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2005* ConferêNcia Santander Janeiro 2005 (DisponíVel Somente Em InglêS)

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Santander Conference January 2005 Cancun
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 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. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Fundamentals Aeronautical Industry Fundamentals High Technology Qualified People Global Presence CUSTOMER SATISFACTION Cash Intensiveness Backbone of our entrepreneurial action Flexibility THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Qualified People More than US$ 85 million invested in training and development in the last 5 years US$ million 24.5 21 18 13.5 11 6.2 1999 2000 2001 2002 2003 1H04 In–house courses: • 18 month graduate course in Aeronautical Engineering THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Qualified People 14,648 Number of Employees 12,941 12,227 11,048 10,334 8,302 6,737 6,087 4,494 4,319 3,849 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Nov 04 April / 97: 3,200 employees BRAZIL 13,799* EUROPE 186 SINGAPORE 19 USA 465 CHINA 179* * ELEB and China Joint Venture employees included THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Global Presence Operations in Brazil, United States, Europe, Asia and Australia USA Nashville China Jacksonville Fort Lauderdale France Beijing Le Bourget Harbin Singapore Brazil Singapore Gavião Peixoto Botucatu Australia Melbourne São José dos Campos THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Flexibility Commercial Aircraft Deliveries as required by market demand 160 161 148 145 145 131 96 101 59 32 4 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005E 2006E THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Business Diversification Sales by Segment 2004E 2005E Customer Services & Customer Services & Others; 7% Others; 6% Defense; 12% Defense; 17% Corporate; 4% Commercial ; 70% Corporate; 6% Commercial;78% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Product Diversification 70’s 80’s 90’s 00’s BRASÍLIA LEGACY BRASÍLIA (EMB 120) ERJ 145 BANDEIRANTE (EMB 120) ERJ 145 XR (EMB 110/111) ERJ 145 ERJ 140 ERJ 135 ERJ 135 EMB 321 EMBRAER 170 EMBRAER 175 EMB 326 ERJ 140 EMBRAER 190 EMBRAER 195 AMX AMX AEW&C/ RS/ MP EMB 121 AEW&C/ RS/ MP AMX-T TUCANO AL X Mirage 2000 BR ? AL X (EMB 312) (EMB 314) (EMB 314) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Customer Diversification Civil & Defense Aircraft flying in 58 countries on 5 continents ERJ 135/140/145 EMBRAER 170/175/190/195 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Partners – ERJ 145 Family 90’s - 4 Risk Sharing Partners 350 Suppliers Systems Partners ROLLS ROYCE PARKER HONEYWELL THALES TRW – LUCAS SIERRACIN GOODRICH EATON LIEBHERR HAMILTON SUNDSTRAND GAMESA Spain C & D USA ENAER Chile SONACA Bélgica • MLG Portas • Interior • Vertical Fin, • Central Fuselage I • Wings, Naceles - Passengers Cabine • Estabilizador Horiz • Tail Cone I - Sonaca - Leading Edges - Bagage Claim • Elevator • Pilon - INS - Naceles THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Partners – EMBRAER 170/190 Family 00’s - 16 Risk Sharing Partners 22 Suppliers HAMILTON GAMESA SUNDSTRAND Empennages & Rear Fuselage Tail Cone & APU EMBRAER( LEADER) KAWASAKI / SONACA Systems partners: Wing, Stub, Control Surfaces & Pylon HAMILTON Air Management SUNDSTRAND LATECOERE Center Fuselage Electrical System LATECOERE PARKER Hydraulics Center Fuselage III Flight Controls Fuel System C&D Interiors EMBRAER / AKROS LIEBHERR Landing Gear Center Fuselage II EMBRAER EMBR0AER / AKROS HONEYWELL Avionics GE Forward Wing to Fuselage Fairing Engine/ Nacelles Fuselage THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Airline Market Status, Trends and Outlook
US Airline Industry Evolution Share of US Domestic RPM 100% 3% 5% 8% 12% 19% 17% 80% 22% 29% 60% 40% 85% 78% 69% 52% 20% ... 0% 1995 2000 2003 2014F M a jo r s Low Costs Regionals Source: WATS, Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
US Domestic Yields: Down Forever? U.S Passenger Yields Down Sharply from 2000 • Airlines were forced to drop fares in order to stimulate demand. • In addition, the more recent growth in low cost carriers and real- time availability of fare information on the Internet has led to a dramatic shift in customer purchasing habits – passenger expect fair fares. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
US Airline Industry Operating Results (US$ millions) Network Regional Low Cost 6000 4000 2000 0 2000 2001 2002 2003 1H 2004 -2000 -4000 -6000 -8000 -10000 Financial losses decreasing due to the pursue of cost reductions and efficiency gains Source: Form41 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
US: Majors and Regionals Performance Domestic Operating Margin (%) 2Q2003 2Q2004 20% 10% M A J 0% O R -10% -20% -30% American Continental Delta Northwest United US Airways 20% R E 15% G 10% I 5% O N 0% A -5% ACA ExpressJet American Eagle Comair Skywest L -10% -15% Source : BTS (2nd Qtr 2004) • Regional airlines still considered as a very useful defensive tool by Majors due to lower trip costs and ability to maintain market presence while reducing capacity. • Regional airlines with profitable operation and increasing their market share. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
US Traffic Recovering Slowly US Domestic RPM (Billion) 1.600 1.400 1.200 1.000 800 600 ... 400 200 0 2000 2001 2002 2003 2004E 2005F 2014F M ajors Low Costs Regionals Source: WATS, Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
An Industry in Transition • Fundamental Correction – Not a Traditional Cycle • Decreasing Average Fare Values • Decreasing Capacity (USA) • Increasing Low Cost Carrier Critical Mass • Increasing Regional Jet Critical Mass • Pressure on Existing Worldwide Airline Model • Major USA Airlines trying to re-invent themselves • Regional affiliates strongly being used as defensive tools (point-to-point X hub and spoke) • Low cost carriers also being inserted in the current “major” airline model THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Responding to Market Needs 37 Seats 44 Seats 50 Seats 50 Seats (2,000 nm range) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Opportunities for Turbo-Prop Substitution There are currently 5244 TPs in Active Service Worldwide Scheduled Flights Non-Scheduled Flights (3160 TPs) (2084 TPs) TP70 TP<20 TP70 TP<20 TP50 382 130 16 267 4% TP35 142 12% 1% 13% 75 7% 4% TP20 TP50 1045 723 33% 23% TP35 TP20 880 1544 28% 75% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Opportunities for New Route Development ERJ 135: Steep Approach Capable (London City Airport) Still Air Range: 600 nm ERJ 135 - Typical European airline OEW - Full PAX Passengers at 90.7 kg (200 lb) - Cruise at LRC - Airport Temp. at 20.5ºC / ISA+5.5ºC (85% Summer) - 85% Summer Winds - JAR OPS Reserves 100 nm alternate THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
