embraer day - apresentação aviação comercial

61
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent Embraer Day 2008 - November 07 th , 2008 Embraer Day 2008 - November 07 th , 2008 Airline Market & Embraer Programs Overview Airline Market & Embraer Programs Overview Mauro Kern Executive Vice President Airline Market

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Page 1: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Embraer Day 2008 - November 07th, 2008Embraer Day 2008 - November 07th, 2008

Airline Market & Embraer Programs OverviewAirline Market & Embraer Programs Overview

Mauro KernExecutive Vice President

Airline Market

Page 2: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

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

Page 3: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Contents

� Air Transport Industry Review

� RJ50 & the ERJ145 Family

� 70 to 120-seat Market & the E-Jets

� Competitive Scenario

� New Embraer Market Outlook 2009-2028

Page 4: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Financial crisis?

Page 5: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Short-term Economic Scenario - USA

Source: Wall Street Journal (Oct/08)

• Recession / Slowdown in the USA economy is a REAL FACT

-2

-1

0

1

2

3

4

5

6

2006-Q

1

2006-Q

2

2006-Q

3

2006-Q

4

2007-Q

1

2007-Q

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2007-Q

3

2007-Q

4

2008-Q

1

2008-Q

2

2008-Q

3

2008-Q

4

2009-Q

1

2009-Q

2

Real USA GDP (Quarter over Quarter % Growth)

Recession

Probability

in the USA:

89%

Page 6: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Short-term Economic Scenario - World

Source: Global Insight (Oct/08)

-1

0

1

2

3

4

5

6

7

8

2007-Q

1

2007-Q

2

2007-Q

3

2007-Q

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2008-Q

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2008-Q

2

2008-Q

3

2008-Q

4

2009-Q

1

2009-Q

2

2009-Q

3

2009-Q

4

2010-Q

1

2010-Q

2

2010-Q

3

2010-Q

4

Emerging Markets

Developing Coutries

World

USA

Europe

Real GDP Growth by Quarter (% change from year earlier)

• USA recession / slowdown putting pressure on world economies

• Emerging and developing countries supporting world economy growth

Page 7: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Source: Global Insight (Oct/08)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

European Union USA Emerging Markets Developing Countries World

1999-2008 2009-2018 2009-2028

Long-term Economic Scenario - World

• Emerging and developing markets sustaining long-term economic scenario

Average Annual Real GDP Growth (%)

Page 8: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

World Real GDP Share (Measured in Yr2000 US$ PPP)

• And leading the future GDP share

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1998 2008 2018 2028 2038

Other AdvancedEconomies

USA

European Union

DevelopingCountries

Emerging Markets

Source: Global Insight (Oct/08)

Long-term Economic Scenario - World

Page 9: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

E-Jets Backlog Evolution

Source: Embraer Emerging Countries include Brazil, Russia, India, China and Eastern Europe.

• North America & Europe share decreased

from 91% in 2005 to 51% in Sep/2008

71%

28%

20%

23%

8%

20%

1%

29%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 Sep/2008

% o

f T

ota

l E-J

ets

Ba

ck

log

Emerging Countries

RoW

Europe

North America

322 Acft 409 Acft

Page 10: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Air Transport Industry Cycles

Source: IATA

Air Travel Demand

-4

-2

0

2

4

6

8

10

12

jan

/06

mar/

06

mai/06

jul/06

set/

06

no

v/0

6

jan

/07

mar/

07

mai/07

jul/07

set/

07

no

v/0

7

jan

/08

mar/

08

mai/08

jul/08

sep

/08

World RPK Growth (%)

• Air travel demand is decreasing in the last months, outpacing capacity cuts

RegionJul-

Sep/08Sep/08

Africa -4.5 -7.8

Asia Pacific -3.5 -6.8

Europe 0.8 -0.5

Latin America 7.2 1.7

Middle East 2.3 -2.8

North America 2.8 -0.9

World 0.1 -2.9

Regional RPK Growth (%)

