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Boeing and Embraer have become big partners

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Boeing and Embraer have become big partners
July 04
09:00 2018

Embraer and Boeing have issued a joint press release referring to the strategic partnership of the companies. This alliance should strengthen the position of each company in the market and help in the development of business.

The companies are going to produce passenger aircraft and related services. The cost of such a project is estimated at $ 4.7 billion. The share of Boeing in this sum will be about 80% – 3.8 billion US dollars.

According to Boeing, the cooperation will become profitable by the year 2020. In just 3 years, the joint venture will save about $ 150 million a year.

This joint enterprise will operate only in civil aviation. Each company will produce military and private models separately.

Thanks to the cooperation, Boeing will become a leader in the market of small commercial aviation designed for 70 – 130 seats. It is these models that are used by regional companies.

The agreement between Boeing and Embraer can be considered an analogue to the recently concluded agreement between Airbus and Bombardier, which agreed to release the Bombardier C Series models.

Despite the great prospects, the Brazilian authorities must approve the establishment of the joint venture. The state owns the “golden share” of Embraer, which gives the right to veto such agreements.

The market has already responded to this news. The shares of Boeing have grown by 0.5%, and securities of  Embraer by 4%.

 

The material was prepared with the participation of Anjela Chromova,
a leading analyst of the brokerage company CT Trade

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