By Dominic Gates / The Seattle Times
New Brazilian President Jair Bolsonaro and his government have approved the terms of Boeing's strategic decision to acquire 80% of the capital and full control of Embraer's commercial aircraft and Erajet services.
Because the Brazilian government holds a so-called "Golden Share" stake in Embraer that gives it the veto right on any sale, its approval is considered the last major hurdle to go before the transaction can be finalized. At a meeting on Thursday, Bolsonaro and his key ministers concluded that "the final proposal preserved sovereignty and national interests".
"Under these conditions, Golden Share will not be exercised," said a Brazilian government press release.
In December, Boeing agreed with Embraer to acquire control of its commercial aircraft and services business for $ 4.2 billion.
Embraer designs and builds E-jets type regional aircraft from 76 to 130 seats. The size of these is just below the Boeing 737 MAX family and is comparable to the CSeries jet aircraft acquired by Airbus last year from Bombardier of Canada and renamed Airbus A220.
Both Boeing and Embraer welcomed the government's approval, saying in a statement that it would "accelerate the growth of global aerospace markets."
This decision is considered essential for Boeing's positioning against its rival Airbus, which has already integrated the A220 into its range of jet aircraft. On Wednesday, just six months after the takeover of the Canadian division, Airbus announced that it had delivered 20 new small jet planes and won 135 additional orders from three US carriers.
The Embraer agreement will also establish its facilities near São Paulo as Boeing's new major design and manufacturing center, the first outside the United States.
Boeing has been trying for years to exploit Embraer's technical capabilities. With this acquisition, Brazilian engineers could participate in the development of Boeing's next new aircraft, the New Mid-market Airplane (NMA), informally called 797.
Although Boeing-Embraer's final approval is expected, the timing is wrong, as it follows legal proceedings by Brazilian unions that resulted in temporary injunctions against the company. court, as well as recent skeptical comments by Brazilian politicians.
Bolsonaro last Friday described the Brazilian private aircraft maker as part of the nation's "heritage" and worried that Boeing could end up with 100% of the business.
On Monday, Brazilian National Security Adviser Augusto Heleno said the government was considering whether the terms of the agreement should be changed.
Yet, after Thursday's announcement of government approval, Boeing spokesman Chaz Bickers said there were no changes or additions to the conditions announced in November. December.
Under these conditions, Boeing will set up a Brazil-based executive, including a president and CEO reporting to Boeing Chairman Dennis Muilenburg in Chicago.
Due to a provision to reassure the Brazilian government on job protection in the country, Embraer, a 20% minority owner, will nevertheless retain the right to approve certain strategic decisions, including the transfer of any operation from Brazil.
The fear of American control over Brazilian defense work was another potential obstacle.
To remedy this, Boeing and Embraer agreed on different conditions for the creation of a parallel joint venture to promote and develop new markets for KC-390 multi-mission military air transport. Embraer will hold 51% of the company's capital, while Boeing will hold the remaining 49%.
Although Boeing has crossed the last major hurdle with government approval, there are still a few steps before the finish line.
The company said on Thursday that Embraer's board should formally ratify the approval it had previously given, after which the transaction would go through a shareholder and regulatory approvals process and the terms of the approval. usual closing.
Boeing said the process should be completed and the transaction will be finalized by the end of 2019.