PRESENTED BY IN PARTNERSHIP WITH

Industry Macro Trends

Commercial OE

• New AT/BA Aircraft OEMs

• Many New Platform/Upgrade Initiatives

Commercial Aftermarket

• Flight Hours Growing

• Changing Operator Business Practices

• Aircraft Demographics Changing

Defense & Space

• Traditional ‘Big Program Spending’ Declines

• Needs Shifting From Conventional to “Hybrid”

Industry Implications

• Emergence of More Customer-Competitor Hybrids

• Traditional Customers Evolving

• Parts Supply/Availability Must Meet Recovering Demand

• Operators Value Safety & Efficiency Improvements

• Growth of Surplus Asset Channels

• Must Innovate Affordably In “Pay To Play” R&D Model

• Leverage Commercial Solutions in D&S Sector

• Expansion of New Spaces (Asymmetric Warfare, UAS)

Changing Market Landscapes

Industry Outlook

Total Flight Hours Growth

Double-digit growth

New AT&R Aircraft Deliveries

• Following a 2-3 year downturn, Air Transport volumes resume growth in 2011

The AT&R OEM Evolution

ConsolidationConsolidationNon-commercially

viable entities were absorbed or disappeared

GlobalizationGlobalization Players entering

with captive markets

Development and Development and ProliferationProliferation

Commercial-based and state-sponsored entities

flourished - many national champions & a regulated airline industry supported

demand

Consolidation (?)Consolidation (?) and The and The New World OrderNew World Order

Winners will emerge, likely tied to technology, growing economies and government

19501950 19801980 20002000 20202020 20402040

Five-Year Purchase Plans for New Business Jets

• 2010 purchase plans at 30%• Operators cautious about slow pace of economic recovery

Business Jet Purchase Expectations by Region

• Significant global demand still present – Asia, Middle East/Africa, Europe more cautious off record 2009 plans

Regional Demand for New B&GA Jets in Next 5 Years

• International share of demand 42%

B&GA Outlook Summary

• Delivery down cycle continues in 2010, 2011 marks bottom of cycle:– Less volatility in OEM rates, but order rates remain soft– Large cabin class aircraft faring better

• Some recovery in purchasing in 2011:– Economic growth expectations are positive but cautious– especially in emerging regions– Projected dollar depreciation will have positive impact on International sales– Recovery in new aircraft deliveries will begin in late 2011 or 2012, orders a year earlier

• Pipeline of new models still important for longer-term growth

• Recovery progressing in fleet utilization, slower improvement in used aircraft

Key Industry Implications

• A number of business models will be challenged … must adapt

• Marketing analytics will be more important … place the right bets

• Supply base performance expectations will heighten• Technology cycles will be shorter, requiring nimble

business/engineering/supply chain• Technology leadership will be difficult due to lack of

science/math orientation