commercial aviation emb_day_2011
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Airline Market UpdateAirline Market Update
Paulo Cesar Silva - EVP Airline MarketPaulo Cesar Silva - EVP Airline Market
Mar/2011
The information contained herein is 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 StatementForward Looking Statement
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
� Air Transport Industry Review
� ERJ 145 Family
� E-Jets Family
� Market Outlook 2010-2029
ContentsContents
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
-14-12-10
-8-6-4-202468
1012
Jan
-07
Mar
-07
May
-07
Jul-
07
Sep
-07
No
v-07
Jan
-08
Mar
-08
May
-08
Jul-
08
Sep
-08
No
v-08
Jan
-09
Mar
-09
May
-09
Jul-
09
Sep
-09
No
v-09
Jan
-10
Mar
-10
May
-10
Jul-
10
Sep
-10
No
v-10
Jan
-11
Air travel rebounded after being depressed by severewinter weather conditions in Europe and North America
7.4% 1.6 % -3.5%
Source: IATA (Feb/11)
8.2%
Air Transport Demand - IATAAir Transport Demand - IATA
World – International RPK Growth Rate (% yoy)
IcelandVolcano
Economic Recession
LehmanBrothers
Bankrupcy
8%
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
0
20
40
60
80
100
120
140
160
180
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
US
$/b
arre
l
Jet Fuel
Crude Oil (WTI)
Crude Oil & Jet Fuel Price EvolutionCrude Oil & Jet Fuel Price Evolution
Source: EIA - Energy Information Agency and Global Insight (Mar/11)
Upward pressure on oil and jet fuel due to MENA instability
Year
2011 89
2012 90
2013 92
2014 92
2015 94
Crude Oil Price Forecast(WTI US$/bar ; Real price 2009 USD)
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
High fuel prices squeeze airline profits despite better economic outlook2011F net profit of US$8.6bi, down from US$9.1bi in last December forecast
Source: IATA (Mar/11 ; ICAO 1995-2008 and IATA 2009-11)
Net Profit/Loss (US$ billion)
Region 2009 2010E 2011F
Africa - 0.1 0.1 0.0
Asia Pacific - 2.7 7.6 3.7
Europe - 4.3 1.4 0.5
Latin America 0.5 1.0 0.3
Middle East - 0.6 1.1 0.7
NorthAmerica
- 2.7 4.7 3.2
World - 9.9 16.0 8.6
Airline Financial Results - WorldAirline Financial Results - World
-20
-15
-10
-5
0
5
10
15
20
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
E
2011
F
Net
Pro
fit/L
oss
(US
$ B
illio
n)
-8
-6
-4
-2
0
2
4
6
8
Net
Mar
gin
(%)
Net Profit Net Loss Net Margin
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
Air Transport Industry Review - SummaryAir Transport Industry Review - Summary
Recovery of market demand – risks due to high oil prices
Local volatility due to Japan’s earthquake and political
instability in the Middle East
Weak revenue environment, but with signs of improvement
Continuous efficiency improvement and cost reductions
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
More than 1,100 ERJ platforms delivered(nearly 900 to commercial airlines)
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
ERJ 145 Family Order Book ERJ 145 Family Order Book
Commercial Aviation(as of Dec 31st., 2010) Firm orders Deliveries Firm Backlog
ERJ 135 108 108 0
ERJ 140 74 74 0
ERJ 145 708 706 2
890 888 2
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
ERJ NetworkERJ Network
North American Carriers (1H2011)
Fleet in Service
Dec/10ERJ
135
ERJ
140
ERJ
145
22 72 118
6 2 7
46
281
12
Total 28 74 464
ERJs 566
566 ERJs serving nearly 660 marketsEssential feeder to US hub & spoke system
Source: OAG, Embraer
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
Pre-Owned ERJ TransactionsPre-Owned ERJ Transactions
More than 200 ERJ transactions since 2000
BMI – United Kingdom
FinnComm - Finland
Satena - Colombia
Air Namibia - Namibia
