BA-BCA 2011 Market Forecast

8/2/2019 BA-BCA 2011 Market Forecast

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Bombardier Commercial Aircraft | Market Forecast 2011-2030


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table of contentsBombardier Commercial Aircraft | Market Forecast 2011-2030 02

executive summary

economic trends

airline industry trends

the forecast

conclusion

geographic detail

03

07

16

23

31

34


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EXECUTIVE SUMMARY

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Welcome to the BombardierAerospace CommercialAircraft Market Forecast,our 20-year view of themarket for 20- to 149-seataircraft.

Taking FlightThe health of the commercial airline industryis highly dependent on the state of theeconomy. In late 2009, the global economicrecovery began and air passenger trafficcontinues to follow suit. As the overalleconomy recovers, so does the level ofpassenger traffic. Both the economy andthe airline industry continue to gain strengthpositively upward (despite the dual shocks ofhigher oil prices and the disaster in Japan).We believe that the momentum of growthcreated before these events will continue.

As well as the overall health of the globaleconomy, a number of themes drive our20- to 149-seat forecast: the impact ofenvironmental issues in aviation, theoptimization of aircraft for maximum efficiencyand profitability, as well as the geographicshift 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 demandfor air travel. The first quarter of our forecastperiod will see the introduction of new enginetechnologies and airframe designs that willreduce fuel burn and make a significantcontribution to the industrys commitmentto carbon-neutral growth. High oil prices,yield pressures and environmental concernswill continue to shift aircraft demand to largercapacity and new, more fuel efficient aircraft

models.Source: Bombardier Commercial Aircraft Market Forecast 2011-2030

Delivery Forecast (Units)

DeliveredSegments

20- to 59-seat

60- to 99-seat

100- to 149-seat

20- to 149-seat total

300

5,800

7,000

13,100

executive summaryBombardier Commercial Aircraft | Market Forecast 2011-2030 04


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Optimization: As the aerospace industryfinds its post-downturn footing, it is also

developing and evolving new models thatcapture more efficiencies and return higheryields. Airframe and engine manufacturerswill continue to innovate and deliver designsthat optimize economics, performance anduse new technologies that enhance theproducts in the capacity segments theyserve. Additionally, airlines are creating orrefining business models designed to reducecosts, reduce network inefficiencies and

increase profitability.

Geographic Shift: Emerging economicmarkets represent the highest growthopportunities for aviation, while stability ispredicted in more mature markets. As apercentage of the total deliveries, new aircraftdemand will increase for emerging marketsoutside of North America and Europe.

The 20- to 149-seat market: Over thenext 20 years, Bombardier forecasts demandfor 13,100 aircraft in the 20- to 149-seatmarket. This segment, part of the overallindustry, will generate approximately $639billion in total sales. This represents anincrease of 300 new aircraft deliveriescompared to last years forecast. The 20-to 99-seat category will account for 34%of these revenues ($215 billion) while the100- to 149-seat segment will generate

66% or $424 billion of the total.

Overall, Bombardiers confidence in theevolution and growth of the airline industryremains strong. We are excited to be anintegral part of an industry that is taking flight.

The next 20 years hold great promise of airtransportation modernization through moreefficient aircraft and engine designs,step-changes in air traffic modernization,

cockpit and other technologies.

The Evolution of the 20- to149-seat MarketplaceCombined with our forecast of fleet, deliveriesand retirement of jets in the 100- to 149-seatsegment, this forecast provides internalguidance for Bombardier's commercialaircraft market forecast strategic planningprocess and public transparency of our viewof the airline marketplace. BombardiersCommercial Aircraft Market Forecast focuseson three distinct seat segments; 20- to 59-seat, 60- to 99-seat and 100- to 149-seat.

Within the lower two seat categories, aircraftdeliveries include families of turboprops andregional jets. The two engine types andaircraft designs cover the full spectrum ofregional airline operating costand mission needs.

The 20- to 59-seat segment remains a keycomponent of the regional airline industry.Demand for new aircraft in this segment isexpected to arise in the latter half of the

forecast period, with some 300 units deliv-ered. These new deliveries are driven by twokey factors, mainly the anticipated retirementof todays active 20- to 59-seat aircraft andnew aircraft technology being applied to thisseat segment. In the near and mid terms, thissegment will exhibit evolutionary vitality in thepre-owned or secondary market. In particular,Russia, Africa and Latin America will seeconsiderable absorption of used 50-seat

regional jets.

Source: Bombardier Commercial Aircraft Market Forecast 2011-2030, OAG Aviation Solutions

Total Fleet Units

60- to 99-seat

11,000Units

17,400Units

0

4,000

8,000

12,000

16,000

20,000

2010 2030

2,200

9,

200

6,

800

1,400

Total FleetUnits

100- to 149-seat

20- to 59-seat

5,

200

3,

600


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The 60- to 99-seat segment has establisheditself as the new foundation of the regional

market. Regional airlines are shifting theirfleets to larger aircraft, both turboprop and

jet. These aircraft offer greater passengercapacity and lower operating costs perseat while meeting passenger demand forincreased frequencies and schedules toprimary, secondary and tertiary airports.Regional airline aircraft are increasinglyconfigured to provide two classes ofseating (business and economy) in order

to provide seamless services across theairline network. We forecast 5,800 unitsfor delivery in this segment.

The 100- to 149-seat segment will exhibitthe strongest growth of the three segmentswe study in our Forecast. The 100- to 149-seat segment today is dominated by a fleetof aging aircraft. With the current averageage of 19 years, we estimate that 58% ofthe current 100- to 149-seat aircraft willbe retired from passenger service by theend of this forecast period.

The global economy and the aviationmarketplace are gaining strength. Drivenby higher gross domestic product (GDP)growth projections, we at BombardierCommercial Aircraft believe that this globaleconomic momentum will continue to bringthe airline industry back to growth. We are

confident that there will be a demand for

new, larger, more fuel efficient aircraft, withsome 13,100 new 20- to 149-seat aircraft

delivered in the next 20 years.



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ECONOMIC TRENDS

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Economic and AviationIndustry GrowthIn late 2009, the world economy beganits recovery, and the airline industry is alsogrowing again. Year-over-year GDP growthfor 2010 was 3.9%, and is forecast to be3.5% in 2011. GDP is projected to grow ata compound annual growth rate (CAGR)of 3.4% over the next 20 years, up from3.2% in last years forecast.

The positive growth trend of the airline

industry can also be measured by thedemand for new aircraft. In 2010, orderswere placed for 1,362 commercial aircraft,more than double the 631 placed in 2009.

As the economy continues to strengthen,it is anticipated that capacity increases willmirror order increases, and some, but not all,modern aircraft currently parked will return tocommercial service. The mixture of parked

and retired aircraft has altered in responseto increased demand for passenger travel.

The total parked aircraft fleet has declinedyear-over-year by 8%. There are currently2,288 commercial aircraft parked, downfrom the high of 2,496 in 2009, but stillabove the 10-year low of 1,681 in 2007.

Source: IHS Global Insight, February 2011. Note 1: GDP = Gross Domestic Product

%, 2010

4 to 6%

> 6%

2 to 4%

0 to 2%

< 0%

WorldAverage

3.9%

World Real GDP Growth

Source: Bombardier Analysis, OAG Aviation Solutions, IHS Global Insight

Commercial Aircraft Orders Lag GDP Growth

500

000

500

000

1500

1000

500

0

7%

6%

5%

4%

3%

2%

1%

0%

-1%

-2%

-3%

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

Commercial Aircraft Orders GDP Growth (IHS Global Insignt Feb 2011)

economic trendsBombardier Commercial Aircraft | Market Forecast 2011-2030 08


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North America and Europe currentlyrepresent the two largest airline fleets and

the largest sources of demand for newaircraft. Over the 20-year forecast period,Bombardier anticipates strong growth inair traffic and fleets across many emergingmarkets, although starting from a muchsmaller base. Demand from outside North

America and Europe will increase considerablyas world economies grow. In particular, India,

China, Latin America, Middle East and Africawill lead with projected real GDP growth

above the world average of 3.4%.

