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Bombardier Business Aircraft | Market Forecast 2011-2030

executive summary

historical market performance

current market drivers

the forecast

conclusion

03

07

10

22

47

table of contentsBombardier Business Aircraft | Market Forecast 2011-2030 02

executive summary

Bombardier Business Aircraft | Market Forecast 2011-2030 03

executive summaryBombardier Business Aircraft | Market Forecast 2011-2030 04

Bombardier Aerospace is pleased to presentthe 2011 edition of its Business AircraftMarket Forecast. The forecast for BusinessAircraft presents a 20-year outlook of thebusiness jet industry. The 20-year time span,from 2011 to 2030, reflects Bombardier’slong-term vision of the business jet market.The time span of the forecast considersthe typical life-cycle of aircraft programs.The 2011 forecast also includes an in-depthlook at the market drivers in the majorregions of the world.

Ord

eran

dD

eliv

ery

Un

its

2,000

1,800

1,600

1,400

1,200

1,000

800

600

400

200

0

-200

-400

-600

-800

-1,000

Industry Order and Delivery UnitsCalendar years, 2001-2010

Sources: Actual deliveries from GAMA. Orders estimated from competitive intelligence, OEM guidance.Excludes Very Light Jet and Large Corporate Airline categories.

Total Orders Total Deliveries

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Bombardier remains confident ofthe strong long-term potential forthe business aircraft industry.

Bombardier is emerging as a clear industryleader as the market recovers from the 2009downturn. In 2010, Bombardier recordedmore orders than all its competitors, with107. Again, in Q1-2011, Bombardierrecorded 77 net orders, equivalent to amarket share of approximately 69%.

Bombardier remains confident of the stronglong-term potential for the business aircraftindustry and maintains its focus on strength-ening its market leadership position bycontinuing to invest in its developmentprograms: the Global 7000 and Global 8000jets, Learjet 85 aircraft and Global Visionflight deck. With its comprehensive productportfolio, dedication to provide superiorcustomer support and solid product

development roadmap, Bombardier plansto benefit from the expected long-termmarket growth and continue leading theway in business aviation.

This forecast focuses on the three businessjet categories in which Bombardier competes:Light, Medium and Large. The Very Light andLarge Corporate Airliner categories are excluded.

Turning the CornerThe business jet industry was clearly remindedof its cyclical nature when, in 2009, the pre-cipitous and rapid decline of the demandresulted in cancellations exceeding grossorders, which caused a significant reductionin firm order backlogs and aircraft deliveries.

Today, the business aircraft industry’s improvingbook-to-bill ratio is a positive signal that the

market has turned the corner and is gainingmomentum. The world economy reboundednicely in 2010, led by high growth economies(China, India and Brazil) and sustained bya recovering United States. On the otherhand, lagging growth in Europe, was andremains, a concern. Most key business jetindicators are showing signs of improvement.Sales of used aircraft are rising to pre-downturnlevels and, as a result, pre-owned inventoriesare declining.

Business jet utilization, as measured bymovements, is up. Industry deliveries arenot expected to improve significantly in 2011;however, signs of a market recovery are plenty,and it is expected that business aircraftmarket deliveries will return to growth in2012. The forecast will detail the expectedtimeline and magnitude of the business jetindustry comeback.

Industry Net OrdersUnits, 2010, Q1-2011

Source: Manufacturer disclosures and Bombardier estimates.Excludes Very Light Jet and Large Corporate Airlines categories.

77

73

34

180

111

107

2010 Q1-11

Bombardier Other OEMs

59%69%



Business Jet Value PropositionBusiness jets provide fast, flexible, safe,secure and cost-effective access to destina-tions around the world. In addition to theincreased productivity and time savinggained when using a business jet, there existother less quantifiable, but equally important,benefits. These include: on-demand flightschedules, the ability to conduct businessmeetings in private during flights, easier accessto company’s sites (which may not be servedby a scheduled airlines), and reduced fatigueon company’s frequent travelers.

In an increasingly competitive and globalmarketplace, business aviation is truly a toolthat directly contributes to growth.

A Long-term Vision for theIndustryWe believe that the long-term market driversof growth for the business jet industry remainsolid. These market drivers include: wealthcreation, increasing penetration in highgrowth economies, globalization of trade,replacement demand, and market accessibility.

Our optimism is reflected in our 20-yearindustry delivery forecast, which predicts24,000 business jet deliveries worth $626billion of revenue. 10,000 deliveries worth

$260 billion are anticipated in the periodfrom 2011 to 2020, and 14,000 deliveriesworth $366 billion are anticipated in theperiod from 2021 to 2030.

The worldwide business jet fleet is expectedto grow, at a Compound Annual Growth Rate(CAGR) of 3.8% over the forecast period,from 14,700 aircraft in 2010 to approximately30,900 aircraft by 2030, net of retirements.

Business Jet Fleet ForecastUnits, calendar years 2010-2030

Source: Bombardier Forecast Model.

14,700

21,600

30,900

10,000

14,000

3,100

4,700

Fleet 2010 Deliveries Retirements Fleet 2020 Deliveries Retirements Fleet 2030

Delivery Units

Revenues

6,400

$133 billion

10,000

$260 billion

14,000

$366 billion

24,000

$626 billion

Historical Forecast

2001-2010 2011-2020 2021-2030 2011-2030

Business Jet Market History and Forecast

Source: Bombardier Forecast Model.


historical market performance

historical market performanceBombardier Business Aircraft | Market Forecast 2011-2030 08

Over the past 40 years, the industry has beendefined by multiple market cycles. From 1965to 1995, the business jet deliveries CAGRwas at 4%, with most of the growth comingfrom the main market, the United States.After 1995, the business jet industry beganrapidly expanding to other regions of theworld, generating much higher growth, 9%per year on average.

2004 to 2008Following the 2001-2003 downturn, theU.S. economy regained its momentum andthe demand for business jets significantlyrose between 2004 and 2007. New businessaircraft markets such as Europe, Asia and theMiddle East began to generate substantialdemand. Moreover, the launch of new,innovative aircraft pushed orders even higher.The 841-unit delivery record set in 2007 was

Historical Business Jet Market DeliveriesUnits, calendar years 1965-2010

Source: Actual deliveries from GAMA.

Business Jet Deliveries

0

100

200

300

400

500

600

700

800

900

1,000

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2010

CAGR = 9%

CAGR = 4%

Demand for business jets rosesignificantly in between 2004-2007.

historical market performanceBombardier Business Aircraft | Market Forecast 2011-2030 09

shattered in 2008, with deliveries totalling927 units for the year. Record sales, as wellas a shift in buyer interest toward largeraircraft, explain the peak of $19.8 billionin industry revenue reached in 2008.

2008The near-collapse of financial markets at theend of 2008 precipitated a sharp downturn inbusiness aviation. Order activity stalled begin-ning in the last quarter of 2008 and onwards.The inventory of pre-owned aircraft for saleincreased dramatically and residual valuestook a significant hit. Moreover, OEMs juggledwith cancellations and deferrals. We estimatethat more than 800 order cancellationswere recorded in 2009 in the Light to Largecategories. These unfavourable marketconditions forced most OEMs to decreasetheir production that same year. The trough,in terms of market conditions, was reachedin the first half of 2009.

Since H2-2009Since the second half of 2009, business jetusage has increased and pre-owned inventoryhas been declining. Credit availability has alsorecovered. Market fundamentals improvedsignificantly in the past 2 years; approximately500 fewer aircraft for sale on the pre-ownedmarket (a drop of 3.4 percentage points,to 14.4% in Q1-2011); 22% and 12% more

flight activity in the U.S. and Europe respec-tively. Business jet utilization is at its highestlevels since 2007 in both regions.

Recently, we have experienced the resurgenceof multiple aircraft deals. Most aircraft OEMsare now recording positive net order intake,signaling that the market has moved to itssecond phase of recovery.

Historical Business Jet Market RevenuesUS$B, calendar years 2001-2010

Sources: Revenues estimated from GAMA and B&CA list prices.

All segments in which Bombardier competes

11.09.1

7.69.7

12.2

14.8

17.2

19.8

15.0 15.2

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Rev

enu

es($

US

Bill

ion

)

current market drivers


current market driversBombardier Business Aircraft | Market Forecast 2011-2030 11

The Bombardier Aerospace Business AircraftMarket Forecast uses an econometric modelbased on several market drivers to forecastbusiness jet demand. The most significantdrivers are detailed below.

