1. Embraer Investor´s Day
Paris Airshow
June 20th, 2007
Mauro Kern
Executive Vice-President, Airline Market
Airline Market Overview
Airline Market Overview
A perspective from the 30 to 120-seat segment
A perspective from the 30 to 120-seat segment
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.
3. Contents
Air Transport Industry Overview
50-seat Regional Jet Market
E-Jets: the 70 to 120-seat segment
Embraer Market Forecast
4. World Financial Net Results
Positive results projected for 2007 and 2008
North America
-10 -7.7 -5.7 0.0 2.9
World
-5.6 -4.1 -0.5 5.1 9.6
Europe
1.1 1.6 2.6 2.7 3.0
2004 05 06 07F 08F
Middle East
0.2 0.2 0.5 0.5 0.6
2004 05 06 07F 08F
Asia Pacific
2004 05 06 07F 08F
3.4 2.1 1.9 1.7 2.5
Africa
Latin America
-0.3 -0.3 -0.3 -0.3 0.0 2004 05 06 07F 08F
0.1 -0.1 0.5 0.5 0.6
2004 05 06 07F 08F
2004 05 06 07F 08F 2004 05 06 07F 08F
Values in US$ Billion
US net results includes restructuring costs and
Source: IATA Economics Jun/07 (ICAO data to 2005 and IATA Forecast 2006-2008) excludes United Airlines ‘fresh-start’ accounting losses and gains
5. Air Transport Industry Major Drivers
Driver Consequence
• New Passenger Profile Different Set of Values (pricing, comfort,
more frequencies and direct services)
• Increased Competition Pressure for Differentiated Services
• Regulatory Liberalization Opportunities for New Entrants
• Weak Revenue Environment Improved Productivity and Efficiency
• Old Fleet Additional Costs - Fuel & Maintenance
• Demand vs. Capacity Need of a Better Match of Market
Demand and Aircraft Capacity
8. ERJ 145 Family Order Book
Firm
Firm Orders Options Deliveries Backlog
ERJ 135 108 - 108 -
ERJ 140 74 - 74 -
ERJ 145 732 132 679 53
Total 914 132 861 53
(March 31st., 2007)
9. RJ 50s current situation
• Worldwide FIS = 2042 aircraft
distribution: 66% in the US; 21% in EU and 13% in ROW
• Parked aircraft: 57 Bombardier CRJs; 2 Embraer ERJs; 30 others
only 4% of the total fleet – a stable market
• RJ50s transported 14% of all US domestic passengers in 2006
• RJ50 fleet is responsible for 28% of US domestic departures
• China´s regional airline industry starts to develop – 70 RJ50s in
operation
• Secondary market being developed: Mexico, Eastern Europe and
Africa
10. China – an unbalanced jet fleet
30-120 seat jets represent only 12% of the Chinese jet fleet up to 210
seats, compared to 43% in the US and 35% in Europe
4,829 aircraft 826 2,612
100%
% of Jet Fleet (J30-210)
80%
58%
65% Seat Segment
60% J121-210
89%
J61-120
40% J30-60
15%
20% 43% 24%
35%
28%
4%
8%
12% 11%
0% Source: BACK (Jun/06 ; active in
service ; scheduled airlines)
USA China Europe
The scarce density of demand and the low density of flights added
to the unbalanced fleet clearly point out to the need of RJs
11. RJ 50 Market Opportunities – Russia/CIS
Old fleet replacement is needed in the short term: 524 aircraft affected
200
Number of Aircraft
150 50 seats 30 seats
Avg. Age Avg. Age 76 seats
35 years 32 years Avg. Age
29 years
100 187 188
An-24 Yak-40 149
50 Tu-134
0
Turboprop Jet 30-60 Jet 61-90
Source: BACK (Mar/07)
12. RJ 50s Future Market Trends
• Market entered a mature phase in the US and Europe
• RJ50s will remain the backbone of US hub feeding system
• New market opportunities (long and thin) in the US and EU
• Potential for regional aviation development in China and Russia
• Secondary market will expand
14. E-Jets Family
EMBRAER 170/175
EMBRAER 170
• 70 to 80 seats
• 2,000 nm Range
• Certification: February 2004
