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Our Business and Our Strategy Gulfstream sets the World Standard in Business Aviation 50 years of satisfying the world s most demanding travelers with... Performance & Operational Flexibility Comfort & In-Flight Productivity Safety & Security Reliability & Exceptional Quality Unmatched Product Support 2
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The Strength of General Dynamics Operating Group within General Dynamics 4 operating groups with over 91,000 employees Well Managed & Financially Strong GD revenues up 9.2% at $32 Billion GD operating earnings up 0.6% at $3.7 Billion Global Presence Leading Edge Technology 4
GENERAL DYNAMICS AEROSPACE GROUP Gulfstream Aerospace Corporation (1999) General Dynamics Aviation Services (2001) Jet Aviation (2008)
Gulfstream Expanded Product Line 2,950 nm (5,463 km) at M0.75 3,400 nm (6,297 km) at M0.75 3,400 nm (6,297 km) at M0.80 G350: 3,800 nm (7,038 km) at M0.80 G450: 4,350 nm (8,056 km) at M0.80 G500: 5,800 nm (10,742 km) at M0.80 G550: 6,750 nm (12,501 km) at M0.80 7,000 nm (12,964 km) at M0.85 G150, G200 range with 4 passengers / G350 G650 range with 8 passengers G150 shown with optional Enhanced Vision System (EVS) 6
Gulfstream Manufacturing Facilities Nearly 4.8 million total square footage with approximately 10,000 employees Long Beach, California Completions Paint/Stripping Facility 335,000 ft 2 (31,123 m 2 ) Appleton, Wisconsin Completions Paint/Stripping Facility 275,200 ft 2 (25,567 m 2 ) Savannah, Georgia Corporate Headquarters Major Assembly, Engineering, and Completions Paint/Stripping Facility 3,181,074 ft 2 (295,531 m 2 ) Mexicali, Mexico Sub-Assembly Support and Spares 335,000 ft 2 (31,123 m 2 ) Dallas, Texas Completions Paint/Stripping Facility 403,561 ft 2 (37,492 m 2 ) Brunswick, Georgia Completions 110,070 ft 2 (10,226 m 2 ) 7
Worldwide Service Network Gulfstream Service Centers Authorized Warranty Repair Centers Authorized Warranty Line Service Centers Component Repair Center Las Vegas Lincoln Long Beach Appleton Dallas Westfield Savannah Brunswick West Palm Beach Caracas, Venezuela Aerocentro de Services London, England Madrid, Spain CORJET Hanover, Germany Jet Aviation Moscow, Russia Jet Aviation Geneva & Basel, Switzerland Jet Aviation Tel Aviv, Israel Bedek Aviation Group Altenrhein, Switzerland Altenrhein Aviation Dubai, UAE Jet Aviation Dubai, UAE ExecuJet Mumbai, India Air Works India Singapore Jet Aviation Sendai, Japan JAMCO Corporation Hong Kong Metrojet Access to service centers around the world increases customer satisfaction Johannesburg, South Africa ExecuJet & Anglo American Corp. Sydney, Australia ExecuJet Australia Melbourne, Australia ExecuJet Australia 8
Gulfstream Technology EVS (Enhanced Vision System) Synthetic Vision PFD Fly by wire Composite technologies Cabin Environment Completions Manufacturing Supersonic Synthetic Vision 9 9
The New Super Midsize Gulfstream G250 The G250 establishes leadership in the super midsize market segment with the largest cabin, the best performance and the most advanced systems Best performance in class 3,400 nm (6,300 km) at Mach 0.80 / short takeoff distances - 4,960 ft (1,511 m) Largest, most comfortable cabin in class Longer and more spacious cabin with in-flight access to baggage Best overall cabin environment Most advanced cockpit and systems PlaneView250 TM flight deck with optional EVS II, HUD II and SV-PFD Standard auto-throttles and auto-braking 10
Gulfstream G250 Program Major Milestones 11
New Gulfstream Flagship - The Gulfstream G650 Longest range and fastest speeds 7,000 NM (12,964 km) at Mach 0.85 / 5,000 NM (9,260 km) at Mach 0.90 Largest, most comfortable cabin in class Widest purpose built business jet New, larger cabin widows & lowest cabin altitude Most advanced cockpit and systems PlaneView II, EVS II, SV-PFD Fly-by-wire flight control system / New Rolls Royce BR 725 engines 12
