Commercial aviation-embraer-day-2010-1029

Paulo Cesar de Souza e Silva
Executive Vice President Airline Market

Airline Market Overview
A perspective from the 30 to 120-seat segment
Oct/2010

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

Contents

Air Transport Industry Review

ERJ 145 Family

E-Jets Family

Market Outlook 2010-2029

Product Development


Air Transport Demand - IATA
World – 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)

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)

Air Transport Demand vs. Economy
1,400

Gulf War

Financial Crisis
Iraq War & SARS
Oil Crisis

Slowdown & Sep 11th.
29
World 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

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 50-Seater Market
ERJ145 – the backbone of the hub-and-spoke system


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

1,000+ ERJ 145 Platforms Delivered

Dec 1996
Dec 1996
Sep 2007
Sep 2007

First Delivery
First Delivery

Dec 1998
Dec 1998

Dec 1999
Dec 1999

Aug 2000
Aug 2000

Mar 2001
Mar 2001 Sep 2001
Sep 2001 May 2002
May 2002 May 2003
May 2003 May 2004
May 2004 Feb 2005
Feb 2005


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

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


E-Jets
helping airlines to be more efficient


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


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)

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

E-Jets: same efficiency different business models

Network Regional Low Cost

Source: Embraer (Jun/10 - Sirte Oil, GECAS, Jetscape and M1 Travel not presented)

Leasing companies supporting E-Jets
Leasing 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


E-Jets Family Commonality

Airlines are exploring the E-Jets family concept.
High commonality in systems, parts and crew qualification.

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


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 America

World 50% 20% 9% 21%

Right-sizing New Markets Replacement of Natural
Source: OAG (1Q10) old Jets Growth

E-Jets Helping to Increase Efficiency


E190 - Right-sizing at US Airways
New 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 190's, 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)

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)

E-Jets Right-sizing narrowbody services


E-Jets Helping Enlarging Networks


E-Jets Helping Explore New Markets
Low Cost Carriers with Two Fleet Types
Seats
150+

A320 B737-700 A320 A320
100

E190 E190 E190 E190

North America Asia Pacific Europe Middle East


E-Jets Helping Reduce Costs and Fuel Burn


E-Jets: Direct Replacement Benefits
Fuel Burn

Source: www.eforefficiency.com
Note: European economic conditions, fuel at 0.50 EUR/liter

E170/E190 - Air France / KLM

10 E170 + 27 E190

Source: 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


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


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


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


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


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)


E190 - Republic (Frontier)

Agreement for more 24 EMBRAER 190s

E190 Routemap 2010 15 E190 already operating under Frontier colors
Source: 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


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

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.

Market Outlook 2010-2029
2010-2029


Each region has a different pattern
Asia 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%


29,135 new aircraft will be required
About 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


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%


680 E-Jets
56 Airlines from 39 Countries

Commercial aviation-embraer-day-2010-1029

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