Economic Market Drivers

Global EconomyThe state of the world economy, and thatof individual countries, is a key factor in thedemand for air travel. For most of 2008 and2009, the worldwide economy experienced asharp downturn. The last recession was theresult of a major financial crisis that had animpact in all regions of the globe, when worldreal GDP shrank at an annual rate of 2.1%in 2009. Concerted efforts by all stategovernments helped the economy to findthe path toward growth in the second half of2009. As a result, the world GDP reboundedby 3.9% in 2010, led by strong growth inemerging economies and an improved U.S.economy. For 2011, the world economy isexpected to continue growing at an annualrate of 3.5%, and to stabilize at approximate-ly 3.4% per year in the longer term.

In its June 2011 Economic Outlook, theOECD stated: “This is a delicate moment forthe global economy, and the crisis is notover until our economies are creating enoughjobs again.” More than 50 million people arecurrently jobless in the OECD area. The

recovery seems, however, to be in theprocess of becoming self-sustained, withtrade and investment gradually replacingfiscal and monetary stimulus as theprincipal drivers of economic growth.

In its latest World Economic Outlook, the

International Monetary Fund talks about atwo-speed recovery. They expect the worldeconomy to grow at about 4.5% a year inboth 2011 and 2012, but with advancedeconomies growing at only 2.5% percent,and emerging and developing economiesgrow at a much higher 6.5% percent.

Sources: IHS Global Insight, February 2011.

4.0%

1.6%

-2.1%

3.5% 3.5% 3.7%3.9%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

2007 2008 2009 2010 2011 2012 2013

Prospect for World GDP GrowthWorld GDP growth forecast (percent change), 2007-2013

Demand for business jets is increasing withthe resumption of global economic growth.


Basically, in most advanced economies,output is still far below potential, while inemerging market economies the crisisleft no lasting wounds.

The significant economic downturn of 2008-2009 resulted in a major short-term reductionin demand for business jets. As expected,this demand, as measured by orders, isincreasing with the resumption of globaleconomic growth. This trend is expectedto translate into a sustained recovery indemand for business jets. The sound

fundamentals of the business jet industryare expected to remain unchanged.

Wealth CreationWorldwide demand for business jets ishighly correlated with wealth creation. TheMorgan Stanley Capital International (MSCI)Index is an aggregate stock market index,based on representative securities listed inmajor financial exchanges around the world.The MSCI World Index is a good estimate ofwealth creation. From 2002 to 2007, the

MSCI World Index literally doubled, mainlydriven by growing prices for oil, naturalresources, and commodities. Most of thesegains were lost in a single year, as, between2007 and 2008, the MSCI World Index fell42%. Business aircraft orders stalled at thesame time the MSCI World Index plummeted.

North America

Europe

Latin America

Russia

India

China

Middle East

Asia Pacific

Africa

105

122

384

188

287

185

327

144

223

113

144

157

628

311

523

232

452

199

272

151

100 176

100 245

100 668

100 567

100

100

699

367

100 605

100 250

100 593

World 100 201

MSCI Index Evolution By Region2002 = 100, Calendar years, 2002-2011

Sources: MSCI World Index from Morgan Stanley.

2002(base)

2007(at peak)

April2009

April2011

MSCI World IndexCalendar years, 2001-2010

Sources: MSCI World Index from Morgan Stanley.

2,000

1,500

1,000

500

0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


Stock markets have rebounded nicely sinceMarch 2009. The MSCI World Index grewby 60% from March 2009 to June 2010.Growth has been consistent during that15-month period, with the exception of spring2010, which was characterized by highmarket uncertainty due to sovereign debtproblems in Europe. The MSCI World Indexended 2010 at levels last seen during thethird quarter of 2008. Although the MSCIWorld Index has increased for more thantwo years, full recovery of business jetorder intake has been lagging.

A March 2011 report from Forbes estimatedthe number of world billionaires at 1,210,surpassing the prior peak of 1,123 reachedin 2008. The March 2011 count of billionairesrepresents a 20% increase versus one yearago and 53% versus 2009. The mostsignificant growth in the number of billionairesoccurred in China with a very impressiveincrease of 66% year-over-year followed byRussia & CIS (61%) and Latin America (47%).

Number of BillionairesUnit & % Change 2010-2011

0

300

400

500

200

100

India LatinAmerica

MiddleEast

Russia& CIS

Asiaex. China

ChinaEuropeNorthAmerica

Number ofBillionaires

% Change2011 vs 2010

Africa

14% 47%39%32%61%66%5%0% 50%

182

10772 72 62

49 36

4

428

192178

11695 86

56 53

427

6

2010

2011

World 2010: 1,011World 2011: 1,210

Sources: Forbes.com March 2010 and March 2011.

The number of billionaires increased 20% versus last year.


US Business Jet UtilizationAll business jets, Thousand departures and landings, 2009-2011

Source: FAA.

826874

927 945 960 1,001 1,018 1,019 1,006-30%-24%

-12%

0%

16% 15%10% 8% 5%

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11

Departures and Landings ('000) Departures and Landings Growth YoY (%)

European Business Jet UtilizationAll business jets, Thousand departures and landings, 2009-2011

Source: Eurocontrol.

Departures and Landings ('000) Departures and Landings Growth YoY (%)

89

113124

103 97

120133

108100

-22% -20%-13%

0%

9%6% 7% 5% 3%

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11

Business Jet Market Drivers

Business Jet UtilizationHistorically, business jet utilization is anindication of the overall health of the industry.The Federal Aviation Administration (FAA) andEurocontrol record the number of take-offsand landings at American and Europeanairports respectively.

Both in the U.S. and in Europe, althoughutilization levels are not yet back to pre-recession levels, business jet movementscontinued to improve during 2011, relativeto the same period in 2010. In Q1-2011,business jet utilization was up 5% year-over-year in the U.S. and 3% in Europe.


BacklogBacklog refers to the total number of ordersnot yet delivered. In the business aircraftindustry, order backlog indicates potentialfor deliveries in the upcoming years. OEMsadjust their production rates based on theircurrent backlog levels and their expectationsregarding the number of orders they canobtain in the future. Production rate changesare a costly and complex matter, due to theexpenses associated with hiring or laying-offemployees, as well as adjustments to thesupply chain and scheduling. Therefore,manufacturers aim to smooth out their pro-duction rates to maximize deliveries whileminimizing the risk of frequent changes.

In terms of business jet industry orders,2007 was a record year, with close to 1,800estimated orders for the Light, Medium andLarge aircraft categories. The first half of 2008continued to be strong, as manufacturersrecorded more than 1,300 orders. The overallindustry backlog peaked during 2008 at morethan 3,000 units. However, toward the end of2008, the economic downturn led to anabrupt drop in orders and a significantnumber of cancellations.

The Light aircraft category was affectedthe most by order cancellations and, as aresult, experienced the greatest changesin production rates.

The Medium category, although enduringdecreasing production rates, was affected toa lesser extent, and the Large aircraft categorywas only slightly affected.

We estimated the industry backlog at about1,400 aircraft at the end of Q1-2011. Thiscorresponds to an estimated value of $48billion, $30 billion less than a few days priorto the Lehman Brothers collapse (Q3-2008).Deliveries decreased by 43% between2008 and 2010.

Moving forward, reduced near-term deliveriescombined with the progressive return topositive industry net orders should resultin industry backlogs stabilizing and growing,with the Large aircraft category leading thenext up-cycle.

Industry BacklogEstimated units, calendar years 2001-2010

Sources: Orders estimated from competitive intelligence, OEM guidance.

0

500

1,000

1,500

2,000

2,500

3,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Industry BacklogEstimated Value ($B), Q1-11

Sources: Orders estimated from competitive intelligence,OEM guidance, 2011 List price from B&CA.

$48.3B

Large:$33.0 B

Light:$7.3 B

Medium:$8.0 B


The Pre-Owned Aircraft MarketOver 60% of new business jet orders representreplacement aircraft for current owners.The demand for new aircraft is stimulated bythe conditions prevailing on the pre-ownedmarket. This market is considered healthywhen residual values are high and when theinventory of used aircraft for sale is low.

