Bombardier Commercial Aircraft Update - July 2012 by say what! communications

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July 2012 – Farnborough Air Show Edition

Leasing company NAC selects

CRJ1000 & Q400 NextGen Inside: • CSeries Update • Expanding Bombardier’s Global Reach • China Express Airlines: planning for growth with the CRJ900 NextGen • 2012-2031 Commercial Aircraft Market Forecast

Bombardier Commercial Aircraft provides optimized aircraft solutions for short-haul, medium-haul and longer-range markets.

CSeries: optimized single-aisle mainline solution

CRJ NextGen: optimized regional jet solution

Q400 NextGen: optimized short-haul solution

Leasing company Nordic Aviation Capital backs

CRJ1000 & Q400 NextGen

value retention

As interest from growth markets spurs momentum for Bombardier’s CRJ NextGen and Q400 NextGen families of aircraft, Bombardier is gearing up for what could be a turnkey sales year in 2012 for its diversity and breadth of new customers. And lessors are proving to be key in helping to open diverse customer bases in places like Indonesia, Latin America, Asia-Pacific region and Eastern Europe. In June, 2012, one of the world’s largest lessors of regional aircraft, Nordic Aviation Capital A/S of Billund, Denmark (NAC) purchased 12 CRJ1000 NextGen regional jets to be operated by Garuda Indonesia. Additionally, as of July 2012, NAC had completed the sale and leaseback of four Q400 NextGen airliners (from a firm order for eight) delivered to Eurolot of Poland. NAC has also completed the sale and leaseback of 10 Q400 and four Dash 8-100 aircraft to Olympic Air’s Marfin Investment Group. “NAC’s order is a milestone achievement for the CRJ1000 NextGen aircraft program as it welcomes its first lessor to the list of buyers,” said Mike Arcamone, President, Bombardier Commercial Aircraft. “As one of the world’s most influential lessors of regional aircraft, NAC has endorsed the value proposition of both the Q400 NextGen, with 35 of the type in its portfolio, and CRJ1000 NextGen aircraft. This illustrates that our commercial aircraft present attractive financing and leasing opportunities for airlines and investors.” In addition to the 12 CRJ1000 NextGen aircraft ordered on its behalf by NAC, Garuda placed an order for six of the model directly with Bombardier, for a fleet total of 18 CRJ1000 NextGen airliners. Garuda also holds options on 18 CRJ1000 aircraft. “Although it is a relatively new product, the CRJ1000 NextGen aircraft is performing extremely well with its current operators, delivering exceptional reliability and the lowest seat-mile costs in its market segment,” said Martin Moller, Chairman, Nordic Aviation Capital. “We are therefore delighted to be acquiring these high-quality assets and assisting Garuda Indonesia in carrying out its business plan.” Stating that its newly-acquired Q400 NextGen aircraft would be used to replace Eurolot’s fleet of turboprops produced by another manufacturer, Bartlomiej Matusewicz, Eurolot’s Vice-president, Operations and Technical, called the Q400 NextGen airliner “a modern, technologically advanced, fuel-efficient and comfortable turboprop with significant operational flexibility and performance capabilities. “Bombardier’s Q400 NextGen aircraft will allow us to cover more ground and gain more market access as we begin our expansion with new regional routes,” he said.

July July 20122012 // 2 // 2

Planning for growth with the CRJ900 NextGen regional jet

With its planned acquisition of up to 11 CRJ900 NextGen regional jets, China Express Airlines plans to extend its route system beyond the 30 destinations it currently serves as well as increase capacity on some of its current routes. The carrier, China’s first private regional airline, has placed a conditional order for six CRJ900 NextGen aircraft, with options on an additional five. They will be the first CRJ900 aircraft in China. “Business for regional airlines in China serving mainly tier three and four cities is steadily increasing,” said Wu Longjiang, Vice-president, China Express Airlines. “The market was not very good when we started operating in 2006. But it has grown as local governments have attached great importance to it and have established subsidies to encourage regional airlines to serve their districts.” Chinese business people flying the country’s regional airlines want the same amenities available to them on mainline carriers, hence China Express Airlines’ 88-seat CRJ900 NextGen jets will have six First Class seats. When asked why China Express chose the CRJ900 NextGen airliner over the competing aircraft, Mr. Wu explained, “We did a comprehensive comparison of the available products and concluded that the other airplane had a bigger cabin and could carry more passengers, but the CRJ900 NextGen was lighter and had better economics and the passenger capacity was not really a factor,” said Mr. Wu. “And since we also operate five 50-seat CRJ200 aircraft, we knew the transition to the larger Bombardier aircraft would be smooth.” When asked about China Express’ leap from a 50-seat jet to an 88-seat jet, Mr. Wu commented: “Our studies showed that even with more seats the CRJ900 would be profitable on many of our routes. It’s because of the great economics that Bombardier’s jets will be very competitive in China.”

