IATA Cargo ConferencePresented by

Dr. Emre Serpen

Executive Vice President

March 8 , 2011

…in 2008 world air cargo market looked bleak

4.5%5.9%

3.3%3.7%

1.3%

-0.8%-1.9%

-2.7%

-7.7% -7.9%

-13.5%

-22.6% -23.2%-25%

-20%

-15%

-10%

-5%

0%

5%

10%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

YoY

Percent ChangeAir Freight Traffic

January 2008 – January 2009

Source: International Air Transport Association

However compared with 2009 world air cargo market expected to

grow approx 5.9 % per annum over the next 20 years1

Since 2000, GDP growth for emerging and developing

economies has outpaced advanced economies

2Source: International Monetary Fund, World Economic Outlook Update, November 2010

Real GDP Growth

CY 1980 – CY 2010

-4%

-2%

0%

2%

4%

6%

8%

10%

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Advanced

Economies

Emerging and Developing

Economies

Air Freight Traffic Shows Normalisation of cargo traffic

in recent months, as high yoy growth rates was due to

recovery from recession

3

YoY

Percent Change

Air Freight Traffic

January 2010 – January 2011

Source: International Air Transport Association

28.3%

26.5%

28.1%

25.2%

34.3%

26.5%

22.7%

19.6%

14.8% 14.4%

5.4%6.7%

9.1%

0%

5%

10%

15%

20%

25%

30%

35%

40%

IMF sees strong growth in emerging markets such as India

and China

4

World Economic Outlook Projections (GDP)

2011 Estimates

Source: International Monetary Fund, World Economic Outlook Update, January 2010

9.6

8.4

5.5

5.1

4.6

4.5

4.5

4.5

4.4

4.2

3.8

3.6

3

2.5

2.3

2

1.6

1.5

0 2 4 6 8 10 12

China

India

ASEAN-5

CIS Excluding Russia

Middle East

Africa

Russia

Brazil

World

Mexico

Other Advanced Economies

Central & Eastern Europe

United States

Advanced Economies

Canada

United Kingdom

Japan

Euro Area

Percent Growth

Asian and Middle Eastern Markets are among fastest

growth markets

5Source: Boeing World Air Cargo Forecast

World Air Cargo Forecast (RTKs)

CY 1999 – 2009 (Historical) and CY 2010 – CY 2029 (Long-Term Forecast)

13.1%

4.1%

3.4%

4.1%

1.4%

3.3%

6.5%

0.1%

-1.5%

2.5%

-0.7%

-2.5%

1.9%

9.2%

6.5%

7.9%

6.6%

6.7%

5.1%

6.0%

3.6%

4.2%

5.6%

5.7%

3.0%

5.9%

-4% -2% 0% 2% 4% 6% 8% 10% 12% 14%

Domestic China

South Asia–Europe

Intra-Asia

Europe–Asia

Asia–North America

Africa–Europe

Middle East–Europe

Intra-Europe

Europe–North America

Latin America–Europe

Latin America–North America

Intra-North America

World

2010-2029

1999-2009

Economic Trends

Since 2004, the historical relationship between GDP

and air freight volume growth has deteriorated

Source: ICAO Air Transport Reporting Form A plus ICAO estimates for non-reporting States

YoY Percent Growth in Freight Tonne Kilometers vs. World GDP

CY 2000 – CY 2009YoY

Percent Growth

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Freight Tonne

Kilometers

GDP

6

Air freight yields continued to rise thru 2008 with increasing fuel

prices than fell 22% 2009 with falling fuel prices

7Source: ICAO Air Transport Reporting Form A plus ICAO estimates for non-reporting States

Air Freight Operating Revenues per RTK

CY 1995 – CY 2007

25¢

27¢

29¢

31¢

33¢

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Deregulation, liberalisation and increased

belly capacity contributed to continuously

declining air freight yields

Avg. Annual Growth Rate

Air Friend Yields

1995-2001 -1.1%

2002-2006 +2.9%

Fuel/Security

Surcharge Effects

Air Freight Yield

(USD ¢)

Few years ago compared to passenger airlines cargo

airlines were slow in executing capacity adjustments

4.3%

-4.0%

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

2007 2008

YoY Percent Chance in Air Freight Traffic

CY 2007 – 2008

Source: International Air Transport Association

Capacity Growth

Market Growth

8

Cargo Airlines are now doing much better job matching

cargo capacity with demand

9

YoY Percent Change in Traffic and Capacity – Passenger vs. Cargo

January 2011 vs. January 2010

Source: International Air Transport Association

Passenger Traffic & Capacity Cargo Traffic & Capacity

8.2%

9.1% 9.1%

10.9%

0%

2%

4%

6%

8%

10%

12%

0.9%

1.8%

Cargo Growth

Passenger Growth

Commercial decision making, Balancing Yield, Price and Service

Operating freighter efficiency critical for profitable

operation

50,000

100,000

150,000

200,000

250,000

10,000 12,500 15,000 17,500 20,000 22,500 25,000

Fuel Burn per Block Hour

Net Payload

(lbs)

A300-600F

B767-300F

Source: DAC; Note: Fuel burn and net payload at 2,500 km

(net payload at 8.5 lb/cu ft); Boeing

A340-300F

B777-200F

MD11-F

B747-400F

Net Payload vs. Fuel Burn per Block Hour for Select Freighter Types

Fleet Trends

Opportunities for improving ‘ margins with better

commercial decisions, route/yield management, fleet

mix, and working with other carriers/alliances

11Source: ATW World Airline Report Financial 2010

Operating Margin for Select Cargo Operators

FY 2009

-12.5%

-8.8%

-0.2%

3.6%

3.6%

4.4%

4.6%

5.9%

6.5%

14.0%

14.1%

14.2%

-15% -10% -5% 0% 5% 10% 15% 20%

Arrow Cargo

Lufthansa Cargo

Polar Air Cargo

AirBridge Cargo

FedEx

Cargolux

Kalitta Air

UPS

Centurion Air Cargo

EgyptAir Cargo

Atlas Air

Astar Air Cargo

Average

4.1%

Thank You

www.InterVISTAS.com