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Boeing secures Embraer strategic arms link

April 11, 2012 at 10:48 AM   |   Comments

SAO PAULO, April 11 (UPI) -- Aircraft makers Boeing and Brazil's Embraer are entering into a partnership that will allow Boeing to position itself strategically for a larger prize -- a multibillion-dollar order for new fighter jets for the Brazilian military.

Boeing is one of three leading contenders for the Brazilian air force's FX-2 jet fighter competition, center of the Latin American country's military modernization program.

Whichever company wins the deal stands to benefit from a wide range of ancillary contracts, joint production, technology transfers and long-term maintenance and service programs.

Once the star item in the air force inventory is chosen, many other contracts are expected to spring from it. Boeing's competitors are Dassault of France with its Rafale jet and Swedish Saab's Gripen.

Rafale is struggling to find buyers outside France while Boeing's F-16 carries a diverse arsenal of weapons and the Gripen is lighter and cheaper to operate than its main rivals.

The Boeing-Embraer deal announced this week isn't about the fighter program but about wider business cooperation designed to benefit aviation industry growth.

Brazil is aggressively negotiating the best possible technology transfer deals, mainly to allow its industry to go it alone and eventually compete with its collaborators.

The Boeing-Embraer agreement came up for discussion when U.S. President Barack Obama visited Brazil last year and was signed when Brazilian President Dilma Rousseff met with Obama in Washington this week.

Details of the deal indicated the two aircraft makers agreed to work together "to benefit their customers, their companies and the global aviation industry."

The agreement establishes an important relationship between two of the world's largest aerospace companies to cooperate in ways that enhance operational efficiency, safety and productivity, improve customer satisfaction and create value for both companies and their customers, a joint statement said.

Embraer President and Chief Executive Officer Frederico Curado and Boeing counterpart Jim Albaugh signed the agreement in Washington when the two attended the annual meeting of the U.S.-Brazil CEO Forum, a public-private partnership.

The forum brings together chief executive officers from both countries. Curado and Albaugh are co-chairmen of the CEO Forum's aviation subcommittee.

Boeing and Embraer agreed to pursue several areas of cooperation, including commercial aircraft features that enhance safety and efficiency, research and technology and sustainable aviation biofuels.

They will also look for other areas to work together to bring mutual benefit and value to customers.

"This significant agreement between two proven aerospace leaders provides real opportunities to reduce customers' operational costs and enhance fleet efficiency," said Albaugh.

"We look forward to working with Embraer to grow our industry and build a productive relationship that will benefit our companies and our countries."

Curado said the Brazilian company was committed to innovation and hoped the accord will allow both sides to work together on "leading-edge matters."

Although it is Brazil's only major aircraft maker, Embraer is a serious rival to U.S., European and Russian aircraft makers and has already taken a slice of lucrative trade in the categories of light attack aircraft and executive jets.

Last year Embraer started assembling executive jets at a new manufacturing plant in Melbourne, Fla.

Embraer is also able to cut deals where Boeing will find Congress or Capitol Hill coming in the way.

Boeing and Embraer earlier launched other cooperative agreements. In July 2011 they announced plans to jointly look into sustainable aviation jet fuel from sugarcane.

In March 2012, Boeing, Embraer and Airbus reached memorandum of understanding to work together on the development of drop-in, affordable aviation biofuels.

In October last year Boeing opened its Brazil office in Sao Paulo, and is actively involved with the Brazil-U.S. Fulbright Commission to fund "Science Without Borders" fellowships for 14 Brazilian aerospace and aeronautical engineering students.

Last week, the company announced that it will open Boeing Research and Technology-Brazil to work with leading Brazilian researchers and scientists to develop aerospace technologies.

At the same time, Boeing, Dassault and Saab remain in the competition for the fighter program. Brazil hasn't said when it will decide to buy the jets. Current plans call for a Brazilian air force purchase of up to 36 fighter jets to replace about 50 aging Northrop F-5 fighters.

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