EMBRAER Analysts                                   Airline Market Outlook
                                                ...
Contents



                Key Global Market Trends



                Regional Jets Sustained Operation



             ...
Forward Looking Statement



This presentation includes forward-looking statements or statements about events or
circumsta...
Key Global Market Trends
• Traffic Recovery
              Intra-Europe (RPK Billion)                                      ...
Key Global Market Trends
•    LCC Expansion
                                                                              ...
Key Global Market Trends




                                                                                     % Change...
Key Global Market Trends
                                                                                                 ...
Not Another Cycle, but a Fundamental Change

   New Passenger Profile                                         Different Se...
Regional Jets
   Sustained
   Operation
(30-60 seat segment)
Regional Jet - A Dynamic Tool

                                                                       When markets are str...
ERJ 145 Family
The Evolution of Regionals




                               An Intrinsic Part of the Solution
     THE IN...
ERJ 145 Family Orderbook




  (as of March 31st., 2005)                                                                  ...
Regional Jet Network - Europe




      Jan 1995: 104 Routes

      Jan 2005: 1143 Routes




Source: Back/OAG (Feb/05 - E...
ERJ 145 Family Network - Europe
                                                                                          ...
New Routes Development - London City
ERJ 135: Steep Approach Capable (London City Airport)
Still Air Range: 600 nm

      ...
New Routes Development - China

                                                                                          ...
ERJ – AeroLitoral
                                                                                                        ...
Regional Jet Network - USA




                                                                                           ...
ERJ 145 Family Network - USA
                                                                                             ...
ERJ 145 Family Network




                                                                                               ...
RJ Routes - Network Airlines




                                                                                         ...
US Regional System Network

     50%
                                                   44%

     40%
                    ...
30-60 Seat RJs Monopoly Routes

                                                0-2                                       ...
From Concept
   to Reality –
  E- stablishing
the 170/190 Family

 (61-120 seat segment)
The Rule of 70 to 110 (www.ruleof70to110.com)

THE FIRST ISSUE: THE NEED FOR AIRLINES TO RIGHT-SIZE THEIR FLEETS
The Rule ...
The                       E-Jets Family




THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE C...
The E- Jets Family Positioning

 Natural evolution of 50 seat market

 Tapping an existing gap

 Enhancing services (frequ...
EMBRAER 170 EIS Statistics
  Operating Summary


                                             Operators                   ...
EMBRAER 170 Network

                                                                                                     ...
EMBRAER 170 - Republic
                          “The delivery of our first EMBRAER 170 ushers in a new period in the
    ...
EMBRAER 170 Network

                                                                                                     ...
EMBRAER 170 Main Missions
       Natural Growth                                             Right-sizing                  ...
Low Cost
 Carriers
Next Steps
LCC Next Step - Moving Downward in Capacity
                   Year 2004
                 1,304 markets
                  ...
200        400




THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMB...
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONS...
75%
                                                                                                                      ...
Network Carriers

 Opportunities
Opportunity for Right Size - Aircraft Capacity

                                       25% of flights                     ...
Opportunity for Right Size - Aircraft Capacity
US Domestic Flights (Jet aircraft ≥ 100 seats)
                25          ...
Optimizing Fleet Capacity
Opportunity for Right Size - Aircraft Capacity
                                                 ...
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONS...
The Opportunity for Right Size - Range

                      Total Market Served by 91-180 Seats Aircraft (US Airlines)

...
Opportunities for Enhancing Market Presence

Rightsizing and Frequency Increase
Average Daily Frequency by Route (USA and ...
EMBRAER 190 – Air Canada
“The introduction of new generation small jet aircraft to our fleet is a key
component of Air Can...
EMBRAER 170/190 Family Orderbook




                                                                                     ...
EMBRAER 170/175 - LOT

  • four EMBRAER 170 options from their original contract converted into four firm
    orders for E...
Embraer

Market

Forecast
Embraer Market Forecast (2005-2024)


        Worldwide Jet Deliveries by Capacity Segment


           Segment           ...
Embraer Market Forecast (2005-2024)




    THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE C...
Market Share (30-60 seat segment)
100%
                93%

                               83%
  80%



                  ...
Market Share (61-90 seat segment)
100%                                             100%
                                  ...
Market Share (91-120 seat segment)

   100%                100%           100%                 100%




    80%
          ...
Market Share (30-120 seat segment)

     60%

                  54%            54%

     50%
                             ...
Thank you !
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S ...
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2005 - Embraer Paris Air Show Presentation Commercial Aviation

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2005 - Embraer Paris Air Show Presentation Commercial Aviation

