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2006 - Ubs Presentation At Nbaa
This document discusses UBS's presentation at the 2006 NBAA convention. It begins with a forward-looking statement disclaimer and provides market figures on the size and growth of the business aviation market. It notes drivers of demand growth and issues with increasing delays at major airports in the US and Europe. The document then discusses the evolution of business models in aviation to address rising costs and hassle factors, including fractional ownership, jet cards, air taxi, and branded charter options. It provides a forecast for executive jet deliveries from 2007-2016 and notes very light jets may help address the price gap between commercial and private aviation for small cities and short flights.
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2006 - Ubs Presentation At Nbaa
- 1. UBS at NBAA2006 Convention José Eduardo Costas Vice-President, Contracts, Executive Jets October 18th,2006
- 2. Forward Looking Statement Thispresentation 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.
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- 4. Business Aviation MarketSize US$ 38.9 bi 3,9 US$ 27.1 bi 6,7 Fractional Ownership 2,2 Charter + Aircraft Management 4,7 4,8 FBO 2,7 4,2 1,2 MRO 2,4 Completion + 1,1 Refurbishment 19,5 15,7 Airframe / OEM (2005 US$ billion) Source: AT Kearney and Embraer estimates 2005 2016e Significant Expansion
- 5. Main demand drivers Stock market Macro-economic Corporate Profits performance factors (GDP) Individual Wealth 6.4% 4.5% 3.4% 3.0% 2006e 2.6% 2.1% 5.3% 4.2% 2007-16e Eastern Europe North America Western Europe Middle East 7.2% 5.8% 5.6% 5.1% 4.8% 4.0% Asia Pacific Africa not including Japan Latin America WORLD 3.9 % 3.2 % Source: Global Insight – May & September 2006 Worldwide deliveries of new executive jets 2006e: + 16% 2007-2016e: + 3.7% (cagr)
- 6. Hassle factor: Growingdelays in US and Europe SEA USA PDX MSP DTW BOS 73% ORD PIT EWR of pax at 35 hubs SLC DEN MDW CLE BWI IAD DCA JFK LGA HNL SFO LAS STL CVG 90% of delays at main hubs LAX SAN PHX DFW MEM ATL CLT IAH TPA MCO FLL MIA AVIÔES EM FILA Europe 13% flight delays increase in 2005 World Terrorism threat increased hassle factor Sources: FAA 2005 Eurocontrol 2006
- 7. Yearly Total Cost Industry answer: business models evolution Traditional Ownership Aircraft Management Fractional Ownership Cost Used Fractional Jet cards memberships Charter On-Demand Scheduled Charter “Bizav” Airline Branded Charter New business Air Taxi models Commercial Aviation Source:: Embraer (adapted from Jet Solutions)
- 8. 2007-2016 Market Forecast(deliveries) - World Product Categories Units US$ ULTRA LARGE 2% 8% 6% ULTRA-LONG RANGE 12% 23% LARGE 11% SUPER MID-SIZE 12% 24% MID-SIZE 10% 16% MID-LIGHT 22% 11% LIGHT 7% 23% VERY LIGHT 9% * additional air taxi demand of 2,500-3,000 units 4% 11,115 executive jets US$ 169 billion in the next 10 years
- 9. Industry Findings Traditional Emerging Transp. Airline First New Models of Commercial Offer Alternatives Reaction Initiative Transportation Charter Growth Air Taxi Hassle factor Small cities: Low frequencies Jet Card Boom Airline Premium No direct flights Service Branded Charter Car trips 2005 2006
- 10. VLJs: Tapping theGap ?? Light Executive Jet Airlines Light bizjet average price $10 Round Trip Price (US$ x 1,000) $8 $6 Huge Gap: US$ 6.000 (example) $4 $2 Airline – Full Fare $0 0 100 200 300 400 500 600 700 Stage Length (miles) VLJs may tap the gap Source:6
- 11. Vision To becomea major player in the Business Aviation Market by 2015 through innovative and differentiating product and service solutions with added value to our customers and shareholders.
