Two years ago, the idea for buying a controlling interest in Brazil-based Embraer was proposed during an internal board meeting at Boeing. Underscoring the benefits of a long-standing and positive relationship between the two airlines, Boeing recently decided to buy 80 percent of Embraer.
Within the aviation industry, the move is largely seen as a response to last year's announcement from Airbus, Boeing's only competitor. Airbus reveal that they'd taken control of the C Series jet from Bombardier. Bombardier is a rival of Embraer who’d been struggling to compete against the Brazilian airline in the 70-130 seat section of the aviation market, so Airbus now presented a threat to Boeing’s relationship with Embraer.
The resulting joint venture could position Boeing ahead of any other aviation competitor in the market for smaller passenger jets. Though Brazil’s President Michel Temer gave positive signals showing satisfaction with the tie-up between Boeing and Embraer, Brasilia (the federal capital and seat of government in Brazil) could veto the transaction based on concerned about the US military’s influence in the region.
Boeing and Embraer are planning to expand the scope of a partnership on the KC-390 military cargo jet and combine it with another joint venture to create new markets and applications for their defense industry products.
Bottom Line
Airbus and Boeing have been archrivals for some time now, after their duopoly was consolidated following a number of mergers in the 1990s. Boeing and McDonell Douglas merged in 1997, British Aerospace and Fokker merged, and Lockheed Martin absorbed Convair and Fairchild Aircraft.
Your move, Airbus.