Defense embraer-day-2010-1029

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Defense embraer-day-2010-1029

  1. 1. Paulo Cesar de Souza e Silva Executive Vice President Airline MarketAirline Market OverviewA perspective from the 30 to 120-seat segmentOct/2010
  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 property of Embraer and shall not be copied or used without Embraer´s written consent
  3. 3. Contents Air Transport Industry Review ERJ 145 Family E-Jets Family Market Outlook 2010-2029 Product Development The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  4. 4. Air Transport Demand - IATAWorld – International RPK Growth Rate (% yoy) 12 10 8 6 4 2 0 -2 -4 -6 -8 -10 -12 7.4% 1.6 % -3.5% 6.4% -14 Apr-07 Aug-07 Apr-08 Aug-08 Apr-09 Aug-09 Apr-10 Aug-10 Jun-07 Oct-07 Jun-08 Oct-08 Jun-09 Oct-09 Jun-10 Feb-07 Dec-07 Feb-08 Dec-08 Feb-09 Dec-09 Feb-10 IATA: “Air traffic strong demand continues, but recovery enters second slower phase” Source: IATA (Sep/10) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  5. 5. Airline Financial Results - World 15 Net Profit Net Loss Net Margin 5 Net Profit/Loss (US$ billion) 12 4 9 3 Region 2009E 2010F 2011F Net Profit/Loss (US$ Billion) 6 2 Africa - 0.1 0.1 0.0 3 1 Net Margin (%) 0 0 Asia Pacific - 2.7 5.2 3.0 -3 -1 Europe - 4.3 - 1.3 0.0 -6 -2 Latin America 0.5 1.0 0.6 -9 -3 Middle East - 0.6 0.4 0.3 -12 -4 North -15 -5 - 2.7 3.5 1.4 America -18 -6 World - 9.9 8.9 5.3 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2010F 2011F 2009E IATA: strong recovery in 2010 and slight slowdown in 2011 2010F net profit of US$8.9bi, up from US$2.5bi projected in last June forecast Source: IATA (Sep/10 ; 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
  6. 6. Air Transport Demand vs. Economy 1,400 Gulf War Financial Crisis Iraq War & SARS Oil Crisis Slowdown & Sep 11th. 29World Real GDP & RPK (Index 1978=100) 20 1,200 0- 201 R AG C 1,000 5 % 9 5. 02 0 -2 1 20 800 GR RPK Avg. Annual Growth CA % 4.5 1978-2009: 5.0% 600 1998-2009: 5.1% 400 200 RPK ICAO Forecast Jun/10 GDP 0 2010F 2012F 2014F 2016F 2018F 2020F 2022F 2024F 2026F 2028F 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Demand recovery better than expected Despite crisis, air transport demand will increase in the mid-long term Source: ICAO (1978-2009) and The Economist The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  7. 7. Air Transport Industry Review - Summary Recovery of market demand – better than expected Weak revenue environment, but with signs of improvement Continuous efficiency improvement and cost reductions Limited aircraft financing resources 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. 8. The 50-Seater MarketERJ145 – the backbone of the hub-and-spoke system The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  9. 9. ERJ 145 Family Order Book Firm orders Deliveries Firm Backlog ERJ 135 108 108 0 ERJ 140 74 74 0 ERJ 145 708 704 4 Total 890 886 4 as of Sep 30th, 2010 (*) Includes only commercial segment The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  10. 10. 1,000+ ERJ 145 Platforms DeliveredDec 1996Dec 1996 Sep 2007 Sep 2007First DeliveryFirst DeliveryDec 1998Dec 1998Dec 1999Dec 1999Aug 2000Aug 2000Mar 2001Mar 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
  11. 11. Pre-Owned ERJ Transactions Trans States - USA Passaredo - Brazil BMI – United Kingdom FinnComm - Finland Dniproavia - Ukraine Aeromexico Connect - Mexico Diexim Expresso - Angola Satena - Colombia City Airline - Sweden Athens Airways - Greece SEAA - Angola Republic - USA Nearly 170 pre-owned ERJ transactions since 2000 61 ERJ transfers in the 2008-09 period The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  12. 12. RJ50 Market Trends RJ50 feeder is fundamental to support US hub and spoke system US Regionals trend towards higher capacity aircraft (75 seater) due to Scope Clause relaxation Secondary markets will keep expanding with pre-owned RJ50s moving to CIS, Mexico, Africa and South America The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  13. 13. E-Jetshelping airlines to be more efficient The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  14. 14. E-Jets Family Order Book Firm Orders Deliveries Firm Backlog EMBRAER 170 191 180 11 EMBRAER 175 173 130 43 EMBRAER 190 457 301 156 EMBRAER 195 95 60 35 Total 916 671 245 as of Sep 30th, 2010 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  15. 