- 12. Legacy™ 600 ProgramUpdate
- 13. The world discoversthe Legacy™ 600 USA 37 EUROPE 31 ASIA 8 MIDDLE EAST 5 LATIN AMERICA 3 AFRICA 1 TOTAL 85 10 Oct 2006 85 aircraft, 18 countries, the right choice
- 14. Competitive Analysis –Floor Plans Superior Privacy and Comfort
- 15. Market share -super midsize category 15% 13.5% 13% 25-30 a/c 12% 12% 10% 20 a/c 13 13 10 a/c a/c a/c 2002 2003 2004 2005 2006 2007-2015 July 2006 2005: deliveries growth of 54%
- 16. Phenom™ 100 andPhenom™ 300 Program Update
- 17. Phenom™ 100 Interior design Preliminary data
- 18. Phenom™ 100 andPhenom™ 300 Prodigy™ - Avionics based on Garmin system Preliminary data
- 19. Phenom™ 100 Layout ConfigurationComparison – Jets Preliminary data Phenom™ 100 Eclipse 500 Mustang Adam 700 CJ1 (Entry Level Jet) Source: Conklin & de Decker Aircraft Comparator 2005/2006 – Manufacturers’ web sites and promotional material
- 20. Phenom™ 100 Cross-section Comparison– Jets Preliminary data 4ft 8in (1.42 m) 4ft 7in (1.40 m) 4ft 11in (1.50 m) 4ft 11in (1.50 m) 4ft 2in (1.27 m) 4ft 6in (1.37 m) 5ft 1in (1.55 m) 5ft 1in (1.55 m) Phenom™ 100 vs. Eclipse 500 Phenom™ 100 vs. Mustang Source: Conklin & de Decker Aircraft Comparator 2005/2006 – Manufacturers’ web sites and promotional material
- 21. Phenom™ 100 Layout andCross-section Comparison – Turboprops Preliminary data Cross-section Comparison 4ft 6 in (1.45 m) 4ft 11in (1.50 m) 4ft 10in (1.37 m) 5ft 1in (1.55 m) Phenom™ 100 King Air C90GT Phenom™ 100 vs. King Air C90GT Source: Conklin & de Decker Aircraft Comparator 2005/2006 – Manufacturers’ web sites and promotional material
- 22. Integrated Development Embraer usesa full range of technologies to enable a complete development integration for its products. Catia V5 is extensively being used. It is a successful heritage that comes from Embraer Commercial aircraft experience and is being applied to the Phenom™ 100 and Phenom™ 300.
- 23. Phenom™ 100 –Wind Tunnel Test Campaign D E TE MPL CO 2Q - 2005 Phase I - USA UWAL - University of 4Q - 2005 Washington Aeronautical Laboratory Phase II - Brazil 2Q - 2006 CTA - General Command for Aerospace Technology Phase III - Russia TsAGI – Central Aerohydrodynamic Institute Design specifications confirmed
- 24. Phenom™ 100 –Engine first flight TE D E MPL CO Oct 2006 Pratt & Whitney Canada PW 617F Successfully completed 4.2 hours of flying
- 25. Phenom™ 100 –Master Phase Plan 2004 2005 2006 2007 2008 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Business Case Approval Business Plan Preparation Business Plan Approval (Official “Go-Ahead”) Joint Definition Phase Detailed Design and Flight Test Campaign First Metal Cut Sub-Assembly Final Assembly First Flight Entry Into Service
- 26. Phenom™ 100 Entry intoService: mid-2008 Price: US$ 2.85 million* * Jan 2005 economic conditions
- 27. Phenom™ 300 ProgramUpdate
- 28. Phenom™ 300 Interior design by Preliminary data
- 29. Phenom™ 300 Baggage Compartment Preliminary data Baggage Compartment - 66 cu ft FWD Baggage Compartment - 5 cu ft Wardrobe - 5 cu ft Competitors Main Baggage Compartment Hawker 400XP: 26 cu ft Citation Encore: 28 cu ft Citation CJ3: 50 cu ft Sources: B&CA Purchase Planning Handbook – May 2005
- 30. Phenom™ 300 Layout ConfigurationComparison Preliminary data PhenomTM 300 CJ2+ Bravo CJ3 Encore (Mid-Light) Source: Conklin & de Decker Aircraft Comparator 2005/2006 – Manufacturers’ web sites and promotional material
