Boeing Terminates $4.2 Billion Joint Venture Deal With Embraer




Boeing Co on Saturday announced that it has terminated a $4.2 billion joint venture deal with Embraer. 

Boeing Terminates $4.2 Billion Joint Venture Deal With Embraer
Boeing Terminates $4.2 Billion Joint Venture Deal With Embraer Photo: Boeing

The manufacturers had planned to create a joint venture comprising the commercial jets division of Embraer and compete with Airbus in small jet market.

Boeing was hoping to form this joint venture with Embraer to meet Airbus' investment in Bombardier's CSeries jet.



Along with this, a second joint venture to develop new markets for the C-390 Millennium medium airlift and air mobility aircraft was also planned.

However, Boeing announced to terminate the Master Transaction Agreement (MTA), after Embraer failed to satisfy certain conditions for the deal to proceed on 24th April, 2020.

Boeing Terminates $4.2 Billion Joint Venture Deal With Embraer
Boeing had hoped to compete with Airbus in smaller aircraft market using this venture Photo: Reuters

Under the agreement, there was provision to extend the termination date, but Boeing chose to terminate the agreement rather than extend.



The president of Embraer Partnership and Group Operations, Marc Allen said:

"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 Merger Transaction Agreement is not going to resolve the outstanding issues," he added in the statement.



Although, the agreement is now terminated, Boeing and Embraer will maintain their MTA, to jointly market and support the C-390 military airlift and air mobility aircraft.

Boeing Terminates $4.2 Billion Joint Venture Deal With Embraer
This agreement was crucial for Embraer's existence into the future Photo: Getty Images 

Back in July 2018, Boeing agreed the 80-20% joint venture with Embraer's commercial jet unit to develop a smaller, 90-120 seat capacity aircraft to challenge the Airbus A220 directly. 

The Airbus A220 currently dominates this market. This agreement could have resulted in a brand new midsize plane of up to 150 seats.



This joint venture was crucial for the existence of Embraer into the future. Embraer had already gone to lengthy process to separate its commercial jet business from the commercial one.

Boeing Terminates $4.2 Billion Joint Venture Deal With Embraer
Airbus currently dominates the smaller 100-seat market Photo: Airbus

Embraer had made its commercial jet unit ready for Boeing's takeover, dealing with all the obstacles, expenses and issues.

What do you think about this termination of the joint venture? Let us know in the comments below:      

0 Comments