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David Nielson Chief Engineer, Airport Strategy Boeing Commercial Airplanes March 1, 2006

David Nielson Chief Engineer, Airport Strategy Boeing Commercial Airplanes March 1, 2006. Market & Product Overview. Agenda. 2005 Current Market Outlook Market Evolution 20-Year Forecast Contrasting Views Product Strategy Twin-Aisle Single-Aisle.

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David Nielson Chief Engineer, Airport Strategy Boeing Commercial Airplanes March 1, 2006

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  1. David Nielson Chief Engineer, Airport Strategy Boeing Commercial AirplanesMarch 1, 2006 Market & Product Overview

  2. Agenda • 2005 Current Market Outlook • Market Evolution • 20-Year Forecast • Contrasting Views • Product Strategy • Twin-Aisle • Single-Aisle

  3. Aviation Is Moving From Being Highly RegulatedTo A More Liberalized And Competitive Marketplace

  4. Passengers Drive Airline Strategies

  5. Since 1995, All Air Travel Growth Has Been Met By Frequency Growth And New Nonstops World Index 1995=1.00 Frequency Growth Air Travel Growth Nonstop Markets Average Airplane Size August OAG

  6. In 1990, Only A Few Cities Had Direct ServiceBetween China And Japan Beijing Dalian Tokyo Fukuoka Osaka Nagasaki Shanghai 59 Weekly Frequencies 8 City Pairs August 1990 OAG

  7. By 2004, The Number Of China To Japan City Pairs Served Increased Five Times Moscow Harbin Changchun Sapporo Shenyang Beijing Niigata Dalian Sendai Tianjin Fukushima Toyama Yantai Qingdao Okayama Xian Tokyo Hiroshima Nagoya Fukuoka Osaka Nagasaki Oita Shanghai Matsuyama Nanjing Kagoshima Hangzhou Lisbon Wuhan Okinawa Fuzhou Xiamen Guangzhou Handan Jinan Chongqing 463 Weekly Frequencies 45 City Pairs Hong Kong August 2004 OAG

  8. 20-Year Forecast: Strong Long-Term Growth 10 8 6 4 2 0 RPKs (trillions) Historical Future Forecast growth annual rate 4.8% (2005-2024) Long-Term Growth 2005 - 2024 GDP = 2.9% Passenger = 4.8% Cargo = 6.2% 1970 1980 1990 2000 2010 2020

  9. Air Travel Growth Varies By Region Annualgrowth % Added traffic 2005-2024 2004 traffic 3.5 5.1 3.4 4.6 5.4 6.0 8.8 5.1 World Average Growth: 4.8% 7.2 4.9 5.0 6.1 * Except Within China RPKs, billions

  10. Regional Market Evolution Shapes Fleet Requirements ASKs (billions) Regional jets Single-aisle Twin-aisle 747 and larger Asia- Europe Trans- Pacific North Atlantic Asia- Pacific Europe North America

  11. Long Term Demand For New Airplanes Remains Strong Units 35,300 18,500GrowthAirplanes 25,700 16,778 7,200Replacements 9,600Retained Fleet 2004 2024

  12. Boeing And Airbus Have Contrasting Views On The Fleet Mix Required Single-aisle Twin-aisle 747 and larger Boeing Airbus 21,080 airplanes 2005 CMO 16,601 airplanes 2004 GMF New passenger airplane deliveries, excluding regional jets

  13. Airbus Is Predicting A Significant Trend Shift In Airplane Size Bygone Era Recent History Forecast 240 • Highly regulated • Few airplane choices • Increasing liberalization • More airplane choices • More competition • Many airplane choices 220 200 Average Seats Per Airplane Airbus: +20% Size Increase 180 Boeing: ~+2% Size Increase 2% Size Growth Over Last 10 Years 160 140 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 Historic Air Travel Growth: 5.8% Forecasted Air Travel Growth: ~5% NOTE: Excludes regional jets

