1. AIRLINE MARKET OUTLOOK
Frederico Fleury Curado
Executive Vice-President, Airline Market
EMBRAER ANALYSTS
& INVESTORS MEETING
São José dos Campos - November 17th., 2006

2. Contents
Industry Review
ERJ 145 family – Retaining value for operators and
investors
E-Jets – Breaking new grounds and achieving
increasing endorsement from airlines worldwide
Embraer’s new 20-year market forecast

3. Industry
Review

4. Passenger traffic back and growing
7000 80%
RPK ASK Load Factor
78%
6000
76%
Billion (RPK & ASK)
5000
% (Load Factor)
74%
4000 72%
3000 70%
68%
2000
66%
1000
64%
0 62%
1995
1996
1996
1998
1999
2000
2001
2002
2003
2004
2005
2006F
2007F
6.3% yoy 7.7% yoy 6.4% yoy
Source: ICAO - Contracting States - Scheduled Airlines

5. LCC´s still in demand’s driver seat…
USA Domestic RPM Intra Europe RPK
5%
11% 14% 18% 17% 17%
19%
29% 11%
31% 30%
40%
8%
76% 71%
60%
53%
47% 43%
2000 2005 2010E 2000 2005 2010E
Netw ork LCC Regional
Grey zone
Source: Back Aviation and Embraer

6. But the cost gap in closing
16
Network LCC
15
14
13 Cost Convergence
CASM (¢/ASM)
12
11
10
9
8
7
6
00
00
01
01
02
02
03
03
04
04
05
05
06
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
• Network carriers taking a disciplined approach towards capacity and cost reduction
• LCCs facing cost pressures and reconsidering growth plans
• Industry increasingly profitability x market share conscious
Source: BACK (Form 41)

7. Strong effort to reduce costs, but ...
14
12.78
12
10
CASM (¢/ASM)
8 Total Cost
Total Cost (Exc Fuel)
6 Labor
Fuel
4 3.16
3.09
2
0
00
00
01
01
02
02
03
03
04
04
05
05
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
• 2000 - fuel costs = 14%; labor costs = 34%
• 2005 - fuel costs = 23%; labor costs = 26%
Source: ATA

8. Fuel prices are eating airlines’ lunch
Jet Fuel Price by Region
Jet Fuel Price Forecast (EIA)
2,25 2,25
New York
2,10
Rotterdam
2,08
2,00 2,00
Jet Fuel Price (US$ per Gallon)
Singapore
Jet Fuel (US$ per Gallon)
1,75 China 1,75
1,65
1,65
1,62
1,50 1,50
1,25 1,25
1,00 1,00
0,75 0,75
0,50 0,50
2000 2001 2002 2003 2004 2005 2006 2006F 2007F 2008F 2009F 2010F
Source: EIA - Energy Industry Administration (Sep/06)

9. Revenue environment is improving
105
100
95
Index (1994=100)
90
85
80
75
World Nominal Yield
70
World Real Yield (adj. for US inflation)
65
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006F 2007F
Source: ICAO (Contracting States – Passenger, Scheduled Airlines), Global Insight and Embraer

10. Profitability a continual challenge
North America
-10 -6.7 -4.5 0
Europe
1.1 1.6 1.8 1.5
World
-5.6 -3.2 -1.7 1.9
2004 2005 2006F 2007F
Middle East
0.2 0.2 0.1 0.1
2004 2005 2006F 2007F
2004 2005 2006F 2007F
Asia Pacific
2004 2005 2006F 2007F
Latin America 3.4 2.1 1.7 1.2
Africa
0.1 -0.1 0.1 0.1
-0.3 -0.4 -0.8 -0.9
2004 2005 2006F 2007F
2004 2005 2006F 2007F
2004 2005 2006F 2007F
Source: IATA Economics Set/06 (ICAO 2004-2005 and IATA Forecast 2006-2007) Values in US$ Billion

11. A quick look at w/w fleet profile
Scheduled Airlines, All Passenger Configuration and Active in Service
16784 aircraft
Age (years)
4.500
> 30
4211
26-30
4.000
21-25
3.500
16-20
Number of Aircraft (Units)
3.000 11-15
2.500 6-10
2035 2016 0-5
2.000 1778
1621
1.500 1342
1051
1.000 935
798
603
500 394
0
TP 30-60
TP 61-90
J 30-60
J 61-90
J 91-120
J 121-150
J 151-180
J 181-210
J 211-300
J 301-400
J > 400
Source: Back Aviation (Dec/05)

