VLJs Panel: What is the European Business Model?

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Melina Miles
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1 VLJs Panel: What is the European Business Model? Phenom 100 and the European market May 24 th, 2007 Marco Túlio Pellegrini VP, Market Intelligence

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 forward-looking 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 Air Transportation Industry Highlights

4 Air Transportation Industry Highlights Traditional Commercial Offer Transportation Alternatives Airline Premium Service Initiative New Operation Models Hassle factor Branded Charter Small cities: Low frequencies No direct flights Reduced premium offers Business Aviation Growth Airline Short-haul Premium Service Air Taxi

European commercial flight scenario Terrorist Attack U.S.

security worldwide Tighter airport security at European airports 150% traffic

Travel Demand & Congestion 13% rise in delays in 2005 4.

5 European commercial flight scenario Terrorist Attack U.S. 9/11 Terrorist Plot Heathrow 8/10 Increasing Hassle Factor Increased airport security worldwide Tighter airport security at European airports 150% traffic increase at Biggin Hill Airport 100% increase in charter demand Increasing Air Travel Demand & Congestion 13% rise in delays in % traffic increase Source: Eurocontrol Trends in Air Traffic, Vol.1, 2006 Flight delays and hassles expected to increase

6 European Charter Activity European charter demand has enjoyed strong growth Charter operator revenues increased 26% in 2006, on average Demand is expected to continue to increase, especially in growing markets like Russia Charter operators are concerned about costs Fuel prices continue to increase Expensive landing and handling fees at some airports European charter prices have increased Source: The Air Charter Market, AIN (Nov,2006) European charter activity is growing, despite cost increase

7 European Fractional Industry NetJets Europe Growth Growth of 1,250% since : 27 new aircraft deliveries 2006: 113 aircraft total fleet and new aircraft acquisition Current customer base of more than 1,000 JetCards Offered in Europe by Skyjet, NetJets Europe, Air Partner and Chauffair Share Sources: European Fractional market is evolving

Airlines and Business Aviation Synergy Lufthansa Private Jet case Launched in 2005 for long-haul flights Launched program with NetJets Europe in 2006 10 flights/day expected in 2007 and growing

8 Airlines and Business Aviation Synergy Lufthansa Private Jet case Launched in 2005 for long-haul flights Launched program with NetJets Europe in flights/day expected in 2007 and growing Point-to-point flights are being currently offered Frankfurt Citation Excel New York City Point to point with Excel ACJ or BBJ 48 pax Source: B&CA MEBA ShowNews, January 2007 Successful operation Customer base: 14% growth/month

9 Current Offer Charter vs. Airline All preliminary data Roundtrip price (US$ x 1,000) Hassle factor Charter Price Light Jet Huge Gap Airline Full Fare Stage Length (nm) Top 25 European business aviation airports The right VLJ can fill the gap Sources: CharterX; Expedia

10 Industry Answer: Business Models Evolution Yearly Total Cost Cost Branded Charter New Business models Air Taxi Commercial Aviation Traditional Ownership Aircraft Management Fractional Ownership Used Fractional Jet cards memberships Charter On-Demand Scheduled Charter Bizav Airline Source: Embraer (adapted from Jet Solutions)

11 World Bizjet Deliveries Forecast ( ) ULTRA LARGE ULTRA-LONG RANGE LARGE SUPER MID-SIZE MID-SIZE MID-LIGHT LIGHT VERY LIGHT Forecast Deliveries continue growing, particularly in the VLJ segment

12 EMEA Bizjet Deliveries Forecast ( ) Ultra-Long Range 11% Ultra-Large 6% Very Light 19% Large 15% Light 16% Supermidsize 12% 315 Midsize 13% 225 Midlight 8% 133 Very Light Light Midlight Midsize Super Midsize Large Ultra-long Range Ultra-Large 2,125 executive jets US$ 41 billion in the next 10 years

13 EMEA VLJ Deliveries Forecast ( ) Traditional Business Market: 412 Aircraft Top-Down Analysis: Econometric Model Bottom-up Analysis: Regional Analysis + New Business Models Fleet: Aircraft Top-down Analysis: Business Travelers Assessment VLJ EMEA Deliveries Forecast 1,012 1,062 Aircraft

14 Phenom 100 Applicability

15 Phenom 100 Design Drivers Business Aviation Focus Premium comfort Outstanding performance Docile flying characteristics Next generation engines Human factors + Commercial Aviation Experience Designed for high utilization High availability Low operating cost Competencies uniquely position Embraer to deliver design drivers

