The acquisition would be much simpler, but we know this will not happen. The government will also not give up the Golden Share (ie the veto power for certain issues). The other possibilities are open, but it will require a lot of work from the parties to find a balanced and acceptable formula, which will involve adjustments in various dimensions (shareholding, representative on the board of directors, working capital, production and marketing partnership, technical personnel exchange, use of facilities, ...). My expectation is that we should prepare ourselves to wait a few months until the agreement is released.

Revelation wrote:

KarelXWB wrote:

Nobody is ordering CSeries and MRJ aircraft by the hundreds either. Whether Airbus can change CSeries sales remains to be seen. The market may not be as big as some people believe.

Indeed. A and B have narrowbody backlogs in the many of thousands with nice profit margins on sales and support. Here we see products struggling to have backlogs of a few hundreds and the market split by many different players with all players sacrificing profit to get some market credibility. The acknowledged up-gauging of aircraft sizes works against this market. A had no interest here till BBD had no choice but give them half the program for $1. IMHO Boeing would be best off steering clear. The only "wildcard" is if they truly see some capabilities that EMB has that would strongly advantage the NMA, but it's hard to see what those capabilities could be.

Boeing has always taken Embraer under its wings for some reason.
This could be a defining make or break moment for the relationship between the manufacturers.

What Boeing can do with the Ejet, is keep Airbus honest with the Cseries.
What we will see happen in the coming years, is Airbus ramping up the Cseries production significantly, while positioning it in the 120-160 seat segment, below the A320. Airbus has stronger sales potential, more leverage versus suppliers of systems and components, a better support system. Airbus has the potential to create a market, not solely by ofering a good product in the right way, but also by making the product affordable and reliable.

Embraer will no longer be competing against the Bombardier Cseries, but against the Airbus Cseries.
In a head-to-head competition for an order, there is no way that an airline would choose an Embraer product over an Airbus product.
We've seen this already before. BBD had a better product in the Cseries, but it couldn't win campaigns against neither Airbus nor Boeing.

The Cseries is going to make Airbus the biggest and most complete aircraft manufacturer in the world. The leader in the segment.
Boeing doesn't want to let that happen.

Waterbomber wrote:

What Boeing can do with the Ejet, is keep Airbus honest with the Cseries.
What we will see happen in the coming years, is Airbus ramping up the Cseries production significantly, while positioning it in the 120-160 seat segment, below the A320. Airbus has stronger sales potential, more leverage versus suppliers of systems and components, a better support system. Airbus has the potential to create a market, not solely by ofering a good product in the right way, but also by making the product affordable and reliable.

Embraer will no longer be competing against the Bombardier Cseries, but against the Airbus Cseries.
In a head-to-head competition for an order, there is no way that an airline would choose an Embraer product over an Airbus product.

You did not understand what KarelWXB exposed even less if you looked at the numbers I put in:
- that market is almost 1/5 of the market just above it. It's not just a matter of being an Airbus CSeries ...

Revelation wrote:

Nean1 wrote:

Like many aviation lovers I am fascinated by the charisma of the Mitsubishi Zero fighter, with clean lines and unique maneuverability.

Maneuverable because it had no armor and no self sealing fuel tanks. Turns out the design was OK as long as the enemy fought a turning fight. Once they learned to not do that, it was toast, literally.

Grammar police mode = on

What do you think "literally" means? Normally it means "not a figure of speech"", and your last sentence means the Zero was roasted bread..

Grammar police mode = off

kitplane01 wrote:

Grammar police mode = on
What do you think "literally" means? Normally it means "not a figure of speech"", and your last sentence means the Zero was roasted bread..
Grammar police mode = off

Could we back to the topic ???
Thank you very much ...

Waterbomber wrote:

What Boeing can do with the Ejet, is keep Airbus honest with the Cseries.
What we will see happen in the coming years, is Airbus ramping up the Cseries production significantly, while positioning it in the 120-160 seat segment, below the A320. Airbus has stronger sales potential, more leverage versus suppliers of systems and components, a better support system. Airbus has the potential to create a market, not solely by ofering a good product in the right way, but also by making the product affordable and reliable.

Embraer will no longer be competing against the Bombardier Cseries, but against the Airbus Cseries.
In a head-to-head competition for an order, there is no way that an airline would choose an Embraer product over an Airbus product.
We've seen this already before. BBD had a better product in the Cseries, but it couldn't win campaigns against neither Airbus nor Boeing.

The Cseries is going to make Airbus the biggest and most complete aircraft manufacturer in the world. The leader in the segment.
Boeing doesn't want to let that happen.

I don't buy it.

For all those economies of scale to kick in, the market demand is going to need to soar. The vendors only give you the 737/A320 style discounts if you buy in 737/A320 quantities. Who is going to be buying CS on that scale? Especially given the competition it has?

We've talked the US market to death. Scope change ain't coming. DL's put their chips on the table, but they're the only one of the big 3 that has shown it can make money in that market segment. No signs of interest from AA or UA.

China? Nope, they've got their own local champion. Might buy a few to satisfy the political ex-im concerns and get a nice good look at the fit and finish, but that's about it.

EU? Is there airport/airspace capacity to start hosting 120 seaters on the same scale as A320/737?

