Brazilian government OKs Boeing’s joint venture with Embraer for commercial jets

  • Brazilian government OKs Boeing’s joint venture with Embraer for commercial jets

Brazilian government OKs Boeing’s joint venture with Embraer for commercial jets

Shortly after assuming the presidency on January 1, Mr. Bolsonaro, a former army captain, had expressed concern that Boeing might end up owning all of Embraer if the deal was approved under the terms proposed.

Uncertainties remained after the election of Brazil's new president Jair Bolsonaro, who criticised Boeing for intending to take over Embraer's defence business.

That approval is crucial to the $4.2 billion deal, because the government holds a "golden share" in Embraer that could have been used to veto the arrangement.

But on Thursday, a statement from his office said his government had analyzed the proposal and found that it "preserves [Brazil's] sovereignty and the national interests".

Embraer designs and builds 76- to 130-seat regional airplanes called E-jets. On Wednesday, just six months after taking over the Canadian operation, Airbus announced that in 2018 it had delivered 20 of the new small jets and won orders for 135 more from three US carriers.

Boeing shares closed up 2.5 per cent on Thursday and were flat in after-hours trade after the deal approval.

A separate joint venture, 51 percent owned by Embraer, would promote and develop new markets for the Brazilian company's KC-390 military transport plane.

The joint venture would be led by Brazil-based management, including its own president and CEO.

At the moment, the Brazilian government has full veto power at Embraer but would be forced to give up all control of the nation's aircraft manufacturer to the American company.

Though Boeing has cleared the last major hurdle by securing government approval, there are still some steps before the finish line.

If approved by shareholders, the companies will then have to seek regulatory approval.

Boeing said this process is expected to be completed and the transaction finalized by the end of 2019.