Aviation: Boeing renounces the takeover of the civil activities of the Brazilian manufacturer Embraer

Text by: RFI Follow

The aircraft manufacturer Boeing gave up on Saturday April 25 to buy the civil activities of its Brazilian competitor Embraer. The Brazilian aircraft manufacturer has accused Boeing of having "illegally" renounced this takeover.

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This is the latest shock for the American group, Boeing, already facing the coronavirus health crisis and the setbacks of the 737 MAX . The aircraft manufacturer Boeing gave up on Saturday April 25 to buy the civil activities of its Brazilian competitor Embraer.

According to a memorandum of understanding signed in July 2018, Boeing was to take control, 80% and for 4.2 billion dollars, of a joint venture comprising the division of Embraer producing commercial aircraft from 30 to 150 seats . A second joint venture was to be responsible for marketing the Brazilian group's C-390 military aircraft, which also manufactures business jets.

While the transactions were to be finalized by April 24, Boeing "   exercised its right to terminate it in so far as Embraer did not meet the necessary conditions  ," the American group said in a statement without specifying the missing criteria. .

No details as to this waiver

The two companies plan, however, according to Boeing, "   to maintain their existing agreement, signed in 2012 and extended in 2016, to market and jointly support the program of the military transport aircraft C-390  ". The American manufacturer does not specify the reasons for renouncing this operation, it comes at a difficult time for the aircraft manufacturer.

We announced today that we have terminated our agreement with Embraer under which the two companies planned to establish two joint ventures.

Release: https://t.co/ORq8lepNis

For its part, the Brazilian accused in a press release Boeing of having renounced "  illegally  " the takeover of its civilian activities. "  Embraer strongly believes that Boeing (...) used fallacious arguments which it used as a pretext for not fulfilling its commitment to complete the transaction,  " he said.

#Embraer says that Boeing wrongfully terminated the Master Transaction Agreement. Learn more: https://t.co/qMz5Y6t3Rw Pic.twitter.com/lcLoxefBTH

The proposed merger was announced a few days after the entry into force of the partnership between Airbus and the Canadian company Bombardier , which enabled the European group to take control of the medium-haul aircraft program CSeries. The transaction was to allow Boeing to compete with its main rival in the regional aircraft segment. At the same time, it was to allow Embraer to benefit from Boeing's commercial strike force.

Bad pass for the two manufacturers

The Covid-19 pandemic has reduced air transport to fright and companies are multiplying cancellations or postponements of orders. Boeing also remains stuck in the setbacks of the 737 MAX, nailed to the ground for more than a year after two accidents that killed 346 people. The value of the company has dropped 61% on the New York Stock Exchange since the start of the year.

Embraer also goes through a bad patch. At the end of March, it had reported significant losses in the fourth quarter of 2019 and had given up on announcing targets for 2020 due to the uncertainties linked to the impact of the pandemic on the aeronautical industry. Since January, its share on the São Paulo Stock Exchange has fallen by almost 60%.

(With AFP  )

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• Aeronautics
• United States
• Brazil

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