Embraer says it will be at least March 2020 before the proposed US$4.2 billion commercial aircraft joint-venture with Boeing is concluded.
The updated timetable for the transaction was announced at Embraer’s third quarter results presentation on Tuesday (Brazil time).
In October, Boeing and Embraer pushed back the expected completion date to early 2020, from the end of calendar 2019 previously, after the European Union said it planned to take a closer look at the proposed deal.
Embraer chief financial officer Nelson Salgado said the company was continuing to work on separating its commercial aircraft business while the European Union conducted its inquiries.
“As it was widely published in the press, European Union has recently announced an extension of its decision deadline regarding the partnership until at least March 2020,” Salgado said at the copmany’s third quarter results presentation.
“Despite that, the carve-out of the company commercial aviation business is starting as planned at the end of 2019. So as we close 2019, we will start implementing the carve-out of our commercial aviation business.
“It’s very important to make clear that the commercial aviation business will continue to operate normally 100 per cent under Embraer’s management until the closing of the operation.
“We now expect the transaction to be consummated shortly after all regulatory approvals are sustained.”
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.
The deal involved Boeing taking 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.
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.
Also, Boeing said the United States Federal Trade Commission had cleared the strategic partnership.
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).
In terms of the financial results, Embraer reported a net loss of US$77.2 million for the three months to September 30 2019, a decline from a net loss of US$12.5 million in the prior corresponding period.
Revenue rose 1.4 per cent to US$1.176 billion, Embraer said in a regulatory filing on Tuesday.
Embraer said the results had been impacted by separation costs associated with the Boeing transaction, as well as higher debt levels.
“Of course, the carve-out has affected our results in 2019, but we are confident that after the conclusion of this partnership with Boeing, Embraer will be much stronger,” Embraer chief executive Francisco Gomes Neto said.
Embraer said it delivered 17 commercial aircraft in the three months to September 30 2019, comprising 13 E175s, two E190s, one E190-E2 and one E195-E2. The figure was up from 15 deliveries in the same quarter a year ago.
The number of business jet deliveries was also up in the quarter at 27 aircraft, from 24 aircraft in the prior corresponding period.
Embraer said it delivered 15 business jets in the light jets category – one Phenom 100s and 14 Phenom 300s – and 12 in the large category, comprising four Legacy 450s, one Legacy 500 and seven Praetor 600s.
Looking ahead, Embraer reaffirmed its previous forecast of 85-95 commercial aircraft deliveries and 90-110 business jets in calendar 2019.
At September 30, Embraer had delivered 54 commercial aircraft and 63 business aircraft.
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VIDEO: A look at Embraer E195-E2 demonstrator PR-ZIQ during a visit to Sydney in July 2019 from Seth Jaworski’s Instagram page.
