Only days after European aerospace giant Airbus completed a 50.01% acquisition of Bombardier's C-Series and took control over such aircraft, its rivaling company Boeing today (June 5th) announced the establishment of a commercial Joint Venture with Embraer, Bombardier's rival from Brazil.
While this Joint Venture currently only is a Memorandum of Understanding (MoU), the plan sees Boeing owning 80% and Embraer owning the remaining 20% of the Joint Venture, which will only include Embraer's commercial aircraft, not its business and military aircraft.
Negotiation of the terms and conditions under the deal will continue in the next few months and only when those have been clarified, the transaction will be subject to shareholder and regulatory approvals, a major obstacle is the so called "golden share", with which the Brazilian government can dismiss or accept any deal that will change Embraer's ownership and other strategic measurements. If the approvals are granted without problems, the transaction is expected to close by the end of 2019.
On finalization, the commercial aviation joint venture will be led by Brazil-based management, including a President and Chief Executive Officer. Boeing will have operational and management control of the new company, which will report directly to Boeing CEO Dennis Muilenburg, who is confident the "strategic partnership, we will be ideally positioned to generate significant value for both companies' customers, employees and shareholders."
"This important partnership clearly aligns with Boeing's long-term strategy of investing in organic growth and returning value to shareholders, complemented by strategic arrangements that enhance and accelerate our growth plans."
– Dennis Muilenburg
Muilenburg's Brazilian counterpart Paulo de Souza:
"The agreement with Boeing will create the most important strategic partnership in the aerospace industry, strengthening both companies' leadership in the global market. The business combination with Boeing is expected to create a virtuous cycle for the Brazilian aerospace industry."
– Paulo de Souza
First reports of a potential Beoing/Embraer tie-up came in late 2017 after Airbus announced that they will eventually take over the C-Series from Bombardier and will implement the aircraft into its own portfolio. Boeing felt they have left behind in the agreement and initially the Brazilian government was completely against a Boeing/Embraer Joint Venture but it seems like these issues have been resolved. Boeing will market the E-Jets in the same way as Airbus is marketing the C-Series by making it an Airbus. The future Boeing line-up will therefor include planes seating 70 up to 450 passengers.
An additional Joint Venture will be established that will help Embraer marketing its military cargo aircraft, the KC-390. Boeing will join Embraer in marketing efforts and by financing additional research, engineering and development for the aircraft.