To represent, lead and serve the airline industry Cyclical upturn and the bigger picture September 2010 Brian Pearce

Markets rebound from Great Recession Source: IATA

World trade upturn boosts air cargo Source: IATA, Netherlands CPB

Freighter utilization peaking at high level Source: IATA

Business travel revives premium business Source: IATA, Haver

Fares turning up but so are fuel prices Source: IATA and Platts

Asset utilization not as good as it seems Source: IATA

Capacity starting to outpace demand Source: IATA

And there are big geographical differences Source: IATA

Reflected in mixed operational cash flows Source: Bloomberg

Some regions back in profit, some not Source: ICAO, IATA

Overall industry profits see cyclical upturn Source: ICAO, IATA

But significant structural gap remains Source: IATA

There are supply chain issues Source: IATA ‘Value Chain Profitability’

But majority of capital invested in airlines Source: IATA ‘Value Chain Profitability’

Returns inadequate for whole value chain Source: IATA ‘Value Chain Profitability’

US-EU 2 nd Stage could have opened path for $5bn benefit from liberalized O&C US-EU Open Skies liberalisation Open Skies only O&C liberalisation (incremental benefits) Passengers: +26m m Economic benefits: €6-12bn €4bn Jobs: +70,000 +1,800-10,000 Source: Booz Allen Hamilton study

M&A and JVs taking place but restructuring potential is limited Source: Bloomberg

Alliances active but share stable at best Air China, China Southern, COPA and others Swiss, SAA, Aeroflot Source: IATA

Exits exceeded by new entrants even in recession Source: Ascend

Substantial value is created…but captured by customers and wider economy Source: IATA