Boeing & Embraer Establish Strategic Partnership

Boeing and Embraer announced a couple of hours ago, that they have signed a MoU to establish a strategic partnership. This Boeing Embraer Partnership proposes the formation of a joint venture comprising the commercial aircraft and services business of Embraer that would align with Boeing’s commercial development, production, marketing and lifecycle services operations. Boeing will hold an 80% stake in the joint venture and Embraer will own the remaining 20% stake. 

Boeing Embraer Partnership

By forging this strategic partnership, we will be ideally positioned to generate significant value for both companies’ customers, employees and shareholders – and for Brazil and the United States,” said Dennis Muilenburg, Boeing’s Chairman, President and Chief Executive Officer. “This important partnership clearly aligns with Boeing’s long-term strategy of investing in organic growth and returning value to shareholders, complemented by strategic arrangements that enhance and accelerate our growth plans,” Muilenburg said. 

The agreement with Boeing will create the most important strategic partnership in the aerospace industry, strengthening both companies’ leadership in the global market,” said Paulo Cesar de Souza e Silva, Embraer Chief Executive Officer and President. “The business combination with Boeing is expected to create a virtuous cycle for the Brazilian aerospace industry, increasing its sales potential, production, creating jobs and income, investments and exports, and in doing so, adding more value to customers, shareholders and employees.”

The strategic partnership will bring together more than 150 years of combined leadership in aerospace and leverage the two companies’ highly complementary commercial product lines. The partnership is a natural evolution of a long-standing history of collaboration between Boeing and Embraer over more than 20 years. The transaction is expected to close by the end of 2019, 12-18 months after execution of the definitive agreements.

On finalization, the commercial aviation joint venture will be led by Brazil-based management, including a President and Chief Executive Officer. Boeing will have operational and management control of the new company, which will report directly to Muilenburg. 

The joint venture will become one of Boeing’s centers of excellence for end-to-end design, manufacturing, and support of commercial passenger aircraft, and will be fully integrated into Boeing’s broader production and supply chain.

Boeing and the joint venture would be positioned to offer a comprehensive, highly complementary commercial airplane portfolio that ranges from 70 seats to more than 450 seats and freighters, offering best-in-class products and services to better serve the global customer base.

In addition, both companies will create another joint venture to promote and develop new markets and applications for defense products and services, especially the KC-390 multi-mission aircraft, based on jointly-identified opportunities. 

The transaction will have no impact on Boeing and Embraer financial guidance for 2018 or Boeing’s cash deployment strategy and commitment to returning approximately 100 percent of free cash flow to shareholders.

Bottomline

This is a significant reaction to the Airbus – Bombardier partnership which is moving forward with a complete revamp of the CSeries program and I’m sure more information will be seen coming outside in the coming months.

So, does that mean that I can start calling the Embraer E2 a Boeing 7×7 sometime soon? Not really… there is still some time to it!

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