BA-BCA 2011 Market Forecast

Bombardier Commercial Aircraft | Market Forecast 2011-2030
table of contents
02
executive summary economic trends airline industry trends the forecast conclusion geographic detail
03 07 16 23 31 34
EXECUTIVE SUMMARY
taking flight
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executive summary
04
Welcome to the Bombardier Aerospace Commercial Aircraft Market Forecast, our 20-year view of the market for 20- to 149-seat aircraft. Taking Flight
The health of the commercial airline industry is highly dependent on the state of the economy. In late 2009, the global economic recovery began and air passenger traffic continues to follow suit. As the overall economy recovers, so does the level of passenger traffic. Both the economy and the airline industry continue to gain strength positively upward (despite the dual shocks of higher oil prices and the disaster in Japan). We believe that the momentum of growth created before these events will continue. As well as the overall health of the global economy, a number of themes drive our 20- to 149-seat forecast: the impact of environmental issues in aviation, the optimization of aircraft for maximum efficiency and profitability, as well as the geographic shift in aircraft demand. Environmental: From a global perspective, modernization of aircraft is a key contributor to reducing the carbon footprint of the airline industry while meeting the increased demand for air travel. The first quarter of our forecast period will see the introduction of new engine technologies and airframe designs that will reduce fuel burn and make a significant contribution to the industrys commitment to carbon-neutral growth. High oil prices, yield pressures and environmental concerns will continue to shift aircraft demand to larger capacity and new, more fuel efficient aircraft models.
Delivery Forecast (Units)

Segments 20- to 59-seat 60- to 99-seat 100- to 149-seat 20- to 149-seat total Delivered 300 5,800 7,000 13,100
Source: Bombardier Commercial Aircraft Market Forecast 2011-2030
executive summary
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Optimization: As the aerospace industry finds its post-downturn footing, it is also developing and evolving new models that capture more efficiencies and return higher yields. Airframe and engine manufacturers will continue to innovate and deliver designs that optimize economics, performance and use new technologies that enhance the products in the capacity segments they serve. Additionally, airlines are creating or refining business models designed to reduce costs, reduce network inefficiencies and increase profitability. Geographic Shift: Emerging economic markets represent the highest growth opportunities for aviation, while stability is predicted in more mature markets. As a percentage of the total deliveries, new aircraft demand will increase for emerging markets outside of North America and Europe. The 20- to 149-seat market: Over the next 20 years, Bombardier forecasts demand for 13,100 aircraft in the 20- to 149-seat market. This segment, part of the overall industry, will generate approximately $639 billion in total sales. This represents an increase of 300 new aircraft deliveries compared to last years forecast. The 20to 99-seat category will account for 34% of these revenues ($215 billion) while the 100- to 149-seat segment will generate 66% or $424 billion of the total.
Total Fleet Units

Total Fleet Units 20,000 11,000 Units 17,400 Units
The Evolution of the 20- to 149-seat Marketplace

Combined with our forecast of fleet, deliveries and retirement of jets in the 100- to 149-seat segment, this forecast provides internal guidance for Bombardier's commercial aircraft market forecast strategic planning process and public transparency of our view of the airline marketplace. Bombardiers Commercial Aircraft Market Forecast focuses on three distinct seat segments; 20- to 59seat, 60- to 99-seat and 100- to 149-seat. Within the lower two seat categories, aircraft deliveries include families of turboprops and regional jets. The two engine types and aircraft designs cover the full spectrum of regional airline operating cost and mission needs. The 20- to 59-seat segment remains a key component of the regional airline industry. Demand for new aircraft in this segment is expected to arise in the latter half of the forecast period, with some 300 units delivered. These new deliveries are driven by two key factors, mainly the anticipated retirement of todays active 20- to 59-seat aircraft and new aircraft technology being applied to this seat segment. In the near and mid terms, this segment will exhibit evolutionary vitality in the pre-owned or secondary market. In particular, Russia, Africa and Latin America will see considerable absorption of used 50-seat regional jets.
16,000
12,000
8,000
5,200
4,000
2,200 3,600
6,800 1,400 2010 2030
100- to 149-seat 60- to 99-seat 20- to 59-seat

Source: Bombardier Commercial Aircraft Market Forecast 2011-2030, OAG Aviation Solutions
Overall, Bombardiers confidence in the evolution and growth of the airline industry remains strong. We are excited to be an integral part of an industry that is taking flight. The next 20 years hold great promise of air transportation modernization through more efficient aircraft and engine designs, step-changes in air traffic modernization, cockpit and other technologies.
9,200
executive summary
06
The 60- to 99-seat segment has established itself as the new foundation of the regional market. Regional airlines are shifting their fleets to larger aircraft, both turboprop and jet. These aircraft offer greater passenger capacity and lower operating costs per seat while meeting passenger demand for increased frequencies and schedules to primary, secondary and tertiary airports. Regional airline aircraft are increasingly configured to provide two classes of seating (business and economy) in order to provide seamless services across the airline network. We forecast 5,800 units for delivery in this segment. The 100- to 149-seat segment will exhibit the strongest growth of the three segments we study in our Forecast. The 100- to 149seat segment today is dominated by a fleet of aging aircraft. With the current average age of 19 years, we estimate that 58% of the current 100- to 149-seat aircraft will be retired from passenger service by the end of this forecast period. The global economy and the aviation marketplace are gaining strength. Driven by higher gross domestic product (GDP) growth projections, we at Bombardier Commercial Aircraft believe that this global economic momentum will continue to bring the airline industry back to growth. We are confident that there will be a demand for
new, larger, more fuel efficient aircraft, with some 13,100 new 20- to 149-seat aircraft delivered in the next 20 years.
ECONOMIC TRENDS
taking flight
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economic trends
08
Economic and Aviation Industry Growth

In late 2009, the world economy began its recovery, and the airline industry is also growing again. Year-over-year GDP growth for 2010 was 3.9%, and is forecast to be 3.5% in 2011. GDP is projected to grow at a compound annual growth rate (CAGR) of 3.4% over the next 20 years, up from 3.2% in last years forecast. The positive growth trend of the airline industry can also be measured by the demand for new aircraft. In 2010, orders were placed for 1,362 commercial aircraft, more than double the 631 placed in 2009.
World Real GDP Growth

%, 2010
World Average 3.9%
< 0% 0 to 2% 2 to 4% 4 to 6% > 6%
Source: IHS Global Insight, February 2011. Note 1: GDP = Gross Domestic Product
As the economy continues to strengthen, it is anticipated that capacity increases will mirror order increases, and some, but not all, modern aircraft currently parked will return to commercial service. The mixture of parked and retired aircraft has altered in response to increased demand for passenger travel. The total parked aircraft fleet has declined year-over-year by 8%. There are currently 2,288 commercial aircraft parked, down from the high of 2,496 in 2009, but still above the 10-year low of 1,681 in 2007.
Commercial Aircraft Orders Lag GDP Growth

3500 3000 2500 2000 1500 1000 500 0
1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
7% 6% 5% 4% 3% 2% 1% 0% -1% -2% -3%
Commercial Aircraft Orders

Source: Bombardier Analysis, OAG Aviation Solutions, IHS Global Insight
GDP Growth (IHS Global Insignt Feb 2011)
economic trends
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North America and Europe currently represent the two largest airline fleets and the largest sources of demand for new aircraft. Over the 20-year forecast period, Bombardier anticipates strong growth in air traffic and fleets across many emerging markets, although starting from a much smaller base. Demand from outside North America and Europe will increase considerably as world economies grow. In particular, India,
China, Latin America, Middle East and Africa will lead with projected real GDP growth above the world average of 3.4%. By 2030, economies outside of North America and Europe will account for 51% of global GDP, up 11 percentage points from their current position. As a countrys GDP per capita grows, so too does its residents' propensity to travel. This propensity in turn
drives demand for aircraft to satisfy the growing base of travelers, reinforcing our positive outlook for these markets. Bombardier takes a positive view of the economic growth forecast, as it exhibits an upward turn following the recent downturn.
Propensity to Travel
10
GDP Growth Rates