  1. 1. EMBRAER Analysts Airline Market Outlook Airline Market & Investors Meeting Trends and Outlook June th - 25th February 2005 24 15th, 2005 President Wilson Hotel, Geneva Some Key Elements Shaping the New Industry Paris, France (30 to 120 seat segment) Orlando José Ferreira Neto Orlando José Ferreira Neto Director of Market Intelligence Director of Market Intelligence
  2. 2. Contents Key Global Market Trends Regional Jets Sustained Operation From Concept to Reality – the E-Jets Family Embraer Market Forecast THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  3. 3. 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.
  4. 4. Key Global Market Trends • Traffic Recovery Intra-Europe (RPK Billion) US Domestic (RPM Billion) 600 300 500 250 400 200 150 300 100 200 50 100 0 0 2000 2001 2002 2003 2004 2005F 2000 2001 2002 2003 2004 2005F Network Low Cost Regional Network Low Cost Regional • Disconnection from Forecast Ground Rules • Historically > 0.90% of GDP, Passenger Revenue is below 0.70%. • RPM is becoming a more complex function Source: US Bureau of Economics Analysis and DOT Form 41 of GDP and Yield. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  5. 5. Key Global Market Trends • LCC Expansion • Around 70% of all domestic passengers in North America and Europe have access to low cost carriers services. • LCCs hold air fare pricing power. • Passengers are more stringent on air travel value proposition. US Domestic (% RPK) Intra-Europe • Shift in Market Share 100% 3% 12% 5% 9% 14% 16% 15% 19% 1% 80% 7% 27% 17% • US: LCCs and Regionals expanding. 60% • Intra-Europe: LCCs expanding and 40% 85% 85% 76% 77% 64% 68% Regionals concentrating on secondary/ 20% /business markets development. Source: Airlines, Embraer 0% 1995 2000 2004 1995 2000 2004 Network Low Cost Regional THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  6. 6. Key Global Market Trends % Change in Passenger Revenues per Mile (Yield) vs 2000 10% • U.S. Pax Yields Down 5% Sharply from 2000 0% -5% -10% • No evidences or expectation of a -15% -20% sizable recuperation. -25% -30% Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Source: ATA - Air Transport Association • Crude Oil and Jet Fuel Prices 60 WTI 200 Jet F u el (U S¢/G allo n ) C ru d e O il (U S$/B arrel) 50 Jet Fuel • Several factors (cold weather, wars, higher 150 40 import rates, refinery operations issues etc) 100 led to higher crude oil/refined product prices. 30 20 50 • Projected oil prices indicate a shift from historical US$25-30/barrel level to US$ 45-50 10 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 short term and US$40-45 longer term. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  7. 7. Key Global Market Trends 25 • Fleet Right-Sizing 60% 20 • 60% of all US domestic flights depart with load of flights 15 factor more appropriate to 70-110 seat aircraft. % 10 • 95% of all North American narrow-body flights are within 1,700nm range. 5 4 8 13 15 20 13 8 7 5 2 2 • 85% of city pairs exclusively served by narrow 0 50 60 70 80 90 100 110 120 130 140 >150 body jets have less than two daily frequencies. Source: US DOT/Embraer Passengers per Departure • Replacement Crisis – Ageing Fleets (61 to 120 seats) 810 • 35% of total fleet is more than 20 years in service 492 Aircraft older than 20 Years 451 35% of total fleet in service and shall start to be replaced in the coming years. 361 320 • Old technology equipments, most of them no longer 233 212 237 in production. • Inefficient and expensive aircraft to operate. 0-5 6-10 11-15 16-20 21-25 26-30 30 Source: DOT/Embraer - Fleet in service - Jan 2005 Aircraft Age (Years) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  8. 8. Not Another Cycle, but a Fundamental Change New Passenger Profile Different Set of Values Ultra Competitive Environment Strong Focus on Cost Reduction, Reduced Investments Cash is King Maximum Utilization of Assets (fleet optimization and flexibility) Clash of 3 models (LCC x Network x Regional) It´s about cost and efficiency B737 MD80 A319 B757 A320 B737 A320 It´s about value proposition B757 MD80 B737 70 to 110 70 to 110 B737 B757 A320 A319 Fast Scope Clauses Relaxation / Seats Seats B757 A319 A320 / Closing the 70-110 Seat Gap B737 B757 B737 B737 MD80 B737 B737 B757 (Bottom-Up and Top-Down) 25 50 75 100 125 150 175+ Source: US DOT/Embraer Seat Capacity THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  9. 9. Regional Jets Sustained Operation (30-60 seat segment)