In the beginning of 2008, the percentage ofthe overall business jet fleet for sale on thepre-owned market started to increase rapidly.Many owners experienced difficulties sellingtheir aircraft, which, in turn, made them less

likely to purchase a replacement. The accumu-lation of aircraft on the pre-owned market wasa leading indicator of the new business aircraftmarket downturn that started in Q4-2008. Atthe end of 2007, the pre-owned inventory wassitting at a low of 10.5%. The level started toclimb in the beginning of 2008 and peaked at17.8% in Q2-2009. During the second half of2009, as pre-owned sales activity strength-ened, inventory started to decline steadily.By Q1-2011, pre-owned inventories hadfallen to 14.4%, continuing a graduallyimproving trend. We expect pre-ownedinventory levels to stabilize forward in a rangeof 11% to 13%.

Through the first half of 2008, residual valueswere still high due to manufacturers’ longbacklogs. Since then, residual values havedropped across all aircraft categories. During2009, average business jet residual values fellby 17 percentage points. In the first quarterof 2011, residual values appeared to bebottoming.

Pre-Owned Aircraft Inventory as a % of the Fleet%, calendar years 2005-2011

14.4%

17.8%

10.5%

Q105

Q205

Q305

Q405

Q106

Q206

Q306

Q406

Q107

Q207

Q307

Q407

Q108

Q208

Q308

Q408

Q109

Q209

Q309

Q409

Q110

Q210

Q310

Q410

Q111

Sources: Aircraft inventory and fleet from JETNET. Excludes Very Light Jet and Large Corporate Airline categories.

5-Year Residual Value as a % of the Original B&CA List PriceAll business jets, %, calendar years 2005-2011

Sources: Residual values from Aircraft Bluebook Price Digest, original list price from B&CA.

78% 79% 80% 81% 83% 83% 84% 83%86% 86% 86% 86%

89%92% 91%

82% 81%

67% 66% 65%67% 65%63%

61%61%

Q105

Q205

Q305

Q405

Q106

Q206

Q306

Q406

Q107

Q207

Q307

Q407

Q108

Q208

Q308

Q408

Q109

Q209

Q309

Q409

Q110

Q210

Q310

Q410

Q111


New Aircraft ProgramsContinued progress, notably in enginespecific fuel consumption, avionics andaerodynamics allows aircraft models fromthe latest generation to offer for a comparableprice, more range, performance and featuresthan those of the previous generation. Thelaunch of new airplane programs reflectsOEMs’ ability to apply the latest technologybreakthroughs to their product lines, themarket need for more performing aircraft,and the OEMs’ confidence in themarketplace going forward.

Three aircraft were launched in 2010,including Bombardier’s Global 7000and Global 8000 jets.

Fractional and BrandedCharter DemandFractional ownership (where several usersacquire a portion of the same aircraft)has existed since the mid-1990’s and hasaccounted for 10% to 15% of industryyearly deliveries on average. In the periodfrom 1995 to 2010, fractional operatorstook delivery of over 1,150 corporate jets.Subsequent variations of this businessmodel include “fractional card” or “jet card”programs whereby customers obtainon-demand access to a business jet bycommitting to a predetermined number

Sources: Dates of entry from competitors’ press releases and trade media coverage.

Entry Into Service of New ProgramsEntry into service by model, calendar years 2011-2017

2011 2012 2013 2017

G250 G650

Global Vision

Hawker 200

Legacy 500

Citation Ten

Learjet 85

Legacy 450

Falcon 2000S

2014 2016

Global7000

2015

Global8000

+

Per

Year

-

Air Travel Options

Source: Bombardier’s internal research department.

Personalized service

Low costairlines

Commercialairlines

First-classcommercial

airlines

Air Taxis

BrandedCharters

Jet-cardprograms

Fractionalownership

Fullownership

Commercial-aviationoffering

On-demand service Business jet ownership

Business jet market


of flight hours per year, without the obligationto purchase shares in any aircraft.

There are four large operators in the fractionalownership industry, among them NetJetsand Flexjet by Bombardier. The fractionalownership industry went through a period offleet rationalisation during 2009, resulting ina substantial reduction of its order backlog.Since then, backlogs have resumed growing;in particular, NetJets placed significantvolume orders for new business jets in2010 and early 2011.

The growth in the number of branded charteroperators is a more recent trend. Theseoperators offer on-demand flight withcompetitive trip-specific pricing. Brandedcharter operators are characterized bysophisticated operations infrastructure,and greater use of airline-style schedulingpractices in order to minimize deadhead costs.

In 2008, branded charter operator ordersrepresented approximately 20% to 30% oftotal business jet orders. In 2009, the after-math of the economic downturn causedbranded charter operators to resort to orderdeferrals and cancellations. Larger operators,such as VistaJet and Comlux, have returnedto growth and have placed orders for addi-tional business jets in 2010 and early 2011.Fractional and branded charter operators

are returning to growth and are expected toaccount for approximately 10% of businessjet deliveries over the next 20 years.

Business Jet Fractional Order and Delivery UnitsUnits, Calendar years 2001-2010

Fractional operators includes: Flexjet, Netjets, CitationAir, Flight Options.Sources: Deliveries from Ascend; Orders from competitive intelligence.Excludes Very Light Jet and Large Corporate Airline categories.

-500

-300

-100

100

300

500

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Ord

eran

dD

eliv

ery

Uni

ts

Fractional Orders Fractional Deliveries


Business Jet Penetrationin Growth MarketsBusiness jet penetration is a measure ofthe number of business jets in each of theforecast regions relative to the size of thatregion’s economy, as measured by GrossDomestic Product (GDP). The penetrationrate of business jets by region is highlyvariable. The most established market forbusiness jets, North America, has the world’slargest fleet which continues to grow, but ata low rate. On the other hand, China has avery low number of business jets relative tothe size of its economy and is now enteringa high growth rate phase for its businessjet fleet. In order to normalize for differingpopulation sizes in each region, penetrationrates and GDP are best compared on aper capita basis.

Growth of business jet fleets over the longer-term in each region is best estimated by anexpected market maturity curve. This curve,an adaptation of the Bass diffusion curve firstpublished in 1969, resembles an “S” shapewith the highest growth occurring in the earlyphases of market adoption and slowinggrowth as the market matures.

NORTH AMERICA

LATIN AMERICA

MIDDLE-EAST& AFRICA ASIA

EUROPE &RUSSIA

1st drivingforce: GDPgrowth

2nd drivingforce:

removal ofbarriers

Averagegrowth path

GDP per Capita (USD, Log Scale)

10,000

1,000

100

10

1

100 1,000 10,000 100,000

Penetration Rates by RegionFleet per Capita vs. GDP per Capita, 1960-2010

Source: Fleet from Ascend, GDP and Population from IMF.

Flee

tp

er10

0M

illio

nP

op

ulat

ion

(Lo

gS

cale

)

The penetration rate of business jets by region ishighly variable; each region is at a different stage.

Projected GDP Growth can be used toforecast the likely trajectory of the businessjet penetration for each region. Realizationof fleet growth implicitly assumes expectedadoption and acceptance of business jets andthe progressive removal of barriers to growth,notably lack of adequate infrastructure andregulatory limitations. As the economydevelops, the expected growth of thebusiness jet fleet in each region can bereasonably predicted over the longer term.Once fleets are netted of aircraft retirements,business jet deliveries to each region canbe derived.

Goldman Sachs Asset Management hasrecently introduced the term "Growth Market"to define any country outside the developedworld that is responsible for at least 1% ofglobal GDP. These economies are most likelyto "experience rising productivity coupledwith favorable demographics and, therefore,a faster growth rate than the world averagegoing forward". These include the BRICcountries (Brazil, Russia, India and China)and also Mexico, South Korea, Turkey andIndonesia. We expect a significant share ofbusiness jet deliveries to originate fromthese Growth Markets.



#o

fA

ircr

aft

Overall Fleet By AgeUnits as of December 31, 2010

55

340380

1,200

1,600

1,2001,300

2,400

2,700

3,500

Age Bracket

46-5041-4536-4031-3526-3021-2516-2011-156-101-5

Fleet Overall Average Age: 15.7 years

Sources: Ascend Online as of December 31, 2011. Excludes Very Light Jet and Large Corporate Airline categories.

