Title Here Departure Future of Boeing Timeline/ Financials Landing Supply Chain Existing Solution Proposed Solution Supplier Boeing supervision office Supplier Separate liaison of Boeing Design & technician support Patching and Redesigning: Our View to the Horizon Fengshui Taskforce Patrick Hoey Pamela Rosales Varun Sarawagi Amy Wei

Current Situation Departure Future of Boeing Timeline/ Financials Landing Supply Chain 57 days $1.3 billion revenue loss 4-year contract signed Workers on strike 3 times, 1.5 years in delay Penalty $2 billion Supplier delay Supply chain problem of Boeing 787: the Dreamliner

Industry outlook Departure Future of Boeing Timeline/ Financials Landing Supply Chain Fuel efficiency 14,000 aircraft to be replaced by eco-efficient types bio fuels could provide up to 30% of all commercial jet fuel by 2030 Point to Point long range flight 34% more long-haul route in 20 years (from 1158 to 1546) Demand from Asian Passenger traffic in China would surge over 8.0% annually

Agenda Departure Future of Boeing Timeline/ Financials Landing Supply Chain Minimize delay in delivery Maximize passenger/fuel rate Create airplanes for the future Goal Supply chain No strike danger Separate liaison Discount airlines Patch Supply Chain labor reinforcement Competition regime 3 Fs (Fuel, Farther, Faster) Explore Asian market Redesign

Competitive advantage Departure Future of Boeing Timeline/ Financials Landing Supply Chain Boeing: Innovation Strong management Diverse product range Relatively efficient delivery Airbus: Capacity Government subsidy

Labor Relations Timeline Departure Future of Boeing Timeline/ Financials Landing Supply Chain 1993: 1-day strike 2000: 40- day strike 2008:57-day strike, lost $1.3 billion in cash - 4-year contract - 10 years without strike - 4-year contract - 10 years without strike

Aging Workforce Departure Future of Boeing Timeline/ Financials Landing Supply Chain AGING BABY BOOM GENERATION Average age of Boeing employees is 46 Eligible to retire in 10 years We expect up to 8,000 employees to retire each year

Patching the Workforce Departure Future of Boeing Timeline/ Financials Landing Supply Chain Retaining critical skills: Option Contract Mentoring the new employees Skilled Employees Offer Competitive Pay and Benefits: Bonus atached to amount of production Retraining workers : assign new tasks Unskilled Employees

Supply Chain Departure Future of Boeing Timeline/ Financials Landing Supply Chain Build to printBuild to performance

Departure Future of Boeing Timeline/ Financials Landing Supply Chain Existing Solution Proposed Solution Supplier Boeing supervision office Supplier Separate liaison of Boeing Design & technician support Patching the Supply Chain

Departure Future of Boeing Timeline/ Financials Landing Supply Chain Multiple bids from suppliers: Delivery efficiency Quality Price Engine and critical parts Miscellaneous Parts Redesigning the Supply Chain

Whats on the Horizon Departure Future of Boeing Timeline/ Financials Landing Supply Chain Low Cost Airlines Growing Market share Emphasis on Economy Opportunities Why How to deploy Time Frame Short-term (Patch)

Departure Future of Boeing Timeline/ Financials Landing Supply Chain Benefits Target Market Emphasis New Technology Composite Materials Economy Fuel efficiency Lower maintenance cost Low Cost & Premium Airlines Plane lifespan Environment Reduced carbon footprint Comfort Premium Airlines Marketing the Dream(liner)

Whats on the Horizon Departure Future of Boeing Timeline/ Financials Landing Supply Chain Low Cost Airlines Growing Market share Emphasis on Economy Improved planes Out-develop competitors Fuel Efficient, Farther, Faster Opportunities Why How to deploy Time Frame Short-term (Patch) Long-term (Redesign)

