On April 25, 2020, U.S. aerospace giant Boeing announced its decision to terminate the $4.2 billion deal to acquire 80% of the commercial aircraft division of Brazilian aircraft manufacturer Embraer. The termination of the agreement, which was first announced in 2018, came after Embraer failed to meet certain conditions including obtaining necessary regulatory approvals.
The deal between Boeing and Embraer was significant in the aviation industry as it would have allowed Boeing to compete more effectively with European rival Airbus in the market for smaller passenger jets. The acquisition would have brought Embraer`s E-Jet family, which includes the E175, E190, and E195 models, under Boeing`s wing.
In addition to strengthening Boeing`s position in the regional jet market, the deal would have also given the U.S. company access to Embraer`s established customer base, especially in Latin America. On the other hand, Embraer would have gained access to Boeing`s global supply chain and marketing network.
However, the deal faced significant opposition from Brazilian politicians and labor unions who were concerned about the potential loss of jobs and technology to the United States. The Brazilian government also had concerns about the transfer of control of a strategic national asset to a foreign company.
Despite the termination of the deal, both Boeing and Embraer have expressed their commitment to continuing their partnership in other areas such as military aircraft and air traffic control systems. Boeing also emphasized its confidence in the long-term prospects of the global aerospace industry and its commitment to its customers.
The termination of the deal between Boeing and Embraer is a reminder that even the biggest deals can fall through due to unforeseen circumstances. The aviation industry, like many others, faces uncertainty amidst the COVID-19 pandemic, and consolidation may not be the top priority for companies at this time. However, the competition in the regional jet market remains fierce, and both Boeing and Embraer will continue to look for ways to stay ahead.