Business Aircraft Market Forecast - BizavNews

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Business Aircraft Market Forecast - BizavNews

Bombardier Aerospace

2011 Business Aircraft Market Forecast

and Program Update

Rod Williams

Vice-President – Marketing

Business Aircraft

EBACE

18 May 2011

1


Forward-looking statements

This presentation includes forward-looking statements. Forward-looking statements generally can be identified by the use of

forward-looking terminology such as “may”, “will”, “expect”, “intend”, “anticipate”, “plan”, “foresee”, “believe” or “continue”, the

negative of these terms, variations of them or similar terminology. By their nature, forward-looking statements require us to

make assumptions and are subject to important known and unknown risks and uncertainties, which may cause our actual

results in future periods to differ materially from forecasted results. While we consider our assumptions to be reasonable and

appropriate based on information currently available, there is a risk that they may not be accurate. For additional information

with respect to the assumptions underlying the forward-looking statements made in this presentation, refer to the respective

Forward-looking statements sections in BA and BT in the MD&A of the Corporation’s annual report for fiscal year 2011.

Certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements

include risks associated with general economic conditions, risks associated with our business environment (such as risks

associated with the airline industry’s financial condition), operational risks (such as risks involved in developing new products

and services, risks in doing business with partners, risks relating to product performance warranty and casualty claim losses,

to regulatory and legal proceedings, to environmental and health and safety, to our dependence on certain customers and

suppliers, to human resources, to fixed-price commitments and to production and project execution), financing risks (such as

risks relating to liquidity and access to capital markets, to the terms of certain restrictive debt covenants, to financing support

provided on behalf of certain customers and to reliance on government support) and market risks (such as risks relating to

foreign currency fluctuations, to changing interest rates and commodity prices risks). For more details, see the Risks and

uncertainties section in Other in the MD&A of the Corporation’s annual report for fiscal year 2011 .Readers are cautioned that

the foregoing list of factors that may affect future growth, results and performance is not exhaustive and undue reliance should

not be placed on forward-looking statements. The forward-looking statements set forth herein reflect our expectations as at the

date of this presentation and are subject to change after such date. Unless otherwise required by applicable securities laws, the

Corporation expressly disclaims any intention, and assumes no obligation to update or revise any forward-looking statements,

whether as a result of new information, future events or otherwise.

All amounts are expressed in 2011 U.S. dollars unless otherwise stated

All amounts are expressed in U.S. dollars unless otherwise indicated

2


Agenda

• Current Market Environment

Business Aircraft Market Forecast (2011-2030)

• Program Update

3


Agenda

• Current Market Environment

Business Aircraft Market Forecast (2011-2030)

• Program Update

4


2010 industry deliveries were down slightly from 2009

and down 43% from the most recent peak

TOTAL INDUSTRY DELIVERIES

Units, 2001-2010

927

775

841

-43%

642

666

518

404

505

574

-8%

528

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: GAMA, excluding very light jets and large corporate airliners

5


While Light deliveries were still depressed, with Medium

stabilizing, 2010 was the best year (so far) for Large

deliveries

LIGHT Category Deliveries

Units, 2006-2010

MEDIUM Category Deliveries

Units, 2006-2010

LARGE Category Deliveries

Units, 2006-2010

436

467

501

-61%

-35%

238

194

257

278

306

212

198

+13%

82

96

120

124

136

2006

2007

2008

2009

2010

2006

2007

2008

2009

2010

2006

2007

2008

2009

2010

Source: GAMA, excluding very light jets and large corporate airliners

6


Industry net orders back to positive during 2010

TOTAL INDUSTRY NET ORDERS

Units, 2001-2010

2000

1800

1600

1400

1200

1000

800

600

400

200

0

-200

-400

-600

-800

-1000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Bombardier estimates based on OEM disclosures, excluding very light jets and large corporate airliners

