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Jun 2001 Embraer Market Forecast Embraer Market Forecast

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Page 1: Embraer Market Forecast

Jun 2001

Embraer Market ForecastEmbraer Market Forecast

Page 2: Embraer Market Forecast

Jun 2001

ContentsContents

Q Regional Airline Market Review

Q The Regional Jet Phenomena

Q Major Issues Impacting Future Demand

Q Embraer Market Forecast

Page 3: Embraer Market Forecast

Jun 2001

Regional Airline MarketRegional Airline Market

Source: Airline Business

Passengers by RegionPassengers by Region

Page 4: Embraer Market Forecast

Jun 2001

Passengers Enplaned (millions)

0

20

40

60

80

100

120

140

160

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

Forecast

5%Projected Average

Annual Growth

10%Average

Annual Growth

139139

8585

Regional Airline Market - USARegional Airline Market - USA

Source: RAA, Embraer

Page 5: Embraer Market Forecast

Jun 2001Source: RAA, FAA

U.S. Regional Airlines% of Domestic Traffic

US Regional Enplanements IncreasingUS Regional Enplanements Increasing

PassengerEnplanements

(Millions)

19701970 19851985 20002000 2010F2010F

00

200200

400400

600600

800800

1,0001,000

3 %3 %7 %7 %

12 %12 %14%14%

Regional

Major

Page 6: Embraer Market Forecast

Jun 2001

4040

00

19901990 19951995 20002000 2010F2010F

3030

2020

1010

5050

Average Seating Capacity

Source: FAA, RAA, Embraer

US Regional Aircraft Size IncreasingUS Regional Aircraft Size Increasing

Seats per Aircraft

Page 7: Embraer Market Forecast

Jun 2001

600600

00

19901990 19951995 20002000 2010F2010F

450450

300300

150150

750750

Average Trip Length

Source: FAA, RAA, Embraer

US Regional Aircraft Flying LongerUS Regional Aircraft Flying Longer

(Km)

Page 8: Embraer Market Forecast

Jun 2001Source: ERAA, Embraer

Regional Airline Market - EuropeRegional Airline Market - Europe

0

20

40

60

80

100

120

140

160

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

Forecast

7%Projected Average

Annual Growth

11%Average

Annual Growth

142142

7272

Passengers Enplaned (millions)

Page 9: Embraer Market Forecast

Jun 2001

00

1010

2020

3030

4040

5050

6060

7070

8080

19901990 19951995 20002000 2010F2010F

Average Seating Capacity

Source: ERAA, Embraer

Seats per Aircraft

European Regional Aircraft Size IncreasingEuropean Regional Aircraft Size Increasing

Page 10: Embraer Market Forecast

Jun 2001Source: ERAA, Embraer

600600

00

19901990 19951995 20002000 2010F2010F

450450

300300

150150

750750

Average Trip Length

European Regional Aircraft Flying LongerEuropean Regional Aircraft Flying Longer

(Km)

Page 11: Embraer Market Forecast

Jun 2001

Page 12: Embraer Market Forecast

Jun 2001

Turboprop Replacement

9%

Turboprop Complement

12%

Regional Jet ApplicationsRegional Jet Applications

New Routes29%

Jet Replacement

25%

Q Nearly 80% of regional jet applications come from new opportunities

(capacity rightsizing, increased hub catchment area, new point to point

routes), missions beyond the traditional turboprop role

Jet Complement

25%

Source: BACK

Page 13: Embraer Market Forecast

Jun 2001

Regional Jet Stage Length - USARegional Jet Stage Length - USA

Source: OAG BACK

20002000

19981998

19961996

1,5001,000500

Sector Distance (km)

0

2:40 2:40 Flight TimeFlight Time

An

nu

al F

ligh

ts

60,000

0

120,000

180,000

Page 14: Embraer Market Forecast

Jun 2001

Houston-Milwaukee(1585 km, 02:55)

Mont Rose(1490 km, 02:20)

Ixtapa (1510 km, 02:20)

ERJ

Continental Express NetworkContinental Express Network

Turboprop

Houston

Cleveland

Newark

Source: OAG BACK

Page 15: Embraer Market Forecast

Jun 2001

Daily Departures 129 110 -22

Average 199 406 +104Sector Length (sm)

Daily ASMs (millions) 1.06 1.98 +87

Daily Departures 129 110 -22

Average 199 406 +104Sector Length (sm)

Daily ASMs (millions) 1.06 1.98 +87

1996 2001 % Diff.1996 2001 % Diff.

