BOMBARDIER AEROSPACE AIRCRAFT INDUSTRY OUTLOOK · PDF filebombardier aerospace aircraft...
Transcript of BOMBARDIER AEROSPACE AIRCRAFT INDUSTRY OUTLOOK · PDF filebombardier aerospace aircraft...
WSU ECONOMIC OUTLOOK
CONFERENCE
JOHN DIEKER
VP STRATEGIC PROJECTS
LEARJET
OCTOBER 11, 2012
BOMBARDIER
AEROSPACE
AIRCRAFT
INDUSTRY
OUTLOOK
ABOUT
BOMBARDIER
Transportation
#1 manufacturer in the world Revenues: $9.8 billion
Workforce: 36,200
Aerospace
#3 manufacturer in the world Revenues: $8.6 billion
Workforce: 33,600
Bombardier Inc.
Headquartered in Montréal, Canada
Revenues: $18.3 billion
Workforce: 70,000
Note: All information as of December, 2011; All monetary amounts are expressed in 2011 US dollars unless otherwise indicated
A WORLD LEADER IN MOBILITY SOLUTIONS
THE EVOLUTION OF MOBILITY
Commercial Aircraft CRJ Series, Q-Series and
CSeries
Business Jets Learjet, Challenger and Global
Amphibious & Specialized Bombardier 415 and Specialized a/c
Customer Services Service Centers, Trainings, Parts,
Smart Services
Aircraft Solutions Aircraft Management, Fractional
and Jet Cards (Flexjet)
EVERY 3 SECONDS, A BOMBARDIER AIRCRAFT TAKES
OFF OR LANDS SOMEWHERE AROUND THE GLOBE
THE EVOLUTION OF MOBILITY
WE HAVE REMAINED COMMITTED TO OUR INVESTMENTS IN NEW
PRODUCT DEVELOPMENT DESPITE THE DIFFICULT ECONOMIC
ENVIRONMENT…
1. Includes spend such as program tooling additions and R&D expenses
CRJ1000 NEXTGEN
CS100/CS300
Global 7000/8000 Vision Flight Deck Learjet 85 Learjet 70/75
0
200
400
600
800
1000
1200
1400
1600
1800
2003 2004 2005 2006 2007 2008 2009 2010 2011 Budgeted 2012
Net product development investments 1
(Intangible assets) Fiscal years ended January 31, 2004-2011
Calendar years ended December 31, 2011-2012
In m
illi
on
s o
f U
.S.
do
lla
rs
Source: 2003-2011 Annual reports and 2012 Budget
A COMPANY OF CHOICE
BOTTOM LINE IS: EXECUTION ON OUR NEW
PROGRAMS IS KEY
CRJ900
CRJ700
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Challenger 300
Learjet 40*
Learjet 45 XR*
Global 5000*
Global
Express XRS*
Learjet
40 XR*
CRJ700 NextGen*
CRJ900 NextGen*
Challenger 605*
Learjet 60 XR* Q400 NextGen*
CRJ1000
NextGen*
CS100
Learjet 85
Vision
Flight Deck*
Global 7000
2017
Global
8000
In Production
In Development
* Derivatives
CS300
Learjet 7075
Challenger
OUR PRIORITIES
LEARJET
FAMILY
CHALLENGER
FAMILY
GLOBAL
FAMILY
Turboprops
Regional jets
Single-aisle
mainline jets
Learjet 40XR/70 Learjet 45XR /75 Learjet 60 XR
Challenger 300 Challenger 605 Challenger 850
Global 5000 Global 6000 Global 7000
Q400 and Q400 NextGen
CRJ700 NextGen CRJ900 NextGen CRJ1000 NextGen
CSeries CS300
