Going into turmoil following Boeing's decision not to buy it again

An E2 plane from the manufacturer Embraer, in São José dos Campos, on September 12, 2019.
An E2 aircraft from the manufacturer Embraer, in São José dos Campos, on September 12, 2019. ROOSEVELT CASSIO / REUTERS

In economics as in aviation, this is called a crash. The action of Brazilian airline manufacturer Embraer is in free fall. Its title collapsed by almost 15% at the opening of the Stock Exchange, Monday, April 27, at 7.12 reais (1.16 euros). At issue: the decision taken by the American group Boeing, which, on Saturday, April 24, announced that it would renounce the takeover of the Brazilian company's civilian activities, for a total amount of $ 4.2 billion ($ 3.9 billion euros).

Apparently, everything was ready for this "mega agreement", negotiated for years by the two companies, in order to compete with Airbus on the Latin American market. A name for the future joint venture had even already been found (Boeing Brasil-Commercial) and an office opened in São José dos Campos (State of São Paulo).

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But, to everyone's surprise, everything collapsed at the weekend. Embraer "Did not meet the necessary conditions (on redemption) ", Boeing said in a statement. "It’s very disappointing"added Marc Allen, who led the partnership project for Boeing, lamenting that"In recent months we have had productive negotiations, but ultimately unsuccessful".

"Spurious arguments"

The subject is deliberately vague. Indeed, for the majority of experts, it would be the financial and industrial crisis engendered by the epidemic due to the coronavirus, and not the attitude of the Brazilians, who would be the real responsible for the sudden withdrawal of Boeing. The American decision thus outraged the Brazilian party, who was offended at being held responsible.

Read the analysis: The fall of Boeing, a revered company in the United States

In a press release, Embraer executives denounced a "Illegal cancellation" and an "Breach of contract" supported by "Fallacious arguments". "We will seek compensation"said Francisco Gomes Neto, the CEO of the South American aircraft maker, who plans to sue Boeing for a cancellation fee.

To meet American requirements, Embraer spent hundreds of millions of reais

" We continue, firm and strong ”, insisted the president and chief executive officer. But the future of the Brazilian group, the world's third largest aircraft manufacturer, created in 1969 under the military dictatorship, is more than uncertain. Its stock has lost more than 60% of its value since January and sales of its new E2 aircraft are stagnating. Above all, to meet American requirements, Embraer spent hundreds of millions of reais, largely explaining the company's record losses in 2019, amounted to 1.3 billion reais.

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