By 2030, economies outside of NorthAmerica and Europe will account for 51%of global GDP, up 11 percentage points fromtheir current position. As a countrys GDPper capita grows, so too does its residents'propensity to travel. This propensity in turn

drives demand for aircraft to satisfy thegrowing base of travelers, reinforcing our

positive outlook for these markets.

Bombardier takes a positive view of theeconomic growth forecast, as it exhibits anupward turn following the recent downturn.

GDP Per Capita

Source: IHS Global Insight, MIDT data, Bombardier Analysis

Trips

PerCapita

Propensity to Travel

0.001

0.01

0.1

1

10

$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000

IrelandAustralia

Germany

Israel

Portugal

RussiaChina

India

Hong KongUnited States

South Africa

Canada

Switzerland

Denmark

Qatar

Brazil

GDP Growth RatesCompound Annual Growth Rate (2011-2030)

1%

0%

2%

3%

4%

8%

5%

6%

7%

World

3.4%

Africa

4.4%

1.9%

India

7.5%

China

7.2%

2.7%

LatinAmerica

4.3%

MiddleEast

NorthAmerica

2.4%

Asia/Pacific

(ex.

China,

India)

Europe

4.1%

Source: IHS Global Insight, Feb 2011, Bombardier Analysis



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Airline CapacityBombardiers forecast model uses fleet seatsas a major driver of the relationship betweenGDP and deliveries. Fleet seats are the totalnumber of passenger seats in all in-servicecommercial aircraft. As a measure of airlinecapacity, total fleet-seats in commercialaircraft are anticipated to grow by 75%over the forecast period.

The 2008-2009 economic recessionresulted in decreased passenger demand

and consequent airline capacity reductions.Historically, previous capacity reductionevents have had a positive effect on airlinedecisions to right-size aircraft and tooptimize their fleet and networks. This,in turn, enabled these airlines to increasetheir capacity quickly increase their capacityas the economy turned upward in 2009.

Total airline capacity increased 2.3% year-over-year between February 2010 and

February 2011. This is a significant changefrom the previous year-over-year 2.5%decrease in capacity. Airlines are experiencinggains in traffic, load factors and yields, andmany airlines are projected to show operatingprofits in 2011. The annual average loadfactor for all US commercial airlines in 2010was 77.9%, an increase of 2.4 percentagepoints from 2009. While airline trafficincreased in 2010, yields remain below the

decade's highest levels in 2008.

Forecast capacity increases will not be evenlydistributed across the globe. In 2010, North

America experienced reduced capacity, whileChina and the Middle East experienceddouble digit year-over-year capacity growth.

Bombardier is confident that total fleet-seatson all in-service commercial aircraft willincrease by 75% over the forecast period

in the 20- to 149-seat range.

0.4

0.6

0.0

0.2

0.8

1.0

1.2

1.4

1.6

1.8

2000

FleetS

eats(millions)

2005 2010 2015 2020 2025 2030

Commercial Aircraft Capacity Worldwide by Seat CategoryFleet seats, 20- to 149-seat aircraft, Calendar year 2000-2030

20- to 59-seats

Actual Forecast

60- to 99-seats 100- to 149-seats

Source: Bombardier Commercial Aircraft Market Forecast 2011-2030



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Oil price and volatilityOil price is a critical determinant of jet fuelprice and remains a key factor in forecastingthe shape and size of the future aviation fleet.Fuel has been the single highest operatingcost factor for airlines since 2006, where itsurpassed labour costs. Fuel represents25.4% of costs, or 3.27 cents per availableseat mile (asm). Today, the combination oflabour and fuel costs account for 50.1% of

all airline operating costs, with labourrepresenting 24.7% of costs, or 3.18

cents per asm.

Oil (Cushing spot price) averaged $19 perbarrel in the 1990s and $51 in the 2000s.

A new plateau has been reached, with oilaveraging $76 per barrel over the last fiveyears and hovering just above $98 per barrelin the first quarter of 2011. The last threeyears saw extremely volatile oil prices,

reaching a spot price of $145 per barrel inthe summer of 2008 and falling to a low of

$30 per barrel in the winter of the same year.

According to the US Energy InformationAdministration, the average price of oil forthe next 20 years will be $107 per barrel.

This estimate is a $4 per barrel increasefrom its 2010 forecast.

Oil prices also influence airline decisionsto replace less efficient aircraft types and to

optimize network operations. This influenceis evident with the increase in demand fornew generation, highly fuel-efficient turbopropaircraft. In addition, major airlines continue toremove older less efficient out-of-productionaircraft from their fleet, replacing them withnewer, more efficient jets.

FuelLabour

Source: Air Transport Association of America, 2011

Operating Cost History: Fuel & Labour

0.0

1.0

2.0

4.0

5.0

6.0

3.0

UnitOp

eratingCost

(CentsperAvailableSeatMile)

1Q00

3Q00

1Q01

3Q01

1Q02

3Q02

1Q03

3Q03

1Q04

3Q04

1Q05

3Q05

1Q06

3Q06

1Q07

3Q07

1Q08

3Q08

1Q09

3Q09

1Q10

3Q10

According to the US

Energy Information

Administration, theaverage price of oil for

the next 20 years willbe $107 per barrel.



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Oil price volatility creates uncertaintythroughout the marketplace; from settingfares to forecasting passenger traffic volumes,airline workload requirements and fleet re-

placement timing and decisions. Oil pricevolatility impacts on the ability of airlines toforecast direct operating costs accuratelyon daily, monthly and annual bases.

Overall, Bombardier believes that oil priceswill remain volatile in the near-term forecastperiod, but in combination with other factors,such as technological improvements, willaccelerate the retirement of older equipmentin favor of more modern, efficient aircraft.

Weekly WTI Cushing Spot Price(Dollars per Barrel)

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

$130

$120

$110

$100

$90

$80

$70

$60

$50

17-Apr-2009

17-May-2009

17-Jun-2009

17-Jul-2009

17-Aug-2009

17-Sep-2009

17-Oct-2009

17-Nov-2009

17-Dec-2009

17-Jan-2010

17-Feb-2010

17-Mar-2010

17-Apr-2010

17-May-2010

17-Jun-2010

17-Jul-2010

17-Aug-2010

17-Sep-2010

17-Oct-2010

17-Nov-2010

17-Dec-2010

17-Jan-2011

17-Feb-2011

17-Mar-2011

17-Apr-2011

17-May-2011

Cushing 2009 Avg.: $61.95

Cushing 2010 Avg.: $79.48 Cushing2011 Avg.:

$98.35

Source: Bombardier Analysis, EIA April 2011

$140

$120

$100

$80

$60

$40

$20

$0

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Actual Forecast

Average: $107 USD per barrel

Oil Forecast



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RetirementsAircraft retirement and replacement is one

of many influential variables in determiningfuture aircraft delivery and fleet composition.Historically, older aircraft are replaced asnewer, more cost effective, and fuel efficientaircraft become available.

In addition to fuel price and volatility, a widearray of factors impact aircraft retirementtiming 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 ageof the aircraft and available new productsand replacement opportunities.

Most aircraft move through a series of life-cycle stages. Historically, passenger aircraftwhen retired from commercial operationmove into cargo operations. A recent trendwith some cargo operators is to purchaselarge, purpose-built new cargo aircraft. Other

aircraft are placed in secondary markets with

commercial operators with different utilizationneeds, different operating environments and

business models.

As 50-seat regional jets reach 20+ years ofage, many will be converted into freighteraircraft. Sizeable opportunities exist for small

jet freighters (between 5,000 and 20,000 lbs.of payload) to replace the more than 1,100aircraft currently in all-cargo service worldwide.Nearly all of the aircraft in this fleet are olderturboprops averaging 29 years of age.

