Regional Aircraft The Way Forward The most successful Regional Aircraft programs in history. Presented by Mike Lewis September 26, 2006
Regional Passenger Traffic Strong Growth Continues 500 450 400 350 300 250 200 150 100 Worldwide Regional Traffic Growth Since 1978 = 11% per annum 50 Deregulation 11% per annum 0 2 Passengers (Millions) 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 est. Source: RAA and ERA
Regional Jets Changed The Landscape 1995 2005 * Source: OAG 3
Continued Growth for U.S. Regionals Passengers Operations 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Passengers Enplaned (millions) 57.2 61.9 66.3 71.1 78.1 84.6 82.8 98.4 +19% 113.2 +15% 134.5 +19% 153.0 +13% RPM s (billions) 12.75 14.22 15.30 17.42 20.81 25.27 25.74 32.77 +27% 43.35 +32% 56.18 +30% 69.06 +23% ASM s (billions) 25.54 26.85 27.79 30.38 35.76 42.55 44.16 52.59 +19% 64.69 +23% 82.58 +28% 95.88 +16% Av Passenger Trip Length (Miles) 223 230 231 245 267 299 311 333 +7% 350 +5% 418 +19% 432 +4% Av Seating Capacity 24.6 25.1 25.9 27.7 29.8 31.7 33.5 35.1 +5% 36.5 +4% 37.7 +3% 40.2 +7% 4 Source: Velocity Group for RAA
50-seat Regional Jets are an integral part of airlines networks Worldwide Scheduled Non-stop Markets by Average Seats Offered 3,500 3,000 No sign of significant fleet withdrawal No. of Markets 2,500 2,000 Short term surplus aircraft are expected to go back into the system 2000 1,500 2005 Source: OAG 1,000 500 20 30 50 70 90 0 110 130 150 170 190 210 230 250 270 290 310 330 350 Average Seats per Departure 5 370 390 410 430 450+
Regional Airlines Link Small Communities to the World 1400 Airport Count by Type of Aircraft Service 1,307 1200 1,097 Airports Served 1000 800 600 42% Served exclusively by regional aircraft 970 55% Served exclusively by regional aircraft 63% Served exclusively by regional aircraft Regional only Mainline only Both 400 200 0 Eurpoe, Europe, Africa & Middle East Asia/Pacific Americas 6 Source: OAG
Regional Airlines and Low Cost Carriers Are Part of the Same Market Dynamic Historical Distribution of U.S. Domestic Passenger Enplanements 3% 5% 10% 7% 7% 9% 14% 16% 18% 20% 21% 22% 11% 13% 16% 19% 20% 21% 91% 83% 84% 76% 71% 66% 61% 59% 57% 1980 1985 1990 1995 2000 2002 2003 2004 2005 Network Regionals Low Cost Source: Velocity Group for RAA 7
Airline Challenges are Intensifying Increasing cost of jet fuel 163 8.3 Decreasing passenger yield 4.0 55 Source: ATA, cents per US gallon US carrier average yield in 1978 cents 1995 1997 1999 2001 2003 2005 1978 1983 1988 1993 1998 2003 Diverging CASM gap 12.1 9.3 Network carrier 8.6 Low cost carrier 8.2 US DOT Form 41 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 8
As Major Carriers Drop Their Small Narrowbodies They Outsource the Routes to Regional Partners Aircraft Unit Cost Comparison (500 nm Sector) Cost per seat-mile (US ) 16 14 12 10 8 Regional Carriers 50 Seaters 70 Seaters 90 Seaters Outsourced Routes 2005 US Domestic Yield Curve Network Carriers 110 Seaters 130 Seaters Low Fare Carriers 150 Seaters 180 Seaters 6 $0 $5 $10 $15 $20 $25 Cost per mile (US$) Assumptions: US operating environment and fuel price @ $1.80 per US gallon 9
