Bombardier Inc. Class A · TSX:BBD.A
Bombardier Inc. Class A — Investor Presentation (July 2006)
43 slides from Bombardier Inc. Class A's investor presentation, Jul 17, 2006
Slide 1: Bombardier Market Forecast
Bombardier Market Forecast Michael McAdoo Vice President, Strategy & Business Development July 17, 2006
Slide 2: Forward-looking statements
Forward-looking statements This presentation includes forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe” or “continue” or the ne
Slide 3: Agenda
Agenda Introduction Business Aircraft • Market Forecast for 2006 - 2010 • Why Bombardier is Positioned for Success Commercial Aircraft • Market Forecast for 2006 - 2025 • Why Bombardier is Positioned for Success Summary 3
Slide 4: Agenda
Agenda Introduction Business Aircraft • Market Forecast for 2006 - 2010 • Why Bombardier is Positioned for Success Commercial Aircraft • Market Forecast for 2006 - 2025 • Why Bombardier is Positioned for Success Summary 4
Slide 5: The market forecast shows growth, structural and geographical shifts, opportunities and risks
The market forecast shows growth, structural and geographical shifts, opportunities and risks The business aircraft market promises sustained strength • Positive market drivers include the large industry installed base and a surge in international markets The commercial aircraft market promises
Slide 6: Agenda
Agenda Introduction Business Aircraft • Market Forecast for 2006 - 2010 • Why Bombardier is Positioned for Success Commercial Aircraft • Market Forecast for 2006 - 2025 • Why Bombardier is Positioned for Success Summary 6
Slide 7: Over the past few years, the industry has enjoyed strong order and delivery momentum
Over the past few years, the industry has enjoyed strong order and delivery momentum INDUSTRY DELIVERIES Traditional market deliveries by unit (calendar years 2001 – 2005) 700 Era of Growth 600 ULR Super Large 500 Large 400 Super Midsize 300 Midsize 200 Super Light Light 100 Very Light 0 2001 2002 2
Slide 8: Market indicators suggest continued growth
Market indicators suggest continued growth PRIMARY MARKET DRIVERS Driver, Market Direction and Justification Installed base Approximately 13,000 jets currently operating in the world market. A On average, each aircraft is replaced every six years. US GDP growth could decrease below 3% in 2007, but r
Slide 9: There has been substantial growth of installed base
There has been substantial growth of installed base GROWTH IN OVERALL DEMAND & INSTALLED BASE Cumulative World New Deliveries and Used Transactions (Calendar Year) Avg. US Real GDP 3.8% 3.5% 2.9% 3.3% New Prod. EIS** 7 14 17 31 2000 Trad. new deliveries 14000 Frax. new deliveries 1800 Installed Base
Slide 10: A steady US economy provides a reason for cautious optimism
A steady US economy provides a reason for cautious optimism U.S. REAL USGDP GDP (1)(%) (1) GROWTH Real U.S. Corporate US CORPORATE Profits ($bn) (2) PROFITS(2) Percentage by quarter, history & forecast (2004 – 2007) Per quarter, billions of U.S. dollars (2003 – 2005) 6% 1,600 Forecast 1,400 5% 1,200
Slide 11: There has been a surge in deliveries to international markets
There has been a surge in deliveries to international markets TRADITIONAL MARKET INTERNATIONAL DELIVERIES Traditional Market Demand by Units (calendar year 2000-2005) 250 204 201 194 186 • International markets 200 providing significant 143 growth 150 131 Units • Emerging economies 100 creating new
