Second Merrill Lynch Latin America Airline Forum

December, 2007

2 2

2007 has been a year of many challenges

Macro Economy

Airline Industry

Airlines Brazil

TAM

High volatility (e.g. subprime crisis)

Fuel prices Scarcity of aircraft, seats, etc due to

overall growth in the sector Conclusion of the “Varig” questionmark Changes in the governing structure of

the industry Collapse of BRA

Impact of infrastructure on operations Accident

3 3

We have not only continued to be the leading domestic carrier...

14.4

20.3

42.4

20.7

8.5

14.5

40.3

30.6

13.5

38.9

11.7

34.6

12.2

33.6

19.4

33.0

8.8

31.1

22.3

35.8

25.5

25.9

41.3

10.3

34.0

47.8

39.4

48.9

2000 2001 2002 2003 2004 2005 2006 Jan-Nov2007

0

20

40

60

80

100%

Domestic Market Share (RPKs)

TAMGOLVARIGVASPTRANSBRASILBRAOther

4 4

...but have become the leading Brazilian carrier in the international market...

75.0

7.4

82.1

13.9

87.4

12.5

87.9

12.0

85.4

14.5

77.0

18.4

50.4

7.3

37.3

12.6

14.6

67.2

2000 2001 2002 2003 2004 2005 2006 Jan-Nov2007

0

20

40

60

80

100%

International Market Share (RPKs)

TAMGOLVARIGVASPTRANSBRASILOther

5 5

...and the only Brazilian carrier with consistent international deployment and growth...

ParisMiamiNew YorkLondonMilanFrankfurtMadrid¹Buenos Aires

Santiago Montevideo Caracas

TAM's Weekly Frequencies

212114777749

777

Since

03/199903/199811/200510/200603/200711/200712/200703/2001

12/200411/200709/2007

Competitors

Air France (17)AA (28)AA (7), Delta (7), Continental (7) and JAL (7)British Airways (7) and Varig (7)Alitalia (7)Lufthansa (7) and Varig (7)Iberia (14)Aerolineas (56), GOL (49), BA (4), Lufthansa (7), LAN (7)

GOL (14), LAN (5) and SwissPluna and GOL (14)Varig (7)

¹ As of December 21

6 6

…with a dedicated focus to intra-regional flights in South America through TAM Mercosur

Buenos Aires Santiago Assuncion1

Montevideo

Ciudad del Este

Sta Cruz dl Sierra

Cochabamba

Cordoba

Weekly Frequencies

377

567

35

7

7

7

Since

09/199609/199609/199609/1996

09/1996

09/1996

09/1996

03/2007

1 Includes 21 frequencies to São Paulo

7 7

53.3%

46.7%

53.8%

46.2%

71.5%

28.5%

65.0%

35.0%

2004 2005 2006 2007*0

20

40

60

80

100%

% International traffic

Braziliancarriers

Intlcarriers

The growth potential for Brazilian carriers is higher due to the unbalance in the bilateral agreements

* estimates

8 8

We are strengthening our product in the international market through fleet and network...

Increased widebody fleet plan for the next 10 years, substituting older aircraft 2 A340s (delivered in 2007) 8 B777-300ERs (4 in 2008, 4 in 2012) 22 A350s (as of 2013) New A330 reducing fleet average age Complete phase-out of F100 (impact on intra South American

routes)

Expansion of network through additional destinations and frequencies

New full code share agreements at each major country Focus on South American coverage – integration of TAM

Mercosur activities

9 9

...as well as retrofitting our entire network in 2008

180º flat beds with shell

In seat power AVOD controls for in-

flight entertainment New colour scheme

First Class

Business

10 10

21%

79%

33%

67%

34%

66%

34%

66%

3Q06 1Q07 2Q07 3Q070

20

40

60

80

100%

Revenues(Passenger + Cargo)

DomesticInternational

% ASK Int

% ASK Dom

Dollarexchangerate

27%

73%

R$2.174

33%

67%

R$2.050

37%

63%

R$1.926

37%

63%

R$1.839

The international operations works as a natural hedge

Approximately 50% of our costs

(including fuel) are exposed to foreign

currencies

Revenues originated in the

international operations are

expected to reach 45% - 50% in the next 12 months

11 11

As Brazil becomes “stable”, the leisure segment will become increasingly more important

Leisu

reBu

sines

s

2000 2001 2002 2003 2004 2005 2006 2007E

17.9

26.6 27.0 25.228.2

35.439.8

43.5

0

10

20

30

40

50

Domestic Market Passenger Mix (RPK M)CAGR

11%

21%

Travelling is one of the top “desire” items for consumption

* TAM Estimates

12 12

We will be expanding our fare bundle strategy for the domestic market in 2008...

