S&P Lowers TAM Rating

S&P has lowered its long-term corporate credit rating on Brazilian airline TAM to BB minus from BB, with a stable outlook. “The rating action reflects our expectations that, despite improvements in operating conditions and profitability projected for 2008, TAM’s credit metrics will remain depressed in the next couple of years due to slower market growth than we originally expected and fuel cost pressures,” says S&P. TAM has managed to sustain robust market shares both domestically and internationally and has significantly reduced non-fuel costs and expenses to preserve adequate levels of profitability, says the agency. “However, we expect TAM’s cash generation to remain compressed in 2008, particularly relative to its debt leverage,” notes S&P.