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Boeing/Embraer: Brazilian Government Approves Joint Venture

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Boeing/Embraer: Brazilian Government Approves Joint Venture

Boeing/Embraer: Brazilian Government Approves Joint Venture
January 11
07:35 2019

LONDON – The Brazilian Government has given its blessing to Embraer and Boeing over the proposed strategic partnership to consolidate commercial and military manufacturing.

The approval comes after the proposal had been rejected on two separate occasions following an injunction placed by Brazilian Judge, Victor Giuizo Neto.

On December 19, Judge Neto rejected the joint venture for a second time, allegedly following a class action suit placed by the Brazilian planemaker’s unions, who claim that should the deal go forward, job losses would occur in Brazil.

The Brazilian judge said that “the brutal asymmetry in the shareholder structure of this venture prevents it from being carried out without compromising the survival of national interests.”

However, reports are coming in with positive news for both planemakers. The approved joint venture will be made up of the commercial aircraft and services operations of Embraer. Boeing will take an 80% ownership stake in the wing with Embraer holding the remaining 20%.

Both sides have also agreed on a second joint venture for the KC-390 multi-mission medium airlift program.

Under the deal, Embraer will have the majority 51% stake in the venture, with Boeing holding the remaining 49%.

Transactions on this deal are expected to close by the year-end, meaning that the two sides will join collectively to go against Airbus and Bombardier with their CSeries (A220) partnership.

Next up, Embraer’s board of directors must approve the deal.

Photo: Ministério da Defesa

Since the government’s approval was announced yesterday, Embraer’s shares increased by more than 4.6% after the manufacturer announced that the Brazilian government had approved its partnership with Boeing.

Back in December 2018, Boeing’s CEO, Dennis Muilenburg, commented, “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.”

Paulo Cesar de Souza e Silva, Embraer CEO, added that his side is, “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.”

Today, yet another political party in Brazil has filed a lawsuit against Boeing’s takeover deal saying that the country’s sovereignty is at risk.

In a statement, the national president of the PDT political party, Carlos Lupi, said Boeing’s takeover “jeopardizes national sovereignty,” because it involves “the complete transfer of technologies fundamental to national security.”

However, Brazil’s new President, Jair Bolzonaro, has already expressed his support for the agreement.

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James Field

James Field

James is a passionate AvGeek based in Manchester, U.K who has been actively spotting for years. James has been an Aviation Enthusiast for 8 years and has a fond likening to Concorde! James hopes to grow in the aviation industry with journalism being his primary focus.

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