LCC Market Outlook Efficiency Drives Long-Term Growth

LCC Market Outlook Efficiency drives long-term growth

Randy Tinseth Vice President, Marketing Boeing Commercial Airplanes October 2014

The statements contained herein are based on good faith assumptions and are to be used for general information purposes only. These statements do not constitute an offer, promise, warranty or guarantee of performance.

9 Air orders (50) Ruili Airlines commences China Eastern commits Okay Airways orders 737 NG/MAX operation with 737-700 to (80) 737NG/MAX (10) 737NG/MAX

Hainan Airlines Xiamen Airlines China Eastern Air China orders (50) 737 MAX receives 787 receives 777-300ER receives 747-8I

7.5%

6.1%

6.3%

5.0%

10.0% China Average 6.6% Growth: 6.9%

7.5% China GDP Growth: 6.2% 7.4%

Number of Value, 6,930 airplanes billion $

4,620 Growth 6,020 77%

2,310 1,400 Replacement 23% Regional Single- Small Medium Large jets aisle wide-body wide-body wide-body 910 Retained fleet 3% 72% 13% 11% 1% 2013 2033

LCC capacity share of total seats World: 30% 27.2%

25%

20%

15% China: 10% 8%

0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

SOURCE: CAPA, OAG

Widebody % of short- LCC market share haul frequency

SOURCE: OAG

Copyright © 2014 Boeing. All rights reserved. Point-to-point New markets CO2 Faster growth +13,000t /year =260,000t in Economic 8% the next 20 yrs development 20% Lower cost More flexibility 737-900ER Low emissions 737 MAX 9

737 operators

(1,948)

A320 operators

(1,603)

SOURCE: Centre for Asia Pacific Aviation, July 31 2014

Europe

USA

Canada

South America

Australia

Asia

120 Total 108

100 Ruili Airlines

Okay 80 Airways

Total 58 Donghai 60 West Air Airlines Loong Air 40 9 Air Qingdao 20 Airlines

Spring Airlines Capital Airlines 0 Airbus A320 Boeing 737

Copyright © 2014 Boeing. All rights reserved. OEW per seat (kg) Relative seat-mile cost % 737-800w A320W IAE (189) (180) 250 0% Base 245 -1% 240 Base 235 -2% Better 230 -3% 225 Lower cost Less risk -4% 220 -8.4% 215 -5% 210 -6% -6% 205

200 -7% 737-800w737-800 A320W(IAE) (189)(189) (180)

Cash airplane-related operating cost 2013 U.S. dollars Fuel price, $3.50 per US gal 500-nmi trip 737 family with optional winglets Exit-limit seating A320 series with optional winglets and IAE engines ( ) Number of seats * Includes one optional auxiliary fuel tank Copyright © 2014 Boeing. All rights reserved. Boeing Sky Interior 787-inspired architecture

61” 69”

737-800W Uses 14% 737 MAX 8 162 seats less fuel 162 seats

Less efficient More efficient

+7% Base -6% 8% more efficient -14%

68” 78”

A320 Uses 13% A320neo 150 seats less fuel 150 seats

CFM engines Typical mission rules 800-nmi trip Two-class seating 737-800 includes optional winglets

Manufacturer-reported data through September 2013 Typical utilization for 500-nmi flights is 2,140 flights a year (about 6 flights a day) using Boeing typical short-medium rules 12-month rolling average percentage of flights without delays over 15 min, cancellations, air turn backs, or diversions (technical causes only) Passenger load factor, 75%

189 Passengers 737-800 3,080 (5,705)

180 Passengers A320neo 3,050 (5,650)

189 Passengers 737 MAX 8 3,535 (6,550)

200 Passengers 737 MAX 200 3,265 (6,045) Range, nmi (km)

Typical mission rules Exit limit seating

X X

X 200 passengers 28-in pitch 4 galley carts 3 lavatories

Relative fuel % Worse BASE

Fuel per Seat -5%

737 MAX 200 A320neo Better 200 seats 189 seats

China is catching up in LCC market

Single-aisles offer lower unit costs and more flexibility

737 has lower unit cost than A320

737 MAX extends the advantage

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