12. Embraer’s unique competitive position
30Y 50Y 70Y 90Y 110Y 130Y
CRJ900X
SSJ
ARJ21
SSJ
? ARJ21
SSJ

13. ERJ 145 family
Retaining Value for
Operators and
Investors

14. USA Hub & Spoke System
1. RJs are responsible for 22% of all USA domestic passengers
2. RJs: 3 connecting passengers for each local passenger
Source: Back Aviation (T100 and OD1A: RJ: ERJ 145 Family, CRJ 100/200/440 and 328JET). 2006 FAA Report (DOT Form 41 & Form 298C)

15. China – an unbalanced jet fleet
30-120 seat jets represent only 12% of China jet fleet (30-210 seats), while
it is 43% in US and 35% in Europe
4,829 aircraft 826 2,612
100%
80%
% of Jet Fleet (J30-210)
58% Seat Segment
65%
60% J121-210
89%
J61-120
40%
15%
J30-60
24%
20% 43% 35%
28%
4%
8%
12% 11%
0%
USA China Europe
Source: BACK FleetPC (Jun/06 ; active in service ; scheduled airlines)

16. China - ERJ 145 and 328Jet Routes
29 328Jet
6 ERJ145
Backlog: 50 ERJ145
4 ERJ145
Backlog: 6
ERJ145
5 ERJ145
328Jet
Source: CAAC (2005), Embraer

17. Mexico - ERJ 145 routes
2004:05
2004:05 ERJ 145
ERJ 145 2006:18
2006:18 ERJ 145
ERJ 145
18 markets 39 markets
18 markets 39 markets
Avg. Stage Length: 398 nm (738 km) Avg. Stage Length: 417 nm (773 km)
Avg. Stage Length: 398 nm (738 km) Avg. Stage Length: 417 nm (773 km)
Source: BACK OAG

18. RJ 50 Market Opportunities – Russia
30-60
Seat Segment
244 aircraft
33 years old
(average)
Yak-40 An-24
Jet – 30 seats Turboprop - 50 seats
122 aircraft 122 aircraft
Average Age: 31 yrs Average Age: 34 yrs
Source: Back Aviation (Fleet PC Feb/06)

19. Parked Aircraft - World
Jet Aircraft (Western Built)
(as of Sep 05, 2006)
Seat Segment Number % of
600 30 - 60 61 - 90 91 - 120 Seg Manuf. of Parked % Fleet
Aircraft Parked
Boeing 149 53% 12%
Douglas 86 30% 28%
500 Fokker 29 10% 11%
91-120
BAe 19 7% 15%
Airbus 0 0% 0%
Number of Aircraft
400 Embraer 0 0% 0%
Total 283 100% 15%
BAe 52 51% 25%
300 Fokker 45 45% 30%
61-90
Douglas 2 2% 8%
Bombardier 2 2% 1%
200 Embraer 0 0% 0%
Total 101 100% 12%
Bombardier 82 71% 8%
30-60
100 Fairchild 30 26% 32%
Embraer 4 3% 0%
Total 116 100% 6%
0
95
96
97
98
99
00
01
02
03
04
05
6
t/0
19
19
19
19
19
20
20
20
20
20
20
se
Source: BACK (Operator Category: Scheduled Airline, Non Scheduled, Leasing and Financial Institution)

20. ERJ 145 Product Improvements
Design Weights High Altitude Operation Brake Hardware
Optional structural weights increase: ERJ 145LR ERJ 145ER/LR/XR Models
13.500 ft Maintenance costs reduction
ERJ 135ER (China) Original 1000FC Guaranteed
Since Dec2005:
MZFW = +400kg (880 lb)
ERJ 145LR/XR New Design
ERJ 145ER 10.000 ft ER/LR Model: 1750 FC
Available mid 2006: (North America, South America,
XR Model: 1800 FC
MZFW = +250kg (550lb) Mexico, China)
ERJ 145LR ERJ 145ER/MP
Available mid 2006: 8.500 ft
MTOW = +600kg (1,320lb) (South America, Mexico, EASA)
MZFW = +500kg (1,100lb)
MLW = +500kg (1,100lb)