Addition of extra features in the segmented bundles

Ability to “sell up” categories Potential for

further revenue increase

Harmonization of the fare bundle strategy to TAM Fidelidade growth

13 13

...increasing capillarity of sales through our new methods of payments... Launched new methods of payment in May 2007

Payment at lottery stores Approximately 9,000 stores in Brazil Already functioning as bank correspondent

Billing slips Automatic debit Financing for passengers via direct consumer credit with

the main retail banks

Focus on leisure/lower income segments

14 14

...optimizing the utilization of our aircraft on off peak hours

* Average day in October, 2007

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 2350

55

60

65

70

75

80%

Domestic load factor per hour

Off Peak Off Peak Off PeakPeakPeak

15 15

TAM had its origin as a regional carrier…

TAMPremium / Business

Commodity / Leisure

Reg

iona

lInternational

TAM’s Origin

16 16

… until 1998, was focused in domestic transportation of business passengers…

TAMPremium / Business

Commodity / Leisure

Reg

iona

lInternational

TAM up to 1998

17 17

… and now, it serves a full spectrum of passengers under one brand

TAMPremium / Business

Commodity / Leisure

Reg

iona

lInternational

First class

Business class

Economy class

Commercial

agreements

with

regional

carriers

18 18

We are beginning to evaluate new potential business units in the company

TAM Linhas Aéreas

MRO(São Carlos)

Loyalty Program HandlingCargo

Already structured as a business unit with focus in maximizing assets

None or little focus on selling services to third-parties

Not structured as business units

19 19

3Q06

22.2

21.475.1

30.1

18.279.6

22.8

10.5

2Q07

16.8

15.371.9

22.3

12.369.1

17.8

9.3

3Q07

17.0

15.466.3

24.4

12.570.8

17.7

9.6

3Q06 vs 3Q07

-23.4%

-28.0% -8.8 p.p.

-18.9%

-31.1% -8.8 p.p.

-22.4%

-8.4%

2Q07 vs 3Q07

1.2%

0.7% -5.6 p.p.

9.4%

1.6% 1.7 p.p.

-0.6%

3.2%

When compared to an extremely strong 3Q in 2006, the result is total RASK decreasing 23%

RASK Total1

RASK Scheduled Domestic2

LF Scheduled Domestic Yield Scheduled Domestic3

RASK Scheduled International2

LF Scheduled International

Yield Scheduled International3 (in R$)

Yield Scheduled International3 (in USD)

1 Includes charter, cargo and Other revenues, net of taxes2 Net of taxes3 Gross of taxes

20 20

Despite the difficulties in the quarter, TAM remained above the average load factor for the industry

Jul Aug Sep

74

6266

Domestic Load Factor

Jul Aug Sep

76

67

71

International Load Factor

71

59

64

72

6366

TAM’s Load Factor Market Average Load Factor

21 21

Our overall domestic RPK remained flat due to the reduction of chartered operations…

Domestic Market RPK

TAM Domestic RPK

TAM DomesticScheduled RPK

3Q06

10.1

5.2

4.6

2Q07

10.9

5.4

5.1

3Q07

10.5

5.2

4.8

2Q07 vs. 3Q07

-3.8%

-3.7%

-5.8%

3Q06 vs. 3Q07

4.1%

-0.2%

4.1%

Our growth y-o-y was the same as the market

Total domestic market

reduced q-o-q

22 22

TAM

2005 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q0715

20

25

30

35

Yield scheduled domesticR$ Cents

…yield environment for the scheduled domestic market continues to recover

2Q vs. 3Q+ 9.4%

23 23

CASKex-fuel

1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07

17.4318.69 18.43

16.98 15.92 16.52 16.54

0

5

10

15

20

Total CASK (BR GAAP - R$ cents)3Q06 vs 3Q07

-7.3%

-10.2%

Our CASK decreased 10% compared to 3Q06

24 24

RASKCASK

2002 2003 2004 2005 2006 1Q07 2Q07 3Q0715

20

25

RASK/CASK (R$ Cents)BR GAAP

EBITMargin

Spread

-7.1%

-1.1

-0.9%

-0.2

6.5%

1.4

7.5%

1.5

13.6%

2.8

4.8%

0.9

1.7%

0.3

2.8%

0.4

The improvement on the spread (RASK-CASK) led our EBIT margin to increase 1 p.p. (vs 2Q07)…

