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historical market performance

09

Bombardier Business Aircraft | Market Forecast 2011-2030

Historical Business Jet Market Revenues US$B, calendar years 2001-2010

19.8

17.2

shattered in 2008, with deliveries totalling 927 units for the year. Record sales, as well as a shift in buyer interest toward larger aircraft, explain the peak of $19.8 billion in industry revenue reached in 2008. 2008 The near-collapse of financial markets at the end of 2008 precipitated a sharp downturn in business aviation. Order activity stalled begin- ning in the last quarter of 2008 and onwards. The inventory of pre-owned aircraft for sale increased dramatically and residual values took a significant hit. Moreover, OEMs juggled with cancellations and deferrals. We estimate that more than 800 order cancellations were recorded in 2009 in the Light to Large categories. These unfavourable market conditions forced most OEMs to decrease their production that same year. The trough, in terms of market conditions, was reached in the first half of 2009.

15.2

15.0

14.8

Revenues ($US Billion)

12.2

11.0

9.7

9.1

7.6

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

All segments in which Bombardier competes

Sources: Revenues estimated from GAMA and B&CA list prices.

Since H2-2009 Since the second half of 2009, business jet usage has increased and pre-owned inventory has been declining. Credit availability has also recovered. Market fundamentals improved significantly in the past 2 years; approximately 500 fewer aircraft for sale on the pre-owned market (a drop of 3.4 percentage points, to 14.4% in Q1-2011); 22% and 12% more

flight activity in the U.S. and Europe respec- tively. Business jet utilization is at its highest levels since 2007 in both regions. Recently, we have experienced the resurgence of multiple aircraft deals. Most aircraft OEMs are now recording positive net order intake, signaling that the market has moved to its second phase of recovery.