EmbraerBusiness

Embraer Business

The aerospace businessis supported by 5 pillars High Technology

Qualified People

Global Business

Flexibility

Cash Intensiveness

HighTechnology

High Technology

The Virtual Reality Center

Provides visualization of the aircraft structure and systems during the project phase, using 3D electronic models.

Reduces the development cycle.

Digital Mock-Up EMBRAER 170

High Technology

High Technology

Digital Mock-Up ERJ 145

QualifiedPeople

High School64,5%

PhD0,2% Graduate

29,3%

Post Graduate4,7%

Master1,3%

Qualified People

Educational Levels

25% of the 11,048 employees, are engineers

Qualified People

More than US$ 60 millioninvested in training and qualificationin the last 3 years.

21 24,518

1999 2000 2001

GlobalBusiness

Global Business

Civil & Defense Aircraft flying in 58 countries in 5 continents.

Global Business

Current Fleet of Regional Aircraft

Latin America& Caribbean260 aircraft85 customers

Africa & Middle East55 aircraft10 customers

AsiaPacific60 aircraft20 customers

Europe285 aircraft40 customers

North America920 aircraft35 customers

Turboprop Operators

ERJ Operators

Global Business

Operations in Brazil, United States, Europe, Asia and Australia

BrazilGavião Peixoto

BotucatuSão José dos Campos

Eugênio de Melo

USADallas

NashvilleAtlanta

Palm Beach GardensFort Lauderdale

FranceLe Bourget

UKWeybridge

ChinaBeijing

AustraliaMelbourne

SingaporeSingapore

CashIntensiveness

Cash Intensiveness

In the last 5 years the Company invested almost US$ 1 billion in research & development and productivity.

10481

122147

213

296

1996 1997 1998 1999 2000 2001

US$ 1.3 Billion Investments in the Next 5 Years

Cash Intensiveness

1,283227224239262331TOTAL

34951505971118PP&E

36527

50141

272

1398

342

1308

612

1098

1056

728

1381551

9

ComercialCorporateDefenseOthers

934176174180191213Research &Development

2002-200620062005200420032002US$ millions

Cash intensiveness

Family launched in July 1999Roll out in October 2001First Flight in February 2002

31 months from launchto first flight

Risk Sharing concept with partners allows the decrease in development cycle and investment risk

Cash Intensiveness

In 2000 Embraer increased its global presence with a US$ 446 million Global Offering:

Funds of US$ 244 in a Primary offering for the EMBRAER 170/190 program

Company positioned in the international capital markets

Cash Intensiveness

Nearly two-thirds of the EMBRAER 170/190 program development costs borne by Risk-Sharing Partners

Development cost for the new EMBRAER 170 family program:

Cash Contribution from Risk Sharing Partners $ 260Net Proceeds from IPO $ 240Funds From Cash Flow $ 60

$ 560

Risk Sharing Partner Development Cost $ 290

Total Cost of the EMBRAER 170/190 Program $ 850

Cash Intensiveness

After Sept 11

Embraer supported some aircraft deliveries, which increased the accounts receivables to US$ 672 million.

Inventories increased to US$ 1,022 million.

Representing a change in the net cash position to a net debt position of US$ 23 million.

Cash Intensiveness

732 749696

129

(23)

574660

764842

1,022

198260

373

737672

4Q00 1Q01 2Q01 3Q01 4Q01

Net Cash (Debt) Inventories Accounts Receivable

Cash Intensiveness

Actions have been taken and the expectations for the accounts receivables and inventories are:

842

1,022 1,006879

535 495

636

20

202 177 130 100

3Q01 4Q01 1Q02 E 2Q02 E

Inventories Receivable (Aircraft) Receivable (Spare Parts & Others)

Flexibility

Flexibility

Embraer has the agility and flexibility to adjust its production in accordance with market demand.

ERJ 135/145Deliveries

Flexibility

New Delivery Forecast

4

32

59

96

160 161

135145

1996 1997 1998 1999 2000 2001 2002 2003

Flexibility

To cope with the new scenario, Embraer adjusted its total labor force and laid off 14% (1,800) of its employees.

6,087

4,319 3,8494,494

6,7378,302

10,33411,048

1994 1995 1996 1997 1998 1999 2000 2001

Total of Employees

Flexibility

Flexibility incorporated into the production line allowed an increase in efficiency and decrease in production lead time

Lead Time in Months

8,0

6,0 6,05,5

4,9 5,0

1996 1997 1998 1999 2000 2001

Flexibility

Embraer presents one of the highest "revenue per employee" in the industry.

