Aviation: Brazil approves Boeing/Embraer deal

January 11, 2019

The Brazilian government has approved a proposed $4.2bn takeover that is likely to result in Boeing acquiring an 80% share in the South American airframer's commercial aviation business.  Boeing will have total control of a new joint venture.  The deal requires the support of Embraer's shareholders within the next 30 days and still has to overcome regulatory hurdles in some regions but final approvals are expected before year end.  The breakthrough came after the government and Boeing agreed to maintain current jobs in Brazil, assuaging the concerns of unions and local politicians.

 

The Brazilian government has agreed to Boeing buying an 80% share in Embraer's commercial airliner business.  (Embraer)

 

Boeing's interest in Embraer stems from the Brazilian firm's successful line of regional jets including the EMB-135 / -145, the E-170 / -175 / -190 / -195 E-Jets, and most recently the E-Jet E-2 family.  It is also driven by rival Airbus' acquisition of the Bombardier C-Series program.  Neither Airbus nor Boeing have focused on the sub-120 seat market but both have recognised that airlines are growing out of 70-100 seat mid-sized jets.  

 

 

Boeing necessity

There's a fair bit of action taking place in the 110-130 airliner market at present, but the Airbus A319neo and Boeing 737-MAX7 are too heavy to win most orders when faced with more svelt competition from the A220 and E-Jets.  At the end of 2018 Airbus closed orders for 135 A220s (the re-designated C-Series) with commitments for 60 from jetBlue Airways (a previous Embraer customer), 60 for US start-up Moxy, and a top up of 15 for Delta Air Lines (adding to 75 it committed to previously).  Embraer holds orders for a total of 260 E2s, the first of which entered service with Widerøe in Norway during 2018.  However, with Airbus behind it, a revitalised A220 program has taken the lion's share of recent transactions.

 

Airline economics improve when dealing with only one aircraft supplier and it became vital for Boeing to respond to Airbus' first move by offering a complete range to its customers.  Embraer also needed Boeing's worldwide presence to help boost sales.  After two rounds of legal challenges lasting six months the deal is now likely to close.

 

Text © The Aviation Oracle

Please reload

Recent Posts

Comments?

 

Have you got any thoughts on this feature?  Do you want to have your say?  If so please get in touch with us using the form below:

Please reload

Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square

©2018-2019 KJMToday. Proudly created with Wix.com