Compound Annual Growth Rate (2011-2030)
Hong Kong Portugal

1
Switzerland Australia Canada United States Ireland

Qatar
8% 7%
7.5%
7.2%
South Africa Brazil Israel
Germany
Denmark
6% 5% 4% 3.4% 3% 2% 1% 2.7% 2.4% 1.9%
Trips Per Capita
4.4% 4.3%
4.1%
0.1
China India
Russia
0.01
0% Latin America Middle East North America Asia/Pacific (ex. China, India) Europe World China Africa India
0.001 $0 $10,000 $20,000 $30,000 $40,000 GDP Per Capita

Source: IHS Global Insight, MIDT data, Bombardier Analysis
$50,000
$60,000
$70,000
Source: IHS Global Insight, Feb 2011, Bombardier Analysis
economic trends
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Airline Capacity
Bombardiers forecast model uses fleet seats as a major driver of the relationship between GDP and deliveries. Fleet seats are the total number of passenger seats in all in-service commercial aircraft. As a measure of airline capacity, total fleet-seats in commercial aircraft are anticipated to grow by 75% over the forecast period.
The 2008-2009 economic recession resulted in decreased passenger demand and consequent airline capacity reductions. Historically, previous capacity reduction events have had a positive effect on airline decisions to right-size aircraft and to optimize their fleet and networks. This, in turn, enabled these airlines to increase their capacity quickly increase their capacity as the economy turned upward in 2009.
Commercial Aircraft Capacity Worldwide by Seat Category

Fleet seats, 20- to 149-seat aircraft, Calendar year 2000-2030
Total airline capacity increased 2.3% yearover-year between February 2010 and February 2011. This is a significant change from the previous year-over-year 2.5% decrease in capacity. Airlines are experiencing gains in traffic, load factors and yields, and many airlines are projected to show operating profits in 2011. The annual average load factor for all US commercial airlines in 2010 was 77.9%, an increase of 2.4 percentage points from 2009. While airline traffic increased in 2010, yields remain below the decade's highest levels in 2008. Forecast capacity increases will not be evenly distributed across the globe. In 2010, North America experienced reduced capacity, while China and the Middle East experienced double digit year-over-year capacity growth. Bombardier is confident that total fleet-seats on all in-service commercial aircraft will increase by 75% over the forecast period in the 20- to 149-seat range.
1.8 1.6 1.4 Fleet Seats (millions) 1.2 1.0 0.8 0.6 0.4 0.2 0.0 2000 2005 2010 20- to 59-seats
Actual
Forecast
2015 60- to 99-seats
2020 100- to 149-seats
2025
2030
economic trends
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Oil price and volatility

Oil price is a critical determinant of jet fuel price and remains a key factor in forecasting the shape and size of the future aviation fleet. Fuel has been the single highest operating cost factor for airlines since 2006, where it surpassed labour costs. Fuel represents 25.4% of costs, or 3.27 cents per available seat mile (asm). Today, the combination of labour and fuel costs account for 50.1% of
all airline operating costs, with labour representing 24.7% of costs, or 3.18 cents per asm. Oil (Cushing spot price) averaged $19 per barrel in the 1990s and $51 in the 2000s. A new plateau has been reached, with oil averaging $76 per barrel over the last five years and hovering just above $98 per barrel in the first quarter of 2011. The last three years saw extremely volatile oil prices,
reaching a spot price of $145 per barrel in the summer of 2008 and falling to a low of $30 per barrel in the winter of the same year. According to the US Energy Information Administration, the average price of oil for the next 20 years will be $107 per barrel. This estimate is a $4 per barrel increase from its 2010 forecast. Oil prices also influence airline decisions to replace less efficient aircraft types and to optimize network operations. This influence is evident with the increase in demand for new generation, highly fuel-efficient turboprop aircraft. In addition, major airlines continue to remove older less efficient out-of-production aircraft from their fleet, replacing them with newer, more efficient jets.
Operating Cost History: Fuel & Labour
6.0
5.0
Unit Operating Cost (Cents per Available Seat Mile)
4.0
3.0
2.0
1.0
0.0
Labour
Fuel
According to the US Energy Information Administration, the average price of oil for the next 20 years will be $107 per barrel.
1Q 00
3Q 00
1Q 01
3Q 01
1Q 02
3Q 02
1Q 03
3Q 03
1Q 04
3Q 04
1Q 05
3Q 05
1Q 06
3Q 06
1Q 07
3Q 07
1Q 08
3Q 08
1Q 09
3Q 09
1Q 10
Source: Air Transport Association of America, 2011
3Q 10
economic trends
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Weekly WTI Cushing Spot Price

(Dollars per Barrel)
$130 $120 $110 $100 $90 $80 $70 $60 $50 17-Apr-2009 17-Jun-2009 17-Jul-2009 17-Aug-2009 17-Oct-2009 17-Nov-2009 17-Jan-2010 17-Feb-2010 17-Mar-2010 17-Apr-2010 17-Jun-2010 17-Jul-2010 17-Aug-2010 17-Oct-2010 17-Nov-2010 17-Jan-2011 17-Feb-2011 17-Mar-2011 17-May-2009 17-Sep-2009 17-Dec-2009 17-May-2010 17-Sep-2010 17-Dec-2010 17-Apr-2011 17-May-2011
Cushing 2009 Avg.: $61.95 Cushing 2010 Avg.: $79.48 Cushing 2011 Avg.: $98.35
Source: Energy Information Administration, 2011. Note: 1 FOB = Freight On Board.
Oil price volatility creates uncertainty throughout the marketplace; from setting fares to forecasting passenger traffic volumes, airline workload requirements and fleet replacement timing and decisions. Oil price volatility impacts on the ability of airlines to forecast direct operating costs accurately on daily, monthly and annual bases. Overall, Bombardier believes that oil prices will remain volatile in the near-term forecast period, but in combination with other factors, such as technological improvements, will accelerate the retirement of older equipment in favor of more modern, efficient aircraft.
Oil Forecast
$140 $120
Actual
Forecast Average: $107 USD per barrel
$100 $80 $60 $40 $20 $0
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
Source: Bombardier Analysis, EIA April 2011
economic trends
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Retirements
Aircraft retirement and replacement is one of many influential variables in determining future aircraft delivery and fleet composition. Historically, older aircraft are replaced as newer, more cost effective, and fuel efficient aircraft become available. In addition to fuel price and volatility, a wide array of factors impact aircraft retirement timing ranging from international and local (airport) noise and emissions fees and regulations; airline branding and competitive
environment, financial and tax considerations (maintenance costs, depreciation, incentives) to airline growth strategies, the structural age of the aircraft and available new products and replacement opportunities. Most aircraft move through a series of lifecycle stages. Historically, passenger aircraft when retired from commercial operation move into cargo operations. A recent trend with some cargo operators is to purchase large, purpose-built new cargo aircraft. Other aircraft are placed in secondary markets with
commercial operators with different utilization needs, different operating environments and business models. As 50-seat regional jets reach 20+ years of age, many will be converted into freighter aircraft. Sizeable opportunities exist for small jet freighters (between 5,000 and 20,000 lbs. of payload) to replace the more than 1,100 aircraft currently in all-cargo service worldwide. Nearly all of the aircraft in this fleet are older turboprops averaging 29 years of age.
Oil Price and Engine Type Forecast Delivery by Engine Type 20- to 99-seats
Units, %, Actual 2001 and 2010, Forecast 2011-2030 period
Commercial Aircraft Retirement Curve

100% 90% 80%
Oil @ $26 per barrel
Oil @ $79 per barrel
Oil @ an average of $107 per barrel
319 12%
218
6100
Units
70% 60% 50% 40% Standard Commercial Passenger Aircraft Retirement Curve
48%
41%
Turboprop
88% 52% 59%

