TAM Announces First Quarter 2007 Results

SAO PAULO, Brazil, May 10 /PRNewswire-FirstCall/ -- TAM S.A. (BOVESPA: TAMM4), leader in the Brazilian airline market, reports its first quarter results for 2007 (1Q07). Operational and financial data, except where otherwise indicated, are presented based on amounts consolidated in Reais (R$) and prepared in accordance with accounting principles generally accepted in Brazil (BR GAAP).

(Logo: http://www.newscom.com/cgi-bin/prnh/20060418/SPTU001LOGO ) Operational Performance Domestic Operations -- TAM reached 48.5% average market share in 1Q07

-- ASKs (capacity) increased 22.4% in 1Q07 as a result of the increase in the operating fleet (18 A320 and 2 A319, vs. 6 F100 returned) and the increase in block hours by aircraft from 12.4 hours/day to 13.0 hours/day (total operation)

-- RPKs (demand) increased 21.9% in 1Q07 compared to 1Q06

-- TAM's domestic load factor decreased to 70.7% in 1Q07, compared to 71.0% in 1Q06

-- We operated with operational efficiency performance in the domestic market of 59% for 1Q07 (January and February) - 5 p.p. below the market average

International Operations -- TAM reached 60.9% average market share in 1Q07

-- ASKs (capacity) increased 78.2% in 1Q07, due to the increase of nineteen weekly frequencies to Buenos Aires, the start of daily frequencies to London and Milan, the second daily frequencies to New York and the third daily flight to Paris by adding three A330 and three MD11 into our international operating fleet, the inclusion of two daily flights to Santiago and also due to the daily frequency Manaus-Miami, the latter connecting Northern and Northeastern Brazil to the USA, operated with an A320.

-- RPKs (demand) increased 64.2% comparing 1Q07 with 1Q06

-- TAM's international load factor decreased 6.1 p.p. to 71.2% in 1Q07 compared to 77.3% in 1Q06

-- We operated with 74.0% operational efficiency in the international market, 16 p.p. above the market average.

Financial Performance -- Total CASK decreased by 8.7% in 1Q07 compared to 1Q06 -- We reached 4.8% and 18.6% of EBIT and EBITDAR margins, respectively -- Net income of R$ 59.2 million and margin of 3.2% -- Our total cash and cash equivalents equaled R$2,026 million Operating data 1Q07 vs. 1Q06 2007 2006 Variation (%) 1st quarter 1st quarter 1st quarter Total Passengers transported (thousand) 6,665 5,551 20.1 RPK (millions) 7,769 5,831 33.2 ASK (millions) 10,967 8,037 36.5 Load factor - % 70.8 72.6 -1.7 p.p. Break-even load factor (BELF) - % 67.4 63.9 3.5 p.p. Average tariff 240 266 -9.7 Flight hours 111,872 90,537 23.6 Kilometers flown by aircraft (millions) 65,628 52,286 25.5 Liters of fuel (millions) 402,576 305,411 31.8 Aircraft utilization (hours per day) 13.0 12.4 5.0 Landings 64,337 57,889 11.1 Stage Length 1,020 903 12.9 No. of employees 16.665 10,240 62.7 Domestic Market Paid passengers transported (thousands) 5,847 5,019 16.5 RPK domestic (millions) 5,203 4,268 21.9 RPK scheduled domestic (millions) 4,722 3,593 31.4 ASK domestic (millions) 7,363 6,015 22.4 ASK scheduled domestic (millions) 6,806 5,243 29.8 Domestic Load factor - % 70.7 71.0 -0.3 p.p. International Market Paid passengers transported (thousands) 818 532 53.6 RPK international (millions) 2,566 1,563 64.2 RPK scheduled international (millions) 2,541 1,540 65.0 ASK international (millions) 3,603 2,022 78.2 ASK scheduled international (millions) 3,566 1,988 79.4 International Load factor - % 71.2 77.3 -6.1 p.p. Financial Performance

All the values shown in the tables below were originally calculated in Brazilian Reais and are stated in millions and cents of Reais. Therefore, (i) the results of the sum and division of some amounts may not correspond to the total amounts shown due to rounding-up procedures; and (ii) the result of percentage variances may be different from the amounts shown in the tables below.

