1. 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
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 property of Embraer and shall not be copied or used without Embraer´s written consent
3. Contents
Air Transport Industry Review
ERJ 145 Family
E-Jets Family
Market Outlook 2010-2029
Product Development
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
4. 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)
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
5. 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)
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
6. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
7. 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 information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
8. The 50-Seater Market
ERJ145 – the backbone of the hub-and-spoke system
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
9. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
10. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
11. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
12. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
13. E-Jets
helping airlines to be more efficient
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
14. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
15. 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)
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
16. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
17. E-Jets: same efficiency different business models
Network Regional Low Cost
Source: Embraer (Jun/10 - Sirte Oil, GECAS, Jetscape and M1 Travel not presented)
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
18. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
19. E-Jets Family Commonality
Airlines are exploring the E-Jets family concept.
High commonality in systems, parts and crew qualification.
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
20. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
21. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
22. E-Jets Helping to Increase Efficiency
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
23. 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)
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
24. 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)
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
25. E-Jets Right-sizing narrowbody services
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
26. E-Jets Helping Enlarging Networks
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
27. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
28. E-Jets Helping Reduce Costs and Fuel Burn
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
29. E-Jets: Direct Replacement Benefits
Fuel Burn
Source: www.eforefficiency.com
Note: European economic conditions, fuel at 0.50 EUR/liter
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
30. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
31. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
32. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
33. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
34. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
35. 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)
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
36. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
37. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
38. 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.
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
39. Market Outlook 2010-2029
2010-2029
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
40. 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%
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
41. 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
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
42. 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%
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent