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Yesterday, Embraer S.A. (ERJ - Analyst Report) along with The Boeing Company (BA - Analyst Report) announced an agreement, which tied the two big banners of global aviation in a strategic relationship.  The mutual partnership is aimed to foster operational efficiency and customer satisfaction, without compromising safety and productivity.

Brazilian and United States governments signed a Memorandum of Understanding (MoU) on the Aviation Partnership, targeted to pursue several areas of cooperation, including research, technology and sustainable aviation biofuels—a stride quite enviable to Embraer’s peers such as Lockheed Martin Corporation (LMT - Analyst Report) and Northrop Grumman Corporation (NOC - Analyst Report).

Frederico Curado, President and CEO of Embraer S.A, expressed his optimism about this public-private partnership between the two nations, which he said would strengthen their national ties on civil aviation platform.

Co-operative agreements between these two nations are not new to the world. Looking back the records, Boeing and Embraer had announced plans in July 2011 to jointly produce sustainable aviation jet fuel from sugarcane.

Later, in March 2012, global aviation industry witnessed the two aviators sign a MoU with Airbus to work together on the development of affordable aviation bio-fuels.

Riding the optimistic wave, both these partners foresee opportunities to reduce customers' operational costs and enhance fleet efficiency. Embraer’s corporate presence in the U.S. for over 3 decades and Boeing’s enduring partnership with Brazil for over 80 years reinforce the partnership spirit.

We are currently holding a long-term Neutral recommendation on Embraer. Also, Embraer has a Zacks #3 Rank, which translates into a short-term (1-3 months) Hold rating.

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