TAM grows first quarter profits on strong revenue performance

Brazilian carrier TAM reported first quarter profits of 57 million real (US$27 million) up from 47 million real for the first three months of 2008.

Those results were strengthened by TAM's revenues growing 17% year-over-year to 2.7 billion real as yields grew 6.5%

TAM's 16.7% capacity growth did outpace a 6.9% in traffic, resulting in a 6.1 percentage point reduction in its load factors. However, TAM beat its 62% break-even load factor targets after posting average load factors of 67%.

Operating expenses for TAM during the first quarter grew 13% year-over-year to 2.4 billion real driven by a 151% rise in maintenance cost. The carrier says the spike in maintenance expense was largely driven by engine maintenance, fleet expansion and a 11% rise in flight hours.

The company's operating income grew 17% to 2.2 billion real, with income international operations growing the most year-over-year at 30%.TAM increased international capacity year-over-year during the first quarter by 18.5% with the addition of four Boeing 777s, four Airbus A330s and three Boeing 767s to support long haul flights from Rio de Janeiro to Miami and New York and from Sao Paulo to Orlando. In South America TAM launched service from Buenos Aires to Brasilia and from Sao Paulo to Lima and Bariloche through the increase of narrowbody flying in the region.

TAM plans to launch service to Johannesburg in September.

The carrier's fleet projections show flat growth as TAM expects to end 2009 with the 132 aircraft, the same number it had at quarter's end.