What’s going on with the status of the Boeing-Embraer Joint Venture (JV) partnership process?
As the Chinese approve the deal, the deal passes to the hands of European Regulators. With the EU (European Union) being the stewards of Airbus, the approval gets that much difficult.
The final approval process of the Boeing-Embraer Joint Venture
- Since the Chinese approve the deal without preconditions it transfers the approval to the EU and Brazil.
- Brazilian sources (Embraer is a Brazilian company) confirmed that Brazil’s anti-trust regulator would approve the deal by February.
Therefore, leaving only the EU for approval of the joint venture.
Why is the European Union is taking its time approving the joint venture?
In short, the EU needs to protect its aircraft company, Airbus. Furthermore, Airbus wants to dominate the single-aisle market with the acquisition of the C-Series.
In addition, Boeing’s problems with the Max Jet have place Airbus as an alternative to Boeing. Creating an opening as the favorite aircraft of choice.
Why Embraer is a better choice in the regional airline market (video)
Investigation Suspended until now
The EU Commission was waiting for more information regarding the joint venture.
The clock was restarted on January 6, 2020, with a possible decision by April 30. The Boeing-Embraer Team provided the EU Commission all the necessary information needed to restart the clock.
The departure of Boeing’s Muilenburg affected the flow of information
The departure of Dennis Muilenburg was a factor in providing any information to the Europeans. Having a war open on multiple fronts is never easy for a general.
Boeing was not only having an inquiry in the U.S. Congress but the manufacturer was also dealing with multiple settlements with multiple airlines.
In addition, being faced with the requirement of more information drains a team into complying with everything.
This is without mentioning the Ukraine International Airlines flight 752 Boeing 737-800 crash out of Tehran.
Why is the EU afraid of these aircraft manufacturers’ joint venture?
Embraer has more than 50% percent of the market share of the single-aisle (narrowbody) aircraft. With Bombardier out of the picture and Airbus replacing Bombardier, Embraer doesn’t have the financial firepower to go toe-to-toe with Airbus!
With this potential venture with Boeing, Embraer has the financial know-how to go to war with Airbus while doing a product they know without the financial worry.
That is why the EU Commission is looking at this a threat.
Reading the Tea leaves? The Opinion of the Author on the Boeing-Embraer Joint Venture status
I believe that after an exhaustive study of the pros and cons, either would be an unconditional approval or with conditional approval.
The calculated, cynical person in me is aiming for conditional approval as the EU has been #2 in aircraft manufacturing.
However, with the opportunity of the fiasco of the Max Jet, Airbus could overtake Boeing in delivery and orders of aircraft over the next few years. I am more than confident of that since I have not seen Boeing engaging in recruiting efforts during the last year.
This observation, in particular, was apparent in one of the most important career fairs there are for Aeronautics: The Embry-Riddle Career Expo.
However, I was surprised to see how well Airbus was doing during the October Expo of last year. As Boeing was falling back, Airbus took a position over what Boeing left out.
Simply put, two companies can’t share the same stage at the same time.
The optimist and business person in me say that Airbus already has a single-aisle program. Why bother with conditional approvals if the product the competition (Boeing) has in the marketplace isn’t worthy of flying?
Unfortunately, I believe the Europeans would go on cynism which is why my own cynism sense is stronger on this one.
It would be a surprise if the European Regulators would let the Boeing-Embraer JV go through unconditionally.
Comments or questions? Please contact Alex Martinez Rivera here.
Featured Image: Embraer.
Why do Boeing and Embraer want a Joint Venture (JV)?
A joint venture between Boeing and Embraer would help the large aircraft manufacturer Boeing position themselves into the lucrative smaller aircraft market.
What is the acronym for EMBRAER plane manufacturer mean?
EMBRAER, the name of the Brazilian airplane manufacturer, means Empresa Brasileira de Aeronáutica S.A.
Empresa in Portuguese means Company in English, Brasileira means Brazilian, Aeronáutica means Aeronautics.
S.A. (Sociedade anônima) designates a type of corporation in Brazil.
What is an aircraft manufacturer Joint Venture (JV)?
An aircraft manufacturer joint venture (JV) is a partnership agreement. The JV enables the partners to offer a larger aircraft product choice for its airplane purchasers. Such a JV also help increase the JV partners’ shares of the aircraft manufacturing industry.