- 31. Phenom™ 300 Cross-section Comparison Preliminary data Phenom™ 300 – walkthrough cabin 4ft 10in (1.47 m) 4ft 11in (1.50 m) 4ft 9in (1.45 m) 5ft 1in (1.55 m) Phenom™ 300 vs. CJ2+ / Bravo / CJ3 / Encore (Mid-Light Jet) Source: Conklin & de Decker Aircraft Comparator 2005/2006 – Manufacturers’ web sites and promotional material
- 32. Phenom™ 300 –Wind Tunnel Test Campaign TsAGI – Central Aerohydrodynamic Institute - Russia Ongoing campaign
- 33. Phenom™ 300 –Master Phase Plan 2004 2005 2006 2007 2009 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Business Case Approval Business Plan Preparation Business Plan Approval (Official “Go-Ahead”) Joint Definition Phase Detailed Design and Flight Tests Entry Into Service
- 34. Phenom™ 300 Entry into Service: mid-2009 Price: US$ 6.65 million
- 35. The world alsodiscovers the Phenom Family 30 September 2006 Phenom Family - more than 300 firm orders in 22 countries
- 36. Expected Production Plan– PhenomTM 100 & PhenomTM 300 2008 Phenom™ 100 15 - 20 (units) 2009 120 - 150 (units) Phenom™ 100 & Phenom™ 300
- 37. Embraer LineageTM 1000Program Update
- 38. Embraer LineageTM 1000- Interior illustrative purposes only
- 39. Lineage 1000 Performance Range: 4,200 nm* MMO : Mach 0.82 * NBAA IFR reserves (35 min) with 200 nm alternate; 8 passengers @ 200 lb, ISA. Range circles consider 85% annual winds,, 3% allowance Preliminary data
- 40. Embraer LineageTM 1000- Interior Design Office Priestman Goode is a design consultancy specializing in 3D branding. They work in many different sectors, ensuring that the final design genuinely adds to the customer experience. Source: Priestman Goode website
- 41. Expected Production Plan– LineageTM 1000 2008 2009 up to 2 3-4 (units) Lineage™ 1000
- 42. Embraer Lineage™ 1000 Entry into Service: mid-2008 Price US$ 40.95 million* * Jan 2006 economic conditions
- 43. Phenom™ 100 andPhenom™ 300 Fleet Customer operation
- 44. Phenom 100TM andPhenom 300TM design drivers Premium comfort Docile flying characteristics Outstanding performance Next generation engines Low operating cost Designed for high utilization Human factors High availability
- 45. High Utilization –based on 4 main fundamentals Designed for high utilization
- 46. High Utilization Fundamentals Operation Economic Life Maintenance Availability & Reliability
- 47. High Utilization Fundamentals Economic Life
- 48. Economic Life –typical utilization over 10 years Preliminary data Air Taxi (20,000) Fractional (12,000) Charter & Branded Charter (8,000) Private Owner (2,000) 15,000 VLJ (nearest Phenom 100 competitor) 35,000 EXTENDED LIFE Cycles Favors Residual Value
- 49. High Utilization Fundamentals Extended Economic Life Availability & Reliability
- 50. Availability & Reliability Preliminary data High MTBF IESI – Integrated Electronic Standby Instruments FADEC’s 10 times better MTBF All main electronics inside pressurized areas Maturity plan Avionics Pressurization Controller Power Distribution
- 51. Availability & Reliability Preliminary data Dynamic Display Interchangeability The aircraft can be dispatched with PFD2 failure: PFD1 failure: MFD failure:
- 52. Availability & Reliability Low Turn-Around Time (TAT) Phenom™ 300: Externally Serviced Lavatory Single Point Refueling Preliminary data
- 53. High Utilization Fundamentals Extended Economic Life Outstanding Maintenance Availability & Reliability
