Bombardier Forecast 2012-2031pdf70620

business Aircraft
market
forecast
2012-2031
table of contents
Bombardier business Aircraft

Market forecast 2012-2031
Executive Summary
03
Historical Market Performance
08
Current Market Drivers
11
The Forecast
23
Conclusion
46
02
executive
summary

03
Executive Summary
Bombardier continues to grow its leadership

position in the business jet manufacturing
industry. During 2011, Bombardier again
recorded more orders than any single
competitor, with 191 net orders, representing
approximately 45% of industry total net
orders. Bombardier also had strong delivery
performance in 2011 with a 32% market share
based on units and 38% market share based
on revenues.
Bombardier remains confident in the strong
long-term potential for the business aircraft
industry and maintains its focus on strengthening its market leadership position by
continuing to invest in its development
programs: the Global 7000, Global 8000,
Learjet 70, Learjet 75 and Learjet 85 aircraft.
During Q1 2012, the first Global 6000 and
Global 5000 aircraft equipped with the
Vision Flight Deck entered service.
With its comprehensive product portfolio,
dedication to superior customer support
INDUSTRY ORDERS AND DELIVERIES

Units, 20022011
1,800
1,600
1,400
1,200
Order and Delivery Units
Bombardier Aerospace is pleased to present

the 2012 edition of its Business Aircraft
Market Forecast. The forecast incorporates a
20-year outlook of the business jet industry,
Bombardiers long-term vision of the business
jet market and an in-depth look at the market
drivers in the major regions of the world.

1,000
800
600
400
200
0
-200
-400
-600
-800
-1,000
2002
2003
Total Orders
2004
2005
2006
2007
2008
2009
2010
2011
Total Deliveries
Sources: Actual deliveries from GAMA. Orders estimated from competitive intelligence, OEM guidance.
Excludes Very Light Jet and Large corporate airliners segments.
and solid product-development roadmap,

Bombardier is well positioned to benefit from
the next business aircraft industry up-cycle.
This forecast focuses on the three business
jet categories in which Bombardier competes:
Light, Medium and Large. The Very Light and
Large Corporate Airliner categories are
excluded.
Bombardier remains
confident in the strong
long-term potential for
the business aircraft
industry.
04
Executive Summary

05
Industry Recovery Continues

The business jet industry is progressing well
on a prolonged and gradual recovery from
the steep industry downturn of 2009-2010.
Many market indicators continue to improve.
Industry order intake grew over 2010 levels
and the industry book-to-bill ratio also
improved. Bombardier Business Aircrafts
book-to-bill ratio was 1.2 for 2011.
Figure #2
Industry deliveries were relatively flat,

year-over-year. While pre-owned inventories
continue their gradual decline, residual values
remain depressed and trade-ins of pre-owned
aircraft continue to be active. Aircraft utilization is increasing gradually, but remains below
pre-recession levels. The recovery in business
jet orders has been stronger in the Large category while the Light category continues to
lag. Stock markets improved during 2011, but
remain very volatile. Corporate profitability
and the number of billionaires worldwide are
at record levels.
The U.S. economy experienced continued
growth in 2011 and showed signs of improved
market confidence, with increased business
jet orders. Certain emerging markets, notably
China, continued to grow strongly and were
very active for business jet orders during 2011.
The European economy continues to cause

widespread uncertainty.
Market confidence needs to be fully restored
for industry business jet deliveries to increase
substantially and enable the industry to
realize its full potential. Industry deliveries are
not expected to improve significantly in 2012.
With increasing confidence and stronger
economic growth, Bombardier believes
business jet deliveries will return to sustained
growth starting in 2013. This forecast will
detail the expected timeline and magnitude
of the business jet industry comeback.
INDUSTRY NET ORDERS

Units, 2010Q1 2012
423
232
180
73
191
107
45%
59%
2010
Bombardier
2011
78
38
40
Q1 2012
Other OEMs
Sources: Manufacturer disclosures and Bombardier estimates.

Excludes Very Light Jet and Large Corporate Airlines categories.
51%
Executive Summary

06
Business Jet Value Proposition

Business jets provide fast, flexible, safe,
secure and cost-effective access to travelers
destinations of choice. In addition to the time
saving and flexibility gained when using a
business jet, there exist other less quantifiable,
but equally important benefits. These include:
on-demand flight schedules, the ability to
discuss business privately during flights, more
direct access to companys sites (which may
not be served by scheduled airlines), and
reduced fatigue on a companys frequent
travelers.
Nexa Advisors has conducted studies between 2009 and 2012 to evaluate the impact
of business jet ownership on large, medium
and small companies, as well as government
agencies. They found that companies using
business jets are most likely to outperform
non-users on revenue growth, share price
growth, profitability and employee satisfaction. Nexa Advisors also came to the conclusion that business jet use among government
agencies clearly improves taxpayer value.
Noted investor Warren Buffett, CEO of
Berkshire Hathaway, stated: Berkshire has
been better off by me having a plane available
to go and do deals or whatever it may be.
A lot of times it doesnt work out. But net,
its a plus. We have done things I wouldnt

have done if we hadnt had a plane.
In an increasingly competitive global
marketplace, business aviation is a tool that
contributes directly to growth.
In an increasingly competitive
global marketplace, business
aviation is a tool that
contributes directly to growth.
Executive Summary

BUSINESS JET MARKET HISTORY AND FORECAST
Figure #4
FORECAST
HISTORICAL
2002-2011
2012-2021
2022-2031
Total (2012-2031)
Delivery Units
6,300
9,800
14,200
24,000
Revenues
$139 billion
$266 billion
$382 billion
$648 billion
Source: Bombardier Forecast Model.
A long-term vision for

the industry
BUSINESS JET FLEET FORECAST

Units, 2011-2031
We believe that the long-term market drivers

of business jet industry growth remain solid.
These market drivers include: wealth creation,
increasing business jet penetration in highgrowth economies, globalization of trade,
replacement demand, and market accessibility.
4,600
14,200
3,100
This confidence is reflected in our 20-year

delivery forecast, which predicts 24,000
business jet deliveries valued at $648 billion.
We anticipate 9,800 deliveries worth $266
billion from 2012 to 2021, and 14,200 deliveries
worth $382 billion from 2022 to 2031.
9,800
31,500
21,900
15,200
We expect the worldwide business jet fleet

to grow at a compound annual growth rate
(CAGR) of 3.7% over the forecast period, from
15,200 aircraft in 2011 to 31,500 aircraft by
2031, net of retirements.
Fleet 2011
Deliveries
Source: Bombardier Forecast Model.
Retirements
Fleet 2021
Deliveries
Retirements
Fleet 2031
07
Historical
Market
Performance

08
Figure #5

Over the past 40 years, the industry has
been characterized by cyclical performance
in deliveries. From 1965 to 1995, business jet
deliveries increased at a 4% CAGR, where
most of the growth occured in the primary
market, the United States. At the end of the
1990s, business jet purchases accelerated
in other regions of the world, and as a result,
world deliveries increased by 9% per year
on average during that period.
2004 to 2007
Following the 2001-2003 downturn, the U.S.
economy regained its momentum and the
demand for business jets rose significantly
between 2004 and 2007. New markets for
business aircraft, such as Europe, Asia and
the Middle East, also began to generate
substantial demand. Moreover, the launch
of new, innovative aircraft spurred demand
even higher.

HISTORICAL BUSINESS JET DELIVERIES

Units, 1965-2011
2011
950
900
850
800
750
700
650
600
550
500
450
400
350
300
250
200
150
100
50
CAGR = 9%
CAGR = 4%
1965 1966
1968
1970
1972
1974
1976
1978
Business Jet Deliveries

Source: Actual deliveries from GAMA.
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998 2000 2002 2004 2006 2008 2010
2011
09

BUSINESS JET DELIVERY REVENUES

$B, 2002-2011
2008-2011
The near-collapse of the financial markets at
the end of 2008 precipitated a sharp downturn
in business aviation and new business aircraft
orders. Order intake stalled in Q4 2008 and
remained very low. The inventory of pre-owned
aircraft for sale increased dramatically and
residual values declined sharply.
Bombardier estimates that more than 800
orders were cancelled in the Light to Large
categories in 2009. That forced manufacturers
to juggle order deferrals and cancellations,
and led them to decrease production rates
and deliveries. The bottom of the market
in terms of demand was reached in the first
half of 2009.
9.6
7.8
9.8
12.3
14.9
17.6
20.1
15.2
15.9
15.5
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Segments in which Bombardier competes

Sources: Revenues estimated from GAMA and B&CA list prices.
From mid-2009 until mid-2012, the market

has made progress on many fronts: credit
availability is less problematic, business jet
usage is rising and gross orders are up.
Moreover, cancellations are back to relatively
low levels. As of Q1-2012, pre-owned inventory
is also down significantly at 13.6%, 4.2
percentage points below its mid-2009 peak.
In 2011, market
fundamentals continued to
improve and order intake
increased significantly.
10
Current
Market Drivers

11

The Bombardier Business Aircraft Market
Forecast uses an econometric model based
on several market drivers. The long-term
portion of the forecast is explained by both
the economic growth and the expected rate
of business jet fleet penetration in each
of the forecast regions.

