Bombardier Commercial Aircraft 2010-29 Market Forecast

moving forward>>>

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

table of contents >>>

03

Executive Summary >>>

07

Economic Trends and Key Factors >>>

16

Airline Industry Trends >>>

The Forecast >>>

Conclusion >>>

Geographic Detail >>>

25 34 36 Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

02

moving forward >>> 03

executive summary >>>

executive summary >>> Welcome to the Bombardier Aerospace Commercial Aircraft Market Forecast, our 20-year view of the market for 20to 149-seat aircraft.

Over the last twelve months, the aviation industry, like many other industries, has faced one of the most challenging environments since the 'Great Depression' of the 1930s. Though negatively affected, the airline industry fared better than many others. Airline operating profits are forecast

by IATA to be positive in 2010. The agility exhibited by the aviation industry when faced with extreme challenges gives Bombardier Commercial Aircraft a sense of confidence in its future. Moving forward, we are confident in the resiliency of the global economy.

We are confident in the adaptability of the aviation industry. We are confident that the commercial aviation industry will continue to develop and grow over the next twenty years.

The evolution of the industry is occurring globally in both developed and emerging airline markets. Airlines are creating in some cases, and refining in others business models that are designed to increase profitability while reducing costs and infrastructure inefficiencies. A prime factor in these

Over the next 20 years, Bombardier

Commercial Aircraft

forecasts delivery demand for 12,800

aircraft between 20- to 149-seats, valued at $612 billion. models is the effective use, deployment and optimization of modern, efficient aircraft.

Over the next 20 years, Bombardier forecasts delivery demand for 12,800 aircraft in the 20- to 149-seat market.

This segment of the overall industry will generate $612 billion in total revenue for original equipment manufacturers (OEMs).

Within that market the 20- to 99-seat segment will account for 36% of the revenues $219 billion, while the 100- to 149-seat segment will generate 64% of revenues of $393 billion.

Continued Growth: Economic growth is the primary driver of our forecast model.

IHS Global Insight expects the global economy to grow at a rate of 3.2% per year over the next 20 years, an increase from last year's forecast of 2.98%. The airline industry will continue to benefit as airline passenger demand is closely linked to economic growth.

Delivery Forecast (Units) Seat Category

2010-2029

20- to 59-seats

200

60- to 99-seats

5,900

100- to 149-seats

6,700

Aircraft Total

12,800

Optimization: Airlines are continuously refining their business models. This is particularly true in an environment where competition is high and yields are low.

Airlines strive to optimize their fleet allocation to best serve their passengers. Airline passengers expect frequency, schedule, comfort and competitive fares while travelling on modern aircraft. New aircraft designs continue to focus on optimizing performance through technology innovations, increased performance and reduced fuel burn and noise levels.

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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executive summary >>>

The 20- to 59-seat segment remains the largest fleet component of the regional airline industry. However, demand for new aircraft in this seat segment is expected to be very low. The few new deliveries in this segment are expected toward the end of the

Total Fleet Units

11,200 Units

17,300 Units

20,000

9,000

16,000

12,000

8,000

4,000

7,000

The 60- to 99-seat segment is becoming 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 available seat.

They also satisfy passenger demand for frequent service to primary, secondary and tertiary airports. Additionally, regional aircraft are increasingly configured to provide two classes of seating in order to provide seamless services across their fleet.

20-Year Worldwide Fleet Forecast

2,200

0 2009

1,300

The Evolution of the 20- to 149-seat market

20-year forecast period, driven by the need to replace obsolescent aircraft. Until then, significant activity will persist in the secondary market. In particular, developing markets will offer considerable opportunities for pre-owned 50-seat regional jets as they grow their airline industries.

5,300

Environmental Focus: Environmental concerns also influence the course of aviation. Building on a strong track record of technological innovation, the industry in aggregate has formally committed to a future of carbon-neutral growth and increased environmental sustainability.

New Aircraft demand will grow fastest in emerging markets within Asia/Pacific, Africa and Latin America.

3,700

Geographic Shift: Growth potential from developing countries is strong as economic growth forecasts are well above the average.

As a percentage of the total deliveries, new aircraft demand will grow fastest in emerging markets within the Asia/Pacific, African, and Latin American regions. However, the 20082009 economic recession has slowed the pace of this emerging demand for the near term.

2029

100- to 149-seats 60- to 99-seats 20- to 59-seats Source: OAG Aviation Solutions, Bombardier Analysis

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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executive summary >>> The Evolution of the 20- to 149-seat market (continued) The 100- to 149-seat segment represents the strongest growth component in terms of deliveries within the 20- to 149-seat market.

With the arrival of new aircraft designed specifically for this segment come the comfort, flexibility, lightweight design and 'game changing' economics needed to stimulate demand.

At Bombardier Commercial Aircraft, we are confident the airline industry will continue to strengthen as the global economy improves.

Moving forward we are confident that there will be a demand for new, larger, more fuel efficient aircraft with 12,800 new deliveries predicted over the next 20 years.

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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moving forward >>> 07

economic trends and key factors >>>

economic trends and key factors >>> Economic and Aviation Industry Growth

Airline traffic growth in developing markets will continue to increase. Growth in airline passenger traffic is related to changes in the population's propensity to travel. Directly linked to changes in GDP per capita, the propensity to travel increases exponentially in markets where GDP per capita is below $15,000 per year, a common occurrence in developing markets. Increased demand for air travel, in turn, drives increased demand for aircraft.

Strong economic growth combined with an amplified

to travel will lead to increased in developing aviation markets.

propensity

aircraft deliveries

Propensity to Travel 10

Switzerland Hong Kong Australia

United States Canada

Ireland

Portugal 1

Trips Per Capita

Airline passenger demand is highly correlated to worldwide economic growth. In the second half of 2009, the worldwide economy began its recovery from a severe global downturn.

Moving forward, worldwide Gross Domestic Product (GDP) is projected to grow at a compound annual growth rate (CAGR) of 3.2% over the next 20 years.

Malaysia South Africa

Qatar Denmark

Germany Israel Russia

0.1

China India

0.01

North America and Europe have wellestablished aviation markets. With North American and European economic growth below the worldwide average at 2.7 % and 1.9 % respectively, airline passenger and fleet growth rates will be proportionately slower.

0.001 $0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

GDP Per Capita Source: IHS Global Insight, MIDT data, Bombardier Analysis

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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economic trends and key factors >>> Economic and Aviation Industry Growth (continued)

Global GDP outside of North America and Europe will increase nine percentage points, over the forecast period representing 48% of World GDP by 2029.

GDP Growth Rates

GDP Distribution by Region

Compound Annual Growth Rate (2010-2029)

(2009 and 2029) 100,000

8%

80,000

6.3% Total GDP ($ Trillion)

6% 5% 4.4% 4% 3%

4.0% 4.0%

3.2% 2.7%

2.4%

2%

1.9%

Europe

Asia/Pacific (ex. China, India)

North America

Middle East

Latin America

(39% of World GDP)

40,000 30,000

10,000 Africa

$20 Trillion

50,000

0% India

(48% of World GDP)

60,000

20,000

Source : IHS Global Insight

$45 Trillion

70,000

1%

China

By 2029, economies outside of North America and Europe will account for 48% of the global GDP, up nine points from their current position.

90,000

7.4% 7%

World

By way of contrast, China and India will have strong GDP growth rates and travel demand. China will experience economic growth of 7.4% over the next 20 years, India 6.3%. This strong growth rate, combined with an amplified propensity to travel among the developing middle-class population, will lead to increased new aircraft deliveries to meet demand.

0 2009

2029 Rest of World China

Source: IHS Global Insight

Asia/Pacific (ex. China) Europe North America

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economic trends and key factors >>> Airline Capacity Fleet seats, the total number of passenger seats in all in-service commercial aircraft, is directly related to GDP growth. As a measure of airline capacity, total fleet seats are anticipated to grow by 75% over the forecast period in the 20- to 149-seat market.

Total fleet seats will grow by 75% in the 20- to 149-seat market over the next 20 years.

Commercial Aircraft Capacity Worldwide by Seat Category Fleet seats, 20- to 149-seat aircraft, Calendar year 1999-2029

1.8 1.6

Actual Fleet Seats (millions)

The 2008-2009 economic recession resulted in decreased airline passenger demand and airline capacity reductions worldwide. Intra-regional capacity declined by 2.3% from 2008 to 2009. However, the emerging aviation markets of Africa, China, Latin America and the Middle East grew in scheduled seat capacity. Though North America and Europe saw capacity decreases during the recession, more positive capacity growth trends are evident in the first-half of 2010.

Forecast

1.4 1.2 1.0 0.8 0.6 0.4

As of June 2010, global capacity growth is increasing at a year-over-year rate of 3.5%.

0.2 0.0 1999

2004

2009 20- to 59-seats

2014 60- to 99-seats

2019

2024

2029

100- to 149-seats

Source: OAG Aviation Solutions, Bombardier Analysis

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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economic trends and key factors >>> Airline Capacity (continued)

Overall global scheduled capacity has returned, showing a year-to-year increase of 3.5%.

Decreases in capacity are related to the number of parked and inactive commercial passenger aircraft. As of June, 2010 inactive aircraft total 1,912 units, up 57% from a ten year low of 1,211 in 2007. It is likely that the older generations of these aircraft will not return to commercial passenger service.

Commercial Aircraft Capacity by Regions

Commercial Aircraft Capacity Worldwide

Total Scheduled Airline Seats By Year

Total Scheduled Airline Seats By Year

4000 1200 3500 Total Scheduled Seats (millions)

Total Scheduled Seats (millions)

1000

800

600

400

3000 2500

2000

1500

1000

200 500 0

0 Africa

Asia/Pacific China

Europe 2008

India 2009

Latin America

Middle East

North America

2003

2000 20- to 59-Seats

2004

60- to 99-Seats

2005

2006

100- to 149-Seats

2007

2008

150- to 199-Seats

2009 200+ Seats

Sources: OAG Aviation Solutions

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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economic trends and key factors >>> Oil Price and Volatility

Fuel and labour cost represent nearly 50% of airline operating costs today.

Operating Cost History: Fuel & Labour

5.0

4.0

3.0

2.0

1.0

Labour

2009

2008

2007

2006

2005

2004

2003

2002

2001

0.0 2000

The price of oil remains a key factor in driving the profile and size of the future aviation fleet. Fuel and labour costs are the two highest operating cost factors for airlines. Today, the combination of labour and fuel costs account for nearly half of airline operating costs. Fuel represents 24% of costs, or 2.97 cents per available seat mile (ASM), while labour costs currently represent 25% of costs, or 3.11 cents per ASM as measured by the Air Transport Association of America.

Unit Operating Cost (Cents per Available Seat Mile)

6.0

Fuel

Source: Air Transport Association of America.

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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economic trends and key factors >>> Oil Price and Volatility (continued) Oil averaged $19 per barrel in the 1990s and $51 in the 2000s. Over the last five years, a new plateau was reached, with oil averaging $71 per barrel while hovering just above $80 per barrel in the first quarter of 2010. The last two years were years with extremely volatile oil prices, reaching a price of over $145 per barrel in the summer of 2008 and a low of under $35 per barrel in the winter of 2009.

Oil prices and volatility impact airline decisions to replace or retire aircraft. Oil is forecast to average $103 per barrel over the next 20 years.

Oil Price Forecast

$225

$175 $150 $125

AEO2010 20-Year Average $103 $100 $75 $50 $25

2010 EIA Forecast

2030

2025

2020

2015

2010

2005

2000

1995

1990

1985

$0 1980

Current forecasts by the US Energy Information Administration (EIA) indicate that the price of oil will average $103 USD per barrel during the 20-year forecast period.

$200 2008 US dollars per barrel

Oil prices impact airline decisions to replace or retire less efficient aircraft types.

This influence is evident with the increase in demand for new generation, fuel-efficient aircraft, both turboprop and jet. Oil price volatility affects the ability of airlines to forecast direct operating costs accurately enough to make cost-based fleet renewal decisions.

2009 EIA Forecast

Source: US Energy Information Administration (EIA), Annual Energy Outlook 2010

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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economic trends and key factors >>> Retirements Aircraft retirements impact aircraft delivery volumes.

Old aircraft are historically retired from commercial service as newer, more cost-effective, and fuel-efficient aircraft become available. Some of these aircraft transition from commercial service into cargo operations.

We anticipate that 60% of today’s 20- to 149-seat fleet, will retire over the period of the forecast.

Commercial Aircraft Retirement Curve 100% 90%

A wide array of factors impact airline retirement timing:

80%

• • • •

60%

• •

aircraft size, capacity and age new product availability engine efficiency (fuel burn) environmental regulations (noise, emissions) specific airline policies, practices or branding financial and tax considerations (operating and maintenance costs, depreciation)

70% Standard Commercial Passenger Aircraft Retirement Curve

50% 40% 30% 20%

80% retired from commercial passenger service 10% 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 Analysis

Age and refurbishment costs are the primary drivers of whether inactive or parked aircraft return to service. As of June 2010, DC9, MD80, F100 and 737 Classic aircraft have seen their scheduled capacity reduced by 20% from 2008.

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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economic trends and key factors >>> Retirements (continued) More than half of the current commercial aircraft fleet will be replaced in the next 20 years due to technical obsolescence, cost inefficiencies, age and individual airline fleet decisions. The retirement of older aircraft types will have a positive impact on the demand for new aircraft.

Retirement activity will be high in the 20- to 59-seat segment of the market, with 7 out of 10 aircraft being retired. As these aircraft retire they will be replaced by larger aircraft.

In the absence of new in-production 20- to 59-seat aircraft, this segment, will be reduced to 8% of the 20- to 149-seat fleet by 2029.

Bombardier analysis shows that on average 80% of aircraft will retire from commercial passenger service within 28 years.

By way of contrast, the 60- to 99-seat segment is projected to retire only 50% of its current fleet during the next 20 years.

In Service Aircraft 15 Years of Age or Over

The growth of this segment is such that in twenty years it will represent 40% of the 20- to 149-seat commercial aircraft fleet.

The 100- to 149-seat segment is projected to retire 3,000 aircraft. This segment will represent 52% of the total 20- to 149-seat fleet in 2029. Both retirements and growth in this segment will be high.

In Service Fleet Forecast 20- to 149-seat aircraft

2500

17,300 2000

Growth

6,100 (48%)

11,200

Units

1500

12,800 Deliveries 1000

Retirements

6,700 (52%)

Retained Fleet

4,500

500

0 20- to 39-Seats

40- to 59-Seats

60- to 99-Seats

100- to 149-Seats

150- to 175-Seats

176- to 230-Seats

230+ Seats

2009 In Service Fleet

2029 In Service Fleet

Source: OAG Aviation Solutions, All Passenger Aircraft, 2010

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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moving forward >>> 16

airline industry trends >>>

airline industry trends >>> Airline Economics The International Air Transport Association (IATA) in March 2010 suggested that international air traffic growth has suffered a three-year setback. IATA believes the 3.5% downturn in passenger demand experienced during the recent recession created a "permanent" loss of 2.5 years' worth of growth opportunities.

In June 2010, IATA predicted that the industry will achieve $2.5 billion net profitability in 2010, versus a $2.8 million loss predicted three months earlier. The difference between the two statements reflects a significant turnaround of the industry and its sensitivity and responsiveness to global economics.

The pace of the airline industry recovery varies by region. Asia/Pacific carriers will enjoy the fastest turnaround with forecast profitability of $2.2 billion. Airlines in North America are expected to realize a return of $1.9 million, a major turnaround from a March forecast of sluggish market growth and losses of $1.8 billion.

In June, 2010, IATA predicted that the industry will achieve $2.5 billion net profitability in 2010.

Airline Industry Net Profit History and Forecast (Billions USD)

Region

2007

World

12.9

North America

2009

2010F

-16.0

-9.9

2.5

3.7

-9.6

-2.7

1.9

Europe

6.4

0.0

-4.3

-2.8

Asia/Pacific

3.0

-4.7

-2.7

2.2

Middle East

-0.1

-0.3

-0.6

0.1

0.1

-1.4

0.5

0.9

-0.2

-0.1

-0.1

0.1

Latin America Africa

2008

Source: IATA, June 2010

Latin America is expected to be the only region that will post two consecutive years of profitability, while Africa and the Middle East are expected to record small profits in 2010.

In the near term, Europe is predicted to realize a net loss at the end of 2010. Some of this loss can be attributed to the eruption of the Icelandic volcano that severely disrupted European passenger travel during April and May 2010.

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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airline industry trends >>> Airline Business Models

Source: OAG Aviation Solutions, flight schedules

17%

15%

15%

24%

28%

31%

32%

59%

56%

54%

53%

2006

2007

2008

2009

16%

18% 21% 62% 2005

19% 17%

20%

22% 10%

13%

21%

18%

7%

66%

64%

2003

2004

68%

72% Mainline

2002

2001

47% 2008

2000

50% 2007

46%

52% 2006

2009

55% 2005

2004

57%

75%

29%

29%

27%

25%

7%

25%

24%

23%

23% 23%

23%

21% 22%

21% 60% 2003

19% 64% 2002

18% 67% 2001

16%

19%

By Airline Type 17%

By Airline Type

16%

Historic Distribution Of European Domestic Market Share

15%

Historic Distribution Of United States Domestic Market Share

69%

Mainline carriers customarily operate fleets of aircraft with 100 or more seats in hub-and-spoke network models, serving numerous cities and countries. As fleets have evolved over time, Mainline carriers have consistently replaced older types with newer and more efficient models. In addition, Mainline network optimization through specialization has led to strong partnerships between Mainline and Regional carriers.

Regional aircraft operate more than one-third of all commercial passenger flights worldwide.

2000

The commercial aviation industry can be segmented into three generally distinct business models. Each model has particular characteristics: Mainline carriers, Low Fare Carriers (LFCs) and Regional carriers. Aircraft capacities range from less than 20 seats to greater than 600 seats within the three types of business models.

LFCs

Regionals

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airline industry trends >>> Airline Business Models (continued) City-Pairs Served By Low Fare Carriers Worldwide 3500

3000

14% CAGR

2500

City-pairs

2000

1500

1000

500

08

07

06

05

04

03

09 20

20

20

20

20

20

20

01

02 20

20

20

00

0

Source: OAG Aviation Solutions, Bombardier Analysis

Regional carriers provide hub feed and market access to smaller cities that would otherwise be cost prohibitive to serve. Hub feed allows Mainline carriers to serve their passengers with a more seamless travel experience from their point of origin to their final destination. Regional carriers normally operate turboprop and jet aircraft of less than 100 seats. These aircraft are optimized

to provide service on short- to medium-haul routes where traffic levels are low. Regional aircraft operate more than one third of all commercial passenger flights worldwide.

The growth of the LFC segment this decade has been astounding. LFCs typically offer point-to-point service for primarily leisure but also for business passengers. While

LFC models vary greatly, they generally compete using low fares and utilize 70- to 200-seat aircraft.

Historically, LFC growth has been strongest in North America and Europe, but today LFC carriers are present in nearly every region of the world.

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airline industry trends >>> Labour Trends

US Airline Labour Productivity Labour Costs: ASMs (000)

3,000

2,500

2,000

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1,500 1997

Labour productivity and costs have been managed through contractual negotiations, internet ticket distribution, electronic boarding operations, system technology improvements and the outsourcing of non-core services.

One form of cost optimization involves outsourcing of scheduled services to Regional airline affiliates. These carriers are commonly compensated by their Mainline partners through capacity purchase agreements (CPA) or a pro-rated revenue sharing agreement. Under a CPA, the Mainline carrier purchases the Regional's capacity based on fixed fees for completed departure and/or block hours. During the past two years, some US Mainline carriers

From 2002 to 2009, airline labour productivity has improved by an average of 3.9% per year.

Productivity: ASMs (000) per FTE

Labour costs represent a quarter of an airline's operating costs. Managing these costs has been critical for Mainline carrier profitability as they compete against LFCs for passengers. Labour costs measured against available seat-miles (ASM) is the foremost measure of productivity for airlines. In the US market, productivity decreased from 1997 to 2001, as costs were higher in proportion to ASMs. Since then, from 2002 to 2009, the ASM/labour cost ratio has improved by an average of 3.9% per year.

Source: Air Transport Association of America (ATA), 2009 FTE: Full-time equivalent employee, 2000 base year

have reversed a decade-long trend by increasing the percentage of pro-rate versus CPA services.

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airline industry trends >>> Labour Trends (continued) An ongoing limitation on Regional carrier outsourcing opportunities has been “scope clauses�, negotiated agreements between Mainline carrier labour and management.

Scope clauses can restrict the use, number and seating capacity of regional aircraft in the Mainline carriers' network. These clauses are predominantly found in US and European airline labour agreements.

Driven by economic and competitive necessity, scope clauses have evolved with the industry to become less restrictive over time, thus allowing for greater network optimization through specialization.

Bombardier anticipates that scope clauses will continue to evolve, permitting up to 100-seat aircraft to be flown by Regional carriers.

Bombardier anticipates that scope clauses will continue to evolve, permitting up to 100-seat aircraft to be flown by Regional carriers. Changes to scope clauses that allow Regional airlines to fly more, larger aircraft will have a positive impact on 20to 149-seat aircraft delivery demand.

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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airline industry trends >>> Turboprops and Jets: Optimization in Practice

High oil prices have contributed to the expanded deployment of turboprops by airlines worldwide. This in turn has caused manufactures to increase the size and capability of these aircraft.

As environmental considerations increasingly influence the industry, the benefits of turboprops becomes more significant.

Designed for short-haul routes, turboprops are more fuel efficient than similar sized jets and generate a smaller carbon footprint.

Critical to airports and the surrounding community, new generation turboprops also produce a smaller noise footprint above and around the airport. Of the 6,100 regional aircraft to be delivered, 2,400 will be turboprops, representing 39% of the total of 20- to 99-seat deliveries.

Offering increased capacity and lower costs per available seat, the current generation of 20- to 99-seat regional jets will experience demand for 3,700 units during the next 20 years. These aircraft are designed to

meet customer demand in terms of improved economics, cabin comfort with a reduced environmental footprint on long, thin regional routes.

Short-Haul Monthly Departures: Turboprops and Jets 350,000 300,000 Monthly Departures

Turboprop and regional jets are critical components for optimizing airline networks.

Airlines are embracing turboprops as the most cost-effective method of serving shorthaul markets, while regional jets are preferred for longer-haul hub feed markets. Increasing oil prices heighten the importance of fuel efficiency within airline fleets.

250,000 200,000 150,000 100,000 50,000 0 1-100

101-200

201-300

301-400

401-500

501-600

601-700

701-800

Distance (SM)

Source: OAG Aviation Solutions, Bombardier Analysis

Currently Turboprop

Currently Jet

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airline industry trends >>> Airlines and the Environment Local Air Quality •

•

Aircraft Emissions (directly related to fuel efficiency)

Over the past 15 years, oxides of nitrogen (NOx) from aircraft engines have been progressively reduced by 50% Carbon monoxide emissions have been reduced by 50% while unburned hydrocarbon and smoke have diminished by 90% over the past 40 years

• •

•

CO2 Emissions

Modern aircraft achieve fuel efficiencies of 3.5 litres per 100 passenger kilometres (km) Today's aircraft fly three times farther on the same amount of fuel than 30 years ago (75% fuel efficiency gain per passenger/km) Despite growth in passenger traffic at an average of 5% each year, aviation has reduced its emissions growth to 3% each year

>40%

Community Noise >20%

• CO 2 Emissions Per Trip

Environmental issues play an increasing role in shaping the future of the airline industry. Air quality and noise are the focus of international environmental regulation.

The aviation community has shown great leadership and progress on environmental issues including local air quality, aircraft engine emissions as measured by fuel efficiency, greenhouse gases such as CO2, and community noise.

•

•

Next Generation Aircraft*

In-Production Aircraft*

Today's aircraft are 20 decibels quieter than they were 40 years ago The latest International Civil Aviation Organization (ICAO) standard for newly manufactured aircraft, Stage 4, requires new aircraft to be at least 10 decibels quieter than the previous standard The introduction of continuous descent approaches will reduce aircraft fuel burn and noise levels on approaches to airports

Out-Of-Production Aircraft*

Source: Bombardier Analysis, 110-seat class aircraft

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airline industry trends >>> Airlines and the Environment (continued) The aviation industry is making further environmental improvements with guidance from self-regulating bodies such as the International Civil Aviation Organization (ICAO) and Air Transport Action Group (ATAG). Key stakeholders, including Bombardier, are committed to moving toward carbon-neutral growth within the aviation industry. This commitment anticipates average fuel efficiency will improve by 1.5% per annum with carbon dioxide (CO2) emissions from aviation, peaking before 2020. Beyond 2020, carbon dioxide emissions from aviation will stabilize and then decline despite the anticipated increase in traffic growth. Achieving these targets will lead to a carbon neutral aviation industry growth.

Environmental challenges are being addressed from a global perspective using a four pillars approach: •

•

Technology: new aircraft designs, new lightweight materials, new engine advances Operations: improved operational practices, more efficient flight procedures, weight reduction measures

Key stakeholders, including Bombardier, are committed to

moving toward carbon-neutral growth within the aviation industry.

•

•

Infrastructure: more efficient air traffic management and airport infrastructure (The Single European Sky and the US Next Generation Air Traffic Management system are two examples) Economic measures: consistency in addressing and assessing noise and emissions within the industry, incentives supportive of environmental sustainability.

Progress related to environmental concerns is best achieved through the replacement of older aircraft with new, efficient aircraft fleets, infrastructure, operational improvements as well as appropriate economic levers. The progression of environmental awareness and regulations will have a positive effect on demand for new, efficient aircraft.

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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moving forward >>> 25

the forecast >>>

the forecast >>> Forecast Summary The 20- to 149-seat market is subdivided into three segments, and two engine types, each with unique growth phases and growth rates.

All forecasts have an underlying set of assumptions and drivers. Our assumptions include:

•

• The 20- to 59-seat segment will experience low demand for new aircraft, but is expected to have robust secondary market demand.

The 60- to 99-seat segment continues to grow rapidly, particularly at the higher end of the capacity range. New aircraft technology and low-cost operators will reinvigorate, and reinvent, the 100- to 149-seat segment leading to substantial growth opportunities for manufacturers with aircraft designed for this segment. As such, the 100- to 149-seat market represents the next large growth opportunity.

•

•

• •

Demand for air travel is cyclical and directly related to economic growth and wealth creation over the long term Access to aircraft financing will not be a constraint to aviation industry growth over the long term The forecast for the 20-year CAGR global GDP growth rate will be 3.2% Oil prices, forecast to average $103 from 2010-2029, continue to influence fleet mix and usage

•

•

•

In more mature economic markets, infrastructure will support demand growth for air travel In some emerging economic markets, infrastructure will lag somewhat and constrain air travel growth Airlines will continue to focus on reducing per-seat costs leading to a preference for larger capacity aircraft within the 20-149 seat market Scope clauses are assumed to continue their evolution, allowing regional airlines to fly aircraft up to 100-seats Environmental regulations and associated costs cause airlines to seek lower fuel burn/emissions aircraft

Fleet Growth Forecast Fleet 2009

Deliveries

Retirement

Fleet 2029

20- to 59-seats

3,700

200

2,600

1,300

60- to 99-seats

2,200

5,900

1,100

7,000

100- to 149-seats

5,300

6,700

3,000

9,000

11,200

12,800

6,700

17,300

Total Aircraft Source: Bombardier Analysis

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

26

the forecast >>> Forecast Summary (continued) Of the 12,800 aircraft deliveries predicted from 2010-2029, 2,400 will be turboprops.

Of the remaining 10,400 jets, 3,700 will be in the 20- to 99-seat segment and 6,700 in the 100- to 149-seat segment.

Sixty percent of the current 20- to 149-seat aircraft fleet will be retired during the period of this forecast. In the 100- to 149- seat segment, retirements of 3,000 aircraft coupled with demand for new products designed for

this capacity range will create demand for 6,700 deliveries over the next 20-years. The 20- to 99-seat regional aircraft segment is projected to take 6,100 new aircraft while retiring 3,700 during the forecast period.

20-Year Turboprop Forecast

20- to 99-Seat Delivery Profile

Geographic Distribution of Deliveries

20- to 99-Seat Aircraft

Segment

Forecasted Worldwide Aircraft Distribution

2010 CAMF

20- to 59-seats

100

60- to 99-seats

2,300

Total

2,400

Deliveries, Units, 2010-2029

Turboprops

% of total

39% Regional Jets

61%

Source: Bombardier Analysis

4,840

North America

38%

China

2,260

18%

Europe

2,200

17%

(Including Russia/CIS)

Asia/Pacific

1,640

13%

Latin America

950

7%

Africa and the Middle East

910

7%

*Numbers rounded

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

27

the forecast >>> Forecast Summary (continued) In the next 20 years, there will be a geographic shift in delivery demand. China is forecast to receive 18% of 20- to 149-seat deliveries. India, from a small base today, will take 5% of the deliveries and will grow to 4% of the 20- to 149-seat fleet, up from 1% today. Conversely, Europe's share of the worldwide 20- to 149-seat fleet will decline to 19% from today's 28%.

The worldwide ratio of delivered aircraft to retired aircraft is 1:1.9, this means that for every aircraft retired 1.9 aircraft are delivered.

Geographically, North America will experience the largest number of retirements, 2,590 units, followed by Europe with 1,380 units.

However, the retirements in Europe will not be matched by a comparable replacement drive. The North American market will replace retired aircraft at a rate of 1:1.8; Europe's replacement rate will be 1:1.2.

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 shift highlights the growing role of emerging aviation markets, particularly China.

In the next 20 years, there will be a geographic

shift in delivery demand.

Geographic Distribution of Fleet Worldwide Distribution of Aircraft Fleet In 2009

Worldwide Distribution of Aircraft Fleet In 2029 % of fleet

North America

4,600

Europe

3,090

(Including Russia/CIS)

Asia/Pacific

Latin America

Africa and the Middle East

China

1,180

970

750

610

41%

28%

% of fleet

North America

6,850

Europe

3,360

(Including Russia/CIS)

40%

19%

11%

China

8%

Asia/Pacific

6%

Latin America

1,290

7%

5%

Africa and the Middle East

1,180

7%

2,550

2,070

15%

12%

*Numbers rounded

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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the forecast >>> 20- to 59-Seat Segment The regional aviation industry has become an integral part of a complex, international system designed to move passengers and cargo seamlessly across the globe.

From its inception as an 'air-taxi' provider deploying 10- to 19-seat turboprop aircraft, the foundation of the regional airline industry shifted upwards to 20- to 59-seat aircraft.

This shift gained momentum with the introduction of the 50-seat Canadair Regional Jet (CRJ) in 1991. The regional jet provides an effective means for Mainline carriers to provide critical feed to their hubs from secondary airports. There are 3,700 regional jets and turboprops with 20- to 59-seats actively operating in commercial passenger service today.

The regional jet provides an effective means for Mainline carriers to provide critical feed to their hubs from secondary airports.

Emerging Markets Served by 50-seat Jets 200 180 160 140 120 100 80

In markets where traffic volumes remain low, the capacity and range of the 50 seat jets remains an attractive option. These aircraft are increasingly being deployed in Russia, Latin America and Africa.

60 40 20 0 2002

2003

2004

2005 Africa

2006 Russia/CIS

2007

2008

2009

2010

Latin America

Source: OAG Aviation Solutions, ERJ135/145, CRJ100/200/440 in passenger service

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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the forecast >>> 20- to 59-Seat Segment (continued)

Regional Market Evolution Calendar year 1980-2009

5,000 4,500 4,000 3,500 Small RJs

3,000

Up to 50 seats

2,500 2,000 Small Turboprops Up to 50 seats

1,500 1,000

Old Gen Small Jets Up to 70 seats

500 Old Gen Turboprops Up to 50 seats

2009

2007

2008

2006

2004

2005

2002

2003

2000

2001

1999

1998

1997

1996

1995

1993

1994

1991

1992

1990

1989

1987

1988

1985

1986

1983

1984

0

1980

New aircraft demand will be derived from replacement opportunities of older 20- to 59-seat aircraft towards the end of the forecast period. Over the next 20 years, we forecast 200 new aircraft deliveries in this segment.

New aircraft demand will be derived from replacement opportunities of older 20- to 59-seat aircraft towards the end of the forecast period.

1982

As 50-seat regional jets reach 20+ years of age, some will be converted into freighter aircraft. Sizeable opportunities exist for small jet freighters, between 2,200 and 9,100 kilograms of payload, to replace the 400 to 600 units currently in service. With nearly all of the current fleet comprised of older turboprops, and thus limited in range, the 50-seat jets are expected to introduce fleet growth to this freighter segment.

Source: OAG Aviation Solutions

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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the forecast >>> 60- to 99-Seat Segment

will be regional jets.

Regional Market Evolution Calendar year 1980-2009

7,000

6,000 Large RJs Up to 100 seats

5,000

Small RJs

4,000

Up to 50 seats

3,000

Large Turboprops Up to 76 seats

2,000 Small Turboprops Up to 50 seats

1,000

Old Gen Small Jets Up to 70 seats

Old Gen Turboprops

0 2009

2007

2008

2006

2004

2005

2002

2003

2000

2001

1999

1997

1998

1995

1996

1993

1994

1991

1992

1990

1989

1987

1988

1985

1986

1983

1984

Up to 50 seats

1980

There is a correlation between turboprop demand and the rising price of fuel. Given the predicted rise of oil prices to an average of $103 per barrel during the forecast period, it is expected that demand for turboprops will remain strong.

39% or 2,300 of the 5,900 60- to 99-seat aircraft delivered will be turboprops, 61%, 3,600

1982

Regional aircraft have grown in size as the industry has evolved. The current generation turboprop and regional jet models are offered from 60 to 99 seats. Turboprops fly shorter hub and spoke routes for an airline, whereas regional jets fly the longer routes. The demand for regional jets will be greater than that of turboprops as they serve longer routes, requiring more aircraft to satisfy market frequency requirements.

Source: OAG Aviation Solutions

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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the forecast >>> 60- to 99-Seat Segment (continued) Currently, turboprops represent 37% of the active 60- to 99-seat aircraft fleet and we forecast that they will represent 39% of deliveries, or 2,300 units, in this segment during the next 20 years.

Regional jets will be in high demand, with total deliveries of 3,600 units predicted in the 60- to 99-seat segment. The final mix of regional jet sizes will be influenced by the evolution of Mainline carrier scope clauses over the next 20 years. As scope limitations ease, Regional carriers' fleets will have more flexibility of fleet choice to optimize network capacity.

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

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the forecast >>> 100- to 149-Seat Segment The 100- to 149-seat segment today is dominated by an ageing fleet of aircraft.

Additionally, the current in-production fleet are not optimized for this segment and are neither efficient nor economically practical today. Because they are derivatives of larger aircraft and not designed for the 100- to 149-seat segment, they are heavier than necessary. The added weight and drag produces inefficiencies related to higher fuel burn and more CO2 emissions.

Demand for new 100- to 149-seat aircraft is driven by the retirement of older generation aircraft and the availability of new models, specifically built for this seat segment. With an average age of 18 years, the majority of the current 100- to 149-seat aircraft will be retired from passenger service during the forecast period.

Bombardier predicts that 57% of today's 100- to 149-seat fleet will be retired by 2029.

New aircraft demand for 100- to 149-seat aircraft will be for 6,700 deliveries over the next 20 years generating OEM revenue of $393 billion. The total fleet will grow from 5,300 to 9,000 units.

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

33

moving forward >>> 34

conclusion >>>

conclusion >>> Conclusion Bombardier's view of the worldwide aviation industry remains positive in spite of the recent recession-driven reductions.

Moving forward, the industry is predicted to continue its focus on optimization and efficiency.

The 20- to 149-seat market will continue its strong growth with deliveries of 12,800 aircraft valued at $612 billion over the next 20 years.

The 20- to 149-seat market will continue its strong growth with deliveries of 12,800 aircraft, representing OEM revenue values of $612 billion over the next 20 years.

Bombardier remains confident in the strength and resiliency of the aviation industry. Interesting shifts within the market signal positive challenges to airlines, manufactures and the aviation industry as a whole during the next 20 years, including: •

•

•

North America and China combined will represent more than 50% of total deliveries Developing markets will grow rapidly, accounting for 44% of the 20- to 149-seat fleet by 2029 The 60- to 99-seat regional fleet will grow by 3.2 times

• •

Turboprops will represent 39% of all 20- to 99-seat deliveries 57% of the current 100- to 149-seat fleet will retire and this segment will experience the largest share of delivery growth

The future of the 20- to 149-seat market is focused on optimization, efficiency and new technologies and will be at the forefront of an economic and environmentally sustainable aviation industry.

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

35

moving forward >>> 36

geographic detail >>>

geographic detail >>> North America (excl. Mexico) North America is the largest aviation market and is predicted to capture 38% of the total deliveries in the 20- to 149-seat market. In the near-term, the United States is experiencing its weakest economic growth since 2002.

Capacity reduction plans by Mainline carriers that began in 2008 put the carriers in a better position to deal with the reduced demand that accompanied the following recession. Annual available seats in the 20- to 149-seat market were reduced by 7% in 2009.

Scope clauses will continue to evolve as Mainline carriers look for optimization opportunities through Regional carrier outsourcing. Scope clauses are expected to continue to ease over the period of the forecast. This relaxation will permit greater flexibility and optimization of aircraft fleet.

North America is predicted to capture 38% of the total deliveries in the 20- to 149-seat market.

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

37

geographic detail >>> North America (excl. Mexico) (continued) Regional airlines carry 51% of all United States airline travellers served by commercial airlines. Of the 658 airports in the region, 72% of them were served exclusively by Regional airlines. The US Regional Airlines Association (RAA) reports that average regional aircraft size has increased to 55 seats from 37 seats in 2000. Over the same period the average trip length has increased by 161 to 457 statute miles.

There are significant near-term replacement opportunities for the 100- to 149-seat aircraft segment with nearly 900 older generation aircraft in service with North American Mainline carriers.

older Mainline and Regional fleet types will create demand for new, small single-aisle aircraft and large regional aircraft.

In North America the 20- to 149-seat fleet will grow to 6,850 units from 4,600 today, with 2,590 retirements. Though GDP economic growth will be lower than most developing economies, delivery demand for 4,840 aircraft will keep North America as the single largest aviation market.