5.9% per year 7.4% per year 3.6% per year

(% change from year earlier)

Page 11: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Air Transport Industry Cycles

Source: ICAO and Embraer

0

100

200

300

400

500

600

700

800

900

1,000

19

70

19

72

19

74

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

F

RPK GDP

• Despite world economic crisis, air travel demand remains growing

2n

d O

il C

risis

Iraq

War

Sep

, 11th

1s

t O

il C

risis

World Economy vs. Air Transport Growth

World Real GDP & RPK (Index 1970=100)

Page 12: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Crude Oil & Fuel Price Evolution

Source: EIA - Energy Information Agency

PeriodCrude Oil (US$/bar)

Jet Fuel (US$/gal)

2000 30.38 0.91

2001 25.98 0.74

2002 26.18 0.71

2003 31.08 0.87

2004 41.51 1.20

2005 56.64 1.72

2006 66.05 1.95

2007 72.34 2.17

Jan-Sep/08 113.31 3.39

Oct/08 82.56 2.59

28/Oct/08 62.80 2.13

0

15

30

45

60

75

90

105

120

135

150

0.0

0.4

0.8

1.2

1.6

2.0

2.4

2.8

3.2

3.6

4.0

Jan

-00

Jan

-01

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

Jan

-07

Jan

-08

Cru

de O

il (U

S$/b

arr

el)

Jet F

uel (U

S$ /G

allo

n)

Jet Fuel Crude Oil

Oct-

08

• Short-mid term: losses due to hedge contracts, but benefit from lower prices.

• Mid-long term: oil price projections ranging from 80-130 USD/barrel.

Page 13: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

-6.7

1.61.2

0.2

-0.1-0.4

-4.1

-2.6

1.8

0.80.2

-0.2 -0.4 -0.5

2.8

2.1

0.90.3

-0.1-0.4

5.6

-5.0

0.3 0.3 0.2

-0.3-0.7

-5.2

-4.0

0.0 0.1 0.2

-0.2 -0.3

-4.1

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

North America Europe Asia-Pacific Middle East Latin America Africa Global

2005 2006 2007 2008F 2009F

Industry net profits

Significant losses continue into 2009.

Source: IATA Economics Sep/08 (ICAO data to 2007 and IATA Forecast 2008-2009)

Values in US$ Billion

Global and US net results includes restructuring costs and excludes United Airlines ‘fresh-start’ accounting losses and gains

IATA Fuel Price Assumption: 2008=$122/b and 2009=110/b

Page 14: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

US Airlines – Foreseeable better results ahead

11.712.6

13.5 13.213.5

10.9

RASM (¢) CASM (¢) RASM (¢) CASM (¢) RASM (¢) CASM (¢)

Source: Airlines (American, Continental, Delta, NWA, United, US Airways, Southwest, JetBlue, Airtran, Alaska); * Excluding Goodwill Impairment;

Others

Pax Revenue

Others

Fuel

Others

Pax Revenue

Others

Others

Fuel

2007 (9M) 2008 (9M) 2009F (9M)

Op. Margin

6.6%6.6%

$5.1 Bi$5.1 Bi

Op. Margin

--7.4%7.4%

($6.2 Bi)($6.2 Bi)

Oil Price (Barrel)

$66Oil Price (Barrel)

$113Oil Price (Barrel)

$90

Fuel

Pax Revenue

Others

Op. Margin

2.3%2.3%

$1.8 Bi$1.8 Bi

� Average Oil Prices on 9M2009: US$ 90/barrel

� ASM reduction: -10%

� RPM reduction: -8%

� Yield increase (fare): 5%

� Other Revenues per ASM growth: 10%

� Other Expenses growth: 8%

Assumptions - Jan-Sep/2009

Page 15: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

US Airlines – Foreseeable better results ahead

Source: Airlines (American, Continental, Delta, NWA, United, US Airways, Southwest, JetBlue, Airtran, Alaska); * Excluding Goodwill Impairment;

� Bloomberg 10/27: “Analysts say the 10 biggest U.S. airlines are poised for a turnaround beginning this quarter. The combination of cheaper fuel and deep capacity cuts

should allow the carriers to profit no matter what happens with the broader economy. Michael Derchin,

FTN Midwest Research Securities, projects $5 billion in profits for the top 10 US airlines next

year.”

