Mauro Kern

Executive Vice-President Airline Market

Airline Market Overview

A perspective from the 30 to 120-seat segment
Mar/2010

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 forwardlooking 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 Embraers written consent

Contents

Air Transport Industry Review ERJ 145 Family E-Jets Family Competitive Scenario Product Development Market Outlook 2010-2019
The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

Economic Scenario
World Real GDP Evolution (USD 2005)
60

55
Real GDP (US$ trillions)

50

45

40

35 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009F 2010F 2011F 2012F 2013F 2014F

World will return to pre-crisis level in 2010 (due to emerging countries) USA and Europe will recover in 2011-12
Source: The Economist (Feb/10)
The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

Air Transport Demand - IATA

World International RPK Growth Rate (% yoy)
12 10 8 6 4 2 0 -2 -4 -6 -8 -10 -12 -14
Jan-06 Mar-06

5.9%
May-06 May-07 Jul-06 Jan-07 Mar-07 Sep-06 Nov-06

7.4%
Jul-07 Jan-08 Mar-08 Sep-07 Nov-07

1.6 %
May-08 May-09 Jul-08 Jan-09 Sep-08 Mar-09 Nov-08

-3.5%
Jul-09 Sep-09 Nov-09 Jan-10

IATA: The industry starts 2010 with some enormous challenges. The worst is behind us, but it is not time to celebrate.
Source: IATA (Jan/10)
The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

Demand Forecast IATA and ICAO

RPK Growth Rate (% yoy)
IATA ICAO

7,4 5,8 1,3 -3,1 -4,1 4,5 3,3 5,0 5,5 6,2 6,1

2006

2007

2008

2009 F

2010 F

2011 F

2012 F

2009: Reduced demand due to economic crisis 2010-2013: Projected demand recovery
Source: IATA and ICAO (Dec/09)
The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

2013 F

Air Transport Industry Review a summary

Gradual recovery of market demand Weak revenue environment, signs of improvement (IATA halved its loss forecast for 2010 to US$2.8bi) 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 current crisis
The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

Air Transport Demand US Mainline vs. Regionals

US Domestic
600 500 RPM (Billion) 400 300 200

Mainline: -0,2% cagr

FAA Aviation Forecast

RPM cagr Mainline Carriers Regional Carriers 20092030F +2,9%

Regional: +13,3% cagr

100

+4,2%

0
20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 E 20 10 F 20 11 F

FAA Forecast (Mar2010):

Source: FAA

higher growth rates for Regionals increased use of 70-90 regional jet aircraft

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

1,100 ERJ145 Platforms Already Delivered

Dec 1996 Dec 1996

First Delivery First Delivery

Dec 1998 Dec 1998

Dec 1999 Dec 1999

Aug 2000 Aug 2000

September, 2007
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 Embraers written consent

Pre-Owned ERJ Transfers

35
Number of ERJs (units)

30 25 20 15 10 5 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

61 pre-owned ERJ transfers in the last two years (2008-09)

Source: Embraer (Mar/09)
The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

Pre-Owned ERJ Transactions

BMI United Kingdom

Passaredo - Brazil Trans States - US

FinnComm - Finland Dniproavia - Ukraine

Aeromexico Connect - Mexico

Satena - Colombia

Diexim Expresso - Angola

Athens Airways - Greece

City Airline - Sweden

Republic - US

Nearly 170 pre-owned ERJ transactions since 2000

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

1st. E195 Delivery to Air Dolomiti (Italy)

(January 27, 2009)

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

1st. E170 Delivery to Fuji Dream Airlines (Japan)

(February 20, 2009)

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

1st. E190 Delivery to Niki (Austria)

(May 14, 2009)

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

1st. E195 Delivery to Augsburg Airways (Germany)

(June 9, 2009)

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

1st. E195 Delivery to Windrose (Ukraine)

(June 22, 2009)

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

1st. E175 Delivery to Trip (Brazil)

(June 24, 2009)

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

1st. E190 Delivery to LAM (Mozambique)

(July 31, 2009)

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

1st. E170 Delivery to BA Cityflyer (United Kingdom)

(September 3, 2009)

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

th. 600

E-Jet

delivered to LOT Polish Airlines September 15th., 2009 !!!

1st. E195 Delivery to Lufthansa Cityline (Germany)

(September 24, 2009)

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

New E-Jet Customer Air Astana (Kazakhstan)

(Nov/09 ; 2 E190 Jetscape)

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

New E-Jet Customer Oman Air (Oman)

(Nov/09 ; 5 E175)

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

New E-Jet Customer Austral (Argentina)

(20 E190)

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

1st. E170 Delivery to Gulf Air (Barhain)

(March 4, 2010)

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

E190 at London City Airport

(2010)
Carriers cleared to use Embraer 190 at London City
BA CityFlyer, Baboo and Lufthansa Cityline will be the first to operate the EMBRAER 190 out of LCY.