101

172

242 247

307

254

1996 1997 1998 1999 2000 2001

Revenue per employeeUS$ thousand

Airline MarketTrends and Outlook

Airline Market Evolution - USA

-5%

10%

25%

40%

81 83 85 87 89 91 93 95 97 99

RPM

Gro

wth

(Yr/Y

r % C

hang

e)

Domestic ATARegional RAA

Source: RAA, ATA

US Regional Enplanements Increasing

Source: RAA, FAA

U.S. Regional Airlines% of Domestic Traffic

PassengerEnplanements (Millions)

1970 1985 2000 2010F0

200

400

600

800

1,000

3% 7%12%

14%

RegionalMajor

5%

-3%-1% -1%

-3% -2%

0%3%

-33%

-21%-18%

-13%

17%

9%7%

2% 2% 1%

6%

13%

5%

14%

-23%

-2%

Jan/01 Feb Mar Apr May Jun/01 Jul Aug Sep Oct Nov Dec/01

RP

M G

row

th -

Yr/

Yr

% C

han

ge

Domestic ATARegional RAA

Airline Market - USA

Source: Top Regionals, ATA

American Airlines Traffic

-36%

-23%-22%

-15%

-10%-13%

-11%-10%

-4%

-27%

5% 4%5%

12%

8%10%

-3%

-7%

RPM

Gro

wth

(Yr/Y

r% C

hang

e)American DomesticAmerican Eagle

Source: American Airlines

Jan-Aug/2001

Sep2001

Oct2001

Nov2001

Dec2001

Year2001

Jan2002

Feb2002

Mar2002

Continental Airlines Traffic

-32%

-17%

-13%-10%

-3%

-11%-8%

-5%

4%

23%

-22%

6%

11%15% 14% 14% 14%

5%

RPM

Gro

wth

(Yr/Y

r%

Chan

ge)

Continental Domestic

ExpressJet

Source: Continental Airlines

Jan-Aug/2001

Sep2001

Oct2001

Nov2001

Dec2001

Year2001

Jan2002

Feb2002

Mar2002

Airline Market Evolution - Europe

0%

20%

40%

1995 1996 1997 1998 1999 2000

RPK

Gro

wth

(Yr/Y

r % C

hang

e)

Intra-European AEARegional ERAA

Source: ERAA, AEA

Airline Market - Europe

Source: ERAA, AEA

9%

-13%-15%

-14%

7%9%

7% 7%6%

6%4%4%

6%6%7%5%

-3%

1%

-7%

1%

4%

13%

5%

-3%

RPK

Gro

wth

- Yr

/Yr %

Cha

nge

Intra-European

Regional ERAA

Jan/01 Feb Mar Apr May Jun/01 Jul Aug Sep Oct Nov Dec/01

Source: Back OAG (ERJ 145/140/135, CRJ-100/200, 328Jet routes)

Jan 1995Jan 2002

Regional Jet Presence - USA

Source: Back OAG (ERJ-145/140/135, CRJ-100/200, 328Jet routes)

Jan 1995Jan 2002

Regional Jet Presence - Europe

Parked aircraft

Delivery schedules re-negotiated, except for regional jets (small unit of capacity)

Rightsizing capacity vs. demand: regional jets being used in the USA to maintain presence in markets with decreased demand

Focus on return to profitability in a low yield environment (Cash Management)

Capacity Management (After Sep 11th)

Industry in Transition after Sep 11th

Rightsizing capacity vs. demand: Routes transfered to RJs

Source: Back OAG (American, Continental, Delta,United, and US Airways)

Turboprop ReplacementJet Replacement

Source: Back OAG Air France, Alitalia and British Airways

Rightsizing capacity vs. demand: Routes transferred to RJs

Industry in Transition after Sep 11th

Jets 30-60 Seats3%

Jets 61-90 Seats16%

Jets 91-120 Seats19%

Jets 121-150 Seats17%

Jets > 151 Seats4%

Turboprop41%

1398 aircraft in storage5 ERJ 145/140/135

Parked Aircraft Worldwide

40

0

1990 1995 2000 2010F

30

20

10

50

Average Seating Capacity

Source: FAA, RAA, Embraer

US Regional Aircraft Size Increasing

Seats perAircraft

European Regional Aircraft Size Increasing

1990 1995 2000 2010F

Average Seating Capacity

Source: FAA, RAA, Embraer

Seats perAircraft

0

10

20

30

40

50

60

70

80

120

160

Seat Capacity

40

80

0

Filling the Seat Capacity Gap

Stage Length (nm)

200 400 600 800 1000 1200 1400

30 Seat Tprops

50 SeatERJ 145

Narrow Body Large Aircraft

37 - 44 Seat ERJ 135/140

EMBRAER 170/190

MarketForecast

World (30-120 seat segment): 8,695 jets (US$200 Billion)

4,6104,085TOTAL

1,5901,19091 - 1201,2851,08561 - 901,7351,81030 - 60

2012 - 20212002 - 2011Segment

World Deliveries by Segment - Jets

Market Forecast 2002 - 2021

Market Forecast 2002-2011

AsiaPacific245

6%

China275

7%Africa &

Middle East130

3%

USA, Canada& Caribbean

2,130

52%

30 – 120 Seats: 4,085 Jets

Europe960

24%

LatinAmerica345

8%

Industry Consolidation

BAE / Avro

Airbus Airbus

Boeing Boeing

McDonnell Douglas

ATR

Jetstream

Avro

AIR

ATR

CanadairBRAD BRAD

Fokker

SAAB

EMBRAER EMBRAER

De Havilland

FairchildFairchild-Dornier

Dornier

ERJ 135

ERJ 140

ERJ 145

30-60 Seat Segment Competitors (Jets)

CRJ 200

328 Jet

?

