TAM posts 4Q profit, outlines new fleet plan

Washington DC
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TAM's new orders with Airbus and Boeing form only one component of a revised fleet plan as the Brazilian carrier looks to accelerate capacity expansion in response to robust demand.

In reporting a fourth quarter 2010 net profit of R$151 million ($91 million), TAM earlier today announced orders for 32 additional Airbus A320s for delivery from 2016 to 2018 and two additional 777-300ERs for delivery in 2014. The A320 order includes 22 A320neos and 10 current generation A320s.

TAM CEO Libano Barroso told analysts in a conference call the new orders are part of a recently completed review of its fleet plan which was precipitated after the carrier decided it needed more aircraft over both the medium and long-term. TAM now expects its fleet to reach 182 aircraft by the end 2015, compared to 151 at the end of 2010.

The revised 182 figure includes 146 A320 family aircraft, 24 A330s and 12 777-300ERs. TAM currently operates four 777-300ERs and says it was already planning to take four more of the type in 2012 followed by two more in 2013 as part of an earlier order.

While the new orders only provide additional aircraft in 2014 and beyond, Barroso says TAM also has adjusted upwards its fleet plan for 2012 and 2013. TAM now plans to end 2012 with 163 aircraft, compared to an earlier plan of 159 aircraft.

TAM's aircraft buying spree, which in some respects began last June with orders for 20 additional A320s and five additional A350s, is not quite finished as the carrier is still evaluating new jets to replace the ATR 42 fleet at regional subsidiary Pantanal.

TAM first revealed a year ago it was evaluating for Pantanal new jets in the 100-seat to 150-seat sector, including Embraer E-195s and additional A320 family aircraft, with a decision initially expected in mid 2010. Barroso says TAM continues to evaluate replacement aircraft for Pantanal's five ATR 42s, two of which are now due to exit the fleet late this year with the final three slated to be phased out in 2012.

"They will be replaced by jets and we are in the final process of deciding," Barroso says. "These will be jets with a gauge between 100 and 160 seats."

For 2011, TAM has not made any revisions to its fleet plan but is accelerating capacity growth by improving average aircraft utilisation by at least 30mins.

TAM plans to add two A319s, one A320, four A321s and two A330s this year. These additional aircraft plus higher utilisation of the current fleet is projected to drive a 10% to 14% increase in domestic capacity for 2011 and a 10% increase in international capacity.

Last year capacity at TAM was up 10.5%, including a 13.5% increase in the domestic market and a 6% increase in the international market. Revenues for the year were up 16% compared to 2009 to R$11.2 billion. TAM recorded an operating profit of R$977 million for 2010, a 366% improvement over 2009.

For the fourth quarter, revenues were up 29% to R$3.2 billion. The operating profit was up 131% to R$218 million but the net result was only up 8% to R$151 million.