1. SpeedNews Regional & Corporate Aviation Suppliers Conference A View From Wall Street Ronald J Epstein

2. Discuss market trends from an investor perspective Equity market conditions Review regional jet market  ML regional jet forecast Review business jet market conditions and opportunities  ML business jet forecast Conclusions Discuss market trends from an investor perspective Equity market conditions Review regional jet market  ML regional jet forecast Review business jet market conditions and opportunities  ML business jet forecast Conclusions Overview

3. Equity Market Conditions

4. Equity Market Performance Investors prefer Aerospace: YTD, Aerospace & Defense has outperformed both S&P 500 and DJ Industrial Average Source: Bloomberg

5. A&D Outperforming S&P 500

6. Aerospace/Defense Valuation

7. Civil Aero OEM Stock Performance Since 2001 Since 2001, Aircraft prime manufacturers have appreciated. Bombardier’s shares; however, continues to lag the group Source: Bloomberg

8. Civil Aero OEM Stock Performance YTD Issues at EADS have plagued the stock, Bombardier stock recovers a bit Source: Bloomberg

9. Business Jet Manufacturer Stock Performance Business jet OEM appreciate since 2001 Source: Bloomberg

10. Business Jet Manufacturer Stock Performance Biz Jets Performed Relatively Well So Far in 2006 Source: Bloomberg

11. Regional Jet Market

12. Regional Jet Market Conditions Stored fleet of modern RJs remains relatively low Orders moving towards larger aircraft Fleet skewed towards 50-seat aircraft Stored fleet of modern RJs remains relatively low Orders moving towards larger aircraft Fleet skewed towards 50-seat aircraft

13. 50-Seat Fleet Evolution – A Deep Downturn Stored fleet increases Deliveries fall off Orders fall off 2005 increase in 50-seat RJs resulted from Chapter 11 of Independence Air Stored fleet increases Deliveries fall off Orders fall off 2005 increase in 50-seat RJs resulted from Chapter 11 of Independence Air

14. 50-Seat Jet Considerations Is there a glut of 50-seaters? –Yes In the market dead? –No  50-seats is a natural market size  There will be a replacement market Cannibalization by larger aircraft Emerging market joint ventures: China, Russia? –HNA Group orders 50 ERJ-145 from Harbin- Embraer  Traditional secondary markets still developing Is there a glut of 50-seaters? –Yes In the market dead? –No  50-seats is a natural market size  There will be a replacement market Cannibalization by larger aircraft Emerging market joint ventures: China, Russia? –HNA Group orders 50 ERJ-145 from Harbin- Embraer  Traditional secondary markets still developing

15. Regional Jet Concept is Evolving What is a Regional Jet?  Capacity: 50-Seats, 70-Seats, 100-Seats  Range: 1000 NM, 1500 NM, 2000 NM  Very confusing to investors Next Generation Aircraft = Small Narrowbody Jets  E-170/-190 Family  C-Series  RRJ and ARJ  Boeing and Airbus move into this market? What is a Regional Jet?  Capacity: 50-Seats, 70-Seats, 100-Seats  Range: 1000 NM, 1500 NM, 2000 NM  Very confusing to investors Next Generation Aircraft = Small Narrowbody Jets  E-170/-190 Family  C-Series  RRJ and ARJ  Boeing and Airbus move into this market?

16. Are scope clauses irrelevant? From an OEM perspective “scope clauses” have become less relevant due to changes in pay and other work rules Airline bankruptcies have help close at least part of the scope arbitrage  US Airways, Air Canada and other airlines have worked around scope clauses –Revised labor rates at mainline make scope less meaningful –Air Canada example: CRJ-200 $77 (at Jazz), 5 yr ERJ 190 captain $118, A320 $156 From an OEM perspective “scope clauses” have become less relevant due to changes in pay and other work rules Airline bankruptcies have help close at least part of the scope arbitrage  US Airways, Air Canada and other airlines have worked around scope clauses –Revised labor rates at mainline make scope less meaningful –Air Canada example: CRJ-200 $77 (at Jazz), 5 yr ERJ 190 captain $118, A320 $156

17. 100-Seat Market is Real – Not Just North America ERJ-170 Interior An ERJ-190 Rationalization of pilot pay structures and “re-gauging” on domestic routes will drive E-Jet market share gains

18. Investor Considerations 50-seat jets were controversial in both the equity and fixed income markets Small Narrow body jets are less controversial and gaining global investor appeal E-Jets are a more favorable asset class in the financing community than 50-seat jets and derivatives Investors are treating the next generation of small narrow body jets more like traditional narrow body jets 50-seat jets were controversial in both the equity and fixed income markets Small Narrow body jets are less controversial and gaining global investor appeal E-Jets are a more favorable asset class in the financing community than 50-seat jets and derivatives Investors are treating the next generation of small narrow body jets more like traditional narrow body jets