Baboo debuts Embraer 190 at London City

We are especially proud to be the first to operate this aircraft, the most comfortable and popular regional jet, into this most userfriendly airport Jacques Bankir, CEO of Baboo

BA CityFlyer starts introducing Embraer 190s

We are now on the last leg of our fleet replacement programme and our passengers will benefit from the extra space these new, greener aircraft offer.
Peter Simpson, Managing Director of BA Cityflyer

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

Grand Slam: E-Jets at Europes top airlines

Orders Backlog

10 E170 10 E190
Orders

Backlog

17 E190

Orders

Backlog

17 E190 15 E195
Orders

16

Backlog

6 E170 5 E190
Source: Embraer (Dec/09)

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

620+ E-Jets. 56 Airlines. 39 Countries

Current Environment Requires Fleet Optimization

Decreasing Demand & Yields

Fleet efficiency
Capacity Cuts Fuel & Environment Pressure

is a critical issue to airlines

Right-sized aircraft help airlines to improve fuel burn (environment) and results
The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

Market Density Profile - USA

500 Number of Markets
51-150 PDEW

400

55%
151-300

300

22%

>300

23%
200

100

0 51 - 75 100 150 200 250 300 350 400 500 1000 >1000 Passenger per Day Each Way (PDEW)

USA domestic mainly low-mid density markets 77% up to 300 PDEW

Source: US DOT (3Q09)
The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

Market Density Profile Latin America

300
26-100 PDEW

250 Number of Markets

54%
200

101-300

28%
>300

150 100

18%

50

0 26-50 100 200 300 400 500 600 700 800 >800 Passenger per Day Each Way (PDEW)

Intra Latin America mainly low-mid density markets 82% up to 300 PDEW
Source: SABRE (2009)
The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

Market Density Profile China

250
26-100

200 Number of Markets

46%

101-300

30%

150
>300

100

24%

50

0 26-50 100 200 300 400 500 600 700 800 900 1000 >1000 Daily Passengers

China mainly low-mid density markets 76% up to 300 daily passengers

Source: China Airline Traffic Statistics 2008 (Markets with at least one weekly frequency)
The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

Passengers per Departure USA

Narrowbodies (121-210 seats)
1000

Annual Flights (x 1000)

900 800 700 600 500 400 300 200 100 0 46-60 61-75 76-90 91-105 106-120 121-135 > 135

Daily Frequencies

>2

<=2

Passengers per Departure

Around 610,000 flights (~18%) of total J121-210 with loads from 61 to 105 pax per departure and low daily frequencies (up to 2)
Source: US DOT (Nov/08-Oct/09)
The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

The CASM Paradigm

2,095 1,434
1,305

454
177

733

(1,051) (1,757)

(504)
Environment: Avg Sector: Avg Fare: Fuel Price: USLCC 800sm 100USD 2USD/gal

6175

7690

90105

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

The CASM Paradigm the ultimate rule

Contribution toProfit perFlight

CONTRIBUTIONTOPROFITPERFLIGHT

Fare Level

100SEATER
Pax/Flight <120

NB
Pax/Flight >120

Passenger Demand perFlight

A place for everything and everything in its place

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

E-Jets Deployment
21%
8% 14%
29%

25%
6%

5%

32%
7%

33% 5%

57%

40%

49%

62%

20% North North America America

20% 31%

Europe Europe

7%

12%

11%
C h in a China

33%
Middle East Middle East

39%

8%

49%
52%

50%

Latin Latin America America

Africa Africa

Asia Pacific Asia P acific

World
Source: OAG (1Q10)

50%

20%

9%

21%

Right-sizing

New Markets Replacement

of old Jets

Natural Growth

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

E-Jets: Complementing Narrowbodies

Madrid Paris (ORY) Dec/08 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
Source: OAG (2010)

EdmoutonVancouver Dec/08 Dec/09

San Salvador - Guatemala

Amsterdam Berlin Jan/09 Jan/10

Dec/09

Sep/08

Sep/09

744

606

1032 E190

930 E190
A320

494
A320

342
A320

754

611

B738

B738

A320

F70 B737

B737

E190
A320 B738

E190
A320

E195
A320 A319 A320 A321 A319

E190
B737

E190

B737 A320

B738

B738

E190
CRJ700 A319

E190 E190

E190

B737 B737 B737

B738

E195

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

E-Jets Complementing Narrowbodies

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

E-Jets: Replacing Narrowbodies

Frankfurt - Katowice Sep/08 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
Source: OAG (2009)

Amsterdam - Helsinki Dec/08 Dec/09

Los Angeles - Vancouver May/07 May/09

Brisbane - Oakhampton Sep/08 Sep/09

Sep/09

714
B737

420 E170

513

392 E190

480
A319

465 E190

690
B737

520 E190

B737 B737 B737

E190

E190
A319

E170 E170 E170 E170

B737 B737

E190
B737

E190

B737 B737 B737

E190

A319

E190
B737

E190

A319

E190
B737

E190

E190

B737

E170

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

E-Jets Helping Explore New Markets

Seats

Low Cost Carriers with Two Fleet Types

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 Embraers written consent

E-Jets Helping Reduce Costs and Fuel Burn

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

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 Embraers written consent

Replacement Opportunities - World

(Jets 61-120 seats)
350
B737-500

300
Number of Aircraft

250
Bae 146

B737-200

200 150 100 50

F70 F28 B717-200 F100 TU-134 YAK-42 DC-9

0 5 15 25 35 Average Age (years)

