TAM Airlines Invests US$ 3.2 Billion In New Aircraft To Meet Growing Market Demand

34 new aircraft will be used for fleet renewal and expansion to meet the growing demand expected over the next 20 years

TAM Airlines is Latin America’s first client for the Airbus A320neo and has also expanded its contract with Boeing with two more B777-300ERs

São Paulo, February 28, 2011 –- TAM Airlines has announced the order of 32 aircraft from the Airbus A320 Family and two new Boeing 777-300ER aircraft. The airline will use the new aircraft to renew and expand the fleet, which will strengthen its operations in both the domestic Brazilian and international markets. With this order, the company is preparing to meet the growing demand for air travel, while maintaining the high level of services offered to its customers.

The combined value of the new orders, based on list prices, is approximately US$ 3.2 billion.

Of the 32 aircraft ordered from Airbus, 22 are new model A320neo and ten are from the A320 family. The aircraft will be delivered between 2016 and 2018. The engine option will be announced at a later date.

TAM is the first client in Latin America, and one of the first airlines in the world, for the A320neo aircraft. The new Airbus model has more efficient engines and an aerodynamic component located on each wingtip called Sharklets. These innovations result in significant savings in fuel consumption of up to 15%, which represents an annual reduction in carbon dioxide (CO2) emissions of up to 3,600 tons per aircraft. The A320neo also offers two-digit reduction in nitrogen oxides (NOx) emissions and considerable reduction in engine noise. The structure of the new aircraft will have more than 95% in common with the current products of the line, but will offer up to 950 km in additional range or two tons in additional payload capacity.

TAM already has four Boeing 777-300ERs in its fleet. The two new aircraft will be delivered in 2014. The company had already ordered four aircraft to be delivered in 2012 and two in 2013. In 2014, TAM will have 12 Boeing 777-300ERs aircraft in its fleet.

With a spacious cabin and capacity to transport 362 passengers in three service classes, the B777-300ER is one of the world’s most efficient two-engine commercial jets. The model produces 22% less carbon dioxide per seat and its operational cost per seat is 20% lower. The B777-300ER’s maximum range is 14,685 km.

“The new aircraft manufactured by Airbus and Boeing will help us lower fuel consumption and gas emissions, making our operations increasingly more efficient and maintaining the company’s high safety levels. This will translate into cost savings for our clients and increase the level of respect for the environment,” said Líbano Barroso, CEO of TAM Airlines.

Robust market: TAM’s fleet has an average age of between 6 and 7 years, one of the youngest in the world, and is equipped with the best and most advanced equipment and software options offered by the manufacturers. The fleet is currently composed of 152 aircraft, of which 140 are Airbus models (26 A319s, 86 A320s, 8 A321s, 18 A330s and 2 A340s), seven are Boeing models (4 B777-300ERs and 3 B767-300s) and five ATR-42s used by Pantanal. The company’s fleet plan is to end the year with 156 aircraft, reaching 182 aircraft by the end of 2015.

TAM is already preparing for the years after 2015, given the growing demand for air travel, both domestic and international, which is expected to continue to register strong growth. Studies indicate that demand should continue growing over the next 20 years at an average annual rate of 9%, driven by both leisure and business travels.

In 2010, the demand for domestic Brazilian flights increased by 23.5%, according to the Brazilian National Civil Aviation Agency (ANAC). TAM estimates that in 2011, demand for commercial flights in the Brazilian market will grow by between 15% and 18%.

“This year we will continue to optimize our costs by efficiently using our fleet in the Brazilian market, with supply growing from 10% to 14%. And in the international market our seat availability will grow by 10% with the launch of two new routes or frequencies,” adds Barroso.

Marco Antonio Bologna, TAM S.A. CEO, says the US$ 3,2 billion investment in new aircraft is another example of the belief the group has in the continuation of the current Brazilian economic growth cycle and in the country’s infrastructure solutions, fundamental for the sustainable air transport expansion. “TAM, as an aviation multi business group, is well positioned to contribute with the relevant investments in the sector,” says Bologna.