25 25

3Q06 3Q07

569

313

0

200

400

600

EBITDAR(BR GAAP - R$ M)

3Q06 3Q07

349

57

0

100

200

300

400

EBIT(BR GAAP - R$ M)

Margin over Net Revenue

3Q06 3Q07

213

49

0

25

50

75

100

Net Income(BR GAAP - R$ M)

-45% -84% -77%

27%

15%17%

3%

2%

10%

… our margins reduced, compared to 3Q06 in BR GAAP…

26 26

3Q06 3Q07

549

306

0

200

400

600

EBITDAR(US GAAP - R$ M)

3Q06 3Q07

382

113

0

100

200

300

400

EBIT(US GAAP - R$ M)

26%

18%

6%

15%

3Q06 3Q07

229

143

0

40

80

120

160

200

Net Income(US GAAP - R$ M)

7%

-44%

11%

...and in US GAAP

Margin over Net Revenue

-38%-70%

27 27

BR GAAP Leasing IncomeTaxes

Others US GAAP

49

129

-4611 143

0

50

100

150

200

Net Profit Reconciliationto US GAAP

41 aircrafts are reclassified as capital leases as per SFAS nº

13

The main difference between BR and US GAAP is the accounting treatment of aircraft leasing

28 28

3Q06 3Q07

1.41

0.32

Earnings per shareBR GAAP (R$)

3Q06 3Q07

1.52

0.95

Earnings per shareUS GAAP (R$)

Our earnings per share decreased compared to 3Q06

-77% -38%

29 29

Our balance sheet remains solid

R$ million - BRGAAP 2007 2006 2005 2004

Cash 2,471 2,453 995 297

Short-Term Debt 799 363 216 204

Long-Term Debt 1,465 895 425 399

Total Debt 2,265 1,258 641 603

Shareholder's Equity 1,514 1,449 760 191

Capitalization 2,980 2,344 1,185 590

Aircraft and flight equipment leases 6,011 5,032 4,389 4,557

Total Debt Adjusted 8,275 6,290 5,030 5,160

Total Capitalization Adjusted 8,990 7,376 5,574 5,147

Debt / Capitalization 76% 54% 54% 102%

Adjusted Debt / Adjusted Capitalization

92% 85% 90% 100%

30 30

Average domestic market share above 50%

Average domestic load factor at approximately 70%

Aircraft utilization per day (block hour) higher than 13 hours

Reduction of 7% in total CASK ex-fuel in BR GAAP yoy

Opportunity in the international marketThird frequency to ParisInauguration of two new international

long haul frequencies

Market demand growth from 10% to 15% (in RPK terms)

Guidance 2007

TAM

Market

We continue with our 2007 guidance, disclosed Dec 2006, demonstrating our commitment to investors

10.9%*

Jan - Sep 2007

• Since January• Milan, Frankfurt

and Madrid (December)

48.9%*70.0%

12.8

8.5%

* Jan – Nov Accumulated

31 31

310

80

13

314

87

6

418

101

4

20

104

4

22

110

4

24

113

8

24

115

3Q07 2007 2008 2009 2010 2011 2012

106 110123 128

136 141 147

0

50

100

150

Total Fleet

Our growth plan is supported by a flexible fleet plan

B777 MD11 Airbus wide-body Airbus narrow-body F100

TAM will be

monofleet in the

domestic operations by 1Q08

32 32

Maintain the leadership in both domestic and international markets

ASK growth of Domestic 14% International 40%

Average load factor at approximately 70% overall Reduction of 7% in total CASK ex-fuel in BR GAAP yoyThree additional international destinations or frequencies in

2008

Domestic market demand growth from 8% to 12% (in RPK terms)

Guidance 2008

TAM

Market

We have a positive outlook for 2008

33 33

We are always looking for improvements and focusing in excellence

Tech

nica

l O

pera

tiona

lO

rganizational

Managem

ent

Services

Focus in

Excellence