Source: BBA Market Forecast Model.

Cumulative Retirement By Age%, 2010-2030

0

10

20

30

40

50

60

70

80

90

100

Airc

raft

Ret

ired

(%)

Aircraft Age (Years)

605550454035302520151050

2030

2020

2010

40 years30 years

Aircraft RetirementsAs of early 2011, the average age of theworldwide business jet fleet was 15.7 years,with approximately 60% of the fleet beingless than 15 years old. However, around 400aircraft are in excess of 40 years.

To date, the total number of permanentretirements of business jets has been low.However, as a result of emerging environmentalconcerns, new regulations and airspacemodernization, the retirement of the oldestbusiness jets is expected to accelerate.Environmental regulations include potentialairport restrictions on Stage 2 business jetoperations and the introduction of the

Emissions Trading Scheme (ETS) in Europetaking effect in 2012. The ETS will penalizeaircraft types with older technology enginesthat burn more fuel and therefore emit moregreenhouse gas (CO2). Similarly, plannedairspace modernization in the United States(FAA NextGen), in Europe (Single EuropeanSky) and elsewhere will require advancedflight deck avionics technologies. It may notbe economically feasible to retrofit olderaircraft cockpits with the required avionicstechnology, rendering these types obsolete.

These dynamics will result in a reductionof the business jet fleet half-life (age at which50% of aircraft have retired) from 40 yearsin 2010 to 30 years in 2030.

The amount of aircraft that retire within theforecast period will vary considerably byregion. Naturally, the regions having well-established business jet fleets and olderaverage fleet ages will experience thegreatest numbers of retirements. Regionsthat currently have relatively small businessjets fleets, such as China, will experiencerelatively fewer business jet retirementsduring the forecast period.

the forecast


the forecastBombardier Business Aircraft | Market Forecast 2011-2030 23

Orders, Deliveries andRevenuesWith the continued recovery of the worldwideeconomy in 2010 and 2011, leading indicatorsfor business aviation are improving, resultingin increased orders for new business jetsand much fewer cancellations. This trendis expected to continue, primarily driven bygrowth in emerging markets and replacementdemand in more established markets.

However, industry deliveries tend to lag orderintake as manufacturers strive to maintainacceptable backlog levels. As a result,industry deliveries for 2011 are expectedto be relatively flat when compared to 2010(approximately 530 aircraft). Improved ordersand backlog should result in increasingindustry deliveries beginning in 2012. Therecovery in deliveries is then expected tobe strong and we forecast that the industrywill surpass the prior delivery peak year(2008) by as early as 2014.

Business Jet Industry 20-Year Deliveries OutlookUnits, calendar years, 1991-2030

Sources: Bombardier Forecasting Model.

0

200

400

600

800

1000

1200

1400

1600

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

1991-2000

3,600 units2001-2010

6,400 units2011-2020

10,000 units2021-2030

14,000 units

Increased orders and backlogshould result in increasing industrydeliveries beginning in 2012.

The delivery forecast shows demand for10,000 aircraft that will generate $260 billionin total revenue in the Light to Large busi-ness jet categories over the 2011-2020period, compared to 6,400 aircraft and$133 billion in total revenue between 2001and 2010. During the 2021-2030 period,deliveries for these categories are expectedto total 14,000 aircraft for total revenues of$366 billion. In 2030, OEMs should deliverapproximately 1,500 business jets.

In summary, total deliveries over the 20-yearforecast period (2011-2030) will be 24,000aircraft worth $626 billion.


Business Jet Market Revenues ForecastConstant 2010 US$B, calendar years, 1991-2030

Sources: Bombardier Forecasting Model.

0

5

10

15

20

25

30

35

40

45

50

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

1991-2000

$49 B2001-2010

$133 B2011-2020

$260 B2021-2030

$366 B

The industry will generate$260 billion over 2011-2020and $366 billion over 2021-2030.

India2011-2020: 3852021-2030: 945

North America2011-2020: 4,2002021-2030: 5,400

Europe2011-2020: 1,9002021-2030: 2,200

Africa2011-2020: 3252021-2030: 475

Latin America2011-2020: 925

2021-2030: 1,200

Russia & CIS2011-2020: 525

2021-2030: 1,010

China2011-2020: 960

2021-2030: 1,400

Asia Pacific2011-2020: 3702021-2030: 605

MiddleEast

2011-2020: 4102021-2030: 765

Regional 10 and 20-Year Delivery OutlookUnits, calendar years, 2011-2020 and 2021-2030

Source: Bombardier Forecasting Model.

Regional DetailsThe Forecast is broken down into nine geographic regions: North America, Europe, China, India, Latin America, Russia and Commonwealthof Independent States (CIS), Middle East, Africa, and Asia Pacific. Deliveries for each region are presented below in the form of two proportionalbubbles according to delivery quantities, where the inner bubble represents regional deliveries in the period 2011-2020, and the outer (larger)bubble represents deliveries in the period 2021-2030.


the forecastNorth America (United States and Canada)


The U.S. economy has been on a recoverypath since mid-2009. Although there is stillplenty of slack in the American economy,growth is expected to unfold evenly through-out 2011. Many key areas are now displayingvisible growth: employment, consumerspending, and exports, with the latter beingfuelled by rapid growth in emerging markets.Last, but not least, corporate profits grew8.5% between Q1-2010 and Q1-2011.

On the other hand, inflation has becomemore of a concern, with higher gasoline andfood prices. It is expected to grow to 3.0%this year, up from 1.6% last year. In the shortterm, the higher U.S. dollar is representinga slight drag on real GDP.

The Canadian economy accelerated ata good rate in 2010. The consumer,government, investment and trade sectorsall performed well. As with the U.S.,Canada’s economy is expected to bestronger moving into 2011.

According to IHS Global Insight, real GDPgrowth for North America should improvethis year over last year, with a forecast 3.2%

growth in 2011, up from 2.8% in 2010.Economic growth should remain steadyfor the region over the 2011-2030 period,with a yearly average of 2.7%.

As the most prevalent economic regionaround the world, North America shouldcontinue creating wealth and sustaining thedevelopment of its business aircraft industry.

Business Jet Penetration Forecast - North AmericaFleet per capita vs. GDP per capita, 1960-2030

Sources: Ascend, IMF, IHS Global Insight, UN Population Project, Bombardier forecast. Includes very light jets.

1

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Business aviation began in North America inthe 1960s by leveraging the pre-existing andwell-implanted general aviation infrastructure.As a consequence, the business aviationindustrial network, regrouping OEMs, suppliers,Fixed Base Operators (FBOs), as well asdedicated airports, experienced a fast-paceddevelopment. This idiosyncratic developmentpath explains the unique shape of thehistorical business jet penetration curvefor North America, significantly higher thanother regions.

Business aviation in North America caters toa continued demand for new and replacementaircraft. Historically, North America has beenthe most prominent region in terms ofbusiness aircraft sales. At the end of 2010,there were 9,700 business jets based inNorth America, approximately 66% of theworldwide business jet installed base. TheNorth America is the most mature market.

As the forecast business jet penetrationcurve shows, fleet per 100 million populationis expected to grow moderately from 3,400to 4,300 over the next 20 years. NorthAmerica is forecast to receive the greatestnumber of new business jet deliveriesbetween 2011 and 2030 with 9,600 aircraft;4,200 aircraft between 2011 and 2020;

and 5,400 aircraft between 2021 and 2030.The 2010 fleet of 9,700 business jets willgrow to 13,800 aircraft in 2030 resultingin a CAGR of approximately 2%.

Fleet Evolution Forecast - North AmericaFleet, Deliveries, Retirements; 2010-2030

9,700

11,700

13,800

4,200

5,400

2,200

3,300


Sources: Ascend, Bombardier forecast. Excludes Very Light Jet and Large Corporate Airline categories.

North America (United States and Canada) (continued)

A two-speed Europe is becoming moreand more an economic reality. As the “core”of the Euro area – Germany, France and UK– is turning the corner, the “peripherals” –Greece, Ireland, Spain and Portugal – arestill suffering from the sovereign-debt crisis.