Commercial Aircraft Retirement Curve

Standard Commercial Passenger Aircraft Retirement Curve

80% retired from commercial passenger service

0%

10%

20%

40%

50%

60%

30%

70%

80%

90%

100%

1 3 5 7 9 11 1 3 15 17 1 9 21 2 3 25 27 29 31 33 35 37 39 41 43 45

Source: Bombardier Analysis


Oil @ $26 Oil @ $79 Oil @ an average ofp er b ar re l p er b ar re l $107 per barrel

218

52%

48%

2001 Actual

319

88%

12%

Turboprop

Regional Jet59%

41%

2030 Forecast

6100

2010 Actual

Units

Oil Price and Engine Type ForecastDelivery by Engine Type 20- to 99-seatsUnits, %, Actual 2001 and 2010, Forecast 2011-2030 period

Source: Bombardier Commercial Aircraft Market Forecast 2011-2030,Energy Information Administration 2011-2030 forecast


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In Service Aircraft 15 Years of Age or Over

500

0

1000

1500

2000

2500

40- to59-Seats

60- to99-Seats

100- to149-Seats

150- to174-Seats

175- to219-Seats

220+Seats

20- to39-Seats

10- to19-Seats

Units

Source: OAG Aviation Solutions, Bombardier Analysis

Fleet evolution from 2010 to 203020- to 149-seat aircraft

11,000

17,400

6,400

(49%)

6,700(51%)

4,300

Growth

13,100Deliveries

Retirements

RetainedFleet

2010 In Service Fleet 2030 In Service Fleet

Source:Bombardier Commercial Aircraft Market Forecast 2011-2030


Age, combined with limited range, willaccelerate this transformation of the smaller

all-cargo fleet. Currently, there is a trendtowards regional jets moving into Russia,Latin America and Africa.

Regulatory requirements also influence theaviation fleet mix and the pace of retirement.Regulations by the International Civil AviationOrganisation, Committee on Aviation andEnvironmental Protection (ICAO/CAEP) in thelast century led to the phase-out of noisieraircraft from US and European commercialfleets. New noise and emissions standardsare being set during this round of ICAO/CAEP

(2010-2013) that will further restrict bothnoise and emissions, and significantly impact

the composition of the future global aviationfleet. The European Union is also advancingan Emissions Trading Scheme involving airtransportation which could dramaticallyaffect aircraft operating in or overflyingEuropean airspace.

Often, exogenous events, such as the attacksof September 11th, 2001, disrupt the normallife cycle processes of aircraft. After 9/11,older commercial aircraft retirements wereaccelerated and even new model aircraftwere temporarily parked. Many, but not all,

of these newer aircraft have now, 10 yearslater, returned to active service.

The base assumption within the Bombardierforecast model is that, on average, approxi-mately 80% of aircraft will retire fromcommercial passenger service within 28years. A few aircraft will enjoy longer service.

We anticipate that 60% of the current20- to 149-seat fleet will retire by 2030,with retirements lowest in the 60- to 99-seatsegment. Seventy percent of current 20- to59-seat aircraft will be retired, driven by theindustry shift to larger capacity aircraft and


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higher operating costs per seat, drivenby high fuel prices. In the absence of

in-production 20- to 59-seat aircraft duringthe near-term forecast period, this segment,representing 33% of todays 20- to 149-seatfleet, will represent only 8% of the fleet in2030.

By way of contrast, the near-term marketwill see the introduction of new-generation100- to 149-seat aircraft. This segment willrepresent 53% of the total 20- to 149-seatfleet in 2030. Both retirements and growthin this segment will be high. In response tothe introduction of aircraft optimized for the100- to 149-seat segment, 7,000 units willbe delivered and 3,000 aircraft will be retired.

More than half of the current commercialaircraft fleet will be replaced in the next 20years due to technical obsolescence, costinefficiencies, and age. The retirement ofolder aircraft types will have a positive

impact on the demand for new aircraft.


More than half of the current commercial aircraft fleetwill be replaced in the next 20 years due to technicalobsolescence, cost inefficiencies, and age.


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AIRLINE INDUSTRY TRENDS

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Airline EconomicsThe International Air Transport Association

(IATA) suggests that international air traffichas returned to profitability. In 2010, airlinepassenger traffic levels recovered as theglobal economy gained strength. IATA reportsthat international passenger air trafficincreased by 8.2% in 2010 compared to2009 and is expected to increase byanother 4.4% in 2011.

The Asia/Pacific region, while still well below

traffic levels in Europe and the US in terms ofoverall passenger numbers, has been relativelyless affected by the downturn. However,domestic and international passenger trafficlevels in the US and Europe, the worldstwo largest air travel markets, has yet torecover to the high levels recorded in 2007.

Looking forward, in a report released inFebruary 2011, IATA predicts that there will

be 3.3 billion air travelers globally in calendaryear 2014, up 38% from 2.4 billion in 2010.

A continued solid traffic growth will be a keyfactor supporting the recovery of the globalairline industry.

Respecting revenues, global commercialprofits were $18 billion in 2010, and IATAanticipates that profits will remain moderate at$4.0 billion in 2011. They attribute the lowerprofitability forecast in 2011 to the increasingcost of oil, calculating that fuel cost increasesadded an extra $20 billion to airlines costs in2010 alone. IATA estimates that the reductionin profitability would have been significantlygreater were it not balanced by better-than-forecast economic growth combined withrelatively stable and high load factors.

The positive effect of continued traffic growthis overshadowed by the negative effect ofhigh oil prices, resulting in decreased airlineprofitability. The ever-changing conditions

have forced airlines to be disciplined in costcontrol and innovative in revenue manage-

ment. The fundamentals still sound for avery resilient industry

Airline Business ModelsWithin the airline industry, three recognizedpassenger carrying business models exist,each with distinctive characteristics: Mainlinecarriers, Low-Fare carriers (LFCs) andregional carriers.

Mainline carriers typically operate fleets ofaircraft with 100 or more seats in hub-and-spoke networks, serving numerous cities andcountries. Mainline carrier evolution has led tothe replacement of older equipment with newer,more efficient aircraft. Network optimizationthrough specialization has led to strong part-nerships between mainline and regional carriers.

Regional carriers enable mainline carriers

to right-size aircraft for passenger demandthroughout their network, typically right-sizedthrough regional carrier affiliates. Theseregional carriers commonly operate aircraftof 100 seats or less and serve short tomedium-haul markets, where traffic levels arelow. Right-sized aircraft fulfill the market de-mand for frequency and schedule. Equippedwith regional jets and turboprops, regionalcarriers operate one-third of all commercialpassenger flights worldwide.

Source: International Air Transportation Association (IATA), June, 2011

Africa

World

North America

Europe

Asia/Pacific

Middle East

Latin America

14.7

5.5

6.4

3.0

-0.1

0.1

-0.2

-16.0

-9.6

0.0

-4.7

-0.3

-1.4

-0.1

-9.9

-2.7

-4.3

-2.7

-0.6

0.5

-0.1

18.0

4.1

1.9

10.0

0.9

0.9

0.1

4.0

1.2

0.5

2.1

0.1

0.1

-0.1

Region 2007 2008 2009 2010 2011F

Airline Industry Net Profits (Billions US$)

airline industry trendsBombardier Commercial Aircraft | Market Forecast 2011-2030 17


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Regional airlines play a crucial role in providingair transportation in primary, secondary and

tertiary markets. Regional airlines act ascontractors for mainline airlines by connectingpassengers from smaller cities to mainlinehubs, thereby providing market access tosmaller cities that would otherwise be cost-prohibitive to serve using larger mainline aircraft.

The average regional aircraft size in theUS has increased, from 34 seats in 2000, to50 seats in 2005 to 56 seats today. Similarly,the average US regional carrier trip length hasincreased from 296 statute miles in 2000, to457 last year and to 464 statute miles today.In Europe, where scope clauses are lessrestrictive, average regional seating capacityhas increased from 63 seats in 2001, to 72seats in 2009 to 76 seats today. Averagestage length, while shorter in Europe than theUS, has increased from 384 status miles to390 status miles over the same time period.