It will be interesting to see what happens once the papers get signed. We should get a good feel for how hard Airbus pushes the product. Then in another 2 years or so we should see if the Airbus umbrella is enough to "create a market". As above, I'm skeptical.

Airbus itself declared they could produce the CSeries 15% cheaper. Most of the savings were from components/ systems costs.

The reason for such savings goes beyond the notion of economy of scale. BBD really got raw deals with its CSeries suppliers. At some point, BBD was stuck in a corner. (One way of escaping some of those unfavorable supplier contracts would be to launch the CS500, switching some suppliers...)

With so high components / systems costs, and the predatory pricings from the duopoly, it's surprising the CSeries survived that long.

ExMilitaryEng wrote:

Airbus itself declared they could produce the CSeries 15% cheaper. Most of the savings were from components/ systems costs.

15% is significant for sure but not sure if it drags the product from a ruinous proposition to a "create a market" proposition, again in the face of much competition.

Revelation wrote:

ExMilitaryEng wrote:

Airbus itself declared they could produce the CSeries 15% cheaper. Most of the savings were from components/ systems costs.

15% is significant for sure but not sure if it drags the product from a ruinous proposition to a "create a market" proposition, again in the face of much competition.

True.
His/hers comment is the traditional "let´s push the best plane in the world" ...

Boeing had a meeting yesterday with Brazil Misnitry of Defense and people from the Military Forces.

The Ministry said the Control of Embraer wouldnt even be in the table for negotiation. But that are ok with collaboration between the 2 companies.

It also says that Brazilian Air Force and Saab are really unhappy with the Boeing, specially the Swedens because they fear that boeing would later interfere with the F-X program, which Brazil could later manufactor and sell the Gripen. They say Boeing would shut the program down after the 36 Gripens goes to Brazil, so they wouldnt have to ''help'' a competitor of the F18.

http://www1.folha.uol.com.br/mercado/20 ... eing.shtml?

EMBSPBR wrote:

True. (Airbus 15% savings in producing CSeries)
His/hers comment is the traditional "let´s push the best plane in the world" ...

Didn't realize my comment give that impression. Obviously did not mean nor believe in such notion.

The old BBD management (before Alain Bellemare) probably had that mentality thought, as they didn't offer very attractive launch prices (hey! it's the best plane in the world, they'll buy it eventually)...

Revelation wrote:

Waterbomber wrote:

What Boeing can do with the Ejet, is keep Airbus honest with the Cseries.
What we will see happen in the coming years, is Airbus ramping up the Cseries production significantly, while positioning it in the 120-160 seat segment, below the A320. Airbus has stronger sales potential, more leverage versus suppliers of systems and components, a better support system. Airbus has the potential to create a market, not solely by ofering a good product in the right way, but also by making the product affordable and reliable.

Embraer will no longer be competing against the Bombardier Cseries, but against the Airbus Cseries.
In a head-to-head competition for an order, there is no way that an airline would choose an Embraer product over an Airbus product.
We've seen this already before. BBD had a better product in the Cseries, but it couldn't win campaigns against neither Airbus nor Boeing.

The Cseries is going to make Airbus the biggest and most complete aircraft manufacturer in the world. The leader in the segment.
Boeing doesn't want to let that happen.

I don't buy it.

For all those economies of scale to kick in, the market demand is going to need to soar. The vendors only give you the 737/A320 style discounts if you buy in 737/A320 quantities. Who is going to be buying CS on that scale? Especially given the competition it has?

We've talked the US market to death. Scope change ain't coming. DL's put their chips on the table, but they're the only one of the big 3 that has shown it can make money in that market segment. No signs of interest from AA or UA.

China? Nope, they've got their own local champion. Might buy a few to satisfy the political ex-im concerns and get a nice good look at the fit and finish, but that's about it.

EU? Is there airport/airspace capacity to start hosting 120 seaters on the same scale as A320/737?

It will be interesting to see what happens once the papers get signed. We should get a good feel for how hard Airbus pushes the product. Then in another 2 years or so we should see if the Airbus umbrella is enough to "create a market". As above, I'm skeptical.

I think that Airbus will push for the Cseries a lot.
1. They have a majority stake as it is, with an option to purchase the entire program further down the line in 2025.
2. Airbus doesn't have anything else to sell in the narrowbody market as it has oversold its A320 production. There is a backlog of over 5000 units versus a delivery rate of 500 per year currently, which may go up to 2 units a day by 2019. That's still 8 years worth of production on the books, without counting the options.
3. Many airlines haven't secured their A320/B737NG replacements yet. This forum talked about AF-KLM, but there are many others that haven't been discussed.

I think that Airbus will aim to push narrowbody output to 1000 units a year between the A320 and Cseries combined.
With 2 assembly lines for the Cseries and enough funds to launch production, this can be done relatively easily within 3-4 years.

Another market that can't be ignored is the E190/E195 replacement market.
That market alone is worth over 200 units and I doubt that Embraer will get an "encore" from many airlines even with the E2. In the 5 years since launch, only Azul and Tianjin have given a total commitment of 50 units. As for ILFC, which now is part of Aercap, I doubt that they'll go through with their entire order. In the 5 years since ordering, they were only able to place 10 units between Borajet and Air Astana and they have a commitment for 65 more. That's a long way to go and they're running out of time.
With the Cseries now being an Airbus product, I doubt that they'll be able to place many more.