ERJ 145 Family Worldwide Fleet SR and CR Schedule Reliability & Completion Rate 12 Months Moving Average REF. CR=99.73% (completion) SEP/2004 SR=98.95% (15 min. delay) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
The E- Jets Family 70 – 78 Seats 78 – 86 Seats 98 - 106 Seats 108 – 118 Seats Engineering Ergonomics Economics Efficiency THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Family Commonality EMBRAER 170 95% EMBRAER 175 85% EMBRAER 190 95% EMBRAER 195 ? Common pilot type rating ? High level of commonality of system components ? 100% cockpit commonality ? 100% of flying qualities commonality due to the Fly-by-Wire system THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Simultaneous Development Type Certification 1999 2000 2001 2002 2003 2004 2005 2006 Fev/04 EMBRAER 170 4Q/04 EMBRAER 175 3Q/05 EMBRAER 190 EMBRAER 195 2Q/06 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Profitable by Design USA Environment *Based on Total Operating Cost BREAK-EVEN* PROFIT 500 sm for EMBRAER 170/175 600 sm for EMBRAER 190/195 EMBRAER 170 78 seat 40 PAX (51%) 38 PAX EMBRAER 175 86 seats 44 PAX (51%) 42 PAX EMBRAER 190 106 seats 57 PAX (54%) 49 PAX EMBRAER 195 118 seats 62 PAX (53%) 56 PAX *Based on Total Operating Costs; Average OW net fare 500 sm USD 90; 600 sm USD 98 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
DMC Comparison Cost-effective use of new technologies results in very competitive direct maintenance costs (DMCs) Maintenance Cost Comparison 180% 160% 140% 120% DMC/FH (%) 100% 80% 60% 40% 20% 0% E170 E175 E190 E195 CRJ700 CRJ900 B717 B737-600 A318 GO 14/Nov/02 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Maintenance Checks Interval The EMBRAER 170/190 family has the longest maintenance checks intervals in the industry. Assumptions: 2,500 FH/year; 1.33 FH/FC; 0.5 AH/FH (APU) Note: Values in FH estimated according to the downtime periods for each aircraft further maintenance plan document MA 15/Mar/04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Cash Operating Cost Comparison (COC) USA Environment COC* per trip versus COC per seat-mile 500 sm trip 15% In summary, in a Regional Carrier operating / economic environment: CRJ 700 (31") 10% • The EMBRAER 170 offers equivalent cash operating costs per trip and an 11% advantage in cash operating costs per seat-mile over the CRJ 700 COC per ASM 5% – while flying 11% more passengers farther and in more comfort ! E 170 (31") 0% • The EMBRAER 175 offers a 6% -10% -5% 0% 5% 10% 15% advantage in cash operating costs per CRJ 900 (31") trip and per seat-mile versus the CRJ 900 – flying the same number of -5% passengers in much greater comfort and operating in more challenging E 175 (31") airports. -10% COC per trip * Cash Operating Cost: Crew, fuel, direct maintenance, landing fees, aiplane handling fees EC 07/Jun/04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Cash Operating Cost Comparison (COC) USA Environment COC* per trip versus COC per seat-mile 600 sm trip 15% In summary, in a Low Cost Carrier operating / economic environment: 10% • The EMBRAER 195 offers cash operating costs per trip lower than its E 190 (32") B717 (32") A318 (32") competitors – 8% when compared to COC per ASM 5% the B717 and up to 12% when compared to the A318. These big B737-600 (32") advantages are further enhanced by E 195 (32") 0% a cost per seat-mile 2% to 5% below -10% -5% 0% 5% 10% 15% the competitor airplanes. • The EMBRAER 190 offers cash -5% operating costs per trip 12% lower than the nearest competitor airplane (B717). At the same time, the 190 -10% can offer equivalent seat-mile costs. COC per trip * Cash Operating Cost: Crew, fuel, direct maintenance, landing fees, aiplane handling fees EC 07/Jun/04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
USA - Opportunities for Right Sizing 25% of flights 35% of flights depart with loads depart with loads Excess capacity appropriate for appropriate for 25 70-80 seat 90-110 seat translates into wasted aircraft aircraft seats, higher operating costs, and 20 greater potential for unprofitability 15 % 10 5 4 8 13 15 20 13 8 7 5 2 2 0 50 60 70 80 90 100 110 120 130 140 >150 Source: Back (US DOT T100) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
PY CO THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Need for Replacing Old Jets – Global Replacement of Ageing Aircraft World Fleet in Service (100+seat segment - Dec/2003) 848 aircraft with more 600 524 than 20 years (37% of 500 total fleet in service) Number of Aircraft 380 387 400 315 300 262 241 199 200 100 0 0-5 6 - 10 11 - 15 16 - 20 21 - 25 26 - 30 >30 Aircraft Age (Years) Source: BACK -Fleet PC (Scheduled Airlines , Active inINFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT. THE Service and All Passenger Configuration)
Opportunities for Enhancing Market Presence Rightsizing and Frequency Increase Average Daily Frequency by City-pair (World) 9392 city pairs with less than 2 average daily frequencies 58% City Pairs 27% 10% 4% 1% 0 - 0,5 0,5 - <2 2-<5 5 - <10 >=10 Average Daily Frequency Source: OAG (Feb/2004) Routes operated byINFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT nm OR USED WITHOUT EMBRAER’S WRITTEN CONSENT. THE Jet Aircraft from 91 to 180 seats up to 2000 BE COPIED
Seat Capacity Gap - USA B737 B737 B757 B737 MD80 B737 B757 Scope Clauses B737 A319 A320 B757 70 to 110 Seats MD80 B737 B737 B757 MD80 B737 A319 B737 B757 A320 A320 B757 A319 A320 25 50 75 100 125 150 175+ Seat Capacity THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
No Artificial Constraints in Europe 80 80 103 – 426 103 – 426 37 – 79 37 – 79 96 – 568 96 – 568 70 to 103 – 261 103 – 261 110 Seats 48 – 70 48 – 70 110 – 291 110 – 291 50 – 70 50 – 70 92 – 390 92 – 390 49 – 78 49 – 78 95 – 401 95 – 401 49 – 257 49 – 257 25 50 75 100 125 150 175+ Seating Capacity Source: Back Fleet PC, Feb 2004, only jets THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
