Boeing is taking a controlling stake in the commercial aircraft arm of Brazilian planemaker Embraer under a new US$4.75 billion joint venture, Reuters reports, citing the companies.
The Boeing-Embraer alliance, following on the heels of the Airbus-Bombardier tie-up announced last year, represents the biggest realignment in the global aerospace market in decades, the report said.
The partnerships are expected to strengthen established Western planemakers against newcomers from China, Russia and Japan.
Under a memorandum of understanding signed by Boeing and Embraer, the Brazilian firm’s commercial aircraft operations were valued at US$4.75 billion.
Boeing will take an 80-percent stake in a newly-created joint venture for US$3.8 billion, according to the report.
Embraer’s CEO Paulo Cesar Silva told employees that consolidation in the aerospace supply chain had forced Embraer’s hand.
“This has been happening with both our suppliers and our clients. They have started to organize in big blocs, making it harder for companies of Embraer’s size to negotiate,” he said, in a note reviewed by Reuters.
The partnership, which adds a 70- to 130-seat family to Boeing’s lineup, is expected to boost the US firm’s earnings per share from 2020, generating annual pre-tax cost savings of about US$150 million by the third year.
“The Boeing-Embraer announcement confirms the strong market potential in the 100- to 150-seat category,” an Airbus spokesman was quoted as saying. “Boeing and Embraer are following Airbus and Bombardier.”
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