On the E175-E2 front, the MRJ, the SSJ100 are now part of the market, with the MRJ as the leading product.

Embraer management are probably more desperate for this deal than Boeing.

Would Boeing ever consider one more stretch of the E2 platform greater than the 195 (132 @ 31" pitch) to yield 148-150pax @ 31" pitch? A short range 737-7Max/737-700/A319/A320 replacement..... 3 flight attendants, 150 pax, 2000nmi range?

Waterbomber wrote:

On the E175-E2 front, the MRJ, the SSJ100 are now part of the market, with the MRJ as the leading product.

Embraer management are probably more desperate for this deal than Boeing.

Besides Japan, I don't think Embraer needs to worry about the MRJ. The E-Jet family is an established product line with an established support network. Mitsubishi has none of those advantages.

Update:

Source: https://www.reuters.com/article/us-embr ... SKBN1F72XB

"Boeing willing to preserve Brazil's 'golden share' in Embraer deal"

Boeing Co (BA.N) is working to overcome the Brazilian military’s objections to its proposed tie-up with Embraer SA (EMBR3.SA) with alternatives that would preserve the government’s strategic veto rights and ensure safeguards for its defense programs, four people familiar with the matter told Reuters.

The U.S. planemaker was forced back to the drawing board after Brazilian officials balked last week at the idea of turning Embraer into a subsidiary such as those that Boeing operates in Australia and Britain, according to the sources, who requested anonymity to discuss the negotiations freely.

Boeing’s plan has snagged on concerns in Brasilia that Washington would get final say over Brazilian defense programs and use of technology developed in the country, including satellite and air-traffic control systems.

The Brazilian government holds a ‘golden share’ in Embraer giving it veto power over strategic decisions involving military programs and any change in its controlling interest. Boeing would be willing to preserve the government’s golden share in Embraer, the people familiar with the matter said, but that may not be enough to win support.

“The Air Force is the main source of resistance,” said an aide to President Michel Temer. “The military oppose any split up of Embraer.” The aide said Jungmann has not yet made a recommendation on the Boeing deal to the president. In an emailed comment, the Air Force said it “considers Embraer a strategic company that is fundamental for our national sovereignty, so a possible partnership with Boeing should also be studied from this point of view.”

With a presidential election looming in Brazil this year and airlines delaying orders until the shape of the industry is clear, all sides of the negotiations are eager for a resolution. Still, government officials are keen on pressing their hand.

“We think Boeing will end up agreeing to a partnership or a joint venture because they have been weakened by the Airbus-Bombardier deal,” said the official familiar with the talks. “They have no other possible partner and need a quick fix.”

"Boeing willing..."

Lol

Like they have any other choice.

Interesting turn of developments, this isn't about present aircraft. I want to know what grand scheme Boeing has in mind project wise with Embraer.

acording Reuters Boeing is offering up to US$ 6 billion to buy EMBRAER

source, in portuguese: http://www.aereo.jor.br/2018/01/19/boei ... z-reuters/

Lol, $6 billion? That must be the equivalent of lunch money, no?

$6 billion doesn’t sound like a lot but remember we are talking about a company with a current market cap of ~$4.7 billion. They also only bring in about $6 billion in revenue a year (for comparison, BBD aerospace brings in about $11 billion in revenue). Don’t over estimate the size of Embraer and how cheap Brazil can be...the E-jet program only cost them what, around $1 billion to develop, and the E2 about $2 billion?

KarelXWB wrote:

Lol, $6 billion? That must be the equivalent of lunch money, no?

Polot wrote:

$6 billion doesn’t sound like a lot but remember we are talking about a company with a current market cap of ~$4.7 billion. They also only bring in about $6 billion in revenue a year (for comparison, BBD aerospace brings in about $11 billion in revenue). Don’t over estimate the size of Embraer and how cheap Brazil can be...the E-jet program only cost them what, around $1 billion to develop, and the E2 about $2 billion?

Hint (a simple way):
"The book value of a company, also known as a book value, is the sum of all its assets - such as buildings, machinery, equipment, money and products in stock -, net of debts and financial obligations."


Or more complex:

Market value:
The definition of market value translates the value by which a company could be traded in the market that is competitive and open to a fair exchange between seller and buyer, both being knowledgeable of the business, prudent and without urgency in doing business, although interested and with alternatives.

Internal factors are involved in the company, such as the quality of its human resources, products and corporate image, as well as external factors such as competition, sector regulation and general economic trends.

Intrinsic value or yield:
The intrinsic value or income represents an opinion of value produced by an appraiser, based on the perception of the characteristics inherent to the investment, through the expected value method, cash flows updated or supernormal profits.

It does not take into account the existence of a specific investor and when it collects the opinion of all the investors, the intrinsic value turns into market value.

Fundamental value:
The fundamental value is a capital market perspective on the assumption that the intrinsic value of an action can be determined by rigorously assessing some key variables such as profit, dividends, financial structure, market outlook or quality of management, among others. It does not imply the existence of a specific investor / buyer.

The fundamental value is used for comparison with quotation prices and consequent decision making:

If the quotation is above the fundamental value, the decision is to recommend the sale.
If the quotation is below the fundamental value, the decision is to recommend the purchase.
In essence, intrinsic value and fundamental value have the same meaning.

