Business Aviation Outlook NBAA 2007 Rob Wilson President, Business & General Aviation Honeywell Aerospace 2007 Business Aviation Outlook • 21st Year of Survey, 16th consecutive public report release • 1,519 Corporate flight departments from around the world – Aircraft Manufacturers and other sources • Purchase plans up significantly, strong international demand • Record deliveries projected for 2007 and 2008 • Long-term outlook strong – 14,000 aircraft worth $233B projected from 2007-2017 NBAA 2007 Honeywell Proprietary First Half ‘07 Business Aviation Environment First Half ‘07 business jet deliveries - 446 aircraft worth $8.3 B 11% increase in units 12% increase in constant 2007 dollars Over 900 New Jet Orders Reported During First Half 2007: Most OEMs reporting >50% of orders coming from International clients Book-to-Bill ratio favorable since 2004, Over 2.0+ since 2005 on higher volume Industry backlog estimated to be 2.5+ years Fractional industry net share gain for first half of 2007 +6% Fractional Segment took 52 new jets in first half, steady over 2006 levels NetJets Posted $109M pretax profit, 1H revenue up $474m and flight op’s up 15%. 2007 Survey Purchase Plans up 20% NBAA 2007 Honeywell Proprietary World Fleet and Operator Base World Jet Operator Base World Business Jet Fleet 8,800 Jet Operators 5 Yr. CAGR +4.6% 14,100 Business Jets 5 Yr. CAGR +4.9% NBAA 2007 Honeywell Proprietary Global GDP Growth Rates Source: Global Insight Slow Growth in North America and Western Europe Offset by Strong Growth in ROW NBAA 2007 Honeywell Proprietary Source: Global Insight 9/07 U.S. Real GDP - Global Insight U.S. GDP Outlook for 2008 ~2% - Some Downside Risk NBAA 2007 Honeywell Proprietary Five Year Purchase Plans for New Jets Fleet Replacement and Expansion Percentage 40% Additions Replacements 32.7% 29.7% 30% 23.3% 21.2% 24% 24.1% 24.6% 22.4% 25.6% 25% 22.9% 20% 13.5% 13.6% 13.3% 14.4% 10% 0% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Purchase Plans Increased Dramatically, Strongest Gains in Europe, Asia and Latin America NBAA 2007 Honeywell Proprietary 2007 Purchase Expectations by Region 5 Year Fleet Replacement and Expansion Percentages 100% 78.7% 80% 60% 50.7% 47.4% 38.4% 40% 20.4% 20% 0% Asia MiddleEast/Africa Europe Latin America North America Strong Global Demand – All Regions Except North America Posted Gains NBAA 2007 Honeywell Proprietary Survey Five Year Jet Buying Plans by World Region – Traditional Market Only Excludes Fractional, Air Taxi Over One Half of Five Year Demand for New Business Jets Could Come from Outside the United States NBAA 2007 Honeywell Proprietary New Jet Deliveries into Fractional Fleets 160 New Jets Added (Units) 16% 15% 120 20% 13% 15% 11% 9% 80 9-13% Range 10% 40 5% 52 New Jets Added YTDQ207 Flat over 2006 Level 0 0% 2004 2005 2006 2007 2008 Share of New Business Jet Deliveries Fractional Ownership & Jet Card Demand 2009-2017 Avg. Fractional Demand Solid at 100-150 New Aircraft Annually Share of Total New Jet Sales Lower Due to High Demand from Traditional Operators and Charter/Air-Taxi Start Up’s NBAA 2007 Honeywell Proprietary Emerging Region Flight Activity Growth BA Flight Hours 57 2007-2016 CAGR % BA hours (M, 10 yrs) 12 6 6 5 12 7 4 3 Asia Middle East / Africa Latin America Europe 4 North America Strong International Business Aviation Growth – Rapidly Gaining Momentum Around the World NBAA 2007 Honeywell Proprietary General Aviation Jets and Business Liners Segment Forecasts 2007-2017 10000 20 ~8,000-9,000 ~$15-16B ~$15B 15 Salesvalue ($B) Aircraft 7500 5000 10 ~$6B 2500 5 ~2,100 Overlaps Business Aviation Outlook ~250 0 0 Small Jets: Units Small Jets: Business Liners: Business Liners: Value of Deliveries Units Value of Deliveries Incremental $25B+ from 2007 - 2017 NBAA 2007 Honeywell Proprietary Business Jet Value Index Links Customer Benefits to Industry Deliveries GIV F900 Turbojets Early TF Challenger F50 New TFE G-V GEX 900EX G100 G-200 F-2000 Cit X Excel LJ-45 Bravo CJ2 Premier Legacy Hawker 4000 Hawker 900/750 G550 G500 G350 G150 Global 5000 CL300 Learjet 40 Falcon 7X F2000EX/DX Sovereign CJ3/4 XLS Mustang Phenom 100/300 HondaJet Grob Utility Jet + Many More Strong New Product Pipeline Correlates to Industry Sales NBAA 2007 Honeywell Proprietary 2007 Outlook for Business Jet Deliveries 1600 History Forecast 1400 Ultra Long Range 1200 Long Range Large Med-Lrg 800 Medium 600 Light-Medium Light 400 200 Very -Light 0 19 85 19 87 19 89 19 91 19 93 19 95 19 97 19 99 20 01 20 03 20 05 20 07 20 09 20 11 20 13 20 15 20 17 Aircraft 1000 14,000 New Jets from 2007 - 2017 NBAA 2007 Honeywell Proprietary 2007 Outlook for Business Jet Deliveries Constant 2007 Dollars $25,000 History Forecast Ultra Long Range $15,000 Long Range Large $10,000 Med-Lrg Medium $5,000 Light-Med Light 17 20 15 20 20 11 20 09 20 07 20 05 20 03 20 01 20 99 19 97 19 95 19 93 19 91 19 89 19 87 19 85 13 V-Light $0 19 Constant $2007 (M) $20,000 $233B from 2007 - 2017 NBAA 2007 Honeywell Proprietary Conclusions • 2007 is another record year in the making – Backlogs and strong order intake should push 2008 deliveries even higher • Dramatic increase in international demand – More than compensates for potential U.S. economic slowing – Near term outlook supported by growth in global buying plans for new jets • Pipeline of new high value models supports long term growth • Fractional, jet card and branded charter taking significant numbers of new aircraft • Strong international flight activity growth • Some operator concerns linger – Sub-prime crisis, stock market volatility, slowing growth in U.S. and outcome of user fee legislation in U.S. Strong Outlook – Heading for Record Territory NBAA 2007 Honeywell Proprietary