  14. Congestion Is Not Driving Large Airplane Use Up NRT HKG HND JFK LHR CDG FRA LAX 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 747 Share of Departures 80% 70% Narita 60% 50% Hong Kong 40% Haneda 30% 20% New York City - JFK London Heathrow 10% 0% August OAG

  15. Very Large Airplanes Will Not Reduce Airport Congestion – London Heathrow Airport Daily departures • OAG August 2004 • All scheduled • passenger service 83% of the airplane departures are below 300 seats 68% of the airplane departures are below 200 seats Seat size category

  16. Nonstop Service Continues To Bypass Mega-Hubs, Not Consolidate Air Canada Emirates London-Heathrow London-Heathrow London Heathrow Toronto Delhi New York (JFK) Dubai Passengers prefer more nonstops and frequency choices American Continental London-Heathrow London-Heathrow Chicago Manchester New York (EWR) Geneva

  17. It Costs Less To Carry Passengers Point-To-Point • Nonstop flights • result in… • Lower costs • Increased revenue • Better utilization • Less environmental impact • More convenience for passenger London Geneva Chicago Seat Mile Cost A320 / A380 Base 787-8 7% Lower 777-300ER 10% Lower

  18. Does The Forecast For 1,648 A380-Size Airplanes Pass The “Reasonableness Test”? Top Fifteen 747 Operators Japan Airlines 72 British Airways 58 Northwest Airlines 48 Korean Air 44 United Airlines 38 Air France 37 Qantas 36 Cathay Pacific 34 Singapore Airlines 32 Lufthansa 31 China Airlines 29 ANA/Nippon Cargo 27 Malaysia Airlines 25 KLM 25 Saudi Arabian 22 Average Fleet 37 • The top fifteen 747 operators average 37 airplanes • a. They would all have to take 110 A380-size • airplanes each • b. Top 25 would have to take 66 each • 2. 629 747-400’s have been delivered over the last 16 years – an average of 39 per year; Airbus is forecasting 1,648 A380-size airplanes to be delivered over a 18 year period (2006-2023) or an average of more than 91 airplanes per year

  19. Boeing and Airbus agree passenger traffic growth will average about 5 percent per year over next 20 years Boeing and Airbus differ as to how airlines will accommodate this future growth Boeing believes the current trend of more frequencies and nonstop flights will accommodate growth Airbus is projecting a significant shift in this trend to larger airplanes Boeing forecasts airlines will need about 25,700 new airplanes valued at $2.1 trillion 2005 Current Market Outlook Summary

  20. Agenda • 2005 Current Market Outlook • Market Evolution • 20-Year Forecast • Contrasting Views • Product Strategy • Twin-Aisle • Single-Aisle

  21. Efficiency In All Markets In Service Launched * w/ Restricted Loadability 747-8 Three class 747-400/-400ER 777-300ER* 777-300 Two class 777-200LR* 777-200 787-3 777-200ER 787-9 767-400ER 787-8 767-300ER 1 Tank 2 Tanks 737-900ER 767-200ER 737-900 737-800 737-700 737-600 797-ZC-0057 1-19-6-CF

  22. The 787 Is a Complete, Flexible, Efficient Family 186.1 ft 170 ft 186.1 ft 197.3 ft 197.3 ft 206.1 ft 787-8 210-250 passengers (three-class) 8,000 nmi / 14,800 km 787-3 290-330 passengers (two-class) 3,000 nmi / 5,500 km 787-9 250-290 passengers (three-class) 8,600 nmi / 15,700 km 797-CO-0218 1-19-6-CF

  23. Improving the Flying Experience Higher humidity More head room Better air quality Large overhead bins Lower cabin altitude 14” (35cm) wider Smoother ride Better economy seating options Large passenger windows Wider seats and aisles Better lighting 797-IN-0063 1-12-6-CF

  24. 787 Significantly Quieter For The Community A330-200 A340-300 787- 8 Feet 0 5000 Meters 0 1500 767-300 4001041404 Source MS Mappoint, (c) Microsoft, Inc.

