Encontro de Investidores em NY - Mercado de Aviação Comercial

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Encontro de Investidores em NY - Mercado de Aviação Comercial

  1. 1. Airline Market Outlook The Future Role of 30 to 120-seat Commercial Aircraft New York Frederico Fleury Curado Wednesday, April 12th, 2006 Executive Vice-President, Airline Market
  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. Contents Current Scenario Key Global Market Trends Important Issues in the 30-120 Seat Segment: RJ 50: an intrinsic part of the air transportation system E-Jets: matching aircraft capacity to market demand Market Forecast THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  4. 4. Positive World Economic Scenario 2006-2025 economic scenario is sustaining Air Travel Demand growth Projected Traffic and Economic Growth by Region (Average Annual Growth) World USA, Canada & Caribbean Latin America Europe RPK Russia & CIS GDP Africa Middle East Asia Pacific China 0% 1% 2% 3% 4% 5% 6% 7% 8% Source: Global Insight and Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  5. 5. Increased Air Travel Demand Traffic is recovering at strong growth rates but in another environment 7000 80% RPK ASK Load Factor 78% 6000 76% Billion (RPK & ASK) 5000 % (Load Factor) 74% 4000 72% 3000 70% 68% 2000 66% 1000 64% 0 62% 1995 1996 1996 1998 1999 2000 2001 2002 2003 2004 2005 2006F 2007F 6.3% yoy 7.7% yoy 6.4% yoy Source: ICAO - Contracting States - Scheduled Airlines THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  6. 6. Revenue Environment World yields are improving, but trend in real terms remains down 105 100 95 Index (1994=100) 90 85 80 75 World Nominal Yield 70 World Real Yield (adj. for US inflation) 65 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005F 2006F 2007F World real yields in 2005 are 28% lower than 1994 values in an environment where LCCs pricing power is the main driver. Source: ICAO (Contracting States - Scheduled Airlines), Global Insight (USA CPI Inflation) and IATA Economics THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  7. 7. End of Cheap Jet Fuel Lack of spare oil production capacity remains high price trend 85 95 Capacity Crude Oil 90 80 Demand Millions of Barrel per Day 85 Jet Fuel Price (US$/Barrel) 75 80 70 75 70 65 65 60 60 55 Current price 55 40% higher than 50 Jan/05 50 45 1970 1975 1980 1985 1990 1995 2000 2005 Mar05 May05 Jul05 Jan05 Sep05 Nov05 Jan06 For coming years oil barrel is expected to stay at US$60 level and jet fuel around US¢170/gallon Source: EIA – Energy Industry Administration (Mar 31st, 2006) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  8. 8. World Financial Net Results Net results improving. Strong net profit expected for 2007. North America -10.8 -5.4 1.1 World -6.0 -2.2 7.2 Europe 1.8 1.4 2.1 2005 2006F 2007F Asia Pacific MEast & Africa 2.9 2.0 3.1 2005 2006F 2007F -0.1 -0.4 0.5 Latin America 2005 2006F 2007F 2005 2006F 2007F 2005 2006F 2007F 0.2 0.2 0.4 2005 2006F 2007F Source: IATA Economics Values in US$ Billion THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  9. 9. Higher Competitive Environment LCC will keep capturing market share from Network carriers USA Domestic RPM Intra Europe RPK 5% 11% 12% 17% 16% 16% 19% 29% 11% 31% 19% 34% 76% 72% 60% 65% 57% 50% 2000 2005 2010E 2000 2005 2010E Netw ork LCC Regional Source: Back Aviation and Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  10. 10. Higher Competitive Environment Top 15 capacity market share declined 13% 100% 90% 80% World Total ASK Share (%) 48% 51% 55% 70% 60% 50% 13% 40% 30% Others 52% 49% Airlines 45% 20% 10% Top 15 Airlines 0% 1995 2000 2005 Top 15 Airlines: American, Delta, United, Continental, British Airways, Northwest, Lufthansa, Source: Back Aviation Air France, Southwest, Japan Airlines, Singapore, US Airways, Qantas, Air Canada, All Nippon THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  11. 