Aircraft maker Boeing has announced that it has received service orders worth over $900 million which allow partners and airlines to excel in the competitive air travel environment of today. The orders that reached close to $1 billion were received at the Singapore Airshow.
“Predicted growth for aerospace services in the Asia Pacific brings opportunities to partner with local industry to understand the region’s greatest needs, invest in new capabilities to meet those needs, and then bring them to market quickly,” the president and chief executive officer of Boeing Global Services, Stan Deal, said.
The agreements between Boeing, carriers and partners that was reached stretched across the four capability areas of Global Services namely training & professional services, digital aviation & analytics, modifications & maintenance, engineering, and parts. Some of the carriers that Boeing signed deals with include All Nippon Airways, Malaysia Airlines, Nippon Cargo Airlines, Royal Brunei Airlines, SilkAir, Singapore Airlines, Alaska Airlines, Biman Bangladesh Airlines, Lufthansa Group, and Tunisair.
The deal signed by Boeing Global Services comes in the wake of reports indicating that Boeing Co has proposed a plan to the government of Brazil which would see the plane maker get a stake of between 80% and 90% in its joint venture with Embraer SA. Consequently the plan would see Boeing take over the commercial operations of Embraer through the formation of a new firm. Defense operations would however remain in the hands of Embraer as this was the requirement of the government.
According to a Brazilian newspaper once the transfer of commercial assets to a new firm is effected, Embraer will get paid in cash by Boeing with shareholders getting most of the money as dividends. With Embraer being the third-biggest plane maker in the world, the joint venture would see Boeing gain dominance in the market share for aircraft that seat between 70 and 130 passengers. This would result in stiffer competition for the joint CSeries program of Bombardier Inc and Airbus SE.
Currently the defense business which Embraer would retain generates close to nothing in EBITDA – earnings before interest, taxes, depreciation and amortization. Embraer’s shareholders would also see between 10% and 20% of the defense unit’s commercial activities moved to the joint venture. Embraer is an ex-state enterprise and the Brazilian government would still maintain a ‘golden share’ which would give it veto powers with regards to particular strategic decisions. Boeing’s plan however still has to get the approval of shareholders and this is expected to be in Q2.