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- TAM Linhas Aéreas S.A.
Av. Jurandir, No. 856, Hangar 7
São Paulo, SP
- Main hub
- Sao Paulo Guarulhos International Airport
- Business model
- Full Service Carrier
- Joined Alliance
- Association Membership
- Codeshare Partners
All Nippon Airways
TAM Airlines (Paraguay)
TRIP Linhas Aereas
Based at Sao Paolo-Guarulhos International Airport, TAM Airlines is listed on the New York and Sao Paulo Stock Exchanges, and is the national airline and largest carrier in Brazil. TAM has an estimated 50% of the domestic market share and 75% of the international market share. Using a fleet of narrow and wide-body Airbus and Boeing aircraft, TAM operates an extensive network of domestic and regional services within South America and international services to North America and Europe. TAM joined the Star Alliance in May-2010.
Location of TAM Airlines main hub (Sao Paulo Guarulhos International Airport)
TAM share price
699 total articles
Azul to launch Porto Alegre-Maringá services from 16-Jul-2013; increases Curitiba-Londrina frequency
94 total articles
Azul's IPO is at a challenging time for economic and traffic growth in Brazil - but offers potential
Nearly five years after inaugurating service, Brazilian carrier Azul is capping off its rapid and highly successful growth with a planned initial public offering. Azul, led by former JetBlue founder and chief David Neeleman has quickly built up a position of strength in the domestic market place through a strategic acquisition it executed during 2012 of fellow Brazilian regional carrier TRIP.
The combination helped Azul flesh out its network and build what it hopes is the necessary scale to withstand the changes its has witnessed in the Brazilian market place during its brief history, ranging from significant growth to a slowdown in traffic expansion as the country’s GDP has slowed during the last couple of years.
The timing of the decision by Azul’s management to take the company public is interesting given that Brazil’s second largest carrier Gol recently warned that inflation in Brazil keeps rising and that it is uncertain if the country will attain its projected 2.5% GDP growth during 2012.
But in making its case to potential investors Azul is attempting to make clear distinctions between itself and Gol by citing yield advantages and merger synergies of BRL200 million (USD96 million) to BRL300 million (USD144 million) during 2013.
Brazil’s second largest carrier Gol recorded mixed fortunes during 1Q2013 as its overall losses widened year-over-year but yields and unit revenues improved at what appears to be at the expense of load factor. After recording annual losses for the last two years Gol is hoping an aggressive capacity reduction in the Brazilian domestic market place and a significant reduction in its workforce will help the carrier slowly improve its fortunes.
But Gol faces challenges in achieving its turnaround as company management believes it is uncertain that Brazil will record 2.5% GDP growth in 2013 while inflation is rising. The carrier feels positive about its position heading into the slow season in South America, but the timing of a full recovery for the carrier seems far from uncertain.
Brazil’s domestic market is showing more signs of a slowdown after shrinking by 1% in the first quarter. Load factors are improving, an encouraging sign for profitability, but growth has taken a back seat, driven by the capacity cuts at Gol and TAM.
The country’s international market, meanwhile, is showing signs of over-capacity as load factors slipped in 1Q2013. The key Brazil-US market has particularly become over-saturated.
The Brazilian international market will likely post high single digit growth in 2013. The domestic market should also still grow, albeit modestly, for the full year. But Brazil’s once red hot aviation sector faces a challenging 2013. As Brazil is by far the largest market in the region, the slowdown will drive down overall Latin America growth figures.
Competitive pressure in long-haul markets between the US and Brazil was a major driver in the 10.3% year-over-year decrease in yields during 4Q2012 for the powerful newly minted LATAM Airlines Group, which is the combination of Brazil’s leading carrier TAM and South American group LAN. The performance in long-haul markets is likely disappointing for the group as its performance in Brazil’s cooling domestic market improved during the last three months of 2012.
In some ways the competitive pressure on long-haul markets from the US and Brazil will be short-lived as TAM and American Airlines are working to forge a codeshare partnership that will see the two historic rivals team up in the market now that LATAM has selected oneworld as its alliance of choice. Once all the regulatory approvals for the tie-up are in place, TAM will be able to benefit from onward connections in Miami and New York that it currently does not enjoy. Based on current schedules in Innovata (24-Mar-2013 to 30-Mar-2013) TAM and American presently account for 69% of the capacity between the US and Brazil.
TAM will soon defect from Star to join its sister carrier LAN in oneworld. TAP Portugal’s future alliance membership is surrounded by uncertainty until its likely renewed privatisation process is complete. These developments throw the spotlight on the strategic importance of routes from Europe to Latin America to European carriers, who dominate this market, in particular the Big Three, but TAP Portugal, Alitalia and Air Europa also have noticeable positions. The South Atlantic market is only around one fifth of the size of the North Atlantic market by RPKs. So why should Latin America matter to European airlines?
In addition to forecast passenger traffic growth rates that, while not spectacular, are still very respectable and superior to those in Europe and on the North Atlantic, Latin America is a fascinating strategic battleground for Europe’s carriers, both directly and through alliances.
It is a territory of changing alliances and emerging players and, for those that are successful, market share gains can provide significantly higher growth then the underlying market.
LATAM Airlines Group announced on 07-Mar-2013 that its TAM, TAM Paraguay and LAN Colombia subsidiaries would join its sister carriers in oneworld, confirming moves which had been considered a foregone conclusion for 18 months. The Star Alliance now faces the risk of not having a member in Brazil, one of the world’s most important growth markets, after TAM shifts from Star to oneworld in 2Q2014. But the void will not last long as Brazil’s fourth largest carrier, Avianca Brazil, will almost certainly join its sister carriers in Star, potentially by the end of 2014.
Meanwhile, Brazil’s second largest carrier Gol continues to be wooed by SkyTeam. With TAM moving to oneworld and Avianca Brazil expected to join Star, the stakes mount for SkyTeam while the benefit of maintaining independence for Gol diminishes.
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