1. Investors Conference – Regional Jets
GECAS & CITIGROUP
19-21th May, 2004
Airline Market
Trends and
Outlook
Frederico Fleury Curado
Executive Vice President
Civil Aircraft
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.
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
3. Global Airline Market Today
Scheduled airline services - Capacity share % by region 2003 FLEET IN SERVICE
Twin Aisle 566 15,613 AIRCRAFT
Single Aisle 1516
Twin Aisle 634 Regional 1256
Single Aisle 3339 Europe
Europe
Regional 2442 North
North
America
America
22% Twin Aisle 88
China
China Single Aisle 481
37% 6% Regional 113
Africa &
Africa &
Latin Middle
Middle Asia/
Asia/
Latin
America & East
East Pacific
Pacific
America &
Caribbean
Caribbean 7% 21%
Twin Aisle 85 7% Twin Aisle 1043
Single Aisle 631 Twin Aisle 327
Single Aisle 893
Regional 578 Single Aisle 509
Regional 783
Regional 329
Total Fleet Twin Aisle 2743
3363 Single Aisle 7369
8099 Regional 5501
8664
OBS.: Regional considered up to 100 seats
Source: OAG (Jan/2004), Fleet PC (Dec/2003) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
4. Airline Market Today – Up to 120 Seats
Scheduled airline services (aircraft from 19 up to 120 seats) : 2003 FLEET IN SERVICE
Capacity share % by region
6,662 AIRCRAFT
Turboprop 691
Turboprop 934 Jet 811
Jet 1913
North
North Europe
Europe
America
America
26% Turboprop 64
54% China
China Jet 73
2%
Latin
Latin Africa &
Africa &
America
America Middle East
Middle East Asia/
Asia/
& Caribbean
& Caribbean Pacific
Pacific
Turboprop 422
6% 4%
Jet 342 8%
Turboprop 243
Turboprop 532
Jet 233
Jet 311
Total Fleet Turboprop
Twin Aisle 2979
3363 Regional Jet 3683
Single Aisle 8099
Source: OAG (Jan/2004), Fleet PC (Dec/2003) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
5. Current Airline Business Model
Regional
Airlines
AK
RS
Major Airlines
Low Cost Carriers
Capacity
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
6. Traffic Recovering Slowly
US Domestic RPM (Billion)
1,600
1,400
1,200
1,000
800
600
400
200
0
...
2000 2001 2002 2003E 2004F 2005F 2013F
Majors Low Costs Regionals
Source: WATS, Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
7. Shifting Capacity Among Business Models
US Domestic ASM Evolution (Index 100)
Majors Low Cost Regional
200
180
160
140
120
100
80
60
Ja 0
1
2
3
0
1
2
3
00
01
02
03
04
0
1
2
3
-0
-0
-0
-0
-0
-0
-0
-0
l-0
l-0
l-0
l-0
n-
n-
n-
n-
n-
ct
ct
ct
ct
pr
pr
pr
pr
Ju
Ju
Ju
Ju
Ja
Ja
Ja
Ja
O
O
O
O
A
A
A
A
Source: EMBRAER THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
8. US Airline Industry Evolution
Share of US Domestic RPM
100% 3% 5% 8%
12% 19%
17%
80% 22%
29%
60%
40% 85%
78%
69%
52%
20%
0%
...
