Commercial aviation emb day mar2011

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


� Air Transport Industry Review

� ERJ 145 Family

� E-Jets Family

� Market Outlook 2010-2029

ContentsContents


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Jan

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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%


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)


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


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


More than 1,100 ERJ platforms delivered(nearly 900 to commercial airlines)


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


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


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


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


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


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


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


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


E-Jets Market AcceptanceE-Jets Market Acceptance

First delivery 2004. Nearly 1,000 net orders accumulated.

947 orders + 720 options


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


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)


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.


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)


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


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)


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


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)


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


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


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)


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


E-Jets Customer Base (by Business Model)E-Jets Customer Base (by Business Model)


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:


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


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


E-Jets Complementing NarrowbodiesE-Jets Complementing Narrowbodies

… many additional right-sizing opportunities worldwide!

Low Cost CarriersLow Cost Carriers

E-Jets Deployment:


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


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


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


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)


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


E-Jets supported by Leasing CompaniesE-Jets supported by Leasing Companies



E-Jets financing partners !E-Jets financing partners !

Companies involved in financial support for the E-Jets

AVIC INTERNATIONAL LEASING CO. LTD.


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


E-JetsCommitment to product update

E-JetsCommitment to product update


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

��

��

Load 21.5 - Pentium MDual Active HF

�

IFE

Panasonic�

�

�

As of December 31st, 2010

��

�

��

��

�

��

�

2011

CPDLC

Load 25

ISA+39 EASA


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


� 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)


E-Jets Around the World58 Airlines from 39 Countries

Documents

Commercial aviation emb day mar2011