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2007* Airline Marketing Embraer Day 2007

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  • 1. Embraer Day 2007 Mauro Kern Exec. VP Airline Market Nov 14th, 2007 Nov 14th, 2007 Airline Market & Embraer Programs Overviews A perspective from the 30 to 120-seat segment Nov/2007
  • 2. Contents Air Transport Industry Review 50-seat Regional Jet Market & the ERJ145 Family 70 to 120-seat Market Evolution & the E-Jets Embraer Market Forecast The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 3. Strong Air Transport Demand RPK Average Annual Growth Rates 5.0 3.5% 6.2% -0.4% 9.5% 5.7% 4.5 4.0 3.5 Total RPK (Trillion) 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007F 2008F Source: ICAO - Contracting States - Scheduled Airlines The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 4. Strong Effort to Reduce Costs vs. Fuel Increase US CASM data 14 Total Cost 12 Total Cost (excl. Fuel) 10 CASM (US¢/ASM) 8 6 4 Labor 2 Fuel 0 00 00 00 00 01 01 01 01 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q • 2Q 2007 Fuel costs = 24% & Labor = 25% of Ops Cost, while 12% & 34% in 2Q2000. • Fuel costs are offsetting labor cost restructuring savings. • Cost Control: Total Cost (Excluding Fuel) has remained flat since 2002. Source: ATA (Airline Cost Index) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 5. Positive Net Results Projected for 2007 & 2008 North America -10 -6.7 -2.7 2.7 2.5 World -5.6 -4.1 -0.5 5.6 7.8 Europe 1.1 1.6 1.8 2.1 3.0 2004 05 06 07F 08F Middle East 0.2 0.2 0.2 0.2 0.3 2004 05 06 07F 08F Asia Pacific 2004 05 06 07F 08F 3.4 1.2 0.8 0.7 2.0 Africa Latin America -0.3 -0.4 -0.4 -0.1 0.0 2004 05 06 07F 08F 0.1 -0.1 -0.2 -0.1 0.1 2004 05 06 07F 08F 2004 05 06 07F 08F 2004 05 06 07F 08F Values in US$ Billions US net results includes restructuring costs and Source: IATA Economics Sep/07 (ICAO data to 2006 and IATA Forecast 2007-2008) excludes United Airlines ‘fresh-start’ accounting losses and gains The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 6. WW Fleet Profile - 18,914 aircraft Scheduled Airlines, All Passenger Configuration and Active in Service Age (years) > 30 4,000 3,563 26-30 3,531 3,500 21-25 Number of Aircraft (Units) 3,000 16-20 2,500 11-15 2,057 6-10 2,000 1,751 0-5 1,630 1,500 1,421 1,088 1,040 1,000 941 921 462 509 500 0 TP < 30 TP 30-60 TP 61-90 Jet 30-60 Jet 61-90 Jet 91-120 Jet 121-145 Jet 146-175 Jet 176-210 Jet 211-300 Jet 301-400 Jet >400 Source: BACK (Sep/07) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 7. Environment: becoming a Critical Issue Increasingly negative public but… image >> a pollution symbol Aviation is currently responsible for 2.9% of all CO2 emissions, and expected to increase to 3.3% by 2050*. Current main focus from NGOs, media, and politicians 2006 2050 2.90% 3.30% The main driver for next generation engines and aircraft Industry working to present real 97.10% 96.70% All Other Sources All Other Sources facts, based on technical and Aviation Aviation economic arguments *IPCC Report Aviation and the Global Atmosphere (1999; scenario FE1); IPCC Report on Emissions Scenarios (2000; Scenario A1F1) and BACK (2006) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 8. Air Transport Industry Main Drivers Driver Consequence • New Passenger Profile Different Set of Values (pricing, comfort, more frequencies and direct services) • Increased Competition Pressure for Differentiated Services • Weak Revenue Environment Requires Continuous Cost Reductions, Improved Productivity and Efficiency • Regulatory: Liberalization Opportunities for New Entrants • Regulatory: Environment Increased Costs – may reduce demand • Old Fleet Additional Costs: Fuel & Maintenance • Fuel Prices Increased Costs – may reduce demand • Demand vs. Capacity Need of a Better Match of Market Demand and Aircraft Capacity The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 9. ERJ 145 Family