LCC Next Steps... ...increase capacity to match market growth, or/and expand their air services to secondary city pairs Regional Jet Model RASK Traditional Main Line Full Service Model Low Cost Model Capacity THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Beyond the Current Model... .... Natural Growth, or Capacity Rightsizing, There is a need for adding another component Regional Jet Model RASK Traditional Main Line Full Service Model E - Jet Model Low Cost Model Capacity THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Competitive Environment
Embraer Commercial Jets Unique Position 30Y 50Y 70Y 90Y 110Y 130Y Potential New Entrants Scope THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
30-60 Seat Jet Competitors ERJ 135 ERJ 135 CRJ200 // 440 CRJ200 440 ERJ 140 ERJ 140 328JET 328JET ? ERJ 145 and 145XR ERJ 145 and 145XR THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Market Share Evolution (30-60 pax) 100% 93% Possible 83% 80% ACA cancelation of 34 CRJ200 67% 60% 54% 50% 52% 51% 50% 51% 49% 50% 43% 45% 40% 32% 42% 46% 45% 45% 44% 45% 17% 20% 7% 5% 6% 4% 5% 4% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: EMBRAER BOMBARDIER AVCRAFT Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
61-90 Seat Segment Competitors RRJ RRJ ? EMBRAER 170 EMBRAER 170 CRJ700 CRJ700 CRJ900 CRJ900 ARJ21 ARJ21 ? EMBRAER 175 EMBRAER 175 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Market Share Evolution (61-90 pax) 100% 90% 87% 80% 72% 70% 67% 64% 60% 53% 52% 49% 50% 40% 36% 32% 30% 33% 30% 27% 28% 14% 21% 20% 16% 19% 10% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Embraer EMBRAER BOMBARDIER FAIRCHILD DORNIER THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
91-120 Seat Segment Competitors B717 B717 B737-600 B737-600 EMBRAER 190 EMBRAER 190 A318 A318 ARJ21 ARJ21 ? RRJ RRJ ? EMBRAER 195 EMBRAER 195 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Market Share Evolution (91-120 pax) 100% 100% 80% 67% 73% 66% 61% 59% 60% 55% 40% 32% 31% 26% 26% 25% 20% 20% 16% 14% 7% 7% 6% 7% 0% 0% 0% 0% 0% 95 96 97 98 99 00 01 02 03 04 19 19 19 19 19 20 20 20 20 20 Source: 2nd As of EMBRAER BOEING AIRBUS Embraer 2004 Quarter THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Airline Market Forecast
Embraer Market Forecast 2005-2024 Worldwide Jet Deliveries by Capacity Segment Segment 2005 - 2014 2015 - 2024 2005- 2024 30 - 60 650 1,300 1,950 61 – 90 1,300 1,550 2,850 91 – 120 1,250 1,750 3,000 TOTAL 3,200 4,600 7,800 30 to 120-seat segment value = US$ 170 billion THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Market Forecast 2005-2024 30 - 120 Seats: 7,800 Jets Europe USA, Canada 1,319 & Caribbean 17% 4,165 China 53% CIS 635 495 8% Latin 6% America Africa & Asia 538 Middle East Pacific 177 471 7% 6% 3% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Market Forecast 2005-2024 30 - 60 Seats: 1,950 Jets Europe USA, Canada 124 & Caribbean 6% 1,320 68% China CIS 190 124 6% 10% Latin America Asia 85 Africa & Pacific Middle East 70 4% 37 4% 3% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Market Forecast 2005-2024 61- 90 Seats: 2,850 Jets Europe 600 USA, Canada & Caribbean 22% 1,315 China 46% CIS 208 245 9% 7% Asia Latin Pacific America Africa & Middle East 215 175 6% 92 8% 2% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Market Forecast 2005-2024 91-120 Seats: 3,000 Jets Europe 592 USA, Canada & Caribbean 20% 1,530 China 51% CIS 200 165 7% Latin 5% Asia Africa & Pacific America 186 278 Middle East 9% 49 6% 2% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
EMBRAER 170 Entry Into Service
EMBRAER 170 EIS Statistics Operating Summary – from March 5th to October 24th Operators 4 Aircraft in Service 37 Flight hours 29,165 Flight Cycles 21,567 USAirways LOT Alitalia United PR13/Oct/04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
EMBRAER 170 EIS Statistics Last 6 Months Schedule Reliability and Completion Rate 100 CR = 99.5 99 98 SR = 97.7 97 96 95 94 93 92 Schedule Reliability 91 Completion Rate 90 M J J A S O THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Commercial Backlog
ERJ 145 Family Orderbook Firm Options Deliveries Firm (as of 4th Quarter, 2004) Total Backlog ERJ 135 123 2 125 106 17 ERJ 140 94 20 114 74 20 ERJ 145 684 314 998 618 66 Total 901 336 1237 798 103 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
EMBRAER 170 / 190 Family Orderbook Firm Firm Options Total Deliveries Backlog (as of 4th Quarter, 2004) EMBRAER 170 158 177 335 46 112 EMBRAER 175 15 - - - 15 EMBRAER 190 155 230 385 - 155 EMBRAER 195 15 20 35 - 15 Total 343 427 755 46 297 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Corporate Aircraft Market Status, Trends and Outlook
Legacy - A New, Breakthrough Concept Based on a proven airplane platform, The Legacy Family provides the ideal balance of comfort, performance and cost in three versions: • Executive • Shuttle • Shuttle HC THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Legacy Family – Executive THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Legacy Family – Shuttle THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Super-midsize category 23‘8” Challenger 300 (7,22m) Horizon 25‘ (7,62m) 24‘6” G200 (7,46m) 42’6” (12,94m) ft 10 20 30 40 50 m 3 6 9 12 15 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Large category 26‘4” Falcon 2000 (8,01m) 41’ G400 (12,49m) 42’6” (12,94m) ft 10 20 30 40 50 m 3 6 9 12 15 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
The world has discovered the Legacy 40 aircraft, 11 countries, the right choice THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Reliability 99% dispatch reliability Over 120 hours per month in fractional operations Exceptional passenger acceptance Image building up in the market Changing the expectations for a Business Jet THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
A Differentiated Value for Customers Price vs. Productivity Index 360 Productivity Index [(Speed x Cabin Volume x Range)/TOFL] x Legacy 340 320 300 R TE 1,000 280 T BE Challenger 300 260 Falcon 2000 240 220 G200 Horizon 200 35.000 30.000 25.000 20.000 15.000 Price US$ x 1,000 Higher Productivity @ Lower cost leading to Greater value THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Program Landmarks 2000 2001 2002 2003 2004 New Interior Enhancements Maintenance Range Plan (weight reduction) (aerodynamics improvement) Certification CTA FAA JAA CIS Maiden Flight Announcement Promises made ... results delivered THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Corporate Aircraft Market Forecast (2005-2014)