More variation exists within the low-farecarrier (LFC) business models. LFCs havehelped open air travel to passengers whocould not previously afford. LFCs commonlyoffer point-to-point service between secondaryairports, operate aircraft ranging from 70 to200 seats, and offer mainly low fares. In thepast decade, the market share of regionaland LFCs, both low cost providers, hasgrown significantly. Geographically, this

growth has been strongest in North America

and Europe, and today, LFCs are present insome form in nearly every region of the world.

New business models are evolving andblurring distinctions among the three estab-lished airline business models. With capaci-ties in the commercial aviation marketplaceranging from less than 50 seats to greaterthan 600 seats, right-sizing aircraft to fit themission is critical for maintaining low costs.Regional jets in the 60- to 99-seat marketoffer optimized capacity solutions for longer

routes with lower traffic volumes. Turboprops

are optimized for short and medium-haulflights, while small single-aisle jets provide

long-haul routing and capacity.

There will be 3,600 regional jets delivered inthe next 20 years. The forecast 7,000 newsingle-aisle jets in the 100- to 149-seat segmentwill be optimized for markets up to 3,000miles with medium-sized traffic volumes.

Labour TrendsAirline labour costs have decreased as a

percent of total costs and highlight theadaptability of the industry. Specializationopportunities derived from outsourcing havecontributed to overall cost reductions in asignificant manner. Outsourcing of cateringoperations, maintenance services, andreservations have helped to lower airlinecosts dramatically. Outsourcing of scheduledoperations to regional airlines providesmainline carriers with access to passengers

in smaller cities that would otherwise be costprohibitive for them. As low cost providers,regional carriers operate profitably on thinroutes where mainline carriers could not.

However, labour remains one of the two largestcost elements (fuel being the other) and opti-mization opportunities still exist. A constrainton regional carrier outsourcing opportunitieshas been scope clauses (negotiatedagreements between mainline carrier labour

Source: US Bureau of TransportationStatistics, Jan 2011.

*Most current available data

**Low-Cost Carriersare alsoreferredto asLow-FareCarriers

US Airline Segmentation

Profitability Loss*

Network

Regional

Low-cost**

20.0

15.0

10.0

5.0

0.0

-5.0

-10.0Operating

Profit/Lossasa%

ofTotalOperatingCosts

4Q20

08

1Q20

09

2Q20

09

3Q20

09

4Q20

09*



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and management). These clauses oftenrestrict the use, number and seating capacity

of regional aircraft in the mainline carriersnetwork. Scope clauses are predominantlyfound in US and European airline labouragreements. Driven by necessity, scopeclauses have evolved with the industry tobecome less restrictive with time, thusallowing for greater network optimizationthrough specialization.

Bombardier anticipates that scope clauseswill evolve, permitting even larger aircraft tobe flown by regional carriers. Changes toscope clauses that allow regional airlines tofly larger aircraft will have a positive impacton demand, as will the development of newbusiness models.

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 asthe most cost-effective method of servingshort-haul markets. Increases in oil pricesexpanded the usage of turboprops by airlinesworldwide, causing manufactures to increasethe size and capability of the aircraft. In 2007,the presence of turboprops deployed bymainline carriers increased significantly.

Turboprops will continue to play an integralrole in the regional aircraft marketplace.

As regional airlines worldwide address risingfuel costs and more stringent environmentalregulations, the low fuel burn of turbopropscompared to similarly sized regional jets willallow airlines to maintain capacity, whilereducing fuel costs and shrinking their overallenvironmental footprint. Overall, 40% of thedeliveries in the 20- to 99-seat market segment(6,100 units) will be turboprops. Of the 2,500turboprops to be delivered, 2,350 will besized for the 60- to 99-seat market.

To achieve greatest efficiencies, jet aircraftare best used for longer routes. With no new50-seat jets currently in production in thenear-term, 70-seat turboprops represent acost-effective replacement or supplementfor those routes that are or were served by50-seat jets.

Source: Air Transport Association of America (ATA), 2010FTE: Full Time Equivalent employees, most current annual data

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

Productivity,

ASKs(000)perFTE

US Airline Labour Productivity



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Large RJ

Large TP

Small TP/RJ

Regional Market Segmentation

Distance (nm)

Annualtrafficg

rowth(2002to2010)

Source: Bombardier AnalysisNote: World Origin & Destination markets with less than 1,000 passenger per day each way

0 200 400 600 800 1000 1200 1400 1600

20%

18%

16%

14%

12%

10%

8%

6%

4%

2%

0%


Larger regional jets allow airlines toaccommodate traffic growth and fly longer

routes with optimized seating capacities,while reducing unit costs without comprisingpassenger comfort. In order to satisfy marketfrequency requirements on these longerroutes, we expect that demand for regional

jets will be greater than for turboprops. Webelieve that 59% of deliveries of aircraft upto 100 seats will be for regional jets duringthe forecast period 2011 to 2030.

Airlines and the EnvironmentGlobal environmental issues and regulationswill play an increasing role in shaping the lookand size of aviation and aviation infrastructure.Environmental issues in aviation are oftenbroadly categorized within the followingcategories: local air quality, aircraft emissionsand community noise. The aviation industryhas made signifcant progress in all threecategories.

Aviation has been improving its environmentalperformance consistently for the last 50years. Greater efficiency directly benefitsthe profitability of our businesses, as wellas the environment.

Modern aircraft achieve fuel efficienciesof 3.5 litres per 100 passenger km

Aircraft operations have become 20%more fuel efficient over the past 10 years

Aircraft and engine design play a critical rolein airline fleet and network optimization.


21/50

Todays aircraft fly three times farther on thesame 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 rangeof commercial jet aircraft has increasedto 15,200 km from 5,190 km in 1960,carrying more passengers further withless fuel

Todays aircraft are 20 decibels quieter

than they were 40 years ago

Despite growth in passenger numbersat an average of 5% each year, aviationhas managed to decouple its emissionsgrowth to around 3%, or some 20million tonnes annually

The aviation industry is making furtherenvironmental improvements with guidancefrom international bodies such as ICAOand Air Transport Action Group (ATAG). Keystakeholders including Bombardier arecommitted to moving toward carbon-neutralgrowth within the industry before the end ofthe forecast period and a 50% reduction inCO2 emissions by 2050 relative to 2005.In order to meet these commitments, theapplication of new technological developmentsto new aircraft design is paramount. The IATA

Technology Roadmap provides a summary

Riblets

Wireless opticalconnections for IFE

Spiroid wingtip

Advanced fly-by-wire

MEA architecture

Fly by light

Variable camber with newcontrol surfaces

Energy harvesting devices

Natural laminar flow

Hybrid laminar flow control

Engine replacements

New engine coreconcepts

Geared turbofan Open rotor /unducted fan

Advanced direct drive

Counter-rotating fan

Biomass to fuel or biojet

Biodiesel

Synthetic paraffinic kerosene

Liquefied petroleum gas

Compressed natural gas

Liquid methane

Furans

Butanol

Transesterification fuels Liquid hydrogen

Ethanol

Hybrid wing body

Cruise-efficient STOL

Truss-braced wing

Wireless flight control system

PEM fuel cell

Solid-oxide fuel cell

Solid acid fuel cell

Morphing materials

Morphing airframe

Advanced 3rd gen. core

Active stability management

Thermal management

Variable cycle Adaptive cycles

Boundary-layer ingesting inlets

Embedded distributed multi-fan

Adaptive / active flow control

Ubiquitous composites

Non-Brayton cycles

Pulse detonation cycles

Regenerative / recuperative cycle

Retrofit

Update

New Aircraft< 2020

New Aircraft> 2020

All stages

20202010 2030

AirTrafficManagement

AlternativeFuels

Engine

Airframe&Systems

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

IATA Technology Roadmap, 2009

Source: International Air Transport Association (IATA) Technology Roadmap 2009.



