Boeing takes over Embraer commercial plane production

Embraer and Boeing signed a memorandum of understanding on July 5, 2018, on the long-awaited joint venture between the two manufacturers. Boeing is to hold an 80 percent ownership stake in the joint venture and Embraer will own the remaining 20 percent.

The joint venture is to be led by a Brazilian management team, President and Chief Executive Officer. Meanwhile, Boeing will have operational and management control of the new company. Embraer’s commercial plane production was valued at $4.75 billion. Boeing’s 80 percent ownership stake in the joint venture is estimated at around $3.8 billion.

It was expected that Boeing would absorb Embraer commercial plane production, while the company would keep its military division and potentially business jet department. However, in the statement announcing the collaboration on commercial plane, a second joint venture for defense programs was announced, mentioning Embraer’s transport plane currently under development, the KC-390.

In a similar way to Airbus and Bombardier partnership that came into effect on July 1, 2018, Boeing will use Embraer models to enrich its catalogue with smaller airplanes, like the new E-Jets series, while Embraer should benefit from Boeing’s commercial power.

Boeing had previously offered to completely absorb Embraer, the third biggest airplane manufacturer in the world. But this proposition was dismissed by the Brazilian government because of the strategic value represented by Embraer defense department.

The prospect of the deal received mixed reactions among the Brazilian lawmakers, with the Workers Party calling the current government to veto it. The government, however, argued that it would help secure jobs for Embraer, which is not currently developing any commercial program. On July 4, 2018,  Brazilian Air Force representative, commander Nivaldo Luiz Rossato defended the deal in front of the Parliament, saying it would “preserve national sovereignty” by securing Brazilian authorities control of Embraer strategic assets.

Source – AeroTime