Tam Unlocking Value 20081110 Eng
description
Transcript of Tam Unlocking Value 20081110 Eng
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
TAM Linhas Aéreas
MRO*
(São Carlos)Loyalty ProgramCargo
3
83
156
123
184
130
277
165
322
417
360
393
337
2003 2004 2005 2006 2007 2008*
239307
407
487
777730
0
200
400
600
800
1,000
Cargo Revenues (R$M)
DomesticIntl
Dom ASKgrowth
Intl ASKgrowth
-
-
9%
46%
33%
34%
24%
35%
18%
65%
14%
40%
CAGR
13.9%
45.1%
We continue to increase our cargo operations
* Jan-Sep
12%
29%
TAM Linhas Aéreas
MRO*
(São Carlos)Loyalty
ProgramCargo
4
9
44
43
9
44
30
10
49
25
10
64
21
3
14
88
10
44
16
101
44
18
104
44
20
110
44
22
113
84
22
115
84
22
117
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
96
83 84
95
115
125130
138143
149 151
Total fleet
Mainly due to the consolidation in our international
businessTAM Linhas Aéreas
MRO*
(São Carlos)Loyalty
ProgramCargo
* Tons per Kilometer (cargo unit)
B767 Airbus wide-body Airbus narrow-bodyB777MD11F100
In 2007, the addition of 7 wide
bodies, increased cargo
international revenues in 153%
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Domestic
Inauguration of two new cargo terminals (Galeão and Manaus)
Addition of commercial functionalities in domestic IT system
Quality assurance area created to speed up problems solution
Massive participation on sector events
Management and organization model optimization at stations
International
New software (Cargospot) to improve commercial, operational and
financial efficiency (in implementation)
Insourcing of the USA cargo commercial unit – increasing commercial
efforts and decreasing costs
Better commercial approach trough cargo and client segmentation
Cargo agreements with Airline partners and key clients
In addition, we have implemented several
initiatives to reach cargo’s full potentialTAM Linhas Aéreas
MRO*
(São Carlos)Loyalty
ProgramCargo
6
Fidelidade continues to show a very healthy
growth in revenues and membership…
Source: TAM
2003 2004 2005 2006 2007 Jan-Sep2008
31
58
85
207
290
337
0
50
100
150
200
250
300
350
Revenue R$ Million
CAGR
82%
0.7 0.81.1
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%
TAM Linhas Aéreas
MRO*
(São Carlos)Loyalty
ProgramCargo
Total Active
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…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 card
Blue card
Red card
Others
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 (%)
AirMilesCA
27
Qantas
24
AirNZ
24
AirFrance/KLM
21
Nectar
21
Lufthansa
18
JAL
16
Flybuys(AU)
13
AirMilesUK
13
Aeroplan
12
VirginBlue
6
BritishAirways
5
TAM
3
Penetration on TAM passengers Penetration on population
Source: TAM
TAM Linhas Aéreas
MRO*
(São Carlos)Loyalty
ProgramCargo
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..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
Bonuses
59.6%
Total from other partners (excluding flight and credit
cards partners): 20,7%
Top mileage earnings sources Opportunities
Source: Wall Street Research; TAM
TAM Linhas Aéreas
MRO*
(São Carlos)Loyalty
ProgramCargo
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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
TAM Linhas Aéreas
MRO*
(São Carlos)Loyalty
ProgramCargo
10 Source: ATW /Flight International / Speednews / Aerohobby
We will focus in the market opportunities in Latin
America for Airbus ...
TAM:
15 A319
70 A320
3 A321
12 A330
2 A340
OceanAir:
16 F100
Aerolíneas
6 A340
Mexicana
10 A318
20 A319
32 A320
18 F100
LAN
5 A318
15 A319
17 A320
5 A340
Mexicana - A320/F100
Aerolíneas Argentinas – A340
TAM
A319/320/321/330
TACA
7 A319
26 A320
4 A321
Air Jamaica
9 A320
6 A321
2 A340
LAN
A318/319/320/340
Aeroman
A319/320
BWIA: 2 A340
Air Caraïbes:3 A330
Dutch Antilles: 2 F100
Cubana
2 A320
TAM Airlines
3 A320
Governo Venezuela
1 A319
TAME
2 A320
Avianca
13 F100
Avianca
F100
MRO FacilitiesAirlines
Aircraft Total
A318 15
A319 58
A320 161
A321 13
A330 15
A340 17
F100 49
Total 328
TAM Linhas Aéreas
MRO*
(São
Carlos)
Loyalty ProgramCargo
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…and for Boeing equipment
Aircraft Total
B727 2
B737 161
B747 2
B757 7
B767 51
B777 8
MD80 22
Total 253
TAM Linhas Aéreas
MRO*
(São
Carlos)
Loyalty ProgramCargo
Source: ATW /Flight International / Speednews / Aerohobby
MRO FacilitiesAirlines
Aerolíneas
Argentinas
B757/767(tbc)
• GOL
14 B737-300
30 B737-700
35 B737-800
• Varig
14 B737-300
01 B737-700
07 B737-800
01 B737-700
01 B767-200ER
01 B767-300ER
• Aerolíneas Argentinas
05 B767-200ER
02 B767-300ER
07 B757-200
Mexicana
02 B767(300ER)
LAN
08 B737-200
22 B767-300ER
02 B737-200F
08 B767-300F
02 B747-200
Mexicana
B727;737;757;767
VEM:
B727;737;747;757;767;777;BBJ;
MD11;DC10
GOL: B737
LAN/Goodrich
Full Boeing MRO
Aeroman/TACA (AirCanada)
B737;747;757;767
BWIA: 07 B737-
800
TAME
02 Boeing 727
Avianca
B767-200ER
B767-300ER
B757-200
MD-83
Avianca Services
B757/767(tbc)
Aeromexico
B737;757;767;777
• TAM:
04 B767
04 B777
• Ocean
Air:
03 B737-
300
02 B767
Aeromexico
33 B737-700
06 B737-800
03 B767-200ER
01 B767-300ER
04 B777-200ER
22 MD-80 family
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We are organizing to capture the opportunities…
People
Current Capabilities Future Capabilities
TAM Linhas Aéreas
MRO*
(São
Carlos)
Loyalty ProgramCargo
Airbus aircraft and F100
Line maintenance, checks C and D
Components: hard-time, on-condition and condition monitoring
ISO14001
FAA
B767 airframe certification
All targeted for 2009
IOSA
Full EASA 145 certification (A330 and A321 included)
Certification for A340, B767 and B777 components
Boeing aircraft
Running 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 laws
Non restricted 24h operations
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…positively impacting MRO’s main customer: TAM
Increasing the scale of sourcing and optimizing the utilization of
facilities with new customers reduces unit cost
TAM Linhas Aéreas
MRO*
(São
Carlos)
Loyalty ProgramCargo
Increasing third part services allow
Better utilization of our installed capacity
Strong dilution of our fixed costs
Increase in high-skilled labor availability
Reviewing the processes to structure the MRO as a business unit has
Reduced 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 optimized
Improved unit cost control