Embraer Market Forecast Embraer Forecast (2005-2014): (2005 -2014): 7,560 aircraft - US$ 130 billion ,560 Deliveries Revenues Category (aircraft) (US$ bi) Super Midsize 1,485 30.0 Large 945 28.5 Other 5,130 71.3 Ultra Long range Light Mid light Large 22% Entry 11% 14% 13% 22% Global Very Light Mid Size 6% 6% 13% Very Light Entry 1% Global 4% 2% Super Mid Size Ultra Long Large Super midsize Mid light Light 13% 18% midsize 10% 4% range 8% 18% 9% Deliveries (cumulative) Revenues (cumulative) 2,430 aircraft in target segment THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Defense Market
Defense Market Products Integrated Market Approach Intelligence, Systems Training Surveillance and Combat Transport & Services Integrated Reconnaissance Ground Super Tucano Command and Super Tucano EMB 145 AEW&C EMB 135/145 Control AMX/AMX-T AMX-T EMB 145 MP/ASW Legacy Integrated F-5 BR Systems Training Systems EMB 145 RS/AGS EMB 120K Mirage 2000 BR Data-Link THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Super Tucano High-performance evolution of the proven EMB 312 Tucano State-of-the-art systems and advanced avionics Optimized for advanced training and operational applications in hostile environments Can operate from unprepared runways, during day or night THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
AMX-T Advanced and fighter lead-in training aircraft Developed by Embraer for modern Training / Combat requirements Baseline avionics architecture commonality with the Super Tucano THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Special Mission Aircraft AIR SEA ISR GROUND Intelligence Surveillance Reconnaissance THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
EMB 145 AEW&C The AEW&C (Airborne Early Warning & Control) is equipped with a state-of-the- art Air Surveillance Radar, Command, Control & Communication System and Data-Link A perfect blend of Embraer’s proven, reliable and economic ERJ 145 platform THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
EMB 145 RS/AGS An advanced asset capable of providing real-time imagery and electronic intelligence over ground objectives It features an advanced Synthetic Aperture Radar (SAR), for day or night and all-weather imagery of the ground over large areas, plus other sophisticated sensors THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
P-99 New generation aircraft for missions ranging from Maritime Patrol to complex and demanding Anti- Surface and Anti-Submarine operations Features a maritime and ground surveillance radar, plus other sophisticated sensors like FLIR and Data- Link THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
ACS – Aerial Common Sensor Embraer, part of the Lockheed Martin team, will provide its ERJ 145 platform for the U.S. Army’s next-generation battlefield surveillance system THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Backlog & Delivery Forecast
Backlog In 4th Quarter 2004 - US$ 27.6 billion in total orders, including US$ 10.1 billion in firm orders US$ billion 28.1 27.6 Firm Orders 24.1 23.4 Options 22.2 17.7 17,5 17,5 12,7 12,7 13,2 11,3 4.1 11,4 10,7 10,6 10,1 3.0 9 1.2 6,4 0.6 3 4,1 0,6 1,2 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Deliveries Forecast 160 161 148 145 145 131 96 101 59 32 4 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005E 2006E THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Deliveries Forecast Breakdown 9% 14% 12% 31% 50% 73% 60% 36% 15% 2004 2005 2006 ERJ 145 Family EMBRAER 170 Family Corporate Aircraft Corporate Aircraft includes corporate authority transportation THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Financial Data
Embraer Voting Capital Ordinary Shares: 242.544.448 33.77% Bovespa 19.2% Brazilian Govt 0.8% Controlling Shareholders 60% European Group 20% 0.8% 20% European Group 60% Controlling Shareholders Brazilian Govt. Dassault Aviation 5.67% PREVI (Pension Fund) 20% Thales 5.67% SISTEL (Pension Fund) 20% EADS 5.67% Bozano Group 20% 19.2% Snecma 3% Bovespa As of November 30th, 2004 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Embraer Preferred Shares Preferred Shares 475.620.289 66.23% BNDES 9.6% Bovespa 34.4% NYSE 56% As of November 30th, 2004 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Dividends 500 60% 404 421 400 49.8% 50% 327 43.3% 40% 300 36.1% 36.1% 228 195 30% 27.2% 200 20% 100 10% 0 0% 2000 2001 2002 2003 9M04 Dividends Pay Out Ratio R$ million THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Net Revenue US$ million 2,762 2,927 2,526 2,486 2,144 1,837 1,354 764 1997 1998 1999 2000 2001 2002 2003 9M04 Sales by Segment - 9M04 7% Customer Services & Q 98% of sales are exports (9M04) Others 4% 78% Corporate Airline Market Market 11% Defense Market THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Income from Operations US$ million 651 462 470 402 368 275 172 49 1997 1998 1999 2000 2001 2002 2003 9M04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Net Income US$ million 321 328 297 235 223 145 136 3 1997 1998 1999 2000 2001 2002 2003 9M04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Inventories US$ Million 1,390 1,158 1,258 1,231 1,111 3Q03 4Q04 1Q04 2Q04 3Q04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Accounts Receivables US$ Million 981 703 356 465 472 3Q03 4Q03 1Q04 2Q04 3Q04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Accounts Receivables US$ Million 95 157 189 166 194 886 315 514 190 271 3Q03 4Q03 1Q04 2Q04 3Q04 Commercial Airline Market Others Others = Defense + Customer Services THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Loans Breakdown Bank Debt - US$ 1,169.2 million September 30, 2004 Currency Breakdown Debt Maturity Local Currency 7% Long Term 63% Short Term 37% Foreign Currency 93% Considering Swap effects; from US$ and Yen to R$ Cost of Local Currency = 12.4 • Loan Average Maturity: 2 years and 11 months Cost of Foreing Currency = US$ variation + 3.9% p/a THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Short and Long-Term Loans Long Term 63% Short Term 37% 454 41 1,169 119 274 281 Total Short Term 2005 2006 2007 2008 - 2015 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
Net Cash (Debt) US$ Million 304 222 178 220 (178) 3Q03 4Q03 1Q04 2Q04 3Q04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
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2005* ConferêNcia Santander Janeiro 2005 (DisponíVel Somente Em InglêS)

