Declines Measured in All Regions Except Europe

Shift in Purchase Interest from Higher Priced Single and Twin Engine Models To Less Expensive New Models and Used Aircraft

Anaheim, Feb. 22, 2009 – Honeywell (NYSE: HON) announced today that its eleventh Turbine-Powered Civil Helicopter Purchase Outlook projects flat to slightly higher deliveries of new civil use helicopters during the five-year period 2009 – 2013 compared to the 2004 - 2008 period. A lack of financing availability (where 30% of sales are financed), a sharp rise in inventories of used current production models for sale, weak new order intake and an uncertain and unpredictable global economic environment are constraining growth.

Both OEM new order intake and utilization of turbine-powered helicopters has dropped significantly in the past few months and the inventory of current production helicopters for sale has doubled since September, 2008. Deliveries are expected to match 2008 levels in 2009 then decline somewhat in 2010 and 2011. Due to the uncertainty of the global economy, the timing of a recovery is undefined and the current cycle may take several years to fully resolve.

Survey purchase plans fell 12% in 2010, 7% in 2011 and exhibited additional, but less well defined erosion in 2012. Industry backlog is expected to be under pressure over this period absent a quick rebound in order rates. Current OEM production schedules for civil turbine-powered helicopters do not suggest a downturn in deliveries will occur during the next several years. However, survey data indicate a reduction in demand for new helicopters is likely during the coming years and we do not believe the backlog will be able to prevent a decline in production during the recessionary period. Five year new helicopter purchase expectations fell 21% in North America, 45% in Latin America, 25% in Asia, 20.5% in Africa/Middle East but were flat in Europe. European respondents were somewhat more optimistic about near term purchases. Some respondents mentioned that new aircraft financing was being promoted by several European governments while others talked of plans to expand their operations into Africa, Middle East and Asia.

Expectations fell sharply in several product segments which contain larger, more expensive helicopters and rose in segments featuring smaller, less expensive machines. Five year expectations for medium twins fell 43%, intermediate twins fell 49% and long cabin light singles fell 28%. Short cabin single engine mentions rose 29% while light twins were up 23%. An unexpectedly large number of operators expect to replace larger more expensive helicopters with smaller less expensive ones. For example, for current owners of intermediate and medium twins who plan to sell and replace their helicopters during the next five years, 22% of replacement aircraft will be downsized light multi engine and single engine aircraft. In the 2008 survey only 4.6% of all expected purchases were trade-downs versus 9% in the 2009 survey. Trade-ups fell from 16% of all expected five year purchases in 2008 to under 11% in 2009.

Corporate, emergency medical services (EMS), law enforcement and utility helicopters combined are expected to account for more than 80% of all global new civil rotorcraft sales during the five-year forecast period. This finding is unchanged from the 2008 survey.

Some key findings revealed by the annual survey of civil helicopter operators’ purchase expectations are:
• Estimated civil helicopter deliveries are expected to reach similar levels to 2008 in 2009, supported extensively by current backlogs, which are expected to face mounting pressure by the end of 2011 absent a rapid economic recovery.
• New order intake in 2009 is expected to decline sharply and will not normalize until a sustained global economic recovery begins and additional aircraft financing becomes available. Eurocopter recently announced that they expected near-term order intake to drop 36% while Bell stated publically that they had only sold 3 helicopters in January 2009 compared to 40 in January 2008.
• Production of new helicopters is forecast to decline in 2010, 2011 and possibly 2012.
• The peak-to-trough decline in deliveries could exceed the post 2001 industry cycle in percentage terms suggesting deliveries could dip near 2006-2007 annual rates in the next two years.

“Honeywell Aerospace’s 2009 survey has reaffirmed avionics capabilities, performance and power, along with cabin volume as the top criteria operators consider when selecting new helicopters,” said Mike Cuff, Honeywell Vice President, Helicopters & Surface Systems. “The decision to acquire new helicopters is driven primarily by the age of current aircraft which is usually reflected in an operator’s desire for better technology, more range, more power, cargo or passenger capacity and lower operating costs. This holds true even in the tough economic environment faced by operators around the world,” Cuff said.

In North America, law enforcement applications were the most frequently mentioned use category with 27.5% of all mentions. Corporate use came in at 24% and EMS at 21%. Emphasis on security and police capabilities was higher than any other category.

While the 2009 outlook projects annual turbine helicopter delivery levels declining in the near term, survey findings indicate that latent demand could drive rates of over 1,000 units a year when the global economy is reestablished on a strong growth track later in the forecast period.

