Boeing pulls out of Embraer joint venture
Boeing has pulled out of a planned joint venture with Embraer Commercial Aircraft. Embraer is now seeking damages.
The US manufacturer says it exercised its right to terminate in the Master Transaction Agreement (MTA) after Embraer did not satisfy necessary conditions. Embraer denies this.
“Embraer believes strongly that Boeing has wrongfully terminated the MTA, that it has manufactured false claims as a pretext to seek to avoid its commitments to close the transaction and pay Embraer the $4.2 billion purchase price,” says the company in a statement. “We believe Boeing has engaged in a systematic pattern of delay and repeated violations of the MTA, because of its unwillingness to complete the transaction in light of its own financial condition and 737 MAX and other business and reputational problems.”
The joint venture was agreed in July 2018 with April 24, 2020, was the initial termination date in the MTA. The two companies will continue to work on a defence joint venture.
Boeing had planned to take 80% of Embraer’s commercial aircraft business.
“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,” said Marc Allen, president of Embraer Partnership & Group Operations. “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 joint venture was still awaiting European Commission approval.
Embraer adds: “Our history of over 50 years is lined with many victories but also some difficult moments. All of them were overcome. And that’s exactly what we are going to do again. Overcome these challenges with strength and determination.”