Embraer says still in talks with Boeing on tie-up

Credit Embraer

Brazil's Embraer said Wednesday it was still in talks with U.S. aerospace giant Boeing on combining their commercial air operations into a new company.

Embraer, a more direct competitor to Bombardier in the market for smaller passenger jets, is backing a separate Brazilian government complaint against Canada at the World Trade Organization, Embraer Commercial Aviation CEO John Slattery said. "The only reason for that is the parties continue to work on identifying structures that might work", he said.

It was previously reported Embraer had accepted Boeing's offer, while Brazil's defense minister said last month a Boeing-Embraer joint venture or partnership would have the government's "blessing" but not a Boeing takeover of control, despite earlier reports that such a move was on the table.

Boeing and Embraer have been in talks to combine their operations, which would see Boeing holding up to 90 percent of the new company to be based in Chicago, a person familiar with the talks told AFP Tuesday.

X If it goes ahead, the plan will give the USA aerospace giant a leading share of the 70- to 130-seat market, allowing it to compete directly with Bombardier's[ticker symb=BDRBF] C-Series jets, which Europe's Airbus (EADSY) controls with a majority stake acquired past year. The deal would maintain the government's so-called golden share in Embraer, a former state enterprise, giving it veto power over certain strategic decisions, including Boeing's current push for a tie-up.

Embraer, the world's third-largest aircraft manufacturer with almost $6 billion in sales, was privatised in 1994 and is one of Brazil's success stories.

A government policy aimed at boosting domestic flights serving secondary markets in China requires fledgling carriers to operate at least 25 city-hopper jets with 100 seats or less, before graduating to bigger aircraft, the executives said.



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