October 26, 2018 / 6:27 PM / in 19 days

Brazil will leave fate of Boeing-Embraer deal to next president

The Brazilian aviation company Embraer factory is seen in Sao Jose dos Campos, Brazil, July 24, 2018. Picture taken July 24, 2018. REUTERS/Roosevelt Cassio

RIO DE JANEIRO (Reuters) - Brazil will leave a decision on whether to approve the sale of a controlling stake in planemaker Embraer SA’s (EMBR3.SA) commercial jet business to Boeing Co (BA.N) to the next government, Defense Minister Joaquim Silva e Luna told Reuters on Friday.

That’s a reversal from Luna’s remarks in August, when he said that current President Michel Temer’s administration would reach a decision after elections conclude this Sunday but before the Jan. 1 transition to the next government.

Embraer and Boeing agreed in July to the deal, but Brazil’s government, which owns a special class of stock in the planemaker that allows it to veto significant business decisions, has yet to sign off on it.

Luna said negotiations on final details of the deal had reached a stalemate due to the electoral uncertainty. The expectation now is that discussions will accelerate once a president has been elected.

“But that doesn’t mean it’s not going to come through,” Luna said of the deal.

Jair Bolsonaro, the far-right candidate widely expected to win the election on Sunday by a large margin, has said in the past that he is in favor of the deal. His rival, left-wing Fernando Haddad, has spoken against it.

Luna said that the deal would probably be presented by the current government to the transition team appointed by the future president-elect.

“We will surely be calling the transition team to talk about the deal, and the idea is to present everything with clarity and transparency,” Luna said.

Under the terms of the proposed deal, Boeing will pay $3.8 billion to own 80 percent of a new joint venture that will hold Embraer’s commercial jet business. Embraer will be left with its private jet and defense divisions.

Reporting by Rodrigo Viga Gaier; writing by Marcelo Rochabrun; Editing by Susan Thomas

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