Raytheon Airline Aviation Services LLC

Regional Industry Supplier ConferenceThe Market for Turboprops19-30 Seat Market Segment

David RosenbergNovember 7, 2005

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Raytheon Airline Aviation Services

• Located in Wichita, Kansas

• Formed in January, 2002

• 58 Employees

• Manages 270 aircraft today

• Supports 700 Beech 99’s, 1300’s and 1900’s

• Provides transportation solutions for cargo, passenger, and government customers

• Placed 46 aircraft in 2004

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Raytheon Airline Aviation ServicesWorldwide 1900 Deliveries September 2004 – September 2005*

• Algeria ZimexStar Aviation

• Australia Queensland Police

• Angola Jet Management• Bahamas Angel Air• Canada Pacific Coastal

Sunwest HomeAir GeorgianCentral Mtn. Air

• Jamaica Intl. Air Link• Japan Air Transse• Nepal Buddha Air• Peru Provincial Airlines

• Puerto Rico MN Aviation• Nigeria Tipmark Maint.• Spain Serair• Turks/Caicos TCI • South Africa NAC • United States Alpine Air

Skysource Intl.Colgan AirwaysProfile AviationNorthropGrumman

Williams Group• Venezuela Chevron-Texaco

Wyngs

71% of our Deliveries in the Past 12 months

Have Been Outside of North America

*Some accounts are multiple deliveries

Raytheon Airline Aviation Services LLC

General Market Overview

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Key Players in the 19/30-Seat Market

• Raytheon Airline Aviation Services (RAAS)

• Saab Aircraft Leasing

• Bombardier

• Embraer

• BAe Systems

• American Eagle & Northwest– Currently have 155 Saab 340’s (including subleased planes)

– Have been disposing some of their fleet (2004 = 178 SF340’s)

• Continental & Delta– Whole fleet of EMB-120’s is parked or subleased (5/05 = 40 aircraft)

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Current Market for 19/30 Seaters

• Largest current market continues to be North America • Largest market for future placements is international

• Niche airlines, General Aviation and International customers offer the best placement opportunities– These customers have been key drivers in the record used sale

numbers we have experienced over the last two years

• The North American market is under extreme pressure due to low fares and high fuel costs– Smaller airplanes have fewer seats to spread costs

• Challenging market due to high number of available aircraft– Specifically the parked and re-marketed 30-seat fleet

Expect Over 75% of Sales to be to the International &

Niche General Aviation Customers

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Regional 1900 DistributionNorth America: August 2005

Major U.S. Customers:

21 D PAX Mesa Air Group 30 D PAX Great Lakes Av.26 D PAX Gulfstream

21 D PAX CommutAir14 C Cargo Alpine Aviation

13 D PAX Skyway11 C Cargo Ameriflight

10 D PAX Colgan Air10 D PAX Big Sky 8 C PAX Frontier Flying 5 C Cargo Alaska Central

Major Canadian Customers: 15 D PAX Central Mtn. Air14 D PAX Georgian Express 2 C Cargo Georgian Express 7 C Cargo Skylink 4 D PAX Skyward 3 D PAX Wasaya

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Worldwide Parked Aircraft* 19 – 30 Seat Turboprop July 2005

*Source: The Airclaims CASE Database

July 00 July 02 July 04 July-05 04 to '05

J31/32 92 153 135 125 -7%

Saab 340 29 74 112 104 -7%

EMB 120 46 92 124 100 -19%

1900   86 151 131 98 -25%

Metro 46 57 52 56 8%

J41 8 3 25 39 56%

 

Total 307 530 579 522 -10%

With 522 Parked Aircraft it Will Remain a Highly Competitive Market With Some Price Pressure

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How are Higher Fuel Prices affecting our Market?

