Boeing drops Embraer

Over the weekend Boeing made a surprising move, with  stock markets closed, by announcing the termination of a Master Transaction Agreement (MTA) with Embraer, under which the two companies sought to establish a new level of strategic partnership.

In response Embraer has issued a statement that it is a move by Boeing to cancel its commitment to pay the US$4.2bn purchase price. “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.”

In February 2019 the parties unveiled 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.

This is the second Boeing failure to get into the smaller narrow-body market. In 1988 it purchased de Havilland Canada and with it the Dash 8 (now Q400).  In 2002 it was sold to Bombardier.

Under the agreement it could be annulled by either party if certain conditions were not met. Boeing says it exercised its rights to terminate after Embraer did not satisfy the necessary obligations.

"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 [Master Teaming Agreement] 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 at Boeing. "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."

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

www.boeing.com/commercial

www.embraer.com

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