16 Phenom 100 Design Drivers Seamless cockpit & cabin design Preliminary data

17 Phenom 100 Floor Plan and Performance Baggage Compartment - 45 cu.ft FWD Baggage Compartment - 5 cu.ft Wardrobe -5 cu.ft Preliminary data Range* 1,160 nm VFR range ** 1,320 nm MMO Mach 0.70 Max ceiling FL 410 TOFL*** 3,400 ft * lb, NBAA IFR reserves (100 nm alternative, 35 min) ** lb, VFR 45 min reserves *** MTOW, ISA, Sea Level

18 Economic Life Typical Utilization over 10 years Charter & Branded Charter Fractional (12,000) (8,000) Private Owner (2,000) Air Taxi (20,000) 15,000 VLJ (nearest competitor) 35,000 Phenom 100 EXTENDED LIFE Preliminary data Favors Residual Value Cycles

19 Traditional Market vs New Business Models Price Strategy Operation Region Fleet Ownership Fleet Composition Current Charter Per aircraft Round trip Unlimited 85% managed aircraft Various models Branded Charter Air Taxi (per seat on demand) Utilization (FH/year) ,000 1,500 1,000 2,000 Operational Challenges for the New models Per aircraft One way Pre determined Wholly owned Single aircraft type High utilization Low operating costs Per seat One way Pre determined Wholly owned Single aircraft type High utilization Low operating costs Regulation Aggregation factor The Phenom Jets fit well in the new business models

20 Phenom Filling the Gap 35 All preliminary data 30 Charter Price Light Jets Airline Full Fare Stage Length (nm) Top 25 European business airports Roundtrip price (US$ x 1,000) Estimated Branded Charter Price Phenom 100 Estimated Air Taxi per-seat Price Phenom 100 Phenom 100 tapping the gap Sources: CharterX; Expedia

21 Case Study: Mission Zurich to Bremen Bremen Check-out Munich to Bremen Time Saved Zurich Munich Connection Zurich to Munich Check-in h45m Commercial Branded Charter Commercial Flight Branded Charter Total: 4h35m 1h40m Source: CharterX, Expedia,April/07 Branded Charter with Phenom 100: 64% time savings

22 Why New Business Aviation Models Now? Demand Dynamics Industry Offer Evolution 1977 Fox Jet st Air Taxi Research NASA GAP Willians EJ22 NASA AGATE Highway in the sky 1999 NASA SATS 2000 Eclipse 2001 Right Product Availability WONDAIR 9/ PW 600 series World Wealth Growth k $5-$30M 231 k > $30M 2004 Garmin G1000 Avidyne - Entegra 21 k $5-$30M 250 k > $30M PHENOM Unveiling New Business Cessna Embraer HondaJet MustangModels Feasibility Studies Increasing Demand for Convenient Air Travel Increasing Hassle and Flexibility Demand US delays record Heathrow

23 First Phenom 100 Assembly First Phenom 100 Fuselage Botucatu Plant March 5 th, 2007 Phenom 100: Design becomes reality

24 First Phenom 100 Assembly Phenom 100: Design becomes reality

25 Phenom 100 Program Progress Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Business Case Approval Business Plan Preparation Business Plan Approval Joint Definition Phase Detailed Design and Flight Test Campaign First Metal Cut Sub-Assembly Final Assembly (on schedule) Program on schedule First Flight Entry Into Service

26 The world also discovers Phenom Jets (May 2007) Phenom Jets over 400 firm orders in 30 countries All images are for illustration purpose only and may not represent the real and final product accurately.some features are optional items not included in the baseline aircraft and are subject to price increase and lead-time analysis.the information contained herein is subject to the disclaimer presented in the last page of this document/presentation.this presentation is the property of Embraer-Empresa Brasileira de Aeronáutica S.A.("Embraer") and shall not be copied, in whole or in part, or used in any manner, except with Embraer s prior written consent.

27 Thank You!

Due to time span between the date of this document/presentation and the entry into service of the aircraft, Embraer reserves the right to revise this document/presentation whenever occasioned by

28 Due to time span between the date of this document/presentation and the entry into service of the aircraft, Embraer reserves the right to revise this document/presentation whenever occasioned by product improvement, government regulations or other good cause. The information contained herein is the property of Embraer S.A. and shall not be copied or used in any manner except with Embraer s written consent.

PHENOM 300 TYPE CERTIFICATE

PHENOM 300 TYPE CERTIFICATE PROGRAM UPDATE AND DEVELOPMENT HIGHLIGHTS THE INFORMATION HEREIN IS SUBJECT TO THE DISCLAIMER PRESENTED IN THE LAST PAGE OF THIS DOCUMENT. THIS PRESENTATION IS THE THE INFORMATION