11. Strong Effort to Reduce Costs Labor cost reduction has not been enough 2000 2001 2002 2003 2004 2005 Labor (¢/ASM) 3.55 3.86 3.99 3.86 3.48 3.10 % y-o-y 9% 3% -3% -10% -11% Fuel (¢/ASM) 1.46 1.40 1.23 1.46 1.94 2.57 % y-o-y -4% -12% 18% 33% 32% Ownership (¢/ASM) 1.52 1.62 1.64 1.66 1.60 1.51 Professional Services (¢/ASM) 0.90 0.92 0.88 0.90 0.93 0.98 Landing Fees (¢/ASM) 0.19 0.21 0.23 0.25 0.25 0.25 Maintenance Material (¢/ASM) 0.29 0.25 0.22 0.19 0.19 0.17 Other (¢/ASM) 2.40 2.65 2.33 2.51 3.07 3.25 Total (¢/ASM) 10.31 10.90 10.52 10.83 11.46 11.84 % y-o-y 6% -3% 3% 6% 3% USA: fuel expenses are burning airline´s cost savings Source: ATA – Air Transport Association (USA Majors and National Passenger Carriers - 3Q05) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  12. 12. LCC & Network Cost Convergence The cost gap is closing USA Europe 8 13 Short-haul unit cost (Euro¢/ASK) Short-haul unit cost (US¢/ASK) Network Network 7 11 6 9 Jetblue easyJet 5 7 4 5 Ryanair Southwest 3 3 2001 2002 2003 2004 2002 2003 2004 Source: IATA Economics THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  13. 13. What the Passengers Want Pricing and convenient flight schedules are main passengers priorities Top 10 factors of airline choice for SHORT-HAUL flights by region Pricing: 50% Americas • 1st - Americas Europe • 1st - Europe Asia Pacific 40% • 3rd- Asia Pacific Afica & Middle East • 6th- Africa&ME 30% 20% 10% Convenient Flight Schedules: 0% • 2nd - Americas • 2nd - Europe t ts pe n e rd k g e s gh m or tio tim in le gh • 4th - Asia Pacific co ty m fli ic tw du ta fl i re ft ra Pr n g ne pu he ra io of tin og • 3rd - Africa&ME ty irc ct re sc e fe i ty ec pr in ne A e sa ht irl al nn in er on lig tu A irl e fl y co in C nc tf A irl nt y en Po m A ue ni or eq ve tf Fr on es C B Source: IATA - 2005 Corporate Air Travel Survey THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  14. 14. Opportunities for Rightsizing Additional opportunities are still in the marketplace 6,018 routes with less than two average daily frequency 41% USA & Europe Average Daily Frequency by Route Routes operated exclusively by Jet Aircraft 34% from 91 – 175 seats up to 2000 nm % of Routes 17% 6% 2% 0 - 0,5 0,5 - <2 2 - <5 5 - <10 >=10 Source: Back Aviation (OAG 4Q05) Average Daily Frequency THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  15. 15. Opportunities for Rightsizing 2005 USA Domestic Flights (Jet aircraft ≥ 100-seat) 25 49% of flights depart with loads appropriate for 70-110 seat aircraft 20 20 17 16 % of Flights 15 10 10 8 7 6 6 5 5 3 1 1 0 <50 50 60 70 80 90 100 110 120 130 140 ≥150 Pax per Departure Airlines could improve efficiency by better Source: Back Aviation (T100) matching demand with aircraft capacity THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  16. 16. Capacity Adjustment Already Under Way USA domestic average seats per aircraft is decreasing 130 128 Seats per Aircraft 126 124 122 120 118 2000 2001 2002 2003 2004 2005 2006 The replacement of old / inefficient NB fleet and the deployment of new generation RJs are providing more flexibility and efficiency for airlines. Source: 2006 FAA Report THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  17. 17. Old Jets Replacement Opportunities Ageing World Fleet in Service (61-120 seats) 700 610 735 • 31% of total world fleet is 600 aircraft older than 522 20 years more than 20 years old and 500 Number of Aircraft (Units) shall start to be replaced in 400 the coming years. 316 305 300 214 214 205 • Old technology equipment: 200 inefficient and expensive 100 aircraft to operate. 0 0-5 6-10 11-15 16-20 21-25 26-30 >30 Aircraft Age (Years) Source: Back Aviation (Dec/05) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  18. 18. Where is the RJ 50 market going?