  • 10. ERJ 145 Family Order Book (September 30th., 2007) Firm Firm Options Deliveries Backlog Orders ERJ 135 108 - 108 - ERJ 140 74 - 74 - ERJ 145 733 131 682 51 Total 915 131 864 51 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 11. 1,000 ERJ145 Platforms Already Delivered Dec 1996 Dec 1996 First Delivery First Delivery Dec 1998 Dec 1998 Dec 1999 Dec 1999 Aug 2000 Aug 2000 September, 2007 Mar 2001 Mar 2001 Sep 2001 Sep 2001 May 2002 May 2002 May 2003 May 2003 May 2004 May 2004 Feb 2005 Feb 2005 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 12. Market Share - World (30-60 seats) 100 Embraer: ERJ 145/140/135 93 Bombardier: CRJ100/200/440 90 83 80 68 70 60 55 54 56 55 52 53 53 53 52 52 (%) 50 45 48 48 45 48 47 45 47 47 46 40 32 30 17 20 7 10 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Oct/07 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 13. RJ50s Current Situation • Worldwide FIS (Sep/07): 2057 aircraft • 66% in the US; 13% in Europe; 9% in the CIS and 12% in ROW • Parked aircraft (in storage): 22 CRJs; 2 ERJs; 17 others • only 2% of the total fleet – a stable market • RJ50s: responsible for nearly 30% of US domestic departures • China´s regional airline industry starts to develop; FIS = 73 RJ50s • Secondary market being developed: Mexico, Eastern Europe and Africa Source: BACK (Sep/07; FIS=Scheduled airlines and A/C active in service) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 14. China: New Opportunities for Regional Airlines Grand China Express (Hainan) • Will operated 50 145s+ 50 E190s. • Started operation with 328s, which will be gradually phased out along the introduction of ERJ145 Kunpeng (Shenzhen & Mesa JV) • Started operation in September 2007 with used RJ50s leased from Mesa • Looking for a fleet of 160-200 aircraft including 50 and 100 seaters China Express • Started operation in September 2006 with used RJ50s leased from Shandong airlines that also provides pilots. • Plan a fleet of 50-100 aircraft in the long term. The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 15. RJ50 Market Opportunities – Russia/CIS Old fleet replacement is needed in the short term: 524 aircraft affected 200 Number of Aircraft 150 50 seats 30 seats Avg. Age Avg. Age 76 seats 35 years 32 years Avg. Age 29 years 100 187 188 An-24 Yak-40 149 50 Tu-134 0 Source: BACK (Mar/07) Turboprop Jet 30-60 Jet 61-90 Replacement already started: Dniproavia / ERJ145; Soyuz / EMB120 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 16. ERJ135 / ERJ140 Higher Density Studies •ERJ 135 = 37 seats ERJ 135HD = 41 seats •ERJ 140 = 44 seats ERJ 140HD = 48 seats • Removal of aft lavatory and Installation of a new lavatory at aircraft fwd. • Add one four abreast row where lavatory was originally installed. The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 17. ERJ 145 Family Shedule Reliability Status ERJ145 - SCHEDULE RELIABILITY AND COMPLETION RATE 100.00 99.50 99.00 SR & CR (%) 98.50 98.00 97.50 97.00 FEB DEC FEB DEC FEB DEC MAY SEP MAY SEP MAY SEP JAN MAR APR JUN JAN MAR APR JUN JAN MAR APR JUN AUG AUG AUG JUL OCT JUL OCT JUL OCT NOV NOV NOV 2005 2006 2007 SR CR The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 18. Residual Value Evolution (RJ50s) RV@ 12 years 10,00 9,00 8,00 7,00 6,00 US$ Millions 5,00 4,00 3,00 2,00 ERJ-145 1,00 CRJ-200 0,00 20 4 20 1 20 2 20 3 20 4 20 1 20 2 20 3 20 4 20 1 20 2 20 3 20 4 20 1 20 2 20 3 20 4 20 1 20 2 20 3 4 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 20 Source: average of 12 representative industry Appraisers The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 19. RJ 50s Future Market Trends • Market entered a mature phase in the US and Europe • RJ50s will remain the backbone of US hub feeding system • Some new market opportunities (long and thin) in the US and EU • Potential for regional aviation development in China and Russia • Secondary market will keep expanding The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 20. E-Jets Family Helping airlines to improve efficiency
