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Boeing and Embraer finally agreed on partnership terms

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Boeing and Embraer finally agreed on partnership terms
December 19
09:00 2018

Embraer, a Brazilian aviation company, has announced that the details of the partnership with Boeing (USA) have been finalized. They will create a joint enterprise of civil aircraft.

At the moment, the new enterprise is estimated at 5.2 billion US dollars. Previously, it was about the figure of 4.7 billion US dollars. Its largest share (in the amount of about $ 4 billion) will belong to the American side.

The joint venture physically will be located in Brazil. The current Embraer’s unit for the development of civil aircraft models will be the basis of the production. Military and private production will be independent, as before.

According to the analysts who serve Boeing, the company will become profitable already in 2020. From 2021, the partnership effect will be expressed in savings of $ 150 million per year.

This transaction is another confirmation of the competition between the two largest concerns – Boeing and Airbus. Last year, Airbus entered into a partnership agreement with Bombardier (Canada), whose goal was to create new “C Series”. Now Bombardier takes the second place in the production in the regional aviation segment.

The Embraer and Boeing deal must be approved by the Brazilian authorities who have the right to veto the agreement.

Let’s recall that the Brazilian concern began its work in 1969. The government of the country provided then a great help to the company. In 1994, the company was privatized, but it had large debts of $ 200 million. At the moment, the Latin American company is ranked third in terms of the revenue from the production of commercial aircraft. About 18,000 employees work for Embraer. The aircraft manufactured by the company can host up to 100 passengers. In the new “E2” the number of the seats has increased to 140. The smallest of the Boeing can transport up to 130 people.

This week, Boeing shares have slipped by 0.3%, while Embraer shares have showed a good growth by 6%.

 

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

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1 Comment

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