BOMBARDIER HAS A BROAD PORTFOLIO OF
PRODUCTS
Global 8000
Challenger 870
CSeries CS100
Learjet 85
BU
SIN
ES
S A
IRC
RA
FT
C
OM
ME
RC
IAL
AIR
CR
AF
T
ALL OF OUR THREE MAIN MARKET SEGMENTS ARE EXPECTED TO
GROW SIGNIFICANTLY OVER THE NEXT FEW YEARS
Units (K)
45
30
15
0
Fleet
2029
29.0
Retirements
11.2
Deliveries
26.0
Fleet
2010
14.2
Units (K)
30
20
10
0
Fleet
2029
17.3
Retirements
6.7
Deliveries
12.8
Fleet
2010
11.2
US$B
9
6
3
0
Revenue
Forecast
2019
7.8
4.3
3.5
Revenue
Growth
3.3
1.4
1.9
Revenue
Forecast
2010
4.5
2.9
1.6
Commercial Aircraft Business Aircraft
Source: Bombardier Market Forecasts
$626B in
deliveries
$612B in
deliveries
A COMPANY OF CHOICE
Business Aircraft Fleet Commercial Aircraft Fleet
Maintenance, Repair,
Overhaul and Training Market
CURRENT
MARKET
CONDITIONS
INDUSTRY DELIVERIES IN THE FIRST HALF OF 2012
BETTER ACROSS THE BOARD VERSUS SAME
PERIOD LAST YEAR
Light Category
Deliveries
Medium Category
Deliveries
Large Category
Deliveries
2012
YTD
88
2011
YTD
101
2011
245
2010
194
2009
238
2008
501
+15%
8469
189208212
306
2012
YTD
2011
YTD
2011 2010 2009 2008
+22%
5953
129142
124120
2012
YTD
2011
YTD
2011 2010 2009 2008
+11%
244210
563544
574
927
2011 YTD 2011 2012 YTD 2008 2010 2009
+16%
Industry Deliveries, units, 2008 to Q2-2012
(all OEMs)
Source: GAMA; excludes very light & large corporate airliners segments.
17.8%17.2%
16.1%15.7%
15.2% 15.2% 15.0%14.4%
13.8% 13.7% 13.6% 13.6% 13.4%13.3%
12.2%
10.9% 10.9%10.5% 10.6% 10.4%
9.8%
9.0% 8.8% 9.1% 9.1%8.7%
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12
Industry - All A/C
Industry - In-Prod
INDUSTRY PRE-OWNED INVENTORY
Q2 INDUSTRY PRE-OWNED INVENTORY IS APPROACHING NORMAL
Percentage (%) of fleet, all aircraft
.
SOURCE: JETNET.
Note: Excluding VLJ & LCA
BUSINESS JET UTILIZATION
SOURCE: FAA. SOURCE: EUROCONTROL.
US Business Jet Utilization, ‘000s departures and
landings
European Business Jet Utilization, ‘000s departures
and landings
1,0341,0151,0101,0131,041
1,0061,0191,0181,001960945927
874
-1%
Q2
12
Q1
12
Q4
11
Q3
11
Q2
11
Q1
11
Q4
10
Q3
10
Q2
10
Q1
10
Q4
09
Q3
09
Q2
09
123
99105
137128
100108
133
120
97103
124
113
-4%
Q2
12
Q1
12
Q4
11
Q3
11
Q2
11
Q1
11
Q4
10
Q3
10
Q2
10
Q1
10
Q4
09
Q3
09
Q2
09
Q2 US AND EUROPEAN BUSINESS JET UTILIZATION IMPROVED VS. Q1
37
43
49
414142
48
42
37
5050
Q3
11
Q4
11
Q1
12
Q2
11
Q4
10
Q2
10
Q1
11
Q1
10
Q3
10
Q2
12
Q3
12*
-14%
*August 15 survey
SOURCE: UBS
THE INDEX IS SCORED ON A SCALE OF ZERO TO 100, WITH 51-100 REPRESENTING INCREMENTALLY
STRENGTHENING MARKET CONDITIONS, 50 INCREMENTALLY STABLE, AND 0-49 INCREMENTALLY WEAKENING
MARKET CONDITIONS.
