to focus on enhancing passenger experience


ServiceComfort

Airp

ortServiceService PunctualityPunctuality

Initiatives to decrease lost luggage Initiatives to decrease lost luggage Web and self check-inWeb and self check-in

• Quality assurance at airports to guarantee service level

New training schemeModification of hiring policy based on adjusted profileDissemination of culture after rapid growthFast track project

• Reduce check-in time trough web and self check-in

Jan/06 May/06 Sep/06 Jan/07 May/07 Sep/07 Jan/08 May/08 Sep/080

10

20

30

40

50%

% of domestic passengers boarded via web and self check-in

Jan/07 Jun/07 Nov/07 Apr/08 Sep/080

2

4

6

Occurrences with luggage per 1,000 enplanements in 2008

• KPIs linked to lost luggage reduction

Jan/07 Jun/07 Nov/07 Apr/08 Sep/080

5

10

15

20

25

30

35

40

45

Claims on delays (Talk to the President)Per 100.000 enplanements

6

We have standardized our narrow body fleet with the Airbus A320family...

Source: Airbus

• Complete phase out of the 100seat aircraft

• Reduction of maintenance costs

• Interchangeability of crew and aircraft in the network

• More comfort to our passengers with modern aircraft (average age of 5.6 years)

• A320 operational excellence with one of the highest flown hours per day


ServiceComfort

7

...while creating a “mixed”

wide body fleet to serve different destinations

Incorporation of Boeing aircraft in the wide body fleet

Creation of a “mix” of aircraft size, allowing for adequate capacity per destination (traffic and infrastructure)

B777 opens a huge opportunityfor the cargo operations

Continuous effort to offer best in class product to passengers

Firm orders of A350-XWB to substitute the A330s as of 2013

New generation of aircraft with reduced noise, weight and emissions


ServiceComfort

8

Despite of the improvements, the pursue of our target continues as we signed a commitment

Unlocking Value...one year later

Paulo Castello Branco / Libano Barroso / Ruy Amparo

2

As announced last year, we evaluated new potential business units in the company


MRO*(São Carlos)

MRO*(São Carlos)Loyalty ProgramLoyalty ProgramCargoCargo

3


MRO*(São Carlos)


4

83

156

123

184

130

277

165

322

417

360

393

337

2003 2004 2005 2006 2007 2008*

239307

407487

777730

0

200

400

600

800

1,000

Cargo Revenues (R$M)

DomesticIntl

Dom ASKgrowth

Intl ASKgrowth

-

-

9%

46%

33%

34%

24%

35%

18%

65%

14%

40%

CAGR

13.9%

45.1%

We continue to increase our cargo operations

* Jan-Sep

12%

29%

TAM Linhas Aéreas TAM Linhas Aéreas

MRO* (São Carlos)

MRO*(São Carlos)Loyalty

Program

Loyalty ProgramCargo

Cargo

5

9

44

43

9

44

30

10

49

25

10

64

21

3

14

88

10

44

16

101

44

18

104

44

20

110

44

22

113

84

22

115

84

22

117

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

96

83 8495

115125

130138 143

149 151

Total fleet

Mainly due to the consolidation in our international business


MRO* (São Carlos)


Program


Cargo

* Tons per Kilometer (cargo unit)

B767 Airbus wide-body Airbus narrow-bodyB777MD11F100

In 2007, the addition of 7 wide bodies, increased cargo

international revenues in 153%

In 2007, the addition of 7 wide bodies, increased cargo

international revenues in 153%

6

DomesticInauguration of two new cargo terminals (Galeão and Manaus)

Addition of commercial functionalities in domestic IT system

Quality assurance area created to speed up problems solution

Massive participation on sector events

Management and organization model optimization at stations

InternationalNew software (Cargospot) to improve commercial, operational and financial efficiency (in implementation)

Insourcing of the USA cargo commercial unit – increasing commercial efforts and decreasing costs

Better commercial approach trough cargo and client segmentation

Cargo agreements with Airline partners and key clients

In addition, we have implemented several initiatives to reach cargo’s full potential…


MRO* (São Carlos)


Program


Cargo

7

…coordinating with the airline business

Investment in the construction of TAM’slargest cargo terminal in Manaus…

Operational area of 2,160 square meters and 540 square meters of admin/commercial area

More than 80 tons per day of storage capacity

Faster dispatch of freight shipments

Individualized service and total access for the handicapped

Exclusive areas for different types of freight, and cold storage for perishables

... and substitution of the aircraft type flying the route Manaus - Miami from an A320 to an A330 so that there is more available capacity for cargo


MRO* (São Carlos)


Program


Cargo

8


MRO*(São Carlos)


9

Fidelidade continues to show a very healthy growth in revenues and membership…

Source: TAM

2003 2004 2005 2006 2007 Jan-Sep2008

31

58

85

207

290

337

0

50

100

150

200

250

300

350

Revenue R$ Million

CAGR

82%

0.7 0.8 1.1 1.41.7

2.1

2003 2004 2005 2006 2007 Sep2008

2.0

2.5

3.0

3.8

4.4

5.9

0

1

2

3

4

5

6

Number ofmembers (Million)

CAGR

32%

31%


MRO* (São Carlos)


Program


Cargo

Total Active

10

…but to reach its full potential, Fidelidade should increase client base penetration…

Up to 7

3%9%

6%

73%

9%

8 to 12

8%

19%

7%

56%

10%

14 to 24

20%

19%

16%

40%

5%

Over 24

31%

17%

23%

26%

4%

Average trips per year

White cardBlue cardRed cardOthers

None/ do notknow

There is an opportunity to increase penetration among both, frequent and non-frequent flyers

0

10

20

30

Penetration on country population (%)

AirM

iles

CA

27

Qanta

s

24

Air NZ

24

AirF

ranc

e/KL

M

21

Nect

ar

21

Lufth

ansa

18

JAL

16

Flyb

uys

(AU)

13

AirM

iles

UK

13

Aero

plan

12

Virg

inBl

ue

6

Briti

shAi

rway

s

5

TAM

3

Penetration on TAM passengersPenetration on TAM passengers Penetration on populationPenetration on population