  25. 787 Ramp Operation • The traditional pneumatic system (used for air conditioning, engine start, and anti-ice today) has been eliminated. • Replaced on 787 by an electrical system to • Improve reliability • Reduce weight and operating costs • APU can run all systems while on the ground • If the APU is not used (or inoperative) • Two 90KVA ground electrical connectors are needed • Existing PC air units can be used • Engines are started using ground electrical power.Two connectors are adequate with load shedding. • Anti-ice is powered electrically 797-WD-0305 1-12-6-CF

  26. Development Schedule On Track 787-8First Flight 787-8 Enters Service 787-9EntersService 787-3EntersService Program Launch Authority To Offer Airplane Announcement Firm Configuration 2002 2003 2004 2005 2006 2007 2008 2009 2010

  27. 777-200LR WorldlinerGoing The Distance

  28. It’s All About Passenger Convenience And Schedule Reliability Scheduled delays and interruptions ½ the delays 777 has half as many scheduled delays Air turnback and diversions 777 has half as many turnbacks and diversions ½ the turnbacks Data based on the manufacturer published interruption rates for the 12 months ending December 2004

  29. 777s Have Better Fuel EfficiencyThan The Competition +23% +24% +13% • Lower Fuel Costs • Lower Emissions

  30. 777 Freighter General Arrangement 212 ft 7 in 61 ft 1 in 36 ft 84 ft 11 in 209 ft 1 in 797-CO-0220 1-17-6-CF

  31. 747-8 Freighter General Arrangement 224 ft 7 in 63 ft 6 in 36 ft 1 in 97 ft 4 in 250 ft 2 in 797-CO-0221 1-18-6-CF

  32. 737-900ER Value Changes Comparedto the 737-900 Stronger fuselage, wing box, center section, landing gear, wheels & tires (enables increased weight) Standard type 2 exit doors (optional activation increases exit limit from 189 to 215) Flat aft bulkhead (enables new larger aft galley) Short field performance enhancements (enables more payload, decreased runway lengths & more derate) Optional aux fuel tanks (1 or 2 tanks increase range) EGT redline limit increase on 27K thrust engines (increases engine on wing life & reduces direct engine maintenance costs) 797-CO-0219 1-12-6-CF

  33. Boeing product strategy is focused on meeting passenger desires and airline requirements Single-aisle: 4 sizes at 20% increments with ~3,000nmi range Twin-aisle: 5 sizes at 20% increments with ~8,000nmi or more range Boeing has a long history of delivering airplanes with superior design and efficiency Product Strategy Summary

  34. Airport Preparation • Wing span increases require changes to gate width. • Increasing range results in increased pavement loading. • Ramp congestion and environmental concerns require more fixed services at the gate.

  35. Wing Span is Increasing for All Sizes of Aircraft Single-aisle 93 ft/28.4m 737-200 112.6 ft/34.3m 737NG 737 with winglet 117.4 ft/35.8m Small wide body 156.1 ft/47.6m 767-300 197 ft/60.0m 197 ft/60m 787 Large wide body 747-200 196 ft/59.7m 213 ft/64.9m 747-400 747-8 225 ft/68.6m

  36. Trends in Pavement Loading Trend in ACN Flexible Pavement – Code B Subgrade 90 80 Concorde 747X A340-600 A340-500 70 Long-Range 777 DC10/MD-11 767-400ER Aircraft Classification Number (ACN) DC8-63/73 A330 747 60 L1011-1 777-300 A340 767-300ER 50 A310 777 (A market) A300 707 40 767-200 30 20 1950 1960 1970 1980 1990 2000 2010 2020 Year of Entry into Service

  37. Servicing Needs • Airports are limiting APU operations to reduce noise and emissions. Electrical and conditioned air is then required at each gate. • To reduce ramp traffic, fuel and potable water are needed at the gate. • Wireless transmission of maintenance information desired for operational efficiency. • Additional boarding bridges are used to service the cabin interior and reduce turn time.

  38. Thank You! For more information, visit our CMO website: http://www.boeing.com/commercial/cmo/index.shtml

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