Business Aviation Providing Tools Not Toys

Business Aviation Providing Tools Not Toys

Tool or Toy?

Tool or Toy? Indefensible Indispensable Personal Toy Business Tool

Tool or Toy? Privileged Pragmatic Social Buyer Sophisticated Buyer

Tool or Toy? Entertainer Entrepreneur In the Tabloid Owns the Tabloid

Tool or Toy? Cutting Cost Creating Time

Delivery Options Commitment, Investment and Access

Aircraft Options Light Micro / Very Light / Light / Super-Light Jets 2 to 9 Passengers 1,000 to 2,250 Nautical Mile Range $1M to $12.5M Acquisition Cost Aircraft

Aircraft Options Mid-size Mid-Size / Super Mid-Size Jet 8 to 12 Passengers 2,450 to 3,400 Nautical Mile Range $13.7M to $25M Acquisition Cost Aircraft

Aircraft Options Large Large / Super Large Jet 9 to 16 Passengers 3,800 to 5,200 Nautical Mile Range $27.5M to $48M Acquisition Cost Aircraft

Aircraft Options Ultra-Long Range, Airliners and Beyond Ultra-Long Range and Converted Airliners 13 to 30 Passengers 2,500 to 6,350 Nautical Mile Range $30M to $70M Acquisition Cost Aircraft In development ~ Supersonic Business Jet

Evaluating Your Needs Utilization Rate Safety & Security Mission Flexibility Consistency & Control Schedule Flexibility Cost / Value Complexity & Commitment

Which Option? Hours Flown Per Year FULL OWNERSHIP FRACTIONAL OWNERSHIP FRACTIONAL CARD CHARTER CARD ON-DEMAND CHARTER 0 25 50 100 200 400 800

Just How Big Is Business Aviation? American Airlines Fleet 693 Aircraft US Fractional F l e e t 921 Aircraft

Ashley Furniture Industries, Inc. Vision Statement We want to the Best Furniture Company Improve Quality Reduce Cost Do More Business Make a Profit Stay in Business Mission Statement

Ashley Furniture Industries, Inc. Founded in 1945 In 1970, the contemporary Ashley was formed In 1976, Arcadia Furniture and Ashley Furniture merged to become Ashley Furniture Industries, Inc.

Ashley Furniture Industries, Inc. Corporate Offices Arcadia WI 2,149,983 sq. ft. Ecru, MS 1,799,504 sq. ft. Ripley, MS 614,562 sq. ft.

Ashley Furniture Industries, Inc. Colton, CA 853,341 sq. ft. Redlands, CA 683,269 sq. ft. Leesport, PA 1,248,572 sq. ft. Shangahi, China 1,144,755 sq. ft.

Ashley Furniture Industries, Inc. North America s Largest Selling Furniture Brand Colton, CA 365 HomeStores 6,000 Ashley Accounts

Ashley Furniture Industries, Inc. Started chartering business aircraft in 1989 Purchased first aircraft in 2001 Currently own 3 business aircraft 2007 Utilization (all 3 aircraft combined) Average 900 flight hours per year Averaged 6 passengers per trip Primary manufacturing designations

Ashley Furniture Industries, Inc. Reasons why Ashley Furniture Industries operate business aircraft Executive productivity Enable multi-city schedule Able to work en-route Access to rural areas closest to our customers Over 2,000 US airports available to our aircraft Delays at commercial airports Cost

The Taskmaster How to Execute The Mission Define the Mission Who, when, and where Analysis Financial Operations Implementation Team and structure Evaluate Measure value Keep options open

Define the Mission at ARCO Who, When and Where Executive Officers, International Operations & Pipeline Patrol Scheduled service and on-demand

Define the Mission at Lehman Who, When and Where Executive Officers, Project Teams and Roadshows On-demand and spur of the moment Where ~ Global Office Support And everywhere in between

Roadshow Scenario 6 Cities 3 Days Short notice Strict schedule Conferences enroute New York Boston Cleveland Minneapolis Omaha San Francisco Dallas New York Commercial options?