Value for the investor:
The valuation of value to the investor is made taking into account in its calculations factors that differ from those used in the intrinsic value, since it considers specific variables that concern that particular investor. For example, Sumolis' recent acquisition of Compal was certainly in sync with the synergies this acquisition would generate in terms of enriching its portfolio, enabling it to increase the critical mass of its business. It would then be in a position to attribute greater value to this business than for example a financial institution such as CGD, former majority shareholder.

Residual value:
The analyzes of the fundamental value and the intrinsic value consist of two periods of life of the company:

The annual forecast period
The residual period
In the first period, the company's activity is projected annually to determine annual profits, dividends and cash flows. The residual value refers to the value of the company at the end of the explicit forecast period.

The residual period refers to the value of the company at the end of the forecast period

Fair value:
The notion of fair value is ambiguous and of different uses, and therefore the International Valuation Standards Council (IVSC) designates that "the price, expressed in cash or equivalent, that a property changes from owner to owner hypothetical and interested buyer and a hypothetical and interested seller, in an open and unrestricted market, without any being forced to buy or sell, and in which both are reasonably aware of the relevant facts. " If we understand ownership as the company, we arrive at its fair value.

The IASB recently issued IFRS 13, which regulates the calculation of fair value internationally, with CPC 46 as the Brazilian counterpart. This includes the definition of fair value as "the price that would be received for the sale of an asset or that would be paid for the transfer of a liability in an uncommitted transaction between market participants at the measurement date. "

Perceived Value (by the client):
Perceived Value is the utility given to a given product or service based on the customer's perception, not the company's position in the market. It underpins the concept of embedded benefits versus its cost of acquisition. For a given product or service to enjoy a perceived value by the customer will mean that the customer recognizes a benefit in the offer of the company compared to the benefits offered by the competition.

(Offer value - Offer price = Offer benefits)> (Alternative value - Alternative price = Benefits of Alternative)

If Boeing only considers what are the advantages for Boeing, maybe there won't be a deal at all. Public interest are strong in Brasil, maybe stronger than short term capitalism.



https://www1.salary.com/BOEING-CO-Executive-Salaries.html

There is no news in labor syndicate protests. Twenty years ago, the same syndicate also opposed the privatization of Embraer.

I understant there is no chance of a simple company take-over. I believe Boeing will negotiate some veto power in exchange for equity interest or long term loans. The management of Embraer is very sensitive to its decision freedom and the examples of Boeing (De Havilland) and Airbus (ATR) are not very encouraging.

With all due respect to the good work of Boeing and Airbus, if Embraer were to be managed as one of them probably the company would have already failed. Embraer operates in markets where it is necessary to be much more agile and lean.

That is to say, I see as a somewhat complicated relationship with many important issues that must be discussed in advance so that no one regrets afterwards. On the other hand the potential gains for both sides are very large, so it's worth the effort.

Finally I understand that a more flexible and intelligent model of partner will at some point also interest Saab. A Boeing-Embraer-Saab association would have incredible potential.

Nean1 wrote:

There is no news in labor syndicate protests. Twenty years ago, the same syndicate also opposed the privatization of Embraer.

I understant there is no chance of a simple company take-over. I believe Boeing will negotiate some veto power in exchange for equity interest or long term loans. The management of Embraer is very sensitive to its decision freedom and the examples of Boeing (De Havilland) and Airbus (ATR) are not very encouraging.

With all due respect to the good work of Boeing and Airbus, if Embraer were to be managed as one of them probably the company would have already failed. Embraer operates in markets where it is necessary to be much more agile and lean.

That is to say, I see as a somewhat complicated relationship with many important issues that must be discussed in advance so that no one regrets afterwards. On the other hand the potential gains for both sides are very large, so it's worth the effort.

Finally I understand that a more flexible and intelligent model of partner will at some point also interest Saab. A Boeing-Embraer-Saab association would have incredible potential.

OK, some real opinions/projections please!

For instance, I have idly wondered how a JV project to - say - directly compete with the CS100/300/500 might go.

The wing from Seattle, everything else from EMB's factories? Or the reverse?

Dual factories, one in Brazil, one in US?

What do you think?

cheers Bill

brindabella wrote:

OK, some real opinions/projections please!
What do you think?
cheers Bill

Partnership in the New Single Aisle project.

This is what Boeing is looking for with Embraer: ahead of time, on budget, better than target on specifications.

Source: http://aviationweek.com/commercial-avia ... 47f305203d

Excerpts:

"The flight-test campaign, which is concluding several months ahead of the company’s original, conservative mid-2018 completion target, has confirmed improvements in fuel burn, range, emissions and noise that exceed the program’s baseline targets. Fuel burn is reported as 17.3% lower than for the first-generation E190, compared to the 16% improvement predicted at the start of development."

"Rodrigo Silva e Souza, Embraer Commercial Aviation’s vice president of marketing, said the relatively trouble-free E190-E2 development—which is ahead of schedule, on budget and on weight target—can be attributed largely to the high cadence of new aircraft testing and certification efforts at Embraer, including those for the improved E175, the other E2 models, the Legacy and Phenom business aircraft, and the KC-390 tanker/transport. “I don’t remember any other program of this magnitude which achieved all these goals,” he observed."

brindabella wrote:

Dual factories, one in Brazil, one in US?

