Boeing-Embraer partnership falls apart

Boeing has terminated an agreement to form two joint ventures (JVs) with Embraer, accusing the Brazilian company of failing to meet the “necessary conditions”.

Embraer is headquartered in in the Brazilian city of São José dos Campos. (Embraer)

After trying for more than two years to finalise the transaction, Boeing concluded that further negotiations were “not going to resolve the outstanding issues”, said Marc Allen, Boeing’s president of Embraer Partnership & Group Operations. Boeing did not give details of the outstanding issues.

Embraer called the US firm’s assertion false, insisting it is in “full compliance” with its obligations under the agreement. It said it would to pursue “all remedies” for the “damages” it incurred from Boeing’s action.

Embraer alleged that Boeing became unwilling to complete the transaction after experiencing major financial and reputational problems from the more-than-year-long grounding of the 737 MAX commercial jetliner. Boeing’s financial woes have worsened during the coronavirus-fuelled air-travel slump.

One JV, Boeing Brasil – Commercial, would have comprised Embraer’s commercial aircraft and services operations, with Boeing owning 80% and Embraer 20%. The other JV, Boeing Embraer – Defense, would have focused on marketing Embraer’s new C-390 Millennium medium-lift transport plane, with Embraer owning 51% and Boeing 49%.

Boeing was to have paid Embraer USD4.2 billion to seal the deal. The JVs were under review by the European Commission but had received all other required regulatory approvals.