1995 2000 2003E 2013F
Majors Low Costs Regionals
Source: WATS, Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
9. European Airline Industry Evolution
Share of Intra-European RPKs
100%
14% 16% 19% 21%
1%
80% 6%
13%
31%
60%
40% 85%
77%
68%
20% ... 48%
0%
1995 2000 2003E 2013F
Majors Low Costs Regionals
Low Fares: easyJet + Go + Ryanair + VirginExpress + Buzz + DBA
Source: AEA, ERA, ATI, Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
10. Sales orders pattern is changing
Airbus & Boeing - Orders by Year
100%
90%
80%
271
70%
301
60% 530
511 479
50%
40%
30%
251
20%
162
10% 133
48 43
0%
1999 2000 2001 2002 2003
LOW COST OTHERS
Source: Back Fleet pc
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
11. US Regional Airlines Statistics
ASM - (Billion) Load Factor
60 75%
50
70%
40
65%
30
60%
20
55%
10
0 50%
2001 2002 2003 2001 2002 2003
Source: EMBRAER THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
12. Europe Regional Airlines Statistics
90 ASK - (Billion) Load Factor
65%
80
70
60%
60
50
40
55%
30
20
10 50%
2001 2002 2003 2001 2002 2003
Source: EMBRAER THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
13. US Low Cost Carriers Statistics
ASM - (Billion) Load Factor
200 80%
75%
160
70%
120
65%
80
60%
40
55%
0 50%
2001 2002 2003 2001 2002 2003
Source: EMBRAER THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
14. Europe Low Cost Carriers Statistics
ASK - (Billion) Load Factor
50 85%
80%
40
75%
30
70%
65%
20
60%
10
55%
0 50%
2001 2002 2003 2001 2002 2003
Source: EMBRAER THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
15. US Airline Industry – Majors
ASM - (Billion) 80% Load Factor
520
75%
500
480 70%
460 65%
440 60%
420 55%
400 50%
2001 2002 2003 2001 2002 2003
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
16. Europe Airline Industry – Majors
ASK - (Billion) Load Factor
295 70%
285 65%
275 60%
265 55%
255 50%
2001 2002 2003 2001 2002 2003
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
17. US Domestic Yields Showing Little Progress
16
15
Yield (US¢/RPM)
14
13
12
11
10
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1998 1999 2000 2001 2002 2003
Source:
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
18. US Airline Industry Operating Results
2000 – 2003 (Sep)
6000
4000
2000
US$ (million)
0
2000 2001 2002 2003
-2000
-4000
-6000
-8000
-10000
-12000
Major Low Cost Regional
Source: Back Form41
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
19. Airlines - Some Operating Results
US$ Million
2003 2002
Oper. Income
Airlines Oper. Oper. Oper. Oper.
% (YoY)
Income Margin Income Margin
American (1,129.0) -6.5% (3,313.0) -20.7% 65.9%
United (1,360.0) -9.9% (2,837.0) -19.9% 52.1%
Southwest 483.0 8.1% 417.0 7.6% 15.8%
JetBlue 168.8 16.9% 105.0 16.5% 60.8%
ExpressJet 182.0 13.9% 101.0 13.6% 80.2%
Skywest 108.5 12.2% 119.6 15.4% -9.3%
Air France 533.0 3.4% 353.9 2.6% 50.6%
British Airways 371.2 2.8% 678.8 5.3% -45.3%
Iberia 182.8 3.5% 236.7 5.3% -22.7%
Ryanair (Apr/02-Mar/03) 332.0 31.3% 171.1 26.1% 94.0%
Source: SEC and Company Reports
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
20. A Cyclical Industry, but …
Current down cycle more a fundamental correction than just a cycle
• Yields will remain low as long as LCC’s continue to set the bar in the
market
• For the 1 st time in history RPM showed three consecutive years of
negative evolution
• Major airlines with significant value depreciation and attempting to re-
invent themselves
• Shift in capacity among business models, from majors to LCC’s and
regionals (largely used as defensive weapons by the majors)
• Growth of point-to-point services vis-à-vis hub and spoke
• Untapped 70-110 seats typical E-Jets markets will help to significantly
intensify the competitive scenario
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
21. Regional Jets – Still a Dynamic Tool
When markets are strong…
RJs expand catchment areas by