  10. 10. Regional Jet - A Dynamic Tool When markets are strong… RJs expand the air transport system by enhancing catchment areas, adding more spokes to carrier hubs, opening new routes and increasing frequency. … and when markets are weak RJs help to defend an airline’s overall market presence / network integrity by maintaining route-frequency, replacing unprofitable mainline jet services and rightsizing aircraft capacity to demand. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  11. 11. ERJ 145 Family The Evolution of Regionals An Intrinsic Part of the Solution THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  12. 12. ERJ 145 Family Orderbook (as of March 31st., 2005) Firm Firm Options Total Deliveries Backlog ERJ 135 123 2 125 108 15 ERJ 140 94 20 114 74 20 ERJ 145 681 211 892 634 47 Total 898 233 1,131 816 82 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  13. 13. Regional Jet Network - Europe Jan 1995: 104 Routes Jan 2005: 1143 Routes Source: Back/OAG (Feb/05 - ERJ-145/140/135, CRJ-100/200/440, 328Jet routes) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  14. 14. ERJ 145 Family Network - Europe New Routes Jet Complement Jet Replacement TP Complement TP Replacement 100% 31% 75% 17% 50% 18% 13% 25% 21% 0% Average Stage Length = 430 miles 424 routes Source: BACK/OAG(Jan/05) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  15. 15. New Routes Development - London City ERJ 135: Steep Approach Capable (London City Airport) Still Air Range: 600 nm ERJ 135 - Typical European airline OEW - Full PAX Passengers at 90.7 kg (200 lb) - Cruise at LRC - Airport Temp. at 20.5ºC / ISA+5.5ºC (85% Summer) - 85% Summer Winds - JAR OPS Reserves 100 nm alternate THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  16. 16. New Routes Development - China ERJ 145 Average Stage Length: 345 m China Eastern Backlog of 5 ERJ 145 Chengdu Sichuan Airlines China Southern 5 ERJ 145 Guangzhou 6 ERJ 145 Source: BACK/OAG(1Q05) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  17. 17. ERJ – AeroLitoral New Routes Jet Replacement CJS CJS TIJ TIJ TP Complement TP Replacement HMO HMO CUU CUU CEN CEN 100% LMM LMM MTY MTY 17% CUL CUL 75% 17% BJX BJX 50% GDL GDL MEX MEX 41% The ERJ 145, on average, attracts 10 more pax per flight 25% on every route it replaces the Saab. 25% Since the incorporation of the ERJ 145s, AeroMexico’s market share, on disputed routes, has increased by 9 p.p. 0% Source: BACK/OAG(Jan/05) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  18. 18. Regional Jet Network - USA Year 1995: 192 Routes Year 2004: 2912 Routes Source: Back/OAG (Mar/05; ERJ-145/140/135, CRJ-100/200/440, 328Jet routes) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  19. 19. ERJ 145 Family Network - USA New Routes Jet Complement Jet Replacement RJ Complement RJ Replacement TP Complement TP Replacement 100% 28% 75% 18% 50% 22% 3% 25% 5% 6% Average Stage Length = 460 miles 18% Source: BACK/OAG(Jan/05) 0% 1371 routes THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  20. 20. ERJ 145 Family Network < 1 hour 1 – 2 hours 2 – 3 hours > 3 hours Number of Routes Jan/2000 Jan/2005 < 1 hour 41 (14%) 179 (15%) 1 - 2 hours 157 (55%) 639 (51%) 2 - 3 hours 87 (31%) 380 (30%) > 3 hours 0 48 (4%) Source: BACK/OAG (Jan/05) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  21. 21. RJ Routes - Network Airlines Year 2004 Total RJ Routes: 2912 RJ Monopoly Routes: 848 (29% of total RJ routes without any direct competition) Source: Back/OAG (Yr 2004: ERJ-145/140/135, CRJ-100/200/440, 328Jet routes) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  22. 22. US Regional System Network 50% 44% 40% 35% 30% 27% 21% 20% 15% 15% 10% 0% AA CO DL NW UA US • A high percentage of RJ service is on monopoly routes Source: BACK/OAG (Jan/05; analysis by airport) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  23. 23. 30-60 Seat RJs Monopoly Routes 0-2 2-5 5-7 100% 80% 60% 40% 20% 0% AA CO DL NW UA US Total System • 75% of all RJs monopoly routes are operated with less than 2 daily frequencies Source: OAG (2004) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  24. 24. From Concept to Reality – E- stablishing the 170/190 Family (61-120 seat segment)
