Business

Embraer shares take off on Boeing talks

Shares in Brazilian plane-maker Embraer soared more than 20% on Thursday, after the company said it had held talks with Boeing about a possible combination.

A deal with the US aerospace giant would join two of the world's biggest plane-makers.

Any deal would require permission from the Brazilian government, which is a stakeholder in Embraer.

News of the talks comes a few months after rivals Airbus and Bombardier announced an alliance.

Europe's Airbus said it would take a majority stake in Bombardier's CSeries jet project, a line of narrow-body planes that the firms said would drive growth in coming years.

That deal prompted questions from analysts about whether Boeing, which has focused on larger planes, would pursue its own joint venture or partnership to compete.

In October Boeing said it was reviewing its options and that a deal was one possible use for surplus cash.

Like Bombardier, Embraer is known for its smaller commercial jets.

It claims it is the leading manufacturer of commercial jets of up to 150 seats.

Its stock increased by more than 20% on Thursday, after the Wall Street Journal reported it had held talks with Boeing. The two companies later confirmed the discussions.

Embraer employs about 18,000 people globally. It was formerly state-run and the government continues to hold a "golden share", which gives it veto powers over certain changes, including change of control.

Brazilian President Michael Temer has said he is open to a deal but opposes selling a majority stake, the newspaper Folha de S. Paulo reported.

Bombardier's CSeries is the subject of a bitter trade dispute that has strained relations between the US and Canada and the UK.

The US is weighing possible trade duties of almost 300% on the jets, after Boeing said the Canadian company had received unfair subsidies that allowed below cost sales.

Original Article

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BBC

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