What Boeing wants in Embraer also makes merging with it extremely difficult

As Boeing digs into understanding what makes Embraer tick, they're finding that its structure (by design) makes it inherently difficult to pull apart.

Jon Ostrower
What Boeing wants in Embraer also makes...

What happens when the thing Boeing wants most from Embraer is also the thing that makes it extremely difficult to merge with?

Reuters reported yesterday that Boeing and Embraer’s talks have hit a rocky patch:

The companies have won the support of Brazil’s government for such a deal, but the maneuver has created other headaches, according to the sources, who spoke to Reuters anonymously due to the sensitivity of talks.

Negotiators are picking through the details of long-term service contracts between the companies and working on how to distribute Embraer’s thousands of engineers, many of whom have migrated between military and civilian projects during their careers.

I wrote last month after a visit to Brazil that Embraer’s attractiveness to Boeing lay in how it’s structured, delivering advanced technology in an affordable, stable, recurring system:

At a strategic level, Embraer has a young and deeply experienced engineering workforce. (The E2’s program director is just 42 and a mentee of its strategy chief) Its supply chain is a laundry-list of the same global players as its rivals, but its structure significantly more integrated.

The company hasn’t swung from inactivity to over-extension. And while the company has distinct business units, its core iterates on homegrown technology and advances from one project to the next. Embraer has certified 12 new airplanes in 14 years, including its KC-390.

It’s the type of architecture that keeps cost down, knowledge shared and an organization stable; ideal for the process-driven mature environment of commercial aerospace.

As Boeing digs into understanding what makes Embraer tick, they’re finding that its structure (by design) makes it inherently difficult to pull apart. Boeing wants Embraer’s commercial aircraft business, leaving the defense business and executives jets behind to satisfy the Brazilian government.

By contrast, Airbus’s own experience extracting the C Series program from Bombardier has gone far smoother. Airbus and Bombardier CEOs Tom Enders and Alain Bellemare in a company memo last week said the “approval process is moving ahead faster than expected and as a result, the transaction is set to conclude by the middle of this year.”

But the CSeries was an island of development inside of Bombardier. And the Canadian company’s distinctly less-integrated corporate structure is what also makes it so much easier to part out. The question for Boeing as they force a dis-integration of Embraer really focuses on whether they can split the Brazilian aircraft manufacturer without losing what made them want to join forces in the first place.

Show Comments (2)


  • Andre

    that’s all that’s holding the deal to move forward?

    • Article Author
    • Reply
  • Sprectre49

    First confirmation of what I thought. Boeing does not want business jet, it does not want the defense part

    But what is left if you take the commercial out of the other two leaving a non viable wreck that can’t sustain itself.

    Why would Brazil or Embraer want that?

    • Article Author
    • Reply

Related Articles


Westjet’s new 787 Dreamliner sprints away from its ‘Southwest’ roots

An entire community of airlines around the planet have been based around Southwest Airlines. It’s a model oft-replicated with great success: A single fleet type with a...

Posted on by Jon Ostrower
Industry Strategy

Embraer and Boeing ready to unveil commercial joint venture

Boeing and Embraer are at the finish line on a commercial aerospace tie up that will reshape the global industrial landscape and firmly establish a new superduopoly to challenge...

Posted on by Jon Ostrower