  25. 25. The Rule of 70 to 110 (www.ruleof70to110.com) THE FIRST ISSUE: THE NEED FOR AIRLINES TO RIGHT-SIZE THEIR FLEETS The Rule gives the airlines the tools to right-size their fleets thereby optimally matching capacity to demand. THE SECOND ISSUE: AIRLINES USING AIRCRAFT WITH TOO MUCH CAPACITY The Rule, by allowing the airline to efficiently right-size, creates increased frequency to capture market share and provides customers with more choice. The airlines can therefore focus their 120-plus seat aircraft on high-demand routes. THE THIRD ISSUE: USE OF TODAY’S REGIONAL JETS IS NOT OPTIMIZED The Rule provides the right aircraft for the right market and allows the airlines to reposition their existing fleets to ensure that aircraft are neither overused or underused. THE FOURTH ISSUE: AGEING FLEETS The Rule, by introducing the right equipment for the right market, gives airlines the opportunity to develop the most optimum aircraft replacement strategy. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  26. 26. The E-Jets Family THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  27. 27. The E- Jets Family Positioning Natural evolution of 50 seat market Tapping an existing gap Enhancing services (frequency) Low risk for demand stimulation Improving network deployment (capacity & range) New markets opportunities (long & thin routes) Replacing old & inefficient narrow body jets Blurring the line between regional and mainline operations THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  28. 28. EMBRAER 170 EIS Statistics Operating Summary Operators 5 Aircraft in Service 62 Flight hours 102,829 Flight Cycles 70,820 (as of May 31st., 2005) PR 03/Jun/05 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  29. 29. EMBRAER 170 Network New Routes Right-sizing Natural Growth 100% 5% 75% 50% 50% 25% 45% 0% Source: BACK/OAG(Jan/05) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  30. 30. EMBRAER 170 - Republic “The delivery of our first EMBRAER 170 ushers in a new period in the continued growth of our company and will allow us to support our growing United Express operation. The 170’s unique design allows us to offer United a true mainline product but at regional jet operating economics”. Bryan Bedford, Chairman, President and CEO of Republic Airways Holdings (Sep/2004) 70 seats: 48 @ 31” pitch 16 @ 34” 6 @ 36” FA Seat Wardrobe Aft Lavatory FA Seat Aft Galley Forward Lavatory Forward Galley THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  31. 31. EMBRAER 170 Network New Routes Right-sizing Natural Growth 2% 100% 39% 75% 50% 59% 25% 0% Source: BACK/OAG(Jan/05) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  32. 32. EMBRAER 170 Main Missions Natural Growth Right-sizing New Routes 100% 2% 5% 6% 7% 8% 75% 39% 48% 50% 48% 68% 50% 59% 25% 45% 45% 46% 24% 0% Source: BACK/OAG(Jan/05) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  33. 33. Low Cost Carriers Next Steps
  34. 34. LCC Next Step - Moving Downward in Capacity Year 2004 1,304 markets 500 PDEW = 160/170 seater x 100% LF x 3 frequencies upper boundary for a B737, A319/320 21% 315 PDEW lower boundary for a B737, A319/320 50% From these 1,304 markets, at least 646 are perfectly suited for a 70-110 seater LCC operation 150 PDEW upper boundary for a 50 seater 29% 105 PDEW = 50 seater x 70% LF x 3 frequencies lower boundary for a 50 seater Source : US DOT OD1A THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  35. 35. 200 400 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  36. 36. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  37. 37. 75% 65% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  38. 38. Network Carriers Opportunities
  39. 39. Opportunity for Right Size - Aircraft Capacity 25% of flights 35% of flights More than half of the US domestic depart with loads depart with loads appropriate for flights in 2003 would be better appropriate for 90-110 seat suited to 70-110 seat aircraft. 70-80 seat aircraft aircraft Excess capacity translates to wasted seats, higher operating costs, and 25 greater potential for unprofitability 20 20 15 % of Flights 15 13 13 10 8 8 7 5 5 4 3 2 2 0 <50 50 60 70 80 90 100 110 120 130 140 ≥150 Passengers per Departure US Domestic Flights (Jets ≥ 100 seats) Source: Back (US DOT T100; 2003) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  40. 40. Opportunity for Right Size - Aircraft Capacity US Domestic Flights (Jet aircraft ≥ 100 seats) 25 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 20 % of Flights 15 10 5 0 <50 50 60 70 80 90 100 110 120 130 140 ≥150 Pax per Departure Source: US DOT (T100 - Segment) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  41. 41. Optimizing Fleet Capacity Opportunity for Right Size - Aircraft Capacity In 38% of all UA flights the actual load factor called Mainline United Airlines for a 90-110 seater In 19% of all Domestic Network UA flights the actual load 13 13 factors called for 12 Percent of Flights a 70-90 seater 10 9 9 8 6 6 5 4 3 2 <50 50 60 70 80 90 100 110 120 130 140 150 >150 Passengers per Departure Source: United Airlines (The-Mechanic.com) IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT. THE INFORMATION CONTAINED HEREIN