The German economy, the most prominentin Europe, is recovering quite well from the2008-2009 downturn. The ramifications ofthe Eurozone sovereign debt crisis have sofar had little impact on this country. Themassive and sustained growth accelerationsince Q2-2010 has made Germany the starperformer in Western Europe. Germany’seconomy is expected to remain exceptionallyrobust in 2011 compared to the economiesof France and the UK.

According to the economic research firmXerfi, the outlook for France is quite contrasted:bearing a record trade deficit in Q1-2011,France saw its industrial output falling back tolevels experienced 10 years ago. Its industrynetwork is slowly deteriorating, while con-sumption is hampered by a rising inflation.

Britain’s economy saw most of its sectorsoff to a strong start in Q1-2011, in particularwith regards to output in the services andmanufacturing sectors. Britain's short tomidterm growth is expected to remain mild,as the country faced important governmentalbudget tightening.


Europe

Business Jet Penetration Forecast - EuropeFleet per capita vs. GDP per capita, 1960-2030


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WESTERNEUROPE

EASTERN EUROPE

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2010

Actual Western Europe

Forecast

2030

2010

Actual Eastern Europe


Since the beginning of the recession, Greecehas been under the most intense pressure.Continuous high levels of public debt areforcing Greece to further fiscal tightening overthe coming years, weighing on economicactivity. The ongoing financial crisis is expectedto further dampen private consumption andinvestment. As a consequence, the Greekeconomy is expected to further contract in2011. This is expected to be the third yearof GDP contraction in a row.

Overall, after contracting its GDP by 4.1%in 2009, the Eurozone rebounded with 1.7%growth in 2010. According to IHS GlobalInsight, the Eurozone GDP is forecast to grow1.5% in 2011. In the period from 2011 to2030, growth is predicted to average 1.7%.The recession may be over, but the econo-mists are preaching caution as economicgrowth carries on at a slowing rate.

For the last few years before the GreatRecession, Europe has taken an increasinglyprominent position in the business aviationmarket. The region saw its share of world-wide business jet deliveries jump from 12%in 2003 to 31% in 2008. The main driverswere the strong Euro relative to the U.S.dollar, significant economic growth generatedby the expanding European Union, and theemergence of branded charter business jetoperators.

The growing business jet installed base inEurope will create a significant replacementmarket, ensuring that this region will continueto be a major source of demand for businessjets. As the forecast business jet penetrationcurve shows, fleet per 100 million populationis expected to grow from 470 to 1,300 overthe next 20 years. Europe will receive thesecond largest number of business jetdeliveries with 4,100 aircraft in the period

from 2011 to 2030; 1,900 aircraft between2011 and 2020; and 2,200 aircraft between2021 and 2030. The 2010 fleet of 1,800business jets will grow to 5,190 aircraft by2030 with a fleet growth CAGR of approxi-mately 5%.


1,900

2,200

210

500

5,190

3,490

1,800

Fleet Evolution Forecast - EuropeFleet, Deliveries, Retirements; 2010-2030


Europe (continued)


China delivered a stellar performance duringthe Great Recession with 9.1% and 10.3%growth in 2009 and 2010. The Chinesegovernment has been implementing measuresto prevent the economy from overheating.Credit tightening should start cooling downdomestic demand and price controls for theproperty market should limit constructionactivities. Given the Chinese public’s highfinancial savings, consumer-demand growthshould remain resilient throughout the year.

Traditionally driven by export markets, Chinais determined to accelerate its transitiontoward a more domestically based economy.Taking a longer term perspective, Chinaand India are expected to lead the world’s

economic growth. Given China’s largepopulation and vast physical size, stronggrowth could continue for several yearsand spread from coastal areas to inlandprovinces. In its 12th 5-year plan, Chinawill continue to focus on inclusive growth,by guaranteeing housing affordability andby investing massively in rural regions.According to IHS Global Insight, China's

economy is expected to grow at 9.5% in2011. China is expected to account for anannual average GDP growth of 7.2% forthe next 20 years.

Business aviation in China is at its veryearly stages. Over the past years, significantbarriers have prevented the Chinese businessjet market to grow to its potential. Restrictive

China

Business Jet Penetration Forecast - ChinaFleet per capita vs. GDP per capita, 1960-2030



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airspace access, high aircraft import taxes, ashortage of airport infrastructure for businessaviation and high user fees are among thefactors which explain why China only hostsan installed base of some 150 business jetsfor a population of 1.3 billion. Nevertheless,China’s number of civil airports is expected togrow from 156 in 2009 to 244 by 2020.

Aside from the buoyant economic growth,many factors suggest that China holds thepotential for a rapid business aircraft marketdevelopment in the coming years.

First, according to China.org.cn’s study ofthe top 500 enterprises of China in 2010,the revenues of the 500 largest companieshave been growing at an annual average rateof 21% between 2002 and 2010.

Moreover, its population of High Net WorthIndividuals1 (HNWI) has been increasing by animpressive 10% per year on average between2004 and 2009, according to Merrill Lynchand Capgemini. China is already the secondlargest luxury goods market, and is forecastto gain the first place by 2015.

All summed up, we expect that the culturalacceptance of business aviation, the rapidgrowth of HNWIs, the plans for new airports,

and the recent improvements to flightplanning regulation and airspace liberalizationwill allow private aviation to blossom inChina over the next 20 years.

Demand for business jets should increaseas barriers progressively come down. As theforecast business jet penetration curveshows, fleet per 100 million population isexpected to grow from 12 to 200 over the

next 20 years. The Chinese business jetfleet of 150 aircraft in 2010 is predicted togrow at a CAGR of 15% over the next 20years, and to account for 2,470 aircraft in2030. 2,360 deliveries are expected in Chinathroughout the next 20 years; 960 aircraftbetween 2010 and 2020; and 1,400aircraft between 2021 and 2030.

1 Individuals with investable assets over U.S. $1 Million.

China (continued)

Fleet Evolution Forecast - ChinaFleet, Deliveries, Retirements; 2010-2030


150

1,100960

10

30

2,470

1,400



India

Business Jet Penetration Forecast - IndiaFleet per capita vs. GDP per capita, 1960-2030



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India’s economy continued to experienceremarkable development, increasing at 8.5%per year during 2010, second only to China.Economic liberalization that began in the early1990s served to accelerate India’s growth,which averaged more than 7% per yearsince 1997.

India has one of the fastest growing middle-class in the world. The world’s most populousdemocracy escaped the worst of the globalfinancial crisis of 2008-2009 through cautiousbanking policies and a relatively low depend-ence on exports. While the Indian economyis diverse, services, such as IT, are the majorsource of economic growth, accountingfor more than half of India’s output. India

has capitalized on its large number ofwell-educated people, skilled in the Englishlanguage.

According to IHS Global Insight, India isforecast to be the world’s fastest growingregion in the period from 2011 to 2030, withGDP growth averaging 7.5% per year. In2011, India’s growth is predicted to be at 8.3%.


According to Forbes, the number ofbillionaires in India grew to 56 during 2010,from 49 a year earlier.

India’s business aviation sector has not livedup to its full potential due to lack of aviationinfrastructure, stringent government regula-tions, high import taxes and duties, long pro-cedures for aircraft imports. There are signsof improvement, as the Airports Authority ofIndia announced plans to modernize manyairports, and bring 32 existing unused air-ports into operation over the next 10 years.As the current installed base of business jetsin India is small and relatively young at 9.5years old at the end of 2010, retirementswill not be a major factor in this market.

As the forecast business jet penetrationcurve shows, fleet per 100 million populationis expected to grow from 12 to 120 overthe next 20 years. Business jet sales shouldprogressively accelerate in the country due toeconomic growth and wealth creation. Indiais forecast to take delivery of 1,330 businessjets in the period from 2011 to 2030, with385 aircraft between 2011 and 2020 and 945aircraft between 2021 and 2030. The 2010fleet of 110 business jets will grow to 1,400aircraft in 2030, resulting in a CAGR ofapproximately 14%.

India (continued)

Fleet Evolution Forecast - IndiaFleet, Deliveries, Retirements; 2010-2030


110

10

30

1,400

485

945

385



Latin America

Business Jet Penetration Forecast - Latin AmericaFleet per capita vs. GDP per capita, 1960-2030



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Latin America is a diverse region, and, for thepurposes of the forecast, includes all countriesbetween the Rio Grande and the Cape Horn.During 2010, most countries in the regionexperienced strong to very strong growth.Average economic growth for the regionduring 2010 was 5.8%.

