The Win-Win JV?

The much-hyped Boeing-Embraer deal is still a “work in progress” and faces a lot of hurdles before it receives the final nod. Life after the deal will not be easy for the likes of China’s Comac, Russia’s Sukhoi and Japan’s Mitsubishi. Perhaps, more important, it could set the ball rolling for Boeing’s Midmarket Aircraft – unofficially, the 797. A report.

A Boeing-Embraer joint venture or collaboration or cooperation, call it what you will, could lead to a new family of larger jets. While there is still no clarity on the final collaborative template, there are plenty of potential benefits for both Boeing and Embraer? For Boeing, the possibilities and the opportunities are immense as it works on its blueprint for the new Midmarket Aircraft (the NMA or, unofficially, the 797).

One of its biggest headaches has been getting partners on board who are willing to share the potential risk of such a venture. A collaboration with Embraer could well provide Boeing with both the flexibility and the muscle it needs to exploit the opportunity.

One can easily envision Embraer, with its lower-cost wages, taking a major engineering role — something that might be crucial at a time when a very large number of Boeing’s engineers are reaching retirement age. Boeing may find itself with a critical engineering shortage at just the wrong time if the NMA programme proceeds.

Embraer and Boeing have had business relationships for years. A joint venture now, however it’s structured, can do nothing but benefit the Brazilian company with new business, new opportunities and new expertise. A major role on the NMA would be a huge shot in the arm for Embraer.

However, the Boeing-Embraer partnership will be complete after the dynamics. So far there have been mixed signals from the Boeing Board for a NMA programme — a replacement for the 737 — the Max being the last iteration. With Embraer on board, however, and contributing to the engineering, development and, most important, financing of the NMA, the costs would come down dramatically for Boeing.