Boeing announces Partnership with Embraer

Boeing - Embraer

Just five days after the Airbus-Bombardier C-Series partnership came into effect, rival Boaing has announced that they are taking over 100% of Embraer’s commercial aircraft operations.

In October 2017 Airbus purchased a 50.01% majority stake in the Bombardier CSeries program. As part of the deal, Bombardier retained a 31% stake in the aircraft and Investissement Qu├ębec retained a 19% stake. Airbus plans to open a second assembly line for the aircraft at its Mobile, Alabama factory.

Because Boeing have no competing product in the 100-150 seat short-haul market, they were forced to find a solution to keep up with Airbus. The only possibility was a partnership with 4th biggest manufacturer Embraer and their E-jet family of aircraft, that was pretty much the only company that was left on the market of commercial airplanes – except for Russian Sukhoi and a few Chinese manufacturers.

As a result, Boeing today have announced that both companys have signed a Memorandum of Understanding to establish a strategic partnership.
The non-binding agreement proposes the formation of a joint venture comprising the commercial aircraft and services business of Embraer that would strategically align with Boeing’s commercial development, production, marketing and lifecycle services operations. Under the terms of the agreement, Boeing will hold an 80 percent ownership stake in the joint venture and Embraer will own the remaining 20 percent stake.
In addition, both companies plan to create another joint venture to promote and develop new markets and applications for defense products and services, especially the Embraer KC-390 multi-mission aircraft.

After the announcement, Embraer stock value has lost more than 13%.

Brazil government have said it will not allow Boeing to take over Embraer. The Brazilian government holds a controlling “golden share” in Embraer and can veto any deal agreed.
In an interview with the Financial Times, Brazil’s defence minister said that his government would allow a partnership or joint venture but ruled out any change of ownership to Boeing.
Embraer is of strategic importance for Brazil military.