July 4, 2018 / 11:11 PM / 15 days ago

Embraer CEO says talks with Boeing are in final stage: report

SAO PAULO (Reuters) - Embraer SA (EMBR3.SA) Chief Executive Officer Paulo Souza e Silva said the company is in the final stage of talks to combine operations with Boeing Co (BA.N), newspaper Valor Economico reported on its website late on Wednesday.

FILE PHOTO: The logo of Brazilian planemaker Embraer SA is seen at the company's headquarters in Sao Jose dos Campos, Brazil February 28, 2018. REUTERS/Roosevelt Cassio

Souza e Silva, attending an event hosted by the paper, declined to elaborate on details of the agreement and described the negotiation as “complex.”

The two planemakers have been discussing for months a transaction in which a new company controlled by Boeing would be created and focused on commercial aviation. Embraer would keep its defense division and possibly its business jet unit.

A Brazilian air force official defended the deal between the two planemakers from the criticism of lawmakers at a congressional hearing on Wednesday, suggesting the government’s concerns about a deal have subsided.

Air Force Commander Lt Brig Nivaldo Luiz Rossato said the proposed deal would “preserve national sovereignty,” by keeping Brazilian defense programs out of the hands of the U.S. company, according to the congressional news service.

The companies said in April that they were discussing the creation of a new company with Embraer’s airliner business, leaving out its defense unit and “potentially” its business jet division.

Embraer said this week that talks were ongoing and any deal would need the approval of Brazil’s government and regulators.

Workers Party Congressman Carlos Zarattini called such a deal a “crime against the homeland,” questioning how the government, which can veto the deal, could let Boeing take control of the crown jewel of Brazil’s aerospace industry.

Rossato argued that the U.S.-Brazil partnership could actually preserve jobs at Embraer, which is wrapping up development on two major new families of aircraft and has not announced any other major investments.

Embraer shares rose nearly 4 percent in Sao Paulo on Wednesday amid rising speculation that a deal could be announced soon. The stock has gained about 35 percent so far this year.

Reporting by Tatiana Bautzer; editing by Phil Berlowitz, G Crosse

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