<PAGE>
* Confidential treatment has been requested for portions of this exhibit.
  The copy filed herewith omits the information subject to the confidentiality
  request. Omissions are designated as "*". A complete version of this exhibit
  has been filed separately with the Securities and Exchange Commission.

                                                                    Exhibit 10.3


                        TAY ENGINE MAINTENANCE AGREEMENT

                            dated September 14, 2000

between

TAM - Transportes Aereos Regionais S.A.
Av. Jurandir, 856
Aeroporte - CEP 04072-000 Sao Paulo
Brazil

acting for and on behalf of itself or any other subsidiary or affiliate of TAM -
Transportes Aereos Regionais

- hereinafter collectively referred to as "Operator" -

and

MTU Motoren- und Turbinen-Union Munchen GmbH
Dachauer Strasse 665
80995 Munchen
Germany

- hereinafter referred to as "MTU-M" -

- Operator and MTU-M hereinafter collectively referred to as the "Parties" -

<PAGE>

                                                                          Page 2


TABLE OF CONTENTS

<TABLE>
<S>           <C>
RECITAL

Clause 1      DEFINITIONS
Clause 2      SCOPE OF SERVICES
Clause 3      RECORDS AND STANDARDS
Clause 4      DELIVERY
Clause 5      TURNAROUND TIMES AND EXCUSABLE DELAY
Clause 6      ORDER PROCESSING
Clause 7      REJECTED PARTS
Clause 8      CHARGES
Clause 9      PAYMENT
Clause 10     TAXES, DUTIES AND CUSTOMS FEES
Clause 11     SUBCONTRACTING
Clause 12     WARRANTY
Clause 13     LIABILITY
Clause 14     MISCELLANEOUS
Clause 15     DURATION AND TERMINATION
Clause 16     REPRESENTATIONS AND WARRANTIES
Clause 17     LAW AND ARBITRATION
Clause 18     NOTICES
Appendix Al   ENGINE(S)
Appendix A2   ACCESSORIES
Appendix B    CHARGES
Appendix C    ESCALATION FORMULAE
Appendix D    AIRWORTHINESS AUTHORITIES APPROVALS
Appendix E    PARENT COMPANY GUARANTEE
</TABLE>

<PAGE>

                                                                          Page 3


RECITAL

<TABLE>
<S>           <C>
WHEREAS       Operator requires maintenance, refurbishment, repair and
              modification services with respect to Engines (as hereinafter
              defined).

WHEREAS       MTU-M acknowledges and agrees that any subsidiary or affiliate of
              TAM - Transportes Aereos Regionais S.A. may from time to time
              operate the Engines and may therefore utilise the services
              specified in this Agreement, in its own name.

WHEREAS       MTU-M is willing to perform or cause to be performed such services
              based upon a staggering and removal plan for the Engines to be
              mutually agreed between the Parties and taking into account
              MTU-M's recommendations.

WHEREAS       Operator and MTU-M intend to meet in reasonable intervals
              (approximately twice per year) to consult on the technical and
              organizational aspects of this Agreement.

WHEREAS       Operator will * place purchase orders for Services on the Engines
              with MTU-M and MTU-M will accept the same, in each case, subject
              to the terms and conditions of this Agreement.
</TABLE>

NOW THEREFORE, in consideration thereof and reliance on the mutual promises
given herein, the Parties hereto agree as follows:

<PAGE>

                                                                          page 4


CLAUSE 1  DEFINITIONS

          Within the scope of this Agreement, unless otherwise individually
          stipulated, the following definitions shall apply:

     1.1  Accessories

          The Engine related components listed in Appendix A2.

     1.2  AOG

          "Aircraft on Ground" indicates that an aircraft is unable to continue
          or be returned to revenue service until appropriate corrective action
          is taken.

     1.3  CSLV

          The number of cycles an item of Supplies has completed since last Shop
          Visit.

     1.4  CSN

          The number of cycles an item of Supplies has completed since
          manufacture.

     1.5  DAC Brasil

          The Brasilian airworthiness authority, or any successor organization
          thereof.

     1.6  Days

          Any calendar days.

     1.7  Domestic Object Damage or DOD

          Damage to any portion of the Engine by a domestic object from the
          Engine, such as bolts, brackets, airfoils etc.

     1.8  Effective Date

          Shall have the meaning set forth in Clause 15.1.

     1.9  Engine(s)

          Each TAY650-15 engine listed in Appendix A, subject to additions or
          deletions as may be specified by Operator and notified in writing to
          MTU-M from time to time.

<PAGE>

                                                                          page 5


     1.10 Engine Flight Hour (EFH)

          The cumulative number of airborne hours in operation of an Engine
          computed from the time an aircraft leaves the ground until it touches
          the ground at the end of the flight.

     1.11 Fixed Prices

          The fixed prices relating to the performance of the Services as set
          out in Appendix B.

     1.12 Flight Cycle

          A completed Engine thermal cycle including the application of take off
          power.

     1.13 Foreign Object Damage or FOD

          Damage to any portion of the Engine caused by any object other than an
          integral part of the Engine including but not limited to an impact or
          ingestion of birds, stones, hail and/or runway, taxiway or apron
          gravel and for the avoidance of doubt excluding DOD.

     1.14 Incoterms

          Incoterms 2000 plus later amendments as published by the I.C.C. Paris
          valid at the time of conclusion of this Agreement.

     1.15 Life Limited Part

          Any Part which is admitted by the manufacturer for a defined service
          life.

     1.16 Line Maintenance

          Routine checks, inspections and rectification of malfunctions
          performed en route and at base stations during transit, turnaround or
          night stop.

     1.17 Module

          "Major Engine Build Group" as specified in ATA Chapter 72 of the OEM's
          illustrated parts catalogue.

     1.18 MTU-M

          Shall also mean any company of the MTU group of companies.

<PAGE>

                                                                          page 6


     1.19   Operator

            Shall also mean any affiliate or subsidiary of TAM - Regionais S.A.
            from time to time.

     1.20   Operator Owned Part/Module

            Any Operator owned Repair Part or Module used during Work in order
            to expedite the Turnaround Time.

     1.21   Original Equipment Manufacturer (OEM)

            Rolls-Royce plc (P.O. Box 31, Derby DE24 8BJ, England), or any
            successor thereof.

     1.22   Part

            Any part of an Engine.

     1.23   Pool Parts/Modules

            All Parts/Modules required in replacement of Parts/Modules for which
            the Repair time exceeds the applicable Turnaround Time.

     1.24   Purchase Order

            An order stating that it is subject to the terms and conditions of
            this Agreement issued by Operator to MTU-M and including:

            a)   The Purchase Order number to be referenced to in all invoices
                 and other correspondence related to the Work under such
                 Purchase Order;

            b)   A statement of or reference to the applicable Work Statement;

            c)   Return delivery instructions, including packaging and shipping.

     1.25   Rejected Part

            Any item removed by MTU-M from a Module or Engine and consequently
            replaced by a Part.

     1.26   Repair Part

            Any Part which is repaired to serviceable condition.

<PAGE>

                                                                          page 7


     1.27   Services

            All Work in:

            - Maintenance          Those actions required for restoring or
                                   maintaining Supplies in serviceable
                                   condition, including servicing, repair,
                                   modification, overhaul, inspection and
                                   determination of condition.

            - Modification         Services agreed upon between MTU-M and
                                   Operator, which are based upon a
                                   manufacturer's Service Bulletin.

            - Testing              As defined in the applicable Engine
                                   manufacturer's Overhaul and Repair manual as
                                   well as additional Testing if required by the
                                   MTU-M test procedures.

            - Overhaul             The Work necessary to return Modules or Parts
                                   to the highest standard specified in the
                                   relevant manual.

            - Refurbishment        The Work necessary to restore an Engine or
              (Engine, Module)     Module to ensure that cost effective
                                   operation will be achieved.

            - Repair               To make an Engine or Modules serviceable by
                                   replacing or processing failed or damaged
                                   Parts.

            - Restoration          The Work (on/off the aircraft) necessary to
                                   restore Modules or Parts to a specific
                                   standard.

            - Rework               To carry out Work on uninstalled Modules or
                                   Parts.

            - Replacement          The action whereby a Module or Part is
                                   removed and another Module or Part is
                                   installed in its place for any reason.

            - Inspection           An examination of Supplies against a specific
                                   standard.

            - Midlife Inspection   The Work necessary to restore an Engine at
                                   approximately 12,000 Flight Cycles since new
                                   or last Overhaul, as applicable, with the
                                   objective to enable the Engine to be released
                                   for uninterrupted service until the next
                                   Overhaul.

<PAGE>

                                                                          page 8


     1.28   Service Bulletin (SB)

            Any document issued by the OEM to notify Operator and MTU-M of
            recommended Modifications, substitution of Parts, special
            Inspections/checks, reduction of existing life limits or
            establishment of first time life limits and conversion from one
            Module to another.

     1.29   Shop Handling Guide

            The shop handling guide agreed by the Parties pursuant to Clause 2.3
            (iii).

     1.30   Shop Visit

            The performance of Services at MTU-M's facilities or the facilities
            of any subcontractor on an Engine or Module which entails either the
            separation of pairs of major mating engine flanges or the removal of
            a disc, hub, or spool.

     1.31   Supplies

            Engines, Modules, Parts or any other items of associated equipment
            delivered to MTU-M.

     1.32   TSLV

            The time expressed in operation hours an item of Supplies has
            completed since last Shop Visit.

     1.33   TSN

            The time expressed in operation hours an item of supplies has
            completed since manufacture.

     1.34   Turnaround Time (TAT)

            The agreed time of performance of Services in respect of an Engine
            by MTU-M. Unless otherwise agreed and subject to the provisions of
            Clause 5 of this Agreement, the TAT shall commence the Day after
            receipt of an Engine or Module by MTU Maintenance do Brasil Ltda.
            ("MTU Brasil") and ends upon redelivery of such Engine or Module
            according to Clause 4. For purposes of TAT an Engine shall be deemed
            delivered on the Scheduled Delivery Date (as defined in Clause 5.2)
            if such Engine is removed from wing, mounted to a transportation
            stand ready to be shipped from Operator's facility together with the
            documentation to be furnished to MTU-M pursuant to Clause 3.3.

     1.35   Work

            The performance of Services according to the terms and conditions of

<PAGE>

                                                                          page 9


          this Agreement.