  • 1. Santander Conference January 2005 Cancun
  • 2. 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 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. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 3. Fundamentals Aeronautical Industry Fundamentals High Technology Qualified People Global Presence CUSTOMER SATISFACTION Cash Intensiveness Backbone of our entrepreneurial action Flexibility THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 4. Qualified People More than US$ 85 million invested in training and development in the last 5 years US$ million 24.5 21 18 13.5 11 6.2 1999 2000 2001 2002 2003 1H04 In–house courses: • 18 month graduate course in Aeronautical Engineering THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 5. Qualified People 14,648 Number of Employees 12,941 12,227 11,048 10,334 8,302 6,737 6,087 4,494 4,319 3,849 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Nov 04 April / 97: 3,200 employees BRAZIL 13,799* EUROPE 186 SINGAPORE 19 USA 465 CHINA 179* * ELEB and China Joint Venture employees included THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 6. Global Presence Operations in Brazil, United States, Europe, Asia and Australia USA Nashville China Jacksonville Fort Lauderdale France Beijing Le Bourget Harbin Singapore Brazil Singapore Gavião Peixoto Botucatu Australia Melbourne São José dos Campos THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 7. Flexibility Commercial Aircraft Deliveries as required by market demand 160 161 148 145 145 131 96 101 59 32 4 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005E 2006E THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 8. Business Diversification Sales by Segment 2004E 2005E Customer Services & Customer Services & Others; 7% Others; 6% Defense; 12% Defense; 17% Corporate; 4% Commercial ; 70% Corporate; 6% Commercial;78% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 9. Product Diversification 70’s 80’s 90’s 00’s BRASÍLIA LEGACY BRASÍLIA (EMB 120) ERJ 145 BANDEIRANTE (EMB 120) ERJ 145 XR (EMB 110/111) ERJ 145 ERJ 140 ERJ 135 ERJ 135 EMB 321 EMBRAER 170 EMBRAER 175 EMB 326 ERJ 140 EMBRAER 190 EMBRAER 195 AMX AMX AEW&C/ RS/ MP EMB 121 AEW&C/ RS/ MP AMX-T TUCANO AL X Mirage 2000 BR ? AL X (EMB 312) (EMB 314) (EMB 314) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 10. Customer Diversification Civil & Defense Aircraft flying in 58 countries on 5 continents ERJ 135/140/145 EMBRAER 170/175/190/195 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 11. Partners – ERJ 145 Family 90’s - 4 Risk Sharing Partners 350 Suppliers Systems Partners ROLLS ROYCE PARKER HONEYWELL THALES TRW – LUCAS SIERRACIN GOODRICH EATON LIEBHERR HAMILTON SUNDSTRAND GAMESA Spain C & D USA ENAER Chile SONACA Bélgica • MLG Portas • Interior • Vertical Fin, • Central Fuselage I • Wings, Naceles - Passengers Cabine • Estabilizador Horiz • Tail Cone I - Sonaca - Leading Edges - Bagage Claim • Elevator • Pilon - INS - Naceles THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 12. Partners – EMBRAER 170/190 Family 00’s - 16 Risk Sharing Partners 22 Suppliers HAMILTON GAMESA SUNDSTRAND Empennages & Rear Fuselage Tail Cone & APU EMBRAER( LEADER) KAWASAKI / SONACA Systems partners: Wing, Stub, Control Surfaces & Pylon HAMILTON Air Management SUNDSTRAND LATECOERE Center Fuselage Electrical System LATECOERE PARKER Hydraulics Center Fuselage III Flight Controls Fuel System C&D Interiors EMBRAER / AKROS LIEBHERR Landing Gear Center Fuselage II EMBRAER EMBR0AER / AKROS HONEYWELL Avionics GE Forward Wing to Fuselage Fairing Engine/ Nacelles Fuselage THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 14. US Airline Industry Evolution Share of US Domestic RPM 100% 3% 5% 8% 12% 19% 17% 80% 22% 29% 60% 40% 85% 78% 69% 52% 20% ... 0% 1995 2000 2003 2014F M a jo r s Low Costs Regionals Source: WATS, Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 15. US Domestic Yields: Down Forever? U.S Passenger Yields Down Sharply from 2000 • Airlines were forced to drop fares in order to stimulate demand. • In addition, the more recent growth in low cost carriers and real- time availability of fare information on the Internet has led to a dramatic shift in customer purchasing habits – passenger expect fair fares. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 16. US Airline Industry Operating Results (US$ millions) Network Regional Low Cost 6000 4000 2000 0 2000 2001 2002 2003 1H 2004 -2000 -4000 -6000 -8000 -10000 Financial losses decreasing due to the pursue of cost reductions and efficiency gains Source: Form41 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 17. US: Majors and Regionals Performance Domestic Operating Margin (%) 2Q2003 2Q2004 20% 10% M A J 0% O R -10% -20% -30% American Continental Delta Northwest United US Airways 20% R E 15% G 10% I 5% O N 0% A -5% ACA ExpressJet American Eagle Comair Skywest L -10% -15% Source : BTS (2nd Qtr 2004) • Regional airlines still considered as a very useful defensive tool by Majors due to lower trip costs and ability to maintain market presence while reducing capacity. • Regional airlines with profitable operation and increasing their market share. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 18. US Traffic Recovering Slowly US Domestic RPM (Billion) 1.600 1.400 1.200 1.000 800 600 ... 400 200 0 2000 2001 2002 2003 2004E 2005F 2014F M ajors Low Costs Regionals Source: WATS, Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 19. An Industry in Transition • Fundamental Correction – Not a Traditional Cycle • Decreasing Average Fare Values • Decreasing Capacity (USA) • Increasing Low Cost Carrier Critical Mass • Increasing Regional Jet Critical Mass • Pressure on Existing Worldwide Airline Model • Major USA Airlines trying to re-invent themselves • Regional affiliates strongly being used as defensive tools (point-to-point X hub and spoke) • Low cost carriers also being inserted in the current “major” airline model THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 20. Responding to Market Needs 37 Seats 44 Seats 50 Seats 50 Seats (2,000 nm range) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 21. Opportunities for Turbo-Prop Substitution There are currently 5244 TPs in Active Service Worldwide Scheduled Flights Non-Scheduled Flights (3160 TPs) (2084 TPs) TP70 TP<20 TP70 TP<20 TP50 382 130 16 267 4% TP35 142 12% 1% 13% 75 7% 4% TP20 TP50 1045 723 33% 23% TP35 