61-90 Seat Segment Competitors (Jets)

EMBRAER 175

EMBRAER 170

CRJ 700

CRJ 900

728 Jet

?

91-120 Seat Segment Competitors (Jets)

717

928

737-600

EMBRAER 190

EMBRAER 195

A 318

?

ERJ 145 Family Orderbook

March/2002

334

160

142

32

FirmBacklog

5311,224359865Total

410837267570ERJ 145

3221945174ERJ 140

8916847121ERJ 135

DeliveriesTotalOptionsFirm

NewJet Family

EMBRAER 170/190 Family

70 Seats

78 Seats

98 Seats

108 Seats

Partnership Evolution

80’s: 500 + Suppliers

90’s:4 Risksharing Partners350 Suppliers

Partnership Evolution

GAMESA (SPAIN) C&D (USA)SONACA (BELGIUM) ENAER (CHILE)

Partnership Evolution

SYSTEMSHAMILTON SUNDSTRAND (USA)HONEYWELL (USA)PARKER (USA)C & D (USA)LIEBHERR (GERMANY)GEAE (USA)

EMBRAER

GAMESA(SPAIN)

LATECOERE(FRANCE)

EMBRAER (LEADER)KAWASAKI (JAPAN)SONACA (BELGIUM)

GEAE (USA)

LATECOERE(FRANCE)

EMBRAER (BRAZIL)

SAINT GOBAIN(USA)

HAMILTON SUNDSTRAND

(USA)WING, STUB, CONTROL SURFACES & PYLON, WINGLET

FORWARD FUSELAGE

WING TO FUSELAGE FAIRING

CENTRAL FUSELAGE I & DOORS

CENTRAL FUSELAGE II

ENGINE & NACELLES

CENTER FUSELAGE III

EMPENNAGES AND REAR FUSELAGE

TAIL CONE & APU

RADOME

00’s:16 Risksharing Partners22 Suppliers

1999 2000 2001 2002

13 months26 months28 months32 months

Go-ahead 1st metal cut

Wing and fuselage mating

Roll out

1st flight

EMBRAER 170/190 Program Progress

February 19th, 2002 1st Flight

T1T4T2 T3T1

1998

T4T2 T3T1 T4T2 T3T1 T4T2 T3T1

1999 2000 2001

T4T2 T3T1

2002

PlannedActual

Competitor

May 1998 August 2002

Cycle to First Flight

EMBRAER 170

June 1999 February 2002

All prototypes ready in the 1st Sem. 02

Jan 02 Feb 02 Mar 02 Apr 02 May 02 Jun 02 Jul 02 Aug 02 Sep 02 Oct 02 Nov 02 Dec 02Nov 01 Dec 01Oct 01

1st Flight19 FEB 2002

S/N 0001

Fatigue test set up

S/N 0006

S/N 0005

S/N 0003

S/N 0004

S/N 0002

Static test set up

Roll Out29 OCT 2001

Static tests conclusion

Fatigue tests conclusion

Aircraft S/N 0001 and S/N 0002

S/N 0002 First flight: April 9, 2002

Large BaggageCompartment Actual mockup picture

HighestVolume / Pax

Cross Section

Cross Section Comparison

EMBRAER 170/190

Excellent Field Performance

Same En Route Performance as Big Jets

Performance Commonality within Family

Performance

Maintenance Costs Comparison

Direct Maintenance Cost

Mature Aircraft

EMBR

AER 17

5CRJ 70

0

EMBR

AER 19

0

EMBR

AER 19

5CRJ 90

0

FD 72

8JET

FD 92

8JET

BAe RJX-10

0

FOKK

ER 10

0

A318 (P

W6122)

A318 (C

FM56

-5B8)

B 717

-200

DM

C (U

S$/

FH

)

EMBRAER 170/195 presents the lowest maintenance costs in its class

Assumptions:2900 FH/Year1.10 FH/FCLabor Rate: US$70/MH2001 economic conditionMature Aircraft

