Earlier this month, Boeing and Embraer announced that they have signed a Memorandum of Understanding to establish a strategic partnership designed to allow both companies “to accelerate growth in global aerospace markets”.

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 life-cycle services operations.

The agreement would give Boeing an 80% stake in the joint venture, with Embraer owning the balance.

Dennis Muilenburg — Boeing’s chairman, president and CEO — said (www.boeing.com): “By forging this strategic partnership, we will be ideally positioned to generate significant value for both companies’ customers, employees and shareholders — and for Brazil and the USA.

"This important partnership clearly aligns with Boeing’s long-term strategy of investing in
organic growth and returning value to shareholders, complemented by strategic arrangements that enhance and accelerate our growth plans.”

Paulo Cesar de Souza e Silva, Embraer CEO and president (www.embraer.com), said: “The business combination with Boeing is expected to create a virtuous cycle for the Brazilian aerospace industry, increasing its sales potential and production, creating jobs and income, investments and exports, and adding more value to customers, shareholders and employees.”

The transaction values 100% of Embraer’s commercial aircraft operations at $4.75 billion. The proposed partnership is expected to generate estimated annual pre-tax cost synergies of about $150 million by year three.

When finalised, the joint venture will be led by Brazil-based management, including a president and CEO. Boeing will have operational and management control of the new company, which will report directly to Mr Muilenburg.

The joint venture will become one of Boeing’s centres of excellence for end-to-end design, manufacturing and support of commercial passenger aircraft, and will be fully integrated into Boeing’s broader production and supply chain.

Boeing and the joint venture would be positioned to offer a comprehensive and highly complementary commercial-airplane portfolio that ranges from 70 seats to more than 450 seats — and freighters.

In addition, both companies will create another joint venture to promote and develop new markets and applications for defence products and services, especially the KC-390 multi-mission aircraft.