São José dos Campos, Embraer S.A. (NYSE: ERJ; BM&FBOVESPA: EMBR3) based in São José dos Campos, São Paulo that develops, manufactures and sells aircraft and systems for the commercial aviation, executive aviation, and defense and security segments. Has released the following market outlook and guidance.

2011 Highlights

Embraer experienced a positive year in 2011. The Company delivered a total of 105 commercial jets, as well as 99 executive jets, being 83 light jets and 16 large jets.

Furthermore, overall revenues from the Aviation Services and the Defense & Security segment were above the Company’s guidance, which, combined with the additional deliveries f commercial jets, helped offset the shortfall in executive jet deliveries. Considering the above, the Company was able to meet its annual Revenue guidance. From an operational perspective, the Company’s ongoing productivity efforts, coupled with a good revenue mix, contributed to a strong recurring operating margin profile, above the annual Operating Margin guidance. With respect to sales, the Company booked a total of 124 new orders for the E-Jets family, which helped assure a reasonably stable backlog, totaling US$15.4 billion at the end of 2011. As a result of the strong deliveries in 4Q11, the Company had a strong operating cash flow generation for the period and therefore the Company’s Net Cash position at the end of 2011 was approximately US$ 470 million.

2012 Outlook and Guidance

As we move into 2012, macro-economic expectations are that the global economy will continue to grow at a more moderate pace (approximately 2.5% GDP growth). In 2012, emerging markets are expected to lead the pace of growth in GDP, at approximately 5%, whereas the United States should grow its GDP approximately 1.5%, while Europe’s GDP will likely remain stagnant. Order activity in Commercial aviation is expected to be similar to 2011, supporting a stable book to bill for the year. In the Executive aviation market, despite historically high corporate profit levels, which is a key macro-economic indicator for this segment, recovery has not yet started. The volatility in the financial markets and the European crisis will likely continue to affect market recovery in 2012, as has been generally the case in

2011. With respect to Defense & Security, the Company expects this market to continue to grow at a more accelerated pace than the other business units, and therefore, over the next five years, this segment should represent a greater share of the Company’s total Revenue mix. In this line, considering an accelerated growth rate in Defense & Security, and a stable business in Executive Aviation and Commercial Aviation, the Company expects a modest growth in total Revenues in 2012. For the coming years, Revenue growth will depend on the evolution of the global macro scenario, which remains unstable.

In terms of product strategy, the Legacy 450 and Legacy 500 programs are approaching their final years of development and shall therefore require an increase in investments. The Company also expects to intensify its research expenditures, as it continues the definition of the E-Jets evolution strategy. Regarding CAPEX, the construction of the industrial facilities in Evora, Portugal, is ongoing and the project remains on track to commence operations in 2012.

In light of the scenario above, in 2012, Embraer expects to deliver between 105 and 110 commercial jets, 75 to 85 light executive jets, and 15 to 20 large executive jets. Given the mix of products, the Company’s Revenue is expected to reach between US$ 5.8 billion and US$ 6.2 billion, to which Commercial Aviation, Executive Aviation and Defense & Security business shall contribute as per the following table:

Net Sales Breakdown

US$ Million

Commercial Aviation

3700 ~ 3850

Executive Aviation

1100 ~ 1300

Defense & Security

900 ~ 950

Other business is expected to achieve US$ 100 million. Revenues for Aviation Services are accounted for within the revenues of each of the business units and shall reach a total of US$ 750 million to US$ 800 million, with the following expected breakdown:

"EMBRAER

For its projections, the Company is assuming that, in 2012, the average Real to Dollar exchange rate will remain relatively stable when compared to 2011. Operating expenses shall be impacted by an increase of approximately 10% in wages at the end of 2011, as result of the annual settlement between the worker’s union and the Company and certain increases in

Commercial expenses driven by additional marketing efforts as well as the expected mix of products. Therefore, Embraer expects 2012 EBIT margin to stay between 8% and 8.5% and 2012 EBITDA margin to stay between 11.5% and 12.5%.

Total investments shall reach US$650 million for 2012, of which projected Research expenditures are expected to total US$ 100million, product development is expected to amount to US$ 350 million and CAPEX investments is expected to reach US$ 200 million.

Also, it is important to note that the Company was able to anticipate the receipt of approximately US$ 70 million in risk sharing partner contributions for 2011, which helped reduce the Company’s total investment in product development for that year.

Considering most of contributions from risk sharing partners were already received, there will be fewer contributions from them in 2012, as most of those contributions were already made in 2009, 2010 and 2011.

Source: Embraer S.A.