Airline Market Overview

Transcription

1 Mauro Kern Executive Vice-President Airline Market Airline Market Overview A perspective from the 30 to 120-seat segment Mar/2010

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 forwardlooking statements because of new information, future events or other factors. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation might not occur. Our actual results could differ substantially from those anticipated in our forward-looking statements.

3 Contents Air Transport Industry Review ERJ 145 Family E-Jets Family Competitive Scenario Product Development Market Outlook

4 Economic Scenario World Real GDP Evolution (USD 2005) Real GDP (US$ trillions) F 2010F 2011F 2012F 2013F 2014F World will return to pre-crisis level in 2010 (due to emerging countries) USA and Europe will recover in Source: The Economist (Feb/10)

5 Air Transport Demand - IATA World International RPK Growth Rate (% yoy) % 7.4% 1.6 % -3.5% Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 IATA: The industry starts 2010 with some enormous challenges. The worst is behind us, but it is not time to celebrate. Source: IATA (Jan/10)

6 Demand Forecast IATA and ICAO RPK Growth Rate (% yoy) IATA ICAO 7,4 5,8 4,5 1,3 3,3 5,0 5,5 6,2 6,1-4,1-3, F 2010 F 2011 F 2012 F 2013 F 2009: Reduced demand due to economic crisis : Projected demand recovery Source: IATA and ICAO (Dec/09)

7 Air Transport Industry Review a summary Gradual recovery of market demand Weak revenue environment, signs of improvement (IATA halved its loss forecast for 2010 to US$2.8bi) Continuous efficiency improvement and cost reductions Limited aircraft financing resources More consolidations & mergers and fewer start-ups Long term growth in air transport demand despite current crisis

8 Air Transport Demand US Mainline vs. Regionals US Domestic RPM (Billion) Mainline: -0,2% cagr FAA Aviation Forecast RPM cagr F Regional: +13,3% cagr E 2010F 2011F Mainline Carriers Regional Carriers +2,9% +4,2% FAA Forecast (Mar2010): higher growth rates for Regionals increased use of regional jet aircraft Source: FAA

9 1,100 ERJ145 Platforms Already Delivered Dec 1996 First Delivery Dec 1998 Dec 1999 Aug 2000 September, 2007 Mar 2001 Sep 2001 May 2002 May 2003 May 2004 Feb 2005

10 Pre-Owned ERJ Transfers 35 Number of ERJs (units) pre-owned ERJ transfers in the last two years ( ) Source: Embraer (Mar/09)

11 Pre-Owned ERJ Transactions BMI United Kingdom Trans States - US Passaredo - Brazil FinnComm - Finland Aeromexico Connect - Mexico Dniproavia - Ukraine Satena - Colombia Diexim Expresso - Angola Athens Airways - Greece City Airline - Sweden Republic - US Nearly 170 pre-owned ERJ transactions since 2000

12 1 st. E195 Delivery to Air Dolomiti (Italy) (January 27, 2009)

13 1 st. E170 Delivery to Fuji Dream Airlines (Japan) (February 20, 2009)

14 1 st. E190 Delivery to Niki (Austria) (May 14, 2009)

15 1 st. E195 Delivery to Augsburg Airways (Germany) (June 9, 2009)

16 1 st. E195 Delivery to Windrose (Ukraine) (June 22, 2009)

17 1 st. E175 Delivery to Trip (Brazil) (June 24, 2009)

18 1 st. E190 Delivery to LAM (Mozambique) (July 31, 2009)

19 1 st. E170 Delivery to BA Cityflyer (United Kingdom) (September 3, 2009)

20 600 th. E-Jet delivered to LOT Polish Airlines September 15 th., 2009!!!