• For our typical regional operator every 1¢ increase in jet fuel price leads to an $80,000 annual increase in expenses

• An increase in jet fuel price from $1 to $2 increases the hourly operating cost of the 1900D by $120

• Fuel prices have made RJs uneconomical in certain markets, thus opening limited new route opportunities for turboprops

• Turboprop operators (particularly in the U.S.) are cash poor and have limited access to capital, which higher fuel prices exacerbate– This limits their ability to fill gaps being created by RJ’s being pulled

back

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Financing Status

• Majority of cash sales during 2005 are self-financed by customers– Worked with relationship banks rather than “going to market”

• Traditional aircraft financing sources remain reluctant to finance airline risk and/or turboprop assets– Deal size is generally unattractive

– Customers who cannot bring cash to the table are difficult to finance outside of ECA supported deals

• U.S. Exim Bank’s regulations limit their ability to support our typical customer– Three 1900D’s supported by Exim in the last two years

– Short amortizations (3-5 years) limit applicability

Despite roadblocks vast majority of RAAS transactions are “cash” sales

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Worldwide Market Outlook

• Limited placement opportunities with North American airlines (mostly in Canada)

• Have limited supply left of used 1900C’s– Expect to sold out by 2006

• Continued focus to selling the 1900D as a General Aviation/niche aircraft, as well as selected special missions applications

• Strong international sale opportunities in Africa– Key market to place aircraft coming out of the United States

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U.S. 1196 1140993 -4% -7% -7% -6%Canada 175 188 195 2% 2% 2% 2%Europe 425 347 343 -4% -1% -3% -3%Latin/South America 286 190 164 -11% -7% -3% -4%Africa/Mid East 115 125 161 7% 13% 11% 13%Asia/Australia 284 288 279 0% -2% 0% 0%

FCST

CAGR CAGR 2000 2003 2005 00-05 03-05 5-Year 2-Year

• U.S. Turboprop Market will Continue to Decline driving availability• Highest Overall Fleet Growth in Africa and Canada

A/C Seats Cargo PAX

BAe J32 19 $5-7k $10-12kB1900C 19 $10-12k $12-15kB1900D 19 N/A $28-33kEMB 120 (Key competition) 32 $10-20k $21-30kS 340 (Key Competition) 32 N/A $28-33k

Current Lease Rates:

Total Fleet

Market Outlook 19 – 30 Seaters

Source: JP Fleets

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1900 Market Share By Region Green = 2003, Yellow = 2005

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

North America Latin/SouthAmerica

Europe Africa/MiddleEast

Asia

Market Share - August 2005

1900 99 Metro Jetstream SF 340 EMB120 EMB110 Dornier Total

North America 283 126 202 159 229 136 32 21 1,188

Latin/South America 27 1 18 21 0 24 58 15 164

Europe 45 3 55 61 62 36 7 74 343

Africa/Middle East 65 1 16 17 12 10 9 31 161

Asia/Australia/N.Z. 53 2 73 21 60 15 21 34 279

Total Population 473 133 364 279 363 221 127 175 2,135

Total Market Share 22.2% 6.2% 17.0% 13.1% 17.0% 10.4% 5.9% 8.2% 100%

Dornier totals include DO228 and DO328 (Turboprop), Jetstream includes J31, J32, J41

Source: “JP Fleets” , August 2005

Asia13.1%

Europe16.1%

Africa/Middle East7.5%

North America55.6%

Latin/South America7.7%

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RAAS Formula for Continued Success

• Provide top notch service/customer support– Aircraft refurbishment & modification

– Spare parts, prompt delivery

– 24/7 customer support

– Roving training teams with web-based training site

– Technical manual awareness

• Focus on reduced cost of operation– Engine programs

– Systems enhancements & modernization

• Develop new or growing applications for 1900’s– Actively market the product worldwide

� Corporate Shuttle niche

� Air Ambulance niche

� Non-Governmental Organizations (NGO) niche

• Know the 1900 fleet– Conduct fleet monitoring & technical audits

– Increase the number of site visits from our tech reps

– Conduct regular North American and International operators conferences

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Thank You!