1	Rolls-Royce Helicopter Overview and 10-year Forecast 2007-2016
2	Agenda Introduction Total rotorcraft forecast 2007 to 2016 – Summary Turbine powered rotorcraft forecast 2007-2016: Phasing Turbine rotorcraft forecast: Civil market Market drivers Turbine rotorcraft forecast: Military market Market drivers Forecast conclusions
3	Rotorcraft market forecast 2007 to 2016: Introduction This is a 10-year turbine rotorcraft sales forecast developed by Rolls-Royce It is based on: Civil customer new requirement and fleet replacement plans Military new requirement and fleet replacement/upgrading schedules OEM forecasts Customer input
4	Total rotorcraft forecast 2007 to 2016 – Summary 15,038 total rotorcraft deliveries 6,096 civil rotorcraft (41%) 8,493 new or upgraded military rotorcraft (59%) Growth in the delivery volumes from 2006 forecast: Major military procurements to meet new requirements and to replace heritage fleets Increased opportunities in emerging markets such as India, Russia and China Most OEMs reporting increases in sales with some production lines being sold out over the next 18-24 months Major indicators continue to trend positive Macro-economy Used aircraft retirements OEM profitability Forecast includes civil and military tiltrotors and major engine-related upgrades
5	Turbine powered rotorcraft forecast 2007-2016: Phasing
6	Rotorcraft sales by engine size (shp)
7	Turbine rotorcraft forecast: Civil market 6,095 civil rotorcraft deliveries Airframe value $24.0 billion Engine value $3.6 billion Engine support business about $16.2 billion Single engine (41%) and light twins (40%) lead market Excludes military surplus rotorcraft deliveries Includes paramilitary market
8	Civil turbine rotorcraft market: Overview Turbine rotorcraft deliveries Strong market sector throughout forecast period Offshore oil support market growing – influence of increasing oil prices, exploration activity and production Increasing market for heavy twin sales (S-92, EC225) Police and HEMS sales strong as international market expands Corporate sales expanding into the larger twin market Piston-engine deliveries Favorable dollar exchange rate supporting sales Robinson remains as market leader with increasing sales Avgas fuelled engines dominate market Avgas pricing/availability expected to foster market for affordable turbines Little impact of diesel engines in short term
9	Civil turbine rotorcraft: Market drivers Single-engine rotorcraft continues to lead market Eurocopter retains leading position followed by Bell and AgustaWestland Growing international demand for police, law enforcement, corporate, EMS and utility New product offerings expected to emerge over the next 3-5 years Heritage twins being replaced by new-generations twins Eurocopter, AgustaWestland and Bell products replacing older designs Increased safety and lower emissions provided in newer products AW139 emerging as leader in intermediate-twin segment Design imperatives of increased safety and reduced emissions Increasing demand for safety of twin engines in urban operations Increasing demand for lower noise and exhaust emissions
10	Civil turbine rotorcraft: Market drivers (cont.) Industry relationships Bell still experiencing difficulties created by ARH-70, UH-1Y, AH-1Z Eurocopter only bidder for Romanian helicopter manufacturer Sikorsky new owner of Polish helicopter manufacturer PZL Mielec Expanding international manufacturing influence Chinese market expanding in parallel with military demand Russian civil sales dwarfed by demand for its military products, both in national and export markets HAL products will have increasing impact on international markets Tiltrotor market still to be proven BA609 certification continuing; first 2 years of production sold Sikorsky’s X-2 project delayed, but will offer alternative approach to high-speed rotorcraft
11	Military rotorcraft sales by engine power
12	Rotorcraft turbine engine sales by engine size
13	Rotorcraft turbine engine sales by value
14	Turbine rotorcraft forecast: Military market 8,943 new military rotorcraft or engine upgrades Significant growth of about 7% annually until 2012 to meet both new requirements and replacements Rotorcraft value of about $120 billion Engine value of $11.4 billion Engine support business value of $51.3 billion Market demand led by medium and medium-heavy twins, but with big increase in heavy lift rotorcraft
15	Military turbine rotorcraft market: Overview Major program selections announced in 2006 US Air Force CSAR-X (HH-47) US Army LUH program (EC UH-72A) The UK Ministry of Defence (MoD) (Future Lynx) Indian Army and Air Force (Mil Mi-17V5) Brazil (Mil Mi-17) Russia (Mil Mi-28N) Netherlands Air Force (CH-47F) Imminent selection decisions India, Turkey, Saudi Arabia, UAE, UK New programs making first production deliveries NHI NH90 Mil Mi-28N
16	Military turbine rotorcraft: Market drivers Next generation heavylift rotorcraft USMC MV-22 now in full-rate production Foreign interest growing in export version of MV-22 USMC CH-53K now in development – some interest from Europe in joining program to meet French/German HTH requirement Major boost to Boeing CH-47 project after selection for CSAR-X First reports due in 2007/8 from US DoD JHL study contracts Turbine VTUAV market developing Northrop Grumman MQ-8B Fire Scout started production Jan 07 for first 12 aircraft First prototype Bell TR918 Eagle Eye crashed during flight test. Second aircraft is currently being built Boeing A-160 Hummingbird flight test continuing Boeing MH/AH-6X Unmanned Little Bird (ULB) trials underway Retrofit market losing favour with major nations Most major programs now converted to new-build Still interest in smaller nation programs i.e.AH-64 in UAE, Saudi Arabia; SA330 in UAE
17	Military turbine rotorcraft: Market drivers (cont.) International industry relationships Russia establishing manufacturing and training facilities in Mexico European OEMs have achieved substantial sales to US DoD through US partner companies (UH-72A, VH-71) Eurocopter to become owner of Romanian helicopter industry Spain is establishing helicopter production facilities Europe still considering joint HTH project with US DoD China, Russia and India becoming more influential players Russian helicopter industry consolidating and achieving substantial export sales in absence of home demand China developing wide range of new indigenous programs, while continuing to expand transport fleet with Mil Mi-17 Indian aerospace industry seeking industrial partnerships to produce new helicopters for three Services Development of industrial infrastructure in Middle East nations New rotorcraft programs in Middle East countries now require industrial offset to feed indigenous aerospace industries
18	Forecast conclusions Civil markets Single and light twins will head the market, with increasing numbers of new large twins to meet increased offshore oil demand and replace aging S-61s/SA330 Annual demand will remain generally constant Emerging markets creating new demand (Russia, India, China) Military markets Demand for military rotorcraft will increase steadily until 2012 then subside quickly to a more sustainable level Continuing move away from single-engine aircraft, with development and production emphasis on medium and heavy helicopters to meet future operational needs Continuing demand for improved ‘Hot & High’ performance China, Russia and India becoming more influential players
19	Rolls-Royce contacts George McLaren Senior Communications Manager (317) 230-8260; mobile, (317) 366-9624 Email: george.h.mclaren@rolls-royce.com Matt Haugk Director, Marketing & Strategy (317) 230-3883 Email: matthew.p.haugk@rolls-royce.com