Michael Smith Sales Director

Middle East & Africa Sales

Boeing Commercial Airplanes

Cost Efficient Fleet Management

November 2005

Sun City, South Africa

Agenda

Cost Efficient Fleet

Management

Market Dynamics

Boeing Product Strategy

Aviation Is Moving From Being Highly Regulated

To A More Liberalized And Competitive Marketplace

The Underlying Dynamics of Our Industry

Economic growth

Traffic growth

Fleet Capacity Requirement

Fleet Capacity Growth

Airline Capacity Decisions

Capital intensity to adjust capacity

Utilization

Used Airplanes

New Airplanes

Parked Airplanes

High Low

Short term

Long term

Delayed

Retirement

Airlines adjust capacity

using available options

($14)

($10)

($6)

($2)

$2

$6

$10

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

-14%

-10%

-6%

-2%

2%

6%

10%

..

Net Profit (Loss) Billions Percent of Revenue

Source: 1983-2004: ICAO data for world scheduled

traffic (domestic + international)

2005: IATA estimate for world scheduled

traffic (domestic + international)

Est.

Content owner:

Wendy Sowers

IATA Raises 2005 Industry Loss Forecast

There is a Large Regional Profitability Disparity Airlines Outside The U.S. Are Generally Profitable

($10,000)

($8,000)

($6,000)

($4,000)

($2,000)

$0

US Europe Asia-

Pacific

Other Total

2004 Industry Profits (Losses)

($10,000)

($8,000)

($6,000)

($4,000)

($2,000)

$0

US Europe Asia-

Pacific

Other Total

2005 Industry Forecast

Source: IATA

0

10

20

30

40

50

60

70

80

90

J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M

Oil Prices Remain High Prices Rising on Supply and Demand Concerns

$/Barrel

Crude Oil

Jet Fuel

2003 2004 2005

Futures Markets

¢/Gallon

200

180

160

140

120

100

80

The Price of Fuel at African Airports is

Generally Above the World Average

• Chicago Jet: $2.20 – YOY: +0.75

• West Coast Jet: $2.06 – YOY: +0.52

• Rotterdam Barge: $2.02 – YOY: +0.56

• Singapore Kero: $1.91 – YOY: +0.53

• NY Jet Barge: $2.25 – YOY: +0.75

Source: Aviation Daily

September 22, 2005

JNB: $2.10 - $2.50

MRU: $2.20 - $2.30

LOS: $2.50 - $2.70 NBO: $2.20 - $2.80

LAD: $2.70 - $2.90

Source: Industry Contacts

September 2005 prices

CAI: $2.00 - $2.10

HRE: $3.25 - $3.50

20 Year Forecast (2005 – 2024) Africa is above the world average in GDP and RPK growth

4.1

4.3

6.6

7.8

5.7

5.5

4.8

0 1 2 3 4 5 6 7 8

North America

Europe

Southwest Asia

China

Africa

Middle East

WORLD

Percentage

RPK

GDP

Source: CMO 2005

Africa Air Traffic Growth Differs by Flow

0 50 100 150 200 250 300

To and from Latin

America

To and from North

America

To and from Asia

Pacific

To and from Middle

East

To and from Europe

Within Africa

RPKs, billions

Added Traffic 2005 - 2024

6.1

2004

5.0

6.0

6.1

8.2

8.8

Annual

Growth %

Source: CMO 2005

Since 1995, All Air Travel Growth Has Been Met By Frequency Growth And New Nonstops

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Index 1995=1.00 World Frequency

Growth

Nonstop Markets

Average Airplane Size

Air Travel Growth

August OAG

Since 1990, Frequencies And Nonstops In European Markets Have Doubled

Routes: 1990

2005 vs 1990

Capacity (seats)

2.0X; 2.0X Int’l

Average airplane size

1.0X; .9X Int’l

Frequencies

2.1X; 2.2X Int’l

Nonstops (# city pairs)

2.0X; 1.7X Int’l

Average distance

1.3X; 1.0X Int’l

X = Intra-Europe

Routes Added: 1990-2005

In 1990, Only a Few Cities Had Non-stop Long-haul Service From Johannesburg

Source: August 1990 OAG

Johannesburg

Rome

Frankfurt

Lisbon

London

Zurich

• All Nonstop, Long-

Haul service was

to Europe − 28 frequencies*

− 5 city pairs

• Some European

and Middle East

flights operated

via NBO – Tel Aviv

– Athens

• Asian flights

operated via MRU – Hong Kong

– Taipei

By 2004, The Number of Long-haul City Pairs

Served Increased Over Three Times

Source: August 2004 OAG

• Additional Nonstop, Long-Haul services to Europe, Asia and the Middle East – 161 frequencies*