Republic - USA
Dniproavia - Ukraine
City Airline - Sweden
South African Airlink - USA
Passaredo - Brazil
Aeromexico Connect - Mexico
Diexim Expresso - Angola
Air26 - Angola
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
ERJ 145 in MexicoERJ 145 in Mexico
Source: OAG
39 ERJ 145 (5 new + 34 pre-owned)expanding Aeromexico regional network
Source: OAG (Dec/2010)
Fleet Evolution
ERJ 145 Network
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
ERJ 145 in UkraineERJ 145 in Ukraine
Source: OAG (Dec/2010)
Fleet Evolution
25 pre-owned ERJ 145 (18 in service + 7 to be added)Further expansion with 10 new E190s
ERJ 145 Network
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
ERJ 145 in BrazilERJ 145 in Brazil
Source: HOTRAN (Dec/2010)
11 pre-owned ERJ 145 (projected growth to nearly 20 units)
“The ERJ 145 is the base for Passaredo’s ambitious expansion plan by increasing frequencies and adding destinations”
José Luiz Felício, Passaredo Transportes Aéreos CEO
Fleet EvolutionERJ 145 Network
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
RJ50 Market TrendsRJ50 Market Trends
Core role in hub-and-spoke tend to continue
High fuel prices tend to pressure RJ50 operation
RJ50 replacement cycle around 2015-2025
US RJ50 fleet of ~900 units by 2015
Trend towards larger 75-seat jet (US scope relaxation)
Secondary markets expanding with pre-owned RJ50s
Nearly 1,000 E-Jets orderedMore than 700 delivered
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E-Jets Family Order BookE-Jets Family Order Book
Commercial Aviation(as of Dec 31st., 2010)
FirmOrders
Deliveries Backlog
191 181 10
173 133 40
478 321 157
105 64 41
947 699 248
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E-Jets Market AcceptanceE-Jets Market Acceptance
First delivery 2004. Nearly 1,000 net orders accumulated.
947 orders + 720 options
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
Market Confidence on E-Jets in 2010Market Confidence on E-Jets in 2010
2 2 E170
3536 E175
1
17
49 E190
10
10
6
2
2
1
Undisclosed 1
8 8 E195
95 E-Jets orders
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E175 - FlybeE175 - Flybe
Jim FrenchChairman and CEO of Flybe
“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
business model.”
Jul/2010: EMBRAER AND FLYBE SIGN AN ORDER FOR 35 EMBRAER 175
(plus 65 Options and 40 Purchase Rights)
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E190 - Air LeaseE190 - Air Lease
Oct/2010: EMBRAER AND AIR LEASE SIGN FINAL AGREEMENT FOR UP TO 20 E-JETS
(15 orders (5 re-confirmable) + 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 Fboro, we
have received significant interest from customers from all parts of the world.”
John L. Plueger, President and COO of Air Lease Corp.
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E190 - Republic (Frontier)E190 - Republic (Frontier)
“The E-Jets are a favorite among our passengers because of their
comfort and amenities. They play an integral and growing role in
our Frontier Airlines operations.”Bryan Bedford
CEO of Republic Airways
E190 Routemap 2010Source: OAG
15 E190 already operating under Frontier colors
Nov/2010: EMBRAER and REPUBLIC confirm deal for up to 24 E190s, plus 24 options
(Six firm orders and the other 18 aircraft should be confirmed on or before Apr/2011)
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E190 - China Southern AirlinesE190 - China Southern Airlines
“China Southern enjoys the good partnership with Embraer and is full of
confidence in its products. The EMBRAER 190 is a successful aircraft with
proven economics and performance, and it is well received by the market.”
