2005* merrill lynch 7th annual global industries conference embraer presentation

Merrill Lynch

7th Annual Global Industries Conference

May 10th, 2005

Luís Carlos AffonsoSenior Vice-President Corporate Aviation Market

Forward-looking Statement

This presentation includes forward-looking statements or statements about events or circumstances which have not occurred. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting our business and our future financial performance. These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things: general economic, political and business conditions, both in Brazil and in our market.

The words “believes,” “may,” “will,” “estimates,” “continues,” “anticipates,” “intends,” “expects” and similar words are intended to identify forward-looking statements. We undertake no obligations to update publicly or revise any forward-looking statements because of new information, future events or other factors. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation might not occur. Our actual results could differ substantially from those anticipated in our forward-looking statements.

Customer SatisfactionBackbone of our entrepreneurial action

HighTechnology

QualifiedPeople

Global Presence

FlexibilityCashIntensiveness

SUCCESSFUL BUSINESS

Aerospace Industry Fundamentals

Global Business

Operations in Brazil, United States, Europe and Asia

FranceLe Bourget

Villepinte ChinaBeijingHarbin

SingaporeSingapore

USANashville

Palm Beach GardensFort Lauderdale

Jacksonville

BrazilGavião Peixoto

BotucatuSão José dos Campos

Eugênio de MeloELEB

PortugalAlverca

Product Portfolio

EMBRAER 170/190 Family

Commercial Aviation

ERJ 145 Family

Business Aviation

The Legacy

New products

Combat

IntelligenceSurveillance &Reconaissance

Transport

Defense

Training

Regional Jets - A Dynamic Tool

When markets are strong…RJs expand catchment areas by adding more spokes to carrier hubsin addition to:

• supplementing mainline jet capacity

• increasing route frequency

• opening new “long & thin” routeswith small, low-risk capacity.

• introducing secondary-to-secondary market service

• rightsizing aircraft capacity to match demand.

• maintaining high route-frequency

RJs help to defend an airline’s competitive market position by:

• preserving network integrity and overall market presence

• replacing unprofitable mainline jet capacity service

… and when markets are weak

Regional Jets - A Dynamic Tool

ERJ 145 Family Orderbook

(as of 1st quarter, 2005)

82

47

20

15

FirmBacklog

8161,131233898Total

634892211681ERJ 145

741142094ERJ 140

1081252123ERJ 135

DeliveriesTotalOptionsFirms

THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT

Beyond the Current Model...

Network Airlines

Low Cost Carriers

RA

SK /

M

Capacity

Regional Airlines

There is a need for a new TOOL

E-JetsE-Jets

THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT

The E- Jets Family

CertifiedCTA / FAA / EASA

CertificationMid 2005

CertificationMid 2006

CertifiedCTA / EASATC Mid 2005

THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT

EMBRAER 170/190 Recent Announcement

15-352015EMBRAER 195

301

155

15

116

FirmBacklog

56744387357Total

-385230155EMBRAER 190

-15-15EMBRAER 175

56309137172EMBRAER 170

DeliveriesTotalOptionsFirms

(as of 1st quarter, 2005)

EMBRAER 170/190 Family Orderbook

4

32

59

96

160 161

131

101

148 145 145

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005E 2006E

Jet Deliveries Forecast

Aircraft Deliveries as required by market demand

Backlog

In 1st Quarter 2005 - US$ 24,9 billion in total orders, including US$ 9,9 billion in firm orders

0,6 1,23 4

11,3 12,7 12,7 13,2

17,5 17,5

9,9

6,4

11,4 10,7 9

10,6 10,1

15

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1Q05

US$ billion

Firm Orders

Options

0,6 1,23,0

4,1

17,7

24,1 23,4 22,1

28,1 27,624,9

Defense Market Products

Systems & Services

Training Intelligence, Surveillance andReconnaissance

Combat Transport

Integrated Market Approach

ACS – Aerial Common Sensor

• Embraer will be responsible to supply the new Intelligence and Reconnaissance Aircraft to the U.S. Army and U.S. Navy.

