UBS UBS Investment Research UBS Business Jet Survey Recovery Stalls • Index holds at 50 Our March Business Jet Index came in at 50, indicative of a stable market and in line with our prior survey from January following increases in each of our previous eight surveys. While our Index continues to reflect a stable market, our straight up measure of absolute business conditions moved modestly lower this time, the first decline since March of 2009 and indicative of a slight degradation in market conditions since January. • Survey reflects improving customer interest Our survey continues to reflect improving customer interest and a strong I2-month outlook, although it is still weighed down by very high used inventory levels. Pricing in most models is off 30-40% from peak levels, but now appears to be stabilizing. Overall, our respondents cited an increased willingness to add to their own inventories this time, reflecting increased confidence in near-term pricing/liquidity. Despite improved buyer interest/outlook. we think significant oversupply on the used market, particularly in small/midsize aircraft, will continue to overhang new aircraft orders. • Prefer GD/COL Our Buy rating on GI) reflects an improved defense risk profile and stabilization in our bizjet survey, with particular strength at the high end. Our Neutral rating on TXT reflects concerns over the shape of the recovery at Cessna, given significant oversupply, fractional weakness, and increased competition at the low-mid end (Embraer). Of the suppliers. Buy rated COL is our preferred play on business jets. Global Equity Research Americas Aerospace Sector Comment 24 March 2010 ww*.ubs comonvestmentreseatch David E. Strauss Anato daed strainsktubs Qom .1-212.7136185 Cristina Fernandez Anaysl cnsmalemancleziNosoom •1.212.713 3321 Darryl Genovesi Asscoate Anatol darrytgenovesigubs corn •1.212.7134016 Tasneem Azim Assooate Anatest tasneemiazenVis corn .1416-814 3678