Mr. Xu Jiebo, Vice President of China Southern Airlines Co. Ltd. (Jan/2011)
CDB LEASING, FROM CHINA, SIGNS FOR TEN EMBRAER 190 JETSThe aircraft will be operated by China Southern Airlines
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
Jan/2011: Dniproavia (Ukraine)
4 E190
Market Confidence on E-Jets in 2011Market Confidence on E-Jets in 2011
10 E190
Feb/2011: TRIP (Brazil)
... same positive trend:
Jan-Mar/2011: 34 E-Jets orders
... more orders to come ...
2015 E175
5 E190
Mar/2011: Alitalia (Italy)
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
More than 700 E-Jets deliveredMore than 700 E-Jets delivered
Nov 2010Nov 2010
Sep 2009Sep 2009Dec 2008Dec 2008May 2008May 2008
Oct 2005Oct 2005
Dec 2006Dec 2006
Oct 2007Oct 2007
Mar 2004Mar 2004
First DeliveryFirst Delivery
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E-Jets Customer Base (by Region)E-Jets Customer Base (by Region)
Source: Embraer (Dec/2010)
Diversified customer base across five continents
Europe & CIS
Latin America
North America Asia Pacific & China
Middle East & Africa
(% of Customers)
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
Operations in Brazil, United States, Europe and Asia
Customer Support & Services Global Presence Customer Support & Services Global Presence
Operations in Brazil, United States, Europe and Asia
USANashville
Fort Lauderdale
FranceVillepinte
SingaporeSingapore
ChinaBeijingPortugal
Évora
BrazilSão José dos Campos
Dec/2010
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
EASC Network – Airline MarketEASC Network – Airline Market
Embraer Authorized Service Centers – Current Authorized MROs
TAP (Brazil)E-Jets / ERJLine / Heavy
OGMA (Portugal)E170 / ERJLine / Heavy
Flybe (England)E-Jets / ERJLine / Heavy
NAC (South Africa)E120 (former Naturelink) Line / Heavy
Tianjin (China PR)E-Jets / ERJLine / Heavy
AAI (France)E120Line / Heavy
Egyptair (Egypt)E-JetsLine / Heavy
EAMS (USA)E-Jets / ERJLine / Heavy
Embraer Service Center (Brazil)E-Jets / ERJLine / Heavy
8 Authorized MRO: EAMS; OGMA; EgyptAir; AAI; Flybe; NAC; Tianjin
* Note: Embraer Service Center (GPX) in Brazil depending on special availability
Reference: Feb 2011
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
EASC Network – Airline MarketEASC Network – Airline Market
Embraer Authorized Service Centers
Reference: Feb 2011
TAP (Brazil)E-Jets / ERJLine / Heavy
OGMA (Portugal)E170 / ERJLine / Heavy
Flybe (England)E-Jets / ERJLine / Heavy
NAC (South Africa)E120 (former Naturelink) Line / Heavy
STAECO (China PR)E-Jets / ERJLine / Heavy
Tianjin (China PR)E-Jets / ERJLine / Heavy
John Holland (Australia)E-Jets / ERJLine / Heavy
DIAF CEMA (Ecuador)E-Jets / ERJLine / Heavy
AAI (France)E120Line / Heavy
Egyptair (Egypt)E-JetsLine / Heavy
EAMS (USA)E-Jets / ERJLine / Heavy
Embraer Service Center (Brazil)E-Jets / ERJLine / Heavy
MRO Authorized
MRO Under Authorization Process
8 Authorized MRO: EAMS; OGMA; EgyptAir; AAI; Flybe; NAC; Tianjin
3 MRO under Authorization: John Holland; STAECO; DIAF/CEMA
5 Additional MROs for new Authorizations by 2012 (potential)
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
Full Flight Simulator Network
São Paulo – E190Azul (RFT 2011)Manufacturer: FlightSafety