  19. 19. Regional Airlines – Europe TP 1995 TP 2005 3026 routes 2810 routes 723 aircraft 666 aircraft Av. stage length: Av. stage length: 200 nm (370 km) 231nm (428 km) Last 10 years: RJ fleet grew 700% and TP shrank by 8% RJ 1995 RJ 2005 273 routes 1722 routes 37 aircraft 294 aircraft Av. stage length: Av. stage length: 414 nm (767 km) 387 nm (717 km) Source: Back Aviation (OAG Jan/06; RJ: ERJ 145 Family, CRJ 100/200 and 328JET) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  20. 20. Regional Airlines – USA TP 1995 1908 routes TP 2005 1599 aircraft 902 routes Av. stage length: 740 aircraft 179 nm (332 Km) Av. stage length: 159 nm (295Km) Last 10 years: RJ fleet grew 3600% and TP fleet shrank 54% RJ 1995 RJ 2005 180 routes 2888 routes 36 aircraft 1358 aircraft Av. stage length: Av. stage length: 391 nm (724 Km) 395 nm (732 Km) Source: Back Aviation (OAG Jan/06: RJ: ERJ 145 Family, CRJ 100/200/440 and 328JET) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  21. 21. RJ 50 in the USA – Main Trends Main Trends that we already know: Mature Market – no additional major orders USA scope relaxation shifted demand to bigger RJs RJ50s will keep their importance as hub feeders and long thin point-to-point routes But, can the RJ50 market get sustained? ... Source: Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  22. 22. USA Hub & Spoke System Hubs are largely dependent on RJs 1. RJs are responsible for 22% of all USA domestic passengers 2. RJs: 3 connecting passengers for each local passenger Source: Back Aviation (T100 and OD1A: RJ: ERJ 145 Family, CRJ 100/200/440 and 328JET). 2006 FAA Report (DOT Form 41 & Form 298C) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  23. 23. RJ 50 Evolution - USA • Scope Clauses New Markets Opened per Year relaxation Sep 11, 2001 • Low density market opportunities 180 • RJs as single service • Sep 11 impact providers 160 (right-sizing) • Replacing old and 140 inneficicent jets New Markets per Year 120 100 • Scope Clauses • TP avoidance factor 80 • RJ phenomena 60 40 20 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 TP Replacement Jet Complement/Replacement New Routes Source: Back Aviation (OAG ; RJ: ERJ 145 Family, CRJ 100/200/440 and 328JET) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  24. 24. New Market Opportunities - USA New market opportunities Selection Criteria: 1. Market Demand: 25-75 PDEWs without 136 potential markets direct flights 2. Distance Profile: 250 -- 1500 mi without any direct service 3. Revenue Environment: Yield >= RJ Yield Source: Back Aviation (OAG 2005) Note: RJ Yield Curve = 2005 Yields for ExpressJet and Pinnacle – 1 coupon) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  25. 25. New Market Opportunities – EU Point-to-Point – new routes to secondary cities/airports is increasing 1996-2000 2001-2005 0 40 80 120 160 200 Markets Primary-Primary Primary-Secondary Secondary-Secondary Source: Back Aviation (OAG) and Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  26. 26. RJ 50 Market Opportunities – China Most of the routes have low demand density and low frequencies. 59% of total routes have less than 1 daily frequency and less than 135 pax/day Source: China Airline Traffic Statistics 2004. Only domestic routes less than1,500 nm THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  27. 27. RJ 50 Market Opportunities – Russia Old Fleet Replacement 30-60 Seat Segment 244 aircraft 33 years old (average) Yak-40 An-24 Jet – 30 seats Turboprop - 50 seats 122 aircraft 122 aircraft Average Age: 31 yrs Average Age: 34 yrs 61-90 91-120 Seat Segment Seat Segment Tu-134 Jet - 76 seats Yak-42 Jet - 120 seats 123 aircraft 54 aircraft Average Age: 28 yrs Average Age: 17 yrs Source: BACK (Fleet PC Feb06) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  28. 