0
Investors Conference – Regional Jets
        GECAS & CITIGROUP
           19-21th May, 2004




         Airline Market
  ...
Forward Looking Statement



This presentation includes forward-looking statements or statements about events or
circumsta...
Global Airline Market Today
    Scheduled airline services - Capacity share % by region                                   ...
Airline Market Today – Up to 120 Seats
    Scheduled airline services (aircraft from 19 up to 120 seats) :                ...
Current Airline Business Model




             Regional
              Airlines
  AK
 RS




                             ...
Traffic Recovering Slowly
US Domestic RPM (Billion)

  1,600

  1,400

  1,200

  1,000

     800

     600

     400

   ...
Shifting Capacity Among Business Models
                        US Domestic ASM Evolution (Index 100)
                    ...
US Airline Industry Evolution
Share of US Domestic RPM

     100%               3%           5%                           ...
European Airline Industry Evolution
  Share of Intra-European RPKs


         100%
                                 14%   ...
Sales orders pattern is changing

                                      Airbus & Boeing - Orders by Year

  100%

   90%

...
US Regional Airlines Statistics

                         ASM - (Billion)                                                 ...
Europe Regional Airlines Statistics

      90                 ASK - (Billion)                                             ...
US Low Cost Carriers Statistics

                         ASM - (Billion)                                                 ...
Europe Low Cost Carriers Statistics

                         ASK - (Billion)                                             ...
US Airline Industry – Majors

              ASM - (Billion)                                     80%                       ...
Europe Airline Industry – Majors

               ASK - (Billion)                                                          ...
US Domestic Yields Showing Little Progress

                    16

                    15
Yield (US¢/RPM)




           ...
US Airline Industry Operating Results
                                               2000 – 2003 (Sep)
                   ...
Airlines - Some Operating Results


              US$ Million
                                                2003        ...
A Cyclical Industry, but …
Current down cycle more a fundamental correction than just a cycle

  • Yields will remain low ...
Regional Jets – Still a Dynamic Tool
                                         When markets are strong…

                  ...
Regional Jets - A Dynamic Tool
                                 … and when markets are weak

                             ...
Regional Jets Network - USA




                                                                                          ...
Regional Jets Network - Europe




     Jan 1995 – 104 Routes

     Jan 2004 – 1134 Routes




Source: Back OAG (ERJ-145/1...
Turboprop Networks – USA




                                                                                             ...
Turboprop Networks - Europe




    Jan 1995 – 1918 routes

    Jan 2004 – 1898 routes

Source: BACK OAG_Feb2004

        ...
Narrowbody Jets Replacement (Rightsizing)
    Number of monthly frequencies


         Route                           ROC...
Turboprop Retirement




            Route                   BOS-ISP                            BOS-BGR                   ...
High Frequency Services



                                      Days of                                                  ...
Routes Development



                                     Days of                                                        ...
Responding to Market Needs

                                                                                              ...
Roll-out Ceremony
                                                              First Chinese made ERJ-145
               ...
China - PDEW vs. Frequency
  PDEW




     480   129   59           33            21              15              14      ...
China – Opportunities for RJ
   Frequency /day                              Y2002 - 550 Domestic Routes with PDEW < 120


...
ERJ 145 Family Orderbook




   (as of 1 st quarter 2004)                                                                 ...
The Challenge posed by the Low Cost Carriers
• Highly flexible and dynamic route structure
   • Intense focus on O&D traff...
Low Cost Carriers Network - USA




    Jan 1995 – 336 Routes
    Jan 2004 – 1375 Routes
Source: BACK OAG Feb/2004
1995 - ...
Low Cost Carriers Network - Europe




      Jan 1995 – 18 Routes
     Jan 2003 – 374 Routes




Source: BACK OAG (Ryanair...
LCC Moving Downwards in Capacity

Markets between 150 and 500 PDEW (USA)
               1,098 markets

                   ...
LCC Moving Downwards in Capacity

             1,098 markets

                                              500 PDEW
     ...
Market Opportunities - Australia
        125 markets

                               8300 PDEW
                           ...
Majors are reacting – focus in cost reduction

 • Reorganization under or out of Chapter 11 protection
 • Revision of labo...
Opportunity for Right Size – Aircraft Capacity

                        25% of flights         35% of flights
            ...
Demand x capacity mismatch not a new phenomenon

         25
                                                             ...
Market Opportunities - Global
Rightsizing and Frequency Increase
Average Daily Frequency by City-pair (World)
Routes opera...
Beyond the Current Model...
RJs Natural Growth . . . Expand LCC air services to secondary cities . . .
                The...
The Next Step in the Industry
                                                       • Natural evolution of 50 seat market...
The Rule of 70-110

          “Maximize Profits by Right-sizing your Fleet
              in the Untapped 70-110 Seat Marke...
Mainline, Mid-Size or Regional?