21 1 st. E195 Delivery to Lufthansa Cityline (Germany) (September 24, 2009)

22 New E-Jet Customer Air Astana (Kazakhstan) (Nov/09 ; 2 E190 Jetscape)

23 New E-Jet Customer Oman Air (Oman) (Nov/09 ; 5 E175)

24 New E-Jet Customer Austral (Argentina) (20 E190)

25 1 st. E170 Delivery to Gulf Air (Barhain) (March 4, 2010)

26 E190 at London City Airport (2010) Carriers cleared to use Embraer 190 at London City BA CityFlyer, Baboo and Lufthansa Cityline will be the first to operate the EMBRAER 190 out of LCY. Baboo debuts Embraer 190 at London City We are especially proud to be the first to operate this aircraft, the most comfortable and popular regional jet, into this most userfriendly airport Jacques Bankir, CEO of Baboo BA CityFlyer starts introducing Embraer 190s We are now on the last leg of our fleet replacement programme and our passengers will benefit from the extra space these new, greener aircraft offer. Peter Simpson, Managing Director of BA Cityflyer

27 Grand Slam: E-Jets at Europe s top airlines Orders Backlog 10 E E190 Orders Backlog 17 E190 7 Orders Backlog 17 E E195 Orders Backlog 6 E E190 Source: Embraer (Dec/09)

28 620+ E-Jets. 56 Airlines. 39 Countries

29 Current Environment Requires Fleet Optimization Decreasing Demand & Yields Capacity Cuts Fuel & Environment Pressure Fleet efficiency is a critical issue to airlines Right-sized aircraft help airlines to improve fuel burn (environment) and results

30 Market Density Profile - USA PDEW Number of Markets % % >300 23% >1000 Source: US DOT (3Q09) Passenger per Day Each Way (PDEW) USA domestic mainly low-mid density markets 77% up to 300 PDEW

31 Market Density Profile Latin America PDEW Number of Markets % % >300 18% >800 Source: SABRE (2009) Passenger per Day Each Way (PDEW) Intra Latin America mainly low-mid density markets 82% up to 300 PDEW

32 Market Density Profile China Number of Markets % % >300 24% >1000 Daily Passengers China mainly low-mid density markets 76% up to 300 daily passengers Source: China Airline Traffic Statistics 2008 (Markets with at least one weekly frequency)

33 Passengers per Departure USA Narrowbodies ( seats) Annual Flights (x 1000) Daily Frequencies >2 <= > 135 Passengers per Departure Around 610,000 flights (~18%) of total J with loads from 61 to 105 pax per departure and low daily frequencies (up to 2) Source: US DOT (Nov/08-Oct/09)

34 The CASM Paradigm 2,095 1,434 1, (1,051) (504) (1,757) Environment: Avg Sector: Avg Fare: Fuel Price: US LCC 800 sm 100 USD 2 USD/gal

35 The CASM Paradigm the ultimate rule Contribution to Profit per Flight CONTRIBUTION TO PROFIT PER FLIGHT 100 SEATER Pax/Flight < 120 Fare Level NB Pax/Flight > 120 Passenger Demand per Flight A place for everything and everything in its place

36 E-Jets Deployment 21% 29% 8% 14% 25% 6% 5% 33% 32% 7% 57% 40% 5% 49% North America 20% Europe 7% 20% 31% 33% 8% 62% Middle East 12% China 11% 39% 49% 52% 50% Latin Latin America America Africa Asia Pacific World Source: OAG (1Q10) 50% Right-sizing 20% New Markets 9% Replacement of old Jets 21% Natural Growth

37 E-Jets: Complementing Narrowbodies Madrid Paris (ORY) Edmouton Vancouver San Salvador - Guatemala Amsterdam Berlin 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 Dec/08 Dec/ B738 B738 B738 B738 B738 E195 B738 E195 Dec/ E190 A320 E190 A320 A320 A319 E190 CRJ700 A319 Dec/ E190 A320 E190 A320 A320 A319 E190 E190 Sep/08 Sep/ Source: OAG (2010) A320 A321 A320 A320 E190 E190 Jan/ F70 B737 B737 B737 B737 Jan/ B737 E190 B737 B737

38 E-Jets Complementing Narrowbodies

39 E-Jets: Replacing Narrowbodies Frankfurt - Katowice Amsterdam - Helsinki Los Angeles - Vancouver Brisbane - Oakhampton Sep/08 Sep/09 Dec/08 Dec/09 May/07 May/09 Sep/08 Sep/09 SEATS 06:00 07:00 08:00 09:00 10:00 11:00 12:00 13: B737 B E170 E B E190 E A319 A E190 E B737 B737 B E190 E190 E190 14:00 B737 E170 15:00 B737 E190 A319 E190 16:00 17:00 B737 E170 B737 E190 18:00 B737 E170 A319 E190 19:00 B737 E190 20:00 21:00 B737 E190 22:00 23:00 B737 E170 Source: OAG (2009)

