A $4.2 BILLION DEAL
The collaboration was first established in February 2019. Boeing agreed to purchase 80% of Embraer’s commercial aircraft division. The agreement was approved by Embraer’s shareholders and was expected to close in June 2020.
Unfortunately, Boeing has put an end to the $4.2 billion deal with Brazilian aircraft maker Embraer on April 24th, 2020. The contract was a formation of a joint venture by the two companies to design, build, and sell commercial airliners worldwide. Boeing would have owned 80% and Embraer 20%. This new company would have been valued at $ 4.75 billion.
Some said it was all due to the impact of the COVID-19 pandemic on aviation. Others said it was due to Boeing’s financial condition, 737 Max and reputational problems, some alleged that U.S. labor and political considerations played a role.
30% DROP IN DELIVERIES FOR EMBRAER
The brazilian aircraft maker blamed Boeing for the decline in deliveries, about 30% drop in deliveries of aircraft. Embraer said the end of this deal has resulted in wiping out its 2019 profits, before interest and taxes. They also revealed that they had a backlog of $15.9 million at the end of March, down from $16.8 billion in the fourth quarter of 2019.
BOEING HAS ABANDONED THE DEAL
Boeing said they had tried for two years to finalise the deal before the deadlines but the negotiations were not successful.
Boeing also said that Embraer did not satisfy the conditions established in their agreement. Moreover, Boeing wanted to avoid making the impression that funds intended to support U.S. jobs were instead used to secure a deal with a Brazilian firm.
LEGAL PROCEEDING?
Embraer has announced that they will “pursue all remedies against Boeing for the damages incurred”. Accusing them with false Claiming that they excuses. “manufactured false claims as a pretext to seek to avoid its commitments to close the transaction and pay Embraer”.