Source: OAG BACK

Regional Jet Productivity

Continental Express’ Newark Hub example

Regional Jet Productivity

Continental Express’ Newark Hub example

20012001

16% Turboprop

16% Turboprop

84% Jet

84% Jet

100% Turboprop100%

Turboprop

19961996

Page 16: Embraer Market Forecast

Jun 2001

The Trend to All-Jet FleetThe Trend to All-Jet Fleet

Hopkins AirportCleveland, OhioUSA

Hopkins AirportCleveland, OhioUSA

Page 17: Embraer Market Forecast

Jun 2001

Baton Rouge Bloomington

Cedar Rapids Champaign

Chattanooga Cincinnati

Cleveland Columbus

Dayton Des Moines

Dubuque Duluth

Evansville Fort Wayne

Grand Rapids Green Bay

Greensboro Greenville

Huntsville Indianapolis

Kalamazoo La Crosse

Madison Memphis

Milwaukee NW Arkansas

Omaha Peoria

Pittsburgh South Bend

Toledo Traverse City

Regional Jets are Replacing TurbopropsRegional Jets are Replacing Turboprops

Page 18: Embraer Market Forecast

Jun 2001

20002000

Regional Jet Stage Length - EuropeRegional Jet Stage Length - Europe

19981998

Source: OAG BACK

2:40 2:40 Flight TimeFlight Time

An

nu

al F

ligh

ts

30,000

0

60,000

90,000

Sector Distance (km)

1,5001,0005000

Page 19: Embraer Market Forecast

Jun 2001

ZurichBasel

Turboprop

Stockholm(1500 km, 02:40)

Sevilla(1570 km,

02:30)

ERJ

Crossair NetworkCrossair Network

Source: OAG BACK

Page 20: Embraer Market Forecast

Jun 2001

Nice(1390 km, 02:40)

Oslo(1070 km, 02:00) St. Petersburg

(1030 km, 01:55)

Bucharest(930 km, 01:50)

