A Boeing aircraft model sits on a desk at an industry exhibition in Hamburg, Germany. Picture: REUTERS/FABIAN BIMMER
A Boeing aircraft model sits on a desk at an industry exhibition in Hamburg, Germany. Picture: REUTERS/FABIAN BIMMER

Sao Paulo — Tie-up talks between Boeing and Embraer do not contemplate a change of control at the Brazilian aircraft maker and are focused on joint ventures and joint business agreements, a Brazilian newspaper reported on Tuesday.

Citing sources familiar with the talks, Valor Econômico said the companies were looking at forming joint business agreements in which they divide costs and income in certain areas, or joint ventures, in which both companies enter independently into a partnership.

Among the areas Boeing was looking to focus on, the paper said, was complementing its aircraft portfolio, expanding sales platforms, and developing new products. Such an arrangement would likely ease regulatory pressure surrounding the deal, as Brazil’s government has repeatedly said it is opposed to Boeing gaining control over Embraer due to the plane maker’s key role in Brazil’s defence sector. However, it may point to limits to the ambitions of a potential tie-up.

Neither Boeing nor Embraer immediately responded to a request for comment.

On December 21, the two plane makers said they were discussing a "potential combination", in a move that could consolidate a global passenger-jet duopoly.

The talks are widely seen as a way for Boeing to strengthen its position in the regional jetliner market, in which Embraer is strong, thanks largely to its 70 to 130-seat E-Jets.

Less than three months ago, Boeing’s European arch-rival Airbus agreed to buy a majority stake in Bombardier’s 100 to 130-seat CSeries jet, putting pressure on the US plane maker to seek a similar partnership.

The Boeing-Embraer talks involve Embraer’s defence business, as well as its passenger business, sources have said.

In the Tuesday report, Valor said Boeing was confident it could convince Brazil’s government that it could safely operate in Brazil’s defence sector, partially by pointing to defence deals Boeing has made in countries, such as Australia.

Reuters

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