Brazil is the fifth largest domestic aviation market in the world, covering a vast area (greater than the continental United States) and a population of approximately 182 million people (according to the Brazilian Geography and Statistics Institute. According to IATA, the São Paulo — Rio de Janeiro shuttle route is one of the busiest shuttle routes in the world (after the New York—Washington D.C. and London—Paris routes). Growth of the Brazilian commercial aviation industry is closely related to growth of Brazilian GDP. According to DAC, the Brazilian commercial aviation industry transported more than 32.2 million passengers in the domestic market in 2004.

The market for scheduled airline service in Brazil includes two main types of passengers: those traveling on business and those travelling for leisure. Business passengers generally place more importance to factors such as frequency of flights, reliability, availability of direct flights, extent of area served and value-added services (and are becoming increasingly sensitive to price). Leisure passengers generally place more importance on price and tend to be more flexible regarding scheduling of their trips.

The business travel sector is the largest and most profitable segment of the air transport industry in Brazil. In Brazil, small and medium-sized companies place significant importance on receiving good service from their airline, while maintaining a balance between quality, frequency of flights and low prices.

According to data compiled by DAC, flights between Rio de Janeiro and São Paulo represented 11.3% and 10.8% of all domestic passengers (in terms of departures and arrivals) in 2003 and 2004 respectively. The six most heavily traveled routes between pairs of cities in Brazil, represented 25.3% and 22.2% of all passengers traveling on domestic flights in Brazil (in terms of departures and arrivals) in 2003 and 2004 respectively.

The Company currently operates an average of 636 daily flights to 46 destinations in Brazil. Through its regional alliances with Oceanair, Pantanal, Passaredo, Total Linhas and Trip Transporte, the Company serves an additional 27 domestic destinations.

The Company operates 148 international flights weekly to Buenos Aires, Santiago, Asunción, Montevideo, Punta del Este, Ciudad del Este, Santa Cruz de la Sierra, Cochabamba, Miami, New York and Paris. The Company recently obtained authorization to operate flights to Caracas, Venezuela and plan to begin the operation of a daily flight from São Paulo to Lima, Peru, in a code-sharing arrangement with TACA Airlines, from March 18, 2006. The Company’s codeshare agreements with American Airlines and Air France allow the passengers to make connections to destinations in Latin America, the United States and Europe, in addition to access to other services, such as check-in at desks of the Company’s partner airlines, simplified baggage shipping, access to VIP lounges and the ability to earn points in the TAM Loyalty Program.

The Company generates revenue from charter operations (flying primarily during off-peak hours) increasing the productivity of its fleet. According to DAC, the Company is the largest charter flight operator in Brazil. In 2004, the Company operated over 5,500 charter flights, primarily to the capitals of states in the Northeast of Brazil.

The Company also earns revenues through cargo transportation operations. TAM Express (the cargo unit of TAM Linhas Aéreas) is responsible for providing express package, conventional cargo and special transportation services. TAM Express serves various locations in Brazil and abroad, flying directly to 46 airports, picking up packages at approximately 400 cities in Brazil and making deliveries to approximately 3,450 locations in Brazil.

Taxes and deductions increased by 16.7% to R$261 million for the year ended December 31, 2005, compared to R$224 million for the year ended December 31, 2004.

Net operating revenues increased by 25.0% to R$5,649 million for the year ended December 31, 2005 compared to R$4,520 million for the year ended December 31, 2004.

Cost of services rendered and operating expenses increased by 23.6% to R$5,222 million for the year ended December 31, 2005, compared to R$4,226 million for the year ended December 31, 2004.

Net income decreased by 45.2% to R$187 million for the year ended December 31, 2005, compared to R$341 million for the year ended December 31, 2004.