40 E-Jets Helping Explore New Markets Seats Low Cost Carriers with Two Fleet Types A320 B A320 A320 E190 E190 E190 E190 North America Asia Pacific Europe Middle East

41 E-Jets Helping Reduce Costs and Fuel Burn

42 E-Jets: Direct Replacement Benefits Fuel Burn Source: Note: European economic conditions, fuel at 0.50 EUR/liter

43 Replacement Opportunities - World (Jets seats) B Number of Aircraft B Bae 146 F100 DC-9 TU-134 B YAK-42 F70 F Average Age (years) Nearly 1,000 aircraft with more than 15 years old Source: OAG (Dec/09 ; Passenger, Active in Service, Scheduled Services)

44 E-Jets Family Order Book Firm Orders Options Deliveries Firm Backlog EMBRAER EMBRAER EMBRAER EMBRAER Total (December 31 th 2009)

45 E-Jets Worldwide Distribution Customers Firm Orders Diversified customer-base across five continents Increased presence in emerging markets with established carriers Source: Embraer (Dec/09)

46 E-Jets Backlog Evolution Backlog Share per Region (# of Aircraft): 322 Acft 257 Acft 1% 8% 20% 71% 32% 16% 22% 31% Emerging Countries RoW Europe North America 2005 Dec/2009 North America + Europe share decreased from 91% to 53% Source: Embraer (Dec/09) Emerging Countries include Brazil, Russia, India, China and Eastern Europe.

47 E-Jets Schedule Reliability & Completion Rate Schedule Reliability: 99.2% ; Completion Rate: 99.9% 100, % 99,88 99,75 99,50 99, % 99,22 SR/CR (%) 99,00 98,75 98,50 98,25 98,00 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC SR - MONTH SR - L12M CR - MONTH CR - L12M

48 Market Share - World (Jets seats) Embraer: 170/175/190/195 Sukhoi: Superjet 100 Bombardier: CRJ700/900/1000; CS110 Comac: ARJ-21 Airbus: A318 Antonov: An-148 Boeing: B Mitsubishi: MRJ90 Considering accumulated Net Orders up to Dec/09.

49 E-Jets vs. New Entrants Competitive Scenario E195 CS100 Seat Capacity (32'' pitch) E175 ARJ21 MRJ90 E170 MRJ70 E190 SSJ100/ Seats Seats 110 Seats Range (nm)

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

51 Competition: E175 vs. MRJ90 Major design review in 2009: back to metallic wing, increased cross-section. 3,500 kg heavier than E175 Equivalent DOC vs. E175 but at higher risks: Challenging integration and development Risk associated with new engine technology (GTF) TSA deal no bid ; price agressiveness sustainable??

52 Expected Technologies for Commercial Aviation 2015/2016 Wingtip devices Advanced structures Composites / Metallic Avionics functionalities Electric taxi Geared and Adv. Turbofan engines 2017/2019 APU Fuel Cell Carbon composites nanotubes (2 nd gen.) 2 nd generation GTF/ATF Health monitoring systems (On condition maintenance) 2020/2025 Open Rotor / New Configs / Advanced Aerodynamics Single pilot capability

53 New Technologies and Next Generation Industry focus on new technologies maturity 2015/ / /2025 Potential COC vs. Current Technology 4% 7%

54 Competitive Product Positioning along time Competitive positioning code: higher average lower New entrants introduction Next Gen NB New entrants competitiveness new entrant maturation mature new entrant competition from next-gen NB New entrants introduction Next Gen NB New entrants competitiveness in case of NB re-engining new entrant maturation mature new entrant competition from next-gen NB

55 Embraer Market Forecast ( ) Projected Deliveries - Jets Market Segment (Seats) Deliveries Around 2600 jet deliveries (US$ 80bi) in the next 10 years.

56 Embraer Market Forecast ( ) 2,625 jet deliveries ( seats) North America % Latin America % Europe % Africa 80 3% Middle East 105 Russia / CIS 155 6% China % 4% Asia Pacific 210 8%

57 620+ E-Jets. 56 Airlines. 39 Countries