BOEING is a trademark of Boeing Management Company.Copyright © 2008 Boeing. All rights reserved.
The statements contained herein are based on good faith assumptions and provided for general information purposes only. These statements do not constitute an offer, promise, warranty or guarantee of performance Actual results may vary depending on certain events or conditions. This document should not be used or relied upon for any purpose other than that intended by Boeing.
J. Miguel SantosDirector, International SalesBoeing Commercial Airplanes
6 November 2008 Porto, Portugal
State of the Aviation Industry and Market Outlook
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Agenda
Current environment
Long-term outlook
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Challenging market conditions
Economic OutlookRecent era of high oil prices likely to be sustained for the foreseeable futureEconomic growth slowing in developed economies, emerging market growth at increased riskU.S. dollar remains weak, outlook mixed
CustomersRapidly rising and continued fluctuation in jet fuel prices outpacing airline revenue and efficiency growthCapacity growth plans and profitability outlook declining; further bankruptcies likelyConsolidation activity slowing as airlines focus on reacting to rising fuel prices and slowing economy
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Oil prices and volatility remain high
20
40
60
80
100
120
140
160
180
200
2004 2005 2006 2007 2008 2009
Crude Oil
Jet Fuel
Avg Ann Prices
$/Barrel (Brent Crude Oil / Rotterdam Jet Fuel)
2003 $29
2004 $38
2005 $55
2006 $65
2007 $72
2008YTD $110
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Airline fuel expenses have increased $130B since 2003
$46 $43 $40 $44 $61$90
$111$136
$17614% 13% 13% 14%16%
22%25%
29%
35%
2000 2001 2002 2003 2004 2005 2006 2007 2008
Global airline fuel expense (billions $)Global airline fuel expense (billions $) Share of operating expensesShare of operating expenses
Source: IATA, June 2008
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50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
2003 2004 2005 2006 2007 2008 2009
Year
Jet F
uel P
rice
per U
SG (U
S C
ents
)
USA Europe Asia
Boeing Proprietary
2008 average annual oil price forecasts as of October 2008 (Global Insight, EIA)
Hedging
Tankering
Weight impact of adding features to the aircraft
APU use during ground operations
Operational climb and descent procedures
Fuel Price Volatility a Challenge for PlanningFuel Price Volatility a Challenge for Planning
Airlines Focus on Airplane Selection and Controlling Fuel CostsAirlines Focus on Airplane Selection and Controlling Fuel Costs
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2007 GDP, Billions U.S. DollarsBased on Global Insight Monthly Interim Forecast (October Update — Annual Real GDP)
2008
Increasing risk in economic outlook -- world economy headed for recession
2009
1.5%
1.3%
0.6%
9.8%
4.4%
5.0%
1.8%
6.4%
0.6%
2.9%
7.2%
6.2%
7.4%
2.4%
0.2%
0.4%
0.4%
8.4%
3.8%
3.8%
1.0%
4.8%
0.9%
2.6%
7.0%
6.2%
6.3%
2.4%
$0 $2,000 $4,000 $6,000 $8,000 $10,000
Australia and NZ
Russia and CIS
Africa
India
Other Europe
Canada
Middle East
Mexico
Latin America
Other Asia
China
Japan
European Union
United States
World Growth: 2007 = 3.7%2008 = 2.6%2009 = 1.8%
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Airlines responding quickly
Cutting 7,000 jobs
11-12% domestic capacity cuts
Grounding 100 aircraft
16% domestic cut in 4Q08, 17% in 2009
Eliminating 3,000 jobs
11% domestic cut in 4Q08, 4.5% in 2009
2008/9 growth plan reduced from 8% to 0%
Retiring up to 22 aircraft
10% capacity cut, up to 30% on long-haul routes
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World airline productivity continues to rise—utilization and load factors at historical highs
Single Aisle Utilization
6.0
6.5
7.0
7.5
8.0
8.5
9.0
2000
2001
2002
2003
2004
2005
2006
2007
EHours per Day
Twin Aisle Utilization
8.0
8.5
9.0
9.5
10.0
10.5
11.0
2000
2001
2002
2003
2004
2005
2006
2007
E
Hours per Day
World Load Factors
60%
65%
70%
75%
80%
2000
2001
2002
2003
2004
2005
2006
2007
Load Factor
+13% +9% + 4%
Sources: Utilization – ACAS, December 2006 database + RMT for 2007E; Load Factors – ICAO
Utilization and load factors at historical highs Utilization and load factors at historical highs Utilization and load factors at historical highs
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Some have already failed, more likely
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IATA Profitability OutlookSharply Higher Fuel Prices Push 2008 Forecast to Loss
($14)
($10)
($6)
($2)
$2
$6
$10
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
..
Net Profit (Loss) Billions
Source: 1983-2006: ICAO data for world scheduled traffic (domestic + international)
2007-8: IATA estimate for world scheduled traffic (domestic + international)
Source: IATA, June 2008
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276255
174
124
70
0
50
100
150
200
250
300
2004 2005 2006 2007 3Q08
Backlog $Backlog $$ - Billions
ModelModel
Single-Aisle32%
Twin-Aisle61%
Large7%
747
777 737
767
787
RegionRegion
AmericasAmericas
EuropeEurope
Leasing Leasing & & Gov'tGov't
S.E.S.E.AsiaAsia
Middle Middle East East
& Africa& Africa
AsiaAsia--PacificPacific
China & China & East AsiaEast Asia
RussiaRussia
Strong, balanced backlog validates Boeing’s product strategy
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Sources of financing U.S. Dollars (in millions)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2002 2003 2004 2005 2006 2007 2008
376 281 285 290 394 441 487$26B $20B $19B $19B $25B $29B $33B
Leasing companies
Export credit
Bank debt
Manufacturer
Public debt/ capital markets
Cash / Other
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Agenda
Current environment
Long-term outlook
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Aviation demand elasticity with other forms of travel
Intra-N. AmericaIntra-Europe
Intra-Asia
Intra-Sub-Saharan AfricaIntra-S. America
Trans-AtlanticTrans-Pacific
Europe-Asia
Data Source: InterVISTAS; IATA
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20-year forecast: strong long-term growth
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Annual GDP Growth, 2008 - 2027Annual GDP Growth, 2008 - 2027
Source: Global Insight
Emerging markets are driving the economic growth
Percentage
1.32.1
3.13.2
4.24.34.44.4
5.16.4
7.1
0 1 2 3 4 5 6 7
Northeast Asia
Europe
North America
Oceania
WORLD
Central America
South America
Middle East
CIS
Southeast Asia
Africa
SW Asia
China
3.8
2.5
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2%
3%
4%
5%
6%
7%
8%
9%
10%
0 200 400 600 800 1,000 1,200
2007 Traffic (RPK, billions)
Annual Traffic Growth Rate, 2008-2027
North America
Europe
North Atlantic
China
China-SW AsiaOceania-SW Asia
Africa-SW Asia
SW AsiaNE Asia-SW Asia
SE Asia
Africa-Europe
N. America – NE AsiaNE Asia
S. America
Strong traffic growth for emerging markets
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…leading to a geographically diverse market
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Single Aisle and Twin Aisle markets leading the way
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Asia-Pacific air traffic growth exceeds the world average
Annual growth %
Added traffic2008 - 2027
Added traffic2008 - 20272007 traffic2007 traffic
RPKs, billions
Asia-Pacific Average Growth: 6.7%Asia-Pacific Average GDP Growth: 4.1%
0 500 1,000 1,500 2,000 2,500 3,000
To and from Africa
To and from Middle East
To and from North America
To and from Europe
Within Asia Pacific
7.4%
5.7%
5.7%
5.6%
7.1%
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Asia-Pacific airlines will need 9,160 new airplanes
Shar
e of fl
eet
Market value: $1,190 billion
747 and largerTwin-aisleSingle-aisleRegional jets
2008-2027
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Europe air traffic growth varies by market
3.5%
4.7%
5.7%
4.7%
5.4%
4.9%
0 200 400 600 800 1,000 1,200 1,400
To and fromMiddle East
To and fromAfrica
To and fromLatin America
To and fromAsia-Pacific
To and fromNorth America
WithinEurope
Europe Average Europe Average Growth: 4.1%Growth: 4.1%
RegionRegion’’s Annual GDP s Annual GDP Growth: 2.1%Growth: 2.1%
Annualgrowth %
Added traffic2008 - 2027
Added traffic2008 - 20272007 traffic2007 traffic
RPKs, billions
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European airlines will need 6,900 new airplanes
Shar
e of fl
eet
Market value: $740 billion
747 and largerTwin-aisleSingle-aisleRegional jets
2008-2027
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RPKs, billions
5.4%
Africa air traffic growth varies by market
5.6%
6.1%
7.3%
5.4%
7.1%
Annualgrowth %
Added traffic2008 - 2027
Added traffic2008 - 20272007 traffic2007 traffic
0 100 200 300 400
Africa--Other
Africa--North America
Africa--Southeast Asia
Africa--Middle East
Africa--Africa
Africa--Europe
Africa Average Africa Average Growth: 6.0%Growth: 6.0%
RegionRegion’’s Annual GDP s Annual GDP Growth: 5.1%Growth: 5.1%
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African airlines will need 560 new airplanes
Market value: $60 billion
Shar
e of fl
eet
747 and largerTwin-aisleSingle-aisleRegional jets
2008-2027
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RPKs, billions
Region’s AverageGrowth: 5.5%
Region’s Average GDP Growth: 4.3%
2007 traffic2007 trafficAdded Traffic 2008 - 2027
Added Traffic 2008 - 2027
Annualgrowth %
5.0
6.0
6.0
6.1
5.9
5.7
5.4
6.0
4.9
Middle East air travel growth varies by market
0 50 100 150 200 250 300
To/From Northeast Asia
To/From Oceania
To/From China
To/From Africa
To/From North America
Intra-Middle East
To/From Southeast Asia
To/From Southwest Asia
To/From Europe
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Middle East airlines will need 1,580 new airplanes
Shar
e of fl
eet
Market value: $260 billion
747 and largerTwin-aisleSingle-aisleRegional jets
2008-2027
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RPKs, billions
4.72.8
4.03.9
6.26.17.6
7.15.9
4.85.4
Region’s AverageGrowth: 3.4%
Region’s Annual GDP Growth: 2.5%
2007 traffic2007 trafficAdded Traffic 2008 - 2027
Added Traffic 2008 - 2027
North American air travel growth varies by market
Annualgrowth %
0 300 600 900 1,200 1,500 1,800
To/From Africa
To/From Southwest Asia
To/From Middle East
To/From Oceania
To/From Southeast Asia
To/From China
To/From South America
To/From Central America
To/From Northeast Asia
To/From Europe
Within North America
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North American airlines will need 8,550 new airplanes
Shar
e of fl
eet
Market value: $740 billion
747 and largerTwin-aisleSingle-aisleRegional jets
2008-2027
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One last thought
Air travel is, and will continue to be, a highly valued and integral part of the social and economic fabric of our world
Air travel is crucial to business, personal relationships, transporting goods and improving the standard of living around the world
Today, the air transport industry supports (directly and indirectly) more than 32-million jobs... about 8% of World GDP*
In 20 years, these economic benefits have the potential to more than double
*The Economic and Social Benefits of Air Transport 2008, ATAG
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