Story ID: 
Boeing, Embraer Eye 'Potential Combination'
By: Kerry Lynch
Caption: Talks ongoing as Airbus and Bombardier finalize plans for the European venture to take a 50.01 percent stake in the CSeries program.
Word Count: 349
The Boeing Company and Embraer confirmed today that they are engaged in talks over a “potential combination.” The companies issued a short statement saying the basis of a combination remains under discussion and that “there is no guarantee a transaction will result from these discussions.” Such a move, though, would be subject to regulatory and shareholder approvals, the companies said, declining any further comment.

Boeing/Embraer talks do not come as a surprise given the looming alliance of rivals Airbus and Bombardier. Airbus and Bombardier have formed “clean teams” as they finalize plans for the European manufacturer will take a 50.01-percent stake in the C Series Aircraft Limited Partnership (CSALP). Under the agreement, Bombardier Aerospace and Québec provincial economic development agency Investissement Québec will reduce their stakes in CSALP to 31 percent and 19 percent, respectively. In addition Bombardier has extended its supplier relationship with Airbus.

The airliner manufacturers have been fierce rivals. Just this week Boeing notched another victory this week in its dispute against Bombardier as the U.S. Commerce Department finalized duties against the C Series.

Boeing has accused Bombardier of dumping C Series in the U.S. to the determent of 737 sales. A teaming with Embraer would give Boeing a direct competitor against the C Series.

The prospective alliance would come as Embraer prepares to bring the first of its new E-Jet E2 family, the E190-E2, to market in 2018. Embraer Commercial Aviation CEO John Slattery had indicated that any stimulation of the narrowbody market resulting from Airbus’s involvement in the Bombardier C Series program could also serve to stimulate Embraer’s E190-E2 and E195-E2, the primary challengers of the C Series in the under-150-seat market segment.

While Bombardier has been engaged in its dispute with the U.S. Commerce Department, Embraer has faced its own scrutiny for dealings in the past by the U.S. government. The Brazilian company agreed to a $200 million settlement in late 2016 with the U.S. Justice Department and the Securities and Exchange Commission.