Boeing and Embraer in venture deal

CHICAGO/SAO PAULO: Boeing Co is forming a $4.75 billion venture with long-time industrial partner Embraer SA, a move that will expand the US planemaker’s manufacturing base abroad while extending its reach into the market for small jetliners.

“Under a preliminary deal, Boeing will own 80% of a partnership controlling Embraer’s commercial airplane and services business while the Brazilian manufacturer holds 20%,’’ the companies said in a statement yesterday.

The tie-up caps years of talks between the two, while extending the duopoly held by Boeing and Airbus SE as competitive threats emerge from rivals in Russia, Japan and China.

By adding Embraer’s E-Jet family to its portfolio, Boeing bolsters its arsenal in the newest battlefront with Airbus: the market for 100-seat planes.

The European aerospace giant took control of Bombardier Inc’s C Series jet on July 1, through a joint venture it forged with no out-of-pocket cost.

Boeing was left without a comparable offering, while Embraer, Bombardier Inc’s main rival, faced a tough new competitor in Airbus’s global marketing organisation.

Embraer, a jewel of Brazilian industry, will remain a separate company that makes military and private jets while reaping a revenue stream from the new partnership.

The structure, along with the company’s flagging sales and an increasingly challenging market, helped win the support of the Brazilian government.

The Brazilian company has overtaken Bombardier as the largest manufacturer of regional jets while burnishing its reputation for engineering prowess.