Boeing-Embraer alliance explodes in flight

“Boeing worked diligently for more than two years to finalize its transaction with Embraer. Over the past few months, we have had productive, but ultimately fruitless, negotiations on MTA conditions not metSaid Marc Allen, Senior Vice President of Boeing and President of Embraer Partnership & Group Operations in a statement. And to continue: “It is deeply disappointing. But we have reached a point where continuing negotiations under the MTA will not resolve the outstanding issues“

The aircraft manufacturer from São José dos Campos immediately responded by stating that Boeing had “fabricated false allegations as an excuse to try to breach its commitments to complete the transaction and pay Embraer the purchase price of $ 4.2 billion.“

Embraer also intends to use all possible means against Boeing for the damage suffered following the “improper termination of Boeing and MTA violation“

Boeing and Embraer had defined the main lines of their strategic merger in December 2018, an agreement which was to lead to the creation of two joint ventures, one focused on commercial aviation, the other in defense aeronautics.

The first, in which Boeing was to hold an 80% interest, covered all of Embraer’s Commercial Aircraft activity (E-Jet E2) as well as after-sales services. Called “Boeing Brasil – Commercial“, This entity was a kind of response to the effective resumption of the Bombardier CSeries program by Airbus on July 1, 2018, now the A220 family.

The second joint venture, which was to be 51% owned by the Brazilian aircraft manufacturer, was to support the commercial development of the KC-390 / C-390 Millenium military transport jet.

These projects had received the unconditional approval of all the regulatory authorities necessary for their implementation, with the exception of that of the European Commission, whose decision was expected on August 7.

Commercial aircraft merger had been condemned in recent months

The fact remains that notwithstanding the official reason advanced by Boeing to put an end to the project of rapprochement between the two aircraft manufacturers, the creation of Boeing Brasil – Commercial seemed doomed for a few months already and in particular with the crisis of the 737 MAX.

The potential synergies between the E2 family and the 737 MAX family were far from obvious in the eyes of the market, and the commercial prospects of the new generation of E-Jets may not have sufficiently convinced Boeing in the light of the 4, $ 2 billion to invest, and while its Commercial Aircraft activity is particularly impacted by the crisis linked to the coronavirus pandemic due to the inability to deliver a single single aisle. Boeing Commercial Aircraft (BCA) plans to cut up to 10% of its workforce to weather the crisis.

Embraer also believes that “Boeing has engaged in a systematic pattern of repeated delays and violations of the MTA, due to its reluctance to close the deal given its own financial situation, the 737 MAX, and other business and reputation issues.“

According to Boeing, the two aircraft manufacturers plan however to continue to cooperate in defense and in particular on the KC-390 / C-390 Millenium program, by maintaining their existing agreement, signed in 2012 and extended in 2016, but without providing further details.

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