22/50


and assessment of technological opportuni-ties for future aircraft. The roadmap looks at

technologies that will reduce, neutralize andeventually eliminate the carbon footprint ofaviation.

Bombardier believes that the most equitablemeans to industry sustainability goals isthrough global initiatives led by bodies suchas ICAO, with its four pillar approach oftechnology, operations, infrastructure changeand economic measures.

Reducing Bombardier's carbon and environ-mental footprints is critical. Though ourcorporate responsibility activities, we arecommitted to minimizing our manufacturingand operating footprint through increasedefficiency, innovation on site, and creatingenvironmental synergies through engagementwith our supply chain partners.

In sum, environmental concerns are being

addressed by the aviation industry throughthe retirement of older aircraft, fleetmodernization, technology, infrastructure andoperational improvements. The progressionof environmental awareness and regulationswill have a positive effect on demand forefficient new aircraft. Aviation has been improving its environmental

performance consistently for the last 50 years.


23/50

THE FORECAST

taking flight 23


24/50

All forecasts have an underlying

set of assumptions and drivers.

Our assumptions are:

Demand for air travel is cyclical anddirectly related to economic growth andwealth creation over the long term

Airline markets will continue theirevolution towards liberalization

Fleet utilization is directly related toeconomic growth over time

The forecast for the 20-year averageglobal GDP growth rate will be 3.4%,signifying a recovery from the2008/09 recession

Oil prices are forecast to average$107 from 2011-2030, and fuel priceswill affect fleet mix and usage

Aviation Infrastructure will support airtravel demand over the long term

In more mature economic markets,infrastructure will support demandfor air travel

Emerging regional economies willrebound during the first five-year periodof the forecast. In some emergingmarkets, infrastructure will lag,constraining aviation growth

Airlines will continue to focus on reducingcosts; leading to a preference for larger

capacity aircraft in all segments

Scope clauses are assumed to easeover time, stimulating demand forregional aircraft

Environmental regulations will alsoencourage airlines to seek, on a per-seatbasis, lower fuel burn and emissionsaircraft


20-Year Outlook

OutlookMarket Driver

Economic Growth

Fuel Prices

Fuel Volatility

Replacement Demand

Emerging Markets

Environmental Regulations

Environmental Fees

Labour Trends

20- to 59-seat

60- to 99-seat

100- to 149-seat

Total Aircraft

3,600

2,200

5,200

11,000 13,100 6,700 17,400

300

5,800

7,000

2,500

1,200

3,000

1,400

6,800

9,200

Fleet 2010 Fleet 2030Del iv eries Retirement

Fleet Growth Forecast


Segments

Demand for air travel is

cyclical and directly relatedto economic growth andwealth creation over thelong term

the forecastBombardier Commercial Aircraft | Market Forecast 2011-2030 24


25/50


GDP Distribution by Region(2010 and 2030)

North America

Europe

Asia Paci fic (ex. Chi na)

China

ROW

TotalGDP

($Trillion)

$49 Trillion(51% of World GDP)

100,000

80,000

60,000

20,000

0

2010 2030

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

Segment

60- to 99-seat

Total

20- to 59-seat

2011 CAMF

2,350

2,500

150


20-Year Turboprop Forecast20- to 99-Seat Aircraft


20- to 99-Seat Delivery Profile

Regional Jets

59%

Turboprops

41%

SummaryOf the 13,100 aircraft deliveries predicted

from 2011-2030, 2,500 will be turboprops.The remaining 10,600 will be jets, with 3,600in the 20- to 90-seat segment and 7,000 inthe 100- to 149-seat segment. While theabsolute number of aircraft deliveries willbe weighted towards North America and

Europe, still the dominant sources of aircraft

demand, there is a shift in terms of thepercentage of total deliveries. This is indicativeof the increasing importance particularly ofChina and other Asia/Pacific countries whereeconomic growth is projected to outpace therest of the world over the forecast period.

Of the 13,100 aircraft deliveries predictedfrom 2011-2030, 2,500 will be turboprops


26/50

Regional 20-Year Delivery OutlookUnits, 2011-2030


Total World 2011-2030

13,100

North America4,860

Latin America1,000

Africa

550

Europe &Russia/CIS

2,250

China2,310Middle East

430

Asia/Pacific1,700



27/50

20- to 59-Seat SegmentThe regional aircraft market has grown and

with it a preference for larger regional aircraft.Despite this evolution, we foresee 300 newaircraft deliveries in the 20- to 59-seat segment.

These deliveries will occur at the latter stagesof the forecast period when the remainingolder aircraft in this segment needs to bereplaced and new technologies are readyto transform this seat segment.

The regional jet aircraft will continue to

represent a substantial base fleet of regionalairlines in the near term and will give way toa vibrant secondary aircraft market overthe long term.

The capacity and range of 50-seat jets isattractive to emerging airline markets, wheretraffic volumes are low. As evidenced todayin Africa, Latin America, and Eastern Europe,the 50-seat jet will remain in demand withpotential to develop the travel industry further.

New aircraft demand will be derived fromreplacement opportunities of older 20- to59-seat aircraft towards the end of theforecast period.

The regional aircraft market has grown andwith it a preference for larger regional aircraft.



28/50

60- to 99-Seat SegmentThe growth of the 60- to 99-seat segment

will be dependent on the relationship betweenregional and mainline carriers. The outsourcingof regional aircraft flying to regional airlines,which have suitable cost structures, willcontinue to be the main focus for networkoptimization. Scope clauses in North Americaand Europe will continue to ease in order tomeet 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 segmentwill be used to right-size capacity to meettraffic demand.

With the volatility of oil prices, turbopropsbecome a good hedging tool. At short stagelengths, they are more economical than jets.High-speed turboprop aircraft are used bymany airlines to replace 50-seat regional jets.

The worldwide turboprop fleet has continuedto grow and is experiencing resurgence inNorth America. Of the 2,500 turbopropdeliveries predicted in our forecast, 2,350will be in the 60- to 99-seat segment.

Deliveries of regional jets in the 60- to 99-seatmarket will generate in excess of $137 billionin revenue. With a small current fleet, the sizeof this segment is expected to more thantriple. Of the 3,600 regional jet deliveries

forecast, 3,450 will be in the 60- to 99-seatsegment. These aircraft will be used byairlines around the world to improve theirnetwork capacity optimization.


The outsourcing of regionalaircraft flying to regionalairlines, which have suitablecost structures, will continueto be the main focus fornetwork optimization.

Source: Bombardier Commercial Aircraft Market Forecast 2011-2030.

Bombardier Market Segment EvolutionFleet, Deliveries, Retirement: 2010-2030

3,600300 2,500

1,400

2,200

5,800 1,200

6,800

5,200

7,000 3,000

9,200

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

Fleet 2010: 11,000 Deliveries: 13,100 Retirements: 6,700 Fleet 2030: 17,400


29/50

100- to 149-Seat SegmentThe 100- to 149-seat segment represents

the largest market growth opportunity.Current in-production aircraft are notoptimized for this segment, because theyare derivative of larger aircraft and notdesigned for this seat category. They havebecome economically impracticable in anatmosphere driven by efficiency andenvironmental sustainability.

As well as economic cost, the added

weight and drag of current products produceinefficiencies related to higher fuel burn andmore CO2 emissions. The closest alternativesto the 100- to 149-seat segment are thenext smaller and larger aircraft. An industrycommitted to a generational change inoperating economics will shift focus backtoward aircraft optimized for their segmentsand a significant improvement in profitability.

Driving demand in this segment is theacceleration of older generation aircraftretirements. The OAG Fleet iNet database,for example, identifies 1,120 single-aisleaircraft in storage and temporarily inactive.

This represents 8% of the total (active andparked) single-aisle fleet in February 2011,identical proportions from this time last year.