  • 21. E-Jets Family EMBRAER 170/175 EMBRAER 170 • 70 to 80 Seats • 2,100 nm Range • Certification – February 2004 EMBRAER 175 • 78 to 88 Seats • 2,000 nm Range • Certification – December 2004 EMBRAER 190/195 EMBRAER 190 • 98 to 114 Seats • 2,400 nm Range • Certification – August 2005 EMBRAER 195 • 108 to 122 Seats • 2,200 nm Range • Certification – June 2006 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 22. E-Jets Family - Main Applications Natural evolution for existing 50-seat markets Right-sizing of low load-factor narrow-body flights Capacity, range & seamless service Enhancing services by increasing frequencies New market opportunities – low risk development Medium density and long/thin markets Replacement of old & inefficient jets The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 23. US Regionals: Trend towards high capacity aircraft Capacity Share by Segment - Jets 30-60 61-90 100% 80% ASM Offered 60% 40% 20% 0% 00 07 00 07 00 07 00 07 00 07 00 07 20 20 20 20 20 20 20 20 20 20 20 20 Source: BACK The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 24. World Market Opportunities – Replacement World Fleet Age Profile (61-120 seats): 2,454 jets / 15 years average age 800 Avg. Region # Acft. 30% of 61-120 fleet Age 700 (735 acft) with more North America 846 10 600 Latin America 285 23 Number of Aircraft than 20 years 500 Europe 617 11 Russia & CIS 231 23 400 Africa 148 22 300 Middle East 48 16 200 Asia Pacific 241 19 100 China 38 8 World 2,454 15 0 0-5 6-10 11-15 16-20 21-25 26-30 31-35 >35 Age (Years) 735 aircraft will be eligible for replacement in the coming years; retirement may be antecipated due to fuel costs Source: BACK (Oct/06) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 25. Comparison: Fuel / CO2 Emissions The E-Jets Family offers substantial fleet renewal benefits with fuel / emission reductions up to 50%. CO2 Emissions*: 61 to 90-seat segment 160% 140% 120% +53% 100% 80% 60% 40% 20% 0% E170 E175 BAe 146- BAe 146- F70 RJ85 DC9-10 100 200 *500 nm sector, 100% Load Factor. The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 26. Comparison: Fuel / CO2 Emissions The E-Jets Family offers substantial fleet renewal benefits with fuel / emission reductions up to 50%. 160% CO2 Emissions*: 91 to 120-seat segment 140% +50% 120% 100% 80% 60% 40% 20% 0% E190 E195 B717 B737- B737- B737- F100 MD87 RJ100 DC9-30 200 300 500 *500 nm sector, 100% Load Factor. The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 27. Short Term Fleet Renewal Benefits E-Jets can bring immediate fuel / emissions savings of up to 50% The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 28. E-Jets Joint Certification means Flexibility Same Type Design for ANAC, FAA and EASA FAA EASA ANAC FAA EASA EMBRAER 170 February 2004 February 2004 EMBRAER 175 December 2004 August 2006 January 2005 EMBRAER 190 August 2005 September, 2005 June 2006 EMBRAER 195 June 2006 July 2007 July 2006 Market swap flexibility Increased residual value The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 29. E-Jets Commonality Training 70% of the potential Spare Parts 30% of the potential benefits benefits same cockpit, common systems and fly-by- E170 wire technology mean maximum training 100% commonality within the family E175 EMBRAER 170 175 