Nearly 1,000 aircraft with more than 15 years old

Source: OAG (Dec/09 ; Passenger, Active in Service, Scheduled Services)
The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

E-Jets Family Order Book

Firm Orders EMBRAER 170 EMBRAER 175 EMBRAER 190 EMBRAER 195 187 140 448 87

Options 48 178 426 70

Deliveries 170 125 263 47

Firm Backlog 17 15 185 40

Total

862

722

605

257
(December 31th 2009)

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

E-Jets Worldwide Distribution

Customers Firm Orders

Diversified customer-base across five continents Increased presence in emerging markets with established carriers
Source: Embraer (Dec/09)
The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

E-Jets Backlog Evolution

Backlog Share per Region (# of Aircraft):
322 Acft
1% 8% 20% 32% 16% 71% 22% Emerging Countries RoW Europe North America

257 Acft

31%

2005

Dec/2009

North America + Europe share decreased from 91% to 53%

Source: Embraer (Dec/09) Emerging Countries include Brazil, Russia, India, China and Eastern Europe.

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

E-Jets Schedule Reliability & Completion Rate

Schedule Reliability: 99.2% ; Completion Rate: 99.9%
100,00

99.9% 99,88

99,75

99,50

99,25 SR/CR (%)

99.2% 99,22

99,00

98,75

98,50

98,25

98,00 MAY MAY MAY JUL JUL JUL NOV NOV NOV FEB SEP SEP APR SEP FEB FEB JAN MAR MAR MAR DEC DEC AUG AUG AUG OCT OCT OCT DEC APR APR JUN JUN JUN JAN JAN

2007 SR - MONTH

2008 SR - L12M CR - MONTH CR - L12M

2009

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

Market Share - World (Jets 61-120 seats)

Embraer: 170/175/190/195 Bombardier: CRJ700/900/1000; CS110 Airbus: A318 Boeing: B737-600 Sukhoi: Superjet 100 Comac: ARJ-21 Antonov: An-148 Mitsubishi: MRJ90

Considering accumulated Net Orders up to Dec/09.

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

E-Jets vs. New Entrants

Competitive Scenario
120 E195 E190 SSJ100/95 90 E175 E170 MRJ70 60 1800 ARJ21 MRJ90 CS100

110

Seat Capacity (32'' pitch)

100

110 Seats 100 Seats

80

70-90 Seats
70

2000

2200

2400

2600

2800

3000

3200

Range (nm)
The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

Competition: CS100 vs. E195

4,500 kg heavier than E195 Higher DOC than E195 Risk associated with new engine technology (GTF) Implications for CS100 inneficient Momentum after Republic CS 150-seater derivative perceived as heavy and CS300 vs. A319/737-700 Competition vs. A320/737-800

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

Competition: E175 vs. MRJ90

Major design review in 2009: back to metallic wing, increased cross-section. 3,500 kg heavier than E175 Equivalent DOC vs. E175 but at higher risks: Challenging integration and development Risk associated with new engine technology (GTF) TSA deal no bid ; price agressiveness sustainable??

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

Expected Technologies for Commercial Aviation

2015/2016

Wingtip devices

Advanced structures Composites / Metallic

Avionics functionalities

Electric taxi

Geared and Adv. Turbofan engines

2017/2019

APU

Fuel Cell

Carbon composites nanotubes (2nd gen.)

2nd generation GTF/ATF

Health monitoring systems (On condition maintenance)

2020/2025

Open Rotor / New Configs / Advanced Aerodynamics

Single pilot capability

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

New Technologies and Next Generation

Industry focus on new technologies maturity

2015/2016
PotentialCOCvs. CurrentTechnology

2017/2019

2020/2025

4% 7%

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

Competitive Product Positioning along time

Competitive positioning code: higher average lower

New entrants introduction

mature new entrant

Next Gen NB

New entrants competitiveness 2010

new entrant maturation

competition from next-gen NB

2015

2020

New entrants introduction

New entrants competitiveness in case of NB re-engining 2010

Next Gen NB

new entrant maturation

mature new entrant

competition from next-gen NB

2015

2020

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

Embraer Market Forecast (2010-2019)

Projected Deliveries - Jets Market Segment
(Seats)

2010 2019 Deliveries 60 1015 1550

30-60 61-90 91-120

30-120

2625

Around 2600 jet deliveries (US$ 80bi) in the next 10 years.

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

Embraer Market Forecast (2010-2019)

2,625 jet deliveries (30-120 seats)

Russia / CIS Europe North America

155
6%

580
22%

840
32%

China Middle East

340
13%

Africa

80
Latin America

105
4%
Asia Pacific

3%

315
12%

210
8%

The information contained herein is property of Embraer and shall not be copied or used without Embraers written consent

620+ E-Jets. 56 Airlines. 39 Countries