adding more spokes to carrier hubs
in addition to:
• increasing route frequency
• supplementing mainline jet capacity
• introducing secondary-to-secondary
market service (EU)
• opening new “long & thin” routes
with small, low-risk capacity
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
22. Regional Jets - A Dynamic Tool
… and when markets are weak
RJs help to defend an airline’s
competitive market position by:
• maintaining high route-frequency
• preserving network integrity and
overall market presence
• replacing unprofitable mainline jet
capacity service
• rightsizing aircraft capacity with
demand
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
23. Regional Jets Network - USA
Jan 1995 – 76 Routes
Jan 2004 – 2224 Routes
Source: Back OAG (ERJ-145/140/135, CRJ-100/200, 328Jet routes)
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
24. Regional Jets Network - Europe
Jan 1995 – 104 Routes
Jan 2004 – 1134 Routes
Source: Back OAG (ERJ-145/140/135, CRJ-100/200, 328Jet routes)_Feb2004
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
25. Turboprop Networks – USA
Jan 1995 – 2,908 routes
Jan 2004 – 1,580 routes
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
26. Turboprop Networks - Europe
Jan 1995 – 1918 routes
Jan 2004 – 1898 routes
Source: BACK OAG_Feb2004
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
27. Narrowbody Jets Replacement (Rightsizing)
Number of monthly frequencies
Route ROC-ORD SYR-ORD BUF-ORD
Equipment M80 100 ERJ M80 ERJ M80 100 ERJ
Jan 02
92 32 0 93 0 88 32 0
Jan 03
0 116 66 0 151 27 120 5
Jan 04
0 0 187 0 160 0 0 185
Source: Back – OAG Data, Feb2004
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
28. Turboprop Retirement
Route BOS-ISP BOS-BGR BOS-PHL
Equipment SF3 ERJ SF3 ERJ SF3 ERJ
Jan 01
182 0 231 0 110 108
Jan 02
139 0 144 31 137 27
Jan 04
0 87 0 140 0 126
Source: Back – OAG Data, Feb2004
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
29. High Frequency Services
Days of Duration
Eqp Departure Origin Arrival Destination
Operation (min)
ER4 xSaSu 8:20 MAN 9:15 EDI 55
January
ER4 xSaSu 11:55 MAN 12:45 EDI 50
2002
ER4 xSaSu 14:40 MAN 15:30 EDI 50
ER4 xSaSu 17:30 MAN 18:25 EDI 55
ER4 xSa 20:20 MAN 21:10 EDI 50
ER4 xSaSu 07:00 MAN 7:55 EDI 55
ER4 xSaSu 08:55 MAN 09:50 EDI 55
January
2003
ER4 xSaSu 12:15 MAN 13:15 EDI 60
ER4 xSaSu 17:00 MAN 18:00 EDI 60
ER4 xSaSu 19:55 MAN 20:50 EDI 55
ER4 xSaSu 07:00 MAN 08:00 EDI 60
ER4 xSaSu 08:55 MAN 09:50 EDI 55
January
2004
ER4 xSaSu 12:05 MAN 13:00 EDI 55
ER4 xSaSu 17:00 MAN 17:55 EDI 55
ER4 xSaSu 19:55 MAN 20:50 EDI 55
Source: Back – OAG, Feb 2004 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
30. Routes Development
Days of Range
Eqp Departure Origin Arrival Destination
Operation (Km)
M80 daily 07:00 DUS 08:35 MXP 644
January
2002
ER4 daily 11:45 DUS 13:20 MXP 644
ER4 daily 16:10 DUS 17:45 MXP 644
ER4 daily 20:35 DUS 22:10 MXP 644
319 daily 07:00 DUS 08:30 MXP 644
January
2003
319 daily 11:45 DUS 13:15 MXP 644
ER4 daily 17:30 DUS 19:05 MXP 644
ER4 xSa 19:45 DUS 21:20 MXP 644
319 daily 07:10 DUS 08:45 MXP 644
January
2004
319 daily 12:10 DUS 13:45 MXP 644
319 daily 17:30 DUS 19:05 MXP 644
ER4 xSa 19:45 DUS 21:20 MXP 644
Source: Back – OAG Data, Feb 2004
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
31. Responding to Market Needs
37 Seats
44 Seats
50 Seats
50 Seats (2,000 nm range)
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
32. Roll-out Ceremony
First Chinese made ERJ-145
Dec 16 th, 2003
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
33. China - PDEW vs. Frequency
PDEW
480 129 59 33 21 15 14 8 5 3
FROM 786 DOMESTIC ROUTES …
61% 16%
… 550 ROUTES (70%) are under 120PDEW
Daily Frequency
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
34. China – Opportunities for RJ
Frequency /day Y2002 - 550 Domestic Routes with PDEW < 120
• Improved Service
• Profitable Load Factor
Low LF
Add Frequency
Low Frequency
Low Freq.
