UBS Investment Research UBS Business Jet Update Cycles Lower Sequentially • Cycles 1% lower sequentially We estimate business jet cycles (takeoffs & landings) were 1% lower from the prior year in April, better compared to 3% decline in March on easier comp as seasonally-adjusted cycles moved 1% lower sequentially. We estimate cycles are now running 26% higher from trough in early 2009, although still off 18% from prior peak in late 2007 including relatively flat cycles for past 18 months. • Long- and short-range cycles declined on sequential basis By segment. we estimate long- and short-range aircraft cycles were both 1% lower sequentially in April. while medium-range was roughly flat. Overall, through the recovery, short-range aircraft cycles have improved the most, up 28% from trough in early 2009 with mid-range and long-range both up 23%. Of the five major manufacturers. Dassault cycles decreased the most in April, down 4% sequentially, followed by Gulfstream down 2% and Cessna down 1%, while Bombardier and Hawker cycles were roughly flat. Dassault cycles are now 23% below prior peak in 2007 with Bombardier/Cessna/Hawker all 20.21% below and Gulfstream 18% below, while Embraer cycles have roughly tripled. Please see inside of note for detail by engine/avionics supplier. • See positive risk-rewards We believe North America bizjet is improving driven by replacement demand postponed during the downturn. We still see positive risk-rewards as we don't think stocks incorporate much for bizjets following recent underperformance. We prefer TXT/COL chart 1: Seasonally-Adjusted Monthly Cycles 450.000 400.000 350.000 300.000 250.000 200.000 150.000 100.000 50.000 0 4S4 S4S SS t3 :7 =' XX Source: FM and UBS eslirnanys Global Equity Research Donl Sector Comment Chart 2: YoY Absolute Cycle Growth 25 May 2012 mwrebs.cominvestmentiesearch David E. Strauss Analyst [email protected] +12127136185 Darryl Genovesi Analyst darrylgen