19. Merrill Lynch Regional Jet Forecast

20. Business Jet Market

21. Business Jet Market is Thriving Demand continues to be robust in all market segments Deliveries could peak in 2007/2008 2008/2009  “Available for sale” fleet as % of fleet beginning to climb, but still near 15 year average levels  Historical data suggests bottom in “available for sale” fleet leads peak in new deliveries by 1 to 2 years –R 2 =0.49 for lights, R 2 =0.52 for mid-size, R 2 =0.32 for heavies Potentially disruptive forces on the horizon for light jets and avionics Demand continues to be robust in all market segments Deliveries could peak in 2007/2008 2008/2009  “Available for sale” fleet as % of fleet beginning to climb, but still near 15 year average levels  Historical data suggests bottom in “available for sale” fleet leads peak in new deliveries by 1 to 2 years –R 2 =0.49 for lights, R 2 =0.52 for mid-size, R 2 =0.32 for heavies Potentially disruptive forces on the horizon for light jets and avionics

22. Light Business Jet Secondary Market Source: AMSTAT Age Distribution Geographic Distribution Jets Available for Sale Jets Available for Sale as % of Fleet

23. Medium Business Jet Secondary Market Source: AMSTAT Age Distribution Geographic Distribution Jets Available for Sale Jets Available for Sale as % of Fleet

24. Heavy Business Jet Secondary Market Source: AMSTAT Age Distribution Geographic Distribution Jets Available for Sale Jets Available for Sale as % of Fleet

25. Fractional Programs Approach Equilibrium Shares bought from fractional programs less shares sold back approaching zero New aircraft are now replacing retirements

26. Fractional Programs are Improving Source: AMSTAT 2005 looks like it may have been the bottom in terms of overcapacity FlexJet and Flight Options have both improved 2005 looks like it may have been the bottom in terms of overcapacity FlexJet and Flight Options have both improved

27. Secular Shift to Lower Cost Private Aviation We are in the midst of a secular shift towards lower cost private aviation Manifestations: Fractional Programs, VLJs, Jet Cards Manifestations: New light engines and avionics Just as commercial aviation has become the Greyhound in the sky, private aviation will become for accessible to a broader audience Other business models will emerge We are in the midst of a secular shift towards lower cost private aviation Manifestations: Fractional Programs, VLJs, Jet Cards Manifestations: New light engines and avionics Just as commercial aviation has become the Greyhound in the sky, private aviation will become for accessible to a broader audience Other business models will emerge

28. Very Light Jets Are Coming Impact of VLJs on market and OEMs  Another source of lift or incremental lift  Bridging corporate aviation and owner/operator GA –Serving a market that is starved for innovation Possible market size for VLJs  Number of aircraft transactions in the $0.5 million to $4.0 million range –New or used transactions ~2000 Used Transactions ~400 New Aircraft –Total: 2400 (20% to 40% share shift) -> 480 to 960 with mid- point of 720 Jets Impact of VLJs on market and OEMs  Another source of lift or incremental lift  Bridging corporate aviation and owner/operator GA –Serving a market that is starved for innovation Possible market size for VLJs  Number of aircraft transactions in the $0.5 million to $4.0 million range –New or used transactions ~2000 Used Transactions ~400 New Aircraft –Total: 2400 (20% to 40% share shift) -> 480 to 960 with mid- point of 720 Jets

29. Merrill Lynch Business Jet Forecast

30. Investor Considerations How much better can it get?  The peak is coming International demand is sustaining the cycle  Is it permanent or temporary?  Is it secular or event driven?  Mitigate some cyclicality? VLJs are still not widely appreciated New competitors in light jet market: Embraer, Honda, etc. How much better can it get?  The peak is coming International demand is sustaining the cycle  Is it permanent or temporary?  Is it secular or event driven?  Mitigate some cyclicality? VLJs are still not widely appreciated New competitors in light jet market: Embraer, Honda, etc.

31. Conclusions From an investor perspective Equity market conditions – volatile, but aerospace has done Regional jet market conditions and opportunities  Next generation of small narrowbody jets  Are scope clauses becoming irrelevant Business jet market conditions and opportunities  Secular shift to lower cost private aviation  How much better can it get? From an investor perspective Equity market conditions – volatile, but aerospace has done Regional jet market conditions and opportunities  Next generation of small narrowbody jets  Are scope clauses becoming irrelevant Business jet market conditions and opportunities  Secular shift to lower cost private aviation  How much better can it get?

32. Disclosures