7


International markets are the source of most orders

BUSINESS JET INDUSTRY GROSS ORDERS

Units, % of world total, 2001-2010

8%

0%

1%

10%

7%

11%

10%

1% 0% 1%

3% 3%

1% 2% 2% 5% 6% 4% 6% 5%

7% 2%

2%

1%

2% 1%

2%

2%

2% 2%

4% 2%

2% 2%

8% 8%

9%

3%

11%

7% 7%

6%

3% 1%

3% 5%

4% 2% 4%

3%

4%

9% 19%

6%

6%

5%

8% 6%

10%

11% 10%

15%

12%

19%

7%

4%

9%

6%

4%

6%

6%

Asia Pacific

India

China

Russia & CIS

17% 30%

34%

32% 23%

Africa

72%

67%

Middle-East

52%

58%

53%

Latin America

43%

35%

29%

33%

38%

Europe

North America

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Bombardier analysis based on OEM disclosures, excluding very light jets and large corporate airliners

8


OEMs 1 backlog reduced 21% from 2009 to 2010, most

impact in light and medium category

TOTAL INDUSTRY BACKLOG

$US B, 2010 BCA list prices, 2009-2010 at year end

TOTAL INDUSTRY BACKLOG BY CATEGORY

$US B, 2010 BCA list prices, as of Dec 31, 2010

$49.7

- 21%

$39.5

$39.5B

Light

$7.5

Large

$25.6

Medium

$6.4

2009

2010

2010

Sources: Manufacturer disclosures and BBA estimates. For consistency purposes,

backlog in value is expressed as backlog in units x 2010 B&CA list prices

Note: 1 OEMs = Original Equipment Manufacturers

9


Bombardier Business Aircraft is the industry leader in

terms of deliveries and revenues

Delivery Market Share

Revenue Market Share

(%)

100% 3% 3% 4% 4% 3% 7%

17% 15% 13% 14% 14%

12%

75%

22%

16%

31% 31%

32% 31%

(%)

100% 4% 4% 5% 5% 3% 4%

9% 8% 7% 8% 8% 6%

6%

11%

75%

17% 17% 17% 17%

26%

20%

11% 12% 13% 13%

50%

8% 8% 8% 8%

13% 15% 16% 17%

13%

16%

18%

19%

50%

27%

27%

27%

27%

26%

26%

25%

25%

28%

27%

27%

26%

30%

28%

31%

32% 30% 31%

32%

32%

0%

’05

’06

’07

’08

’09

’10

0%

’05

’06

’07

’08

’09

’10

Bombardier is the #1 manufacturer of

business aircraft in the world

Source: GAMA, Bombardier analysis, excluding very light jets and large corporate airliners

10


The world economy continues to recover

WORLD REAL GDP 1 GROWTH

%, 2010

World Average 3.9%

< 0% 0 to 2% 2 to 4% 4 to 6% > 6%

Source: IHS Global Insight, February 2011

Note: 1 GDP = Gross Domestic Product

11


Business conditions continue to improve

European Utilization is increasing

EUROPEAN BUSINESS JET UTILIZATION

Thousands of Departures and Landings, 2008-2011/Q1

Departures and Landings ('000) Departures and Landings Growth YoY (%)

Pre-owned inventory levels are falling

PRE-OWNED INVENTORY

% of fleet, 2008-2011 Q1

-22% -20%

89

113

-13%

124

0%

103

9%

97

6% 7% 5% 3%

120

133

108

100

17.6%17.8% 17.2%16.1%15.7%

16.2%

15.2%15.2%15.0%

13.8% 13.8% 14.4%

13.3%12.2%

11.3% 12.1% 12.1%

10.9%10.9% 10.5%10.6%10.4% 9.9%

9.1%

6.1% 7.1%

Industry - All A/C

Industry - In-Prod

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11

Source: Eurcontrol

U.S. Utilization is increasing

US BUSINESS JET UTILIZATION

Thousands of Departures and Landings, 2008-2011 Q1

1,172 1,150

1,056

946

826

874

927 945 960 1,001 1,018 1,0191,006

UBS BUSINESS JET MARKET CONDITIONS INDEX

Broker and dealers confidence, 100-point scale, 2008-2011 FEB 11

48

Q1

08

29

Q2

08

26

Q3

08

Source: AMSTAT

Q4

08

Threshold= 50

25

Q1

09

35

Q2

09

43

Q3

09

45

Q4

09

Q1

10

50 50

Q2

10

Market confidence is increasing

37

Q3

10

42

Q4

10

49

Q1

11

14

Q1

08

Q2

08

Q3

08

Source: JETNET

Q4

08

Q1

09

Q2

09

Q3

09

Q4

09

Q1

10

Q2

10

Q3

10

Q4

10

Q1

11

Q1

08

Q2

08

Q3

08

Source: UBS

Q4

08

Q1

09

Q2

09

Q3

09

Q4

09

Q1

10

Q2

10

Q3

10

Q4

10

FEB Q1

11

12


Agenda

• Current Market Environment

Business Aircraft Market Forecast (2011-2030)