- 54. Maintenance Ground Connectivity - Data link capability (road map) Network Trend and exceedance Remote Diagnostic Two-way high-speed Phase 1 – On Ground Datalink MSG-3 and low intervention philosophies Customized maintenance plan Simple maintenance procedures Reduced number of tasks with higher intervals Smooth replacement & adjustment tasks Quick fault location and isolation up to LRU level Highly integrated central maintenance computer (engine, avionics & other systems – AMS, electrical etc) Preliminary data
- 55. High Utilization Fundamentals Operation Extended Economic Life Outstanding Simple Availability Maintenance & Reliability
- 56. Operation – increasedoperational safety level Usual tasks Phenom Tasks Focus on Human Factors Press Button Start Switch Engine start Fuel ON High automation level workload Engine Parameters Monitor Gen ON Reduced pilot workload Gen Load Check Av Master ON Reduced crew stress Standby horizon Brakes chk Brakes chk High situational awareness Flaps and speed brake Flaps and speed brake Chk elect trim disconnect Pitot / static Ignition on Check thrust rev Functionalities IESI – Integrated Electronic Standby Instrument Integrated EICAS – Engine Indication and Crew Alert System Synoptic graphics Moving map Weather datalink & weather radar Autopilot guidance controller Preliminary data
- 57. High Utilization Fundamentals Easy Extended Operation Economic Life Outstanding Simple Availability Maintenance & Reliability Enables intense operation and favors residual value
- 58. Phenom™ 100 andPhenom™ 300 – design drivers Low operating cost Designed for high utilization
- 59. Low operating cost Phenom™ 100 Phenom™ 300 DOC: US$ 440 / FH * DOC: US$ 700 / FH * 20% lower than an entry level jet 20% lower than a light jet (Citation CJ1)* (Hawker 400XP)* 12% lower than King Air C90B 16% lower than a mid-light jet for a 600 nm mission** (Citation Encore)* * Per B&CA assumptions – Typical Bizjet Operation ** B&CA Operations Planning Guide – August 2005 Preliminary data
- 60. VLJs: Tapping theGap ?? Light Executive Jet Airlines Light bizjet average price $10 Round Trip Price (US$ x 1,000) $8 $6 Huge Gap: US$ 6.000 (example) $4 $2 Airline – Full Fare $0 0 100 200 300 400 500 600 700 Stage Length (miles) VLJs may tap the gap Source:6
- 61. Charter Light JetOffer Phenom 100 Applicability – Branded Charter $18 $16 Light Jet average price Round Trip Price (US$ x 1,000) $14 $12 $10 30% - 40% ce $8 ted Pri 0 0Proje c om 1 $6 $4 Phen $2 $0 0 100 200 300 400 500 600 700 800 900 Stage Length (miles) Source: 6, 12 Phenom 100: 30% - 40% less expensive for customer
- 62. Fractional Ownership –Price Comparison 25% of aircraft share 800 Yearly price (US$ x1,000) 700 600 44% 500 44% 24% 24% 400 300 200 100 0 Phenom 100 CJ1 Hawker 400 XP Acquisition Cost Management Monthly Fee Operating Hourly Fee Source: 12,18 Phenom 100 can enlarge the fractional customer basis
- 63. Air Taxi -per Seat on Demand Light Executive Jet Airlines Light bizjet average price $10 Round Trip Price (US$ x 1,000) $8 $6 $4 no m 100 ted P rice – Phe $2 Air T axi Projec Airline – Full Fare $0 0 100 200 300 400 500 600 700 Stage Length (miles) Air Taxi per seat fills the gap Source:6
- 64. Customer Support &Services
- 65. Vision To become a leading Support & Services provider in the Business Aviation Market within 3 years through a solid network, genuine customer relationship and best practices.