3 // July 2012

CSeries I Capt. Peter Koch CSeries Project Pilot Swiss European Airlines “I felt right at home as soon as I sat in the cockpit. There was obviously a great deal of engineering involved, but this is a cockpit designed by pilots for pilots with the latest state-of-the art avionics technology in navigation and communications that will set a new standard for the industry.”

n June 2012, Bombardier played host to approximately 60 visitors (mainly media and analysts) at Mirabel, Quebec for a first-hand look at the CSeries Complete Integrated Aircraft Systems Test Area (CIASTA) and production facility that will house the aircraft’s final assembly line. The impressive tour demonstrated that the key facilities are ramping up to reduce the amount of time required to prepare the manufacturing process. And it’s off to a strong start.

The hydraulic system for the CSeries aircraft was commissioned on “Aircraft 0” (Aircraft Zero), Bombardier’s onthe-ground systems test rig, late in May 2012. Along with the electrical system, which was commissioned earlier in 2012, the hydraulic system will permit enhanced validation testing of the CSeries family of aircraft integrated systems prior to first flight. “This was an important milestone that now allows for the operation of the actuation systems for the aircraft’s flight control surfaces, thrust reversers and landing gear,” said Rob Dewar, Vice-president and General Manager, CSeries, Bombardier Commercial Aircraft.

July 2012 // 4

Update “Excitement in the development of the CSeries aircraft keeps building as ‘Aircraft 0’ matures and provides us with the ability to collect more data in sophisticated areas – particularly as we prepare to power up the flight systems,” said Mr. Dewar. “Every week the testing and delivery of key components and systems from our suppliers around the globe helps make the CSeries aircraft real. Bombardier’s collaborative approach to supply chain management is showing real benefits and delivering outstanding results as the progress continues and specific systems are powered up for on-the-ground validation.” In Belfast, Northern Ireland, the CSeries composite wing program is meeting all expectations. Bombardier Belfast has confirmed that it will meet the target weight for the complete wing including all the systems installations and control surfaces. The complete set of advanced composite wing skins and spars has been produced for the first flight test vehicle for the CSeries aircraft. Some of the large titanium components to support the main landing gear have been delivered. Assembly of the rear spar is in progress. Bombardier has established a Customer Support organization dedicated exclusively to the CSeries aircraft program. Entry into Service (EIS) is scheduled for late in 2013. EIS Project Managers and Customer Care Account Managers have been assigned to each customer, developing a customized EIS plan for that customer.

5 // July 2012 5 // July 2012

“With our technical people embedded in the CSeries Integrated Development teams and taking an active role in the aircraft build and flight test, we will be ready to send our experts to the customer’s base of operations to ensure a smooth EIS,” said Todd Young, Vice-president, Customer Support and Services, Bombardier Commercial Aircraft. “Additionally, we will work closely with the customers to ensure that all their maintenance needs will be met.” Bombardier has booked firm orders for 138 CSeries airliners. Customers include Braathens Aviation (five CS100 and five CS300 aircraft), Deutsche Lufthansa AG (30 CS100 aircraft), Korean Air (10 CS300 aircraft), Lease Corporation International Group (17 CS300 and three CS100 aircraft), PrivatAir (five CS100 aircraft), Republic Airways (40 CS300 aircraft), an unidentified major network carrier (10 CS100 aircraft), an unidentified European customer (10 CS100 aircraft) and a well-established, unidentified airline (three CS100 aircraft). The CSeries aircraft program has also booked options for 124 aircraft and purchase rights for 10 aircraft from these customers, as well as Letters of Intent for up to 30 CSeries aircraft from Ilyushin Finance Co, and for up to 15 CS300 aircraft from Atlasjet.