Bombardier predicts that the growth potential for the North American market is robust for both Regional and small single-aisle Mainline aircraft. With increasing fuel prices as a key driver, implementation of highly fuel-efficient aircraft will be imperative. The removal of

Demand Distribution by Seat Segment North America, 2010-2029

Yearly Scheduled Intra-North American Airline Seats

Total: 4,840 Units

800

2%

700

Millions

600

41%

500 400 300 200 100

57%

0 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Source: OAG Aviation Solutions

20- to 59-seats 60- to 99-seats Source: Bombardier Analysis

100- to 149-seats

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

38

geographic detail >>> Europe (including Russia/CIS) Europe is currently the second largest 20to 149-seat market after North America.

It is expected that European deliveries will account for 17% of total deliveries over the next 20 years. European GDP growth will trail the rest of the world at 1.9% per year compared to 2.2% in last year’s forecast.

The related impact on air traffic can be measured through the 8% decline in scheduled intra-European airline seats from 2008 to 2009. As of June 2010, Europe and Russia/CIS have shown signs of a market recovery with a year-to-date scheduled capacity increase of 2%.

Environmental sustainability has an elevated focus in the European Community and is reflected in a legislative mandate to include aviation in the broader European Emissions Trading Scheme (ETS) and other environmental taxes and fees. Though the ETS will introduce new fees for passengers and airlines, it will also have the effect of accelerating the retirement of old, less efficient aircraft. The concern for sustainability will increase demand for new aircraft with lower weights, fuel burn and emissions. Airline network optimization activities will trigger increased turboprop usage on short routes, and both turboprop and regional jet deployment to serve smaller, secondary airports.

European deliveries will account for 17% of total deliveries over the next 20 years.

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

39

geographic detail >>> Europe (including Russia/CIS) (continued) In Europe, where scope clauses are less restrictive than in the US, the average regional seating capacity has increased to 76 seats in 2009 from 63 in 2001. Average flight lengths, while shorter in Europe than the US, have increased to 357 miles from 329 miles in the same period.

Including Russia, the 20- to 149-seat European fleet will grow to 3,360 units in 2029 from 3,090 today. Moving forward, 62%, or 1,930 aircraft, of the existing fleet will retire.

With total deliveries of 2,200 units, more than half of the European deliveries are anticipated to be 100- to 149-seat aircraft. The shift to larger capacity aircraft in the regional markets is evident in the distribution of demand over the 20-year period. New 60- to 99-seat aircraft will account for 42% of the remaining deliveries, with a small component of 20- to 59-seat deliveries.

Demand Distribution by Seat Segment Europe (incl. Russia/CIS), 2010-2029

Yearly Scheduled Intra-European Airline Seats

Total: 2,200 Units

500 2% Millions

400 300 200 100 42% 0

56%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Source: OAG Aviation Solutions

20- to 59-seats 60- to 99-seats Source: Bombardier Analysis

100- to 149-seats

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

40

geographic detail >>> Asia/Pacific (excl. China (PRC)) Asia/Pacific aviation growth is occurring in congruence with a growing middle-class population. As well as Regional and Mainline airlines, LFCs are expanding to support the increased demand for low-fare, point-to-point travel.

Deregulation and further development in the private sector aerospace industry are also shaping this growth. The Asia/Pacific region is expected to take delivery of 1,640 aircraft in the 20- to 149-seat market representing 13% of the total demand.

India is a key driver of economic growth in the Asia/Pacific regional with a GDP growth rate of 6.3% over the next 20 years.

From a small 20- to 149-seat fleet base of 120 units, India's fleet will grow to 650 units by 2029. India is predicted to take 600 deliveries, representing 36% of the total deliveries within the Asia/Pacific region.

The Asia/Pacific region is expected to take delivery of 1,640 aircraft in the 20- to 149-seat market.

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

41

geographic detail >>> Asia/Pacific (excl. China (PRC)) (continued) In 2009, scheduled intra-regional airline declined 6.8% in the 20- to 149-seat segments in Asia/Pacific. However, 60 to 99 scheduled seats grew 45% in 2009 from a small base in 2008.

In total, Asia/Pacific including India will yield 1,640 20- to 149-seat deliveries. Seven hundred or 43% of deliveries will be 60- to 99-seat aircraft and 920 units or 56% will be 100- to 149-seat aircraft.

Demand Distribution by Seat Segment Asia/Pacific (ex. China), 2010-2029

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

Total: 1,640 Units

1%

200

Millions

150

43%

100 50

56% 0 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Source: OAG Aviation Solutions

20- to 59-seats 60- to 99-seats Source: Bombardier Analysis

100- to 149-seats

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

42

geographic detail >>> China (PRC) Over the next 20 years, it is projected that China will more than double its proportion of the worldwide GDP moving to over 15% from 6.8% currently. Since 1945 half-a-billion people have moved from rural into urbanized environments, contributing to the high GDP growth and marking a major shift in China's demographics.

IHS Global Insight reports that in 2009, Chinese economy navigated the most severe downturn in more than a decade with 8.7% year-over-year GDP growth. China's growth will accelerate to 9.9% in 2010, averaging 7.4% over the next 20 years.

China's growing economic power can be observed throughout its aviation industry.

Aviation sector manufacturing, repair and supply organizations are well entrenched in China. Growth in China continues to progress in concert with development of its aviation infrastructure. The Civil Aviation Administration of China (CAAC) expects that it will transition to a civilian controlled air traffic management system. The implication of this transition is noteworthy for commercial aviation and will likely improve access to Chinese airspace and airports for commercial airlines.

By 2029, China's 20- to 149-seat fleet will reach 2,550, third in size after North America and Europe.

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

43

geographic detail >>> China (PRC) (continued) By 2029, China's 20- to 149-seat fleet will reach 2,550, third in size after North America and Europe. Currently, China's fleet is the sixth largest among the forecast geographic regions.

Domestic capacity in China increased by 11.5% in 2009 over 2008. The majority of the current capacity is in the 100- to 149-seat segment. However, there was a 265% increase in 60- to 99-seat capacity.

China is predicted to take delivery of 2,260 aircraft in the 20- to 149-seat market during the next 20 years, representing 18% of worldwide demand. High airline traffic growth drives China's fleet requirements for larger capacity aircraft, with 62% of deliveries in the 100- to 149-seat segment, and 38% in the 20- to 99-seat segment.

Demand Distribution by Seat Segment China (PRC), 2010-2029

Yearly Scheduled Intra-China (PRC) Airline Seats 2010-2029

Total: 2,260 Units

140

< 1%

120 Millions

100

37%

80 60 40 20

62%

0 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Source: OAG Aviation Solutions

20- to 59-seats 60- to 99-seats Source: Bombardier Analysis

100- to 149-seats

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

44

geographic detail >>> Latin America (including Caribbean and Mexico) Latin America currently accounts for 6% of the world's GDP and is expected to achieve growth rates of 4.0% over the next 20 years.