What do you think?

cheers Bill

As much production as possible in Brazil because of cheaper labor costs.

LockheedBBD wrote:

brindabella wrote:

Dual factories, one in Brazil, one in US?

What do you think?

cheers Bill

As much production as possible in Brazil because of cheaper labor costs.

Reasonable. But what about the technology and skills in each outfit?

These E2 results are impressive all right. They should certainly win the EMB engineers some dedicated (large) portions of the entire project.

I was also wondering about the massive new CFRP wing plant in Seattle. Maybe the design & automated wing production there?

More specifically, is the "new Single Aisle" the CS competitor as above? Or NSA?

cheers Bill

In https://www.seattletimes.com/business/b ... ith-trump/ we can read Boeing CEO's quotes on now things started and where they stand:

The talks became public in December following Airbus’ shock move to acquire control of the CSeries jet program from Bombardier of Canada.

Yet Muilenburg is adamant that Airbus’ decision “wasn’t a trigger for us … No. Not at all.”

He confirmed The Seattle Times’ account of Boeing’s longtime interest in Embraer, stretching back to 1999, and the close partnership the two companies have enjoyed in recent years.

“We always look at the competitive playing field, but this is something we’ve been working on for a long time,” Muilenburg said. “We have a very intimate relationship with Embraer.”

He then talks about how the workforce and skills line up favorably, and why the deal would be attractive:

He envisages selling packages of regional and mainline jets to carriers — such as Alaska Airlines — that have combined fleets of Embraer Ejets and Boeing 737s, as well as selling aftermarket services to such airlines across both aircraft sectors.

If it can buy Embraer, Muilenburg said, Boeing will be able to go into the global marketplace with an expanded offering across regional, single-aisle and twin-aisle jets.

Seems dubious to me. Why should Boeing spend money to get into the same market that BBD was willing to give to them for $1, and in the process piss off a big commercial and defense customer? Seems to me if they make this kind of move they are admitting they were outflanked.

Also if I was him I don't know that I'd discuss this in the same article where I'm discussing spending the windfall from the Trump corporate welfare tax break. It ends up sounding like the taxpayers will end up bailing Boeing out of a strategic mistake.

Negócio entre Boeing e Embraer pode afetar caça da FAB
http://www1.folha.uol.com.br/mercado/20 ... -fab.shtml

Swedish manufacturer SAAB can revise its contract to supply Grippen to FAB fighters if it considers that the eventual association between Boeing and Embraer jeopardizes the technological secrets of its product.

Saab is not happy about this...

Revelation wrote:

In https://www.seattletimes.com/business/b ... ith-trump/ we can read Boeing CEO's quotes on now things started and where they stand:

The talks became public in December following Airbus’ shock move to acquire control of the CSeries jet program from Bombardier of Canada.

Yet Muilenburg is adamant that Airbus’ decision “wasn’t a trigger for us … No. Not at all.”

He confirmed The Seattle Times’ account of Boeing’s longtime interest in Embraer, stretching back to 1999, and the close partnership the two companies have enjoyed in recent years.

“We always look at the competitive playing field, but this is something we’ve been working on for a long time,” Muilenburg said. “We have a very intimate relationship with Embraer.”

He then talks about how the workforce and skills line up favorably, and why the deal would be attractive:

He envisages selling packages of regional and mainline jets to carriers — such as Alaska Airlines — that have combined fleets of Embraer Ejets and Boeing 737s, as well as selling aftermarket services to such airlines across both aircraft sectors.

If it can buy Embraer, Muilenburg said, Boeing will be able to go into the global marketplace with an expanded offering across regional, single-aisle and twin-aisle jets.

Seems dubious to me. Why should Boeing spend money to get into the same market that BBD was willing to give to them for $1, and in the process piss off a big commercial and defense customer? Seems to me if they make this kind of move they are admitting they were outflanked.

Also if I was him I don't know that I'd discuss this in the same article where I'm discussing spending the windfall from the Trump corporate welfare tax break. It ends up sounding like the taxpayers will end up bailing Boeing out of a strategic mistake.

Because maybe BBD as a whole is not the corporate gem some here think it is. And looking at the CS and E2 projects at how they were handled and developed, the decision is clear to Boeing.

Again, this cannot be said enough and gets purposely overlooked because it doesn't fit the popular narrative here on Anet. Boeing was OFFERED the same deal as Airbus, but passed.

Thats true.

And thats not the first time Boeing is trying to buy Embraer.

I wish some internal Boeing memos coulve been leaked so we could see Boeing vision about Embraer and BBD at the time it was offered to Boeing.

william wrote:

Revelation wrote:

In https://www.seattletimes.com/business/b ... ith-trump/ we can read Boeing CEO's quotes on now things started and where they stand:

The talks became public in December following Airbus’ shock move to acquire control of the CSeries jet program from Bombardier of Canada.

Yet Muilenburg is adamant that Airbus’ decision “wasn’t a trigger for us … No. Not at all.”

He confirmed The Seattle Times’ account of Boeing’s longtime interest in Embraer, stretching back to 1999, and the close partnership the two companies have enjoyed in recent years.

