The Brazilian government today approved the creation of a joint venture that would give Boeing control over the operation of Embraer 's commercial aircraft.

This approval is crucial for the $ 4.2 billion deal, as the government holds a "preferred share" in Embraer that could have been used to veto the deal. Some observers have wondered whether Jair Bolsonaro, the newly elected president of the country, would agree.

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The agreement provides for Boeing to acquire an 80% interest in a joint venture that would take over Embraer's commercial aircraft and service activities.

<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The joint venture would be headed by a company based in Brazil Boeing would have the operational control and management control of the new company, which would report directly to Boeing's CEO, Dennis Muilenburg. Embraer would retain the right of consent for certain decisions, such as the transfer of transactions Brazil. "data-reactid =" 26 "> The joint venture would be headed by a Brazil-based management, including its own president and CEO Boeing would have operational control and management control of the new company, which would report directly Boeing's chief executive, Dennis Muilenburg Embraer, would retain the rights of consent for certain decisions, such as the transfer of Brazil's operations.

A separate joint venture, owned 51% by Embraer, would promote and develop new markets for the Brazilian company's KC-390 military transport aircraft.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "In a joint declaration, Boeing and Embraer said that they "welcome the government's approval of Brazil strategic partnership that will enable both companies to accelerate their growth in the global aerospace markets. "" data-reactid = "28"> joint declarationBoeing and Embraer said they "welcomed the Government of Brazil's approval of the strategic partnership that will allow both companies to accelerate their growth in global aerospace markets."

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Boeing-Embraer Partnership Counters an agreement between Boeing's European rival, Airbus, and the Canadian Bombardier. Both Embraer and Bombardier are focusing on the lower segment of the commercial aircraft market, and both international teams are expected to compete fiercely in the coming years. "Data-reactid =" 29 "> The partners of the Boeing-Embraer partnership an agreement between Boeing's European rival, Airbus, and the Canadian Bombardier. Embraer and Bombardier both focus on the lower segment of the commercial aircraft market. The two international teams should therefore compete fiercely over the next few years.

Boeing and Embraer must sign the final transaction documents as soon as the board of the Brazilian company has ratified its prior authorization. Closing of the transaction is always subject to shareholder and regulatory approval and customary closing conditions. If all goes as planned, the deal could be finalized by the end of 2019. However, the deal could be subject to legal challenges from Brazilian unions, politicians and minority shareholders.

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