WORLD GDP GROWTH FORECAST

% Change Year-over-Year, 2008-2014
4.5
4.0
3.5
3.0
2.5
2.0
Economic Market Drivers

Global Economy
In 2011, multiple events slowed global GDP
growth. Political upheavals included major
popular uprisings that swept across the
Middle East and North Africa, while Europes
fiscal austerity measures, sovereign debt and
banking problems also constrained global
growth. Emerging markets, which have been
the engine of the world economy for years,
showed signs of slowing. As a result, in 2011,
the world economy grew at an annual rate
of 2.7%.
For 2012, the world economy is expected
to grow at an annual rate of 2.4%, and to
stabilize at approximately 3.2% per year over
the longer term. Growth, however, remains
uneven. While emerging markets and most
natural resource-exporting economies are
expanding at a rapid pace, the output in
most advanced economies is still far below
potential.
1.5
1.0
0.5
1.4%
4.1%
2.7%
2.4%
3.1%
3.8%
2010
2011
2012
2013
2014
0.0
-0.5
-2.2%
-1.0
-1.5
-2.0
-2.5
2008
2009
Source: IHS Global Insight, February 2012.
In its April 2012 Economic Outlook, the

Organization for Economic Cooperation and
Development (OECD) stated: The global
economy is moving away from the cliff edge,
with short-term prospects clearly improving
compared to the situation in the end of 2011.
North America looks stronger, suggesting
firm growth. In the United States, consumer
confidence is strengthening, unemployment
is falling and credit growth is recovering
strongly, driving the recovery.
The World economy

is to grow on average
at 3.2% per year over
the next 20 years.
12

Activity in Japan will remain volatile, with
moderate growth expected in the first half of
the year. In China, recent policy decisions have
been effective in partially offsetting external
headwinds faced by its export sector. In Brazil,
a loosening of monetary policy and a boost
to investment in infrastructure and energy
should help offset economic challenges.
The European economy is expected to remain
fragile. Major decisions in Europe at the
beginning of 2012 have improved the outlook,
reduced the risk of catastrophe, and moderated
the severity of the recession. Nevertheless,
substantial risks remain in the Eurozone: high
unemployment, low confidence and weak
lending activity prevent the economy
from growing.
The OECD also suggests: The global
outlook is still largely dependent on policy
actions: in the U.S. the fiscal debt lock must
be addressed, in the Eurozone the firewall
must be significantly strengthened, banks
need to be recapitalized.
We have stepped back from the cliff, but
more needs to be done to boost growth and
sustain the recovery.

13

MSCI WORLD INDEX
Wealth Creation
Worldwide demand for business jets is highly
correlated with wealth creation which, in turn,
is largely driven by economic growth. The
Morgan Stanley Capital International (MSCI)
World index is an aggregate stock market
index, based on representative securities
listed in major financial exchanges around
the world, and a good indicator of wealth
creation.
2002-2012
1,700
1,600
1,500
gure #9
1,400
1,300
1,200
1,100
1,000
900
800
700
600
500
400
300
Stock markets have rebounded nicely since

the bottom in March 2009. The MSCI World
Index grew by 60% from March 2009 to
March 2012. The European sovereign debt
problems continue to affect the markets.
Although the MSCI World Index has increased
since 2009, the recovery in business jet
orders and deliveries has lagged.
200
100
0
2002
2003
2004
2005
2006
2008
2009
2010
2011
2012
Source: MSCI World Index from Morgan Stanley.
NUMBER OF BILLIONAIRES
Units and % Change 2011-2012
450
+6%
World 2011: 1,184
Number of Billionaires
400
A high portion of billionaires are business

jet owners. A March 2012 report from Forbes
estimated a record number of billionaires at
1,226 worldwide, a 4% increase over 2011.
The most significant growth in billionaires
occurred in Latin America, which saw a
year-over-year increase of 25%, followed
by Asia Pacific at 15%. In their Wealth Report
2012, Knight Frank and Citi Private Bank
conclude: Economic turbulence failed to
curb the rise in the number of ultra-wealthy
individuals last year.
2007
World 2012: 1,226
350
300
250
+9%
200
- 7%
150
-6%
+15%
100
-5%
+25%
50
0
-11%
426 450
189 206
168 157
114 107
93 107
74 70
52 65
54 48
North
America
Europe
China
Russia
and CIS
Asia
Pacific
Middle
East
Latin
America
India
2011
2012
Sources: Forbes, March 2011 and March 2012.
+14%
14
16
Africa
14

Business Jet Market Drivers
Business Jet Utilization
Historically, business jet utilization is an
indication of the overall health of the industry.
The Federal Aviation Administration (FAA)
and Eurocontrol record the number of
take-offs and landings at U.S. and European
airports respectively.
Figure #10
The busiest airports for business jet movements in the U.S. include Teterboro, White
Plains and Washington-Dulles. Around the

world, Paris-Le Bourget, Geneva, Nice,

London-Luton, Farnborough, Mexico CityToluca, Moscow-Vnukovo, JohannesburgLanseria and Beijing-Capital are among the
most significant business jet airports.
In both the U.S. and Europe, business jet
usage made little progress in 2011 over 2010.
In its April 2011 Briefing on Business Aviation
in Europe, Eurocontrol predicted that utilization wouldnt return to pre-crisis growth rates
in the medium-term, given the relative weakness of European economies.
U.S. BUSINESS JET UTILIZATION
EUROPEAN BUSINESS JET UTILIZATION
Take-offs and Landings (000), 2009-2012

16%
15%
9%
10%
0%
945
960
1,001
Take-offs and Landings (000), 2009-2012
1,018
8%
1,019
5%
1,006
4%
1,041
-1%
-1%
1%
1,013
1,010
1,015
0%
Q1 10
Q2 10
Q3 10
Take-offs and Landings (000)

Source: FAA.
Q4 10
Q1 11
7%
5%
3%
128
120
Q2 11
Q3 11
Take-offs and Landings YoY (%)
Q4 11
Q1 12
Q4 09
7%
3%
-3%
133
103
Q4 09
6%
108
97
Q1 10
Q2 10
Q3 10
Take-offs and Landings (000)

Source: Eurocontrol.
Q4 10
137
105
100
Q1 11
Q2 11
-1%
Q3 11
Take-offs and Landings YoY (%)
Q4 11
99
Q1 12
15

INDUSTRY BACKLOG
INDUSTRY BACKLOG
Estimated Units, 2002-2011
Estimated Value ($B), Q4-2011
$ 44.6B
3,000
Light:
2,500
$5.0 B
2,000
Medium:
$7.6 B
1,500
Large:
$32.0 B
1,000
500
Backlogs
Backlog refers to the total number of aircraft
orders not yet delivered. Manufacturers adjust
their production rates based on their current
backlogs and their expectations regarding
the number of orders they can obtain in the
future.
Production rate changes are costly and
complex, due to the expenses associated
with hiring or laying-off employees, as well
as adjustments to the supply chain and
scheduling. Manufacturers, therefore, aim
to optimize deliveries, while minimizing
fluctuations in production rates.
2002 2003 2004 2005 2006 2007 2008 2009 2010
2011
Sources: Orders estimated from competitive intelligence, OEM guidance.
We estimated the industry backlog at the

end of 2011, at about 1,300 aircraft, with a
value of $44.6 billion. The Large category
makes up the greatest portion of the backlog
in value, followed by the Medium and Light
categories respectively. We estimate that
85% of the unit backlog is from traditional
customers, such as corporations, high net
worth individuals, and government agencies.
The remaining 15% of the backlog are orders
for fractional operators. Approximately 19%
Sources: Orders estimated from competitive

intelligence, OEM guidance, 2011 List price from B&CA.
of the total unit backlog is comprised of

development programs that is, aircraft
which have not yet entered service.
Moving forward, reduced near-term deliveries
combined with the progressive return to
positive industry net orders should result in
industry backlogs stabilizing and growing,
with the Large aircraft category leading the
next up cycle.
16

The Pre-Owned Aircraft Market
More than 85% of new business jet orders
originate from existing owners, either to
replace or expand their fleet. The demand for
new aircraft is stimulated by the conditions
prevailing on the pre-owned market. This
market is considered healthy when residual
values are high and when the inventory of
used aircraft for sale is low.
At the end of 2007, the pre-owned inventory
sat at a low of 10.5% of the business aircraft
fleet. The accumulation of aircraft on the
pre-owned market was a leading indicator of

the new business aircraft market downturn

that started a year later.
In early 2008, the percentage of the overall
business jet fleet for sale on the pre-owned
market started to increase rapidly. Many
owners experienced difficulties selling their
aircraft, which, in turn, made these owners
less likely to purchase new aircraft. The
inventory peaked at 17.8% in Q2 2009.
Financing became very difficult for aircraft
more than 15 years old.
From mid-2009 until now, sales of pre-owned
aircraft have increased and inventory has
PRE-OWNED AIRCRAFT INVENTORY

