Bloomberg News

Multiplus Heads to Six-Month High as Board Approves Price Change

December 06, 2011

Dec. 6 (Bloomberg) -- Multiplus SA, the frequent-flyer unit of Brazilian airline Tam SA, headed to a six-month high after its board approved changing the prices it pays the parent company for tickets and the amount it charges Tam for air miles.

Multiplus advanced 4.3 percent to 32.02 reais at 4:31 p.m. in Sao Paulo, the highest on a closing basis since June 3. The benchmark Bovespa index gained 0.2 percent.

The board approved a revision in its contract with Tam, according to a regulatory filing yesterday. It provides for a 10 percent cut in prices for tickets it buys from Tam and a 20 percent drop in prices it charges the parent company for frequent-flyer points, Banco BTG Pactual SA wrote in a note.

“The revision’s impact is encouraging,” analyst Rodrigo Goes wrote. The change should reduce nominal income in business with Tam, while increasing “considerably” profitability from financial institutions and other partners, provided Multiplus is able to maintain stable air miles prices for them.

Revenue could fall 2.5 percent while earnings before interest, taxes, depreciation and amortization and earnings per share could rise 20 percent and 25 percent, respectively, Goes wrote.

Tam’s board of directors hasn’t yet approved the proposed contract changes.

--Editors: Richard Richtmyer, Brendan Walsh

To contact the reporter on this story: Jose Sergio Osse in Sao Paulo at

To contact the editor responsible for this story: David Papadopoulos at Helder Marinho at

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