Gulfstream G650 Program Major Milestones 13
People Build Business Aircraft 14
General Aviation s Economic Contribution General Aviation s Total Economic Contribution in 2008 Total economic contribution > $150 billion Employment Direct > 1.2 million Indirect > 7 million Sales U.S. > US$13 billion Int l > US$5.8 billion * 15
General Aviation Economic Development Business aviation attracts businesses to small and medium-sized communities Businesses consider access to general aviation airports when relocating or expanding More than 5,000 general aviation airports vs. ~500 commercial airports Source: FAA 2008 Study: Economic Impact of Civil Aviation on the U.S. Economy 16
General Aviation Economic Contribution Per Capita $499 $509 $259 $322 $430 $405 $507 $529 $465 $393 $378 $529 $621 $478 $378 $595 $374 $643 $508 $424 $481 $489 $409 $478 $492 $539 333 $2,561 $437 $455 $426 $503 $431 $348 $376 $398 $296 $370 $1,040 $722 $381 $641 $726 $518 Economic Contribution: Top 2 States 1. Kansas - $2,561 2. Georgia - $1,040 >$540 $523 $454 $500 - $540 $462 $440 - $500 $390 - $440 $250 - $390 Major Contributor to State Economies Source: GAMA 17 17
Strong Export Industry Stronger exports are one sound foundation for sustainable expansion Larry Summers Civilian Aircraft, engines, and parts contributed $86 billion to the balance of trade In 2008, general aviation industry generated: $5.9B in new airplane exports +28% over 2007 1,161 airplanes +2% over 2007 The Nation s Largest Manufacturing Export Earner Source: US Dept. Of Commerce; GAMA 18 18
State of the Business Jet Market Market stabilization continues flight hours up and preowned inventory slowly selling off Evolution of the customer mix is changing. No longer U.S. and Fortune 500 dominated International markets are driving the recovery but the U.S. will continue to be a formidable market VLJs didn t over-take the skies as expected 19
Industry Issues Worldwide economy Political climate Supply chain FAA funding User fees Certification services ATC modernization/airspace Foreign repair stations Jet fuel costs TSA and LASP 20
Airport Issues Infrastructure Large city business aviation airports FBO s, ramp and hangar space Weight limitations 100,000 lb. limit at many airports Lower limit at selected airports Noise limitations Community relations Biggest issue at busiest business aviation airports 21
NextGen U.S. leadership position is being challenged China and India will look to the U.S. and Europe for guidance as they develop their ATC system Aviation community supports transition to a satellite-based system Aviation already pays for upgrade through taxes at the pump. Fuel taxes should remain mechanism for GA to help fund modernization 22
NextGen Benefits Safety Job creation and retention Emissions reductions Less noise Shorter flight times Reduced delays Rapid transportation of people and products 23
Total Business Jet Operations Y/Y Improving Trend of Business Jet Operations Source: FAA ETMSC 24
Historical Business Jet Deliveries 1200 Units Value $B 25 Total Deliveries 1000 800 Market Value $B Recessionary Periods 20 15 854 ($16.2B) 2009 600 400 10 200 5 0 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 0 Peak in 2008 with 1,139 Units Delivered Valued at $20.8B Does not include Airliners and VLJs Sources: McGraw Hill, B&CA, GAMA 25
Projected Business Jet Deliveries 1400 Units Delivered 25 Value Delivered $B 1200 20 1000 800 15 600 10 400 200 Historical Average 5 Historical Average 0 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 10-Year Projection Shows Market Bottoming in 2010 Excludes Bizliners and Very Light Jets 26
Worldwide Business Jet Installed Fleet 2001 11,358 Total Worldwide U.S./Canada 8,548 75% Latin America 873 8% Europe 1,271 Mid East/ Africa 418 11% 4% Asia 248 2% Source: AvData December 2001 27
Worldwide Business Jet Installed Fleet 2010 16,961 Total Worldwide U.S./Canada 11,187 66% Latin/South America 1,700 Europe 2,697 Mid East/ Africa 770 16% 10% 4% Asia 607 4% Significant Growth Opportunity in International Markets Source: AvData January 2010 28
Key Drivers to Market Growth 100% 75% 50% 25% 65% Shift of Business to International Gulfstream Sign-Ups 2005-09 35% North America International 57% 43% 47% 53% 54% 46% 39% 61% 1200 1000 800 600 400 200 Increase in Worldwide Personal Wealth 1,011 Billionaires in 2010 0% 2005 2006 2007 2008 2009 0 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Growth of Int l Markets and Emerging Economies Real GDP Growth 2015-2040 Continued Development of New Aircraft Entry-Into-Service of New or Derivative Jets* China India Russia Brazil Europe U.S. Latin America Mid East Asia Pacific World 1.7% 2.5% 3.0% 4.1% 3.9% 3.8% 3.5% 5.0% 5.9% 6.9% 10 8 6 4 2 0 2 5 3 5 9 9 6 7 8 3 3 *excludes VLJs 12+ Aircraft In- Development 1 4 3 1 0% 2% 4% 6% 8% 10% 1999 2000 2001 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 29
1982 Competitive Market Segments Typical Equipped Price ~ $MM 30 50 45 40 35 30 25 20 15 10 5 0 MU-300 L25 CI F20 CII 27 years ago BAe 700 L55 L35 CIII F100 F200 L36 Westwind I, II F50 CL600 GIII 1,000 2,000 3,000 4,000 5,000 6,000 7,000 NBAA IFR Range ~ NM Range at LRC w/ typical executive payload Data from April 1983 B&CA and other published sources One airplane Top of the market Not a lot of competition
1987 Competitive Market Segments Typical Equipped Price ~ $MM 31 50 45 40 35 30 25 20 15 10 5 0 F100 B400 L31 CII 22 years ago BAe 800 L55 L35 CIII CS/II, CV F200 Astra L36 Westwind I, II F50 CL601-3A F900 1,000 2,000 3,000 4,000 5,000 6,000 7,000 NBAA IFR Range ~ NM GIV Range at LRC w/ typical executive payload Data from April 1988 B&CA and other published sources One airplane Top of the market Competition emerging
1992 Competitive Market Segments Typical Equipped Price ~ $MM 32 50 45 40 35 30 25 20 15 10 5 0 CVII L31A B400 CV CJ, CII 17 years ago CVI L35A CL601RJ BAe 800 L60 L36A F50 F2000 Astra SP BAe 1000 CL601-3R F900B Two airplanes Top of the market More direct competition GIV-SP Galaxy CX F900EX 1,000 2,000 3,000 4,000 5,000 6,000 7,000 NBAA IFR Range ~ NM CL604 Range at LRC w/ 4 pax (8 pax for Ultra Long Range class) Data from May 1993 B&CA and other published sources GV GX Existing Aircraft In Development
Current Competitive Market Segments 70 Typical Equipped List Price ~ $MM 60 50 40 30 20 10 0 F2000EX, LX CL850 F900EX F900DX A318 Elite Lineage 1000 G350 Global 5000 G450 F2000DX CL605 Legacy 600 CX G200 G250* Sovereign CL300 (2011EIS) H750 L60XR H4000 CXLS+ G150 L40XR H400XP H850XP, H900XP Premier L45XR CJ1 CJ3 Mustang CJ2 Encore+ A319CJ GEX XRS G500 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 BBJ F7X G550 G650* (2012EIS) It s getting very crowded! * G650 price is in 2012 dollars. All other aircraft are noted in 2007 dollars. NBAA IFR Range ~ NM Range at LRC w/ 4 pax (8 pax for Long Range and Ultra-Long-Range class) 33
Future Competitive Market Segments Typical Equipped List Price ~ $MM 70 60 50 40 30 20 10 0 Expect Future Market to Be Even More Competitive! F2000EX, LX CL850 F900EX F900DX A318 Elite Lineage 1000 G350 Global 5000 G450 F2000DX CL605 Legacy 600 CX G200 G250* Sovereign CL300 (2011EIS) H750 L60XR H4000 CXLS+ G150 L40XR H400XP H850XP, H900XP Premier L45XR CJ1 CJ3 Mustang CJ2 Encore+ A319CJ GEX XRS G500 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 BBJ F7X G550 G650* (2012EIS) Potential Bombardier Aircraft Potential Dassault Aircraft Potential Embraer Aircraft Potential Cessna Aircraft Potential Raytheon Aircraft * G650 price is in 2012 dollars. All other aircraft are noted in 2007 dollars. NBAA IFR Range ~ NM Range at LRC w/ 4 pax (8 pax for Long Range and Ultra-Long-Range class) 34
