Boeing is reportedly considering creating a new company with Embraer to produce small airliners. The proposed deal would exclude Embraer’s defense business, which Brazil considers an essential element of its national sovereignty. It’s not clear if Embraer’s business aircraft business would be part of the deal with Boeing. Embraer confirmed the talks in a securities filing and it also said there had been no formal proposal from Boeing. News of a proposed arrangement between Boeing and Embraer emerged shortly after Airbus and Bombardier announced their partnership on the CSeries airliner.
The dynamics of the Airbus/Bombardier deal changed when Bombardier unexpectedly won its International Trade Commission case against punishing tariffs imposed by the U.S. Commerce Department. The CSeries partnership was seen as a way to circumvent the tariffs by building CSeries for the U.S. market at Airbus’s Mobile, Alabama, plant. Boeing’s overtures to Embraer are now seen as a means of rejoining the bottom end of the airliner market, which Embraer currently dominates.