12,800 DELIVERIES $630 BILLION US

Growing economies and the expanding middle class worldwide will drive demand for travel and new aircraft. Bombardier Aerospace anticipates the delivery of 12,800 commercial aircraft in the 20- to 149-seat segment valued at $630 billion U.S. by 2031. The company’s Commercial Aircraft Market Forecast 2012-2031 predicts 300 fewer deliveries than forecast in 2011 due mainly to a lower GDP forecast and a sharp increase expected in fuel costs. Worldwide, Bombardier expects 300 aircraft deliveries in the 20- to 59-seat segment, 5,600 deliveries of aircraft with 60 to 99 seats, and 6,900 deliveries in the 100- to 149-seat segment. Interestingly, turboprop aircraft are expected to comprise 48 per cent of deliveries in the 20- to 99-seat marketplace with 95 per cent of those units in the 60- to 99-seat segment. The forecast notes that this is the deepest market penetration ever by turboprops. Technical obsolescence, cost inefficiencies and age are driving the expected retirement of 7,000 aircraft – more than 50 per cent of the current fleet – during the forecast period. This, in turn will have a positive impact on the demand for new aircraft. Although high oil prices will continue to challenge airline profitability, the forecast states, the arrival of new, technologically-advanced aircraft that deliver operating cost reductions will accelerate the retirement of older, less fuel-efficient aircraft. Thumbnail descriptions of the geographic regions covered in the forecast accompany this introduction. The full forecast is available in .pdf format at www.bombardier.com/en/aerospace.

2012-2031 Market Forecast

July 2012 // 6

BY SEAT SEGMENT, AFRICA AND THE MIDDLE EAST, 2012-2031 Total: 970 Units

36% 62%

DEMAND DISTRIBUTION BY SEAT SEGMENT Legend 20- to 59-seat

DEMAND DISTRIBUTION DEMAND DISTRIBUTION BY SEAT SEGMENT, EUROPE BY SEAT SEGMENT, NORTH AMERICA, 2012-2031 (INCL. RUSSIA & CIS), 2012-2031 Total: 4,730 Units

Total: 2,240 Units

60- to 99-seat DEMAND DISTRIBUTION DEMAND DISTRIBUTION BY SEAT SEGMENT,100- to 149-seatBY SEAT SEGMENT, ASIA/PACIFIC, 2012-2031 Source: Bombardier Commercial Aircraft Market Forecast 2012-2031. CHINA, 2012-2031 Total: 1,710 Units

45% 52%

52%

Total: 2,220 Units

Total: 930 Units

36%

41% 57%

63%

20- to 59-seat

60- to 99-seat

100- to 149-seat

Total: 970 Units

45%

DEMAND DISTRIBUTION DEMAND DISTRIBUTION BY SEAT SEGMENT, BY SEAT SEGMENT, AFRICA AND THE MIDDLE EAST, LATIN AMERICA, 2012-2031 2012-2031

32%

36% 62%

65%

20- to 59-seat

60- to 99-seat

100- to 149-seat

Source: Bombardier Commercial Aircraft Market Forecast 2012-2031. Source: Bombardier Commercial Aircraft Market Forecast 2012-2031.Source: Bombardier Commercial Aircraft Market Forecast 2012-2031. Source: Bombardier Commercial Aircraft Market Forecast 2012-2031.Source: Bombardier Commercial Aircraft Market Forecast 2012-2031. Source: Bombardier Commercial Aircraft Market Forecast 2012-2031.

North America (including Mexico)

North America will maintain its leadership position over the course of the next 20 years, and is expected to require more than 4,700 new commercial aircraft, or 37 per cent of world demand. North America’s large installed fleet base requires constant replenishment and renewal. As air carriers in the region regain financial strength following a period of declining passenger loads, financial failures, bankruptcies, restructurings and consolidations, their attention will focus on cost control strategies that include expanding scope clauses to cover larger aircraft, capacity planning and optimizing their asset use. One key will be fleet renewal that delivers significant improvements in operating efficiency and flexibility. New aircraft that burn less fuel and deliver other operating efficiencies are certain to be in high demand in the coming cycle of fleet renewal.

