Embraer's Outlook Is Brightening
Embraer (NYSE: ERJ) has had an unlucky run over the past few years. Brutal competition from Boeing (NYSE: BA) and Airbus and the bankruptcies of several key customers have weighed on sales of its new commercial jet line (the E2-series E-Jets). A downturn in the business aviation market and development delays for its biggest defense project (the KC-390 military tanker) added to the pressure. Finally, Boeing offered to buy the company at a big premium, but Brazil's government vetoed that move.
Boeing and Embraer settled for a less ambitious (but still promising) pair of joint ventures. Boeing plans to buy an 80% stake in Embraer's commercial aviation business and a 49% stake in a joint venture to develop new markets for the KC-390 (also known as the C-390 Millennium). Those transactions have also been delayed due to regulatory issues.
However, 2020 could finally be the year that Embraer's long-term strategic plans start to pay off. The long-awaited joint venture deals with Boeing are likely to close sometime this year, and the remainder of Embraer's business is finally gaining momentum.
Source Fool.com