Medium High LF
Rightsizing
LF
RJ provides the right solution for the thin Traffic Routes
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
35. ERJ 145 Family Orderbook
(as of 1 st quarter 2004) Firm
Firm Options Total Deliveries
Backlog
ERJ 135 122 2 124 105 17
ERJ 140 94 20 114 74 20
ERJ 145 697 440 1,137 545 152
Total 913 462 1,375 724 189
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
36. The Challenge posed by the Low Cost Carriers
• Highly flexible and dynamic route structure
• Intense focus on O&D traffic opportunities
• Aggressive new market development (E-Jets the next frontier)
• High aircraft daily utilization / low TAT’s
• Agressive yield management
• Fare Structure
• Simplified fare structures
• Low fares stimulating demand
• High load factors
• Cost Leadership
• Low operating costs (labor, overhead and distribution costs are the key factors)
• Lean, agile structure and operations
• Labor Relationships
• Partnership shareholders / management / employees
• Competitive compensation systems / higher productivity
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
37. Low Cost Carriers Network - USA
Jan 1995 – 336 Routes
Jan 2004 – 1375 Routes
Source: BACK OAG Feb/2004
1995 - Southwest, Airtran and Frontier 2004 - Southwest, Airtran, Frontier, Jetblue, America West, Alaska, ATA, Spirit
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
38. Low Cost Carriers Network - Europe
Jan 1995 – 18 Routes
Jan 2003 – 374 Routes
Source: BACK OAG (Ryanair, easyjet, Buzz and GO)
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
39. LCC Moving Downwards in Capacity
Markets between 150 and 500 PDEW (USA)
1,098 markets
500 PDEW = 240 seater x 70% LF x 3 Frequencies
B 757/737 A319/320/321
These 1,098 markets
are predominantly
served by either B737/
A320 or 50 seat jets
50 seat Jets
105 PDEW = 50 seater x 70% LF x 3 Frequencies
Source : DOT OD1A Data Q2 2002
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
40. LCC Moving Downwards in Capacity
1,098 markets
500 PDEW
upper boundary for a B737/757 or A320/321
24%
315 PDEW
lower boundary for a B737 or A319/320
Over 500 markets are
48% better suited for a 70-
110 seat aircraft
150 PDEW
28% upper boundary for a 50 seater
105 PDEW
lower boundary for a 50 seater
Source : DOT OD1A Data Q2 2002
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
41. Market Opportunities - Australia
125 markets
8300 PDEW
20 markets are suited for a
16% mixed fleet operation
315 PDEW
Almost 70 markets are better
53% suited for a 70-100 seat
aircraft
50 PDEW
30% 37 markets are suited for 35-
50 seaters
25 PDEW
More than half of the markets above 25 PDEW could be
more efficiently served with 70-100 Seaters
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
42. Majors are reacting – focus in cost reduction
• Reorganization under or out of Chapter 11 protection
• Revision of labour contracts
• Reduction of fleet types
• Renegotiation of old leases
• Turboprop retirement
• Deferral of new (big) aircraft deliveries
• Downsizing of several routes to smaller equipment
• Intensification of the use of regional aircraft as defensive tools
• Some LCC initiatives
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
43. Opportunity for Right Size – Aircraft Capacity
25% of flights 35% of flights
depart with loads depart with loads
more appropriate more appropriate
25 for a 70-90 seat for 90-110 seat
aircraft aircraft More than half of the domestic
flights in the US are better
suited for 70-110 seat aircraft.