30/50


Bombardier forecasts that nearly 61% oftodays 100- to 149-seat fleet will be retired

by 2030. New generation aircraft specificallydesigned for this segment will have superioreconomics, comfort, lightweight design andbuilt-in operational flexibility. New designs willadvance the retirement of older aircraft andstimulate demand for new services usingaircraft of this capacity.

New aircraft demand for 100- to 149-seataircraft will be for 7,000 deliveries over thenext 20 years, generating sales of more than

$424 billion. The total fleet will grow from5,200 to 9,200 units, an increase of 35%.For new aircraft designed in this segment,change is in the air.

Current large single-aisle jetNew design small single-aisle jetLarge RJ

Passenger Demand per Departure

Profitcontribution

perDeparture

Source: US Department of Transportation, Bombardier Analysis

RJ = Regional jet, Small single-aisle jet: 100- to 149-seats, Large single-aisle jet: 150+ seats

Profit zone Right-sizing aircraft for traffic demand

High

Low

60 200

Current small single-aisle jet

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.


31/50

CONCLUSION

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32/50

The rising cost and volatility of oil prices isan area of concern in the aviation industry.

It creates uncertainty in the planning activiesof many airlines and operators. Combinedwith the political changes taking place inmany of the oil producing countries and therecent climate events, the global demandfor air travel has slowed in the near term.However, in the long term, the price of oiland its volatile nature will drive airlines toaccelerate the retirement of older, lessefficient equipment, increasing the demandfor new-technology, fuel-efficient aircraft.

Bombardiers view of the 20- to 149-seataircraft market remains optimistic. Ourconfidence stems from the industrysrelentless focus on optimization andefficiency. The overall fleet in this marketwill grow by 58% from 11,000 units in2010 to 17,400 units in 2030. New aircraftdeliveries will reach 13,100 units, valuedat $639 billion over the next 20 years.

Bombardiers view of the 20- to 149-seataircraft market remains optimistic.

conclusionBombardier Commercial Aircraft | Market Forecast 2011-2030 32


33/50

conclusionBombardier Commercial Aircraft | Market Forecast 2011-2030 33

Interesting shifts within the marketplacesignal positive challenges to airlines,

manufacturers and the aviation industryas a whole during the next 20 years,including:

The 20- to 59-seat regional fleetwill shrink by more than 60%

The 60- to 99-seat regional fleetwill increase more than 300%

The turboprop share of deliverieswill continue to increase

The 100- to 149-seat fleet will growby almost 77%, from 5,200 today,to 9,200 units.

Going forward, aircraft with optimizedeconomics, operational efficiency andenvironmentally friendly technology willbecome the leading force of a sustainableaviation industry.


34/50

GEOGRAPHIC DETAIL

taking flight 34


35/50

Deliveries remain strongAs a result of a large installed fleet basethat requires continuous replenishment overthe forecast period, deliveries in the North

American remain strong.

Continuous optimization leads toimproving asset efficiencyBetween 2001 and 2010, over 10 carriers inNorth America filed for bankruptcy protection.

Restructuring within bankruptcy protectionbecame a key tool for North American carriersto reduce costs, expand scope clauses, trimcapacity, and improve financial efficiency. Inrecent years, mergers and acquisitions havebecome an effective way of improving theoperating environment by further adjustingcapacity with less competition.

As North American carriers continue toregain financial strengths, the inefficiency of

their aging fleets will be the Achilles' heelof their decade long restructuring efforts. Itis expected that fleet renewal is the nextlogical step towards further improving efficiency.Fuel efficient aircraft with great operatingeconomics will undoubtedly be favoured inthe next fleet renewal cycle.

North America (excluding Mexico)

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 detailBombardier Commercial Aircraft | Market Forecast 2011-2030 35

US Carriers Total Cash and Cash Equivalent

0

5

10

15

20

25

30

35

U

S$

billion

Source: Bureau of Transportation Statistics, Schedule B-1


36/50

Scope clause evolution continuesRegional aircraft have become an integralpart of the commercial aviation route networkin North America. Most US regional carriersact as contractors for larger mainline affiliates.

They provide the affiliates with the flexibility toright-size equipment to meet the demand ofthe traffic. In addition, they are able to accessairfields 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 byregional airlines. According to the regional Air-line Association (RAA), regional aircraftdepartures accounted for 48% of alldepartures at the top 10 US airports. Theyenplaned roughly 24% of passengers flownin the United States in 2010, generating21% of domestic airline revenues, roughlythe same amount as the previous year.

Regional airline payment for servicingthese routes is not based on the numberof passengers carried, but rather on fixedfee-for-flying agreements with their mainlineaffiliates. Outsourcing in the form of capacitypurchase agreements (CPAs) has been, andwill continue to be, the main thrust behind therelationship of mainline and regional carriers.

scope clauses will continue to evolve asmainline carriers search for optimizationopportunities. Scope Clauses will easeover the period of the forecast and willdrive demand for an increased numberof larger capacity regional aircraft.

North America (excluding Mexico) (continued)



37/50

Fast forward 20 yearsNorth America will represent a progressivelysmaller share of worldwide GDP, decliningfrom 28% today to 25% over the forecastperiod. Though growth will be slower thanother economies, delivery demand for 4,860aircraft will maintain North America as thesingle largest aviation market. It is withinNorth America that we expect to see thelargest demand for 100- to 149-seat aircraft,with 2,130 units forecast. This demand willbe fueled by the anticipated retirements of1,000 units and strong growth opportunities.

There will be 130 deliveries of 20- to 59-seataircraft, while retirements are expected tobe strong in this segment, driven by highfuel and operating costs. The largest growthsegment will be the 60- to 99-seat segment,with some 2,600 units to be delivered andonly 400 retired.

North America (excluding Mexico) (continued)


Demand Distribution by Seat Segment

North America, 2011-2030Total: 4,860 Units

3%

53%

44%

20- to 59-seat

60- to 99-seat

100- to 149-seat

Source: Bombardier Commercial Market Aircraft Forecast, 2011-2030

Source: OAG Aviation Solutions

20 01 20 02 20 03 2 004 2 005 2 006 20 07 20 08

0

200

100

400

300Millio

ns

600

500

800

700

2 00 9 2 01 0

Yearly Scheduled Intra-North American

Airline Seats


38/50

Moderate fleet growthEurope is the third largest 20- to 149-seatmarket after North America and China. It isexpected that European deliveries will accountfor 17% of total deliveries. Composed ofa mix of developed and emerging market-places, the European GDP growth rate willtrail the rest of the world at 2.0% per year.

Also contributing to the pace of aviationgrowth is competition from other transportationmodes, both rail and road, which are oftentime-competitive due to the EuropeanUnions densely populated geography andairport-security delays.

European air traffic has experienced disruptionsrecently from climatic activity, particularly themovement of volcanic ash over Europeanairspace. At the height of the disruption,IATA estimated that it was costing the airlineindustry $200 million per day in lost revenues.

The European Regional Airline Associationreports that passenger traffic declined by14.1% in one month alone due to the eruptionof the Eyjafjallaj volcano in 2010.

Environmental sustainability has an elevatedfocus in the European Community, which isreflected in a committed push to includeaviation in the Emissions Trading Scheme (ETS).

Though the ETS will introduce new fees

Europe (including Russia/CIS)


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).


39/50

to passengers and airlines, it is anticipatedthat it will also have the affect of acceleratingthe retirement of old, less efficient aircraft.Continued airline network optimizationactivities will trigger increased turbopropusage on short routes, and regional aircraftin general, in smaller, secondary airports.

The Russian aviation marketplace is notliberalized and access to the marketplace istightly controlled, particularly for new aircraft.Over the past several years, the RussianFederation has had a national objective ofre-establishing its civilian aerospace industry,

which has been stagnant since the breakupof the former Soviet Union. One of the show-case products for this effort is the designand construction of a domestic regional jetwith 78 to 98 seats. This aircraft has beenunder development by Russian state-ownedor state-controlled entities since 2001, andhas recently been certified by the Interstate

Aviation Committee (MAK), the airworthinessauthority for Russia and the Commonwealthof Independent States (CIS).