�Morgan Stanley 10/28: “We believe that falling fuel prices and nearly unprecedented

domestic capacity cuts have laid the foundation for a movement toward mid-cycle

margins in ’09.”

� Scott Kirby, US Airways Pres: “It would take a truly unprecedented decline in demand to overcome the impact of oil… if we exclude the impact of hedging, to

produce the same results in 2009 as we produced in 2008, revenue would need to decline by 22%... with the exception of 9/11, nothing like that has happened in the history of the airline industry”

Page 16: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

What can we expect?

• Continuous world air transport demand growth despite current

economic slowdown ���� ~ 3% in 2008 and 2009

• More consolidation, merges and less start-ups

• Additional capacity cuts, fare increases and demand slowdown

• Additional quest for efficiency: cost cuts, higher LFs and higher

aircraft utilization

• Early retirement of older jets

• Better match of aircraft capacity to a lower demand

• Limited aircraft financing in 2009

Page 17: Embraer Day - Apresentação Aviação Comercial

RJ50 Market

&

ERJ 145 Family

Page 18: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

ERJ 145 Family Order Book

(September, 30th 2008)

DeliveriesFirm

Backlog

ERJ 135 108 0

ERJ 140 74 0

ERJ 145 693 40

Total 875 40

Page 19: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Source: Back (Dec/07)

0

100

200

300

400

500

600

700

800

900

1,000

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

Age (Years)

Nu

mb

er

of

Air

cra

ft

2,050 Jets (average age: 9 years)

RegionNumber

of Aircraft

%Average

Age (years)

North America 1,422 70% 7

Latin America 49 2% 7

Europe 268 13% 8

Russia & CIS 185 9% 32

Africa & MEast 27 1% 15

Asia Pacific 24 1% 9

China 75 4% 6

World 2,050 9

Fleet Age Profile (30-60 seats)

• Young fleet not requiring replacement in the short-medium term,

(except Russia/CIS fleet)

Page 20: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Source: BACK Aviation (Operator Category: Scheduled Airline, Non Scheduled, Leasing and Financial Institution; Status: In Storage and Temporarily Inactive)

44

38

28

0

20

40

60

80

100

120

2001 2002 2003 2004 2005 2006 2007 26/Oct/08

Nu

mb

er

of

Air

cra

ft

Jet Aircraft (Western Built)

Parked Aircraft (30-60 seats)

• Parked RJ50 fleet increasing due to high fuel prices in the last months.

• Reduced fuel prices bringing some relief to RJ50 short-haul operations.

FairchildDO328

Bombardier

CRJs 100/200/440

Embraer36 ERJ-135

8 ERJ-145

Page 21: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

RJ50 – Importance to the Air Transport System

• Feeding system is vital for Airline´s Success

Page 22: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

20062003

Source: CAAC

RJ50 Evolution on Non-Traditional Markets

China´́́́s RJ aviation is growing at slower pace but has huge potential

196 Markets - 45 A/C 223 Markets - 61 A/C

0% 20% 40% 60% 80% 100%

USA

Europe

China

30-120 Seats

120-210 Seatsunbalanced jet fleet

11%

33%

42%

% of Fleet

Page 23: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

RJ50 Market Opportunities – CIS

Yakovlev Yak-40 30-seat jet

Aircraft in service

Scheduled Airlines: 175Non-Scheduled Airlines: 110

285 Yak-40s (average age: 33 years)

Tupolev Tu-134 70-seat jet

Aircraft in service

Scheduled Airlines: 134Non-Scheduled Airlines: 37

171 Tu-134s (average age: 30 years)

Source: BACK (Jun/08)