Source: TAM


MRO* (São Carlos)


Program


Cargo

11

..and strengthen partnership network

There is a significant opportunity to grow Fidelidade’s penetration in partners from non-financial industries

Less than 1% of TAM Fidelidade’s gross billing come from non-financial partners

Other top FFPs reach 10-20% of earnings sources from non-financial partners

High volume of miles could be sold to new partners, such as retail and telecom (large scale industries)

More options for accrual and redemptions also improve FFP’s value proposition

Retail Shopping 3.1%

Car Rentals 1.4%

Personal Financial

0.9%Flowers0.6%

Other0.5%Hotels

4.9%Telephone, Wireless 9,3%

Credit Cards 19.7%

Flying, Elite Status/Other Bonuses59.6%

Total from other partners (excluding flight and credit cards partners): 20,7%

Top mileage earnings sourcesTop mileage earnings sources OpportunitiesOpportunities

Source: Wall Street Research; TAM


MRO* (São Carlos)


Program


Cargo

12

Therefore TAM has dedicated a team with a clear mandate

Increase airline and financial services penetration

Prospect and develop profitable relationship with members (i.e. CRM)

New businesses within existing industries (i.e. debit cards)

Explore new industries (i.e. retail, telecom)

Renegotiation of current partnership agreements

Focus on higher price partnerships

Design lower cost redemption options

Focus on cheaper partnerships

Management of breakage


MRO* (São Carlos)


Program


Cargo

13


MRO*(São Carlos)


14 Source: ATW /Flight International / Speednews / Aerohobby

We will focus in the market opportunities in Latin America for Airbus ...

TAM:15 A31970 A3203 A32112 A3302 A340OceanAir:16 F100

Aerolíneas6 A340

Mexicana10 A31820 A31932 A32018 F100

LAN5 A31815 A31917 A3205 A340

Mexicana - A320/F100

Aerolíneas Argentinas – A340

TAM A319/320/321/330

TACA7 A31926 A3204 A321

Air Jamaica9 A3206 A3212 A340

LANA318/319/320/340

AeromanA319/320

BWIA: 2 A340Air Caraïbes:3 A330Dutch Antilles: 2 F100

Cubana2 A320

TAM Airlines3 A320

Governo Venezuela1 A319

TAME2 A320

Avianca13 F100

AviancaF100

MRO FacilitiesAirlines

Aircraft Total

A318 15

A319 58

A320 161

A321 13

A330 15

A340 17

F100 49

Total 328


MRO*

(São Carlos)

MRO*

(São Carlos)

Loyalty Program Loyalty Program

Cargo Cargo

15

…and for Boeing equipment

Aircraft Total

B727 2

B737 161

B747 2

B757 7

B767 51

B777 8

MD80 22

Total 253


MRO*

(São Carlos)

MRO*

(São Carlos)


Cargo Cargo

Source: ATW /Flight International / Speednews / Aerohobby

MRO FacilitiesAirlines

Aerolíneas ArgentinasB757/767(tbc)

• GOL14 B737-30030 B737-70035 B737-800• Varig14 B737-30001 B737-70007 B737-80001 B737-70001 B767-200ER01 B767-300ER

• Aerolíneas Argentinas05 B767-200ER02 B767-300ER07 B757-200

Mexicana02 B767(300ER)

LAN08 B737-20022 B767-300ER02 B737-200F08 B767-300F02 B747-200

MexicanaB727;737;757;767

VEM: B727;737;747;757;767;777;BBJ; MD11;DC10GOL: B737

LAN/GoodrichFull Boeing MRO

Aeroman/TACA (AirCanada)B737;747;757;767

BWIA: 07 B737- 800

TAME02 Boeing 727

AviancaB767-200ERB767-300ERB757-200MD-83

Avianca ServicesB757/767(tbc)

Aeromexico B737;757;767;777

• TAM:04 B76704 B777• Ocean

Air:03 B737-

30002 B767

Aeromexico 33 B737-70006 B737-80003 B767-200ER01 B767-300ER04 B777-200ER22 MD-80 family

16

We are organizing to capture the opportunities…

People

Current CapabilitiesCurrent Capabilities Future CapabilitiesFuture Capabilities


MRO*

(São Carlos)

MRO*

(São Carlos)


Cargo Cargo

Airbus aircraft and F100 Line maintenance, checks C and DComponents: hard-time, on-condition and condition monitoring

ISO14001FAA B767 airframe certificationAll targeted for 2009

IOSAFull EASA 145 certification (A330 and A321 included)Certification for A340, B767 and B777 components

Boeing aircraftRunning at optimized productivity

Construction of a new hangar for B777-300 and A350 (target 2010)Full utilization of facilities

Certifications

Facilities Hangars for up to 7 narrow body aircraft simultaneously (or 1 wide body and 5 narrow bodies)Painting hangar in full compliance with environmental lawsNon restricted 24h operations

17

…positively impacting MRO’s

main customer: TAM

Increasing the scale of sourcing and optimizing the utilization of facilities with new customers reduces unit cost


MRO*

(São Carlos)

MRO*

(São Carlos)


Cargo Cargo

Increasing third part services allow Better utilization of our installed capacityStrong dilution of our fixed costsIncrease in high-skilled labor availability

Reviewing the processes to structure the MRO as a business unit hasReduced the downtime per aircraft in 30% (more time available to fly and generate revenues)Reduced the turnaround time for components allows the inventory of spares of the airline to be optimizedImproved unit cost control

MB ASSOCIADOS

1

Brazilian Macroeconomic

Perspectives

“T A M DAY”

November 2008

Financial crisis impact on commodities Financial crisis impact on commodities

prices and on the Brazilian economy

perspectives

2

Financial crisis impact on commodity prices

• Prospects for global

growth have

deteriorated as

financial crisis has 130

140

Oil prices (US$/barrel)

financial crisis has

worsened.

• Weakening global

demand is

depressing

commodity prices.