Excess capacity translates into
20 empty seats, higher operating
costs and unprofitability
15
%
10
5
4 8 13 15 20 13 8 7 5 2 2
0
50 60 70 80 90 100 110 120 130 140 >150
Source: Back (US DOT T100) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
44. Demand x capacity mismatch not a new phenomenon
25
2000
20 2001
2002
15 2003
%
10
5
0
50 60 70 80 90 100 110 120 130 140 >150
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Source: Back (US DOT T100)
45. Market Opportunities - Global
Rightsizing and Frequency Increase
Average Daily Frequency by City-pair (World)
Routes operated exclusively by Jet Aircraft from 91 – 175 seats up to 2000 nm
9392 city pairs with less than
2 average daily frequency
58%
City Pairs
27%
10%
4%
1%
0 - 0,5 0,5 - <2 2-<5 5 - <10 >=10
Average Daily Frequency
Source: OAG (Feb/2004)
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
46. Beyond the Current Model...
RJs Natural Growth . . . Expand LCC air services to secondary cities . . .
There is a need for a new TOOL
. . . Majors Airlines aircraft rightsizing and services enhancement.
Regional
Jet Model
AK
Major Airline Model
RS
E- Jets
Low Cost
Model
E-Jets
Capacity
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
47. The Next Step in the Industry
• Natural evolution of 50 seat market
• Tapping an existing gap
• Enhancing services (frequency)
Regional
Jet Model
Major Airline Model • Low risk for demand stimulation
• Improving network deployment
(capacity and range)
Low Cost
Model • New markets opportunities
E-Jets
(long and thin routes)
• Replacing old narrowbodies
• Blurring the line between regional
and mainline operations
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
48. The Rule of 70-110
“Maximize Profits by Right-sizing your Fleet
in the Untapped 70-110 Seat Market”
1. Use the right aircraft family for the mission:
.c om
• Minimize spill sit o110
Vi 0t
of7
• Maximize yield and load factors
• Improve network deployment .r ule
w
ww
2. Provide mainline service operating aircraft with mainline
characteristics at RJ operating costs and flexibility:
• Minimized DOC through use of new technology and family concept
• Optimized comfort, range and performance
• 21st century economics to match 21st century yield trends
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
49. Mainline, Mid-Size or Regional?
Engineering Ergonomics Economics Efficiency
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
50. Introducing the E- Jets
Seat Capacity
160
Narrow Body Large
120 Aircraft E xperience
E ntertainment
80 EMBRAER 170/190 Family E asy
E nhance
50 Seat
40 37 - 44 Seat ERJ 145 E xpress
ERJ 135/140
30 Seat E verywhere
Tprops
E xcellence
200 400 600 800 1000 1200 1400 . . .
E xceptional
Stage Length (nm)
E nvironment
E mbraer
Engineering Ergonomics Economics Efficiency
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
51. EMBRAER 190 RollOut Ceremony
Feb 9th, 2004
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52. EMBRAER 190 First Flight – 12th March, 2004
Taking off . . .
. . . Smooth Flight . . .
. . . Landing
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
53. EMBRAER 170/190 Family Orderbook
Firm
(as of 1 st quarter 2004) Firm Options Total Deliveries
Backlog
EMBRAER 170 133 162 295 8 125
EMBRAER 190 110 150 260 - 110
EMBRAER 195 15 30 45 - 15
Total 258 (*) 342 600 8 250
(*) Does not include Air Canada’s 45 firm + 45 options order for EMBRAER 190’s
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
55. Market Forecast 2004-2023
World Deliveries by Segment - Jets
Segment 2004 - 2013 2014 - 2023 2004 - 2023
30 - 60 1,150 1,450 2,600
61 – 90 1,300 1,600 2,900
91 – 120 1,250 1,700 2,950
TOTAL 3,700 (*) 4,750 8,450
(*) Open demand à approximately 2,900 a/c
World (30-120 seat segment): 8,450 jets (US$180 billion)
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
56. Market Forecast 2004-2023
30 - 120 Seats: 8,450 Jets
USA, Canada
USA, Canada
& Caribbean
& Caribbean Europe,
Europe, China
China
4,740
4,740 Middle East
Middle East 635
635
56% & Africa
& Africa 8%
1,970
1,970
23%
Latin
Latin Asia
Asia
America &
America & Pacific
Pacific
Caribbean
Caribbean
480
480
625
625 6%
7%
THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
57. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.