GDP growth rates for Russia and CIS areforecast at 4.5%. We anticipate demand for

20- to 149-seat aircraft in Russia/CIS willbe 460 units, one-fifth of the total demandfor all deliveries in Europe.

More than 50% of the European deliveriesare anticipated to be 100- to 149-seat aircraftover the forecast period. Within the regionalsegments, deliveries of 60- to 99-seat aircraftwill dominate, with a small component of20- to 59-seat deliveries adding to the total.

The shift to larger capacity aircraft in theregional markets is evident in the distributionof demand over the 20-year period.

Europe (including Russia/CIS) (continued)

Demand Distribution by Seat SegmentEurope (incl. Russia/CIS), 2011-2030Total: 2,250 Units

3%

42%

55%

20- to 59-seat

60- to 99-seat

100- to 149-seat


20 01 20 02 20 03 20 04 2 005 2 006 2 007

0

100

300

200Millions

400

500

2 00 8 2 00 9 2 01 0

Yearly Scheduled Intra-European Airline Seats




40/50

Moderate fleet growthAsia/Pacific, excluding China (PRC), has amoderate fleet growth in the 20- to 149-seatsegment over the next 20 years. It takesdelivery of 1,700 units and retires 770 aircraft.

The fleet grows from 1,190 units in 2010 to2,120 in 2030, an increase of 78%.

A diversified and resilient regionWithin Asia/Pacific, South and Southeast

Asia recovered from the recent economicdownturn at a much faster pace thanNortheast Asia and Oceania. This is mainlydriven by the inherent domestic demandof these high growth regions. Coupled withthis region's diversified culture, governmentpolicies and geography, the need for airtransport is fundamental.

The resilience of this region is impressive,having rebounded quickly from downturns

brought on by the Asian financial crisis in1997, SARS pandemic in 2003, Indian Oceantsunami in 2004, and the 2008 oil pricespike and global economic slowdown.

The emergence of India as a new globalpower will begin to transform the economiclandscape worldwide. With a forecast GDPgrowth rate of 8.5% in 2011, India is second

Asia/Pacific (excluding China (PRC))

Within Asia/Pacific, South and Southeast Asia recovered

from the recent economic downturn at a much faster pace

than Northeast Asia and Oceania.


Sub-region of Asia/Pacific

Northeast Asia

South Asia

Southest Asia

Oceania


41/50

Asia/Pacific (excluding China (PRC)) (continued)

Demand Distribution by Seat SegmentAsia/Pacifi c (ex. China), 2011-2030Total: 1,700 Units

2%

41%57%

20- to 59-seat

60- to 99-seat

100- to 149-seat


2001 2002 2003 2004 2005 2006 2008 2009 2010

0

50

150

100

Million

s

200

2007

Yearly Scheduled Intra-Asia/Pacific Airline Seats(ex. China)



in growth only to China (at 10.3%). As a largeland mass with a large population, domesticair travel is increasing proportionately with thedevelopment of the middle-class community.Domestic consumption and demand is a keydifferentiator from Chinas export-focusedeconomy. IHS Global Insight states thatIndian infrastructure output in late 2010 haspicked up steadily, in tandem with manyother indicators of healthy manufacturingactivity. Nevertheless, India's manufacturingsector as a whole remains fairly robustdespite global headwinds and higher interest

rates. IHS remarks that these infrastructuredata are considered an advance indicator ofgrowth in industrial output, which in turn willlead to infrastructure development, includingaviation. The government plans to investabout $500 million in infrastructure overthe next two years, in transportation, power,telecommunications, roads and oil pipelines.

The government is also seeking to increaseits outlay on infrastructure to $1 trillion overthe five-year period 201217. As a result,investment is expected to remain robust,particularly infrastructure investment.

Japan is only just beginning to rebuild thecountry and its economy following the after-math of the Fukushima environmental crisis.However, in the long term, the growth ofNortheast Asia is expected to be strong interms of a substantial domestic demand,but weak with international trade. In general,history indicates that the entire region isvery resilient.


42/50

The evolution of the growth marketsAs network connectivity between major citycentres is well entrenched and very effective,a shift in attention towards secondary andtertiary cities is the logical next step of devel-opment. Loosening of intra-regional aviationregulation is a prerequisite for such develop-ment and is evolving. This will eventually leadto a similar demand for small to medium sizeaircraft as experienced previously in the USand Europe. Aircraft in the 60-to 149-seatcategory are anticipated to meet thisgrowing traffic demand.

Fleet replenishment continues in themature marketsMature markets within Asia/Pacific continueto look for optimization opportunities. In ahighly environmentally regulated market,aircraft with the highest standard in fueleconomy and lowest noise and emission

characteristics are in a favourable positionto take advantage of the market need. Thereis already an installed base of turbopropand regional jet aircraft in these markets.Continued replenishment or growth intomore efficient 100- to 149-seat segmentis a natural evolution.

Asia/Pacific (excluding China (PRC)) (continued)



43/50

Fleet growth is phenomenalChina is a market that requires all types ofaircraft in volume to meet its economic growthover the next 20 years. The overall fleet from20- to 149-seats is forecast to grow 300%over the next 20 years.

A robust commercial aviation system is keyTo meet the demands of its dynamiceconomic growth, China requires a veryrobust commercial aviation system. Thisincludes not only a continuous replenishmentof new fleets, but also infrastructure such asnew airports, air traffic management systems,the availability of pilots and technicians, andmost importantly, government policy tosupport this phenomenal growth.

In the governments most recent five-yearplan, large-scale new airport developmentis mapped out to 2020. The objective is to

have 82% of the population within 100 kmor 1.5 hours reach of air services, covering96% of the nations GDP. It is very clear thata portion of these new airports is to alleviateair traffic congestion in the densely populatedregions.

China (PRC)


Source: Bombardier Analysis

2006 Airport location

2006-2010 Expansion

2011-2020 Expansion

Persons per square kilometer

Persons per square mile

0 10 100 7001

0 26 250 52025

Existing and Forecast Airports in China


44/50

The remaining airports will develop links toremote areas. This airport growth demandhighlights Chinas need for small to mediumsize aircraft. As a result, China has developedits own turboprop, regional jet and largesingle-aisle jet aircraft programs.

High speed rail complementscommercial aviationMr. Li Jia Xiang, Minister of General

Administration of Civil Aviation of China, inthe outlook of the 12th five-year plan, statedthat the development of high speed rail is akey strategy to alleviate the congestion inaviation hubs such as Beijing, Shanghai andGuangzhou. This strategy also helps theadministration focus on areas where airtransport has clear advantages over highspeed rail, such as China's sparselypopulated western regions.

China (PRC) (continued)


...the development of high speed rail is a key strategy

to alleviate the congestion in aviation hubs...


45/50

Demand Distribution by Seat Segment

China (PRC), 2011-2030Total: 2,310 Units

< 1 %

20- to 59-seat

60- to 99-seat

100- to 149-seat


37%

62%

Yearly Scheduled Intra-China (PRC) Airline Seats

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

0

20

60

40

Millions

80

100

120

140


Regional aircraft play a key role in feedingtraffic to big city hubs and meeting Chinaspresent and forecast needs. Bombardierpredicts a demand for almost 2,400 aircraftin the 60- to 149-seat segment over theforecast period, to fulfill the growing need forincreased distribution of wealth throughoutthe country.

Starting from a small base, regional aircraftdeliveries will reach 2,540 units. Starting froma small base, deliveries in the regional aircraftrange will reach 870 units with fewer than150 retirements. The strongest growth willbe in the 100- to 149-seat segment,with 1,440 units.


China (PRC) (continued)


46/50

Deliveries remain strongLatin America currently accounts for 6% ofworld GDP and carries about 6% of worldpassenger traffic. This contrasts with thepresence of 11% of the world's airlines inthe region. Fierce competition leads toconsolidation in the industry. The bankruptcyof Mexicana and the merger of LAN and TAMare the highlights of the industry in 2010.