190 195 86% 170 ------- A/A/A A/A/A A/A/A 175 A/A/A ------- A/A/A A/A/A E190 190 A/A/A A/A/A ------- A/A/A 100% 195 A/A/A A/A/A A/A/A ------- E195 Training Qualification Differences : According to FAA AC 120- 53, grades Based on the aircraft RSPL (Recommended Spare Parts List) range from A (best) to E (worst) in 3 categories: Training Differences, Check Note: Airframe and Ground Servicing Equipment only (Engines are not included). Differences and Recurrent Training E-Jets have the maximum training commonality (A/A/A) E-Jets offer an outstanding parts commonality (86% to 100%) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 30. The Comfort Factor E-Jets: Narrowbody airplane comfort in more convenient sizes CRJ700/900 EMBRAER 170/190 A318/320 17.3” 18.25” 18.0” 16” 19.75” 19” E170/190 advantages: 0.95” (2.4cm) wider seats Widest seats 0.25” (0.6 cm) wider seats 3.75” (9.5cm) wider aisle (+23%) Widest aisles 0.75” (1.9 cm) wider aisle 16% more volume per seat No middle seats Equal volume per seat “Passengers love this aircraft for its spacious interior design and in particular the absence of a middle seat.” Bryan Bedford, CEO Republic Airways (Jul/06) “The comfort of the E175 aircraft is important to our customers and the economics of the aircraft make good business sense.” Scott Kirby, US Airways EVP Sales and Marketing (Jul/06) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 31. The Trip Cost Factor E-Jets: Lower trip costs than comparable airplane sizes 8000 7563 - 20% - 32% 7000 6310 6058 6000 US Domestic 5368 5135 Network Airline - US$ per Trip 5000 800 sm trip 4000 3000 Airplane Variable plus Ownership 2000 Costs per Trip 1000 0 E170 E175 E190 E195 A319 / B737-700 2-class seating: 70 78 94 104 124 Costs exclude: revenue related costs and system (overhead) costs Costs include: variable: fuel, crew, maintenance, landing fees, handling fees ; ownership: lease cost, hull insurance, spares inventory costs The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 32. Air Canada – Merrill Lynch Global Transportation Conference (Jun/2007) Domestic International Y COP The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 33. E-Jets Family Order Book (September 30th., 2007) Firm Firm Options Deliveries Orders Backlog EMBRAER 170 163 123 137 26 EMBRAER 175 106 136 46 60 EMBRAER 190 391 432 99 292 EMBRAER 195 52 65 10 42 Total 712 756 292 420 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 34. Market Share - World (61-120 seats) Embraer: 170/175/190/195 Bombardier: CRJ700/900/1000 100 100 Airbus: A318 100 Boeing: B737-600 99 AVIC I: ARJ-21 90 Sukhoi: Superjet 100 Antonov: An-148 80 70 60 60 (%) 50 46 46 44 44 44 42 40 40 38 39 36 33 32 34 30 38 30 29 25 23 28 22 21 20 17 21 16 12 17 16 16 9 10 11 79 6 5 8 5 4 5 2 2 2 2 2 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Oct/07 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 35. E-Jets Customer Base Evolution Customers/ Operators 1 2 3 4 9 14 19 29 40 800 712 700 619 600 Accumulated Firm Orders 500 440 400 343 300 245 200 110 112 118 100 60 0 1999 2000 2001 2002 2003 2004 2005 2006 Sep/2007 Deliveries Source: Embraer The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 36. E-Jets Worldwide Distribution Customers Firm Orders Asia Pacific / China 19% Middle East / 14% 19% Africa 5% Europe 53% 19% 17% 18% 26% Latin America 10% North America Growing and diversified customer-base across five continents. Increased presence in emerging markets with established carriers. Source: Embraer (Sep/07) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 37. E-Jets Delivery Pace Evolution 1st Delivery - Mar/2004 100th: Oct/2005 200th: Dec/2006 300th: Oct/2007 350 300 Accumulated Deliveries (units) 250 200 150 100 50 0 