AS A % OF THE FLEET
17
declined. By Q1 2012, pre-owned inventories

continued to fall, to 13.6%. We expect
pre-owned inventories to stabilize in the
range of 11% to 13% of the fleet.
As for residual values, they remained elevated
through the first half of 2008 due to manufacturers long backlogs. Since then, residual
values have dropped across all aircraft categories. During 2009, average business jet residual
values fell by 27 percentage points. By Q1 2012,
residual values appeared to have bottomed
with the average value for a 5-year old business
jet at 63% of the original Business & Commercial
Aviation (B&CA) magazine list price.
5-YEAR RESIDUAL VALUE

AS A % OF THE ORIGINAL B&CA LIST PRICE
%, 2006-2012
%, 2006-2012
17.8%
92%
13.6%
67%
10.5%
59%
Q1 Q2 Q3 Q4 Q1
06 06 06 06 07
Q2 Q3 Q4 Q1
07 07 07 08
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
08 08 08 09 09 09 09 10
Q2 Q3 Q4 Q1
10 10 10 1 1
Source: Aircraft inventory and fleet from Jetnet. Excludes Very Light Jet Segment.
Q2 Q3 Q4 Q1
11
11
1 1 12
Q1 Q2 Q3 Q4 Q1
06 06 06 06 07
Q2 Q3 Q4 Q1
07 07 07 08
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
08 08 08 09 09 09 09 10
Q2 Q3 Q4 Q1
10 10 10 1 1
Sources: Residual values from Aircraft Bluebook Price Digest, original list price from B&CA.
63%
Q2 Q3 Q4 Q1
11
11
1 1 12

New Aircraft Programs

Continued technological improvements,
notably in lower fuel consumption, avionics
and aerodynamics, allow new generation
aircraft to offer more range, performance and
features than earlier aircraft, for a comparable
price. The availability of more capable aircraft
spurs demand for replacement aircraft and
from first-time buyers. The launch of new
airplane programs reflect manufacturers
ability to incorporate the latest technology

breakthroughs in their product lines and their
confidence in the marketplace going forward.
This also reflects the industrys constant focus
on safety, making business aviation one of
the worlds safest forms of transportation,
according to the International Business
Aviation Council (IBAC).
Over the last three years, several new

programs have been launched publicly,
including Bombardiers Global 7000,
Global 8000, Learjet 70 and Learjet 75 jets.
ENTRY INTO SERVICE OF NEW PROGRAMS

Bombardier Models, 2012-2017
2012
2013
Global 6000
Global 5000
Learjet 85
Learjet 75
Learjet 70
both equipped with

Vision Flight Deck
Sources: Bombardier Aerospace.
2014
2015
2016
2017
Global 7000
Global 8000
18

Fractional and Branded
Charter Demand
Fractional ownership, through which several
users acquire ownership interests in the same
aircraft, has existed since the mid-1990s and
has accounted for an average of 10% to 15% of
business jet deliveries. In the 1995-2011 period,
fractional operators took delivery of more
than 1,150 business jets. Other alternatives to
conventional ownership include fractional
card and jet card programs, through which
customers obtain on-demand access to a
third party-operated business jet.
There are currently four large operators in the
fractional ownership industry, including Flexjet
by Bombardier. One operator, CitationAir,
has announced plans to exit the fractional
ownership market, but will remain in the jet
card and jet management businesses. The
fractional ownership industry went through
a period of fleet rationalisation in 2009,
resulting in a substantial reduction of its order
backlog. Fractional program orders have since
resumed growth; in particular, NetJets placed
signficant volume orders between 2010 and
2012, including firm orders for 50 Bombardier
Global and 100 Bombardier Challenger aircraft.

19

The growth in the number of branded charter
operators is more recent. These operators
offer on-demand lift and compete on tripspecific pricing. Branded charter operators,
like Vistajet or XOJET, are characterized by
sophisticated operations infrastructure and
greater use of airline-style scheduling practices to minimize deadhead costs. In 2008,
branded charter operator orders represented
approximately 20% to 30% of total business
jet orders. In 2009, the aftermath of the
economic downturn caused branded charter
operators to defer and cancel orders.

AIR-TRAVEL OPTIONS
Commercial aviation offering
BUSIN
Business jet market
900
+
On-demand service
Business jet ownership
Hours
Year
600
500
Low cost
airlines
Large fleet operators are growing again and

have placed orders for additional business
jets in 2010 and 2011.
Commercial
airlines
First-class
commercial
airlines
Air Taxis
Charters
/Branded
Charters
Jet-card
programs
Fractional
ownership
Full
ownership
ial
ace.
First-class
commercial
airlines
Air Taxis
Charters
/Branded
Charters
Jet-card
programs
Fractional
ownership
Units, 2002-2011
900
800
700
500
400
300
200
100
2002
2003
2004
2002
2003
200
Source: Jetnet. Includes the 4 majo
BUSINESS JET FRACTIONAL FLEET
300
100
600
Full
ownership
400
200
Source: Bombardier Aerospace.
AIR-TRAVEL OPTIONS
Fractional operators are

expected to account for
approximately 10% of
business jet deliveries over
- Personalized
the next 20
years. service +
800
700
Per
- Personalized service +
In the near-term, fractional market demand

will be mainly forBusiness
fleet replacement.
Fractional
ion offering
jet market
operators are expected to account for
On-demand
service
Business
ownership
approximately
10%
of business
jetjetdeliveries
over the next 20 years.
20
2005
2006
2007
2008
2009
2010
2011
Source: Jetnet. Includes the 4 major fractional providers: Flexjet, NetJets (all subsidiaries), CitationAir, Flight Options.
PENETRATION RATES BY REGION
Business Jet Penetration in

Growth Markets
Fleet per Capita vs. GDP per Capita, 1960-2011

10,000
Fleet per 100 Million Population (Log Scale)
Business jet penetration is a measure of

the number of business jets in each of the
forecast regions relative to the size of that
regions economy, as represented by gross
domestic product (GDP). To normalize for
differing population sizes in each region,
penetration rates and GDP are best compared
on a per capita basis. The penetration rate of
business jets by region is highly variable. The
most established market for business jets,
North America, has the worlds largest fleet,
which continues to grow, but slowly. China, in
contrast, has a very small number of business
jets relative to the size of its economy and
its business jet fleet is now entering a rapid
growth phase.

NORTH AMERICA
1st driving
force: GDP
growth
1,000
Average
growth path
LATIN AMERICA
100
EUROPE &
RUSSIA
ASIA
MIDDLE-EAST
& AFRICA
10
2nd driving
force:
removal of
barriers
Longer term business jet fleet growth by

region is best represented by an expected
market maturity curve resembling an S
shape, with the fastest growth occurring
in the early phase of market adoption and
slowing growth as the market matures.
Projected GDP growth can be used to
forecast the likely trajectory of the business
jet penetration for each region. Realization
of fleet growth implicitly assumes expected
adoption and acceptance of business jets and
the progressive removal of barriers, notably
100
1,000
10,000
100,000
GDP per Capita ($, Log Scale)

Sources: Ascend, IMF, IHS Global Insight, UN population project, Bombardier forecast. Includes Very Light Jets.
the lack of adequate infrastructure and

regulatory limitations. As the economy
develops, the expected growth of the
business jet fleet in each region can
reasonably be predicted over the longer
term. Once fleet sizes are netted of aircraft
retirements, business jet deliveries can be
derived for each region.
The penetration rate of

business jets by region is
highly variable; each region
is at a different stage.
21

Goldman Sachs Asset Management has
introduced the term growth market to
define any country outside the developed
world that is responsible for at least 1% of
global GDP. These economies are most likely
to experience rising productivity coupled
with favorable demographics and, therefore,
a faster growth rate than the world average
going forward. These include the BRIC
countries (Brazil, Russia, India and China),
as well as Mexico, South Korea, Turkey and
Indonesia. We expect a significant share
of business jets to be delivered in these
growth markets.
Aircraft Retirements
As of the end of 2011, the average age of the
worldwide business jet fleet was 15.9 years,
with 60% of the fleet at less than 15 years old.
At the other end of the spectrum, around 200
aircraft are more than 40 years old.
To date, the total number of permanent
retirements of business jets has been low,
equivalent to about 7% of total deliveries
since 1965. However, as a result of emerging
environmental concerns, new regulations and
airspace modernization, the retirement of the
oldest business jets is expected to accelerate.
Environmental regulations include potential
airport restrictions on Stage 2 business jet
operations and the introduction of the