The largest economy of Latin America,Brazil, grew by 7.7% last year. The country’sproductivity is increasing rapidly after manyyears of economic and political stability.Brazilians are moving forward with confidence,preparing for the 2014 World Cup and the2016 Olympics. In the September 2010

Pew Global Attitudes Survey, 62% ofBrazilians said their nation’s economy is ingood shape. Of the 21 other publics includedin the survey, only the Chinese are moreupbeat about their country’s overall directionsand economic conditions.


The economy of the region has traditionallybeen driven by exports of manufacturedgoods, agricultural products and naturalresources, such as oil and minerals. Tourismis also an important driver, notably forMexico and the Caribbean.

According to Forbes, Latin America experi-enced a jump in its number of billionaires,going from 36 in 2009 to 53 in 2010. Mexicoranks above Brazil and Argentina in sales ofluxury brands in Latin America and is thehome of the world's wealthiest individual in2011: Carlos Slim Helu. According to IHSGlobal Insight, in 2011, Latin America’sgrowth is predicted to be at 4.6%. Over the20-year forecast period, the Latin Americaneconomy is forecast to grow, on average,by 4.3% per year.

Business aviation has a long and well-estab-lished presence in Latin America, particularlyin Mexico and Brazil. The success of businessaviation in the region is partly due to the poorscheduled airline service in the area. LatinAmerica shows a noticeably high proportionof business jets in the Light category. In late2010, the region had one of the oldest busi-ness jet fleets in the world, with an averageage of 18.5 years (versus 15.7 years world-wide). As a result, the region should accountfor a significant amount of replacements.

As the forecast business jet penetrationcurve shows, fleet per 100 million populationis expected to grow from 315 to 500 overthe next 20 years. Latin America is forecastto take delivery of 2,125 business jets in theperiod from 2011 to 2030, with 925 aircraftbetween 2011 and 2020 and 1,200 deliveriesbetween 2021 and 2030. The 2010 fleet of1,400 business jets will grow to 2,735aircraft in 2030 resulting in a CAGR ofapproximately 3%.

Latin America (continued)

Fleet Evolution Forecast - Latin AmericaFleet, Deliveries, Retirements; 2010-2030


1,400

1,200

360

430

2,735

1,965

925



Recovering at a relatively moderate pacefrom a deep recession suffered in 2009, theRussian economy remains overly dependenton energy export revenues to drive domesticgrowth. Energy prices have risen steadilysince mid-2009. They are expected to remainelevated in the near-to-medium term, particu-larly in light of popular unrest in the MiddleEast and North Africa. Exports have beendriving the recovery, while domestic demandhas remained slack. Consumer confidence hasbounced back and household consumptionhas been adding some momentum to theeconomic recovery.

Business confidence is improving as well,as shown by the strong growth in investmentactivity. Nevertheless, there are offsettingfactors in the Russian economic environment

that will keep growth in the moderate pace.Commercial lending rates are still relativelyhigh and banks are leery of a new waveof loan defaults.

Future growth will be influenced by WTOaccession and the nation's newly cementedenergy exporting ties to China. According toMoscow investment bank Renaissance

Capital, increased government spendingbefore parliamentary elections in the end ofthe year and a presidential vote in early 2012may boost inflation. The number of billionairesin Russia & CIS amounted to 116 in 2010,up 61% from 72 in 2009, according toForbes. A total of 50 billionaires live inMoscow, making it the city with the second-highest billionaire population after New York.

Russia & CIS

Business Jet Penetration Forecast - Russia & CISFleet per capita vs. GDP per capita, 1960-2030


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IHS Global Insight estimated Russia’s growthto be 4.6% for 2011, slightly up from 4.5% in2010. Economic growth should remainsteady for the region over the 2011-2030period, with a yearly average growth of 3.4%.

The development of the Russian economyhas had a positive effect on the demand forbusiness jets in the region. Fleets of Russian-owned aircraft grew significantly from 100aircraft in 2004 to an estimated 380 jets in2010. Due to taxation issues, most Russianbusiness jet owners register their businessjets outside of Russia.

Russia is the largest country in the world.Russian customers have to fly longerdistances, and have a strong cultural accept-ance of business jets. Currently, the majorfeatures of the Russian business aviationmarket are the dominance of foreign opera-tors, the intense concentration in the Moscowregion and the lack of clear legislation in thefield. Infrastructure, an issue for many years,is now improving, and air traffic control isbecoming more accustomed to working withbusiness aviation. In November 2010, Russiaadopted new airspace classifications whichshould allow general aviation to be exemptfrom many of the bureaucratic proceduresthat pilots had to contend with. According toRosaviatsia, the Federal Air Transport Agency,

this move is expected to boost the country'sfledgling business aviation sector and toencourage more people to own private jets.

As the forecast business jet penetrationcurve shows, fleet per 100 million populationis expected to grow from 146 to 700 overthe next 20 years. Between 2011 and 2030,Russia & CIS is forecast to receive 1,535

business jet deliveries, 525 aircraft between2011 and 2020, and 1,010 aircraft between2021 and 2030. The 2010 fleet of 380 busi-ness jets will grow to 1,765 aircraft by 2030representing a CAGR of approximately 8%.

Russia & CIS (continued)

Fleet Evolution Forecast - Russia & CISFleet, Deliveries, Retirements; 2010-2030


380

60

90

1,765

845

1,010

525



Middle East recorded significant economicgrowth between 2004 and 2008, an annual6.7% on average, largely due to high oilprices. In 2009, tight international credit,plummeting oil prices and the global economicslowdown inhibited Middle East's real GDPgrowth to 0.6%. 2010 saw the whole regionrecover gradually with a 4.1% GDP growth.Recovery was largely driven by increasing oilrevenues, improving exports, and statespending, the latter made possible by finan-cial reserves accumulated by the Gulf statesduring the 2004-2008 prosperous period.

The beginning of 2011 witnessed the emer-gence of political unrest in North Africa andthe Middle East. The "Arab Spring" resultedin change in regimes in Tunisia and Egypt,civil war in Libya, and civil troubles in Syria,Yemen, and Bahrain. The resulting uncertaintymay somewhat damp confidence in thisyear's economic outlook for the region.

In the Gulf states, oil production is expectedto increase in the short term to compensatefor losses in Libyan crude oil. Saudi Arabiawill strongly benefit from this situation, andthus will see its economy accelerate in 2011.As well, government spending and exportswill continue to bolster overall activity in theKingdom.

Middle East

Business Jet Penetration Forecast - Middle EastFleet per capita vs. GDP per capita, 1960-2030



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After Dubai's troubles in 2010 with regards toslumping property market and cash-strappedstate-owned firms, prospects are becomingbrighter this year for the United ArabEmirates. Fiscal spending and resurgentexports will help build some momentum forthe economic recovery in Dubai.

According to IHS Global Insight, Middle EastGDP growth is forecast to strengthen to 5.4%in 2011. In the period from 2011 to 2030, theyearly average growth is predicted at 4.1%.

Stimulated by a sustained economic growth,business aviation has been expanding fast inthe Middle East, from 140 business aircraftin the region in 2004, to a total fleet of 380 atthe end of 2010, representing a fleet growthCAGR of 18%. Based on the historicalbusiness jet penetration curve, the MiddleEast business jet market is showing somesigns of maturity.

Against the global backdrop of economicturmoil, the Middle East remains a strongmarket for business aviation. High pricesfor the region's oil exports, long distancesbetween its major cities, and mediocresurface transportation, all help to supportthe business aviation industry, as does thefact that scheduled airlines services in theregion tend to focus more on long-haul

routes than on shorter ones. According tothe Middle East Business Aviation Association(MEBA), the next barrier to overcome in theregion is access, as there are not enoughdesignated airports for business aviation.

As the forecast business jet penetration curveshows, fleet per 100 million population isexpected to grow from 135 to 400 over thenext 20 years. Between 2011 and 2030, theMiddle East will receive 1,175 business jet

deliveries, 410 aircraft between 2011 and2020, and 765 aircraft between 2021 and2030. The 2010 fleet of 380 business jets willgrow to 1,415 aircraft by 2030 with a fleetgrowth CAGR of approximately 7%.

