Bombardier business aircraft OVERVIEW & market update

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Bombardier business aircraft OVERVIEW & market update

EFZ Welcome by Peter Kraft, Academic DeanAyer Memorial ChapelMonday, December 6, 2010On behalf of Mr. Green, Ms. Rodrigue, and the entire Peddie community, it is my honor towelcome our partners and friends from No. 2 High School Attached to East China NormalUniversity--or “EFZ”--to Peddie.This is, as you might recall, the second time we have had the good fortune to host students fromEFZ. It is a great privilege to be working with a school as exceptional as theirs.Indeed, EFZ’s academic excellence, commitment to community service, and development ofbalanced and “well-rounded” students match Peddie’s own rich history.Yet perhaps most importantly, our partnership with EFZ has allowed us to become friends withamazing students like Ostrich, Vera, and Vetra. And it has brought us close to exceptionalteachers like Madame He, Mr. Shi, and Ms. Wang….These relationships have deeply enrichedthe Peddie community, and I have no doubt that this year’s group of students and their teacher,Ms. Jiang, will leave a similar legacy of friendship and cooperation.We are living, of course, in an era of rapid change, one in which understanding the societies,histories and cultures of other nations is a pre-requisite, not a privilege, of a first-class education.Peddie recognizes this. And, as we explicitly state in our Strategic Vision—and here I quote—“we take seriously our responsibility to graduate accomplished students who understand thecomplexity of globalization.”But make no mistake. Helping our entire COMMUNITY—young and old—understand whathistorian and syndicated columnist Thomas Friedman has termed a “flat world” takes real work.It is not easy. And it is not always comfortable.Fortunately, we have models of this spirit in our own community:--We have adventurers like Mr. Nicholson, Ms. Sherman, Bryan Fiori, Alex Cettina, MelissaSanchez, and Cori-Lynn Cubberly, who recently went to India.--We have pioneers like Dr. Caglieris and his International Student leaders, who do importantwork, quietly, every day.--We have thinkers like Mr. Gustavson, Dr. Peretz, Mr. Clements and Mr. Drotch, among manyothers, who continue to look for ways to enrich our curricula—both inside and outside theclassroom—to include more global perspectives.


FORWARD-LOOKING STATEMENTSThis presentation includes forward-looking statements, which may involve, but are not limited to: statements with respect to our objectives, guidance,targets, goals, priorities, our market and strategies, financial position, beliefs, prospects, plans, expectations, anticipations, estimates and intentions;general economic and business outlook, prospects and trends of an industry; expected growth in demand for products and services; productdevelopment, including projected design, characteristics, capacity or performance; expected or scheduled entry-into-service of products and services,orders, deliveries, testing, lead times, certifications and project execution in general; our competitive position; and the expected impact of the legislativeand regulatory environment and legal proceedings on our business and operations. Forward-looking statements generally can be identified by the use offorward looking terminology such as “may”, “will”, “expect”, “intend”, “anticipate”, “plan”, “foresee”, “believe”, “continue”, “maintain” or “align”, the negativeof these terms, variations of them or similar terminology. By their nature, forward-looking statements require us to make assumptions and are subject toimportant 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 beaccurate. For additional information with respect to the assumptions underlying the forward looking statements made in this presentation, refer to therespective Guidance and forward-looking statements sections in Overview, Aerospace and Transportation sections in the Management’s Discussion andAnalysis (“MD&A”) of the Corporation’s annual report for the fiscal year ended December 31, 2012.Certain factors that could cause actual results to differ materially from those anticipated in the forward looking statements include risks associated withgeneral economic conditions, risks associated with our business environment (such as risks associated with the financial condition of the airline industryand major rail operators), operational risks (such as risks related to developing new products and services; doing business with partners; productperformance warranty and casualty claim losses; regulatory and legal proceedings; to the environment; dependence on certain customers and suppliers;human resources; fixed-price commitments and production and project execution), financing risks (such as risks related to liquidity and access to capitalmarkets, exposure to credit risk, certain restrictive debt covenants, financing support provided for the benefit of certain customers and reliance ongovernment support) and market risks (such as risks related to foreign currency fluctuations, changing interest rates, decreases in residual values andincreases in commodity prices). For more details, see the Risks and uncertainties section in Other in the MD&A of the Corporation’s annual report for thefiscal year ended December 31, 2012. Readers are cautioned that the foregoing list of factors that may affect future growth, results and performance isnot exhaustive and undue reliance should not be placed on forward-looking statements. The forward-looking statements set forth herein reflect ourexpectations as at the date of this presentation and are subject to change after such date. Unless otherwise required by applicable securities laws, weexpressly disclaim any intention, and assume no obligation to update or revise any forward-looking statements, whether as a result of new information,future events or otherwise. The forward-looking statements contained in this presentation are expressly qualified by this cautionary statement.2All amounts are expressed in U.S. dollars unless otherwise indicated