BUSINESS JET DELIVERIES AND RETIREMENTS BY AGE GROUP

1965-2011
3,410
2,840
78%
Total deliveries: 16,330

Total retirements: 1,130
Current fleet: 15,200
2,690
1,365
5
1,255
15
1,520
40
1,590
110
29%
970
3,410
2,840
2,690
1,360
1,240
1,480
1,480
0%
0%
0%
0%
1%
3%
7%
690
200
490
1-5
6-10
11-15
16-20
21-25
26-30
31-35
36-40
760
Retired
210
Current Fleet
>40
Aircraft Age Groups

In Service
Retired
% Retired
Source: Ascend.
Emissions Trading Scheme (ETS) in Europe

taking effect in 2012. The ETS will penalize
aircraft with older technology engines that
burn more fuel and emit more greenhouse
gases (such as CO2 ). Similarly, planned airspace modernization in the United States
(FAA NextGen), in Europe (Single European
Sky) and elsewhere will require advanced
flight deck avionics technologies and it may
not be economically feasible to retrofit older
aircraft, rendering these types obsolete.
These dynamics will result in a reduction of
the business jet fleet half-life (age at which

50% of aircraft have retired) from 40 years
in 2011 to 30 years in 2031.
The number of aircraft that retire within the
forecast period will vary considerably by
region. Naturally, the regions having well
established business jet fleets and older
aircraft will experience the greatest numbers
of retirements. Regions that currently have
relatively small business jet fleets, such as
China, will experience comparatively fewer
retirements during the forecast period.
22
The Forecast

23
The Forecast

BUSINESS JET INDUSTRY 20-YEAR DELIVERIES OUTLOOK

Units, 1992-2031
HISTORY
1992-2001
3,950 units
1,500
FORECAST
2002-2011
6,300 units
2012-2021
9,800 units
2022-2031
14,200 units
1,400
1,300
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
92
94
96
98
00
02
04
06
08
10
12
14
16
18
20
22
24
26
28
30
Source: Bombardier Forecasting Model.
Orders, Deliveries and

Revenues
While leading indicators for business aviation
gradually improved in 2011, the disparity in
economic recovery among regions is
becoming more apparent, with North America
set for growth while Europe remains under
strong pressure and Asia slows its expansion.
Industry deliveries are expected to lag order

intake as manufacturers strive to maintain
acceptable backlog levels. Business jet
deliveries for 2012 are expected to be
comparable to 2011, just under 600 aircraft.
Deliveries are expected to accelerate in 2013
and we forecast that the industry will surpass
the 2008 delivery peak, as early as 2016.
We forecast that the

industry will surpass the
prior delivery peak year
by as early as 2016.
24
The Forecast

BUSINESS JET MARKET REVENUES FORECAST

Constant 2011 $B, 1992-2031
HISTORY
1992-2001
$58 B
FORECAST
2002-2011
$139 B
2012-2021
$266 B
2022-2031
$382 B
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
Our delivery forecast anticipates demand for

9,800 aircraft valued at $266 billion across
the three categories of business jets during
the 2012-2021 period. In comparison, the
industry saw 6,300 deliveries valued at $139
billion, from 2002 to 2011.
During the 2022-2031 period, deliveries for
Light, Medium and Large categories are
projected to amount to 14,200 aircraft valued
at $382 billion. By 2031, manufacturers are
expected to deliver approximately 1,500
business aircraft annually.
92
94
96
98
00
02
04
06
08
10
12
14
16
18
20
22
24
26
28
30
Source: Bombardier Forecasting Model.
To summarize, over the 20-year forecast

period 2012-2031, we anticipate total
deliveries of 24,000 aircraft valued at a
total of $648 billion.
Total deliveries of
24,000 aircraft totalling
$648 billion.
25
The Forecast

Regional details
The Forecast is broken down into eight geographic regions: North America, Europe, China, India, Latin America, Russia and the Commonwealth of
Independent States (CIS), Middle East and Africa, and Asia Pacific. Deliveries for each region are presented below in the form of two proportional
bubbles according to expected delivery quantities, where the inner bubble represents deliveries in the 2012-2021 period, and the outer (larger)
bubble represents deliveries in the 2022-2031 period.
INDUSTRY DELIVERIES BY REGION

2012-2021 vs. 2022-2031
Russia and CIS

2012-2021: 525
2022-2031: 1,025
Europe
2012-2021: 1,700
2022-2031: 2,220
North America
2012-2021: 4,100
2022-2031: 5,400
China
2012-2021: 1,000
2022-2031: 1,420
Africa
2012-2021: 325
2022-2031: 485
Latin America
2012-2021: 985
2022-2031: 1,300
Source: Bombardier forecast.
Middle
East
2012-2021: 410
India
2022-2031: 775
2012-2021: 385
2022-2031: 960
Asia Pacific
2012-2021: 370
2022-2031: 615
26
Figure
The#24
Forecast

North America (United States and Canada)

BUSINESS JET PENETRATION FORECAST NORTH AMERICA
North America is, by far, the largest market

for business jets and key to the long-term
success of the industry.
10,000
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10
Actuals
Forecast
The U.S. economy has been recovering since

mid-2009. In recent quarters, the economy
has been strengthened by the ongoing
rebound in employment, stronger consumer
confidence, higher equity prices and credit
growth. Notably, corporate profitability is at
record levels. However, risks remain to the
economy in terms of surging gasoline prices
driving up inflation, sluggish worldwide
growth impacting exports and high debt
levels. This is also a presidential election
1991
2031
20112021
2001
100
1,000
10,000
100,000

year, which could impact U.S. corporate and

personal buying decisions.
Canada accounts for about 4% of the business
jet demand in North America. According to
IHS Global Insight, the Canadian economy
grew at a rate of 2.3% in 2011 and is expected

to grow at a slower rate of around 2% in 2012.
While many sectors have performed well,
Canadian economic growth is being impacted
by high household debt, government deficits
and associated restraint measures.
27
The Forecast
The Canadian economy is highly reliant on
commodity exports and is therefore affected
by the economic health of its southern
neighbor and the rest of the world.

FLEET EVOLUTION FORECAST NORTH AMERICA

Fleet, Deliveries and Retirements, 2011-2031
3,280
5,400
According to IHS Global Insight, real GDP

growth for North America should improve this
year over last year, with 2.1% growth in 2012,
up from 1.8% in 2011. Economic growth should
remain steady for the region over the 20122031 period, averaging 2.5%.
Business aviation began in North America in
the 1960s by leveraging the established general aviation infrastructure. As a consequence,
the business aviation industrial network,
including manufacturers, suppliers, fixed base
operators (FBOs), and dedicated airports,
experienced rapid expansion. This development
path explains the unique shape of the historical
business jet penetration curve for North
America, which is significantly higher than
other regions.
North America is the worlds most mature
market. Aircraft replacement is an important
driver of business jet demand in North
America. Following the downturn of 20092010, many buyers deferred replacement
decisions.
4,100
2,240
11,630
9,725
Fleet 2011
Deliveries
Retirements
Fleet 2021
13,750
Deliveries
Retirements
Fleet 2031
Sources: Ascend, Bombardier forecast. Excludes Very Light Jets and Large Corporate Airliners.
With increasing market confidence, it appears

that replacement aircraft are now being
ordered. The extension of U.S. bonus
depreciation in 2011 has been a positive
influence for certain buyers considering
aircraft replacement.
At the end of 2011, there were 9,725 business
jets based in North America, approximately
64% of the worldwide installed base.
As the forecast business jet penetration

curve shows, fleet per multiple of 100 million
inhabitants is expected to grow moderately
from 3,380 aircraft to 4,179 over the next 20
years. North America is forecast to receive
the greatest number of new business jet
deliveries between 2012 and 2031 with 9,500
aircraft; 4,100 aircraft between 2012 and 2021;
and 5,400 from 2022 to 2031. The 2011 fleet
of 9,725 business jets will grow to 13,750
aircraft by 2031, representing a CAGR of
approximately 2%.
28
Figure
The #26
Forecast

Europe
BUSINESS JET PENETRATION FORECAST EUROPE
Although the collapse of the Eurozone was

avoided during 2011, Europe is still suffering
from economic difficulties. The sovereign debt
crisis weighs heavily on consumer and business
confidence across the region. Growth differs
significantly between the relatively healthy
northern countries, led by Germany, and
struggling southern countries.
The German economy is performing well
and the strength of its exports has made it
the economic engine of Europe. The German
economy is likely to grow in 2012. At 5.5%, it
has one of the lowest unemployment rates
in Europe, according to the OECD, as of
December 2011.
10,000
2021
1,000
2031
2011
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Actuals
Forecast
1961
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100
1,000
10,000
100,000

France is currently facing rising unemployment

and a weak economy. The new French
President, Franois Hollande, will therefore
have to address multiple challenges during his
first year. He will seek to recalibrate French
policies regarding the European Union
through an attempt to renegotiate the

Eurozone fiscal measures.
Britains economy was weak at the beginning
of 2012, affected by fiscal austerity and
the lengthened Eurozone crisis.
29
The Forecast