The Capacity Growth and Outsourcing Trends Are Evident in Reported Figures Mainline Aircraft Market Share and Average Seat Capacity Regional Aircraft Market Share and Average Seat Capacity 174.1 174.8 37.5 38.0 172.0 173.0 173.2 35.9 36.4 36.8 170.9 35.3 83.8% 83.2% 81.9% 80.4% 80.0% 77.6% 2000 2001 2002 2003 2004 2005 16.2% 16.8% 18.1% 19.6% 20.0% 22.4% 2000 2001 2002 2003 2004 2005 Average seats per departure Total seats offered 10 Source: OAG, US & Europe data ONLY
Industry Instability Will Continue Until Segmentation Share Equilibrium Is Reached Networks will match their operating costs to the premium the passenger is willing to pay: Where Will It End Up? Restructure - labor - productivity - schedule - distribution - simplification Route Transfer to Regional Partners - scope - cost Network Carriers Low Cost Carriers 22% Regional Airlines 21% Network Carriers 57% Today Low Cost Carriers 33% Regional Airlines 33% Network Carriers 33% Equilibrium Operating Costs Are The Key 11
Market Pressures Are Favoring Larger Regional Aircraft Driving Factors Lower Yields Higher Fuel Prices Relaxed Pilot Scope Clauses Route Transfers from Mainline 12
Only Bombardier Offers Comprehensive Common Families of Turboprops and Regional Jets Q200 37-39 seats CRJ200 40-50 seats Q300 50-56 seats CRJ700 66-78 seats Q400 68-78 seats CRJ900 75-90 seats Q200, Q300, Q400, CRJ200, CRJ700 and CRJ900 are trademarks of Bombardier Inc. or its subsidiaries. 13
Bombardier Has Lead the Market Over Five years Gross Orders in the 20-99 Seat Regional Market 28% 49% 42% 40% 50% 58% 72% 51% 58% 60% 50% 42% 2001 2002 2003 2004 2005 2006 Ytd Bombardier Others Note: Data includes order conversions between programs. Does not include corporate shuttle aircraft. At September 27, 2006 14
Regional Jet Market & Programs 15
The World s 5 th Most Successful Commercial Jet Program Total Units Delivered B737 5133 A318/319/320/321 2828 DC9/MD80 2287 B727 1832 CRJ 1376 Aircraft Family B747 B757 B707 B767 ERJ 1049 1010 942 858 1375 A300/310 808 A330/340 747 B777 576 F28/70/100 570 DC8 556 Sources: Company reports at July31, 2006 ERJ includes EMB 135/140/145 16
Diverse Customer Base for the CRJ Series 45 Customers Worldwide 17
Bombardier CRJ Series Sales Status As of July 31, 2006 Firm Aircraft Delivered Aircraft Backlog 1,048 1,047 1 CRJ700* 284 255 29 CRJ705 15 15 0 CRJ900 102 59 43 1,449 1,376 73 CRJ100/200/440* Total * Includes Corporate variants of the CRJ (Orders and deliveries include 26 CRJ200 and seven CRJ700.) 18
CRJ100/200/440 Fleet At a Glance Fleet Aircraft in Service * 948 Parked Aircraft * 94 Operators in Service 28 Regional operators 12 Business operators Reliability - as of June 2006 (excludes business operators) Dispatch Reliability 99.0% Scheduled Completion 99.6% Utilization - as of June 2006 (excludes business operators) Cumulative Hours 13,426,555 Cumulative Cycles 11,582,651 High Time Aircraft - (in service) Hours 32,019 SN 7030 (SkyWest) Cycles 29,458 SN 7011 (Comair) 19 * Commercial Aviation Value Report August 2006
CRJ700/900 Fleet At a Glance Fleet Aircraft in Service * 328 Parked Aircraft * 2 Operators in Service 20 Reliability - June 2006 (excludes business operators) Dispatch Reliability 99.0% Scheduled Completion 99.6% Utilization Cumulative Hours 1,860,215 Cumulative Cycles 1,386,935 20 * Commercial Aviation Value Report August 2006
