j miguel santos

BOEING is a trademark of Boeing Management Company.Copyright © 2008 Boeing. All rights reserved.

The statements contained herein are based on good faith assumptions and provided for general information purposes only. These statements do not constitute an offer, promise, warranty or guarantee of performance Actual results may vary depending on certain events or conditions. This document should not be used or relied upon for any purpose other than that intended by Boeing.

J. Miguel SantosDirector, International SalesBoeing Commercial Airplanes

6 November 2008 Porto, Portugal

State of the Aviation Industry and Market Outlook

COPYRIGHT © 2008 THE BOEING COMPANY

Agenda

Current environment

Long-term outlook


Challenging market conditions

Economic OutlookRecent era of high oil prices likely to be sustained for the foreseeable futureEconomic growth slowing in developed economies, emerging market growth at increased riskU.S. dollar remains weak, outlook mixed

CustomersRapidly rising and continued fluctuation in jet fuel prices outpacing airline revenue and efficiency growthCapacity growth plans and profitability outlook declining; further bankruptcies likelyConsolidation activity slowing as airlines focus on reacting to rising fuel prices and slowing economy


Oil prices and volatility remain high

20

40

60

80

100

120

140

160

180

200

2004 2005 2006 2007 2008 2009

Crude Oil

Jet Fuel

Avg Ann Prices

$/Barrel (Brent Crude Oil / Rotterdam Jet Fuel)

2003 $29

2004 $38

2005 $55

2006 $65

2007 $72

2008YTD $110


Airline fuel expenses have increased $130B since 2003

$46 $43 $40 $44 $61$90

$111$136

$17614% 13% 13% 14%16%

22%25%

29%

35%

2000 2001 2002 2003 2004 2005 2006 2007 2008

Global airline fuel expense (billions $)Global airline fuel expense (billions $) Share of operating expensesShare of operating expenses

Source: IATA, June 2008


50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

2003 2004 2005 2006 2007 2008 2009

Year

Jet F

uel P

rice

per U

SG (U

S C

ents

)

USA Europe Asia

Boeing Proprietary

2008 average annual oil price forecasts as of October 2008 (Global Insight, EIA)

Hedging

Tankering

Weight impact of adding features to the aircraft

APU use during ground operations

Operational climb and descent procedures

Fuel Price Volatility a Challenge for PlanningFuel Price Volatility a Challenge for Planning

Airlines Focus on Airplane Selection and Controlling Fuel CostsAirlines Focus on Airplane Selection and Controlling Fuel Costs


2007 GDP, Billions U.S. DollarsBased on Global Insight Monthly Interim Forecast (October Update — Annual Real GDP)

2008

Increasing risk in economic outlook -- world economy headed for recession

2009

1.5%

1.3%

0.6%

9.8%

4.4%

5.0%

1.8%

6.4%

0.6%

2.9%

7.2%

6.2%

7.4%

2.4%

0.2%

0.4%

0.4%

8.4%

3.8%

3.8%

1.0%

4.8%

0.9%

2.6%

7.0%

6.2%

6.3%

2.4%

$0 $2,000 $4,000 $6,000 $8,000 $10,000

Australia and NZ

Russia and CIS

Africa

India

Other Europe

Canada

Middle East

Mexico

Latin America

Other Asia

China

Japan

European Union

United States

World Growth: 2007 = 3.7%2008 = 2.6%2009 = 1.8%


Airlines responding quickly

Cutting 7,000 jobs

11-12% domestic capacity cuts

Grounding 100 aircraft

16% domestic cut in 4Q08, 17% in 2009

Eliminating 3,000 jobs

11% domestic cut in 4Q08, 4.5% in 2009

2008/9 growth plan reduced from 8% to 0%

Retiring up to 22 aircraft

10% capacity cut, up to 30% on long-haul routes


World airline productivity continues to rise—utilization and load factors at historical highs

Single Aisle Utilization

6.0

6.5

7.0

7.5

8.0

8.5

9.0

2000

2001

2002

2003

2004

2005

2006

2007

EHours per Day

Twin Aisle Utilization

8.0

8.5

9.0

9.5

10.0

10.5

11.0

2000

2001

2002

2003

2004

2005

2006

2007

E

Hours per Day

World Load Factors

60%

65%

70%

75%

80%

2000

2001

2002

2003

2004

2005

2006

2007

Load Factor

+13% +9% + 4%

Sources: Utilization – ACAS, December 2006 database + RMT for 2007E; Load Factors – ICAO

Utilization and load factors at historical highs Utilization and load factors at historical highs Utilization and load factors at historical highs


Some have already failed, more likely


IATA Profitability OutlookSharply Higher Fuel Prices Push 2008 Forecast to Loss

($14)

($10)

($6)

($2)

$2

$6

$10

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

..

Net Profit (Loss) Billions

Source: 1983-2006: ICAO data for world scheduled traffic (domestic + international)

2007-8: IATA estimate for world scheduled traffic (domestic + international)

Source: IATA, June 2008

Copyright © 2008 Boeing. All rights reserved.

276255

174

124

70

0

50

100

150

200

250

300

2004 2005 2006 2007 3Q08

Backlog $Backlog $$ - Billions

ModelModel

Single-Aisle32%

Twin-Aisle61%

Large7%

747

777 737

767

787

RegionRegion

AmericasAmericas

EuropeEurope

Leasing Leasing & & Gov'tGov't

S.E.S.E.AsiaAsia

Middle Middle East East

& Africa& Africa

AsiaAsia--PacificPacific

China & China & East AsiaEast Asia

RussiaRussia

Strong, balanced backlog validates Boeing’s product strategy

Copyright © 2008 Boeing. All rights reserved.