Purchase Expectations Survey
The eleventh worldwide survey of civil helicopter operators’ future purchase plans compares with last year’s outlook with reduced demand for new aircraft over the next five years. Purchase expectations fell about 21% globally, measured on the basis of specific new helicopter purchase plans in 2009 over 2008 levels.

The survey continues to show that there was little trade-up expectation among the world operator base. Around 80% of new purchases will be made to replace older aircraft in the same size/capability and price class. Less than 11% of operators plan to trade-up to more expensive and capable machines. There was no segment with any significant trade up aspirations. For example, 54% of surveyed current heavy multi-engine operators’ new aircraft replacement plans focused on dramatically smaller light-multiengine craft.

Buyer interest declined broadly across regions and model segments and there is every indication that a demand decline is likely to occur in the near future. These findings are based on inputs from over 1,000 flight departments.

Consistently since 2003, over half of all European purchase expectations have been for twin-engine models. This year’s findings show 56% of European purchase plans falling in the multi-engine helicopter class. Regulations requiring twin-engine aircraft on flights over congested areas and other use limitations continue to shape the preferences of the European operators. Light twins were the most frequently mentioned multi-engine product segment, capturing over 36% of all European mentions. In a near repeat of last year’s result, single engine models were strong for the fourth year in a row at 44 % of expected purchases.

In North America, where there are no current or pending regulations requiring twin-engine aircraft, 62.3% of planned purchases are for single-engine aircraft. This actually represents a slide of around 7.5% in the popularity of light single models over the past three years. Virtually all the shift in demand went to the light twin engine category which rose 1.2 points to 25.1% in the 2009 survey. In Latin America, 46% of planned purchases are for single-engine models, down for a third year in a row. In both regions the single engine share has begun to fall off in favor of light twins. Operator preferences in Asia, The Middle East, Africa and Oceania strongly favor twin-engine machines maintaining a 67-77% share in the 2009 survey slightly higher than last year’s levels.

“Honeywell’s global demand projections now stand at 3,500 to 4,500 new Helicopter deliveries during the period 2009-2013 reflecting industry conditions that have weakened perceptibly compared to the last five years” Cuff said. “The uncertain global economic climate has resulted in a range of outcomes for the next five year period.”

37% of New Turbine Demand Projected in North America
North America continues to provide the greatest regional share of demand for new helicopters, accounting for 37% of planned future purchases, a slightly lower share to last year’s outlook. Buying plans fell 21% in this year’s survey compared to 2008.

Survey responses indicate that North America will still predominate in the purchase of light single-engine helicopters. On average more than 62% of future new aircraft purchases in this region are expected to be light singles, though this is somewhat lower as noted, than prior trends.

Avionics capabilities, aircraft age, new technology, mission requirements and cabin volume were the most frequently mentioned factors by North American operators as to their reasons for planning to purchase new aircraft.

European Fleet Replacement and Expansion Plans Flat
The survey shows continued improvement in European global share, moving up to nearly 30% of the extrapolated 5 year market in 2009 compared to 27% in 2008. The increase in global share was the result of European expectations remaining flat while all other regions fell. Broadly distributed buying plans again favors multi-engine machines compared to last year. As we moved further beyond the implementation of the single engine operations regulations in Europe, the spike in planned orders and deliveries of twin engine helicopters has softened however, interest in less costly single-engine models has trended down during the last 3 years. Over 56% of five year planned European purchases are for multi-engine models. Survey responses suggest that about 30% of world new turbine-powered helicopter sales will occur in Europe during the next five year period, an improvement of three points over the 2008 survey share. Some of the gains are attributable to growth in emerging Eastern Europe and Russia, though the pace of expansion has stalled in the short term.

Some European operators plan to expand their operations into Asia, Africa and the Middle East. European operators cite mission requirements and updated technology/avionics capabilities as the top reasons for acquiring a new helicopter. Other important factors are aircraft age, cabin size, performance, and speed. The corporate and general utility use categories were most frequently mentioned by European respondents followed by EMS, and law enforcement.

Asia, Pacific, Africa and Middle East to Capture Nearly 18% Global Share of Five Year Market
New aircraft purchase expectations fell 25% in Asia and 20.5% in Middle East/Africa compared to the 2008 survey. The sharp decline in oil prices and declining economic growth in Asia were key contributing factors.

Between 67 – 77% of future demand in these regions is expected to be for multi-engine craft. Operators cited cabin size, new technology/avionics and mission requirements most frequently as key reasons for replacing current helicopters. Intermediate and medium twins were most frequently mentioned for 5 year purchase.