Amsterdam – E170/190FlightSafetyManufacturer: CAE
Singapore – E170/190FlightSafetyManufacturer: CAE
Zurich – E170FlightSafetyManufacturer: CAE
Paris – E170FlightSafetyManufacturer: FlightSafety
Panama City – E190CopaManufacturer: CAE
São Paulo – E190AzulManufacturer: FlightSafety
Jeddah – E170Saudi ArabianManufacturer: CAE
Brisbane – E190Virgin BlueManufacturer: FlightSafety
Sanya – E190TianjinManufacturer: CAE
Shizuoka – E170Fuji DreamManufacturer: CAE
Munich – E190LufthansaManufacturer: CAE
Helsinki – E170FinnairManufacturer: CAE
London – E170/190Oxford AviationManufacturer: CAE
Montreal – E170FTFManufacturer: CAE
Charlotte – E190US AirwaysManufacturer: CAE
Orlando – E190jetBlueManufacturer: CAE
Orlando – E170/190jetBlueManufacturer: CAE
Orlando – E190jetBlueManufacturer: CAE
Minneapolis – E190CompassManufacturer: FlightSafety
Toronto – E170Air CanadaManufacturer: CAE
Toronto – E190Air CanadaManufacturer: CAE
St. Louis – E170/190FlightSafetyManufacturer: FlightSafety
St. Louis – E170FlightSafetyManufacturer: FlightSafety
St. Louis – E170FlightSafetyManufacturer: FlightSafety
FlightSafety FFSs
Customer Owned FFSs
Other Providers FFSs
Upcoming RFT**Ready For Training
Ammam – E170/190JATS (RFT 2011)Manufacturer: FlightSafety
Bahrain – E170/190Gulf Air (RFT 2011)Manufacturer: CAE
Buenos Aires – E190Austral (RFT 2012)Manufacturer: FlightSafety
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E-Jets Customer Base (by Business Model)E-Jets Customer Base (by Business Model)
Source: Embraer (Dec/2010)
E-Jets efficiency in all business models
Regional Airlines
Network Airlines
(% of E-Jets Fleet+Backlog)
Low Cost Carriers
• Right-sizing• New markets
• New markets• Right-sizing
• Natural Growth• Right-sizing
Regional AirlinesRegional Airlines
E-Jets Deployment:
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E175 - Right-sizing at Delta AirlinesE175 - Right-sizing at Delta Airlines
Dec/08
E175
MD88
Feb/11
Frequency 15 15
Seats 2,058 1,050
MD88
MD88
MD88
MD88
MD88
MD88
MD88
MD88
MD88
MD88
MD88
MD88
MD88
E175
E175
E175
E175
E175
E175
E175
E175
E175
E175
E175
E175
E175
E175
E175
E17
5M
D88
Source: OAG (1st Wed of Dec/08 and Apr/09)
Glen HauensteinDelta EVP Network
“These are not normal Regional Jets when we say Embraers. These are the E175s which are actually the most comfortable
airplanes out there – more comfort with fewer seats” (2009)
New York LaGuardia (LGA) – Washington National (DCA)
E-Jets Deployment:
Network AirlinesNetwork Airlines
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E-Jets: Complementing NarrowbodiesE-Jets: Complementing Narrowbodies
Source: OAG (2011)
SEATS
06:00
07:00
08:00
09:00
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
19:00
20:00
21:00
22:00
23:00
496 596
Jan/10 Jan/11
Panama City - Havana
B737-700
B737-700
B737-700
B737-700
B737-700
B737-700
B737-800
E190
E190
Abu Dhabi - Bahrain
532
Oct/10
A320
424
Feb/11
A320
E190
E190
A320
A319
E190
A320
Helsinki - Brussels
405
Mar/08
A319
458
Jan/11
A319
A319
A320
E170
A320
E190
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E-Jets Complementing NarrowbodiesE-Jets Complementing Narrowbodies
… many additional right-sizing opportunities worldwide!
