Current Market Outlook

Randy Tinseth
Vice President, Marketing
Boeing Commercial Airplanes July 2012
The statements contained herein are based on good faith assumptions and provided for general information purposes only. These statements do not constitute an offer, promise, warranty or guarantee of performance. Actual results may vary depending on certain events or conditions. This document should not be used or relied upon for any purpose other than that intended by Boeing. Boeing is a trademark of The Boeing Company.

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Agenda
Reminiscing 20-year traffic and airplane forecast Boeing product strategy & development
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1977 vs. today: In-service fleet

Regional Jet Single Aisle Twin Aisle Large

20,000

Fleet size has tripled Twin-aisle market share has more than doubled Average age of fleet has increased from 7 to12 years

15,000

10,000

5,000

0 1977 2011

6,476

19,890

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1977 vs. today: Top 10 airlines

United American Eastern TWA Delta British Airways Northwest Air Canada Air France PanAm 0 100 200 300 400 Delta United American Southwest ExpressJet FedEx China Southern US Airways Lufthansa Ryanair 0 200 400 600 800

4 of top 10 in 1977 no longer in operation Top 10 used to represent more than one-third of total fleet; now its less than one-quarter In 1977, all were large network carriers; today, two are LCCs, one is Cargo, one a RJ operator and one is Chinese
2011

1977

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1977 vs. today: 727-200 vs. 737-800

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1977 vs. today: Competitive landscape

3,000 12,000

55%
2,500 10,000

50%

Boeing still the market leader

31%

2,000

8,000

30%
1,500

6,000

1,000

4,000

5 of top 6 in 1977 no longer producing aircraft

7% 7% 1%

500

6% 3% 3% 2%

2,000

**

1977 year-end fleet

2011 year-end fleet

Includes only western built aircraft *Boeing includes MD products ** Bombardier includes reserved. Copyright 2012 Boeing. All rightsCanadair

1977 vs. today: Summary

Bigger, deeper, broader, more diverse, resilient market

1977 ~6,500 airplanes North America-centric Multiple stops Regulated Expensive, luxury item Low, stable fuel prices Broad network airline business model ~65% load factors

Today ~20,000 airplanes Diverse, globally balanced Point-to-point More competition Affordable -- 1/3 the price High, volatile fuel prices Low Cost Carrier/hybrid business models ~78% load factors

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Agenda
Reminiscing 20-year traffic and airplane forecast Boeing product strategy & development
Copyright 2012 Boeing. All rights reserved.

Why the Current Market Outlook (CMO)?

Product strategy

Long-range business plan

Suppliers and airline customers

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Market forecast drivers and considerations

Airplane capabilities Market liberalization Emerging markets Fuel price Economic growth Infrastructure Environment High Speed rail

Airline strategies & business models

Traffic forecast and network development

Annual growth, 2009 - 2028 Annual growth, 2012-2031
WORLD 4.9 Northeast Asia 4.3 Europe 4.1 North America Oceania Central America South America Middle East CIS Southeast Asia Africa Southwest Asia China 5.8 7.5 7.8 5.1 6.6 6.6 3.2 5.1 5.6 7.0

4 Percentage

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Air travel and economic growth are directly related

Percent annual change passenger traffic Real GDP growth

16 14 12 10 8 6 4 2 0 -2 -4

8 7 6 5 4 3

Long-term traffic growth

2 1 0 -1 -2

1971

1976

1981

1986

1991

1996

2001

2006

2011

Pax Airline Traffic Growth

GDP

Sources: Traffic Growth ICAO, GDP Growth IMF (PPP)

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Drivers of air travel

Economic growth Global trade Traveler values

60-80%
Travel demand
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20-40%
Additional travel demand

World air travel has grown 5% per year since 1980

6.0

5.0
RPKs (trillions)

4.0

3.0

4 recessions 2 financial crises 2 Gulf wars 1 oil shock 1 near pandemic (SARS) 9/11

2.0

1.0

0.0
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F

RPKs = Revenue Passenger Kilometers Sources: ICAO Scheduled Traffic

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20-year forecast: strong long-term growth

2011 to 2031
World economy (GDP) Number of airline passengers Airline traffic (RPK) Cargo traffic (RTK) 3.2%

4.0%

5.0%

5.2%

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Air travel growth has been met by increased frequencies and nonstops
Index 1991=1.00 2.5

World
Air Travel Growth Frequency Growth

2.0

Nonstop Markets

1.5

1.0

Average Airplane Size

0.5

August OAG
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All routes

Airlines will need 34,000 new airplanes valued at $4.5 trillion

Airplane deliveries: 34,000
2012 - 2031

Market value: $4.5T

2012 - 2031

25,000 Market value, $ billions 2,020 23,240 regional jets single-aisle 6% 68% 7,950 twin-aisle 24% 790 large 2% Airplane units 20,000 15,000 10,000 5,000 0

2,500 2,000 1,500 1,000 500 0 $80B regional jets 2% $2,030B single-aisle 45% $2,080B twin-aisle 47% $280B large 6%

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Older, less efficient airplanes will be replaced with more efficient, newer generation airplanes
40,000

39,780

30,000

19,890 Growth 59% 34,000

19,890 14,110 Replacement 41%

10,000

20,000

5,780 Retained fleet

0 2011
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2031

Emerging markets are driving the economic growth

Annual GDP growth
2011 2031 South Asia China Asia Pacific Africa Southeast Asia Latin America Middle East CIS

7.1 6.5 4.6 4.4 4.3 4.1 3.9 3.4

World
Oceania North America Europe Northeast Asia

3.2
2.8 2.6 1.9 1.3
Source: IHS Global Insight

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Air travel growth varies by market

