The end of the Brazilian planemaker Embraer has taken a step closer this week as US giant Boeing released details of the deal of its take over of the company - which for legal reasons has to be called a 'joint venture' or 'strategic partnership'.
The approved terms define this joint venture comprising the commercial aircraft and services operations of Embraer, in which Boeing will hold an 80% ownership stake and Embraer will hold the remaining 20%.
The transaction remains subject to approval by the Government of Brazil, after which Embraer and Boeing intend to execute definitive transaction documents. Once the transaction has closed, the commercial aviation joint venture will be led by Brazil-based management, including a president and chief executive officer, both of which are just positions of show as Boeing will have all the operational and management control of the new company, which will report directly to Dennis Muilenburg, Boeing chairman, president and chief executive officer.
As a supposed safeguard, Embraer will retain consent rights for certain strategic decisions, such as transfer of operations from Brazil. This follows recent reports that nearly 10,000 jobs, around half of Embraers workforce, would be lost to the US to cut costs and achieve the $150 million of annual savings Boeing says is possible, within three years.
"Boeing and Embraer know each other well through more than two decades of collaboration, and the respect we have for each other and the value we see in this partnership has only increased since we announced our joint efforts earlier this year," said Dennis Muilenburg, Boeing chairman, president and chief executive officer.
"We are confident that this partnership will deliver great value to Brazil and the Brazilian aerospace industry as a whole. This alliance will strengthen both companies in the global market and is aligned with our long-term sustainable growth strategy," said Paulo Cesar de Souza e Silva, Embraer president and chief executive officer.
The Boeing deal already has the approval of US President Donald Trump but it has to be approved by the Government of Brazil, ratification by the Embraer Board of Directors and its further authorisation to execute the definitive transaction documents.
So, maybe in future, we could be looking at the Boeing 606, 616 and 626, which were once known as the Embraer 175, 190 and 195 - E2 versions.