Regional Jet
30% 20%
80% retired from commercial passenger service

10%
2001 Actual
2010 Actual
2030 Forecast
0% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45
Source: Bombardier Commercial Aircraft Market Forecast 2011-2030, Energy Information Administration 2011-2030 forecast
Source: Bombardier Analysis
economic trends
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Age, combined with limited range, will accelerate this transformation of the smaller all-cargo fleet. Currently, there is a trend towards regional jets moving into Russia, Latin America and Africa. Regulatory requirements also influence the aviation fleet mix and the pace of retirement. Regulations by the International Civil Aviation Organisation, Committee on Aviation and Environmental Protection (ICAO/CAEP) in the last century led to the phase-out of noisier aircraft from US and European commercial fleets. New noise and emissions standards are being set during this round of ICAO/CAEP
(2010-2013) that will further restrict both noise and emissions, and significantly impact the composition of the future global aviation fleet. The European Union is also advancing an Emissions Trading Scheme involving air transportation which could dramatically affect aircraft operating in or overflying European airspace. Often, exogenous events, such as the attacks of September 11th, 2001, disrupt the normal life cycle processes of aircraft. After 9/11, older commercial aircraft retirements were accelerated and even new model aircraft were temporarily parked. Many, but not all,
of these newer aircraft have now, 10 years later, returned to active service. The base assumption within the Bombardier forecast model is that, on average, approximately 80% of aircraft will retire from commercial passenger service within 28 years. A few aircraft will enjoy longer service. We anticipate that 60% of the current 20- to 149-seat fleet will retire by 2030, with retirements lowest in the 60- to 99-seat segment. Seventy percent of current 20- to 59-seat aircraft will be retired, driven by the industry shift to larger capacity aircraft and
In Service Aircraft 15 Years of Age or Over

2500
Fleet evolution from 2010 to 2030

20- to 149-seat aircraft
17,400
Growth
2000
1500 Units
11,000
Retirements
6,400 (49%)
13,100 Deliveries
1000
6,700 (51%)
500
0 10- to 19-Seats 20- to 39-Seats 40- to 59-Seats 60- to 99-Seats 100- to 149-Seats 150- to 174-Seats 175- to 219-Seats 220+ Seats
Retained Fleet
4,300
2010 In Service Fleet
2030 In Service Fleet
Source: OAG Aviation Solutions, Bombardier Analysis
economic trends
15
higher operating costs per seat, driven by high fuel prices. In the absence of in-production 20- to 59-seat aircraft during the near-term forecast period, this segment, representing 33% of todays 20- to 149-seat fleet, will represent only 8% of the fleet in 2030. By way of contrast, the near-term market will see the introduction of new-generation 100- to 149-seat aircraft. This segment will represent 53% of the total 20- to 149-seat fleet in 2030. Both retirements and growth in this segment will be high. In response to the introduction of aircraft optimized for the 100- to 149-seat segment, 7,000 units will be delivered and 3,000 aircraft will be retired. More than half of the current commercial aircraft fleet will be replaced in the next 20 years due to technical obsolescence, cost inefficiencies, and age. The retirement of older aircraft types will have a positive impact on the demand for new aircraft.
More than half of the current commercial aircraft fleet will be replaced in the next 20 years due to technical obsolescence, cost inefficiencies, and age.
AIRLINE INDUSTRY TRENDS

taking flight
16
airline industry trends

17
Airline Economics
The International Air Transport Association (IATA) suggests that international air traffic has returned to profitability. In 2010, airline passenger traffic levels recovered as the global economy gained strength. IATA reports that international passenger air traffic increased by 8.2% in 2010 compared to 2009 and is expected to increase by another 4.4% in 2011. The Asia/Pacific region, while still well below traffic levels in Europe and the US in terms of overall passenger numbers, has been relatively less affected by the downturn. However, domestic and international passenger traffic levels in the US and Europe, the worlds two largest air travel markets, has yet to recover to the high levels recorded in 2007. Looking forward, in a report released in February 2011, IATA predicts that there will
be 3.3 billion air travelers globally in calendar year 2014, up 38% from 2.4 billion in 2010. A continued solid traffic growth will be a key factor supporting the recovery of the global airline industry. Respecting revenues, global commercial profits were $18 billion in 2010, and IATA anticipates that profits will remain moderate at $4.0 billion in 2011. They attribute the lower profitability forecast in 2011 to the increasing cost of oil, calculating that fuel cost increases added an extra $20 billion to airlines costs in 2010 alone. IATA estimates that the reduction in profitability would have been significantly greater were it not balanced by better-thanforecast economic growth combined with relatively stable and high load factors. The positive effect of continued traffic growth is overshadowed by the negative effect of high oil prices, resulting in decreased airline profitability. The ever-changing conditions
have forced airlines to be disciplined in cost control and innovative in revenue management. The fundamentals still sound for a very resilient industry
Airline Business Models

Within the airline industry, three recognized passenger carrying business models exist, each with distinctive characteristics: Mainline carriers, Low-Fare carriers (LFCs) and regional carriers. Mainline carriers typically operate fleets of aircraft with 100 or more seats in hub-andspoke networks, serving numerous cities and countries. Mainline carrier evolution has led to the replacement of older equipment with newer, more efficient aircraft. Network optimization through specialization has led to strong partnerships between mainline and regional carriers. Regional carriers enable mainline carriers to right-size aircraft for passenger demand throughout their network, typically right-sized through regional carrier affiliates. These regional carriers commonly operate aircraft of 100 seats or less and serve short to medium-haul markets, where traffic levels are low. Right-sized aircraft fulfill the market demand for frequency and schedule. Equipped with regional jets and turboprops, regional carriers operate one-third of all commercial passenger flights worldwide.
Airline Industry Net Profits (Billions US$)

Region
World North America Europe Asia/Pacific Middle East Latin America Africa
Source: International Air Transportation Association (IATA), June, 2011
2007
14.7 5.5 6.4 3.0 -0.1 0.1 -0.2
2008
-16.0 -9.6 0.0 -4.7 -0.3 -1.4 -0.1
2009
-9.9 -2.7 -4.3 -2.7 -0.6 0.5 -0.1
2010
18.0 4.1 1.9 10.0 0.9 0.9 0.1
2011F
4.0 1.2 0.5 2.1 0.1 0.1 -0.1

18
Operating Profit/Loss as a % of Total Operating Costs
Regional airlines play a crucial role in providing air transportation in primary, secondary and tertiary markets. Regional airlines act as contractors for mainline airlines by connecting passengers from smaller cities to mainline hubs, thereby providing market access to smaller cities that would otherwise be costprohibitive to serve using larger mainline aircraft. The average regional aircraft size in the US has increased, from 34 seats in 2000, to 50 seats in 2005 to 56 seats today. Similarly, the average US regional carrier trip length has increased from 296 statute miles in 2000, to 457 last year and to 464 statute miles today. In Europe, where scope clauses are less restrictive, average regional seating capacity has increased from 63 seats in 2001, to 72 seats in 2009 to 76 seats today. Average stage length, while shorter in Europe than the US, has increased from 384 status miles to 390 status miles over the same time period. More variation exists within the low-fare carrier (LFC) business models. LFCs have helped open air travel to passengers who could not previously afford. LFCs commonly offer point-to-point service between secondary airports, operate aircraft ranging from 70 to 200 seats, and offer mainly low fares. In the past decade, the market share of regional and LFCs, both low cost providers, has grown significantly. Geographically, this growth has been strongest in North America
US Airline Segmentation Profitability Loss*

