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.
3. Contents
Air Transport Industry Review
RJ50 Market & the ERJ145 Family
70 to 120-seat Market & the E-Jets
Competitive Scenario
6. Estimated US GDP Growth (as of Jun 2008)
(as of Jun 2008)
Quarter over Quarter Growth %
(Annualized Rates)
Prior Survey Results (May/08)
0.2 1.8 1.6 1.8
7. Emerging Economies
World Real GDP Share (Measured in Yr2000 US$ PPP)
Other Advanced
100%
Economies
90%
Japan
80%
70% United States
60%
50% Eurozone
40%
Other Emerging
30% Economies
20%
India
10%
0% China
1997 2007 2017 2027
Emerging economies increasing their share of global output
Source: Global Insight (Jun/08)
8. Industry Net Results
8
Scenario 1 Scenario 2
6 5.6 US$80-120 US$120-140
per barrel per barrel
4
2.8
2.1
1.6 1.8
2 1.2
US$ Billion
0.8 0.9
0.6 0.4
0.2 0.2 0.3 0.2
0
-0.1 -0.2-0.4 -0.1 -0.2 -0.3-0.1-0.3
-0.4 -0.5 -0.4 -0.5 -0.4 -0.7
-2
-2.3
-2.6 -2.8
-4
-4.1 -4.2
-6
-6.1
-6.7
-8
2005 2006 2007 2008F 2008F
North America Europe Asia-Pacific Middle East Latin America Africa Global
Profitability is not expected to be achieved until 2010 or later
Values in US$ Billion
Source: IATA Economics Jun/08 (ICAO data to 2007 and IATA Forecast 2008-2009) Global and US net results includes restructuring costs and
excludes United Airlines ‘fresh-start’ accounting losses and gains
9. What can we expect?
• World air transport demand keeps growing despite US
slowdown
• More consolidation, merges and less start-ups
• Capacity cuts (mainly in the US)
• Fare increases & slowdown in demand
• Additional quest for efficiency: cost cuts, higher LFs and
higher aircraft utilization
• Early retirement of older jets
• Better match of aircraft capacity to a lower demand
11. ERJ 145 Family Order Book
September, 2007 Firm Firm
Options Deliveries
Orders Backlog
ERJ 135 108 0 108 0
ERJ 140 74 0 74 0
ERJ 145 733 75 692 41
Total 915 75 874 41
(June 30th, 2008)
12. 1,000 ERJ 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
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
13. RJ50s – Market Density Profile
US Domestic (2007)
700,000
% 2007 RJ50 Flights
per Market Density (PDEW Class)
600,000
26-50 51-75
500,000 19% 11%
A nnual Flights
76-100
400,000 7%
101-150
300,000
5-25 10%
29% 151-200
200,000
5%
>200
100,000 19%
0
5
50
00
00
- 50
- 75
0
00
- 10
5- 2
1-1
1-2
1-3
>3
26
51
76
10
15
20
Market Density (PDEW)
Almost 60% of all RJ50 flights served low density markets
Source: BACK / OD1A 2007
14. US Hub & Spoke – RJ50 Importance
Regional Carriers Passenger Type Breakdown
Connecting Passenger : Local Passenger
3:1 2:1 1:1 1:1 1:1 1:2 1:2 2:1
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
5-25
26-50
51-75
76-100
101-150
151-200
201-300
RJ 30-60
PDEW
Source: BACK - RJ50 operations with 1 coupon
RJ50 is a fundamental feeder of network operations, especially in low
density markets (two connecting passengers for each local passengers)
15. RJ50 – Importance to the Air Transport System
Feeding system is vital for Airline´s Success
Seabury Group – FAA Forecast Conference (Mar 11, 2008)
RJ50 Presence
Yes
Yes
Yes
Yes
Yes
Yes
Yes
16. RJ50 – Relevance to the US Transport System
US Domestic (2007) 800
Other Aircraft RJ50
CAGR: 25.1%
700
Pax Enplanements (Millions)
600
500
400 CAGR: 0.1%
300
200
100
0
2000 2007
RJ50 - % of all US 3% 13%
domestic enplanements
RJ50s carried more than 90 mi passengers (13% of all US domestic)
2/3 of all RJ50 passengers (~61 millions) are connecting
Source: US DOT (T100)
17. US Regionals: Trend to higher capacity aircraft
Capacity Share by Jet Capacity Segment
100%
Backlog:
NW: 12 E175
80% 15 CRJ900
DL: 17 CRJ900
UA: 14 CRJ700
ASM Offered
60% SKYW: 18 CRJ700
4 CRJ900
REP: 17 E175
40%
Source: EMB (as of Jun 2008)
BBD (as of Apr 2008)
20%
0%
E
E
E
E
E
E
00
00
00
00
00
00
08
08
08
08
08
08
20
20
20
20
20
20
20
20
20
20
20
20
30-60 61-90
Skywest Airlines regional operations: CO, DL and UA
Source: BACK (not considered AVRO operation in 2000 for Northwest) Republic Airways regional operations: AA, CO, DL, UA and US
18. Aircraft Direct Operating Cost
As reported. Adjusted for distance (409 sm).
