Embraer Announces Its Long-Term Aviation Market Outlook

Sees demand for more than 11,000 bizjets through 2018


SAO JOSE DOS CAMPOS, Brazil , Nov. 10 /PRNewswire-FirstCall/ -- Embraer (NYSE: ERJ; BOVESPA: EMBR3) presented its 20-year forecast, today, of the world demand for 30- to 120-seat commercial jets, and its ten-year forecast for the business aviation market. The announcement was made at the close of the ninth edition of the annual Embraer Day encounter with analysts and investors, organized by the Company and held, this year, on November 6 and 7, in Sao Jose dos Campos, Brazil .

Long-Term Market Outlook

Commercial Aviation Market

World air travel demand should grow on an average of 5% per year, from 2009 to 2028. Embraer estimates that the air transportation industry will react positively, after the end of the current economic crisis, and that the long-term growth trend will be maintained. China will lead the growth in the next 20 years, with an average annual rate of more than 7.5%, followed by the emerging regions of Latin America and Russia & Commonwealth of Independent States (CIS), both at 6% per year. Asia Pacific and Africa will grow about 5%, and the European and North American markets, 4%.

Embraer foresees a global demand of 6,750 jets with a 30- to 120-seat capacity over the next 20 years, which will generate sales of new aircraft totaling US$ 220 billion. Of this total, 2,950 jets should be delivered between 2009 and 2018, and the remaining 3,800 units between 2019 and 2028, as detailed, below.

The forecast indicates that the 30- to 60-seat capacity segment will be under pressure, over the next five years, due to the economic crisis and fuel prices, forcing airlines to review their strategies, mainly in the North American environment. The 50-seat regional jet market has achieved maturity, but tends to continue supporting the U.S. and European systems and to contribute to the development of regional aviation in Russia & CIS, Mexico , Africa and South America .

The jets with 61 to 120 seats should continue to help airlines match aircraft capacity to market demand, by right-sizing low load factor narrow-body airplanes that have too many seats. Furthermore, the jets in this segment also tend to be used to substitute older fleets, to expand into new markets, and to aid the natural growth of regional airlines on high demand routes operated by smaller jets, for the purpose of increasing revenues and market share.

Embraer believes that emissions will be one of the main influences on the development of future aircraft. Today, more than 700 units of the 30- to 120-seat fleet are over 20 years old and should soon be replaced, which will result in significant environmental benefits. In this scenario, Embraer's family of E-Jets provides a reduction of as much as 50% in carbon dioxide emissions.

Embraer forecasts a global demand of 11,880 business jets for 2009-2018, which could generate approximately US$ 204 billion in new aircraft deliveries. The new air taxi and branded charter market may add yet another 1,800 to 2,800 jets to the personal and entry level segments for the same period.

Since 2006, the industry has posted consecutive delivery records, largely supported by the growing demand from non-U.S. markets, but deliveries are expected to slow down, in 2009, with a market adjustment in the 2009-2012 period. Despite the reduction in short-term deliveries, long-term sustainable growth is foreseen for the business jet market, due to the return of economic growth, albeit at more conservative levels.

Launched in 2005, the Phenom 100 and Phenom 300 jets are positioned in the entry level and light segments, respectively. The Phenom 100's maiden flight occurred on July 26, 2007 , and the model has already accumulated over 1,300 hours of test flights for certification, which is expected by the end of the 2008. Ten Phenom 100s are expected to be delivered to North American customers this year. The first flight of the Phenom 300 occurred on April 29, 2008 . The flight test campaign for certification moves steadily ahead, and is expected to be concluded in the second half of 2009.

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