Boeing and Embraer approve joint venture agreement in commercial aviation
The two aircraft manufacturers will create a new company that will take over Embraer’s commercial jet line. A second joint venture to market the KC-390 will be created
Boeing and Embraer today announced that they have reached the final terms of the strategic aerospace partnership they have been discussing for months. The joint venture, which was announced in July, will comprise 80% of Boeing and 20% of Embraer and will involve the regional jet lines of the Brazilian company.
To purchase the E-Jet and E2 families Boeing will pay $ 4.2 billion for Embraer and is committed to maintaining Brazil in the headquarters of the new company, whose name is still a secret – internally it is called “NewCom”.
Now, the agreement will go through the analysis of the Brazilian government that owns the golden share, a resource with veto rights in Embraer’s decisions. If it is approved, the company will then be submitted to the approval of shareholders, regulatory authorities until it becomes effective, which should occur in 2019.
New joint venture
In addition to defining the terms of the deal, Boeing and Embraer have also closed another joint venture to handle the production and sale of KC-390, a military transport that the Brazilian company develops and will start operations next year. In this new partnership, where Embraer will own 51% of the shares and Boeing 49%, the focus will be to offer the aircraft in the global market as an option for the old C-130 Hercules turbo-propeller.
With the arrangement, the new company will begin to produce and market the E-Jets at the Embraer headquarters in Sao Jose dos Campos while the other divisions of the original company, such as business, military and systems aviation, are expected to move to the Gavião Peixoto, both in the state of Sao Paulo.
Under the agreement, Boeing will expand its line of commercial jets by offering the E175-E2, E190-E2 and E195-E2, all cheaper than its smaller commercial aircraft, the Boeing 737 MAX 7 that has disappointing sales until time.
As a result, the US company will be better placed to compete with Airbus, which took over Bombardier CSeries jets this year.
But the partnership of the two companies is not limited to that. Known by a young and efficient team of engineers, Embraer is expected to help Boeing develop the challenging NMA project, the intermediate jet between 737 and 787, which should be called 797.