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Is there any future for the Boeing/Embraer collaboration involving the C-390?
Aviation Week Defense Editor Steve Trimble responds:
Here’s an answer and a qualification: Technically, yes. But the joint venture that once seemed inevitable is permanently dead.
Many viewed Boeing’s late 2018 proposal to purchase 80% of Embraer’s commercial aviation business and form a joint venture for the Embraer C-390 as a knee-jerk reaction to Airbus’ surprise acquisition of the Bombardier C Series family (now Airbus’ A220) a few months earlier. In fact, Airbus’ move only accelerated a nearly decade-long convergence of the American and Brazilian aircraft manufacturers, which was principally led by a series of collaboration agreements on the C-390 program.
The cooperation between Boeing and Embraer began in 2012, with a broad cooperation agreement to collaborate on research in aviation safety, efficiency and sustainable fuels, along with defense products. A year later, Boeing announced that it would take the lead on C-390 sales, sustainment and training opportunities in the U.S., UK and “select” Middle East markets. By 2016, the partners added “in-service support” for worldwide sales of the C-390 to Boeing’s list of duties within the partnership.
Then came the 17-month drama of the failed joint venture. Although Embraer and Brazilian authorities approved Boeing’s offer for the commercial aviation business and the Embraer C-390, scrutiny from European regulators dragged out the closing of the deal. By April 2020, Boeing was facing a major crisis, with the 737 MAX grounding and a series of financial losses on the KC-46 program compounded by the effect of the COVID-19 pandemic on demand for air travel.
Under the terms of the original “contribution agreement” approved by Embraer’s board of directors, a joint venture named EB Defense LLC would have been established on behalf of the C-390. Embraer would own 51% of the joint venture and control four board seats, with Boeing receiving 49% ownership and authority over one board seat. The Brazilian government also would retain a golden share over the C-390.
At the time the deal was proposed, Embraer viewed Boeing’s participation in the C-390 program with great enthusiasm. The partnership should “significantly amplify the production and delivery scale of the C-390,” Embraer told investors in 2019. Jackson Schneider, president of Embraer’s defense and space business, also clarified in an interview with Aviation Week that Boeing’s principal role in the joint venture would be to win orders for the C-390 from the U.S. government.
In addition to marketing and production capacity, Embraer also wanted access to Boeing’s enterprise agreements with major suppliers, such as the Raytheon Technologies subsidiaries that provide the engines, nacelles, avionics and many of the mission systems for the C-390.
But Boeing’s decision in April 2020 to terminate the master teaming agreement with Embraer for the commercial aviation business did not leave the C-390 unscathed. Embraer later confirmed that Boeing also had terminated the separate contribution agreement to establish EB Defense LLC as the C-390 joint venture.
In Boeing’s press release announcing the termination of the agreement to acquire Embraer’s commercial aviation business, there was no reference to the status of the contribution agreement related to the C-390. Instead, Boeing said only that it would uphold the terms of the master teaming agreement signed in 2012 and expanded in 2016 to market the C-390 in select international markets and provide in-service support.
A Boeing spokeswoman reaffirmed on Oct. 8 that the expanded master teaming agreement from 2016 with Embraer on the C-390 remains in effect. The website for the commonwealth of Virginia shows that EB Defense LLC was registered in November 2019. The same website also shows that EB Defense still exists, but the plans for C-390 joint venture were canceled and Boeing has no plans to revive them, the Boeing spokeswoman said.
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