Boeing eyes tie-up with Embraer
Employees check out the first Boeing 737 MAX 7 aircraft on the tarmac outside of the Boeing factory in Washington. The 737 MAX 7 will have the longest range of the MAX airplane line with a maximum range of 7,130 kilometers. Boeing announced over US$900 million in orders yesterday at the Singapore Airshow from companies in the region and beyond. The orders consist of aircraft parts, digital applications and planning tools. Japan’s biggest airline, All Nippon Airways, ordered 36 landing gear exchanges for Boeing 787s. Singapore Airlines signed a deal for the usage of an electronic logbook application that makes operations more efficient.
Boeing Co has presented a plan to Brazil’s government that would give it an 80 to 90 percent stake in a new venture encompassing Embraer SA’s commercial jet business, a Brazilian newspaper said yesterday.
The plan Boeing presented to the government on Thursday would let it take over Embraer’s commercial operations via the creation of a new company, with defense operations remaining under the Brazilian planemaker’s control in order to meet government demands, Valor Economico reported, without citing a source.
Reuters previously reported on Friday that Boeing was seeking approval in Brasilia for a plan creating a new joint company excluding defense operations.
Valor reported that under the proposal Boeing would pay Embraer in cash when the commercial assets are transferred to the new company, with most of the proceeds then distributed to shareholders as dividends.
Boeing’s tie-up with Embraer, the world’s third-largest planemaker, would give it a leading share of the 70- to 130-seat market, meaning stiffer competition for Bombardier Inc and Airbus SE’s joint CSeries program.
Embraer would retain the defense business that generates almost nothing in earnings before interest, taxes, depreciation and amortization. Shareholders would also have 10 to 20 percent of the commercial activities transferred to the new company and be entitled to dividends.
The deal would maintain the government’s so-called golden share in Embraer, a former state enterprise, giving it veto power over certain strategic decisions, including Boeing’s current push for a tie-up.
The plan — if supported by the government and Embraer — could be presented to shareholders for approval as soon as the second quarter, the newspaper said. Further meetings between Boeing and the government will not occur until after the Carnival holiday, which ends next week, it reported.
Boeing and Embraer did not immediately respond to requests for comment.