• Program Update

13


Long term business aircraft market drivers remain solid

20-Year Outlook

Market Driver Description Outlook

Wealth Creation

Globalization of

Trade

The wealth of our customer base is highly dependent on real GDP, which is

forecast to grow worldwide at an average rate of 3.4% over the next 20 years

Business aviation provides the flexibility to link new markets

Replacement

Demand

The worldwide installed fleet of 14,700 aircraft (1) typically rolls over every 5-10

years from initial delivery; 60% of customers trade-up

New Aircraft

Programs

New programs stimulate demand by offering customers ever better performing

aircraft; numerous aircraft programs are currently in development

Emerging

Markets

Significant business aviation potential in fastest growing economies

Accessibility

Non-traditional solutions (e.g. branded charter, card programs, fractional

ownership) offer tailor-made services to customers

Source: Bombardier Analysis

Note: 1 Excludes very light jets and large corporate airliners

14


Our market forecast is based on regional penetration rates

PENETRATION RATES BY REGION

Fleet per Capita vs. GDP 1 per Capita, 1960-2010

10000

Fleet per 100 Million Population (Log Scale)

1000

100

10

1st driving

1 st driving

force: GDP

force: GDP

growth

growth

LATIN

LATIN

AMERICA

AMERICA

MIDDLE-EAST &

AFRICA

MIDDLE-EAST &

AFRICA

ASIA

ASIA

NORTH AMERICA

NORTH AMERICA

EUROPE &

EUROPE &

RUSSIA

RUSSIA

Average

growth

Average

path

growth path

2nd

2 driving

driving

force: force:

removal of of

barriers

1

100 1,000 10,000 100,000

GDP per Capita (USD, Log Scale)

Source: Fleet from Ascend, GDP and Population from IMF

Note: 1 GDP = Gross Domestic Product

15


Business jet penetration will continue worldwide

WORLD BUSINESS JET PENETRATION FORECAST

Fleet per capita vs. GDP 1 per capita, Actual 1960-2010, Forecast 2011-2030

1000

Fleet per 100 Million Population (Log Scale)

100

10

20-year CAGR 2 = 3.8%

20-year fleet per million population = from 260 to

460 aircraft per 100 million in population

Actuals

Forecast

1

100 1,000 10,000 100,000

GDP per Capita (USD, Log Scale)

Sources: Ascend, IMF, IHS Global Insight, UN population project,

Note: 1 GDP = Gross Domestic Product

Bombardier forecast, including very light jets

2

CAGR = Compound Annual Growth Rate

16


24,000 deliveries forecast over the next 20 years

BUSINESS AIRCRAFT INDUSTRY DELIVERIES

Units, Actual 1991-2010, Forecast 2011-2030

1991-2000 2001-2010 2011-2020 2021-2030

1,500

3,600 6,400 10,000 14,000

Forecast

1,250

1,000

2008 2014

750

500

250

0

1995

2000

2005

2010

2015

2020

2025

2030

Sources: GAMA, Bombardier forecast. Excludes very light jets and large corporate airliners

