defense embraer-day-2010-1029

Airline Market OverviewA perspective from the 30 to 120-seat segment

Airline Market OverviewA perspective from the 30 to 120-seat segment

Oct/2010Oct/2010

Paulo Cesar de Souza e SilvaExecutive Vice President Airline Market

Paulo Cesar de Souza e SilvaExecutive Vice President Airline Market

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


� Air Transport Industry Review

� ERJ 145 Family

� E-Jets Family

� Market Outlook 2010-2029

� Product Development

ContentsContents


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IATA: “Air traffic strong demand continues,

but recovery enters second slower phase”

7.4% 1.6 % -3.5%

Source: IATA (Sep/10)

6.4%

Air Transport Demand - IATAAir Transport Demand - IATA

World – International RPK Growth Rate (% yoy)


IATA: strong recovery in 2010 and slight slowdown in 20112010F 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)

Net Profit/Loss (US$ billion)

Region 2009E 2010F 2011F

Africa - 0.1 0.1 0.0

Asia Pacific - 2.7 5.2 3.0

Europe - 4.3 - 1.3 0.0

Latin America 0.5 1.0 0.6

Middle East - 0.6 0.4 0.3

NorthAmerica

- 2.7 3.5 1.4

World - 9.9 8.9 5.3-18

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Net Profit Net Loss Net Margin

Airline Financial Results - WorldAirline Financial Results - World


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1,400

1978

1980

1982

1984

1986

1988

1990

1992

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RPK

ICAO Forecast Jun/10

GDP

Gulf

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War

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Source: ICAO (1978-2009) and The Economist

Demand recovery �� better than expected

Despite crisis, air transport demand will increase in the mid-long term

Oil

Crisis

5.5

% C

AGR

2010

-202

9

4.5% C

AGR 2010-2029

RPK Avg. Annual Growth

1978-2009: 5.0%

1998-2009: 5.1%

Air Transport Demand vs. EconomyAir Transport Demand vs. Economy


Air Transport Industry Review - SummaryAir 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 50-Seater MarketERJ145 – the backbone of the hub-and-spoke system

The 50-Seater MarketERJ145 – the backbone of the hub-and-spoke system


ERJ 145 Family Order Book 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


Dec 1998Dec 1998

Dec 1999Dec 1999

Aug 2000Aug 2000

Mar 2001Mar 2001 Sep 2001Sep 2001 May 2003May 2003

Dec 1996Dec 1996

First DeliveryFirst Delivery

May 2002May 2002 Feb 2005Feb 2005May 2004May 2004

1,000+ ERJ 145 Platforms Delivered1,000+ ERJ 145 Platforms Delivered

Sep 2007Sep 2007


Pre-Owned ERJ TransactionsPre-Owned ERJ Transactions

Nearly 170 pre-owned ERJ transactions since 2000

61 ERJ transfers in the 2008-09 period

BMI – United Kingdom

FinnComm - Finland

Satena - Colombia

Athens Airways - Greece

Trans States - USA

Dniproavia - Ukraine

City Airline - Sweden

Republic - USA

Passaredo - Brazil

Aeromexico Connect - Mexico

Diexim Expresso - Angola

SEAA - Angola


RJ50 Market TrendsRJ50 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


E-Jetshelping airlines to be more efficient


E-Jets Family Order BookE-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


12%

23%

33%

18%

14%13%

8%

23%

15%

41%

Asia Pacific / China

Middle East / Africa

Europe/CIS

Latin America

North America

E-Jets Worldwide DistributionE-Jets Worldwide Distribution

Customers Firm Orders

Diversified customer-base across five continents

Increased presence in emerging markets with established carriers

Source: Embraer (Sep/10)


E-Jets Deliveries: approaching 700 unitsE-Jets Deliveries: approaching 700 units

jan

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2004 2005 2006 2007 2008 2009 2010

100thOct 20051st

Mar 2004

200thDec 2006

300thOct 2007

20052004 20072006 2008

400thMay 2008

500thDec 2008

2009 2010

600thSep 2009

Sep/2009

700

671


E-Jets: same efficiency �� different business modelsE-Jets: same efficiency �� different business models

Network Low CostRegional

Source: Embraer (Jun/10 - Sirte Oil, GECAS, Jetscape and M1 Travel not presented)


Leasing companies supporting E-JetsLeasing companies supporting E-Jets

Leasing and financial companies commitment in the E-Jet program

1

34

9

13

17

19

2004 2005 2006 2007 2008 2009 2010

AAM Gbmh

Aircraft

Asset

Management

MARUTA

INDUSTRIES


E-Jets Family CommonalityE-Jets Family Commonality

Airlines are exploring the E-Jets family concept.

High commonality in systems, parts and crew qualification.


E-Jets Main Applications “by design”E-Jets Main Applications “by design”

Natural evolution for existingNatural evolution for existing5050--seat marketsseat markets

RightRight--sizing of low loadsizing of low load--factor factor

narrownarrow--body flightsbody flights

New market opportunities through New market opportunities through

lower risk and flexibilitylower risk and flexibility

Replacement of old and Replacement of old and

inefficient jetsinefficient jets


14%

57%

North America

20%50%

6%

40%

Europe/CIS

31%

49%

Latin America

29%

60%

Africa/Middle East

53%

9%

China

38%

47%

Asia Pacific

14%

8%

57%

North America

6%

25%

40%

Europe/CIS 29%

60%

6%

Africa/Middle East

38%

47%

6%

Asia Pacific

20% 9%50%

14%

8%

21%

57%

North America

6%

25%

29%

40%

Europe/CIS

31%

20%

49%

Latin America

29%

60%

6%5%

Africa/Middle East

53%

9%

38%

China

38%

47%

6%10%

Asia Pacific

20% 9% 21%50%

57%

North America

40%

Europe/CIS

49%

Latin America

60%

Africa/Middle East

9%

China

47%

Asia Pacific

50%

Source: OAG (1Q10)

World

E-Jets Actual DeploymentE-Jets Actual Deployment

Right-sizing New Markets Replacement of old Jets

NaturalGrowth


E-Jets Helping to Increase EfficiencyE-Jets Helping to Increase Efficiency


“Going to Embraer 190's, shorter stage length, fewer seats per flight,

outperformance in RASM, (…) and driving more revenue.”

