TAM DAY 2006 - Maintenance Overview

TAM DAY 2006Maintenance Overview

Ruy Amparo

December 8th, 2006

2

Assure passenger safety, on time performance and comfort through:

• Compliance with all authority requirements

• Excellence in its maintenance centers

• Constant training and upgrading of mechanics and engineers

• Selection of qualified suppliers

• Alignment with world’s best practices

• Optimized cost management

• High dispatch reliability

The VP’s Mission

3

Brazilian Boundary Conditions

• Geography and logistics

• Traffic (and flight) concentration in the southern states

• “Low speed” customs

• No other A320/A330/F100 full MRO provider in Brazil

• Low labor cost

• Non availability of expansion areas in main airports

• Main airports fully or strongly surrounded by the cities

4

TAM Fleet Highlights

• Continuous growth

• Main operation in domestic network

• No other A330, A320 and F100 operator in Brazil

• 1.2 flight hour stage lenght A320 family

• Operational Excellence Award 2003/2005 AIRBUS (10 to 49

fleet A320 acft)

• Lower maintenance costs compared with world average (source

Benchmarking Report Airbus)

5

Main Drivers of Maintenance Costs

EnginesEngines

• Strongest cost driver

• Off-wing maintenance

ComponentComponent

• Electronic and mechanical devices (computers, flaps, landing gear, tyres, brakes, etc)

• Independent control (hours, cycles, life) for each component

LineLine

• Day to day maintenance

• Performed overnight; checks on acftand small repairs

• Typically does not disturb Network

HeavyHeavy

• Structural and system inspections

• Programmed two years ahead

• Longer downtime (up to 4 weeks, in complex checks)

6

Maintenance Cost Breakdown

��

��

��

��

��

��

�

��

��

��

��

�� !��

2006

7

MaintenanceTAM

EngineeringCTMMCC

Line Maintenance

HEAVYMAINTENANCE In-house Shops

Supply & Logistics ExternalSuppliers

External Shops

MRO SÃO CARLOS

CENTER

ComponentsConsumables

Engine and Component Repair


ConsumablesRotable Repair

REPAROROTABLES

Check A

Check C / D

Inventory Mgmt

SupplySão Carlos


8

MaintenanceTAM

EngineeringCTMMCC

Line Maintenance


Supply & Logistics

SupplySão Carlos

• Aircraft specification support

• Authorities requirement compliance

• Aircraft modification suport (cabin reconfiguration)

• Fuel consumption focus (degradation )

• Engine trend monitoring (GE Remote Diagnostics)

• Satellite and VHF links

• Aircraft fault monitorig (AIRMAN - AIRcraft Maintenance ANalysis)

• Reliability analysis

ADLT(Montreal)

RGS

GES

Conexão Direta

ADLT(Singapore)

Primary

Backup

9

Reliability A319 Fleet – Stage Length :

August 2006

Source: Airbus

AIR CANADA

AM ERICA WESTIBERIA.

LAN

US AIRWAYSALITALIA

LUFTHANSAM EXICANAAIRFRANCE

TACATAM

95.00%

96.00%

97.00%

98.00%

99.00%

100.00%

0 0.5 1 1.5 2 2.5 3

Average Stage Length (hour)

Bas

ic O

per

atio

nal

Rel

iab

ility

10

Reliability A319 Fleet – Daily utilization :

AIR CANADA

AM ERICA WEST

IBERIA

LAN

US AIRWAYSALITALIA

LUFTHANSAM EXICANAAIRFRANCE EASYJET

TAM

95,00%

96,00%

97,00%

98,00%

99,00%

100,00%

0 2 4 6 8 10 12

Average Daily Utilization

Bas

ic O

per

atio

nal

Rel

iab

ility

August 2006

Source: Airbus

11


AIR CANADA

LANTACA

AM ERICA WESTIBERIA

JET BLUE

LUFTHANSA

M EXICANA

AIRFRANCEUNITED

TAM

95,00%

96,00%

97,00%

98,00%

99,00%

100,00%

0 0,5 1 1,5 2 2,5 3 3,5

Average Stage Length

Bas

ic O

per

atio

nal

Rel

iab

ility

August 2006

Source: Airbus

12


AIR CANADA

LANTACA

AM ERICA WEST

IBERIA

JET BLUELUFTHANSA

M EXICANA

AIRFRANCE

UNITED

TAM

95,00%

96,00%

97,00%

98,00%

99,00%

100,00%

0 2 4 6 8 10 12 14


Bas

ic O

pera

tion

al R

elia

bili

ty

August 2006

Source: Airbus

13


AIR CANADACATHAY PACIFIC

CORSAIR

GULF AIR

BM I

TAPLUFTHANSA

ETIHAD

AIRFRANCE

SWISS

TAM

95,00%

96,00%

97,00%

98,00%

99,00%

100,00%

0 1 2 3 4 5 6 7 8 9

Average Stage Length

Bas

ic O

per

atio

nal

Rel

iab

ility

August 2006

Source: Airbus

14


AIR CANADACATHAY PACIFIC

CORSAIR

GULF AIR

BM I

TAP

LUFTHANSA

ETIHAD

AIRFRANCE

SWISS

TAM

95,00%

96,00%

97,00%

98,00%

99,00%

100,00%

0 2 4 6 8 10 12 14 16 18


Bas

ic O

per

atio

nal

Rel

iabi

lity

August 2006

Source: Airbus

15

MaintenanceTAM

EngineeringCTMMCC

Line Maintenance


Supply & Logistics

SupplySão Carlos

• Two Main Basis: Guarulhos & Congonhas

(São Paulo Airports, International & Downtown)

• Maintenance “Nucleous”: Recife, Brasília, Belo Horizonte, Rio de Janeiro, Curitiba & Porto Alegre

• 100% In-House Maintenance Inside Brazil

• Third Party Contracted Abroad: LH (CDG, JFK), KLM ( LHR) and LAN (SCL).