Europe

(including Russia and CIS) Anticipated deliveries for this region, 2,240 units, are unchanged from Bombardier’s 2011 forecast, as a significant increase in expected Russia and CIS deliveries is offset by projected decline in deliveries in the financially troubled Eurozone. Airline strategies have focused on cost reduction as well as consolidation through acquisition among larger airlines, which reduces demand for new aircraft. In addition, Europe’s population density, comparatively short travel distances and extensive airport security measures also mean that both rail and road provide significant competition to air travel. In 2011, the Russian aviation authority announced the grounding of a number of domestically-built aircraft fleets. This action has advanced the retirement of these already ageing fleets, thereby creating an immediate opportunity for both new and used aircraft for the replenishment. As a result, Bombardier has revised its forecast 7 // July 2012

to increase the demand of 60- to 99-seat aircraft by approximately 180 units in last year’s forecast to 320 units.

Asia/Pacific

(excluding China) This region is expected to account for approximately 13 per cent of new aircraft deliveries during the forecast period, largely unchanged from the 2011 forecast and representing approximately 1,710 aircraft against retirement of 790 units, resulting in fleet growth of 920 aircraft, to a total of 2090. Connections between countries in the region are expected to increase in both number and extent. Larger longerrange aircraft are increasingly required for international routes and, as in most other regions addressed in this forecast and the industry generally, the 100- to 149-seat segment is expected to account for 57 per cent of total deliveries to the region. Smaller, short-haul aircraft will be required for growth and fleet replacement in smaller markets. Growth markets linking major city pairs will be stimulated further by the continued loosening of regulatory restraint, except those relating to aircraft environmental performance, which are expected to remain the strictest in the world. Modern turboprop and jet aircraft which meet these standards will be well positioned for increased acceptance.

China (PRC)

China’s emergence as an economic powerhouse drives demand for new aircraft and this market is now second only to that of North America. China is expected to take delivery of 2,200 aircraft (including 1,400 in the 100- to 149-seat segment) over the 20year forecast period. China will need to aggressively build and equip a significant number of new airports, some to relieve air traffic congestion in heavily populated and travel areas, and still more to develop and extend economic and social links to remote parts of the country.

China is therefore expected to also require a significant number of 60- to 99-seat regional aircraft to meet demand, as well as pilots to fly them, technicians to maintain them and an air traffic control system with which to operate them safely.

Latin America

(including Mexico and Caribbean) Latin America’s economic growth is expected to be among the highest at an average 4.1 per cent for the period, which should result in a medium-high growth environment for air travel and deliveries of new aircraft, which this forecast places at 930 total units. The Latin American region is increasingly home to world-scale events such as the 2014 FIFA World Cup and 2016 Summer Olympic Games. These can be expected to boost regional economies and to energize the development of infrastructure to support air travel growth. In addition, the recent growth of lowfare air carriers is helping to make air travel much more accessible to the population, largely through the use of regional jets and turboprops and single-aisle mainline jet aircraft.

Africa and the Middle East Despite political uncertainty, economic growth is expected to be solid and slightly above the world average during the forecast period, at 3.8 per cent CAGR in the Middle East and 4.4 per cent in Africa. As in other regions, 100- to 149-seat airliners will dominate new aircraft deliveries to this region, and are expected to account for 600 of the 970 total deliveries. Of the 970 units, 420 would be delivered to the Middle East and 550 to Africa.