DESPITE DROP IN SURVEY, UBS BELIEVES THAT THE NORTH AMERICAN
MARKET IS IMPROVING DRIVEN BY REPLACEMENT DEMAND
UBS BUSINESS JET MARKET INDEX
Declines in customer
interest and willingness
scores with regards to
aircraft purchase
intentions drove majority
of the drop in the index.*
DEMAND FOR AIR TRAVEL REFLECTED IN ORDERS
FOR NEW AIRCRAFT
Commercial aircraft orders reflect GDP growth trends
• New aircraft order intake (20-
220 seats) reached more
than 2,300 units in 2011, a
314% increase vs. 2009
• Non-North American and
European economies to
account for 61% of GDP
growth from 2012 to 2031
• New aircraft orders for the
20- to 149- seat segment to
be evenly distributed between
mature and emerging
markets
COMMERCIAL AIRCRAFT ORDERS AND GDP GROWTH
KEY MARKET
DRIVERS AND
INFLUENCING
ISSUES
MARKET DRIVERS OF AIR TRAVEL DEMAND
•Air travel demand will be cyclical and directly related to GDP growth
•Global GDP forecast at 3.2% over the 20-year forecast period Economic Growth
•Forecast at $126/bbl over the 20-year period •Fleet mix will be affected by fuel prices Fuel Prices
•Increasing fuel price volatility will dampen airline profits
Fuel Volatility
•Due to age, technical obsolescence and cost inefficiencies, more than half of the current aircraft fleet will be replaced in the next 20 years Replacement Demand
•Emerging markets are expected to lead global economic growth
•Strong growth in air traffic despite the constraints of lagging aviation infrastructure
Emerging Markets
•Increasing regulation will encourage lower per-passenger fuel burns and emissions, thereby affecting fleet mix
Environmental Regulations
•Imposition of environmental and emissions fees will increase airline operating costs Environmental Fees
•Contractual restrictions on airline operations will ease over time Labor Trends
ENVIRONMENTAL ISSUES AND REGULATIONS
INCREASINGLY IMPORTANT OVER THE FORECAST
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Improvements in aircraft emissions, local air quality and community noise
• Modern aircraft achieve fuel efficiency of 3.5L / 100 passenger km comparable to hybrid passenger cars
Goal of carbon-neutral growth over the forecast period
• ICAO-led industry goal of a 50% reduction in CO2 emissions from 2005 levels by 2050
Higher demand for efficient new aircraft
• Retirement of older aircraft, fleet modernization, application of new technology
LONG-TERM OIL PRICES FORECAST TO AVERAGE $126/BBL
Sustained high oil prices will continue to challenge airlines’ profitability
• Jet fuel accounts for an average of 34% of an airline’s operating costs
• New aircraft with cost-reducing technologies will accelerate the
retirement of older aircraft
BUSINESS
AIRCRAFT
MARKET
FORECAST
2012-2031
BUSINESS AVIATION HAS A SIGNIFICANT GROWTH RUNWAY
Penetration index represents the number of business aircraft per $100B US GDP
Note: Penetration index defined as business aircraft fleet per $100 B US of GDP. Data excludes very light jets and large corporate airliners Source: Ascend, IHS Global Insight, 2005 constant Dollars
0
10
20
30
40
50
60
70
Penetration index
(Fleet per $100B US)
4
2
China
3
2
25
19
Middle-East
22
17
India
12
4
Europe
12
6
Asia &
Oceania
Leading
Market
North
America
67
54
Latin
America
41
28
Russia
& CIS
29
6
Africa
2000
2010
20
SOURCE: ASCEND, UNITED NATIONS AND IHS GLOBAL INSIGHT.
1960-2031 Fleet per Capita vs. GDP per Capita
BUSINESS JETS WILL PENETRATE NEW MARKETS
WORLDWIDE
1
10
100
1000
10000
100 1,000 10,000 100,000
GDP per Capita (USD, Log Scale)
Fle
et
pe
r 1
00
Millio
n P
op
ula
tio
n (
Lo
g S
ca
le)
2nd driving
force:
removal of
barriers
1st driving
force: GDP
growth
NORTH AMERICA
LATIN AMERICAEUROPE &
RUSSIA
ASIA
MIDDLE-EAST &
AFRICA
Average
growth path
NORTH AMERICA
LATIN AMERICA
MIDDLE-EAST
& AFRICA
ASIA
EUROPE &
RUSSIA
1st driving
force: GDP
growth
2nd driving
force:
removal of
barriers
Average
growth path
24,000 BUSINESS JET DELIVERIES WORTH $648B
OVER NEXT 20 YEARS
SOURCE: BOMBARDIER BUSINESS AIRCRAFT MARKET FORECAST, REVENUES IN CONSTANT 2011 BILLIONS $.