Slide 12: Launch of many new aircraft programs show confidence in a strong market going forward
Launch of many new aircraft programs show confidence in a strong market going forward AIRCRAFT PROGRAMS, EXISTING AND IN DEVELOPMENT MANY NEW MODELS: Number of models by year (1996 – 2006 & new models) 50 46 Learjet 60 XR 45 Challenger 605 39 40 40 37 Encore + Number of Models 35 32 F2000DX 30 27 27
Slide 13: Baseline forecast of deliveries per annum over the next five years
Our baseline forecast suggests an average of 600 to 700 deliveries per annum over the next five years BASELINE SCENARIO — TRADITIONAL MARKET DELIVERY UNIT FORECAST Historic Deliveries & Demand Model (Calendar Years 2001 — 2010) ae 2001 - 2005 Actuals 2006 - 2010 Forecast 800 Delivery Average = 540 D
Slide 14: Baseline forecast equates to average market-wide revenue of $14.8B per year
This baseline forecast equates to an average market- wide revenue of $14.8B per year over the next 5 years BASELINE SCENARIO — TOTAL MARKET REVENUE FORECAST Historic Revenues & Demand Model, Constant 2006 US$ Million (Calendar Years 2001 — 2010) 18,000 2001-2005 Actuals 5-year | 5-Year 46.000 Revenu
Slide 15: Agenda
Agenda Introduction Business Aircraft • Market Forecast for 2006 - 2010 • Why Bombardier is Positioned for Success Commercial Aircraft • Market Forecast for 2006 - 2025 • Why Bombardier is Positioned for Success Summary 15
Slide 16: A key to Bombardier's success is our commitment to innovation and ongoing investment in new products
A key to Bombardier’s success is our commitment to innovation and ongoing investment in new products Segment Micro / Super Super Super Ultra Long Converted Light Midsize Large Very Light Light Midsize Large Range Airliner * OEM L40 L45 CL-850 Bombardier L60XR CL-870 CL-300 CL-605 G5000 GEX XRS L40XR
Slide 17: We have led in delivery revenues two years in a row
We have led in delivery revenues two years in a row DELIVERY REVENUE MARKET SHARE EVOLUTION Total Market, Delivery Revenues, $US million (Calendar Years 2001 – 2005) $12,544 $10,447 $8,742 $10,326 $13,163 73% 70% 74% 82% 83% 27% 30% 26% 19% 18% 2001 2002 2003 2004 2005 17 Source: Market Analysis & R
Slide 18: Agenda
Agenda Introduction Business Aircraft • Market Forecast for 2006 - 2010 • Why Bombardier is Positioned for Success Commercial Aircraft • Market Forecast for 2006 - 2025 • Why Bombardier is Positioned for Success Summary 18
Slide 19: There is a positive market outlook for the airline market, with structural adjustments ahead
There is a positive market outlook for the airline market, with structural adjustments ahead Worldwide airline capacity to double in the next 20 years • Strong focus on cost optimization and capacity restraint • Traffic flowing to lower cost providers • Emerging markets gaining higher share of wor
Slide 20: Airline capacity will double in 20 years
Airline capacity will double in 20 years AIRLINE CAPACITY TRENDS FORECAST Millions of Available Seat Kilometres (1995 - 2025) 12000 Available Seat Kilometres (millions) 10000 Actual Forecast 8000 6000 4000 2000 0 1995 2000 2005 2010 2015 2020 2025 North America Asia Pacific (ex. China) Europe ROW Ch
Slide 21: Continued downward pressure on yields offers no relief to rising airline costs
Continued downward pressure on yields offers no relief to rising airline costs EUROPEAN PASSENGER YIELD (US Cents/RPK) US PASSENGER YIELD (US Cents/RPM) (1991 - 2005) (1978 - 2005) 21.7¢ Decreasing 8.3¢ Decreasing passenger yield passenger yield 11.3¢ 4.0¢ 1991 1993 1995 1997 1999 2001 2003 2005E 19
Slide 22: Lower cost providers will gain share of traffic
Lower cost providers will gain share of traffic STRUCTURAL SHIFT DUE TO YIELD PRESSURE Cost per seat, Cost per Trip Yield Pressure Cost per Seat Mainline Airline Cost Structure Regional Airline Low Fare Airline Structure Cost Structure Next-Generation Narrow Body Aircraft Cost per Trip 22 Normalized
Slide 23: Regional airline traffic growth is directly correlated with pilot scope clause evolution
Regional airline traffic growth is directly correlated with pilot scope clause evolution REGIONAL TRAFFIC GROWTH SINCE 1978 Millions of passengers (Calendar years 1979 - 2005) 450 Pilot Scope Clause Jets 400 migrating to larger capacity Less than 70 Seats regional jets Limited to 76 Seats 350 Jets P
Slide 24: Traffic redistributed among the three airline categories
Traffic redistributed among the three airline categories HISTORICAL DISTRIBUTION OF U.S. DOMESTIC PASSENGER ENPLANEMENTS Network, Low Cost and Regionals (1980 – 2005) 5% 7% 9% 3% 11% 13% 10% 7% 22% 14% 16% 21% 91% 83% 84% 76% 71% 57% 1980 1985 1990 1995 2000 2005 Network Low Fare Regionals Source: V
Slide 25: Worldwide delivery forecast 2006 - 2025
Worldwide delivery forecast 2006 - 2025 Seat 2006 - 2025 Category 20-59 Seats 1,100 60-99 Seats 4,100 100-149 Seats 5,800 Aircraft Total 11,000 Source: Bombardier Analysis 25
Slide 26: World fleet forecast 2006 - 2025
World fleet forecast 2006 - 2025 Seat 2005 Fleet Deliveries Retired 2025 Fleet Category Aircraft 20-59 3,450 1,100 1,650 2,900 Seats 60-99 1,250 4,100 850 4,500 Seats 100-149 5,300 5,800 3,000 8,100 Seats Aircraft 10,000 11,000 5,500 15,500 Total Source: Bombardier Analysis 26
Slide 27: Turboprops will represent 17% of the worldwide regional aircraft deliveries
Turboprops will represent 17% of the worldwide regional aircraft deliveries 20-YEAR FORECAST, DELIVERY UNITS BY ENGINE TYPE Turboprop Units = 1,900 Jet Units = 9,100 Turboprop 17% Jet 83% Source: Bombardier Analysis 27
Slide 28: In the 100- to 149-seat market, there is an equal split of demand between replacement and growth/new markets
In the 100- to 149-seat market, there is an equal split of demand between replacement and growth/new markets 20-YEAR DEMAND IN 100-149 SEATS SEGMENT 20-year demand percentage by motivation, Total Units = 5,800 New Markets 16% Replacement 52% Growth 32% Source: Bombardier Analysis Growth = markets an
Slide 29: Larger capacity aircraft will be predominant in all major geographic regions
Larger capacity aircraft will be predominant in all major geographic regions DEMAND DISTRIBUTION BY SEAT CATEGORY AND REGION Demand by units, seat category & region (Forecast for 2006 – 2025) 4,460 1,800 2,890 1,850 100% 5% 8% 13% 13% 80% 25% 35% 37% 44% 60% 40% 67% 60% 50% 20% 43% 0% North America
Slide 30: Agenda
Agenda Introduction Business Aircraft • Market Forecast for 2006 - 2010 • Why Bombardier is Positioned for Success Commercial Aircraft • Market Forecast for 2006 - 2025 • Why Bombardier is Positioned for Success Summary 30
Slide 31: Bombardier has lead product innovation in the regional airline market
Bombardier has lead product innovation in the regional airline market WORLDWIDE REGIONAL FLEET IN-SERVICE UNITS 20 – 99 seats (1980 – 2005) 6000 5000 Large RJs 4000 Small RJs UNITS 3000 3rd Gen T/Ps 2000 2nd Gen T/Ps 1000 Old Gen Small Jets 1st Gen T/Ps 0 1980 1985 1990 1995 2000 2005 31
