Boeing and Embraer study on a broad alliance rather than a takeover, including military aviation


Sao Paulo - According to the Brazilian Ministry of Defense, a partnership between Embraer and Boeing could be beneficial, including the military field.

Two weeks after the announcement of negotiations between Boeing and Embraer, the outlines of a possible alliance become clearer. The Brazilian government who has a veto right at Embraer immediately dismissed the possibility of a buy-out at the very beginning of the talks. But Defense Minister Raul Jungmann said to the local press that he supports a comprehensive partnership with Boeing, which would include military division of Embraer.

I hope this partnership will progress, I support everything except a takeover. For all the rest, they are welcome,
Jungmann said.
It is possible to make a partnership or a commercial alliance, including in the military field as long as the secrecy is protected on a case by case basis. On the other hand, we will not accept a sale or a takeover,
added the minister of defense.

The day after the formalization of negotiations with Boeing, the shares of Embraer jumped 22% and didn't come down since then. The statements of Defense minister Raul Jungmann added another 2.6% upon the opening of São Paulo Stock Exchange yesterday, on January 2.

A milestone for KC-390

There is much to argue for a strategic alliance between Boeing and Embraer, which would not be limited to the commercial aircraft and a simple response to the agreement between Airbus and Bombardier on the CSeries program. In the military field, Embraer could complement Boeing's offering with its two flagship products, the Super Tucano Light Attack Aircraft and the KC-390 Transport Aircraft. The latter would allow Boeing to offer the US military an alternative to replace the Lockheed Martin's old Hercules.

A prospect that not only boosts KC-390 export sales but also relieves the finances of the Brazilian government who committed to purchasing 28 copies of the KC-390 and which remains, for the time being, the only financial support of the program.

A possible partnership on the mid-range aircraft

Some analysts even say that Embraer may team up with Boeing to produce Brazil's future fighter planes in Brazil and replace Swedish Gripen Saab fighters that are currently in service at the Brazilian Air Force. However, collaboration in the ​​commercial aircraft field seems to be the most promising. According to some experts, Boeing could rely on Embraer's engineers and industrial resources to launch a mid-range aircraft project at a lower cost widely referred to the acronym MOM (Middle of the Market).

Before opting the range of its regional jet in 2013, Embraer had long worked on a project of medium-haul aircraft of larger size. It could be a fundamental challenge to Airbus in a segment on which its A320 family rules the market.