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 38. E-Jets Deployment in North America Sep/07 Deliveries Backlog 15 E175 11 E190 34 E190 29 E190 72 E190 4 E175 32 E175 8 E190 49 E190 13 E175 16 E170 4 E170 Natural Growth Right-sizing New Routes 28 E170 40% 42% 18% 28 E170 13 E175 17 E175 0% 20% 40% 60% 80% 100% E-Jets 183 190 Source: BACK (4Q06), Embraer The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 39. E-Jets Deployment in domestic long haul Airline Longest Route E190 New York-Calgary 1,768 nm ; 5:20 (2 Daily) E170 New York – Austin 1,316 nm ; 4:10 (1 Daily) E170 Denver – Dayton 942 nm ; 2:47 (1 Daily) E190 Boston – Austin 1,470 nm ; 4:10 (1 Daily) E170 Edmonton – Chicago 1,231 nm; 3:10 (1 Daily) E175 Philadelphia – Houston 1,150 nm ; 3:30 (2 Daily) Efficiency and flexibility also for long haul domestic/transborder markets Source: BACK (Jul/07) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 40. E-Jets Deployment in Europe Sep/07 Deliveries Backlog 6 E170 10 E195 2 E170 10 E170 6 E190 4 E190 5 E190 6 E195 8 E195 10 E190 10 E170 6 E175 30 E190 Natural Growth Right-sizing New Routes 2 E195 41% 53% 3% 6 E170 4 E190 6 E190 0% 20% 40% 60% 80% 100% E-Jets 48 83 Source: BACK (4Q06), Embraer The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 41. E-Jets Deployment in Middle East & Africa Sep/07 Deliveries Backlog 15 E170 2 E175 4 E195 1 E195 6 E170 2 E170 1 E170 2 E170 1 E170 Natural Growth Right-sizing New Routes E-Jets 28 6 5% 86% 9% 0% 20% 40% 60% 80% 100% Source: BACK (Jan/07), Embraer The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 42. E-Jets Deployment in Asia Pacific & China Sep/07 Deliveries Backlog 50 E190 5 E170 1 E170 14 E190 2 E190 5 E190 2 E170 3 E175 1 E170 1 E170 10 E170 E-Jets 10 84 Source: Embraer The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 43. E-Jets Deployment in Latin America Sep/07 Deliveries Backlog 4 E190 8 E190 1 E175 1 E190 20 E195 10 E190 5 E190 2 E170 2 E170 2 E190 Natural Growth Right-sizing New Routes 1 E190 27% 58% 15% E-Jets 24 32 0% 20% 40% 60% 80% 100% Source: BACK (3Q07), Embraer The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 44. E-Jets – more than 1,000,000 Flight Hours E170/175 E190/195 Operators 18 Operators 11 Aircraft in Service 181 Aircraft in Service 109 Flight Hours 861,698 Flight Hours 238,362 Flight Cycles 608,493 Flight Cycles 149,492 Fleet Leader Fleet Leader Flight Hours (Republic S/N 0016) 9,430 Flight Hours (Air Canada S/N 0013) 4,974 Flight Cycles (Republic S/N 0016) 6,618 Flight Cycles (JetBlue S/N 008) 3,402 E170/190 Family Operators* 26 Aircraft in Service 290 Flight Hours 1,100,060 Flight Cycles 757,985 Source: Airlines (as of Sep 30th, 2007) (*) Air Canada, Finnair and TAME operate aircraft of both subfamilies The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 45. E-Jets Continuous Product Evolution 2006 2007 2008 2009 HUD Repeater ETOPS 190 (75’) + LVTO 170 Steep Approach 170 New Higher Thrust Engine Version CF34-10E7 CAT III A Autoland 175 CAT III HGS 190 CAT III HGS 195 “… (E-190 flightcrew) will be able to fly “… (E-190 flightcrew) will be able to fly every approach the same way, in good every approach the same way, in good CAT III B 170 weather and in bad, from the left seat or weather and in bad, from the left seat or CAT III A Autoland190 the right seat, to ILS-equipped runways the right seat, to ILS-equipped runways or on non-precision approaches” or on non-precision approaches” Usto Schutz, JetBlue’s VP (E190 Program) Usto Schutz, JetBlue’s VP (E190 Program) EFB E170/190 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 46. E-Jets Continuous Product Evolution… 2006 2007 2008 2009 ETOPS 190 (120’’) E175 AR E170 AR CAT IIIA Autoland 195 • Steep Approach 190 …creating value to