Slide 32: The Q400 continues to gain ground around the world
The Q400 continues to gain ground around the world LUXAIR 79 firm orders in the past 24 months … including our latest customer 32
Slide 33: The CRJ900 continues to gain momentum
The CRJ900 continues to gain momentum Air Canada Atlasjet Air Nostrum Mesa Macedonian Delta Lufthansa Arik Air 75 firm orders in the past 24 months… including our latest customer Air One 33
Slide 34: Large regional jets compete effectively with narrow-body aircraft
Large regional jets compete effectively with narrow-body aircraft UNIT COST COMPARISON Cents per ASM, Aircraft Model 16 15.0¢ 14 13.6¢ 13.7¢ 12.7¢ 11.6¢ 12.1¢ 12 11.3¢ 10.5¢ Indirect 9.7¢ Cents per ASM 10 Operating Costs 8 6 Direct Operating 4 Costs 2 0 CRJ200 CRJ700 CRJ900 100-seat 130-seat 150-sea
Slide 35: Bombardier has lead the regional market over five years
Bombardier has lead the regional market over five years GROSS ORDERS IN THE 20 – 99 SEAT REGIONAL MARKET (Calendar Years 2001 – 2005, 2006 Year to Date) Total Units 344 111 283 325 290 85 28% 42% 40% 41% 49% 50% 72% 58% 60% 59% 51% 50% 2001 2002 2003 2004 2005 2006 Ytd Source: Bombardier Analysis Bo
Slide 36: Bombardier Regional Aircraft is well-positioned for the future market requirements
Bombardier Regional Aircraft is well-positioned for the future market requirements Q200 37-39 seats CRJ200 40-50 seats Q300 50-56 seats CRJ700 66-78 seats Q400 68-78 seats CRJ900 75-90 seats Under Study Q400X 80-90 seats CRJ900X 98-100 seats 36 Q200, Q300, Q400, CRJ200, CRJ700 and CRJ900 are tradema
Slide 37: The CSeries is the natural next step for Bombardier
The CSeries is the natural next step for Bombardier CRJ900 Q400 Q SERIES Family C130 CRJ705 CRJ Family Q300 CSERIES Family CRJ700 C110 Q200 CRJ200 Commuter Primarily Regional Primarily Mainline 37 76 50 100 149 # of Seats 37
Slide 38: The CSeries will be the first design focused on the 90-149 seat segment
The CSeries will be the first design focused on the 90-149 seat segment Downsized From Optimum Design Point RRJ60 Boeing (60) RRJ75 737-800 737-900 (75) RRJ95 Sukhoi RRJ95 (175) (190) (95) Embraer Upsized From Optimum Design Point Designed Specifically CRJ900X for the 110-130 Segment CRJ CSeries 130
Slide 39: CSERIES – Optimized for the 90-149 seat market
CSERIES – Optimized for the 90-149 seat market 9 Family of Aircraft with Full Commonality 9 Total Life Cycle Cost Improvement 9 Cash Operating Costs – 15% better than competition 9 Passenger Appeal – Personal Space, Storage, Large Windows 9 Reliability – 99% at Entry Into Service 9 Operational Flexi
Slide 40: Agenda
Agenda Introduction Business Aircraft • Market Forecast for 2006 - 2010 • Why Bombardier is Positioned for Success Commercial Aircraft • Market Forecast for 2006 - 2025 • Why Bombardier is Positioned for Success Summary 40
Slide 41: The outlook is positive for commercial and business aircraft markets, and Bombardier is well-positioned
The outlook is positive for commercial and business aircraft markets, and Bombardier is well-positioned Business aircraft • An already strong market shows great potential to remain strong in the upcoming years • Bombardier’s industry leadership and comprehensive portfolio leaves it well-positioned
Slide 42: Any questions?
Bombardier’s products are well-positioned for the promising markets ahead ANY QUESTIONS? 42
Slide 43: Bombardier Market Forecast
Bombardier Market Forecast Michael McAdoo Vice President, Strategy & Business Development July 17, 2006