21. RJ 50 Residual Value Evolution
RV @ 12 Years
10,00
9,00
8,00
7,00
US$ Million
6,00
5,00
4,00
3,00
2,00 ERJ 145
1,00 CRJ-200
0,00
4
1
2
3
4
1
2
3
4
1
2
3
4
1
2
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
02
03
03
03
03
04
04
04
04
05
05
05
05
06
06
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
ERJ 145s are sustaining Residual Values
Source: MBA Avitas Airclaims, et al

22. RJ 50s market trends
• Market entered a mature phase in the US and Europe
• RJ50s will remain the backbone of US hub feeding system
• There is potential for increasing frequencies in the US and EU
• New market opportunities (long and thin) in the US and EU
• Potential in China, Mexico, Russia and other emerging markets
• Secondary market developing

23. ERJ 145 Family Orderbook
Firm Firm
Options Total Deliveries Backlog
Orders
ERJ 135 108 1 109 108 -
ERJ 140 74 - 74 74 -
ERJ 145 732 132 864 677 55
Total 914 133 1,047 859 55
(as of September 30, 2006)

24. E-Jets
Breaking New Grounds
Achieving Increasing
Endorsement from
Airlines

25. Filling the Seat Capacity Gap – Remember?
Seat
Capacity
160
Narrowbody Aircraft
120
Right-sizing
EMBRAER 170/190
80
Natural Growth
30-70 Seat
T’ Props 37 -50 Seat
40 ERJ 135/140/145
0
0 500 1,000 1,500 2,000
Stage Length (nm)

26. Beyond the current models – Remember?
There is a need for a new TOOL
Regional Airlines
RASK / M
Network Airlines
Low Cost
Carriers
E-Jets
Capacity

27. E-Jets Family – Efficiency to all Business Models
Regional
Northwest
Network
E175’s
Low Cost
Virgin Blue
E170’s + E190’s
Source: Embraer (Sep/06)

28. US Domestic: Pax & Seats per Departure
Jet aircraft (70-150 Seats)
35%
Pax/Dep 2000 Seats/Dep 2000
Pax/Dep 2005 Seats/Dep 2005
30%
2000
25%
Seats/dep
20% 2000
Pax/dep 2005
% of Flights
15%
2005
10%
5%
0%
<50 50 60 70 80 90 100 110 120 130 140 ≥150
US Industry is becoming more efficient through better matching
market demand with aircraft capacity
Source: BACK (T100)

29. Opportunities for Replacement - World
Ageing World Fleet in Service (61-120 seats).
700
600
610
735
522
Number of Aircraft (Units)
aircraft older than
500 20 years
400
305 316
300
214 214 205
200
100
0
0-5 6-10 11-15 16-20 21-25 26-30 >30
Aircraft Age (Years)
31% of world fleet is more than 20 years old and will be replaced in the coming years.
Source: Back Aviation (Dec/05)

30. E-Jets deployment – US and Canada
Sep/06: 126 E-Jets % of Routes (4Q05)
Sep/06: 126 E-Jets
Avg. Stage Length: 548 nm (1015 km)
Avg. Stage Length: 548 nm (1015 km) New Route
Right-sizing
Natural Growth
100%
14%
75%
41%
50%
25% 45%
0%
Source: BACK/OAG (1H06 routes ; Fleet Sep/06)

31. E-Jets deployment – Europe
% of Routes (4Q05)
New Route
Right-sizing
Natural Growth
100% 4%
75%
57%
50%
25%
39%
Sep/06: 31 E-Jets 0%
Sep/06: 31 E-Jets
Source: BACK/OAG (1H06 routes ; Fleet Sep/06) Avg. Stage Length: 445 nm (824 km)
Avg. Stage Length: 445 nm (824 km)

32. E-Jets deployment - Asia & Middle East
Sep/06: 18 E-Jets
Sep/06: 18 E-Jets
Avg. Stage Length: 364 nm (675 km)
Avg. Stage Length: 364 nm (675 km)
4 E170 4 E170 10 E170
Avg. Stage Length: Avg. Stage Length: Avg. Stage Length:
377 nm (698 km) 458 nm (848 km) 303 nm (561 km)
Source: BACK/OAG (1H06 routes ; Fleet as of June 30, 2006)