Expanding Bombardier’s

global reach Over the past 18 months, Bombardier Commercial Aircraft has almost doubled the size of its sales and marketing team, placing strong emphasis on the ongoing regionalization of the teams. With approximately 75 per cent of the sales representatives being located in the markets they serve, the team keeps growing. The Regional Support Office (RSO) in Munich, Germany getting additional manpower. The company plans to double the staff to 40 people by the end of 2012 to provide expert support for CRJ and Q-Series operators across Europe and the Middle East. The staff will include a specialist in structured finance. Bombardier will open its sixth RSO, in Russia, in September 2012. Continuing its aggressive pace of broadening its support services internationally, Bombardier expects to announce the appointment of an Authorized Service Facility (ASF) for CRJ and Q-Series aircraft in southern Africa in the near future; ASF’s in the Asia-Pacific region, including India, are on the horizon. “Our customers are telling us how much they appreciate us bringing our considerable skills closer to their base of operations,” said Todd Young, Vice-president, Customer Support and Services, Bombardier Commercial Aircraft. “Our goal for these investments is to make it easier than ever to own and operate Bombardier aircraft.” As the global demand for air travel and new aircraft continues to shift towards growth markets, Bombardier Commercial Aircraft has significantly increased its marketing and sales teams, placing a strong emphasis on the growth markets to meet the demand.

B Q400 airliner approved for

Russia & CIS

8 // July 2012

ombardier’s Q400 airliner has received certification in Russia and the Commonwealth of Independent States (CIS) – the largest Western-built turboprop aircraft to receive such approval. The approval was granted on June 7, 2012 by the Interstate Aviation Committee (IAC), commonly known by its Russian acronym, MAK. The Type Certificate was presented to Bombardier in a ceremony at IAC headquarters in Moscow. A Q400 NextGen aircraft with its innovative Get More livery was in Moscow during its world demonstration tour. The tour covered 30 countries in North and South America, Africa, Russia and CIS, and the Far East. “Russia presents a key market for diversifying the use of Q400 and other Dash 8/Q-Series turboprops,” said Sergey Ermolaev, Bombardier’s Chief Country Representative, Russia and CIS. “There is a high potential for non-airline market applications such as cargo, corporate shuttle and business aircraft conversions. Expanding into this region is a key initiative for Bombardier as it aims to establish a long term partnership with the Russian aviation industry.” The Q400 NextGen turboprop addresses two major environmental issues facing Russian regional aviation: difficult, tundra-like terrain, and the extreme cold weather. Furthermore, on the European side of Russia, 36 airports have their runways paved with concrete, allowing them the infrastructure needed to accommodate passenger flows that are consistently on the rise. On the other side of the Ural mountain chain, it’s another story altogether. Unpaved or grass runways account for 43 per cent of the infrastructure found within the 119 airports serving the region. Add to that the flight distances, typically 400 km to 2,000 km (215 to 1,080 nm) and you find an existing need perfectly suited to the capabilities of Bombardier Aerospace’s flagship turboprop. Regional airlines in Russia and the CIS can be expected to eventually develop route systems similar to those of Canada’s regional airlines, Air Canada Express and Porter Airlines, which operate the Q400 or the Q400 NextGen aircraft and WestJet which recently placed an order for up to 45 Q400 NextGen aircraft for its new regional airline. Hydro-Québec also operates the aircraft to shuttle employees between Montreal and hydroelectric sites in northern Quebec, further proof of the aircraft’s rugged capability.

momentum building for

Smart Parts

Bombardier Commercial Aircraft’s Smart Parts program has gained momentum with Eurolot of Poland as the newest customer with a five-year commitment to the program. Eurolot joined Luxair of Luxembourg which extended its existing participation in the program for an additional five years. Republic Airlines in the U.S. has agreed to terms for Smart Parts coverage for its nine-year heavy maintenance agreement for its 32 Q400 aircraft, with the work to be carried out at Bombardier’s service centres at Macon, Georgia and Tucson, Arizona. The Smart Parts program is customized to satisfy an airline’s specific operational and dispatch reliability requirements and to provide the airline with competitive and predictable advanced component exchange and repair costs as well as superior availability of key components. “As the original equipment manufacturer, Bombardier is in a unique position to understand the needs of an airline and provide the best solution to ensure the highest reliability and lowest lifecycle costs,” said Gary Martin, Vice-pesident, Sales, Marketing and Service Programs, Bombardier Customer Services. There are currently more than 1,000 Bombardier business aircraft enrolled in the Smart Services programs, including the Smart Parts plan, covering more than 80,000 components. Luxair was the launch customer for the Q400 Smart Parts program in 2008.

