Boeing held talks with Embraer on takeover: WSJ report

Boeing reportedly has held talks with Brazilian aircraft and defence services company Embraer to acquire an ownership stake, the Wall Street Journal reports on 21 December.

Such a move would further reshape a regional jet market in flux since Boeing filed an anti-dumping and countervailing duty complaint against Bombardier with the US Department of Commerce last May.

A preliminary determination in September by Commerce officials – and finalised two days ago – means Bombardier could face a 292% tariff on the imported value of CS100s for Delta Air Lines. That determination drove Bombardier to agree in October to give away an ownership stake in the CSeries joint venture to Airbus, pending anti-trust reviews.

That agreement led to speculation that Boeing may look to deepen its existing cooperation with Embraer on biofuel research and international marketing support for the KC-390. Some analysts speculated that Boeing would consider acquiring the Brazilian manufacturer of E-Jet regional airliners, business jets, and military support and combat aircraft.

But Boeing chief executive Dennis Muilenburg appeared to push back against such speculation in a 25 October call with analysts after the company reported third quarter earnings.

Credit Suisse analyst asked Muilenburg about Boeing’s interest in the market below the 737 Max 7, the company’s smallest airliner at 138 seats.

Muilenburg replied: "We continue to evaluate all of our strategic options, as we always have. And as I said earlier, recent changes in the marketplace, the discussions between Airbus and Bombardier, don't change our plans. We have a strong strategy in place. We'll continue to look at our strategic alternatives. But we don't need to change the path that we're on. We're very confident we're going to continue to look at ways to accelerate our core business, grow organically as our primary growth engine. That will continue to be our growth engine."

The Wall Street Journal report citing anonymous sources says negotiations between Boeing and Embraer are on hold while the Brazilian government considers the deal.

Embraer was created by the Brazilian air force in 1969 and became privatised in 1994, but Brasilia retains a golden share with veto rights over any deal that would “transfer control of the company”, according to Embraer financial documents.

Since 1994, Embraer has grown rapidly to become the world’s third-largest maker of commercial aircraft, with 225 jets overall delivered in 2016. Embraer also makes the KC-390 tanker-transport and the A-29 Super Tucano turboprop for light attack and training missions.

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