     1.36      Work Statement

               Statement or statements being part of the Purchase Order which
               include(s) the Work requirements applicable to Engines, Modules
               or Parts. The Work Statement(s) shall include details relating
               to:

               -    reason for Shop Visit

               -    disassembly and re-assembly requirements

               -    Inspection requirements

               -    Repairs to be accomplished

               -    Modification standard to be accomplished

               -    Testing,

               and any other information notified by MTU-M to Operator with five
               (5) Days prior notice from time to time.

<PAGE>

                                                                         page 10


Clause 2 SCOPE OF CONTRACT

     2.1       During the term of this Agreement, Operator agrees to place *
               purchase orders for off-wing services required on all Engines,
               Modules and Parts owned or operated by it * on MTU-M subject to
               the provisions of Clauses 5.7 and 15.3.

     2.2       MTU-M agrees to accept all Purchase Orders and will perform, or
               cause to be performed, all Services on Engines, Modules and Parts
               subject to the terms and conditions of this Agreement.

     2.3       All Services will be performed in accordance with

               (i)  the airworthiness requirements of the FAA and shall comply
                    with applicable requirements of the DAC Brasil from time to
                    time;

               (ii) the Engine manufacturer's overhaul and repair manuals as
                    supplemented by MTU-M's/MTU-M's subcontractors' procedures
                    which procedures shall be agreed and approved by Operator;
                    and

               (iii) a shop handling guide to be mutually agreed between the
                    Parties within four (4) weeks following an initial meeting
                    between Operator and MTU-M to be scheduled within ten (10)
                    Days of signature of this Agreement by the Parties.

               Within one (1) year of the Effective Date, all Services will also
               be performed in accordance with the airworthiness requirements of
               the Joint Aviation Authorities (the "JAA").

     2.4       Scope of Services

     2.4.1.    Services covered by the * shall be limited to the following
               services:

     2.4.1.1   Disassembly, cleaning, Inspection and rebuilding of Engines;

     2.4.1.2   Rework of Engines, Modules and Parts which have become
               unserviceable due to normal wear and tear to a serviceable
               condition;

     2.4.1.3   Engine Testing according to the specifications of the OEM, or
               other relevant manufacturer and MTU-M;

     2.4.1.4   Technical support including Engineering Services when requested
               by Operator, provided the following Engine documentation is made
               available to MTU-M:

               -    Log book or equivalent

               -    Life of all Life Limited Parts

               -    In-flight readings of all parameters of the Engine;

<PAGE>

                                                                         page 11


     2.4.1.5   Replacement of Life Limited Parts upon expiration of the approved
               Life Limit as outlined in Appendix B;

     2.4.1.6   Administration of warranty claims on Engines, Modules, principle
               maintenance assemblies and Parts on behalf of Operator upon
               receipt of proper documentation from Operator;

     2.4.1.7   Services necessary to render Engines serviceable, when damaged by
               FOD up to a maximum amount of *

     2.4.1.8   Repair Services on Accessories listed in Appendix A2 during Shop
               Visit and installed on the Engine at the time of delivery of such
               Engine to MTU-M's facility; and

     2.4.1.9   *

     2.4.2.    * ("Additional Services"):

     2.4.2.1   Performance of Modifications,

               *

     2.4.2.2   Incorporation of Modifications other than those specified in the
               Shop Handling Guide, if specifically requested by Operator;

     2.4.2.3   Performance of Services related to campaign changes and / or AD -
               Notes;

     2.4.2.4   Repairs (i) caused by Operator's failure to comply with the
               instructions given in the applicable operation and maintenance
               manuals, (ii) otherwise caused by Operator's negligence, or (iii)
               necessitated by accident or catastrophic failure;

     2.4.2.5   Repairs on Accessories not listed in Appendix A2 as well as
               Accessories not installed on the Engine at the time of delivery
               of such Engine to MTU-M's facility;

<PAGE>

                                                                         page 12


     2.4.2.6   (i) Any replacement material for material scrapped or rejected
               during any Repair, Midlife Inspection or Overhaul event, not
               resulting from normal wear and tear, (ii) services related to a
               modification standard deviating from the standards required per
               the mutually agreed Shop Handling Guide, or (iii) any replacement
               material for material scrapped or rejected in consequence of OEM
               design deficiencies on either original equipment or replacement
               Parts, incorporated as per OEM specifications and requirements
               per the applicable manual, modifications, service bulletins and
               AD Notes; and

     2.4.2.7   Services necessary to render Engines serviceable, when damaged by
               FOD, exceeding an amount of * Only the FOD related Services in
               excess of * will be charged.

     2.5       Operator's Responsibility

     2.5.1     In case of defects or deficiencies in the design or manufacture
               of the Supplies by the OEM Operator agrees to exercise all
               commercially reasonable endeavours to assist and allow MTU-M to
               recover from the OEM all cost and expenses associated with any
               measure taken by MTU-M to rectify or repair such defects and
               deficiencies.

     2.5.2     Operator shall use all commercially reasonable endeavours to
               increase the on-wing time of the Engines under consideration of
               reliability and costs in cooperation with MTU-M. Moreover,
               Operator agrees to cooperate with MTU-M with respect to the
               determination of the optimum removal date for each eligible
               Engine. For the avoidance of doubt it is expressly agreed by the
               Parties that nothing contained herein shall limit or shall be
               construed as limiting Operator's airworthiness responsibilities
               (which shall be paramount).

     2.5.3     Operator will report to MTU-M by the tenth (10th) day of each
               month the Engine Flight Hours (EFH) of the preceding month for
               each Engine.

     2.5.4     Operator will report to MTU-M each month the Engine on-wing data
               in order to allow MTU-M to evaluate those data by MTU-M's
               engineering personnel.

     2.5.5     Operator agrees to assign all assignable and unexpired
               maintenance related guarantees, warranties or other remedies
               specified in the general terms agreement between Operator and the
               OEM regarding the sale of the Engines, in particular any of the
               following:

               -    New Engine Guarantee

               -    Shop Visit Rate Guarantee

               -    EGT Guarantee

               -    Campaign Change Allowance

               -    New Part Warranty

               -    FOD Guarantee

               -    Spare Parts Warranty

<PAGE>

                                                                         page 13


               -    Spare Engine Availability

               -    Hot/Cold Section Guarantee

               -    TAY630-15 Maintenance Cost Guarantee

               Operator agrees to use all commercially reasonable endeavours to
               support MTU-M in the enforcement of any assigned rights as
               described above.

               If these guarantees, warranties or other remedies cannot be
               assigned, Operator shall raise claims under said non-assigned
               guarantees, warranties or other remedies and shall to the extent
               recovered under the relevant warranties/guarantees transfer the
               economic benefit to MTU-M.

     2.5.6     Operator shall maintain a spare engine level of * of its
               operating Engines *

     2.6       Should it become necessary for the proper performance to carry
               out Services substantially different from those specified in the
               Work Statement, MTU-M will promptly notify Operator (in
               sufficient detail) of the nature and extent of such Services and
               seek Operator's authorization to carry out such different
               Services. Operator shall respond in writing (to include telex and
               telefax) to such request within * hours. The Turnaround Time
               will be increased by the additional time that is needed and
               verified by MTU-M due to the delay in question. Any impact on the
               agreed TAT resulting from such delay will be promptly advised by
               MTU-M (with supporting evidence if requested).

               In the event Operator withholds the authorization or direction
               for the necessary alteration of the Work Statement for a period
               exceeding *, MTU-M may remove the Engine, Module or Part from the
               production line.

     2.7       In recognition of Operator's and MTU-M's desire to stabilize the
               financial expectations resulting from this Agreement, the Parties
               agree to meet annually to discuss and reconcile the overall
               technical and business aspects of this Agreement.

     2.8       Operator acknowledges that MTU-M may perform its obligations
               under this Agreement by contracting a third party sub-contractor
               to undertake any Work requested to be performed. Operator shall
               provide commercially reasonable assistance to MTU-M at the cost
               and expense of MTU-M during an initiation period of * months
               following the Effective Date to have the Work required under this
               Agreement performed by other qualified parties as subcontractors
               to MTU-M.

     2.9       Operator agrees that it will use reasonable commercial efforts to
               assist MTU-M in purchasing spare parts for Operator's Engines
               from the

<PAGE>

                                                                         page 14


               OEM and that such spare parts will be supplied by the OEM to
               MTU-M on MTU-M's account.

     2.10      Operator agrees that it will provide MTU-M with all information
               and technical data, and any other assistance which may be
               reasonably requested by MTU-M.

               *

<PAGE>

                                                                         page 15


CLAUSE 3 RECORDS AND STANDARDS

      3.1      MTU-M will maintain or cause to be maintained throughout the
               duration of this Agreement a service organization and facilities
               for Services on Engines, Modules, Parts and Accessories in
               accordance with the respective manufacturer's manuals and other
               applicable documentation. These facilities shall be approved
               and/or accepted by the FAA and the DAC Brasil. Within one (1)
               year of the Effective Date, these facilities shall also be
               approved and/or accepted by the JAA.

      3.2      Operator shall provide to MTU-M its General Maintenance Manual
               and all pertinent parts of its Maintenance Policy and Procedure
               Manual. Moreover, Operator shall either itself furnish to MTU-M,
               or cause the OEM to furnish to MTU-M the following technical
               information and documentation regarding the Repair, Overhaul and
               Maintenance of the Engines, as well as any revisions thereto, and
               all other means required to enable MTU-M to maintain, repair and
               overhaul Operators Engines and Accessories.

               -    Illustrated Parts Catalogue

               -    Inspection Manual

               -    Maintenance Manual (TNSM)/Engine Manual

               -    Power Plant Build Up Manuals of the relevant aircraft Engine
                    application

               -    Component Maintenance Manuals

               -    Tooling and Facility Catalogue.

               -    NDT Manual

               -    Service Bulletins

               -    All Engine related aperture cards

               -    Blue prints if necessary and as permitted

               -    Proprietary OEM information as permitted.