3

60,8

50

60

70

80

90

100

110

120

06/11/07 06/02/08 06/05/08 06/08/08 06/11/08

Source: Bloomberg. Prepared by: MB Associados.

Oil: Supply and Demand (mb/d)

IEA Forecast: Demand projections have been reduced (mb/d)

mb/d

2008 2009

Demand 86,5 87,2

Supply non Opec 54,4 56,1

Source: Opec.

October

4

Source and forecasts: Opep. Prepared by: MB Associados.

IEA Forecast: Demand projections have been reduced (mb/d)

CRB – Commodities Index

700

900 CRB Total

Food

Metals

100

300

500

set/98 set/00 set/02 set/04 set/06 set/08

Source: CRB. Prepared by: MB Associados.

255,3

194,8

186,9

165,5

114,4

Islândia

EUA

Japão

Reino Unido

China

Brazilian banks have strong fundamentals

Average BIS ratio of the 50 largest banks (%)

Total Private Credit (% of GDP)

114,4

111,4

61,0

34,8

25,7

18,2

11,7

9,0

1,9

China

Alemanha

Emirados Árabes

Brasil

Rússia

México

Argentina

Noruega

Congo

Source: Bacen. Prepared by: Credit Suisse.

Source: Nation Master (2004/2005 data). Prepared by: MB Associados.

Financial crisis impact on the Brazilian economy?

• Strong contraction in

credit availability;

Reduction in

7

• Exchange rate

depreciation

aggravated by

investors

deleveraging;

Reduction in the Brazilian economy growth

2,122,00

2,10

2,20

2,30

2,40

Strong devaluation in domestic exchange rate (R$/US$)

Central bank’ sales of dollars in the spot and future exchange rate markets

(data until November 06, 2008 - US$ bi)

24,5Swap

1,50

1,60

1,70

1,80

1,90

05/11/2006 05/05/2007 05/11/2007 05/05/2008 05/11/2008

Source: Bacen. Prepared by: MB Associados.

3,1

5,8

6,3

Dollars lines for exporters

Swap with repurchase agreement

Spot

Inflation dilema: activity x exchange rate

Optimistic Scenario :

– If the exchange rate

returns to R$/US$ 1,90

combined with a strong

reduction in activity,

Pessimistic Scenario:

– If the exchange rate

remains above

R$/US$ 2,00, then it

will be necessary to reduction in activity,

then the exchange rate

pass-through into

inflation should be low;

will be necessary to

increase interest

rates to curb inflation

surge;

9

6,1

6,5

5,0

5,5

6,0

6,5

7,0

IPCA optimistic

IPCA pessimistic

Inflation (IPCA) in 2008 and 2009 (%)

4,8

4,3

2,5

3,0

3,5

4,0

4,5

5,0

I/07 II/07 III/07 IV/07 I/08 II/08 III/08 IV/08 I/09 II/09 III/09 IV/09

Source: IBGE. Prepared by and Forecast: MB Associados. 10

2008 2009 2008 2009

Exchange rate R$/US$ 1,90 R$/US$ 1,90 Above R$/US$ 2,0 R$/US$ 2,0

Interest rates 13,75 12,75 14,25 16,25%

OPTIMISTIC PESSIMISTIC

• Reduction in dollar

credit lines

(including ACC);

• Uncertainty about

small banks

balance situation;

Reduction in credit availability

Evolution of ACC lines to exports (US$ millions) – daily average

291

393

Lehman Brothers bankruptcy

Central bank first offer of credit

lines in dollars for exporters

(US$ 1,6 billions).Lehman Brothers bankruptcy

balance situation;

• Concerns about

companies

exposure to loans

that combine

exchange rate

derivatives

transactions;

11Source: Banco Central. Prepared by: MB Associados.

186

144

92

133 106

150

229

173

1-5 8-12 15-19 22-26 29-30 1-3 6-10 13-17 20-24 27-31

Sept/08 Oct/08

When will the credit availability normalize?

• The Central Bank measures to address liquidity

problems should help small banks to deal with

their balance sheet, reducing solvency risks. It

also may help to increase interbank credit

availability.availability.

• Despite that, the normalization in the credit

market will take time. For now, companies that

have access to credit are paying much higher

interests (140 to 150% of the CDI interest for

short term credit lines).

12

Demand slowdown in the Demand slowdown in the

4th quarter of 2008

13

Consumer expectation and business confidence indexes

Consumer 4.24.6

7.7

4.35.2

12.1

6.3 5.6

-1.7

-5.8

-1.0

3.4

-5

0

5

10

15Change over the same month last year - %

50.5

53.4

40.0

45.0

50.0

55.0

60.0

65.0

70.0

Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08

ICEI Actual Conditions Expectations

Source: Sondagem de Opinião da CNI. Prepared by: MB Associados.

Index

14

Business

-5.8

-10.1

-15

-10

Oct-07 Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08Source: FGV. Prepared by: MB Associados.

Commerce indicators in São Paulo(consults to SCPC)

%

SCPC

Jul/08 - Jul/07 6,5

15

Source: ACSP. Prepared by: MB Associados.

Jul/08 - Jul/07 6,5

Ago/08 - Ago/07 13,5

Sep/08 - Sep/07 0,2

Oct/08 - Oct/07 0,0

New vehicle sales

Units

Oct/08 Sept/08

Auto + light trucks 224.744 254.182 -11,6 �

Change

Oct/08 -

Sept/08 (%)

16

Auto + light trucks 224.744 254.182 -11,6 �

Trucks 12.100 12.040 0,5 �

Bus 2.485 2.512 -1,1 �

Motorcycle 150.110 184.368 -18,6 �

Others 9.068 9.254 -2,0 �

TOTAL 398.507 462.356 -13,8 �

Source: Fenabrave. Prepared by: MB Associados.