FLEET EVOLUTION FORECAST EUROPE
A highly ambitious fiscal tightening program

requiring tax increases and significant public
spending cuts will continue to affect UKs
economic activity in 2012. Hence, according
to the Economist Intelligence Unit (EIU), the
UK is expected to grow by a weak 0.2% in 2012.
Despite the fact that Greece and its major
bondholders came to an agreement in March
2012 to restructure the Greek debt, the
country remains under intense pressure.
The Greek economy is expected to contract
again in 2012 for a fifth consecutive year,
according to projections from the IMF.
In addition, political turmoil and economic
difficulties could still trigger a debt default
in the near-term, forcing Greece to exit the
Eurozone, a scenario that is 35% likely,
according to Morgan Stanley.
Overall, after having its GDP decline by 4.1% in
2009, the Eurozone countries rebounded with
2.2% growth in 2010 and 1.9% in 2011. However,
Q1 2012 economic indicators highlight the
Europe will remain the

second largest market of
business jets.
30
500
2,220
220
1,700
3,370
1,890
Fleet 2011
Deliveries
Retirements
Fleet 2021
5,125
Deliveries
Retirements
Fleet 2031
fragility of the European economy. According

to Deutsche Bank, the Eurozone GDP is
anticipated to contract by 0.2% in 2012, as
pessimism persists, especially in Greece,
Spain, Portugal and Italy. From 2012 to 2031,
growth is expected to average 1.9%.
The growing business jet installed base in
Europe will create a significant replacement
market. Bombardiers forecast for business jet
penetration predicts that fleet per population
of 100 million will grow from 447 to 1,147 over
the next 20 years, equivalent to 3,920 aircraft

deliveries. Europe will remain the second largest market of business jets with 1,700 aircraft
deliveries between 2012 and 2021 and 2,220
deliveries between 2022 and 2031. The fleet will
increase at a CAGR of 5% from 1,890 aircraft
in 2011 to 5,125 aircraft by the end of 2031.
Figure
The#28
Forecast

China
BUSINESS JET PENETRATION FORECAST CHINA
During the last recession, the Chinese economy

probably prevented the world economy from
contracting more than it did. However, the
Chinese economy is starting to show some
signs of vulnerability. It is in the midst of a
gradual slowdown, due to the combined
impact of lower exports to Western economies
and tighter domestic policies. Most economists
agree that Chinas economy will likely avoid
a hard landing in the short term.
Industrial value added output was up by
11.4% year on year in January-February its
slowest rate of growth in two years. According to the Economist Intelligence Unit, GDP
growth is expected to reach 8.2% in 2012
10,000
1,000
2031
2021
100
2011
10
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Actuals
Forecast
1981 1991
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1,000
10,000
100,000

and 8.6% in 2013. China posted double-digit

growth during most of the past decade.
Traditionally driven by export markets, China
is determined to accelerate its transition
toward a more domestically based economy.
Taking a longer term perspective, China and

India are expected to lead world economic
growth. According to IHS Global Insight,
China is expected to account for annual
average GDP growth of 6.3% for the next
20 years.
31
The Forecast
Business aviation in China is in its very early
stage. Over the past years, significant
barriers have prevented the Chinese business
jet market from growing to its potential.
Restrictive airspace access, high aircraft import
taxes, a shortage of airport infrastructure
for business aviation and high user fees are
among the factors which explain why China
only hosts an installed base of some 210
business jets for a population of 1.3 billion.
Nevertheless, the number of civil airports in
China is expected to grow from 156 in 2009
to 244 by 2020, according to the General Administration of Civil Aviation of China (CAAC).
Aside from its buoyant economic growth,
many factors suggest that China holds the
potential for rapid business aircraft market
development in the coming years. The
Chinese population of billionaires has been
increasing by 16% annually between 2008
and 2012, totaling 157 individuals as of 2012,
according to Forbes. China is already the
second largest luxury goods market, and is
forecast to take first place by 2015, according
to Boston Consulting Group.
This years Forbes Global 2000 list of the
biggest and most powerful companies in the
world include 207 Chinese companies with
PetroChina and Industrial and Commercial
Bank of China (ICBC) ranking in the Top 10.

32
FLEET EVOLUTION FORECAST CHINA

30
1,420
10
1,000
1,200
2,590
210
Fleet 2011
Deliveries
Retirements
Fleet 2021
Deliveries
Retirements
Fleet 2031
Ultimately, we expect that the cultural

acceptance of business aviation, the rapid
growth of High Net Worth Individuals
(HNWIs), the plans for new airports, and the
recent improvements to flight planning
regulation and airspace liberalization will
allow business aviation to blossom in China
over the next 20 years.
Demand for business jets should increase
as barriers progressively come down. Over
the forecast period, Chinas business jet fleet
penetration per population of 100 million will
grow from 16 to 195, translating into 2,420
deliveries over 20 years. China is the third

largest region for business jet deliveries in our
forecast, which predicts that 1,000 aircraft will
be delivered between 2012 and 2021 and 1,420
aircraft between 2022 and 2031. The fleet of
210 aircraft at the end of 2011 will increase to
2,590 aircraft by the end of 2031, equivalent
to a CAGR of 13%.
China holds the potential

for rapid business aircraft
market development.
The Forecast

India
BUSINESS JET PENETRATION FORECAST INDIA
Indias economy has experienced significant

advancement to date and is expected to
continue expanding at a rapid pace. Economic
growth in India was 6.8% in 2011, compared
to 9.6% in 2010. This relative slowdown is
primarily due to the action of Indias Central
Bank to restrict monetary policy to offset
inflation. Other factors contributing to the
cooling included high fiscal deficit and
deceleration in investment activity. The
Indian government disclosed its budget for
the fiscal year 2012-2013, aiming to reduce
its deficit to 5.1% of GDP from an estimated
5.9% in 2011-2012.
10,000
1,000
2031
100
2021
2011
10
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Actuals
Forecast
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1,000
10,000
100,000

Indias fast-growing middle class, currently

numbered at around 300 million people, has
made a significant contribution to the growth
of the national economy over the past two
decades. According to the October 2010
Pew Global Attitudes survey, nine out of
10 Indians declare their country is or will

eventually be one of the most powerful
nations in the world.
33
The Forecast

FLEET EVOLUTION FORECAST INDIA
According to the World Bank, Indias real GDP

growth is anticipated to be 6.5% in 2012. IHS
Global Insight predicts India to be the worlds
fastest growing region from 2012 to 2031, with
GDP growth averaging 7.4% per year and
surpassing China by almost 1 percentage
point. Moreover, Forbes estimated that the
number of billionaires in India has more than
doubled, reaching 55 in 2012, up from 23 in
2006.
Although the government of India has
increased infrastructure investments under
the Eleventh Five Year Plan for 2008-2012,
the lack of aviation infrastructure remains
an issue for the business aviation industry.
In addition, stringent government regulations,
high import taxes and duties as well as long
procedures for aircraft imports are preventing
Indias business aviation sector from reaching
its full potential. There are, however, signs of
improvement, as the Airports Authority of
India (AAI) has announced plans to modernize
many airports and bring 32 currently unused
airports into operation over the next 10 years.
As the installed base of business jets in India
is small and relatively young (8.9 years old
at the end of 2011), retirements will not be a
major driver in this market.
30
960
10
385
490
1,420
115
Fleet 2011
Deliveries
Retirements
Fleet 2021
Deliveries
Retirements
As the forecast business jet penetration curve

shows, fleet per 100 million population is
expected to grow from 12 to 121 over the next
20 years. Business jet sales should accelerate
due to economic growth and wealth creation.
India is forecast to take delivery of 1,345
business aircraft during the period from 2012
to 2031, with 385 deliveries between 2012 and
2021 and 960 from 2022 to 2031. The 2011
fleet of 115 business jets will grow to 1,420
aircraft by 2031, resulting in a CAGR of
approximately 13%.
Fleet 2031
34
Figure
The #32
Forecast

Latin America
BUSINESS JET PENETRATION FORECAST LATIN AMERICA
10,000
Latin America is a diverse region and, for

the purposes of the forecast, comprises all
countries between the Rio Grande and Cape
Horn. Latin American economies grew at 4.2%
in 2011, due to rising commodity prices and
increasing employment, which boosted
export revenue and consumption demand
respectively.
To anticipate and offset the deceleration
of economic growth in the region, some
countries, Brazil in particular, have already
adopted stimulus packages.
1,000
2011
2021
2031
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Actuals
Forecast
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Latin Americas largest economy, Brazil,

has emerged as an important global player.
Brazils active exports policy, abundant natural
resources and strong industrial capacity have
stimulated the growth of its economy.
Brazil is preparing to host the 2014 FIFA

World Cup and the 2016 Olympics, which will
bring increased international exposure.
The economy of the region has traditionally
been driven by exports of manufactured
goods, agricultural products and natural resources, such as oil and minerals.
35
The Forecast
The economy of Latin Americas second most
populous country, Mexico, has been vigorous
lately, led by expanding demand from the
U.S. and growing domestic consumption.
Argentinas economy also expanded strongly
in 2011. This growth was spurred by high
consumer spending, buoyant commodity
prices and generally solid demand from
Brazil and China.
As reported by Forbes, Latin America
generated the greatest increase in the number
of billionaires last year, going from 52 in 2011
to 65 in 2012. Mexico is home to the worlds
wealthiest individual in 2012, Carlos Slim
Helu. Over the 20-year forecast period,
Latin Americas economy is forecast to grow,
on average, by 4.1% per year, according
to IHS Global Insight.
According to the World Bank, Latin America
will remain, in 2012, resilient to the economic
challenges faced by the U.S. and European
countries. The regions prosperity, however,
relies significantly on Chinas economy, which
is currently showing gradual slowdown. In
addition, challenges to sustain growth, such
as modernizing infrastructure, boosting
innovation and rebuilding political institutions,
remain across the region.

