2005* ubs 6th annual conference embraer presentation

UBS Sixth Annual CEOs Conference

March 8, 2005Rio de Janeiro

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

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.

Forward Looking Statement


Product Diversification

70’s 90’s 00’s80’s

BANDEIRANTE(EMB 110/111)

TUCANO(EMB 312)

BRASÍLIA(EMB 120)

ERJ 145

AEW&C/ RS/ MP

ERJ 135

EMB 326

EMB 321

EMB 121

AMX

BRASÍLIA(EMB 120)

ERJ 140

AL X(EMB 314)

LEGACY

ERJ 145

ERJ 135

ERJ 140

EMBRAER 170EMBRAER 175

EMBRAER 190EMBRAER 195

AMX-TAEW&C/ RS/ MP

AL X(EMB 314)

Mirage 2000 BR ?

AMX

ERJ 145 XR


Customer Diversification

Civil & Defense Aircraft flying in 58 countries on 5 continents

EMBRAER 170/175/190/195

ERJ 135/140/145


Global Presence

Operations in Brazil, United States, Europe, Asia and Australia

BrazilGavião Peixoto

BotucatuSão José dos Campos

USANashville

JacksonvilleFort Lauderdale

Palm Beach

FranceLe Bourget

ChinaBeijingHarbin

AustraliaMelbourne

SingaporeSingapore


Business Diversification

Sales by Segment

2004E

Corporate; 4%

Defense; 12%

Customer Services & Others; 6%

Commercial;78%

2005E

Corporate; 6%

Defense; 17%

Customer Services & Others; 7%

Commercial ; 70%

Airline Market Status, Trends

and Outlook


Share of US Domestic RPM

8 5 %7 8 %

6 9 %

5 2 %

3 % 5 % 8 %1 9 %1 2 %

1 7 %2 2 %

2 9 %

0 %

2 0 %

4 0 %

6 0 %

8 0 %

1 0 0 %

1 9 9 5 2 0 0 0 2 0 0 3 2 0 1 4 F

M a j o r s L o w C o s t s R e g i o n a l s

...

Source: WATS, Embraer

US Airline Industry Evolution


U.S Passenger Yields Down Sharply from 2000

• Airlines were forced to drop fares in order to stimulate demand.

• In addition, the more recent growth in low cost carriers and real-time availability of fare information on the Internet has led to a dramatic shift in customer purchasing habits – passenger expect fair fares.

US Domestic Yields: Down Forever?


US: Majors and Regionals Performance

2Q20042Q2003

• Regional airlines still considered as a very useful defensive tool by Majors due to lower trip costs and ability to maintain market presence while reducing capacity.

• Regional airlines with profitable operation and increasing their market share.

Source : BTS (2nd Qtr 2004)

Domestic Operating Margin (%)

- 3 0 %

- 2 0 %

- 1 0 %

0 %

1 0 %

2 0 %

A m e r i c a n C o n t i n e n t a l D e l t a N o r t h w e s t U n i t e d U S A i r w a y s

MAJOR

- 1 5 %- 1 0 %

- 5 %0 %5 %

1 0 %1 5 %2 0 %

A C A E x p r e s s J e t A m e r i c a n E a g l e C o m a i r S k y w e s t

REGIONAL


37 Seats

44 Seats

50 Seats

50 Seats (2,000 nm range)

Responding to Market Needs


There are currently 5244 TPs in Active Service Worldwide

TP<201304%

TP3588028%

TP5072323%

TP7038212%

TP20104533%

TP<2026713%

TP20154475%

TP35754%

TP501427%

TP70161%

Scheduled Flights(3160 TPs)

Non-Scheduled Flights(2084 TPs)

Opportunities for Turbo-Prop Substitution


70 – 78 Seats

78 – 86 Seats

98 - 106 Seats

108 – 118 Seats

Engineering Ergonomics Economics Efficiency

The E- Jets Family


*Based on Total Operating Costs; Average OW net fare 500 sm USD 90; 600 sm USD 98