      3.3      In respect of individual Engines or Modules, Operator shall
               provide to MTU-M all documents and supply all information within
               Operator's possession or control necessary to establish the
               extent of Services required. This includes:

      3.3.1    The technical documentation (or any other applicable
               documentation):

      3.3.2    Any required variations to the applicable standard Work
               specification including Modifications which are required to be
               embodied in the Engine or Module during the performance of Work.
               Further variations to any specific Work on an Engine or Module
               will be agreed between MTU-M and Operator;

      3.3.3    Any further information concerning the condition of the Engine or
               Module;

<PAGE>

                                                                         page 16


      3.3.4    Life of all Life Limited and/or time tracking Parts, Life Limited
               Parts list;

      3.3.5    Module tracking list;

      3.3.6    AD-Note status;

      3.3.7    Service Bulletin status and Service Bulletin requirements (may be
               included in workscope);

      3.3.8    Operator's special requirements;

      3.3.9    Removal reason;

      3.3.10   Installed powerplant accessory component sheet, a listing by
               nomenclature of each accessory component, Part number, quantity,
               time and cycles and serial number (EBU List Accessory
               List/Accessory Life List);

      3.3.11   Log book or equivalent and Part (Module) cards;

      3.3.12   Engine/Part installation data records;

      3.3.13   Purchase Order; and

      3.3.14   Trend Monitoring and In-flight readings (as mutually agreed upon)
               of all Engine parameters on that specific Engine from its last
               flight prior to removal.

      3.4      MTU-M will ensure that the record system will include
               documentation of all Services performed, Rework operations
               required and disposition of all Parts replaced. MTU-M agrees to
               keep all records herein described in form and detail sufficient
               for accurate and expeditious administration of the Agreement and
               shall furnish to Operator the following records and reports, as
               applicable for each Shop Visit:

      3.4.1    Engine, Module, Part or accessory serial numbers;

               The general exterior condition of the Engine, Module or Part and
               shipping conveyance;

               List of the missing and/or damaged external Parts; and
               Borescope/chamberscope results, as applicable.

      3.4.2    The following information for each cycle controlled and Life
               Limited Part installed during a Shop Visit:

               a) Nomenclature;

               b) Part number;

               c) Serial number;

               d) Total operating cycles and hours accumulated to date;

               e) Total cycles remaining;

               f) Major maintenance events (date, TSN, CSN) if available.

<PAGE>

                                                                         page 17


      3.4.3    A list of all Life Limited Parts determined to be scrap
               identified by Module installed, Part number, quantity and reason
               for scrappage.

      3.4.4    A list by nomenclature of each accessory component, Part number,
               quantity, Part time and serial number.

      3.4.5    One (1) copy of the applicable engine and/or accessory test logs.

      3.4.6    A report summarizing condition detected subsequent to Engine
               disassembly.

      3.5      MTU-M shall be required to complete and properly execute, or
               cause to be completed and properly executed, Federal Aviation
               Administration (FAA) Form 8130-3, and for major repairs FAA Form
               337, or its equivalent for Supplies repaired, modified and/or
               tested by MTU-M or its subcontractors under this Agreement.

               MTU-M undertakes to store all records provided to it by Operator
               hereunder safely as the property of Operator and to return the
               same to Operator upon request or expiry of this Agreement (in
               respect of an Engine).

               Upon the request from Operator accident and damage reports,
               including pictures and laboratory investigation results will be
               issued by MTU-M.

<PAGE>

Clause 4 DELIVERY

     4.1  MTU-M shall appoint MTU Brasil to handle on behalf of Operator
          relevant import/export procedures related to the transactions
          contemplated in this Agreement, except for the payment of any Taxes
          (as defined in Clause 10) due upon such import/export transactions,
          which shall subject to the provisions of Clause 10 be the entire and
          sole responsibility of Operator. In this regard, the parties agree and
          acknowledge that Operator itself shall be the importer/exporter of
          record of all Engines, Modules, Parts and other items imported
          into/exported from Brasil under this Agreement. Operator agrees that,
          upon request of MTU-M or MTU Brasil, Operator will timely do, execute,
          acknowledge and/or deliver and/or to cause to be done, executed,
          acknowledged and/or delivered, all such acts and documents as may be
          required to allow MTU Brasil to conduct all relevant imports/exports
          for and on behalf of Operator. Delivery of Engines, Modules, Parts and
          other items requiring Work to MTU Brasil shall be the obligation of
          Operator.

     4.2  Operator shall advise MTU-M of its intention to deliver Engines,
          Modules, Parts and other items no less than * prior to their dispatch.

     4.3  No less than two (2) Days prior to each such dispatch of an Engine,
          MTU-M shall advise Operator of the sub-contractor where each such
          Engine will be serviced. If there is no sub-contractor willing to
          perform the Work, MTU-M may at its option either (i) provide Operator,
          subject to Clause 2.5.6, with a leased engine in case Operator is in
          zero spare situation for as long as the relevant Engine is repaired,
          or (ii) allow Operator to have the Work performed by the closest DAC
          approved OEM maintenance facility able to perform such Work within no
          less than the Turnaround time set forth herein. In case MTU-M elects
          to supply a leased engine, (a) such lease shall be subject to a
          separate lease agreement, and (b) MTU-M shall bear the cost of
          providing such lease engine (including, for the avoidance of doubt,
          any cost incurred in delivering or re-delivering such leased engine)
          except that any maintenance reserves for such leased engines shall be
          borne by Operator. In case MTU-M elects to allow Operator to have the
          Work performed by the closest DAC approved OEM maintenance facility
          able to perform the Work, MTU-M will bear the cost of any such Work
          performed by such OEM maintenance facility (including, for the
          avoidance of doubt, transportation cost, taxes and fees) that exceed
          US Dollars * as may be escalated by MTU-M in accordance with Appendix
          C hereof, per Engine Flight Hour since last scheduled Shop Visit
          (Midlife Inspection or Overhaul, as applicable) as follows:

               MTU-M shall bear the cost exceeding * (as escalated in accordance
               with item 3 of Appendix C) with respect to a Midlife Inspection,

<PAGE>

               and the cost of an Overhaul exceeding the amount determined in
               accordance with the following formula:

               Engine Flight Hours operated since last Overhaul (or, in case of
               new engines, since manufacture) multiplied by * as escalated in
               accordance with item 3 of Appendix C less * for the Midlife
               Inspection (as escalated in accordance with item 3 of Appendix C)
               preceding the current Overhaul Shop Visit.

          Such additional costs shall be paid to Operator without deductions on
          or prior to the date Operator is required to settle the invoice of the
          OEM maintenance facility in respect of such Work. Notwithstanding
          anything herein to the contrary, the obligations of MTU-M contained in
          this Clause 4.3 shall terminate three (3) years after the Effective
          Date (i.e. on July 1, 2003).

     4.4  Risk of loss or damage shall be borne by Operator until arrival at MTU
          Brasil.

     4.5  Upon receipt of Engines, Modules or Parts to MTU Brasil (as evidenced
          by signature of an acknowledgement of delivery) risk of loss or damage
          shall pass to MTU-M.

     4.6  After completion of Work, MTU-M shall be obliged to redeliver Engines,
          Modules, Parts and other items to Operator at MTU Brasil and give
          notice to Operator of such redelivery in due course of time. Risk of
          loss or damage shall remain with MTU-M until the relevant Engines,
          Parts or Modules are received by Operator at ist facility as evidenced
          by signature of an acknowledgement of receipt by Operator.

<PAGE>

CLAUSE 5 TURNAROUND TIME (TAT) AND EXCUSABLE DELAY

     5.1  Prior to delivery of an Engine, Module, Part or other item to MTU-M
          and after inspection by MTU-M, MTU-M and Operator shall agree on a
          reasonable TAT for such Engine, Module or Part and upon delivery of an
          Engine to MTU-M and after Inspection by MTU-M, MTU-M shall perform its
          Services within the following TAT:

          MTU-M will use commercially reasonable efforts to Derform Work on a
          complete Engine within a TAT of * If a shorter TAT will have to be met
          on certain occasions upon request of Operator, MTU-M will use
          commercially reasonable efforts to try to comply with such request and
          shall keep Operator informed, if requested by Operator, of the TAT.

     5.2  Compliance with an agreed TAT requires * advance notification by
          Operator that an Engine or Module is being or will be shipped for
          Services ("Scheduled Delivery Date"). In the event that MTU-M does not
          receive such advance notification (e.g. in the event of an unscheduled
          Engine removal), the TAT shall commence with the start of Services on
          the Engine or Module but not later than * after receiving the Engine
          or Module at MTU-M including the documentation listed in Clause 3.3.

     5.3  Any technical requests from MTU-M to Operator which will affect the
          TAT have to be answered by Operator within * provided always that if
          such a request is received by Operator later than 4 p.m. (Sao Paulo
          time) on a Friday, Operator's response shall be received by MTU-M no
          later than 6 p.m. (Sao Paulo time) of the following Monday. If no
          replies are received within that time, the TAT will be increased by
          the additional time which is needed and verified by MTU-M due to the
          delay in question. Any impact on the TAT resulting from this decision
          will be advised by MTU-M together with supporting evidence of any
          delay in the TAT.

     5.4  MTU-M shall not be liable for exceeding the TAT due to reasons
          contained in Clause 5.7 - Excusable Delays.

     5.5  MTU-M shall promptly notify Operator when Excusable Delays occur or
          impending delays are likely to occur and shall continue to advise
          Operator of new shipping schedules and/or changes thereto.

<PAGE>

                                                                         page 21


     5.6   If the actual TAT in respect of an Engine exceeds the TAT
           referred to in this Clause 5 (as such period maybe extended
           pursuant to this Agreement) and if Operator is in, or during
           such event of delay enters into, a zero spare engine situation,
           Operator may as its sole remedy for such delay (i) require MTU-M
           to have a spare engine delivered to Operator (at Operator's
           facility in Sao Paulo) within * of MTU-M being notified of
           such zero spare engine situation, or failing which (ii) claim
           damages from MTU-M in an amount not exceeding the cost of
           leasing an engine until such time as the delayed Engine is
           delivered to Operator (including, for the avoidance of doubt,
           any cost incurred in delivering or re-delivering such leased
           engine). Any maintenance reserves * to be paid for such leased
           engine shall be borne by Operator. Such claim is only permitted
           (i) if Operator has maintained an appropriate quantity of spare
           Engines as specified in Clause 2.5.6, and (ii) is furthermore
           limited to the costs of a lease Engine until the Engine so
           delayed is redelivered to Operator. In the event MTU-M provides
           a lease Engine, such lease shall be subject to a separate lease
           agreement.