July 2012 // 9

Bombardier at Farnborough 2012 Bombardier Aerospace will mount its usual strong presence at one of the world’s premier air shows, Farnborough, which runs from July 9 to 13 in the city located in the picturesque English countryside west of London. Bombardier Commercial Aircraft’s static display will include a Q400 NextGen new-technology turboprop airliner and CRJ900 NextGen regional jet. The company’s unique CSeries dome which has attracted wide interest everywhere it has been shown, will be set up for the show. The CSeries dome features geodesic fabric architecture and, for the first time in Europe, will house the CSeries aircraft’s flight deck demonstrator. Making his debut at Farnborough, Mike Arcamone, President, Bombardier Commercial Aircraft will welcome visitors who will also experience the single-aisle CSeries aircraft’s widebody-type cabin environment. State-of-the-art 2D and 3D entertainment will also figure prominently in the CSeries dome. Bombardier’s contingent will be headquartered in Row C, Chalets C1-2-3, while the dome will be located at OE3 near Hall 1 and the Media Centre in the static display area.

crjnextgen.com

q400nextgen.com

Q Series Dash 8 Facts and Figures

CRJ Series Facts and Figures

Status (March 31, 2012) Delivered Series 100 299 Series 200 105 Series 300 267 Series 400 392 Program total 1,063

Status (March 31, 2012) Delivered Total CRJ100 226 226 CRJ200 709 709 CRJ440 86 86 CRJ700 315 324 CRJ705 16 16 CRJ900 257 268 CRJ1000 23 55 Challenger 800 33 33 Program total 1,665 1,717

Total 299 105 267 428 1,099

Dash 8-100/Q200/Q300 Fleet statistics, March 2012 Average flight time (mins.) 51 Average annual utilization (hours/cycles) 1,779/2,100 Highest annual utilization (hours/cycles) 3,037/4,764 Fleet total hours 21,089,071 Fleet total cycles 25,349,022 Schedule completion rate 99.5% 12-mo. Avg. Q400 Fleet statistics, April 2012 Average flight time (mins.) 57 Average annual utilization (hours/cycles) 2,146/2,241 Highest annual utilization (hours/cycles) 3,259/3,396 Fleet total hours 3,579,857 Fleet total cycles 3,899,594 Schedule completion rate 99.6% 12-mo. Avg.

CRJ100/200 Fleet statistics, March 2012** Average flight time (hrs.) Average annual utilization (hours/cycles) Highest annual utilization (hours/cycles) Fleet total hours Fleet total cycles Schedule completion rate

1.06 2,206/2,089 3,518/3,322 24,737,487 21,716,132 99.7% 12-mo. Avg.

CSeries Facts and Figures

CRJ700/705/900 Fleet statistics, April 2012* Average flight time (hrs.) 1.41 Average annual utilization (hours/cycles) 2,655/1,889 Highest annual utilization (hours/cycles) 3,360/2,691 Fleet total hours 8,834,484 Fleet total cycles 6,455,591 Schedule completion rate 99.7% 12-mo. Avg.

Status (March 31, 2012) Delivered Total* CS100 0 66 CS300 0 72 Program total 0 138 * The CSeries Airline program has also booked 179 Options, Letters of Intent and Purchase Rights for CS100 and CS300 Aircraft.

CRJ1000 Fleet statistics, April 2012 Average flight time (hrs.) Average annual utilization (hours/cycles) Fleet total hours Fleet total cycles Schedule completion rate ** Does not include operators of corporate aircraft.

1.11 2,323/2,113 44,601 40,613 99.8% 12-mo. Avg. Utilization based on schedule data.

Bombardier Commercial Aircraft is pubished by: Bombardier Commercial Aircraft 123 Garratt Boulevard, Toronto, Ontario Canada M3K 1Y5 Tel: +1-416-375-4027 // Fax: +1-416-375-4540

President: Michele (Mike) Arcamone Senior Vice-president, Commercial: Chet Fuller Vice-president, Marketing: Philippe Poutissou Vice-president, Customer Support and Services: Todd Young

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Information, technical data and performance figures in this publication are subject to change without notice. This publication does not intend to convey any guarantees or warranties. Any guarantees or warranties on any subject are extended to customers only as may be provided in their purchase agreements. Articles in Commercial Aircraft Update may be reproduced without permission, providing the acknowledgement is given to Bombardier Commercial Aircraft Update.

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