28. RJ 50 Parked Aircraft Parked Region Aircraft Type (as of Mar/06) Africa ERJ 145 1 CRJ00/200/440 15 Europe ERJ145 2 Latin America ERJ145 5 USA, Canada & Caribbean CRJ100/200/440 90 Parked % of Fleet Region Aircraft Type Parked (as of Mar/06) CRJ100/200/440 105 10% WORLD ERJ145 8 1% Total 113 6% Source: Back Aviation (Fleet PC Mar31,2006) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  29. 29. RJ 50 Residual Value (RV) Evolution RV by Quarter at 12 Years Age 10.00 9.00 8.00 7.00 US$ Million 6.00 5.00 4.00 3.00 2.00 ERJ 145 1.00 CRJ-200 0.00 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 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 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 ERJ 145s are sustaining Residual Values Source: MBA Avitas Airclaims, et al THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  30. 30. RJ 50s Future 1. Will remain the backbone of USA hub feeding system 2. Potential for increasing frequencies in the USA and EU 3. New market opportunities in the USA and EU 4. Potential in China, Russia and other markets 5. Secondary market developing 6. ERJ 145 retaining Residual Values THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  31. 31. ERJ 145 Family Orderbook Firm Firm (as of December 31st, 2005) Options Total Deliveries Backlog Orders ERJ 135 123 2 125 108 15 ERJ 140 94 20 114 74 20 ERJ 145 677 157 834 667 10 Total 894 179 1,073 849 45 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  32. 32. ERJ 145 Family The Evolution of Regionals THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  33. 33. The 70 to 110-seat jet market evolution
  34. 34. USA Domestic: Pax & Seats per Departure Jet aircraft (70-150 Seats) 35% Pax/Dep 2000 Seats/Dep 2000 Pax/Dep 2005 Seats/Dep 2005 30% 2000 25% Seats/dep 20% 2000 Pax/dep 2005 % of Flights 15% 2005 10% 5% 0% <50 50 60 70 80 90 100 110 120 130 140 ≥150 USA Industry is becoming more efficient through better matching demand with aircraft capacity Source: Back Aviation (T100) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  35. 35. USA Dom.: Further Capacity Adjustment Opportunities Load Factor distribution for USA domestic jet flights 20-40% 41-60% 61-80% 81-95% 4000000 3000000 Number of Flights 2000000 1000000 0 2000 2005 2000 2005 2000 2005 RJ 50 70-110 Narrow-body (120-150) There are further opportunities in the capacity adjustment process Source: Back Aviation (T100) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  36. 36. USA Dom.: Detail of Capacity Adjustment Opportunities 4000000 3000000 2000000 1000000 Natural Growth Right-sizing 0 2000 2005 2000 2005 2000 2005 400000 Number of Annual Flights 300000 200000 100000 E-Jets: The 70 to 110-seat market evolution 0 RJ 50 NB 120-150 Source: Back Aviatio (T100 2005) LFactor: 81-95% LFactor: 20-60% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  37. 37. E-Jets Family @ USA and Canada % of Routes (4Q05) New Route Right-sizing Natural Growth 100% 14% 75% 41% 50% 25% 45% 0% Source: Back Aviation (OAG 4Q05 routes) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  38. 38. E-Jets Family @ USA and Canada 28 E170 Dec/05: Dec/05: 89 EMBRAER 170/190 in service 89 EMBRAER 170/190 in service 78 routes 228 routes Avg. Stage Length: 228 routes 532 nm (985 km) Avg. Stage Length: 556 nm (1030 km) Avg. Stage Length: 556 nm (1030 km) 14 E175 3 E190 28 E170 7 E190 9 E170 28 routes 18 routes 64 routes 20 routes 20 routes Avg. Stage Length: Avg. Stage Length: Avg. Stage Length: Avg. Stage Length: Avg. Stage Length: 468 nm (867 km) 624 nm (1156 km) 553 nm (1024 km) 344 nm (637 km) 1120 nm (2074 km) Source: Back Aviation (OAG 4Q05 routes) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  39. 39. E-Jets Family @ Europe % of Routes (4Q05) New Route Rightsizing Natural Growth 100% 4% 75% 57% 50% 25% 39% 0% Source: Back Aviation (OAG 4Q05 routes) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  40. 