Sources of financing U.S. Dollars (in millions)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2002 2003 2004 2005 2006 2007 2008

376 281 285 290 394 441 487$26B $20B $19B $19B $25B $29B $33B

Leasing companies

Export credit

Bank debt

Manufacturer

Public debt/ capital markets

Cash / Other


Agenda

Current environment

Long-term outlook


Aviation demand elasticity with other forms of travel

Intra-N. AmericaIntra-Europe

Intra-Asia

Intra-Sub-Saharan AfricaIntra-S. America

Trans-AtlanticTrans-Pacific

Europe-Asia

Data Source: InterVISTAS; IATA


20-year forecast: strong long-term growth


Annual GDP Growth, 2008 - 2027Annual GDP Growth, 2008 - 2027

Source: Global Insight

Emerging markets are driving the economic growth

Percentage

1.32.1

3.13.2

4.24.34.44.4

5.16.4

7.1

0 1 2 3 4 5 6 7

Northeast Asia

Europe

North America

Oceania

WORLD

Central America

South America

Middle East

CIS

Southeast Asia

Africa

SW Asia

China

3.8

2.5


2%

3%

4%

5%

6%

7%

8%

9%

10%

0 200 400 600 800 1,000 1,200

2007 Traffic (RPK, billions)

Annual Traffic Growth Rate, 2008-2027

North America

Europe

North Atlantic

China

China-SW AsiaOceania-SW Asia

Africa-SW Asia

SW AsiaNE Asia-SW Asia

SE Asia

Africa-Europe

N. America – NE AsiaNE Asia

S. America

Strong traffic growth for emerging markets


…leading to a geographically diverse market


Single Aisle and Twin Aisle markets leading the way


Asia-Pacific air traffic growth exceeds the world average

Annual growth %

Added traffic2008 - 2027

Added traffic2008 - 20272007 traffic2007 traffic

RPKs, billions

Asia-Pacific Average Growth: 6.7%Asia-Pacific Average GDP Growth: 4.1%

0 500 1,000 1,500 2,000 2,500 3,000

To and from Africa

To and from Middle East

To and from North America

To and from Europe

Within Asia Pacific

7.4%

5.7%

5.7%

5.6%

7.1%


Asia-Pacific airlines will need 9,160 new airplanes

Shar

e of fl

eet

Market value: $1,190 billion

747 and largerTwin-aisleSingle-aisleRegional jets

2008-2027


Europe air traffic growth varies by market

3.5%

4.7%

5.7%

4.7%

5.4%

4.9%

0 200 400 600 800 1,000 1,200 1,400

To and fromMiddle East

To and fromAfrica

To and fromLatin America

To and fromAsia-Pacific

To and fromNorth America

WithinEurope

Europe Average Europe Average Growth: 4.1%Growth: 4.1%

RegionRegion’’s Annual GDP s Annual GDP Growth: 2.1%Growth: 2.1%

Annualgrowth %



RPKs, billions


European airlines will need 6,900 new airplanes

Shar

e of fl

eet

Market value: $740 billion


2008-2027


RPKs, billions

5.4%

Africa air traffic growth varies by market

5.6%

6.1%

7.3%

5.4%

7.1%

Annualgrowth %



0 100 200 300 400

Africa--Other

Africa--North America

Africa--Southeast Asia

Africa--Middle East

Africa--Africa

Africa--Europe

Africa Average Africa Average Growth: 6.0%Growth: 6.0%

RegionRegion’’s Annual GDP s Annual GDP Growth: 5.1%Growth: 5.1%


African airlines will need 560 new airplanes


Shar

e of fl

eet


2008-2027


RPKs, billions

Region’s AverageGrowth: 5.5%

Region’s Average GDP Growth: 4.3%

2007 traffic2007 trafficAdded Traffic 2008 - 2027

Added Traffic 2008 - 2027

Annualgrowth %

5.0

6.0

6.0

6.1

5.9

5.7

5.4

6.0

4.9

Middle East air travel growth varies by market

0 50 100 150 200 250 300

To/From Northeast Asia

To/From Oceania

To/From China

To/From Africa

To/From North America

Intra-Middle East

To/From Southeast Asia

To/From Southwest Asia

To/From Europe


Middle East airlines will need 1,580 new airplanes

Shar

e of fl

eet



2008-2027


RPKs, billions

4.72.8

4.03.9

6.26.17.6

7.15.9

4.85.4

Region’s AverageGrowth: 3.4%

Region’s Annual GDP Growth: 2.5%

2007 traffic2007 trafficAdded Traffic 2008 - 2027

Added Traffic 2008 - 2027

North American air travel growth varies by market

Annualgrowth %

0 300 600 900 1,200 1,500 1,800

To/From Africa

To/From Southwest Asia

To/From Middle East

To/From Oceania

To/From Southeast Asia

To/From China

To/From South America

To/From Central America

To/From Northeast Asia

To/From Europe

Within North America


North American airlines will need 8,550 new airplanes

Shar

e of fl

eet



2008-2027


One last thought

Air travel is, and will continue to be, a highly valued and integral part of the social and economic fabric of our world

Air travel is crucial to business, personal relationships, transporting goods and improving the standard of living around the world

Today, the air transport industry supports (directly and indirectly) more than 32-million jobs... about 8% of World GDP*

In 20 years, these economic benefits have the potential to more than double

*The Economic and Social Benefits of Air Transport 2008, ATAG

j miguel santos

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