With focus on profitability, TAM revises fleet plan
We chose not to increase our fleet of aircraft for the domestic market in 2012; changes in the international network should lead to annual earnings of US$ 50 million
São Paulo, August 30, 2011 – We have revised our fleet plan from 2012 with the aim of increasing profitability and improve operational performance. Thus, we will close next year with 159 aircraft, rather than with the 163 foreseen in the previous fleet plan.
Domestic Market
We estimate for 2012 a smaller growth in demand than expected for this year - between 15% and 18%, as our guidance for 2011 - because of the uncertainties surrounding the global economy. "We are confident in Brazil’s growth and in the aviation market next year, but we understand that an adjustment in our fleet plan is needed to ensure the profitability of the business, in a context of greater rationality of the market," said Líbano Barroso, TAM Airlines CEO.
To achieve this target, we will intensify our efforts to controlling costs and increasing revenues. Among the adopted measures, the narrow body fleet (aircraft with only one aisle) will not be increased by four units next year as originally planned.
In 2012, we will receive 13 new Airbus A320 family aircraft and will return 13 currently in operation. We will not opt for the renewal of four leases of aircraft by modifying the original plan of receiving 13 new equipment and returning nine. That is, there will be no net growth of the fleet.
"In our conference call with analysts, after the announcement of second quarter results in early August, I said we had the flexibility to reduce the fleet of aircraft in 2012, if necessary," says Líbano Barroso. "Even with this review, we will renew 10% of the domestic fleet, while maintaining a low average age of aircraft. Besides the clear benefit of service quality to our customers who have one of the youngest fleets in the world, it would help to reduce maintenance costs and fuel consumption. "
Even with the adopted measures, thanks to efficiency gains already achieved by high aircraft utilization, the number of company seats (ASK) will increase 4% in 2012 compared to 2011.
Below the fleet plan for the coming years, including large aircraft, which operate international routes:
International market
There are no changes in the plan for wide body aircraft fleet (with two aisles, used for long flights). However, to increase operations efficiency, we will switch the A340 aircraft that operates the São Paulo/Guarulhos - Milan route by the Airbus A330 in October, in a date to be announced. These aircraft, with more energy-efficiency, by flying with two engines - the A340 has four engines- will represent a gain of more than 20% in fuel costs per available seat in São Paulo-Milan route. Currently, fuel costs represent about 35% of our total costs.
To make this equipment exchange possible, we will promote an adjustment in international routes, and flights from Rio de Janeiro/Galeão to Frankfurt and London. The current seven weekly departures to Frankfurt will be reduced to four, and six weekly departures to London will return to three.
With the set of actions, including the new flight to Mexico - beginning in October-, the additional frequency to Orlando from Sao Paulo and the replacement of A340 by A330, among others, we estimate earnings of approximate US$ 50 million per year, discounting amounts paid by leasing of aircraft, wich will no longer be operated.
"The demand for international flights remains strong in 2012, and our offer remains proper to demand. This adjustment of the international network has only the objective to make operations more efficient, reducing costs and offering the route São Paulo - Milan passengers with other aircraft model, without reducing the quality of services”, said Líbano Barroso.