In Asia/Pacific close to 52% of expected purchases will be for corporate applications, followed by utility and oil exploration. In Africa / Middle East, oil and gas exploration applications remain most frequently mentioned at 48.6%, followed by corporate uses at 31.4%.

Latin American Purchase Expectations Fall Sharply
Latin American new helicopter expectations fell 44.8% compared to the 2008 survey finding. Despite the large drop in buying plans, this region is still forecast to absorb about 15% of global five year new aircraft production. Approximately 46% of expected new aircraft demand in the region is for single-engine helicopters. This statistic has been trending down for the past three years with light twins capturing the share and reaching 28.4% of all mentions in the 2009 survey. Age, new technology/avionics, mission requirements and speed were most frequently mentioned as reasons for purchase. Corporate end use continues to be far and away the most popular application for new helicopters planned for purchase in Latin America at a 69.3% level. EMS and utility applications were the second at 9% each.

Civil Turbine Helicopter Survey Results
The 2009 Turbine Powered Civil Helicopter Outlook is based on Honeywell’s recently conducted customer expectations survey, an assessment of consensus forecasts, review of factory delivery rates and analysis of future new helicopter introductions. The 2009 outlook excludes uniformed military demand for civil helicopters but resulting civil estimates do include government and security force demand.

This year’s survey queried 1036 chief pilots and flight department managers of companies operating over 2,000 helicopters worldwide. The survey excluded large fleet or “mega” operators which were interviewed separately. The survey detailed the types of aircraft operated and assessed specific plans to replace or add to the fleet with new aircraft.

The 2009 outlook presents a snapshot of the helicopter business at a point in time and does not reflect unforeseen events such as an unexpected economic downturn, the impact of government stimulus programs, sharp increases or decreases in fuel costs, a fuel availability crisis, imposition of heavy user fees or other unfavorable regulations / taxes that could affect results in future years. Demand for new helicopters is also highly price sensitive. Decisions by aircraft manufacturers to offer discounts or raise prices can significantly influence sales activity on affected models.

Demand by Helicopter Size Category
Light Single-engine Helicopters: Operators continue to express a strong preference for light single-engine helicopters in their purchase expectations, choosing this class of aircraft 48.3 % of the time, a slightly higher level compared to the 2008 survey. Overall mentions for light singles fell 20% however the entire decline was with more expensive longer cabin models like the Bell 407, EC130 and AS350 series. Mentions for smaller light singles like the EC120 and Bell 206B3 actually increased 29% over the 2008 survey. Mentions for Popular helicopters within this class include the Bell 206 series and 407, AgustaWestland A119, Eurocopter EC120, AS350/EC130, Robinson R66, Enstrom 480 and MD 500 and MD600 series. Regionally, the light single class is highly popular in North America, cited in 62% of new purchase expectations. Latin American operators also reported a strong preference for this class of equipment with 46% of regional demand however the share has been declining since 2006. In Europe, regulations requiring multi-engine aircraft limit the appeal of single-engine models. Though sizable at about 44%, the average share of planned single-engine purchases in this region has also been trending down each year since 2006. Demand for single-engine models in Africa, Middle East, Asia and Oceania is relatively low compared to the Americas and Europe falling in the 23-33% range.

Light Twins: Purchase expectation groupings for new helicopters in the light multi-engine class are exemplified by the Bell 429, Eurocopter EC135, AS355, AgustaWestland A109 series, and MD 902. Expectations for the future purchase of aircraft in this segment during the next five years rose 23% in the 2009 survey as some operators of larger machines said they plan to downsize to light twins.

The largest regional demand for light twins will be in Europe, with a 36% projected share of total regional purchases, up 10.5 percentage points compared to 2008. Gains in demand for light twins were recorded in all other regions - - Africa/Middle East gained 9.8 points, Asia was up 6.3 points, Latin America’s share increased 5.3 points and North America was up 1.2 points.

Intermediate and Medium Twin Helicopters: Purchase mentions for new intermediate twin-engine helicopters as a class fell almost 50% compared to the 2008 survey. Popular models include the EC145 and AS365. Close to 60% of demand for intermediate twin class helicopters is in North America and Europe.

The medium twin class includes the AW139, S76 series, EC155 and Bell 412 models. These are especially popular in the oil and gas industry. Purchase mentions for this class fell 43% compared to the 2008 survey. Certainly, the sharp decline in oil prices and the global economic slowdown’s impact on other raw material and construction related industries has impacted future purchase expectations for medium twins. Close to 40% of world demand for this class is in the Asia/Africa and Middle East regions.

