Latest Aviation News Civil aerospace BOEING, EMBRAER NEAR DEAL ON COMMERCIAL AIR BUSINESS: SOURCE

Boeing, Embraer near deal on commercial air business: source

AFP
07/02/2018 | 578 words

US aerospace giant Boeing and Brazil's Embraer are close to an agreement to combine their commercial air operations into a new company, a person familiar with the talks told AFP Tuesday.

The deal is designed to address the main roadblock to a merger between the two aerospace companies: Brazilian government opposition.

Boeing would hold 80 to 90 percent of the new company, which would be based in Chicago, while Embraer's military operations would not be affected by the transaction and would remain under Brazilian control, the source said.

The companies in December confirmed they were in talks on a possible combination, a move seen as part of Boeing's strategy to counter archrival Airbus' ambitions in the smaller commercial aircraft category with a venture with Canadian company Bombardier.

However, the talk of a merger drew immediate objections from the government in Brazil, which holds a so-called golden share with veto power over Embraer transactions.

Boeing presented this structure to the government, and the discussions "are moving in the right direction," the source said, noting the announcement of an agreement could be made in the coming weeks.

- 'Golden share' -

Brazil's Defense Ministry has referred to government control of Embraer as "a matter of national sovereignty." According to a report in Brazilian daily Valor Economico, the government would retain the "golden share" in Embraer.

Boeing declined to comment on the reports, but chief Dennis Muilenburg told investors last week that the combination with Embraer would be "a great strategic fit," and that the company was working to address the Brazilian government's concerns.

"These discussions are productive and we're continuing to have active dialogue with the key stakeholders," Muilenburg said.

The takeover of Embraer's commercial airliners would enable Boeing to complete its portfolio by adding aircraft with a capacity of up to 150 seats and to regain ground in the medium-haul against Airbus.

Airbus announced in mid-October a strategic partnership with Canadian Bombardier on CSeries aircraft in that size range, which was the subject of a bitter trade complaint brought by Boeing, which failed.

The world's third-largest aircraft manufacturer with nearly $6 billion in sales, Embraer was privatized in 1994 and is one of Brazil's success stories. It offers a range of civil and military aircraft as well as business jets.

In 2013, Embraer launched the E-Jets E2 family, a new generation of aircraft due to enter the market this year as a potential competitor of the CSeries.

Its defense branch includes models such as the A-29 Super Tucano for attack or training missions, and the KC-390 for military transport.

The reaction to the proposed deal was largely positive, given the potential to address the government's objections and put Boeing on surer footing in its battle with Airbus and Bombardier.

The agreement to keep Embraer's "military division in-house... would hopefully satisfy the Brazilian government," CFRA's Jim Corridore said in a research note.

"We think that Boeing would benefit, gaining entry into a plane size they are not currently in."

Canaccord Genuity aviation analyst Ken Herbert said he is "not convinced of the strategic long-term benefit for Boeing," but noted that the combination "does position Boeing as a leader from the mid-size business jet market through regional aircraft on up."

 
 
 
Related articles

Boeing says it will not deliver any aircraft to Iran

Boeing CEO champions free trade at Washington event

Ryanair exercises option for 25 more Boeing 737 planes

Canada declares truce after Boeing says will not appeal trade ruling

15/11 Thierry Tosi : "Rockwell Collins proposes flexible solutions with significant growth rates"
15/11 MRO: Malaysia Airlines is transforming itself to become competitive in the market once again
15/11 MRO: Engine shops overheating in Asia
15/11 Pratt & Whitney plots a course for Europe again
15/11 Aviation maintenance: the dash to the East
15/11 Lion Air: a deadly crash and a whole lot of questions for Boeing
7 HOURS AGO
NORTHROP GRUMMAN has been awarded a $489,92 for the Japan Global Hawk program. The contract provides (...)
8 HOURS AGO
Singapore's SELETAR airport has opened its new passenger terminal on 19 November. The new facility is ready to (...)
14 HOURS AGO
JEJU AIR has ordered forty 737 MAX 8s from BOEING, with options for ten additional aircraft. This is (...)
19 NOV 2018
FASTJET has successfully taken a series of measures to raise funds and increase its equity by $40 million. (...)
19 NOV 2018
SR TECHNICS has appointed OWEN MCCLAVE as Senior Vice President Engine Services, effective January 1, 2019. He will (...)
ALERTAVIA, the News platform for Aerospace and Defense industry Professionals.

Featured Content
AFI KLM E&M steps up a gear on CFM's LEAP
Sabena technics finally gets back on-board C-130Hs
Airbus and Thai Airways to launch a new joint venture MRO facility at U-Tapao
How Thai Airways will Expand Rolls-Royce's Trent Engine Service Network
China embarks on board aircraft recycling
LATEST NEWS   CIVIL AEROSPACE   MRO & SUPPORT   AIR TRANSPORT   DEFENCE   SPACE
Follow us
© 2018 Le Journal de l'Aviation - All rights reserved

By continuing to use the site, you agree to the use of cookies. You can find out more by following this link.  OK  Find out more