17


24,000 deliveries will be worth $626 billion over 20 years

INDUSTRY DELIVERIES BY CATEGORY

Units, Forecast 2011-2030

1,500

1,250

Units Value

Total 20 Yrs

24,000 $626B

Large

5,250

$260B

INDUSTRY REVENUES BY CATEGORY

$US billion, Constant 2010, Forecast 2011-2030

40

35

30

1,000

7,750

25

750

Medium

20

500

$236B

15

11,000

10

250

$130B

5

Light

0

11 12 13 14 15 16 17 18 19 20 21 22

Source: Bombardier forecast

23

24 25 26 27

28

29 30

11

12

13 14 15

16

17 18 19

20

21 22 23

24

25 26 27

28

29 30

0

18


North America, Europe and China will be largest markets

for business jet deliveries

Total World

2011-2020

2020 10,000

2021-2030

2030 14,000

Source: Bombardier forecast model

19


Fleet forecast to grow to 30,900 by 2030, CAGR 1 of 3.8%

WORLD FLEET EVOLUTION FORECAST

Fleet, Deliveries, Retirements; 2010-2030

4,700

14,000

10,000

3,100

30,900

14,700

21,600

Fleet 2010 Deliveries Retirements Fleet 2020 Deliveries Retirements Fleet 2030

Sources: Ascend, Bombardier forecast. Excludes very light jets and large corporate airliners

Note: 1 CAGR = Compound Annual Growth Rate

20


Agenda

• Current Market Environment

Business Aircraft Market Forecast (2011-2030)

• Program Update

21


We have the industry’s leading product portfolio

LEARJET CHALLENGER GLOBAL

More than 3,700 BBA 1 aircraft are in service worldwide,

BBA fleet has accumulated more than 26 million flight hours

Note: 1 BBA = Bombardier Business Aircraft

22


With 12 programs, Bombardier has the industry’s

strongest product portfolio

LEARJET 40 XR LEARJET 45 XR LEARJET 60 XR

LEARJET 85

CHALLENGER 300 CHALLENGER 605 CHALLENGER 850 CHALLENGER 870

GLOBAL 5000

GLOBAL 6000

GLOBAL 7000 GLOBAL 8000

23


Bombardier has remained committed to investing in its

future despite the downturn

Expenditures on product

development initiatives Recently launched programs 1

1,000

800

$US M

R&D expenses

Program change and engineering

Program tooling additions

928

46

101

Global 8000

Global 7000

Global Vision

Learjet 85

Legacy 500

Legacy 450

600

400

200

329

78

91

160

340

37

94

209

494

51

118

325

623

105

512

781

G650

G250

Citation Ten

No announcement

0

F2007

F2008

F2009

F2010

F2011

No announcement

Sources: Bombardier Analysis, Manufacturers Websites

Note: 1 . Launched programs from F2007 to F2011 that are currently in development

24


We are investing in key growth segments to maintain

and grow our leadership position

LEARJET 85 GLOBAL VISION GLOBAL 7000 & 8000

25


Learjet 85 – Program Status

Wichita and Belfast factories capacity increase

underway. Mexico factory built complete.

Successfully exited aircraft level Critical Design

Review (CDR). More than 6000 drawings released.

Commissioning of 44 test rigs world wide

underway. Focus is on EIS reliability at first flight.

Composite and composite tooling manufacturing

has started.

The Learjet 85 program is on track for a 2013 EIS

26


Global Vision – Program Status

Rockwell Collins obtained all FAA TSO’s for the Pro

Line Vision suite in April ’11.

Flight testing with Basic Certification Load

complete (over 600 flight hours accumulated).

Five production aircraft inducted to Completion in

Montreal.

Vision aircraft in full production in Toronto Final

Line.

Global Vision Program progressing towards certification (SOC) with

Transport Canada with first delivery planned in Q1 2012

27


Global 7000/8000 – Program Status

Program was launched during NBAA 2010 with a

very positive market response.

Wind tunnel testing is underway

Several major suppliers have been selected.

Three focus groups have been initiated to

incorporate our customers’ feedback.

Maintenance

Cabin Experience

Operations

The Global 7000/8000 program is progressing as per plan

28


Summary

• This year’s edition of the 20-year market forecast highlights our positive

outlook regarding the timeline and the magnitude of the business jet

industry’s comeback:

• 10,000 deliveries over 10 years; 24,000 deliveries over 20 years

• Deliveries to beat the prior peak year (2008) by 2014

• $626 billion of revenues over the next 20 years, 42% of which from Large category

• China to generate the 3 rd highest revenues, after North America and Europe over

the forecast period

• 3.8% worldwide 20-year fleet CAGR, for a total fleet of 30,900 in 2030

• Bombardier is leading the market recovery and investing to grow our

leadership position

29


Bombardier Aerospace

2011 Business Aircraft Market Forecast

and Product Briefing

Thank You!

Questions

EBACE

18 May 2011

30

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