Heavy Lift Helicopters: Heavy lift helicopters continue to exhibit relatively low purchase expectation scores relative to the other classes of aircraft, with share of mentions running between 1% and 5% over the last four surveys. Heavy twin mentions were flat compared to the 2008 survey. As discussed in our previous outlooks, this low level of demand is to be expected, both as a function of higher prices for larger helicopters as well as the more narrowly defined applications such craft typically serve. Based on the level of Oil and gas support and exploration being handled by large fleet operators, we feel that demand for this class of helicopter as well as the intermediate class may be somewhat understated in the survey feedback. Additional demand for this class aircraft often comes from governmental or “para-public” sources that this survey may not always reach. Geographically, the bulk of projected demand for heavy helicopters is concentrated in Asia with 64% of 2009 heavy multi mentions.

Demand by Primary Use of New Turbine Helicopters
Corporate and EMS: Corporate and EMS were the leading applications for which operators said they would purchase new helicopters in the 2009 survey. The corporate segment, the largest use category, totaled about 40% of the projected world new turbine helicopter sales. Substantial demand exists for new corporate use helicopters in nearly all world regions. Close to 70% of all demand in Latin America is for corporate-use machines, followed by Asia at over 50%, Europe at over 40%, Africa / Middle East at 31% followed by North America at a slightly increased rate of 24%.

Mentioned second most frequently as a use category for new aircraft purchases, new helicopter buying plans for EMS applications comprise 14.7% of total demand. The most interest in EMS helicopters is in North America, accounting for about 21% of regional demand.

Utility and Law Enforcement: World expectations for the purchase of new helicopters for utility usage were measured at just over 14% of total demand this year. Utility helicopter demand was especially strong in Europe and Asia, with a >;21% share of mentions for these regions. Expected demand for law enforcement helicopters was very strong in North America, where 27.5% of all new aircraft mentions were for law enforcement aircraft. Globally, about 14% of all new aircraft mentions were for law enforcement helicopters.

Oil and Gas Support: The oil and gas production and exploration segment’s share of new aircraft fell to 5.6% in the 2009 survey after posting a 9% share in 2008 and a 14% share in the 2007 survey. This falloff is most certainly linked to the sharp declines in oil prices and demand. Based on the makeup of the survey respondent pool, Honeywell feels these levels likely understate true demand levels in this segment. Additional research with mega-operators was used to augment the survey and is reflected in the overall demand and equipment class share projections in the outlook. Regional interest in new helicopters for this industry continues to be highest in Africa/Middle-East at 49% of that region’s demand followed by Asia/Pacific at 14%.

Operators in other segments such as Television News, Tourism, Firefighting and Training continue to report projected requirements for new helicopters over the next five years at levels well below the applications discussed above. The only use segment in this group with any significant share of mentions was tourism and sightseeing, which captured 6.4% of global mentions.

Planned Turbine Helicopter Utilization Rate Growthbr />; Overall, respondents reported using their turbine-powered helicopters between 350 and 544 hours during the past 12 months. The averages are higher in emerging high growth regions like Asia and Africa/Middle East. Use rates vary by region, with the highest utilization rates in North America, Africa/Middle-East and Asia. Europe and Latin America had the lowest utilization rates.

Survey data clearly indicates that on a global basis, the vast majority of operators plan to use their aircraft at least as much as or more than they did during the past 12 months. In North America and Europe, about 90% of respondents expect their utilization to be the same or greater than the prior 12 month period. Looking ahead, nearly all Latin America operators polled indicated that utilization would remain steady or rise again this year. Estimates for steady or higher utilization growth in Africa and the Middle East and Asia/Pacific operations run in the 89-93% range. All three regions have strong percentages of operators planning to increase utilization rates.

Although there is no tracking of actual helicopter utilization, Honeywell has received inputs from several reliable industry sources that indicate turbine helicopter utilization has dropped off in some usage segments and in some regions. We are also well aware that Governments at all levels are facing budget shortfalls and may be forced to reduce helicopter usage in the near term. Government and press scrutiny of corporate aircraft use, including helicopters, may also influence purchases and utilization adversely. This suggests that the survey data may be somewhat more optimistic than what is actually occurring in the field.

Honeywell International is a $37 billion diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes and industry; automotive products; turbochargers; and specialty materials. Based in Morris Township, N.J., Honeywell’s shares are traded on the New York, London, and Chicago Stock Exchanges. For additional information, please visit www.honeywell.com

Based in Phoenix, Honeywell’s aerospace business is a leading global provider of integrated avionics, engines, systems and service solutions for aircraft manufacturers, airlines, business and general aviation, military, space and airport operations.

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.

Media Contact:
Bill Reavis
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bill.reavis@honeywell.com