15. E-Jets Worldwide Distribution Customers Firm Orders 12% Asia Pacific / China 13% 14% Middle East / Africa 23% 41% 8% 18% Europe/CIS Latin America 23% 33% North America 15% Diversified customer-base across five continents Increased presence in emerging markets with established carriers Source: Embraer (Sep/10) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  16. 16. E-Jets Deliveries: approaching 700 units 700 600th 500th Sep 2009 671 Sep/2009 Dec 2008 400th May 2008 300th Oct 2007 200th Dec 2006 100th Oct 2005 1st Mar 2004 oct oct oct oct oct oct nov nov nov nov nov nov jul jul jul jul jul jul jul jan jun jan jun jan jun jan jun jan jun jan jun jan jun apr apr apr apr apr apr apr dec dec dec dec dec dec feb feb feb feb feb feb feb sep sep sep sep sep sep sep mar mar mar mar mar mar mar may may may may may may may aug aug aug aug aug aug aug 2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 2010 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  17. 17. E-Jets: same efficiency different business models Network Regional Low Cost Source: Embraer (Jun/10 - Sirte Oil, GECAS, Jetscape and M1 Travel not presented) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  18. 18. Leasing companies supporting E-JetsLeasing and financial companies commitment in the E-Jet program 19 17 13 AAM Gbmh Aircraft 9 Asset Management MARUTA 4 INDUSTRIES 3 1 2004 2005 2006 2007 2008 2009 2010 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  19. 19. E-Jets Family Commonality Airlines are exploring the E-Jets family concept. High commonality in systems, parts and crew qualification. The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  20. 20. E-Jets Main Applications “by design” Natural evolution for existing 50-seat markets Right-sizing of low load-factor narrow-body flights Replacement of old and inefficient jets New market opportunities through lower risk and flexibility The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  21. 21. E-Jets Actual Deployment 29% 38% 21% 25% 8% 6% 14% 53% 40% 5% 6% 57% 29% 9% Europe/CIS China 10% 6% North America 20% 60% 38% 31% Africa/Middle East 47% 49% Asia Pacific Latin AmericaWorld 50% 20% 9% 21% Right-sizing New Markets Replacement of Natural Source: OAG (1Q10) old Jets Growth The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  22. 22. E-Jets Helping to Increase Efficiency The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  23. 23. E190 - Right-sizing at US AirwaysNew York LaGuardia (LGA) – Boston Logan (BOS) Dec/09 Jan/10 Frequency 16 Frequency 16 Seats 2,096 Seats 1,568 6:00 A319 E190 A319 E190 8:00 A319 A319 E190 E190 A319 E190 10:00 A319 E190 A319 12:00 E190 A319 E190 A319 14:00 E190 A319 E190 Load Factor: 41.7% 16:00 A319 E190 A319 E190 18:00 A319 E190 A319 E190 20:00 A319 E190 A319 E190 22:00 A319 E190 “Going to Embraer 190s, shorter stage length, fewer seats per flight, Scott Kirby outperformance in RASM, (…) and driving more revenue.” US Airways President Source: OAGback (3rd Wed of Dec/09 and Jan/10) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  24. 24. E-Jets: Complementing Narrowbodies Madrid – Paris (ORY) Cairo – Sharm el Sheik San Salvador - Guatemala New York – Chicago Dec/08 Dec/09 Aug/07 Aug/09 Sep/08 Sep/09 Apr/09 Apr/10 SEATS 744 606 1160 978 494 342 2,040 1,920 06:00 B735 A321 A319 A319 07:00 B735 E170 A320 A320 B757 A319 08:00 B738 B738 A321 E170 A320 E170 09:00 A321 E170 B757 A319 10:00 B757 A319 11:00 B735 E170 A319 E170 12:00 A319 A320 13:00 B738 E195 E190 A319 E170 14:00 B735 E170 B737-3 A320 15:00 A321 A319 A319 16:00 A320 A320 17:00 E170 B737-3 A319 18:00 B738 B738 A320 E190 A320 E170 19:00 E170 A319 A320 20:00 A319 A319 21:00 B738 E195 A321 A319 22:00 A321 A321 A319 23:00 Source: OAG (2009) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  25. 25. E-Jets Right-sizing narrowbody services The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  26. 26. E-Jets Helping Enlarging Networks The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  27. 27. E-Jets Helping Explore New MarketsLow Cost Carriers with Two Fleet TypesSeats150+ A320 B737-700 A320 A320100 E190 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
  28. 28. E-Jets Helping Reduce Costs and Fuel Burn The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  29. 29. E-Jets: Direct Replacement BenefitsFuel BurnSource: www.eforefficiency.comNote: 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
