© Oliver Wyman

TURBULENCE AHEAD DISENGAGE THE AUTOPILOT Tuesday, October 13th 2015

Christopher Doan

Vice President

2015-2025 GLOBAL FLEET & MRO MARKET FORECAST

1 1 © Oliver Wyman

Oliver Wyman acquired TeamSAI and integrated the business into CAVOK, its aviation technical consulting and services practice

~150 Dedicated CAVOK employees located

in DFW and ATL

(Supported by +250 Oliver Wyman

aviation consultants)

+70% of CAVOK staff hold FAA certification/license

+2,300 years of combined airline operations expertise

The respected TeamSAI Global Fleet & MRO Market Forecast, and related

betterinsightTM market intelligence data, remains available at

www.PlaneStats.com/betterinsight

Global Fleet &

MRO Market Outlook

3 3 © Oliver Wyman

The global air transport jet and turboprop fleet will grow by more than 10,000 net new aircraft by 2025

2015-2025 Global Fleet Forecast

by Aircraft Class

Key Fleet Forecast

Growth Rates

• Global fleet will grow on

average 3.7% annually over

the full forecast period

• Passenger fleet expected to

grow at 3.8% annually

• Cargo fleet forecast to grow

by 2.3% annually

• Narrowbody aircraft will lead

the growth

• Regional jets will actually

decline in the mix

13,124 16,949

21,089

4,686

5,753

7,181

3,396

3,222

2,906

2,721

3,079

3,232

5.2%

4.2%

-1.0%

2.5% 23,927

29,003

34,408

4.5%

4.5%

-2.0%

1.0%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2015 2015-2020 CAGRS

2020 2020-2025 CAGRS

2025

N u

m b

e r

o f

A ir

c ra

ft

Forecast Year and Forecast CAGR

Narrowbody Widebody Regional Jet Turboprop

The growth outlook, however, varies widely from region to region

3.9%

3.5%

4 © Oliver Wyman 4

A 5 pt spread in regional growth rates leads to a significant share shift over the decade ahead

The mature North American and Western European markets will continue to

undergo significant refleeting efforts during the next 10 years

722 North America

Europe

Latin America

& the Caribbean

Africa / Middle East

Asia Pacific / China / India

0.9%

2.8%

4.7%

5.5%

6.1%

6,131

1,720

1,965

997

1,562

5,235

2015

Fleet Size

10YR

CAGR

2015- 2025

Absolute Growth

2,204

6,452

7,420

5 © Oliver Wyman 5

A 5 pt spread in regional growth rates leads to a significant share shift over the decade ahead

The mature North American and Western European markets will continue to

undergo significant refleeting efforts during the next 10 years

2025

Fleet Size

North America

Europe

Latin America

& the Caribbean

Africa / Middle East

Asia Pacific / China / India 6.1%

7,420

6,131

1,720

2,204

6,452

8,096

2,717

3,766

11,687

8,142

6 6 © Oliver Wyman

43% of all new aircraft deliveries will replace old technology aircraft over the forecast period

The systematic elimination and replacement of older aircraft with new technology

aircraft will drive significant change is the business for airlines and maintainers

New Cargo Deliveries

423

New Passenger Deliveries

18,068

664

Cargo Retirements

7,346

Passenger Retirements

Passenger Fleet

716

P2F Conversions

Cargo Fleet

7 7 © Oliver Wyman

43% of all new aircraft deliveries will replace old technology aircraft over the forecast period

The systematic elimination and replacement of older aircraft with new technology

aircraft will drive significant change is the business for airlines and maintainers

New Cargo Deliveries

423

New Passenger Deliveries

18,068

664

Cargo Retirements

7,346

Passenger Retirements

Passenger Fleet

716

P2F Conversions

Cargo Fleet

10,481 Net Growth

8 8 © Oliver Wyman

The result is a staggering change in fleet mix by 2025

2015 Global Air Transport Fleet

by Vintage

2025 Global Air Transport Fleet

by Vintage

The significant move towards late generation aircraft, in addition to improving airline

costs, will undoubtedly impact MRO dynamics

1970's 2%

1980's 26%

1990's 63%

2000's 9%

1970's 0.1%

1980's 9%

1990's 46%

2000's 16%

2010's 29%

9 9 © Oliver Wyman

The fleet dynamics of the period result in a forecast that tops $100 billion by 2025, a 4.1% average annual growth rate

2015-2025 Global MRO Market Size Forecast

by MRO Segment

2015-2025 Global MRO Market Share Forecast

by MRO Segment

Airframe Heavy Maintenance costs improve with the new technology while both

Engine and Component sectors will take a larger share

22% 19% 17%

42% 45% 47%

19% 18% 19%

18% 18% 18%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2020 2025

Forecast Year

Airframe Engine Component Line

M R

O S

p e n

d i n

2 0 1 5 D

o ll

a rs

( $ U

S B

)

M a

rk e t

S h

a re

$14.5 $15.9 $16.7

$27.9 $37.1

$46.8 $12.4

$15.2

$19.2

$12.3

$15.0

$17.8

1.9%

5.9%

4.1%

4.0% $67.1

$83.2

$100.4

1.0%

4.8%

4.7%

3.5%

$0

$20

$40

$60

$80

$100

$120

2015 15-'20 CAGRS

2020 20-'25 CAGRS

2025

B ill

io n s

Forecast Year and Forecast CAGR

Airframe Engine Component Line

4.4%

3.8%

10 10 © Oliver Wyman

Shadowing the fleet trends, large differences in regional growth rates will lead to a significant shift in MRO demand over the decade ahead

Asia Pacific / China / India will be challenged to build the necessary infrastructure

capable of handling the volume of MRO the combined region will demand

$1.3 North America

Europe

Latin America

& the Caribbean

Africa / Middle East

Asia Pacific / China / India

0.6%

3.3%

7.3%

5.5%

6.6%

$17.9

$3.2

$7.5

$18.3

$7.0

$3.3

$5.3

$16.5

2015

MRO Spend ($USB)

10YR

CAGR

2015- 2025

Absolute Growth ($USB)

$20.0

11 11 © Oliver Wyman

Shadowing the fleet trends, large differences in regional growth rates will lead to a significant shift in MRO demand over the decade ahead

Asia Pacific / China / India will be challenged to build the necessary infrastructure

capable of handling the volume of MRO the combined region will demand

2025

MRO Spend ($USB)

North America

Europe

Latin America

& the Caribbean

Africa / Middle East

Asia Pacific / China / India 6.6%

$20.0

$17.9

$3.2

$7.5

$18.3

$21.3

$24.9

$6.5

$12.8

$34.8

European MRO Market

Outlook

13 13 © Oliver Wyman

Passenger traffic is picking up; however, the fleet growth will be constrained over the next 10 years as half of all the new aircraft deliveries are slated to replace aging aircraft

2015 PASSENGER TRAFFIC (RPK) GROWTH

6.8%

2015 CURRENT FLEET

6,131

4,100+

2015-2025 AIRCRAFT DELIVERIES

2,100+

2015-2025 AIRCRAFT RETIREMENTS

+2.8%

2015-2025

FLEET CAGR

14 14 © Oliver Wyman

$2.9B in MRO from ’70s and ’80s vintage aircraft will be lost over the next 10 years; however, ’90s, ’00s and ’10s vintage aircraft will see a $9.9B increase

Top 10 European Aircraft Families in 2015

Top 10 European Aircraft Families in 2025

A320C/NEO

737NG/MAX

777

747

A330

A340

737CL

757

767

EJET

A320C/NEO

737NG/MAX

777

A330

787

A350

747

A340