Vehicle inventories are increasing, as sales fall production will have to adjust

Vehicles: Production and sales(yoy montly change - %)

Vehicles: Inventories(in days of supply)

Sales

Production

17

Production

Industrial Electrical Energy consumption

5,25,3

5,2

5,6

5,2

4,8 4,8 4,8

5,1

5,6

12 - month accumulated growth - %

Previous forecast

4,84,7

4,8

4,6

3,8

4,8

3,6

4,1

4,6

jan/08 fev/08 mar/08 abr/08 mai/08 jun/08 jul/08 ago/08 set/08 dez/08

Source: EPE. Prepared by: MB Associados.

Current forecast

GDP Growth in 2009 (%)?

Optimistic Scenario:

– Even if the credit

availability starts to

recuperate, the

economy is expected to

Pessimistic Scenario:

– If the international

crisis don’t show

signs of

improvement then economy is expected to

expand slower in 2009,

with GDP growth of

3,5%;

improvement then

GDP growth rate

should be significant

smaller, around 2,3%.

19

2009 Most Probable GDP Growth Scenario

• GDP growth is expected to slow from 5,4% to 5,1%,

due to signs that 4th quarter growth will be lower

than previously forecasted.than previously forecasted.

• Activity is now expected to grow 2,8%, down 0,7

percentage point from our previous estimative. A

recovery is expected to begin late in 2009.

20

2009 GDP slowdown will be led by a decline in investment growth

• Most companies have decided to delay further

investments as the international financial crisis

deteriorated. This decision was intensified by thedeteriorated. This decision was intensified by the

fact that most companies deadline for fiscal

budged review occurs in September and October,

exactly when the credit crunch worsened.

21

Companies that already announced investments postponement

Sectors Companies

Oil and Gas Petrobrás

AgribusinessMinerva, VCP, Suzano Papel e Celulose, Cosan e Crystalsev (Uniduto), Klabin, Aracruz, Grupo Orsa, Stora Enso, Duratex, CoopercentralAurora, John Deere, Grupo Equipav, Nova America

Automotive Hyundai, Volkswagen, GM, Delphi, Bosch

CR2, Even, Camargo Correa Desenvolvimento Imobiliário, Condomínio Civil Construction

CR2, Even, Camargo Correa Desenvolvimento Imobiliário, Condomínio RN, Inpar, Holcim

Mining and Steelmaker

Gerdau, ArcelorMittal

Chemical and petrochemical

Elekeiroz, Comperj, Reliance

Electrical energy Tractebel Energia

Telecomunications Vivo

Retail Lojas Renner, Magazine Luiza, Ponto Frio, Amis

Information technology

Samsung

Sources: Jornal Valor, Estado de S.Paulo, Gazeta Mercantil , Folha de S. Paulo e Relatório Reservado. Prepared by: MB Associados.

2009 Most Probable Scenario: Breakdown on Brazil's quarterly GDP growth

5,3%

4,6%

5,8%6,1%

5,1%

4,4%

Previous forecast (2008: 5,3% e 2009: 3,5%)

Current forecast (2008: 5,1% e 2009: 2,8%)

Source: IBGE. Prepared by: MB Associados.

4,0%

3,0%2,6%

3,6%

4,6%

3,2%

1,9% 2,1%

2,9%

4,4%

I/08 II/08 III/08 IV/08 I/09 II/09 III/09 IV/09

6,04,4

12,9

2,9

19,3

3,3 4,02,5

5,57,8

2009 Most Probable Scenario: GDP growth by main components

Household consumption

Government consumption

Investment Exports Imports

4,2

5,5

4,55,1

2,02,4

2,9 2,8

Agriculture Industry Services GDP 24Source: IBGE. Prepared by and forecast: MB Associados.

Real income on 2006 and 2007, by minimum wage (variation in R$ billions)

14.1

20.117.3

25.7

16.9

20.3

9.6

15.415.0

20.0

25.0

30.0 2006 2007

On 2006 low income classes got real income growth because of minimum wageand social welfare. By 2007 middle class income has also started to improve.

25

2.8

6.5

0.8

-0.5

2.9

9.6

-6.4-10.0

-5.0

0.0

5.0

10.0

15.0

Up to 1 From 1 to 2 From 2 to 3 From 3 to 5 From 5 to 10 From 10 to 20 More than 20

Source: IBGE. Prepared by MB Associados.

Real income on 2008 and 2009, by minimum wage (variation in R$ billions)

Growth has accelerated income gain of the upper classes. This may diminish by2009 with the economy slowdown.

14.417.0

18.8 19.4

14.6 14.115.0

20.0

25.0

2008

2009

26

2.04.6

7.2

1.74.7

8.8

5.0 5.2

0.0

5.0

10.0

15.0

Up to 1 From 1 to 2 From 2 to 3 From 3 to 5 From 5 to

10

From 10 to

20

More than

20

2009

Source: IBGE, MB Associados. Prepared by MB Associados.

• Gradual recovery in credit availability;

• Exchange rate stabilization around R$/US$ 2,00;

• End of the interest rate hike cycle;

Perspectives for 2009 and 2010

• Inflation should converge towards the Central

Bank’s target;

• In 2008 GDP is expected to grow 5,1%. For 2009,

GDP growth rate will fall to around 3,0%. By 2010,

growth rate is expected to pickup to around 4,0%.27

Strong improvement in Brazil’s Strong improvement in Brazil’s

political, social and macroeconomic

indicators

28

Investment Grade reflects the strong improvement in Brazil’s economy

• Stabilization: domestic and external;

• Strong links with high growth regions;

• Formalization and consolidation in most markets;• Formalization and consolidation in most markets;

• Reduction in poverty, credit expansion and growth

in the domestic market;

• Investment expansion;

29

-4 -1

6

-1 -2

14 14

2

-2

11 1115 13

10

-3 -6 -7

45 46

40

31

-10

0

10

20

30

40

50

60

Current Account Balance

Trade Balance

33 36 3849 53 54

86

180

201

Improvements in the External SectorCurrent Account Evolution (US$ Billion)

International Reserves (US$ Billion)

-18-24

-30-40

-30

-20

1990 1991 1992 1993 1994 1995 1996 1997 2005 2006 2007 2008*

3,9

3,63,5

2,9

2,1

1,41,3 1,2 1,2

2000 2001 2002 2003 2004 2005 2006 2007 2008*

33 36 38

2000 2001 2002 2003 2004 2005 2006 2007 2008*

30

External Debt and Exports Ratio (%)

Source: Central Bank of Brazil. Prepared by: MB Associados(*) 12-month accumulated until June.