- 66. Building Up Experience Integrated Solutions Reputable Maintenance Services Excellent Parts Support & Repairs Outstanding Field & Tech. Support 37 y ears Comprehensive Training Program of cu Embraer Executive Care programs s tom er supp ort
- 67. Embraer owned ServiceCenters Network in USA Embraer Owned Service Centers Bradley Hartford, CT Williams Gateway EAMS Mesa, AZ Nashville, TN Exisiting Service Center New Service Centers Fort Lauderdale International, FL
- 68. Revamped Service CentersNetwork in USA 13 Authorized Service Centers Hillsboro, OR Bedford, MA Wheeling, IL Teterboro, NJ Lincoln, NE Cleveland,OH Lincoln, NE Cahokia, IL LAX, CA Phoenix, AZ Phoenix, AZ Augusta, GA Houston, TX West Palm, FL Legacy 600 Authorized Service Centers Enlarged and reconfigured network
- 69. Reputable Service CentersNetwork in USA 8 Authorized Service Centers Hillsboro, OR Moline, IL Indianapolis, IN Grand Junction, CO Greenville, SC Dallas, TX Phenom 100 & 300 Authorized Service Centers Different service levels (line to overhaul)
- 70. Service Centers Networkin USA Embraer Owned Service Centers Phenom 100 & 300 Authorized Service Centers Legacy 600 Authorized Service Centers 21 Service Centers provide territorial coverage
- 71. Enhanced Service CenterNetwork in Europe Exisiting Service Center New Service Center Le Bourget, FR FR PT OGMA, PT
- 72. Enhanced Service CenterNetwork in Europe 5 Authorized Service Centers Legacy 600 Phenom 100 & 300 London, UK Prague, CR Munich, GY Zurich, SW Lugano, SW Lugano, TO BE APPOINTED. Operators have a wider choice of services
- 73. Service Network forEmbraer Executive Jets Worldwide Network (middle 2008): 45 Service Centers 7 Embraer Wholly Owned 38 Authorized Service Centers Best choices for all kind of operators
- 74. Logistic Provider –Phenom 100/300 Phenom logistics operated through UPS
- 75. Phenom 100/300 Training Joint Venture Commitment to deliver best training solution
- 76. Phenom 100/300 TrainingPhilosophy te r en ing C ote ain er ing ote em Tr nt ain Rem R Tr & Ce Continuous Flight Skills Pre-Training Ground School Ground School Practical Assessment Package Study (class room) (simulation) Experience Training Mentor Pilot Computer Based 3 Proficency Levels Training Flight School Cockpit + Systems Full Flight Simulator Web Based Training Internet + CD Instrument Procedures Training
- 77. Phenom 100/300 PotentialTraining Locations USA Europe First Training Center USA 2008 First Training Center Europe 2009 Second Training Center USA 2012 Full Flight Simulator available at Phenom EIS 77
- 78. Embraer Executive Care Legacy600* Standard Intermediate Enhanced Scheduled + basic unscheduled airframe parts Parts freight Parts for Service Bulletins, AD related Embraer Maintenance Tracking & Planning System Scheduled heavy checks labor (24 MO) Labor, all scheduled tasks Labor, basic unscheduled tasks Labor on Service Bulletins, AD related Mobile Rescue Team, AOG * Only airframe. No engine included. More levels of coverage
- 79. Embraer Executive Care Phenom100 & 300 Standard Enhanced Scheduled + basic unscheduled airframe parts Airframe parts freight High Utilization Airframe parts for Service Bulletins, AD related above 400 FH/y Embraer Maintenance Tracking & Planning System Low Utilization Engine Coverage below 400 FH/y Airframe Labor, Scheduled and Basic Unscheduled Airframe Labor, Service Bulletins, AD related Airframe Mobile Rescue Team, AOG OPT. OPT. Engine Life Limited Parts Coverage OPT. OPT. OPT. OPT. Different Levels of coverage
- 80.