     5.7   The party actually performing Services hereunder (the "Service
           Provider"), i.e. MTU-M (if performing Services) or MTU-M's
           subcontractors (if performing Services), shall not be charged
           with any liability for delay or non-delivery when due to any of
           the following events ("Excusable Delays")

           (i)  delays of Operator, single source suppliers of the Service
                Provider, or the OEM;

           (ii) acts of God or the public enemy, fires, riots;

           (iii) compliance in good faith with any applicable foreign or
                domestic governmental regulations or order whether or not
                it proves to be valid or invalid provided that compliance
                with any governmental or domestic regulations or orders in
                Germany, Brazil (or where the Services are to be provided
                by a subcontractor, the jurisdiction of such subcontractor)
                which the Service Provider ought reasonably to have been
                aware of and ought reasonably to have complied with shall
                not constitute an Excusable Delay;

           (iv) labor disputes at companies other than MTU-M or any of its
                affiliates;

           (v)  unusually severe weather or

           (vi) any other cause beyond the control of the Service Provider
                which could not reasonably be foreseen.

           To the extent the occurrence of an Excusable Delay causes actual
           delay to the Turnaround Time or renders them in part or whole
           impossible, the time for the performance shall be extended for
           as many Days beyond the agreed TAT as is required to obtain
           removal of such causes.

<PAGE>

                                                                         page 22


           This provision shall, however, not relieve MTU-M from using its
           best efforts to avoid or remove such causes and to continue
           performance with reasonable dispatch whenever such causes are
           removed. In case that upon occurrence of an Excusable Delay it
           is evident that the resulting impact on the Service Provider is
           such as to delay the performance of Services on the Engines,
           Modules and Parts then undergoing Services at the Service
           Provider (hereinafter the "Affected Items") for more than *
           Operator shall have the right to either (i) terminate the
           Purchase Order relating to the Services for the Affected Items
           to the extent the Services cannot be completed by the Service
           Provider due to such Excusable Delay and take possession of the
           Affected Items in the possession of the Service Provider or
           shipping agents and cause such Services to be completed by
           another maintenance provider without any obligation on the
           Service Provider's part for any Services so performed by another
           maintenance provider, or (ii) cause MTU-M to have the Services
           provided by another Service Provider not afected by the
           Excusable Delay.

           For the avoidance of doubt it is expressly agreed that once such
           impact on MTU-M is removed, Operator will continue to send all
           Engines, Modules and Parts needing Services to MTU-M.

<PAGE>

                                                                         page 23


CLAUSE 6 ORDER PROCESSING

     6.1   Operator will provide MTU-M with a Purchase Order number before
           commencement of Services.

     6.2   In the event that Operator delivers an incomplete Engine or
           Module, MTU-M will promptly following discovery of any such
           deficiency inform Operator in writing of the missing Parts. In
           case Operator does not react within 1 * upon such information,
           the TAT may be increased accordingly. Should Operator promptly
           request to add the missing Parts, MTU-M will use commercially
           reasonable efforts to deliver the requested Parts together with
           the Engine or Module.

           Requested accessories which are not available at the date of
           redelivery of an Engine or Module will be sent separately to
           Operator when such accessories become available.

     6.3   In case of Reworks MTU-M shall not perform uneconomical Rework,
           i.e. when the costs for the Rework of a Part exceed * of the
           then current list price for the respective new Part. In such
           case MTU-M shall replace the removed Part by a new one and
           charge the price for it according to Appendix B.

<PAGE>

                                                                         page 24


CLAUSE 7 REJECTED PARTS

     All Parts removed during Work and determined by MTU-M as rejected shall
     become MTU-M's property.

     All Parts removed during Work and determined by MTU-M as scrap will be held
     for Operator's review and disposition. Such disposition by Operator shall
     occur twice per calendar year. If such disposition for any such Parts is
     delayed for any reason whatsoever for more than *, it shall be conclusively
     deemed that Operator has transferred title to any such Parts to MTU-M, and
     MTU-M may dispose of such Parts at its sole discretion.

<PAGE>

                                                                         page 25


CLAUSE 8 CHARGES

     For all Services Operator shall pay the sums charged in accordance with
     Appendix B subject to the Escalation Formula contained in Appendix C.
     Engines delivered for the performance of Services in a given year shall be
     invoiced at the charges applicable to such year.

<PAGE>

                                                                         page 26


CLAUSE 9 PAYMENT

     9.1.1   For Services' * stipulated in Appendix B, MTU-M will render
             invoices * following redelivery of an Engine in accordance with
             Clause 4.6.

     9.1.2   For Services * stipulated in Appendix B, MTU-M shall render an
             initial invoice within * after completion of Work. The final
             invoice shall be issued not later than * after completion of Work.

     9.2     Invoices shall be issued in US-Dollars and promptly forwarded to
             Operator in duplicate.

     9.3     Unless otherwise provided herein, all invoices shall be
             payable(within * (the due date) after date of issue) all payments
             shall be made in * in US-Dollars on MTU-M's bank account with *
             Operator shall promptly furnish copies of the documents evidencing
             wire transfer of all such payments to the attention of the
             Financial Director, MTU-M.

     9.4     In case of Excusable Delays, MTU-M shall be entitled to payment of
             an adequate and reasonable partial payment for Services already
             rendered as may be agreed by MTU-M and Operator on a case by case
             basis.

     9.5     If Operator is in default of any payment obligation, MTU-M is
             without reminder and prejudice to any other rights entitled to
             charge interest at * any outstanding sum, starting from the due
             date of payment until the date payment is received.

     9.6     If Operator is in default of any payment obligation, MTU-M may
             postpone the performance of its own obligations under this
             Agreement until such payment is made.

     9.7     Operator is not entitled to withhold payments or to make any
             deductions whatsoever unless accepted by MTU-M or affirmed by an
             arbitral ruling under Clause 16 or a judgment of a court of
             competent jurisdiction.

<PAGE>

                                                                         page 27


     9.8  *

     9.9  MTU-M shall be entitled to a general lien on any of the Supplies
          delivered by Operator which are in the care, custody and control of
          MTU-M under this Agreement together with any amounts due to MTU-M from
          Operator which have arisen with respect to respect to other or
          previous Services performed by MTU-M for Operator. Such provision
          shall also apply if any Supply owned or leased by Operator passes into
          the hands of MTU-M at a later date and MTU-M has claims out of the
          business relationship at the time the lien is claimed.

<PAGE>


                                                                         page 28

CLAUSE 10 TAXES, DUTIES AND CUSTOMS FEES

     10.1 MTU-M shall pay all Taxes (as defined below) levied on either Party by
          authorities in the Federal Republic of Germany.

     10.2 Any and all Taxes levied by any authority in Brazil on MTU-M or
          Operator, including, but not limited to, the Import Duty (ID) and Tax
          on Industrialized Products (IPI) levied on the importation of goods
          into Brazil, shall be borne by Operator, except for (a) the Income Tax
          Withholding (Imposto de Renda na Fonte - "Current Income Tax"), which
          shall be withheld by Operator from amounts due to MTU-M under this
          Agreement, if thus required by Brazilian law; and (b) the Tax on
          Transactions Related to the Circulation of Goods and Interstate and
          Intermunicipal Transport and Communication Services ("ICMS"), if any,
          due upon the importation of new Engines, Modules and Parts into Brazil
          in connection with MTU-M's performance of its obligations under this
          Agreement. In this regard, MTU-M shall grant Operator a rebate on the
          charges due by Operator under this Agreement in the exact amount of
          the ICMS actually paid by Operator (if any) upon importation by
          Operator of relevant Engines, Modules and Parts into Brazil, provided
          (i) Operator evidences actual payment of such ICMS in a form
          satisfactory to MTU-M; (ii) the rate at which the ICMS is paid by
          Operator is not higher than 4%; (iii) Operator does not fail to
          benefit from any ICMS benefit (including ICMS reduction or exemption)
          that may be available; (iv) Operator is unable to and actually does
          not offset such ICMS against any Taxes due by Operator, nor directly
          or indirectly recover such ICMS in any form whatsoever; and (v) if so
          allowed by applicable regulations, upon written request of MTU-M,
          Operator promptly assigns, transfers or makes in any form available to
          MTU-M and/or any company indicated by MTU-M the ICMS credits earned by
          Operator upon the abovementioned imports. If any of the conditions set
          forth in items (i) and (iii) through (v) above is not met, MTU-M's
          obligation set forth in the immediately preceding sentence (i.e. to
          grant Operator a rebate at a rate of 4%) shall not apply.

          The Parties hereby acknowledge and agree that (i) the compensation due
          by Operator to MTU-M under this Agreement, was established assuming
          that (i) invoices issued hereunder will be issued by MTU Motoren- und
          Turbinen-Union Munchen GmbH, and (ii) the only Taxes that will levy in
          Brazil on payments by Operator to MTU Motoren- und Turbinen-Union
          Munchen GmbH in connection with the transactions contemplated in this
          Agreement are Current Income Tax and ICMS; (ii) in the event (a) the
          Current Income Tax and/or the ICMS become due at a rate higher than
          its current rate; (b) it is later determined that other Taxes are also
          due in Brazil on payments made by Operator to MTU-M in connection with
          MTU-M's performance of its obligations under this Agreement; and/or
          (c) new Taxes are Created and become due in Brazil on payments due by
          Operator to MTU-M in connection with MTU-M's performance of its
          obligations under this

<PAGE>


                                                                         page 29

          *

          For purposes of this Agreement, the term "Tax" or "Taxes" shall mean
          all federal, state, or municipal taxes, charges, fees, levies,
          imposts, duties (including import duties), tariffs, surcharges, or
          other assessments, including, without limitation, sales, use,
          transfer, gross receipts, excise, withholding or any similar charges
          or assessments and all taxes, charges, fees, levies, imposts, duties,
          tariffs, surcharges, or other assessments placed by, or replacing, any
          of the above, or other tax or governmental fee of any kind whatsoever
          directly or indirectly imposed by any governmental authority,
          including any interest or penalties or additions thereto, whether
          disputed or not.

          Taxes imposed in any other jurisdiction shall be borne by the relevant
          Party on whom such taxes are levied, provided that TAM shall not be
          responsible for any Taxes due in any jurisdiction other than Brazil in
          connection with the performance by MTU-M of its obligations under this
          Agreement.