Engineering Ergonomics Economics Efficiency
                 THE INFORMATION CONTAINED...
Introducing the                     E- Jets
Seat Capacity
160



                                                         ...
EMBRAER 190 RollOut Ceremony
                                                                                             ...
EMBRAER 190 First Flight – 12th March, 2004

 Taking off . . .
                 . . . Smooth Flight . . .




            ...
EMBRAER 170/190 Family Orderbook




                                                                                     ...
Airline Market

  Forecast
Market Forecast 2004-2023


       World Deliveries by Segment - Jets


     Segment     2004 - 2013                      ...
Market Forecast 2004-2023
30 - 120 Seats: 8,450 Jets




  USA, Canada
  USA, Canada
  & Caribbean
  & Caribbean          ...
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONS...
Upcoming SlideShare
Loading in...5
×

2004 - Charleston Regional Jets Conference

271

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
271
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
7
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Transcript of "2004 - Charleston Regional Jets Conference"

  1. 1. Investors Conference – Regional Jets GECAS & CITIGROUP 19-21th May, 2004 Airline Market Trends and Outlook Frederico Fleury Curado Executive Vice President Civil Aircraft
  2. 2. Forward Looking Statement This presentation includes forward-looking statements or statements about events or circumstances which have not occurred. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting our business and our future financial performance. These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things: general economic, political and business conditions, both in Brazil and in our market. The words “believes,” “may,” “will,” “estimates,” “continues,” “anticipates,” “intends,” “expects” and similar words are intended to identify forward-looking statements. We undertake no obligations to update publicly or revise any forward-looking statements because of new information, future events or other factors. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation might not occur. Our actual results could differ substantially from those anticipated in our forward-looking statements. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  3. 3. Global Airline Market Today Scheduled airline services - Capacity share % by region 2003 FLEET IN SERVICE Twin Aisle 566 15,613 AIRCRAFT Single Aisle 1516 Twin Aisle 634 Regional 1256 Single Aisle 3339 Europe Europe Regional 2442 North North America America 22% Twin Aisle 88 China China Single Aisle 481 37% 6% Regional 113 Africa & Africa & Latin Middle Middle Asia/ Asia/ Latin America & East East Pacific Pacific America & Caribbean Caribbean 7% 21% Twin Aisle 85 7% Twin Aisle 1043 Single Aisle 631 Twin Aisle 327 Single Aisle 893 Regional 578 Single Aisle 509 Regional 783 Regional 329 Total Fleet Twin Aisle 2743 3363 Single Aisle 7369 8099 Regional 5501 8664 OBS.: Regional considered up to 100 seats Source: OAG (Jan/2004), Fleet PC (Dec/2003) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  4. 4. Airline Market Today – Up to 120 Seats Scheduled airline services (aircraft from 19 up to 120 seats) : 2003 FLEET IN SERVICE Capacity share % by region 6,662 AIRCRAFT Turboprop 691 Turboprop 934 Jet 811 Jet 1913 North North Europe Europe America America 26% Turboprop 64 54% China China Jet 73 2% Latin Latin Africa & Africa & America America Middle East Middle East Asia/ Asia/ & Caribbean & Caribbean Pacific Pacific Turboprop 422 6% 4% Jet 342 8% Turboprop 243 Turboprop 532 Jet 233 Jet 311 Total Fleet Turboprop Twin Aisle 2979 3363 Regional Jet 3683 Single Aisle 8099 Source: OAG (Jan/2004), Fleet PC (Dec/2003) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  5. 5. Current Airline Business Model Regional Airlines AK RS Major Airlines Low Cost Carriers Capacity THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  6. 6. Traffic Recovering Slowly US Domestic RPM (Billion) 1,600 1,400 1,200 1,000 800 600 400 200 0 ... 