TP20 880 1544 28% 75% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 22. Opportunities for New Route Development ERJ 135: Steep Approach Capable (London City Airport) Still Air Range: 600 nm ERJ 135 - Typical European airline OEW - Full PAX Passengers at 90.7 kg (200 lb) - Cruise at LRC - Airport Temp. at 20.5ºC / ISA+5.5ºC (85% Summer) - 85% Summer Winds - JAR OPS Reserves 100 nm alternate THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 23. ERJ 145 Family Worldwide Fleet SR and CR Schedule Reliability & Completion Rate 12 Months Moving Average REF. CR=99.73% (completion) SEP/2004 SR=98.95% (15 min. delay) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 24. The E- Jets Family 70 – 78 Seats 78 – 86 Seats 98 - 106 Seats 108 – 118 Seats Engineering Ergonomics Economics Efficiency THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 25. Family Commonality EMBRAER 170 95% EMBRAER 175 85% EMBRAER 190 95% EMBRAER 195 ? Common pilot type rating ? High level of commonality of system components ? 100% cockpit commonality ? 100% of flying qualities commonality due to the Fly-by-Wire system THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 26. Simultaneous Development Type Certification 1999 2000 2001 2002 2003 2004 2005 2006 Fev/04 EMBRAER 170 4Q/04 EMBRAER 175 3Q/05 EMBRAER 190 EMBRAER 195 2Q/06 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 27. Profitable by Design USA Environment *Based on Total Operating Cost BREAK-EVEN* PROFIT 500 sm for EMBRAER 170/175 600 sm for EMBRAER 190/195 EMBRAER 170 78 seat 40 PAX (51%) 38 PAX EMBRAER 175 86 seats 44 PAX (51%) 42 PAX EMBRAER 190 106 seats 57 PAX (54%) 49 PAX EMBRAER 195 118 seats 62 PAX (53%) 56 PAX *Based on Total Operating Costs; Average OW net fare 500 sm USD 90; 600 sm USD 98 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 28. DMC Comparison Cost-effective use of new technologies results in very competitive direct maintenance costs (DMCs) Maintenance Cost Comparison 180% 160% 140% 120% DMC/FH (%) 100% 80% 60% 40% 20% 0% E170 E175 E190 E195 CRJ700 CRJ900 B717 B737-600 A318 GO 14/Nov/02 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 29. Maintenance Checks Interval The EMBRAER 170/190 family has the longest maintenance checks intervals in the industry. Assumptions: 2,500 FH/year; 1.33 FH/FC; 0.5 AH/FH (APU) Note: Values in FH estimated according to the downtime periods for each aircraft further maintenance plan document MA 15/Mar/04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 30. Cash Operating Cost Comparison (COC) USA Environment COC* per trip versus COC per seat-mile 500 sm trip 15% In summary, in a Regional Carrier operating / economic environment: CRJ 700 (31") 10% • The EMBRAER 170 offers equivalent cash operating costs per trip and an 11% advantage in cash operating costs per seat-mile over the CRJ 700 COC per ASM 5% – while flying 11% more passengers farther and in more comfort ! E 170 (31") 0% • The EMBRAER 175 offers a 6% -10% -5% 0% 5% 10% 15% advantage in cash operating costs per CRJ 900 (31") trip and per seat-mile versus the CRJ 900 – flying the same number of -5% passengers in much greater comfort and operating in more challenging E 175 (31") airports. -10% COC per trip * Cash Operating Cost: Crew, fuel, direct maintenance, landing fees, aiplane handling fees EC 07/Jun/04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 31. Cash Operating Cost Comparison (COC) USA Environment COC* per trip versus COC per seat-mile 600 sm trip 15% In summary, in a Low Cost Carrier operating / economic environment: 10% • The EMBRAER 195 offers cash operating costs per trip lower than its E 190 (32") B717 (32") A318 (32") competitors – 8% when compared to COC per ASM 5% the B717 and up to 12% when compared to the A318. These big B737-600 (32") advantages are further enhanced by E 195 (32") 0% a cost per seat-mile 2% to 5% below -10% -5% 0% 5% 10% 15% the competitor airplanes. • The EMBRAER 190 offers cash -5% operating costs per trip 12% lower than the nearest competitor airplane (B717). At the same time, the 190 -10% can offer equivalent seat-mile costs. COC per trip * Cash Operating Cost: Crew, fuel, direct maintenance, landing fees, aiplane handling fees EC 07/Jun/04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 32. USA - Opportunities for Right Sizing 25% of flights 35% of flights depart with loads depart with loads Excess capacity appropriate for appropriate for 25 70-80 seat 90-110 seat translates into wasted aircraft aircraft seats, higher operating costs, and 20 greater potential for unprofitability 15 % 10 5 4 8 13 15 20 13 8 7 5 2 2 0 50 60 70 80 90 100 110 120 130 140 >150 Source: Back (US DOT T100) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 33. PY CO THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 34. Need for Replacing Old Jets – Global Replacement of Ageing Aircraft World Fleet in Service (100+seat segment - Dec/2003) 848 aircraft with more 600 524 than 20 years (37% of 500 total fleet in service) Number of Aircraft 380 387 400 315 300 262 241 199 200 100 0 0-5 6 - 10 11 - 15 16 - 20 21 - 25 26 - 30 >30 Aircraft Age (Years) Source: BACK -Fleet PC (Scheduled Airlines , Active inINFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT. THE Service and All Passenger Configuration)
  • 35. Opportunities for Enhancing Market Presence Rightsizing and Frequency Increase Average Daily Frequency by City-pair (World) 9392 city pairs with less than 2 average daily frequencies 58% City Pairs 27% 10% 4% 1% 0 - 0,5 0,5 - <2 2-<5 5 - <10 >=10 Average Daily Frequency Source: OAG (Feb/2004) Routes operated byINFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT nm OR USED WITHOUT EMBRAER’S WRITTEN CONSENT. THE Jet Aircraft from 91 to 180 seats up to 2000 BE COPIED