– 18 city pairs

• More Point-to-point frequencies using smaller aircraft

Johannesburg

Rome

Frankfurt

Lisbon

Zurich

Amsterdam

Athens

Madrid

Mumbai

Paris

Dubai

Hong Kong

Kuala Lumpur

Milan

Perth

Singapore

Sydney

Tel Aviv

London

Boeing Does Not Predict A Significant

Trend Shift In Airplane Size

140

160

180

220

240

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

Airbus: +20% Size Increase

Historic Air Travel Growth: 5.8% Forecasted Air Travel Growth: ~5%

Recent History Forecast

Boeing: ~+2% Size Increase

NOTE: Excludes regional jets

• Highly regulated

• Few airplane choices

• More competition

• Many airplane choices

Bygone Era

1975 1970

• Increasing liberalization

• More airplane choices

200

2% Size Growth Over Last 10 Years

Average Seats Per Airplane

0

100

200

300

400

500

1990 2000 2010 2020

Airlines Will Continue To Meet Air Travel Growth

With More Frequencies And Nonstops

Routes over 3,000 miles

Index (1990=100)

Air Travel Growth

Frequency Growth

Nonstops

Average Airplane Size

History Forecast

20 Year Forecast Projections For The Africa Fleet Boeing Current Market Outlook

• Single-Aisle airplanes will

dominate the African Fleet

• The percentage of Twin-

Aisle airplanes will double

to better serve long-haul

and larger inter-regional

markets

• Traffic from Southern

Africa to Europe will use

Twin-Aisle and larger

airplanes

Regional jets

Single-aisle

Twin-aisle

747 and larger

Regional jets

Single-aisle

Twin-aisle

747 and larger

Percentage of fleet

0

25

50

75

100

2004 2024719 Airplanes 1,062 Airplanes

Percentage of fleet

0

25

50

75

100

2004 2024719 Airplanes 1,062 Airplanes

Bilateral Changes And New Airplane Capabilities Influence Fleet Mix

• Airlines have added

flights and more point-

to-point services to

meet passenger

demand

• More point-to-point

frequencies from JNB

using smaller aircraft – Lower percentage of 747

aircraft

– More Intermediate Twin

Aisle aircraft

0%

20%

40%

60%

80%

100%

August

1990

August

1995

August

2000

August

2005

Intermediate Twin Aisle

747

Source: OAG

Departures from Johannesburg Airport

Very Large Airplanes Will Not Reduce Airport

Congestion – London Heathrow Airport

0

50

100

150

200

250

300

100 or less 101-150 151-200 201-250 251-300 301-350 350-401 401-450 Over 450

Daily departures

Seat size category

• OAG August 2005

• All scheduled

passenger service

87% of the airplane

departures are below

300 seats

67% of the airplane

departures are below

200 seats

Nonstop Service Continues To Bypass

Mega-Hubs, Not Consolidate

Passengers prefer

more nonstops and

frequency choices

London

Heathrow

London-Heathrow

Air Canada Emirates

American Continental

London-Heathrow

New York (JFK)

London-Heathrow London-Heathrow

New York (EWR)

Delhi Toronto Dubai

Manchester Geneva Chicago

New Nonstop Flights Continue To Grow,

Not Consolidate

Airbus claims

the number of

city pairs has

stagnated

since 1996

Airbus projects

fewer airport

pairs in 2022

than served

today 5,000

6,000

7,000

8,000

9,000

10,000

11,000

1985 1990 1995 2000 2005

Airport Pairs

Data from August Schedules

NOTE: Excludes regional jets

~2,200 Airport Pairs Added

Since 1996

The Middle Of The Market Is The Biggest

And Most Demanding

A350

Passenger Airplane Deliveries Forecast

2005 – 2024 2004-2023

747-400ER 416 seats

777-300/-300ER 365 seats

777-200/-200ER/200LR 301 seats

767-400ER 245 seats

767-300ER 218 seats

767-200ER 181 seats

2,235

3,005

200 Seats

200 Seat Gap

A380-800 542 seats

A340-600 323 seats

A340-500/A340-300/A330-300 280 262 262 seats

A330-200 241 seats

1,250

2,650

1,799

450 Seats

400 Seats

300 Seats

BOEING AIRBUS

590

747 Advanced 450 seats

300

787-9 259 seats

787-8 223 seats

Market Needs Summary

Africa and the world markets are evolving

Liberalization continues to create a more competitive environment

Airline strategies are responding to passengers’ desires to save time

Airlines have accommodated air travel growth by adding more frequencies and nonstops