  42. 42. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  43. 43. The Opportunity for Right Size - Range Total Market Served by 91-180 Seats Aircraft (US Airlines) 1.000.000 800.000 Number of Flights 600.000 2004 400.000 200.000 1995 0 100 300 500 700 900 1100 1300 1500 1700 1900 2250 2750 >3000 Distance Sector (nm) 95% of flights are within 1,700 nm range with no remarkable evolution since 1995 Source: Back/OAG THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  44. 44. Opportunities for Enhancing Market Presence Rightsizing and Frequency Increase Average Daily Frequency by Route (USA and Europe - Yr 2004) Routes operated exclusively by Jet aircraft (from 91 – 180 seats ; routes up to 2000 nm) 5760 routes with less than 2 average daily frequency 53% City Pairs 28% 12% 5% 2% 0 - 0,5 0,5 - <2 2 - <5 5 - <10 >=10 Average Daily Freqency Source: OAG (Jan/2005) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  45. 45. EMBRAER 190 – Air Canada “The introduction of new generation small jet aircraft to our fleet is a key component of Air Canada’s restructuring business plan to implement high frequency, low-cost services on new and existing routes in Canada and the US. Consistent with this strategy, the EMBRAER 190 will be deployed to pursue strategic market opportunities in North America while offering customers a premium travel experience with enhanced space, comfort and convenience". Robert Milton, Air Canada President and CEO (Sep/2004) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  46. 46. EMBRAER 170/190 Family Orderbook Firm Firm Options Total Deliveries (as of March 31st., 2005) Backlog EMBRAER 170 172 137 309 56 116 EMBRAER 175 15 - 15 - 15 EMBRAER 190 155 230 385 - 155 EMBRAER 195 15 20 35 - 15 Total 357 387 744 56 301 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  47. 47. EMBRAER 170/175 - LOT • four EMBRAER 170 options from their original contract converted into four firm orders for EMBRAER 175 “The EMBRAER 170s and EMBRAER 175s are pivotal elements in our business plan to support our network expansion from the Warsaw hub. These aircraft give us more seat capacity and range, which will enable us to access new markets”. Marek Grabarek, LOT CEO (May/2005) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  48. 48. Embraer Market Forecast
  49. 49. Embraer Market Forecast (2005-2024) Worldwide Jet Deliveries by Capacity Segment Segment 2005 - 2014 2015 – 2024 2005 - 2024 30 - 60 650 1,300 1,950 61 – 90 1,300 1,550 2,850 91 – 120 1,250 1,750 3,000 TOTAL 3,200 4,600 7,800 30 to 120-seat segment value = US$ 170 billion 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 (2005-2024) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  51. 51. Market Share (30-60 seat segment) 100% 93% 83% 80% 67% 60% 50% 51% 52% 52% 54% 51% 49% 50% 43% 45% 45% 46% 40% 45% 44% 44% 32% 42% 17% 20% 7% 5% 6% 4% 7% 4% 4% 4% 3% 1% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 'May/05 EMBRAER BOMBARDIER AVCRAFT Source: Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  52. 52. Market Share (61-90 seat segment) 100% 100% 87% 80% 72% 67% 64% 62% 53% 60% 52% 49% 40% 38% 32% 33% 36% 30% 28% 28% 13% 21% 16% 19% 20% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 'May/05 EMBRAER BOMBARDIER FAIRCHILD DORNIER Source: Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  53. 53. Market Share (91-120 seat segment) 100% 100% 100% 100% 80% 67% 73% 67% 62% 59% 60% 57% 56% 40% 32% 33% 26% 32% 26% 20% 25% 20% 16% 11% 7% 7% 7% 11% 6% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 'May/05 EMBRAER BOEING (737-500/600, 717) AIRBUS As of 2nd Source: Embraer Quarter 2004 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  54. 54. Market Share (30-120 seat segment) 60% 54% 54% 50% 45% 45% 45% 44% 45% 43% 43% 42% 40% 40% 41% 40% 39% 38% 37% 38% 36% 35% 31% 30% 28% 27% 20% 17% 20% 12% 11% 11% 10% 10% 10% 8% 9% 8% 8% 8% 3% 5% 6% 4% 3% 2% 3% 3% 3% 2% 2% 2% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 'May/05 EMBRAER BOMBARDIER F. DORNIER/AVCRAFT BOEING AIRBUS Source: Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  55. 55. Thank you ! 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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