Middle East (continued)

Fleet Evolution Forecast - Middle EastFleet, Deliveries, Retirements; 2010-2030


380

740

410

50

90

1,415

765



Africa – given the range of its geographicand economic conditions – is recovering ata different pace. While the global economyshrank in 2008-2009, the Sub-saharanAfrica’s economy managed to grow another2% in 2009 and its growth rate in 2010 wasclose to 5%. Recovery in Nigeria, Africa'slargest oil exporting economy, continues tobe on track, and will show further positivesigns as both oil production and prices keepon improving. The continued robust growth inthe non-oil sector will be a major contributingfactor. Chinese investment and trade hasincreased dramatically in recent years inAngola and Nigeria.

South Africa went into recession following asharp slowdown in the mining and manufac-turing sectors. The construction industry, onthe other hand, has benefited from a hugeprogram of government investment to pre-pare for the 2010 World Cup.

The ongoing turmoil in Egypt, Tunisia, andLibya has substantially disrupted economic

activity in North Africa and will continue toweigh on the economies in these countriesover the next several months. Tourism andinvestment have been hit hard and areexpected to continue to slump in the nearterm given the new political uncertaintiesfacing the region, while normal businessactivities have also been impaired by the crisis.

Africa

Business Jet Penetration Forecast - AfricaFleet per capita vs. GDP per capita, 1960-2030



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According to the African Economic Outlookby the OECD released in June 2011, recentpolitical events in North Africa and high foodand fuel prices are likely to slow the conti-nent’s growth down to 3.7% in 2011. Duringthis year, Sub-saharan Africa will grow fasterthan North Africa. From 2011 to 2030,Africa’s growth is predicted to average4.4% per year, according to IHS GlobalInsight.

Due to the low economic growth over thepast 50 years, business aviation did nottake root in Africa. The fleet in the region isrelatively small, representing only 2% of theworldwide fleet. Technical support remainsminimal and lack of trained pilots increasesthe costs of operating a business jet.

However, things could begin to changedue to a prosperous outlook on the horizon.Africa is now one of the world’s fastest-growing regions. South Africa held the2010 World Cup, and its economy andinfrastructure highly benefited from the event.Although taxes are high in some countries,this is not a limitation for aircraft sales.Gaps in scheduled airline service will meangrowth opportunities for business aviation,but at a slow rate of penetration.

As the forecast business jet penetrationcurve shows, fleet per 100 million populationis expected to grow from 37 to 80 overthe next 20 years. Africa will receive 800business jet deliveries during the 2010-2030period, 325 aircraft between 2011 and 2020,and 475 aircraft between 2021 and 2030.The 2010 fleet of 320 business jets will growto 950 aircraft by 2030, with a fleet growthCAGR of approximately 6%.

Africa (continued)

Fleet Evolution Forecast - AfricaFleet, Deliveries, Retirements; 2010-2030


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80

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950

565

475

325



Asia Pacific

Business Jet Penetration Forecast - Asia PacificFleet per capita vs. GDP per capita, 1960-2030



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JAPANEMERGING ASIA

OCEANIA

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Forecast

Actual Emerging Asia

Actual Oceania

The Asia Pacific region's share of the world’seconomy is growing rapidly. This region isfortunate to include two of the eight countriesidentified by Goldman Sachs AssetManagement as "Growth Markets": SouthKorea and Indonesia. The Asia Pacific regioncan be viewed as three distinct markets:Emerging Asia, Japan and Oceania.

Emerging Asian countries have been on arapid industrialization path, during the last10 years, growing at an average of 4.7%per year. Foreign direct investment in countrieslike Singapore, Malaysia, Thailand andIndonesia has been substantial and eachof these countries benefited from growingtrade with China.

Clearly, the repercussions from Japan’snatural disasters are undermining EmergingAsia’s economic prospects this year. Severaltransmission mechanisms from Japan to therest of Asia exist: trade and supply chainrelationships, capital flows, and tourism.


Japan’s situation appears fragile: after a2010 rebound with 4.0% growth, prospectsfor 2011 only amount to 1.2%, even thoughreconstruction efforts will start to kick induring the second half of this year. Manyeconomists expect Japan's long-term GDPgrowth to be below 1% per year.

Led by the Australian economy, Oceaniagrew by 2.5% during 2010. Australia is dotedof a large pool of natural resources and isbenefiting from its geographical proximity toChina and other Growth Markets. The countryhas recently been dubbed "The next GoldenState" by The Economist. Over the next 20years, Asia Pacific is predicted to growat 3.7% per year, according to IHS GlobalInsight.

From a business aviation market stand point,while Oceania is a typical maturing market,the Japanese and Emerging Asia marketsremain relatively under developed.

As the forecast business jet penetration curveshows, fleet per 100 million population isexpected to grow from 34 to 100 over thenext 20 years. Despite hurdles such as thehigh handling costs across the region’sairports, the Asia Pacific region's current

business jet fleet of 350 aircraft is expectedto grow at a CAGR of 6% over the next 20years, and to account for 1,145 aircraft in2030. 975 deliveries are expected in the AsiaPacific region throughout the next 20 years,370 aircraft between 2011 and 2020, and605 aircraft between 2021 and 2030.

Asia Pacific (continued)

Fleet Evolution Forecast - Asia PacificFleet, Deliveries, Retirements; 2010-2030


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660

370

60

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1,145

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Segment DetailsThe following segmentation helps to categorizethe various types of aircraft offered on thebusiness jet market. It is structured through acombination of range, cabin volume, and price.

Light CategoryThe Light category comprises business jetswith Business and Commercial Aircraft(B&CA) magazine 2011 Purchase PlanningHandbook equipped prices between $7Mand $18M, offering 1,700 NM to 3,100 NM ofrange and 300 ft3 (8.5 m3) to 700 ft3 (19.8 m3)of cabin volume. When compared to otherbusiness jet market categories, the Lightcategory value proposition relies on relativelow prices and low operating economicscombined with sufficient range for short-haulmissions. The Bombardier Learjet 40 XR, theLearjet 45 XR, the Learjet 60 XR aircraft andthe in-development Learjet 85 aircraft are allpart of this category. The Learjet 85 aircraftprogram is progressing on schedule for theaircraft entry-into-service in 2013.

The Light aircraft category is expected to takethe longest time to recover from the downturnbecause of the large number of aircraft (15.9%of fleet in Q1-2011) still for sale on the pre-owned market. For the 20-year period from2011 to 2030, we expect the Light categoryto generate a total of 11,000 deliveries,representing U.S. $130 billion in revenue.

Global8000

Global7000

ACJ

BBJ

Legacy600

Legacy650

Lineage1000

G250

Business Jet Market Segmentation (1)

(1) Segmentation is largely determined by a combination of cabin volume, range and price.

Note: Bombardier, Challenger 300, Challenger 605, Challenger 850, Global 5000, Global 6000,Global 7000, Global 8000, Learjet 40, Learjet 45, Learjet 60, Learjet 85, XR are either registeredor unregistered trademarks of Bombardier Inc. or its subsidiaries.

Source: Bombardier’s internal research department.

Bombardier

Cessna

Dassault

Gulfstream

HawkerBeechcraft

Embraer

Others

VeryLightJets

Light Jets Medium Jets Large JetsLarge

CorporateAirliners

Mustang CJ3

G150 G200 G450 G550 G650

CJ4

CXSovereign

Learjet40 XR

Learjet45 XR

Challenger300

Challenger605

Challenger850

Global5000

Global6000

Learjet60 XR

Learjet85

XLS+

F2000LX F900LXF2000S

CJ2+

Premier 1A

35 In production 11 In development

Phenom100

Phenom300

Legacy450

Legacy500

H750 H4000H900XP

HondaJet

SJ30-2

Hawker 200

H400XP

F7X

Citation Ten


Medium CategoryThe Medium category features aircraft withB&CA magazine 2011 Purchase PlanningHandbook equipped prices between $18Mand $42M, offering 3,100 NM to 5,000 NMof range and 700 ft3 (19.8 m3) to 1,500 ft3

(42.5 m3) of cabin volume. The Medium cate-gory value proposition relies on enhanced

cabin comfort and superior range relative tothe Light category, and is often the preferredbusiness jet category of large corporations.Bombardier successfully developed theMedium category with the Challenger 600 jetseries. Today, Bombardier has three strongproducts in this category: the Challenger 300,Challenger 605 and Challenger 850 jets.