“We always look at the competitive playing field, but this is something we’ve been working on for a long time,” Muilenburg said. “We have a very intimate relationship with Embraer.”

He then talks about how the workforce and skills line up favorably, and why the deal would be attractive:

He envisages selling packages of regional and mainline jets to carriers — such as Alaska Airlines — that have combined fleets of Embraer Ejets and Boeing 737s, as well as selling aftermarket services to such airlines across both aircraft sectors.

If it can buy Embraer, Muilenburg said, Boeing will be able to go into the global marketplace with an expanded offering across regional, single-aisle and twin-aisle jets.

Seems dubious to me. Why should Boeing spend money to get into the same market that BBD was willing to give to them for $1, and in the process piss off a big commercial and defense customer? Seems to me if they make this kind of move they are admitting they were outflanked.

Also if I was him I don't know that I'd discuss this in the same article where I'm discussing spending the windfall from the Trump corporate welfare tax break. It ends up sounding like the taxpayers will end up bailing Boeing out of a strategic mistake.

Because maybe BBD as a whole is not the corporate gem some here think it is. And looking at the CS and E2 projects at how they were handled and developed, the decision is clear to Boeing.

Again, this cannot be said enough and gets purposely overlooked because it doesn't fit the popular narrative here on Anet. Boeing was OFFERED the same deal as Airbus, but passed.

I think Boeing was (still is?) quite convinced that it will kill the CSeries by litigation. Why bother taking on a product, even for a steal, that you are convinced you can kill off?

Revelation wrote:

Seems dubious to me. Why should Boeing spend money to get into the same market that BBD was willing to give to them for $1, and in the process piss off a big commercial and defense customer?

Embraer can provide Boeing with low-cost engineers, and low-cost labor. I read somewhere that Boeing has a shortage of experienced engineers. Embraer knows how to deliver planes on-time, on-budget, and above specifications. I can't say the same for Bombardier's CSeries program. Boeing and Embraer also have a cockpit commonality agreement according to last week's Seattle Times article. The CSeries cockpit is more similar to something from Airbus.

LockheedBBD wrote:

Revelation wrote:

Seems dubious to me. Why should Boeing spend money to get into the same market that BBD was willing to give to them for $1, and in the process piss off a big commercial and defense customer?

Embraer can provide Boeing with low-cost engineers, and low-cost labor. I read somewhere that Boeing has a shortage of experienced engineers. Embraer knows how to deliver planes on-time, on-budget, and above specifications. I can't say the same for Bombardier's CSeries program. Boeing and Embraer also have a cockpit commonality agreement according to last week's Seattle Times article. The CSeries cockpit is more similar to something from Airbus.

Very interesting, thanks!

Well yes, https://leehamnews.com/2018/01/08/boein ... d-embraer/ learns us:

Boeing has long known it’s facing an exodus of engineers and technicians from its white collar ranks as the workforce ages.

Since 2013, Boeing laid off thousands of engineers and technicians from its Washington State operations, simply cutting jobs and transferring others to lower cost working environments in right-to-work (ie, non-union) states.

But the cuts have been too deep. Thousands of tasks on the 737 and wide-body lines have been incomplete as the airplanes rolled out the doors, LNC is told. Boeing’s had to scramble to complete the jobs on the ramps to maintain delivery schedules.

Boeing has been hiring back retired and laid-off engineers and technicians as contractors to rebuild the force.

But this doesn’t help fill the thousands of jobs coming up through retirements and the emerging labor pool isn’t going to be enough, either.

KarelXWB wrote:

Well yes, https://leehamnews.com/2018/01/08/boein ... d-embraer/ learns us:

Boeing has long known it’s facing an exodus of engineers and technicians from its white collar ranks as the workforce ages.

Since 2013, Boeing laid off thousands of engineers and technicians from its Washington State operations, simply cutting jobs and transferring others to lower cost working environments in right-to-work (ie, non-union) states.

But the cuts have been too deep. Thousands of tasks on the 737 and wide-body lines have been incomplete as the airplanes rolled out the doors, LNC is told. Boeing’s had to scramble to complete the jobs on the ramps to maintain delivery schedules.

Boeing has been hiring back retired and laid-off engineers and technicians as contractors to rebuild the force.

But this doesn’t help fill the thousands of jobs coming up through retirements and the emerging labor pool isn’t going to be enough, either.

And then you add that to the (astronomical) cost of housing in the SEA area and realize few will chose to move there just to work for Boeing.

aerolimani wrote:

william wrote:

Revelation wrote:

In https://www.seattletimes.com/business/b ... ith-trump/ we can read Boeing CEO's quotes on now things started and where they stand:


He then talks about how the workforce and skills line up favorably, and why the deal would be attractive:


Seems dubious to me. Why should Boeing spend money to get into the same market that BBD was willing to give to them for $1, and in the process piss off a big commercial and defense customer? Seems to me if they make this kind of move they are admitting they were outflanked.

Also if I was him I don't know that I'd discuss this in the same article where I'm discussing spending the windfall from the Trump corporate welfare tax break. It ends up sounding like the taxpayers will end up bailing Boeing out of a strategic mistake.

Because maybe BBD as a whole is not the corporate gem some here think it is. And looking at the CS and E2 projects at how they were handled and developed, the decision is clear to Boeing.