The New Dream Departure Future of Boeing Timeline/ Financials Landing Supply Chain Airbus A380 (2007) Lack of Demand (Flawed projections) Lack of Innovation Congested Airports Last game changer Concorde (1967) Fuel consumption Viability Boeing 777 (1995) Range of 9,380 nmi Meet with warm demand Boeing 787 Dreamliner (2010) First of its kind 14,000+ Eco-efficient aircraft in 20 years More Passengers Faster Further Fuel efficiency Combine the 3 Fs Fuel efficiency Further

Whats on the Horizon Departure Future of Boeing Timeline/ Financials Landing Supply Chain Low Cost Airlines Growing Market share Emphasis on Economy Improve planes Out-develop competitors Fuel Efficient, Farther, Faster Developing Nations Fastest grow markets Manufacturing in these nations Opportunities Why How to deploy Time Frame Short-term (Patch) Long-term (Redesign) Long-term

Asian Market Enterance Departure Future of Boeing Timeline/ Financials Landing Supply Chain Asia will account for 31% of orders of next 20 years ProtectionismGovernment controls the purchase of most airlines Developing suppliers will help break into Asian Market

Mitigating Risks Departure Future of Boeing Timeline/ Financials Landing Supply Chain Risks Chinese and Japanese Government Aircraft Airbus already has JV in China (2008) Protect Technology Cannot compete with our innovation and size Currency Risk Economic Risk (dollar up= cost of plane up)

Timeline Departure Future of Boeing Timeline/ Financials Landing Supply Chain Developing Our line Patch Redesign Market to Low cost Airlines Tap into Asian Market Fuel efficiency, Further, Faster Have more suppliers compete (China & India) Retrain and Standardize Separate Liaison offices

Financial Analysis Departure Future of Boeing Timeline/ Financials Landing Supply Chain % increase in Revenue (LCC/ 3 F's) 0.02 % increase in Revenue (Asian sales) 0.00 Total Revenue68,281,00069,646,62071,039,55272,460,34373,909,550 CF of Increased sales 1,365,6201,392,9321,420,7911,449,207 Cost of Goods Sold (1,092,496)(1,114,346)(1,136,633)(1,159,365) Gross Margin 273,124278,586284,158289,841 SG&A (72,651)(74,104)(75,586)(77,098) Savings on Supplies 696,466710,396724,603739,096 R&D (3 F's) (1,200,000) Liaison Offices (Sales, MGMT & Consulting) (100,000) Marketing 3 F enhanced planes (200,000) Depreciation 0000 EBIT (603,061)(585,122)(566,824)(548,161) Taxes 199,010193,090187,052180,893 Net Income (404,051)(392,032)(379,772)(367,268) Add Back Dep 0000 Change in NWC00000 Capital Expenditures 0000 Cash Flows0(404,051)(392,032)(379,772)(367,268) Terminal Value WACC8.74% NPV9,490,805 ….2020

Financial Analysis Departure Future of Boeing Timeline/ Financials Landing Supply Chain % increase in Revenue (LCC/ 3 F's) 0.02 % increase in Revenue (Asian sales) 0.00 Total Revenue68,281,00069,646,62071,039,55272,460,34373,909,550 CF of Increased sales 1,365,6201,392,9321,420,7911,449,207 Cost of Goods Sold (1,092,496)(1,114,346)(1,136,633)(1,159,365) Gross Margin 273,124278,586284,158289,841 SG&A (72,651)(74,104)(75,586)(77,098) Savings on Supplies 696,466710,396724,603739,096 R&D (3 F's) (1,200,000) Liaison Offices (Sales, MGMT & Consulting) (100,000) Marketing 3 F enhanced planes (200,000) Depreciation 0000 EBIT (603,061)(585,122)(566,824)(548,161) Taxes 199,010193,090187,052180,893 Net Income (404,051)(392,032)(379,772)(367,268) Add Back Dep 0000 Change in NWC00000 Capital Expenditures 0000 Cash Flows0(404,051)(392,032)(379,772)(367,268) Terminal Value WACC8.74% NPV9,490,805 ….2020