• 456 aircraft requiring replacement

• Replacement already started: Dniproavia’s ERJ145

Page 24: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

New Pre-Owned ERJs Operators

• More than 120 used ERJs transactions since 2000

Page 25: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

ERJ-145 Residual Value @ 12years

0,00

1,00

2,00

3,00

4,00

5,00

6,00

7,00

8,00

9,00

10,00

2002

Q4

2003

Q1

2003

Q2

2003

Q3

2003

Q4

2004

Q1

2004

Q2

2004

Q3

2004

Q4

2005

Q1

2005

Q2

2005

Q3

2005

Q4

2006

Q1

2006

Q2

2006

Q3

2006

Q4

2007

Q1

2007

Q2

2007

Q3

2007

Q4

2008

Q1

2008

Q2

2008

Q3

2008

Q4

US

$ M

illi

on

s

ERJ-145

CRJ-200

Page 26: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

RJ50 Market Trends

• RJ50 feeder is fundamental to support US hub and spoke system

• Potential US removal of around 300 RJ50s in five years in a

US$125/oil barrel scenario, tending to decrease due to current

lower fuel price

• US Regionals trend towards high capacity aircraft (75 seater) due to

scope clause relaxation

• China needs RJ50s to achieve a better fleet capacity balance

• Secondary markets will keep expanding – used RJ50s moving to

CIS, Mexico, Africa and South America

Page 27: Embraer Day - Apresentação Aviação Comercial

70 to 120-seat

Jet Market

&

the E-Jets

Page 28: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

E-Jets Family Order Book

Firm Orders

Options DeliveriesFirm

Backlog

EMBRAER 170 187 100 143 44

EMBRAER 175 134 173 100 34

EMBRAER 190 434 460 181 253

EMBRAER 195 110 80 22 88

Total 865 813 446 419(September, 30th 2008)

Page 29: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

E-Jets Worldwide Distribution

• Growing and diversified customer-base across five continents.

• Increased presence in emerging markets with established carriers.

Customers Firm Orders

Source: Embraer (Sep/08)

Page 30: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Source: Embraer

Deliveries

1 2 3 4 9 14 19 29 45 53Customers/Operators

E-Jets Customer Base Evolution

Page 31: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

E-Jets Family - Efficiency to all Business Models

Source: Embraer (Sep/08 ; Sirte Oil, GECAS and Jetscape not presented)

Regional Network Low Cost

Charter

Page 32: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

26% of 61-120 fleet

(666 acft) with more

than 20 years

0

100

200

300

400

500

600

700

800

900

0-5 6-10 11-15 16-20 21-25 26-30 31-35 >35

Age (Years)

Nu

mb

er

of

Air

cra

ft

Source: BACK (Dec/07)

World Fleet Age Profile (61-120 seats): 2,582 jets / 14 years average age

Region # Acft.Avg. Age

North America 884 8

Latin America 305 22

Europe 655 11

Russia & CIS 272 24

Africa 143 22

Middle East 79 13

Asia Pacific 215 19

China 29 9

World 2,582 14

• Nearly 700 aircraft (26% of fleet) need replacement in the coming years

• Retirement cycle may be antecipated due to fuel costs and environment

Market Opportunities - Replacement

Page 33: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

500 nm Sector, Full Pax, Network Environment (3,200 annual BH), Jet Fuel Price $3.00/gallon

