Boeing terminates Embraer deal; Embraer objects

 

Boeing (Chicago, Ill., U.S.) announced on April 25 that it has terminated its Master Transaction Agreement (MTA) with Embraer (São José dos Campos, Brazil), under which the two companies sought to establish a new level of strategic partnership. The parties had planned to create a joint venture comprising Embraer's commercial aviation business and a second joint venture to develop new markets for the C-390 Millennium medium airlift and air mobility aircraft.

Under the MTA, April 24, 2020, was the initial termination date, subject to extension by either party if certain conditions were met. Boeing says it exercised its rights to terminate after Embraer did not satisfy the necessary conditions.

"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 partnership between Boeing and Embraer had received unconditional approval from all necessary regulatory authorities, with the exception of the European Commission.

Boeing says it and Embraer will maintain their existing Master Teaming Agreement, originally signed in 2012 and expanded in 2016, to jointly market and support the C-390 Millennium military aircraft.

Embraer, for its part, also issued a statement on April 25 saying that it is in receipt of Boeing's notice of termination of the MTA. Embraer says it 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 US$4.2 billion purchase price.

Embraer says it believes “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. Embraer believes it is in full compliance with its obligations under the MTA and that it has satisfied all conditions required to be accomplished by April 24, 2020.”

Embraer says it will pursue all remedies against Boeing for the damages incurred by Embraer as a result of Boeing's wrongful termination and violation of the MTA.

Embraer says in its statement that it remains a successful, efficient, diversified and vertically integrated company, with a history of serving customers with highly successful products and services built on a strong foundation of engineering and industrial capabilities.