36
FLEET EVOLUTION FORECAST LATIN AMERICA

430
1,300
370
985
1,650
Fleet 2011
2,265
Deliveries
Retirements
Fleet 2021
3,135
Deliveries
Retirements
Fleet 2031
Business aviation has a long and well

established presence in Latin America, which
most resembles North America in business
jet fleet penetration, and is therefore a relatively
mature market. A high proportion of the
regions fleet is in the Light jet category.
The largest business jet fleet concentrations
are in Mexico and Brazil.
At the end of 2011, the region had one of the
oldest business jet fleets in the world, with an
average age of 18 years. As a result, the region
should account for a significant number of
replacements.
Latin American business jet fleet penetration

per population of 100 million will grow from
353 to 546 over the forecast period, translating into 2,285 aircraft deliveries over 20 years.
This region is expected to be one of the most
important business jet markets, which will see
985 aircraft deliveries between 2012 and 2021
and 1,300 deliveries from 2022 to 2031. The
fleet of 1,650 business jets at the end of 2011
will increase to 3,135 aircraft by the end of
2031, equivalent to a CAGR of 3%
Figure
#34
The Forecast

37
Russia and CIS

BUSINESS JET PENETRATION FORECAST RUSSIA AND CIS
The present moderate pace of growth in

Russia and CIS is expected to continue.
Although Russias manufacturing sector
decelerated in the second half of 2011,
private consumption and exports have been
flourishing. The Russian economy remains
dependent on energy export revenues to
drive domestic growth; energy prices have
risen steadily since mid-2009 and are expected to remain high in 2012 and 2013. Fossil
fuel production from Russia and Kazakhstan
is projected to remain very strong. The energy sector will continue to drive the regions
expansion in the near-to-medium term.
External factors will impact Russias economic
growth. The sovereign debt crisis in the
Eurozone and easing growth in China have a
negative impact on Russian export revenues.
10,000
2031
1,000
2021
2011
100
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Forecast
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The turmoil in international capital markets

has caused investors to move out of Russian
assets and reduce their exposure to risk in
emerging markets. According to the Central
Bank of Russia, the country continued to
experience a net capital outflow through 2011,
partially due to uncertainty about the political

forces after the parliamentary and presidential
elections, held in December 2011 and March
2012.
The Forecast
In the long term, growth will rely on the
willingness of the new Russian government
to modernize and expand the manufacturing
sector. Accelerated investment is the key to
diversifying the Russian economy and
sustaining robust development.
According to Forbes, Russia and CIS had 107
billionaires in March 2012. As of 2011, Moscow
was home to more billionaires than any other
city in the world, with 79. The IMF estimates
Russias GDP growth at 4% for 2012. Economic
advancement should remain steady for Russia
and CIS over the 2012-2031 period, with
annual average growth of 3.4%, according
to IHS Global Insight.

FLEET EVOLUTION FORECAST RUSSIA AND CIS

90
1,025
60
525
Russian customers have a strong acceptance

of business aviation. They also have to fly long
distances. Currently, the major characteristics
of the Russian business aviation market are
the dominance of foreign operators, intense
concentration in the Moscow region and a
865
400
Fleet 2011
The development of the Russian economy

has had a positive effect on regional demand
for business jets. The regions fleet grew
significantly from 100 aircraft in 2004 to an
estimated 400 jets in 2011. Due to taxation
issues, most Russian business jet owners
register their aircraft outside of Russia.
38
Deliveries
Retirements
Fleet 2021
1,800
Deliveries
Retirements
Fleet 2031
Sources: Ascend. Bombardier forecast. Excludes Very Light Jets and Large Corporate Airliners.
The Russia & CIS fleet is adjusted to include aircraft registered outside of the region.
lack of clear legislation in the field. Infrastructure, an issue for many years, is now improving, and air traffic control is becoming more
accustomed to working with business
aviation.
Our forecast for business jet penetration
predicts that fleet per population of 100
million will grow from 155 to 727 over the
next 20 years, equivalent to 1,550 aircraft
deliveries. The Russia and CIS region is

forecast to receive 525 aircraft deliveries
between 2012 and 2021 and 1,025 deliveries
between 2022 and 2031. The fleet will increase
at a CAGR of 8% from 400 aircraft in 2011 to
1,800 aircraft by the end of 2031.
Figure #36
The Forecast

Middle East and Africa

BUSINESS JET PENETRATION FORECAST MIDDLE EAST AND AFRICA
Political unrest erupted in North Africa and

the Middle East in 2011. The Arab Spring
resulted in regime changes in Tunisia, Egypt,
Libya and Yemen. Revolts also affected
Bahrain, while violence continues in Syria.
In the four states where governments were
overthrown, the economic and political
situation remains very delicate. This extreme
political volatility has caused the economy
of North Africa and the Middle East to see a
reduction in GDP growth from 4.4% in 2010
to 2.9% in 2011.
Daily life in these countries continues to be
punctuated by protests, and the main structural
problems, such as unemployment and income
inequality remain unresolved. Moreover,
foreign investment and tourism have not fully
resumed. The IMF, in its April 2012 Regional
Economic Outlook, remarked that social
10,000
1,000
2021
100
2031
2011
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Forecast
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unrest and policy uncertainty in the Arab

Spring countries are likely to endure in the
near term. In Egypt, despite these difficulties,
the population remains upbeat about the
course of the nation and prospects for
progress, according to a recent Pew Global
Attitudes survey.
The Gulf countries shrugged off the regional
turmoil and maintained strong growth in 2011.

Oil producing countries such as Saudi Arabia
and the United Arab Emirates have boosted
production following the war in Libya and the
embargo over Iran. The U.S. Energy Information Administration (EIA) is expecting oil
prices to remain high in 2012 and over the
next several years, at $95-$115 between
2012-2016.
39
The Forecast
If the economic situation worsens in Europe
or worldwide, demand for oil and the prospects for economic growth in the Gulf will be
compromised. North Africa and the Middle
East economies are expected to return to a
growth rate of 4.1% in 2012 according to IHS
Global Insight.
Sub-Saharan Africa has benefited from
investments by booming Asian economies
looking to secure energy and food supplies.
Foreign and domestic investment has been
aided by improvements in the regulatory
environment. According to the Doing Business
2012 report, over the last year, a record 78%
of the economies in Sub-Saharan Africa made
changes to their respective regulatory
environments to facilitate domestic firm
start-ups and operations.
The resource-rich Sub-Saharan African
economy grew by 4.8% in 2011, aided by high
commodity prices. Over a third of countries
in the region attained growth rates of at least
6%. Rising oil output, increasingly diversified
trade with growing Asian economies and a
rebounding agricultural market will push
output growth higher than 5% in 2012.
From 2012 to 2031, GDP growth in the Middle
East and African economies should average
3.7% per year, according to IHS Global Insight.

