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The proposed joint venture would supply the commercial aircraft “mid-market,” including Embraer E-Jet E2 twin-engine narrow-body jets, though not the larger Boeing 737 series.

Brazil May Seek New Terms for Boeing-Embraer Venture

In considering commercial aircraft business sale, new president expresses concern about loss of local control

A Brazilian official indicated that the government there may consider whether the proposed Boeing-Embraer joint venture may need to be redefined in order to gain approval. National security adviser Augusto Heleno said the $4.75-billion purchase of the Embraer’s commercial aircraft business, and consolidation into a new organization controlled (80%) by Boeing Co., may not be "ideal" as presently defined.

In December Boeing and Embraer agreed to the final terms of their joint-venture plan, which will produce aircraft for the commercial aircraft “mid-market,” meaning for 70-150 passengers. This would include the Embraer E-Series and newer E-Jet E2 twin-engine narrow-body jets.

Strategically, for Boeing, the addition of Embraer would counter rival Airbus’ consolidation of the Bombardier C-Series medium-range product line.

The sale of Embraer’s commercial aircraft business requires Brazilian government approval. Two separate efforts by leftist and Labor Party figures to block the government considering the sale have been overturned by courts in recent weeks. Now, Brazil’s newly installed president Jair Bolsonaro – a conservative and a populist – has indicated some doubt about joint-venture terms that would give Boeing full control.

Although Embraer is a private company, the government holds a "golden share" that gives it a veto over any change in ownership. Bolsonaro said opposed letting Embraer ownership “pass to the other side.”

The merger has been in discussion for about a year, but the terms were announced in July 2018. Officially, Embraer would retain 20% ownership of the joint venture.

The Embraer defense aircraft business would remain within the current ownership structure.

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