$0,16 $0,16
$0,12 $0,12 -12%
CASM ($)
-42%
$0,08 $0,08
$0,04 $0,04
$0,00 $0,00
Jet 50 Jet 158 0 200 400 600 800 1000 1200
Distance (sm)
Most of the operating cost difference between small jets and big jets is
due to the distance they fly, not the airplane size.
Source: US form 41 - fiscal year ending 3Q07
Airplane variable + ownership cost
19. Fuel Price Impact on Aircraft Cost
$0,16
19%
$0,12
CASM ($)
$0,08 21%
$0,04
$0,00
Jet 50 Jet 158
Fuel at $2 Fuel at $3
Rising fuel prices affect big airplanes as much as small airplanes.
Source: US form 41 - fiscal year ending 3Q07
Airplane variable + ownership cost
20. U.S. Capacity Reduction Plan
2008 ASM Forecast
Aircraft Removal Plan
(compared to 2007)
Airline Domestic International 2008-2012
Regional -6.5 to -5.5% ▼ 35 to 40 Regional Jets ; 26 Saab 340
Mainline -6 to -5% ▼ 1 to 2% ▲ 55 MD-80 ; 3 A300
Regional 3.6% ▲ 3 Beech 1900 ; 24 CRJ-200 ; 30 ERJ135; 10 ERJ145
Mainline -4.5% ▼ 4.7% ▲ 47 B737-300 ; 20 B737-500
12 ATR-72 ; 60-70 Regional Jets
System (1H08) -13% ▼ 15 to 17% ▲
15 MD-80 ; 3 B757 ; 2 B767-300
Regional (4Q08) 50 to 55% ▲ Regional growth: introduction of 76-seater
System (4Q08) -9.5 to -8.5% ▼ 26 DC-9-30 ; 7 DC-9-40/50; 4 A319 ; 4 A320 ; 6 B757
23 EMB-120
Regional “Some of United’s 737 routes will be down-gauged to 50- to 70-seaters, which are
0 to 1% ▲
operated by regional affiliates under the United Express banner”.
(Jake Brace, UAL CFO - Merrill Lynch Conf. Jun 18, 2008)
-8 to -7% ▼ (*)
Mainline 1.5 to 2.5% ▲
64 B737-300 ; 30 B737-500 ; 6 B747
10 CRJ-200
Regional 4 to 6% ▲
System -5 to -3% ▼ 3 to 5% ▲ 17 B737-300 ; 4 B757; 4 A320
Domestic -2% ▼
Transborder -13% ▼ Adjustments to the fleet, will be made available at a later date.
International -7% ▼ (AC Press Release - Jun 17, 2008)
• 184 RJ50s to be removed by the end of 2012
• RJ50s are essential to feed/support international expansion
Source: Airlines (Jun/18/08) (*) United Airlines report "North America" figures, what includes transborder flights to Canada.
21. U.S. Airlines Capacity Reductions for 2008
• Forecasted Change in ASM
Network Carriers -20 bln ASM (-2.7%)
Regional Carriers +3 bln ASM (+3.3%) mainly from backlog in J70/J80
Largest Fleet Reduction J140 Segment (-118 units)
ASM (billion) Fleet in Service – Number of Aircraft
500 -8% -8% 25% -33% -2% -1% 2500
450
400 2000
350
300 2007 1500
250 2008E
200 1000
150
100 500
50
0 0
WB
WB
J30-60
J61-90
J91-120
J30-60
J61-90
J91-120
NB
NB
TP
TP
Number of aircraft
Removed -61 -119 -19 -66 -135 -8
Backlog 20 0 102 14 44 1
FIS08E vs. FIS07 -41 -119 83 -52 -91 -7
Source: BACK, Airlines and Embraer
22. Mexico - RJ50 Evolution
2004 2007
•
RJ50 ERJ145 RJ50 ERJ145
# Aircraft 5 5 # Aircraft 44 27
Markets 18 18 Markets 106 78
Av. Stage Length 405 nm 405 nm Av. Stage Length 362 nm 369 nm
Source: BACK (Dec/07), RJ50 includes ERJ145 and CRJ100/200/440
23. RJ50 Market Opportunities – CIS
Yakovlev Yak-40
30-seat jet
Aircraft in service
Scheduled Airlines: 176
Non-Scheduled Airlines: 110
Average age: 33 years
Tupolev Tu-134
70-seat jet
Aircraft in service
Scheduled Airlines: 135
Non-Scheduled Airlines: 37
Average age: 30 years
458 aircraft requiring replacement
Replacement already started: Dniproavia’s ERJ145
Source: BACK (Mar/08 – CIS includes Russia)
24. RJ50 Evolution in China
´
China´s RJ aviation is growing at slower pace but has huge potential
2003 2006
196 Markets - 45 A/C 223 Markets - 61 A/C
11%
unbalanced jet fleet China
33% 30-120 Seats
Europe
120-210 Seats
42%
USA
Source: CAAC % of Fleet
0% 20% 40% 60% 80% 100%
25. RJ50 Market Trends
• RJ50 feeder is fundamental to support US hub and spoke system
• High fuel prices forcing airlines to revise RJ50 short-haul and
long/thin operations
• Regionals trend towards high capacity aircraft (75 seater)
• Potential US removal of up to 250 RJ50 units in five years
