Boeing & Embraer Cozy Up
Two giants of the aerospace industry, Boeing and Embraer, have entered into a strategic partnership that aims to combine Boeing’s commercial development, production, marketing, and lifecycle services operations with Embraer’s commercial aircraft and services business. The signed Memorandum of Understanding that establishes the partnership entitles Boeing and Embraer to and 80% and 20% ownership stakes, respectively.
Mutual Benefits
According to Boeing Chairman, President, and CEO Dennis Muilenburg, the partnership will “enhance and accelerate” Boeing’s strategy for future growth. Paulo Cesar de Souza e Silva, Embraer’s CEO and president, agrees, saying that the deal will help both companies perform well in the global market. “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,” he says.
According to the companies, the agreement has the potential to generate annual pre-tax cost synergies of up to $150 million or more by 2022. Over the last 20 years, the two companies have collaborated more than a few times. A team from Embraer will take charge of the commercial aviation joint venture, while Boeing will maintain operational and management control. With the deal in place, Boeing will have expanded its commercial airplane offerings to models that span from 70 seats to more than 450 seats. Both companies will also be able to offer freighters as well as develop new markets and applications for defense products and services.
The final contract is still pending shareholder and regulatory approvals, as well as closing conditions. The finalized agreement is expected to be in place by the end of 2019.
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Source: Boeing
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