12

14

16

18

20

Inflation (CPI)

Inflation Target

Exchange

rate shock

(political

transition)

Domestic Stabilization

Reduction in Net Public Debt

(% of GDP)

Inflation rate

(12 months accumulated growth)

48,7 48,8

52,6

55,557,2

51,7

46,544,7

45

50

55

60

5,84,4

8,5

5,5 5,1

4,5 4,5

0

2

4

6

8

10

12

dez/01 jan/03 jan/04 jan/05 jan/06 jan/07 jan/08Source: Bacen, IBGE. Prepared by: MB Associados.

31

30,0 30,6

33,334,4

41,7

44,742,7

40,4

25

30

35

40

45

1994 1996 1998 2000 2002 2004 2006 2008*Source: Bacen. Prepared by: MB Associados.

(*) Until June-08.

8,5

14,815,8

17,3 17,4 17,718,6

17,7

20,6 20,9 20,6

11

13

15

17

19

21

23

40

60

80

100

120

140

160

180

200Number of companies

Exports

8,0

-0,8-1

2

4

6

8

Formal Informal

Formal markets are expandingFormal and Informal Employment

(12 months accumulated growth - %)

Exports (US$ Billion) and number of exporting

companies (thousands)

8,5

7

9

0

20

40

1990 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008*So urce: Secex. Prepared by: MB Associados.

-5

-3

mar/05 set/05 mar/06 set/06 mar/07 set/07 mar/08 set/08


32

IPOs in Bovespa

6,7

55,7

15,45,44,54

64

26

97

20082007200620052004

R$ billions

No. IPOs

Source: Bovespa. Prepared by: MB Associados.

(*) 12-month accumulated until June.

Accumulated Change in Poverty –Brazil (%)

-2,15%

-0,15

-0,10

-0,05

0,00

2005/2003 1995/1993 2003/1995 2005/1993

33

-19,18% -18,47%

-35,53%

-0,40

-0,35

-0,30

-0,25

-0,20

-0,15

Source: Neri, Marcelo (2007). “ Poverty, Inequality and Income Policies”.

7,2

7,1 7,1

7,2

7,1 7,1 7,1 7,1 7,1

7,4

7,3

7,5

7,37 ,2

7 ,4

7 ,6

14,5

15,5

16,5 Duration (in months)

Deliquency rate (%)

Meses %

Credit Expansion, Duration and Delinquency rate

30,7

34,7

36,7

30

32

34

36

38% of GDP

Total Credit - % of GDPPersonal Credit - Duration and

Delinquency rate

7,0

7,1 7,1 7,1

7,0

7,1

7,0

7,1 7,1

6,9

7,1

7,0

6 ,4

6 ,6

6 ,8

7 ,0

10,5

11,5

12,5

13,5

ab

r/0

7

ma

i/0

7

jun

/07

jul/

07

ag

o/0

7

set/

07

ou

t/0

7

no

v/0

7

de

z/0

7

jan

/08

fev

/08

ma

r/0

8

ab

r/0

8

ma

i/0

8

jun

/08

jul/

08

ag

o/0

8

set/

08

Source: Bacen. Prepared by: MB Associados.

34

24,9

26,4

24,7

22,024,0

24,5

28,1

20

22

24

26

28

30

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008*

Source: Banco Central. Elaboration: MB Associados.

(*) Until June-08.

5,7

3,8

5,46,0

4,0

5,0

6,0

7,0 GDP Growth%

Gross Domestic Product is Growing Faster

1,3

2,7

1,1

3,23,8

0,0

1,0

2,0

3,0

4,0

2001 2002 2003 2004 2005 2006 2007 2008*Source: IBGE. Prepared by: MB Associados.

35

(*) 4-quarter accumulated growth until the 2nd quarter of 2008.

Increase in Investment in recent periods

8,7 9,110,0

13,4

15,7

10

15

20

Var.%

36

1,5

-0,3

-8,2

5,0

0,4

-5,2 -4,6

3,6

-10

-5

0

5

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008*

Fuente: IBGE. Elaboración y proyección: MB Associados. (*) Acumulado 4 trimestres até Junho/08.(*) Acumulado hasta II/08.Source: IBGE. Elaboration and Forecast: MB Associados. (*) 4-quarter accumulated growth until the 2nd quarter of 2008.

Real Overall Income Growth by minimum wage classes — in 2007/06 %

5,5%

3,4%2,9%

4,0%

5,0%

6,0%

37

2,3%

1,6%

2,9%

1,7%1,2%

0,0%

1,0%

2,0%

3,0%

Up to 1 From 1 to 2

From 2 to 3

From 3 to 5

From 5 to 10

From 10 to 20

More than 20


22,9

10

15

20

25Credit to Real State

Real State Sector Expansion

Construction Sector

Percentage growth - %

Credit to Real State

12 months accumulated growth - %

8,5

6,6

4,6 5,0

9,4

6,3

8,3

10,3

-15

-10

-5

0

5

10

set/04 mai/05 jan/06 set/06 mai/07 jan/08 set/08Source: BCB, IBGE e SNIC. Prepared by: MB Associados.

38

3,2

1,1

-2,9

2,0

-2,1 -2,2

-3,3

1,8

4,6 5,0

-3,7

-1,7

0,3

2,3

4,3

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20072008*

Source: IBGE. Elaboration and Forecast: MB Associados

(*) 4-quarter accumulated growth until the 2nd quarter of 2008.

