VALUESNews and Perspectives from Embraer Sales Finance & Leasing

• JANUARY 2012 •

• WHAT WE DO • NEWS ROUNDUP• 1,100 E-JET ORDERS. AND COUNTING.

Even though the first E-Jet entered revenue service nearly eight years ago, airlines are still discovering the potential of the 70 to 120-seat aircraft capacity segment, especially in regions of the world that never experienced the regional jet revolution. That interest has attracted the attention of lessors who have recognized the versatility of the E-Jets platform, which are continuously increasing it’s number of orders from Lessors worldwide. Our ECC Leasing division is working with airlines to help place both E-Jets and ERJs as inventory becomes available. New opportunities are appearing in Africa, for example, as carriers on that continent replace their ageing fleets and position themselves for economic growth. It’s encouraging to see airlines that embrace a philosophy of adding capacity in disciplined increments rather than simply replacing big old aircraft with big new aircraft. I believe the supply of used regional jets and the emergence of the 70 to 120-seat jet segment are finally bringing new, more economically viable options to the global airline community. I applaud the investors, lessors and financial community who share our optimism for the future prospects for Embraer aircraft.

John SlatterySr. Vice PresidentHead of Sales Finance, Asset Management & Lessor Sales

As a division of Embraer Commercial Aviation, our mandate is to coordinate and maintain relationships with the aircraft financing community. This division is comprised of three highly integrated areas: Sales Finance liaises with financial institutions in order to seek the most efficient structures to finance customer acquisitions of Embraer aircraft.

Asset Management administers and trades a portfolio of used aircraft and works to develop secondary markets to place Embraer aircraft.

Lessor Sales manages the relationships with commercial lessors around the world. These three divisions combined enable us to deliver a value-added service proposition to Embraer partners. Airlines benefit from a broader range of financing options and lessors have access to investment opportunities for aircraft purchase and lease back as well as the ability to place assets from direct orders. We regularly communicate with appraisers to help them understand the global operations of Embraer’s commercial products and the applications for the company’s family of E-Jets in the 70 to 120-seat capacity segment. After all, accurate aircraft evaluations serve to benefit all stakeholders involved in E-Jet transactions and investments.

Air Astana of Kazakhstan is flying E190s leased from Air Lease Corporation.

A WORLD OF OPPORTUNITY

WHAT WE DOWelcome to this first issue of Values, a new publication that highlights how airlines, lessors and broader financing community are investing at the highly successful Embraer Commercial aircraft.

ASSETMANAGEMENT

LESSORSALES SALES

FINANCE

NEW LESSORS FOR E-JETS

BRAZIL RISKUPGRADED

E-JETSRANK ON TOP

BRAZIL RATIFIESCAPE TOWNCONVENTION

Two more leasing companies announced the addition of Embraer E-Jets to their asset portfolios in November 2011. CIT Group and BOC Aviation now join over twenty other lessors who have acquired E-Jets either through factory orders or via purchase and lease-back transactions with airlines.

The long-term foreign currency sovereign rating on the Federative Republic of Brazil was upgraded one notch from “BBB-“ to “BBB” by Standard & Poor’s Rating Service on November 17, 2011. Brazil’s long-term local currency debt was also upgraded to “A-“ from “BBB+.” These changes reflect the robust macroeconomic fundamentals of the country and its sound economic policies. According to S&P’s press release, the adjustments were made in light of the Rousseff administration’s growing track record of prudent macro economic policies, including fairly consistent primary surpluses of close to 3% of GDP. S&P also cited the country’s “growing economic resilience”. Moody’s, Fitch and S&P have all raised their foreign and local currency credit rating for Brazil to reflect the country’s fiscal strength. This is in contrast to the first ever downgrade to the USA and, more recently, to France and 8 other Euro-zone nations that have taken a hit to their sovereign ratings. Rousseff had implemented nearly $30 billion in budget cuts last year to temper the growing economy and stem inflation. “The Independent Rating Agencies’ decision to upgrade Brazil’s debt rating at such a turbulent time in the international economy confirms that the country’s macro economic scenario has stabilized over the years,” according to Marcelo Santiago, Embraer’s Director of Sales Finance. “For Embraer customers, these decisions may increase the appeal to financiers on ECA transactions backed by the Brazilian Export Credit Guarantee (“Pure Cover.”) Besides the potential liquidity increment which can bring more players to the program, the credit rating upgrade will reduce the margins charged by the commercial banks to provide aircraft financing under such structures.”