Financial Analysis Departure Future of Boeing Timeline/ Financials Landing Supply Chain % increase in Revenue (LCC/ 3 F's) 0.02 % increase in Revenue (Asian sales) 0.00 Total Revenue68,281,00069,646,62071,039,55272,460,34373,909,550 CF of Increased sales 1,365,6201,392,9321,420,7911,449,207 Cost of Goods Sold (1,092,496)(1,114,346)(1,136,633)(1,159,365) Gross Margin 273,124278,586284,158289,841 SG&A (72,651)(74,104)(75,586)(77,098) Savings on Supplies 696,466710,396724,603739,096 R&D (3 F's) (1,200,000) Liaison Offices (Sales, MGMT & Consulting) (100,000) Marketing 3 F enhanced planes (200,000) Depreciation 0000 EBIT (603,061)(585,122)(566,824)(548,161) Taxes 199,010193,090187,052180,893 Net Income (404,051)(392,032)(379,772)(367,268) Add Back Dep 0000 Change in NWC00000 Capital Expenditures 0000 Cash Flows0(404,051)(392,032)(379,772)(367,268) Terminal Value WACC8.74% NPV9,490,805 ….2020

Financial Analysis Departure Future of Boeing Timeline/ Financials Landing Supply Chain % increase in Revenue (LCC/ 3 F's) 0.02 % increase in Revenue (Asian sales) 0.00 Total Revenue68,281,00069,646,62071,039,55272,460,34373,909,550 CF of Increased sales 1,365,6201,392,9321,420,7911,449,207 Cost of Goods Sold (1,092,496)(1,114,346)(1,136,633)(1,159,365) Gross Margin 273,124278,586284,158289,841 SG&A (72,651)(74,104)(75,586)(77,098) Savings on Supplies 696,466710,396724,603739,096 R&D (3 F's) (1,200,000) Liaison Offices (Sales, MGMT & Consulting) (100,000) Marketing 3 F enhanced planes (200,000) Depreciation 0000 EBIT (603,061)(585,122)(566,824)(548,161) Taxes 199,010193,090187,052180,893 Net Income (404,051)(392,032)(379,772)(367,268) Add Back Dep 0000 Change in NWC00000 Capital Expenditures 0000 Cash Flows0(404,051)(392,032)(379,772)(367,268) Terminal Value WACC8.74% NPV9,490,805 ….2020

Financial Analysis Departure Future of Boeing Timeline/ Financials Landing Supply Chain % increase in Revenue (LCC/ 3 F's) 0.02 % increase in Revenue (Asian sales) 0.00 Total Revenue68,281,00069,646,62071,039,55272,460,34373,909,550 CF of Increased sales 1,365,6201,392,9321,420,7911,449,207 Cost of Goods Sold (1,092,496)(1,114,346)(1,136,633)(1,159,365) Gross Margin 273,124278,586284,158289,841 SG&A (72,651)(74,104)(75,586)(77,098) Savings on Supplies 696,466710,396724,603739,096 R&D (3 F's) (1,200,000) Liaison Offices (Sales, MGMT & Consulting) (100,000) Marketing 3 F enhanced planes (200,000) Depreciation 0000 EBIT (603,061)(585,122)(566,824)(548,161) Taxes 199,010193,090187,052180,893 Net Income (404,051)(392,032)(379,772)(367,268) Add Back Dep 0000 Change in NWC00000 Capital Expenditures 0000 Cash Flows0(404,051)(392,032)(379,772)(367,268) Terminal Value WACC8.74% NPV9,490,805 ….2020