2011 traffic
Asia Pacific* Within North America Within China Within Europe Europe Asia Pacific North Atlantic Middle East Asia Pacific Transpacific Within Latin America North America Latin America Within / to CIS Africa Europe Europe Latin America 0
*includes within China
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Added traffic 2012-2031

Annual growth%

6.7% 2.2% 6.9% 3.5% 5.7% 3.8% 7.2% 4.8% 6.5% 5.1% 4.8% 4.8% 4.6%
500 1,000 1,500 2,000

World Average Growth: 5.0%

2,500

3,000

3,500

4,000

RPKs, billions

Air travel becoming more diverse geographically

Air traffic, RPKs (billions)
14,000

12,000

Other Middle East

10,000

China
8,000

6,000

Asia Pacific (excl. China)

4,000

Europe 40% 72% 53% North America 2031

2,000

1991

2011

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World airlines business model shifts

World airlines business model shifts

ASMs

2001
8% 3% 24% 65%

2011
3% 14% 19%

2031
3%

23%

60%

22%

56%

LCC
Source: Boeing CMOs
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Charter/IT

Broad Network

Other Networks

Market for new airplanes set to become considerably more geographically balanced
New airplane deliveries by region
20122031

Market value by region

20122031

Region
Asia Pacific

Airplanes
12,030 7,290 7,760 2,370 2,510 1,140 900
23% 22% 7% 3% 7% 3% 35%

Region
Asia Pacific North America Europe Middle East Latin America C.I.S. Africa

$B
1,700 820 970 470 260 130 120
22% 18% 10% 3% 6% 3% 38%

North America Europe Middle East Latin America C.I.S. Africa

34,000

$4.5T

World Total

34,000

World Total $4,470B

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World air cargo traffic has grown 5.5% per year since 1980
250

200

RTKs (billions)

150

100

50

* Revenue tonne-kilometers

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1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

New freighter demand -- 940 new, 1,820 converted

Share of fleet
Size category

Delivery units
Large
>80 tonnes

250 680 1,120

Medium
40 to 80 tonnes

Standard
<45 tonnes

2,760
450 260

2011 Freighters 1,740

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2031 Freighters 3,200

2012 to 2031 Freighters

Future freighter deliveries will be led by demand for large widebodies

New freighter deliveries: 940
20122031

Market value: $250 billion

20122031

700 600 Airplane units 500 400 300 200 100 0

72%

250 Market value 200 150 100 50

80%

28%

20%

680
Large
More than 80 tonnes

260
Medium
40 to 80 tonnes

0
Standard
Less than 45 tonnes

$200B
Large
More than 80 tonnes

$50B
Medium
40 to 80 tonnes

$0B
Standard
Less than 45 tonnes

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Europe traffic varies by market

2011 traffic
Within Europe North America Middle East Africa China Southeast Asia South Asia South America Central America Northeast Asia 0 200

Added traffic 2012 - 2031

Annual growth %

3.5% 3.8% 5.1% 4.8% 6.4% 5.0% 7.4% 4.5% 4.8% 3.5%
400 600 800 RPKs (billions) 1,000 1,200 1,400

Europe Average Growth: 4.1% Europe GDP Growth: 1.9%

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Europe will need 7,760 new airplanes

Europe will need 7,760 new airplanes valued at $970 billion

Airplane deliveries: 7,760
2012 - 2031

Market value: $970 billion

2012 - 2031

6,000 5,000 4,000 3,000 2,000 1,000 0 320 5,800 regional jets single-aisle 4% 75% 1,440 twin-aisle 18% 200 large 3%

600 500 400 300 200 100 0 $10B regional jets 1% $520B single-aisle 54% $370B twin-aisle 38% $70B large 7%

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Half of Europes deliveries are for growth

Units 9,000

8,320
8,000 7,000 6,000 5,000

3,880 Growth 50% 7,760

4,440
4,000 3,000 2,000 1,000 0

3,880 Replacement 50%

560 Retained fleet

2011 2031

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Agenda
Reminiscing 20-year traffic and airplane forecast Boeing product strategy & development
Copyright 2012 Boeing. All rights reserved.

Providing more value to our customers in all markets

Environmentally progressive Long-range, fast, reliable Operational commonality Passenger experience Low operating cost Standardization

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Giving each airline the Boeing Edge

Material
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Fleet

Flight

Information

Substantial, balanced backlog validates Boeings product strategy

Backlog ($B) Model

308
300 296 279 250 256
777

747
Large 5% SingleAisle 737 38%

250

200

787

TwinAisle 57%

767

150

Region
Leasing, Gov't & BBJ ME, Central & S. Asia North America L. America & Africa Asia Pacific Europe & Russia China, East & SE Asia

100

50

0 2008 2009 2010 2011 1Q2012

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Things to remember
Todays market bigger, deeper, broader, more diverse and resilient than 1977 Strong demand for new, efficient aircraft; emerging economies leading growth Boeings market-driving products and services provide more value to our customers in all markets
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What about next week?

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1977 a very BIG year

January - record company EMI sacks controversial UK punk rock group the Sex Pistols February - Fleetwood Mac's Grammywinning album Rumours is released April - The Clash's debut album released in the UK on CBS Records June - The Supremes perform their final concert together at Drury Lane in London and disband August - Elvis Presley, the king of rock and roll, dies in his home in Graceland at age 42 November - The Bee Gees release the soundtrack to Saturday Night Fever, which would go on to become the then best selling album of all time
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For more information, please visit our CMO website: http://www.boeing.com/cmo

You can also visit my blog, Randys Journal: http://boeingblogs.com/randy/

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