Brazilian airline TAM has confirmed it saw a sharp drop in profits during financial 2010, despite an upturn in company turnover.

The largest airline in Brazil saw profits fall $362 million, down some 48.9 percent on the previous year, in part due to rising operating costs for fuel, staffing and maintenance.

However, company turnover was $6.4 billion up 16.5 per cent on 2009.

“In 2010 we saw a change in the profile of our passengers,” explained TAM president Marco Antonio Bologna.

“Brazilians, who before used to take the bus, are turning more and more to air travel for trips over 800 kilometres.”

“We think that a large part of the growth in our sector will come in the next few years from Brazilians from the developing classes who will take a plane for the first time.”

TAM dominated the Brazilian domestic market in 2010, registering a total of 34.5 million passengers on its internal and international flights.

TAM is presently seeking to finalise a merger with rival LAN.

It is hoped the merger would create up to $400 million annually in expected synergies, LAN and TAM would continue to operate as independent brands, with headquarters in both Santiago and Sao Paulo.

The combined airline group would provide passenger services to more than 115 destinations in 23 countries while providing cargo services throughout Latin America and across much of the globe.

Aircraft Order

Announcing the results, TAM also confirmed it would acquire a total of 34 aircraft for about $3.2 billion in order to meet growing market demand.

The ordered, designed to renew and expand the TAM fleet, comprised 32 A320-family aircraft from Airbus and two 777-300ER aircraft from Boeing.

The Boeing portion of the order – valued at about $568 million - will be delivered in 2014.

The Airbus aircraft will delivered between 2016 and 2018.