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Boeing and Embraer Close on Tie-up

Photo: Boeing and Embraer have signed a memorandum of understanding to establish a strategic partnership. (Photo Boeing)

 

Boeing and Embraer have signed a memorandum of understanding to establish a strategic partnership that will position both companies to accelerate growth in global aerospace markets.

The non-binding agreement, announced on July 5, proposes the formation of a joint venture comprising the commercial aircraft and services business of the Brazilian manufacturer, that it said will “strategically align with Boeing’s commercial development, production, marketing and lifecycle services operations.”   Under the terms of the potential deal, Boeing will hold an 80% ownership stake in the joint venture with Embraer taking the remaining 20%.

Dennis Muilenburg, Boeing’s chairman, president and chief executive officer, remarked: “By forging this strategic partnership, we will be ideally positioned to generate significant value for both companies’ customers, employees and shareholders – as well as for Brazil and the US.  This important partnership also aligns with Boeing’s long-term strategy of investing in organic growth and returning value to our shareholders.

Paulo Cesar de Souza e Silva, Embraer’s chief executive officer and president, added: “This agreement with Boeing will create the most important strategic partnership in the aerospace industry, strengthening both companies’ leadership in the global market.  The joint venture with Boeing will bring increased sales potential, production, jobs and opportunity for the Brazilian aerospace industry.

On finalisation, the commercial aviation joint venture will be led by Brazil-based management, with a president and chief executive officer, while Boeing will have operational and management control of the new company, reporting directly to Muilenburg.  The joint-venture will also become one of Boeing’s centres of excellence and will be fully integrated into the US manufacturer’s broader production and supplier chain.

In addition to the commercial enterprise, both companies will also create another joint venture to promote and develop new markets and applications for defence products and services, especially for the KC-390 multi-mission aircraft based on jointly-identified opportunities.

Both Boeing and Embraer say that the finalisation of the financial and operational details of their strategic partnership and the negotiation of definitive transaction agreements are expected to continue over the next few months.  These will then require regulatory, shareholder and approvals – including from the Brazilian Government – and assuming all are received the deal is expected to be closed by the end of next year.

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