Brazil to maintain Embraer’s control
rio de janeiro — Brazil on Friday ruled out relinquishing government control over the country’s strategically important aircraft manufacturer Embraer but said investment from Boeing would be welcome.
“We welcome an injection of foreign capital. What we are not considering is the question of transferring” control, President Michel Temer said in Brasilia. The government holds a so-called golden share in the privatised Embraer, the world’s third biggest airplane builder.
When Embraer and the US aerospace giant announced Thursday that merger talks were underway there was an immediate sharp rise in the Brazilian company’s share price.
A merger between the two companies would build on their existing alliance on the KC-39 military plane and would permit the much-bigger Boeing to fill a gap in its fleet with Embraer’s regional single-aisle planes.
Crucially, a transaction also would respond to an alliance between Boeing archrival Airbus and Canada’s Bombardier to build smaller planes.
However the political sensitivity over Embraer’s ownership and immediate opposition from the local trade union means that Boeing is more likely to seek something less than a full takeover, such as a joint venture.
Brazilian Defense Minister Raul Jungmann emphasised the strategic importance of the company. Embraer is also one of the chief sources of economic pride in a country just coming out of a severe recession and whose flagship oil company Petrobras has been badly damaged by graft scandals.
“Our position is positive about this and other commercial partnerships,” Jungmann said. However, with its “major defense component,” Embraer cannot be fully sold off.
Canaccord Genuity, a US financial services firm, said in an analysis note that while Boeing is looking to defend itself against the Airbus-Bombardier tie-up, a deal with Embraer might not work out. — AFP
We welcome an injection of foreign capital. What we are not considering is the question of transferring control Michel Temer, President of Brazil