EMBRAER 175
• 78 to 88 seats
• 1,900 nm Range
• Certification: December 2004
EMBRAER 190/195
EMBRAER 190
• 98 to 114 seats
• 2,300 nm Range
• Certification: August 2005
EMBRAER 195
• 108 to 122 seats
• 2,100 nm Range
• Certification: June 2006
15. The E-Jets Family – Main Applications
Natural evolution for existing 50-seat markets
Right-sizing of low load-factor narrow-body flights
Capacity, range & seamless service
Enhancing services by increasing frequencies
New market opportunities – low risk development
Medium density and long/thin markets
Replacement of old & inefficient jets
19. Market Opportunities – Right-sizing
US Domestic Load Factor Profile (100/160-seat Jets - 12 months ending Sep/2006)
r
to
600,000
F ac 100%
ad r
Lo eate ate
r
g. e tr y
Av 76-s 0-s Indus
480,000 10 80%
Average Load Factor
Annual Flights
360,000 60%
240,000 40%
120,000 20%
0 0%
20
0
0
0
50
60
70
80
90
<5
10
11
>1
Pax per Departure
851 thousand flights (40% of total) carried less than 100
passengers onboard – still low load factors to be corrected!
Source: BACK
20. Market Opportunities – Replacement
World Fleet Age Profile 61 to120-seats: 2,454 jets / 15 years average age
800
Avg.
Region # Acft.
700 Age
USA, Canada &
600 846 10
Caribbean
Number of Aircraft
500 Latin America 285 23
Europe 617 11
400
Russia & CIS 231 23
300
Africa 148 22
200 Middle East 48 16
100
Asia Pacific 241 19
China 38 8
0
0-5 6-10 11-15 16-20 21-25 26-30 31-35 >35 World 2,454 15
Age (Years)
30% of the 61 to 120-seat fleet (735 acft) are more than 20 years old
Source: BACK (Oct/06)
21. US Scope Clauses - Jun/2000
Labor
Seats 40 50 60 70 80 90 100
Contract
Amendable
Year
30 units Not Allowed
Unlimited 45-55 seats (Grandfathered rights 36 Avro RJ85 up to 69 seats) 2003
Unlimited Not Allowed 2003
Unlimited Up to 67 units Not Allowed 2002
Unlimited Up to 75 units Not Allowed 2000
Not Allowed
Up to 65 units 2000
(Grandfathered rights 18 AirWis BAe 146)
Up to 35 units 50 seats and
35 units 69 seats Not Allowed 2003
22. US Scope Clauses - Jun/2007
Labor
Seats 40 50 60 70 80 90 100
Contract
Amendable
Year
Unlimited Up to 90 units Not Allowed
2012
Unlimited Not Allowed 2009
“Unlimited”
(Up to 110% AA Up to 50 units Not Allowed 2008
narrow body)
Up to 200 units
Unlimited (30 units 71-76 seats + 3 units for each Not Allowed 2010
mainline aircraft increase)
“Unlimited” up to 70 seats Not Allowed 2010
Up to 93 units
Unlimited up to 78 seats (86 seats)
Not Allowed 2010
23. E-Jets Joint Certification means Flexibility
Same Type Design for ANAC, FAA and EASA
FAA EASA
ANAC FAA EASA
EMBRAER 170 February 2004 February 2004
EMBRAER 175 December 2004 August 2006 January 2005
EMBRAER 190 August 2005 September, 2005 June 2006
EMBRAER 195 June 2006 June 2007 July 2006
• Market swap flexibility
• Increased residual value
24. E-Jets Commonality
Training 70% of the potential Spare Parts 30% of the potential
benefits benefits
same cockpit, common systems and fly- E170
by-wire technology mean maximum
training commonality within the family 100%
E175
EMBRAER 170 175 190 195
170 ------- A/A/A A/A/A A/A/A 86%
175 A/A/A ------- A/A/A A/A/A
E190
190 A/A/A A/A/A ------- A/A/A
100%
195 A/A/A A/A/A A/A/A -------
E195
Training Qualification Differences : According to FAA AC 120- 53, grades
Based on the aircraft RSPL (Recommended Spare Parts List)
range from A (best) to E (worst) in 3 categories: Training Differences, Check
Note: Airframe and Ground Servicing Equipment only (Engines are not included).