          In the event that any Party shall be held responsible by any taxing
          authority for the collection or payment of Taxes to be borne by the
          other Party and shall be required to pay the same to such authority,
          such other Party shall reimburse the first Party the full amount of
          such payment and any expenses connected therewith upon the first
          Party's first demand therefor.

     10.3 Operator reserves the right to use its commercially reasonable efforts
          to negotiate and enter into an arrangement with the Brazilian taxing
          authorities for an exemption for the assessment and payment of import
          duties, tariffs or similar taxes imposed on any and all goods,
          material or services imported to Brazil under this Agreement.

     10.4 *

<PAGE>

                                                                         page 30


<PAGE>

                                                                         page 31


CLAUSE 11 SUBCONTRACTING

          Notwithstanding anything contained herein to the contrary, MTU-M may
          subcontract all or part of the Work to be performed by MTU-M hereunder
          to the OEM or to another qualified party to perform the type of Work
          subcontracted to it by MTU-M.

          Any subcontracting shall not release MTU-M from its obligations under
          this Agreement and MTU-M shall remain liable to Operator for the
          performance of Services under this Agreement by any subcontractor as
          if such Services were performed by MTU-M. MTU-M shall use best
          endeavours to ensure that all Work subcontracted is undertaken by
          reputable Maintenance facilities appropriately certified by all
          relevant authorities and able to perform the Services to the standard
          required of MTU-M pursuant to this Agreement. Nothing in this Clause
          will cause MTU-M to be liable for any default by a subcontractor where
          MTU-M or another subcontractor remedies that default.

          Operator shall if requested by MTU-M assist MTU-M at no cost to
          Operator in securing appropriate subcontractors for all or part of the
          Work covered under this Agreement without in any way warranting the
          ability of such third parties to perform the Services or warranting
          the quality of such Services.

<PAGE>

                                                                         page 32


CLAUSE 12 WARRANTY

     12.1   MTU-M warrants that at the time of delivery of serviced Engines the
            Services will have been performed in a skilled and workmanlike
            manner in accordance with best industry practice and in accordance
            with the requirements of this Agreement. This warranty is limited to
            MTU-M's correcting at its facilities within a reasonably prompt
            period of time and at its own cost and expense such Services as are
            shown to MTU-M's reasonable satisfaction to be defective, provided
            that the defect has arisen within * following delivery to Operator
            or the * following delivery whichever shall first occur, provided
            further that written notice of the defect is received by MTU-M
            within: * after discovery by Operator. Transportation charges for
            return of defective Engines to MTU-M and their reshipment will be
            borne by MTU-M, subject to Clause 12.7 herebelow. In the event of a
            justified warranty claim hereunder the warranty period shall be
            extended by the time required to carry out the work.

     12.2   Non-compliance of an Engine with the specified performance and
            consumption rates can only be determined and demonstrated by a test
            run at MTU-M's facilities or any test cell agreed between both
            Parties.

     12.3   MTU-M's warranty shall not apply if after redelivery by MTU-M
            Operator, its servants, agents, subcontractors or third parties have
            abused, altered or repaired the Engine or Module or have not
            operated the Engine or Module in accordance with the manufacturer's
            operating instructions or recommendations.

     12.4   If an Engine defect was caused due to the failure of a new Part
            properly installed by MTU-M, MTU-M will assign to the fullest extent
            possible the warranty granted by the manufacturer of such new part
            to Operator. In the event that the warranty related to such new Part
            cannot be assigned, MTU-M will administer and enforce the warranty
            claim against the manufacturer on behalf of Operator and pass the
            respective remedies on to Operator. In any event MTU-M's liability
            shall be limited to the extent outlined in this Clause 12 and Clause
            13 herebelow and shall apply if all attempts at judicial actions
            against the manufacturer have failed.

     12.5   MTU-M assumes no warranty for Parts supplied by Operator and
            properly installed by MTU-M.

     12.6   Within two (2) months after notification by Operator MTU-M will use
            its reasonable efforts to determine if a warranty claim can be
            accepted.

     12.7   In case Operator asserts a warranty claim according to this Clause
            12 and as a result of the investigation it is established that MTU-M
            is not liable for the defects claimed, the reasonable and properly
            incurred costs of investigation as well as any other reasonable and
            properly

<PAGE>

                                                                         page 33


            incurred costs and expenses connected with such claim shall be borne
            by Operator and due and payable upon receipt of the respective
            invoice.

     12.8   MTU-M acknowledges and agrees that it shall bear responsibility in
            accordance with this Clause 12 for any Engine defect caused due to
            Work performed by any of MTU-M's subcontractors and that Operator
            shall not be required to take any action against such subcontractor.
            The Operator agrees that the provisions of Clause 12.4 above will
            apply where the defect is caused by a new Part installed by a
            subcontractor.

     12.9   EXCLUSIVE WARRANTIES AND REMEDIES

            THE FOREGOING WARRANTIES ARE EXCLUSIVE AND ARE GIVEN AND ACCEPTED IN
            LIEU OF (i) ANY AND ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
            INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
            MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE; AND (ii) ANY
            OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN CONTRACT, TORT OR
            STRICT LIABILITY, WHETHER OR NOT ARISING FROM MTU-M's NEGLIGENCE,
            ACTUAL OR IMPUTED. THE REMEDIES OF THE OPERATOR SHALL BE LIMITED TO
            THOSE PROVIDED IN THIS AGREEMENT TO THE EXCLUSION OF ANY AND ALL
            OTHER REMEDIES, INCLUDING WITHOUT LIMITATION, INCIDENTAL OR
            CONSEQUENTIAL DAMAGES. NO AGREEMENT VARYING OR EXTENDING THE
            FOREGOING WARRANTY, REMEDIES OR THIS LIMITATION WILL BE BINDNG UPON
            MTU-M UNLESS IN WRITING, SIGNED BY TWO DULY AUTHORIZED OFFICERS OF
            MTU-M.

<PAGE>

                                                                         page 34


CLAUSE 13 LIABILITY

     13.1   MTU-M, its officers, directors, employees, agents and subcontractors
            (collectively herein "the Indemnified Parties") shall not be liable
            for any damage to or loss of the aircraft and other properties owned
            or operated by Operator or injury or death or any other damage
            sustained by Operator, its personnel or third parties due to or in
            connection with or in consequence of the performance or
            non-performance of Services under this Agreement unless caused by
            willful misconduct or negligence of an Indemnified Party.

     13.2   In cases of negligence any liability of the Indemnified Parties
            shall be limited for any and all claims which might arise under or
            out of this Agreement to * per occurrence or in the aggregate per
            year.

            Throughout the term of this Agreement, MTU-M shall maintain in full
            force, at its expense, appropriate aviation products third party
            liability insurances in respect of the liabilities specified in
            Clause 13.2 in accordance with current aviation insurance practice.
            MTU-M shall provide evidence of such insurances to Operator from
            time to time.

     13.3   Except for the Indemnified Parties' liability outlined in Clauses
            13.1 and 13.2 above, Operator shall indemnify and hold harmless the
            Indemnified Parties from any and all liability claims including
            costs and expenses incident thereto. The obligation by TAM to
            indemnify pursuant to this Clause 13 shall, however, exclude (i)
            MTU-M's officers, directors and employees, (ii) MTU-M's property,
            and (iii) the property of third parties in the care custody and
            control of MTU-M.

     13.4   Throughout the term of this Agreement, Operator shall maintain in
            full force, at its expense, the following insurance:

            a)   Comprehensive aircraft third party, passenger (including
                 personal injury), baggage (checked or unchecked), cargo and
                 mail legal liability insurance for a combined single limit of
                 * per occurrence. Such insurance shall name the Indemnified
                 Parties as additional insured.

            b)   Hull All Risks, Hull War and Allied Perils insurances covering
                 Operator's aircraft against loss or damage. Such Hull
                 insurances shall contain a waiver of recourse in favour of the
                 Indemnified Parties, except in cases of the Indemnified
                 Parties' liability outlined above in this Clause 13.

            Upon MTU-M's request Operator shall have its insurers provide
            certificates of insurance evidencing the coverages required under a)
            and b) above. Each insurance certificate shall provide for at least
            fourteen (14) days' written notice to MTU prior to any premature
            termination

<PAGE>

                                                                         page 35


            or reduction of coverages or limits. Any deductibles shall be the
            sole responsibility of Operator.

     13.5   For the purposes of this Clause 13, the term "Indemnified Parties"
            shall also include the companies of the MTU group of companies (MTU
            Maintenance Hannover GmbH etc.).

<PAGE>

                                                                         page 36


CLAUSE 14 MISCELLANEOUS

     14.1   Interpretation

            The rule of construction that ambiguities or inconsistencies are to
            be resolved against the drafting Party shall not be employed in the
            interpretation of this Agreement to favour any Party against the
            other. Ambiguities or inconsistencies shall be resolved by applying
            the most reasonable interpretation under the circumstances, giving
            full consideration to the intentions of the Parties at the time of
            conclusion of this Agreement.

     14.2   Order of Precedence

            In the event that there are any conflicts of inconsistencies between
            the provisions of this Agreement and the appendices hereto, the
            provisions of this Agreement shall prevail.

     14.3   Merger of Negotiations

            The terms and provisions contained herein constitute the entire
            agreement between the Parties and the Parties agree that neither of
            them has placed any reliance whatsoever on any representations,
            agreements, statements or understandings made prior to the signature
            of this Agreement whether orally or in writing relating to the scope
            of this Agreement other than those expressly incorporated in this
            Agreement which has been negotiated on the basis that its provisions
            represent their entire agreement relating to the subject matter
            hereof and shall supersede all such representations, agreements,
            statements and understandings.

     14.4   Property and Risk

            The risk in respect of loss of or damage to the Supplies shall pass
            to MTU-M on delivery to MTU-M in accordance with Clause 4 hereof and
            shall remain with MTU-M until redelivered in accordance with Clause
            4 hereof.

            MTU-M shall maintain and shall procure that any subcontractor
            performing services also maintains insurance coverage in an amount
            of not less than thirty million US Dollars (30,000,000 US $) against
            loss of or damage to the Supplies while they are in its or any of
            its subcontractor's care, custody and control in accordance with
            current aviation insurance practice. MTU-M shall provide evidence of
            such insurances if requested by Operator, from time to time.

