Boeing and Embraer Seal Strategic Alliance

2 months ago Editor

Boeing and Embraer have finalized terms for a strategic partnership that will see Boeing acquire an 80% stake in a joint venture for Embraer’s commercial aviation operations. The deal awaits approval from the Brazilian government.

Embraer and Boeing have officially finalized the terms of a strategic partnership that will see the two giants join forces to accelerate growth in the global market. Under the agreement, Boeing will acquire an 80% stake in a new joint venture focused on Embraer’s commercial aircraft and services operations, while Embraer will retain a 20% stake. The partnership is now pending approval from the Brazilian government, after which the companies will proceed with the final transaction documents.

This joint venture represents a significant move for both companies, with Boeing investing $4.2 billion into the partnership. The venture is expected to be earnings-neutral for Boeing in 2020, with an estimated $150 million in annual pre-tax cost synergies anticipated by the third year. The new company will be led by Brazil-based management and will operate under Boeing’s control, reporting directly to Boeing’s CEO, Dennis Muilenburg. Embraer will maintain certain rights, including consent over strategic decisions like the potential transfer of operations from Brazil.

The Boeing-Embraer partnership is poised to have a significant impact on the global aviation industry. By combining Boeing’s extensive reach and resources with Embraer’s expertise in regional and commercial aircraft, the joint venture is set to offer a competitive edge in the market. This collaboration is expected to enhance both companies’ ability to innovate, develop new products, and respond to the evolving demands of the global commercial aviation sector. Additionally, the partnership aligns with Boeing’s broader strategy to expand its presence in emerging markets and diversify its portfolio.

In addition to the commercial aviation joint venture, the companies have agreed to another partnership focused on the KC-390 multi-mission airlift aircraft. In this venture, Embraer will hold a 51% stake, with Boeing owning 49%. Both ventures are subject to approval by the Brazilian government, shareholder and regulatory approvals, and other customary closing conditions. The transactions are expected to close by the end of 2019.