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TAM S.A. (TAM) is a Brazilian airline company incorporated more than 30 years ago and through its subsidiaries TAM Linhas Aéreas and TAM Mercosur has been providing air transportation services in both the domestic and the international markets. TAM is a leading airline in the domestic market, with a 49.3% market share as of June 30, 2008 in RPKs (revenue passenger kilometer) according to data from the Brazilian National Civil Aviation Agency (ANAC).
We are maintaining our Hold recommendation on TAM S.A. Although the company posted positive operating figures for the third quarter 2008, net income was highly disappointing. TAM reported a net loss of US$285.8 million due to the net financial loss during the quarter.
Additionally, competition is growing in Brazil's airline industry, a development that will certainly affect the company's results in the following quarters. The recession in the U.S. due to the recent global financial crisis is a matter of great concern. Nevertheless, after the recent sell-off, the stock seems to be attractive again, mainly considering lower oil prices.
Read the full analyst report on TAM.
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