customers. The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 47. E170/175 Schedule Reliability Status The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 48. E190/195 Schedule Reliability Status The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 49. Residual Value Evolution (100 seaters) RV@ 12 years 16,00 15,00 14,00 13,00 12,00 11,00 10,00 US$ Millions 9,00 8,00 7,00 6,00 5,00 Embraer 190 4,00 Embraer 195 3,00 B737-600 2,00 A318 1,00 0,00 20 4 20 1 20 2 20 3 20 4 20 1 20 2 20 3 20 4 20 1 20 2 20 3 20 4 20 1 20 2 20 3 20 4 20 1 20 2 20 3 4 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 20 Source: average of 12 representative industry Appraisers The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 50. 70 to 120-seat Future Market Trends Traffic growth on high load factor RJ50 routes REGIONAL Capacity increase on RJ50 routes at peak hours Mainline service level on regional routes NETWORK Right-sizing of low load factor narrow-body flights Replacement of old and inefficient jets LOW COST Expansion into medium density markets The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 51. Embraer´s main actions towards a cleaner environment • Embraer was the first aircraft manufacturer to obtain ISO 14001 certification in March 2002. • Embraer is the first aircraft manufacturer to produce a 100% biofuel powered aircraft (Ipanema). • Embraer is improving efficiency of its current aircraft portfolio and investing in the development and implementation of new technologies. • Replacement of old jets can produce emissions reduction of up to 50% in the short term. • Embraer is putting big efforts in cleaning its production processes. • Embraer is fully committed to develop new products that will help the aviation industry to reduce its environmental impact. The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 52. NEW Market Forecast (2008-2027) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 53. Projected Traffic and Economic Growth Growth by Region (2008-2027) China Middle East Latin America Africa RPK CIS GDP Asia Pacific Europe North America World 0% 1% 2% 3% 4% 5% 6% 7% 8% Average Annual Growth (%) Projected world GDP growth around 3% in the next twenty years sustaining nearly 5% annual increase in air transport demand Source: Global Insight and Embraer (Oct/06) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 54. Embraer Market Forecast (2008-2027) Jet Deliveries by Capacity Segment Segment 2008 - 2017 2018 - 2027 2008 - 2027 30 - 60 275 825 1,100 61 - 90 1,075 1,525 2,600 91 - 120 1,800 1,950 3,750 TOTAL 3,150 4,300 7,450 30-60: Mature market, low 50-seat demand in the short/mid term. 61-90: 75-seater as a natural growth of RJ50s. 91-120: Right-sizing of narrowbody operations, replacement of old & inefficient jets and airline expansion into mid-density markets. The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 55. Embraer Market Forecast (2008-2027) Projected Deliveries (30-120 seats): 7,450 Jets CIS North 510 America Europe 7% 3,330 1,350 45% 18% China Middle 730 East 10% Africa 190 Latin America 220 2% 3% Asia 580 Pacific 8% 540 7% The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 56. Market Share - World (30-120 seats) Embraer: ERJ 145/140/135 ; Embraer 170/175/190/195 80 Bombardier: CRJ100/200/440/700/900/1000 Airbus: A318 Boeing: B737-600 AVIC I: ARJ-21 70 Sukhoi: Superjet 100 Antonov: An-148 60 59 51 52 51 52 50 50 50 50 48 47 47 47 44 45 45 45 42 42 44 44 44 (%) 40 38 38 37 34 30 24 20 23 14 10 11 8 8 5 4 3 3 5 8 33 2 2 2 4 2 2 0 4 4 3 2 1 1 1 1 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Oct/07 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 57. E-Jets Around the World Thank you The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent