Commercial aviation emb_day_2011

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  • 1. Mar/2011Airline Market UpdatePaulo Cesar Silva - EVP Airline Market
  • 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 property of Embraer and shall not be copied or used without Embraer´s written consent
  • 3. Contents Air Transport Industry Review ERJ 145 Family E-Jets Family Market Outlook 2010-2029 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 4. Air Transport Demand - IATAWorld – International RPK Growth Rate (% yoy) 12 10 Economic Recession 8 6 4 2 0 -2 -4 -6 Lehman Iceland Brothers Volcano -8 Bankrupcy -10 -12 7.4% 1.6 % -3.5% 8.2% 8% -14 May-07 May-08 May-09 May-10 Jan-07 Mar-07 Jul-07 Jan-08 Mar-08 Jul-08 Jan-09 Mar-09 Jul-09 Jan-10 Mar-10 Jul-10 Jan-11 Sep-07 Nov-07 Sep-08 Nov-08 Sep-09 Nov-09 Sep-10 Nov-10 Air travel rebounded after being depressed by severe winter weather conditions in Europe and North America Source: IATA (Feb/11) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 5. Crude Oil & Jet Fuel Price Evolution 180 Crude Oil Price Forecast 160 (WTI US$/bar ; Real price 2009 USD) Jet Fuel 140 Year 120 Crude Oil (WTI) 2011 89US$/barrel 100 2012 90 80 2013 92 60 2014 92 40 2015 94 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Upward pressure on oil and jet fuel due to MENA instability Source: EIA - Energy Information Agency and Global Insight (Mar/11) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 6. Airline Financial Results - World 20 Net Profit Net Loss Net Margin 8 Net Profit/Loss (US$ billion) 15 6 Region 2009 2010E 2011F Net Profit/Loss (US$ Billion) 10 4 Africa - 0.1 0.1 0.0 5 2 Net Margin (%) Asia Pacific - 2.7 7.6 3.7 0 0 Europe - 4.3 1.4 0.5 -5 -2 Latin America 0.5 1.0 0.3 -10 -4 Middle East - 0.6 1.1 0.7 North -15 -6 - 2.7 4.7 3.2 America -20 -8 World - 9.9 16.0 8.6 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2011F 2010E High fuel prices squeeze airline profits despite better economic outlook 2011F net profit of US$8.6bi, down from US$9.1bi in last December forecast Source: IATA (Mar/11 ; ICAO 1995-2008 and IATA 2009-11) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 7. Air Transport Industry Review - Summary Recovery of market demand – risks due to high oil prices Local volatility due to Japan’s earthquake and political instability in the Middle East Weak revenue environment, but with signs of improvement Continuous efficiency improvement and cost reductions More consolidations & mergers and fewer start-ups Long term growth in air transport demand despite crisis The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 8. More than 1,100 ERJ platforms delivered (nearly 900 to commercial airlines) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 9. ERJ 145 Family Order Book Commercial Aviation (as of Dec 31st., 2010) Firm orders Deliveries Firm Backlog ERJ 135 108 108 0 ERJ 140 74 74 0 ERJ 145 708 706 2 890 888 2 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 10. ERJ NetworkNorth American Carriers (1H2011) Fleet in Service ERJ ERJ ERJ Dec/10 135 140 145 22 72 118 6 2 7 46 281 12 Total 28 74 464 ERJs 566 566 ERJs serving nearly 660 markets Essential feeder to US hub & spoke system Source: OAG, Embraer The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 11. Pre-Owned ERJ Transactions Republic - USA Passaredo - Brazil BMI – United Kingdom FinnComm - Finland Dniproavia - Ukraine Aeromexico Connect - Mexico Satena - Colombia City Airline - Sweden Diexim Expresso - Angola Air Namibia - Namibia Air26 - Angola South African Airlink - USA More than 200 ERJ transactions since 2000 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 12. ERJ 145 in Mexico Fleet Evolution ERJ 145 Network 39 ERJ 145 (5 new + 34 pre-owned) expanding Aeromexico regional network Source: OAG (Dec/2010)Source: OAG The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 13. ERJ 145 in Ukraine Fleet Evolution ERJ 145 Network 25 pre-owned ERJ 145 (18 in service + 7 to be added) Further expansion with 10 new E190s Source: OAG (Dec/2010) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 14. ERJ 145 in Brazil ERJ 145 Network Fleet Evolution 11 pre-owned ERJ 145 (projected growth to nearly 20 units) “The ERJ 145 is the base for Passaredo’s ambitious expansion plan by increasing frequencies and adding destinations” José Luiz Felício, Passaredo Transportes Aéreos CEO Source: HOTRAN (Dec/2010) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 15. RJ50 Market Trends Core role in hub-and-spoke tend to continue High fuel prices tend to pressure RJ50 operation RJ50 replacement cycle around 2015-2025 US RJ50 fleet of ~900 units by 2015 Trend towards larger 75-seat jet (US scope relaxation) Secondary markets expanding with pre-owned RJ50s The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 16. Nearly 1,000 E-Jets ordered More than 700 delivered
  • 17. E-Jets Family Order Book Commercial Aviation Firm Deliveries Backlog (as of Dec 31st., 2010) Orders 191 181 10 173 133 40 478 321 157 105 64 41 947 699 248 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 18. E-Jets Market Acceptance 947 orders + 720 options First delivery 2004. Nearly 1,000 net orders accumulated. The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 19. Market Confidence on E-Jets in 2010 2 2 E170 35 36 E175 1 17 10 10 6 49 E190 2 2 1 Undisclosed 1 8 8 E195 95 E-Jets orders The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 20. E175 - Flybe Jul/2010: EMBRAER AND FLYBE SIGN AN ORDER FOR 35 EMBRAER 175 (plus 65 Options and 40 Purchase Rights) “The EMBRAER 175 will give us significant added capacity and is particularly suited to the sector lengths prevalent in Europe that we are most interested in exploiting. In short, it perfectly fits Flybe’s Jim French Chairman and business model.” CEO of Flybe The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 21. E190 - Air LeaseOct/2010: EMBRAER AND AIR LEASE SIGN FINAL AGREEMENT FOR UP TO 20 E-JETS(15 orders (5 re-confirmable) + 5 options) “… the unique design of the E-190 allows us to offer Air Lease customers a mainline product but at regional jet operating economics”. “Since Fboro, we have received significant interest from customers from all parts of the world.” John L. Plueger, President and COO of Air Lease Corp. The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 22. E190 - Republic (Frontier)Nov/2010: EMBRAER and REPUBLIC confirm deal for up to 24 E190s, plus 24 options(Six firm orders and the other 18 aircraft should be confirmed on or before Apr/2011) E190 Routemap 2010 15 E190 already operating under Frontier colorsSource: OAG “The E-Jets are a favorite among our passengers because of their comfort and amenities. They play an integral and growing role in Bryan Bedford our Frontier Airlines operations.” CEO of Republic Airways The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 23. E190 - China Southern Airlines CDB LEASING, FROM CHINA, SIGNS FOR TEN EMBRAER 190 JETS The aircraft will be operated by China Southern Airlines “China Southern enjoys the good partnership with Embraer and is full of confidence in its products. The EMBRAER 190 is a successful aircraft with proven economics and performance, and it is well received by the market.” Mr. Xu Jiebo, Vice President of China Southern Airlines Co. Ltd. (Jan/2011) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 24. Market Confidence on E-Jets in 2011 ... same positive trend: Jan/2011: Dniproavia (Ukraine) 10 E190 Feb/2011: TRIP (Brazil) 4 E190 Mar/2011: Alitalia (Italy) 15 E175 20 5 E190 Jan-Mar/2011: 34 E-Jets orders ... more orders to come ... The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 25. More than 700 E-Jets delivered Mar 2004 Mar 2004 Nov 2010 Nov 2010First DeliveryFirst Delivery Oct 2005 Oct 2005 Dec 2006 Dec 2006 Oct 2007 Oct 2007 May 2008 May 2008 Dec 2008 Dec 2008 Sep 2009 Sep 2009 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 26. E-Jets Customer Base (by Region)(% of Customers) North America Asia Pacific & China Latin America Middle East & Africa Europe & CIS Diversified customer base across five continents Source: Embraer (Dec/2010) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 27. Customer Support & Services Global Presence Operations in Brazil, United States, Europe and Asia France USA Villepinte Nashville Fort Lauderdale China Beijing Portugal Évora Singapore Brazil Singapore São José dos Campos Dec/2010 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 28. EASC Network – Airline MarketEmbraer Authorized Service Centers – Current Authorized MROs Flybe (England) E-Jets / ERJ Line / Heavy Tianjin (China PR) AAI (France) E-Jets / ERJ E120 Line / Heavy Line / Heavy EAMS (USA) E-Jets / ERJ Line / Heavy OGMA (Portugal) E170 / ERJ Line / Heavy Egyptair (Egypt) E-Jets Line / Heavy NAC (South Africa) E120 (former Naturelink) Line / Heavy TAP (Brazil) E-Jets / ERJ Embraer Service Center (Brazil) Line / Heavy E-Jets / ERJ Line / Heavy 8 Authorized MRO: EAMS; OGMA; EgyptAir; AAI; Flybe; NAC; Tianjin * Note: Embraer Service Center (GPX) in Brazil depending on special availability Reference: Feb 2011 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 29. EASC Network – Airline MarketEmbraer Authorized Service Centers Flybe (England) E-Jets / ERJ Line / Heavy Tianjin (China PR) AAI (France) E-Jets / ERJ E120 Line / Heavy Line / Heavy EAMS (USA) E-Jets / ERJ Line / Heavy OGMA (Portugal) STAECO (China PR) E170 / ERJ Egyptair (Egypt) E-Jets / ERJ Line / Heavy E-Jets Line / Heavy DIAF CEMA (Ecuador) Line / Heavy E-Jets / ERJ Line / Heavy John Holland (Australia) NAC (South Africa) E-Jets / ERJ E120 (former Naturelink) Line / Heavy Line / Heavy TAP (Brazil) E-Jets / ERJ Embraer Service Center (Brazil) Line / Heavy E-Jets / ERJ Line / Heavy MRO Authorized 8 Authorized MRO: EAMS; OGMA; EgyptAir; AAI; Flybe; NAC; Tianjin MRO Under Authorization Process 3 MRO under Authorization: John Holland; STAECO; DIAF/CEMA 5 Additional MROs for new Authorizations by 2012 (potential) Reference: Feb 2011 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 30. Full Flight Simulator NetworkToronto – E170 Charlotte – E190 Montreal – E170 London – E170/190 Amsterdam – E170/190 Helsinki – E170Air Canada US Airways FTF Oxford Aviation FlightSafety FinnairManufacturer: CAE Manufacturer: CAE Manufacturer: CAE Manufacturer: CAE Manufacturer: CAE Manufacturer: CAEToronto – E190Air CanadaManufacturer: CAE Paris – E170 FlightSafetyMinneapolis – E190 Manufacturer: FlightSafetyCompassManufacturer: FlightSafety Munich – E190 LufthansaSt. Louis – E170/190 Manufacturer: CAEFlightSafetyManufacturer: FlightSafety Zurich – E170St. Louis – E170 FlightSafetyFlightSafety Manufacturer: CAEManufacturer: FlightSafety Shizuoka – E170St. Louis – E170 Fuji DreamFlightSafety Manufacturer: CAEManufacturer: FlightSafety Sanya – E190Orlando – E190 TianjinjetBlue Manufacturer: CAEManufacturer: CAEOrlando – E190 Singapore – E170/190jetBlue FlightSafetyManufacturer: CAE Manufacturer: CAEOrlando – E170/190jetBlue Brisbane – E190Manufacturer: CAE Virgin Blue Manufacturer: FlightSafety FlightSafety FFSs Bahrain – E170/190 Customer Owned FFSs São Paulo – E190 Gulf Air (RFT 2011) Azul (RFT 2011) Manufacturer: CAE Other Providers FFSs Manufacturer: FlightSafety Upcoming RFT* Panama City – E190 Buenos Aires – E190 São Paulo – E190 Jeddah – E170 Ammam – E170/190 *Ready For Training Copa Austral (RFT 2012) Azul Saudi Arabian JATS (RFT 2011) Manufacturer: CAE Manufacturer: FlightSafety Manufacturer: FlightSafety Manufacturer: CAE Manufacturer: FlightSafety The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 31. E-Jets Customer Base (by Business Model)(% of E-Jets Fleet+Backlog) Low Cost Carriers Network Airlines • New markets • Right-sizing • Right-sizing • New markets Regional Airlines • Natural Growth • Right-sizing E-Jets efficiency in all business models Source: Embraer (Dec/2010) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 32. Regional AirlinesE-Jets Deployment:
  • 33. E175 - Right-sizing at Delta AirlinesNew York LaGuardia (LGA) – Washington National (DCA) Dec/08 Feb/11 Frequency 15 15 Seats 2,058 1,050 MD88 E175 MD88 MD88 E175 MD88 E175 MD88 E175 MD88 E175 MD88 E175 MD88 E175 MD88 E175 E175 MD88 E175 MD88 E175 MD88 E175 MD88 E175 MD88 E175 MD88 E175 E175 E175 Source: OAG (1st Wed of Dec/08 and Apr/09) “These are not normal Regional Jets when we say Embraers. These are the E175s which are actually the most comfortable airplanes out there – more comfort with fewer seats” (2009) Glen Hauenstein Delta EVP Network The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 34. Network AirlinesE-Jets Deployment:
  • 35. E-Jets: Complementing Narrowbodies Abu Dhabi - Bahrain Panama City - Havana Helsinki - Brussels Oct/10 Feb/11 Jan/10 Jan/11 Mar/08 Jan/11 SEATS 532 424 496 596 405 458 06:00 B737-700 E190 07:00 B737-700 B737-700 E170 08:00 A320 E190 09:00 10:00 11:00 A319 A319 12:00 13:00 A320 A320 14:00 15:00 B737-700 B737-700 16:00 B737-800 17:00 B737-700 A319 E190 18:00 E190 19:00 A320 A320 A320 E190 20:00 21:00 22:00 23:00 A319 E190 Source: OAG (2011) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 36. E-Jets Complementing Narrowbodies … many additional right-sizing opportunities worldwide! The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 37. Low Cost CarriersE-Jets Deployment:
  • 38. E-Jets Helping Explore New Markets Low Cost Carriers with Two Fleet TypesSeats150+ A320 B737-700 A320 A320100 E190 E190 E190 North America Asia Pacific Europe Middle East The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 39. E190: essential to LCCs ExpansionThe importance of a mixed fleetNumber of Markets A320 E190 Both 737-800 E190 Both E190 helping LCCs to explore new market opportunities Source: OAG ; Airport IS (IATA) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 40. E-Jets Helping Reduce Costs and Fuel BurnFuel Burn Source: www.eforefficiency.com Note: European economic conditions, fuel at 0.50 EUR/liter The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 41. Replacement Opportunities - World(Jets 61-120 seats) Nearly 1,000 aircraft with more than 15 years old Source: OAG (Dec/10 ; Passenger, Active in Service, Scheduled Services) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 42. 2010 Aircraft Investment Appeal Investors Poll 2010 – Jets up to 210 seats Investment Equipment Appeal Boeing B737-800 4.95 Airbus A320 4.70 Airbus A321 3.70 Embraer E190 3.68 Boeing B737-700 3.68 Airbus A319 3.65 Embraer E195 3.58 Embraer E175 2.79 Embraer E170 2.74 Bombardier CRJ900 2.61 Bombardier CRJ700 2.28 Boeing B737-600 1.63 Airbus A318 1.37 Source: Air Finance Journal, September 2010 * Scored out of 5, with 1 being least appealing investment and 5 being most appealing investment The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 43. E-Jets supported by Leasing Companies Source: Embraer (Dec/2010) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 44. E-Jets financing partners ! Companies involved in financial support for the E-Jets AVIC INTERNATIONAL LEASING CO. LTD. The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 45. Market Share - World (Jets 61-120 seats) Embraer: 170/175/190/195 Sukhoi: Superjet 100 Bombardier: CRJ700/900/1000; CS100 Comac: ARJ-21 Airbus: A318 Antonov: An-148/158 Boeing: B737-600 Mitsubishi: MRJ90 Considering accumulated Net Orders up to Dec/10 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 46. E-JetsCommitment to product update The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 47. Main Recent & On Going Developments E 170 AR (EASA) 14.000 ft E190 15 knot (8000 ft) ISA + 39 E170/E190 (FAA) Load 21.5 - Pentium M Dual Active HF VDL Mode 2 IFE Load 21.4 Panasonic Slim Seat 2008 2009 2010 2011CAT IIIb E170ETOPS 120 E190 E175 AR (FAA) Steep Approach E190 CPDLCEFB 170/175/190/195 ADSB-Out Load 25 RAAS ISA+39 EASA CAT IIIa Autoland 195 Load 23 Docking EFB As of December 31st, 2010 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 48. E-Jets vs. New EntrantsCompetitive Scenario 120 E195 CS100 110 E190 110 seats 100 Seat Capacity (32 pitch) SSJ100/95 ARJ21 100 seats 90 MRJ90 E175 80 70-90 seats E170 70 MRJ70 (?) 60 1800 2000 2200 2400 2600 2800 3000 3200 Range (nm) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 49. 6,400 new jet deliveries (61-120 seats) Scope Clauses relaxation allowing 80-seater aircraft as a natural growth of RJ50s in the US Right-sizing of narrow-body operations Regional aviation development in Emerging Markets Acceleration of replacement of old & inefficient jets Russia CIS Europe North 385 America 1,490 6% 23% China 2,010 Middle 930 31% East 15% 110 Africa Asia Latin 4% America 240 Pacific 560 4% 570 9% 9% The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  • 50. E-Jets Around the World 58 Airlines from 39 CountriesThe information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent