July 6, 2018 / 8:11 AM / 2 years ago

BUZZ-Embraer will make Boeing even better - Melius

** Boeing Co to take over commercial aircraft arm of Brazilian planemaker Embraer SA under a new $4.75 bln joint venture, the firms said on Thursday

** Embraer will transfer much of its debt to the new venture and receive cash from Boeing; new company to give stiff competition to the CSeries jets designed by Canada’s Bombardier Inc and backed by European rival Airbus SE

** Five-star rated Melius research says Embraer will make Boeing even better; says although the JV marks a small change it will be strategically significant catalyst in BA’s ongoing transformation to a leaner, more profitable and more competitive company

** Melius says the deal closure will not face obstacles of significance as such; deal not focused solely on earnings accretion, but something more strategic instead

** Says the deal is about transforming BA’s cost structure, which stands in contrast to AIR’s acquisition of the BBD C-series

** BA believes Embraer’s expertise could be helpful in long-term cost front in BA’s Next Midsize Airplane (NMA) business case but doesn’t guarantee that an NMA launch is likely in the near term - Melius (Reporting by Aniruddha Chakrabarty)

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