2000 2001 2002 2003E 2004F 2005F 2013F Majors Low Costs Regionals Source: WATS, Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  7. 7. Shifting Capacity Among Business Models US Domestic ASM Evolution (Index 100) Majors Low Cost Regional 200 180 160 140 120 100 80 60 Ja 0 1 2 3 0 1 2 3 00 01 02 03 04 0 1 2 3 -0 -0 -0 -0 -0 -0 -0 -0 l-0 l-0 l-0 l-0 n- n- n- n- n- ct ct ct ct pr pr pr pr Ju Ju Ju Ju Ja Ja Ja Ja O O O O A A A A Source: EMBRAER THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  8. 8. US Airline Industry Evolution Share of US Domestic RPM 100% 3% 5% 8% 12% 19% 17% 80% 22% 29% 60% 40% 85% 78% 69% 52% 20% 0% ... 1995 2000 2003E 2013F Majors Low Costs Regionals Source: WATS, Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  9. 9. European Airline Industry Evolution Share of Intra-European RPKs 100% 14% 16% 19% 21% 1% 80% 6% 13% 31% 60% 40% 85% 77% 68% 20% ... 48% 0% 1995 2000 2003E 2013F Majors Low Costs Regionals Low Fares: easyJet + Go + Ryanair + VirginExpress + Buzz + DBA Source: AEA, ERA, ATI, Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  10. 10. Sales orders pattern is changing Airbus & Boeing - Orders by Year 100% 90% 80% 271 70% 301 60% 530 511 479 50% 40% 30% 251 20% 162 10% 133 48 43 0% 1999 2000 2001 2002 2003 LOW COST OTHERS Source: Back Fleet pc THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  11. 11. US Regional Airlines Statistics ASM - (Billion) Load Factor 60 75% 50 70% 40 65% 30 60% 20 55% 10 0 50% 2001 2002 2003 2001 2002 2003 Source: EMBRAER THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  12. 12. Europe Regional Airlines Statistics 90 ASK - (Billion) Load Factor 65% 80 70 60% 60 50 40 55% 30 20 10 50% 2001 2002 2003 2001 2002 2003 Source: EMBRAER THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  13. 13. US Low Cost Carriers Statistics ASM - (Billion) Load Factor 200 80% 75% 160 70% 120 65% 80 60% 40 55% 0 50% 2001 2002 2003 2001 2002 2003 Source: EMBRAER THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  14. 14. Europe Low Cost Carriers Statistics ASK - (Billion) Load Factor 50 85% 80% 40 75% 30 70% 65% 20 60% 10 55% 0 50% 2001 2002 2003 2001 2002 2003 Source: EMBRAER THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  15. 15. US Airline Industry – Majors ASM - (Billion) 80% Load Factor 520 75% 500 480 70% 460 65% 440 60% 420 55% 400 50% 2001 2002 2003 2001 2002 2003 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  16. 16. Europe Airline Industry – Majors ASK - (Billion) Load Factor 295 70% 285 65% 275 60% 265 55% 255 50% 2001 2002 2003 2001 2002 2003 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  17. 17. US Domestic Yields Showing Little Progress 16 15 Yield (US¢/RPM) 14 13 12 11 10 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1998 1999 2000 2001 2002 2003 Source: THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  18. 18. US Airline Industry Operating Results 2000 – 2003 (Sep) 6000 4000 2000 US$ (million) 0 2000 2001 2002 2003 -2000 -4000 -6000 -8000 -10000 -12000 Major Low Cost Regional Source: Back Form41 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  19. 19. Airlines - Some Operating Results US$ Million 2003 2002 Oper. Income Airlines Oper. Oper. Oper. Oper. % (YoY) Income Margin Income Margin American (1,129.0) -6.5% (3,313.0) -20.7% 65.9% United (1,360.0) -9.9% (2,837.0) -19.9% 52.1% Southwest 483.0 8.1% 417.0 7.6% 15.8% JetBlue 168.8 16.9% 105.0 16.5% 60.8% ExpressJet 182.0 13.9% 101.0 13.6% 80.2% Skywest 108.5 12.2% 119.6 15.4% -9.3% Air France 533.0 3.4% 353.9 2.6% 50.6% British Airways 371.2 2.8% 678.8 5.3% -45.3% Iberia 182.8 3.5% 236.7 5.3% -22.7% Ryanair (Apr/02-Mar/03) 332.0 31.3% 171.1 26.1% 94.0% Source: SEC and Company Reports THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  20. 