Boeing has decided to terminate discussions and annull agreements for its proposed joint venture with Embraer. The aerospace giant said on Saturday that the Brazilian company had satisfied necessary conditions of the agreement.
According to the terms of the agreement, Boeing was to buy 80% of Embraer’s commercial aircraft business for US$4.2 billion. Boeing will pay a termination fee of $75 million.
“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.” Marc Allen, president of the Embraer Partnership and Group Operations, in a Boeing news release.
The joint venture, which was announced in July 2018, would have given Boeing control of Embraer’s commercial aerospace arm, which makes passenger planes that are smaller than Boeing’s. The move came soon after Airbus had taken a stake in Bombardier’s C-Series program. The aircraft has since been renamed the A220 and has received an enthusiastic response from airlines.
Boeing’s decision comes at a time when the aerospace industry is going through a crippling crisis because of Covid-19. The company is also reeling from the continued grounding of its best-selling 737 Max aircraft, with demand for new planes disappearing and many carriers cancelling orders for the beleaguered jet.
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