Preparations for the separation have been going on for months in São José dos Campos. Embraer employees were working tirelessly on separating the business jet and military divisions from the civil aircraft division. The latter was to be integrated into a joint venture that would have been 80 percent owned by Boeing. For a long time now, it was no longer a matter of contractual matters, but of very concrete issues such as the division of facilities, staff or IT systems.
But now the work, which is well advanced, comes to a halt. Boeing announced on Saturday (25 April) that it is terminating the contract with Embraer. On the date set for termination, 24 April, Boeing exercised its rights to terminate «after Embraer did not satisfy the necessary conditions», the Chicago based plane maker says. The Boeing Brasil – Commercial project is dead.
Takeover price too high
«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», says 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.»
Boeing is not being specific on what issues exactly didn’t work out. One of the key issues was probably the takeover price. The contract set a price of 4.2 billion dollars for the 80 percent share in the joint venture. By now, however, the entire Embraer group with all its divisions is only worth 1.07 billion on the stock exchange.
Boeing financially stricken
Moreover, the Corona crisis is hitting Boeing itself hard. The Group’s earnings prospects have deteriorated – as with everyone in the industry – and liquidity is also dwindling. In addition, the Americans’ finances were already strained before because of the debacle with the 737 Max. As a result, they simply could no longer afford Embraer.