• China will absorb additional new units to achieve a better capacity
balance in its fleet
• Secondary markets will keep expanding – used RJ50s moving to
CIS, Mexico, Africa and South America
33. E-Jets Deployment – Summary
Natural Growth Direct Replacement Right-sizing New Markets
100%
% of Total E-Jets Markets
14% 8% 15%
80%
42%
60% 51% 53%
7%
40%
8% 6%
20% 42%
27% 26%
0%
North America Europe World
53% of E-Jets operations: right-sizing of narrowbody services
Source: BACK, Embraer
34. Narrow-body Complement - North America
Toronto - Halifax Charlotte – Toronto
2007 2008 2007 2008
Seats* 1,033 992 318 436
6:00 A319 A319
A320 E190
8:00 E190 CRJ-200
A320 E170
10:00 A320
A319
12:00 A320 A319
A320 737-300
14:00 737-300
A319
16:00
E190 E175
18:00 A320
20:00 A320
E190 737-300
22:00 737-400
Source: BACK (4Q06) *4th Wednesday of January
35. Air Canada – Merrill Lynch Global Transportation Conference (Jun/2007)
Domestic
International
Y
COP
36. Robert Milton (AC) statement on June 30th, 2008
"What could be better if you're looking at a high fuel cost,
increasing passenger ticket price environment, which will
logically lead to decreased demand, than to have the most
efficient, comfortable aircraft in the 100-seat category,
which is the Embraer 190?" Mr. Robert Milton told
reporters after the ACE annual meeting.
The Globe and Mail and Financial Post
37. E170/190 at Finnair
Helsinki - Gothenburg Helsinki - Dusseldorf Helsinki - Warsaw
2006 2007 2008 2006 2007 2008 2006 2007 2008
Seats Oferred 126 202 304 126 226 278 76 202 252
6:00
E170 E170
8:00 A319 E170 E170
E170 A319
10:00
A319
12:00 E170 E170
14:00
16:00 E170 A320 A319
E170 E190
18:00 A319 E170
E170
20:00 E170
22:00
Midnight
E-Jets Right-sizing at Finnair: 76% of E170/190 markets
18 markets complementing A319/320s ; 11 markets replacing A319/320s/ MD-80s
Source: BACK (Jan/08) *4th Wednesday of January
39. E-Jets Interchanged with Narrowbodies
New York City - Portland Denver - Montreal
(JFK-PWM) 1,400 nm
274 sm
Apr/06 Apr/06
Spring Summer Fall Winter Spring Summer Fall Winter
Spring Summer Fall Winter Spring Summer Fall Winter
E-Jets Narrowbodies
E-Jets provide year-round network coverage, optimizing fleet
capacity to seasonal market demand
Source: BACK
40. E-Jets Deployment in Long Haul Markets
Toronto - Seattle
1,783 nm; 4:57 (1 Daily)
Boston - Austin
1,470 nm; 4:17 (1 Daily)
Minneapolis - Vancouver
1,243 nm; 3:44 (1 Daily)
Atlanta - Queretaro
1,154 nm; 3:38 (1/2 Daily)
Chicago - Edmonton
1,231 nm; 3:39 (2 Daily)
Philadelphia - Houston
1,150 nm; 3:41 (4 Daily)
Denver - Los Cabos
1,040 nm; 3:06 (1 Daily)
Efficiency and flexibility also for long haul domestic/transborder markets
Source: BACK (Jan/08)
41. Fuel & Maintenance Cost Savings vs. Older Jets
E170/175 can offer up to US$ 2.2 million yearly fuel savings and up to
US$ 1.3 million maintenance cost savings
$4.000
Additional Annual Cost (US$ -
$3.500 DC-9-10
BAe 146-200
thousands) Vs. E170
$3.000 BAe 146-100
AVRO RJ-85
$2.500
$2.000 F70
$1.500
$1.000
$500
E175
$0
0% 10% 20% 30% 40% 50% 60% 70% 80%
Additional Fuel Burn (%) vs. E170
500 nm Sector, Full Pax, Network Environment (3,200 annual BH), Jet Fuel Price $3.00/gallon
42. Fuel & Maintenance Cost Savings vs. Older Jets
E190/195 can offer up to US$ 2.7 million yearly fuel savings and up to
US$ 1.2 million maintenance cost savings
$4.000 MD-87
DC-9-30
Additional Annual Cost (US$ -
$3.500
thousands) Vs. E190
$3.000 737-300
$2.500 737-500
$2.000 F100
$1.500 717
$1.000
$500 E195
$0
0% 10% 20% 30% 40% 50% 60% 70%
Additional Fuel Burn (%) vs. E190
500 nm Sector, Full Pax, Network Environment (3,200 annual BH), Jet Fuel Price $3.00/gallon
43. Market Opportunities - Replacement
World Fleet Age Profile (61-120 seats): 2,582 jets / 14 years average age
900
26% of 61-120 fleet Avg.