20. A Cyclical Industry, but … Current down cycle more a fundamental correction than just a cycle • Yields will remain low as long as LCC’s continue to set the bar in the market • For the 1 st time in history RPM showed three consecutive years of negative evolution • Major airlines with significant value depreciation and attempting to re- invent themselves • Shift in capacity among business models, from majors to LCC’s and regionals (largely used as defensive weapons by the majors) • Growth of point-to-point services vis-à-vis hub and spoke • Untapped 70-110 seats typical E-Jets markets will help to significantly intensify the competitive scenario THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  21. 21. Regional Jets – Still a Dynamic Tool When markets are strong… RJs expand catchment areas by adding more spokes to carrier hubs in addition to: • increasing route frequency • supplementing mainline jet capacity • introducing secondary-to-secondary market service (EU) • opening new “long & thin” routes with small, low-risk capacity THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  22. 22. Regional Jets - A Dynamic Tool … and when markets are weak RJs help to defend an airline’s competitive market position by: • maintaining high route-frequency • preserving network integrity and overall market presence • replacing unprofitable mainline jet capacity service • rightsizing aircraft capacity with demand THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  23. 23. Regional Jets Network - USA Jan 1995 – 76 Routes Jan 2004 – 2224 Routes Source: Back OAG (ERJ-145/140/135, CRJ-100/200, 328Jet routes) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  24. 24. Regional Jets Network - Europe Jan 1995 – 104 Routes Jan 2004 – 1134 Routes Source: Back OAG (ERJ-145/140/135, CRJ-100/200, 328Jet routes)_Feb2004 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  25. 25. Turboprop Networks – USA Jan 1995 – 2,908 routes Jan 2004 – 1,580 routes THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  26. 26. Turboprop Networks - Europe Jan 1995 – 1918 routes Jan 2004 – 1898 routes Source: BACK OAG_Feb2004 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  27. 27. Narrowbody Jets Replacement (Rightsizing) Number of monthly frequencies Route ROC-ORD SYR-ORD BUF-ORD Equipment M80 100 ERJ M80 ERJ M80 100 ERJ Jan 02 92 32 0 93 0 88 32 0 Jan 03 0 116 66 0 151 27 120 5 Jan 04 0 0 187 0 160 0 0 185 Source: Back – OAG Data, Feb2004 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  28. 28. Turboprop Retirement Route BOS-ISP BOS-BGR BOS-PHL Equipment SF3 ERJ SF3 ERJ SF3 ERJ Jan 01 182 0 231 0 110 108 Jan 02 139 0 144 31 137 27 Jan 04 0 87 0 140 0 126 Source: Back – OAG Data, Feb2004 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  29. 29. High Frequency Services Days of Duration Eqp Departure Origin Arrival Destination Operation (min) ER4 xSaSu 8:20 MAN 9:15 EDI 55 January ER4 xSaSu 11:55 MAN 12:45 EDI 50 2002 ER4 xSaSu 14:40 MAN 15:30 EDI 50 ER4 xSaSu 17:30 MAN 18:25 EDI 55 ER4 xSa 20:20 MAN 21:10 EDI 50 ER4 xSaSu 07:00 MAN 7:55 EDI 55 ER4 xSaSu 08:55 MAN 09:50 EDI 55 January 2003 ER4 xSaSu 12:15 MAN 13:15 EDI 60 ER4 xSaSu 17:00 MAN 18:00 EDI 60 ER4 xSaSu 19:55 MAN 20:50 EDI 55 ER4 xSaSu 07:00 MAN 08:00 EDI 60 ER4 xSaSu 08:55 MAN 09:50 EDI 55 January 2004 ER4 xSaSu 12:05 MAN 13:00 EDI 55 ER4 xSaSu 17:00 MAN 17:55 EDI 55 ER4 xSaSu 19:55 MAN 20:50 EDI 55 Source: Back – OAG, Feb 2004 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  30. 30. Routes Development Days of Range Eqp Departure Origin Arrival Destination Operation (Km) M80 daily 07:00 DUS 08:35 MXP 644 January 2002 ER4 daily 11:45 DUS 13:20 MXP 644 ER4 daily 16:10 DUS 17:45 MXP 644 ER4 daily 20:35 DUS 22:10 MXP 644 319 daily 07:00 DUS 08:30 MXP 644 January 2003 319 daily 11:45 DUS 13:15 MXP 644 ER4 daily 17:30 DUS 19:05 MXP 644 ER4 xSa 19:45 DUS 21:20 MXP 644 319 daily 07:10 DUS 08:45 MXP 644 January 2004 319 daily 12:10 DUS 13:45 MXP 644 319 daily 17:30 DUS 19:05 MXP 644 ER4 xSa 19:45 DUS 21:20 MXP 644 Source: Back – OAG Data, Feb 2004 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  31. 31. Responding to Market Needs 37 Seats 44 Seats 50 Seats 50 Seats (2,000 nm range) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  32. 32. Roll-out Ceremony First Chinese made ERJ-145 Dec 16 th, 2003 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  33. 