Income Statement - 1Q07 vs. 1Q06 1st quarter BR GAAP In cents of R$ per ASK In millions of R$ 2007 2006 Variation(%) 2007 2006 Variation(%) Operational Income 17.45 20.70 -15.7 1,913.3 1,663.8 15.0 Flight revenue 16.01 19.64 -18.5 1,755.3 1,578.2 11.2 Domestic 9.96 14.78 -32.6 1,092.6 1,187.9 -8.0 International 4.61 3.57 29.1 506.0 287.2 76.2 Cargo 1.43 1.28 11.4 156.7 103.1 52.0 Other operating sales and/or services revenues 1.44 1.07 35.2 158.0 85.6 84.5 Sales deductions and taxes (0.72) (0.92) -21.7 (79.3) (74.2) 6.9 Net operational income 16.72 19.78 -15.4 1,834.0 1,589.6 15.4 Cost of services and operational expenses Fuel (5.20) (5.85) -11.0 (570.2) (469.8) 21.4 Selling and marketing expenses (1.71) (2.53) -32.4 (187.3) (203.1) -7.8 Aircraft and equipment leasing (2.05) (2.04) 0.7 (225.2) (163.8) 37.4 Personnel (2.44) (2.36) 3.3 (267.7) (190.0) 40.9 Maintenance and reviews (except personnel) (0.96) (0.97) -1.3 (104.9) (77.8) 34.7 Outsourced services (1.26) (1.56) -19.4 (137.9) (125.4) 10.0 Landing and take-off and navigation charges (0.91) (0.86) 5.3 (99.3) (69.1) 43.6 Depreciation and amortiz- ation (0.25) (0.29) -13.6 (27.0) (22.9) 17.9 Aircraft insurance (0.08) (0.11) -29.9 (8.5) (8.9) -4.3 Others (1.07) (0.87) 23.4 (117.8) (70.0) 68.3 Total cost of services and operational expenses (15.92) (17.43) -8.7 (1,745.8) (1,400.8) 24.6 Gross profit 0.80 2.35 -65.8 88.2 188.8 -53.3 Financial income (expense) 0.02 0.15 2.4 12.1 Other operating expenses. Net (0.07) (0.13) -50.6 (7.3) (10.8) -32.6 Operating income (loss) 0.76 2.37 -67.9 83.4 190.2 -56.2 Non- operating results, net 0.05 0.06 -10.8 5.7 4.7 21.7 Income (loss) before income and social contribution taxes 0.81 2.42 -66.5 89.0 194.8 -54.3 Income tax and social contrib- ution (0.27) (0.84) -68.0 (29.6) (67.9) -56.4 Income (loss) before minority interest 0.54 1.58 -65.7 59.4 126.9 -53.2 Minority interest (0.00) (0.00) 6.2 (0.3) (0.2) 45.0 Reversal of interest on equity 0.00 0.00 0.0 0.0 Net income (loss) for the period 0.54 1.58 -65.8 59.2 126.7 -53.3 EPS (R$) 0.39 0.85 -53.8 EPADS (USD) 0.19 0.39 -51.0 Income Statement - 1Q07 vs. 1Q06 US GAAP In cents of R$ per ASK In millions of R$ Variation Variation 2007 2006 (%) 2007 2006 (%) Operational Income 17.40 20.65 -15.8 1,907.9 1,659.6 15.0 Flight revenue 16.01 19.64 -18.5 1,755.3 1,578.2 11.2 Domestic 9.96 14.78 -32.6 1,092.6 1,187.9 -8.0 International 4.61 3.57 29.1 506.0 287.2 76.2 Cargo 1.43 1.28 11.4 156.7 103.1 52.0 Other operating sales and/or services revenues 1.39 1.01 37.3 152.6 81.5 87.3 Sales deductions and taxes (0.72) (0.92) -21.7 (79.3) (74.2) 6.9 Net operational income 16.67 19.73 -15.5 1,828.6 1,585.4 15.3 Cost of services and operational expenses Fuel (5.20) (5.85) -11.0 (570.2) (469.8) 21.4 Selling and marketing expenses (1.71) (2.53) -32.4 (187.3) (203.1) -7.8 Aircraft and equipment leasing (1.17) (1.00) 16.8 (127.9) (80.3) 59.3 Personnel (2.44) (2.36) 3.8 (268.0) (189.3) 41.6 Maintenance and reviews (except personnel) (0.96) (0.97) -1.3 (104.9) (77.8) 34.7 Outsourced services (1.26) (1.48) -15.1 (137.9) (119.0) 15.9 Landing and take-off and navigation charges (0.91) (0.86) 5.3 (99.3) (69.1) 43.6 Depreciation and amortization (0.52) (0.68) -24.0 (56.9) (54.9) 3.7 Aircraft insurance (0.08) (0.11) -29.9 (8.5) (8.9) -4.3 Others (1.11) (0.94) 17.9 (121.7) (75.6) 60.9 Total cost of services and operational expenses (15.34) (16.77) -8.5 (1,682.6) (1,347.8) 24.8 Gross profit 1.33 2.96 -55.0 146.1 237.7 -38.6 Financial income (expense) 0.61 2.18 -72.1 66.9 175.6 -61.9 Income (loss) before income and social contribution taxes 1.94 5.14 -62.2 213.0 413.3 -48.5 Income tax and social contribution (0.68) (1.81) -62.2 (74.9) (145.1) -48.4 Income (loss) before minority interest 1.26 3.34 -62.2 138.1 268.2 -48.5 Minority interest (0.00) (0.00) -24.1 (0.2) (0.2) 3.6 Net income (loss) for the period 1.26 3.33 -62.3 137.9 268.0 -48.5 EPS (R$) 0.92 1.80 -49.0 EPADS (USD) 0.45 0.83 -46.0 Find the full release on the company's website: http://www.tam.com.br/ri Investor Relation contacts: Libano Miranda Barroso (CFO) Cristina Betts (Dir. Corporate Planning and Controlling) Roberta Noronha (Manager Investor Relations) Jorge Helito (Investor Relations Analyst) Andre Ferreira (Investor Relations Analyst) Tel.: (5511) 5582-9715 Fax: (5511) 5582-8149 invest@tam.com.br http://www.tam.com.br/ri About TAM:

TAM (http://www.tam.com.br/) has been the leader in the Brazilian domestic market for more than three years, and held a 50.7% domestic market share and 69.7% international market share at the end of April 2007. TAM operates regular flights to 48 destinations throughout Brazil. It serves 75 different cities in the domestic market through regional alliances. Additionally, it maintains code-share agreements with international airline companies that allow passengers to travel to a large number of destinations throughout the world. TAM was the first Brazilian airline company to launch a loyalty program. Currently, the program has over 3.8 million subscribers and has awarded more than 4.2 million tickets.

Forward-looking statement:

This notice may contain estimates for future events. These estimates merely reflect the expectations of the company's management and involve risks and uncertainties. The Company is not responsible for investment operations or decisions taken based on information contained herein. These estimates are subject to changes without prior notice.