Variations on a Theme All About the Mission Corporate Shuttle Scheduled service Company schedule not the airline s Airports of operation Access to more airports Productivity enroute Sports Teams Business tool Flexible schedule Privacy and security

Analysis Financial, Operations and Options Financial Acquisition Operations Operations In-house or management Visibility Commitment Flexibility On-Demand Charter Fractional Ownership Block Fractional / Fractional Card Block Charter/ Charter Card Options ~ One option does not fit all missions ARCO owned and operated 41 aircraft in 1980s Lehman owns aircraft, fractional shares and charters Full Aircraft Ownership

Implementation Structure and Team Flight Department - Corporate relationship Reporting Teambuilding In-house Outside Fractional and Charter providers Policies and Procedures Corporate Policies Department Procedures

Evaluate Measure Value How do you measure a flight department s value? How much would a company save by moving their top executives more efficiently? How much is a top executive s time worth? Periodically review requirements ARCO decided to outsource Lehman continues to explore options

2007 Business Jet Outlook Aircraft Deliveries 14,000 New Jets from 2007-2017 Source: Honeywell 2007 Report

Business Jet Deliveries Fractional Units Fractional ownership accounts for 10-15% of traditional market deliveries. 18% 18% 14% 16% 16% 16% 15% 13% 16% 15% Fractional Deliveries, Units and as % of Total Deliveries (Excludes Very Light Jets) Calendar year. Source: Airclaims database

5 Year Sales Forecast Business Jets growth of emerging markets Forecast 22% (07 Deliveries 25%) Forecast 15% (07 Deliveries 4%) Forecast 50% (07 Deliveries 58%) Forecast 4% (07 Deliveries 5%) Forecast 10% (07 Deliveries 8%) Source: GAMA report Source: GAMA

Growth in Deliveries by Regions %, Total units, 2005-2006 vs. 2003-2004, Excluding Fractional Deliveries Russia & Eastern Europe Southern Europe Asia (excl. China & India) Northern Europe Western Europe Latin America (excl. Brazil) Growth %: 2005-2006 vs. 2003-2004 China India Brazil Middle-East Oceania 64% 55% 40% 67% 140% 140% 119% 110% 240% 367% 340% Total Units: 2005-2006 108 133 14 22 17 24 35 21 65 65 14 North America 23% 982 Africa 5% Source: Deliveries by region from Airclaims database. 20

Industry Backlog Estimated 3+ Years As of June 07 Total Industry Backlog 2,480 Units $52 Billion 2007-2009 Planned Production 935 Units 2007 1,018 Units 2008 1,110 Units 2009 Sources: Orders/unit prices estimated from competitive intelligence, OEM guidance.

Business Growth Economic Influence - Jobs In the next 10-years Aerospace Manufacturing Employment will increase 30% Wichita, KS needs 20,000 workers Industry growth has created a shortage of engineers and pilots Business Aviation contributes more than $150 billion to the US economy annually Employs more than 1.2 million people Sources: Orders/unit prices estimated from competitive intelligence, OEM guidance.

Access General aviation provides services at more than 4,000 public-use airports Commercial airlines serve at most 420 airports 73% of commercial airline activity is concentrated at 35 of the busiest airports General aviation aircraft fly 27 million hours annually, carrying 166 million passengers 12,000 business aircraft in service in 2006 4 million hours total flight time 3.8 million hours for business use

CO 2 Emissions General Aviation Accounts for Less than 2/10 th of 1% of Global CO 2 Emissions Source: GAMA

What Is Business Aviation Doing? 2008 Aviation & Environment Summit April 22-23, 2008 in Geneva, Switzerland International Environmental Policy by ICAO Carbon Credit Programs Fuel Initiatives

Business Aviation Providing Tools Not Toys Panel Q&A

Fuel Tax or User Fees? The Issues Does the FAA need more money? Is the current tax system "broken"? Who should pay how much towards FAA costs? Who controls the airspace system - Congress or the airlines? Source: AOPA

Fuel Tax or User Fees? The Players The FAA and Department of Transportation... want user fees to "match revenue to costs," to eliminate congressional controls on what they spend, and to charge pilots directly for FAA services. The big airlines... want to shift some of the costs to support the FAA onto GA, and they want to control the air traffic control system and access to "their" airspace. The White House... wants to take FAA funding "off budget" by charging user fees to free tax revenue for non-aviation uses. General Aviation... wants to preserve a robust aviation system that is the envy of the world and that serves all citizens, not just the wealthy. Source: AOPA

Business Aviation ~ Giving Back