2007 International Paris Air Show Precursor

1. 2007 International Paris Air Show Precursor

2. Council Member Biography • Addison Schonland is a Partner at Innovation Analysis Group, a firm providing information and consulting services in travel and aviation industries. Mr. Schonland has experience in working with the clients including ABCNews.com, Carey, get2net.com, CMP Media, ATCOM/INFO, Boeing, Airbus Industrie, Airports Council International – North America, Microsoft Expedia, SABRE-Travelocity, GRS Network, US Department of Commerce, In-Flight Technologies, Airline Business Magazine, Lufthansa, United Airlines, Japan Airlines, and Delta Air Lines. Prior he was a consultant at PA Consulting Group; a global management, systems, and technology consulting firm.

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6. Big Picture • Main feature remains Boeing vs. Airbus • The tenor of the show likely to be • Airbus is rebounding from disaster • Boeing has retaken industry leadership • Both will announce orders; it may be a near record year • Huge Emirates order: 100 A350XWBs and 50 A330s? • Qatar likely to firm up 80 A350XWBs and maybe 787s? • US Airways, United, American and Delta may announce orders? There are rumblings from Airbus but Boeing has a couple of large surprises in store, as they love nothing better than to beat the French on home soil during Paris shows. The Emirates order will be tough to top, however.

7. Traffic growth expected to continue Source: Airbus

8. Technology Probably not much new technology this year – • Boeing's 797, (737 replacement) design is underway and could emerge early • 797 will leapfrog the A320 with two radical models; a twin aisle and single aisle narrow body replacement that are otherwise identical • Boeing pondering a 777 replacement before the 797 • Airbus will increase CFRP use in new designs • The key technology to watch is engines • SAFRAN’s Unducted Fan engine • P&W’s Geared Fan engine

9. Higher tech engines are coming

10. Evolutionary innovation Source: Airbus

11. Short term outlook - Airbus • Cash flow constraints mean evolutionary improvements to A320 family through 2013 • A330 program doing very well, A340 fading fast • Freeze of A350XWB design; marketed aggressively • Airbus determined to get GE to provide an engine for the -1000 • Which likely leads to GECAS support (orders/leasing) • A380 deliveries start and new orders come in – potentially a 600 VLA market • A380 likely to impress passengers and operators • Airbus has identified significant weight savings • Plane is QC 0.5 (24 hr ops at LHR possible) • Outperforms 747-8 in range from DXB (LAX non stop year round)

12. Changes Source: Airbus

13. Short term outlook - Boeing • Continued tweaks for 767, 777, 747-8 • 767 tanker to have “advanced” flight deck and more • 777 with more CFRP, lower noise, looking at -400 stretch • 747-8 may be as cost-effective per seat mile as the A380 at lower risk given proven design and smaller size with lower breakeven. • Potential big 747-8 order could be announced from Asian customer supplementing their 777 fleet • 787 program may reach 700 orders before year end as US carriers step up • Strong indications USAirways selected 787 over A350XWB with GE engines • 737 program continues to be harvested with latest models • 797 development continues to benefit from 787 learning curve

14. Order race Pre Show

15. Delivery race

16. Order/Delivery Ratio

17. Airbus - Summary • Product lines • Airbus now a two trick pony – A320 & A330 • Key models delayed – A350 & A380 • A320 replacement likely delayed • Customer base • Customers are publicly irritated • Airbus is exposed to a few customers (EK) • Airbus is losing the order race • Strikes mean losing delivery race as well • Perhaps now a decade behind Boeing

18. Airbus summary Source: Airbus

19. Ratio Orders/Delivery Airbus really got output humming Source: Airbus.com

20. Widebody weakness Source: Airbus.com

21. Orders A320 dependence Source: Airbus.com

22. Deliveries A320 drives their business Source: Airbus.com

23. Widebodies Source: Airbus.com

24. Airbus feeling more confident

25. Widebody delivery share Mainly A330s Source: Airbus.com

26. Boeing • Product lines • Strong demand across entire offering • Record breaking demand for 787 • Strong demand for 747-8 & 737 • 767 making a comeback as freighter & tanker • 777 regarded as benchmark widebody • Customer base • Airbus’ failure makes Boeing look good • 777 success has built deep confidence • Customers willing to bet on 787 & 747-8

27. Orders & Deliveries 787 & 737 Source: Boeing

28. Widebody strength 787 Source: Boeing

29. Order breakdown Source: Boeing

30. Delivery challenges • 737 • How much & how fast to invest in 797? • How much life left in 737 design? • 747-8 • Needs passenger model sales • A380 remains a serious competitor • 767 • Future as a Tanker & Freighter • 777 • Must hold off A350XWB • 787 • Complex supply chain • Extraordinary high expectations • Other Boeing Challenges • Restless labor • Arrogance • Technology • Fossil fuels • BWB • China

31. Airlines & Routes The Primary Argument • Hub to Hub - Airbus • Secondary cities – Boeing The Response - Airbus A380 vs. Boeing 787 • Airbus A380 sales (161) • Boeing 787 sales (580) • Decision drivers for airlines and passengers • Congestion (air & ground) • Pollution (noise, air, environment) • Time (security, elapsed hours)

32. Big twins rule – Boeing’s view

33. The hubs have it – Airbus’ view

34. Conclusion • Gulf airlines • They are experimental – buy every big plane being sold • They are growing fastest – can they sustain? • The neighborhood – great hub location though • India • Horrible infrastructure problems • Will the state quit its interference? • China • Huge ambitions – risk of foreign travel • Will incomes rise fast enough? • LCCs • Entering long haul markets