Differences and Recurrent Training
E-Jets have the maximum training commonality (A/A/A)
E-Jets offer an outstanding parts commonality (86% to 100%)
25. The Comfort Factor
E-Jets: Narrowbody airplane comfort in convenient sizes
CRJ700/900 EMBRAER 170/190 A318/320
17.3” 18.25” 18.0”
16” 19.75” 19”
E170/190 advantages:
0.95” (2.4cm) wider seats Widest seats 0.25” (0.6 cm) wider seats
3.75” (9.5cm) wider aisle (+23%) Widest aisles 0.75” (1.9 cm) wider aisle
16% more volume per seat No middle seats Equal volume per seat
“Passengers love this aircraft for its spacious interior design and in particular the
absence of a middle seat” Bryan Bedford, CEO Republic Airways (Jul/06)
“The comfort of the E175 aircraft is important to our customers and the economics of
the aircraft make good business sense.”
Scott Kirby, US Airways EVP Sales and Marketing (Jul/06)
26. The Trip Cost Factor
E-Jets: Lower trip costs than conventional narrow bodies
8000 7563
- 20%
7000 - 32%
6310
6058
6000
5368 US Domestic
5135
US$ per Trip
5000 Network Airline -
800 sm trip
4000
3000
Airplane Variable
2000 plus Ownership
Costs per Trip
1000
0
(2-class seating): E170 (70) E175 (78) E190 (94) E195 (104) A319 / (124)
B737-700
“… Moreover, we are now seeing the tangible benefits of our fleet renewal with markedly reduced
Embraer trip costs. The Embraer E190 fleet produced direct operating costs 20 per cent lower
than the Airbus A319 fleet on a per trip basis”. said Montie Brewer, AC´s Pres.& CEO (Q1/2007)
Costs exclude: revenue related costs and system (overhead) costs
Costs include: variable: fuel, crew, maintenance, landing fees, handling fees ; ownership: lease cost, hull insurance, spares inventory costs
30. E-Jets Worldwide Distribution
Customers Firm Orders
Asia Pacific /
China
14% Middle East / 13%
24% Africa 5%
21% Europe 16%
60%
17%
24% 6%
Latin America
North America
• growing and diversified customer-base across five continents
• increased presence in emerging markets with established carriers
31. E-Jets Family - Efficiency to all Business Models
Regional Network Low Cost
Charter
Source: Embraer (Mar/07 ; Sirte Oil and GECAS not presented)
38. 2007-2026 Embraer Market Outlook
4th. Edition
A LONG-TERM VIEW
OF THE 30 TO 120-SEAT
COMMERCIAL JET MARKET
39. Projected Traffic and Economic Growth
Growth by World Region (2007-2026)
USA, Canada & Caribbean
RPK
Latin America GDP
Europe
CIS
Africa
Middle East
Asia Pacific
China
World
0% 1% 2% 3% 4% 5% 6% 7% 8%
Average Annual Growth (%)
Projected world GDP growth around 3% in the next twenty years
will sustain nearly 5% annual increase in air transport demand.
Source: Global Insight and Embraer (Oct/06)
41. Embraer Market Forecast (2007-2026)
Projected Deliveries (30-120 seats): 7,500 Jets
Russia & CIS
USA, Canada 505
& Caribbean Europe 7%
3,850 1,290
51% 17% China
Middle 630
East 9%
Africa 230
Latin 130 3%
America 2% Asia
480 Pacific
6%
385
5%
42. Summary
• Air transportation growth and airline economic conditions are
favourable
• 50-seat RJ market is stable in the US and EU with new opportunities
in China and Russia
• Market conditions are in place for further expansion of the 70 to 120-
seat jet fleet, showing strong opportunities for the E-Jets
• Embraer´s market share growing with a diversified customer base
• Embraer´s firm backlog of US$15 billion
