Boeing and Embraer have approved terms of a joint venture deal that would see the US aircraft manufacturer hold an 80% ownership stake in the South American airframer’s commercial aircraft and services operation.
Under the deal – valued at US$4.2bn – Embraer would retain a 20% stake. The transaction remains subject to approval by the government of Brazil, after which the pair will seek to execute definitive transaction documents.
Boeing’s chairman, president and chief executive officer, Dennis Muilenburg remarked: “Boeing and Embraer know each other well through more than two decades of collaboration, and the respect we have for each other and the value we see in this partnership has only increased since we announced our joint efforts earlier this year.”
Announced through a memorandum of understanding in July 2018, the joint venture will be led by Brazil-based management with Boeing having operational and management control on the new company. It is understood Embraer will retain consent rights for certain strategic decisions, such as transfer of operations from Brazil.
Embraer’s president, and chief executive officer, Paulo Cesar de Souza e Silva added: “We are confident that this partnership will deliver great value to Brazil and the Brazilian aerospace industry. This alliance will strengthen both companies in the global market and is aligned with our long-term sustainable growth strategy.”
Should the deal go through, it’s hoped interest in Embraer’s E2 series may rise akin to Bombardier C Series – now the A220 – which saw its orders increase after a tie-up with Airbus was agreed.
Boeing says the deal will have neutral effects on its earnings in 2020, with small gains in the years that follow. Subject to approvals, financial analysts predict the transaction could be completed by the end of 2019.