An Engine Manufacturer View Air Finance Journal Financing & Investing in Engines Hamburg Roadshow

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An Engine Manufacturer View Air Finance Journal Financing & Investing in Engines Hamburg Roadshow The information in this document is CFM Proprietary Information and is

It is the property of CFM International and its parent companies, General Electric Company and Snecma, and shall not be used, disclosed to others or reproduced without

1 An Engine Manufacturer View Air Finance Journal Financing & Investing in Engines Hamburg Roadshow The information in this document is CFM Proprietary Information and is disclosed in confidence. It is the property of CFM International and its parent companies, General Electric Company and Snecma, and shall not be used, disclosed to others or reproduced without the express written consent of CFM. If consent is given for reproduction in whole or in part, this notice shall appear in any such reproduction in whole or in part. The information contained in this document may also be controlled by the U.S. and French export control laws. Unauthorized export or re export is prohibited

2 CFM the world s largest engine manufacturer The OEM for CFM56 engines 30+ years design & support experience on CFM56 engines ~9000 people designing, certifying, manufacturing, and supporting CFM56 engines 6 engine models powering 30 commercial and military applications (6650+ total aircraft in 2006) Primary power for A320 and B737 single aisle families CFM is fully committed to its customers

CFM recognizes evolving industry conditions Airline economic conditions cost, competition CFM56 3 fleet maturation Short term ownership horizon Engine life cycle Service options exist at differing

3 CFM recognizes evolving industry conditions Airline economic conditions cost, competition CFM56 3 fleet maturation Short term ownership horizon Engine life cycle Service options exist at differing levels of value and risk CFM service products deliver financial productivity with proven history of safe and reliable operation Non Type Certificate Holder (TCH) parts are moving from low tech to high tech, safety critical parts Safety, asset value, and productivity is CFM s customer commitment

4 CFM powers ~ 60% of the single aisle fleet Broad experience and demand for CFM56 engines CFM56 Installed base growing 8.3% Compound Annual Growth Rate Single aisle aircraft in service Portion of world wide fleet Pax 61% 52% 41% % % % CFM power AC CFM power IAE PW & RR CFM CFM 2006 forecast, with Boeing CFMO and Airbus LRF

5 Delivering asset productivity CFM56 powered fleet logged 350+ million engine flight hours 1 million hours every 10 days Departure every 3 seconds Increasing departures while reducing engine disruptions Industry best reliability CFM continually invests in and supports the fleet 160% 140% 120% 100% 80% 60% 40% 20% 0% 20% 40% CFM Departures CFM Event Rate 154% increase 32% decrease by keeping your aircraft flying CFM analysis

6 Reliability best in class In Flight Shut Downs Aborted Take Offs IFSD per 1000 EFH 77% Reduction IFSD rate or 1 per AC every 42 years ATO per 1000 Take Offs 55% Reduction ATO rate or 1 every 77K flights Departure Reliability Cycles to Shop Visit Departure Reliability (%) > 99.97% 3 D&Cs in 10K departures Time on Wing (cycles) 10+K cycles Restored (Average of CSV at Removal) 0 10 CFM analysis

7 CFM56 engine value CFM56 engine consistently recognized for highest value on similar applications Liquidity due to large installed base 8, Engine Residual Value Rank 7,4 6,9 6,5 5,6 4,3 CFM56 reliability and cost of ownership Valuations based on engines with CFM56 OEM technology and material Uniquely maintains configuration management integrity No issues with asset liquidity and transferability CFM56 7B CFM56 5B CFM56 3 V2500 A5 CFM56 5A V2500 A1 Source: Airfinance Journal, September, 2006, Number Engine Current Market Value, $M $5.7 $5.7 $5.5 CFM56 7B27 CFM56 5B3/P V2533 A5 Source: Avitas BlueBook of Jet Engine Values highest in single aisle aircraft market

8 Aircraft Residual Value Assured with CFM56 OEM Material Percent of Aircraft Value Aircraft/Engine value relationship Airframe Engine Aircraft/Engine Age value Base data source: Engine Yearbook 2007, published by the Aviation Industry Group Reduced asset value based on CFM estimate ~ scrap value for the Aircraft On older Aircraft, engines maintained with OEM parts & repairs hold the

9 Aircraft Residual Value Assured with CFM56 OEM Material Engine Projected Value Engine valuation life cycle Acquisition Maintenance Disposition Non OEM? OEM on a mid life CFM56 3 engine Estimated by IBA at 20% to 26% Estimated by ASCEND at 11,3% to 15,1% IBA & Ascend are independent aviation consultancy appraisors

10 Maintenance cost Shop Visit cost Maintenance Cost ($/EFH) $175 14% Airline Focus one Cost Per Shop Visit High Use of PMA & DER $150 Airlines Focus on Time On Wing, Use OEM Parts & OEM Repairs 24% Based on a CFM engineering study 150 million EFH engines 4 of largest CFM56 3 operators $133 Airline Focus on Time On Wing, Has the TOW kit, Use OEM Parts & OEM Repairs TOW kits insure even higher Time On Wing, decreasing the maintenance cost OEM maintenance decrease maintenance cost by insuring longer Time On Wing The highest user of PMA/DER has the cheapest SV it also has the worst SV rate and the most expensive Maintenance Cost

11 System effects All CFM parts are developed, designed, tested, and substantiated as part of an integrated system ~3,000 individual parts 40 sub systems & subassemblies 8 main engine modules not one piece at a time

12 PMA Impact on LLP Life Management PMA blades Source #1 PMA blades Source #2 TCH blades STCH Spool Source #3 TCH Disk STCH Spool Source #4 TCH Seal Who knows how this engine work?

CFM56 customers have service choices Service options exist at differing levels of value and risk The CFM solution delivers Proven history of safe and reliable operation Financial

13 CFM56 customers have service choices Service options exist at differing levels of value and risk The CFM solution delivers Proven history of safe and reliable operation Financial productivity asset value and operating cost World class engineering & technology Assured ICA and configuration management applicability Total commitment to customer & product support

14 Experience Asset Value Reliability When you maintain your engines using the CFM solution, you maintain the value of your CFM56 engine investment Maintenance Engineering Technology Support

15 The information in this document is CFM Proprietary Information and is disclosed in confidence. It is the property of CFM International and its parent companies, General Electric Company and Snecma, and shall not be used, disclosed to others or reproduced without the express written consent of CFM. If consent is given for reproduction in whole or in part, this notice shall appear in any such reproduction in whole or in part. The information contained in this document may also be controlled by the U.S. and French export control laws. Unauthorized export or re export is prohibited This document is a Bullet Point presentation. It may be misinterpreted without the proper comments from an appropriate CFM representative.

Engines - Managing The Asset and Residual Values

Engines - Managing The Asset and Residual Values David Tokoph Vice President Valuations and Technical Analysis October 20,2011 washington frankfurt tokyo 1 Introduction About MBA Where the Value in Engines