Reflecting the potential of this market, Latin American airlines as a group outperformed all other geographic regions by remaining profitable through the 2008-2009 recession, according to IATA. Traffic growth in Latin America continues to increase with the Latin American & Caribbean Air Transport Association (ALTA) members collectively recording a 4% increase in traffic last year.

Within Latin America, LFC airline models are enjoying particular success in Brazil and Mexico. Additionally, Latin America has maintained robust demand for pre-owned aircraft, originally with smaller turboprops and today with 50-seat regional jets. Latin American 20- to 149-seat fleet will grow to 1,290 units from 970 today. Sixty-five percent of the current fleet will be replaced in the next 20 years.

Latin American 20- to 149-seat fleet will grow 1,290 units from 970 today.

to

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

45

geographic detail >>> Latin America (including Caribbean and Mexico) (continued) Latin America will represent 7% of the delivery demand during the forecast period, or 950 aircraft. The majority of the deliveries will be in the 100- to 149-seat segment with 35% comprised of 60- to 99-seat aircraft.

Scheduled domestic airline seats increased 2% in 2009 from 2008 in Latin America.

Airline seats in the 100- to 149-seat category declined by 1.4%, while seats in the 60- to 99-seat category increased 44% compared to last year.

Demand Distribution by Seat Segment Latin America, 2010-2029

Yearly Scheduled Intra-Latin America Airline Seats

Total: 950 Units

160

2%

140

Millions

120

35%

100 80 60 40 20

63%

0 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Source: OAG Aviation Solutions

20- to 59-seats 60- to 99-seats Source: Bombardier Analysis

100- to 149-seats

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

46

geographic detail >>> Africa and the Middle East 2009 was a difficult year economically for Africa and the Middle East. From 2003 to 2008, Africa experienced GDP growth in excess of 5%, and the Middle East averaged nearly 7%. In 2009, these growth rates dropped to 1.9% and -1.9% respectively.

IHS Global Insight reports that these indicators were driven primarily by plunging commodity prices dragged down by sluggish global demand, including oil demand, a major export of both regions.

However, during the next 20 years, Africa's GDP is projected to grow at a rate of 4.4% while the Middle East will grow at 4.0%, both above the worldwide average of 3.2%.

IHS Global Insight analysis suggests that overall transportation infrastructure development remains a challenge throughout Africa. However, Africa's aviation infrastructure and airline industry is growing. Much of this change is driven by revitalized international airline carrier traffic into and within Africa through increased point-to-point routes.

Foreign carriers are increasing their routes and frequencies to Africa.

Africa and the Middle East together will account for 7%, or 910 units of the 20- to 149-seat aircraft delivery demand.

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

47

geographic detail >>> Africa and the Middle East (continued) The Middle East represents 3% of our forecast 20- to 149-seat deliveries. Regional airline development is starting from a small base, with a small domestic population and a developing regional airline infrastructure.

The Middle East will almost double its regional fleet base to 540 units.

However, the Middle East is playing a transformational role in the global aviation network. The Middle East is geographically

well situated. Sitting between key emerging economic markets like India, China and Africa. The Arab Air Carriers Organization (ACCO) reports that Middle East airlines have experienced a 17% year-over-year increase in international passenger travel as of March 2010. Both Africa and the Middle East are experiencing consistent increases in domestic scheduled airline capacity, including a 26% increase in 60to 99-seat capacity from 2008 to 2009.

Demand Distribution by Seat Segment Africa and the Middle East, 2010-2029

Yearly Scheduled Intra-Africa and Intra-Middle East Airline Seats

Total: 910 Units

20- to 149-seat Aircraft In Africa and The Middle East

The Middle East will double its existing 20- to 149-seat fleet to 540 units, while Africa's fleet will increase to 640 units from 480 today.

Africa and the Middle East together will take delivery of 7%, or 910 of the total 12,800 20- to 149-seat aircraft to be delivered worldwide in the next 20 years.

80

1%

70 60 Millions

50

39%

40 30 20

60%

10 0 2000 20- to 59-seats

2001

2002

2003

2004

2005

2006

2007

2008

2009

Source: OAG Aviation Solutions

60- to 99-seats Source: Bombardier Analysis

100- to 149-seats

Bombardier Commercial Aircraft >>> Market Forecast 2010-2029

48

resources >>> 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 ALTA – Latin American & Caribbean Air Transport Association ATA – Air Transport Association of America Aviation Daily BTS – US Bureau of Transportation Statistics 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 International Panel on Climate Change (IPCC) – Report on Aviation and Climate Change OAG – OAG Aviation Solutions RAA – Regional Airline Association www.enviro.aero

For electronic copies of the Bombardier Aerospace Commercial Aircraft Market Forecast, 2010-2029, please visit our website at: www.bombardier.com

forward looking statement This presentation includes forward-looking statements. Forwardlooking statements generally can be identified by the use of forwardlooking terminology such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe” or “continue” or the negatives of these terms or variations of them or similar terminology.

By their nature, forwardlooking statements require Bombardier Inc. (the “Corporation”) to make assumptions and are subject to important known and unknown risks and uncertainties, which may cause the Corporation’s actual results in future periods to differ materially from forecasted results. While the Corporation considers its assumptions to be reasonable and appropriate based on current information 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, please refer to the respective sections of the Corporation’s aerospace segment (“Aerospace”) and the Corporation’s transportation segment (“Transportation”) in the F10 MD&A. 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 the Corporation’s business environment (such as the financial condition of the airline industry, government policies and priorities and competition from other businesses), operational risks (such as regulatory risks and dependence on key personnel, risks associated with doing business with partners, risks involved with developing new products and services, warranty and casualty claim losses, legal risks from legal proceedings, risks relating to the Corporation’s dependence on certain key customers and key suppliers, risks resulting from fixed-term commitments, human resource risk, and environmental risk), financing risks (such as risks resulting from reliance on government support, risks relating to financing support provided on behalf of certain customers, risks relating to liquidity and access to capital markets, risks relating to the terms of certain restrictive debt covenants and market risks (including currency, interest rate and commodity pricing risk). See the Risks and Uncertainties section in the F10 MD&A. 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 the Corporation’s expectations as at the date of the F10 MD&A 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 forwardlooking statements, whether as a result of new information, future events or otherwise.

All monetary amounts are expressed in 2010 US dollars unless otherwise stated.

Registered trademark(s) or trademark(s) of Bombardier Inc. or its subsidiaries © 2010 Bombardier Inc. All rights reserved. Printed in Canada. 07/2010

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