Fitch: TAM outlook negative

Fitch Ratings said it revised TAM SA's outlook to negative from stable and affirmed its ratings, including the foreign- and local-currency issuer default ratings and $300 million senior unsecured notes due in 2017 at BB and its national scale rating and R$500 million first debentures issuance at A+(bra).

The agency said the outlook revision reflects the expectation that the unprecedented rise in crude oil over the last several months will continue to put pressure on TAM's margins and cash flow generation capacity throughout 2008 and Fitch's concerns regarding the challenges that the company is expected to face to improve its operating performance.

TAM's financial profile and credit protection measures deteriorated significantly in 2007 and are weak for the rating category, Fitch said. For the 12 months ended March, the adjusted total-debt-to-EBITDAR ratio was 7.3 times.

Positively, TAM's liquidity remains solid with R$2.2 billion in cash and marketable securities for the first quarter ending March 31, the agency added.

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