            Should any item of Supplies delivered to MTU-M or any of its
            subcontractors according to Clause 4 above while being in MTU-M's or
            any of its subcontractor's care, custody and control be damaged,
            howsoever, MTU-M as its sole responsibility and as Operator's sole

<PAGE>

                                                                         page 37


             remedy with regard thereto, will either (as MTU-M may in its
             discretion decide) provide an adequate replacement or pay to
             Operator the actual replacement cost of such item of Supplies.

             MTU-M shall at all times ensure that Supplies in its care, custody
             and control or in the care, custody and control of any
             subcontractor do not by its or its subcontractor's act or omission
             become the subject of any lien, tax, charge, duty or encumbrance
             and MTU-M shall indemnify Operator against all costs, expenses and
             damages which Operator may incur or suffer by reason of MTU-M
             failing to carry out its obligations under this Clause.

     14.5    Lien

             Except as otherwise provided in this Agreement, MTU-M shall ensure
             that the Engines remain free and clear of all liens other than
             liens arising by operation of the law.

     14.6    Title to Parts

             MTU-M shall ensure that full legal and beneficial title to Parts
             incorporated into Engines during Services shall pass to the owner
             of such Engines free and clear of all liens and encumbrances upon
             re-delivery of such Engines to Operator.

     14.7    Title to Exchanged Parts

             Operator and MTU-M each represent and warrant that they will
             accomplish transfer of the full legal title of any item exchanged
             hereunder free and clear of all charges, liens and encumbrances.
             Operator warrants the authorization of the owner of such items to
             effect such exchange of title. Either Party will only with the
             prior written consent of the other enter into any arrangement or
             agreement which might prejudice or impair its ability to perform
             its obligations under this Clause.

     14.8    Assignment

             Neither Party hereto may assign any of its rights or obligations
             hereunder without prior written consent of the other Party except
             that MTU-M may assign claims for monies due hereunder to a bank or
             to a bank or other financial institution. Any assignment by MTU-M
             as aforementioned shall be on terms that Operator's obligations
             hereunder shall not be increased as a result of such assignments.
             MTU-M shall remain liable for the performance of all its
             obligations hereunder, notwithstanding any such assignment. Any
             assignment made in violation of this Clause shall be null and void.

<PAGE>

                                                                         page 38


     14.9    Alterations and Amendments

             This Agreement shall not be altered or amended in any way other
             than by agreement in writing (to include telex) entered into by the
             Parties after the date of this Agreement, which is expressly stated
             to amend or alter this Agreement.

     14.10   Negation of Waiver

             Failure of either Party at any time to enforce any of the
             provisions of this Agreement shall not be construed as a waiver or
             forbearance by such Party of such provisions or in any way affect
             the validity of this Agreement or part thereof.

     14.11   Partial Invalidity

             In case one or more of the provisions contained in this Agreement
             should be or become fully or in part invalid, illegal or
             unenforceable, the validity, legality or enforceability of the
             remaining provisions contained in this agreement shall not be
             affected in any way or impaired thereby, and the Parties shall to
             the extent possible replace such invalid, illegal or unenforceable
             provision(s) by another clause or clauses considering the economic
             intention of the Parties.

     14.12   Precedent

             None of the provisions of this Agreement shall be considered by
             either Party as precedent for any further agreements between the
             Parties which relate to the same subject matter hereof.

     14.13   Representative

             Operator shall have the right to appoint a representative at MTU-M
             to consult with MTU-M during performance of Services. All costs
             connected with such appointment shall be borne by Operator.

             If requested by Operator, MTU-M will appoint a representative in
             Brasil to consult with Operator during performance of Services. All
             costs associated with such appointment shall be borne by MTU-M.

     14.14   Communication and Accommodation

             MTU-M shall provide Operator's representative with reasonable
             office space and adequate telephone access at MTU-M's expense.

<PAGE>

                                                                         page 39


     14.15   Inspection

             The appropriate airworthiness authorities and Operator's
             representatives may at all reasonable times, upon advance notice,
             inspect the performance of Services. Any such inspection shall not
             constitute an acceptance of Services.

<PAGE>

                                                                         Page 40


CLAUSE 15   DURATION AND TERMINATION

     15.1   Subject to Clause 15.4 below, this Agreement shall become effective
            on July 1st, 2000 regardless of the date this Agreement is signed by
            both Parties (the "Effective Date"), and it shall automatically
            terminate and become null and void on June 30th, 2015. For any
            Purchase Orders placed prior to the date of expiration or
            termination this Agreement shall continue to be valid until
            fulfillment of all obligations of the Parties thereunder.

     15.2   The rights and obligations of the Parties under the following
            clauses shall survive any termination or expiration of this
            Agreement:

            Clause 12 (WARRANTY)
            Clause 13 (LIABILITY)
            Clause 17 (APPLICABLE LAW AND ARBITRATION).

     15.3   Termination

            If either Operator or MTU-M makes an agreement with creditors
            compounding debts, enters into liquidation whether compulsory or
            voluntary (otherwise than for the purpose of amalgamation or
            reconstruction), becomes insolvent, suffers a receiver of the whole
            or parts of its assets to be appointed, or commits a breach of any
            of its obligations under this Agreement (hereinafter collectively"
            Termination Events"), the defaulting Party shall have thirty (30)
            Days upon notification by the non-defaulting Party to remedy any
            such Termination Event or provide an acceptable plan for the remedy
            otherwise the non-defaulting Party shall have the right without
            prejudice to its other rights or remedies under applicable laws
            which rights or remedies shall be cumulative and not exclusive:

            a)   to terminate this Agreement or any Purchase Order hereunder by
                 written notice (to include telex), and

            b)   to stop any Work already commenced and to refuse to commence
                 any further Work.

            For the avoidance of doubt, it is expressly agreed between the
            Parties that Purchase Orders placed by Operator with MTU-H on or
            before the effective date of termination shall continue to be
            subject to the provisions of this Agreement.

<PAGE>

                                                                         page 41


     15.4   Conditions Precedent

            The Agreement and its Annexes shall become effective subject to the
            following conditions precedent being fullfilled:

            a)   signature of the V2500-A5 Maintenance Agreement between the
                 Parties relating to the performance of Services by MTU
                 Maintenance Hannover GmbH for Operator's V2500-A5 engine fleet,

            b)   signature of the Sale and Purchase Agreement relating to the
                 sale of up to twelve (12) V2500-A5 engines from Operator to MTU
                 Maintenance Hannover GmbH, and

            c)   signature of the lease agreement between the Parties relating
                 to the lease of six (6) V2500-A5 engines from MTU Maintenance
                 Hannover GmbH to Operator.

<PAGE>

                                                                         Page 42


CLAUSE 16   REPRESENTATIONS AND WARRANTIES

            Each of the Parties hereby represents and warrants that:

     16.1   It is a limited liability company duly constituted and validly
            existing under the laws of its country of incorporation, its
            obligations under and pursuant to this Agreement constitute its
            legal, valid, binding and enforceable obligations (save to the
            extent that enforcement may be limited by applicable bankruptcy,
            insolvency, moratorium or other laws for the protection of creditors
            and debtors generally and general principles of equity) and that
            this Agreement has been duly executed by it;

     16.2   The execution and delivery by it of this Agreement, the consummation
            by it of any of the transactions contemplated hereby and compliance
            by it with any of the terms and conditions hereof do not require any
            consent of any trustee or holder of any indebtedness or other
            obligation of it, violate any term or condition of its constitutive
            documents, contravene any provision of or constitute or will
            constitute a default under or pursuant to or result in any breach of
            or the creation of any lien (other than as contemplated under this
            Agreement) on or over any of its assets or any other agreement or
            instrument to which it is a party or by which it is bound;

     16.3   No consent of, giving of notice to, registration with or taking of
            any other action in respect of any government entity in its country
            of incorporation is required for the execution by it of this
            Agreement.

<PAGE>

                                                                         page 43


CLAUSE 17 LAW AND ARBITRATION

          This Agreement shall be governed by and construed in accordance with
          the laws of the State of New York, United States of America, but
          without giving effect to the principles of conflicts of laws thereof.
          The United Nations Convention on Contracts for the International Sale
          of Goods shall not govern this Agreement or the rights and obligations
          of the Parties hereunder. Any and all disputes arising out of or in
          connection with this Agreement between the Parties shall be finally
          settled under the rules of the American Arbitration Association by
          three (3) arbitrators. Each Party shall name one (1) arbitrator within
          thirty (30) Days following notification by the other Party; the two
          (2) arbitrators so chosen shall then select a third arbitrator as
          chairman. Should one (1) Party delay nomination of its arbitrator or
          if an arbitrator does not take up his office or if he is prevented
          from taking up his office at the correct time for any other reason, or
          if the two (2) arbitrators cannot agree within thirty (30) Days as to
          the choice of the chairman, the President of the American Arbitration
          Association shall be asked to appoint such arbitrator. The Rules of
          Conciliation and Arbitration of the American Arbitration Association
          shall apply for the arbitration proceedings. The place of arbitration
          shall be New York, New York, United States of America. All arbitration
          filings and proceedings shall be in the English language. A Party
          entitled under an award by the arbitrators to receive an amount of
          money shall be entitled to recover its costs, including reasonable
          attorneys' fees, incurred in preparing for and participating in the
          arbitration proceeding and any ancillary proceedings, including
          proceedings to compel or enjoin arbitration or to request, confirm or
          set aside an award, in the same ratio as the total amount of money
          ultimately awarded to such Party divided by the amount claimed by such
          Party.

<PAGE>

                                                                         page 44


CLAUSE 18 NOTICES

          Any notice or communication to be served pursuant to this Agreement
          shall be sent by registered mail, telefax, telex or delivered
          personally (and a copy - which shall not constitute notice hereunder-
          shall also be promptly transmitted by e-mail to the other Party) and
          shall be deemed to have been duly given when received by the
          addressees under the following address:

          For Operator:

          TAM - Transportes Aereos Regionais S.A.
          Av. Jurandir, 856 - Lote 4 - Hangar VII
          Attn. Mr. Jose Maluf
          Contracts Director
          Aeroporte - CEP 04072-000 Sao Paulo
          Brasil
          Phone: +55-11-5582-8675
          Fax: +55-11-5581-9167
          E-mail: maluf@tam.com.br

          For MTU-M:

          MTU Motoren- und Turbinen-Union Munchen GmbH
          Attn: General Counsel
          Dachauer Strasse 665
          80995 Munchen
          Germany

          Phone: +49-89-1489 3815
          Fax: +49-89-1489 5814
          E-mail: Michael.Weber@muc.mtu.de

          copy to:

          MTU Maintenance Hannover GmbH
          Attn: General Counsel
          Munchner Strasse 31
          30855 Langenhagen
          Germany

          Phone: +49-511-78 06-388
          Fax: +49-511-78 06-100
          E-mail:Andreas. Brosig@haj.mtu.de

          or such other place of business as may be notified in writing by the
          other Party to this Agreement from time to time.

