2005 HONEYWELL HELICOPTER SALES FORECAST

March 2005

Category: Helicopter Sales Forecasts

Author: Honeywell Aerospace

March 2005

Honeywell Aerospace’s seventh Turbine-Powered Civil Helicopter Purchase Outlook projected deliveries of approximately 2,400 new civil use helicopters during the five-year period 2005 - 2009, driven in part by increased demand for light single and intermediate twin-engine models offering newer technology.

Corporate segment tops pile

Corporate, emergency medical services (EMS) and law enforcement helicopters combined are expected to account for more than 60 percent of all new civil rotorcraft sales during the five-year forecast period.

The corporate segment, the largest use category, totaled 25 percent of the projected new turbine helicopter sales. Substantial demand exists for new corporate use helicopters in all world regions. Nearly half of all demand in Latin America is for corporate use machines. North America has the largest projected unit demand for corporate use helicopters based on the large fleet in the region, followed closely by Latin America and Asia, Oceania, Africa and Middle East.

Mentioned second most frequently as a use category for new aircraft purchases, planned purchases of new helicopters for EMS applications rose to 22 percent of total demand from 19 percent in the 2003 survey. Almost all demand for EMS helicopters is in North America and Europe. Notably, Latin America seems to be warming to the EMS application and the region posted a strong increase in interest to nearly 11 percent share of projected new purchases.

Survey Highlights

Some highlights revealed by the annual survey of civil helicopter operators’ purchase expectations are as follows:

• Civil helicopter sales in 2004 were up 8-10 percent as projected in last year’s forecast and are likely to rise 4-6 percent in 2005 compared to 2004.

• Civil helicopter sales during the five-year period 2005-2009 are predicted to be around 10 percent greater than in the five-year period 2000-2004.

• Over 5,550 Civil helicopter sales during the 11-year period 2005-2015 are projected. Yearly delivery rates are forecast to enjoy a 1-2 percent annual compounded growth rate.

"The 2005 Honeywell Aerospace survey reconfirmed engine power, safety/crashworthiness, useful load, aircraft price and direct operating costs as the top five criteria operators consider when selecting new helicopters," observed Lynn Brubaker, vice president, Honeywell Commercial Aerospace.

"The decision to acquire new helicopters is driven primarily by age of current aircraft and an operator’s desire for newer technology, bigger cabins and more payload. Obviously, new model introductions help fuel that demand. Survey results have now strengthened, and OEMs report strong sales activity supporting our optimism about the long range prospects for helicopters in a growing global economy."

Purchase Expectations Survey

Purchase expectations rose about 1 point over the solid findings reported in the 2004 Survey. Interest in this year’s survey, for "all new derivative aircraft" rose to about 13 percent of all the models mentioned for future purchase.

Though improved over the 2004 findings, brand new or significantly enhanced model purchase plans remain down significantly from prior surveys where 40 percent to 50 percent of model mentions usually fall into the ‘new' classification. This reflects the relative lack of recent new model additions to manufacturer offerings and the new models of five years ago no longer qualify as all-new today.

The survey continues to show that there was little trade-up expectation among the world operator base. Nearly 80 percent of new helicopter purchases will be made to replace older aircraft in the same size/capability and price class. Only about 16 percent of operators plan to trade-up to more expensive and capable machines.

Buyer interest remains healthy overall and there is no indication that a demand decline is likely to occur in the near future. These findings are based on inputs from nearly 1,000 flight departments in North America, Latin America, Europe, Asia, the Middle East and Africa.

Twin-engine preference:

Operators reported that regulatory initiatives and proposals around the world are continuing to favor interest in twin-engine helicopters, as are perceived safety advantages in multi-engine operations. This is offset to some extent by higher operating costs associated with twin piston engine aircraft.

In Europe, over 70 percent of all survey expectations are for twin-engine models, while in North America, where there are no current or pending regulations requiring twin-engine aircraft, 70 percent of planned purchases will be single-engine aircraft. Latin America, Asia, The Middle East, Africa and Oceania are evenly divided in preference for twin-engine versus single engine machines with a 50-50 ratio in the 2005 survey.

This release contains forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934, including statements about future business operations, financial performance and market conditions. Such forward-looking statements involve risks and uncertainties inherent in business forecasts as further described in our filings under the Securities Exchange Act.

* This is an edited version of Honeywell’s Forecast. For more information, or to see this Forecast in full, visit www.honeywell.com

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