Boeing and Brazil's Embraer announced yesterday a joint venture that will see Boeing essentially taking control of the Brazilian company's commercial airliner business which makes regional jets used worldwide.
The joint venture will continue to build the 70-to-100 seat airliners in Brazil, with a Brazilian president, but the joint venture company will report to Boeing for operational control. Boeing will own 80% of the company.
The deal comes in the wake of last year's takeover of Bombardier's CS Series program by Airbus, in a move spurred in part by U.S. tariff threats and in part by Bombardier's need for a cash infusion. The CS Series carries 100 to 140 passengers, while Embraer's regional jets, like Bombardiers, compete in the 70-100 seat class. Both Boeing and Airbus planes start at about 150 seats.
The deal faces some political opposition in Brazil, which has invested heavily over the years in making the company a major supplier. However, proponents of the deal believe that Boeing's deal-making clout will give Embraer a big market boost.
The two companies are also considering a second joint venture that would cover Embraer's military products, a field where Boeing is also strong. If a deal is concluded, the second joint venture would have majority Brazilian ownership.
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