Again, this cannot be said enough and gets purposely overlooked because it doesn't fit the popular narrative here on Anet. Boeing was OFFERED the same deal as Airbus, but passed.

I think Boeing was (still is?) quite convinced that it will kill the CSeries by litigation. Why bother taking on a product, even for a steal, that you are convinced you can kill off?

aerolimani,

I know this narrative of the facts and two years ago you would have also included Airbus in the list of bad guys ...

I have a different narrative and it begins in 1999 when Embraer launches the E-Jets family. It was a bold bet whose failure would lead to bankruptcy. The timing was good, but Embraer's direction needed to turn into a game where he was handicapped by the demand for larger aircraft.

The BBD from a favorable position preferred to study the subject better, seeking to find a project that offered adequate return. Soon after, the events of September 11, 2001 paralyzed the studies. Embraer had no other way than to implement a challenging 4-aircraft design in the best possible way.

With the lost timing the BBD had to wait until a new generation of turbofans was available. They made bold technological decisions and a couple of bluntly wrong ones (wings in composite material, Al-Li fuselage). The tech fans loved it, but who was doing the business case analysis realized there were solutions that were only justified by oil above $ 100 / bb.

The investment was very high, so subsidies were needed on a much larger scale. But the call to the governments of Canada and the United Kingdom was strong, for the creation of qualified jobs. To accelerate the project, BBD actively sought to recruit specialized staff from competitor Embraer with attractive financial packages.

The project cost much more than the initial budget (5.4 vs. $ 2.1 billion) and delayed about 2.5 years. By 2015, the company was practically bankrupt. In fact, the expectation of unconditional support from the Canadian government avoided the worst. But management mistakes are not mentioned, everything looks like a big conspiracy.

But how to explain the decisions, how to prioritize CS-100 on CS-500? Boeing and Airbus would not realize that the plane was reasonably large and pointed to the heart of its own single-aisle aircraft lines. Instead of the CS-500, the company launched the CS-100, at best, an niche aircraft.

Even the claimed leadership in energy efficiency seems quite threatened by the E2 line, theoretically less technological, but lighter and with improved aerodynamics.

Yet many questions remain unanswered, including BBD's real ability to produce the aircraft at a rate consistent with the initial investment. I suspect that solving the issues with the PW engines will make it clear that there are many other bottlenecks.

aerolimani wrote:

I think Boeing was (still is?) quite convinced that it will kill the CSeries by litigation. Why bother taking on a product, even for a steal, that you are convinced you can kill off?

They don´t.
And they don´t care.

This is all about:

Source: https://leehamnews.com/2018/01/08/boein ... d-embraer/

Boeing’s special needs in the next decade may be solved by Embraer

Excerpts:

"Boeing’s need for engineering talent from Embraer has been touched on by many media, including LNC. But a detailed analysis hasn’t been forthcoming, that we’ve seen.
Not discussed yet is the fact that new airplane programs at Boeing and Embraer wind down in 2021-22, leaving both companies in danger of facing the next decade without new products at a time when competition will be emerging."

"The lack of new airplane programs endangers the engineering talent pool. For Boeing, this is already going to be critical as more than 5,500 engineers and technicians reach age 65 in the next 10 years."

"Like Boeing, Embraer’s current crunch on its new commercial airplane program is fast approaching the downhill slide.
The E190-E2 enters service this year. The larger E195-E2 enters service next year."

And more specifically this Boeing is looking for:

Source: http://aviationweek.com/commercial-avia ... tion-nears

Embraer Targets Improved E190-E2 As Certification Nears

Excerpts:

"Buoyed by better-than-expected flight-test performance, Embraer says it is just weeks away from finalizing certification of the E190-E2, the first of the company’s second-generation, reengined single-aisle airliners to reach this stage."

"The flight-test campaign, which is concluding several months ahead of the company’s original, conservative mid-2018 completion target, has confirmed improvements in fuel burn, range, emissions and noise that exceed the program’s baseline targets."

Nean1 wrote:

But how to explain the decisions, how to prioritize CS-100 on CS-500? Boeing and Airbus would not realize that the plane was reasonably large and pointed to the heart of its own single-aisle aircraft lines. Instead of the CS-500, the company launched the CS-100, at best, an niche aircraft.
Even the claimed leadership in energy efficiency seems quite threatened by the E2 line, theoretically less technological, but lighter and with improved aerodynamics.

Well said Nean1.

Embraer with the E2 decided to stay in the market.
In the other hand, BBD without the CS500 avoided the market ...

Geez, you guys act like I’ve insulted the entire nation of Brazil.

To singularly dismiss any of these narratives is foolish. The truth lies somewhere in the gray area. To suggest otherwise is to ignore the nuanced and complex nature of the real world, versus the polarized fanboy world of a.net.

Another worthwhile narrative is that Embraer, its product, and its corporate culture, are a better fit with Boeing. And similarly, the CSeries is a better fit with Airbus. Try to tell me there isn’t some truth in that.

Revelation wrote:

And then you add that to the (astronomical) cost of housing in the SEA area and realize few will chose to move there just to work for Boeing.

Why would they need to move? Many enigneering tasks can be done from Brasil . . . it's a global industry, connected networks etc.