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

0% 10% 20% 30% 40% 50% 60%

Additional Fuel Burn (%) vs. E190

Ad

dit

ion

al A

nn

ua

l C

os

t (U

S$

-

tho

us

an

ds

) V

s. E

19

0

E195

717

F100

737-500

737-300

DC-9-30

MD-87

Fuel & Maintenance Cost Savings vs. Older Jets

E190/195 can offer up to US$ 2.7 million yearly fuel savings and up to

US$ 1.2 million maintenance cost savings

Page 34: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

27%42%

26%

8%

7%

6%

51%

42%

53%

14% 8% 15%

0%

20%

40%

60%

80%

100%

North America Europe World

% o

f T

ota

l E

-Je

ts M

ark

ets

Natural Growth Direct Replacement Right-sizing New Markets

E-Jets Deployment

Source: Back (4Q07), Embraer

• 53% of E-Jets operations: right-sizing of narrowbody services

Page 35: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Source: Back (4Q07), Embraer

E-Jets Deployment - North America

Sep/08 Deliveries Backlog

15 E175

45 E190

36 E190 69 E190

30 E175 6 E175

24 E190 18 E190

76 E170

43 E175

11 E175

E-Jets 269 104

Page 36: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

E-Jets Right-sized NB Markets - North America

Source: OAG (Oct/08)

Markets operated by A320, 737 and MD families in 2003 that are currently operated by E-Jets.

NUMBER OF E-JETS MARKETS: 363

Page 37: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

E-Jets Deployment - Europe/CIS

Sep/08 Deliveries Backlog

1 E190

6 E170

10 E195

2 E170

10 E170 8 E190

5 E190

3 E190 5 E190

13 E195 1 E195

10 E190

10 E1706 E175

12 E175

18 E19012 E195

1 E195 2 E195

5 E190

1 E1706 E190

8 E170 5 E190

1 E195 5 E195

E-Jets 67 99 Source: Back (4Q07), Embraer

Page 38: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

E-Jets Right-sized NB Markets - Europe

Source: OAG (Oct/08)

Markets operated by A320, 737 and MD families in 2003 that are currently operated by E-Jets.

NUMBER OF E-JETS MARKETS: 148

Page 39: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

E-Jets Deployment - Middle East & Africa

Sep/08 Deliveries Backlog

15 E170

5 E195

2 E175

6 E170 6 E170

3 E170

2 E170

1 E1907 E170

2 E190

2 E190

2 E195 10 E190

1 E170

E-Jets 35 27Source: Back (4Q07), Embraer

Page 40: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Sep/08 Deliveries Backlog

6 E190 44 E190

5 E170

10 E190

1 E170

8 E190

10 E170

6 E1901 E1901 E195

2 E170

3 E175

2 E170

1 E170

1 E1901 E190

1 E170

7 E170

1 E190 4 E190

E-Jets 36 79

E-Jets Deployment - Asia Pacific & China

Source: Back (4Q07), Embraer

Page 41: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

E-Jets Deployment - Latin America

Sep/08 Deliveries Backlog

4 E190 12 E190

8 E190 4 E190

1 E175

1 E190

5 E190

31 E195

20 E195

13 E190 2 E190

2 E170

2 E190 9 E190

2 E170

3 E190

5 E175

E-Jets 36 88Source: Back (4Q07), Embraer

Page 42: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

E170/190

2006 2007 2008 2009

New Higher Thrust

Engine Version

CF34-10E7

HUD Repeater

+

LVTO 170 �

E-Jets Continuous Product Evolution

EFB

CAT III B 170

CAT III A Autoland190

CAT III HGS 195

CAT III A Autoland 175

CAT III HGS 190

Steep Approach 170

�“… (E-190 flightcrew) will be able to fly every approach the same way, in good weather and in bad, from the left seat or the right seat, to ILS-equipped runways or on non-precision approaches”Usto Schutz, JetBlue’s VP (E190 Program)

“… (E-190 flightcrew) will be able to fly every approach the same way, in good weather and in bad, from the left seat or the right seat, to ILS-equipped runways or on non-precision approaches”Usto Schutz, JetBlue’s VP (E190 Program)

ETOPS 190 (75’)�

Page 43: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

2006 2007 2008 2009

• Steep Approach 190

• RNP < 0.1 / RAAS / ADSB

• CPDLC / Dual HF

• Slim Seats

E175 AR

…creating value to customers.