40
FLEET EVOLUTION FORECAST MIDDLE EAST AND AFRICA

120
1,260
130
735
1,380
775
Fleet 2011
Deliveries
Retirements
Fleet 2021
2,440
Deliveries
Retirements
Fleet 2031
The business jet fleet per 100 million

population is expected to grow from 64 to
142 over the next 20 years. Against the global
backdrop of economic turmoil, Middle East
and Africa remains a strong market for
business aviation. High prices for the regions
oil exports, long distances between its major
cities, and mediocre surface transportation,
all help to support the business aviation
industry, as do the scheduled airlines services
in the region that focus more on long-haul
routes than on shorter ones. According to
the Middle East Business Aviation Association
(MEBA), the next barrier to overcome in the
region is access, as there are not enough

airports designated for business aviation.
Moreover, business aviation is still absent from
many African countries, while the economic
development of the continent is showing
major potential.
Middle East and Africa will receive up to
1,995 business jet deliveries during the 20122031 period, 735 deliveries between 2012 and
2021, and 1,260 from 2022 to 2031. The 2011
fleet of 775 business jets will grow to 2,440
aircraft by 2031, representing a CAGR of
approximately 6%.
Figure
#42
The Forecast

Asia Pacific
BUSINESS JET PENETRATION FORECAST ASIA PACIFIC
10,000
1,000
100
2031
2021
1981
10
1971
1
Asia Pacific, with its diverse population,

massive size, and vast cultural history, is
one of the worlds most multifaceted and
intriguing regions.
The emerging economies of Asia have
been on a path to rapid industrialization
over the last 10 years, growing at an average
of 4.8% annually. Net inflows of foreign direct
investment over the last decade have been
strong in countries such as South Korea,
Indonesia, Singapore, Thailand and Vietnam.
2011
2001
1991
Actuals
Forecast
1961
100
1,000
10,000
100,000

Each of these has also benefited from

growing trade with China and Japan.
According to the IMF, trilateral trade between
South Korea, China and Japan has expanded
by an annual average of 17% over the 20012011 period.
Real GDP in Asias emerging economies is

expected to grow by 4.2% in 2012, according
to IHS Global Insight, consistent with 2011.
Export activity is expected to soften in 2012
as weakness in Europe weighs down aggregate demand. Emerging Asian economies
real GDP growth should average 4.1% annually
for the next 20 years.
41
The Forecast

Japans economy contracted by 0.9% in

2011 as a result of the March earthquake
and tsunami. Buoyed by accelerated
reconstruction spending, the economy is
expected to grow by 1.8% in 2012, according
to the May 2012 Blue Chip consensus forecast.
However, with the extent of reconstruction
required, growth is not expected to return to
normal rates before 2014. Over the 2012-2031
period, Japan is expected to grow by 0.8%
annually, according to IHS Global Insight.
Australias Queensland floods and New
Zealands Canterbury-region earthquake
damaged Oceanias two biggest economies
in 2011. Reconstruction efforts will bring
investment to the region. Stronger demand
for Australian coal and liquid natural gas from
Asian economies such as China, India and
post-Fukushima Japan will drive GDP in 2012.
IHS Global Insight expects that Oceanias
economy will grow by 3.1% in 2012. Over the
next 20 years, Oceanias real GDP is expected
to grow on average by 2.7% annually.
Forbes estimates that the number of
billionaires in the Asia Pacific region has grown
almost 70%, from 63 in 2006 to 107 in 2012.
42
FLEET EVOLUTION FORECAST ASIA PACIFIC

120
615
60
370
685
375
Fleet 2011
Deliveries
Retirements
Fleet 2021
1,170
Deliveries
Retirements
Fleet 2031
As shown on the business jet penetration

curve, fleet per 100 million population is
expected to grow from 36 to 95 over the
next 20 years. From a business aviation
market perspective, the Japanese market
remains comparatively under developed.
Despite hurdles such as high aircraft handling
costs at airports and limited airport access
in countries like Japan, Asia Pacifics current

business jet fleet of 375 aircraft is expected
to grow at a 6% CAGR over the next 20 years,
and to account for 1,170 aircraft in 2031.
We expect 985 deliveries in Asia Pacific over
the next 20 years, 370 deliveries between
2012 and 2021, and 615 from 2022 to 2031.
The Forecast

Segment Details
The following section presents the forecast
of the business jet market broken down into
three categories (Light, Medium and Large),
which are defined through a combination of
price, range and cabin volume.
In recent years, demand has improved for
Large and Medium category aircraft. As
business jet purchases soared outside of
North America, the need for larger and more
capable aircraft increased. In North America,
business jet adoption has been historically
driven by Light aircraft sales. However, the
demand for business jets is shifting towards
emerging markets, where it is not uncommon
to encounter first-time buyers who purchase
in the Large category. Moreover, as aircraft
productivity increases, customers can get
more performance and cabin size at a similar
price. For all these reasons, we expect the
fleet of Large and Medium category aircraft to
grow at a faster pace, relative to Light aircraft.
Light Category
The Light category comprises business jets
with B&CA magazines 2012 Purchase Planning
Handbook equipped prices between $9M
and $18M, offering ranges of 1,700 NM to
3,100 NM and cabin volumes of 300 ft3 (8.5
m3) to 700 ft3 (19.8 m3). Compared to other
BUSINESS JET MARKET SEGMENTATION (1)

Very Light Jets
Light Jets
Learjet
40 XR
Learjet
45 XR
Learjet
70
Learjet
75
CJ4
XLS+
Learjet
60 XR
Medium Jets
Learjet
85
Challenger
300
Challenger
605
Large
Corporate
Airliners
Large Jets
Challenger
850
Global
5000
Global
6000
Global
7000
Bombardier
Mustang
CJ2+
M2
CJ3
Global
8000
Latitude
Sovereign
Citation X
Longitude
Cessna
Citation Ten
Dassault
Phenom
100
Embraer
Phenom
300
Gulfstream
Hawker
Beechcraft
Others
Premier 1A
F2000S
F2000LX
F900LX
Legacy
450
Legacy
500
Legacy
600
Legacy
650
G150
G280
H900XP
G450
F7X
Lineage
1000
G500
G550
H4000
HondaJet
ACJ 318/319
SJ30-2
35
G650
In production 15 In development
(1) Segmentation is largely determined by a combination of cabin volume, range and price.
Note: Bombardier, Learjet 40, Learjet 45, Learjet 60, Learjet 85, Learjet 70, Learjet 75, Challenger 300, Challenger 605, Challenger 850, Global 5000, Global 6000,
Global 7000, Global 8000, XR and Vision Flight Deck are either registered or unregistered trademarks of Bombardier Inc. or its subsidiaries.
Source: Bombardier.
business jet categories, the Light category

is differentiated by relatively low purchase
prices and low operating costs, combined
with sufficient range for short distance
missions. In this category, Bombardier
delivers three types of aircraft to the market:
the Learjet 40XR, the Learjet 45XR and the
Learjet 60XR. In addition, Bombardier is
currently developing the Learjet 70, the
Learjet 75 and the Learjet 85 aircraft.
BBJ 1/2/3
43
Figure #41
The Forecast
All three aircraft development programs are
progressing on schedule and the aircraft are
expected to enter service in 2013. The Learjet
70 and Learjet 75 were launched in May 2012
and will feature an all-new modern design
interior, a new cabin management system,
the Vision Flight Deck with a state-of-the-art
avionics suite, superior aircraft performance
and low operating costs.
Demand in the Light category remains soft
and is recovering slowly from the downturn.
Residual values remain low and levels of preowned inventory are high (14.6% of the Light
aircraft fleet in Q1 2012). During the 20-year
period from 2012 to 2031, we anticipate the
Light category to generate a total of 10,700
deliveries, valued at $117 billion.
Medium Category
The Medium category features aircraft with
equipped prices from $18M to $45M, offering
ranges from 3,100 NM to 5,000 NM and cabin
volume of 700 ft3 (19.8 m3 ) to 1,500 ft3 (42.5
m3). The Medium category value proposition
relies on greater cabin comfort and superior
range compared to the Light category.
Medium category aircraft are often the
backbone of large corporations business
jet operations. Bombardier has successfully
developed the Medium category through the
Challenger 600 jet series offering. Bombardier

44
FORECAST BY CATEGORY
Units and Revenues ($ Billion), 2012-2031

Total 20Yrs
$648B
Total 20Yrs
24,000 units
40
5,500
(23%)
Large
35
$292
(45%)
30
7,800
(32%)
25
20
Medium
$239
(37%)
15
10
10,700
(45%)
Light
$117
(18%)
12
13 14 15
16 17
18 19 20 21
22 23 24 25 26 27 28 29 30 31
Source: GAMA, Bombardier forecast. All revenues expressed in 2011 dollars.
now has three well-known products in this

category, the Challenger 300, Challenger 605
and Challenger 850 jets.
For the 2012-2031 period, our market forecast
anticipates promising growth in the Medium
aircraft category. The pre-owned inventory
in this category accounts for 13.5% of the

fleet, and is close to pre-recession levels.
During the 20-year period from 2012 to 2031,
we anticipate the Medium category to
generate a total of 7,800 deliveries, valued
at $239 billion.
The Forecast

Large Category
The Large category features aircraft with
equipped prices between $45M and $69M,
offering ranges over 5,000 NM and cabin
volumes of 1,500 ft3 (42.5 m3 ) to 3,000 ft3
(85.0 m3). Large category business jets
offer the greatest capabilities in range,
speed, and cabin comfort.
Bombardier currently delivers Global 5000
and Global 6000 aircraft. The first Global
5000 and Global 6000 jets equipped with
the Vision Flight Deck were delivered in
March 2012. The Global 7000 and Global
8000 jets will enter service in 2016 and 2017
respectively. Bombardier offers the most
technologically advanced and the broadest
product line in this market category. The
Global 7000 and Global 8000 aircraft are
designed to offer customers more non-stop
destinations, combined with extraordinary
performance, flexibility and comfort.
Deliveries in the Large

category will generate 45% of
total industry revenues in the
period from 2012 to 2031.
In addition, for the 2012-2031 period, our

market forecast anticipates that the Large
aircraft category will demonstrate the fastest
growth. This category was less affected by
the downturn than the Medium and Light
categories. Pre-owned inventory accounts
for 6.2% of the Large category fleet.
During the 20-year period from 2012 to 2031,

we anticipate the Large category to generate
a total of 5,500 deliveries, valued at $292
billion, representing approximately 45% of
total delivery revenues.
45
conclusion