Financial Analysis Departure Future of Boeing Timeline/ Financials Landing Supply Chain % increase in Revenue (LCC/ 3 F's) 0.02 % increase in Revenue (Asian sales) 0.00 Total Revenue68,281,00069,646,62071,039,55272,460,34373,909,550 CF of Increased sales 1,365,6201,392,9321,420,7911,449,207 Cost of Goods Sold (1,092,496)(1,114,346)(1,136,633)(1,159,365) Gross Margin 273,124278,586284,158289,841 SG&A (72,651)(74,104)(75,586)(77,098) Savings on Supplies 696,466710,396724,603739,096 R&D (3 F's) (1,200,000) Liaison Offices (Sales, MGMT & Consulting) (100,000) Marketing 3 F enhanced planes (200,000) Depreciation 0000 EBIT (603,061)(585,122)(566,824)(548,161) Taxes 199,010193,090187,052180,893 Net Income (404,051)(392,032)(379,772)(367,268) Add Back Dep 0000 Change in NWC00000 Capital Expenditures 0000 Cash Flows0(404,051)(392,032)(379,772)(367,268) Terminal Value WACC8.74% NPV9,490,805 ….2020 NPV= $9.5 billion

Sensitivity Analysis Departure Future of Boeing Timeline/ Financials Landing Supply Chain DropRise WACC (+/- 5%)55%124% % increase in Revenue (LCC/ 3 F's)46%59% % increase in Revenue (Asian sales)40%49% COGS53% SG&A82%53% R&D (3 F's)8%

Mitigating Risks Departure Future of Boeing Timeline/ Financials Landing Supply Chain Risks Threat of Chinese and Japanese Government Aircraft Airbus already has JV in China (2008) Protect Technology Cannot compete with our innovation and size Currency Risk Hedging

Conclusion Departure Future of Boeing Timeline/ Financials Landing Supply Chain Patches Redesigns Future

Apendix Appendix: Comparison between Boeing 787 Appendix: Comparison between Boeing 787 Appendix: Direct non stop scheduled flights to mainland ChinaAppendix: Direct non stop scheduled flights to mainland China Appendix: Capacity vs. Traffic balance Appendix: Growth vs. Capacity Appendix: Asian-Pacific market Appendix: Latin America, Middle East & Africa market Appendix: Latin America, Middle East & Africa market Appendix: Fred traffic: High potential in China Appendix: Commercial Air Tranport Scorecard

Appendix: Comparison between Boeign 787 Boeing 787Airbus 350 Fuselage and wing material Composites Fuel efficiency20% reduction in fuel consumption 8% lower operating cost than Boeing 787 (20 per cent lower cash operating costs per seat and fuel efficiency improvements of up to 25 per cent per seat) SpeedMach.85Mach.92 Cargo capacity x ld3 EnginesGE / RRRR Passenger capacity Range m m Launch dateLaunched2013 Orders Boeing 787Airbus 350 Fuselage and wing materialComposites Fuel efficiency20% reduction in fuel consumption 8% lower operating cost than Boeing 787 (20 per cent lower cash operating costs per seat and fuel efficiency improvements of up to 25 per cent per seat) SpeedMach.85Mach.92 Cargo capacity x ld3 EnginesGE / RRRR Passenger capacity Range m m Launch dateLaunched2013 Orders850500

Appendix: Direct non stop scheduled flights to mainland China Boeing 787Airbus 350 Fuselage and wing material Composites Fuel efficiency20% reduction in fuel consumption 8% lower operating cost than Boeing 787 (20 per cent lower cash operating costs per seat and fuel efficiency improvements of up to 25 per cent per seat) SpeedMach.85Mach.92 Cargo capacity x ld3 EnginesGE / RRRR Passenger capacity Range m m Launch dateLaunched2013 Orders850500

Appendix: Direct non stop scheduled flights to mainland China

Appendix: Capacity vs. Traffic balance

Appendix: Growth vs. Capacity

Appendix: Asian-Pacific market

Appendix: Latin America, Middle East &Africa market

Appendix: Fred traffic: High potential in China

Appendix: Freighter fleet: high potential Asia-Pacific

Appendix: Commercial Air Tranport Scorecard