PW100 wrote:

Revelation wrote:

And then you add that to the (astronomical) cost of housing in the SEA area and realize few will chose to move there just to work for Boeing.

Why would they need to move? Many enigneering tasks can be done from Brasil . . . it's a global industry, connected networks etc.

I don't believe he's talking about Embraer employees coming to Seattle, just the need to attract new talent in the States to work for Boeing in Seattle. If you're local talent pool is drying up (aging out, etc) you need to expand that pool. Unfortunately, Seattle has become so expensive the talent Boeing would need/does need to fill in the gaps, is not moving to the area. Therefore, you need to find new pools/locations to tap into where the infrastructure already exists and Embraer checks many of those boxes.

aerolimani wrote:

Another worthwhile narrative is that Embraer, its product, and its corporate culture, are a better fit with Boeing. And similarly, the CSeries is a better fit with Airbus. Try to tell me there isn’t some truth in that.

Of course, the CS cockpit has more in common with Airbus than Boeing. One of the reasons I am sure Boeing passed when same deal Airbus took was offered them.

tistpaa727 wrote:

PW100 wrote:

Revelation wrote:

And then you add that to the (astronomical) cost of housing in the SEA area and realize few will chose to move there just to work for Boeing.

Why would they need to move? Many enigneering tasks can be done from Brasil . . . it's a global industry, connected networks etc.

I don't believe he's talking about Embraer employees coming to Seattle, just the need to attract new talent in the States to work for Boeing in Seattle. If you're local talent pool is drying up (aging out, etc) you need to expand that pool. Unfortunately, Seattle has become so expensive the talent Boeing would need/does need to fill in the gaps, is not moving to the area. Therefore, you need to find new pools/locations to tap into where the infrastructure already exists and Embraer checks many of those boxes.

Yes, thanks, I was addressing the general issue of Boeing needing more human resources, and a lot of the need is for the mechanics who do hands-on work and so can't be remote workers. The Amazon HQ2 saga shows that the SEA area is not a great place to be looking for more human resources.

aerolimani wrote:

Another worthwhile narrative is that Embraer, its product, and its corporate culture, are a better fit with Boeing. And similarly, the CSeries is a better fit with Airbus. Try to tell me there isn’t some truth in that.

You are probably right, exemplified by the Airbus - Bombardier deal being written in French.

Source: https://leehamnews.com/2018/01/24/boein ... tor-737-7/

"Boeing aims for half of 100-150 seat sector with 737-7"


Boeing says that it expects the 737-MAX 7 to capture half the 100-150 seat market share. That leaves Embraer/Bombardier/Airbus to fight over the other 50%?

LockheedBBD wrote:

Source: https://leehamnews.com/2018/01/24/boein ... tor-737-7/

"Boeing aims for half of 100-150 seat sector with 737-7"


Boeing says that it expects the 737-MAX 7 to capture half the 100-150 seat market share. That leaves Embraer/Bombardier/Airbus to fight over the other 50%?

That is already a bizarre claim, but could it bite them when they try to get regulatory approval to take over Embraer and the other 25-30%(?) of that market?
I don't know anything about law, just a thought.

LockheedBBD wrote:

"Boeing aims for half of 100-150 seat sector with 737-7" Boeing says that it expects the 737-MAX 7 to capture half the 100-150 seat market share. That leaves Embraer/Bombardier/Airbus to fight over the other 50%?

Can you get punished for such lousy lies to shareholders? (I know you can with the ITC, but what about the shareholders?)

Revelation wrote:

Yes, thanks, I was addressing the general issue of Boeing needing more human resources, and a lot of the need is for the mechanics who do hands-on work and so can't be remote workers. The Amazon HQ2 saga shows that the SEA area is not a great place to be looking for more human resources.

Sorry, I misunderstood.

I was reading your comment with the Embrear deal in mind - which after all is what this thread is about . . . The lack of skilled enigneers could be one of the factors for Boeing's continued interested in Embrear. Not sure how that would be received by Seattle unions though (still recovering from "outsourcing" to South Carolina).

The Brazilian government received three signals from Boeing in the negotiation process with Embraer: guaranteeing the autonomy of the partnership between Saab and Embraer in the production of Gripen fighters; transformation of Brazil into a new hub for the production of components of Boeing aircraft outside the United States; and maintenance, as required by the Brazilian authorities, of the veto power of the government in the company of São José dos Campos (SP).

The message is that Boeing agrees with the protection of the Gripen project, which would remain autonomous even with eventual deal between the two companies. One of the arguments for the autonomy of the Gripen project is that Boeing and Saab have been partnering since 2013 in the US in the development and manufacture of the T-X - military training aircraft - and that the project has not generated any conflict between companies.

The company also signaled that it accepts to maintain the veto power of the Brazilian government - through the so-called golden share - on the future of the Brazilian company's business. It is not entirely clear on what terms, since the design of the business between Embraer and Boeing is still at the beginning and not even reached the political top of the government.

Parts
In order to garner support for the negotiations, it has been indicated that if the transaction is closed, Brazil could be the fourth pole of production of Boeing components, alongside Australia, Canada and the United Kingdom.

https://exame.abril.com.br/negocios/boe ... m-embraer/

Boeing is quite desperate.

If Brazilian Govnmt and Embraer keeps playing hard to get, they could get a lot more from Boeing.