  30. 30. E170/E190 - Air France / KLM 10 E170 + 27 E190Source: OAG, 2010 “The E-Jets continue to receive great acceptance from our customers for their large and comfortable cabin, and we gain great efficiency by operating both the EMBRAER 190 and the EMBRAER 170.” Jean-Yves Grosse, Régional/Air France President and CEO “KLM Cityhopper is impressed with the excellent performance of EMBRAER 190 from an operational-technical and customer perspective.” Boet Kreiken, Managing Director of KLM Cityhopper The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  31. 31. E190/E195 - Lufthansa 11 E190 + 19 E195 Source: OAG, 2010 “… Lufthansa will continue its strive to further upgrade its fleet to offer its customers an unrivalled premium product on its regional network, with exceptional levels of comfort.” Nico Buchholz, Lufthansa Senior Vice President, Corporate Fleet The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  32. 32. E170/E190 - British Airways 6 E170 + 5 E190 "Passenger feedback on the new fleet has been fantastic, with the two-by-two seating configuration and the additional space a particular hit over the RJs they have replaced,"(ATI, July 15 2010) th Peter Simpson Managing Director of BA Cityflyer The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  33. 33. E-Jets Sales at Farnborough 2010 LOI for 24 E190 2 E190 converted options Order for 35 E175 Order can increase up to 140 Jets 5 E195 converted LOI for up to 20 EJets options The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  34. 34. E175 – Flybe FIS Backlog Options E195 14 E175 35 65 as of Jun/10 “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.” (Flybe Jul/2010) CEO of Flybe The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  35. 35. E190 - Air Lease Oct/2010: EMBRAER AND AIR LEASE SIGN FINAL AGREEMENT FOR UP TO 20 E-JETS (15 orders + 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 the initial announcement made at the Farnborough Air Show, we have received significant interest from customers from all parts of the world and we look forward to providing an aircraft that meets their needs.” John L. Plueger, President and COO of Air Lease Corp (Oct/2010) The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  36. 36. E190 - Republic (Frontier) Agreement for more 24 EMBRAER 190s E190 Routemap 2010 15 E190 already operating under Frontier colorsSource: OAG “This new agreement confirms our commitment to the E-Jet family. We chose them again because passenger comfort, mission performance, especially in hot and high markets like Denver (DEN), and compelling economics are hallmarks of Bryan Bedford the E-Jets product line.” (July/2010) CEO of Republic Airways The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  37. 37. Orders announced in Farnborough Air Show Total Orders* for aircraft up to 120 seats 200 191 150 100 64 50 7 0 0 0 0 E-Jets ATR 72 Q400 CRJ CSeries MRJ *Includes Firm Orders, Options , Purchase Rights and LOIs The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  38. 38. 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 Jun/10. The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  39. 39. Market Outlook 2010-2029 2010-2029The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  40. 40. Each region has a different patternAsia Pacific and China will represent 36% of RPK in 2029 2010-2029 Annual Growth Rate [%] RPK (Billion) 2009 Traffic Added Traffic 2010-29 RPK GDP 3.2% 2.6% 4.2% 2.0% 5.7% 3.2% 7.3% 6.7% 6.5% 4.0% 6.0% 4.0% 6.0% 3.3% 5.1% 4.4% World 4.9% 3.1% The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  41. 41. 29,135 new aircraft will be requiredAbout US$3 tri in terms of aircraft deliveries opportunities worldwide 14,435 6,875 aircraft 6,875 aircraft (24%) (24%) 5,565 3,885 2,260 2,515 475 The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  42. 42. 6,875 jet deliveries (30-120 seats)North America + Europe will represent 57% of new world deliveries Russia Europe CIS North 1,510 405 America 22% 6% 2,400 China Middle 35% East 950 240 14% 4% Asia Africa Pacific Latin 220 575 America 8% 3% 575 8% The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
  43. 43. 680 E-Jets56 Airlines from 39 Countries

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