Thu, Apr 12, 2018 - Page 10 News List

Boeing, Embraer close to deal: Brazilian minister

Bloomberg

Boeing Co and Embraer SA are likely to reach a deal after months of talks, Brazil’s new defense chief said, opening the door to the second alliance between major planemakers in six months.

Negotiators “are getting closer” to an agreement, Brazilian Minister of Defense Joaquim Silva e Luna said in an interview on Tuesday at a security trade show in Sao Paulo, Brazil.

“I would say, in short, this will end in marriage,” said Silva e Luna, who was appointed six weeks ago.

The comments marked a change of tone at the Brazilian Ministry of Defense, which has been cautious about a deal because of Embraer’s role as a leading Brazilian innovator and a crucial supplier of military airplanes.

On the commercial side, a tie-up with Boeing would extend an industry shift that began in October last year, when Airbus SE agreed to take control of Bombardier Inc’s C Series jet — a competitor to the Embraer E2 airplanes debuting this year.

Boeing and Embraer declined to comment.

Silva e Luna said he was not sure what form a transaction between Embraer and Chicago-based Boeing would take.

“Don’t ask me which kind of marriage, if it is with total sharing of assets, with partial sharing of assets or with separation of assets,” he said.

One option under discussion is a venture that would include commercial jets instead of an outright acquisition, Bloomberg reported in February.

However, a deal would potentially go beyond commercial airplanes, Silva e Luna said, citing an opportunity for Brazil to get help from Boeing in selling Embraer’s KC-390 military transport aircraft.

“This is one of the ‘wins’ for Embraer,” Silva e Luna said. “Boeing can facilitate the marketing of the KC-390. Boeing can offer that. So in these talks, this makes talks easier.”

The discussions are going “very well,” Embraer CEO Paulo Cesar de Souza e Silva told reporters on Wednesday last week while delivering the first E190-E2 jet to Norwegian airline Wideroe Flyveselskap AS in Sao Jose dos Campos, Brazil, where the company is based.

“It’s a complex operation, and all the parts need to be comfortable,” he said.

De Souza e Silva said he was not sure a deal could be reached in the first half of the year, as the companies previously expected.

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