Embraer, Boeing Ink Partnership Agreement

Boeing and Embraer have signed a memorandum of understanding to establish a strategic partnership that positions both companies to accelerate growth in global aerospace markets.

The news follows the completion of a deal between Airbus and Bombardier that will see the European aerospace giant take a controlling stake in the C Series program.

The non-binding agreement proposes the formation of a joint venture comprising the commercial aircraft and services business of Embraer that would strategically align with Boeing’s commercial development, production, marketing and lifecycle services operations.

Under the terms of the agreement, Boeing will hold an 80 percent ownership stake in the joint venture and Embraer will own the remaining 20 percent.

The transaction values 100 percent of Embraer’s commercial aircraft operations at $4.75 billion, and contemplates a value of $3.8 billion for Boeing’s 80 percent ownership stake in the joint venture.

The proposed partnership is expected to be accretive to Boeing’s earnings per share beginning in 2020 and to generate estimated annual pre-tax cost synergies of approximately $150 million by year three.

On finalization, the commercial aviation joint venture will be led by Brazil-based management, including a president and chief executive.