TAM Airlines Registers Operating Margin of 16.7 Percent in the Third Quarter of 2011

TAM Airlines Registers Operating Margin of 16.7 Percent in the Third Quarter of 2011

TAM S.A. recorded an operating profit (EBIT) of R$ 553.3 million in the third quarter of 2011, the equivalent to an operating margin of 16.7 percent. Excluding a non-recurring accounting gain in the period, related to the recognition of tax credits to the value of R$ 426 million, the operating income was R$ 192 million, equivalent to a 5.8 percent margin. In the same months of 2010, excluding a non-recurring gain with the reversal of the provision of the taxes registered at the time, TAM had achieved positive operating result of R$ 275.8 million, with an operating margin of 9.5 percent.

As a result of the strong appreciation of the dollar against the real, the company's net income was down by R$ 620 million in the third quarter of this year, including the non-recurring gain. In the same period in 2010, including the extraordinary gain obtained at the time, net income was R$ 733 million.

The volatility of the dollar - the currency rose from R$ 1.56 per dollar at the end of the second quarter of this year to R$ 1.85 at the close of the third quarter - strongly impacted on the company's debts linked to the U.S. dollar. For comparison the impact to the financial results of TAM of an exchange rate variation of 10 cents is about R$ 400 million to more (if there is appreciation of the real) or less (when the Brazilian currency loses value).

From July to September, TAM's net income increased by 13.3 percent to R$ 3.3 billion, compared to the same period last year. The company's gross operating revenue grew 14.8 percent to R$ 3.5 billion. The total number of paying passengers carried rose by 3.3 percent in the third quarter to 9.5 million in the quarter.

The growth of gross revenue in the third quarter is a result of the increase of 9.2 percent in gains in the operation of domestic and international passengers (R$ 2.6 million), of 6.5 percent with cargo transported (R$ 294.4 million), and a 57 percent increase from other revenues, including the results of Multiplus (the fidelity program company, subsidiary of TAM S.A.) - when compared to the same period last year. The latter group alone was responsible for generating R$ 580 million in the period, compared to a revenue of R$ 370 million in the same quarter of 2010.