EMBR

AER 17

0

A family designed for excellent revenue generation

EMBRAER 170

EMBRAER 175

EMBRAER 190

EMBRAER 195

PROFITBREAK-EVEN*

28 PAX 42 PAX

30 PAX 48 PAX

34 PAX 64 PAX

36 PAX 72 PAX*Break-even to DOC

Profitable by Design

314202112Total

1027230EMBRAER 190

21213082EMBRAER 170

TotalOptionsFirm

EMBRAER 170/190 Family Orderbook

March/2002

79

FinancialResults

Units

Jet Deliveries

4

32

59

96

160 161

0

40

80

120

160

200

1996 1997 1998 1999 2000 2001

Jet Deliveries / Quarterly

Units

34

414442

1T01 2T01 3T01 4T01

US$ Million

US dollars amounts were obtained using the average rate of the

commercial dollar during each period

Net Sales & Gross Margin

1352

29292787

1844

28,3% 28,6% 31,0% 41,6%

0

500

1000

1500

2000

2500

3000

3500

1998 1999 2000 20010%

10%

20%

30%

40%

50%

US$ Million

US dollars amounts were obtained using the average rate of the

commercial dollar during each period

Net Sales & Gross Margin/Quarterly

7 7 2 775

577

756 838 35 ,1%

44,3%45,3%39,5%

31,3%

0

3 0 0

6 0 0

9 0 0

1 2 0 0

1 5 0 0

4T00 1 T 0 1 2 T 0 1 3T01 4 T 0 1

0%

1 0 %

2 0 %

3 0 %

4 0 %

5 0 %

Brazilian Market

2%

Exports 98%

Parts and Services

6%Corporate

3%Defense

4%

Commercial87%

Sales per Segment Sales per Market

Revenue Breakdown

US$ Million

Includes Profit Sharing

US dollars amounts were obtained using the average rate of the

commercial dollar during each period

EBIT

199324

8 2 0

517

14,7%17,6%

18,6%

28,0%

0

250

500

750

1000

1250

1500

1998 1999 2000 20010%

10%

20%

30%

US$ Million

EBIT/Quarterly

Includes Profit Sharing

US dollars amounts were obtained using the average rate of the

commercial dollar during each period

137

242

115

261

20917,8%

27,6%31,1% 31,2%

20,0%

0

100

200

300

400

4 T 0 0 1T01 2 T 0 1 3 T 0 1 4T010 %

10%

20%

30%

40%

50%

285394

891

599

21,1% 21,4% 21,5%

30,4%

0

200

400

600

800

1000

1200

1998 1999 2000 20010%

5%

10%

15%

20%

25%

30%

35%

US$ Million

EBITDA

Includes Profit Sharing

US dollars amounts were obtained using the average rate of the

commercial dollar during each period

EBITDA/Quarterly

159

259

128

231

28222,2%

33,4%33,6%30,5%

20,6%

0

100

200

300

400

4T00 1 T 0 1 2T01 3 T 0 1 4T010 %

10%

20%

30%

40%

50%

Includes Profit Sharing

US dollars amounts were obtained using the average rate of the

commercial dollar during each period

US$ Million

US$ Million

Net Income

Includes Profit Sharing

US dollars amounts were obtained using the average rate of the

commercial dollar during each period

227114

468

353

8,4%

12,3%

12,7%16,0%

0

200

400

600

1998 1999 2000 20010%

5%

10%

15%

20%

25%

30%

35%

US dollars amounts were obtained using the average rate of the

commercial dollar during each period

Net Income/Quarterly

12899 114

148108

16,6% 14,3%17,6%

12,8%

19,7%

0

100

200

300

400

4 T 0 0 1T01 2 T 0 1 3 T 0 1 4T010 %

10%

20%

30%

40%

50%

US$ Million

Total Debt US$ 772.3 million

Brazilian currency5%

Foreign currency95%

Long Term32%

Short Term68%

Debt Breakdown

US dollars amounts were obtained using the final rate of the commercial dollar during each period

Net Cash (Debt)

US$ Million

$ 732

($ 329)($ 415)

($ 23)

($1.000)

($500)

$0

$500

$1.000

1998 1999 2000 2001

US$ Million

US dollars amounts were obtained using the final rate of the commercial dollar during each period

Accounts Receivables

672

198

326

145

0

200

400

600

800

1998 1999 2000 2001

US dollars amounts were obtained using the final rate of the commercial dollar during each period

US$ Million

Inventories

$ 5 6 4

$ 7 1 6

$574

$1 .022

$0

$400

$800

$1.200

1 9 9 8 1 9 9 9 2000 2 0 0 1

US$23.4 billion in total orders,

including US$ 10.7 billion in firm orders

150% 36,7%Annual Growth

56,1% 78,1% (6,1)%

Backlog

$3,0$6,4

$11,4 $10,7

$11,3

$12,7 $12,7

$1,2 $4,1$0,0

$5,0

$10,0

$15,0

$20,0

$25,0

$30,0

1996 2000199919981997 2001