EMBRAER 2018

Abstract

EMBRAER is a Brazilian aircraft founded in 1969 by the Brazilian military government with the intention of the country to have its own aircraft-manufacturing capacity. Since its foundation the company developed and manufactured several aircraft models on both military, commercial and executive segments. By 1994, the company was bankrupt with an estimated USD337 million loss which led the Brazilian government to decide to privatize to company. Taking credit of the existing design studies and benefiting from qualified management brought by later appointed CEO Mauricio Botelho the company developed the ERJ-145 aircraft family and managed to take the market share leadership on the regional jet up to 60 seats. Rivalry with the Canadian aircraft manufacturer BOMBARDIER was intensified with both countries involved in disputes on the World Trade Organization. In 1999 EMBRAER took the brave decision to develop a brand new “clean-sheet” design aircraft family named EJETs that dominated the regional aviation market up to 130 seats. BOMBARDIER response considered the development of the CSeries aircraft that, after a long period of studies and development reached the market in 2016. Struggling to market its latest product, BOMBARDIER established a partnership with the aviation industry giant AIRBUS that later allowed the European conglomerate to take over the program, rebrand the product and market it as AIRBUS products. In response to that, BOEING and EMBRAER outlined a non-binding agreement that proposes the formation of a joint venture comprising the Brazilian company commercial aircraft and services business unit that would strategically align both companies’ commercial development, production, marketing and lifecycle services operations. Under the agreement terms, BOEING would hold an 80 percent ownership stake in the joint venture and EMBRAER the remaining 20 percent. This case evaluates the aviation industry and possibilities that could be considered by EMBRAER in lieu of accepting the deal proposed by BOEING.

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