20.0
are optimized for short and medium-haul flights, while small single-aisle jets provide long-haul routing and capacity. There will be 3,600 regional jets delivered in the next 20 years. The forecast 7,000 new single-aisle jets in the 100- to 149-seat segment will be optimized for markets up to 3,000 miles with medium-sized traffic volumes.
15.0
10.0
5.0
0.0
Labour Trends
Airline labour costs have decreased as a percent of total costs and highlight the adaptability of the industry. Specialization opportunities derived from outsourcing have contributed to overall cost reductions in a significant manner. Outsourcing of catering operations, maintenance services, and reservations have helped to lower airline costs dramatically. Outsourcing of scheduled operations to regional airlines provides mainline carriers with access to passengers in smaller cities that would otherwise be cost prohibitive for them. As low cost providers, regional carriers operate profitably on thin routes where mainline carriers could not. However, labour remains one of the two largest cost elements (fuel being the other) and optimization opportunities still exist. A constraint on regional carrier outsourcing opportunities has been scope clauses (negotiated agreements between mainline carrier labour
-5.0
-10.0
08
09
09
09
4Q
1Q
2Q
3Q
Source: US Bureau of Transportation Statistics, Jan 2011. *Most current available data **Low-Cost Carriers are also referred to as Low-Fare Carriers
and Europe, and today, LFCs are present in some form in nearly every region of the world. New business models are evolving and blurring distinctions among the three established airline business models. With capacities in the commercial aviation marketplace ranging from less than 50 seats to greater than 600 seats, right-sizing aircraft to fit the mission is critical for maintaining low costs. Regional jets in the 60- to 99-seat market offer optimized capacity solutions for longer routes with lower traffic volumes. Turboprops
4Q
Network Regional Low-cost**
20 0
20
20
20
20
9*

19
Productivity, ASKs (000) per FTE
and management). These clauses often restrict the use, number and seating capacity of regional aircraft in the mainline carriers network. Scope clauses are predominantly found in US and European airline labour agreements. Driven by necessity, scope clauses have evolved with the industry to become less restrictive with time, thus allowing for greater network optimization through specialization. Bombardier anticipates that scope clauses will evolve, permitting even larger aircraft to be flown by regional carriers. Changes to scope clauses that allow regional airlines to fly larger aircraft will have a positive impact on demand, as will the development of new business models.
US Airline Labour Productivity

3,000
2,500
2,000
1,500
1,000
500
0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Turboprops and Jets: Optimization in Practice

Aircraft and engine design play a critical role in airline fleet and network optimization. Many airlines have embraced turboprops as the most cost-effective method of serving short-haul markets. Increases in oil prices expanded the usage of turboprops by airlines worldwide, causing manufactures to increase the size and capability of the aircraft. In 2007, the presence of turboprops deployed by mainline carriers increased significantly. Turboprops will continue to play an integral role in the regional aircraft marketplace.
Source: Air Transport Association of America (ATA), 2010 FTE: Full Time Equivalent employees, most current annual data
As regional airlines worldwide address rising fuel costs and more stringent environmental regulations, the low fuel burn of turboprops compared to similarly sized regional jets will allow airlines to maintain capacity, while reducing fuel costs and shrinking their overall environmental footprint. Overall, 40% of the deliveries in the 20- to 99-seat market segment (6,100 units) will be turboprops. Of the 2,500 turboprops to be delivered, 2,350 will be sized for the 60- to 99-seat market.
To achieve greatest efficiencies, jet aircraft are best used for longer routes. With no new 50-seat jets currently in production in the near-term, 70-seat turboprops represent a cost-effective replacement or supplement for those routes that are or were served by 50-seat jets.

20
Annual traffic growth (2002 to 2010)
Larger regional jets allow airlines to accommodate traffic growth and fly longer routes with optimized seating capacities, while reducing unit costs without comprising passenger comfort. In order to satisfy market frequency requirements on these longer routes, we expect that demand for regional jets will be greater than for turboprops. We believe that 59% of deliveries of aircraft up to 100 seats will be for regional jets during the forecast period 2011 to 2030.
Regional Market Segmentation

20%
18%
16%
Large TP
14%
12%
Large RJ
Airlines and the Environment

Global environmental issues and regulations will play an increasing role in shaping the look and size of aviation and aviation infrastructure. Environmental issues in aviation are often broadly categorized within the following categories: local air quality, aircraft emissions and community noise. The aviation industry has made signifcant progress in all three categories. Aviation has been improving its environmental performance consistently for the last 50 years. Greater efficiency directly benefits the profitability of our businesses, as well as the environment. Modern aircraft achieve fuel efficiencies of 3.5 litres per 100 passenger km Aircraft operations have become 20% more fuel efficient over the past 10 years
10%
8%
6%
4%
2%
Small TP/RJ
0%
200
400
600
800 Distance (nm)
1000
1200
1400
1600
Source: Bombardier Analysis Note: World Origin & Destination markets with less than 1,000 passenger per day each way
Aircraft and engine design play a critical role in airline fleet and network optimization.

21
Todays aircraft fly three times farther on the same amount of fuel than 30 years ago (75% fuel efficiency gain per passenger/km) Fuel use and emissions per passenger kilometer have been reduced by 70% in the last 50 years At the same time, the average range of commercial jet aircraft has increased to 15,200 km from 5,190 km in 1960, carrying more passengers further with less fuel Todays aircraft are 20 decibels quieter than they were 40 years ago Despite growth in passenger numbers at an average of 5% each year, aviation has managed to decouple its emissions growth to around 3%, or some 20 million tonnes annually
IATA Technology Roadmap, 2009

Riblets Hybrid wing body Truss-braced wing Cruise-efficient STOL Fly by light Wireless flight control system PEM fuel cell Solid-oxide fuel cell Solid acid fuel cell Morphing materials Morphing airframe Advanced 3rd gen. core New engine core concepts Open rotor / unducted fan Counter-rotating fan Active stability management Thermal management Variable cycle Boundary-layer ingesting inlets Embedded distributed multi-fan Adaptive / active flow control Ubiquitous composites Non-Brayton cycles Pulse detonation cycles Regenerative / recuperative cycle Adaptive cycles Wireless optical connections for IFE Spiroid wingtip Advanced fly-by-wire MEA architecture Variable camber with new control surfaces Energy harvesting devices Natural laminar flow Hybrid laminar flow control Engine replacements
Airframe & Systems
Geared turbofan Advanced direct drive
The aviation industry is making further environmental improvements with guidance from international bodies such as ICAO and Air Transport Action Group (ATAG). Key stakeholders including Bombardier are committed to moving toward carbon-neutral growth within the industry before the end of the forecast period and a 50% reduction in CO2 emissions by 2050 relative to 2005. In order to meet these commitments, the application of new technological developments to new aircraft design is paramount. The IATA Technology Roadmap provides a summary
Engine
Alternative Fuels
Biomass to fuel or biojet Synthetic paraffinic kerosene Biodiesel Furans Transesterification fuels Butanol
Liquefied petroleum gas Liquid methane Compressed natural gas Ethanol Liquid hydrogen
Air Traffic Management
Data link communication Required time of arrival Performance-based navigation Automatic dependent surveillance broadcast - OUT System-wide information management GNSS landing system via ground based augmentation system Automatic dependent surveillance broadcast - IN
Retrofit Update New Aircraft < 2020 New Aircraft > 2020 All stages
2010
2020
2030
Source: International Air Transport Association (IATA) Technology Roadmap 2009.

22
and assessment of technological opportunities for future aircraft. The roadmap looks at technologies that will reduce, neutralize and eventually eliminate the carbon footprint of aviation. Bombardier believes that the most equitable means to industry sustainability goals is through global initiatives led by bodies such as ICAO, with its four pillar approach of technology, operations, infrastructure change and economic measures. Reducing Bombardier's carbon and environmental footprints is critical. Though our corporate responsibility activities, we are committed to minimizing our manufacturing and operating footprint through increased efficiency, innovation on site, and creating environmental synergies through engagement with our supply chain partners. In sum, environmental concerns are being addressed by the aviation industry through the retirement of older aircraft, fleet modernization, technology, infrastructure and operational improvements. The progression of environmental awareness and regulations will have a positive effect on demand for efficient new aircraft.
Aviation has been improving its environmental performance consistently for the last 50 years.
THE FORECAST
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the forecast
24
All forecasts have an underlying set of assumptions and drivers. Our assumptions are:
Demand for air travel is cyclical and directly related to economic growth and wealth creation over the long term Airline markets will continue their evolution towards liberalization Fleet utilization is directly related to economic growth over time The forecast for the 20-year average global GDP growth rate will be 3.4%, signifying a recovery from the 2008/09 recession Oil prices are forecast to average $107 from 2011-2030, and fuel prices will affect fleet mix and usage
Aviation Infrastructure will support air travel demand over the long term In more mature economic markets, infrastructure will support demand for air travel Emerging regional economies will rebound during the first five-year period of the forecast. In some emerging markets, infrastructure will lag, constraining aviation growth
Demand for air travel is cyclical and directly related to economic growth and wealth creation over the long term
20-Year Outlook
Market Driver Economic Growth Outlook
Airlines will continue to focus on reducing costs; leading to a preference for larger capacity aircraft in all segments Scope clauses are assumed to ease over time, stimulating demand for regional aircraft Environmental regulations will also encourage airlines to seek, on a per-seat basis, lower fuel burn and emissions aircraft
Fuel Prices
Fuel Volatility
Replacement Demand
Fleet Growth Forecast