International Opportunities For Growth 6000 United States $14,253B GDP 11,538 Jets 2009 Nominal GDP, $B 5000 4000 3000 2000 1000 0 Japan China Sweden Hong Kong Italy France Russia Spain India Netherlands Australia Turkey Venezuela Switzerland Argentina Austria Portugal Mexico 0 100 200 300 400 500 600 700 Installed Fleet Source: IHS Global Insight, AvData Brazil Germany United Kingdom Canada California $1,846B GDP 961 Jets 35
Environmental Considerations - Next 10 years New Noise, Emissions and Fuel Burn/CO2 Certification Standards being developed by International Civil Aviation Organization (ICAO) New Global Fuel Efficiency Goals being considered by ICAO or other UN organizations European Emissions Trading Scheme or other similar Cap and Trade systems Impacts of Alternative Fuels Concerns with CO2 Levels Is Driving Most Environmental Discussions 36
Aviation s Part of Global CO2 Emissions Business Aviation is reported to be approximately 2% of all Aviation s CO2 emission 2% of 2% or 0.04% of the Global CO2 Emissions Business Aviation is a small contributor, but growing and very visible! 37
Aviation Commitments to Climate Change Commercial Aviation (IATA June 2009) Achieving carbon-neutral growth by 2020 General Aviation (IBAC / GAMA Nov 2009) Achieving carbon-neutral growth by 2020 Improving fuel efficiency by an average of 1.5% per year from 2009 to 2020 Reducing CO2 emissions by 50% by 2050, relative to 2005 Improving fuel efficiency by an average of 2% from today until to 2020 Reducing CO2 emissions by 50% by 2050, relative to 2005 Business Aviation has similar position statements as Commercial Aviation 38
Aviation Commitments Based on 4 Pillars Improved Technology Advanced aerodynamics More efficient power plants Lighter airframe / advanced materials Improved Infrastructure & Operations Direct routing and operations into congested airspace and airports NextGen implementation Advanced avionics Improved operational procedures & ground infrastructure Use of Alternative Fuels Goal is a lower CO2 output than Jet-A on a life-cycle basis Market Based Measures Carbon trading & carbon offset programs 39
Continuous Improvement in Emissions Nitrous Oxide (NOx) 140 120 % of the CAEP VI Limit 100 80 60 40 20 0 Spey Mk511-8 Tay Mk611-8 BR710-C4 BR725 (GII, GIII) (GIV) (G550) (G650) The BR725 engine has lower NOx emission levels and will meet the latest ICAO CAEP VI requirements 40
Gulfstream Large Cabin CO 2 Improvements Mach 0.80 Mach 0.85 G650-10% G550-20% G450-6% GIII Mach 0.83 Cannot Fly 3,000 nm at M0.85 0 5 10 15 20 25 30 35 CO 2 Emissions ~ Metric Tonnes 3,000 nm Mission, Typical BOW, 8 Passengers (1800 lb), ISA Day, Zero Wind, NBAA IFR Fuel Reserves, Existing Airplanes Based on Operating / Cruise Manual Data G650 Performance data is preliminary and subject to change 41
Summary Business Aviation is susceptible to unpredictable exogenous events, i.e. 9/11, credit market collapse, image issue, but long-term trend is upward U.S market will recover and grow, but significant growth opportunity in developing international markets Continued focus on political environment important Number of GA hours flown is projected to increase an average of 2.5% a year through 2030 Downturn has negatively impacted R&D spend on future programs for many OEMs Market projections conservative in near-term 10-year projection is a V shape 42
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