• Support to Foreign Airbus Airlines in Brazil

16

��

17

MaintenanceTAM

EngineeringCTMMCC

Line Maintenance


Supply & Logistics

SupplySão Carlos

• Own property of 4,6 million sq metres

• Fully certified for all acft in TAM fleet

• Brazilian and European certifications

• ~800 employees

• Best practices in technical &

environmental management

• Capacity to sell services

18

MaintenanceTAM

EngineeringCTMMCC

Line Maintenance


Supply & Logistics

SupplySão Carlos

• Availability of high level and low cost manpower

• Very low union activity

• No airport authority restrictions and 24H operation

• 140 km from Campinas (strong cargo hub)

• Sinergy with Embraer (60 Km) new facility (Gav. Peixoto)

• Cleared from city interference

• Room for long term expansion and partnerships

19

MaintenanceTAM

EngineeringCTMMCC

Line Maintenance


Supply & Logistics

SupplySão Carlos

• Wildlife and water reserves protection

• Re-foresting agressive program

• Three Wastewater Treatment Units

• Domestic

• Industrial

• Electroplating shop

• Full compliance with environmental laws and best practices

��

��

��

��

20

MaintenanceTAM

EngineeringCTMMCC

Line Maintenance


Supply & Logistics

SupplySão Carlos

• Hangar slots for 1 wide and up to 5 narrow-bodies

• Largest civil painting hangar in Latin America

• Brazilian DAC approved repair station RBHA-145

– EASA Part 145 approved for F100 and A320 fleet

– DINAC Part 145 approved for F100 and components

– DINACIA Part 145 approved for F100 and components

– DIRMAB approved for Brazilian Presidential aircraft

– Adequate hangars for narrow (F100, A319/20) and

wide (A330) bodies maintenance : up to D check

• Presidential aircraft total care

21

MaintenanceTAM

EngineeringCTMMCC

Line Maintenance


Supply & Logistics

SupplySão Carlos

• Strong savings in logistics, inventory levels and labor

intensive repairs

• Nationalization of components has reduced costs by

USD 4 million per year (2005)

• Capability for over 2000 different

components

• Composite repair for third parties

• Pioneering in digital diagnosis (ATEC) in

Brazil

• Single EASA certified A320 LG overhaul

in Latin AmericaCapability Model

22

MaintenanceTAM

EngineeringCTMMCC

Line Maintenance


Supply & Logistics

SupplySão Carlos

Component Management:

• Components repair logistics

• Inventory management

• Warranty recovery

• Technical contract management

• Compliance with SOX and best practices

23

548 579 503 496 600 595

26332969 2873

3367

3037

25472312

3104

2867

3336

3640

2770

3121

571487535542527 505 502

3160

3474

3902

3524

3118

2860

3683

3370

3832

3272

4240

3415

3716

0

500

1000

1500

2000

2500

3000

3500

4000

4500

out/05 nov/05 dez/05 jan/06 fev/06 mar/06 abr/06 mai/06 jun/06 jul/06 ago/06 set/06 out/06

External Shops In-house Shops

Rotable Repair Process

24

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

25

Reconciliation

0

3,000,000

6,000,000

9,000,000

12,000,000

Jul-9

9

Dec

-99

May

-00

Oct

-00

Mar

-01

Aug

-01

Jan-

02

Jun-

02

Nov

-02

Apr

-03

Sep

-03

Feb-

04

Jul-0

4

Dec

-04

May

-05

Oct

-05

Feb-

06

Jul-0

6

APU - A320

26

IDG - A320

Reconciliation

0

500,000

1,000,000

1,500,000

2,000,000

Dec

-04

Feb

-05

Apr

-05

Jun-

05

Aug

-05

Oct

-05

Dec

-05

Feb

-06

Apr

-06

Jun-

06

Aug

-06

Oct

-06

27

BRAKES - F100

Reconciliation

3.000.000

3.500.000

4.000.000

4.500.000

5.000.000

5.500.000

6.000.000

Jan-

05

Mar

-05

Apr

-05

Jun-

05

Jul-0

5

Sep

-05

Oct

-05

Dec

-05

Jan-

06

Mar

-06

Apr

-06

Jun-

06

Jul-0

6

Set

-06

Oct

-06

28

• Main company cost driver

• Suport to corporate fuel consumption control project

•Analysis of fuel burn per aircraft

•Comparison of planned vs. real consumption

•Purchasing strategy for fuel

•Suport to hedge policies

29

• MRO Service for third parties

• Still marginal but strong potential for growth

• Around U$8.0 MI revenue

• Brazilian and International customers

• Line Maintenance for A330 charters

• Composite repair for Brazilian’s domestic airlines

30

End of Presentation – Thank you!

TAM DAY 2006 - Maintenance Overview

Business

Transcript of TAM DAY 2006 - Maintenance Overview