          All notices, reports, certificates, data and communications pertaining
          to this Agreement shall be in the English language. The giving of any
          notice

<PAGE>

                                                                         page 45


          required hereunder may be waived in writing by the Party entitled to
          receive such notice.

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be
executed and delivered on its behalf by its duly authorized representative(s) as
of the Effective Date.

TAM - Transportes Aereos                MTU Motoren- and Turbinen-Union
Regionais S.A.                          Munchen GmbH


By /s/                                  By /s/
   ----------------------------------      -------------------------------------
Title                                   Title EXEC. V.P. SALES AND CUST. S


By /s/                                  By /s/
   ----------------------------------      -------------------------------------
Title Contracts Director                Title Attorney

                                        (STAMP)
                                        (SEAL)

                              OLVAN ODALVO BOARO JR
                              ESCREVENTE AUTORIZADO

                                        (STAMP)
                                        (SEAL)

                              OLVAN ODALVO BOARO JR
                              ESCREVENTE AUTORIZADO

<PAGE>

                                  APPENDIX A(1)

                    TO THE TAY MAINTENANCE SERVICE AGREEMENT
                  BETWEEN TAM TRANSPORTES AEREOS REGIONAIS S.A.
                        AND MTU MAINTENANCE HANNOVER GMBH
                            DATED SEPTEMBER 14, 2000

LIST OF ENGINES: TAY 650-15

<TABLE>
<CAPTION>
RUNNING
 NUMBER    S/N
-------   -----
<S>       <C>
    1     17235
    2     17236
    3     17238
    4     17247
    5     17249
    6     17250
    7     17258
    8     17259
    9     17267
   10     17268
   11     17271
   12     17272
   13     17292
   14     17293
   15     17302
   16     17303
   17     17306
   18     17307
   19     17311
   20     17320
   21     17321
   22     17322
   23     17326
   24     17328
   25     17331
   26     17336
   27     17348
   28     17352
   29     17358
   30     17359
   31     17360
   32     17363
   33     17366
   34     17367
   35     17370
   36     17371
   37     17372
   38     17373
   39     17411
   40     17413
   41     17438
   42     17444
   43     17446
   44     17460
   45     17470
   46     17473
   47     17474
   48     17475
   49     17490
   50     17491
   51     17517
   52     17518
   53     17520
   54     17521
   55     17522
   56     17533
   57     17534
   58     17535
   59     17536
   60     17537
   61     17538
   62     17557
   63     17558
   64     17559
   65     17560
   66     17561
   67     17564
   68     17589
   69     17590
   70     17619
   71     17635
   72     17637
   73     17663
   74     17664
   75     17671
   76     17676
   77     17677
   78     17684
   79     17688
   80     17689
   81     17697
   82     17705
   83     17711
   84     17712
   85     17722
   86     17723
   87     17724
   88     17727
   89     17728
   90     17729
   91     17730
   92     17734
   93     17735
   94     17736
   95     17737
   96     17738
   97     17739
   98     17740
   99     17741
  100     17742
  101     17748
  102     17752
  103     17801
  104     17803
  105     17804
</TABLE>


                                                                     page 1 of 1

<PAGE>

APPENDIX A2

The following TAY650-15 Accessories are covered by the Agreement, when removed
during a shop visit:

<TABLE>
<CAPTION>
PART NUMBER/ IPC
REFERENCE          DESCRIPTION                                ATA CHAPTER
----------------   -----------                                -----------
<S>                <C>                                        <C>
B36110104          HP BLEED VALVE SENSING SWITCH,
                   7th/12th STAGE AIR BLEED                   36-11-01
B715001 *ALL       LT ELECTRICAL HARNESS                      71-50-01
JR32500A           LP/IP ONCE PER REVOLUTION PROBE            72-35-43
EU51936            MAGNETIC CHIP DETECTORS AND HOUSINGS       72-61-10
775C62NWR          FUEL DRAIN VALVE ASSEMBLY                  73-11-03
QA03198            LP FUEL FILTER ELEMENT                     73-11-03
GD501              HP FUEL PUMP                               73-11-05
B73110601          FUEL SPRAY NOZZLES                         73-11-06
SC503              HP FUEL SHUT OFF VALVE                     73-11-07
EJP101             FUEL DRAINS EJECTOR PUMP                   73-11-08
LPG500             LP SHAFT GOVERNOR                          73-21-02
SV500              APPROACH IDLE SOLENOID                     73-21-06
05407              FUEL FILTER PRESSURE DIFFERENTIAL SWITCH   73-33-01
1453PGCP115        FUEL LOW PRESSURE WARNING SWITCH           73-34-01
44302              HE IGNITION UNIT                           74-11-01
CI650091           HE IGNITION LEADS                          74-21-02
Y183-6             HE IGNITION PLUGS                          74-21-03
17343-83-860       LP COOLING AIR OUTLET SWITCH               77-22-01
JR31762A           EPR PROBES                                 77-41-01
T3K12-21-41PN      EPR TRIM PLUG                              77-41-03
S110-50-911        FUEL TEMPERATURE TRANSMITTER               77-42-02
3002KGA-1          LP AND HP TACHO GENERATORS                 77-43-01
S684-8-34          TGT THERMOCOUPLES                          77-45-01
B77450202          TGT THERMOCOUPLE HARNESS                   77-45-02
LK83996            TGT THERMOCOUPLE JUNCTION                  77-45-03
R18-8xx            TGT BALLAST RESISTOR                       77-45-03
R20-871            TGT TRIMMING RESISTOR                      77-45-03
APTE65RT175G       OIL PRESSURE TRANSMITTER                   77-47-01
APTE128RT175G      OIL TEMPERATURE TRANSMITTER                77-47-02
OMP2506-9          OIL PRESSURE FILLER                        79-10-01
9201000-272        OIL TANK CONTENTS TRANSMITTER              79-10-01
MPA30502           OIL FILTER ELEMENT                         79-10-01
JR31848A           FUEL COOLED OIL COOLER                     79-22-01
1138PGCP115        OIL LOW PRESSURE WARNING SWITCH            79-32-01
QA05167            OIL FILTER DIFFERENTIAL PRESSURE SWITCH    79-32-01
3214684-5          AIR START CONTROL VALVE                    80-11-02
</TABLE>


                                                                     page 1 of 1

<PAGE>

                                   APPENDIX B

CHARGES

Operator shall pay for services rendered the amounts invoiced in accordance with
the following:

1    SERVICES COVERED BY THE FIXED PRICES AS SET FORTH IN CLAUSE 2.4.1

1.1  The Fixed Price for Midlife Inspection shall be US$ *

1.2  The Fixed Price for Overhaul shall be determined in accordance with the
     following formula:

     Engine Flight Hours operated since last Overhaul (or, in case of new
     engines, since manufacture) multiplied by * US Dollars * as escalated in
     accordance with item 3 of Appendix C less the fixed price for the Midlife
     Inspection set forth in item 1 of this Appendix B (as escalated in
     accordance with item 3 of Appendix C) preceding the current Overhaul Shop
     Visit provided that the Fixed Price for Overhaul shall (i) not be less than
     * as escalated in accordance with item 3 of Appendix C, and (ii) shall not
     exceed * as escalated in accordance with item 3 of Appendix C.

     (Price basis January 01, 2000)

1.3  The Fixed Prices are valid and binding until December 31st, 2000, and shall
     be subject to escalation in accordance with item 3 of Appendix C to this
     Agreement.

     MTU-M reserves the right to make appropriate adjustments to the Fixed
     Prices, *

     The Fixed Prices shall become payable in accordance with Clause 9 of this
     Agreement for Midlife Inspection or Overhaul events of Engines as follows:

     -    Midlife Inspection Shop Visit:
          to be performed upon approximately 12,000 Flight Cycles since new or,
          as applicable, since previous Overhaul, as per


                                                                     page 1 of 2

<PAGE>

                                   APPENDIX B

          Shop Handling Guide, aiming at the refurbishment of an Engine's high
          pressure turbine.

     -    Overhaul Shop Visit, incl. of Replacement of Life Limited Parts to be
          performed upon expiration of time limits on Life Limited Parts.

2    SERVICES NOT COVERED BY THE FIXED PRICES AS SET FORTH IN CLAUSE 2.4.2

     Operator shall pay to MTU-M the costs invoiced as per the actual invoice of
     MTU-M's authorized subcontractor.

     In addition, MTU-M shall invoice to Operator a three percent (3%) handling
     fee on any such invoice, provided that such handling fee shall be limited
     to US$ 30,000 plus travel expenses, and Operator shall pay MTU-M such
     handling fee in accordance with Clause 9 of this Agreement.


                                                                     page 2 of 2

<PAGE>

                                   APPENDIX C

ESCALATION FORMULAE

1.   Labor Rate Escalation

     The Labor rate will be adjusted * using the cumulated adjustment factor for
     labor costs as published *        MTU-H will inform the Operator or the
     of the factor for the next     The change in the factor will reflect the
     actual effects of labor costs incurred by MTU-H.

     The Labor rate shall not be adjusted before * and escalation shall
     thereafter not exceed *

2.   Material Price Escalation

     Material prices * will be adjusted * using the * average material price
     increase according to *

3.1  Fixed Price Escalation

     The Fixed Prices stipulated in Appendix B shall be subject to * escalation
     in accordance with the following formula.


                                       *
<PAGE>

3.2  Limitation of Fixed Price Escalation

     Based on the assumptions specified in Appendix B the Fixed Prices
     stipulated in Appendix B will result in Engine maintenance cost per Engine
     Flight Hour of    *    . Such Fixed Prices shall be escalated as specified
     in Clause 3.1 above (hereinafter the "Escalated Fixed Price").

