The U.S. aerospace behemoth Boeing has signed a joint venture agreement with Embraer that may reportedly give the former prime control of the Brazil industry major’s commercial jet business. The deal is slated to provide Boeing a stronger position in the smaller passenger plane market. The two companies had been in talks for an agreement for a while, and the deal is expected to be closed by the end of 2019 pending the obligatory approvals.
As per reliable reports, Boeing will acquire a giant 80% stake of Embraer’s commercial business under the new joint entity, with a total worth $3.8 billion (£2.9bn). Although Embraer will be owning 20% of the business, most investors in Sao Paulo had anticipated a larger share and the company’s share prices plunged more than 10% after the details regarding the joint venture were disclosed.
Boeing’s Chief Executive, Dennis Muilenburg said that a strategic partnership with Embraer will deliver a significantly higher value to the shareholders, employees and customers of both the companies, and will also substantially benefit Brazil and the U.S.
Recently, Boeing’s European rival Airbus took over the regional jet program of Canada-based Bombardier’s C-series planes, records stated. With Airbus getting an opportunity from this deal to edge-out its U.S. counterpart in the global aerospace market, the Boeing-Embraer joint operations will bring back the industry balance.
Past records will show that Airbus and Boeing have maintained a sort of duopoly in the large-jets segment while their new collaborations will help them further penetrate the market for smaller planes.
For the record, Embraer and Bombardier have been key competitors in the regional jet market and proven to be capable of giving industry leaders a run for their money. Embraer’s smaller but upgraded E-195 E2 planes and Bombardier’s highly efficient C-series are more than able to compete with Boeing 737 and Airbus A320 versions, reports indicated.