Embraer, Boeing sign deal to boost growth

Embraer and Boeing announced they have approved the terms for a strategic partnership to speed up the growth in the global aerospace market in the two companies. The partnership will include Embraer’s commercial aviation and services linked to Boeing’s 80 percent ownership stake, standing at at $4.2 billion, and Embraer’s 20 percent.

The cooperation is not expected to bring a positive impact on Boeing’s earnings until 2020.

The joint venture should include synergies adding up to $150 million in its first three years in operation. The partnership is yet to be approved by the Brazilian government, then by shareholders and watchdogs, and will have to comply with relevant standards. The enterprise will be conducted by a team of executives based in Brazil, and Boeing will hold operational control over the management of the resulting company, which will answer directly to Boeing CEO Dennis Muilenburg. Embraer will have decision power on certain key topics, like the transfer of operations to Brazil.

“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,” Muilenburg said.

Embraer CEO Paulo Cesar de Souza e Silva said he is confident that the partnership will be of “great value” for Brazil. “This alliance will strengthen both companies in the global market and is aligned with our long-term sustainable growth strategy.” The companies also reached an agreement on the terms for a second joint venture aimed at promoting and developing new markets for multi-mission plane KC-390. Under the deal, Embraer will hold 51 percent, Boeing the remaining 49.