USA Environment

EMBRAER 170 78 seat

EMBRAER 17586 seats

EMBRAER 190106 seats

EMBRAER 195118 seats

PROFITBREAK-EVEN*

40 PAX (51%) 38 PAX

44 PAX (51%) 42 PAX

57 PAX (54%) 49 PAX

62 PAX (53%) 56 PAX

*Based on Total Operating Cost

500 sm for EMBRAER 170/175

600 sm for EMBRAER 190/195

Profitable by Design


E 170 (31")

E 175 (31")

CRJ 700 (31")

CRJ 900 (31")

-10%

-5%

0%

5%

10%

15%

-10% -5% 0% 5% 10% 15%

COC per trip

CO

C p

er A

SM

USA Environment

Cash Operating Cost Comparison (COC)

• The EMBRAER 170 offers equivalentcash operating costs per trip and an11% advantage in cash operatingcosts per seat-mile over the CRJ 700 – while flying 11% more passengersfarther and in more comfort !

• The EMBRAER 175 offers a 6% advantage in cash operating costs per trip and per seat-mile versus the CRJ 900 – flying the same number of passengers in much greater comfortand operating in more challengingairports.

* Cash Operating Cost: Crew, fuel, directmaintenance, landing fees, aiplane handling fees

500 sm tripIn summary, in a Regional Carrieroperating / economic environment:

EC 07/Jun/04

COC* per trip versus COC per seat-mile


E 195 (32")

E 190 (32") A318 (32")B717 (32")

B737-600 (32")

-10%

-5%

0%

5%

10%

15%

-10% -5% 0% 5% 10% 15%

COC per trip

CO

C p

er A

SM

USA Environment

Cash Operating Cost Comparison (COC)

• The EMBRAER 195 offers cashoperating costs per trip lower than itscompetitors – 8% when compared to the B717 and up to 12% when compared to the A318. These big advantages are further enhanced by a cost per seat-mile 2% to 5% below the competitor airplanes.

• The EMBRAER 190 offers cashoperating costs per trip 12% lowerthan the nearest competitor airplane(B717). At the same time, the 190 can offer equivalent seat-mile costs.

600 sm trip

* Cash Operating Cost: Crew, fuel, directmaintenance, landing fees, aiplane handling fees

In summary, in a Low Cost Carrieroperating / economic environment:

EC 07/Jun/04

COC* per trip versus COC per seat-mile


4 8 13 13 8 7 5 2 220150

5

10

15

20

25

50 60 70 80 90 100 110 120 130 140 >150

%35% of flights

depart with loads appropriate for

90-110 seat aircraft

25% of flights depart with loads

appropriate for 70-80 seat

aircraft

Excess capacity translates into wasted

seats, higher operating costs, andgreater potential for

unprofitability

Source: Back (US DOT T100)

USA - Opportunities for Right Sizing

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.Source: BACK -Fleet PC (Scheduled Airlines , Active in Service and All Passenger Configuration)

Replacement of Ageing AircraftWorld Fleet in Service (100+seat segment - Dec/2003)

387

524

380

262

199241

315

0

100

200

300

400

500

600

0 - 5 6 - 10 11 - 15 16 - 20 21 - 25 26 - 30 >30

Aircraft Age (Years)

Nu

mb

er o

f A

ircr

aft

848 aircraft with more than 20 years (37% of total fleet in service)

Need for Replacing Old Jets – Global


Seat Capacity

25 50 75 100 125 150 175+

B75

7

B73

7

B73

7

B73

7

B75

7

A31

9

A32

0

B75

7

A32

0

MD

80B

737

A32

0

B73

7A

319

MD

80

B75

7

B73

7

A32

0

A31

9

B75

7

B73

7

B75

7

B73

7

MD

80

B73

7

70 to110 Seats

70 to110 Seats

Seat Capacity Gap - USA

Sco

pe

Cla

use

s

Competitive

Environment


30Y30Y 50Y50Y 70Y70Y 90Y90Y 110Y110Y 130Y130Y

Scope

PotentialNew Entrants

Embraer Commercial Jets Unique Position


45%42% 44%45%46%

50%

7%

17%

32%43%

52%

93%

83%

67%

51%54%51%

45%

49% 50%

4% 5%4%6%5%

0%

20%

40%

60%

80%

100%

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

EMBRAER BOMBARDIER AVCRAFTSource:

Embraer

Market Share Evolution (30-60 pax)

50%

45%


21%

28%33% 36%

16% 19%

72%

53%

49%52%

87%

64%67%

14%

32% 30%27%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

EMBRAER BOMBARDIER FAIRCHILD DORNIERSource:

Embraer



0% 0% 0% 0%

7%7%6%

25%

7%

73%66%

61%

67%

100%

59%55%

26%32%

26%

20%16%

31%

14%

0%

20%

40%

60%

80%

100%

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

EMBRAER BOEING AIRBUSAs of 2nd

Quarter 2004Source:

Embraer


Airline Market

Forecast


Worldwide Jet Deliveries by Capacity Segment

30 to 12030 to 120--seat segment value = US$ seat segment value = US$ 170170 billionbillion

Embraer Market Forecast 2005-2024

4,600

1,750

1,550

1,300

2015 - 2024

7,800

3,000

2,850

1,950

2005- 2024

3,200TOTAL

1,25091 – 120

1,30061 – 90

65030 - 60

2005 - 2014Segment

4,600

1,750

1,550

1,300

2015 - 2024

7,800

3,000

2,850

1,950

2005- 2024

3,200TOTAL

1,25091 – 120

1,30061 – 90

65030 - 60

2005 - 2014Segment


AsiaPacific

471

6%

China6358%

Africa &Middle East

177

3%

USA, Canada& Caribbean

4,165

53%

30 - 120 Seats: 7,800 Jets

Europe1,319

17%

LatinAmerica

538

7%

CIS4956%

Market Forecast 2005-2024

Commercial Backlog


103

66

20

17

FirmBacklog

7981237336901Total

618998314684ERJ 145

741142094ERJ 140

1061252123ERJ 135

DeliveriesTotalOptionsFirm(as of 4th Quarter, 2004)

ERJ 145 Family Orderbook


EMBRAER 170 / 190 Family Orderbook

15---15EMBRAER 175

297

15

155

112

FirmBacklog

46755427343Total

-352015EMBRAER 195

-385230155EMBRAER 190

46335177158EMBRAER 170

DeliveriesTotalOptionsFirm(as of 4th Quarter, 2004)

Corporate Aircraft Market Status, Trends

and Outlook


Corporate Aviation Segments


Note: * aircraft under development

Product Category

Other

Very light Mustang* Eclipse 500*

Avocet* A700*

Entry CJ1, CJ1+* CJ2, CJ2* Premier I SJ-30*

Light Lear 40 Lear 40 XR*

CJ3 Bravo

Hawker 400XP

Midlight Lear 45 Lear 45 XR

Encore XLS

Midsize Lear 60 Sovereign Hawker 800 XP G100 G150*

Super Midsize Challenger 300 Citation X Horizon* G200 50 EX 2000

2000 EX Legacy

Large Challenger 604 Global 5000

G350 G400 G450*

900 C 900 EX 900 DX*

Ultra-Long Range

Global Express Global XRS* G500

G550 Falcon 7X

Global BBJ1, BBJ2 ACJ

Corporate Aviation Product Range


Super-midsize category

10 20 30 40 50ft

m 3 6 9 12 15

Challenger 30023‘8”(7,22m)

25‘(7,62m)

Horizon

G20024‘6”(7,46m)

42’6”(12,94m)


Large category

10 20 30 40 50ft

m 3 6 9 12 15

Falcon 200026‘4”(8,01m)

G40041’(12,49m)

42’6”(12,94m)


40 aircraft, 11 countries, the right choice

The world has discovered the Legacy


Higher Productivity @ Lower cost leading to Greater value

Price vs. Productivity Index

Challenger 300

HorizonG200

Legacy

Falcon 2000

200

220

240

260

280

300

320

340

360

15.00020.00025.00030.00035.000

Price US$ x 1,000

Pro

du

ctiv

ity

Ind

ex [

(Sp

eed

x C

abin

Vo

lum

e x

Ran

ge)