Conclusions: Medium and long term perspectives are very good considering:

• Democracy in better shape compared to important countries

in Latin America;

• Population sees low inflation as an important value;

• Brazil’s importance as a global supplier of food and energy is• Brazil’s importance as a global supplier of food and energy is

increasing;

• Long term links with China;

• Internationalization of some Brazilian companies;

• Brazil is becoming a more open economy;

39

MB Associados

Av. Paulista, 2421 – 6°andarSão Paulo – SP – 01311-300

40

São Paulo – SP – 01311-300Telephone: (011) 3062 - 1085Fax: (011) 3062 – 8482

[email protected]

São Paulo, November 10, 2008

3Q083Q08 Results PresentationResults Presentation

2

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 forwardlooking 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.

3

PreviousPeriod

CurrentPeriod

J F MAM J J ASOND J FMAM J J A SOND J FMAM J J ASOND J FMAM J J A S80859095

100105110115120125130

Domestic Market - Variation(vs previous period)

The domestic market grew 10% from January to September 2008

Source: ANAC

Accum. market growth 2006

12%


19%


12%


10%

20072005 2006 2008

4

PreviousPeriod

Market

TAM

J FMAM J J ASOND J FMAM J J ASOND J FMAM J J A SOND J FMAM J J AS40

60

80

100

120

140

160

180

200

International Market - Variation(vs previous period)

The international market (among Brazilian carriers) is recovering and grew 36% …

Source: ANAC

Accum. Marketgrowth 2008

36%

Acum TAM 200641%

Acum TAM 200771%

Acum TAM 200540%

Acum TAM 200844%


7%

Accum. market decrease 2006

30%

Accum. market decrease 2007

5%

20072005 2006 2008

5

…with higher growth anticipated for Brazilian carriers due to the unbalance in the bilateral agreements…

Source: ANAC annual report

* estimates

58.2%

41.8%

57.7%

42.3%

66.9%

33.1%

71.2%

28.8%

66.5%

33.5%

2004 2005 2006 2007 Jan - Sep2008*

0

20

40

60

80

100%

% international passenger

BrazilianCarriers

IntlCarriers

6

…observed in many countries, as the example between Brazil and USA

77

107

147

2821

357

10542

Italy

England

Germany

France

Spain

USA

1414

1414

2121

3030

5151

126*126*

150 100 50 0 50 100 150

Weekly Frequencies

* 21 frequencies limited to the cities in the north, northeast and central west regions of Brazil and/or Belo Horizonte

Brazilian Carriers Foreign Carriers

Available space on bilateral Operated by Brazilian Carriers Operated by Foreign Carriers

7

We are both domestic and international market leaders

TAM’s Domestic Market Share*TAM’s Domestic Market Share*

Source: ANAC

* RPK – Revenue passenger kilometer

TAM’s International Market Share* – Among Brazilian carriersTAM’s International Market Share* – Among Brazilian carriers

33,0%35,8%

48,0% 48,9% 50,2% 52,4% 52,8%

43,5%

2003 2004 2005 2006 2007 Jan - Sep 2008 3Q08 Sep/08

12,0% 14,3%

37,5%

67,5%72,4% 75,8%

82,1%

18,8%

2003 2004 2005 2006 2007 Jan - Sep 2008 3Q08 Sep/08

8

Increasing our fleetDelivery of 2 A319 and 4 A320 (versus 2Q08)Delivery of 1 B767 and first B777-300ER (versus 2Q08)Redelivery of the entire F100 fleetRedelivery of 1 MD11 (versus 2Q08)

Operational efficiency12.6 block hours per aircraft per day13.1 block hours per aircraft per day. considering only the operating fleetAverage total load factor of 72.4% in 3Q08

Agreements:Increase in TAP’s code share, with flights to Buenos Aires, via São Paulo and Rio de JaneiroBeginning code share with Lufthansa (August 18)Beginning code share with Air Canada (October 07)Entrance in Star Alliance announced (October 07)

3Q08 Highlights (1/3)

9


Strengthening of our networkNew nonstop flight to:

Buenos Aires, including from Brasília (August 08)Bariloche and Lima, via São Paulo (August 14 and October 17, respectively)Miami, via Rio de Janeiro (September 19)

ANAC’s approval to new nonstop flights to:New York, via Rio de Janeiro (November 1st) Orlando, via São Paulo (November 21)

Adjustments in TAM Airlines’ operational and administrative structureAwards Received

Honor in 'Biggest and Best' of EXAME’s magazine 35 years ceremonyValor 1,000 as the best Company in the Transportation and Logistics sector

10


Adherence to the declaration of "Business Social Responsibility and Human Rights”

Share Buy-back program228.700 thousand shares bought-back

Contract for mobile communications aboard its aircraft

TAM CARGOLargest freight terminal installed in Manaus

New Cargo Terminal Operations installed at Tom Jobim Airport

11

Star Alliance

On October 7, we announced our entry into the Star Alliance

Star Alliance is the largest global alliance and today is composed by 22 airline companies from all over the world

After the integration period, our passengers will have a better experience and several benefits as:

1,000 destinations in 170 countries

20 thousand daily frequencies

Luggage to final destination

Faster and easier connections

More than 800 VIP lounges

Possibility of accumulate and redeem points or miles in different loyalty programs

12

178200

554

1,214

263

260

813

1,670

3Q07 3Q08

2,146

3,006

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Gross Revenue (R$ M) Domestic passenger revenue grew 38%

RPK increased 17%

ASK increased 17%

International passenger revenue grew 47%

RPK increased 38%

ASK increased 23%

Cargo revenue grew 30%

Other revenue grew 48%

Our gross revenue increased 40%...

Domestic Pax International Pax Cargo Other

40%

13

...and total RASK increased 18%...

RASK total ¹ ²

RASK scheduled domestic²

Domestic load factor - %

Yield scheduled domestic³

RASK scheduled international²

International load factor - %

Yield scheduled international³

Yield scheduled international³(USD cents)

3Q073Q07 2Q082Q08 3Q083Q08 3Q08 vs 3Q07

3Q08 vs 3Q07

3Q08 vs 2Q08

3Q08 vs 2Q08

R$ Cents

1 Includes charter. cargo and Other revenues. net of taxes2 Net of taxes3 Gross of taxes

RASK scheduled international² (USD cents)

17.01

15.43

66.3

24.42

12.52

70.8

17.69

9.62

18.40

17.66

68.1

27.23

11.48

73.4

15.64

9.82

20.07

18.24

66.5

28.81

14.85

79.9

18.60

9.72

18.0

18.2

0.1

p.p.