800 Region # Acft.
(666 acft) with more Age
700
than 20 years North America 884 8
Number of Aircraft
600 Latin America 305 22
500 Europe 655 11
400 Russia & CIS 272 24
300 Africa 143 22
200
Middle East 79 13
Asia Pacific 215 19
100
China 29 9
0
0-5 6-10 11-15 16-20 21-25 26-30 31-35 >35 World 2,582 14
Age (Years)
Nearly 700 aircraft (26% of fleet) need replacement in the coming years.
Retirement cycle may be antecipated due to fuel costs and environment.
Source: BACK (Dec/07)
45. E-Jets Worldwide Distribution
Customers Firm Orders
Asia Pacific /
China
Middle East / 13%
17%
19% Africa
47% 7%
17% Europe/CIS
21% 19%
26% Latin America
14%
North America
Growing and diversified customer-base across five continents.
Increased presence in emerging markets with established carriers.
Source: Embraer (Jun/08)
46. E-Jets - Efficiency to all Business Models
Regional Network Low Cost
Charter
ETA Star
Aviation
Source: Embraer (Jun/08 ; Sirte Oil, GECAS and Jetscape not presented)
47. Embraer Worldwide Backlog Distribution
Backlog (437 aircraft)
Emerging Countries
15% North America
34%
4%
Western Europe
19%
Latin America
28%
ROW
Increased presence in emerging markets.
Emerging Coutries: China, India, Brazil, Emerging Europe (Central Europe & the Balkans + CIS); Latin America does not include Brazil
Source: Embraer (Jun/08)
49. E-Jets vs. Large CRJs Competitive Profile
43%
E-Jets 60% Large CRJs
93 Markets 171 Markets
12%
13%
45%
27%
Narrowbody Regional Jet Monopoly
E-Jets are clearly being used by airlines to compete against narrowbody
aircraft; CRJs are being more used in monopoly routes.
Source: BACK – OAG (4Q07)
51. Competition: E-Jets vs. New players
Aircraft Overview Fuel/ COC/ DOC Potential Markets
vs. E-Jets
ARJ21 Product: Conventional FB: Higher China and countries
x E175 Risk: Moderate COC: Higher with Chinese influence.
Supp.: from scratch DOC: ?
SSJ 95 Product: Conventional FB: Similar Eastern Europe, maybe
x E190 Risk: Moderate COC: Similar also Western Europe
(political reasons).
Supp.: from scratch DOC: Lower
MRJ 90 Product: New Concept FB: Lower Initially to be proved in
x E175 Risk: High COC: Similar Japan/ Asia Pacific.
Supp.: from scratch DOC: ?
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
52. Embraer´s views on CSeries Value Propositions
• The most significant propositions of the CSeries are:
• Lower Engine SFC
• Lower External Noise
• Most part of the SFC benefit is cancelled by the “family” requirements:
• Optimization point is on C130 (C110 with same engine / structure)
• Longer range (C110 capability exceeds 3,000 nm)
• Accomodation for future “C150” needs
• Estimated impacts on aircraft efficiency:
• OEW: 5.5 tons heavier than E195 (vs. C110)
• Wet Area: 11.7% larger than E195
• Other offsets may come from new technologies risks:
• New platform design and full FBW lacking strong experience
• High composite level on high cycle aircraft
• New engine with new technology
56. US Parked
Acft by Equip #
(2001-2000)
727-200 106
737-200 105
DC-9-30 29
MD-82 25
737-300 23
FOKKER 100 22
737-700 19
DC-10-30 17
During slowdown periods, smaller aircraft help airlines keeping market
presence and are more part of the solution than of the problem.
57. E-Jets around the world:
48 Airlines / 34 Countries
Star
*
Thank You
The information contained herein is the property of Embraer S.A. and shall not be copied or used without Embraer’s written consent.
