Boeing and Embraer have been partners in the past, including developing technologies to improve airplanes’ environmental performance. The Boeing ecoDemonstrator was introduced in 2016.

Boeing Still Working to Define, Complete Embraer Deal

Jan. 3, 2018
U.S. jet builder is pushing Brazilian government officials in effort to gain control over commercial aircraft program

The Boeing Company is making a case with Brazilian government officials in its push to secure “a combination” with jet-builder Embraer S.A., a possibility that emerged in late December. The potential partners have been silent on the possibility since briefly confirming their discussion last month, but Brazilian president Michel Temer has declared he would not approve a deal that threatens control of Embraer’s defense business. As an Embraer stakeholder, the government can block any deal on Embraer ownership.

The future role of the Brazilian government share in the enterprise may also be a point of contention.

The scope and value of a Boeing-Embraer combination remains unknown.

Boeing and Embraer have stated only that they are “engaged in discussions regarding a potential combination, the basis of which remains under discussion … There is no guarantee a transaction will result from these discussions.”

Both companies have separate commercial aircraft and defense programs. According to some reports, Boeing’s interest in Embraer is rooted in its efforts to develop a new, “middle market” aircraft series, larger than its narrow-body 737 platform but smaller than its 777 and 787 long-distance jets.

It’s also likely that such a combination would impress market analysts and investors with its potential for expanding Boeing’s global market share – similar to the response Airbus received when it acquired a majority stake in Bombardier’s C Series program.

Reportedly, Boeing is seeking control of Embraer’s commercial aircraft product line, and will commit to retain the Embraer brand, designers, and engineers, who may be instrumental in developing new aircraft series.

Despite the Brazilian government’s stated opposition to the combination, there are indicators of more flexibility on the issue of control over Embraer, assuming that Boeing can guarantee Embraer's defense business remains under separate, local control. Boeing has made such arrangements for defense programs in its past acquisitions of aerospace contractors in Australia and the United Kingdom.

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