Embraer inBusiness Aviation

33.6

10.5

2004

1.02.2

3.8

4.1

1.9

1.22.6

4.5

6.0

3.3

2014

16.0

Business Aviation Market Size

Source: AT Kearney and Embraer estimates

Airframe / OEM

Completion and Refurbishment

MROFBOAircraft ManagementCharter andFractional Ownership

23.4

(2004 US$ billions)

Solid position in the commercial aviation market

Embraer Competitive Factors

Enterprise expertiseAbility to identify market and product opportunitiesDevelopment of differentiated products at competitive costsIndustrial efficiencyGlobal customer support and services

Solid position in the commercial aviation market

General Aviation previous experienceBusiness Aviation Market experience

Enterprise expertiseAbility to identify market and product opportunitiesDevelopment of differentiated products at competitive costsIndustrial efficiencyGlobal customer support and services

Embraer Competitive Factors

General Aviation Experience

Ipanema

Minuano

More than 2,500 aircraft delivered

Carajá

Seneca

Xingu

Business Aviation Market experience

Worldwide acceptance Continuous market understanding and product enhancementUnmatched reliability levels

Enterprise expertiseAbility to identify market and product opportunitiesDevelopment of differentiated products at competitive costsIndustrial efficiencyGlobal customer support and services

Solid position in the commercial aviation market

General Aviation previous experience

Embraer Competitive Factors

The world discovers the Legacy

49 aircraft, 12 countries, the right choice

CTA / FAA / JAA / CIS

New Interior

Range

41,000 ftCeiling

MaintenancePlan

LCYOperation

Short RunwayPerformance

2002

Certification

Enhancements

2003 20052004

Legacy Landmarks

Legacy Landmarks

Promises made … promises delivered

Enhancementsto come

Window Shade

HSD

9,500 ft Take-off Landing Altitude

EVS

LED lighting

EFB

Legacy Authorized Sales Representative Network

United Kingdom and Ireland

Sub – Saharian African Countries

Belgium MonacoNetherlands Côte d’AzurLuxembourg

Growing Sales Structure

Super midsize category market share

15%

8%

11% 11%

2002 2003 2004 2005-2014

80% of 2005 production sold

Consistent deliveries performance

Vision

To become a major player in the Business Aviation Market

within 10 years by providing innovative and differentiating

product and service solutions with added value to our

customers and shareholders.

Understanding the market

In-depth assessment of the Business Aviation Market

4 advisory board meetings4 global market surveys3,000 operators surveyed9 concept-aircraft tested + 6 under evaluation

Integrated solution

Comprehensive training programOutstanding support and total care programs

Extensive service centers coverageAircraft exchange facilitation

Third-party financing packagesFBO and aircraft management partnerships

Truly revolutionary products

Truly revolutionary products – design drivers

Docile flying qualitiesNext generation engines Designed for high utilizationHigh Availability

Premium comfortOutstanding performanceLow operating costHuman factors

Very Light and Light Jets by Embraer

Truly revolutionary products

Program Data

Very Light and Light Jets

mid 2009mid 2008Entry into Service

US$ 235 millionInvestment

US$ 2.75 million

Embraer VLJ Embraer LJItem

US$ 6.65 millionPrice

Preliminary data

Product portfolio expansion

Very-light

Entry

Light

Mid-light

Mid-size

Super Mid-Size

Large

Ultra-Long Range

Global

Financial Data

THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT

Net Revenues and Gross Margin

2.525,82.143,5

3.440,5

1.353,51.837,3

2.762,2 2.927,0

28,2%32,0%

39,6% 39,4% 37,7%

32,0%34,1%

1998 1999 2000 2001 2002 2003 2004

• 91% of sales are exports (2004)6.7%Customer Services

& Others6.9%

CorporateMarket

10.3 %Defense Market

76.1%Airline Market

US$ million

Annual growth 77% 36% 50% 6% -14% -15% 60%

CAGR 14%

THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT

Income from Operations

543,9

171.7368.0

462.1651.4

469.6264.8

15,8%12.7%

20.0%

16.7%

22.3%

18.6%

12.3%

1998 1999 2000 2001 2002 2003 2004

US$ Million

250% 114% 26% 41% -28% -41% 105%Annual Growth

CAGR 18%

THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT

Net Income

145,3

234,5

320,7 328,4

222,6

136,0

380,2

11,10%

6,3%

8,8%

11,2%10,7%

12,8%

16,7%

1998 1999 2000 2001 2002 2003 2004

US$ Million

4,618% 61% 37% 2% -32% -39% 180%Annual Growth

CAGR 15%

THE INFORMATION CONTAINED HEREIN IS PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR DISSEMINATED WITHOUT EMBRAER’S WRITTEN CONSENT

PP&E and R&D – Cash Flow

US$ million

Gross R&D amounts

111

6450

7759

70

158173

152

119

66

143

114100

020

4060

80100120

140160

180200

2000 2001 2002 2003 2004 2005 E 2006 E

PP&E

R&D

Thank you!