Boeing, Embraer eye tie-up
Boeing Co.’s chief executive said it is continuing discussions about a potential tie-up with Bombardier Inc.’s rival Embraer S.A., a deal some analysts say is more likely after a top U.S. trade body unexpectedly voted against the American aerospace giant last week.
Boeing CEO Dennis Muilenburg told analysts and reporters on a conference call Wednesday that the two aerospace companies continue to have “productive discussions” about a potential deal, calling the opportunity to join forces with Brazil’s Embraer “an important one” that would be “a great strategic fit.”
“We’re interested in a business combination because we see strong strategic value and clear synergy in a number of areas, including highly complimentary product lines, advanced vertical capabilities, broadening service offerings and leveraging world-class talent,” he said.
Boeing and Embraer confirmed that the two firms were engaged in talks about “a potential combination” in December, just two months after it was announced that Airbus SE — Boeing ’s chief rival — would be acquiring a majority stake in Bombardier’s CSeries program.
The CSeries was the subject of a surprise ruling by the U.S. International Trade Commission on Friday that got rid of huge 292.21-per-cent duties levied against Bombardier by the Department of Commerce. The ITC determined that Boeing, which had filed a complaint, was not materially injured or threatened by the sale of 75 CSeries jets to Delta Air Lines Ltd.
Chris Higgins, a Morning Star equity analyst, said in a note to clients that the ITC decision made a potential Boeing-Embraer tie-up “more probable.”
“Given Boeing ’s difficult selling the 737 MAX7, coupled with Airbus’ plans to take a majority stake in the Bombardier CSeries, we’re not surprised to see Boeing courting Embraer,” he said, adding that Embraer — which makes jets that compete with the CSeries — would fill a void for Boeing in the low-end of its product lineup.
“Embraer’s management might also be (contemplating ) a partnership with Boeing now, because beating Bombardier with its E2 offering wasn’t difficult when the CSeries future was in doubt, but this has changed.”