In 2018 Boeing and Embraer announced plans to form a joint venture, and this has just been called off…
The basics of the Boeing & Embraer joint venture
In 2017 it was announced that Bombardier would sell a majority stake in the CSeries program to Airbus (the CSeries is now known as the A220).
This was a huge win for Airbus, since it added another very popular jet to Airbus’ product line. Getting into the smaller jet market also gave them a significant advantage over Boeing, as their smallest plane is the 737.
As a competitive response, Boeing and Embraer announced plans to form a joint venture, which would have seen Boeing take an 80% stake in a partnership that would control Embraer’s commercial airplane and services division.
Embraer produces popular regional jets, so this would have made those planes part of Boeing’s product line.
Boeing & Embraer call off deal
Boeing has announced today that it has terminated the Master Transaction Agreement with Embraer, under which the two companies were to establish their new strategic partnership.
Under the agreement, April 24, 2020, was the initial termination date, subject to extension by either party if certain conditions were met. Boeing exercised its rights to terminate the agreement after Embraer did not satisfy the necessary conditions.
Marc Allen, Boeing’s President of Embraer Partnership & Group Operations, said the following:
“Boeing has worked diligently over more than two years to finalize its transaction with Embraer. Over the past several months, we had productive but ultimately unsuccessful negotiations about unsatisfied MTA conditions. We all aimed to resolve those by the initial termination date, but it didn’t happen. It is deeply disappointing. But we have reached a point where continued negotiation within the framework of the MTA is not going to resolve the outstanding issues.”
The planned partnership had received unconditional approval from regulatory authorities, with the exception of the European Commission.
Ultimately we don’t know the exact details of what caused this to fall through, though I suspect there were many factors involved here, not the least of which is that Boeing’s business has changed drastically in the past year, between the 737 MAX issues, and now the anticipated massive drop in demand due to COVID-19.
Bottom line
Boeing and Embraer have called off their joint venture. This isn’t surprising given the current climate, though it increasingly looks like Airbus has the upper hand (by a long shot) as far as the “big two” aircraft manufacturers go.
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