     In consideration of a similar fixed price offer received by Operator from a
     party other than MTU-H, which fixed price offer results in Engine
     maintenance cost per Engine Flight Hour of US$ 102.00 / EFH (Price Basis
     2000), (such offer hereinafter the "Comparison Offer"), and which
     Comparison Offer shall be subject to a fixed escalation of 2,6% per year
     starting as of January 01, 2001, the following shall apply with regard to
     the Escalated Fixed Price:

     MTU-H shall make all commercially reasonable efforts in order to keep the
     applicable maintenance cost below such Comparison Offer.

     In the event that the Escalated Fixed Price exceeds the Comparison Offer
     escalated as specified above and during the same escalation period, MTU-H
     and TAM will share the amount to which the Escalated Fixed Price exceeds
     the escalated Comparison Offer in a ratio of one third (1/3) to be borne by
     TAM and two thirds (2/3) to be borne by MTU-H.

     Such cost sharing of the amount to which the Escalated Fixed Price may
     exceed the escalated Comparison Offer shall become effective and first be
     applied with the escalation to be performed on January 1st, 2004, provided
     however, that the actual cost indeed exceed the escalated cost per the
     comparison offer, as illustrated for reference purposes in the table set
     out below.

4.   Price adjustment according to the above escalation formulae shall be
     performed     *     and shall be applicable to Services performed between
     *



<PAGE>

                                       *

<PAGE>

                                   APPENDIX D

                TO THE TAY ENGINE MAINTENANCE AGREEMENT TAM / MTU

                           [Intentionally left blank]

<PAGE>

                                   APPENDIX E

                TO THE TAY ENGINE MAINTENANCE AGREEMENT TAM / MTU

                                    GUARANTY

     GUARANTY, dated ____________________, 2000, made by TAM-Compania De
Investimentos Em Transportes S.A., a company (sociedade por acoes) organized and
existing under the laws of Brazil (the "GUARANTOR"), in favor of MTU Motoren-
und Turbinen-Union Munchen GmbH ("MTU").

                             PRELIMINARY STATEMENTS:

     WHEREAS, MTU desires to enter into that certain TAY Engine Maintenance
Agreement dated as of September 14, 2000 (said Agreement, as it may hereafter be
amended or otherwise modified from time to time, being the "MAINTENANCE
AGREEMENT", the terms defined therein and not otherwise defined herein being
used herein as therein defined) with TAM-Transportes Aereos Regionais S.A., a
corporation organized and existing under the laws of Brazil ("TAM").

     NOW, THEREFORE, in consideration of the premises and in order to induce MTU
to enter into the Maintenance Agreement, the Guarantor hereby agrees as follows:

     SECTION 1.01. GUARANTY.

     The Guarantor hereby unconditionally guarantees the punctual payment when
due and the punctual performance of all obligations of TAM now or hereafter
existing under the Maintenance Agreement (such obligations being the
"OBLIGATIONS"), and agrees to pay any and all expenses (including counsel fees
and expenses) reasonably incurred by MTU in enforcing any rights under this
Guaranty within five business days of receipt of a written demand notice under
this Guaranty. Without limiting the generality of the foregoing, the Guarantor's
liability shall extend to all amounts which constitute part of the Obligations
and would be owed by TAM under the Maintenance Agreement but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization, or similar proceeding involving TAM.

     SECTION 1.02. GUARANTY ABSOLUTE.

     The Guarantor guarantees that the Obligations will be paid or performed,
respectively, strictly in accordance with the terms of the Maintenance
Agreement, regardless of any law, regulation, or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of MTU with
respect thereto. The obligations of the Guarantor under this Guaranty are
independent of the Obligations, and a separate action or actions may be brought
and prosecuted against the Guarantor to enforce this Guaranty, irrespective of
whether any action is brought

<PAGE>

                                                                     App E / TAY
                                                                     page 2 of 4


against TAM or whether TAM is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:

          (i) any lack of validity or enforceability of the Maintenance
     Agreement;

          (ii) any change in the time, manner or place of payment of, or in any
     other term of, all or any of the Obligations, or any other amendment or
     waiver of or any consent to departure from the Maintenance Agreement,
     including, without limitation, any increase in the Obligations resulting
     from the extension of additional services or forbearance to TAM or any of
     its subsidiaries or otherwise;

          (iii) any taking, exchange, release, or non-perfection of any
     collateral, or any taking, release, or amendment or waiver of or consent to
     departure from any other guaranty, for all or any of the Obligations;

          (iv) any manner of application of collateral, or proceeds thereof, to
     all or any of the Obligations, or any manner of sale or other disposition
     of any collateral for all or any of the Obligations or any other assets of
     TAM or any of its affiliates;

          (v) any change, restructuring, or termination of the corporate
     structure or existence of TAM; or

          (vi) any other circumstance which might otherwise constitute a defense
     available to, or a discharge of, TAM or a guarantor.

          (vii) this Guaranty shall continue to be effective or be reinstated,
     as the case may be, if at any time any payment or performance of any of the
     Obligations is rescinded or must otherwise be returned by MTU upon the
     insolvency, bankruptcy, or reorganization of TAM or otherwise, all as
     though such payment had not been made.

     SECTION 1.03. WAIVER.

     The Guarantor hereby waives promptness, diligence, notice of acceptance,
and any other notice with respect to any of the Obligations and any requirement
that MTU protect, secure, perfect, or insure any security interest or lien or
any property subject thereto or exhaust any right or take any action against TAM
or any other person or entity or any collateral.

     SECTION 1.04. SUBROGATION.

     The Guarantor will not exercise any right which it may acquire by way of
subrogation under this Guaranty, by any payment made hereunder or otherwise,
until all the Obligations and all other amounts payable under this Guaranty
shall have been paid or performed in full and MTU shall cease to be obligated
under the Maintenance Agreement for any reason ("MTU'S COMMITMENT"). If any
amount shall be paid to the Guarantor on account of such subrogation rights at
any time prior to the later of (x) the payment or performance in full of the
Obligations and payment in full of all other amounts payable under this Guaranty
or (y) the expiration or termination of MTU's Commitment, such amount shall be
held in trust for the benefit of MTU and shall forthwith be paid to MTU to be
credited and applied upon the Obligations, whether

<PAGE>

                                                                     App E / TAY
                                                                     page 3 of 4


matured or unmatured, in accordance with the terms of the Maintenance Agreement
or to be held by MTU as collateral security for any Obligation thereafter
existing. If (i) the Guarantor shall make payment to MTU, or fulfill, of all or
any part of the Obligations, (ii) all the Obligations shall be paid or performed
in full and all other amounts payable under this Guaranty shall be paid in full,
and (iii) the Commitment shall have expired or terminated, MTU will, at the
Guarantor's request, execute, and deliver to the Guarantor appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation to the Guarantor of an interest in the
Obligation resulting from such payment by the Guarantor.

     SECTION 1.05. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES.

     (a) The Guarantor hereby irrevocably submits to the jurisdiction of any New
York State or Federal court sitting in New York City, Borough of Manhattan and
any appellate court from any thereof in any action or proceeding arising out of
or relating to this Guaranty, and the Guarantor hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such New York State court or in such Federal court. The Guarantor hereby
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding. The
Guarantor hereby irrevocably appoints___________________(the "PROCESS AGENT"),
with an office on the date hereof at _______________, New York, New York
100______________, United States, as its agent to receive on behalf of the
Guarantor and its property service of copies of the summons and complaint and
any other process which may be served in any such action or proceeding. Such
service may be made by mailing or delivering a copy of such process to the
Guarantor in care of the Process Agent at the Process Agent's above address, and
the Guarantor hereby irrevocably authorizes and directs the Process Agent to
accept such service on its behalf. As an alternative method of service, the
Guarantor also irrevocably consents to the service of any and all process in any
such action or proceeding by the mailing of copies of such process to the
Guarantor at its address specified in Section 1.07. The Guarantor agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.

     (b) Nothing in this Section shall affect the right of MTU to serve legal
process in any other manner permitted by law or affect the right of MTU to bring
any action or proceeding against the Guarantor or its property in the courts of
any other jurisdictions.

     (c) To the extent that the Guarantor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution, or otherwise) with respect to itself or its property, the
Guarantor hereby irrevocably waives such immunity in respect of its obligations
under this Guaranty and, without limiting the generality of the foregoing,
agrees that the waivers set forth in this subsection (c) shall have the fullest
scope permitted under the Foreign Sovereign Immunities Act of 1976 of the United
States and are intended to be irrevocable for purposes of such Act.

<PAGE>

                                                                     App E / TAY
                                                                     page 4 of 4


     SECTION 1.06. AMENDMENTS, ETC.

     No amendment or waiver of any provision of this Guaranty, and no consent to
any departure by the Guarantor herefrom, shall in any event be effective unless
the same shall be in writing and signed by MTU, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.

     SECTION 1.07. ADDRESSES FOR NOTICES.

     All notices and other communications provided for hereunder shall be in
writing (including telecopier) and mailed, telecopied, or delivered to it, if to
the Guarantor, at its address at TAM - Transportes Aereos Regionais S.A., Av.
Jurandir, 856 - Lote 4 - Hangar VII, Attn. Mr. Jose Maluf, Contracts Director,
Aeroporte - CEP 04072-000 Sao Paulo, Brasil, Phone: +55 - 11 - 5582-8675, Fax:
+55 - 11 - 5581-9167, E-mail: maluf@tam.com.br, and if to MTU, at its address
specified in the Maintenance Agreement, or, as to either party, at such other
address as shall be designated by such party in a written notice to the other
party. All such notices and other communications shall, when mailed or
telecopied, be effective on the day following the day when deposited in the
mails or telecopied (and OK transmission receipt is obtained), respectively.

     SECTION 1.08. NO WAIVER; REMEDIES.

     No failure on the part of MTU to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

     SECTION 1.09. GOVERNING LAW.

     This Guaranty shall be governed by, and construed in accordance with, the
laws of the State of New York without regard to the provisions on conflict of
laws thereof.

     SECTION 1.10. ASSIGNMENT.

     MTU may not assign any of its rights hereunder without prior written
consent of the Guarantor. Any assignment made in violation of this Section shall
be null and void.

     IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

                                        TAM-Compania De Investimentos Em
                                        Transportes S.A.


                                        By:
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                                        Name:
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                                        Title:
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