40. E-Jets Family @ Europe 10 E170 6 E170 74 routes 22 routes Avg. Stage Length: 539 nm Avg. Stage Length: 361 nm 4 E170 1 E170 36 routes 6 routes Avg. Stage Length: 396 nm Avg. Stage Length: 456 nm Dec/05: Dec/05: 21 EMBRAER 170 in service 21 EMBRAER 170 in service 187 routes 187 routes Avg. Stage Length: 464 nm (859 Km) Avg. Stage Length: 464 nm (859 Km) Source: Back Aviation (OAG 4Q05 routes) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  41. 41. E-Jets Family @ Asia & Middle East % of Routes (Feb06) New Route Rightsizing Natural Growth 100% 77 Dec/05: EMBRAER 170/190 in service Dec/05: EMBRAER 170/190 in service 29% 66 routes 66 routes 75% Avg. Stage Length: 319 nm (591 km) Avg. Stage Length: 319 nm (591 km) 50% 71% 25% 1 E170 1 E170 5 E170 2 routes 3 routes 61 routes Avg. Stage Length: 598 nm Avg. Stage Length: 417 nm Avg. Stage Length: 305 nm 0% Source: Back Aviation (OAG Feb/06) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  42. 42. Beyond the Current Models... There is a need for a new TOOL Regional Airlines RASK / M Network Airlines Low Cost Carriers E-Jets Capacity THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  43. 43. E-Jets Family – Efficiency to all Business Models Regional Network Low Cost Source: 4Q05 Embraer Orderbook and Back Aviation (OAG 4Q05 routes) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  44. 44. 70 to 110-seat Jets Future 1. Traffic growth on RJ 50 routes REGIONAL 2. Capacity increase on regional routes at peak hours 3. Mainline like services on regional routes 4. Right-sizing of low load factor narrow body flights NETWORK 5. Replacement of old and inefficient jets 6. Expansion into medium density markets LOW COST 7. Similar or higher service level compared to narrow body existing fleets THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  45. 45. The E-Jets Family The 70 to 110-seat market evolution THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  46. 46. EIS Statistics – E-Jets Family E170/190 Family Operators 12 Aircraft in Service 131 Flight Hours 286,200 Flight Cycles 192,132 Note: As of Mar 28th 2006 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  47. 47. E-Jets Family Orderbook Firm Firm Aircraft Customer Delivered Orders Backlog ALITALIA 6 6 0 CIRRUS 1 1 0 FINNAIR 10 4 6 GECAS 8 7 1 LOT POLISH 6 6 0 170 PARAMOUNT* 2 1 1 REPUBLIC 48 37 11 SAUDIA 15 2 13 SWISS 15 0 15 TAME 2 0 2 US AIRWAYS 85 28 57 AIR CANADA 15 14 1 175 LOT POLISH 4 0 4 GECAS 3 0 3 AIR CANADA 45 3 42 COPA 12 2 10 FINNAIR 6 0 6 190 GECAS 20 0 20 JETBLUE 101 7 94 REGIONAL CAE 6 0 6 TAME 1 0 1 FLYBE 14 0 14 195 SWISS 15 0 15 TOTAL 440 118 322 * ECC leasing (Dec 31th, 2005) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  48. 48. Market Forecast 2006-2025
  49. 49. Embraer Market Forecast Worldwide Jet Deliveries by Capacity Segment Segment 2005 - 2014 2006 - 2015 2005 - 2024 2006 - 2025 30 - 60 650 500 1,950 1,550 61 – 90 1,300 1,300 2,850 2,950 91 – 120 1,250 1,550 3,000 3,450 TOTAL 3,200 3,350 7,800 7,950 30 to 120-seat segment value = US$ 180 billion Source: Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  50. 50. Embraer Market Forecast (2006-2025) 30 - 120 Seats: 7,950 Jets Russia & CIS USA, Canada Europe 525 & Caribbean 1,450 7% 4,230 18% China 53% 590 Africa & 7% Latin Middle East America 280 Asia 465 4% Pacific 410 6% 5% Source: Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  51. 51. Jet Fleet Evolution (30-120 seats) Fleet in Service – Current and Embraer´s Projection 4,000 30-60 61-90 91-120 Projected Fleet in Service 3,500 3,000 Number of Aircraft 2,500 2,000 1,500 1,000 500 0 1995 2000 2005 2015 2025 Source: Back Aviation and Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  52. 52. Thank you 70 airlines. 43 countries. 1 manufacturer. EMBRAER THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

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