18.0

18.6

9.1

p.p.

5.1

1.0

9.1

3.3

-1.6

p.p.

5.8

29.4

6.5 p.p.

18.9

-1.1

6.81 7.21 7.76 13.9 7.6

14

...and the total CASK increased 14%...

CASK

CASK excl-fuel

3Q07 3Q08

16.54

18.91

0

5

10

15

20

Total CASKBR GAAP - R$ cents

3Q08 vs 3Q07

1.2%

14.3%

15

...leading to an increase in spread (RASK-CASK)

3Q07 3Q08

17.0116.54

20.08

18.91

15

17

19

21

RASK/CASK (R$ Cents)BR GAAP

RASKCASK

EBITMargin

Spread

2.8%

0.47

5.8%

1.18

16

However, we presented losses in our financial result

*WTI West Texas Intermediate

09.30.2008 09.30.2007

Financial incomeInterest income from financial investments 48.050 65.261Exchange variation 482.358 122.327Financial instrument/gains – FX 75 42.557Financial instrument/gains – WTI*

Realized 24.672Unrealized 28.219

Other 4.818 1.310535.301 284.346

Financial expensesExchange variation -428.884 -146.559Interest expense -111.115 -61.837Financial instrument/losses – FX -1.923 -38.612Financial instrument losses – WTI*

Realized -18.840Unrealized -268.267

Other -7.775 -9.410-836.804 -256.418

Financial result, net -301.503 27.928

Mainly impacted by unrealized

losses in WTI hedging

17

All instruments contracted over-the-counter

No deposits of guarantees or margin calls

Counterparties rated as “low credit risk” by the major rating agencies (Standard & Poors, Fitch, and Moody’s)

Our WTI derivative transactions are contracted only for hedging purposes to protect operations...

20082008 20092009 20102010Notional(thousand of barrels)Fair Value (MTM)

2,180 7,200 800

(21,941) (170,276) (17,118)

1Q081Q08 2Q082Q08 3Q083Q08

Volume of contracted transactions (thousand of barrel)

WTI end of period (USD/barrel)

% consumption of the twelve ensuing months

5,390

102

41%

4,390

140

31%

10,180

101

56%

Current SituationCurrent Situation

18

…following our policy and corporate governance

Our policy is to hedge from 30% - 80% of the projected fuel consumption in a minimum of 3 and a maximum of 24 months, approved and monitored monthly by board audit and financial committee

Fuel HedgingFuel Hedging

Risk CommitteeRisk Committee

We are committed to the highest standards of corporate governance and concerned with ensuring a high control standard of our processes

Composition: eight executives of the Company from different areasResponsibility: to make Management comfortable to regularly evaluate scenarios, hedge operations adopted and suggest any necessary adjustmentsActivities: to validate policies, approving processes and activities to manage risks involving liquidity, credit, legal, fiscal and operations

specialized in measuring risks and suggesting protection alternatives objectives

to make Management comfortable by creating “risk committees” to permanently evaluate scenarios, confirm the effectiveness of the hedge operations adopted and suggest any necessary adjustments

quality assurance on MTM evaluations

Risk Office (third part)Risk Office (third part)

19

In BR GAAP our operating margin was 6%...

Margin over net revenue

BR GAAP

3T07 3T08

49

-113-120

-90

-60

-30

0

30

60

Lucro Líquido - R$ M

3T07 3T08

313

423

0

100

200

300

400

500

EBITDAR - R$ M

35%

15% 15%

3T07 3T08

57

167

0

50

100

150

200

EBIT - R$ M

192%

3%

6%2%

- 4%

20

...the same as in US GAAP

Margin over net revenue

US GAAP

3Q07 3Q08

306

390

0

100

200

300

400

EBITDAR - R$ M

28%

3Q07 3Q08

112

186

0

50

100

150

200

EBIT - R$ M

66%

3Q07 3Q08

143

-475-550

-450

-350

-250

-150

-50

50

150

Net Income - R$ M

15% 14% 5%

6%

7%

- 16%

21

We posted loss per share

3Q07 3Q08

0.95

-3.15

Earnings per shareUS GAAP (R$)

3Q07 3Q08

0.32

-0.75

Earnings per shareBR GAAP (R$)

22

BR GAAP Leasing IncomeTaxes

Others US GAAP

-113

-535

184-11 -475

-800

-600

-400

-200

0

Net Profit Reconciliation to US GAAP

52 aircrafts are reclassified as capital

leases as per SFAS nº 13

52 aircrafts are reclassified as capital

leases as per SFAS nº 13

The main difference between BR and US GAAP is the accounting treatment of aircraft leasing

23

Our balance sheet remains solid…

R$ million - BRGAAP 2008* 2007 2006 2005 2004

Cash (1) 2.105 2.607 2.453 995 297

Short-Term Debt (2) 836 1.005 363 216 204

Long-Term Debt (3) 1.752 1.345 895 425 399

Total Debt (A) = (2) + (3) 2.588 2.350 1.258 641 603

Shareholder's Equity (4) 1.420 1.527 1.449 760 191

Capitalization (B) = (3 + 4) 3.173 2.872 2.344 1.185 590

Aircraft and flight equipment leases** (5) 6.140 5.976 5.032 4.389 4.557

Total Debt Adjusted (C) = (A + 5) 8.729 8.326 6.290 5.030 5.160

Total Capitalization Adjusted (D) = (3 + 4 + 5) 9.313 8.848 7.376 5.574 5.147

Debt / Capitalization (A / B) 82% 82% 54% 54% 102%

Adjusted Debt / Adjusted Capitalization (C / D) 94% 94% 85% 90% 100%

Adjusted Net Debt / Adjusted Capitalization (C - 1) / (D) 71% 65% 52% 72% 94%

* LTM

** Aircraft and flight equipment leases of the last twelve months x 7

24

…with no major exposure to foreign currency…

Current41%

Long term - 6%

Current24%

Long term10%

Permanent assets19%

Current21%

Long term23%

Current19%

Long term17%

Shareholders' equity20%

Assets Liabilities

R$ 7.1billion R$ 7.1billion

0

20

40

60

80

100%

Balance sheet mix

Permanent assets

Shareholders’ equity

Local currencydenominated

Foreign currencydenominated

BR GAAP

25

BR GAAP

Year Loans Lease payable Reorganization of Fokker 100 fleet Debentures Bonds Total % Total