E190 - Right-sizing at US AirwaysE190 - Right-sizing at US Airways

6:00

8:00

10:00

12:00

14:00

16:00

18:00

20:00

22:00

Dec/09

Frequency 16

Seats 2,096

A319A319A319A319

A319A319A319A319

A319A319

A319

A319

A319A319

A319A319

Scott KirbyUS Airways President

Jan/10

E190E190

E190E190

E190E190E190E190E190E190

E190E190

E190E190

E190E190

Frequency 16

Seats 1,568

Source: OAGback (3rd Wed of Dec/09 and Jan/10)

A319 E190

Load Factor: 41.7%

New York LaGuardia (LGA) – Boston Logan (BOS)


E-Jets: Complementing NarrowbodiesE-Jets: Complementing Narrowbodies

Source: OAG (2009)

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

Cairo – Sharm el Sheik

B735

B735

B735

B735

1160

Aug/07

A321

A321

978

Aug/09

A321

A321

E170

E170

A321

A321

E170

E170

E170

E170

E170

New York – Chicago

2,040

Apr/09

1,920

Apr/10

A319

B757

A320

B757

B757

A319

A319

A319

B737-3

A319

A320

B737-3

A320

A319

A319

A319

A319

E170A319

A319

E170A320

E170A320

A319

A320

A319

E170A320

A319

A319

A319

Madrid – Paris (ORY)

B738

B738

744 606

Dec/08 Dec/09

E195

B738

B738B738

B738 E195

494 342

Sep/08 Sep/09

A320

E190

E190

A321

A320

San Salvador - Guatemala

A320


E-Jets �� Right-sizing narrowbody servicesE-Jets �� Right-sizing narrowbody services


E-Jets Helping Enlarging NetworksE-Jets Helping Enlarging Networks


E190E190E190 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


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

E-Jets: Direct Replacement BenefitsE-Jets: Direct Replacement Benefits

Fuel Burn


E170/E190 - Air France / KLME170/E190 - Air France / KLM

“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

Source: OAG, 2010

10 E170 + 27 E190


E190/E195 - LufthansaE190/E195 - Lufthansa

“… 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

Source: OAG, 2010

11 E190 + 19 E195


E170/E190 - British AirwaysE170/E190 - British Airways

Peter Simpson ManagingDirector of BA Cityflyer

"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 15th 2010)

6 E170 + 5 E190


E-Jets Sales at Farnborough 2010E-Jets Sales at Farnborough 2010

LOI for up to 20 LOI for up to 20 EJetsEJets

LOI for 24 E190LOI for 24 E190 2 E190 converted 2 E190 converted

optionsoptions

5 E195 converted 5 E195 converted

optionsoptions

Order for 35 E175Order for 35 E175

Order can increase Order can increase

up to 140 Jetsup to 140 Jets


E175 – FlybeE175 – Flybe

Jim FrenchChairman andCEO of Flybe

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

business model.” (Flybe Jul/2010)

FIS Backlog Options

E195 14

E175 35 65


E190 - Air LeaseE190 - 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)


E190 - Republic (Frontier)E190 - Republic (Frontier)

Agreement for more 24 EMBRAER 190s

“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

the E-Jets product line.” (July/2010)Bryan Bedford

CEO of Republic Airways

E190 Routemap 2010Source: OAG

15 E190 already operating under Frontier colors


Orders announced in Farnborough Air ShowOrders announced in Farnborough Air Show

0

50

100

150

200

E-Jets ATR 72 Q400 CRJ CSeries MRJ

Total Orders* for aircraft up to 120 seats

191

64

0 07 0

*Includes Firm Orders, Options , Purchase Rights and LOIs


Market Share - World (Jets 61-120 seats)Market Share - World (Jets 61-120 seats)

Considering accumulated Net Orders up to Jun/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


Market Outlook 2010-2029MarketMarket Outlook 2010Outlook 2010--20292029


Each region has a different pattern

Asia Pacific and China will represent 36% of RPK in 2029

RPK (Billion) 2009 Traffic Added Traffic 2010-29

2010-2029 AnnualGrowth Rate [%]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%

4.9% 3.1%World


29,135 new aircraft will be required29,135 new aircraft will be required

About US$3 tri in terms of aircraft deliveries opportunities worldwide

2,2602,260

475475

2,5152,515

3,8853,885

14,43514,435

5,5655,565

6,875 aircraft(24%)

6,875 aircraft(24%)


6,875 jet deliveries (30-120 seats)

North America

2,40035%

Europe

1,51022%

Russia CIS

4056%

Latin America

5758%

Africa

2203%

Middle East

2404%

China

95014%

Asia Pacific

5758%

North America + Europe will represent 57% of new world deliveries

680 E-Jets56 Airlines from 39 Countries

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