Boeing and Embraer today announced they have signed a MoU to set up a joint venture comprising the commercial aircraft business of Embraer that would strategically align with Boeing’s commercial development, production, marketing and lifecycle services operations.
Under the terms of the agreement, Boeing will hold an 80 percent ownership stake in the joint venture and Embraer will own the remaining 20 percent stake.
“By forging this strategic partnership, we will be ideally positioned to generate significant value for both companies’ customers, employees and shareholders – and for Brazil and the United States,” said Dennis Muilenburg, Boeing’s Chairman, President and Chief Executive Officer.
“The agreement with Boeing will create the most important strategic partnership in the aerospace industry, strengthening both companies’ leadership in the global market,” said Paulo Cesar de Souza e Silva, Embraer Chief Executive Officer and President.
The transaction values 100 percent of Embraer’s commercial aircraft operations at $4.75 billion, and contemplates a value of $3.8 billion for Boeing’s 80 percent ownership stake in the joint venture. The proposed partnership is expected to be accretive to Boeing’s earnings per share beginning in 2020 and to generate estimated annual pre-tax cost synergies of approximately $150 million by year three.
On finalization, the commercial aviation joint venture will be led by Brazil-based management, including a President and Chief Executive Officer. Boeing will have operational and management control of the new company, which will report directly to Muilenburg.
Boeing and the joint venture would be positioned to offer a comprehensive, highly complementary commercial airplane portfolio that ranges from 70 seats to more than 450 seats and freighters.
The joint venture will become one of Boeing’s centers of excellence for end-to-end design, manufacturing, and support of commercial passenger aircraft, and will be fully integrated into Boeing’s broader production and supply chain.
In addition, both companies will create another joint venture to promote and develop new markets and applications for defense products and services, especially the KC-390 multi-mission aircraft, based on jointly-identified opportunities.
"Joint investments in the global marketing of the KC-390, as well as a series of specific agreements in the fields of engineering, research and development and the supply chain, will enhance mutual benefits and further enhance the competitiveness of Boeing and Embraer," said Nelson Salgado, Embraer's Executive Vice President, Financial and Investor Relations.
Boeing and Embraer have prepared contracts of their proposed tie-up and are expected to submit them to the Brazilian government within two weeks, Brazilian newspaper reported. The proposed merger, which would need the go-ahead from the Brazilian government, would leave Boeing as the majority partner, according to Valor Economico report on its website Monday
EmbraerX, an Embraer organization, unveiled Tuesday its first electrical Vertical Take-Off and Landing (eVTOL) aircraft concept during Uber Elevate 2018, in Los Angeles, California. EmbraerX is engaged in several projects, including the development of eVTOL concepts through a cooperation with Uber and other companies to explore business opportunities within the Uber Elevate ecosystem
Embraer demonstrated the new KC-390 military transport and aerial refueling jet to the Brazilian Air Force (FAB) for the attainment of the Initial Operational Capability (IOC). The achievement of the IOC ensures the necessary conditions have been met for the aircraft to start operations, in accordance with the scope agreed upon with the FAB
Embraer has delivered today the first of five Phenom 100 business jet to Affinity Flight Training Services for the UK military's pilot training program. The aircraft has been selected to provide Multi-Engine Pilot Training to UK Armed Forces as part of the United Kingdom Ministry of Defence´s Military Flying Training System (UKMFTS) programme
The Brazilian government has filed its first written submission to the dispute settlement panel at the World Trade Organization (WTO) in Geneva. The Panel is examining more than $4 billion in subsidies that Bombardier received from the Governments of Canada and Quebec
Embraer has completed Troop unloading, evacuation by hatch and evacuation tests through the front and rear doors of the KC-390 airlift. The tests were held at Brasília Air Force Base, Brazil
Boeing and Embraer are in talks to set up an assembly line for the production of KC-390 cargo jets in the United States. The two aircraft manufacturers announced a deal for sales and services partnership on the new KC-390 jets through a separate defense venture that they said was likely to eventually receive a joint investment in July,
BAE Systems along with L3 Technologies has begun transitioning its Compass Call Electronic Warfare (EW) system from US Air Force's EC-130H aircraft to Gulfstream 550 aircraft to improve stand-off jamming capability and also counter communications and radar threats. In 2017, BAE Systems and its partners completed the initial design review of the Compass Call weapon system, and the final design review is planned for this fall
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