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Brazilian Aviation Company to Control 20% of New Company with Boeing

07/05/2018 - 11h38

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IGOR GIELOW
FROM MOSCOW

After months of negotiations, the Brazilian government approved the continuation of the deal between Boeing, of the U.S., and Brazil's Embraer.

Both companies will make the official announcement in the next few days with details of the creation of a third company, which will receive Embraer's regional aviation line.

REUTERS/Roosevelt Cassio ORG XMIT: BRA105
The the E195-E2 commercial jet's first prototype was pictured in Sao Jose dos Campos, Brazil
The the E195-E2 commercial jet's first prototype is pictured in Sao Jose dos Campos, Brazil

The new company will be controlled mostly by its U.S. partner, while Embraer will have 20%. Its board will include a Brazilian member.

The deal will undergo government auditing and the process could last between three and four months.

Then the board of directors will be consulted and, as it will include a member of the Brazilian government with the right to direct vote, another month until the final deliberation is expected.

The negotiations had reached a standstill and there were rumors in the Brazilian government that the objections would break the deal and paint the stalemate in ideological colors. President Temer said that he would never lose the "national Embraer," while Ciro Gomes, who is likely to run for president in this year's election, said he would "take it back" if it were sold.

Embrarer is mostly controlled by foreign funds. The Brazilian government has preferred share which gives it the power to veto deals - the company was previously owned by the government and was privatized in 1994; however, the Brazilian government maintained certain rights within the company.

The new agreement settles a major deadlock hindering negotiations: the issue of financing of the expenditure area.

The Brazilian government was satisfied with the terms set forth. Nobody in the government or in the companies wanted to comment on the point.

The new company will be responsible for the regional aviation division - a niche that Embraer controls in the world market.

Translated by THOMAS MUELLO

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