Low Cost CarriersLow Cost Carriers
E-Jets Deployment:
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E190E190 E190
100
150+
Seats
B737-700A320 A320 A320
Middle EastEuropeAsia PacificNorth America
E-Jets Helping Explore New MarketsE-Jets Helping Explore New Markets
Low Cost Carriers with Two Fleet Types
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
Number of Markets
E190: essential to LCCs ExpansionE190: essential to LCCs Expansion
The importance of a mixed fleet
Source: OAG ; Airport IS (IATA)
A320 E190 Both
E190 helping LCCs to explore new market opportunities
737-800 E190 Both
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E-Jets Helping Reduce Costs and Fuel BurnE-Jets Helping Reduce Costs and Fuel Burn
Source: www.eforefficiency.comNote: European economic conditions, fuel at 0.50 EUR/liter
Fuel Burn
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
Replacement Opportunities - WorldReplacement Opportunities - World
Source: OAG (Dec/10 ; Passenger, Active in Service, Scheduled Services)
Nearly 1,000 aircraft with more than 15 years old
(Jets 61-120 seats)
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
2010 Aircraft Investment Appeal2010 Aircraft Investment Appeal
EquipmentInvestment
Appeal
Boeing B737-800 4.95
Airbus A320 4.70
Airbus A321 3.70
Embraer E190 3.68
Boeing B737-700 3.68
Airbus A319 3.65
Embraer E195 3.58
Embraer E175 2.79
Embraer E170 2.74
Bombardier CRJ900 2.61
Bombardier CRJ700 2.28
Boeing B737-600 1.63
Airbus A318 1.37
Source: Air Finance Journal, September 2010* Scored out of 5, with 1 being least appealing investment and 5 being most appealing investment
Investors Poll 2010 – Jets up to 210 seats
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E-Jets supported by Leasing CompaniesE-Jets supported by Leasing Companies
Source: Embraer (Dec/2010)
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E-Jets financing partners !E-Jets financing partners !
Companies involved in financial support for the E-Jets
AVIC INTERNATIONAL LEASING CO. LTD.
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
Market Share - World (Jets 61-120 seats)Market Share - World (Jets 61-120 seats)
Considering accumulated Net Orders up to Dec/10
Embraer: 170/175/190/195 Sukhoi: Superjet 100Bombardier: CRJ700/900/1000; CS100 Comac: ARJ-21Airbus: A318 Antonov: An-148/158Boeing: B737-600 Mitsubishi: MRJ90
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E-JetsCommitment to product update
E-JetsCommitment to product update
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
Main Recent & On Going DevelopmentsMain Recent & On Going Developments
Steep Approach E190
ADSB-Out
RAAS
CAT IIIa Autoland 195
Load 23Docking EFB
E 170 AR (EASA)14.000 ft E190
15 knot (8000 ft)
ISA + 39 E170/E190 (FAA)
E175 AR (FAA)
VDL Mode 2Load 21.4
CAT IIIb E170
ETOPS 120' E190
EFB 170/175/190/195
Slim Seat
20092008 2010
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Load 21.5 - Pentium MDual Active HF
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IFE
Panasonic�
�
�
As of December 31st, 2010
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�
��
��
�
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�
2011
CPDLC
Load 25
ISA+39 EASA
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E-Jets vs. New EntrantsE-Jets vs. New Entrants
MRJ70 (?)
MRJ90
ARJ21
E195
E190
E175
E170
SSJ100/95
CS100
60
70
80
90
100
110
120
1800 2000 2200 2400 2600 2800 3000 3200
Sea
t Cap
acit
y (
32''
pit
ch)
Range (nm)
110 seats
100 seats
70-90 seats
Competitive Scenario
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
� Scope Clauses relaxation allowing 80-seater aircraft as a natural growth of RJ50s in the US
� Right-sizing of narrow-body operations
� Regional aviation development in Emerging Markets
� Acceleration of replacement of old & inefficient jets
North America
2,010
31%
Europe
1,490
23%
Russia CIS
385
6%
Latin America
560
9%
Africa
240
4%
Middle East
110
4%
China
930
15%
Asia Pacific
570
9%
6,400 new jet deliveries (61-120 seats)
The information contained herein is property of Embraer and shall not be copied or used without Embraer´s written consent
E-Jets Around the World58 Airlines from 39 Countries