Boeing Abandons Deal to Buy the civil aviation division of Embraer

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The American aircraft manufacturer Boeing announced yesterday that it had abandoned the acquisition of the civil aviation division of the Brazilian Embraer, the third largest aircraft manufacturer behind Airbus and Boeing.

« Over the past few months, we have had productive but ultimately unsuccessful negotiations, » said Marc Allen, senior vice president of Boeing, which piloted the operation at $ 4.2 billion (3, 87 billion euros) in negotiation for two years. « We were all aiming to settle them by the initial completion date (of the agreement), but that did not happen. The transaction was scheduled to close on April 24, but Boeing said it was exercising its right not to execute the agreement, saying « Embraer did not meet the necessary conditions. »

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Officially, according to Boeing, negotiations on the finalization of the contract, complicated for weeks, have ended in recent hours on a statement of failure. Boeing objected during discussions on financial and legal matters, which Embraer considered a deliberate will to break the deal on the part of Boeing.

« Embraer is firmly convinced that Boeing has unlawfully terminated » the memorandum of understanding and « used fallacious arguments which it used as a pretext for not fulfilling its commitment to conclude the transaction and paying Embraer the price of ‘purchase of 4.200 million dollars’, reacted the Brazilian group in a press release.

In July 2018, Boeing had agreed to buy 80% of Embraer’s civil aeronautics division, after Airbus took control in 2017 of CSeries from Canadian Bombardier (renamed A220). These operations were explained by the desire of Airbus and Boeing to extend their activities to regional airliners (from 100 to 150 seats), in order to generate new revenues on this market and find ways to reduce their costs of design and manufacturing.




According to observers of the case, it is certain that Boeing has abandoned the takeover of the civil aviation division of Embraer in the context of the coronavirus crisis, where airlines around the world cancel their orders and postpone deliveries. The American aircraft manufacturer itself is preparing to cut its workforce and drastically reduce its production due to the economic crisis linked to the coronavirus. « Boeing has been hit hard by the global (coronavirus) crisis and has found mechanisms in the contract to end it, » a Brazilian source told Reuters.

 

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