Brazil became another signatory to the Cape Town Convention and Protocol at a ceremony at the 10th anniversary seminar of the accord last November 30th at UNIDROIT’s headquarters in Rome. The addition of Brazil brings the total number of Convention parties to 50. Brazil opted for Alternative A under the Aircraft Protocol which essentially allows a financier to recover an aircraft within 60 days of default. Brazil Minister Counselor, Maria Izabel Vieira, submitted the Instrument of Accession to the Secretary-General of UNIDROIT. Brazil’s participation is effective March 1, 2012.

AirFinance Journal’s September 2011 investor poll ranked Embraer’s E-Jet family as the leader among aircraft with capacity up to 120 seats. Scores were given based on the best remarket potential as evaluated by investors. The E190 was given the highest rating in the category.

Source – AirFinance Journal (Sep/2011)

CIT Group signed for up to 30 E190s and/or E195s and confirmed an initial order for ten of the aircraft.

BOC Aviation ordered 15 E190s with options for another 15. Deliveries will start in the fourth quarter of

this year and continue through 2014.

3.73.42

2.91 2.872.48

2.26

E190 E195 E175 E170 CRJ900 CRJ700

E-JETS PROVEN MISSION VERSATILITYMAKES FOR A LIQUID ASSETIn a sector that is often misunderstood and frequently overlooked amid the publicity generated by mega-sized airplanes and the rivalry between the world’s two biggest airframers, Embraer owns a commanding share of the market between 50-seat regional jets and larger single-aisle jets with capacity up to 120 seats. Since they entered revenue service in 2004, Embraer has “tapped the gap” with its family of E-Jets, comprised by 4 models ranging from 70 to 120 seats, with more than 1,100 orders from 60 airlines in 40 countries. The 900th E-Jet will be delivered later this year.

One attribute of the E-Jet platform that make it so attractive to airlines and lessors is the diversity of its application across a range of business models. While 40% of E-Jets are deployed on regional missions with regional carriers, 38% are configured to mainline standards with premium cabins and in-flight entertainment systems. The remaining 22% of the world fleet is flying with low-cost carriers who have discovered that one aircraft size no longer fits all.

Values is produced by Embraer team São José dos Campos.

We welcome your comments and contributions. Please contact:

Vagner Proenca Ricardo

Lessors Market Strategy Manager

vagner.ricardo@embraer.com.br

TEL: +55 (12) 3927 7744

While carriers in the more developed markets of North America and Europe long recognized the capacity gap between 50-seat regional jets and 150-seat single-aisle narrow bodies, airlines in most other parts of the world are beginning to understand the potential of 70 to 120-seat jets in their networks. The absence of large fleets of small airplanes never generated a capacity gap in Africa, South America, the Middle East, India, China, and most countries in Asia.

The interest in E-Jets is truly going global. In 2005, over 90% of the order backlog was from carriers in the USA and Europe. By September

2011, over 40% of the backlog was from airlines outside thosetwo regions.

Airlines in emerging markets are showcasing the true potential of the aircraft. Low-cost carrier Azul is using its fleet of E-Jets to link secondary cities in Brazil and bringing affordable air travel to an entirely new segment of first-time travelers. E-Jets in China, operated by Tianjin Airlines, China Southern, Hainan Airlines and Hebei Airlines, are instrumental in growing the economies of several provinces and opening new routes. At the end of 2011, China was the country with the largest fleet of Embraer airplanes, second only to the USA.

The diverse customer base helps to increase the liquidity of E-Jets and translates into stable lease rates. According to Ascend, both the E190 and its smaller cousin, the E170, saw their lease rates dip an average of only 4% during the industry turmoil of 2008 compared to some 20% for the A319, A320 and B737-700 and -800.

Some forty financial institutions, asset management and leasing companies, including GECAS, RBS, Jetscape, CIT, Air Lease Corporation, ORIX, Aldus and BOC Aviation, who have added E-Jets to their portfolios through direct orders and purchase and lease-backs.

We look forward to continuing to support these companies in their partnership with Embraer.