Industry Embraer and Boeing approve terms of strategic partnership

The approval by Boeing and Embraer for the terms of their strategic partnership paves the way to the manufacturer´s ultimate goal to accelerate growth in global aerospace markets. However, the approval of the partnership is still subject to the Brazilian government, after which companies must sign the agreement.

After the governmental approval, the partnership will then be submitted to all authorities and shareholders for approval. Then, a team of Boeing and Embraer executives in Brazil will be put together.

In the agreed terms it becomes clear, that the joint venture will have a 20% participation by Embraer´s commercial aviation and associated services, while Boeing will have a participation of 80%. Boeing´s 80 percent stake reflects in an investment of US$4.2 billion.

Boeing President and CEO Dennis Muilenburg will be the leading Boeing executive, the company has operational and management control of the new company. Embraer on the other hand will have decision-making power for strategic issues such as the transfer of Brazilian operations.

Muilenburg said: “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.”

Boeing expects no impact on its earnings per share in 2020. In subsequent years, a positive impact is being expected by generating annual synergies of about US$ 150 million by the third year of operation.

Paulo Cesar de Souza e Silva, Embraer president and chief executive officer added: “We are confident that this partnership will deliver great value to Brazil and the Brazilian aerospace industry as a whole. This alliance will strengthen both companies in the global market and is aligned with our long-term sustainable growth strategy.”

Initially in July 2018, Boeing and Embraer announced the partnership, after Airbus had acquired Bombardier´s CSeries program in October 2017 and renamed it to the A220 family. Back then, Airbus acquired 50,01% in the Canadian single-aisle aircraft program.

Embraer has started its very own state-of-the-art aircraft that is competing with the A220 family, Boeing´s 737 MAX family and Airbus´ A320neo family. The E190-E2 is currently flying with Wideroe and Air Astana.