Our 2011-2030 market forecast accountsfor significant growth in the Medium aircraftcategory. By the first quarter of 2011,pre-owned inventory in this category hadfallen to 13.2%, 2.9 percentage points lowerthan a year ago. For the 20-year period from2011 to 2030, we expect the Medium categoryto generate a total of 7,750 deliveriesrepresenting $236 billion in revenue.

3029282726252423222120191817161514131211

0

500

1,000

1,250

750

250

1,500

3029282726252423222120191817161514131211

40

35

30

25

20

15

10

5

0

Units Value

11,000

7,750

5,250

$130B

$236B

$260B

Large

Industry Deliveries by CategoryUnits, Forecast 2011-2030

Source: Bombardier forecast.

Industry Revenues by Category$US billion, Constant 2010, Forecast 2011-2030

24,000 $626BTotal 20 Yrs

Medium Light


Large CategoryThe Large category regroups aircraft withB&CA magazine 2011 Purchase PlanningHandbook equipped prices between $46Mand $68M, offering over 5,000 NM of rangeand 1,500 ft3 (42.5 m3) to 3,000 ft3 (85.0 m3)of cabin volume. Of all market categories, theLarge offers the greatest capabilities in termsof range, speed, and cabin comfort. With theGlobal 5000, Global 6000, and in-develop-ment Global 7000, Global 8000 jets andGlobal Vision flight deck, Bombardier offersthe broadest and most advanced productline of the industry in this market category.The Global 7000 and Global 8000 aircraftwill give our customers the ability to reachmore destinations non-stop than everbefore, delivering unprecedented levelsof performance, flexibility, and comfort.

The Large category has been the mostresilient during the downturn, with anincrease in deliveries of 13% from 2008to 2010. We expect deliveries in the Largecategory to expand the fastest after thedownturn. For the 20-year period from 2011to 2030, we expect the Large categoryto generate a total of 5,250 deliveriesrepresenting $260 billion in revenue.

The Large category will represent 42% of businessjet delivery revenues, and Bombardier is in the bestposition to benefit from that huge market potential.

conclusion


The business aviation market has turned thecorner and is gaining momentum. Industrynet orders are back to positive and mostleading indicators continue to improve.The industry backlog rebuilds and deliveriesare months away of the new up-cycle. Whilethe business jet industry is very cyclical,it also has significant growth potential.All long-term market fundamentals remainpositive: business jet utilization, backlogs,the pre-owned aircraft market, new aircraftprograms, fractional and branded charterdemand, business jet penetration in GrowthMarkets, and aircraft retirements. Manufacturerswill continue to generate more value forcustomers by supplying more efficient andbetter designed aircraft.

The business jet market should experiencestrong growth over the 2011-2030 periodwith 24,000 deliveries worth $626 billion ofrevenues. The worldwide business jet fleet isexpected to grow from 14,700 in 2010 to30,900 by 2030, net of retirements. TheLarge category of the market is expectedto expand faster than the other categories.The manpower needed to manufacture theseaircraft and the revenues associated withthem will create significant economic value.

conclusionBombardier Business Aircraft | Market Forecast 2011-2030 48

The business jet market will generate24,000 new aircraft deliveries, worth$626 billion over the next 20 years.


The business aircraft industry will likely facenew challenges going forward. As fuel pricesand environmental concerns rise, the greenwave is expected to modify customers’actions and perceptions in the future. Theindustry has anticipated this by announcingits commitment on climate change to reducetotal CO2 emissions by 50% by 2050 relativeto 2005 levels. Bombardier continues tobe proactive in addressing environmentalconcerns through corporate social responsibilityinitiatives such as being the first aircraftmanufacturer to offer business aircraftcustomers a fully managed carbon-offsetprogram. Also, OEMs will have to contributeto develop worldwide infrastructure tosupport the expected rapid growth ofbusiness aviation in Growth Markets.

Despite short-term challenges that arelikely to occur along the way, the long-termprospects for business aviation are solid, andBombardier expects the industry to reachnew heights over the next 20 years.

The long-term prospects for businessaviation are solid and Bombardierexpects the industry to achieve newheights in the next 20 years.

sourcesResources used in the Bombardier Business Aircraft Market Forecast:

Note: Bombardier, Challenger 300, Challenger 605, Challenger 850, Global 5000, Global 6000, Global 7000, Global 8000,Learjet 40, Learjet 45, Learjet 60, Learjet 85, XR are either registered or unregistered trademarks of Bombardier Inc. or its subsidiaries.

© 2011 Bombardier Inc. All rights reserved. Printed in Canada. 06/2011

For electronic copies of the Bombardier Business Aircraft Market Forecast 2011-2030visit the company’s website at www.bombardier.com.

Airport Authority of IndiaAircraft Blue Book Price Digest

ASCENDAMSTAT (Aviation Market STATistics)

Bass, Frank (1969)" A New Product Growth Model for ConsumerDurables",Management Science, 15 (5) pp.215-227B&CA – Business & Commercial Aviation Magazine

Blue Chip Economic Forecast,Board of Governors of the Federal Reserve SystemChina.org.cn – Top 500 Enterprises of China 2010

EIU – Economist Intelligence UnitEurocontrolEurostat

Flight International MagazineFAA- Federal Aviation Administration

GAMA – General Aviation Manufacturers AssociationGoldman Sachs Asset ManagementIHS Global Insight, February 2011

IMF – International Monetary FundJETNET databaseJP Morgan Business Jet Monthly, June 2011Merrill Lynch and Capgemini 2010 World Wealth ReportMEBA - Middle East Business Aviation AssociationMorgan Stanley Capital International (MSCI) U.S. IndexNBER – National Bureau of Economic ResearchOECD - Organisation for Economic Co-operation and DevelopmentPew Global Attitude SurveyRenaissance CapitalRosaviatsiaRoyal Bank of Canada – Economic and Financial Market OutlookOEMs’ financial reports, websites and press releasesUBS Business Jet MonthlyUN Population ProjectU.S. Bureau of Economic Analysiswww.Forbes.comXerfi (Groupe Xerfi)

This presentation includes forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”,“anticipate”, “plan”, “foresee”, “believe” or “continue”, the negativeof these terms, variations of them or similar terminology. By theirnature, forward-looking statements require us to make assumptionsand are subject to important known and unknown risks anduncertainties, which may cause our actual results in future periodsto differ materially from forecasted results. While we consider ourassumptions to be reasonable and appropriate based on informationcurrently available, there is a risk that they may not be accurate. Foradditional information with respect to the assumptions underlying theforward-looking statements made in this presentation, refer to therespective Forward-looking statements sections in BA and BT in theMD&A of the Corporation’s annual report for fiscal year 2011.

Certain factors that could cause actual results to differ materiallyfrom those anticipated in the forward-looking statements includerisks associated with general economic conditions, risks associatedwith our business environment (such as risks associated with the airlineindustry’s financial condition), operational risks (such as risksinvolved in developing new products and services, risks in doingbusiness with partners, risks relating to product performance warranty

and casualty claim losses, to regulatory and legal proceedings, toenvironmental and health and safety, to our dependence on certaincustomers and suppliers, to human resources, to fixed-pricecommitments and to production and project execution), financingrisks (such as risks relating to liquidity and access to capital markets,to the terms of certain restrictive debt covenants, to financing supportprovided on behalf of certain customers and to reliance on governmentsupport) and market risks (such as risks relating to foreign currencyfluctuations, to changing interest rates and commodity prices risks).For more details, see the Risks and uncertainties section in Other inthe MD&A of the Corporation’s annual report for fiscal year 2011.Readers are cautioned that the foregoing list of factors that mayaffect future growth, results and performance is not exhaustive andundue reliance should not be placed on forward-looking statements.The forward-looking statements set forth herein reflect our expectationsas at the date of this presentation and are subject to change aftersuch date. Unless otherwise required by applicable securities laws,the Corporation expressly disclaims any intention, and assumes noobligation to update or revise any forward-looking statements,whether as a result of new information, future events or otherwise.

All monetary amounts are expressed in 2011 US dollars, unlessotherwise stated.

forward looking statement


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