E-Jets Continuous Product Evolution…

ETOPS 190 (120’’)�

IFE Live TV E195

• 14000 ft TO/LAND

• 15 kts Tailwind E190

CAT IIIA Autoland 195

E170 AR

VHF Mode 2

Page 44: Embraer Day - Apresentação Aviação Comercial

The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent

E-Jets SR & CR

Page 45: Embraer Day - Apresentação Aviação Comercial

The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent

E170/175 Residual Value @ 12 years

0,00

1,00

2,00

3,00

4,00

5,00

6,00

7,00

8,00

9,00

10,00

11,00

12,00

13,00

2002

Q4

2003

Q1

2003

Q2

2003

Q3

2003

Q4

2004

Q1

2004

Q2

2004

Q3

2004

Q4

2005

Q1

2005

Q2

2005

Q3

2005

Q4

2006

Q1

2006

Q2

2006

Q3

2006

Q4

2007

Q1

2007

Q2

2007

Q3

2007

Q4

2008

Q1

2008

Q2

2008

Q3

2008

Q4

US

$ M

illi

on

s

Embraer 170

Embraer 175

CRJ-700

CRJ-900

Page 46: Embraer Day - Apresentação Aviação Comercial

The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent

E190/195 Residual Value @ 12 years

0,00

1,00

2,00

3,00

4,00

5,00

6,00

7,00

8,00

9,00

10,00

11,00

12,00

13,00

14,00

15,00

16,00

2002

Q4

2003

Q1

2003

Q2

2003

Q3

2003

Q4

2004

Q1

2004

Q2

2004

Q3

2004

Q4

2005

Q1

2005

Q2

2005

Q3

2005

Q4

2006

Q1

2006

Q2

2006

Q3

2006

Q4

2007

Q1

2007

Q2

2007

Q3

2007

Q4

2008

Q1

2008

Q2

2008

Q3

2008

Q4

US

$ M

illi

on

s

Embraer 190

Embraer 195

B737-600

A318

Page 47: Embraer Day - Apresentação Aviação Comercial

Competitive

Scenario

Page 48: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Market Share - World (61-120 seats)

40

24

38

232122

17

4646464444

25

32

2

32

3639

38

4442

33 34

57

911

100 100 99

60

28

17 16 16

4 4

1216

21

2930

36

98

45

6

25

2 2 10

20

40

60

80

100

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sep-

08

(%)

Considering accumulated firm orders.

Embraer: 170/175/190/195 Sukhoi: Superjet 100

Bombardier: CRJ700/900/1000 AVIC I: ARJ-21

Airbus: A318 Antonov: An-148

Boeing: B737-600 Mitsubishi: MRJ90

Page 49: Embraer Day - Apresentação Aviação Comercial

The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent

Backlog Evolution Comparison

Source: Embraer, Bombardier, ACAS

E-Jets have a strong competitive position

Source: Embraer, Bombardier, ACAS

Page 50: Embraer Day - Apresentação Aviação Comercial

The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent

Competition: AVIC ARJ21-700 vs E175

Program Status:

• Current first flight planned for Nov/2008 (initially planned for Q4/2005)

• Current EIS announced for middle 2010 (initially planned for Q4/2006)

Competitive Positioning: ARJ21/700 vs E175

• Conventional concept

• Heavier design

• Higher fuel burn

Page 51: Embraer Day - Apresentação Aviação Comercial

The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent

Competition: Sukhöi SSJ 100 vs E190

Program Status:

• First flight happened on May/08 (initially planned for middle 2005)

• Engine has not been certified yet

• Current EIS announced for Q3/2009 (initially planned for 2006)

Competitive Positioning: SSJ 100 vs E190

• Conventional concept, with higher risks.

