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TAM plans to acquire 20 aircraft for Pantanal unit

Brazil's TAM is looking at acquiring 20 aircraft in the 100 to 150-seat category as part of a new plan to significantly expand the operation of recently acquired regional carrier Pantanal.

TAM CEO Libano Barroso reveals the carrier is now working on a new fleet and network plan for Pantanal, which envisions 20 jets within three years. He says TAM has begun discussing this requirement with potential suppliers but has not yet concluded which type of aircraft is the best fit for Pantanal's network.

"We are studying the gauge, the size, between 100 seats to 150 seats. We are studying the trade-offs to see what the best aircraft is to fulfil this new network," Barroso told investors during a 31 March conference call to discuss TAM's fourth quarter earnings.



Pantanal, which was acquired by TAM in December 2009, currently operates five ATR 42 turboprops on short-haul routes from its base at Sao Paulo's Congonhas airport. These five aircraft have been incorporated into TAM's newly revised five-year fleet plan, but the carrier plans to phase out the five ATR 42s in 2012.

Barroso says TAM plans to use Pantanal to operate routes to "medium density cities". This includes continuing to serve some of the regional destinations in Pantanal's current network as well as new destinations.

"In three years we feel we'll be able to have 20 aircraft dedicated to these mid density routes," Barroso explains.

He adds these 20 aircraft will be added to TAM's current five-year fleet plan, which already includes 27 additional narrowbody aircraft as TAM grows its Airbus A320 family fleet from 107 at the end of 2009 to 134 aircraft at the end of 2014.

Barroso says TAM, which previously operated Fokker 100s but currently does not operate any aircraft smaller than A319s, will focus on trunk routes while Pantanal will be used to operate thinner routes. He says these routes are particularly important to TAM's growth going forward as they will result in improved domestic and international connections for Brazil's regional cities. He points out TAM in May will join Star Alliance, giving these regional cities connections to even more international destinations.

Barroso did not specify which types of aircraft specifically TAM is looking at for Pantanal. But the Embraer E-190/195 and A318/A319 are the most logical candidates given the former is produced in Brazil and TAM already operates A319s. The new Bombardier CSeries is probably not an option because it will not be available until late 2013.

"We are negotiating with the providers to see what the best solution is for us," Barroso says, adding TAM is still studying and designing the Pantanal network.

He says while the Pantanal acquisition is small, it was "of great strategic value because with that we are expanding our operation". He adds: "Furthermore we are strengthening our strategic position at Congonhas airport, the most important in the country."

With Pantanal, TAM has regained the leadership position at Congonhas with 48% of the slots at the downtown airport. Gol, which now has 46% of Congonhas' slots, became the largest carrier at Congonhas after acquiring Varig in 2007.

Pantanal was struggling as an independent regional carrier and in bankruptcy protection when acquired by TAM for R$13 million ($7 million) in an auction. Pantanal only generated R$52 million in revenues in 2009, down from R$72 million in 2006.

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