46
conclusion
The business aviation market continues to make
progress in recovering from the significant
downturn of 2009-2010. While current market
leading indicators are mixed, the overall trend
is positive. As confidence returns to world
markets, aircraft orders and backlogs will
expand and deliveries will accelerate. While
the business jet industry is cyclical, it also has
significant growth potential. The key market
drivers such as wealth creation, globalization
of trade, replacement demand, new aircraft
programs, emerging market growth and
greater market accessibility through fractional
and branded charter demand are all showing
positive trends. Furthermore, the penetration
of business jet fleets in many emerging markets
is low, indicating significant growth potential
as these economies surge and more readily
accept business jets as productivity tools.
Manufacturers continue to anticipate market
needs by developing and supplying more capable, efficient and better designed aircraft.
The business jet market

will generate 24,000 new
aircraft deliveries, worth
$648 billion over the
next 20 years.

47
conclusion

The business jet market should experience

strong growth over the 2012-2031 period with
24,000 deliveries valued at $648 billion. The
worldwide business jet fleet is expected to
swell from 15,200 in 2011 to 31,500 by 2031,
net of retirements. The ingenuity and labor
needed to manufacture these aircraft and
deliver the revenues associated with them
will create significant economic value.
The business aircraft industry will likely face
new challenges going forward. As fuel prices
and environmental awareness rise, Bombardier
continues to address environmental concerns
actively, through corporate social responsibility
initiatives, as well as through the technology
The long-term prospects

for business aviation are
solid and Bombardier
expects the industry to
achieve new heights
in the next 20 years.
Its about the evolution
of mobility.
incorporated in our products. Manufacturers

will also have to help develop the infrastructure
to support the expected rapid adoption of
business aviation in growth markets.
As market confidence returns, so will the
demand for business jets. The long-term
prospects for business aviation are solid

and Bombardier is a proven visionary. The
concept of evolution, of constant, deliberate
and tangible progress, is a perfect reflection
of who we are. We see far ahead, while
delivering today. Its all about the evolution
of mobility.
48
FORWARD LOOKING STATEMENTS

49
This presentation includes forward-looking statements,
Certain factors that could cause actual results to differ
which may involve, but are not limited to: statements with
materially from those anticipated in the forward-looking
respect to our objectives, guidance, targets, goals, pri-
statements include risks associated with general economic
orities, markets and strategies, financial position, beliefs,
conditions, risks associated with our business environment
prospects, plans, expectations, anticipations, estimates
(such as risks associated with the financial condition of the
and intentions; general economic and business outlook,
airline industry and major rail operators), operational risks
prospects and trends of an industry; expected growth in
(such as risks related to developing new products and ser-
demand for products and services; product development,
vices; doing business with partners; product performance
including projected design, characteristics, capacity or
warranty and casualty claim losses; regulatory and legal
performance; expected or scheduled entry into service
proceedings; to the environment; dependence on certain
of products and services, orders, deliveries, testing, lead
customers and suppliers; human resources; fixed-price
times, certifications and project execution in general; our
commitments and production and project execution), fi-
competitive position; and the expected impact of the leg-
nancing risks (such as risks related to liquidity and access
islative and regulatory environment and legal proceedings
to capital markets, exposure to credit risk, certain restric-
on our business and operations. Forward-looking state-
tive debt covenants, financing support provided for the
ments generally can be identified by the use of forward-
benefit of certain customers and reliance on government
looking terminology such as may, will, expect, in-
support) and market risks (such as risks related to foreign
tend, anticipate, plan, foresee, believe , continue
currency fluctuations, changing interest rates, decreases
or maintain, the negative of these terms, variations of
in residual value and increases in commodity prices). For
them or similar terminology. By their nature, forward-look-
more details, see the Risks and uncertainties section in
ing statements require us to make assumptions and are
Other. Readers are cautioned that the foregoing list of
subject to important known and unknown risks and uncer-
factors that may affect future growth, results and perfor-
tainties, which may cause our actual results in future peri-
mance is not exhaustive and undue reliance should not be
ods to differ materially from forecasted results. While we
placed on forward-looking statements. The forward-look-
consider our assumptions to be reasonable and appropri-
ing statements set forth herein reflect our expectations as
ate based on information currently available, there is a risk
at the date of the Corporations MD&A and are subject to
that they may not be accurate. For additional information
change after such date. Unless otherwise required by ap-
with respect to the assumptions underlying the forward-
plicable securities laws, we expressly disclaim any inten-
looking statements made in this presentation, refer to the
tion, and assume no obligation to update or revise any
respective Guidance and forward-looking statements sec-
forward-looking statements, whether as a result of new in-
tions in Overview, Bombardier Aerospace and Bombardier
formation, future events or otherwise. The forward-looking
Transportation sections in the Managements Discussion
statements contained in this presentation are expressly
and Analysis (MD&A) in the Corporations annual report
qualified by this cautionary statement.
for the fiscal year ended December 31, 2011.

All monetary amounts are expressed in 2012 U.S. dollars, unless otherwise stated.
resources
Resources used in the Bombardier Business Aircraft Market Forecast:
Aircraft Blue Book Price Digest
AAI Airport Authority of India
ASCEND
B&CA Business & Commercial Aviation Magazine
Blue Chip Economic Forecast
Boston Consulting Group
CAAC General Administration of Civil Aviation of China
Central Bank of India
Central Bank of Russia
Deutsche Bank
Doing Business
EIA U.S. Energy Information Administration
EIU Economist Intelligence Unit
Eurocontrol
Eurostat
FAA Federal Aviation Administration
Forbes
GAMA General Aviation Manufacturers Association
Goldman Sachs Asset Management
IBAC International Business Aviation Council
IHS Global Insight
IMF International Monetary Fund
JETNET
Knight Frank / Citi Private Bank The Wealth Report 2012
MEBA Middle East Business Aviation Association
Merrill Lynch and Capgemini
Morgan Stanley
Morgan Stanley Capital International (MSCI) World Index
Nexa Advisors
OECD Organisation for Economic Co-operation and Development
Pew Global Attitudes Survey
UN Population project
U.S. Bureau of Economic Analysis
World Bank
Note: Bombardier, Challenger 300, Challenger 605, Challenger 850, Global 5000, Global 6000, Global 7000,
Global 8000, Learjet 40, Learjet 45, Learjet 60, Learjet 70, Learjet 75, Learjet 85, XR, Vision Flight Deck are either
registered or unregistered trademarks of Bombardier Inc. or its subsidiaries.

50

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business Aircraft

Bombardier business Aircraft

Historical Market Performance

Current Market Drivers

Bombardier business Aircraft

Bombardier continues to grow its leadership

INDUSTRY ORDERS AND DELIVERIES

Bombardier Aerospace is pleased to present

Bombardier business Aircraft

and solid product-development roadmap,

Bombardier business Aircraft

Industry Recovery Continues

Industry deliveries were relatively flat,

The European economy continues to cause

INDUSTRY NET ORDERS

Sources: Manufacturer disclosures and Bombardier estimates.

Bombardier business Aircraft

Business Jet Value Proposition

its a plus. We have done things I wouldnt

Bombardier business Aircraft

BUSINESS JET MARKET HISTORY AND FORECAST

Source: Bombardier Forecast Model.

A long-term vision for

BUSINESS JET FLEET FORECAST

We believe that the long-term market drivers

This confidence is reflected in our 20-year

We expect the worldwide business jet fleet

Source: Bombardier Forecast Model.

Bombardier business Aircraft

Historical Market Performance

Bombardier business Aircraft

HISTORICAL BUSINESS JET DELIVERIES

Business Jet Deliveries

1998 2000 2002 2004 2006 2008 2010

Historical Market Performance

Bombardier business Aircraft

BUSINESS JET DELIVERY REVENUES

Segments in which Bombardier competes

From mid-2009 until mid-2012, the market

Bombardier business Aircraft

Current Market Drivers

Bombardier business Aircraft

WORLD GDP GROWTH FORECAST

Economic Market Drivers

Source: IHS Global Insight, February 2012.

In its April 2012 Economic Outlook, the

The World economy

Current Market Drivers

Bombardier business Aircraft

Current Market Drivers

Bombardier business Aircraft

MSCI WORLD INDEX

Stock markets have rebounded nicely since

Source: MSCI World Index from Morgan Stanley.

World 2011: 1,184

A high portion of billionaires are business