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Boeing, Embraer push back expected completion of JV until 2020

written by WOFA | October 4, 2019
A an artist's impression of an Embraer E-jet and Boeing 737 flying in formation. (Boeing/Embraer)
A an artist’s impression of an Embraer E-jet and Boeing 737 flying in formation. (Boeing/Embraer)

Boeing and Embraer say they now expect their proposed commercial aircraft joint-venture to be finalised in early 2020.

The updated timeline, announced on Thursday (US time), followed the European Commission saying it planned to take a closer look at the proposed deal.

“The European Commission recently indicated it will open a Phase II assessment in its review of the transaction, and Boeing and Embraer look forward to assisting with that review,” Boeing said in a statement.

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“Based on this development, however, the companies now expect the transaction to close in early 2020.”

Previously, both Boeing and Embraer had been working towards completing the deal by the end of calendar 2019.

On July 5 2018, Boeing and Embraer announced plans to establish a joint-venture that aims to boost their competitive offerings in the commercial aircraft sector.

Boeing will acquire an 80 per cent stake in Embraer’s commercial aircraft operations for US$4.2 billion, effectively adding the E-Jet family to its own commercial airliner line-up. Embraer will hold a 20 per cent stake in the new JV.

The deal, following months of negotiations, valued Embraer’s commercial aircraft operations at US$4.75 billion.

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The new JV would be led by Brazil-based management, including a president and chief executive. Boeing would have operational and management control of the new company.

Embraer’s commercial aircraft business will be known as Boeing Brasil – Commercial.

In March, it was announced John Slattery would lead the Boeing and Embraer commercial aviation and services joint-venture.

Currently, Slattery is the president and chief executive of Embraer Commercial Aviation and executive vice president of Embraer.

In February, the Brazil-headquartered company said 96.8 per cent of shareholders had approved the the proposed partnership.

Boeing said on Thursday the United States Federal Trade Commission had cleared the strategic partnership and it was continuing to work to secure all the necessary approvals.

“The two companies are actively engaged with authorities in relevant jurisdictions and have obtained a number of regulatory approvals,” Boeing said.

Meanwhile, Embraer said in a statement it was working with Boeing to “diligently and cooperatively to consummate the transaction as soon as possible”.

“In this regard, Embraer will implement the internal separation of the company’s commercial aviation business starting at the end of this fiscal year and currently expects that the transaction will be consummated early in 2020,” Embraer said.

“The company will keep its shareholders and the market in general informed of any new relevant information concerning the transaction.”

Embraer’s E-jet family of aircraft includes the in-service E190-E2 and E195-E2, with the E175-E2 due to enter service in 2021. There was also the current generation E170, E175, E190 and E195 E-jet variants.

The E-jet line-up compliments Boeing’s 737 narrowbody family of aircraft that begins with the smallest variant the MAX 7 (138-153 seats) and stretches all the way up to the 737 MAX 10 (188-204 seats).

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