1. NEW CORPORATE AIRCRAFT PROGAM REVIEW
Gerald W. Bernstein Stanford Transportation Group San Francisco, CA
SPEEDNEWS
7th Annual Regional & Corporate Aviation Suppliers Conference
November 4 - 5, 2002

2. THREE SUBJECTS WILL BE ADDRESSED
A brief history of business jet deliveries and current program status
A review of recent developments
Perspective on the next few years
STG

3. APPROXIMATELY 30 MAJOR MODELS AND 100 VARIANTS HAVE BEEN PRODUCED
STG

4. MANY FIRMS HAVE PARTICIPATED; BUT NOW THERE ARE…5?
2000
Jetstar
Sabreliner
Commander/ Westwind
Gulfstream
Learjet
Challenger
Cessna
Dassault
Diamond/Beechjet
Hawker
Hansa
Corvette
Israel Aircraft Industries
Grumman
Gates GD
Rockwell
North American ... Rockwell
Bombardier
Textron
Chrysler
Canadair
Mitsubishi / Beech / Raytheon
Raytheon
Messerschmitt MBB
Aerospatiale
Lockheed
STG
STG

5. 25 MODELS ARE IN PRODUCTION: ANOTHER 14 ARE EXPECTED
CitationJet 1
CitationJet 2
Premier I
Bravo
LR 31A
BeechJet 400A
Encore
Excel
LR 45
LR 60
G100 (Astra)
800XP
F2000
C-X
G200 (Galaxy)
F50EX
F2000EX
F900C
CL604
F900EX
G400 (GIV SP)
G550 (GV SP )
Global Express
Airbus A319CJ
Boeing B BJ
PRODUCTION
Eclipse 500
Mustang
SJ30-2
CitationJet 3
LR 40
LR 45EX
G150
Sovereign
CL300 (Continental)
Horizon
F7X
G300
G500
G5000
DEVELOPMENT / CERTIFICATION
STG

6. A SIMPLE ANALYSIS IDENTIFIES HOLES
STG

7. SURE ENOUGH, NEW MODELS ARE FILLING THE GAPS
STG

8. NEW AIRCRAFT OFFER LOWER OWNER- SHIP COSTS WITH IMPROVED CAPABILITY
1992
BAe 800
F50 $14 M
CL601-3A
Year 1992$
2002
G150
Sovereign $14 M
CL300
Year 2002$
A 25% price reduction in constant (real) dollars

9. ECLIPSE 500, AND NOW MUSTANG, RE-DEFINE “ENTRY-LEVEL”
Eclipse place; 1300 nmi; Williams EJ-22 - $837,500 - January “1357 firm orders and 715 options”
Cessna Mustang place; 1300 nmi; EJ-33 or PWC $2.3 Million “217 orders”
STG

10. AND WHAT LIES IN WAIT BEYOND THESE MODELS...
Light Jets - Piper - Honda - Adam Aircraft - ...
Supersonic Business Jets - Gulfstream-Lockheed - Dassault
STG

11. NEW CHANNELS AS WELL AS NEW AIRCRAFT SUSTAIN THE MARKET
Charter (18% increase 1Q2002 to 1Q2001)
On-line bookings (CharterX, LegFind, SkyJet)
Charter and Corporate re-packaging (Sentient)
Fractionals
Fractional re-packaging (Marquis)
STG

12. FRACTIONAL PROGRAMS ABSORB ABOUT 100 AIRCRAFT ANNUALLY

13. GROWTH IN FRACTONAL OWNERSHIP IS PHENOMENAL…
ARE WE AT AN INFLECTION POINT?

14. RECENT FORECASTS REMAIN ESSENTIALLY OPTIMISTIC
Honeywell: - from 770 in 2001 to 650 in 2003 then up to business jets from 2003 to 2012 (~700/yr)
Cessna - from 770 in 2001 to 550 in 2004 then up to average of per year,
Rolls Royce - 14,670 business jets from (~700/yr) - one-third to fractional programs
Walsh Aviation

15. I REMAIN A BIT MORE CAUTIOUS… FOR HISTORIC REASONS
The business jet backlog is impressive, but past performance doesn’t guarantee future returns
What have we learned from previous market cycles?
STG

16. THE AUTO MARKET EXPERIENCES CONSISTENT CYCLES
Source: Dennis Virag, Automotive Consulting Group, Ann Arbor, MI

17. THE COMMERCIAL TRANSPORT MARKET HAS CONSISTENT CYCLES
STG

18. BUSINESS JETS DELIVERIES APPEAR TO FOLLOW SIMILAR CYCLICALITY
STG

19. IF CYCLES APPLY TO BUSINESS JETS, THEN THE MARKET FALLS TO 350 BEFORE RECOVERING

20. CONCLUSIONS
Expect one more manufacturer change/ reduction from the pool of established suppliers
Expect the new “entry level” jets to do well, particularly if they appeal to turboprop users (a market expansion opportunity for jets)
If this market merely sneezes (while other aircraft markets catch the flu), expect more manufacturers or models to enter at the low end
If the economic downturn is sustained, a deeper decline in deliveries than forecast is plausible
STG

21. Stanford Transportation Group 236 W. Portal Ave
Stanford Transportation Group 236 W. Portal Ave., #359 San Francisco, CA (415)