  • 36. Seat Capacity Gap - USA B737 B737 B757 B737 MD80 B737 B757 Scope Clauses B737 A319 A320 B757 70 to 110 Seats MD80 B737 B737 B757 MD80 B737 A319 B737 B757 A320 A320 B757 A319 A320 25 50 75 100 125 150 175+ Seat Capacity THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 37. No Artificial Constraints in Europe 80 80 103 – 426 103 – 426 37 – 79 37 – 79 96 – 568 96 – 568 70 to 103 – 261 103 – 261 110 Seats 48 – 70 48 – 70 110 – 291 110 – 291 50 – 70 50 – 70 92 – 390 92 – 390 49 – 78 49 – 78 95 – 401 95 – 401 49 – 257 49 – 257 25 50 75 100 125 150 175+ Seating Capacity Source: Back Fleet PC, Feb 2004, only jets THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 38. LCC Next Steps... ...increase capacity to match market growth, or/and expand their air services to secondary city pairs Regional Jet Model RASK Traditional Main Line Full Service Model Low Cost Model Capacity THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 39. Beyond the Current Model... .... Natural Growth, or Capacity Rightsizing, There is a need for adding another component Regional Jet Model RASK Traditional Main Line Full Service Model E - Jet Model Low Cost Model Capacity THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 41. Embraer Commercial Jets Unique Position 30Y 50Y 70Y 90Y 110Y 130Y Potential New Entrants Scope THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 42. 30-60 Seat Jet Competitors ERJ 135 ERJ 135 CRJ200 // 440 CRJ200 440 ERJ 140 ERJ 140 328JET 328JET ? ERJ 145 and 145XR ERJ 145 and 145XR THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 43. Market Share Evolution (30-60 pax) 100% 93% Possible 83% 80% ACA cancelation of 34 CRJ200 67% 60% 54% 50% 52% 51% 50% 51% 49% 50% 43% 45% 40% 32% 42% 46% 45% 45% 44% 45% 17% 20% 7% 5% 6% 4% 5% 4% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: EMBRAER BOMBARDIER AVCRAFT Embraer THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 44. 61-90 Seat Segment Competitors RRJ RRJ ? EMBRAER 170 EMBRAER 170 CRJ700 CRJ700 CRJ900 CRJ900 ARJ21 ARJ21 ? EMBRAER 175 EMBRAER 175 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 45. Market Share Evolution (61-90 pax) 100% 90% 87% 80% 72% 70% 67% 64% 60% 53% 52% 49% 50% 40% 36% 32% 30% 33% 30% 27% 28% 14% 21% 20% 16% 19% 10% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Embraer EMBRAER BOMBARDIER FAIRCHILD DORNIER THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 46. 91-120 Seat Segment Competitors B717 B717 B737-600 B737-600 EMBRAER 190 EMBRAER 190 A318 A318 ARJ21 ARJ21 ? RRJ RRJ ? EMBRAER 195 EMBRAER 195 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 47. Market Share Evolution (91-120 pax) 100% 100% 80% 67% 73% 66% 61% 59% 60% 55% 40% 32% 31% 26% 26% 25% 20% 20% 16% 14% 7% 7% 6% 7% 0% 0% 0% 0% 0% 95 96 97 98 99 00 01 02 03 04 19 19 19 19 19 20 20 20 20 20 Source: 2nd As of EMBRAER BOEING AIRBUS Embraer 2004 Quarter THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 48. Airline Market Forecast
  • 49. Embraer Market Forecast 2005-2024 Worldwide Jet Deliveries by Capacity Segment Segment 2005 - 2014 2015 - 2024 2005- 2024 30 - 60 650 1,300 1,950 61 – 90 1,300 1,550 2,850 91 – 120 1,250 1,750 3,000 TOTAL 3,200 4,600 7,800 30 to 120-seat segment value = US$ 170 billion THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 50. Market Forecast 2005-2024 30 - 120 Seats: 7,800 Jets Europe USA, Canada 1,319 & Caribbean 17% 4,165 China 53% CIS 635 495 8% Latin 6% America Africa & Asia 538 Middle East Pacific 177 471 7% 6% 3% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 51. Market Forecast 2005-2024 30 - 60 Seats: 1,950 Jets Europe USA, Canada 124 & Caribbean 6% 1,320 68% China CIS 190 124 6% 10% Latin America Asia 85 Africa & Pacific Middle East 70 4% 37 4% 3% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 52. Market Forecast 2005-2024 61- 90 Seats: 2,850 Jets Europe 600 USA, Canada & Caribbean 22% 1,315 China 46% CIS 208 245 9% 7% Asia Latin Pacific America Africa & Middle East 215 175 6% 92 8% 2% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 53. Market Forecast 2005-2024 91-120 Seats: 3,000 Jets Europe 592 USA, Canada & Caribbean 20% 1,530 China 51% CIS 200 165 7% Latin 5% Asia Africa & Pacific America 186 278 Middle East 9% 49 6% 2% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 55. EMBRAER 170 EIS Statistics Operating Summary – from March 5th to October 24th Operators 4 Aircraft in Service 37 Flight hours 29,165 Flight Cycles 21,567 USAirways LOT Alitalia United PR13/Oct/04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 56. EMBRAER 170 EIS Statistics Last 6 Months Schedule Reliability and Completion Rate 100 CR = 99.5 99 98 SR = 97.7 97 96 95 94 93 92 Schedule Reliability 91 Completion Rate 90 M J J A S O THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 58. ERJ 145 Family Orderbook Firm Options Deliveries Firm (as of 4th Quarter, 2004) Total Backlog ERJ 135 123 2 125 106 17 ERJ 140 94 20 114 74 20 ERJ 145 684 314 998 618 66 Total 901 336 1237 798 103 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 59. EMBRAER 170 / 190 Family Orderbook Firm Firm Options Total Deliveries Backlog (as of 4th Quarter, 2004) EMBRAER 170 158 177 335 46 112 EMBRAER 175 15 - - - 15 EMBRAER 190 155 230 385 - 155 EMBRAER 195 15 20 35 - 15 Total 343 427 755 46 297 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 61. Legacy - A New, Breakthrough Concept Based on a proven airplane platform, The Legacy Family provides the ideal balance of comfort, performance and cost in three versions: • Executive • Shuttle • Shuttle HC THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 62. Legacy Family – Executive THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 63. Legacy Family – Shuttle THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 64. Super-midsize category 23‘8” Challenger 300 (7,22m) Horizon 25‘ (7,62m) 24‘6” G200 (7,46m) 42’6” (12,94m) ft 10 20 30 40 50 m 3 6 9 12 15 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 65. Large category 26‘4” Falcon 2000 (8,01m) 41’ G400 (12,49m) 42’6” (12,94m) ft 10 20 30 40 50 m 3 6 9 12 15 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 66. The world has discovered the Legacy 40 aircraft, 11 countries, the right choice THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 67. Reliability 99% dispatch reliability Over 120 hours per month in fractional operations Exceptional passenger acceptance Image building up in the market Changing the expectations for a Business Jet THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 68. A Differentiated Value for Customers Price vs. Productivity Index 360 Productivity Index [(Speed x Cabin Volume x Range)/TOFL] x Legacy 340 320 300 R TE 1,000 280 T BE Challenger 300 260 Falcon 2000 240 220 G200 Horizon 200 35.000 30.000 25.000 20.000 15.000 Price US$ x 1,000 Higher Productivity @ Lower cost leading to Greater value THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 69. Program Landmarks 2000 2001 2002 2003 2004 New Interior Enhancements Maintenance Range Plan (weight reduction) (aerodynamics improvement) Certification CTA FAA JAA CIS Maiden Flight Announcement Promises made ... results delivered THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 70. Corporate Aircraft Market Forecast (2005-2014)