/TO

FL

] x

1,00

0

BETTER

A Differentiated Value for Customers


2,430 aircraft in target segment

Embraer Market Forecast

5,130

945

1,485

Deliveries(aircraft)

Embraer Forecast (Embraer Forecast (20052005--20142014): ): 77,5,56060 aircraft aircraft -- US$ 130 billionUS$ 130 billion

71.3Other

28.5Large

30.0Super Midsize

Revenues(US$ bi)

Category

Revenues (cumulative)Deliveries (cumulative)

Very Light6%

Entry13%

Light11%

Mid light14%

Mid Size13%

Large13%

Ultra Long range9%

Global2%

Super midsize18%

Entry4%

Light4%

Mid Size10%

Large22%

Very Light1%

Global6%

Mid light8%

Ultra Long range22%

Super midsize

18%

Defense Market


Super Tucano

AMX/AMX-T

F-5 BR

Mirage 2000 BR

Super Tucano

AMX-T

Training Systems

EMB 145 AEW&C

EMB 145 MP/ASW

EMB 145 RS/AGS

EMB 135/145

Legacy

EMB 120K

Integrated Ground Command and Control

Integrated Systems

Data-Link

Defense Market Products

CombatTrainingIntelligence,

Surveillance andReconnaissance

TransportSystems & Services

Integrated Market Approach


ACS – Aerial Common Sensor

Embraer, part of the Lockheed Martin team, will provide its ERJ 145 platform for the U.S. Army’s next-generation battlefield surveillance system

Backlog & Delivery Forecast


0,6 1,23 4,1

6,4

11,4 10,7 9 10,6 10,1

11,3

12,7 12,713,2

17,5 17,5

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

In 4th Quarter 2004 - US$ 27.6 billion in total orders, including US$ 10.1 billion in firm orders

Backlog

US$ billion

Firm Orders Options

1.23.0

4.1

17.7

24.1 23.422.2

28.1 27.6

0.6


Deliveries Forecast

4

32

59

96

160 161

131

101

148 145 145

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005E 2006E


Deliveries Forecast Breakdown

Corporate Aircraft includes corporate authority transportation

60%

36%

15%

31%

50%73%

9% 14% 12%

2004 2005 2006

ERJ 145 Family EMBRAER 170 Family Corporate Aircraft

Financial Data


764

1,837

1,354

2,486

2,144

2,526

2,9272,762

1997 1998 1999 2000 2001 2002 2003 9M04

US$ million

Net Revenue

Q 98% of sales are exports (9M04)

Sales by Segment - 9M04

7%Customer Services &

Others

4%Corporate

Market

11%Defense Market

78%Airline Market


Income from Operations

US$ million

49

172

368

462

651

470

275

402

1997 1998 1999 2000 2001 2002 2003 9M04


US$ million

Net Income

3

145

235

321 328

223

136

297

1997 1998 1999 2000 2001 2002 2003 9M04


Inventories

US$ Million

1,158 1,258 1,2311,390

1,111

3Q03 4Q04 1Q04 2Q04 3Q04


Accounts Receivables

US$ Million

Others = Defense + Customer Services

886

190 271 315 514

95

166 194 157 189

3Q03 4Q03 1Q04 2Q04 3Q04

Commercial Airline Market Others


1,169

454

41119

274

281

Total Short Term 2005 2006 2007 2008 - 2015

Short Term37%

Long Term63%

Short and Long-Term Loans


Net Cash (Debt)

US$ Million

(178)

222 178304

220

3Q03 4Q03 1Q04 2Q04 3Q04


US$ million

PP&E and R&D – Cash Flow

Gross R&D amounts

111

64

44

77

5970

158173

136119

66

143

114100

0

20

40

60

80

100

120

140

160

180

200

2000 2001 2002 2003 2004 E 2005 E 2006 E

PP&E

R&D

Investor RelationsDepartment

Phone: (55 12) 3927 [email protected]

www.embraer.com.br

2005* ubs 6th annual conference embraer presentation

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