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Boeing Co. will resume the commercial activities of Embraer SA in Brazil under an agreement announced Thursday, extending the penetration of the US aircraft manufacturer into the smaller jet market .
Under this agreement, Boeing will take control of Embraer. service business. The Chicago-based aircraft builder will have an 80% stake and Embraer will hold the remaining 20% in what has been described as a joint venture. The operation valued Embraer's commercial aircraft operations at $ 4.75 billion
. The Embraer management in Brazil will lead the proposed company, although Boeing would have operational and management control of the new company. Management should report directly to Boeing Chief Executive Dennis Muilenberg.
The Wall Street Journal reported in December that Boeing and Embraer were in talks of recovery. The companies had been working to overcome the Brazilian government's resistance to the agreement centered largely on Embraer's defense affairs.
The proposed company is expected to generate approximately $ 150 million in annual pre-tax cost savings for Boeing in its third year, the company said.
Write to Andrew Tangel at [email protected]
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