• SSJ75: not competitive against E175 (SSJ100 shrink)

Page 52: Embraer Day - Apresentação Aviação Comercial

The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent

Competition: Mitsubishi MRJ 90 vs E175

Program Status:

• EIS announced for 2013

• Program is still in the early design phase

Competitive Positioning: MRJ 90 vs E175

• 3,500 kg heavier than E175

• Similar capacity of the E175 (92 seats @ 29” versus 86 seats @ 31”)

• Aft baggage compartment may cause CG balance problems as well as increases

baggage handling cost

Page 53: Embraer Day - Apresentação Aviação Comercial

The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent

Competition: CSeries C110 vs E195

Program Status:

• First flight planned for 2012

• EIS announced for 2013

• Program launched without firm orders in place

Competitive Positioning: C110 vs E195

• 5,500 kg heavier than E195

• Higher drag due to cross section and wider engine nacelle

• Just 2% COC better than E195

• E195 offers positive NPV benefits for airlines and a mature product

Page 54: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Page 55: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Projected Economic and Traffic Growth

Source: Global Insight and Embraer (Oct/08)

North America

AfricaLatin America

Middle East

World

Europe Russia / CIS

China

2.5% 3.5%

4.2% 6.0%

2.0% 4.2% 4.4% 6.1%

7.2% 7.7%

5.0% 5.5%

3.9% 6.2%

2.8% 5.2%

3.1% 4.9%

Asia Pacific

Growth by Region (2009-2028)

Projected world GDP growth around 3% in the next twenty years

sustaining nearly 5% annual increase in air transport demand

Page 56: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Market Segment (Seats) 2009 – 2018 2019 - 2028 2009 - 2028

30 - 60 75 575 650

61 - 90 1,150 1,300 2,450

91 - 120 1,725 1,925 3,650

30 - 120 2,950 3,800 6,750

Embraer Market Forecast (2009-2028)

Main Driver

30-60 Mature market, low RJ50 demand in the short/mid term

61-90 75-seater as a natural growth for RJ50s

91-120Right-sizing of narrowbody operations, replacement of old & inefficient jets and airline expansion into mid-density markets

Projected Deliveries - Jets

Page 57: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Embraer Market Forecast (2009-2028)

North

America

2,57038%

Latin

America

5408%

Europe

1,35020%

Russia / CIS

4557%

Africa

2303%

Middle East

2103% Asia

Pacific

5208%

China

87513%

6,750 new jets will be delivered in the 30 to 120-seat segment

Page 58: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Embraer Market Forecast (2009-2028)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Jet 30-60 Jet 61-90 Jet 91-

120

Number of New Aircraft Deliveries - World

30,750

Aircraft

2019-2028

2009-2018

650 2,450 3,650

6,750

Source: Embraer

Page 59: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Embraer Market Forecast (2009-2028)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

TP 30-60 TP 61-90 TP >90 Jet 30-60 Jet 61-90 Jet 91-

120

Number of New Aircraft Deliveries - World

30,750

Aircraft

2019-2028

2009-2018

650 1,400 1,000

3,050

650 2,450 3,650

6,750

Source: Embraer

Page 60: Embraer Day - Apresentação Aviação Comercial

T h e i n f o r m a t i o n c o n t a i n e d h e r e i n i s p r o p e r t y o f E m b r a e r a n d s h a l l n o t b e c o p i e d o r u s e d w i t h o u t E m b r a e r ´ s w r i t t e n c o n s e n t

Embraer Market Forecast (2009-2028)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

TP 30-60 TP 61-90 TP >90 Jet 30-60 Jet 61-90 Jet 91-

120

Jet 121-

145

Jet 146-

175

Jet 176-

210

Jet 211-

400

Jet >400

Number of New Aircraft Deliveries - World

30,750

Aircraft

2019-2028

2009-2018

650 1,400 1,000

3,050

650 2,450 3,650

6,750

4,300 8,000 2,350

14,650

5,400 900

6,300

Source: Embraer

Page 61: Embraer Day - Apresentação Aviação Comercial

The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent

E-Jets around the world: 52 Airlines / 35 Countries

Thank You