MercoPress. South Atlantic News Agency

Embraer-Boeing combined operations talks “complex” but ongoing

The two aircraft makers have been discussing for months a transaction in which a new company, Boeing controlled, would be created focused on commercial aviation

Embraer SA Chief Executive Officer Paulo Souza e Silva said the company is in the final stage of talks to combine operations with Boeing Co, newspaper Valor Economico reported on its website late on Wednesday. Souza e Silva, attending an event hosted by the paper, declined to elaborate on details of the agreement and described the negotiation as “complex.”

The two plane-makers have been discussing for months a transaction in which a new company controlled by Boeing would be created and focused on commercial aviation. Embraer would keep its defense division and possibly its business jet unit.

A Brazilian air force official defended the deal between the two plane-makers from the criticism of lawmakers at a congressional hearing on Wednesday, suggesting the government's concerns about a deal have subsided.

Air Force Commander Lt Brig Nivaldo Luiz Rossato said the proposed deal would “preserve national sovereignty,” by keeping Brazilian defense programs out of the hands of the U.S. company, according to the congressional news service.

The companies said in April that they were discussing the creation of a new company with Embraer's airliner business, leaving out its defense unit and “potentially” its business jet division.

Embraer said this week that talks were ongoing and any deal would need the approval of Brazil's government and regulators.

Workers Party Congressman Carlos Zarattini called such a deal a “crime against the homeland,” questioning how the government, which can veto the deal, could let Boeing take control of the crown jewel of Brazil's aerospace industry.

Rossato argued that the U.S.-Brazil partnership could actually preserve jobs at Embraer, which is wrapping up development on two major new families of aircraft and has not announced any other major investments.