Emerging Markets
Segments 20- to 59-seat 60- to 99-seat 100- to 149-seat Total Aircraft
Fleet 2010 3,600 2,200 5,200 11,000
Deliveries 300 5,800 7,000 13,100
Retirement 2,500 1,200 3,000 6,700
Fleet 2030
Environmental Regulations
1,400 6,800 9,200 17,400

Labour Trends Environmental Fees
the forecast
25
Summary
Of the 13,100 aircraft deliveries predicted from 2011-2030, 2,500 will be turboprops. The remaining 10,600 will be jets, with 3,600 in the 20- to 90-seat segment and 7,000 in the 100- to 149-seat segment. While the absolute number of aircraft deliveries will be weighted towards North America and Europe, still the dominant sources of aircraft demand, there is a shift in terms of the percentage of total deliveries. This is indicative of the increasing importance particularly of China and other Asia/Pacific countries where economic growth is projected to outpace the rest of the world over the forecast period.
GDP Distribution by Region

(2010 and 2030)
20- to 99-Seat Delivery Profile
20-Year Turboprop Forecast

20- to 99-Seat Aircraft
100,000 Total GDP ($ Trillion)
Segment
Turboprops
$49 Trillion
(51% of World GDP)
2011 CAMF 150 2,350 2,500
20- to 59-seat
Regional Jets
80,000
41%
60- to 99-seat Total
59%
60,000
20,000
0 2010 North America Europe Asia Pacific (ex. China) China ROW
Source: Bombardier Commercial Aircraft Market Forecast 2011-2030, IHS Global Insight, Feb 2011 Note:1 GDP = Res Gross Domestic Product. 2 ROW = Rest of the World
2030
Of the 13,100 aircraft deliveries predicted from 2011-2030, 2,500 will be turboprops
the forecast
26
Regional 20-Year Delivery Outlook

Units, 2011-2030
North America 4,860
Europe & Russia/CIS 2,250
Middle East 430
China 2,310
Latin America 1,000
Africa 550
Asia/ Pacific 1,700
Total World 2011-2030
13,100
the forecast
27
20- to 59-Seat Segment

The regional aircraft market has grown and with it a preference for larger regional aircraft. Despite this evolution, we foresee 300 new aircraft deliveries in the 20- to 59-seat segment. These deliveries will occur at the latter stages of the forecast period when the remaining older aircraft in this segment needs to be replaced and new technologies are ready to transform this seat segment. The regional jet aircraft will continue to represent a substantial base fleet of regional airlines in the near term and will give way to a vibrant secondary aircraft market over the long term. The capacity and range of 50-seat jets is attractive to emerging airline markets, where traffic volumes are low. As evidenced today in Africa, Latin America, and Eastern Europe, the 50-seat jet will remain in demand with potential to develop the travel industry further. New aircraft demand will be derived from replacement opportunities of older 20- to 59-seat aircraft towards the end of the forecast period.
The regional aircraft market has grown and with it a preference for larger regional aircraft.
the forecast
28

The growth of the 60- to 99-seat segment will be dependent on the relationship between regional and mainline carriers. The outsourcing of regional aircraft flying to regional airlines, which have suitable cost structures, will continue to be the main focus for network optimization. Scope clauses in North America and Europe will continue to ease in order to meet the growing demand in this segment. In markets where scope clauses are absent, the attractive economics and the operational efficiency of regional aircraft in this segment will be used to right-size capacity to meet traffic demand. With the volatility of oil prices, turboprops become a good hedging tool. At short stage lengths, they are more economical than jets. High-speed turboprop aircraft are used by many airlines to replace 50-seat regional jets. The worldwide turboprop fleet has continued to grow and is experiencing resurgence in North America. Of the 2,500 turboprop deliveries predicted in our forecast, 2,350 will be in the 60- to 99-seat segment. Deliveries of regional jets in the 60- to 99-seat market will generate in excess of $137 billion in revenue. With a small current fleet, the size of this segment is expected to more than triple. Of the 3,600 regional jet deliveries
Bombardier Market Segment Evolution

Fleet, Deliveries, Retirement: 2010-2030
20- to 59-seat
60- to 99-seat
100- to 149-seat
7,000 3,000
9,200 5,800 1,200 6,800 5,200 3,600 300 2,500 2,200
1,400
Fleet 2010: 11,000
Deliveries: 13,100
Retirements: 6,700
Fleet 2030: 17,400
Source: Bombardier Commercial Aircraft Market Forecast 2011-2030.
forecast, 3,450 will be in the 60- to 99-seat segment. These aircraft will be used by airlines around the world to improve their network capacity optimization.
The outsourcing of regional aircraft flying to regional airlines, which have suitable cost structures, will continue to be the main focus for network optimization.
the forecast
29

The 100- to 149-seat segment represents the largest market growth opportunity. Current in-production aircraft are not optimized for this segment, because they are derivative of larger aircraft and not designed for this seat category. They have become economically impracticable in an atmosphere driven by efficiency and environmental sustainability. As well as economic cost, the added weight and drag of current products produce inefficiencies related to higher fuel burn and more CO2 emissions. The closest alternatives to the 100- to 149-seat segment are the next smaller and larger aircraft. An industry committed to a generational change in operating economics will shift focus back toward aircraft optimized for their segments and a significant improvement in profitability. Driving demand in this segment is the acceleration of older generation aircraft retirements. The OAG Fleet iNet database, for example, identifies 1,120 single-aisle aircraft in storage and temporarily inactive. This represents 8% of the total (active and parked) single-aisle fleet in February 2011, identical proportions from this time last year.
the forecast
30
Profit contribution per Departure
Bombardier forecasts that nearly 61% of todays 100- to 149-seat fleet will be retired by 2030. New generation aircraft specifically designed for this segment will have superior economics, comfort, lightweight design and built-in operational flexibility. New designs will advance the retirement of older aircraft and stimulate demand for new services using aircraft of this capacity. New aircraft demand for 100- to 149-seat aircraft will be for 7,000 deliveries over the next 20 years, generating sales of more than $424 billion. The total fleet will grow from 5,200 to 9,200 units, an increase of 35%. For new aircraft designed in this segment, change is in the air.
Profit zone Right-sizing aircraft for traffic demand

High Large RJ New design small single-aisle jet Current large single-aisle jet
Current small single-aisle jet
Low 60 Passenger Demand per Departure

Source: US Department of Transportation, Bombardier Analysis RJ = Regional jet, Small single-aisle jet: 100- to 149-seats, Large single-aisle jet: 150+ seats
200
An industry committed to a generational change in operating economics will shift focus back toward aircraft optimized for their segments and a significant improvement in profitability.
CONCLUSION
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conclusion
32
The rising cost and volatility of oil prices is an area of concern in the aviation industry. It creates uncertainty in the planning activies of many airlines and operators. Combined with the political changes taking place in many of the oil producing countries and the recent climate events, the global demand for air travel has slowed in the near term. However, in the long term, the price of oil and its volatile nature will drive airlines to accelerate the retirement of older, less efficient equipment, increasing the demand for new-technology, fuel-efficient aircraft. Bombardiers view of the 20- to 149-seat aircraft market remains optimistic. Our confidence stems from the industrys relentless focus on optimization and efficiency. The overall fleet in this market will grow by 58% from 11,000 units in 2010 to 17,400 units in 2030. New aircraft deliveries will reach 13,100 units, valued at $639 billion over the next 20 years.
Bombardiers view of the 20- to 149-seat aircraft market remains optimistic.
conclusion
33
Interesting shifts within the marketplace signal positive challenges to airlines, manufacturers and the aviation industry as a whole during the next 20 years, including: The 20- to 59-seat regional fleet will shrink by more than 60% The 60- to 99-seat regional fleet will increase more than 300% The turboprop share of deliveries will continue to increase The 100- to 149-seat fleet will grow by almost 77%, from 5,200 today, to 9,200 units.
Going forward, aircraft with optimized economics, operational efficiency and environmentally friendly technology will become the leading force of a sustainable aviation industry.
GEOGRAPHIC DETAIL
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geographic detail
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North America (excluding Mexico)

Deliveries remain strong As a result of a large installed fleet base that requires continuous replenishment over the forecast period, deliveries in the North American remain strong. Continuous optimization leads to improving asset efficiency Between 2001 and 2010, over 10 carriers in North America filed for bankruptcy protection. Restructuring within bankruptcy protection became a key tool for North American carriers to reduce costs, expand scope clauses, trim capacity, and improve financial efficiency. In recent years, mergers and acquisitions have become an effective way of improving the operating environment by further adjusting capacity with less competition. As North American carriers continue to regain financial strengths, the inefficiency of their aging fleets will be the Achilles' heel of their decade long restructuring efforts. It is expected that fleet renewal is the next logical step towards further improving efficiency. Fuel efficient aircraft with great operating economics will undoubtedly be favoured in the next fleet renewal cycle.
US Carriers Total Cash and Cash Equivalent

35
30
25
US$ billion
20
15
10
Source: Bureau of Transportation Statistics, Schedule B-1
As North American carriers continue to regain financial strengths, the inefficiency of their aging fleets will be the Achilles' heel of their decade long restructuring efforts.
geographic detail
36
North America (excluding Mexico) (continued)

Scope clause evolution continues Regional aircraft have become an integral part of the commercial aviation route network in North America. Most US regional carriers act as contractors for larger mainline affiliates. They provide the affiliates with the flexibility to right-size equipment to meet the demand of the traffic. In addition, they are able to access airfields that are not suited to larger equipment. US regional carriers enplaned 163.5 million passengers on 4.75 million flights in 2010. Of the 673 airports in commercial service, 74% (498) of them are served only by regional airlines. According to the regional Airline Association (RAA), regional aircraft departures accounted for 48% of all departures at the top 10 US airports. They enplaned roughly 24% of passengers flown in the United States in 2010, generating 21% of domestic airline revenues, roughly the same amount as the previous year. Regional airline payment for servicing these routes is not based on the number of passengers carried, but rather on fixed fee-for-flying agreements with their mainline affiliates. Outsourcing in the form of capacity purchase agreements (CPAs) has been, and will continue to be, the main thrust behind the relationship of mainline and regional carriers.
scope clauses will continue to evolve as mainline carriers search for optimization opportunities. Scope Clauses will ease over the period of the forecast and will drive demand for an increased number of larger capacity regional aircraft.
geographic detail
37
North America (excluding Mexico) (continued)

Fast forward 20 years North America will represent a progressively smaller share of worldwide GDP, declining from 28% today to 25% over the forecast period. Though growth will be slower than other economies, delivery demand for 4,860 aircraft will maintain North America as the single largest aviation market. It is within North America that we expect to see the largest demand for 100- to 149-seat aircraft, with 2,130 units forecast. This demand will be fueled by the anticipated retirements of 1,000 units and strong growth opportunities. There will be 130 deliveries of 20- to 59-seat aircraft, while retirements are expected to be strong in this segment, driven by high fuel and operating costs. The largest growth segment will be the 60- to 99-seat segment, with some 2,600 units to be delivered and only 400 retired.
Demand Distribution by Seat Segment North America, 2011-2030

Total: 4,860 Units
Yearly Scheduled Intra-North American Airline Seats

800 700 600 Millions 500 400 300 200 100
3%
44%
53%
0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: OAG Aviation Solutions

Source: Bombardier Commercial Market Aircraft Forecast, 2011-2030
geographic detail
38
Europe (including Russia/CIS)

Moderate fleet growth Europe is the third largest 20- to 149-seat market after North America and China. It is expected that European deliveries will account for 17% of total deliveries. Composed of a mix of developed and emerging marketplaces, the European GDP growth rate will trail the rest of the world at 2.0% per year. Also contributing to the pace of aviation growth is competition from other transportation modes, both rail and road, which are often time-competitive due to the European Unions densely populated geography and airport-security delays. European air traffic has experienced disruptions recently from climatic activity, particularly the movement of volcanic ash over European airspace. At the height of the disruption, IATA estimated that it was costing the airline industry $200 million per day in lost revenues. The European Regional Airline Association reports that passenger traffic declined by 14.1% in one month alone due to the eruption of the Eyjafjallaj volcano in 2010. Environmental sustainability has an elevated focus in the European Community, which is reflected in a committed push to include aviation in the Emissions Trading Scheme (ETS). Though the ETS will introduce new fees
Environmental sustainability has an elevated focus in the European Community, which is reflected in a committed push to include aviation in the Emissions Trading Scheme (ETS).
geographic detail
39
Europe (including Russia/CIS) (continued)

to passengers and airlines, it is anticipated that it will also have the affect of accelerating the retirement of old, less efficient aircraft. Continued airline network optimization activities will trigger increased turboprop usage on short routes, and regional aircraft in general, in smaller, secondary airports. The Russian aviation marketplace is not liberalized and access to the marketplace is tightly controlled, particularly for new aircraft. Over the past several years, the Russian Federation has had a national objective of re-establishing its civilian aerospace industry, which has been stagnant since the breakup of the former Soviet Union. One of the showcase products for this effort is the design and construction of a domestic regional jet with 78 to 98 seats. This aircraft has been under development by Russian state-owned or state-controlled entities since 2001, and has recently been certified by the Interstate Aviation Committee (MAK), the airworthiness authority for Russia and the Commonwealth of Independent States (CIS). GDP growth rates for Russia and CIS are forecast at 4.5%. We anticipate demand for 20- to 149-seat aircraft in Russia/CIS will be 460 units, one-fifth of the total demand for all deliveries in Europe. More than 50% of the European deliveries are anticipated to be 100- to 149-seat aircraft over the forecast period. Within the regional segments, deliveries of 60- to 99-seat aircraft will dominate, with a small component of 20- to 59-seat deliveries adding to the total. The shift to larger capacity aircraft in the regional markets is evident in the distribution of demand over the 20-year period.
Demand Distribution by Seat Segment Europe (incl. Russia/CIS), 2011-2030

Total: 2,250 Units
Yearly Scheduled Intra-European Airline Seats

500
3% Millions 42% 55%
400 300 200 100 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

geographic detail
40
Asia/Pacific (excluding China (PRC))

Moderate fleet growth Asia/Pacific, excluding China (PRC), has a moderate fleet growth in the 20- to 149-seat segment over the next 20 years. It takes delivery of 1,700 units and retires 770 aircraft. The fleet grows from 1,190 units in 2010 to 2,120 in 2030, an increase of 78%. A diversified and resilient region Within Asia/Pacific, South and Southeast Asia recovered from the recent economic downturn at a much faster pace than Northeast Asia and Oceania. This is mainly driven by the inherent domestic demand of these high growth regions. Coupled with this region's diversified culture, government policies and geography, the need for air transport is fundamental. The resilience of this region is impressive, having rebounded quickly from downturns brought on by the Asian financial crisis in 1997, SARS pandemic in 2003, Indian Ocean tsunami in 2004, and the 2008 oil price spike and global economic slowdown. The emergence of India as a new global power will begin to transform the economic landscape worldwide. With a forecast GDP growth rate of 8.5% in 2011, India is second
Sub-region of Asia/Pacific
Northeast Asia South Asia Southest Asia Oceania
Within Asia/Pacific, South and Southeast Asia recovered from the recent economic downturn at a much faster pace than Northeast Asia and Oceania.
geographic detail
41
Asia/Pacific (excluding China (PRC)) (continued)

in growth only to China (at 10.3%). As a large land mass with a large population, domestic air travel is increasing proportionately with the development of the middle-class community. Domestic consumption and demand is a key differentiator from Chinas export-focused economy. IHS Global Insight states that Indian infrastructure output in late 2010 has picked up steadily, in tandem with many other indicators of healthy manufacturing activity. Nevertheless, India's manufacturing sector as a whole remains fairly robust despite global headwinds and higher interest rates. IHS remarks that these infrastructure data are considered an advance indicator of growth in industrial output, which in turn will lead to infrastructure development, including aviation. The government plans to invest about $500 million in infrastructure over the next two years, in transportation, power, telecommunications, roads and oil pipelines. The government is also seeking to increase its outlay on infrastructure to $1 trillion over the five-year period 201217. As a result, investment is expected to remain robust, particularly infrastructure investment. Japan is only just beginning to rebuild the country and its economy following the aftermath of the Fukushima environmental crisis. However, in the long term, the growth of Northeast Asia is expected to be strong in terms of a substantial domestic demand, but weak with international trade. In general, history indicates that the entire region is very resilient.
Demand Distribution by Seat Segment Asia/Pacific (ex. China), 2011-2030

Total: 1,700 Units
Yearly Scheduled Intra-Asia/Pacific Airline Seats (ex. China)

200 150 Millions 100 50 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
2%
57%
41%

geographic detail
42
Asia/Pacific (excluding China (PRC)) (continued)

The evolution of the growth markets As network connectivity between major city centres is well entrenched and very effective, a shift in attention towards secondary and tertiary cities is the logical next step of development. Loosening of intra-regional aviation regulation is a prerequisite for such development and is evolving. This will eventually lead to a similar demand for small to medium size aircraft as experienced previously in the US and Europe. Aircraft in the 60-to 149-seat category are anticipated to meet this growing traffic demand. Fleet replenishment continues in the mature markets Mature markets within Asia/Pacific continue to look for optimization opportunities. In a highly environmentally regulated market, aircraft with the highest standard in fuel economy and lowest noise and emission characteristics are in a favourable position to take advantage of the market need. There is already an installed base of turboprop and regional jet aircraft in these markets. Continued replenishment or growth into more efficient 100- to 149-seat segment is a natural evolution.
geographic detail
43
China (PRC)
Fleet growth is phenomenal China is a market that requires all types of aircraft in volume to meet its economic growth over the next 20 years. The overall fleet from 20- to 149-seats is forecast to grow 300% over the next 20 years. A robust commercial aviation system is key To meet the demands of its dynamic economic growth, China requires a very robust commercial aviation system. This includes not only a continuous replenishment of new fleets, but also infrastructure such as new airports, air traffic management systems, the availability of pilots and technicians, and most importantly, government policy to support this phenomenal growth. In the governments most recent five-year plan, large-scale new airport development is mapped out to 2020. The objective is to have 82% of the population within 100 km or 1.5 hours reach of air services, covering 96% of the nations GDP. It is very clear that a portion of these new airports is to alleviate air traffic congestion in the densely populated regions.
Existing and Forecast Airports in China
Persons per square kilometer 0 0 1 25 10 26 100 250 700 520
2006 Airport location 2006-2010 Expansion 2011-2020 Expansion
Persons per square mile
Source: Bombardier Analysis
geographic detail
44
China (PRC) (continued)

The remaining airports will develop links to remote areas. This airport growth demand highlights Chinas need for small to medium size aircraft. As a result, China has developed its own turboprop, regional jet and large single-aisle jet aircraft programs. High speed rail complements commercial aviation Mr. Li Jia Xiang, Minister of General Administration of Civil Aviation of China, in the outlook of the 12th five-year plan, stated that the development of high speed rail is a key strategy to alleviate the congestion in aviation hubs such as Beijing, Shanghai and Guangzhou. This strategy also helps the administration focus on areas where air transport has clear advantages over high speed rail, such as China's sparsely populated western regions.
...the development of high speed rail is a key strategy to alleviate the congestion in aviation hubs...
geographic detail
45
China (PRC) (continued)

Regional aircraft play a key role in feeding traffic to big city hubs and meeting Chinas present and forecast needs. Bombardier predicts a demand for almost 2,400 aircraft in the 60- to 149-seat segment over the forecast period, to fulfill the growing need for increased distribution of wealth throughout the country. Starting from a small base, regional aircraft deliveries will reach 2,540 units. Starting from a small base, deliveries in the regional aircraft range will reach 870 units with fewer than 150 retirements. The strongest growth will be in the 100- to 149-seat segment, with 1,440 units.
Demand Distribution by Seat Segment China (PRC), 2011-2030

Total: 2,310 Units
Yearly Scheduled Intra-China (PRC) Airline Seats
< 1%
140 120 100 Millions 37% 80 60 40 20
62%
0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

geographic detail
46
Latin America (including Caribbean and Mexico)

Deliveries remain strong Latin America currently accounts for 6% of world GDP and carries about 6% of world passenger traffic. This contrasts with the presence of 11% of the world's airlines in the region. Fierce competition leads to consolidation in the industry. The bankruptcy of Mexicana and the merger of LAN and TAM are the highlights of the industry in 2010. Latin America, beset in the past by debt defaults, currency devaluations and the need for bailouts from other countries, is experiencing robust economic growth. According to IATA, Latin America is the only region to have delivered a profit in both 2009 and 2010.
Market Capitalization (US$ Billion)

$14.0 $11.2 $10.4 $8.8
$5.7
$5.5
LA
AM NT
lta De Lu fth s an
o Gr Co
up a nt
nit l/U
ed rF n ra ce
/K
LM BA
/Ib
ria
ine nt
Ai
Latin America, beset in the past by debt defaults, currency devaluations and the need for bailouts from other countries, is experiencing robust economic growth.
Source: Bombardier Analysis, various company websites
geographic detail
47
Latin America (including Caribbean and Mexico) (continued)

The Latin American and Caribbean Air Transport Association (ALTA) announced that its member airlines carried 136.4 million passengers in 2010, up 11.3% from the previous year. The load factor climbed to 73.3%, 3.2 percentage points higher than in 2009. The combined market capitalization of LAN and TAM is about $14 billion, higher than most leading airline groups. It is a promising indication that Latin America is gaining more influence on the global air transport issues, such as the environment and liberalization. Secondary aviation infrastructure demand is growing Brazil, which led the regional recovery from the 2009 downturn, will host the upcoming 2014 FIFA World Cup and 2016 Summer Olympics. Regional economies will undoubtedly be stimulated by these major events, and it is anticipated that it will spur much needed infrastructure development to support its long-term growth in air transport. The development and increase of low-fare carriers in the region allows much wider population access to affordable air travel. Some low-fare carriers have just begun to utilize smaller regional jet and turboprop aircraft to reach further into secondary or tertiary markets. Increased use of smaller regional aircraft will provide affordable service to smaller markets in the regions Starting from a base of just under 1,000 aircraft, there will be 1,000 units delivered within the 100- to 149-seat market, and 640 of the existing fleet will be retired. More than 60% of deliveries will be in the 100- to 149seat segment.
Demand Distribution by Seat Segment Latin America, 2011-2030