Boeing expects these trends to continue

The middle of the market is the biggest and most demanding

Agenda

Cost Efficient Fleet

Management

Market Dynamics

Boeing Product Strategy

Product Family Enabling More Frequent, Nonstop Service With Breakthrough Economics & Technology

Product Family Enabling More Frequent, Nonstop Service With Breakthrough Economics & Technology

• Complete Market Coverage with Operational Commonality

• Long Range, Fast, Quiet

• Reliable, Efficient, Low Operating Cost

• Passenger Experience

• E-Enabled

• Standardization

The All New 787 Dreamliner – New Opportunities

For Passengers And Airlines

Twin-Aisle Jets

200 – 300 Seats

Where they want to go, when they want to go in comfort

New levels of airplane efficiency, speed, comfort and

environmental responsibility

Single airplane family serving a wide spectrum of markets,

common operationally with the 777 family

787 Family Plan Offers Efficiency For Short, Medium And Long Haul Markets

787-9 8,300 nmi (15,400km)

259 Passengers

787-3 3,500 nmi (6,500km)

296 Passengers 787-8

8,500 nmi (15,700km)

223 Passengers

787 Breakthrough Technologies Result In Superior Design Efficiencies

Trip Fuel Consumption

787 Advantages

• Better

aerodynamics

• Better engine

integration

• Lower airplane

weights

Per

Sea

t F

uel

Co

nsu

mp

tio

n

A340

Four engine technology

A330

15 year-old technology

A350

Derivative technology

787

All new technology

Composite Manufacturing Is Changing The 2nd Century Of Powered Flight

787 Integrates Breakthrough Technologies To Improve Fuel Efficiency And Lower Cost

787-8 A350-800

Cabin Area

Seats

Range

Take-off Weight

Fuel Efficiency*

Cash Operating Cost*

*Typical mission rules

~ Same

~ Same

~Same

+27 tonnes

+7%

+8%

Base

Better Design Results In Greater Cargo Capacity For More Revenue

20 to 45% more revenue cargo volume

787 Crew Rest is overhead (fwd/aft)

5 Pallets

4 Pallets +

2 LD-3’s

8 LD-3’s

Pallet-mounted

Attendant Rest*

12 LD-3’s

Bulk

Bulk

787-8

A330-200

A350-800

Passenger Baggage

Revenue Cargo

Bulk Cargo *A330-200 uses bulk cargo attendant

rest or lower deck mobile crew rest

787 Provides A New Sensation In

Passenger Comfort

• Dramatic entryway

• Improved lighting

• Larger bins and windows

• Lower cabin altitude

• Higher humidity

• Better air quality

• Advanced temperature control

• Smoother ride

All New Architecture

More

headroom

Larger

Overhead

bins Larger

passenger

windows

Wider

cabin

787 And 777 – The Perfect Combination For The

200-400 Seat Market Segment

• True operational commonality

• Complementary sizes

• Same speed

• Similar ranges

• Common flight decks

• Highest level of passenger comfort

• Wider cabins

• Wider seats and aisles

• Best cabin environment

• Most efficient airplanes

• Lower fuel consumption

• Lower operating costs

• More capacity

• Highest environmental responsibility

• Lowest fuel emissions

• Lowest community noise

777 Attributes Advanced alloys

Flight deck features

Passenger Windows

787 Technology Advanced-technology

engines

Advanced materials

747 Advanced Design Increases capacity and range

Adds aerodynamic performance

Improves passenger appeal

Increases operational

commonality

Optimum Solution in Technology,

Function and Value

Product Development

Study

Things To Remember …

• Airlines are profitable, except for the large ones in the United States, which are severely impacted by fuel prices

• Low Cost carriers are growing as traffic rebounds

• Point to point routes and market fragmentation continues

• Airplane sizes continue to decline

• Airlines require efficient aircraft to replace portions of their current fleet

• Boeing’s long-term partnership with Africa remains strong

Thank You!