33. China - PDEW vs. Frequency PDEW 480 129 59 33 21 15 14 8 5 3 FROM 786 DOMESTIC ROUTES … 61% 16% … 550 ROUTES (70%) are under 120PDEW Daily Frequency THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  34. 34. China – Opportunities for RJ Frequency /day Y2002 - 550 Domestic Routes with PDEW < 120 • Improved Service • Profitable Load Factor Low LF Add Frequency Low Frequency Low Freq. Medium High LF Rightsizing LF RJ provides the right solution for the thin Traffic Routes THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  35. 35. ERJ 145 Family Orderbook (as of 1 st quarter 2004) Firm Firm Options Total Deliveries Backlog ERJ 135 122 2 124 105 17 ERJ 140 94 20 114 74 20 ERJ 145 697 440 1,137 545 152 Total 913 462 1,375 724 189 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  36. 36. The Challenge posed by the Low Cost Carriers • Highly flexible and dynamic route structure • Intense focus on O&D traffic opportunities • Aggressive new market development (E-Jets the next frontier) • High aircraft daily utilization / low TAT’s • Agressive yield management • Fare Structure • Simplified fare structures • Low fares stimulating demand • High load factors • Cost Leadership • Low operating costs (labor, overhead and distribution costs are the key factors) • Lean, agile structure and operations • Labor Relationships • Partnership shareholders / management / employees • Competitive compensation systems / higher productivity THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  37. 37. Low Cost Carriers Network - USA Jan 1995 – 336 Routes Jan 2004 – 1375 Routes Source: BACK OAG Feb/2004 1995 - Southwest, Airtran and Frontier 2004 - Southwest, Airtran, Frontier, Jetblue, America West, Alaska, ATA, Spirit THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  38. 38. Low Cost Carriers Network - Europe Jan 1995 – 18 Routes Jan 2003 – 374 Routes Source: BACK OAG (Ryanair, easyjet, Buzz and GO) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  39. 39. LCC Moving Downwards in Capacity Markets between 150 and 500 PDEW (USA) 1,098 markets 500 PDEW = 240 seater x 70% LF x 3 Frequencies B 757/737 A319/320/321 These 1,098 markets are predominantly served by either B737/ A320 or 50 seat jets 50 seat Jets 105 PDEW = 50 seater x 70% LF x 3 Frequencies Source : DOT OD1A Data Q2 2002 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  40. 40. LCC Moving Downwards in Capacity 1,098 markets 500 PDEW upper boundary for a B737/757 or A320/321 24% 315 PDEW lower boundary for a B737 or A319/320 Over 500 markets are 48% better suited for a 70- 110 seat aircraft 150 PDEW 28% upper boundary for a 50 seater 105 PDEW lower boundary for a 50 seater Source : DOT OD1A Data Q2 2002 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  41. 41. Market Opportunities - Australia 125 markets 8300 PDEW 20 markets are suited for a 16% mixed fleet operation 315 PDEW Almost 70 markets are better 53% suited for a 70-100 seat aircraft 50 PDEW 30% 37 markets are suited for 35- 50 seaters 25 PDEW More than half of the markets above 25 PDEW could be more efficiently served with 70-100 Seaters THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  42. 42. Majors are reacting – focus in cost reduction • Reorganization under or out of Chapter 11 protection • Revision of labour contracts • Reduction of fleet types • Renegotiation of old leases • Turboprop retirement • Deferral of new (big) aircraft deliveries • Downsizing of several routes to smaller equipment • Intensification of the use of regional aircraft as defensive tools • Some LCC initiatives THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  43. 43. Opportunity for Right Size – Aircraft Capacity 25% of flights 35% of flights depart with loads depart with loads more appropriate more appropriate 25 for a 70-90 seat for 90-110 seat aircraft aircraft More than half of the domestic flights in the US are better suited for 70-110 seat aircraft. Excess capacity translates into 20 empty seats, higher operating costs and unprofitability 15 % 10 5 4 8 13 15 20 13 8 7 5 2 2 0 50 60 70 80 90 100 110 120 130 140 >150 Source: Back (US DOT T100) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  44. 44. Demand x capacity mismatch not a new phenomenon 25 2000 20 2001 2002 15 2003 % 10 5 0 50 60 70 80 90 100 110 120 130 140 >150 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT. Source: Back (US DOT T100)