Large RJs Compete Effectively With Narrowbodies on a Cost Per Seat Basis 500 nm Sector Operating Cost per Seat-Mile Comparison Regional Carriers Major Carriers 15.0 13.6 13.7 TOC 9.1 11.3 8.1 9.7 7.1 8.9 6.6 8.2 7.8 12.1 7.2 10.5 6.5 TOC DOC DOC CRJ200 CRJ700 CRJ900 CRJ900X 100-Seat Jet 130-Seat Jet 150-Seat Jet 180-Seat Jet 21 Assumptions: US operating environment and fuel price @ $1.80 per US gallon
Larger Regional Jets Are A New Weapon In The Arsenal 500 NM Sector Base CRJ200 50 seats CRJ200 Cost per Seat (CASM) -11 % CRJ700 70 Seats CRJ700-21% CRJ900 86 Seats CRJ900 Trip Costs 22
The CRJ900 Continues to Gain Momentum Over 100 firm orders in the past 30 months 23
Turboprop Market & Programs 24
Bombardier Q Series Dash 8 Sales Status As of July 31, 2006 Firm Aircraft Delivered Aircraft Backlog Q100 299 299 0 Q200 100 96 4 Q300 247 229 18 Q400 185 125 60 Total 831 749 82 25
Q100/200/300 Fleet At a Glance Fleet Aircraft in Service * 604 Parked Aircraft * 20 Operators in Service 85 Reliability - as of June 2006 (excludes business operators) Dispatch Reliability 98.8% Scheduled Completion 99.4% Utilization - as of June 2006 Cumulative Hours 15,698,390 Cumulative Cycles 19,086,029 High Time Aircraft - (in service as of Sept 2005)) Hours 55,794 SN 9 (Piedmont) Cycles 68,413 SN 23 (Island Air) 26 * Commercial Aviation Value Report August 2006
Q400 Fleet At a Glance Fleet Aircraft in Service* 125 Parked Aircraft * 0 Operators in Service 16 Reliability - as of July 2006 (excludes business operators) Dispatch Reliability 98.7% Scheduled Completion 99.6% Utilization - as of July 2006 (excludes business operators) Cumulative Hours 819,102 Cumulative Cycles 914,585 27 * Commercial Aviation Value Report August 2006
Larger Turboprops Are The Next Breakthrough 200 NM Sector Base Q200 37 seats Q200 Cost per Seat -24 % Q300 50 Seats Q300-42 % Q400 78 Seats Q400 Trip Costs 28
The Q400 Continues to Gain Ground Around The World Luxair South African Express Over 90 firm orders in the past 30 months including our latest Customers Porter Airlines Tassili Airlines Frontier Airlines 29
Their Has Been a Resurgence in Turboprop Orders Gross Orders in the 20-99 Seat Regional Market 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 15% 36% 52% 85% 64% 48% 2004 2005 2006 Ytd Regional Jets Turboprops 30
Market Pressures Are Favoring Larger Regional Aircraft Driving Factors Lower Yields Higher Fuel Prices Relaxed Pilot Scope Clauses Route Transfers from Mainline 31
Bombardier Is Well Positioned for the Future Q200 37-39 seats CRJ200 40-50 seats Q300 50-56 seats CRJ700 66-78 seats UNDER STUDY Q400 68-78 seats Q400X 90 seats CRJ900 75-90 seats CRJ900X 98 seats Q200, Q300, Q400, CRJ200, CRJ700 and CRJ900 are trademarks of Bombardier Inc. or its subsidiaries. 32
Regional Aircraft Strategy Going Forward Capitalize on surging turboprop volume and forecasted next wave of large CRJ orders to strengthen our backlog Aggressively pursue cost reduction initiatives including lean manufacturing, supply base rationalization and low cost manufacturing strategies Continue to capitalize on our strong platforms and introduce new derivatives to meet market needs 33
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