40
35
30
25
20
30 29 28 27 26 25 24 23 22 21 15 14 13 12 20 19 18 17 16
15
10
5
0
31
$292B
(45%)
$117B
(18%)
$239B
(37%)
Large
Medium
Light
10,700
(45%)
7,800
(32%)
5,500
(23%)
Total 20Yrs
$648B
Total 20Yrs
24,000 units 20-Year Revenue Forecast by Size Category, $ Billion
NORTH AMERICA, EUROPE, CHINA WILL BE THE
LARGEST MARKETS FOR BUSINESS JET DELIVERIES
Regional 10-Year and 20-Year Delivery Outlook, Units
Total World
2012-2021 9,800
2022-2031 14,200 SOURCE: BOMBARDIER ANALYSIS.
115
210
340
375
400
435
1650
1890
9725
India
China
Africa
Asia Pacific
Russia &CIS
Middle East
LatinAmerica
Europe
NorthAmerica
970
1170
1420
1470
1800
2590
3135
5125
13750
Africa
Asia Pacific
India
Middle East
Russia & CIS
China
LatinAmerica
Europe
NorthAmerica
64%
12%
11%
3%
3%
2%
2%
1%
1%
5%
44%
16%
10%
8%
6%
5%
4%
3%
CAGR: 13%
CAGR: 2%
CAGR: 5%
CAGR: 3%
CAGR: 13%
CAGR: 8%
CAGR: 6%
CAGR: 6%
CAGR: 5%
Total Fleet Size ~15,200 Total Fleet Size ~31,500
Distribution of World Fleet in 2011, units Distribution of World Fleet in 2031F, units
100% 100%
BUSINESS JET FLEET BY REGION – 2011 VS. 2031F
SIGNIFICANT FLEET ADDITIONS IN HIGH GROWTH ECONOMIES EXPECTED
SOURCE: BOMBARDIER MARKET FORECAST.
% %
COMMERCIAL
AIRCRAFT
MARKET
FORECAST
2012-2031
MIDDLE CLASS CONSUMER SPENDING TO EXPAND
RAPIDLY IN EMERGING MARKETS
• Asia-Pacific middle-class spending to jump to $32.6 trillion in 2030, compared to $5.0 trillion in 2009
• In South America, Africa and the Middle East, middle-class spending is poised to double
MIDDLE-CLASS CONSUMER SPENDING IN TRILLIONS USD*
HIGH OIL PRICES AND ENVIRONMENTAL REGULATIONS TO
DRIVE THE USE OF TURBOPROPS
Advanced turboprops’ lower fuel burn allows carriers to maintain capacity and shrink their overall environmental footprint
2,850 turboprop aircraft to be delivered from 2012 to 2031
2001 Actual 2011 Actual Average
Turboprop
Regional Jet
Units per year
Oil @ $111 per barrel Oil @ $26 per barrel Oil @ $126 per barrel
248 319 295
Source: Bombardier Commercial Aircraft Market Forecast 2012-2031, Energy Information Administration 2012-2031 forecast
INCREASED AIRCRAFT RETIREMENTS DUE TO COST
INEFFICIENCIES AND AGE
2011 Fleet
(units)
FLEET EVOLUTION FROM 2011-2031
20- TO 149-SEAT FLEET
PACE OF OLDER AIRCRAFT RETIREMENTS INCREASES
60% of current 20- to 149- seat aircraft fleet will retire
by 2031: 3000 aircraft
New-generation 100- to 149- seat aircraft
expected to account for half of 20- to 149- seat
fleet by 2031
% o
f fle
et
active
Age
Source: Bombardier Analysis
COMMERCIAL AIRCRAFT GENERAL RETIREMENT PROFILE
STRONG GROWTH IN LARGER SEAT SEGMENT FLEETS
Overall fleet growth of 52%, representing a compound annual growth rate of 2.1%
11,200
12,800
2031
Fleet
2011
Fleet
Total
7,000
17,000
BOMBARDIER MARKET SEGMENTATION EVOLUTION
FLEET, DELIVERIES, RETIREMENT 2011-2031
DEMAND FOR NEW AIRCRAFT IS SHIFTING TO EMERGING
MARKETS
Total World
2012-2031 12,800
Regional 20-Year Delivery Outlook
CONCLUSION
• NEW AIRCRAFT WILL BE
MORE ENVIRONMENTALLY
FRIENDLY AND EFFICIENT
• MARKET OUTLOOK REMAINS
OPTIMISTIC (BUSINESS AND
COMMERCIAL)
• EMERGING MARKETS ARE
EXPECTED TO LEAD GLOBAL
ECONOMIC GROWTH
32