  45. 45. Market Opportunities - Global Rightsizing and Frequency Increase Average Daily Frequency by City-pair (World) Routes operated exclusively by Jet Aircraft from 91 – 175 seats up to 2000 nm 9392 city pairs with less than 2 average daily frequency 58% City Pairs 27% 10% 4% 1% 0 - 0,5 0,5 - <2 2-<5 5 - <10 >=10 Average Daily Frequency Source: OAG (Feb/2004) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  46. 46. Beyond the Current Model... RJs Natural Growth . . . Expand LCC air services to secondary cities . . . There is a need for a new TOOL . . . Majors Airlines aircraft rightsizing and services enhancement. Regional Jet Model AK Major Airline Model RS E- Jets Low Cost Model E-Jets Capacity THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  47. 47. The Next Step in the Industry • Natural evolution of 50 seat market • Tapping an existing gap • Enhancing services (frequency) Regional Jet Model Major Airline Model • Low risk for demand stimulation • Improving network deployment (capacity and range) Low Cost Model • New markets opportunities E-Jets (long and thin routes) • Replacing old narrowbodies • Blurring the line between regional and mainline operations THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  48. 48. The Rule of 70-110 “Maximize Profits by Right-sizing your Fleet in the Untapped 70-110 Seat Market” 1. Use the right aircraft family for the mission: .c om • Minimize spill sit o110 Vi 0t of7 • Maximize yield and load factors • Improve network deployment .r ule w ww 2. Provide mainline service operating aircraft with mainline characteristics at RJ operating costs and flexibility: • Minimized DOC through use of new technology and family concept • Optimized comfort, range and performance • 21st century economics to match 21st century yield trends THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  49. 49. Mainline, Mid-Size or Regional? Engineering Ergonomics Economics Efficiency THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  50. 50. Introducing the E- Jets Seat Capacity 160 Narrow Body Large 120 Aircraft E xperience E ntertainment 80 EMBRAER 170/190 Family E asy E nhance 50 Seat 40 37 - 44 Seat ERJ 145 E xpress ERJ 135/140 30 Seat E verywhere Tprops E xcellence 200 400 600 800 1000 1200 1400 . . . E xceptional Stage Length (nm) E nvironment E mbraer Engineering Ergonomics Economics Efficiency THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  51. 51. EMBRAER 190 RollOut Ceremony Feb 9th, 2004 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  52. 52. EMBRAER 190 First Flight – 12th March, 2004 Taking off . . . . . . Smooth Flight . . . . . . Landing THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  53. 53. EMBRAER 170/190 Family Orderbook Firm (as of 1 st quarter 2004) Firm Options Total Deliveries Backlog EMBRAER 170 133 162 295 8 125 EMBRAER 190 110 150 260 - 110 EMBRAER 195 15 30 45 - 15 Total 258 (*) 342 600 8 250 (*) Does not include Air Canada’s 45 firm + 45 options order for EMBRAER 190’s THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  54. 54. Airline Market Forecast
  55. 55. Market Forecast 2004-2023 World Deliveries by Segment - Jets Segment 2004 - 2013 2014 - 2023 2004 - 2023 30 - 60 1,150 1,450 2,600 61 – 90 1,300 1,600 2,900 91 – 120 1,250 1,700 2,950 TOTAL 3,700 (*) 4,750 8,450 (*) Open demand à approximately 2,900 a/c World (30-120 seat segment): 8,450 jets (US$180 billion) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  56. 56. Market Forecast 2004-2023 30 - 120 Seats: 8,450 Jets USA, Canada USA, Canada & Caribbean & Caribbean Europe, Europe, China China 4,740 4,740 Middle East Middle East 635 635 56% & Africa & Africa 8% 1,970 1,970 23% Latin Latin Asia Asia America & America & Pacific Pacific Caribbean Caribbean 480 480 625 625 6% 7% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  57. 57. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×