33. E-Jets operational flexibility – as promised
Longest Route Shortest Route
3,274 km (1,768 nm ; 2,033 sm) @ 5:10 hs 137 km (74 nm ; 85 sm) @ 0:37 hs
Air Canada – E190 Saudi Arabian – E170
Calgary Arar
Jouf
New York
Avg. Stage Avg. Elapsed Longest Shortest
Equipment
Length (km) Time (hours) Flight (km) Flight (km)
E170 930 1:50 2,510 137
E175 962 1:55 2,219 150
E190 1,017 2:01 3,274 301
E-Jets 945 1:52 3,274 137
Source: BACK/OAG (2Q06)

34. 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
Up to 65 units Not Allowed
(Grandfathered rights 18 AirWis BAe 146) 2000
Up to 35 units 50 seats and
35 units 69 seats Not Allowed 2003

35. US Scope Clauses – Jun/2006
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 narrow Up to 50 units Not Allowed
body) 2008
Up to 200 units
Unlimited (30 units 71-76 seats + 3 units for each Not Allowed
mainline aircraft increase) 2010
“Unlimited” up to 70 seats Not Allowed 2010
Unlimited up to 78 seats Up to 93 units
(86 seats) Not Allowed 2010

36. 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
• Remarketing flexibility EMBRAER 190 August, 2005 September, 2005 June, 2006
• Higher residual values EMBRAER 195 June, 2006 4th Quarter, 2006* July, 2006
• Reduced cycle for aircraft configuration definition

37. E-Jets: Continuous Product Development
Follow-on Certification items already achieved:
Dual HUD
HUD for Low Visibility Takeoff (E170)
CAT III A (E170)
IFE – Thales E170/190
IFE – LiveTV
PC Power Outlets
Cabin Surveillance System (CSS)
Vertical Navigation (VNAV)
Lightning Sensor System (LSS)
Autobrake
Ditching (extended overwater ops)
Quick Access Recorder (QAR)

38. E-Jets : On-going New Developments
Follow-on Certification
E190 ETOPS CAT IIIa Autoland E170 LCY Steep Approach
Ready for customer operational • Kit provides a fly-by-wire function
E170 Certified
approval: to allow the use of multi-function
E175 4Q 2006 spoilers as lift/drag devices.
ETOPS 75 minutes: Aug/06 E190 3Q 2007 • 650 nm range
ETOPS 120 minutes: by Aug/07 E195 4Q 2008 Certification: Dec/06

39. E-Jets Operational Statistics
E170/175 E190/195
Operators 10 Operators 5
Aircraft in Service 139 Aircraft in Service 40
Flight Hours 433,822 Flight Hours 52,506
Flight Cycles 296,927 Flight Cycles 32,512
E170/190 Family
Operators* 13
Aircraft in Service 179
Flight Hours 486,328
Flight Cycles 329,439
Source: Airlines (as of Oct 22nd, 2006) (*) Air Canada operates E175 and E190 and Tame operates E170 and E190

40. E-Jets Family Orderbook
Firm
Firm Orders Options Total Deliveries Backlog
EMBRAER 170 152 133 285 120 32
EMBRAER 175 52 - 52 22 30
EMBRAER 190 298 248 546 41 257
EMBRAER 195 41 40 81 1 40
Total 543 421 964 184 359
(as of September 30, 2006)

41. E-Jets market trends
• Traffic growth on 50-seater routes
• Capacity increase at regional routes peak hours
• Mainline service in regional routes
• Market fragmentation – more point to point flying
• Right sizing of non-optimized narrowbody lift
• Replacement of older, less efficient aircraft
• Less risky market developments with no compromise to mainline service

42. Market
Forecast
2007 - 2026

43. Projected Traffic and Economic Growth
Growth by 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)

44. Embraer Market Forecast (2007-2026)
Worldwide Jet Deliveries
Segment 2007 - 2016 2017 - 2026 2007 - 2026
30 - 60 300 1,100 1,400
61 - 90 1,100 1,500 2,600
91 - 120 1,650 1,850 3,500
TOTAL 3,050 4,450 7,500

45. Embraer Market Forecast Comparison
World Jets
Segment 2007-2016 2006-2015
30-60 300 500
61-90 1.100 1.300
91-120 1.650 1.550
30-120 3.050 3.350
121-150 1.350 1.418
151-180 3.250 3.191
181-210 800 796
121-210 5.400 5.405

46. Embraer Market Forecast (2007-2026)
Projected Deliveries (30-120 seats): 7,500 Jets
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%

47. Thank you
70 airlines. 43 countries. 1 manufacturer. EMBRAER