The almost complete Embraer-Boeing deal will define a new regulatory path

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Embraer’s Board of Directors ratifies approval of the deal with Boeing

Embraer and Boeing Welcome Brazilian Government Approval of Strategic Partnership

Commercial Deal agreed to

Brazilian Government Approves

What Regulatory Steps Needed

Brazilian Science and Technology Minister Marcos Pontes, engineer, pilot, and astronaut, 
speaks at the meeting that marked the approval of the Embraer-Boeing partnership. 
(Photo: Isac Nóbrega/Presidency of the Republic)

 

A commercial transaction of global significance has passed several critical milestones. The operating details likely not yet decided and will not likely be disclosed for a while. The Boeing-Embraer transaction will have major ramifications for both the FAA and Agência Nacional de Aviação Civil (ANAC). These CAAs have responsibilities for the certification of the Embraer aircraft to be developed under the Joint Venture. Here are the terms as they have been announced.

 
Boeing-Embraer Deal Approved
 
Boeing and Embraer now have all the approvals they need to move forward with two joint ventures that will change the commercial and perhaps military aircraft market.

Once Embraer’s Board of Directors ratifies its prior approval, the two companies will then execute definitive transaction documents. The closing of the transaction will be subject to shareholder and regulatory approvals and customary closing conditions. Assuming the approvals are received in a timely manner, the transaction is intended to close by the end of 2019.

Boeing will take over 80 percent of the Brazilian company’s passenger plane business and will also take a 49 percent stake in the development of the KC-390 military transport.

Both the Brazilian government, which has veto power over Embraer’s decisions, and the company board of directors have approved the deal. All the paperwork is expected to be done by the end of 2019. The government had sovereignty concerns about allowing such a large foreign investment but Boeing and Embraer were able to convince officials the deal would be good for the country and the company.

Under the deal, Boeing will take over the day-to-day management and operation of the commercial aircraft operation, allowing it to compete directly with Airbus in the small airliner business. Airbus assumed control of Bombardier’s C Series airliner business last July and the rebranded A220 has attracted some large orders since then. Embraer’s answer to the A220 is its E series of airliners, which effectively had the 100-160-seat market to itself until C Series entered service in 2016. It hasn’t been announced if the E-series will be rebranded with a Boeing nameplate.

Empresa Brasileira de Aeronáutica, S. A. (Embraer) has a world class headquarters at São José dos Campos, São Paulo, Brazil. The campus includes an exceptional R&D organization, a highly regarded engineering team, a manufacturing/ production line which is the envy of the world plus all of the support facilities required for a world-class aerospace company. Embraer has reached the #3 position on the list of the world’s aircraft enterprises with a marketing division which has a demonstrated skill to listen to its customers.

ANAC is similarly a highly regarded CAA, so much so that the FAA has recognized its Brazilian counterpart[1] with the following, high level agreements:

 

 

 

 

Bilateral Airworthiness Agreement (replaced)

Bilateral Aviation Safety Agreement – Executive Agreement

Implementation Procedures for Airworthiness (Revision 2) (Effective March 18, 2019)

Implementation Procedures for Airworthiness (Revision 1) (In effect until March 18, 2019)

Implementation Procedures for Airworthiness (Amendment 1 to Revision 1) (In effect until March 18, 2019)

Implementation Procedures for Airworthiness (Amendment 2 to Revision 1) (In effect until March 18, 2019)

Revised Export Documentation Requirement For Engines And Propellers

2016 Notification of Part 21 Amendment

2016 Notification of Part 23 NPRM

2016 Notification of Policy Deviation Memorandum for FAA Order 8130.21H

This level of confidence is an indication that ANAC and the FAA will be able to facilitate the certification of the new Embraer/Boeing aircraft.

If the future aviation products will be designed and developed in São José dos Campos, the two entities may execute a higher level agreement in which an FAA Part 25 certification will incorporate the ANAC technical findings. The FAA appears to have already foreseen such an option in its planning (2014) :

 

 

 

 

 

 

 

 

 

The US Government has an FAA representative in Brasilia at the Embassy. The US enjoys robust political and economic relations with the Federative Republic of Brazil. This Joint Venture holds tremendous economic potential for both countries; so, an efficacious relationship will certainly be defined soon.

In fact, the Embraer-Boeing/NAC-FAA commercial/ governmental track may serve as a model for future such global alliances.

 

 

 

 



 

[1] ANAC also has bilateral airworthiness agreements with EASA. Not surprisingly, Transport Canada does not have a similar recognition,

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