ERJ

LOT Polish Airlines NetworkLOT Polish Airlines Network

Turboprop

Warsaw

Source: OAG BACK

Page 21: Embraer Market Forecast

Jun 2001

RJ High Frequency starting in EuropeRJ High Frequency starting in Europe

Days Flight Depart Arrive Eqp Stop Duration

xSaSu BA 4032 7:30a BRS 8:45a EDI ERJ 0 01:15

xSaSu BA 4034 9:15a BRS 10:30a EDI ERJ 0 01:15

xSaSu BA 4036 1:05p BRS 2:20p EDI ERJ 0 01:15

xSa BA 4038 4:00p BRS 5:15p EDI ERJ 0 01:15

xSaSu BA 4040 5:20p BRS 6:35p EDI ERJ 0 01:15

xSa BA 4042 7:45p BRS 9:00p EDI ERJ 0 01:15

Days Flight Depart Arrive Eqp Stop Duration

xSaSu BA 4032 7:30a BRS 8:45a EDI ERJ 0 01:15

xSaSu BA 4034 9:15a BRS 10:30a EDI ERJ 0 01:15

xSaSu BA 4036 1:05p BRS 2:20p EDI ERJ 0 01:15

xSa BA 4038 4:00p BRS 5:15p EDI ERJ 0 01:15

xSaSu BA 4040 5:20p BRS 6:35p EDI ERJ 0 01:15

xSa BA 4042 7:45p BRS 9:00p EDI ERJ 0 01:15

From Bristol, UK Airlines: BA

To Edinburgh, UK

Date/Time30/Jan/2001 – 06:00a

From Bristol, UK Airlines: BA

To Edinburgh, UK

Date/Time30/Jan/2001 – 06:00a

Page 22: Embraer Market Forecast

Jun 2001

RJs Complement with Larger JetsRJs Complement with Larger Jets

Days Flight Depart Arrive Eqp Stop Duration

xSaSu NI 100 7:30a LIS 8:15a OPO 100 0 00:45xSa NI 532 8:45a LIS 9:30a OPO 100 0 00:45xSaSu NI 547 11:20a LIS 12:05p OPO 100 0 00:45xSaSu NI 807 1:45p LIS 2:30p OPO ERJ 0 00:45xSa NI 600 2:30p LIS 3:15p OPO 100 0 00:45MoTuSu NI 816 3:05p LIS 3:50p OPO ERJ 0 00:45xSa NI 720 4:00p LIS 4:45p OPO ERJ 0 00:45xSa NI 533 5:10p LIS 5:55p OPO 100 0 00:45xSaSu NI 106 5:50p LIS 6:35p OPO ERJ 0 00:45MoTu NI 809 6:45p LIS 7:30p OPO 100 0 00:45xSaSu NI 122 7:30p LIS 8:15p OPO 100 0 00:45xSa NI 911 8:00p LIS 8:45p OPO ERJ 0 00:45xSa NI 721 11:45p LIS 0:30a OPO ERJ 0 00:45

From Lisbon, Portugal Airline: Portugalia (NI)To Porto, Portugal

Date: 04/Jun/2001

Page 23: Embraer Market Forecast

Jun 2001

Responding to Market NeedsResponding to Market Needs

Page 24: Embraer Market Forecast

Jun 2001

Responding to Market NeedsResponding to Market Needs

Page 25: Embraer Market Forecast

Jun 2001

Responding to Market NeedsResponding to Market Needs

Page 26: Embraer Market Forecast

Jun 2001

Anticipating Market NeedsAnticipating Market Needs

ERJ 170 70 SeatsFirst Flight 2001 (Q4) First Delivery 2002 (Q4)2,100 nm Range

ERJ 170 70 SeatsFirst Flight 2001 (Q4) First Delivery 2002 (Q4)2,100 nm Range

ERJ 190-100 98 SeatsFirst Flight 2004 (Q3) First Delivery 2005 (Q2)2,300 nm Range

ERJ 190-100 98 SeatsFirst Flight 2004 (Q3) First Delivery 2005 (Q2)2,300 nm Range

ERJ 190-200 108 SeatsFirst Flight 2003 (Q3)First Delivery 2004 (Q2)1,800 nm Range

ERJ 190-200 108 SeatsFirst Flight 2003 (Q3)First Delivery 2004 (Q2)1,800 nm Range

Page 27: Embraer Market Forecast

Jun 2001

Anticipating Market NeedsAnticipating Market Needs

Page 28: Embraer Market Forecast

Jun 2001

Market IssuesImpacting Future Demand

Market IssuesImpacting Future Demand

Page 29: Embraer Market Forecast

Jun 2001

Economic ScenarioEconomic Scenario

Countries representing 75% of World Capacity

(aircraft up to 100 seats)

USA, Canada, Mexico, Brazil

58%

Others25%

Germany, UK, France, Italy

12%

Japan, India, Australia,

China5%

Source:Merrill Lynch, Consensus Economics, OAG BACK

Country 2001 2002 2005 2006-2010USA 1.9 3.7 3.3 3.2

Canada 2.7 3.6 3.2 3.0France 2.1 2.3 3.0 2.9Italy 1.7 1.8 2.7 2.6

Germany 1.5 2.2 2.5 2.2UK 2.6 3.0 2.4 2.4

Japan 0.0 1.6 2.4 2.3China 7.5 7.0 7.8 7.9

Australia 2.2 4.1 3.8 3.7India 7.0 7.5 7.2 7.6Brazil 3.4 3.0 4.6 4.6

Mexico 2.4 5.8 5.0 5.0WORLD 2.0 3.1 3.4 3.3

Real GDP Growth (%)

QThe worldwide economic scenario is favorable to continuous growth of air transport traffic demand in the next 10 years

Page 30: Embraer Market Forecast

Jun 2001

Scope Clauses - USAScope Clauses - USA

Q unlimited quantity for jets up to 59 seats

Q unlimited quantity for jets up to 44 seats, restriction of 67 jets from 50 to 70 seats

Q unlimited quantity for jets up to 70 seats

Q nearly 400 units of jets up to 50 seats

Q unlimited quantity for jets up to 44 seats, up to 30 units of jets from 45 to 50 seats

Q Reduced short term prospects for 70-seat jet in the USA

Q In the medium to long term, airlines will work out labor agreements to meet their market needs

Page 31: Embraer Market Forecast

Jun 2001

Scope Clauses - EuropeScope Clauses - Europe

Q Not as restrictive as in the USA.

