FARNBOROUGH, England (Reuters) - Boeing Co (BA.N) sees scope for additional cost savings from suppliers as it expands through the proposed acquisition of the regional jet business of Brazil’s Embraer SA (EMBR3.SA), Chief Executive Dennis Muilenburg told Reuters on Tuesday.
The comment from the head of the world’s largest plane maker is the latest sign of pressure on aerospace suppliers to share the benefits from fast-rising demand for jetliners, highlighted by bullish market forecasts published by Boeing on Tuesday.
Boeing and Airbus have been negotiating price cuts from suppliers as an industry boom leaves an unprecedented eight-year backlog of unfilled orders, and now their efforts to expand outside their traditional market look set to extend that trend.
“The key thing you are going to see is that through the combination between Boeing and Embraer, we will be able to increase volume for our supply chain, which is generally going to be beneficial. And that beneficial volume should also turn into more affordability and competitiveness,” Muilenburg said in an interview at the Farnborough Airshow.
Although a broader tie-up, Boeing’s tentative deal with Embraer echoes Airbus’s (AIR.PA) decision last year to expand into a lower tier by buying Bombardier’s (BBDb.TO) 110- to 130-seat CSeries jet. The Embraer deal is due to close by end-2019.
Asked if he expected further price cuts, beyond those already agreed with suppliers, Muilenburg said: “Yes. Because you’ll see additional increases in volume. And a very typical discussion we’ll have with our supply chain is, if there’s an opportunity for them to increase volume or access to additional platforms, if we can gain a