A STRONG HERITAGE


Bombardier Aerospace – Strong HeritageFounded in 1950Business Jet pioneerShort BrothersFounded in 1908First true aviation company in the worldAcquired in 1990 Acquired in 1989Founded in 1928Best selling commercial turbopropeverFounded in 1944Water bomber and Regional Jet pioneerAcquired in 1992Acquired in 19864


Headquartered in Montréal, CanadaRevenues: $16.8 billionWorkforce: 71,700Aerospace#3 manufacturer in the world#1 in business jetsRevenues: $8.6 billionOrder Backlog: $32.9 billionWorkforce: 35,500Transportation#1 manufacturer in the worldRevenues: $8.1 billionOrder Backlog: $33.7 billionWorkforce: 36,000A WORLD LEADER IN MOBILITY SOLUTIONS5 NOTE: ALL INFORMATION AS OF DECEMBER 31, 2012. ALL MONETARY AMOUNTS EXPRESSED IN 2012 U.S. DOLLARS.BOMBARDIER CORPORATE OFFICE INCLUDES 200 EMPLOYEES.


PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.Bombardier Business Aircraft Net OrdersBombardier Net orders (Fiscal years ended)[Unit, 2007 – 2012]452Canadian GAAPIFRS343274251191107-85Jan. 31, 2007 Jan. 31, 2008 Jan. 31, 2009 Jan. 31, 2010 Jan. 31, 2011 Dec. 31, 2011 Dec. 31, 2012Strong growth in orders over the last three years6Note: Announced orders for under 10 aircraft have been excluded in the graph above


PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.Key large fleet operators have chosen BombardierBusiness AircraftBombardier Large Block Orders[Unit Deliveries, 2011 – Q3 2013]8222013 Bombardier Large Block OrdersVISTAJET– CHALLENGER 350OptionsFirm orders511$17.2 billion417261285FLEXJET– LEARJET, CHALLENGER120180311$10.8 billion7050156105201120122013 YTD2011-2013YTD$10.8 billion in firm orders over the last three years7Note: Announced orders for under 10 aircraft have been excluded in the graphic above


MARKET UPDATE


PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.Bombardier segments the business jet market based onprice and aircraft performance9Source: Bombardier


PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.Business aircraft orders continued to recover in 2012At mid-year orders comparable when NetJets is excludedEstimated Net Orders[Units, 2003 to H1-2013]1,7851,4121,112803+27%52542353774180234*169-8652003200420052006200720082009201020112012H1 12H1 1310Source: Estimates based on competitors disclosures and financial reports* Includes a large order by


PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.Deliveries at mid-year are stable, new programintroductions to drive deliveries slightly higher in 2013Industry Deliveries[Units, Light to Large Categories, 2003-Q2 2013763839Light Category[Units, 2003-Q2 2013]326364389413242207 198223 209 -35%17489587032003200420052006200720082009201020112012 H1 12 H1 13404499618534524541536Medium Category[Units, 2003-Q2 2013]154197226257278306212208189182+8%85 92+3%2003200420052006200720082009201020112012 H1 12 H1 13233240Large Category[Units, 2003-Q2 2013]436066829612012414212914559+53%902003200420052006200720082009201020112012H1 12H1 132003200420052006200720082009201020112012 H1 12 H1 1311Source: GAMAExcludes Very Light Jets and Large Corporate Airliners


PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.Pre-owned inventory levels continue to gradually improveResidual values have not yet turned the cornerAircraft Residual Values, 5-Year[% of original B&CA list prices, 2009 to Q3-12]100%20%Aircraft Pre-owned Inventory by Category[% of Fleet, 2009 to Q3-12]90%18%Large16%Light80%70%Historic. Norm76.4%14%12%Historic. NormOverallMedium14.5%13.4%12.9%Medium60%Overall56.7%10%8.7%50%Light56.2%47.2%8%6%Large40%Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 Q3 11 Q1 12 Q3 12 Q1 13 Q3 134%Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 Q3 11 Q1 12 Q3 12 Q1 1312Residual values expressed as an un-weighted average of the aircraft residual values within each categoryExcludes Very Light Jets and Large Corporate AirlinersSources: Bluebook and B&CA (residual values) ; JETNET and ASCEND (pre-owned inventory)


PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.Inverse relationship between pre-owned market anddemand for new aircraftNet Orders and Pre-owned Inventory Level[Units, 1998 to 2012]Net orders(units)20003000Pre-owned ac.(units)15002500100020005001500098 99 00 01 02 03 04 05 06 07 08 09 10 11 121000-500500-1000Net OrdersPre-owned Inventory (t-1)0~50% of new aircraft demand for the industry comes from aircraft trade-ins13Note: Pre-owned inventory has been lagged by1-year in the above graphicSource: JETNET and Bombardier estimatesExcludes Very Light Jets and Large Corporate Airliners


PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.Growth in 2013 expected to be on-par with 2012 strongergrowth predicted starting in 2014Real GDP Growth[%, YoY]U.S.EurozoneChina9.89.59.18.98.17.67.47.97.77.57.822.61.9 1.71.5 1.420.73.32.83.121.31.61.4-0.2-0.5-0.7-1-1.2-0.6-0.4Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13FGDP Outlook Commentary• Citigroup forecasts a global economic growth to be 2.5% in 2013 and 3.2% growth in 2014• A widespread recovery is under way across advanced economies. Some near-term global downside risks have receded• We [Citigroup] think improved fundamentals and still highly supportive financial conditions could resolve the start of Fedtapering by December, but there is a chance that the fiscal debate could hamstring monetary policy decisions into nextyear.• The euro area economy is growing again, albeit modestly• As the recovery remains fragile, the ECB will continue to keep monetary conditions accommodative• Economic data released since the beginning of July have been generally positive• We have edged up our GDP growth forecasts to 7.6% for 2013 and 7.2% for 2014 from 7.4% and 7.1% respectively14 Source: IHS Global Insight September 2013, Citi Global Economic Outlook and Strategy September 2013


PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.Business Aircraft Market Long-term DriversLong-term Business Aircraft Key Market DriversThe long-term business aircraft drivers remain solid15


TodayPRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.GDP growth is a major driver of new aircraft demandWorld Real GDP 20-Year Forecast[%, 2008-2032]5%4%20-Year Average GDPGrowth3%2%1%2011 Forecast 3.3%2012 Forecast 3.2%2013 Forecast 3.2%0%-1%2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032-2%-3%Actuals 2011 Forecast 2012 Forecast 2013 ForecastForecasted world economic recovery has been delayed two years in a row16Source: IHS Global Insight, 2011 to 2013


Fleet per 100 million pop, (log scale)Fleet per 100 Million Population (Log Scale)PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.Basis of Bombardier’s long-term forecast is continued fleetpenetration based on projected GDPFleet per capita vs. GDP per capita[Units, $]1000010001st drivingforce: GDPgrowth1 st drivingforce: GDPgrowthNORTH AMERICANORTH AMERICATypical Averagegrowth pathgrowth path100LATIN AMERICALATIN AMERICAEUROPE & CISEUROPE &RUSSIA10MIDDLE-EAST &AFRICA MIDDLE-EAST& AFRICAASIAASIA2 nd drivingforce:removal of2nd drivingforce:removal ofbarriersbarriersE.g.:•Infrastructure•Regulatory regime•Airspace Access1100 1,000 10,000 100,000GDP per Capita (USD, Log Scale)GDP per capita ($, log scale)17Sources: ASCEND, IHS Global Insight and IMF, Bombardier analysis


PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.India and China will be the fastest growing majoreconomies over the next 20 years20-Year GDP Growth by Region[%, Regions]10%9%Bubble Size =2012 GDP in Trillion8%7%$1.4$5.36%5%4%3%2%1%$1.3$3.6$2.2$1.3$14.9World Average: 3.2%$8.5$15.50%India China Africa Latin Middle CIS North AmericaEuropeAsiaAmerica EastPacificMature economies will show slower growth rates, but on a larger base18Source: IHS Global Insight, February 2013


PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.Forecasted recovery in business jet deliveries has beendelayed by a year as well1,4001,2002003-2012 2013-20226,000 9,8002012-2021 Forecast:9,800 deliveries1,0008002013-2022 Forecast:9,800 deliveries60040020002003 2005 2007 2009 2011 2013 2015 2017 2019 202119Source: GAMA and Bombardier estimatesExcludes Very Light Jets and Large Corporate Airliners


PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.Significant fleet additions in high growth economiesexpectedDistribution of Fleet by Region, Actual and Forecast[Units]2012 FLEET % TOTAL 2032 FLEET% TOTALNorth America 9,600 64%North America13,640CAGR: 2%44%Latin America1,67511%Europe4,740CAGR: 6%15%Europe1,50010%Latin America3,085CAGR: 3%10%CIS5354%Greater China2,640CAGR: 12%9%Middle East4003%CIS1,925CAGR: 7%6%Asia Pacific4003%Middle-East1,420CAGR: 7%5%Africa3502%India1,415CAGR: 13%5%Greater China2902%Asia Pacific1,150CAGR: 5%3%India1251%Africa960CAGR: 5%3%Total Fleet Size 14,875 Total Fleet Size 30,97520Source: Bombardier Business Aircraft Market Forecast 2013-2032


PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.Bombardier Business Aircraft Market Forecast 2013-2032$650 billion over the next 20 yearsBusiness Aircraft Forecast by Category[Units and revenues ($B), 2013-2032 ]Total 20Yrs$650BTotal 20Yrs24,000 units$B40Large$293B(45%)5,500(23%)35308,000(33%)2520Medium$238B(37%)1510,500(44%)10Light$119B(18%)50131415161718192021222324252627282930313221Source: Bombardier Business Aircraft Market Forecast 2013-2032


PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.North America, Europe and Greater China will be thelargest markets for business jet deliveriesRegional 10-Year and 20-Year Delivery Outlook[Units]2013-2022: 9,800 units2023-2031: 14,200 units22Source: Bombardier Business Aircraft Market Forecast 2013-2032


PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.Conclusion• Current market indicators remain mixed, but continue to see signs of forward momentum• Industry net orders up in 2012• Pre-owned inventory levels continue to gradually improve• Orders and deliveries in 2013 are expected to remain comparable to those of 2012• The long-term outlook for business aircraft demand remains solidBombardier remains confident in the strong long-term potential for thebusiness aircraft market23


BOMBARDIERBUSINESSAIRCRAFTOVERVIEW &MARKET UPDATETHANK YOU!QUESTIONS?2013 PRODUCT UPDATE &VALUATION SEMINAROCTOBER 9, 2013


PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.


PRIVATE AND CONFIDENTIAL© Bombardier Inc. or its subsidiaries. All rights reserved.World fleet forecasted to grow to 30,975 units by 2032Business Aircraft Fleet, Deliveries, Retirements[Units, 2012-2032]4,75014,2003,1509,80030,97521,52514,875Fleet 2012DeliveriesRetirementsFleet 2022DeliveriesRetirementsFleet 2032Retirements expected to accelerate over next 20 years as a result of emergingenvironmental concerns, new regulations and airspace modernization26Source: Bombardier Business Aircraft Market Forecast 2013-2032

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