Q Usually around 100+ seats.

Q Will allow for larger growth in the 60-120 seat segment.

Page 32: Embraer Market Forecast

Jun 2001

Environment (Noise and Emissions)Environment (Noise and Emissions)

Q Regulations are becoming more stringent, imposing restrictions and taxes on higher noise and emissions airplanes.

Q Environmental groups are pressing national governments to establish “green taxes” that could penalize airlines because of perceived aircraft pollution.

Q Committee on Aviation and Environmental Protection (CAEP): studying policy options to define more stringent noise standardsand to limit or reduce greenhouse gases emissions from civil aviation.

Page 33: Embraer Market Forecast

Jun 2001

Congestion - USACongestion - USA

QATC systems and airport infrastructure have not kept pace with air transport growth. Investments are required to be consistent withprojected air transport growth.

% Reported Flight Operations arriving Delayed

0

51015

2025

3035

Continental American Delta

1998 1999 2000

Source: US DOT

Page 34: Embraer Market Forecast

Jun 2001

Congestion - EuropeCongestion - Europe

% of Departures delayed more than 15 min

0

5

10

1520

25

30

35

1994 1995 1996 1997 1998 1999 2000

Delays by Cause

76%

4%4%

6%10%

ATC (route)

Weather

Military

ATC (capacity)

Others

Q Despite the collaborative approach under development with the air traffic service providers, air traffic flow management restrictions are the current main cause of delays.

Q “Single Sky” concept (fifteen countries, one single sky - Eurocontrol) is the solution forcurrent poor performance of the European fragmented ATC System, but the solution is more political than technical.

Source: AEA

Page 35: Embraer Market Forecast

Jun 2001

Market ForecastMarket Forecast

Page 36: Embraer Market Forecast

Jun 2001

Market Forecast 2001-2010Market Forecast 2001-2010

30-60 Seats2,085 Jets30-60 Seats2,085 Jets

Page 37: Embraer Market Forecast

Jun 2001

61-90 Seats1,200 Jets61-90 Seats1,200 Jets

Market Forecast 2001-2010Market Forecast 2001-2010

Page 38: Embraer Market Forecast

Jun 2001

91-120 Seats1,650 Jets91-120 Seats1,650 Jets

Market Forecast 2001-2010Market Forecast 2001-2010

Page 39: Embraer Market Forecast

Jun 2001

Market Forecast 2001-2010Market Forecast 2001-2010

30-60 Jet40%

61-90 Jet22%

91-120 Jet31%

30-60 TP5%

61-90 TP2%

World (30-120 seat segment): 4935 jets (US$115 Billion)World (30-120 seat segment): 4935 jets (US$115 Billion)

World Deliveries by SegmentWorld Deliveries by Segment

Segment Type (Units)

30 - 60 Jet 2085

Turboprop 290

61 - 90 Jet 1200

Turboprop 110

91 - 120 Jet 1650

Total 5335Jet 4935TP 400

Page 40: Embraer Market Forecast

Jun 2001

Market Forecast 2001-2010Market Forecast 2001-2010

30-120 Seats4,935 Jets30-120 Seats4,935 Jets

Page 41: Embraer Market Forecast

Jun 2001

from turboprops . . . to commercial jetsfrom turboprops . . . to commercial jets

Embraer Commercial Aircraft ProductsEmbraer Commercial Aircraft Products

EMB 110

EMB 120

ERJ 135

ERJ 140

ERJ 145

ERJ 170

ERJ 190-100

ERJ 190-200

Page 42: Embraer Market Forecast

Jun 2001

Worldwide Program Order BookWorldwide Program Order Book

Total ERJ 956 418 538 606Total ERJ 956 418 538 606

May 2001May 2001

Firm Deliveries Firm Options

Orders Backlog

Firm Deliveries Firm Options

Orders Backlog

ERJ 135/140/145 Family 836 418 418 401ERJ 135/140/145 Family 836 418 418 401

ERJ 170/190 Family 120 0 120 205ERJ 170/190 Family 120 0 120 205

Page 43: Embraer Market Forecast

Jun 2001

Thank you!Thank you!