Latin America, beset in the past by debt de-faults, currency devaluations and the need forbailouts from other countries, is experiencingrobust economic growth. According to IATA,Latin America is the only region to havedelivered a profit in both 2009 and 2010.

Latin America (including Caribbean and Mexico)

Latin America, beset in the past by debt defaults, currencydevaluations and the need for bailouts from other countries,is experiencing robust economic growth.


Market Capitalization (US$ Billion)

Source: Bombardier Analysis, various company websites

LANT

AM Delta

Lufth

ansa

Grou

p

Conti

nenta

l/Unit

ed

AirFra

nce/K

LM

BA/Ib

eria

$14.0

$11.2 $10.4

$8.8

$5.7 $5.5


47/50

The Latin American and Caribbean AirTransport Association (ALTA) announcedthat its member airlines carried 136.4 millionpassengers in 2010, up 11.3% from theprevious year. The load factor climbed to73.3%, 3.2 percentage points higher thanin 2009. The combined market capitalizationof LAN and TAM is about $14 billion, higherthan most leading airline groups. It is apromising indication that Latin America isgaining more influence on the global airtransport issues, such as the environmentand liberalization.

Secondary aviation infrastructuredemand is growingBrazil, which led the regional recovery fromthe 2009 downturn, will host the upcoming2014 FIFA World Cup and 2016 SummerOlympics. Regional economies will undoubt-edly be stimulated by these major events,and it is anticipated that it will spur muchneeded infrastructure development tosupport its long-term growth in air transport.

The development and increase of low-farecarriers in the region allows much widerpopulation access to affordable air travel.

Some low-fare carriers have just begunto utilize smaller regional jet and turbopropaircraft to reach further into secondary ortertiary markets. Increased use of smallerregional aircraft will provide affordable serviceto smaller markets in the regions

Starting from a base of just under 1,000aircraft, there will be 1,000 units deliveredwithin the 100- to 149-seat market, and 640of the existing fleet will be retired. More than60% of deliveries will be in the 100- to 149-seat segment.

Latin America (including Caribbean and Mexico) (continued)

Demand Distribution by Seat SegmentLatin America, 2011-2030Total: 1,000 Units

3%

35%

62%

20- to 59-seat

60- to 99-seat

100- to 149-seat


Yearly Scheduled Intra-Latin America Airline Seats

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

0

40

20

80

60Millions

120

100

160

140




48/50

Moderate growthEconomic prospects for the Middle East andAfrica are promising, showing strong signs ofGDP growth, with 4.5% for Africa and 5.2%for the Middle East over the forecast period.

Both regions face challenges, which haveled to a slower pace of growth of regionaland 100- to 149-seat aircraft markets. Thesechallenges include political uncertainty,lagging infrastructure development andslow aviation deregulation.

There are signs that these challenges arebeing addressed and that their impact willbegin within the period of this forecast.Currently, the Middle East and North Africa(MENA) are experiencing economic down-turns due to the social and political upheaval.Egypt, Libya and Tunisia are particularlyexperiencing slumps in their tourism trade,

and hence air traffic, as well as a slowdownin normal business activity. The InternationalMonetary Fund has trimmed its 2011 GDPforecast for MENA by 50 basis points fromthe beginning of the year (from 4.6% to4.1%).

In Africa, with its multitude of countries, manyof which are mired in poverty or warfare, airtransportation infrastructure development is

focused primarily on a few international hubs

rather than secondary and tertiary airports.Other forms of infrastructure, such as sophisti-cated telecommunications networks, also varysignificantly between regions. There are signs

of economic change, which should begin to

filter down to the heavily regulated aviationindustry near or just beyond the end of theforecast period. One such sign is the amountof external investment in the country by India

and China.

Africa and the Middle East


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.


49/50


Demand Distribution by Seat SegmentAfrica and the Middle East, 2011-2030Total: 980 Units

2%

37%

61%

20- to 59-seat

60- to 99-seat

100- to 149-seat


Yearly Scheduled Intra-Africa andIntra-Middle East Airline Seats20- to 149-seat Aircraft In Africa and The Middle East


20 01 2 00 2 2 00 3 20 04 2 00 5 20 06 2 007 20 08 2 00 9 2 010

0

20

10

40

30Millions

60

50

80

70

Great economic promiseIHS Global Insight analysis indicates thatIndian trade with Africa has increased sub-stantially over the decade, with Indian importsfrom Africa growing from $18.7 billion to$20.7 billion last year. Additionally, India hasextended $5 billion in credit over three yearsto Africa in order to support economic growth.Similarly, China has steadily contributed to

Africas resource development and trans-portation infrastructure. Since 2006, Chinahas invested in $4.5-5 billion per year insub-Saharan Africa.

Transformational geographic locationThe Middle East continues to offer thepotential to play a key role in the transformationof the aviation industry. Sitting between theemerging economic markets of India andChina, Middle East carriers have consistentlyreported increased annual enplanements andrevenues. The Arab Air Carriers Association(ACCO) most current data, 2009, reports a9.4% year-over-year increase in internationalpassengers. 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 quarterof 2010.

While starting from a small base, Africaand Middle East deliveries will capture 7%,or 980, of the total 13,100 20- to 149-seatdeliveries worldwide.

Africa and the Middle East (continued)


50/50

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 DailyBank 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

For electronic copies of the Bombardier AerospaceCommercial Aircraft Market Forecast, 2011-2030, please

visit our website at: www.bombardier.com

Resources used in the Bombardier Aerospace,Commercial Aircraft Market Forecast

forward looking statement

This pres enta tio n incl udes forw ard- loo king stat ement s. Forw ard-looking statements generally can be identified by the use of for-

ward-looking terminology such as may, will, expect, intend,anticipate, plan, foresee, believe or continue, the negativeof these terms, variations of them or similar terminology. By theirnature, forward-looking statements require us to make assumptionsan d ar e su bject to im por tan t kn own an d u n kn own r isks an duncertainties, which may cause our actual results in future periodsto differ materially from forecasted results. While we consider ourassumptions to be reasonable and appropriate based on informationcurrently available, there is a risk that they may not be accurate.For additional information with respect to the assumptions underlyingthe forward-looking statements made in this presentation, refer tothe respective Forward-looking statements sections in BA and BTin the MD&A of the Corporations annual report for fiscal year 2011.

Certain factors that could cause actual results to differ materiallyfrom those anticipated in the forward-looking statements includerisks associated with general economic conditions, risks associatedwith our business environment (such as risks associated with theairline industrys financial condition), operational risks (such as risksinvolved in developing new products and services, risks in doingbusiness with partners, risks relating to product performance warrantyand casualty claim losses, to regulatory and legal proceedings, toenvironmental and health and safety, to our dependence on certaincustomers and suppliers, to human resources, to fixed-pricecommitments and to production and project execution), financingrisks (such as risks relating to liquidity and access to capital markets,to the terms of certain restrictive debt covenants, to financing supportprovided on behalf of certain customers and to reliance on governmentsupport) and market risks (such as risks relating to foreign currencyfluctuations, to changing interest rates and commodity prices risks).For more details, see the Risks and uncertainties section in Otherin the MD&A of the Corporations annual report for fiscal year 2011.Readers are cautioned that the foregoing list of factors that may affectfuture growth, results and performance is not exhaustive and unduereliance should not be placed on forward-looking statements. Theforward-looking statements set forth herein reflect our expectationsas at the date of this presentation and are subject to change aftersuch date. Unless otherwise required by applicable securities laws,the Corporation expressly disclaims any intention, and assumes noobligation to update or revise any forward-looking statements,whether as a result of new information, future events or otherwise.

All monetar y amo unts are e xpress ed i n 20 11 US do llars , unl ess oth-erwise stated.

Registered trademark(s)or trademark(s)of Bombardier Inc.or its subsidiaries.

2011 Bombardier Inc. All rights reserved. Printed in Canada. 06/2011

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