2008 663.276 128.557 14.842 10.825 18.236 835.736 32%2009 30.837 17.081 3.711 0 0 51.629 2%2010 59.717 37.522 16.824 166.667 0 280.730 11%2011 160.247 37.232 12.189 166.667 0 376.335 15%2012 4.755 35.783 0 166.667 0 207.205 8%After 2012 9.203 253.014 0 0 574.290 836.507 32%

928.035 509.189 47.566 510.825 592.526 2.588.141 100%Foreign currency - denominated 837.411 509.189 47.566 0 592.526 1.986.692 77%Local currency - denominated 90.624 0 0 510.825 0 601.449 23%

R$ thousand09.30.2008

…and no leverage in the short term

Breakdown and maturity of financial debt

From the R$ 663 million of our short term loans, 92% are in foreign currency and correspond to pre delivery payments financing due 4Q08 – to be repaid with pre-committed US Ex-Im Bank financing

26

We intend to achieve a neutral hedging position due to the growth in our international business

31%

69%

35%

65%

2Q08 3Q080

20

40

60

80

100%

Revenue(Passenger + Cargo)

Dollarexchangerate

DomesticInternational

1.592

62%38%

1.914

62%38%

Approximately 50% of our costs

(including fuel) are exposed to foreign

currencies

Approximately 50% of our costs

(including fuel) are exposed to foreign

currencies

20%

ASK proportion

International(Dollar denominated)Domestic(Real denominated)

27

-50%

50%

150%

250%

350%

Stocks performance since follow-on

www.tam.com.br/irwww.tam.com.br/ir

IPOJun/14/2005

Follow-onMar/10/2006

TAMM4 TAMN IBOV DJBR20

Sep/30/2008

92%100%

33%-1%

Average Daily Trade VolumeBOVESPA: R$ 25 millionNYSE: USD 22 million

Average Daily Trade VolumeBOVESPA: R$ 25 millionNYSE: USD 22 million

28

2008 Guidance2008 Guidance

2008 has been a positive year

Jan – Sep 2008Jan – Sep 2008

10.2%

50.2% dom72.4% intl

14.2%32.2%

72.1%

-2.2%

Brasília – Buenos AiresRio de Janeiro – MiamiSão Paulo – LimaRio de Janeiro – NYSão Paulo – Orlando

Maintain leadership in both domestic and international markets

ASK growth of

Domestic 14%

International 40%

Average load factor at approximately 70% overall

Reduction of 7% in total CASK ex-fuel in BR GAAP yoy

Three additional international destinations or frequencies in 2008

Domestic market demand growth from 8% to 12% (in RPK terms)

TAMTAM

MarketMarket

29

2009 will be a challenging year

Maintain leadership in both domestic and international markets

ASK growth of

Domestic 8%

International 20%

Average load factor at approximately 70% overall

One additional international destination or frequency in 2009

Domestic market demand growth from 5% to 9% (in RPK terms)

Guidance 2009Guidance 2009

MarketMarket

TAMTAM

30

44

16

101

44

18

104

44

20

110

44

22

113

84

22

115

84

22

117

2008 2009 2010 2011 2012 2013

125130

138143

149 151

Total fleet

We are maintaining our fleet plan

B767 Airbus wide-body Airbus narrow-bodyB777

In 2013 we will receive the first 2 A350s, which will

gradually substitute the

A330s

In 2013 we will receive the first 2 A350s, which will

gradually substitute the

A330s

MD11

31

To be the preferred airline company

Excellence in Technical-

Operational

Excellence in Service

Excellence in

Management

We signed a commitment

PASSION FOR AVIATIONPASSION FOR AVIATION

32

São Paulo, November

10, 2008

3Q083Q08 ResultsResults

PresentationPresentation

Cash is King

...”Fasten seat belt”

Libano Barroso

2

The economy downturn is a fact, however,

understanding the bounce back is key

Rapid market recovery

in 2010

Market recovery in

2011

Adjustment of operations in flown

hours and micromanagement of

non operating activities

Maintaining fleet might jeopardize

cash

ILLUSTRATIVE

?

Longer term recovery Mandatory fleet alteration

3

On our side, we are acting to prepare TAM for any

turbulence

Act in the balance sheet

Increase /

Preserve

liquidity

Postpone / reduce investments

Focus in the P&L defending liquidity

Initiatives

impacting cash

Initiatives

impacting cost

4

Meaning

1) Cross management

“Spending Matrix”

2) Focus on spending

development

Spending managed by more than one

person (Entities and packages)

3) Systematic monitoring Effort directed based on spending

detailed management:

• deviation cause analysis

• action plan to eliminate deviations

Spending detailed until realization

level

Sharing accountability is the main principle of the

initiatives…

Principle

5

... which have been identified and detailed at each

directory

Finance & IT

Commercial &

Planning

Operations

Technical

Knowledge &

People

MRO

Reviewing need/scope of IT projects

Treasury total focus on liquidity

Distribution costs

Control non-operating international costs

Efficiency gains

Crew overnight scheme evaluation

Strategic sourcing

Renegotiation with third parties

Conscious hiring

Reexamining benefits

Reduction of downtime per aircraft

Financing any required investment

Main priority

to executives

during

uncertainty:

regular

meetings

2x/week

NON EXHAUSTIVE

Tam Day 08 20090115 Eng

Economy & Finance

Transcript of Tam Day 08 20090115 Eng