Total: 1,000 Units
Yearly Scheduled Intra-Latin America Airline Seats
3%
160 140 120 Millions 35% 100 80 60 40 20 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
62%

geographic detail
48
Africa and the Middle East

Moderate growth Economic prospects for the Middle East and Africa are promising, showing strong signs of GDP growth, with 4.5% for Africa and 5.2% for the Middle East over the forecast period. Both regions face challenges, which have led to a slower pace of growth of regional and 100- to 149-seat aircraft markets. These challenges include political uncertainty, lagging infrastructure development and slow aviation deregulation. There are signs that these challenges are being addressed and that their impact will begin within the period of this forecast. Currently, the Middle East and North Africa (MENA) are experiencing economic downturns due to the social and political upheaval. Egypt, Libya and Tunisia are particularly experiencing slumps in their tourism trade, and hence air traffic, as well as a slowdown in normal business activity. The International Monetary Fund has trimmed its 2011 GDP forecast for MENA by 50 basis points from the beginning of the year (from 4.6% to 4.1%). In Africa, with its multitude of countries, many of which are mired in poverty or warfare, air transportation infrastructure development is focused primarily on a few international hubs
There are signs of economic change, which should begin to filter down to the heavily regulated aviation industry near or just beyond the end of the forecast period.
rather than secondary and tertiary airports. Other forms of infrastructure, such as sophisticated telecommunications networks, also vary significantly between regions. There are signs of economic change, which should begin to filter down to the heavily regulated aviation industry near or just beyond the end of the forecast period. One such sign is the amount of external investment in the country by India and China.
geographic detail
49
Africa and the Middle East (continued)

Great economic promise IHS Global Insight analysis indicates that Indian trade with Africa has increased substantially over the decade, with Indian imports from Africa growing from $18.7 billion to $20.7 billion last year. Additionally, India has extended $5 billion in credit over three years to Africa in order to support economic growth. Similarly, China has steadily contributed to Africas resource development and transportation infrastructure. Since 2006, China has invested in $4.5-5 billion per year in sub-Saharan Africa. Transformational geographic location The Middle East continues to offer the potential to play a key role in the transformation of the aviation industry. Sitting between the emerging economic markets of India and China, Middle East carriers have consistently reported increased annual enplanements and revenues. The Arab Air Carriers Association (ACCO) most current data, 2009, reports a 9.4% year-over-year increase in international passengers. In some countries within MENA, air traffic continues its strong growth: Saudi Arabia, for example, enplaned 4.5 million passengers in the first quarter of 2011, compared to 4.1 million in the same quarter of 2010. While starting from a small base, Africa and Middle East deliveries will capture 7%, or 980, of the total 13,100 20- to 149-seat deliveries worldwide.
Demand Distribution by Seat Segment Africa and the Middle East, 2011-2030
Total: 980 Units
Yearly Scheduled Intra-Africa and Intra-Middle East Airline Seats

20- to 149-seat Aircraft In Africa and The Middle East
80 70 60 50 Millions 40 30 20
2%
37% 61%
10 0 2001 20- to 59-seat 60- to 99-seat 100- to 149-seat 2002 2003 2004 2005 2006 2007 2008 2009 2010
resources
50
Resources used in the Bombardier Aerospace, Commercial Aircraft Market Forecast

ACCO Arab Air Carriers Organization AAPA Association of Asia-Pacific Airlines ACAS AirCraft Analytic System database AIA Aerospace Industries Association of America Airline Monitor ATA Air Transport Association ATAG Air Transport Action Group Aviation Daily Bank of America Merrill Lynch Industry Overview Report BTS US Bureau of Transportation Statistics CAAC Civil Aviation Administration of China DOT US Department of Transportation EIA US Energy Information Administration ERAA European Regional Airline Association IATA International Air Transport Association ICAO International Civil Aviation Organisation IHS Global Insight IPCC Report on Aviation and Climate Change OAG BACK Aviation RAA Regional Airline Association www.enviro.aero
forward looking statement

This presentation includes forward-looking statements. Forwardlooking statements generally can be identified by the use of forward-looking terminology such as may, will, expect, intend, anticipate, plan, foresee, believe or continue, the negative of these terms, variations of them or similar terminology. By their nature, forward-looking statements require us to make assumptions a n d a re s u b j e c t t o i m p o r t a n t k n o w n a n d u n k n o w n r i s k s a n d uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. While we consider our assumptions to be reasonable and appropriate based on information currently available, there is a risk that they may not be accurate. For additional information with respect to the assumptions underlying the forward-looking statements made in this presentation, refer to the respective Forward-looking statements sections in BA and BT in the MD&A of the Corporations annual report for fiscal year 2011. Certain factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include risks associated with general economic conditions, risks associated with our business environment (such as risks associated with the airline industrys financial condition), operational risks (such as risks involved in developing new products and services, risks in doing business with partners, risks relating to product performance warranty and casualty claim losses, to regulatory and legal proceedings, to environmental and health and safety, to our dependence on certain customers and suppliers, to human resources, to fixed-price commitments and to production and project execution), financing risks (such as risks relating to liquidity and access to capital markets, to the terms of certain restrictive debt covenants, to financing support provided on behalf of certain customers and to reliance on government support) and market risks (such as risks relating to foreign currency fluctuations, to changing interest rates and commodity prices risks). For more details, see the Risks and uncertainties section in Other in the MD&A of the Corporations annual report for fiscal year 2011. Readers are cautioned that the foregoing list of factors that may affect future growth, results and performance is not exhaustive and undue reliance should not be placed on forward-looking statements. The forward-looking statements set forth herein reflect our expectations as at the date of this presentation and are subject to change after such date. Unless otherwise required by applicable securities laws, the Corporation expressly disclaims any intention, and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All monetary amounts are expressed in 2011 US dollars, unless otherwise stated.
For electronic copies of the Bombardier Aerospace Commercial Aircraft Market Forecast, 2011-2030, please visit our website at: www.bombardier.com
Registered trademark(s) or trademark(s) of Bombardier Inc. or its subsidiaries. 2011 Bombardier Inc. All rights reserved. Printed in Canada. 06/2011

BA-BCA 2011 Market Forecast

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BA-BCA 2011 Market Forecast

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Bombardier Commercial Aircraft | Market Forecast 2011-2030

Delivery Forecast (Units)

Source: Bombardier Commercial Aircraft Market Forecast 2011-2030

Total Fleet Units

The Evolution of the 20- to 149-seat Marketplace

6,800 1,400 2010 2030

100- to 149-seat 60- to 99-seat 20- to 59-seat

Economic and Aviation Industry Growth

World Real GDP Growth

World Average 3.9%

Commercial Aircraft Orders Lag GDP Growth

7% 6% 5% 4% 3% 2% 1% 0% -1% -2% -3%

Commercial Aircraft Orders

GDP Growth (IHS Global Insignt Feb 2011)

GDP Growth Rates

Hong Kong Portugal

Switzerland Australia Canada United States Ireland

South Africa Brazil Israel

6% 5% 4% 3.4% 3% 2% 1% 2.7% 2.4% 1.9%

Trips Per Capita

0.001 $0 $10,000 $20,000 $30,000 $40,000 GDP Per Capita

Source: IHS Global Insight, Feb 2011, Bombardier Analysis

Commercial Aircraft Capacity Worldwide by Seat Category

2015 60- to 99-seats

2020 100- to 149-seats

Oil price and volatility

Operating Cost History: Fuel & Labour

Source: Air Transport Association of America, 2011

Weekly WTI Cushing Spot Price

Source: Energy Information Administration, 2011. Note: 1 FOB = Freight On Board.

Forecast Average: $107 USD per barrel

$100 $80 $60 $40 $20 $0

Source: Bombardier Analysis, EIA April 2011

Commercial Aircraft Retirement Curve

Oil @ $26 per barrel

Oil @ $79 per barrel

Oil @ an average of $107 per barrel

88% 52% 59%

80% retired from commercial passenger service

Source: Bombardier Analysis

In Service Aircraft 15 Years of Age or Over

Fleet evolution from 2010 to 2030

2010 In Service Fleet

2030 In Service Fleet

Source: OAG Aviation Solutions, Bombardier Analysis

Source: Bombardier Commercial Aircraft Market Forecast 2011-2030

AIRLINE INDUSTRY TRENDS

airline industry trends

Airline Business Models

Airline Industry Net Profits (Billions US$)

airline industry trends

Operating Profit/Loss as a % of Total Operating Costs

US Airline Segmentation Profitability Loss*

airline industry trends

Productivity, ASKs (000) per FTE

US Airline Labour Productivity

Turboprops and Jets: Optimization in Practice

airline industry trends

Annual traffic growth (2002 to 2010)

Regional Market Segmentation

Airlines and the Environment

800 Distance (nm)

airline industry trends