  • 71. Embraer Market Forecast Embraer Forecast (2005-2014): (2005 -2014): 7,560 aircraft - US$ 130 billion ,560 Deliveries Revenues Category (aircraft) (US$ bi) Super Midsize 1,485 30.0 Large 945 28.5 Other 5,130 71.3 Ultra Long range Light Mid light Large 22% Entry 11% 14% 13% 22% Global Very Light Mid Size 6% 6% 13% Very Light Entry 1% Global 4% 2% Super Mid Size Ultra Long Large Super midsize Mid light Light 13% 18% midsize 10% 4% range 8% 18% 9% Deliveries (cumulative) Revenues (cumulative) 2,430 aircraft in target segment THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 73. Defense Market Products Integrated Market Approach Intelligence, Systems Training Surveillance and Combat Transport & Services Integrated Reconnaissance Ground Super Tucano Command and Super Tucano EMB 145 AEW&C EMB 135/145 Control AMX/AMX-T AMX-T EMB 145 MP/ASW Legacy Integrated F-5 BR Systems Training Systems EMB 145 RS/AGS EMB 120K Mirage 2000 BR Data-Link THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 74. Super Tucano High-performance evolution of the proven EMB 312 Tucano State-of-the-art systems and advanced avionics Optimized for advanced training and operational applications in hostile environments Can operate from unprepared runways, during day or night THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 75. AMX-T Advanced and fighter lead-in training aircraft Developed by Embraer for modern Training / Combat requirements Baseline avionics architecture commonality with the Super Tucano THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 76. Special Mission Aircraft AIR SEA ISR GROUND Intelligence Surveillance Reconnaissance THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 77. EMB 145 AEW&C The AEW&C (Airborne Early Warning & Control) is equipped with a state-of-the- art Air Surveillance Radar, Command, Control & Communication System and Data-Link A perfect blend of Embraer’s proven, reliable and economic ERJ 145 platform THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 78. EMB 145 RS/AGS An advanced asset capable of providing real-time imagery and electronic intelligence over ground objectives It features an advanced Synthetic Aperture Radar (SAR), for day or night and all-weather imagery of the ground over large areas, plus other sophisticated sensors THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 79. P-99 New generation aircraft for missions ranging from Maritime Patrol to complex and demanding Anti- Surface and Anti-Submarine operations Features a maritime and ground surveillance radar, plus other sophisticated sensors like FLIR and Data- Link THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 80. ACS – Aerial Common Sensor Embraer, part of the Lockheed Martin team, will provide its ERJ 145 platform for the U.S. Army’s next-generation battlefield surveillance system THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 82. Backlog In 4th Quarter 2004 - US$ 27.6 billion in total orders, including US$ 10.1 billion in firm orders US$ billion 28.1 27.6 Firm Orders 24.1 23.4 Options 22.2 17.7 17,5 17,5 12,7 12,7 13,2 11,3 4.1 11,4 10,7 10,6 10,1 3.0 9 1.2 6,4 0.6 3 4,1 0,6 1,2 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 83. Deliveries Forecast 160 161 148 145 145 131 96 101 59 32 4 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005E 2006E THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 84. Deliveries Forecast Breakdown 9% 14% 12% 31% 50% 73% 60% 36% 15% 2004 2005 2006 ERJ 145 Family EMBRAER 170 Family Corporate Aircraft Corporate Aircraft includes corporate authority transportation THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 86. Embraer Voting Capital Ordinary Shares: 242.544.448 33.77% Bovespa 19.2% Brazilian Govt 0.8% Controlling Shareholders 60% European Group 20% 0.8% 20% European Group 60% Controlling Shareholders Brazilian Govt. Dassault Aviation 5.67% PREVI (Pension Fund) 20% Thales 5.67% SISTEL (Pension Fund) 20% EADS 5.67% Bozano Group 20% 19.2% Snecma 3% Bovespa As of November 30th, 2004 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 87. Embraer Preferred Shares Preferred Shares 475.620.289 66.23% BNDES 9.6% Bovespa 34.4% NYSE 56% As of November 30th, 2004 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 88. Dividends 500 60% 404 421 400 49.8% 50% 327 43.3% 40% 300 36.1% 36.1% 228 195 30% 27.2% 200 20% 100 10% 0 0% 2000 2001 2002 2003 9M04 Dividends Pay Out Ratio R$ million THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 89. Net Revenue US$ million 2,762 2,927 2,526 2,486 2,144 1,837 1,354 764 1997 1998 1999 2000 2001 2002 2003 9M04 Sales by Segment - 9M04 7% Customer Services & Q 98% of sales are exports (9M04) Others 4% 78% Corporate Airline Market Market 11% Defense Market THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 90. Income from Operations US$ million 651 462 470 402 368 275 172 49 1997 1998 1999 2000 2001 2002 2003 9M04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 91. Net Income US$ million 321 328 297 235 223 145 136 3 1997 1998 1999 2000 2001 2002 2003 9M04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 92. Inventories US$ Million 1,390 1,158 1,258 1,231 1,111 3Q03 4Q04 1Q04 2Q04 3Q04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 93. Accounts Receivables US$ Million 981 703 356 465 472 3Q03 4Q03 1Q04 2Q04 3Q04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 94. Accounts Receivables US$ Million 95 157 189 166 194 886 315 514 190 271 3Q03 4Q03 1Q04 2Q04 3Q04 Commercial Airline Market Others Others = Defense + Customer Services THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 95. Loans Breakdown Bank Debt - US$ 1,169.2 million September 30, 2004 Currency Breakdown Debt Maturity Local Currency 7% Long Term 63% Short Term 37% Foreign Currency 93% Considering Swap effects; from US$ and Yen to R$ Cost of Local Currency = 12.4 • Loan Average Maturity: 2 years and 11 months Cost of Foreing Currency = US$ variation + 3.9% p/a THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 96. Short and Long-Term Loans Long Term 63% Short Term 37% 454 41 1,169 119 274 281 Total Short Term 2005 2006 2007 2008 - 2015 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
  • 97. Net Cash (Debt) US$ Million 304 222 178 220 (178) 3Q03 4Q03 1Q04 2Q04 3Q04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.