Boeing Proposed an Amazing Aircraft deal with Brazil's Embraer

Company - Mohit Shah - Jul 06,2018

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boeing proposed an amazing aircraft deal with brazils embraer

Boeing Co. bump into a deal for a controlling stake in the commercial aircraft arm of Brazilian planemaker Embraer SA under a new $4.75 billion joint venture, the firms confirmed on Thursday.

Under the deal, Boeing would take an 80 percent stake worth of $3.8bn in a joint endeavor comprising Embraer’s regional commercial jet manufacturing & services business. On the other hand, Embraer would retain the remaining 20 percent, with an option to sell it to Boeing. Both the companies would be subject to a 10-year lock-up period on stakes in the joint venture.

It has been reported that this joint venture will give the US aerospace giant, Boeing a significant stake in the market for smaller passenger planes. Also, the deal is seen in the industry as a much longer-term strategic move in Boeing’s complex chess game against rival Airbus. In fact, it is important to note that the tie-up encourages the duopoly held by Boeing and Airbus as economical threats emerge from rivals in Russia, Japan, and China.

After the deal happened, Embraer’s chief executive officer, Paulo Cesar de Souza e Silva, clearly said on a conference call “For Embraer, it means that we will have better access to markets with Boeing,” “Boeing also values a lot the way that Embraer designs, develops and engineers aircraft”. Embraer itself is a Brazilian industrial champion and a major manufacturer of military systems.

Moreover, it has been also reported that both the company, Boeing and Embraer said they plan to form a second joint venture to develop new markets for defense products and applications that bolster the Brazilian company’s military portfolio, including its KC-390 cargo aircraft.

The partnership, which adds a 70- to 130-seat family to Boeing’s lineup, is expected to boost the U.S. firm’s earnings per share from 2020 End.

Another important information about the deal is that it would have no impact on Boeing and Embraer financial guidance for 2018; and commitment to returning approximately 100 percent of free cash flow to shareholders.